Motorola is bringing in salary freezes and slashing pension
benefits to cut costs as the recession continues to bite the IT
sector.
From 1 March 2009, Motorola will permanently freeze its US
pension plans, preserving vested benefits accrued by employees and
retirees but eliminating future benefit accruals.
Motorola says it intends to continue to provide funding to meet
its pension obligations to present and future retirees.
From 1 January 2009, Motorola will also temporarily suspend all
company matching contributions to the US Motorola pension plan. US
employees may continue to contribute to the plan but will not
receive matching contributions from Motorola.
The company has not said for how long it will not offer matching
funding for scheme.
The company has also said "that employees in many of the markets
in which it operates will not receive a salary increase in
2009".
In addition, Motorola co-chief executive officers Greg Brown and
Sanjay Jha will voluntarily take a 25% decrease in their base
salaries in 2009.
Brown will also voluntarily forgo any 2008 cash bonus earned
under the Motorola incentive plan.
Jha's employment contract provides for a guaranteed cash bonus
for 2008. His bonus will also be voluntarily reduced by an amount
equal to Brown's forfeited bonus, and the remainder will be taken
in the form of restricted stock units.
The latest cost-cutting measures are expected to lead to cost
savings in addition to the
$800m in cuts that were previously announced in October.
These cuts included another 3,000 job losses, at a company that
has shed thousands of jobs over recent years in response to losing
market share in phones, network equipment and other products and
services. The latest recession, therefore, is not the only reason
the company is contracting further.
"The sustained downturn in the global economy requires that we
take these difficult but necessary steps. While serving our
customers remains a top priority, we are equally focused on our
cost structure, and we will continue to implement appropriate
measures to conserve cash and reduce expenses," said Motorola.