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Eight Nortel execs get OK on bankruptcy bonuses

23 марта 2009

Nortel Networks Corp., which announced 3,000 layoffs last month, won court approval Friday to pay eight top executives their share of a $45 million bankruptcy bonus package.

Judge Kevin Gross, who earlier cleared the general bonus program which covers about 900 employees, approved the bonuses for the highest executive ranks of the telecommunications maker at a hearing in the U.S. Bankruptcy Court in Wilmington, Del.

"The debtor has exercised their judgment," said Gross.

Congress moved to rein in bonuses for leaders of bankrupt companies in 2005, demanding that top insiders not get paid extra unless there is proof they have job offers elsewhere.

Bankruptcy courts in Delaware and New York continue to approve the bankruptcy bonus programs, reasoning Congress didn't mean to ban bonus programs like Nortel's that are premised on hitting specific targets. The company's bonus program is keyed to cost-cutting efforts, among other things.

Nortel is operating under insolvency protection in the U.S. and Canada and is in talks about deals that would likely break up the company, according to recent reports in the Wall Street Journal.

It has shed thousands of jobs in an effort to survive under a $4.5 billion mound of debt.

One of Nortel's former employees, Robert L. Kenas of New Jersey, criticized Nortel's bonus proposal, telling the judge in a letter that it's a way of "rewarding poor leadership."

James Bromley, attorney for the Canadian company, said Nortel is "concerned" about the plight of fired workers, and believes the best way to take care of them is to make sure top executives get extra pay to stay on the job. Bromley is with the firm of Cleery Gottlieb Steen & Hamilton.

Nortel says the group whose bonuses were approved Friday doesn't include Chief Executive Mike Zafirovski.

Источник: Total Telecom

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