Nortel announces more layoffs

3,200 will lose their jobs, and employee-stock compensation plans may go, too

Nortel Networks will further cut its workforce by 3,200 and eliminate bonuses as part of its ongoing bankruptcy reorganization.

The company had already announced 1,800 layoffs last year in an effort to curb losses and avoid bankruptcy, but they have not all taken effect. It has also been trying to sell off business units as a way to cut costs and raise cash.

View a slideshow on the most notable IT layoffs of 2009. 

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Nortel Networks will further cut its workforce by 3,200 and eliminate bonuses as part of its ongoing bankruptcy reorganization.

The company had already announced 1,800 layoffs last year in an effort to curb losses and avoid bankruptcy, but they have not all taken effect. It has also been trying to sell off business units as a way to cut costs and raise cash.

View a slideshow on the most notable IT layoffs of 2009. 

The new layoffs, which will bring the corporate headcount below 30,000, are worldwide. They are staggered because of the varying local laws governing how much notification of termination must be given, the company says.

Nortel also says it won't pay bonuses that employees earned in 2008 as part of its annual incentive plan. The plan will be modified for 2009 to allow quarterly evaluations and payouts so both employees and the company will have shorter-term objectives that better fit with actual performance.

The company is seeking to further cut employee incentives by getting rid of its equity-based compensation plans – stock options, restricted stocks and performance stocks. Eliminating the plans would affect all outstanding equity employees have accrued, whether vested or not. No further equity would be awarded in 2009 if the proposal is approved by Canadian courts.
Nortel stock last traded Jan. 13 for 32 cents a share.

Despite those measures, Nortel says it wants to set up an incentive program to retain employees it deems essential while the business is still under bankruptcy protection. The company didn't say exactly what the incentives might be.

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