# Nortel and bonuses to execs



## conix67 (Jul 27, 2008)

Nortel is approved of paying 45 million in bonuses to 8 of their execs. This is a court ruling! Like someone says, world has gone mad!

I was outraged of this story. I'm sure many of you have followed Nortel's story for many years.

General reaction of course is outrage, but the article on Toronto Star defends this ruling, specifically saying "bonuses have it uses where the individuals meet certain performance targets or goals.... cost cutting measures and having business focus ..."

This is a total B.S!

Nortel has laid off more than 90% of employees since their glory days. I wonder how many of high level execs they have cut while they are doing this. I can't believe they still have 8 senior executives!

You know what? These are probably 8 guys with some MBA degree, have no clue on telecom business but they hire consultant to do all technical work. 

Their main tools for cost cutting, as you may already know, is laying off people. For other areas, they just cut off businesses, those that don't make money, is that so difficult? You look at your balance sheet, and pick one that has lowest return, then just cut it.

They are approved of paying 45 million while they STOPPED paying out severance pays to laid off employees because they are under Bankrupt protection! How much more outrageous can things get than this?

How is one company who has lost over 99% of its value in stocks is allowed to set bonuses of 45 million dollars to just 8 execs, while they are under bankrupt protection??? Clearly there's a flaw in economy system in North America. Those with money and connection, they can be in places where they can greedly score all kinds of huge compensations through the goals they set themselves that can be achieved by almost anyone!

If they are allowed to set such high bonuses for objective targets met, they should also be penalized with equal amount when they fail. Yet, no such thing exists, and when *they* fail, everyone else pays, and they still get paid.

Sorry I had to rant. Nortel bonus is even more outrageous than AIG, since the article suggests this is a performance bonus...

Where do they get money, while they've been losing billions of dollars EVERY SINGLE QUARTER for years !!


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## twoheadedfish (May 10, 2008)

i administer nortel's pension plan. there are MANY extremely pissed off people and they all want to talk to me.

most retirees have lost half their income, as they had a retirement "bonus" that was outside their pension plan. since it was outside the plan, it wasn't protected by law and they've lost it, but they've come to depend on it.

Now I know that executive income is 90 per cent bonus to start with, and they really don't make much salary but it doesn't make sense to take money from poor retirees and give it to the people who've driven the company into the ground.


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## conix67 (Jul 27, 2008)

Correction on my end, 8 execs are to share the bonus pool of 45mil. However, it's just different bonus amount, nothing else changes.

Yes, their base salary is not as high as these bonuses. Yet, their base salaries are high enough. Every company has different payroll policy, but VP of large companies receive at least 200K in base salary, 500K or more is common. This is not including other incentives such as stock options and other who-knows-what-else-is-there.

This is exactly what drove these companies down to the ground. It's their priority #1 to fill this hole, which goes to their pockets.

I've been in companies that ran into financial troubles long before the recent global crisis. They go through restructuring to cut costs, and the first method they use is "reduction in forces", because they don't need to produce so much.

However, those in control are not part of this "forces" for some reason. I rarely see the management team getting reduced at the same rate as workers.


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## JSCOOK (Feb 29, 2008)

I'm not amused ... I think the $45 million should have been paid back to shareholders when they had falsely reported profits a few years ago ... I lost a pile of money.

The rich just get richer ... not as if these top exec's actually NEED the money.


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## blossom112 (Mar 19, 2008)

Although 45mil is alot for 8 people .
Corporate people have a base pay and anything over and above work does not get paid as in overtime hence the big bonus...and This I know if the company however does crappy for the year bonus are slim to none and any overtime isnt covered like reg employees (like working for free!)
I think someone made a mistake and I have read that they are returning the moneys 
stock options should be provided the same to all employee's 

Most of what I know is canadian .... and I know because on years the company does poorly and many days my hubby has worked for free did not get a bonus and the pager calls and all the calls to my home at all hours ...and the trips to vancover and calgary .....all that was for free!!!
oh and then theres EOM which no one knows how to do ...thats 9 to 12 after hours a month x20 years free work!

So I see where these people are coming from and they feel entitled to it and ripped off!!!and underpaid!!
If I were them I wouldnt return a dime !
just my opinions !

P.S the rich dont get richer ..........they pay more taxes !!!!


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## JamesG (Feb 27, 2007)

blossom112 said:


> P.S the rich dont get richer ..........they pay more taxes !!!!


Thank you Blossom for some political sense on this forum. In the US the top 25% of income earners pay 86% of all federal income taxes.

People whine that the rich don`t pay but they pay for everything this squishy safety blanket smothered country enjoys. Few people realize what they see when they look at a rich Canadian and their home or car. To have a $1M home in this country you would have to have made at least $2M in before tax income (assuming you are made your money in CDN dollars). That is a 50% payout that is taken by government to be feast upon in the public trough.

I really feel sorry for those in this country who have successful businesses they have nurtured from the ground up. Rampant populism and socialism in this country ensures that you will always be demonized, not applauded for your efforts in creating jobs and providing goods or services that others believe are valuable and worth paying for.


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## conix67 (Jul 27, 2008)

JamesG said:


> Thank you Blossom for some political sense on this forum. In the US the top 25% of income earners pay 86% of all federal income taxes.
> 
> People whine that the rich don`t pay but they pay for everything this squishy safety blanket smothered country enjoys. Few people realize what they see when they look at a rich Canadian and their home or car. To have a $1M home in this country you would have to have made at least $2M in before tax income (assuming you are made your money in CDN dollars). That is a 50% payout that is taken by government to be feast upon in the public trough.
> 
> I really feel sorry for those in this country who have successful businesses they have nurtured from the ground up. Rampant populism and socialism in this country ensures that you will always be demonized, not applauded for your efforts in creating jobs and providing goods or services that others believe are valuable and worth paying for.


I have no problem paying taxes, as long as taxes get spent in right places (well many do wonder about this though). Populism and socialism have places.

It is for this reason these execs pump up their bonus amounts to offset the taxes they have to pay, and many of them don't pay full tax anyway.

Hardly is the case those who built their business from ground up receive these bonuses. The professional CEOs and execs they hire do. These guys are *feasting* on money they don't have, the money the company's borrowing from others, and some cases from tax payers and government (rescue funds). Their job is to inflate the company's value as high as they can, to keep the shareholders happy.

Stock options are supposed to be the biggest incentive of all for this purpose - keep them motivated and retain talent. Since they usually have delayed vesting schedule, they can't just score large amount of cash in few quarters and exit with satisfactory result. Even this had been tweaked for CEOs and execs, so that they can score quick cash as soon as they are awarded of these stock options.

They create bonuses when they have no hope of scoring additional cash out of stock options, as form of incentives. What this effectively tells is that *they know they can't turn things around, but they are greed and need to get paid more than what they are really eligible for!*

This is where things are wrong. How can they be allowed pay themselves outrageous amount of bonuses (let alone unreasonably high base salary to begin with) with the money they don't have while the company's under bankrupt protection and they've done absolutely nothing to turn things around?

This is not about ordinary people whining about riches. I have no problem seeing riches get richer, as long as they earn it.

The biggest problem with current financial crisis, all these investment firms, is that they take your money, play with it, and lose the bets they made, and turn around and says it's gone (they are not even sorry), while they themselves still get paid with tax payers money they get by threatening government and general public.

Like they say on paper now, "Media deserves blame for failing to notice bubble".

I work for a company I had respected for a long time, long before I joined the company. When I joined, three of four original founders were still with the company. They made a lot of money through stock options they owned, yet they were still eager to focus on fundamentals of the company by themselves, and let the employees enjoy fair treatment regardless of rank.

This motivated all employees to perform well, as they believed in the leaders. It was when the founders were replaced with professional CEOs and VPs he brought in. The new CEO looked good for years, and everyone had an illusion that he was just as good a leader as the founders for this company. However, toward the end it became very clear, that his true intentions were elsewhere. He tried very hard to jack up company's stock price. When he failed, he sold the company to an American company, telling all employees it's for the good cause. We had no way of telling what's good or bad at the time, since so much was hidden, but things became crystal clear when details of his contract was published. The CEO cleared prepared for exit, with an instant compensation of 2 million or more, no matter how things go with merger.

Thanks to inflated financials, the new owner quickly learned that our company was not as valuable as they thought it was, and few months later our CEO was eventually fired (oh they say he left for personal reasons). Years after the Canadian operation has been split up, sold in parts, and wave of reduction in forces keep coming... and the Canadian government approved this take over deal...


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## blossom112 (Mar 19, 2008)

JamesG said:


> Thank you Blossom for some political sense on this forum. In the US the top 25% of income earners pay 86% of all federal income taxes.
> 
> People whine that the rich don`t pay but they pay for everything this squishy safety blanket smothered country enjoys. Few people realize what they see when they look at a rich Canadian and their home or car. To have a $1M home in this country you would have to have made at least $2M in before tax income (assuming you are made your money in CDN dollars). That is a 50% payout that is taken by government to be feast upon in the public trough.
> 
> I really feel sorry for those in this country who have successful businesses they have nurtured from the ground up. Rampant populism and socialism in this country ensures that you will always be demonized, not applauded for your efforts in creating jobs and providing goods or services that others believe are valuable and worth paying for.


AMEN!!!

Well I mind very much being robbed every year of A small fortune and it pisses me off!!!!!! and each year the ammount goes up!
you kidding me we could get richer if they would stop robbing us blind !!
you think we get any taxes back NOT they take take take and we cant get baby bonus either just like everyother CANADIAN and both hubby and I were born here and so was our daughter ,meanwhile people who werent born here get it ............I would love to work ,,,,but tax man would take every friggen dime and For the live of me IM SICK OF PAYING.....so I stay trapped at home pissed at the government for robbing us leagally!!!!!!!!

They make you THINK these top exc make their own rules ....but this isnt so .

Those exc's arent as rich as people believe them to be when the tax man is taking MORE then their share ...
I am soo sick of people whining .....lets see you get robbed a small fortune every pay see if you still whining about getting .
I have been living it more then a decade why do you think We sold our house ...WE ARE SICK AND TIRED OF BEING ROBBED......Other people on the same street were paying 1/4 of what they were charging us ......At first I thaught it was a mistake then I finally realized with the help of hubby .
I would love to see what the government would do if we went on welfare .....refuse it to us probably because they want the MONEY.
think we would get any back on unemployment NOT 
We already enquired about that!

If you were being robbed and there was nothing you could do how would you feel!!!!
If the company sent hubby a check I would cash it and run cause they arent getting it back!!! and dont say I cant cash it because I can!!!!  
I agree with James 100 and 50 %!!

exc dont make all the decisions alone and this I KNOW!
Nortel was screwed from the get go and even hubby knew this when they first started up it was a flip between one company or Nortel and he took the other company ....geese if he had a picked nortel can you imagine how many people my opinions would outrage .......
government should not have given them anything .....another stupid decision about my tax dollars that pisses me off!!!!!!!!!!!!!!!!!

OH but you know my hubby is corporate management for a telecommunication right ?
So we KNOW BETTER ....sure we read the news and follow storys ,and laugh because people REALLY dont know!!!
if they offered my hubby millions to take the fall ...........I would friggen JUMP at the opertunity ..........so for those who have been paid to take the fall CHEERS!!!!!!!

sure people who dont mind paying taxes are not the ones paying tens of thousands every year!(half of what you make)If you had to you would be so pissed off ...if not you your wife for sure!~

Income taxes comes directly out of paychecks this is the same for corporate people as well!
So to think somehow they are getting away with it isnt so !


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## jrs (Mar 18, 2006)

It surely didn't take much time for the shine to come off of the new Obama penny. The general public and media are catching on to his game much quicker than I thought they would.

The US Bailout bill was handed to the Congress about 2 hrs before they had to vote on it (ie) it was kept secret. This was a huge bill and no one had time to read it before they voted on it. The same administration that is condeming these CEO's also buried in the bill the ability to handout these bonuses. The added porkbarrel that was attached at the last minute to fund pet projects in key congressional districts was disgraceful and is only still starting to become clear.

Then the administration (Obama) stands up and acts surprised that these bonuses were being given out. Do you mean to tell me that they handed over 9 TRILLION dollars of public money and didn't take the time to know or understand where the money was going? 

Then there solution is to introduce a RETROACTIVE tax at a rate of 90%! This tax bill BTW is unconstitutional and will not come into law. One could say that the greedy CEO's should have there bonuses taxed or not provided at all. Perhaps. But watchout because this now sets the precident for them to unfairly tax the bonuses YOU may get in your jobs.

It is not the rich get richer that scares me, it is the big government getting bigger that does.


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## conix67 (Jul 27, 2008)

Blossom, everyone pays same amount of income tax out of same amount of taxable income. There are no different rules against different types/groups of people in Canada.

Surely if you're paying income tax of exactly half of the gross income, you'd be among the top 1% of highest paid Canadians, I wouldn't be complaining about that.

The morale of this story is not about exec's bonuses in general. When the company's making profit, and largely due to well guided leadership of CEOs and execs, they deserve it.

Why is that when they screw up, everyone else has to pay for it???? Watch out, your tax money could be going into these troubled company's execs pockets.

Like many other Canadian companies, Nortel is a victim of greed from high level corporate officers, those with access to enormous compensation packages regardless of company's performance.


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## JamesG (Feb 27, 2007)

conix67 said:


> Surely if you're paying income tax of exactly half of the gross income, you'd be among the top 1% of highest paid Canadians, I wouldn't be complaining about that.


You would change your tune so fast if this was your salary being halved. It would make your blood boil realizing all the services and program you are paying for that everyone else enjoys and you will never use or at least never recoup the value from.


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## conix67 (Jul 27, 2008)

JamesG said:


> You would change your tune so fast if this was your salary being halved. It would make your blood boil realizing all the services and program you are paying for that everyone else enjoys and you will never use or at least never recoup the value from.


Unfortunately, my marginal tax rate has been up there for years. Only then I was able to learn the facts in corporate world.

It is not only the income tax, but all other taxes that add up to the outrageous amount you're paying to the government, for the questionable services you receive in return. However, at least the rule applies to everyone, and there's no exception (at least on surface).

Are there any other countries any better than Canada in this regard? Probably. Is it worth migrating to those countries simply because you're sick of paying high taxes? Not likely.


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## conix67 (Jul 27, 2008)

No I've never seen a trace of what you call "baby bonus". Whether you believe me or not, that's not my concern. 

You think you'd better off in US taxwise? Think twice. Try living in California. Not only your income tax rate wouldn't be any better, you'd also need to have a decent income just to be able to send your kids to *decent* public schools. 

Remember popular vocal group ABBA? They had to pay 98% of their income in taxes under Swedish law back then. Surely, our marginal tax rate of 50% isn't as outrageous as this one.

GST/PST on purchases, just like your income taxes, is what everyone pays. Sure you can choose not to pay, buy not purchasing anything or not earning any *taxable income*. 

You also pay GST on large purchases such as Cars or newly constructed houses. The amount then becomes outrageous, and yes everyone feels the pain.

If you purchase gas, smoke cigarettes, drink alcohol, you pay additional taxes, often substantially higher amount than GST/PST combined.

When you use up a lot of these, combined with your income tax, property tax, and all other hidden taxes, you could be paying well over 80% of your gross income in taxes. Yes, that's an outrageous amount, but everyone pays.

Anyway, you're missing my point here in this post. Everyone loves money!! Because you can do a lot with them, and often what you can do is limited by what you can afford. However, when it comes down to a troubled company stop giving out severance and protected against creditors, while handing out large amount of bonuses to its execs who created all this mess is simply *wrong*, and there's not another word best describing it.


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## conix67 (Jul 27, 2008)

blossom112 said:


> But when the time came im handed a bill for som,ewhere around 180.00 cant remember the exact ammount..........hey I have the same OHIP as everyone else whats up with the cost?


Are you billed for an ambulance service? That's the only thing I can think of.


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## Mr Fishies (Sep 21, 2007)

Post retracted.


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## blossom112 (Mar 19, 2008)

I dont agree ......with your numbers ...I have a T5 here saying they are wrong ........it is 40% for people way under 160k 

This I know for a fact!!!! 

dont think i said 50% but pretty darn close


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## blossom112 (Mar 19, 2008)

no I was billed for the cast ,,, the crutches .the shoe to go on the cast and probably the garbage lol
probably even the techs time lol 

but cant really complain can I it was almost like going to the cast drive through ...np tho 
i WILL JUST SEND THE COMPANY THE BILL rolmao ........AS i wont have to pay a dime lol
nope not 20% not even 10% we pay nadda~~~~~
the ambulace bill will come in the mail .... seperately so thats 180.00 ish plus 45 I believe unless it went up


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## blossom112 (Mar 19, 2008)

You know I like you as a person ...that dont change becausewe have different views !!
Your still cool to me!


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