Motorola freezes salaries and benefits, but no layoffs announced
To cut costs, Motorola is reducing the salaries of its co-CEOs and freezing the pension plans of all employees, while avoiding job layoffs at the moment.
In response to what Motorola calls "continuing global economic challenges," the company is making changes to employee benefits and executive compensation. Yet the cost reduction measures don't include any job losses right now. Many of Motorola's existing employees will not receive salaries in 2009, also under the plan.
But Motorola co-CEOs Greg Brown and Sanjy Jha are each voluntarily accepting an actual decrease of 25% in their base salaries. Brown also plans to give up any 2008 cash bonus earned under the company's incentive plan, according to a statement from Motorola this morning.
Jha, who joined Motorola last summer from Qualcomm, has a contract with Motorola that provides for a guaranteed cash bonus for 2008. However, Jha's bonus will be "voluntarily reduced by an amount equal to [Brown's] forfeited bonus," and the rest will be taken in restricted stock units.
In permanently freezing its pension plans, Motorola intends to preserve the vested benefits already earned by employees while "eliminating future benefit accruals." But the company will continue to fund pension obligations to current and future retirees.
Starting January 1, 2009, Motorola will also temporarily suspend all company matching contributions to the company's 401(k) plan. Employees in the US will be able to keep making payments to their plans, but they won't get matching contributions from Motorola.