Motorola Makes Pension Plan Changes
CEOs to reduce their pay, bonuses.
By TWICE Staff -- TWICE, 12/17/2008
Schaumburg, Ill. — Motorola announced a pension-plan freeze, temporary suspension of 401(k) company matches, and a 2009 salary freeze in most of its markets to save more money on top of the $800 million in cost cuts announced in October.
In addition, the company’s co-CEOs voluntarily reduced their 2009 base compensation by 25 percent, the company said.
The company didn’t specify how much money the measures would save.
In freezing its pension plan, Motorola said it will preserve vested benefits accrued by employees and retirees, but eliminate future benefit accruals. Motorola also said it “intends to continue to provide funding to meet its pension obligations to present and future retirees.”
The suspension of company 401(k) matches begins Jan. 1. U.S. employees can continue to make their own contributions to their 401(k) plan.
In addition to a base-salary reduction, co-CEO Greg Brown will voluntarily forgo any 2008 cash bonus earned under Motorola’s incentive plan, the company said. Sanjay Jha's employment contract provides for a guaranteed cash bonus for 2008, but his bonus will be voluntarily reduced by an amount equal to Greg Brown's forfeited bonus. The remainder will be taken in the form of restricted stock units.
"The sustained downturn in the global economy requires that we take these difficult but necessary steps," the company said. “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."
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