Motorola will cut the 2009 salaries of its co-CEOs, suspend matching contributions to employee 401(k) retirement accounts and freeze its pension plans in an effort to reduce costs, the company announced Wednesday.
Motorola will permanently freeze its U.S. pension plans as of March 1, the company said. Vested pension benefits accrued by employees and retirees will still be available, but the company will no longer pay future benefits, it said. Motorola plans to continue to meet its current pension obligations.
Motorola previously announced cost-cutting measures expected to save US$800 million on Oct. 30, the same day the company reported a quarterly net loss of $397 million.
The suspension of 401(k) matching funds will become effective Jan. 1. U.S. employees can continue to contribute to their 401(k) accounts, but their contributions will not be matched.
In addition, co-CEOs Greg Brown and Sanjay Jha will voluntarily take a 25 percent cut in their base salaries. Brown had his base salary increased from $950,000 to $1.2 million in January. Jha, named co-CEO in August after leaving Qualcomm, also has a base salary of $1.2 million, according to reports.
Brown will also voluntarily pass up any 2008 cash bonuses earned under the Motorola incentive plan. Jha's employment contract provides for a guaranteed cash bonus for 2008, reportedly of $2.4 million. His bonus will also be voluntarily reduced by an amount equal to Brown's forfeited bonus and the remainder will be taken in the form of restricted stock units, the company said.
"The sustained downturn in the global economy requires that we take these difficult but necessary steps," Brown and Jha said in a statement. "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."