Reply #52: Motorola Permanently Freezes Employee Pension Fund [View All]

[MilesColtrane]

CEOs take 25% Pay Cut (looks like they'll have to resort to domestic caviar.)

Letter sent to me by email. Confirmed by MSNBC at http://www.msnbc.msn.com/id/28277913/

17 December 2008

To: All Motorola Employees



Important Compensation and Benefit Changes



As we all know, these are the most difficult economic times in recent memory. The current economic downturn has affected Motorola’s customers, suppliers and employees, impacting every area of our business. We have already asked you to do all you can to improve cash flow, while at the same time serving our customers – and your efforts are sincerely appreciated.

Now, even more is being asked of us all. The continued decline in the global economy requires that we take further action to best position the company for today and for the future. We simply must make tough decisions to conserve cash and further reduce costs. Today, we are announcing important changes to the employee compensation and benefit programs to help achieve these goals.

Global 2009 Merit Program and CEO Pay Changes

In response to economic realities and globally competitive pay practices, Motorola will eliminate 2009 salary increases in many markets. Salary increases will continue to be offered in countries where it is legally required or a competitive necessity; however, in most cases, these increases will be below 2008 levels.

In addition, the two of us will voluntarily reduce our base compensation by 25 percent in 2009 and forgo our 2008 cash bonuses.

U.S. 401(k) Company Match Suspension

Effective 1 January 2009, we will temporarily suspend all company matching contributions to the Motorola 401(k) Plan. This means that while U.S. employees may continue to contribute to the 401(k) plan, you will not receive matching contributions from the company. Motorola will provide the 2008 matching contribution as planned.

U.S. Pension Plan Freeze

Effective 1 March 2009, we will permanently freeze all future benefit accruals under the Motorola Pension Plan and the Motorola Supplemental Pension Plan. This means that U.S. pension plan participants (i.e., employees hired on or before 31 December 2004) will keep any pension benefits earned through 28 February 2009, but will not accumulate any additional pension benefits beyond that date.


In addition to current difficult market conditions, the pension benefit freeze is in response to, and in line with, the competitive industry environment. However, after the freeze we intend to continue to fund the pensions to meet our obligations to retirees and active employees with accrued benefits. Participants will receive more information about this change in March 2009.

Resources

We know that you will have questions about what these important changes mean to you. Please refer to the prepared questions and answers and submit additional questions as needed.


You also may direct your questions as follows:

U.S. 401(k) company match suspension – Hewitt Participant Service Center at 1-800-585-5100
U.S. pension plan freeze – Hewitt Participant Service Center at 1-800-585-5100
Global 2009 Merit program – your local human resources representative
In Closing
We hope you will understand these are difficult, but necessary steps to further improve our overall cost structure. As we head into 2009, we all must continue to look for ways to better serve our customers while reducing cost and improving our cash flow.

By focusing on the things that we can control, planning for continued macroeconomic challenges and executing efficiently to continue meeting customer needs, we will navigate through the issues confronting all companies around the world and deliver on our business objectives. Thank you for your continued focus and dedication.


Best regards,

Merry Effing Christmas