Motorola Chiefs Volunteer to Take Pay Cut, Freezes Company Pensions

Motorola (NYSE: MOT)’s financial situation was dire before the global economic downturn. Now that the planet is elbow-deep in recession, Motorola’s bottom-line is hurting more than ever. And, it looks like Motorola has finally owned up to the mess they’ve gotten themselves into and taken more drastic cost-cutting measures.

Following on previous cost-cutting moves, Motorola has announced that their two co-CEOs will be taking significant pay cuts to help offset the company’s bleeding balance sheet. Both Greg Brown and Sanjay Jha will be taking 25% cuts to their 2009 salary. Brown will forfeit his 2009 bonus (a reasonable concession, given Brown’s role in Motorola’s misfortunes) and Jha will see his contractually-required bonus reduced by the amount of Brown’s forfeit. The remainder of Jha’s bonus will be paid in the form of restricted stock.

Starting on January 1, 2009, Motorola will cease to match employee contributions to their 401k. Employees will be allowed to continue making contributions, but will not receive matching funds from the company. Motorola will also be freezing its pension plans on March 1, 2009. The move is expected to help preserve Motorola’s employee pension fund.

“The sustained downturn in the global economy requires that we take these difficult but necessary steps,” said Greg Brown and Sanjay Jha, co-chief executive officers of Motorola. “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.”

When a corporation takes a fiscal nose-dive, the highest-paid executives should be held accountable. But, is Motorola’s latest salary-cutting initiative too little, too late?

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