Motorola bosses take 25% pay cut

Motorola Inc, the second-biggest US seller of mobile phones, will freeze US pension plans and reduce executive salaries to help cope with the economic slump.

Co-Chief Executive Officers Greg Brown and Sanjay Jha are taking a 25 per cent cut in base salary in 2009, Motorola said in a statement. Employees in many markets won’t get a raise, and the company will temporarily stop making matching contributions to US workers’ retirement investment accounts.

Jha, hired in August to lead the wireless device division, seeks to turn around a unit that has posted operating losses of $2.8 billion since the start of 2007. He tapped Google Inc to supply software for phones after losing market share to Samsung Electronics Inc and Apple Inc, whose iPhone 3G topped Motorola’s Razr in the third quarter as the most popular US phone.

“Turnarounds are always hard to execute on, and a bad economy makes them tougher,” said Tavis McCourt, an analyst at Morgan Keegan & Co in Nashville. “I’d be shocked if this is all they do in 2009.”

The pay cuts and pension freeze will help Motorola add to the $800 million in annual costs savings it announced in October, including 3,000 job cuts, the company said.

Worldwide mobile-phone sales will drop 13 per cent next year, the first decline since 2001, as economic growth slows, analysts at Citigroup Inc said in a research note.

Motorola, based in Schaumburg, Illinois, rose 5 cents, or 1.1 per cent, to $4.46 at 12:07 pm in New York Stock Exchange composite trading. The shares had dropped 73 per cent this year before today.

Source: Agencies