Business

Former Nortel CEO claims company owes him $12M

Posted October 9, 2009 7:27 a.m. EDT

— Mike Zafirovski, who resigned as bankrupt Nortel’s chief executive officer in August, is seeking more than $12 million from the company.

In a filing with the federal court handling the Nortel bankruptcy proceedings in the U.S., Zafirovski said he is due the money under terms of an employment contract signed in 2005.

The claims:

  • $2.4 million in base salary, the equivalent of 24 months
  • $3.6 million bonuses due under Nortel’s compensation plan
  • $200,543.48 in pro-rate bonus for the third quarter of 2009
  • $50,000 in health, life and accidental death and dismemberment insurance benefits
  • Not less than $6 million in lump sum “present value” of a $355,000 per year single life annuity pension benefit
  • Total: “Not less than $12,250,543.48.”

Zafirovski, who was hired from Motorola to rebuild the company but ended up leading it into bankruptcy and dismemberment, also is seeking indemnification from a class action lawsuit filed against Nortel.

When Zafirovski and several board members, including former N.C. Gov. Jim Hunt, resigned in August, Nortel said Zafirovski would receive no severance.

Nortel ceased making severance payments to former employees when it declared bankruptcy in January.

A resident of Illinois, Zafirovski filed the claim through a lawyer with the firm Vedder Price in Chicago.

The filing was made near a deadline set for such actions by the bankruptcy court.

According to an Ottawa Citizen newspaper report, numerous other current and former Nortel executives made claims, including Joel Hackney who leads the Enterprise business unit. Hackney is based at Nortel’s RTP campus where some 1,700 people work.

Nortel is in the process of auctioning off its business units.

Meanwhile, in Canada, hundreds of Nortel retirees protested to the government about the threat the bankruptcy poses to their pensions.

"The corpse is being cut up, dissected, and handed all around," Eddie Halpin, 70, told the Toronto Star. "They are taking the money and running."