Now as you may or may not recall, I used to work for Nortel Networks. I curiously looked them up the other day, not without a certain degree of schadenfreude, and the wiki on their shenanigans makes for quite an enlightening read.

Quote:

Executive compensation 2003 In 2003 Nortel paid tens of millions of dollars in so-called "return to profitability" bonuses, largely to a select group of senior managers. The "return to profitability" was a fabrication achieved by the release of $490 million in reserves to boost earnings.[86] 2008 In 2008, despite continuing losses, layoffs and declining share prices at the struggling telecom-gear maker, Nortel Networks CEO Mike Zafirovski is awarded a 21.5 percent pay increase to $10.1 million.[87] 2009 As Nortel entered protection from creditors proceedings, it paid out retention bonuses to almost 1,000 top executives, totalling up to US$45 million,[44] drawing criticism as the company withheld severance payments to employees laid-off prior to the creditor protection filing. Nortel proceeded with thousands of additional layoffs without severance,[88][89] and the pension fund remained underfunded,[90] while Nortel paid $14.2 million in cash to seven executives. Nortel also paid $1.4 million to ten former and current directors, and paid $140 million to lawyers, pension, human resources and financial experts helping to oversee the company’s bankruptcy proceedings.[52] 2010 In a U.S. court filing on February 11, 2010, Nortel proposed to spend $92.3M on retention bonuses for 1,475 employees in its Nortel Business Services and Corporate groups. According to the plan, Christopher Ricaurte, president of Nortel Business Services, will receive $2.5 million in incentives. In all, Canadian employees are eligible for $27 million, U.S. employees $55 million, and about $10 million will go to others. This proposed plan came the same week Nortel negotiated a $57-million deal to wind up health care and other benefits for former Canadian employees.[91] Claiming that the retention bonuses proposal is extraordinary, acting US trustee, Roberta DeAngelis, objected to the payment of $55.6 million to 866 employees.[70] However, court appointed representatives for Nortel former employees, who are creditors in the Ontario bankruptcy court, have signed an agreement to not oppose any employee incentive program. Treatment of Nortel pensioners On June 23, 2010 the newsobserver published a story critical of the treatment pensioners have been receiving from their former employer, Nortel. According to the article Nortel has asked a federal court to terminate medical coverage, prescription drug coverage, long-term disability and life insurance of 4,000 retirees and dependents, claiming the benefits are costing the company $2 million per month. Nortel blamed the company's creditors for this decision. [92] Nortel ex-CEO files as a creditor seeking $1 billion from the proceeds of bankruptcy In the middle of the decade several class-action lawsuits were filed against John Roth and others, by former employees who felt that their 401K company plans were depleted due to misrepresentation by the defendants. They claimed they were duped into investing in Nortel stock, when those who encouraged them to do so allegedly knew that the company was ailing. John Roth left Nortel in 2001 with more than $130 million. In 2009 Mr. Roth filed a claim for $1 Billion, aiming to become a creditor to the assets of Nortel along with all other Nortel employees, in case the class action lawsuits against him succeeded.[93][94]

That last is particularly.... I can't put it into words. This fucker is filing as a creditor of the company for a payout to offset the penalties that may be applied for fraud committed under his own leadership.

On the whole, I didn't get done over Nortel, partly because of protections of workers under British law, and partly because I avoided schemes to exchange pay for shares, or getting involved in their pension, like the plague, even before there was any whiff of wrongdoing.

There have been criminal charges filed against some of the executives, although it was a few years ago and I can't find anything about the proceedings. But of course, all the charges have to do with defrauding investors or misrepresenting accounts to the authorities, not for any of the abuses dished out to their employees. That's all just fine, perfectly within the remit of a capitalist corporation.

Originally Posted by contracycle

On the whole, I didn't get done over Nortel, partly because of protections of workers under British law, and partly because I avoided schemes to exchange pay for shares, or getting involved in their pension, like the plague, even before there was any whiff of wrongdoing.

I always like to think that I'd do that. In reality I'm lazy and trusting and, let's be frank, a tad stupid, so I'm a sitter for this sort of scam.

In my favour I wouldn't act all outraged and "how could you do this to me?!" afterwards, because it would basically be my fault.

__________________
Standard disclaimer: the disgusting statements contained in this post are the views of the poster, and unless specified do not represent the views of the moderators or the site's owners.

In the 1980s Nortel was a telecom giant.

What happened?

The proportion of firms that go down the tubes and shaft their employees and pensioners is, I think, small. Zichao is unlikely to be a victim of such an event even if she is lazy and trusting. However there are no statistics I can find on the probability of this kind of thing happening.

You might want to look at rating agencies matrixes. They give you a default rate according to the rating over a given period of time...

Edited to add: Moodys KMV has always been good sport about their data. Here is a good link: http://www.moodyskmv.com/research/whitepaper/52453.pdf

You want to look at page 16 (exhibit 16): A Aaa rated company has a less than 5% default chance within 20 years. A single B nearly 45%...

__________________
Unless otherwise specified, I am posting as a regular poster. When I will act as a mod, I'll make sure you're in no doubt.

And again, I mightn't.

They would have been no help to a young and enthusiastic contracycle getting his first job at Nortel to determine whether his company-funded superannuation policy would cough up 40 years later, or for Zichao getting a challenging government job in France to determine whether in 40 years from now, France might be the 2050 version of Portugal, or even Greece.

Numbers don't lie. If they say that less than 5% of Aaa rated companies default within 20 years, then less than 5% of Aaa rated companies default within 20 years.

As to Nortel, Contra, I suspect, doesn't like company-backed pensions for ideological reasons. I don't like them because, unless you got total control and can get things other than the company's stock, they represent a doubling-down approach - If they go bust, not only do you lose your job but you lose your pension on top.

One of the first law of finance is diversification. For good reasons.

As to Zichao, we both know for a fact that France won't be paying the promised retirement entitlement to our generation. It's mathematically impossible unless they start seriously confiscating wealth...

__________________
Unless otherwise specified, I am posting as a regular poster. When I will act as a mod, I'll make sure you're in no doubt.

That "ideological" reason is that pensions, like a bank deposit, is just money that someone owes you. You are not actually in control. Whats more, seeing as this was not my first job, and I had no idea how long it would last, I was concerned that I'd end up with a bunch of tiny deposits in multiple schemes that were essentially worthless. Plus, I wasn't getting paid a whole lot, although it was much better than any previous job I'd had. In addition, there were already plenty of reports - this was precisely when companies were closing down their final salary schemes - of peoples pensions being unilaterally downgraded by their employer.

What happened to Nortel is actually quite hard to say. They still own about 6000 patents covering the current batch of network technologies, and Google has placed an open bid of nearly a billion dollars for them. Shortly before I joined they had just taken over Bay Networks. It's probably true, as per the Wiki, that Nortel wasn't actually making a profit at this time, but it also looks like the efforts to stave off those concerns by Enron-style fakery did much more harm than good.

Originally Posted by contracycle

That "ideological" reason is that pensions, like a bank deposit, is just money that someone owes you. You are not actually in control. Whats more, seeing as this was not my first job, and I had no idea how long it would last, I was concerned that I'd end up with a bunch of tiny deposits in multiple schemes that were essentially worthless. Plus, I wasn't getting paid a whole lot, although it was much better than any previous job I'd had. In addition, there were already plenty of reports - this was precisely when companies were closing down their final salary schemes - of peoples pensions being unilaterally downgraded by their employer.

Fair enough. I seem to recall some earlier comments by which you were saying you refused to own shares or property as not to become an however small capitalist... I might have misunderstood/mis-remembered...

__________________
Unless otherwise specified, I am posting as a regular poster. When I will act as a mod, I'll make sure you're in no doubt.

Quote:

As to Nortel, Contra, I suspect, doesn't like company-backed pensions for ideological reasons. I don't like them because, unless you got total control and can get things other than the company's stock, they represent a doubling-down approach - If they go bust, not only do you lose your job but you lose your pension on top.

That's interesting. We survive on a company-backed pension but the funding is not predominantly shares in that company. It is managed by an independent board of trustees and they have invested in a ranged of listed companies, property trusts, infrastructure bonds and government securities.

Quote:

seeing as this was not my first job, and I had no idea how long it would last, I was concerned that I'd end up with a bunch of tiny deposits in multiple schemes that were essentially worthless. Plus, I wasn't getting paid a whole lot

That's a fair reason to defer contributing to superannuation. I didn't start to do so until I was around 40 and working for a company where I expected to be for quite a while. As it turned out I survived the company being taken over by another, and that one being taken over by yet another.

Quote:

Numbers don't lie. If they say that less than 5% of Aaa rated companies default within 20 years, then less than 5% of Aaa rated companies default within 20 years.

That's why I previously wrote that:

Quote:

The proportion of firms that go down the tubes and shaft their employees and pensioners is, I think, small. Zichao is unlikely to be a victim of such an event even if she is lazy and trusting.

The statistic you provide Gilles from some unidentified source seems to confirm that, but if companies invest their superannuation savings solely in their own securities then Zichao stands a 1 in 20 chance of seeing out her twilight years trying to sleep each night under a bridge over the Seine, despite France's completely egalitarian view of the practice.

As Anatole France observed in 1894, "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."

She may be looking for something better.

Full disclosure: just got screwed for 125 euros in fees by Crédit Agricole because I didn't realise that they'd just spontaneously decided to allow me an overdraft (my card used to stop working when I hit zero).

__________________
Standard disclaimer: the disgusting statements contained in this post are the views of the poster, and unless specified do not represent the views of the moderators or the site's owners.