Motorola freezes pension plans
Cell phone maker announces pension freeze and suspends matching contributions to 401(k)s; execs take a pay cut.
NEW YORK (CNNMoney.com) -- Motorola, Inc. said on Wednesday that it is freezing employee pension plans and no longer matching 401(k) contributions as a result of the economic crisis.
Motorola (MOT, Fortune 500), a maker of cell phones and other communications devices based in the Chicago-area town of Schaumburg, Ill., said it will "permanently freeze" all U.S. pension plans by March 1, 2009.
Motorola said it will continue to invest cash into its pension plan, as required. But individual pensions will not reflect any employee salary increases after March 1, effectively capping Motorola's contributions. The company stopped admitting new members to its pension plan in January, 2005.
"The plan is not going away - it is being frozen," said Motorola spokeswoman Jennifer Weyrauch-Erickson.
In addition, the company said it will no longer match employees' 401(k) contributions, as of Jan. 1, 2009.
Motorola will also freeze salaries for many of its employees throughout 2009.
The company's co-CEOs, John Brown and Sanjay Jha, are voluntarily taking 25% cuts to their 2009 salaries, Motorola said. Brown will not accept a cash bonus for 2008, the company said, while Jha's "guaranteed" bonus for that year will be "voluntarily reduced."
"The sustained downturn in the global economy requires that we take these difficult but necessary steps," Brown and Jha said in a joint press release.
Motorola said these changes were in addition to $800 million worth of cost reductions the company announced on Oct. 30, when it unveiled its third-quarter net loss of nearly $300 million.
Motorola isn't alone in suspending matches to its 401(k) plan. Battered automakers General Motors (GM, Fortune 500) and Ford Motors (F, Fortune 500), as well as Dollar Thrifty Automotive Group (DTG) and real estate firm Cushman & Wakefield, have all said they will no longer offer matching contributions.
But these changes aren't necessarily permanent. On Dec. 15, Dollar Thrifty said it would reinstate the company match for its employee 401(k) plan in 2009.