Light Reading

Nortel's Roth Rakes It In

Light Reading
News Analysis
Light Reading
3/13/2002
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How good a CEO was Nortel Networks Corp.'s (NYSE/Toronto: NT) John Roth? So good that he is being paid more not to be at work than he was getting when he ran the company.

Just a few days before former Nortel CEO Roth announced his retirement back in May 2001, he received a $250,000 annual raise, according to documents Nortel filed with the Securities and Exchange Commission (SEC).

For the first four months of 2001, Roth’s base salary was $1,250,000 per year. This climbed to $1,500,000 a year on May 1, 2001. Roth officially retired as Nortel's president and CEO on November 1, 2001. Since then he has been on a yearlong leave of absence, during which he will continue to draw his entire salary.

In 2000, Roth earned $6.7 million in cash, including $1,104,167 in base salary, a bonus of $5.6 million, and miscellaneous pocket-change of $33,199 (see 2001 Top Ten: Fat Cats).

Roth, now Nortel's vice chairman, became Nortel's president and CEO in October 1997, and while he held that title Nortel shrank in size by about 28 percent and lost about 50 percent of its market capitalization.

When Roth took the top job, Nortel had a stock price of around $105 a share and employed more than 72,800 people. By the time he retired, Nortel was down to around 52,600 employees, and its stock price was less than $6 a share.

In the summer of 1997, Nortel's market capitalization was hovering around $32 billion. Now it is about half that.

Along with many other telecom chief executives in the late 90s, Roth's cheerleading about the Internet's exponential growth contributed to many of the unsustainable investments in the telecom market. Moreover, the vendor financing and overblown acquisitions that took place on his watch helped usher in a long and humiliating restructuring period at Nortel (see Nortel Buys: Reaping the Whirlwind? and Nortel: Can This Company Be Saved?). "He misread so many of the signals the market gave him in 2001," says Ariane Mahler, an analyst at Dresdner Kleinwort Wasserstein.

Frank Dunn, Roth's successor, began 2001 with a base salary of $475,000 a year (see Nortel Swings Axe, Switches CEOs). By November 1, he'd been bumped up to $825,000 a year to reflect his promotion, according to Nortel's SEC filings.

Nortel declined to discuss Roth's compensation. "I'm not going to dissect the numbers. They are what they are. They speak for themselves," says Nortel spokesman David Chamberlin.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com

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OptixCal
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OptixCal,
User Rank: Light Beer
12/4/2012 | 10:48:07 PM
re: Nortel's Roth Rakes It In
Why should an announcement like Nortel's Roth getting this huge payout upset us? Aren't we all pretty much resigned to the fact that this sort of thing continually happens? On the surface, doesn't this smack a bit of "Enron-gate"? Big execs getting big payouts and leaving just before the fit hits the shan? come on! As an unfortunate investor in Nortel I can only hope the shedding of this "exec's-utive" weight will eventually help.
kcufde
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kcufde,
User Rank: Light Beer
12/4/2012 | 10:48:05 PM
re: Nortel's Roth Rakes It In
roth made money, by acquiring companies which are non standards, and people who worked hard , walked out home, why did they paid him salary when he was at home , to make the stock to 5 dollar, if this continues, stock will come to 5 cents
Lopez
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Lopez,
User Rank: Light Beer
12/4/2012 | 10:48:05 PM
re: Nortel's Roth Rakes It In
I guess at 15 or so engineers out of 50K were laid off so Roth could continue to collect his paycheck. What a wanker.
Star
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Star,
User Rank: Light Beer
12/4/2012 | 10:48:05 PM
re: Nortel's Roth Rakes It In
Thats BS, This jabrone, Roth will continue to drive into the sunset with one of his millions and I said millions of cars he owns, laughing and lying all the way to the bank !
The old geyser is a prime example of all that's wrong with NT and their old school mentality.
I saw this old buck speak 2 years ago to a standing ovation by NT workers only to have them turn on him a year later and beat him down like a government mule.
Today it's clear he's just a Jackass and my NT stock is on a roll in my bathroom waiting to wipe my mudhole...........
optical_man
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optical_man,
User Rank: Light Beer
12/4/2012 | 10:48:04 PM
re: Nortel's Roth Rakes It In
Ever see the Poseiden Adventure?
Remember the part where the small group of refugees sees the unending line of poor souls headed towards the bow, and the Preacher says "but the bow is under water, wake up Man, you're headed towards certain death!" and no one listens?
Someone in the refugee group said "we've got to do something to help them!", the Preacher says "forget it, they're aleady dead".

Does anyone who was there (at Norty) see the connection now that time has passed?
optical_man
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optical_man,
User Rank: Light Beer
12/4/2012 | 10:48:04 PM
re: Nortel's Roth Rakes It In
Good for John.
He wanted that old fuddy duddy to make a right angle turn, but many of the employees at Norty were too entrenched in their mindsets to change with him.
He tried. He tried darned hard. If you've heard the speeches you know.
If you tried to make a difference and were frustrated, you cashed out your options, and left for somewhere else.
If you stayed and lost it all, and now want to complain, you missed your timing, you should have stood up at a company conference and said "my department is holding us back and I want to change it!".
You didn't did you...
Why? You wanted to become part of the country club set, and figured if you sat quietly long enough, a factor of number of years served would promote you.
Nortel has it's issues, but who doesn't. They are an incumbent and will press on eventually.
Good for John, now quit complaining.
lucidity
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lucidity,
User Rank: Light Beer
12/4/2012 | 10:48:04 PM
re: Nortel's Roth Rakes It In
OptixCal -
I must respectfully disagree with you. The "we've all been screwed/will be screwed again by the fat cats" attitude doesn't serve anyone except said fat cats. The management of any corporation must be held accountable for their poor decisions and the effect those decisions have on their employees and investors. Sitting back and sighing "not again" only encourages those who (ab)use the system for their own financial gain to continue their behavior unabashed.
mrcasual
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mrcasual,
User Rank: Light Beer
12/4/2012 | 10:48:03 PM
re: Nortel's Roth Rakes It In
Good for John.
He wanted that old fuddy duddy to make a right angle turn, but many of the
employees at Norty were too entrenched in their mindsets to change with him.
He tried. He tried darned hard. If you've heard the speeches you know.
If you tried to make a difference and were frustrated, you cashed out your options,
and left for somewhere else.


I did exactly what you suggested. Worked for me. I don't have any beefs with JR getting all his cash and options when Nortel was going up. He gets paid for peformance, and until the crash Nortel was performing exceptionally based on the only metric that matters at the CEO level, i.e. stock price.

However, I do have a beef with JR getting a 20% raise after presiding over a year that even the most generous of souls would call a disaster. Let's be serious, if any of us had had a similar year, evaluated against our performance metric, we probably would have been fired, not given a 20% raise.
Star
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Star,
User Rank: Light Beer
12/4/2012 | 10:48:03 PM
re: Nortel's Roth Rakes It In
Hey Jackass, don't talk about preechers to me...
I went to mine and asked him to forgive me for buying NT stock. I also asked him to prepare last rights for NT.
As far as boats go, that boat at NT has sailed.
Star
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50%
Star,
User Rank: Light Beer
12/4/2012 | 10:48:03 PM
re: Nortel's Roth Rakes It In
My only mistake was listening to my fearless leader, "Uncle Buck" better known as JR and drinking the NT Kool-Aid.....

As for your comments, "pull your lips away from JR's ASS and just shut the hell up !"
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