Nortel News: Puzzling Board Appointment, Ex-CEO's Expensive Pension

In hindsight, Nortel’s (NRTLQ.PK) appointment of David Richardson as a new board member earlier this week is, well, curious.

While Nortel was preparing to announce Richardson’s arrival, Richardson was busy behind the scenes orchestrating a senior management overhaul at Air Canada where he’s a director and chairman of the board. Air Canada, which is teetering on the verge of bankruptcy protection itself, turfed its CEO, and brought in two new senior executives with lots of experience in cost-cutting.

Now, you would think that Nortel should have known that Richardson was probably going to be in the spotlight given what was going down - assuming that Richardson was able to give them hints that perhaps announcing his appointment this week wasn’t such a good idea.

On the other hand, can you imagine what the reaction would have been if Nortel had waited until after Air Canada shuffled the executive deck?

Either way, the timing is puzzling but nothing Nortel does these days surprises me.

For more on Richardson, who’s a restructuring expert, check out this short Globe & Mail story.

Ex-CEO's Expensive Pension

One of the more interesting filings amid Nortel’s bankruptcy protection process is ex-CEO Bill Owens making a statement of claim for $2,179,606 of pension payments owed to him.

In the U.S. Bankruptcy Court for the District of Delaware, Owens made a filing last week - with the basis of his claim being severance payment that Nortel is slated to pay him from January 2009 to November 2010.

The payments of $99,073/month are part of the sweet severance deal that Owens struck with Nortel when he “resigned” in November 2005. Owens was succeeded by Mike Zafirovski.

Owens’ package included a payment of two years his annual base salary, a special award of $5.4-million, a pension benefit that started with a lump-sum payment of $703,913 and included monthly payments of $99,073 over five years (November 2005 to November 2010), $173,076 in vacation payments, and $20,000 in a relocation allowance.

Owens’ tenure during his short stint at Nortel was arguably a disaster on a number of fronts. The lowlights were a costly decision to establish a foothold in India through a deal with BSNL, and the departures of COO Gary Daichendt and CTO Gary Kunis, who had come up with an ambitious plan to remake Nortel.

While a respected U.S. Admiral, Owens lacked the telecom experience and vision that Nortel desperately needed. The decision to hire him ranks among the board’s most puzzling and expensive decision.