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Motorola Trimming Benefits To Prepare For Downturn

The cuts start with co-CEOs Greg Brown of Motorola's Broadband Mobility Solutions unit and Sanjay Jha of the Mobile Devices unit.
Motorola said it will sharply reduce employee benefits, including from top executives, as the communications equipment company battles a perfect storm of internal problems, a plunging handset market share, and a tightening worldwide economic slump.

The cuts start with co-CEOs Greg Brown of Motorola's Broadband Mobility Solutions unit and Sanjay Jha of the Mobile Devices unit. Both men will voluntarily take a 25% pay cut in salary in 2009, the company said. While Brown won't receive any 2008 cash bonus earned under the company's incentive plan, Jha, who joined Motorola recently, will see his bonus trimmed substantially.

A halt in matching contributions to all employee 401(k) plans will begin in January; a freeze in U.S. pension plan contributions will begin in March.

"The sustained downturn in the global economy requires that we take these difficult but necessary steps," the two men said in a statement. "While serving our customers remains a top priority, we are equally focused on our cost structure, and we will continue to implement appropriate measures to conserve cash and reduce expenses."

The company has been reeling for years as it spun off some operations like its Freescale Semiconductor unit so it could concentrate more on its handset unit where it has rapidly been losing market share in the United States to Samsung and LG. Jha was recently brought in from Qualcomm to oversee the Mobile Devices operation in anticipation of eventually spinning it off as a separate company.

The across-the-board cuts to employees amount to a considerable savings, but Motorola leadership has stated that the solution to the company's current malaise is to produce new desirable products like the Razr handset, which boomed a few years ago but now has run out of steam.

A Motorola spokeswoman said the new measures "are a direct response to the economic downturn."