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Nortel chief flying in corporate jet as company files for bankruptcy protection

By Brad Reese on Wed, 01/21/09 - 11:54pm.

Mike ZafirovskiYours truly was totally shocked to learn that Nortel CEO Mike Zafirovski was still using a private jet, especially six days after Nortel filed for bankruptcy protection. As the company lays off thousands of workers, halts salary increases, institutes a hiring freeze, and confirms laid off Nortel employees will not be receiving their severance payments because of the bankruptcy filing, Zafirovski continued to use a private jet (often it appears to commute between a home and his office). In my personal opinion, any leader who can do that while the company is crumbling around him:

Has got to go!

The good news is that Nortel is in talks to get rid of the plane, which was grounded earlier today, according to a report by Reuters, which also added that Nortel was unable to say when its private jet was last used.

Nortel's Private JetSource: FlightAware

View the cabin interior of a Bombardier Challenger 605 corporate aircraft.

After some digging (thank you Mark Evans, author of the fabulous All About Nortel Blog, for pointing me in the right direction), I was able to determine that the last flight of Nortel's private jet was Tuesday morning, flying from Chicago to Toronto. It appears that Nortel CEO Mike Zafirovski commutes on the jet from a home in Chicago to an office in Toronto. Examination of the jet's activity logs over the past 5 months has revealed that Chicago accounts for over 27% of the jet's visits.

The following is a list of all airport visits (58 visits in total), by Nortel's private jet over the past 5 months:

Toronto, Ontario Canada (Lester B. Pearson Intl Airport, CYYZ) - 22 visits.

Chicago/Waukegan, Illinois (Waukegan Rgnl Airport, KUGN) - 16 visits.

Pontiac, Michigan (Oakland County Intl Airport, KPTK) - 7 visits.

Teterboro, New Jersey (Teterboro Airport, KTEB) - 4 visits.

Morristown, New Jersey (Morristown Muni Airport, KMMU) - 3 visits.

White Plains, New York (Westchester County Airport, KHPN) - 2 visits.

Washington, DC (Washington Dulles Intl Airport, KIAD) - 2 visits.

Williamsport, Pennsylvania (Williamsport Rgnl Airport, KIPT) - 1 visit.

Phoenix, Arizona (Phoenix Sky Harbor Intl Airport, KPHX) - 1 visit.

Reading page 41 of the Nortel Proxy Statement (Schedule 14A) filed with the Securities and Exchange Commission on Feb. 27, 2008, reveals:

M.S. Zafirovski

The incremental cost of personal travel on the company aircraft and commercial airlines principally related to commuting ($136,262), personal use of ground transportation ($25,595).

Last Flight of Nortel's Private Jet

Last Flight of Nortel's Private JetSource: FlightAware

Activity Logs of Nortel's Private Jet

Activity Logs of Nortel's Private Jet
Activity Logs of Nortel's Private Jet
Activity Logs of Nortel's Private Jet
Source: FlightAware

Page 1 of Nortel's most recent Form 10-Q filing with the Securities and Exchange Commission reports that Nortel had a operating loss of $1.188 billion for the 3 months ended Sep.30, 2008. Yet Nortel CEO Mike Zafirovski continued to commute to work on a private jet.

It is my opinion that Nortel needs a leader who can present to Nortel employees a personal example of fiscal responsibility; ostentatiously commuting to work on a private jet while your company suffers over a billion dollar operating loss (heck, even 6 days after filing for company bankruptcy protection that also froze severance payments to laid off company employees), is outrageous!


Don't be shy, do you agree with me that Nortel's CEO has got to go or do you believe he should stay?

Brad Reese
BradReese.Com Cisco Refurbished
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Nortel CEO

Thank you Brad for exposing this sorry excuse for a human being- much less a extravagantly compensated CEO.
We are becoming less surprised by the hour at the bald hypocracy played by the leaders of miserably failed corporations in the West. It seems this raucous evil is the ethics of the day for top tier management- the norm rather than the exception.
I for one applaud a journalist doing his due diligence to expose the frauds.

way to go Brad.

Mike Zee Has To Go

Rick:

I disagree that this is "sensational journalism". Just look at the following facts:

1. Most of the flights shown in Brad's piece are for personal use. 22 to Chicago, 16 to Toronto, and 7 to Pontiac. That's a WHOPPING 45 out of 58 flights!

2. Most of these are simple one legged commute trips. There are numerous direct commercial flights between Chicago and Toronto, probably one leaving every 30 minutes. These are also two airports that are easy to get through, especially if you have the top tier frequent flyer privilege. This is NOT a case where he needs to squeeze in a number of customer visits in a tight schedule.

3. Look at the timing of these flights. He knew full well that they are in trouble in September. When they laid off people in Oct/Nov, they knew there was a possibility for bankruptcy and those poor employees not getting any severances that they were promised. Yet, this personal exuberance continues. What does this say bout his personal integrity, values, and judgment?

4. Nortel GREEN hypocrisy - Mike Zee touted how green their equipment is. Yet he jetted around in one of the biggest private jet. Look at the type of jet he is using for personal commute. It's one of the biggest ones you can get. It is significantly costlier and burns more fuel than the other private jets that he could have chosen.

On top of all these, there is already a huge controversy about his unwillingness to reduce his compensation, despite calling from many different sources including recently a professor in McGill.

Why does this guy feel that he is entitled to all these, when he sent multiple messages to employees apologizing that the company cannot pay any severances, pension benefits anymore?

One thing that is not well known also, is that in addition to the Pension Plan deficit, employees who have hundreds of thousands of dollars saved up in the company's Deferred Compensation plan has lost their entire savings in that account due to bankruptcy. So, either directly or indirectly, Mike Zee's leadership has resulted in deep financial impact, to the tune of hundreds of thousands of dollars in many cases, on individual employees. I am not kidding when I say that the human toll on this restructuring is extremely high. Most employees feel that Mike Zee is making the employees pay for the restructuring, while he himself is enjoying a multi-million salary and a private jet for personal use.

If you put all that in context, it is extremely poor taste and disregard of human decency that Mike Zee is exhibiting in his behaviors.

Just do an informal poll around the Nortel office. The feeling of betrayal is so deep that, the only hope to make the employees "believe" again is to see this man go. HE HAS GOT TO GO!

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Get a grip!
0 Up Down
By Rick (not verified) on Thu, 01/22/2009 - 4:38pm.

I think this is sensationalistic journalism. The U.S. hearings with the automakers made similar fuss over the CEOs traveling in this manner.

This is how business is done - these executives travel the world and keep insane schedules. The use of a corporate jet is often required by corporate policy intended to protect the executive from the threat of violence or abduction.

The claims made protesting this travel show a lack of understanding of how business functions.

Now - all of that said, I think the performance of the management team at Nortel has earned them a trip to unemployment office.

Mark Evans Deserves ALL of the Credit

Hi James,
Mark Evans, author of the fabulous All About Nortel Blog, deserves ALL of the credit for exposing Mike Z's private jet use. Actually, it NEVER would occur to me that the CEO of a company undergoing the difficulties that Nortel has experienced would be commuting to work in a private jet. That's why I was totally shocked when I read the Reuters story yesterday, which announced that Nortel grounded its private corporate jet. The thought that came to my mind at that moment was; Nortel filed for bankruptcy protection a week ago and it is just now grounding its corporate jet? After digging further, I fortunately came across Mark Evan's blog story and yours truly as well as many others noted the "unusual coincidence" that only 2 days after Mark brought public attention to Nortel's private jet use, it was publicly announced that the jet would be grounded. Also, when Nortel said that it did not know when the jet was last used, a big "red flag" waved in front of me.
Brad Reese
BradReese.Com Cisco Refurbished

Nortel CEO has got to go!

As a shareholder, I fully agree he has got to go. Why does the Nortel Board of Directors continue to allow this??!! They should all be replaced as well!

Mike Zee

Mike Zee's behaviour is a good example of what we let executives get away with these days. He and his counterparts live by very different rules than the employees they oversee. The day a CEO comes into the position they know what their salary increases will be, what their bonuses will be, and what their severance packages(most likely bankruptcy independent) will be. In addition to all this, none of their compensation is tied to company performance. There is no oversight from the boards of directors, and the trend is more and more money going to these people for less and less accountability. Who on earth could have such an enormous ego that they could convince themselves that they are worthy of commuting to work on a private jet, especially when they head a company that's losing money and laying off employees at the rate Nortel is?

It's sickening.

Get a grip!

I think this is sensationalistic journalism. The U.S. hearings with the automakers made similar fuss over the CEOs traveling in this manner.

This is how business is done - these executives travel the world and keep insane schedules. The use of a corporate jet is often required by corporate policy intended to protect the executive from the threat of violence or abduction.

The claims made protesting this travel show a lack of understanding of how business functions.

Now - all of that said, I think the performance of the management team at Nortel has earned them a trip to unemployment office.

If your claim is true

Rick, if your claim is true, why did Nortel ground the jet? According to your claim, Mike Z will now be vulnerable to the threat of violence or abduction. Additionally, according to your claim, how can Nortel's business function with Mike Z's jet grounded, since I obviously have a lack of understanding of how a business functions? I mean, if this is how business is done, how will Nortel get its business done now? Finally, looking at the jet's activity logs, yours truly is not too impressed with the work hours Mike Z keeps (I personally don't have a "beef" with clock watchers, just those with private jets at their disposal). Finally, I find it absolutely amazing that it "appears" the CEO of Nortel did not travel to Ottawa, RTP and other Nortel locations over the last 5 months.
Brad Reese
BradReese.Com Cisco Refurbished

got it!

Rick,

According to the article above, 38 out of 58 trips with the company jet were either to the office or home.

do you think he does not feel same at home?

R

Get a grip!

I think this is sensationalistic journalism. The U.S. hearings with the automakers made similar fuss over the CEOs traveling in this manner.

This is how business is done - these executives travel the world and keep insane schedules. The use of a corporate jet is often required by corporate policy intended to protect the executive from the threat of violence or abduction.

The claims made protesting this travel show a lack of understanding of how business functions.

Now - all of that said, I think the performance of the management team at Nortel has earned them a trip to unemployment office.

Tell Z to get a grip and pay back for usage of the jet...

Ahh, but this executive appears to be using it as a private limousine to and from home...look at the track of where the plane has been...travel the world??? not at all...travel the continental US? hardly...ostentatious overkill...if it has resulted in awesome deal-making, giant sales increases..by all means yes that would justify...but that sadly is not the case...what it is a case of, the numerous short hops illustrate quite well, is yet another CEO's self-interest...self-importance...self-hyped ego...yep, that's what this is all about. If he were serious about NT he would have MOVED to Toronto a long time ago AND he'd be working for a $1 a year until NT turned around...but nope...grab-grab-grab-n-go-Mike.

As for the unemployment office...the sad thing is along with the golden parachutes in all likelihood the execs WILL draw unemployment as well (gotta have tips for the pilot and ground crews which is about what unemployment will cover)

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