Ex-Nortel staff angry at £5m bonus pot

Former employees of Canadian vendor up in arms after courts okays executive bonuses despite unpaid severance packages

Ex-Nortel employees have reacted angrily to news that courts have allowed the troubled communications vendor to dish out $7.3m (£5m) in bonuses to eight high-ranking managers.

Courts in the US and Canada ruled on Friday that the payments could be made despite the objections of more than 60 employees who have lost their jobs. Under the terms of Nortel's incentive plans, the eight executives could receive bonuses which would more than double their yearly compensation.

Chief executive Mike Zafirovski is not one of those included and it is not clear whether he will be otherwise compensated. The $7.3m put aside for the eight executives is part of a wider plan allotting $45m in bonuses for a total of about 900 employees. Official complaints about the bonuses came from a handful of the thousands of Nortel employees to have lost their job and missed out on severance payments.

In a strongly worded letter to the US bankruptcy court, former employee Robert Kenas called Nortel's request to hand out bonuses totalling almost $50m "outrageous".

He added: "No matter what you call them, they would be rewarding dreadful results. The simple truth that must be considered in this request is that this particular leadership has been and remains an abysmal failure."

Russell Schooley, a software developer who lost his job at the troubled communications firm earlier this year, told the Ottawa Citizen: "Where is the fairness in giving these executives a bonus just a few months after they deny other employees their severance pay?

"It is like the guy who refuses to pay his debts but then spends $50,000 on a new sprint bike. These are tough times and it should apply to everybody."