March 20, 2009 / 4:29 PM / in 9 years

UPDATE 1-Court lets senior Nortel execs share in bonus pool

*Court lets top Nortel execs share in $45 mln bonus pool

*Executives do not include CEO Mike Zafirovski (Releads with court approval. In U.S. dollars unless noted)

By Wojtek Dabrowski

TORONTO, March 20 (Reuters) - A Canadian court has allowed eight senior executives at Nortel Networks Corp NT.TO to share in the bonuses that the telecom equipment maker plans to pay out even as it fights for survival in bankruptcy protection.

Nortel already had court approval to pay out a total of $45 million in bonuses for close to 1,000 executive and nonexecutive employees.

Friday’s ruling by the Ontario Superior Court makes the eight senior executives, who do not include Chief Executive Mike Zafirovski, eligible to receive a share of this money, company spokesman Mohammed Nakhooda said.

In addition to the $45 million, Nortel has a separate quarterly bonus plan in place for “the vast majority of employees at all levels,” he added.

Nortel -- North America’s biggest maker of telephone gear -- had argued in an earlier court report that the bonuses were needed because “the commitment and retention of key employees will be essential to the execution of a restructuring of Nortel”.

    Executive compensation has become a hot-button issue with investors and politicians alike, particularly amid revelations that U.S. insurance giant American International Group (AIG.N) paid out $165 million in bonuses after receiving $180 billion in government aid.

    Some companies, including all of Canada’s large banks, have introduced nonbinding shareholder votes on executive compensation in a bid to provide greater transparency and more accountability.

    Toronto-based Nortel filed for bankruptcy protection in January, blaming the economic crisis for derailing a turnaround effort that began in 2005.

    It had about $2.4 billion in cash when it sought protection and about $4.5 billion in long-term debt.

    Nortel shares were unchanged at 10 Canadian cents on the Toronto Stock Exchange on Friday. In mid-2000, at the height of the company’s success, they were worth more than C$1,100 each, adjusted for a stock consolidation that took place in 2006.

    $1=$1.24 Canadian Reporting by Wojtek Dabrowski; editing by Peter Galloway

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