Motorola freezes pension plan, cuts other benefits

Motorola freezes pension plan, cuts other benefits

Reuters
(12/17/2008 11:46 AM EST)

NEW YORK—Embattled cell-phone maker Motorola Inc. is suspending contributions to its 401(k) worker retirement plan, freezing its pension plan, stopping some pay increases and reducing the salaries of its two top executives to cut costs in the weak economy.

Motorola said employees in many of the markets where it operates would not receive pay raises in 2009.

The company, whose money-losing cellphone division has been hemorrhaging marketshare for about two years, said Wednesday (Dec. 17) that the moves would create extra savings on top of the $800 million expense reduction plan it announced in October.

As Motorola's biggest rival Nokia has recently made several warnings about weak cellphone demand, analysts have worried that weaker Motorola would find it even tougher to weather the storm during an industrywide downturn.

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