Motorola, Inc. announced today that it will reduce retirement benefits to cut costs. The cell phone maker will permanently freeze its U.S. pension plans on March 1. Vested benefits accrued by employees and retirees will remain intact, but future benefit accruals will be eliminated.
The company will also temporarily suspend company matching contributions to the 401(k) plan beginning on January 1. Employees may continue to contribute to the 401(k) plan, but will not receive matching contributions from Motorola.
Motorola co-CEOs Greg Brown and Sanjay Jha will take a 25 percent cut in 2009. Brown will also forgo his 2008 cash bonus and Jha will reduce his bonus by an amount equal to Brown’s forfeited bonus.
“The sustained downturn in the global economy requires that we take these difficult but necessary steps,” say Brown and Jha 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 did not say how much they expect to save from these measures.