Posted by: Shamus McGillicuddy
bankruptcy, Networking Channel, Nortel
Have you ever noticed that the root of the word “fired” is contained within Mike ZaFIRovski’s name?
Nortel answered the prayers of many of its channel partners today when it announced the inevitable. CEO Zafirovski is out.
Nortel put out a press release today announcing changes to its management team, board of directors and organizational structure.
Citing the sale of Nortel’s CDMA/LTE business to Ericsson, its agreement to sell its enterprise division to Avaya and the “successful reorganization” of Nortel’s other business units into standalone entities that it can sell off easily, Harry Pearce, Nortel’s board chairman said now is “a logical departure point” for Zafirovski. Not exactly a Mission Accomplished banner. But Pearce did have some nice things to say about the man who stood side-by-side with him during the biggest corporate collapse in the IT industry since the Dot-Com bubble burst nearly a decade ago.
Mike came to Nortel to transform this company. He made great progress on many fronts including addressing significant accounting and related legal issues; improving the quality of Nortel products and the company’s cost structure. His ambitious vision helped shift the economic center of the company from legacy to growth investments. It was unfortunate the transformation was derailed by a deteriorating economic climate and the company’s legacy cost structure. The operating improvements and strategic investments made during his tenure significantly contributed to the fact that Nortel’s businesses are so attractive to potential buyers today.
With that said, Pearce is out as chair of Nortel’s board. In fact, the board of directors is being chopped down from nine members to three. The three remaining board members will be John A. MacNaughton, Jalynn H. Bennett and David Richardson. Richardson will serve as the chair.
According to Richardson’s bio, he is a corporate accounting veteran with deep connections to Ernst & Young, Nortel’s bankruptcy monitor. Since retiring from Ernst & Young as the managing partner of the firm’s corporate finance practice in 2002, Richardson has sat on a few corporate boards. He’s a the former chairman of the board of directors of Ernst and Young’s Canadian operation. He is currently the chairman of the board for Air Canada and is he also serves on the board (and chairs the audit committee) for ACE Aviation Holdings Inc, which owns Air Canada.
No CEO has been named to replace Zafirovski. Instead, most of Nortel’s remaining business units will report to Chief Restructuring Officer Pavi Binning. Nortel’s mergers and acquisitions teams will continue to report to Chief Strategy Officer George Riedel. A core “Corporate Group” has been established which will be responsible for the management of ongoing restructuring activities. It will be led by John Doolittle, Nortel’s now former treasurer.
All of these executives will report to the reduced board of directors, Ernst & Young and a new U.S. principal officer, who will run the Nortel companies who are currently in U.S. Chapter 11 proceedings. This principal officer hasn’t been named.