Already a Bloomberg.com user?
Sign in with the same account.
In a Securities & Exchange Commission filing in mid-August, Lucent Technologies disclosed the severance package it awarded former CEO Richard McGinn, who was dethroned last October. McGinn, who became CEO in 1997 and on whose watch the telecom equipment giant lost more than 70% of its market value, bagged a one-time payment of $5.5 million when the board ousted him. Lucent also assumed $4.3 million in loans for McGinn and will shell out $1 million a year for his pension.
Cecilia Mikla, 45, gritted her teeth when she read about McGinn's parting handshake in her local newspaper. A 22-year Lucent employee who got axed in the first wave of layoffs earlier this year, Mikla has watched her 401(k) -- which was heavily concentrated in Lucent shares -- dwindle from $420,000 to $80,000 as the stock plummeted this past year.
During her long tenure at AT&T and later at Lucent, she also bought company shares through the employee stock purchase program. "My financial counselor calls it my toilet paper," she says now.
Mikla is part of the contingent of Lucent employees -- enough to fill a small town -- who've lost their jobs this year as the beleaguered company struggles to recover from a string of management missteps and a telecom sector slowdown that has pummeled its bottom line. Lucent started the year with 106,000 employees but slashed 19,000 jobs within the first six months through attrition, layoffs, and buyouts. More cuts are coming: In July, while posting a $3.25 billion third-quarter net loss, the company vowed to eliminate as many as 20,000 more positions before yearend.
BITTERNESS AND OPTIMISM. Which raises the question: What will all of these Lucent refugees do next? BusinessWeek Online tracked down a handful of them to find out. Their stories offer a glimpse of the fluctuating career paths taken by American workers today. The group includes a 60-year-old middle manager-turned-professor, a budding entrepreneur, and a Gen-X expat whose résumé is littered with corporate carnage brought on by mergers and acquisitions. These people share tips about finding new careers and explain what it's like to be on the receiving end of a pink slip. While they express some bitterness over their ejection from Lucent, they all seem fairly optimistic about the future, at least for now.
That's not to say these New Economy victims are sipping piña coladas on the beach this summer. Most are watching their expenses carefully and chasing down job leads. For some, mortgage payments loom, as do back-to-school purchases and college tuition. Stephen Mershon, a 50-year-old former systems engineer at Lucent, was one day away from putting his four-bedroom house in suburban Maplewood, N.J., on the market when he found a boarder to help cover his mortgage. He says he's financially O.K. for at least six months. But if "someone came up with a job offer now, I wouldn't pass up the chance." Neither would many other folks who make up the widening circle of ex-Lucent employees.
Name: Craig Lippincott
Craig Lippincott was told to "expect great things" when he joined Lucent 11 months ago. Today, that promise is woefully ironic. "The only thing I can expect is not going to be that great," he says. A few weeks ago, Lippincott learned that he would be out of a job after Aug. 31.
An expat and self-described Army brat who knows four languages, Lippincott was hired as a "forward-looking solutions director" -- a fancy title that, among other things, meant he evaluated new markets for Lucent's products in Europe. He agreed to work for a year in Amsterdam, an arrangement that was supposed to be preempted by another contract once he was cleared to hold a job legally in Spain. Not anymore. His $78,000 position is a goner, one of about 900 jobs Lucent is cutting in the Netherlands.
At first glance, Lippincott's résumé looks like it belongs to an indecisive job hopper: Over the past 10 years, he has collected a paycheck from no fewer than six companies. Lippincott, who holds a master's degree in international business studies from the University of South Carolina, didn't set out to create a patchwork career. But like many professionals in industries ranging from financial services to consumer goods, he has been sideswiped by mergers and acquisitions.
He lost his job at Upjohn after it merged with Pharmacia. Ditto at AT&T Unisource Communication Services, a joint venture that eventually landed in the lap of Infonet Services, a communications company in El Segundo, Calif. "You always hear that [recruiters] want to see loyalty and continuity with one business," Lippincott says. "It's not a middle manager's fault that companies keep going under. [Résumés] are starting to reflect a corporate graveyard."
Lippincott sent out a batch of résumés last February after Lucent announced its first round of layoffs. Through a colleague, he heard about a pre-IPO startup in California that was looking for someone to drum up demand for its telecom equipment in Europe. So far, he has gone through two rounds of interviews and is waiting on the third. Isn't he a tad skittish about hitching up with a fledgling business, given the current telecom slump? "I don't think they are any riskier than working with a Lucent or a Cisco right now," he says, adding that he may have to take a small pay cut at his next job.
While he never expected to be hunting for work every 18 to 24 months, he says he has learned a valuable lesson about the corporate grind: "You realize that you don't have a lot of time to make your mark before a company gets restructured, gets bought, or buys another company. I've tried to put my stamp on as early as possible."
Name: Richard Bohannon
Richard Bohannon began his telecom career installing switching equipment for Western Electric back in 1971. Since then, he has held various positions in middle management at Western Electric, AT&T, and finally, Lucent. In his most recent job in Lucent's optical network group, he supervised training and development of technical-support staffers in 17 countries in the Carribbean, Latin America, and South America. In between bringing up two kids with his wife, Sandra, he earned a bachelor's degree and an MBA, and he's on his way to getting a doctorate in education, with a focus in organizational development.
Bohannon had planned to switch careers in a year or two anyway, but Lucent made him "change my schedule a bit." In June, he was one of some 10,000 managers offered voluntary early retirement, known in Lucent circles as the 5/5 plan because the company added five years to an employee's age and years of service to make the offer more attractive. The magic number was 75: If your age and years of service -- with the extra five years tacked onto each -- added up to that figure, you could receive your full pension, plus medical benefits. If your number fell short, you were entitled to a discounted pension under the buyout. Roughly 8,500 managers took the package, according to Lucent.
Bohannon didn't need to spend time with his calculator: His age and years of service easily surpassed 75, so he left with a full pension, worth close to 50% of his low six-figure salary. Still, he isn't ready to retire yet. A couple of weeks ago, he became an adjunct professor at Mercer University in Atlanta, teaching undergraduate classes in
organizational leadership. He plans to write his dissertation next year and maybe scout for a job as a full-time professor.
"I've always advocated that people must be ready for change. I'd like to think I could work for another 10 years," he says, then chuckles and adds: "I still have my mental faculties."
Name: Cecilia Mikla
Location: Columbus, Ohio
Mikla found out she was losing her job as a Lucent product manager when she showed up at her office on a chilly Thursday morning in February. Her security pass wouldn't work, so she approached the security booth to be let into the building. The guard told her that she was on a list of people who weren't allowed inside. Perplexed, Mikla phoned her
supervisor in Chicago to ask what was going on. Since the guard wouldn't admit her, she drove back home to wait for a response from her boss.
Later that day, her supervisor called back and said there had been a terrible mixup -- Mikla wasn't being laid off until the following Thursday, but somehow her security pass had been inadvertently deactivated a week ahead of schedule. Then, Mikla says, her boss told her to go back to work. "It was like dropping a brick on me," she adds. "I had no idea it was coming."
As part of the Force Management Program (FMP) -- Lucent lingo for layoffs -- Mikla received one week's pay for every year of service plus a bonus of five additional weeks. Instead of cutting checks, Lucent is distributing severance from its pension fund, which means the money is subject to a 10% lump-sum tax, plus income tax. Mikla would have scored a far more lucrative payout if she had still been with the company when it announced the 5/5 early-retirement program in June. With the buyout, she says she would have qualified to get her full pension, roughly $2,700 a month, immediately.
Mikla has helped launch a Web site, www.fmpvoicesunite.com, to identify other FMP'd people who believe they were layoff targets because they were well paid and near the age -- 50 -- that would have made them eligible for the June buyout. So far, Mikla says, hundreds of former Lucent workers have registered at the site. They're appealing to Lucent to make the 5/5 plan retroactive to the start of this year.
Lucent spokesman Bill Price says the company has no such intentions. "Lucent does not practice any discrimination in our employment practices," he says. The layoffs done at the beginning of the year turned out to be insufficient, he adds, which led the company to offer the voluntary-retirement plan. "This was a business decision we had to make," he says.
Mikla, meanwhile, is trying to expand a small travel agency that she started eight years ago out of her home. She never dreamed that the business, which specializes in cruise and vacation travel, would be more than something to "dabble in" when she retired. But soon she hopes to draw a modest monthly income, maybe as much as $2,000, from the venture.
For now, Mikla and her husband, a former Lucent manager who retired a few years ago, are tightening their purse strings. They went on an Alaskan cruise this summer that was planned more than a year ago, but they opted out of many of the costly side trips that are offered with it. And these days, she adds, dinner out often means the "Wendy's 99-cent menu."
Location: Warren, N.J.
Like Cecilia Mikla, Robert Muñiz, a seven-year senior consulting manager with AT&T and Lucent, got his "love letter" from the company in February. A previous layoff from original Baby Bell Nynex, now part of Verizon, had taught him the value of keeping his network of contacts alive, so when the pink slip arrived this time, he rushed out roughly 100 résumés to colleagues who could vouch for his performance.
A friend of a friend put his résumé in front of recruiters at telecom company Global Crossing. Muñiz flew to Miami for an interview at the end of April and received an offer that day, for about the same salary he made at Lucent. He moved to Florida and started his job in June. Reflecting on his layoff, Muñiz says it was important to stay calm. Above all, he adds, "I didn't blame myself." By Jennifer Gill in New York