SCHAUMBURG, Ill. -- Motorola's retirement plans are not expected to feel the effects of the company's recently announced layoffs, officials said.
Garth Milne, vice president and treasurer, said he didn't expect any changes to the company's pension and profit-sharing plans to result from the 15,000 layoffs worldwide, which account for 10% of the company's employees.
The company decided to lay off employees because its financial performance was not what company leaders thought it would be, a spokesman said.
Layoffs mainly will affect junior people, Mr. Milne said, although he has yet to see an official company estimate on exactly which employees will be leaving.
He does not think the layoffs warrant an asset/liability study, because studies have been completed in recent years.
As of Dec. 31, the defined benefit plan totalled $2.6 billion, which includes the Motorola Supplemental Pension Plan. The plan is well-funded with an accumulated benefit obligation of $1.8 billion, according to the company's 1997 annual report.
According to Pensions & Investment's survey of the 200 largest pension funds in the United States, the plans' managers are:
* Equities: Independence Investment Associates Inc., Boston; Northern Trust Co., Chicago; Jennison Associates, LLC, New York; Lincoln Capital Management, Chicago; Ark Asset Management, New York; and Boston Co. Asset Management LLC, Boston.
* International equities: Brinson Partners Inc., Chicago; and Morgan Grenfell Asset Management Ltd., London.
* Bond managers: Scudder Kemper Investments, New York; Stein Roe & Farnham Inc., Chicago; Harris Investment Management, Chicago; and Weiss Peck & Greer LLC, New York.
The profit-sharing and defined benefit plans share managers, which have not changed in at least four years, said Andrew Steiner, assistant treasurer.
The defined benefit plan's asset mix, as of Sept. 30, was: 75% U.S. and foreign stocks, 24% U.S. and international fixed income and 1% cash.
The profit-sharing plan had $5.5 billion in assets as of Sept. 30 and includes a company stock option. Company stock made up 17% of the plan, while international and domestic equity totalled 52%, fixed income was 28%, and 3% was listed as other. In 1997, employer and employee contributions totaled $364 million, which was more than double those made in 1996, according to P&I's annual survey.
The profit-sharing plan has approximately 18,822 stock option holders, according to Motorola's 1997 annual report. A total of 14,800 employees were granted options last year. All of the options vest in one year. Of the shares outstanding as of Dec. 31, 10,013 were priced between $9 and $40 and 23,260 were priced between $41 and $83.
Employee buyout packages are expected, but have not yet been finalized.
"Our plan is for people to take advantage of early retirement buyouts," a Motorola spokesman said.
Some buyouts may occur, Mr. Milne said, but nothing will be offered companywide.
Motorola will close certain businesses around the world as a result of the downsizing, he said. But some overseas divisions do not have pension plans.
Joel Rich, senior vice president and consultant with the Segal Co., said that typically a company that lets go between 20% and 25% of its workers gives departing employees fully vested status, which means more money leaves the plan. In extreme cases, fund investments may be liquidated.
"There is no hard-and-fast rules though," he said.
There are also administrative challenges with this many terminations.
Future contributions may be affected and the layoffs may reduce the pension fund liabilities because fewer benefits will be paid out in the future, Mr. Rich speculated.