Verizon expects thousands of managers to take buyout
The company offers the voluntary severance packages after warning of below-forecast profits for the rest of 2003.
By Associated Press
Published October 1, 2003
NEW YORK - Verizon Communications has offered a voluntary severance package to all of its 74,000 nonunion management employees, part of a bid to slash costs as rivals and rival technologies nibble away at the company's core telephone business.
The buyout package, offered to managers two weeks ago and confirmed Tuesday, comes less than a month after Verizon averted a strike by its 78,000 union employees with a five-year contract that failed to produce many of the cost-saving provisions sought by the company.
Verizon had mentioned employee buyouts as a cost-cutting measure last week, when the company warned investors that it would not meet profit forecasts for the remainder of 2003.
Company spokeswoman Sharon Cohen-Hagar said Verizon expects "several thousand" managers to accept the package, which includes two weeks of pay for each year of employment up to 35 weeks, plus a bonus ranging from $15,000 to $30,000. A typical manager may earn $75,000 a year in salary, or about $1,400 per week. The managers will have between Oct. 1 and Nov. 14 to decide whether they want to accept the severance deal. Those who accept the offer will end their employment Nov. 21.
Verizon has about 6,000 nonunion employees in Florida, but spokesman Bob Elek said he did not know how many of them would be eligible for the buyout or how many were expected to accept the offer. He added that the company does not expect the buyouts to affect customer service in Florida.
A separate buyout offer will be made to at least 12,000 retirement-eligible union technicians and call center operators upon ratification of their new contract, possibly next month. That accord brought concessions on employee health care expenses that the company estimates will save $500-million, but the deal preserved long-standing protections against layoffs and nonconsensual transfers to different cities or regions, provisions which Verizon had been determined to eliminate.
In issuing last week's profit warning, Verizon said it expects to record a charge against fourth-quarter earnings to cover severance expenses for any employees who accept a buyout.
Like many traditional telephone companies, Verizon is beset by a number of forces that are eating away at its core business of connecting voice calls to homes and businesses.
In addition to technological alternatives such as mobile phones, e-mail and Internet phone services, Verizon has lost some major battles in the regulatory arena. A recent ruling by the Federal Communications Commission ensures that rivals such as AT&T and MCI will be allowed to sell their own residential phone service by leasing local lines from Verizon and the other Bell monopolies at attractive rates set by state regulators.
Tuesday, a lawsuit by the Bells challenging the new FCC rules was transferred to the U.S. Court of Appeals for the District of Columbia, which already has handled a case on the same matter. The transfer may benefit the Bells since the Washington court has previously ruled that the FCC has been too permissive in this area. The Bells charge that the FCC's decision to delegate authority to state regulators violates the court's ruling.
- Times staff writer Louis Hau contributed to this report.
