[With Staci D. Kramer] We said last week that the cuts at the new AOL (NYSE: TWX) could go far deeper than the anticipated 1,000. At the time, execs declined comment but today the company admitted that it is it slashing its 6,900-member staff by roughly one-third. Employees around the world were told today via e-mail and a video from CEO Tim Armstrong that AOL is looking for up to 2,500 volunteers; if enough don’t show up, layoffs will be involuntary. The goal that came out of Armstrong’s touted Project Everest: to reduce operating costs by an estimated $300 million annually, according to an SEC filing. AOL, scheduled to spin off from Time Warner Dec. 9, had already said it planned to take up a $200 million charge in its first quarter; this filing says the charges are expected to occur between the spinoff and the first half of 2010.
The “voluntary” layoffs program runs from Dec. 4 through Dec. 11. To show that he feels some of the pain, Armstrong, who is also chairman, told the troops he will not take his 2009 bonus, which was guaranteed to be at least $1.5 million and as high as $4 million. However, he will not require other executives to give up their ’09 bonuses. We have learned the severance package runs by title: SVP-9 months pay; VP-6 months, Director- 4 months; below director- 3 months. Those accepted will be notified between Dec.16 and Jan.1, 2010; for the “vast majority” it is anticipated that Jan. 1 will be their last date.
Would the layoffs be reduced if AOL sells ICQ and MapQuest or other assets? We were told that was too speculative to factor in.
Here’s a rundown of what was told to AOL staffers:
– Voluntary layoff program announced: We announced a voluntary layoff program that begins 12/4 and extends to Dec. 11 (post-spin). Looking for up to 2500 volunteers. We will need to do an involuntary layoff if we do not reach the target numbers through the voluntary option. We believe the voluntary program gives people more choice and decision-making ability instead of waiting for the final cost recommendations and involuntary layoffs.