Zhone execs take pay cuts as sales stall

After falling short of its goal of flat revenue growth in the fourth quarter, Zhone Technologies employees are taking pay cuts, and the biggest cuts will come at the top.

Zhone’s chief executive officer, Mory Ejabat, will take a 20% salary reduction. The rest of the management team will take a 15% cut, and others will take a 5% cut.

Together, those moves should lower the company’s first-quarter operating expenditures by $500,000, Zhone said, resulting in a total first-quarter opex between $14 million and $15 million.

In 2007, the latest year for which numbers are available, Ejabat’s salary was $825,000, but option awards brought his total compensation to nearly $1.9 million.

Salaries for the other top executives, Kirk Misaka, Michael Fischer, David Misunas and Michaeal Scheck, varied between $150,000 and $365,000 then.

The Oakland, Calif.-based access equipment vendor saw revenue dip from $32 million to $31 million in the fourth quarter, while its net loss shrank nearly 12% sequentially to $4.7 million. Though the company saw demand in Latin America and the Middle East, it was overshadowed by weakness in the US market, Zhone said.

“Global credit contractions caused customers to delay or reduce plans to expand their networks,” Ejabat said on the company’s fourth-quarter earnings call Wednesday. “Until the global economy improves, I don’t see sustainable revenue growth.”

The first quarter is typically a seasonally weak one for the company, which predicts revenue will be flat to slightly down sequentially in the first quarter.