Mark Evans wrote about the compensation package that Nortel CEO Bill Owens gets (including sallary, bonus, pension, and other incentives).  A close inspection of the benefits (on the company's latest 10-K) reveals a pretty generous package, including a base salary of US$1-million a year (with a chance of bonuses worth up to 170% of that base), a special pension worth about US$33,540 a month for the five years following Mr. Owen's retirement, and an added "special pension benefit" in March of US$4.5-million to compensate Mr. Owens for equity incentives he forfeited when he resigned from the boards of other other companies after he was hired as Nortel's president and CEO last April.

While that might seem like a pretty good deal on the surface, in terms of CEO compensation packages, it is nowhere near what some top corporate czars typically command.  Let's take a few comparative examples mentioned in this article.  AT&T CEO David Dorman got a $2 million bonus for 2004 (note: bonus only - that does not even include his base salary), despite a drop in revenues of nearly 12% for that year.  Lucent CEO Pat Russo got a generous package from Lucent's board last December, totalling $13.6 million, including stock, options and a $2.95 million bonus (ed.note: at least in this case, Lucent did register a profitable year, the company's first since 2000).  And here's another data point: Ivan Seindenberg, who made $20.8 million last year (salary plus incentives).

So the real question is: compared to the above figures, how is Mr. Owens' total compensation package?  I would say Nortel got a pretty good deal there (compared to other peers).  But having established that and leaving the comparisons aside for a moment, what would be the best formula in general to determine how much a CEO should be compensated?  I would suggest performance-restricted stock is a flexible way, since this can be tied to a set of metrics including profitability, return on assets, etc.  However, a short term goal (e.g. EPS) should be combined (from a compensation perspective) with a longer-term objective (e.g. return on invested capital).  Another alternative is premium options.  In the future, boards will begin scrutinizing a bit more the compensation their CEOs receive, but they might have a tough time determining some performance targets and appropriate pay scales. 

Earlier today, Avaya (NYSE:AV) and Juniper (Nasdaq:JNPR) announced that they formed a global strategic relationship to deliver enterprise class VoIP solutions to enterprises.  The partnership will leverage Juniper's routing and security solutions with Avaya's enterprise communications equipment, with each company being able to resell each other's products and services.

From Juniper's perspective, this deal enables the company to tap into Avaya's large installed base of PBX / IP PBX gear, and will be a catalyst to more sales of Juniper's enterprise routing solutions (including products such as the J-Series enterprise router).  This move is another piece of Juniper's puzzle in its quest for expanding its enterprise networking portfolio (after NetScreen - firewalls/VPNs, Perbit - WAN acceleration and Redline - application front end technology).

Avaya gets another relationship in the routing space (where it already had a deal with Extreme), and a best-in-class partner to jointly develop products geared to enterprise employees in remote, branch or mobile locations.  Of course, Avaya maintains that the relationship with Juniper is "complementary" to the one with Extreme, but that remains to be seen.  A more interesting consideration is whether or not we will see a subset of the Avaya call processing software being productized on a future Juniper routing solution targeting the SME market segment, and what is the time-to-market for such a product.