AOL seeks to shrink workforce by a third after spin-off
To achieve that figure, the company is offering enhanced severance packages to volunteers who step forward between Dec. 4 and Dec. 11. (The spin-off will take place Dec. 9.) If the reduction can't be achieved solely through voluntary departures, the remainder will take the form of layoffs, with those workers receiving less-generous severance pay and benefits.
AOL said in a filing with the Securities and Exchange Commission that it expects the restructuring -- part of a makeover referred to inside the company as "Project Everest" -- to yield annual cost savings of $300 million, although it will necessitate charges of $200 million in the first half of 2010. In an additional bit of symbolic belt-tightening, Tim Armstrong, who left Google (GOOG) to become AOL's chairman last May, is forgoing his 2009 bonus, which would have been between $1.5 million and $4 million.
While the bulk of the restructuring is being saved for after the spin-off, AOL recently laid off about 100 people. Soon-to-be-ex-parent company Time Warner embarked this month on a round of cuts at its magazine division, Time Inc. There, about 400 to 500 employees are being given buyouts or let go in a move expected to save $100 million.