Nancy Sousa left Eastman Kodak Co. in 2003 to be an executive at Given Imaging Inc., a startup developer of medical devices in Atlanta.
She left that company in 2006 for another startup, Mazor Surgical Technologies Inc., and was chief operating officer for the U.S. subsidiary of the Israeli-based provider of miniature surgical assistance systems.
"As with a lot of startups, we were going to raise money this year," says Sousa, a native of Binghamton who worked at Kodak in Rochester for nearly 22 years. "Of course, as we looked at what was happening for this year, there was no way we were going to be able to raise money."
Mazor also is handcuffed by delays in approvals from the U.S. Food and Drug Administration. The company had counted on FDA clearance, but the agency wanted more data.
Sousa took stock of the company’s financial situation.
"I said, ‘Look, I’m the most expensive part of the U.S. operations,’" she says. "So I took myself off payroll."
Sousa is among many business executives here and nationwide who have been laid off or have left jobs because of the recession. The disruptions in employment and transitions are causing them to re-evaluate their careers, financial portfolios and plans for retirement.
Sousa has been working as a consultant since April while assessing her next career move. She is aware that many companies face challenges like Mazor.
"I think it’s permanent," she says of her decision to leave Mazor. "I do consult with the company on a paid basis, so every once in a while they call me. I have done a project with them."
"And it’s possible that next year, when they get the FDA clearance and can raise some money, I could be hired back," says Sousa, who is a member of the medical device committee of the American-Israeli Chamber of Commerce in Atlanta. "But I’m not counting on that."
Her situation has prompted Sousa to rearrange her financial and personal obligations. The family’s benefits coverage has been shifted to the school system that employs Sousa’s husband, providing both state and county benefits.
"We had to scale back here at the house with all our household expenses," Sousa says. "And I’ve been a care provider with members of my family, and I’ve had to have hard conversations with them, saying I can’t do everything I’ve always done."
Sousa has family members in the Rochester region and other areas of Upstate New York.
"My family has had to look at other ways in which they can support themselves more," she says.
Sousa’s money matters, and those of many corporate executives, rest in the hands of AM&M Financial Services Inc. in Perinton. AM&M has several clients in Atlanta, where Kodak’s U.S. consumer marketing business was relocated several years ago.
"We’re on our second or third time with some former Kodakers in helping them through the second or third company after they’ve left Kodak," says John Lawson, vice president and manager of executive compensation at AM&M.
Sousa meets with AM&M representatives annually, either in Perinton during her visits to the area or with AM&M representatives who come to Atlanta to do business with current and former Kodak workers.
Lawson has worked with as many as 40 executives who have lost or changed jobs in the last three years. Locally, job losses have occurred at employers including the traditional Big Three-Kodak, Bausch & Lomb Inc. and Xerox Corp.
"I can’t give survey data comparing Rochester with other areas, but I would think Rochester, in spite of its reputation as being somewhat of a recession-proof community, probably stands out because of the organizations here that have gone through such a churn," he says.
Executives can follow a number of guidelines to preserve and manage their dollars, Lawson says. Mostly, the guidelines are client-specific; his firm works to understand an executive’s risk tolerance, skills, marketability and even relocation options.
"But the general guidance is did you follow our advice and the rest of the financial planning community’s advice to establish an emergency fund, which would consist of three to six to 12 months of living expenses, depending upon how safe you thought your job was and the nature of your portfolio?" Lawson says.
Experts advise that executives create an emergency fund even if they are employed. Lawson asks clients who have left or lost their jobs about their sources of liquidity; the financial terms of their layoff; their severance package-including whether they are drawing a full salary for an extended period or whether the severance is a lump sum-and the disposition of employer equity awards and stock options.
"We would do an inventory of what would be coming in, triggered by the severance, what they have in their personal financial situation, and then develop a tailored plan for that individual," he says.
Laid-off executives fall into several categories, financial advisers say. Some are ready and able to retire. Some want to re-enter the work force in a similar financial position; others are willing to accept lesser pay to stay in the area. Still others decide to relocate.
"The classic case is somebody comes to us and says they’ve been told they have 60 to 90 days," Lawson says of a looming job loss. "They come to us, in many cases, in shock."
Many AM&M clients have moved up in corporate ranks and thrived, he says. Some who were helped through a transition to a layoff as long as two years ago still have not found a job, Lawson notes. Others who formerly worked for a major corporation have elected to take pay cuts in the range of $200,000 to follow a dream.
Those determined not to relocate are the most limited, Lawson says.
"The party that says, ‘I’m going to stay in my current geographical area’ is the party that’s going to have to make some significant adjustments," he says.
Those with the most choices are more likely to make a successful transition, says James Eckl, a partner at Cobblestone Capital Advisors LLC in Rochester.
"Could you retire or, based on your goals, do you need to go back to work?" he says. "If they say they’ve had enough and they’re done, obviously we’d start modeling out what their financial situation looks like to them in retirement."
For those clients who want to rejoin the work force, Eckl and his team offer advice on finding a new job.
"Most times you’ll find that executives have a pretty tied-in network," he says. "They’ll often know better than we do about where they need to go to try to find that next position."
Adds Eckl: "Networking is the No. 1 key. Even with contacts that you might not necessarily think would be good to finding a new job, often they can be."
Those in higher levels of management usually take longer to find the next assignment, he observes.
"One thing we have to work on with them is ‘Where do we stand here?’" Eckl says. "’What are your expenses? What is your income for the next year or two? What are your assets? What type of cash flows do you have coming in?’ Those are the kinds of things we ask to try to set up a plan that will help them get through however long it takes to find the next position."
For some, the job search can take years.
"It could take six months, or a year or two, to find your next job," Eckl says. "If we know it’s going to take six months or a year to find a new job, we are likely to recommend that we build some type of reserve to fund cash flow needs for the next year.
"We would want to make sure that the portfolio is structured in a way to give us the liquidity that the family needs to hold them over until the new position can be found."
Eckl represents some 30 active and retired executives. None of his active clients has been laid off, he says. For those who may face layoffs, Eckl says the next job might be harder to find in Rochester than in other parts of the country.
"In Rochester, it’s been more downsizing than expanding," Eckl says. "So you’re often either looking at a job here at lower pay or, if you want something similar, you have to leave the area."
Cobblestone Capital works with clients to make sure their financial plans are well developed, he says.
"We’re not necessarily planning for a layoff, but we’re trying to make sure that even if unforeseen circumstances arise, the family is in a good enough financial position to deal with it and doesn’t wind up in bankruptcy or taking drastic measures to get through the period," he says.
Tax planning is another important measure that must be part of discussions with laid-off executives.
"Typically, the year in which they’re laid off could be one of the highest-income years in their life," he says. "Their severance starts. They could have a supplemental executive retirement plan that pays out. They could have nonqualified elective deferred compensation that pays out."
Income from a former employer cannot be deferred, Lawson says, but deferments from a new employer are possible.
For Sousa, the job search continues.
"I am continuing to look at opportunities (in Atlanta)," she says. "There are a number of startups, but they’re all trying to find financing.
"So while I’m doing that, I’m consulting. Quite honestly, I’m working a few hours as a consultant and it’s not all bad."
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09/18/09 (C) Rochester Business Journal. To obtian permission to reprint this article, call 585-546-8303.