AOL CEO Tim Armstrong this morning informed staff that the company will be looking for 2,500 people to voluntarily hand in their resignations, which would represent about one third of the company’s payroll.
The news comes a mere week after AOL, which is preparing to spin off from Time Warner and go public, said it would be firing at least 1,000 employees and spend about $200 million cleaning house prior to the planned IPO.
The voluntary layoff program is to begin on December 4 and end after the spin-off date (December 9), and if not enough volunteers come forward the company says it will fire people on its own. AOL says the cuts will drop its annual operating expenses by $300 million, and that it will incur a $200 million charge from the time of the spin-off through the first half of 2010.
Update: Business Insider has the details of the lay-off package.
When AOL will be on its own again, it will be worth about $3.15 billion.
Worth noting: Armstrong says he has personally decided to forego his 2009 bonus (which was guaranteed to be in between $1.5 million and $4 million). This, in contrast to the decision to let 2,500 people go, is not to please the market pre-IPO, but more of a goodwill gesture to current employees.
From the SEC filing:
On November 19, 2009, AOL Inc. (the “Company”) informed its employees of proposed restructuring activities as part of its continuing cost reduction initiatives aimed at aligning the Company’s organizational structure and costs with its strategy (the “Restructuring”). The Restructuring is conditioned upon the successful completion of the Company’s previously announced spin-off from Time Warner Inc. (the “Spin-off”), as well as the approval of the Company’s new Board of Directors that will begin service in connection with the Spin-off. It is anticipated that, if approved, the Restructuring will include the reduction of approximately a third of the Company’s current employee base, which will be conducted on a voluntary and involuntary basis. The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the Spin-off through the first half of 2010.