A shot of the Ottawa River in Canada. Click to enlarge.

It is certainly a tough time for Nortel to be trying to get a court to approve senior level management bonuses as just south of Canada here in the US, the government is focusing on taxing bonuses to employees of TARP recipients to death. The good news here is these bonuses – unlike many on Wall Street seem to be tied to cost-reduction and reducing the company’s focus – or selling off parts of the business.

The question worth asking is, anyone can cut expenses at a company, how do you measure the effectiveness of what was cut? In other words, how do you ensure the things which are eliminated are smart for the long-term health of the company? Obviously there is no simple answer but this sort of incentive seems to be something which can have unintended consequences.