By: Andrew Wahl

Jon Ogg at 24/7 Wall St. wrote yesterday an unequivocally scathing assessment of Mike Zafirovski’s term as CEO at Nortel. It’s pretty hard to disagree—the stock is down about 98.5% since Mike Z.’s first day, Nov. 15, 2005, and as the downgrades just keep on coming (Zacks Investment Research’s “sell” rating is the latest), it’s clear things are not getting better. And Ogg makes a good case that this isn’t just about the stock price, that there are many fundamental problems facing the company, and rattles off the Nortel’s leveraging problems, widening losses, declining revenues, and the current economic climate. All true. Nortel is in a bad way, and Zafirovski wears it.

But Ogg concludes that Zafirovski has to be shown the door, and puts him on a watch list of 10 CEOs to go in 2009.

I’m not so sure, for a very simple reason: at this point, no one is going to do a better job. None of the very critical problems that Nortel faces gets solved by Zafirovski getting the boot. The company has lurched from crisis to crisis, and many of them over the years were rooted in failures of leadership of one kind or another. Not one of Mike Z.’s three predecessors, John Roth, Frank Dunn, and Bill Owens, deserve passing grades from shareholders. The last thing Nortel needs right now is to try and switch leaders again.

Besides, as Ogg himself notes:

Nortel needs a top sales-oriented CEO from one of the few key competitors.  These executives will tend to have non-compete clauses so it may even have to dip down into the pools of executives from the sales side that have been out of the game for a year or two.  That is a risk, and it is one we openly admit….

…Let’s just say he gets dumped as CEO or even if they just take away the President title.  We are hard pressed to think that anyone would want to take this role.  The upside is huge, but the next round of shrinkage and plundering could in theory make the successor the man who took over from the dead train conductor and still drove off the edge of the abyss.

Right. Nortel doesn’t have the luxury of time to undertake a high-level executive search for a CEO who would then potentially want to hire a new management team. And the board probably couldn’t find a good candidate, anyway.

No, this all rests on Zafirovski’s shoulders. Either he gets the credit for some modern-day miracle of business turnarounds, or he gets the ignominy of being on duty for the iconic Canadian company’s breakup, bankruptcy, sale, or some combination thereof. And, by the way, his compensation ought to closely reflect those outcomes.

Yes, 2009 will be a defining year for Nortel and Zafirovski. But their fates are inextricably linked. Showing him the door, probably with a big payout, would only let him off the hook.