WorldCom may opt to undo Ebbers' severance
By Reuters
September 10, 2002, 5:08 AM PT
news.com.com
WorldCom’s board on Tuesday is expected to consider whether to undo the severance package of ousted Chief Executive Bernard Ebbers, according to a Tuesday report that cited people familiar with the situation.
The package includes the repayment terms of a low-interest $408 million loan and lifetime retirement pay of $1.5 million a year, The Wall Street Journal reported.
Separately, John Sidgmore, who succeeded Ebbers about four months ago, is expected to present to the board a plan to conduct a search to replace himself as CEO, say people familiar with the matter, according to the paper.
The board's expected revisiting of Ebbers' big severance package comes amid questions of whether his loan might originally have been approved by a director who later received use of a corporate jet, the paper reported.
Among the actions the board may consider is reversing the terms of the severance agreement, which allows Ebbers to pay off his debts to the company over a five-year period beginning in 2003, the Journal reported.
Prior to that agreement, his loans were demand notes, meaning the company could call them at any time, the paper said.
A reversal of those terms could allow creditors to seize some or all of the assets Ebbers pledged as collateral, the paper reported. Those assets include major timber holdings, a yacht-building business in Florida and a 500,000-acre ranch in Canada, according to the Journal article.
Items that could be reversed are the $1.5 million annual payments and lifetime use of the corporate jet. The $408 million loan had its own bonus: a 2.3 percent interest rate that saved Ebbers $28 million each year compared with WorldCom's corporate interest rate, the Journal reported. |
