WorldCom Board Will Consider Rescinding Ebbers's SeveranceSep 10, 2002 | Dow Jones Business News
WorldCom Inc.'s board is expected today to consider whether to undo the severance package of ousted Chief Executive Bernard J. Ebbers, which includes the repayment terms of a low-interest $408 million loan and lifetime retirement pay of $1.5 million a year, people familiar with the situation told The Wall Street Journal.
Separately, John Sidgmore, who succeeded Mr. 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.
Additionally, federal prosecutors are understood to be focusing on the company's chief operating officer, Ronald Beaumont, believing he may have information that could help make a case against Mr. Ebbers.
The board's expected revisiting of Mr. Ebbers's big severance package today comes amid questions of whether his loan might originally have been approved by a director who later received use of a corporate jet.
Richard Breeden, a court-appointed monitor of WorldCom and former Securities and Exchange Commission chairman, has investigated the use of a Falcon 20 jet. WorldCom rented it to board member Stiles A. Kellett Jr. for $1 a month, plus certain fees, in 2001. It normally would have cost as much as $1 million annually, said a person familiar with the matter. Use of the plane wasn't disclosed at the time in regulatory filings, or to some board members, say people familiar with the matter.
Mr. Kellett, as head of the board's compensation committee, was one of two directors, along with Max E. Bobbitt, who worked out terms of Mr. Ebbers's departure after the board decided to oust him. The loan deal and a severance package won unanimous board approval. Mr. Breeden is expected to present his report, which is critical of the arrangement, to WorldCom's board at a meeting this morning.
Prosecutors haven't linked the roughly $7 billion of WorldCom accounting impropriety to Mr. Ebbers. Former Chief Financial officer Scott Sullivan, however, has been indicted. The loan agreement, which followed Mr. Kellett's deal for a jet a year earlier, might give prosecutors a new avenue to pursue Mr. Ebbers criminally, say people familiar with the situation. These people also say prosecutors are also examining Mr. Kellett's role, seeking to learn whether his approval of terms of Mr. Ebbers's loan and severance package was tied to use of the jet.