WorldCom Director Kellett Resigns Amid Furor Over Role In Ebbers DealsOct 28, 2002 | Wall Street Journal
One of WorldCom Inc.'s longest-standing directors resigned Sunday night after the company's board pressured him to step down for his involvement in controversial arrangements with ousted Chief Executive Bernard Ebbers.
Stiles A. Kellett Jr.'s resignation comes after WorldCom imposed a 5 p.m. deadline for his resignation last Friday. Though lawyers for Mr. Kellett notified the company that he would not step down, Mr. Kellett resigned Sunday night after learning that the WorldCom board of directors had scheduled a 6 p.m. vote Monday "to vote him off," said one person close to the situation.
The pressure against Mr. Kellett has been building for weeks. As chairman of WorldCom's executive-compensation committee, he also drew criticism for his role in granting Mr. Ebbers a whopping personal loan, now totaling $415 million, which wasn't initially disclosed to all board members.
Last month, Richard C. Breeden, a court appointed monitor in the Securities and Exchange Commission's fraud case against WorldCom, harshly criticized Mr. Kellett for an arrangement in which he received favorable lease terms on a WorldCom corporate jet starting in 2001 without the full knowledge of the board. Upon Mr. Ebbers's ouster last April, Mr. Kellett helped negotiate his generous severance package. Mr. Breeden essentially argued in a memo to the directors that the jet deal and the subsequent severance package amounted to a quid pro quo.
In a statement issued Monday night through his attorneys, Mr. Kellett said that WorldCom "needs relief from all the distraction" of his controversy. He added that his primary concern is for the interests of the company and shareholders. "Those interests have been cast in jeopardy by criticism of me that has warped the truth and leaped to false conclusions," he said in the statement.