As 7,500 jobs are cut, MCI reveals monster payout for briefly tenured former president Rick Roscitt
May 11, 2004
MCI (Nasdaq: MCWEQ.PK) handed former president Rick Roscitt an $8 million severance package when he received his marching orders in March this year. News of the payment comes as MCI plans to lay off 7,500 staff to help cut costs following a disappointing first quarter (see MCI Posts Q1 Loss).
Roscitt, who joined MCI from ADC Telecommunications Inc. (Nasdaq: ADCT), left the carrier in March, only seven months after taking the president's role (see Rick Roscitt Rabbits Off). That values his carryout bag at more than $1 million a month.
In its Form 10-Q filed with the Securities and Exchange Commission (SEC) yesterday, MCI noted that Roscitt received a lump sum of $8.075 million when his contract was terminated in March, plus four weeks' holiday pay. It also agreed to provide Roscitt with "secretarial support, continuation of internet access, and reimbursement of fees for cellular phone service for up to six months," and a home PC for good measure.
It seems unlikely that the 7,500 staff due to lose their jobs during this quarter will be given a equivalent parting gifts. MCI won't say which areas of its business will be affected by these cuts, which will leave the carrier with about 42,500 staff worldwide. MCI has already culled 5,700 jobs this year, including 4,000 call center personnel (see MCI Cuts 4,000 Jobs). It expects these new cuts will save $200 million in the second half of the year.
And MCI's not the only major carrier handing out redundancy notices. Sprint Corp. (NYSE: FON) is to lay off another 550 staff this year in addition to the 1,750 jobs already cut in the first three months of this year.
MCI, which emerged from bankruptcy protection in April (see MCI Starts a New Chapter), aims to return to profitability before the end of 2004. It recorded a net loss of $388 million from revenues of $6.3 billion in the first quarter, compared with a profit of $52 million from revenues of $7.2 billion a year earlier.
The carrier believes it can turn itself around by investing in next-generation technologies and delivering new IP services to its customers (see MCI Offers IP Access to Conferencing,MCI Offers VOIP Over DSL, and MCI Bolsters VOIP Offering). It plans to spend just over $1 billion on its network and operations, and has outlined some of its plans (see MCI Europe to Invest in Ethernet and MCI's on a New Wavelength). It has also been busy forging new partnerships to help expand its range of services (see MCI Hooks Up With Microsoft, MCI, Verisign Team on Security and MCI Offers SSL VPNs With Aventail).
— Ray Le Maistre, International Editor, Boardwatch
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