x
Cable/Video

WorldCom Bonuses Brew Controversy

After going down in history with the largest and probably most scandalous bankruptcy filing ever, one might expect WorldCom Inc. (OTC: WCOEQ) to be pinching pennies at every turn (see WorldCom Files for Bankruptcy). When it comes to certain "key employees," however, the company is actually loosening its purse-strings.

Late last Friday afternoon, the company filed a request with the U.S. Bankruptcy Court of the Southern District of New York to allow it to hand out $25 million in bonuses to 325 top employees. Judge Arthur Gonzalez will consider the retention plan at a hearing scheduled for October 29.

"I find it really incredible that they would pay bonuses now, when they haven’t even finished paying us severance," says Kate Lee, who was laid off from her position as senior manager of internal communications back in June. Lee is now the chairperson of the exWorldCom Employee Assistance Fund, which aims to help former employees of the company who can no longer scrape up enough money for essentials such as rent and food. "I’m adding at least one or two people to the list every day," she says.

WorldCom spokeswoman Claire Hassett insists that the severance pay issue has been resolved. “This is a moot issue,” she says. “WorldCom is taking care of those who were with the company and is trying to incent [sic] others in mission-critical positions to stay with the company.”

While Lee acknowledges that many of the employees being offered bonuses are probably good workers and are important to the corporation, she says some of them may have caused the problems in the first place. “I find it absurd. These are the same people that got WorldCom into this mess and weren’t able to avoid bankruptcy,” she says. “So now they get a massive reward?”

If the plan is approved, as WorldCom expects it will be, the employees in question will get bonuses ranging from $20,000 to $125,000, or between 35 percent and 65 percent of their annual base salaries. According to the plan, the employees will get the first 25 percent of the bonus on December 1 this year, the next 25 percent on March 31, 2003, and the final 50 percent 60 days after the courts approve WorldCom’s reorganization plan.

This is a revision from the company’s original plan, through which it wanted to pay nearly double this $25 million to less than half the number of employees, according to a source close to the company, who has asked to remain anonymous. The company’s court monitor, Richard Breeden, reportedly asked the company to revise its plan.

WorldCom isn’t saying which of its employees will be getting a bonus, but it has stated that four of its top executives are not on the list. While the company won’t say who these executives are, they're likely to include company CEO John Sidgmore -- who has said that he will step down as soon as a replacement is found -- along with chairman Bert Roberts and COO Ronald Beaumont.

“The purpose of the program is to help retain employees in mission-critical positions and to boost employee morale,” says Hassett. She wouldn’t comment on which employees will be rewarded, but they will certainly all be in high-level positions. According to the anonymous source, WorldCom is facing potential massive flight by many upper executives who don’t want to deal with the stress of working for a bankrupt company. Others are considering leaving due to the difficulties connected with consolidated office space, the source says.

“[The bonus program] would seem to indicate that they’re having a problem with… a lot of key people leaving,” says Davenport & Co. LLC analyst F. Drake Johnstone. “If too many key people leave, it could spell the end of the company.”

On the other hand, for former WorldCom employees, who are still waiting for the rest of their severance pay, as well as for shareholders of the company, who lost everything when the company filed for Chapter 11, paying tens of thousands more to the guys at the top probably doesn’t seem like the best way for WorldCom to be spending the little money it has.

WorldCom should also consider compensating people further down in the organization for a change, Lee says. “Would I expect it? No. Do I wish that they would recognize their achievements more? Yeah. The company wouldn’t be there without them.”

— Eugénie Larson, Reporter, Light Reading
www.lightreading.com
Page 1 / 2   >   >>
MP_UK 12/4/2012 | 9:30:15 PM
re: WorldCom Bonuses Brew Controversy
I got talking to a girl in a bar a few weeks ago who, it transpired, works for WorldCom as a project manager. "Things must be prety bad there right now." said I (stating the bloody obvious.) The response did shock me though, apparently getting ANY purchase signed off at the moment is so difficult that the presence of toilet paper in the office wash rooms cannot be relied upon, consequently the female staff have resorted to taking their own.

And now they're talking about bonuses?!! When *exactly* do this lot intend to stop taking the piss?
billy_fold 12/4/2012 | 9:30:15 PM
re: WorldCom Bonuses Brew Controversy Say Worldcom decided not to pay the bonuses and the top executives decided to leave. Where would they go? Who would hire them?

billy
opticalfodder 12/4/2012 | 9:30:13 PM
re: WorldCom Bonuses Brew Controversy 25% Dec 1st
25% Mar 31st
50% 60 Days after emerging from bankruptcy

Gimme a break. The company is buying an option on these employees. What are the odds these folks will be laid off before the last 50% is paid out? Does WCOM have the cash flow to pay the first or second phase of the bonus - along with all of its other obligations to creditors?

Don't these employees become liabilities (layoff targets?) because of their personal 'bonus due' entry on the balance sheet?

....or do the bonusses allow a reasonable person to infer their employment stability through the 60-day period following emergence from bankruptcy? If the implication is not founded, then are the bonuses possibly fodder for illusory promise? Does WCOM really intend to pay the bonus, or merely to entice 325 of their finest to stay for a lottery-chance at HALF of their bonus?

Time to put your engineer's thinking cap back on and get real skeptical.

How long do you suppose bankruptcy will take?
opticalfodder 12/4/2012 | 9:30:12 PM
re: WorldCom Bonuses Brew Controversy
WilTel ?
360 ?
XO ?
KPNQwest ?
[email protected] ?




sigint 12/4/2012 | 9:30:11 PM
re: WorldCom Bonuses Brew Controversy Article Quote:
GǣThe purpose of the program is to help retain employees in mission-critical positions and to boost employee moral,Gǥ says Hassett.
__________________________________________________

A 'moral boost' would indeed help.
A 'morale boost', espcially the means employed to achieve one, are questionable.

LR, was this a deliberate pun ? :-)
rafaelg 12/4/2012 | 9:30:08 PM
re: WorldCom Bonuses Brew Controversy "According to the anonymous source, WorldCom is facing potential massive flight by many upper executives who donGt want to deal with the stress of working for a bankrupt company. Others are considering leaving due to the difficulties connected with consolidated office space, the source says"
STRESS of working? OFFICE too small? Give me a break! Let all the scumbags find another source of income. If they were so loyal to WC in the good times, why not stick around now?

What is the purpose of the big salaries then?
Fire their A&^!!
geof hollingsworth 12/4/2012 | 9:30:07 PM
re: WorldCom Bonuses Brew Controversy According to the anonymous source, WorldCom is facing potential massive flight by many upper executives who donGt want to deal with the stress of working for a bankrupt company.

Let's see how they like the stress of dealing with the key customer issues at their only other likely source of employment, issues like "should I super-size that for you?", "would you like fries with that?",....
billy_fold 12/4/2012 | 9:30:05 PM
re: WorldCom Bonuses Brew Controversy WilTel ?
360 ?
XO ?
KPNQwest ?
[email protected] ?

Are those companies hiring? Hold me back.

billy
kampar 12/4/2012 | 9:30:02 PM
re: WorldCom Bonuses Brew Controversy Following on from moral vs morale ...

GǣThis is a moot issue,Gǥ she says. GǣWorldCom is taking care of those who were with the company and is trying to incent [sic] others in mission-critical positions to stay with the company.Gǥ

I'm with the remedial group ... why is "incent" a problem in this context apart from seeking to make the spokesperson look below average intelligence? The American Heritage Dictionary has this example:

Incent:Verb:To incentivize: Gǣwould use tax breaks to incent corporations to invest in their futureGǥ: back formation of incentive.

As a follow-on, the Columbia Guide to Standard American English has this description of [sic]...

"Americans pronounce this Latin word (meaning GǣthusGǥ) to rhyme with either sick or seek, and use it mainly to dissociate themselves from errors in a text theyGre quoting........ This use of sic may be defensive, but its overuse is offensive (nor does a following exclamation point help matters); in typographical and other truly minor matters itGs usually better quietly to correct the original."

With apologies for any grammatical/spelling/usage errors in the above!

kampar
bitemewcom 12/4/2012 | 9:30:01 PM
re: WorldCom Bonuses Brew Controversy For all of the employees who went without merit pay increases in 2001, while corporate jets were being leased for $1 per month, for all employees who lost thousands in 401K investments, because they were foolish enough to believe company numbers and invest at least the matching amount in company stock, THIS IS SIMPLY WRONG.

You can rest assured that some of these top 325 employees are the cause of the problems here. While they may not be criminally responsible, like Scotty & Co., they were executives that encouraged a corrupt Mississippi corporate culture that worshiped and rewarded fake, bogus, and inflated sales numbers. This was a once proud company, but it needs to be cleaned out from the top. Roughly 500,000 workers have been laid off in the past two years from telcom and telcom related industries. Are we to believe that we can't attract talented people with top dollar offers if the current crop of inept WorldCom execs are NOT given retention bonuses???????

Sorry about venting. Had to get that off my chest. Hopefully the BK judge will turn the request down.
Page 1 / 2   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE