WorldCom -- soon to change its name to MCI -- received its blueprint for emerging from Chapter 11 today, and, boy, is it a doozy. The plan from court-appointed corporate monitor Richard Breeden contains no less than 78 "recommendations" designed to keep the company from repeating the past abuses under Bernie Ebbers that led to the most massive accounting fraud in history.
Here are the highlights:
- A separation of the chairman and CEO positions.
- No stock option grants for at least five years; any thereafter must be expensed.
- Dividends initially targeted at 25% of net income.
- At least one new director to be elected each year.
- Ten-year term limits for all directors except CEO.
- All directors except CEO must be independent.
- Independent auditors must be rotated every 10 years.
- $15 million cap on total executive compensation per individual; board is free to set the cap lower.
- These governance standards can only be changed with prior shareholder consent.
"As CEO, Ebbers was allowed nearly imperial reign over the affairs of the Company, without the board of directors exercising any apparent restraint on his actions, even though he did not appear to possess the experience or training to be remotely qualified for his position," said Breeden. "One cannot say that the checks and balances against excessive power within the old WorldCom didn't work adequately. Rather, the sad fact is that there were no checks and balances."
Breeden seems pleased with current CEO Michael Capellas and the rest of the management team, saying "there is a deep commitment" to eradicating the harmful practices of the past.
That's probably small compensation for Verizon Communications
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