Sidgmore Says He’s Stepping Down
WorldCom Inc. Chief Executive John W. Sidgmore said Tuesday that he would step down as soon as a permanent replacement can be found to lead the telecommunications provider.
“I have concluded that having moved WorldCom through the initial phase of the bankruptcy process, now is the appropriate time for the company to initiate a search for a long-term CEO,” said Sidgmore, who replaced company founder and former CEO Bernard J. Ebbers in April.
WorldCom, the nation’s No. 2 long-distance carrier, filed for Chapter 11 bankruptcy protection July 21 after it reported $3.9 billion in bogus accounting. That figure has been revised to $7.2 billion. The former telecom giant laid off 17,000 workers in June.
Sidgmore said he intended to return to his former position of vice chairman, and the Clinton, Miss.-based company said it “remains on track to restructure and emerge from Chapter 11 protection in mid-2003.”
The announcement followed a meeting of WorldCom’s board of directors to discuss a board member’s use of a company plane and whether it was tied to a generous severance given to Ebbers.
The board also considered rescinding Ebbers’ severance package, according to a report on the Wall Street Journal’s Web site Tuesday.
Ebbers’ pay package allowed him to pay back a $408-million loan over five years--at an ultra-low interest rate--starting in 2003 and paid him $1.5 million a year in severance. A reversal of those terms could allow creditors to seize Ebbers’ assets, the Journal said
Jay L. Westbrook, a professor at the University of Texas School of Law and a member of the National Bankruptcy Conference, said the board might not be in control of what happens with Ebbers’ agreement because courts and creditors have a lot of say in what happens with a company’s finances when it seeks bankruptcy protection.
“In a bankruptcy situation there’s a tendency for the board of directors to become dramatically less relevant,” Westbrook said.
At the board meeting, a lawyer for director Stiles A. Kellett Jr. said his client asked the board for an opportunity to respond to a report by a court-appointed monitor of WorldCom that questioned his client’s use of a corporate jet.
“The board asked him to respond on Oct. 3 and we expect him to make that date, but others said he can have more time if he wanted it,” Stuart Pierson said.
Pierson would not discuss the contents of the report by court monitor Richard Breeden, a former Securities and Exchange Commission chairman. But the Journal said it criticized Kellett’s use of a company jet for $1 a month, plus operating costs.
