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Ebbers May Lose Severance
Tuesday, September 10, 2002
By Susan Pulliam, Jared Sandberg & Deborah Solomon
The Wall Street Journal

Mr. Beaumont, who reported to Mr. Ebbers, oversaw capital spending for the core WorldCom business until last April, then became COO for the entire company. Investigators want to determine if Mr. Beaumont knew the company was spending far less on capital expenditures than it was telling Wall Street. In 2001, WorldCom told the Street that it spent about $8.7 billion on capital expenditures, while in reality it spent about $5.7 billion. WorldCom disclosed this year that it treated some of its biggest operating costs as capital expenditures.

WSJ
WorldCom Inc.’s board is expected Tuesday to consider whether to undo the severance package of ousted Chief Executive Bernard J. Ebbers, which includes the repayment terms of a low-interest $408 million loan and lifetime retirement pay of $1.5 million a year, according to people familiar with the situation.

Separately, John Sidgmore, who succeeded Mr. Ebbers about four months ago, is expected to present to the board a plan to conduct a search to replace himself as CEO, say people familiar with the matter.

Additionally, federal prosecutors are understood to be focusing on the company’s chief operating officer, Ronald Beaumont, believing he may have information that could help make a case against Mr. Ebbers.

The board’s expected revisiting of Mr. Ebbers’s big severance package Tuesday comes amid questions of whether his loan might originally have been approved by a director who later received use of a corporate jet.

Richard Breeden, a court-appointed monitor of WorldCom and former Securities and Exchange Commission chairman, has investigated the use of a Falcon 20 jet. WorldCom rented it to board member Stiles A. Kellett Jr. for $1 a month, plus certain fees, in 2001. It normally would have cost as much as $1 million annually, said a person familiar with the matter. Use of the plane wasn’t disclosed at the time in regulatory filings, or to some board members, say people familiar with the matter.

Mr. Kellett, as head of the board’s compensation committee, was one of two directors, along with Max E. Bobbitt, who worked out terms of Mr. Ebbers’s departure after the board decided to oust him. The loan deal and a severance package won unanimous board approval. Mr. Breeden is expected to present his report, which is critical of the arrangement, to WorldCom’s board at a meeting this morning.
(More: MSNBC.com News Source)
2002 © Dow Jones & Company, Inc.

Dan