Slashdot Mirror
WorldCom Wins $25M Bonus Judgement
tekBuddha writes "According to this article at CNN.com WorldCom has won a suit allowing them to pay $25 million in bonuses to certain 'key employees' that are necessary for their re-organization." They hope to be out of bankruptcy protection by mid-2003. Hopefully this will help them retain important members of their sales and service teams.
Run the company into the ground, then line up for you bonus.
It should be noted that according to the article, the $25 million will be used as incentive for 325 key sales and service employees, not executives. So not only is this money not going to the executives, but it only works out to be approximately $75,000 per person. While that's hardly chump change, it seems more like an attempt to stop key employees from jumping ship and causing the company even more turmoil than a corporate pay-off.
Sun Tzu argued that a soverign (or business) required knowledgeable leadership (executives), the blessing of the Heavens and the Earth (the cooperation of the Powers That Be, in this case the court, which it seems they have now) and Justice (doing what's right -- I'd say they've learned their lesson) to overcome adversity and opponents (their creditors.)
I'd say WorldCom is doing a good job of getting back on their feet. 'Tis a good thing. UUNet falling into the hands of say, a Baby Bell like SBC (as FCC Chairman Michael Powell wanted at first) would not be a good thing at all.
"I am root. Bow before me." To this I say, "You are root, and you bear the sins of the world upon your shoulders."
Salespeople often work for very low base wages and count on commissions to make up the difference. When a company tanks like WorldCom did the sales taper off and these workers suddenly find themselves without commissions. No commissions means no rent money. There are legitimate reasons to award bonuses to sales staff. And regardless of what you techs may think, good sales and support teams are critical to the success of a company.
I noticed the other day when I looked at my phone bill, that MCI(Worldcomm) was so gracious to raise the minimum account billing to $10.00 per month, up 50% from the previous $5 per month. Funny thing is, I've NEVER made a long distance call using MCI as a carrier. What a load.
Nope its coming from the banks.
Now you may be asking yourself: why are the banks lining up to give them more money when they have already lost a fortune to them ??
Answer: The "lendors of last resort" ie the banks giving them more money to keep going through bankruptcy protection get first dibs on the assets. Thats right, the banks are hoping to jump the queue on the dibs the assets if it still goes bust (and it will).
Yet another "+4 Insightful" that deserves to be "-1 Has No Clue" None of this is coming from taxpayers. When Enron crashed, the (same?) batch of slashdotters complained about bondholders getting mythical compensation from the government.
The real loss was suffered by stockholders when their stock became worthless, and by employees laid off when the fiction of profit could no longer be sustained. Bond and debt holders now get to stand in line to get whatever is left of value in the company, for instance, by reconstituting the company, issuing new stock in exchange for the bonds and debts. So instead of an IOU, they get stock in the new company, for whatever that is worth.
The theoretical reason for the bonuses is that the company is worth more when enough people are left that know how things are actually set up. These clueful people are the most likely to be able to get jobs at competitors (and taking with them access to good customers), so you need a bonus to keep them from doing so.
The ethical problem, of course, is that the clueful people either were aware or should have been aware of the rampant misstatements of the accounting reality. But hey, if I'm stuck with a Worldcom IOU, I'm more interested in getting my 25 cents on the dollar than in making sure everyone gets what they deserve.
Lesson in life: we rarely get what we deserve. Better make do with what you can.