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.
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.
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.