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.
It's nothing less than legalized robbery.
.....when the company was called Enron. And the bonuses were awarded BEFORE the bankrupcy was filed.
Remember that you are unique, just like everybody else.
Hopefully this will help them retain important members of their sales and service teams
One can always hope, can't they???
Take the cheese to sickbay, the doctor should see it as soon as possible - B'Elanna Torres, "Learning Curve"
that those key people aren't the ones responsible for buying the $5k shower curtains for their $12 million NYC apartment.
... eh, who cares. they'd need to have like $250 million to waste before the price of my T1 through them comes down any. $25 million is a drop in the bucket.
$25 million tho
non-dark-fibre-lighting-bastards
Run the company into the ground, then line up for you bonus.
$25 million / 325 key employees = $76,923 per key employee.
Wow.
I don't see huge amounts of money being given to individuals who royally fuck their finances and claim "accounding errors" for huge debts. That's fraud, my friend. If WorldCom were a person, they'd be doing time. They should be disbanded with all speed. And if not, then businesses are liable for less than a human. Therefore, if a human is more responsible for their acts, then a human should therefore be also offered more protection under the law against such entities with such limited liability and unlimited lifespan. My $.02.
In SOVIET RUSSIA... erm...NSA AMERICA, the Internet logs onto YOU!
Which, of course, means that $1M will be split among the 325 employees, with the remaining $24M going to the executives for the brilliant idea of giving out bonuses to retain good employees.
I know this isn't a political decision but a legal one, but this sort of thing still pisses me off. Let someone buy the remains of the company, and if they want, pay for their own "recovery team" out of their own pockets. I don't get mad when my taxes go to good causes like science or welfare or public services, but I see no reason to bankroll sleazy and incompetent executives.
Of course, this may not be what's happening--I don't really understand bankrupcy law.
I called them the other day and this was all I heard.
tcd004
Works out to about 60 or 70 Large per "sales and service [employee]." This is BONUS dough, on top of regular salary.
Just where would these people rush off to in the current abysmal telecom job market if they didn't get the bribe money?????
Golden parachute.
Qu'on me donne six lignes écrites de la main du plus honnête homme, j'y trouverai de quoi le faire pendre.
After filing for bankruptcy, the company admitted finding another $3.8 billion in accounting errors....
So that's where that other 3.8 billion went! And I thought for sure it got lost when they moved last time. It's nice to see that turn up; I was going to call the moving company and complain....
moto411.com
Just last week we were complaining that CEOs are getting paid to much and now slashdot is saying that it's a good thing that they get to give out $25 million worth of bonuses after filing Chapter 11? Like some other posters have already said, we know who's going to get the big bucks out of this bonus, the same executives that drove the company into the ground in the first place.
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.
When a company goes into bankruptcy, key employees who are capable of getting a job somewhere else, usually do.
This mass exodus of employees would massively decrease the value of Worldcom, which appears likely to emerge from bankruptcy.
Giving the employees bonuses that are contingent on remaining with the company is the best way to ensure that this exodus doesn't happen.
The judge's job is to maximize the value of Worldcom, thus making sure that Worldcom's creditors get as much money as possible.
SBC, in addition to being a creditor, is also a competitor. They had an interest in decreasing Worldcom's competitiveness, so they opposed the bonuses. The Judge (and tellingly, most of Worldcom's creditors) saw through this and supported the bonuses.
They'd be forced to liquidate the company and split the proceeds equally with all the employees that got screwed over.
I don't think the employees would want that...it would come to something like -1*10^4 dollars per employee.
I think they should split the company up and take the resulting debt out of the personal assets of the company officers, and then put those offices in jail.
While they're at it, they should jail the execs at fax.com too for operating illegally just so they can stretch their paychecks out as far as possible and then declare bankruptcy and walk.
moto411.com
You forgot part 2:
2. Pray for a miriacle
was up to no good at Worldcom...
From excellent karma to terible karma with a single +5 funny post...
The poor key employees will soon be out of work, so they will need some cash to live off when looking for a new company to run into the ground... (IMHO)
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."
Hopefully this will help them retain important members of their sales and service teams.
Oh, it definitly will! Just as soon as all the executives get thier "demotions" for putting thier company into bankruptcy. You know, the demotions that will put the CEOs and Vice Presidents into lowly salesmen and and service positions... that'll show em.
"Your superior intellect is no match for our puny weapons!"
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.
Is checking out who the bonus' are going to.
Not necessarily the feet to the pavement types in Sales/Service. Actually Upper level executives with little to do with either function if the Wall Street Journal Article is right. Hardly essential to the proper functioning of a telecom company.
Lobbyists, lawyers, lots of geeks(console/line/net design varieties) maybe. UUNET's sales core in not a bad choice either (but probably won't see a penny). Not the stuffed shirts who are obviously not the peak of their supposedly hard working profession.
Looks like a kickback from the $800/hr Restructuring rep for his outrageous salary.
Next Question: How is this kickback to lucky Execs from the restructuring 'third party' any less slimy than former boardmember Kellett's giving Bernie the Great those $400 million 'loans' and plush parachute?
The more things change the more they stay the same
pr0ct0r
----
the $25Mil is for the "Sales and service" teams, the "employees" not the Pigs at the top. You need to provide an incentive to good workers to keep rowing while the ship is sinking.
judging from the comments here, people don't seem to be getting this.
these *aren't* the people who committed the fraud. those people are gone. these are people who have come in afterwards and are trying to save the company. these are people who more than likely could easily go somewhere else and get more money. they're trying to give them incentive to stay and do the work that needs done. if you think the damage done to investors and employees is bad now, just see how bad they'd be screwed if the company completely liquidated.
hot foreign sheep.
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.
So let me make sure I have this clear...
This is to guarantee that the bankruptcy doesn't interfere with them calling to ask me to "please switch your long distance service to our bankrupt company" during dinner, while I'm in the shower, or in the middle of having sex.
With all that going for it, who could possibly criticize the bonus plan...
-- Terry
- 10 Ugly People for MCI Neighborhood commercials
- 1 WorldCom Guy to ride around office on mini-scooter
- 1 Michael Jordan to continue MCI 5-cent Sunday commercials with Donald Duck
- 10 UUNet people to help spammers contribute to Usenet
- 303 Telemarketers
Without these key positions, how could WorldCom possibly go on as a going concern?!my blog
Every single dime coming into or leaving Worldcom has to be approved by the Bankruptcy Court. Good ol' Chapter 11.
> I don't see huge amounts of money being given to
> individuals who royally fuck their finances and
> claim "accounding errors" for huge debts. That's
> fraud, my friend. If WorldCom were a person,
> they'd be doing time.
You have no idea who the bonuses are being paid to and whether they had anything to do with the past Fraud so don't assume because a company was previusly run by crooks the people left are the same.
The board members responsible are already currently enjoying the hospitality of the FBI... probably with a view to getting some juicy info on Bernie Ebbers himself.
> They should be disbanded with all speed. And if
> not, then businesses are liable for less than a
> human.
Please... there are 60,000 people left working for WorldCom. All normal people with families, homes and lives they don't want turned upside down. Do you really want to see all those lives ruined because some greedy &*%£ higher up decided to commit fraud and run a company into the ground for their own benefit.
The bankruptcy protection process is designed to weed out the unprofitable parts of a business, re-organise the employees to support the profitable bits thereby protecting the jobs of those who stay and maximizing the return for the previous creditor, which you hope is the best result for all.
> Therefore, if a human is more responsible
> for their acts, then a human should therefore
> be also offered more protection under the law
> against such entities with such limited
> liability and unlimited lifespan. My $.02.
Now... this I do agree with. Compare some European countries where governments will pay healthy redundancy money or have very strict workers councils that mean you can only make employees redundant when absolutely necessary.. against the situation in the US where you can be made redundant on some execs whim at a moments notice. That's not good for the poor US employees.
That said, Europe doesn't have a bankruptcy protection process for companies like the US. If you ruin your company in Europe, the bits get sold to the highest bidder and everyone loses their job. Look at poor KPNQwest.
[Serious response to what may or may not have been intended as a funny comment].
Bonuses like this are standard practice when an organization files under chapter 11. Enron was definitely not the first time it happened.
HOWEVER, it is interesting to note that many aspects of Enron's retention strategy were modified. Many of the bonuses were reduced during negotiations with their creditors, and the proposed contract for Enron's CEO during the reorganization was rejected by the Judge overseeing the reorganization.
BTW, bankruptcy judges are empowered to (and do) reverse bonus awards made by companies in the weeks leading up to bankruptcy. [I think they can go back up to one year but IANAL].
First Slashdot say Worldcom bad, then Worldcom good, then Worldcom bad! Frankenstein's head hurt! Slashdot BAD!!!
Just because you can mod me down, doesn't mean you're right. Shoes for industry!
If these executives destroyed the company, why are they being asked to stay?
--- "We've always been at war with Eastasia."
"You got us into this mess, you get us out!"
The company does well, the bosses get bonuses.
The company does poorly, the bosses get bonuses.
The company -files for bankruptcy- the bosses get
even bigger bonuses..
Why do they even call it a bonus?
They should fire the incompetent leadership (no severance package) and use the $25 million
to hire people who knows how to run a company without becoming greedy.
Chapter 11 means that all the people they owe money to can't ask for it. Therefore they are paying this cash from that.
Taxes don't come into it.
An Eye for an Eye will make the whole world blind - Gandhi
5->10 is a 100% increase, 10->5 is a 50% reduction, 50% on 5 is 7.5.
Are you actually a geek or do you really have a liberal arts degree ?
An Eye for an Eye will make the whole world blind - Gandhi
but what about the shareholders? are they just going to cancel the stock (Like williams communication did) ?
Thanks to file sharing, I purchase more CDs
Thanks to the RIAA, I buy them used...
This time they let a judge ok over spending.
I don't suffer from insanity, I enjoy every minute of it.
WorldCom will use the money for incentives to retain 325 employees, mostly sales and service people in its MCI and network and products services units.
That comes to around 76K per person. It seems like they might could spread that a bit thinner, and keep some more people, especially the ones at and below Manager level. But How much do you want to bet that every penny of that is going to VP's and Directors?
-- -- Warning. Do not stare directly at the sun.
K-Mart won a similar request of the courts. However, to K-Mart this did not include average worker, but executive management level only.
What I interpreted that to mean was that they were fleecing the pockets of the upper management before they totally rolled under rather than paying the hard-working grunts that make $$$ for the company. That was my take when I read that comment.
this shows up as a 1.7 billion dollar capital expenditure for "Snacks".
"1. Pay millions to executives
;)
2. ????
3. PROFIT!!!"
2. Rob, cheat, lie, steal, defraud, forge, beguile, deceive, delude, misguide, misinform, misinstruct, mislead, distort, extort, exaggerate, misstate, befool, dupe, fool, gull, con, fudge, short, double-cross, betray, sell-out, spoof, bluff, two-time, bamboozle, hoodwink...
The list goes on and on
-- "Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
I wonder if any of those Key Employees getting the bonuses were in the last edition of Playboy...
SmartBox
Please clarify. Are the bonuses paid to the bankruptcy judges also reduced?
I'll see your senator, and I'll raise you two judges.
Hopefully this will help them retain important members of their sales and service teams.
Yea, they're going to need it. Especially after hiking their rates across the board as an emotional retaliation and blame shift of their troubles to customers "not paying their fair share" according to this Worldcom executive memo.
Hmm... shakey company (understatement), bankruptcy status with a high probability of failure, support people and engineers laid off, sales people too busy on monster.com to answer concerned customer calls, and they hike rates 10% across the board?
We gave Worldcom our response and cancelled the two remaining T1's with them, switching them to Sprint (who gave us, gasp, an even greater discount).
Still, there is fear that by discharging billions of debt in these creative bankruptcies, the real loser will be companies that don't cheat and play by the rules...
*scoove*
"...you don't HAVE to answer the phone..."
What if it's the hospital calling to tell you one of your kids was hit by a bus?
You only have the luxury of not answering the phone when it rings if you have no personal life.
-- Terry
Actually, it is far more likely that those upper managers would surround themselves with clueless flunkies and go out of their way to drive away all the competent geeks they have. They would rather have nice yes men to stroke their egos rather than real professionals that might make a stand for best practices or even might might make the managers think they aren't all knowing.
I've been there already. Perhaps some day YOU will figure it out.
A Pirate and a Puritan look the same on a balance sheet.
hmmm... the math works out to the five JDS executives getting an average bonus of $147,180,000 each. That's HUGE even in Canadian dollars!
So even though your ratio of 14 is correct for the ratio of compensation of 5 JDS executives vs. 120 non JDS executives, the more appropriate ratio is the one executive to one executive ratio.
And that works out to the "average" JDS executive getting 342 times as much as the "average" non-JDS executive.