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 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
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.
was up to no good at Worldcom...
From excellent karma to terible karma with a single +5 funny post...
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.
No, it's coming from investors, who would sue them otherwise for such a misuse of their money.
Contrary to the popular belief, there indeed is no God.
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
[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!
Actually we do - we call it 'administration' where the receivers take over and try to make the company run at a profit. Failing that they try to sell it as a going concern (there is legal protection that says if you buy a running business you can't sack everyone w/o paying their redundancy). Only then is the company wound up.
This happened with KPNQwest. The problem was the whole telecoms market is in depression due to a glut of bandwidth and nobody wanted to buy it whole - I'm not even sure after they gave up and broke it up that all the pieces were sold.
"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?
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
this shows up as a 1.7 billion dollar capital expenditure for "Snacks".
Well, capitalism is a good theory and does work well, but like all systems the flaws are found in the implementation.
First, it does not work well - long term - in industries with large barriers to market entry (national telecom, shipping and distribution, utilities). In these cases, governement regulation is required to either a) define a monopoly and limit pricing or b) prevent the merger of competing entities into a de facto monopoly. Once a monopoly exists, the barriers to entry (money, infrstructure, personnel) can rarely be overcome.
Second, the theory works great when everybody is above board and decisions are made logically - as in an efficient investment market. The late 90s were not an efficient market. The 90s were not a banner time for corporate financial honesty.
While I would generally agree with the "let 'em fail" attitude, the problem is there is no personal accountability. The CEO, CFO, etc. are not left penniless and destitute. The CFPs and investment councellors who recommended the corporations are not penniless and destitute. The losses are, one might say, born by the unwashed masses. Yes, perhaps the masses shouldn't have been investing when they didn't know any better, but everybody in finance and gov't has been harping on the need to invest for your retirement. I don't see them coughing up the dough and saying "oops, I was wrong."
The other problem with national/global capitalism is the size of the companies which fail, and the domino effect if left to take its own course. Prior to the modern era, it was not uncommon for a large, leveraged corporation's failure to cause the collapse of a bank, causing the loss of depositors (sometimes other corporations) savings, causing further collapses. This domino effect, extended to the multi-national firms we're talking about could cause a serious global collapse.
The only way out of this is personal liability. As a former co-worker used to say - you must have "one ass to kick." Meaning, simply, there must be a responsible person for each decision, and they must be liable for that decision. If anything goes wrong - you've got to have someone to pin it on. I'm for requiring the liquidation of officer's and, perhaps, board of director's assets to pay the creditors, and leans put against future earnings (less a stipend amount equal to, say 2087 hours at minimum wage) for the full amount of the debt, payable jointly and separably by the lot. I won't hold my breath for this legislation to pass, though.
Is it just my observation, or are there way too many stupid people in the world?
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.