NEW YORK (AP) _ Federal judges approved a trimmed-back compensation plan for WorldCom Inc.'s incoming CEO Monday, saying the company appeared headed on the right path after plunging into the largest bankruptcy in U.S. corporate history.
U.S. District Judge Jed Rakoff and U.S. Bankruptcy Judge Arthur Gonzalez approved the plan for new Chief Executive Officer Michael Capellas to get $20 million in cash and equities during the three-year contract.
Rakoff said it will be Capellas' challenge to take the scandal-plagued telecommunications company and ``transform it into the model of what a good company should be.''
WorldCom filed for bankruptcy in July and expects its accounting misstatements to top $9 billion. The company, whose MCI unit is the No. 2 U.S. long-distance company with 20 million customers, rattled the stock market when it was accused of fraud for misleading investors by misstating and hiding expenses.
While praising recent actions of WorldCom's current board, Rakoff told the company he will watch it closely before deciding on a fine _ possibly as high as $9 billion _ stemming from the settlement between the company and the government of a civil suit.
Rakoff praised Capellas and a court-appointed monitor for working out a compensation package that was 23 percent below the pay Capellas would have received under a plan that Rakoff criticized a week earlier.
Capellas could earn an additional $6 million in stock grants if the monitor or board of directors concluded his work was exemplary or significantly exceeded expectations.