Court-appointed monitor lays groundwork for future governance of MCI
Tuesday, August 26th 2003, 12:00 am
By: News On 6
The roles of chief executive and chairman at the former WorldCom Inc. will be separated and shareholders will have more say in how the telecommunications company is run, according to a plan laid out Tuesday by the company's court-appointed monitor.
Richard Breeden, a former SEC chairman named last year as the company's watchdog, filed a 150-page report with U.S. District Judge Jed Rakoff detailing his recommendations for turning the scandal-tarnished entity into a model of good governance.
WorldCom, brought down by an $11 billion accounting scandal, is now doing business under the brand name of its MCI long-distance division in an attempt to clean up its image. It is expected to emerge from bankruptcy shortly.
MCI's top executive, Michael Capellas, and the company's directors _ all put in place after the accounting scandal broke last year _ said they unanimously supported Breeden's recommendations.
``We know we have to do even more to regain public trust,'' Capellas said in a statement.
Breeden's 78 recommendations, which cover everything from how directors should be picked to how the company should report its financial results, are to become the basis for a new corporate constitution that can be changed only with shareholder consent.
Breeden wants the board to be fully independent, with the exception of the CEO _ who cannot also serve as chairman or sit on other corporate boards.
He is requiring the Ashburn, Va.-based company to establish an electronic ``town hall'' that will let investors communicate with the board and propose resolutions to be put to shareholders' votes.
``Shareholders will in the future have a much stronger voice in setting limits of behavior,'' Breeden wrote.
Breeden's report adds to the mounting tower of documents that have plumbed WorldCom's ills and misdeeds.
In June, former Attorney General Richard Thornburgh and attorney William McLucas each published reports detailing how former CEO Bernard Ebbers and other top executives enriched themselves and made questionable decisions with the help of intimidated underlings and a compliant board.
The SEC also cited WorldCom's many wrongdoings as it agreed to a $750 million settlement with the company that will be paid as restitution to shareholders.
Breeden played down allegations that arose this summer that MCI has manipulated its routing of long-distance calls to avoid paying access fees to local phone carriers. The complaints have led to a federal investigation.
He said it appears that WorldCom's competitors may be working to destabilize the company, perhaps to keep it from emerging from bankruptcy or to try to force it to submit to a takeover at an ``artificially low price.''