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Sidgmore Steps Down As WorldCom CEO; Ebbers May Lose Golden Parachute


Chief executive says he plans to resume role as vice chairman.

By John Kreiser
InformationWeek
September 10, 2002 12:00 AM

John Sidgmore's tenure as CEO of WorldCom didn't last long. Sidgmore said Tuesday that he'll step down as soon as a permanent replacement can be found to lead the bankrupt telecommunications provider.

"I've concluded that having moved WorldCom through the initial phase of the bankruptcy process, now is the appropriate time for the company to initiate a search for a long-term CEO," Sidgmore, who replaced company founder and former CEO Bernie Ebbers in April, said in a statement.

WorldCom, the nation's second-largest long-distance carrier, filed for Chapter 11 bankruptcy protection on July 21 after reporting $3.8 billion in bogus accounting. That figure has since been revised to $7.1 billion. WorldCom laid off 17,000 workers in June.

Sidgmore said he intends to return to his former position of vice chairman, and the company said it "remains on track to restructure and emerge from Chapter 11 protection in mid-2003."

"I think he has doubts as to whether he can credibly lead the company," Gartner analyst Steve Koppman said after reports surfaced that Sidgmore would step down. "But then, I don't think anybody can credibly lead the company. ... It's kind of like deciding who should be chancellor of Germany in May 1945." Koppman believes the next CEO of WorldCom will likely preside over its dismantling, as the company is sold off in two or three pieces.

Sidgmore's announcement followed a meeting of WorldCom's board of directors to discuss a board member's use of a company plane and whether it was tied to a generous severance given to Ebbers. The board also reportedly considered rescinding Ebbers' severance package.

Ebbers, who left the company five months ago amid the biggest bankruptcy scandal in U.S. history, received a sweet repayment deal on a $408 million loan made to him by the company, a $1.5 million annual payment, and lifetime use of a company jet, according to a report in The Wall Street Journal.

But now, the paper says, a court-appointed investigator is examining whether the loan might have been approved by an executive who got use of a company jet in return. Proof of such an agreement could give federal investigators a good starting place to begin prosecuting Ebbers.

As a consequence, WorldCom's board could revise the terms of the loan, requiring immediate payment. In the event he is unable to pay, creditors could seize Ebbers' assets, which include a 500,000-acre ranch, a yacht-building business, and major timber holdings.


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