Dear Mr. Pitt:
I am writing to you regarding the Securities and Exchange Commission (SEC) investigationof WorldCom. I commend you for taking action that bars WorldCom from paying its officers,directors or employees more than $100,000 in severance. It appears that many top executives viewedWorldCom as their personal piggy bank, and that practice must be stopped.
While these recent actions hopefully shut the barn door, a lot of questionable bonuses andpayments were made earlier by WorldCom. For example, Bernard J. Ebbers, the chief executive ofWorldCom, got a $10 million bonus, as did Scott Sullivan, the chief financial officer.
I fear that this is just the tip of the iceberg of bonuses and other compensation that wasprovided to top executives at WorldCom. For example, it is already reported that in one program-- the WorldCom retention program - 558 top executives received roughly $237 million in bonusestwo years ago. We have seen that Enron Corp. provided approximately $2 billion in bonuses andcompensation to high executives for the last two to three years prior to bankruptcy. It seems thatmany corporations viewed the 1990s as a time to put management’s interests before the concerns ofshareholders and employees.
To provide a better picture of WorldCom, I would ask that you please provide me the dollarfigure, name and title of every employee, director or officer of WorldCom who received a bonus (inany form) with a value of greater than $100,000 (at the time it was awarded) for any year sinceJan. 1, 1999.
Please inform me of what authority the SEC has to force executives to disgorge bonuses orother payments provided in previous years - particularly executives who did know or should haveknown about illegal/improper activities.
Thank you for your time and assistance. If you have any questions, please contact Mr. DeanZerbe of my staff at 224-5315. Given Senate consideration of legislation on the accounting industry,I would ask that you please respond within 14 days.
Cordially yours,
Charles E. Grassley Ranking Member
July 2, 2002 Mr. John Sidgmore CEO WorldCom, Inc.
22001 Loudon County Parkway Ashburn, VA 20147
Dear Mr. Sidgmore:
WorldCom, Inc. (WorldCom) has over 4,000 employees in Iowa, and I am concerned abouttheir future as well as the future of the many small shareholders who invested in WorldCom. Itappears from news reports that WorldCom will need additional financial resources as it seeks to goforward.
To that end, I am concerned about the amount in bonuses and other compensation that seniorWorldCom executives received while the company was reportedly engaged in improper activities.For example, within the last two years Bernard J. Ebbers, the chief executive of WorldCom, got a$10 million bonus, as did Scott Sullivan, the chief financial officer.
I fear that this is just the tip of the iceberg of bonuses and other compensation that wasprovided to top executives at WorldCom. For example, it is already reported that in one program-- the WorldCom retention program - 558 top executives received roughly $237 million in bonusestwo years ago. We have seen that Enron Corp. provided approximately $2 billion in bonuses andcompensation to high executives for the last two to three years prior to bankruptcy.
To provide a more complete picture of WorldCom and senior management’s actions, I wouldask that you please provide me the dollar figure, name and title of every employee, director or officerof WorldCom who received a bonus (in any form) with a value of greater than $100,000 (at the timeit was awarded) for any year since Jan. 1, 1999. Please inform me of what actions thatWorldCom has taken, or is considering taking, to have bonuses returned (or to not provide a bonus)to the company to improve its financial situation.
Thank you for your time and assistance. If you have any questions, please contact Mr. DeanZerbe of my staff at 224-5315. Given Senate consideration of legislation on the accounting industry,I would ask that you please respond within 14 days.
Cordially yours,
Charles E. Grassley Ranking Member
