The various investigation of WorldCom that have been published to date have examined how personnel at the company committed what appears to be the largest accounting fraud in history. Those investigations also outline the governance practices that were followed during the tenure of former WorldCom CEO Bernard J. Ebbers. Among other things, the board of directors of the company consistently ceded power over the direction of the company to Ebbers.
As CEO, Ebbers was allowed nearly imperial reign over the affairs of the company, without the board of directors exercising any apparent restraint on his actions, even though he did not apparent to possess the experience or training to be remotely qualified for his position. One cannot say that the checks and balances against excessive power within the old WorldCom did not work adequately. Rather, the sad fact is that there were no checks and balances.
As with some other U.S. companies, the compensation practices of WorldCom allowed lavish compensation, far beyond any rational calculation of value added by senior executive such as Ebberrs, CFO Scott Sullivan, or COO Ron Beaumont .
Compensation abuse at WorldCom is most vividly symbolized by more than $400 millon in “loans” from shareholders to Ebbers that were put in place
Richard C. Breeden is former chairman of the Securities and Exchange Commission, and chairman of Richard C. Breeden & Co., which provides strategic consulting on governance and financial issues. Mr. Breeden has served on numerous private and public boards and commissions in the U.S. and Europe. Initially by two directors who longtime associates of Ebbers. The loans, which are unlikely ever to be repaid (other than the value of some collateral seized and sold by the company), represented a nearly incredible action by a board that supposedly existed to represent shareholders, but in fact spent much of its time devising ways to enrich Ebbers
initially by two directors who were longtime associates of Ebbers. The loans, which are unlikely ever to be repaid (other than the value of some collateral seized and sold by the company), represented a nearly incredible action by a board that supposedly existed to represent shareholders, but in fact spent much of its time devising ways to enrich Ebbers.