WCG Shareholders Fume at Bonuses
TULSA (AP) -- Williams Communications Group shareholders, whose more than $2 billion in equity was erased in the company's bankruptcy, are angry that executives' stock losses were softened by bonuses.
On Jan. 18, the Tulsa-based broadband wholesaler agreed to forgive $13 million in top executives' outstanding loans. The loans, made with company shares as collateral, were used to buy more company stock. Shareholders have called the bonuses a "free lunch," and several have filed complaints with the Oklahoma Department of Securities. The department on Friday launched an investigation into WCG's spinoff from Williams Cos. and related financial transactions.
A committee of more than 4,000 shareholders have hired an attorney to fight for their interests in U.S. Bankruptcy Court for the Southern District of New York, where the company filed Chapter 11 on April 22. H. Brian Thompson, chairman of the company's compensation committee, said the company felt it had to offer the bonuses to keep executives from taking positions with other companies. "Some of our folks were being recruited heavily," Thompson said, adding that recruiting companies were offering loan forgiveness. "They're first-class people."
Under a Williams Cos. stock option program inherited by Williams Communications after the April 2001 spinoff, executives could borrow up to 80 percent of the value of their stock to buy more shares. By the time of the Jan. 18 compensation committee meeting when the loan forgiveness plan was approved, the outstanding executive loans had exceeded the value of the collateral shares. Under "the executive retention bonus plan," 20 percent of executives' loans are forgiven each year for five years. The plan is guaranteed even if the company files for bankruptcy, according to the company's annual report. The five executives singled out for the retention bonuses and their outstanding loan balances as of Dec. 31 were:
* Chairman, Chief Executive and President Howard Janzen, $5.6 million.
* Chief Financial Officer Scott Schubert, $4 million.
* Co-chief Operating Officer Frank Semple, $2 million.
* Senior Vice President of Human Resources Gerald Carson, $1.2 million.
* Director of Corporate Development James Dutton, $238,478.
Co-chief Operating Officer John Bumgarner Jr. has more outstanding loans than any other executive, with $6.9 million outstanding, but he is not included in the retention bonuses because he is retiring later this year, company officials said.
WorldCom to cut 100 Tulsa workers
TULSA (AP) -- Telecommunications giant WorldCom is letting go about 100 of its workers in Tulsa as part of previously announced cuts. The Tulsa employees who lost their jobs Wednesday worked in corporate positions, in MCI wholesale and in customer service, said spokeswoman Mary Catherine Ratts.
The Clinton, Miss.-based company announced on April 3 that it would lay off 3,700 people, or about 4 percent of its 75,000-member work force. "There will be no more layoffs in the foreseeable future" for the roughly 3,000 WorldCom employees in Tulsa, Ratts said.
The telecom slump has resulted in other layoffs in Tulsa. Williams Communications Group, which filed for bankruptcy last month, laid off 800 people in March and 400 workers last year.
Stock barometers closed mixed
NEW YORK (AP) -- Technology stocks slid again Thursday, their 10th drop in the last 12 sessions, on Wall Street's growing conviction that battered high-tech firms will be the last to recover from recession. The Dow industrials managed a moderate gain, enough to secure their first three-day advance in nearly two months. …