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Cashing in on the MCI-World Com Deal
The word is out about the sweet deal that executives of MCI Communications Corp. have arranged for themselves if the proposed merger between MCI and WorldCom Corp. goes forward.
A new report, issued by “United for a Fair Economy,” a Boston-based research group, highlights how well MCI’s top executives will fare, even if workers, communities and shareholders lose jobs and dollars. Whether or not the merger is successfully completed, MCI executives will enjoy a package of immediately vested stock options, stock awards, retention bonuses, and severance pay if they decide to leave the company.
MCI executives already are very generously paid, the study showed, with pay packages of chairman Bert Roberts and other top company officials coming in at as much as 272 times the pay of MCI technicians.
But the picture for MCI employees, stockholders and consumers is much bleaker. MCI already has announced some 1,500 job cuts and has filed financial reports indicating that perhaps as many as 4,000 jobs could be lost, the report noted. And because MCI employees have no union representation, severance packages for average workers are meager.
MCI shareholders are being forced to gamble that the price of WorldCom stock will remain artificially high, if they are to retain the value they had in MCI stock before the merger. But according to the UFE report, “the deal has a lot of ifs that might affect it: regulators may squash the deal or may set conditions on its approval which lower the merger’s value; a large number of MCI shareholders could decide to take cash for their stock as soon as the merger goes through, sending the stock price down; or the merger may fall flat, failing to generate the revenues needed to justify the merger’s high price tag.”
The business plan filed by MCI and WorldCom demonstrates the merged company’s intent to focus on business customers, despite public statements of WorldCom officials. An analysis by CWA found that the savings promised by MCI and WorldCom “can only be realized by a shift in business focus, away from the high costs of marketing, provisioning, billing and providing customer service to a mass market.”
Not only does this shift mean a cut in service to residential customers, but a loss of jobs as well. The $5.3 billion reduction in investment in local phone service means a loss of some 75,000 job opportunities by the year 2002, “jobs that will be cut or will never be created because of MCI’s retreat from serving residential customers and lower investment in both local and long distance facilities,” CWA has pointed out.
Meanwhile, CWA has taken its case against the proposed MCI/WorldCom merger to public service commissions in seven states to date, which can hold hearings to determine whether or not this $38 billion merger — the largest in U.S. history — is in the public interest. This action follows CWA’s filings with the Federal Communications Commission and materials provided to the U.S. Justice Department for that agency’s review of possible antitrust violations. The seven states are New York, California, Virginia, Florida, Colorado, Montana and Pennsylvania.
A new report, issued by “United for a Fair Economy,” a Boston-based research group, highlights how well MCI’s top executives will fare, even if workers, communities and shareholders lose jobs and dollars. Whether or not the merger is successfully completed, MCI executives will enjoy a package of immediately vested stock options, stock awards, retention bonuses, and severance pay if they decide to leave the company.
MCI executives already are very generously paid, the study showed, with pay packages of chairman Bert Roberts and other top company officials coming in at as much as 272 times the pay of MCI technicians.
But the picture for MCI employees, stockholders and consumers is much bleaker. MCI already has announced some 1,500 job cuts and has filed financial reports indicating that perhaps as many as 4,000 jobs could be lost, the report noted. And because MCI employees have no union representation, severance packages for average workers are meager.
MCI shareholders are being forced to gamble that the price of WorldCom stock will remain artificially high, if they are to retain the value they had in MCI stock before the merger. But according to the UFE report, “the deal has a lot of ifs that might affect it: regulators may squash the deal or may set conditions on its approval which lower the merger’s value; a large number of MCI shareholders could decide to take cash for their stock as soon as the merger goes through, sending the stock price down; or the merger may fall flat, failing to generate the revenues needed to justify the merger’s high price tag.”
The business plan filed by MCI and WorldCom demonstrates the merged company’s intent to focus on business customers, despite public statements of WorldCom officials. An analysis by CWA found that the savings promised by MCI and WorldCom “can only be realized by a shift in business focus, away from the high costs of marketing, provisioning, billing and providing customer service to a mass market.”
Not only does this shift mean a cut in service to residential customers, but a loss of jobs as well. The $5.3 billion reduction in investment in local phone service means a loss of some 75,000 job opportunities by the year 2002, “jobs that will be cut or will never be created because of MCI’s retreat from serving residential customers and lower investment in both local and long distance facilities,” CWA has pointed out.
Meanwhile, CWA has taken its case against the proposed MCI/WorldCom merger to public service commissions in seven states to date, which can hold hearings to determine whether or not this $38 billion merger — the largest in U.S. history — is in the public interest. This action follows CWA’s filings with the Federal Communications Commission and materials provided to the U.S. Justice Department for that agency’s review of possible antitrust violations. The seven states are New York, California, Virginia, Florida, Colorado, Montana and Pennsylvania.