Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles, Ebbers Pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers bankers threatened to sell his stock in order to protect their loan. To avoid having his stock sold, Ebbers asked the board
Bernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles, Ebbers Pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers’ bankers threatened to sell his stock in order to protect their loan. To avoid having his stock sold, Ebbers asked the board of directors of WorldCom to loan him nearly $400 million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money. Comment on the decision of the board of directors in this situation.
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At the time of this decision, the WorldCom board had come under intense scrutiny. This was the largest loan by a company to its CEO in history. The SEC began an investigation into this loan, and Berni…View the full answer
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