Bernie's Bad Idea
from the would-you-loan-this-man-money? dept
A very interesting look at how WorldCom bailed out their CEO, Bernie Ebbers to the tune of nearly half a billion dollars. It seems that Ebbers gambled on his own stock, buying a ton of it on margin when it was at it’s highest. After the stock collapsed, the margin call came, and WorldCom decided that it was “in the shareholders’ best interests” not to have a CEO who was personally bankrupt. So, they “lent” him $430 million at 2.5% annual interest (which is, of course, significantly lower than what anyone could get elsewhere). In other words, he gambled big, and lost big – but it didn’t matter because he just dipped into his troubled companies cash coffers to prop himself up. Seems like quite a deal.
