Ten former board members of WorldCom Inc. have tentatively agreed to pay $54 million, including personal funds, to settle their portion of a class-action lawsuit brought by investors who lost billions when the company collapsed following a massive accounting scandal, according to published reports.
The outside directors have agreed in principle to pay $18 million of their own money, with the remaining $36 million to be paid by the directors’ liability insurers, The Wall Street Journal and The New York Times reported Wednesday on their Web sites.
Some board members would pay more than the others, although the size of each director’s payment has not been determined, the newspapers reported, citing people familiar with the case.
The personal payments were required as part of any deal at the start of negotiations, hoping to make an example of the board members, the Times reported, citing lawyers involved in the settlement.
The agreement is expected to be signed and presented for approval to a U.S. District Court in Manhattan as early as Thursday, the Journal said.
WorldCom, which was based in Clinton, Miss., filed for Chapter 11 bankruptcy protection after admitting that it overstated profits by billions of dollars.
The company left bankruptcy last year, changed its name to MCI and relocated to Ashburn, Va.
WorldCom’s former chief executive, Bernard Ebbers, is scheduled to stand trial this month on criminal charges that he oversaw the $11 billion fraud at the company, the largest corporate fraud in U.S. history.
The settlement includes all but two of WorldCom’s former outside directors: Bert Roberts and Francesco Galesi, who remain defendants in the lawsuit, according to the newspaper.
The 10 settling former outside directors are James C. Allen, Judith Areen, Carl J. Aycock, Max E. Bobbit, Clifford L. Alexander, Stiles A. Kellett Jr., Gordon S. Macklin, John A. Porter, Lawrence C. Tucker and the estate of John W. Sidgmore, who died in December 2003.
The New York State Common Retirement Fund is the lead plaintiff in the suit.
David Neustadt, a spokesman for New York Comptroller Alan Hevesi, said no formal agreement had been completed. He declined further comment.