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Former Directors Agree To Settle Class Actions

Each director is required to pay at least the amount he or she received in compensation from WorldCom during the period covered by the lawsuit. Hevesi said another party would cover the bankrupt director's compensation repayment.

In announcing the agreement, Hevesi rejected arguments that forcing directors to pay out of their own pockets would deter people from serving on boards in the future. Generally, companies or insurers cover any litigation costs directors incur as a result of their official duties.

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Judge Says MCI Broke Pay Rule (The Washington Post, Nov 25, 2004)
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Hevesi said instead that the ruling would help directors perform better in the future.

"The job of directors is to be a fiduciary on behalf of shareholders, to demand documents, to ask tough questions of management," he said. "We believe this settlement will empower directors to do this."

Asked if the settlement could have a chilling effect on would-be board members, Hevesi said, "I believe it will have a chilling effect on any prospective board member whose motivation is not to do their job, who sees serving on a board as a social club."

Hevesi, who is sole trustee of New York's $120 billion public pension fund, is the court-appointed lead plaintiff in the WorldCom shareholder class-action suit.

The 10 former directors who settled were James C. Allen, Judith C. Areen, Carl J. Aycock, Max E. Bobbitt Jr., Clifford L. Alexander Jr., Stiles A. Kellett Jr., Gordon S. Macklin, John A. Porter, Lawrence C. Tucker and the estate of John W. Sidgmore.

Two other former WorldCom outside directors, Bert C. Roberts Jr. and Francesco Galesi, did not join the settlement. Attorneys for Roberts and Galesi declined to comment.

All of the former directors who agreed to settle either declined to comment or did not return calls. Attorneys for the directors also declined to comment publicly. Peter Lucht, a spokesman for WorldCom, now called MCI Inc., also declined to discuss the settlement.

The agreement was formally submitted Friday to U.S. District Judge Denise L. Cote, who is overseeing the WorldCom class-action suit. But approval of the settlement is not expected to come for several months.


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