Ten former outside directors of WorldCom have agreed to a preliminary settlement of the WorldCom securities class action claims against them. The settlement is for $54 million. Notably, $18 million of that sum will be paid personally by the directors (with the rest covered by insurance). According to an article in the Washington Post, the $18 million figure represents more than 20% of the directors’ combined net worth.
Quote of note: “‘This is a watershed development by imposing personal liability on corporate directors beyond the scope of insurance coverage,’ said WorldCom’s court-appointed corporate monitor, Richard C. Breeden, former chairman of the Securities and Exchange Commission. ‘It will send a shudder through boardrooms across America and has the potential to change the rules of the game.'”