by Chris Elkins
Published: March 30,1998
I always find the WorldCom meetings both educational and entertaining. The most recent one did not disappoint. The meeting didn’t start until 11 a.m. One of my clients wanted to attend to see how a stockholder’s meeting was conducted. I told him to meet me in the lobby at 10:45. After I read the morning’s headlines about the Rainbow/Push Coalition being in town to protest this monumental merger, I called him back. Meet me at 10:15, I said.
It was still fairly quiet when I arrived. I was surprised to see security guards, employees posted at strategic points, and a table of laptops where I had to check in. This was new. I checked in and got my “shareholder” badge which entitled me to a spot in the meeting room. Media were politely escorted to a special room to watch the show on monitors.
This was a specially called meeting to vote on the merger between WorldCom and MCI. To date, this was the largest merger ever proposed. It was truly the case of the minnow swallowing the whale. Before the announcement, people around the country said “World Who?” After network news coverage and national news headlines, WorldCom has become a household name, inspiring awe and respect.
We found a good seat, and watched as the place filled quickly. My client leaned over and said, “We’re here to watch history be made.” The buzz in the room was, “Would HE show up?” We checked our watches and waited for Bernie’s appearance. He strode in, confident and chipper, as usual. Unusually, though, he skipped his Western attire in favor of a Wall Street business suit. He meeted and greeted, shaking hands and slapping backs. This was the Bernie of Mississippi folklore.
Bernie milled about the front of the room with an unlit stogie in his mouth, while his employees handed him paperwork and rigged him for sound. Just before 11:00 struck, HE walked in. I punched my client. “There he is. Time for the fireworks.”
HE was none other than the Rev. Jesse Jackson, head of Rainbow/Push. He was preceded and followed by his entourage. He shook Bernie’s hand. Although the room was packed, they didn’t have any trouble finding a seat. Their row was marked reserved. And, yes, he was a shareholder and entitled to be in that room.
The morning paper announced Jackson’s arrival in Jackson to protest the historic merger. He claimed reduced competition and concentration on the business market would eventually mean higher prices for residential customers. This could lead to exclusion of lower income people in the telecommunications arena. With the advent of the internet, this exclusion translates to limited access to information and services. The recent technological changes in our world make internet access crucial.
Bernie started the meeting, reading from his assigned script. His usual banter during this time was missing. When he asked for a count of the shareholder votes present in person or proxy, I was surprised to hear this figure represented 78.4% of the total outstanding. This vote had certainly created some interest. After an announcement of the proposal, the floor was opened for discussion.
On cue, Rev. Jackson stood and went to the podium.
I’m accustomed to fire and brimstone preachers, but he seemed a bit more sedate than I had seen before. But that may just be the difference between television appearances and seeing this in person. He spoke of real concerns about loss of jobs due to outsourcing. He spoke of increased corporate profits at the expense of worker’s wages. He spoke of the reduced competition and asked if residential wiring would suffer. He noted the lack of blacks on the board for WorldCom and the lack of black representation on Wall Street. He asked for diversification in the corporate arena which would not only help strengthen the fabric of America but would give corporations more insight into their customers’ desires and needs. He spoke of shared growth and shared prosperity.
Somewhere in the middle of that approximate 10 minute speech, I glanced over and noticed the posters of Michael Jordan on the wall, the official spokesperson for WorldCom. Hmm… Rev. Jackson had some good points. I’m just not sure why he was making them there.
George Powell, the director of the Communications Workers of Mississippi, also voiced concerns about the merger. He claimed the mere size of MCI as compared to WorldCom would mean MCI’s performance and direction would rule. He asked shareholders to consider the past performance of WorldCom. His argument was if it wasn’t broke, don’t fix it. The problem is I don’t think that applies in the high-tech world of telecommunications. There, change is the only constant.
Neil Fowler, President of the Mississippi AFL-CIO, opposed the merger, as well. He voiced support for Powell and Jackson.
These few, well-rehearsed dissenters stirred up the rest of us. A few shareholders spoke up to voice support. Faye Gordon of Clinton said she belonged to an investment club. The club had only been in existence for two years. It took them a year to buy WorldCom, and they are glad they did. She supported the merger.
Jackson State University President, Dr. Lyons, shared many of Rev. Jackson’s concerns but supported the merger.
After the discussion, the result was announced. Shareholders approved the merger overwhelmingly. The room broke out in applause.
So, who should corporate America answer to? Rainbow Push used this forum and this high-profile event to highlight their concerns. And they were certainly within their rights to do so. But, as my mother would say, “What does all that have to do with the price of tea in China?” Nothing.
The merger between WorldCom and MCI makes good business sense for many reasons. MCI possesses the fiber optic network that WorldCom needs for continued growth. They also own a critical piece of the internet which would go nicely with WorldCom’s UUNET. And MCI needs WorldCom’s progressive management to get them out of their slump.
Nancy Lottridge Anderson, CFA, is president of New Perspectives Inc. in Clinton. Her e-mail address is NL2invest@aol.com.
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