Case Analysis & DiscussionBernie Ebbers, the CEO of WorldCom, a major telecommunications company, was having personal financial troubles. Ebbers pledged a large stake of his WorldCom stock as security for some personal loans. As the price of WorldCom stock sank, Ebbers bankers threatened to sell his stocks in order to protect their loans. To avoid having his stock sold, Ebbers asked the board of directors of WorldCom to loan him nearly $400million of corporate assets at 2.5% interest to pay off his bankers. The board agreed to lend him the money.Comment on the decision of the board of directors in this situations.

The CEO of WorldCom, Bernie Ebbers should not pledged a large stake of his WorldCom stock as security for his personal loans. If he is incapable of paying off his loans, he shouldnt be a CEO since a CEO material person will not take such actions. Borrowing the money from WorldCom should not be an option. Even if he did, the boards should not approve it. The board should have just sacked Ebbers. Therefore, in this case, the board is the main problem of this issue. The characteristics of the board members will define the corporation, as they are responsible in making decisions which will benefits the corporation. When one of the board members is unethical, it can bribe and motivate other employees to follow his/her actions. Thus, the actions can be hide easily by board members from other shareholders of the company leading and telling them the fake truths. The top management of WorldCom had relationships that fostered unethical behavior for the organization. The practices of authorizing wealthy loans at shamelessly low rates, and using company funds to pay off the CEOs personal debts were not necessarily illegal, but unethical. WorldCom failed because of the bad business decisions of its executives to manipulate earnings with improper accounting entries.

Other point of view: The reason why the board agreed to lend him money may be because of preventing Ebbers to sell his stock and depressing the share price. Hence, it is a way that help shareholders by keeping the shares from being sold. However, the boards actions that prevent Ebbers to sell his stock which will depress the share price is already unethical, since the board only focus on their own benefits but not other stakeholders.

Note: Ebbers serve a 25 years of prison as of now and the loan went uncollected.