LITIGATION

WORLDCOM EX-DIRECTORS WILL PAY TO SETTLE SUIT

Former outside directors at WorldCom Inc. agreed to pay $54 million to settle part of a shareholder lawsuit over accounting fraud that led to the largest bankruptcy case in American history. A former chairman of Worldcom’s audit committee, Max Bobbitt, said in an interview that a group of directors had reached a settlement with the investors. A lawyer for shareholders, Sean Coffey, said part of the settlement will be paid by the directors themselves.

“We’ve settled with the directors for $54 million, two-thirds insurance, one-third out of their pockets,” said Mr. Coffey, a lawyer for the New York Common Retirement Fund, which is the lead plaintiff in the lawsuit.

Citigroup Inc. agreed in May to pay $2.6 billion to resolve claims filed by WorldCom investors. That settlement is the second-largest in a securities fraud case. The settlements don’t resolve claims against more than a dozen other securities firms in the case.

David Neustadt, a spokesman for New York Comptroller Alan Hevesi, who serves as a trustee for the New York Common Retirement Fund, said he couldn’t confirm that there was a settlement with outside directors. “We announce deals when they’re complete, we don’t announce deals bit by bit,” Mr. Neustadt said. The fund is the lead plaintiff in the WorldCom shareholder lawsuits.

The Wall Street Journal previously reported the settlement.

An MCI spokesman, Peter Lucht, declined to comment. The Ashburn, Va.-based long distance company was renamed MCI Inc. after emerging from bankruptcy in April.

In August, Mr. Neustadt said as many as 10 former WorldCom directors agreed “in principle” to settle claims that they participated in financial wrongdoing that led to the company’s collapse.

The directors other than Bobbitt named in the investor lawsuit include James Allen, Judith Areen, Carl Aycock, Clifford Alexander, Stiles Kellett, Gordon Macklin, John Porter and Lawrence Tucker. None of the other directors immediately returned calls seeking comment. A number for Porter couldn’t be immediately located. John Sidgmore, who died last year, was also named in the lawsuits. David Elbaum, a lawyer who represents the former directors, also didn’t respond to a message left at his office.

– Bloomberg News

AIRLINES

US AIRWAYS FLIGHT ATTENDANTS APPROVE PAY CUTS

Flight attendants at bankrupt US Airways approved a new labor contract yesterday that cuts their pay by nearly 10%, leaving only one union that has refused to accept the cost cuts the carrier says are needed to avoid liquidation. The Association of Flight Attendants, which represents more than 5,000 workers at the airline, approved the contract with 64% of the vote, according to a union spokeswoman. The new contract cuts pay immediately by 8.4 to 9%, with pay raises of 1% to 2% beginning in 2007 and extending through 2011.Tougher work rules will also be implemented. The airline estimates that the new contract will allow it to save $94 million a year, part of nearly $1 billion the airline is trying to squeeze from its 28,000 workers.

– Bloomberg News

PEOPLE

COCA-COLA’S NORTH AMERICAN MARKETING CHIEF RESIGNS

Coca-Cola Company, the world’s largest soft-drink maker, said Javier Benito, its chief marketing officer in North America, resigned after sales slumped in America. He will be replaced by John Hackett, named senior vice president for marketing, and Melody Justice, named president of its American retail division, a company spokesman, Ben Deutsch, said. The changes were announced in employee memos.

– Bloomberg News