Adelphia Communications Corp. is about to erase the last remaining vestiges of its disgraced founding family with the pending departure of four board members hired under the tenure of former chairman John Rigas.
The four — Mannesmann Dematic Systems managing director Pete Metros, Caithness Corp. president and COO Leslie Gelber, former Fleet Bank New York chairman and CEO Erland Kailbourne and FPL Group Inc. general counsel and secretary Dennis Coyle, all of whom were named to the board under Rigas — have agreed to step down as new independent board members are named.
Adelphia said it has not determined who will replace the four board members, but added that it has hired executive search firm Spencer Stuart to identify potential candidates.
In a statement, Metros, Gelber, Kailbourne and Coyle jointly said the time was right to leave, as Adelphia's operations have been stabilized and a new management team has been recruited.
In a statement, the four directors cited the progress made by the board's Special Committee in investigating the wrongdoings of the past, evidenced by the criminal indictments issued by the U.S. Department of Justice and the pending lawsuits filed by Adelphia against the Rigases and Deloitte & Touche, Adelphia's former auditors. The directors also cited Adelphia's success in obtaining a $1.5 billion debtor-in-possession financing to continue its plant upgrades as influencing their decision.
John Rigas, his sons — former chief financial officer Timothy and former executive vice president of operations Michael — as well as former assistant treasurer Michael Mulcahey and former vice president of finance James Brown were indicted on fraud charges in September. Brown pleaded guilty to three counts of fraud in November, in exchange for his testimony at trial. The Rigases and Mulcahey have pleaded not guilty. A trial is set for January.
Adelphia chairman and CEO Bill Schleyer — hired in March after he left AT&T Broadband, which was acquired by Comcast Corp. in November — had said in the past that he would seek to reconfigure the board. Already he has made two new additions, former Federal Communications Commission commissioner Susan Ness and former Time Warner Inc. executive Philip Lochner.
The board is rounded out by Schleyer, Yale Law School Dean Anthony Kronman and former Renaissance Cable vice chairman Rod Cornelius.
Cornelius's status is also unclear. He was offered the CEO job in September, but that offer was pulled away after Schleyer and former AT&T Broadband executive Ron Cooper (now Adelphia's president and chief operating officer) became available.
In an interview May 28, Schleyer said that Cornelius's past attempt to become CEO has "not been a source of tension."
In that interview, Schleyer had great praise for Adelphia's board of directors, especially the four Rigas-appointees.
"The four incumbent directors have done an unbelievable job of keeping this company together," Schleyer said. "This company would have gone Chapter 7 without them. They stepped in. In my view, it's a model for what a company in trouble's board should do in terms of behavior."
Schleyer added that with the exception of Kailbourne — who served as Adelphia's interim chairman and CEO after John Rigas resigned last May — all of the others had separate full-time jobs, but managed to devote a great deal of time to Adelphia issues.
"They would spend literally their weekends working on this company," Schleyer said. "The fact that they were able to pull this thing together, keep the company intact until new management could come in here is an extraordinary feat. So I have an enormous amount of respect for what they have done."