By David Schepp BBC News Online North America business reporter

A federal judge has characterised the multi-million dollar pay package proposed for WorldCom's newly named chief executive as "grossly excessive" and has questioned the bankrupt company's commitment to reform.

The ailing telecoms firm has proposed paying Michael Capellas, who recently resigned as president at Hewlett-Packard to head WorldCom, as much as $23m (�14.6m).

You cannot ask a person to leave a job at a major company like Hewlett-Packard... and ask them to take a pay cut David Skeel, University of Pennsylvania

In a memorandum, US District Judge Jed Rakoff wrote he was perplexed by the inclusion of some aspects of the compensation package because they had previously been rejected.

"This statement seems most puzzling given that... several material terms of the proposed compensation package have previously been rejected by the corporate monitor as grossly excessive," Judge Rakoff wrote in his ruling.

In a court filing on late on Monday, WorldCom, based in Clinton, Mississippi, proposed paying Mr Capellas $1.5m in annual salary, a signing bonus of $2m, and a guaranteed bonus next year of $1.5m.

Worrying action

Additionally, should WorldCom emerge from bankruptcy, Mr Capellas would be awarded stock worth $18m.

"A compensation package so potentially problematic raises concerns as to whether proposed new management is as committed to reform as the nature of this case requires," Judge Rakoff wrote.

The bankruptcy judge is now playing a very integral role in how the firm is managed Harlan Platt, Northeastern University

In its court filing, WorldCom said it believed Mr Capellas' pay deal was within industry standards for a firm as large and complex as WorldCom.

But the firm continues to pay for the excesses of its past, including mostly those of its founder and former chief executive Bernard Ebbers, who resigned in April.

"That's not going to go away," says David Skeel, professor of law at the University of Pennsylvania.

"That's one of the most worrisome things about Judge Rakoff's order. In effect, what he's saying is 'I still see Bernie Ebbers when I look out there,'" Mr Skeel told BBC News Online.

'Integral role'

WorldCom filed for bankruptcy protection in July and has since disclosed it inflated profits by $9bn over three years.

The firm is one of three large firms that provides long-distance telephone service in the US and supports the internet and is expected to emerge from bankruptcy as a much smaller firm.

WorldCom founder Bernie Ebbers resigned in April

But while in the throws of insolvency, WorldCom's execs have little say in how the company is run, relying on Judge Rakoff and a court-ordered monitor to approve business decisions.

"That is one of the costs of the US bankruptcy system," says Harlan Platt, professor of finance at Northeastern University.

"The bankruptcy judge is now playing a very integral role in how the firm is managed," he says.

Approval

But in scrutinising Mr Capellas' pay package, some say that the judge may have been wrong in lashing out at WorldCom's proposal.

"You cannot ask a person to leave a job at a major company like Hewlett-Packard, which will be here forever, and ask them to take a pay cut to walk into a situation like WorldCom, where their future is somewhat in doubt," Mr Platt says.

Mr Capellas faces huge challenges not only guiding the firm through a distressed period for telecoms but in cleaning up WorldCom's sullied image.

Judge Rakoff has scheduled a joint hearing with the US Bankruptcy Court on Monday to review the proposed compensation package, WorldCom says.

Ultimately, it is believed the pay package will be approved.