The late 1990's and first part of the millennium showed corporate governance in America at its lowest ebb. Imperial CEOs ran their companies like personal fiefdoms, and board of directors were supine, taking care of their companies about as well as Britney Spears took care of her kids. And the poster child of it all, former Tyco International Ltd. (NYSE: TYC) CEO Dennis Kozlowski, he of the $6,000 shower curtain and vodka-spitting penis of David, is in prison.
But as Dan Ackman pointed out (subscription required) in The Wall Street Journal yesterday, he may not really belong there: "Kozlowski wasn't convicted for overspending, nor for defrauding investors -- the most common charges leveled against corrupt CEOs. He was convicted instead of grand larceny, that is, of stealing his bonuses, which were certainly over-sized. But even if you believe the worst about Kozlowski and his co-defendant former Tyco CFO Mark Swartz, they were paid according to a contract, and that is not stealing."
Kozlowski appears to have been jailed as a scapegoat for an era that most of us wish hadn't happened. Kozlowski's lawyers are attempting to have the conviction overturned (subscription required) on appeal, and that looks like the right thing to do. If the board had done something even remotely close to its job, none of this would have happened. Kozlowski should not be punished for receiving a completely outrageous pay package, and behaving in the manner that CEOs were expected to behave in at the time.











Reader Comments (Page 1 of 1)
10-26-2007 @ 1:31PM
louis russo said...
I worked at Tycom when this happened and you don't want to know how many people lost their jobs and retirement funds and I doubt he's in the financial shape that some of my former fellow employee's
Happy to be out of corporate Amercica different rules for the suits and the grunts.
LR Chas. SC.
10-26-2007 @ 3:54PM
Anthony P. De Bellis said...
I own stock in Tyco since the 1970s and due to the corrupt way that Kozlowski and his partner raped the company, my holdings took a considerable loose. If I were rich it wouldn’t matter, but I’m a working slug. Kozlowski got some of what he deserved, I think he should serve his full sentence, and someone should find out where he has his hidden stash of funds and confiscate it so he has to work for a living like the rest of us after he serves his 20 something years.
10-27-2007 @ 8:10PM
Stewart Raphael said...
Anthony, how is it possible that you can say "I owned stock in Tyco since the 1970...and my holdings took considerable loose." That is impossible. That company back then was probably about a 10 million dollar company and Kozlowski, during his tenure, grew it to $40 billion, not to mention the frequent stock splits. Your math doesn’t figure. Also, Dennis needs to be released from jail. How can a CEO who created unprecedented wealth for employees, shareholders, and investors be put in jail over what amounts to a pay dispute. Clearly justice will be rendered as his appeal progresses and he will be freed.
10-27-2007 @ 8:40PM
Stewart Raphael said...
Louis, there was significant net employee gain and growth over the history of Tyco. In seeing Tyco's business model of growth by acquisition, it is not uncommon for non-performing units to be eliminated or to reduce redundant employee functions while the merged units pair down to achieve cost efficiencies. I make no representation about your particular circumstance, but I understand that your situation, as negative as it is, happens at many of the many of the largest organizations, as a response to the competitive environment. The larger issue here relative to competition is US jobs going overseas and a displaced workforce not having alternative options and consequently experiencing an industry restructuring.
11-09-2007 @ 1:20PM
Bill said...
While Dennis Kozlowski is certainly culpable, he is still being made a scapegoat. He could not have gotten away with this if other people at Tyco had been checking, and living up to a moral code as well. To put all of the blame one one person, and let several others go untainted is not justice.
11-14-2007 @ 4:57PM
Chris Headrick said...
That Mr. Kozlowski was found guilty is more a testament of the times than the crimes (or lack thereof). If you look at where the company was when he took the helm and where it is today... the man should have been paid MORE!
11-17-2007 @ 8:07AM
MAK said...
Dennis was convicted of grand larceny - taking his own money due him? If this was part of his contract and signed off by the Board, how is this grand larceny? His salary was a reflection of how the company was doing - the company was obviously flourishing in order for him to have been paid that large amount. If the company wasn't doing well and Kozlowski made less - would we be complaining about his salary? NO - his salary would have been less. Tyco is still alive and doing well - all the B.S. about the stock plumeting due to Koz is stupid - it is due to society gossiping and tainting everybody's view - if we were all speaking the truth, Dennis would be free from innocense and Tyco's stock would have not become so volitile. It's our own fault - STOP BLAMING KOZLOWSKI!