Continue reading Dennis Kozlowski's appeal rejected by Supreme Court

Dennis Kozlowski's appeal rejected by Supreme Court originally appeared on BloggingStocks on Mon, 08 Jun 2009 14:30:00 EST. Please see our terms for use of feeds.

This post is part of AOL Money & Finance's Best & Worst in Money 2008 feature.

In the decades to come, business school students will be faced with a plethora of examples from 2008 in studying how not to do something.

Picking one business decision as the worst is sort of like choosing a favorite child. Each was wretchedly awful in their own unique way. They each deserve their own wing in the hall of shame, but there only can be one winner. In my mind, the company that consistently shot itself in the foot with a heretofore unknown precision was American International Group Inc. (NYSE: AIG).

Of course, AIG is now owned by the U.S. government, largely thanks to two bailouts. The government ripped up the first $85 billion deal after determining that the New York-based company needed an even bigger life preserver of $150 billion. Even then, it managed to post a $24.5 billion loss.

What set the standard for corporate hubris, though, were the junkets. There was a fun-in-the-sun getaway to a resort in California, only days after the $85 billion bailout went through. Recently, it was disclosed that another junket was held in Arizona. Though the amount of money involved in the gatherings was piddly, the principle at stake was not. AIG was telling people -- especially members of Congress who approved the bailout -- that nothing had changed when, of course, everything had.

Continue reading Best & Worst in Money 2008: Dumbest business move

Best & Worst in Money 2008: Dumbest business move originally appeared on BloggingStocks on Thu, 04 Dec 2008 10:56:00 EST. Please see our terms for use of feeds.

We recently presented a look at some of the most notorious financial felons of contemporary times.

Since then, news has included the indictment of Mark Cuban for insider trading in a case that is somewhat reminiscent of Martha Stewart's case. According to the SEC, the billionaire entrepreneur asked his broker to sell all his shares of Mamma.com after the company's CEO confidentially told him of an impending stock offering that would dilute the value of all existing shares. By selling before the information became public, Cuban is said to have sidestepped losses of more than $750,000. Cuban insists, though, that no agreement existed to keep the information confidential.

And then there was the indictment in Texas of Vice President Dick Cheney, along with former U.S. Attorney General Alberto Gonzales and others. There seems to be a conflict of interest between the vice president's influence on the federal agency that oversees federal immigration detention centers and his substantial holdings in Vanguard Group, which invests in private prison companies. But does the lame-duck county district attorney, who was a no-show in court, have the authority to bring charges against federal officials with regard to federally run institutions?

Continue reading Financial Felons: Where are they now and is there a next generation coming?

Financial Felons: Where are they now and is there a next generation coming? originally appeared on BloggingStocks on Tue, 25 Nov 2008 14:40:00 EST. Please see our terms for use of feeds.

This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.

In 2005, Dennis Kozlowski was convicted of misappropriating more than $400 million in company funds from Tyco International (NYSE: TYC). He had been Tyco's CEO from 1992 to 2002, during which he oversaw a massive expansion of the company through a series of strategic mergers and acquisitions. But he left the company amid controversy about his extravagant compensation package.

Though found guilty of grand larceny, Kozlowski continues to deny that he committed any crime. He feels that he was unfairly punished for his "embarrassingly big" pay package, as he once put it, as well as his extravagant lifestyle. That lifestyle included such things as $6,000 shower curtains and $15,000 umbrella stands, as well as a $2 million birthday party complete with togas, Jimmy Buffett, a cake with exploding breasts, and a stature of David that peed vodka. Oh, and the party was also "shareholder meeting" so Tyco could help foot the bill. (The home where this party occurred is now for sale for a mere $16.5 million, if you're interested.)

Continue reading Financial Felons: Dennis Kozlowski

Financial Felons: Dennis Kozlowski originally appeared on BloggingStocks on Wed, 19 Nov 2008 10:10:00 EST. Please see our terms for use of feeds.

Former Tyco CEO slashes price on Nantucket estate originally appeared on BloggingStocks on Fri, 31 Oct 2008 14:30:00 EST. Please see our terms for use of feeds.

Free Dennis Kozlowski! Former Tyco chief pursues appeal originally appeared on BloggingStocks on Fri, 05 Sep 2008 10:30:00 EST. Please see our terms for use of feeds.

'American Greed' profiles Tyco's Dennis Kozlowski originally appeared on BloggingStocks on Thu, 20 Mar 2008 14:02:00 EST. Please see our terms for use of feeds.

Tyco is doing just fine without Kozlowski originally appeared on BloggingStocks on Thu, 15 Nov 2007 12:30:00 EST. Please see our terms for use of feeds.

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.

Free Dennis Kozlowski? Sure, why not? originally appeared on BloggingStocks on Fri, 26 Oct 2007 13:02:00 EST. Please see our terms for use of feeds.

Former Tyco (TYC) chief Dennis Kozlowski's divorce gets messy originally appeared on BloggingStocks on Wed, 12 Sep 2007 19:01:00 EST. Please see our terms for use of feeds.

Tyco International Ltd. (NYSE: TYC) has finally settled multiple lawsuits that accused the company of inflating earnings.

It only had to pay $2.98 billion for the privilege. The bad behavior, which overstated Tyco's income by more than $5 billion during the tenure of former Chief Executive Officer L. Dennis Kozlowski, can now be pushed into the past. That will allow the company to go forward with it plan to split into three companies.

Under the plan to break up the company, its healthcare and electronics divisions will become new public companies. Tyco will keep the company's fire, security and engineered products divisions. One of the news companies will be called Tyco Electronics and the other will take on the name Covidien.

Shareholders seem to think that having the company in three pieces is a good idea. The stock price is up about 18% over the last year and trades near a 52-week high at $32.19.

In the last quarter, Tyco's revenue rose 7% to just over $10 billion. Net was off from $895 million in the quarter a year ago to $835 million. Costs of the breakup drove up expenses.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tyco: Free at last originally appeared on BloggingStocks on Tue, 15 May 2007 09:00:00 EST. Please see our terms for use of feeds.

Backlash building against rich executives originally appeared on BloggingStocks on Wed, 28 Mar 2007 15:15:00 EST. Please see our terms for use of feeds.