1 / 23

Questionable Actions by the Chairman of Tyco International Limited

Questionable Actions by the Chairman of Tyco International Limited. Group 1: Rachel Alexander, Jonathan Crawford, Matt Kambic, You-Chen Lu, and Brittany Snyder. Overview. Introduction and Summary of Situation – Matt Kambic Benefits and Harms – You-Chen Lu Rights Involved – Brittany Snyder

sonya-price
Télécharger la présentation

Questionable Actions by the Chairman of Tyco International Limited

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Questionable Actions by the Chairman of Tyco International Limited Group 1: Rachel Alexander, Jonathan Crawford, Matt Kambic, You-Chen Lu, and Brittany Snyder

  2. Overview • Introduction and Summary of Situation – Matt Kambic • Benefits and Harms – You-Chen Lu • Rights Involved – Brittany Snyder • Economic, Legal, and Ethical Situation – Rachel Alexander • Moral Solution and Conclusion – Jonathan Crawford • Q & A – Group

  3. Company Information for Tyco International Limited • Domestic Manufacturer • Electronics • Fire and Security Technology • Healthcare • Engineered Products and Services • Among market leaders in all industries • Global company

  4. Company Performance History • Prior to July 1992 • Net Profits = $95 million • Return on Sales = 3.1% • Stock Price $4.30 • July 1992 • Hired Dennis Kozlowski as CEO and President of Operations • July 2001 • Net Profits = $5.1 billion • Return on Sales = 13.8% • Share Price = $58.00

  5. Kozlowski’s Rewards • Praised for company performance • Substantially rewarded • $25 million salary • $86 million stocks options sales

  6. First Investigation • SEC launched investigation in late 1999 • Findings • Overstated expected costs of new acquisitions • Made acquisitions appear financially unstable • Results • Technically no laws were broken • Tyco agreed to restate earnings • No fines assessed or penalties imposed

  7. Second Investigation • June 2004 • CEO Dennis Kozlowski and CFO Mark Swartz • Tax Evasion • Improper use of company funds • See Next Slide • Payoffs were paid to directors to cover up • Undisclosed stock sales • $430 million made by Kozlowski and Swartz

  8. Use of Company Funds for Private Purposes • $13.8 million for paintings • $2.5 million for a home in Florida • $9 million for additional property • $5 million for Massachusetts property • $900,000 for Connecticut property • $240,000 jewelry for Mrs. Kozlowski • Many more…

  9. Ethical Question • How wrong were Kozlowski and Swartz? • Totally “Wrong” ? • Somewhat “Wrong”, still did good for company? NOT WRONG AT ALL SOMEWHAT WRONG COMPLETELY WRONG

  10. Benefit to Some • Company’s CEO Dennis Kozlowski, and CFO Mark Swartz • Inside and outside directors who were involved • Company saves on taxes • Company and employees • Customers

  11. Harm to Others • Tyco • Government • Integrity of the company’s CEO and CFO • Company’s reputation • Performance • Stock price • Employees and their families • Executives that were not involved • Stockholders

  12. Rights Exercised • Kozlowski’s right to live lavishly • Board’s right to spend the company’s money as it sees fit • Right to overestimate future costs • Right of the SEC to investigate

  13. Rights Denied • Right of the government to tax its citizens • Rights of the citizens of New York for fair taxes • Rights of the company’s employees and shareholders to fair, honest reporting • Spending of corporate dollars • Acquisitions

  14. Moral Questions • Is it right to make another company appear more unstable that it really is? • Is it right to use corporate money for personal use? • Is it right to bribe board members? • Is it right to have undisclosed sales of stocks?

  15. Economic Outcomes Pre Kozlowski: Stock - $4.30 per share Ten years later: Stock - $58 per share Post Kozlowski: Stock – $16.05 per share

  16. Economic Outcomes • Extravagant purchases helped to boost economy • Purchases took away profit from Tyco International Ltd., its employees, and shareholders

  17. Legal Requirements • No law against overstating future cost • Tyco would restate earnings • June 2004: Tax evasion charges • Personal purchases as companies expense “What is legal, is not always right!”

  18. Ethical Duties • Public Company: Financial Statements – Overstating expenses • Acquisitions • Undisclosed sales of stock • Company funds for personal expenses • Special “bonuses” to keep quiet! • Kozlowski, CEO – Tax Evasion

  19. Kozlowski and Social Responsibility • Kozlowski falls between the Obstructionist and Defensive Approaches

  20. The Court’s Decision: CONVICTED • Fraud against shareholders of over $400 million • 22 counts of grand larceny for unauthorized bonuses totaling over $150 million • Currently serving 8 to 25 years in prison

  21. Moral Solution • Support the Court’s decision • “Superstar” status among CEO’s does not forgive ethical misconduct • Was aware of the ‘fine print’ and knowingly • Cheated • Lied • Broke the law • Not isolated incidents

  22. Conclusion • Matt Kambic - Introduction and History of Company • You-Chen Lu - Benefits and Harms • Brittany Snyder - Rights Exercised / Rights Denied • Rachel Alexander - Economic Outcomes/Legal Requirements/Ethical Duties • Jonathan Crawford - Moral Solution

  23. Q & A

More Related