< Comfort Inn's nightmare | Main | My concierge health care experience >
October 26, 2007
Free the Koz
Dan Ackman provides this cogent WSJ ($) op-ed that calls for the reversal of the convictions of former Tyco International executives Dennis Kozlowski and Mark Swartz:
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 oversized. 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. [. . .]. . . There is no question that Kozlowski was paid according to the incentive compensation plans that were duly approved by the Tyco board in 1994 and again in 1997. The plans rewarded the CEO and CFO with bonuses based on improvements in company earnings, cash flow and earnings per share. Excessive? That's an understatement. But though the record-keeping was careless, nothing was secret: The contract and the payments were all on the books.
In short, Kozlowski and Swartz were convicted of being greedy, which, the last time I looked, is still not a crime. As Larry Ribstein notes:
Kozlowski and Swartz are headed to Riker’s Island, where they’ll mingle with people who did stuff that seems more obviously bad. And they may get 30-year sentences. I wonder what they would have gotten for a first offense selling heroin to schoolkids. . .[T]he shareholder suits are still pending. These suits aren’t ideal (lots of money to lawyers) but they can sweep in all the people involved, including the directors who approved the wrongful payments. Unless, of course, the shareholders contracted to indemnify them against liability, in which case we’re back to wondering whether this is wrong.
What was done to Kozlowski and Swartz is quite similar to the equally vacuous prosecution of Conrad Black. But this was even worse.
Posted by Tom at October 26, 2007 12:05 AM
Comments
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)