Tyco Spent Millions On Exec Perks, Records SaySep 17, 2002 | USA Today
Tyco International provided top employees with hundreds of millions of dollars in loans, bonuses, homes and other expenses that in some cases were not disclosed to investors, court documents filed as part of a lawsuit say.
The expenses, many approved by indicted former CEO Dennis Kozlowski, ranged from a $2.5 million Trump Tower apartment in Manhattan to six-figure bonuses and awards of Tyco stock, the documents say.
Some of the spending is scheduled to be reported this morning to the Securities and Exchange Commission, a person familiar with the filing said Monday.
The SEC filing will summarize findings of an internal legal review of Tyco finances and accounting.
Tyco declined to discuss the report in advance of its scheduled filing early today.
A person familiar with drafts of the report confirmed it would include some of the information contained in attachments to the federal lawsuit Tyco lodged against Kozlowski last week.
The attachments, more than 100 pages of exhibits provide a glimpse at the spending and corporate governance practices that prompted last week's indictment of Kozlowski and former CFO Mark Swartz on New York state charges of corruption, conspiracy and grand larceny. Mark Belnick, Tyco's former chief corporate counsel, was charged separately with falsifying business records.
Kozlowski approved forgiving nearly $96 million in special relocation loans for himself and 41 other Tyco employees in September 2000, the documents say. The total includes taxes the group otherwise would have been required to pay.
Employees' names other than Kozlowski's were edited out of the records, which were marked ''confidential grand jury material.''
The documents say Kozlowski and Swartz approved more than $67 million in late 2000 bonuses and stock grants to two dozen employees who worked on Tyco's sale of ADT Automotive. Those employees' names were edited out.
Other attachments to the lawsuit identify beneficiaries of Tyco largesse, including some awards not disclosed in company proxy statements.
The documents say Tyco:
Spent nearly $14 million to buy homes for 12 employees as of January 2001, including two New Hampshire properties for Kozlowski costing more than $6 million.
Spent more than $2.5 million in July 2001 on a Trump Tower apartment for J. Brad McGee, a Tyco executive vice president.
Gave Barbara Jacques, a vice president of corporate services, a $1 million accrued bonus in 1999.
Awarded seven Tyco senior executives other than Kozlowski and Swartz a total of more than $23 million in bonuses last year.