The Tyco International board member who was a chief proponent of a plan to replace those Tyco board members who were in office when the conglomerate’s chairman came under investigation for allegedly looting the company has resigned.
Lord Michael Ashcroft said yesterday that he felt obligated to follow his plan by being the first to resign.
“I have been a vocal and persistent advocate of the wholesale replacement of the current board as the preferred option,” he wrote in a letter to Tyco’s new chairman and chief executive officer, Ed Breen. “Consistent with that lead, I should set the example by being the first to stand down.”
Ashcroft’s resignation followed a board vote Friday to scrap a plan to retain, for continuity’s sake, two members of the board that served with L. Dennis Kozlowski, the former Tyco chairman and CEO who now is under state criminal and federal securities charges.
Instead, Breen will choose two directors to stay as nonvoting consultants. Ashcroft, who served on the board 18 years, was mentioned as one of those considered, but he told Breen he would not be interested.
In a letter to Ashcroft, Breen said he will miss his “wise counsel and leadership,” but said the resignation “speeds the transition that we both believe is in the interests of Tyco and its shareholders.”
Shares of Tyco fell $1.83, or 11 percent, to close at $14.85 yesterday on the New York Stock Exchange.
The manufacturing conglomerate, based in Bermuda with U.S. offices in Exeter, has been under fire from shareholders and regulators over charges of improper payments to top executives.
Kozlowski resigned in June before he was indicted on charges of evading New York sales taxes.
In September, he and former chief financial officer Mark Swartz were indicted on charges of enterprise corruption and grand larceny. They are accused of stealing $600 million from the company. Both have pleaded not guilty.
Kozlowski also has been charged by the Securities and Exchange Commission with taking $242 million in loans from a program meant to help Tyco employees buy company shares.
Former corporate counsel Mark Belnick also has pleaded not guilty to charges that he falsified business records to cover up $14 million in improper loans.
Several other directors previously resigned.
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