About the same time he obtained $5 million in relocation loans from Tyco to build the largest single-family home in Portsmouth, former Tyco executive Neil R. Garvey bought a 3,800-square-foot oceanfront beach house here for $2 million.
Less than a year after returning to New Hampshire from New Jersey, Garvey closed on the four-bedroom, 3.5-bath house in Rye that has spectacular views of the Atlantic Ocean and the Isles of Shoals on June 23, 2000. Six months earlier, he paid $3.3 million for the 7.7 acre parcel of land on Shapleigh Island in the Piscataqua River. He tore down the 1795 home on the lot and started construction on the extraordinary 21,000-square-foot home where he, his wife, and two daughters now live.
Garvey and his wife, Helen, purchased a 13-room, 5,000-square-foot Portsmouth home in 1996, a year before Garvey was stationed in New Jersey to be closer to facilities in Morristown. The Garveys kept that first Portsmouth house vacant while they lived in a $1.5 million Mendham, N.J., home that Tyco relocation loans helped purchase. Those loans were repaid.
When the Garveys moved back to New Hampshire in the fall of 1999, they lived in the Portsmouth house they already owned. Despite owning that house, Garvey borrowed a total of $5 million in low-interest and no-interest loans from the company after he moved back to build the second Portsmouth home.
Garvey’s loans were disclosed in a voluminous report Tyco filed last month with the Securities and Exchange Commission as part of an ongoing internal probe into alleged abuse of corporate funds by former Tyco chief executive L. Dennis Kozlowski, and two other top executives, former chief financial officer Mark Swartz, and former general counsel Mark Belnick.
The report mentions Garvey’s loans in a three-sentence paragraph, saying ”Mr. Garvey’s loan exceeded approved program guidelines by $472,703. Mr. Garvey’s entire $5 million loan is outstanding, and the company is seeking repayment of the balance.”
Garvey’s attorney, Jayne Robinson, said this week that all but $500,000 of the loans had been repaid and she said he expects the remaining balance ”to be repaid this week or next. Mr. Garvey never thought there was anything wrong with the loans, but he wants to repay them, even though the terms of the loan do not require it.”
Robinson said the relocation program was well known throughout the company and it was ”offered to Mr. Garvey upon his return to New Hampshire.”
She said the Garveys ”always” wanted a house on the ocean and used their own money to buy the Rye house. However, the June 23, 2000, beach house closing and some of the relocation loans occurred within weeks of each other. Robinson said Garvey borrowed $2.7 million interest free in the summer of 2000, and $300,000 at 6 percent. In April, 2001, he also borrowed an additional $2 million from Tyco at 6 percent. The relocation loans funded the construction of the new Portsmouth house.
Compensation specialists have said such borrowing goes beyond what is reasonable assistance in most US companies and is an example of the excess that prevailed at Tyco during Kozlowski’s tenure.
Garvey, former president of Tycom Ltd., earned a salary and bonuses during this time that were well into the millions. In 1999, according to the company’s proxy statement, he received $2.86 million in salary, stock and bonus. In 2000, he earned $9.13 million, including a $7.2 million cash bonus, and the following year he received a $3 million bonus.
After moving into their Shapleigh Island house, the Garveys put the Rye house on the market. It has been on the market at $3.9 million for more than two months.