Meeting minutes indicate that some members of Tyco International Ltd.’s board were aware of controversial pay packages given to the company’s top executives before the board began to disclose them, The New York Times reported Monday.
In addition, a Tyco executive told a Manhattan grand jury that a board member pressured her to change the minutes of a compensation committee meeting to make it look like one of the disputed payment packages hadn’t been approved, the Times said.
Tyco’s board has said previously that it wasn’t aware of the payment packages and loans given to some of its executives, and prosecutors said last week that the board’s directors were misled by corrupt executives.
Exactly what the board knew is currently under investigation; prosecutors have also alleged that some of the company’s directors received payments from management.
Two of the Tyco’s former executives, chief executive L. Dennis Kozlowski and former chief financial officer Mark Swartz, are free on bail after being charged with enterprise corruption and grand larceny for allegedly stealing hundreds of millions from the company.
The company’s former general counsel, Mark Belnick, has been charged with falsifying business records to cover up $14 million in improper loans.
An internal Tyco investigation has also accused Messrs. Swartz, Kozlowski and Belnick of giving themselves and others millions of dollars in unapproved loans and bonuses.
Minutes for a Feb. 21 meeting of the board’s compensation committee, provided to the Times by lawyers involved in the investigation, listed loans given to top executives, including $14 million to Belnick, $18.8 million to Messrs. Kozlowski and $7 million to Swartz.
The board didn’t disclose the loans, which it now describes as improper, or take any action against the executives until early June, the Times said.
In a statement given to the Times Sunday night, the company said: “In early February, the audit committee began a review of all transactions involving senior management. While Mr. Kozlowski claimed to welcome this heightened board oversight, he at no time disclosed the unauthorized benefits that he had lavished on himself and senior management in the proceeding years.”
The minutes also show that the committee authorized Belnick’s compensation agreement for $10.6 million plus taxes, worth about $20 million, the Times said.
The Times also reported that Tyco’s vice president for human resources, Patricia Prue, told a grand jury and Tyco’s lawyers that one board member, Joshua Berman, unsuccessfully pressured her to change the minutes to show that Mr. Belnick’s package wasn’t approved.
When reached by the Times, Mr. Berman denied the allegation. “That is simply not true,” he said. “She is misconstruing my attempt, on behalf of the governance committee, in early May to get the compensation committee to reconsider the retention agreement with Mark Belnick that it had approved of in February.”
Ms. Prue, who has been given immunity from prosecution in the case, herself received a forgiven loan; when reached by the Times, her lawyer, David Spears, declined to comment on her behalf.
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