Free Taking Down the Lion: The Rise and Fall of Tyco's Dennis Kozlowski by Catherine S. Neal Page A

company based on his business judgment, which they applauded, encouraged, and rewarded. Meeting minutes were filled with resolutions empowering Kozlowski to act based on his judgment.Then when things got rough, when there were civil lawsuits and the Directors faced possible criminal charges, they attacked Kozlowski’s judgment—the same judgment he had exercised for years. He was accused of concealing information that was recorded on the books and records of the company in the ordinary course of business, and audited by PricewaterhouseCoopers. I’ve seen volumes of records. They exist. I found no evidence that anything was concealed or that anyone even attempted to conceal any information about compensation, bonuses, loans, or anything else.
There were many conflicts of interest and unreported related-party transactions that involved and financially benefited Directors.
    Robert Morgenthau was asked by the Wall Street Journal at the end of his thirty-five-year tenure as Manhattan DA whether he should have indicted Tyco Directors along with Kozlowski and Swartz. Morgenthau responded “probably.” 8
    Jury foreman Isaac Rosenthal said that over the years, he thought about the case and wondered why the Directors weren’t charged along with Kozlowski and Swartz. It seemed to Rosenthal that the Directors may also be culpable, and it appeared to him that Kozlowski and Swartz were scapegoats—the Directors pointed the finger at them when things got rough. When considering why the executives were charged and not the Directors, Rosenthal assumed it was politically advantageous for the DA to prosecute the top dogs. “I saved Morgenthau’s job,” he said. 9
    Former Director Joshua Berman, who was a member of the Nominating and Governance Committee that spearheaded the investigation of executive compensation, disputed his own compensation from Tyco when he was no longer a member of the Board. Reuters reported in 2007 that Berman filed an action against Tyco in which he claimed that “the company owed him at least $870,000 for consulting work he did during a five-month period following Kozlowski’s resignation.” Berman asserted in the complaint that he “agreed to leave his job at Kramer Levin Naftalis & Frankel LLP in 2000 to work at Tyco full-time at Kozlowski’s request.” Between July and November of 2002, he worked on “legacy matters” that had taken place during Kozlowski’s tenure as CEO and that were then under investigation, according to the complaint. 10 It’s an interesting revelation because prosecutors very clearly told jurors that Tyco Directors were barely part-timers who had access to nothing other than what Kozlowski and Swartz filtered to them. The stories are incongruous.
    Dennis Kozlowski said of the Board’s issues with him in 2002: “It was a dispute over compensation. It should have been resolved through negotiations or a civil action, if necessary.” He also shared, “My biggest mistake was not being more proactive and insistent about having a better Board. If I could go back and do anything differently, I would have worked with a different Board. I had no tolerance for managers who didn’t perform, but I tolerated bad Directors for a lot of years.”Kozlowski said of the Tyco Directors with whom he worked for many years, “It was the ultimate betrayal.” 11
    3. Kozlowski’s Personal Failings
    Kozlowski’s weaknesses, his personal failings, and some bad decisions also contributed to the problems at Tyco.
Kozlowski’s unwillingness to pay attention to details, and the delegation of responsibility for the details in his life left him vulnerable.
Kozlowski lost perspective. He was caught up in the amount of money Tyco was earning, in the size of his own compensation, and the possibilities of the bull market of the 1990s. In a 2009 Fortune magazine article, contributor David Kaplan opined that Kozlowski was “ . . . the embodiment of an earlier epoch of corporate greed and personal