The encyclopedia · People & Management · Financial decision · 2005
Tyco's CEO spent $600M on art, yachts and a $6,000 shower curtain — with shareholder money
Tyco CEO Dennis Kozlowski looted the company of $600M+ for personal luxury: a $30M apartment, a $6,000 shower curtain, a $2M birthday party. Convicted in 2005.
Tyco International · 2005-06
What happened
Dennis Kozlowski, CEO of Tyco International from 1992 to 2002, transformed the industrial conglomerate through aggressive acquisitions, growing its revenue from $3 billion to $36 billion. But behind the growth, Kozlowski and CFO Mark Swartz were looting the company: unauthorized bonuses, forgiven loans and personal expenses charged to Tyco.
The extravagance became legendary: a $30 million New York apartment, a $6,000 shower curtain, a $15,000 dog umbrella stand, a $2 million birthday party for Kozlowski's wife on a private island, and a $1 million contribution to a college that Kozlowski then deducted from his taxes as a charitable donation.
Kozlowski and Swartz were convicted in 2005 of grand larceny, securities fraud and other charges, and sentenced to 8-25 years in prison. The case became a symbol of corporate greed in the post-Enron era and illustrated how a CEO with unchecked authority and a compliant board can treat a public company as a personal bank account.
Why it happened
- Kozlowski looted $600M+ from Tyco through unauthorized bonuses, forgiven loans and personal expenses.
- The board failed to oversee executive compensation and spending.
- The extravagance ($6K shower curtain, $2M birthday party) became a symbol of corporate greed.
- Kozlowski was convicted and sentenced to 8-25 years.
The lesson
A CEO with unchecked authority and a compliant board treats the company as a personal bank. The $6K shower curtain was evidence, not the crime. Oversight is the only defense.
Aftermath
Kozlowski was paroled in 2013. Tyco was restructured and later split into three companies. The case, alongside Enron and WorldCom, prompted the Sarbanes-Oxley Act's provisions on executive accountability and board oversight.
Sources
spotted an error? The club wants to know.
More like this
Enron hid debt in hundreds of shell companies to look profitable — then imploded
Visa bet its future on AI — then cut 2,600 of the engineers who build it
Bridgewater's 'radical transparency' made everyone rate everyone — and turnover hit 30%
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.