Analysis Of Tyco International Ltd.

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Tyco International Ltd. is a security systems company incorporated in Ireland, with United States operational headquarters in Princeton, New Jersey (Tyco International (US) Inc.). Tyco International is composed of two major business segments, Security Solutions and Fire Protection Prior to July 1992, their net profit was $95 million, the return on sales was 3.1%, and the stock price was $4.30. In July 1992, Dennis Kozlowski was appointed CEO of Operations. Kozlowski knew Tyco from the bottom up, and stated that he was determined to make it the greatest company of the next century. Because of Kozlowski’s success the board rewarded Kozlowski’s performance by increasing his salary to $2.1 million and giving him shares of the company’s…show more content…
Also in 2002, the New York State Bank Department observed large sums of money moving in and out of Tyco’s accounts. What made this finding unusual was that the funds were transferred into Kozlowski’s personal accounts. Kozlowski was caught in the act and was facing jail time and having to pay over $100 million in restitutions and back taxes. Learning that he was about to be indicted for tax evasion, Kozlowski resigned as CEO on June 2, 2002. On June 3, he was arrested, but the scandal had barely begun. In September of that year, Dennis Kozlowski and Mark Swartz, who also had resigned, were indicted on thirty-eight felony counts for allegedly stealing $170 million from Tyco and fraudulently selling an additional $430 million in stock options. Among other allegations, Kozlowski was accused of taking $242 million from a program intended to help Tyco employees buy company stock. Kozlowski was found guilty on twenty-two of twenty-three counts of grand larceny, conspiracy, and falsifying business records, as well as violating business law. The judge ordered both men to pay $134 million to Tyco. Kozlowski was also ordered to pay a $70 million fine. Kozlowski 's jail time was about seven years in a state facility. This situation was harmful to the company, to the government, and to the integrity of the ex-CEO and ex-CFO. It damaged the company 's reputation, resulting in a negative impact on its stock price, performance, and other executives
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