[CASE INCIDENT (THE RISE AND FALL OF DENNIS

KOZLOWSKI)] October 16, 2010

The Dennis Kozlowski story could be titled, “The Good, the Bad, and the Ugly.” The
good: As CEO of Tyco International, Kozlowski oversaw the growth of a corporate
giant. At its peak, Tyco was gobbling up 200 companies a year. Under his
leadership, the value of Tyco increased 70-fold. In 2001, Kozlowski proclaimed his
desire to be remembered as the world’s greatest executive.

The bad: Things turned sour when Kozlowski and his former chief financial
officer were accused of running a criminal enterprise within Tyco. The two were
charged with stealing $170 million directly from the company and pocketing an
additional $430 million through manipulated sales of stock.

The ugly: Kozlowski’s actions have almost destroyed the company where for
27 years. In 2002 alone, the value of the company’s stock dropped $90 billion!

To understand Kozlowski’s behavior, we should look at the events that

shaped his personality. He spent his early years in humble circumstances. He grew
up in the 1950s and 1960s in Newark, New Jersey. He said he was the son of a
Newark cop turned police detective. It was only after he was indicted did it come out
that his father was never a police in Newark or anywhere else. However, his mother
did work for the Newark Police Department as a school closing guard. His father, in
actuality, was a where-dealer who was practiced deceiver and effective persuader.
He had a strong personality but, for the most part, kept his misdeeds to little white
lies.

Friends remember Dennis as an easygoing kid who did well in school without
trying very hard. He was elected “class politician” by his high school graduating class
in 1964. He went on to Seton Hall, paying his way through college by paying guitar in
a band. He served in Vietnam, held a few accounting jobs, and eventually joined
Tyco in 1975.

Over the course of the 1980s, Kozlowski’s happy-go-lucky demeanor

disappeared. As he climbed the ladder at Tyco, he became a corporate tough guy,
both respected and feared. He eventually became CEO in 1992 and oversaw the
rapid expansion of the company.

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KOZLOWSKI)] October 16, 2010

Meanwhile, Kozlowski learned to live big. He had $17 million apartment in

New York, a $30 million mansion in Florida and a $15 million yacht. He spent $20
million on art for his luxury homes. He took extravagance to the extreme-for
instance, spending $6000 on shower curtain! The more he made, the more he spent-
and the more he allegedly stole. Although his total compensation was $170 million in
1999, it wasn’t enough. He manipulated the company’s employee relocation fund
and Key Employee Loan Program (the latter created to help executives pay taxes
due on stock options) to take hundreds of million in interest-free funds. In 2001, for
instance, he gave wife $1.5 million to start a restaurant, spent $2.1 million on a
birthday party in the Greek Islands for his wife, and gave away $43 million in
corporate funds to make philanthropic contributions in his own name.

A former Harvard professor suggest Kozlowski was undone by rampant sense

of entitlement: “By entitlement I mean an aspect of a narcissistic personality who
come to believe that he and the institution are one” and thus “that he can take what
he wants when he wants it.

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KOZLOWSKI)] October 16, 2010

QUESTIONS

1. How did Kozlowski past shape his personality?

2. Does this case contradict the view that personality is largely genetically
derived? Explain.
3. What does this case say about corporate ethics?
4. In the movie, “Wall Street,” the Michael Douglas chanter says “Greed is
good.” Is this true? How does haply to Kozlowski?
5. “Kozlowski just did what anybody would do if they had the chance. The people
at fault in this story are Tyco Board of Directors for not controlling their CEO.”
Do you agree or disagree? Discuss.

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KOZLOWSKI)] October 16, 2010

1. How did Kozlowski past shape his personality?

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 [CASE INCIDENT (THE RISE AND FALL OF DENNIS
KOZLOWSKI)] October 16, 2010

2. Does this case contradict the view that personality is largely genetically
derived? Explain.

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 [CASE INCIDENT (THE RISE AND FALL OF DENNIS
KOZLOWSKI)] October 16, 2010

3. What does this case say about corporate ethics?

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 [CASE INCIDENT (THE RISE AND FALL OF DENNIS
KOZLOWSKI)] October 16, 2010

4. In the movie, “Wall Street,” the Michael Douglas chanter says “Greed is
good.” Is this true? How does haply to Kozlowski?

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 [CASE INCIDENT (THE RISE AND FALL OF DENNIS
KOZLOWSKI)] October 16, 2010

5. “Kozlowski just did what anybody would do if they had the chance. The people
at fault in this story are Tyco Board of Directors for not controlling their CEO.”
Do you agree or disagree? Discuss.

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KOZLOWSKI)] October 16, 2010

CONCLUSTION