Ex-DuPont chairman named to Tyco board

New CEO blocks effort to add more directors

August 07, 2002|By BLOOMBERG NEWS

EXETER, N.H. - Tyco International Ltd. Chief Executive Officer Edward D. Breen Jr., in his second week on the job, blocked yesterday plans to add four seats to the conglomerate's board.

Breen named former DuPont Chairman and CEO John A. Krol to a vacancy on the board and hired Eric M. Pillmore as senior vice president of corporate governance.

Breen will wait until he completes his review of the company's governance before changing the board, Tyco said in a statement.

Tyco, the maker of ADT security systems and scores of other products, had scheduled a Sept. 5 vote on a proposal to increase the board to 15 members.

The news comes as the conglomerate struggles to restore investor confidence shaken by months of questions about its complex accounting and inappropriate rewards to executives and the indictment of its former chief executive on tax evasion charges.

Board called insular

Investors have called for changes on Tyco's board, which some view as insular and needing more independent members.

Tyco said Krol would take the seat of Chief Financial Officer Mark H. Swartz, whose resignation was announced Thursday along with the retirement of General Counsel Irving Gutin.

"Just loading on new directors isn't always the best answer," said Ann Yerger, director of research at the Council of Institutional Investors, which represents 120 U.S. pension funds. "Pruning the dead wood is a lot more difficult. Maybe this is a way for allowing for that."

Pillmore was senior vice president, chief financial officer and secretary of Multilink Technology Corp. and was CFO at General Instrument Corp. when Breen was its CEO.

Pillmore also spent 17 years at General Electric Co. in various finance positions, including working under Jeffrey R. Immelt at GE Plastics. Immelt is now GE's CEO.

Last week, Breen hired Michael Useem of the University of Pennsylvania's Wharton School to help review governance.

Breen replaced CEO L. Dennis Kozlowski who was forced to resign and then was indicted for evading New York state sales taxes in the purchase of valuable paintings. Investigations of Tyco by federal prosecutors and the Securities and Exchange Commission have followed.

Investors also are waiting for the results of an internal investigation into executive actions by lawyer David Boies and his law firm. The findings are expected in mid-August.

Ex-director sued

Tyco has sued former director Frank E. Walsh Jr., saying he hid a $20 million "finder's fee" for the purchase of the company's former finance arm, CIT Group Inc.

The company also sued former General Counsel Mark A. Belnick, saying he received unauthorized compensation.

Shares of Tyco, which is based in Bermuda but run from Exeter, N.H., have dropped 78 percent this year, buffeted by allegations that executives, including Kozlowski, misused funds and hid slowing growth.

Tyco shares rose 17 cents yesterday to close at $12.76 in New York Stock Exchange trading.

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