TYC in the WSJ
Am I reading this right?! Mr. Belnick gets 10.6 million immediately in compensation from TYCO if he commits a felony prior to 10/03?! If true this is one **cked up company! I wouldn't touch this with a ten foot pole. I can only imagine what Kozlowski's contract looks like. Murder 1? 1 billion on the spot.......
Tyco Terminates Its Top Lawyer
After a Dispute With David Boies
By LAURIE P. COHEN and JOHN HECHINGER
Staff Reporters of THE WALL STREET JOURNAL
Tyco International Ltd. dismissed its general counsel, Mark A. Belnick, after a clash with David Boies, an outside lawyer who is leading Tyco's internal investigation into alleged misuse of corporate funds.
People familiar with the matter said the action was taken after Mr. Boies accused Mr. Belnick of receiving $20 million in undisclosed compensation from the company between 1999 and 2001 and of refusing to cooperate with the now-widening internal probe.
Mr. Belnick -- who was escorted from the company's New York offices by a security guard just after being fired -- shot back immediately.
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In a statement, his attorney, Stanley S. Arkin, blamed the dismissal on "entrenched factions of the Tyco board" of directors who were resisting a reform effort by Mr. Belnick in an effort "to protect their undeserved entitlements and prerogatives."
Mr. Arkin called the firing "an opportunistic assault" by Mr. Boies and Tyco director Joshua Berman "to take control of Tyco's ongoing legal business" in the turmoil following the resignation and tax-evasion indictment last week of its former chief executive officer, L. Dennis Kozlowski.
In an interview, Mr. Arkin confirmed that Mr. Belnick received the $20 million from Tyco, but said all of his compensation was properly disclosed.
Tyco's filings with the Securities and Exchange Commission, which require compensation disclosures for a company's five highest-paid officers, don't list the amount. It appears Mr. Belnick may have been among the five highest-paid officers during those years if the $20 million is considered as part of his compensation.
In a statement, Tyco said: "Mr. Belnick is among the persons being investigated. The company lost confidence in Mr. Belnick's willingness and ability to conduct a fair and complete investigation, in part because of his unwillingness to cooperate in the investigation of himself and because of his attempt to control the course of that investigation."
Tyco strongly disputed the comments of Mr. Belnick's lawyer. "The assertion by Mr. Belnick's lawyer that the Board of Directors acted to protect anyone's 'turf' is ludicrous and is an attempt to distract attention from his client's serious problems," the company said.
People who were present on a morning call with Tyco directors Monday said their was no disagreement over the decision to fire Mr. Belnick. "It was as unanimous as can be," said a person on the call, adding that all of Tyco's directors were incensed by Mr. Belnick's "refusal to cooperate" with Mr. Boies's investigation. The person said that Mr. Arkin's characterization about factions on the board with regard to Mr. Belnick was "plainly wrong."
Mr. Belnick signed a lucrative retention agreement with Tyco in February that would have paid him $10.6 million on Oct. 1, 2003.
The agreement also provided that if he were fired for any reason, short of a felony conviction, Mr. Belnick would receive $3.53 million within 10 days and the same amount this October and October 2003 -- for a total of $10.6 million. Mr. Kozlowski and Mark Swartz, Tyco's chief financial officer, received even more lucrative contracts with similar provisions last year.
But Mr. Belnick's contract has another provision that would enrich him even faster if he were convicted of a felony. In a separate provision, Mr. Belnick would receive the entire $10.6 million within 10 days if he were fired before October 2003 for committing a felony. Only Mr. Kozlowski signed off on the agreement, which Tyco attached to a regulatory filing in May.
Tyco spokesman Gary Holmes said the company would have no comment on any compensation paid to Mr. Belnick. "We have an internal investigation going on into a number of matters," he said.
Mr. Boies, the New York litigator who is perhaps best known for representing the Justice Department in its case against Microsoft Corp., was retained early last week by a group of Tyco board members who wanted to conduct their own internal investigation into Mr. Kozlowski. The person said Mr. Belnick had refused to turn over documents to Mr. Boies or to make Tyco lawyers and others available for interviews.
"I had hoped to conduct a complete and thorough investigation with Mark's help, but unfortunately, that became impossible," Mr. Boies said. "I have known Mark for 20 years and I have always had a good regard for him. I regret the position in which he now finds himself, but the first duty of every lawyer is to the client -- Tyco." |
