Dennis Kozlowski

Former president, chief executive officer, and chairman, Tyco International

Nationality: American.

Born: November 16, 1946, in Newark, New Jersey.

Education: Seton Hall University, BS, 1968.

Family: Son of Leo Kelly (investigator) and Agnes (Kozell; school crossing guard) Kozlowski; married Angeles Suarez (divorced); married Karen Lee Mayo (waitress), 2000; children: two (first marriage).

Career: SCM Corporation, c.1970, auditor in mergers and acquisitions; Cabot Corporation, senior finance position; Nashua Corporation, director of audit and analysis; Tyco Laboratories (later Tyco International), 1976–1989, various positions, including president of Grinnell Fire Protection Systems division, vice president and chief financial officer of Ludlow Corporation division, and president and chief executive officer of Grinnell Corporation division; 1989–1992, chief operating officer and president; 1992–1993, chief executive officer and president; 1993–2002, chief executive officer, president, and chairman.

■ During the economic boom of the 1990s, L. Dennis Kozlowski was a high-profile hero on Wall Street and in the media. Between 1992 and 2002 he built Tyco—an obscure manufacturer of industrial parts with $3 billion in annual sales—into a global conglomerate with $36 billion in revenues from the sale of everything from diapers to fire alarms. Kozlowski made a business of fast and friendly acquisitions and mergers. He spent over $60 billion for 200 major corporations and hundreds of smaller companies, making countless millions for Tyco investors. He was known as being very aggressive and demanding and as being a drastic cost cutter. His management was completely decentralized. Provided that they met their profit goals, his executives ran their divisions as entrepreneurs. Although some analysts were skeptical, others called him a business genius and the best CEO in the country.

By 2003 Kozlowski was on trial for looting Tyco of $600 million and was also facing charges of tax evasion. Kozlowski

Dennis Kozlowski. AP/Wide World Photos.
Dennis Kozlowski.
AP/Wide World Photos

and Tyco came to symbolize personal and corporate greed in the early 21st century.


Raised in a tough Polish and Italian neighborhood in west-central Newark, New Jersey—a neighborhood that was completely destroyed in the riots of 1967—Kozlowski identified his father as a Newark cop who rose to police detective. In fact, it was his mother who worked for the police department as a school crossing guard. Leo Kozlowski was an undercover investigator for the private predecessor of New Jersey Transit and occasionally worked for a county prosecutor's office and for the Federal Bureau of Investigation. He was also a tireless Republican Party ward worker within the Polish community.

Kozlowski attended Seton Hall University, a Catholic school in South Orange, New Jersey. Living at home, he put himself through college by playing guitar in a wedding band and waiting tables. He quit one restaurant job because the staff pooled their tips. Marc Feigen, who knew Kozlowski at the time, told Time magazine in June 2002, "There seems to have been a fanaticism about getting every last nickel. That was his Achilles' heel."

About 1970 Kozlowski became an auditor in the mergers and acquisitions department of SCM Corporation, an old-style conglomerate. Subsequently he held senior finance positions at Cabot Corporation, a chemicals company, and became director of audit and analysis at Nashua Corporation, a photo-copier manufacturer based in New Hampshire.

In 1976 Joseph Gaziano of Tyco Laboratories hired Kozlowski for the finance department. At the time Tyco had annual sales of only $20 million; however, Gaziano was becoming famous for hostile takeovers. Kozlowski's job was to fix up some of these floundering acquisitions. Determined to rise in Tyco, Kozlowski took a few evening classes at Rivier College in Nashua, New Hampshire, but never earned an MBA as he later claimed. When Gaziano died in 1982 and was replaced by John F. Fort III, Kozlowski began learning the new CEO's profits-first management style.


Kozlowski was involved in Tyco's decision to buy Grinnell Fire Protection Systems, a manufacturer of automated sprinklers. He became vice president of finance for the new division. When he became president of the division in 1984, it had zero profits on sales of about $185 million. Within a year Kozlowski could claim $15 million in profits on revenues of $255 million. He earned a reputation for turning around underperforming companies.

Kozlowski convinced Tyco to buy out the remaining portions of the Grinnell Corporation, including a foundry and an industrial parts distributor. He set out to transform what was now Tyco's largest division. He banished nearly all written reports; set low salaries with generous, performance-based bonuses; and fired all underperformers. In 1987 Kozlowski was named to Tyco's board of directors.

Between 1982 and 1992 Tyco's sales increased from $550 million to $3.1 billion, and its share price increased by more than 800 percent. In 1989 Kozlowski became president and COO of Tyco, with responsibility for its business operations and corporate functions. He then made a quiet power play for Fort's job, becoming CEO in 1992 and chairman of the board shortly thereafter.


Kozlowski was determined that Tyco continue to grow, saying that he wanted it to become the next General Electric. He replaced Tyco's managers with merger specialists who shared his attitudes about the business and maintained an everchanging list of about 30 acquisition candidates. He instituted very generous, performance-related pay schemes. His goal was to make every one of Tyco's businesses first or second in its respective market.

According to a February 9, 2004, story in Time magazine, Kozlowski became known as "Deal-a-Day Dennis." Between 1994 and 1997 Tyco acquired 24 companies. At first Kozlowski looked for small, strong but underperforming companies that would provide Tyco with immediate profits. He also looked to diversify Tyco's holdings. Then in 1997 he paid $850 million for AT&T's undersea fiber-optic cable division. Kozlowski also bought AMP, the world's largest maker of electronic components, and U.S. Surgical, a medical products manufacturer with a growing market. Between 1996 and 1999 Kozlowski spent $30 billion on acquisitions, all but $3 billion paid for with Tyco stock. Tyco's debt tripled between 1997 and 1999. However, its profits continued to rise. During fiscal year 1999 Tyco earned $2.6 billion on sales of $22.5 billion.

Kozlowski's acquisitions were quick and friendly, completed within a few weeks. In 1998 he told Forbes magazine why he opposed hostile takeovers: "In the hostile environment, you can never get to the important people [lower down] who are making things happen. Good people, because of the uncertainty of a hostile takeover, tend to leave. We want to keep employees who fit into our style of entrepreneurial management—no meetings, no corporate bureaucracy over the entrepreneur's head, and focused on the bottom line" (June 15, 1998).

Following an acquisition, Kozlowski moved quickly to cut costs and consolidate, laying off workers and closing factories. He fired top executives, replacing them with young middle managers who were willing to work long hours. All employees received generous severance packages. Some analysts believed that he overpaid for many of his acquisitions. Nevertheless, between July 1992 and its peak in December 2001, Tyco stock increased thirteenfold.


Kozlowski viewed his job as involving strategic planning, making acquisitions, and dealing with specific management problems. He believed that without meetings, memos, or the need to consult the boss, managers could make decisions very quickly. He provided little direction, and division managers' strategic plans were not reviewed. Instead Kozlowski relied on performance-based compensation. All employees were eligible for generous incentive pay that, except for a few top corporate executives, was tied to the division's or unit's performance, not the company's.

Tyco employed some 270,000 people in about two thousand locations around the world, and Kozlowski's management practices never brought together the company's diverse businesses for the benefit of the organization. Health care was lumped into the same division as plastics and adhesives. Kozlowski cared little for quality control or research and development, underinvested in information technology, and failed to train a new generation of executives.

Well into 1997 the press lauded Tyco's sparse staffing and bland headquarters as well as Kozlowski's meager compensation. His $1 million salary remained unchanged for a four-year period, and his annual bonus was limited to an additional $1 million. Tyco offered him no stock options, although Kozlowski did receive performance-linked restricted shares. However, when Tyco merged with the security firm ADT in 1997, it adopted ADT's stock option policy. Kozlowski did not receive such typical executive perks as financial planning, postretirement medical insurance, or club memberships. He was even known to fly his own airplane on business trips without reimbursement.


By 1997 some analysts were beginning to view Kozlowski as one of the country's most overcompensated CEOs. Between 1992 and 2001 Kozlowski's legal compensation increased four times more than Tyco's stock price. As the board raised his compensation from $8.8 million in 1996 to $52.8 million in 1997, Kozlowski began regularly to avail himself of company loans, borrowing hundreds of millions of dollars, most of which he repaid. In 1999, when his board-approved compensation was at $136.1 million, Kozlowski borrowed even more money from Tyco. He bought properties all over the country. His home in Boca Raton, Florida, cost $29.8 million. The company bought, renovated, and furnished his Manhattan apartment at a cost of $30.8 million. He owned motorcycles, airplanes, and a 130-foot classic sailboat that was said to have cost $20 million, plus $700,000 annually for maintenance and crew. Kozlowski billed Tyco $110,000 for 13 days at a London hotel. By pledging $4.5 million of Tyco's money, he bought himself a seat on the board of the Whitney Museum in New York. In 2001 Tyco's board approved a retention deal wherein, if he stayed with the company, Kozlowski would receive 100,000 shares of Tyco stock annually through 2008.

Meanwhile Kozlowski continued to portray Tyco as an austere corporation. Its sparse, rustic headquarters on the outskirts of Exeter, New Hampshire, housed only about 150 employees—mostly lawyers, bankers, accountants, and top executives. Although Kozlowski moved the corporate headquarters to extravagant offices in Manhattan in 1995, he maintained the Exeter facility as Tyco's humble facade. In 1997 Tyco merged with ADT, based in Bermuda. Kozlowski structured the deal as a reverse takeover, with ADT acquiring Tyco. Tyco's head-quarters—and its overseas profits—moved to Bermuda, saving the company between $400 million and $800 million annually in U.S. income taxes. That same year Kozlowski established yet another lavish corporate headquarters in Boca Raton.

According to the New Hampshire Business Review , Tyco's home page quoted Kozlowski as saying that the company "is successful because we adhere to basic strategies. We keep our business simple, stay close to our markets and empower our employees for greater achievements" (November 17, 2000). However, nothing was simple about Tyco. Its hundreds of acquisitions made its accounting unfathomable.

Although some analysts had always had doubts about Kozlowski's management, aggressive maneuvering, and complicated accounting schemes, in late 1999 rumors began circulating that Tyco had inflated its growth and overstated the earnings of some of its slow-growing businesses with unorthodox accounting. Its market value fell 17 percent. Kozlowski denied the charges, and an investigation by the U.S. Securities and Exchange Commission (SEC) cleared the company in 2000. However, Tyco's account books were filled with footnotes about thousands of offshore subsidiaries, scaring many shareholders. Tyco's stock lost half of its value. Although profits and sales remained high, the stock did not fully recover.


Kozlowski remained set on aggressive growth. In 2000 Tyco acquired 40 companies for $9 billion. In 2001, in what many analysts viewed as a serious miscalculation, Kozlowski acquired CIT, Tyco's first commercial finance company. That spring Tyco was valued at $93 billion, and Business Week named Tyco its top performing company.

In January 2002 New York state banking regulators notified the Manhattan district attorney of a suspicious wire transfer of nearly $4 million from a Tyco bank account to a New York art dealer, who then moved the money to an account in the Bahamas. Tyco also was under investigation by the U.S. Treasury Department for tax evasion and money laundering.

At a January 22, 2002, shareholders' meeting, Kozlowski announced that, to simplify accounting, he was going to divide Tyco into five pieces and sell off businesses, reducing the company's size by about one-half. In February 2002 Tyco filings revealed that Kozlowski and his chief financial officer, Mark Swartz, while publicly declaring that they almost never sold Tyco shares, had actually sold a combined total of more than $500 million in stock back to the company since 1999. They were accused of falsely inflating Tyco's stock before selling. Kozlowski alone made $280 million by selling 5.3 million shares of Tyco stock. Tyco also revealed that it had made about 700 acquisitions at a price of $8 billion over the past three years, without informing shareholders.

In April 2002 Kozlowski announced that he would not break up Tyco, thereby destroying any remaining credibility. Between January and June 2002 Tyco's share price fell 80 percent. The rating on the company's $27 billion debt was downgraded.


Kozlowski resigned from Tyco International in June 2002. The following day he was indicted on charges of evading more than $1 million in sales taxes on more than $13 million worth of art, including works by Renoir and Monet. His dealers, cooperating with the Manhattan district attorney, claimed that the works of art, or sometimes just empty boxes, were shipped to Tyco headquarters in New Hampshire to avoid New York sales tax and then immediately returned to Kozlowski's apartment in New York. Kozlowski pleaded not guilty.

In September 2002 a New York grand jury issued a 92-page indictment against Kozlowski and Swartz, charging that between 1995 and 2002 their racketeering schemes had earned them as much as $600 million in unauthorized bonuses and expense reports as well as fraudulent stock sales. The original 39 charges included grand larceny, conspiracy, securities fraud, and 14 charges of falsifying records. Several of the charges carried maximum penalties of 25 to 30 years in prison. After the indictment Tyco filed a report with federal regulators detailing the evidence of alleged fraud and abuse committed by Kozlowski and other Tyco executives. Kozlowski and Swartz pleaded not guilty and were released on bond. Kozlowski also faced an SEC criminal complaint and a civil suit brought by Tyco.

Kozlowski's friends and supporters were shocked. Kozlowski was a shy and unassuming man, they said, who not only moved in high society but also socialized with fishermen, small business owners, contractors, and gardeners. He always gave generously to charities and causes. However, Tyco charged that Kozlowski had loosened up the company's corporate giving program, donating $106 million of stockholders' money to charity and passing off $43 million in company money as personal donations.

At the end of 2002 U.S. News & World Report picked Kozlowski as its corporate rogue of the year, choosing him over Enron and WorldCom executives involved in much more extensive corruption.


The trial in the New York State Supreme Court went on for almost six months. The prosecution relied on sensationalism. Kozlowski's spending habits and lavish lifestyle—financed with company money—grabbed the attention of the press and the public. Kozlowski used Tyco money to furnish his New York apartment and $5 million Nantucket home with a $6,000 shower curtain, a $15,000 antique poodle umbrella stand, a $2,200 gilded wastebasket, and $2,900 in coat hangers. Above all, there was a videotape of Kozlowski's weeklong party for his wife's 40th birthday on the Mediterranean island of Sardinia. It cost $2.1 million, including $250,000 to Jimmy Buffett for a one-hour performance. A Tyco event planner—and former Kozlowski mistress—charged over $1 million of the tab to Tyco for a management meeting.

Kozlowski's former executive assistant testified that she had agreed to cover his personal expenses with company money while having an affair with him. When she ended the relationship and left Tyco, Kozlowski gave her a severance package that included four years' salary and loan forgiveness on several residences. Kozlowski's face appeared on the front page of the New York Post under a giant headline that read "Oink, Oink" (September 13, 2002).

The defense did not so much deny the charges as argue that the board had approved—or at least overlooked—what Kozlowski and Swartz were doing. In March 2004 the judge threw out the most serious charge of enterprise corruption.

On April 2, 2004, a week into jury deliberations, the judge declared a mistrial when a holdout juror was identified in the press and subsequently reported receiving a phone call and a threatening letter. Some jurors claimed that although they had been offended by the prosecution's overkill and were unsure as to whether the prosecution had proved criminal intent, they nevertheless were very close to a consensus guilty verdict on some of the charges. A retrial was expected to begin later in 2004. Some analysts estimated that shareholder lawsuits against Tyco, for mismanagement under Kozlowski, could reach $10 billion or more.

See also entries on Cabot Corporation, Nashua Corporation, and Tyco International Ltd. in International Directory of Company Histories .

sources for further information

Bianco, Anthony, et al., "The Rise and Fall of Dennis Kozlowski: How Did He Become So Unhinged by Greed? A Revealing Look at the Man behind the Tyco Scandal," BusinessWeek , December 23, 2002, pp. 64–66.

Bourque, Ron, "The Lessons Learned from Tyco's CEO: The Basics Still Apply," New Hampshire Business Review , November 17, 2000, p. 12.

"Business: The Case of the Hold-Out Granny; The Tyco Mistrial," Economist (London), April 10, 2004, p. 58.

Chakravarty, Subrata N., "Deal-a-Month Dennis," Forbes , June 15, 1998, pp. 66–67.

Eisenberg, Daniel, and Julie Rawe, "Dennis the Menace: Dennis Kozlowski Built Tyco into a Global Conglomerate by Buying Everything in Sight. Now He's the Latest CEO to Resign in Disgrace," Time , June 17, 2002, pp. 46–49.

Kaback, Hoffer, "Complacency Is Not an Option," Directors & Boards , Spring 2000, p. 14.

"Kozlowski's Colours; Face Value," Economist (U.S.), January 26, 2002.

Symonds, William C., and Pamela L. Moore, "The Most Aggressive CEO," BusinessWeek , May 28, 2001, pp. 68–70.

Thottam, Jyoti, "Can This Man Save Tyco? Ed Breen Is Undoing the Scandalous Excesses of the Kozlowski Era to Give the Company a New Start. Now He Needs to Deliver Profits," Time , February 9, 2004, pp. 48–50.

Useem, Jerry, "The Biggest Show No One's Watching: Mistresses in the Stand! Criminals in the Elevator! Piles and Piles of Really Boring Documents! Here's What the Trial of Former Tyco CEO Dennis Kozlowski—Now at Its Midpoint—Is Really Like," Fortune , December 8, 2003, p. 156.

Varchaver, Nicholas, "The Big Kozlowski: Tyco's ex-CEO Lived Large on the Company Dime. Now the Party's Over. Herewith, the (Pay) Raises and Fall of a Roman Emperor," Fortune , November 18, 2002, p. 123.

Warner, Melanie, "Exorcism at Tyco: CEO Ed Breen & Co. Aim to Run a Big, Solid, and, Yes, Boring Company. But First They Must Drive Out Dennis Kozlowski's Ghost," Fortune , April 28, 2003, p. 106.

—Margaret Alic

User Contributions:

Comment about this article, ask questions, or add new information about this topic: