Rogue CEO
Question 1
Based on the article, rogue means an individual who misappropriates funds and deceives shareholders using the influence and powers vested on him. Kozlowski`s role was to safeguard Tyco’s funds and ensure sustainability of the business. However, because of his dishonest practices, he plunged the business into a financial crisis. When the company was relocating its headquarters to New York, He offered himself and six other managers an interest free loan instead of using the compensation approved by the company`s compensation committee. He also used the company`s resources to furnish his new home to the tune of $269,000. He failed to act in the best interest of Tyco and its stockholders. Moreover, in 1983, Kozlowski created a loan program that allowed managers to get low-interest rate loans, which they used to pay tax liabilities on stock profits. In 1996, the CEO started using these loans to foot his personal bills without the knowledge of shareholders. Furthermore, he increased his salary from $70 million in 1998 to $170 million by 1999 becoming the second highest paid CEO in the globe. He used company resources to reward his mistresses and he made sure that even the money donated to charity benefited him personally.
Question 2
The first explanation is that he was enticed by the lavish lifestyle of Tyco`s CEO Joseph Gaziano characterized by company cars, jets and club membership. This lavish style created a lasting impression on Kozlowski during his early years at Tyco, and his desire was to make this lifestyle a reality. Secondly, the CEO continued with his illegal activities because there was nobody to blow the whistle. The highly centralized operations at Tyco prevented other workers from knowing what was happening and even those who were aware had scanty information. The CEO used the knowledge gap to his advantage by luring people with bonuses to make them loyal to him, and as a result, there was little suspicion and resistance. Thirdly, Kozlowski made use of his accounting and auditing knowledge plus his close association with the CFO to change the regulations in his favor. His auditing experience allowed him to identify the loopholes where he could steal and leave no trace. He knew how to evade taxes and how to convince even professionals such as Swartz, the CFO, to be on his side. His main reason for promoting Swartz was that he wanted to use his expertise to implement and conceal his dubious deals.
Question 3
His behavior was influenced by a host of internal and external factors. For example, his accounting knowledge made him exploit the internal weaknesses at Tyco to make millions of dollars for himself and his mistresses (Ferrell, Fraedrich& Ferrell, 2011). Similarly, using his psychology he was able to buy the silence of employees at different levels within the company. Externally, the centralized organization structure gave him monopoly over information, which made him implement his schemes without the knowledge of the other executives.
Question 4
Kozlowski’s behavior can be best explained by the morals and values, which he has learned from his childhood and embraced throughout his life. From the case, it is evident that Kozlowski has a lop-sided view of what was wrong and what was right. Even after being found guilty and sentenced, he was still convinced that he was innocent. While it is difficult to guess where he learned his values and morals, it is evident that he was rising through the ranks at Tyco, he believed that the numerous unethical actions he did were both ethical and legal.
References
Ferrell, O.C., Fraedrich, J., & Ferrell, L. (2011). Business ethics (8th Ed.). Boston: Houghton Mifflin