Sunbeam’s Ex-CEO Agrees to Settle Suit
Albert J. Dunlap, former Sunbeam Corp. chairman and chief executive, agreed to pay $15 million to settle a shareholder lawsuit that accused him and other former executives of mismanagement and fraud at the small-appliance maker, attorneys said Monday.
The suit against Dunlap--dubbed “Chainsaw Al” for his record of eagerly slashing jobs and expenses at troubled companies--stemmed from the company’s abrupt financial nose dive in the late-1990s.
Sunbeam filed for bankruptcy protection a year ago.
A trial in the case was due to begin Monday in federal court in West Palm Beach, Fla., but the settlement was reached Friday, according to Abraham Rappaport, one of the shareholders’ lawyers.
Another lawyer for the investors, Robert Kornreich, said the settlement still must be approved by a judge. “There are parts of this that are still being discussed. It’s been a long, tough litigation.”
Dunlap, 64, admitted no wrongdoing as part of the settlement, said his attorney Donald Zakarin.
Sunbeam also caused problems for the accounting giant Andersen, which now is embroiled in controversy surrounding its audits of collapsed Enron Corp. Last year, Andersen agreed to pay $110 million to settle securities-fraud litigation brought by Sunbeam shareholders.
Sunbeam marked the downfall of Dunlap. The maker of Oster mixers and Mr. Coffee coffee makers hired Dunlap in mid-1996 to bolster performance. His arrival came with great fanfare, because Dunlap already had earned his reputation for unabashedly eliminating costs to turn around other companies.
Dunlap quickly unveiled a massive restructuring that called for eliminating half of Sunbeam’s 12,000 jobs and closing or selling most of its 53 plants.
But by 1998, things were going very wrong at Sunbeam. The Boca Raton, Fla., company began forecasting losses and posting a much higher debt load. Its accounting practices came under scrutiny by the Securities and Exchange Commission. And in June 1998, Sunbeam’s board fired Dunlap.
Ultimately, Sunbeam was forced to restate its financial results for the six quarters before Dunlap was ousted. Last May, the SEC filed a civil lawsuit in federal court in Miami against Dunlap and other former Sunbeam executives, along with accounting firm Andersen, accusing them of engaging in a massive financial fraud. All the defendants denied wrongdoing, and Dunlap called the charges “baseless.”
Sunbeam never has fully recovered fully, despite introducing new lines of appliances. A hearing on its bankruptcy reorganization plan has been set for March 19.
