Albert J. Dunlap

Albert John Dunlap (July 26, 1937 – January 25, 2019) was an American corporate executive.[2][3] He was known at the peak of his career as a turnaround management specialist via mass layoffs, which earned him the nicknames "Chainsaw Al"[4] and "Rambo in Pinstripes", after he posed for a photo wearing an ammo belt across his chest.[5] It was later discovered that his reputed turnarounds were elaborate frauds and his career was ended after he engineered a massive accounting scandal at Sunbeam Products, now a division of Newell Brands, that forced the company into bankruptcy.[6] Dunlap is on the lists of "Worst CEOs of All Time" published by several business publications.[7][8] Fast Company noted that Dunlap "might score impressively on the Corporate Psychopathy checklist"[9][10] and in an interview, Dunlap freely admitted to possessing many of the traits of a psychopath, but considered them positive traits such as leadership and decisiveness.[11] He was a major benefactor of Florida State University.

Albert J. Dunlap
Born
Albert John Dunlap

(1937-07-26)July 26, 1937
Hoboken, New Jersey, U.S.
DiedJanuary 25, 2019(2019-01-25) (aged 81)
Ocala, Florida, U.S.
NationalityAmerican
Other namesChainsaw Al (Nickname)
EducationWest Point
OccupationCorporate executive
Net worth$100 million (2002)
Notes

Early life and education

Dunlap was born in Hoboken, New Jersey in 1937.[2] He entered West Point in 1956[12] and graduated with a degree in engineering in 1960.[2] He then served in the United States Army for 3 years.

Early career

In 1963, Dunlap entered the business world at Kimberly-Clark as part of its manufacturing operations.[2] He worked there for 4 years before being taken on at Sterling Pulp & Paper where he was put in charge of the family-run business.[12]

He engineered a massive accounting fraud at Nitec, a paper-mill company in Niagara Falls, New York. He was the company's president from 1974 to 1976, when he was fired owing to his abrasive management style. An audit by Arthur Young (now part of Ernst & Young) revealed numerous irregularities, including inflated inventory and nonexistent sales—circumstances similar to the later Sunbeam case. The final result was that Nitec's $5 million profit for 1976 was actually a $5.5 million loss. Nitec sued Dunlap for fraud but was ultimately forced out of business. However, Dunlap never mentioned Nitec on his resume, and these scandals were not widely known until reported by The New York Times after the scandals at Sunbeam.[13]

Lily Tulip Cup hired him as the president and CEO in 1983. In 1985, he was given the additional title of chairman of the company.[14]

From 1991 to 1993, he was CEO for Consolidated Press Holdings (CPH), a private company belonging to the Packer family, after Kerry Packer took a leave of absence due to health reasons. At the time, CPH had a diverse portfolio in media and publishing as well as chemical and agricultural operations. While there, he had mentored James Packer for the three years.[15]

In 1994, Dunlap became the CEO of Scott Paper after Philip E. Lippincott stepped down from the position.[16] In 1995, he sold Scott Paper to Kimberly-Clark for $9 billion and made $100 million from the deal via stock options and appreciation of his holdings.[17][18]

Sunbeam

Dunlap took over as chairman and CEO of Sunbeam in 1996.[19] His methods resulted in Sunbeam's reporting record earnings of $189 million in 1997.[20]

On March 3, 1998, Sunbeam announced the acquisitions of camping gear maker Coleman Company, coffee machine maker Signature Brands (best known for making Mr. Coffee), and smoke detector maker First Alert. Sunbeam's stock rose 9% on the news.[21]

In the second quarter of 1998, the board of directors of Sunbeam investigated aggressive accounting practices and extreme discounting carried out at the direction of Dunlap. On June 13, 1998, Dunlap was fired.[22] As the fraud was further uncovered in late 1998, Sunbeam was forced to restate financial results dating back to 1996 multiple times.[23][24][25]

In 2001, the U.S. Securities and Exchange Commission sued Dunlap, alleging that he had engineered a massive accounting fraud. Also named in the suit were four other former Sunbeam executives and Phillip E. Harlow, the lead partner for Sunbeam's account with Arthur Andersen.[26] An SEC investigation revealed that Dunlap and others had created the impression of a greater loss in 1996 in order to make it look like the company had experienced a dramatic turnaround in 1997. By the SEC's estimate, at least $60 million of Sunbeam's 1997 earnings were fraudulent. He also offered incentives for retailers to sell products that would have otherwise been sold later in the year, a practice known as "channel stuffing," and used illegal bill and hold practices. The SEC also argued that the purchases of Coleman, Signature, and First Alert were made to conceal Sunbeam's growing problems. Sunbeam never recovered from the scandal and was forced into bankruptcy in 2002.[20]

Dunlap was also suspected of irregularities at Scott Paper. Not long after the shareholder settlement, he agreed to pay $500,000 to settle the SEC's charges. He was also banned from serving as an officer or director of any public company.[17][27] The United States Department of Justice investigated Sunbeam's management during Dunlap's tenure but ultimately did not file any charges.[28]

The shareholder lawsuit against Dunlap dragged on until 2002, when he agreed to pay $15 million to settle the allegations.[29]

Death

Dunlap died at his home in Ocala, Florida, on January 25, 2019, following a short illness. His death was announced by Florida State University, of which he was a major benefactor.[19]

He is survived by his wife Judy Dunlap and son Troy Dunlap.[3]

A documentary film was made about Dunlap in 1998 called Cutting to the Core—Albert J. Dunlap.[30]

A documentary film by the BBC about business titans in Britain prominently featuring Dunlap called The Mayfair Set was released in 1999.[31]

In 2001, he was caricatured in Titans of Finance (Alternative Comics, 2001, ISBN 1-891867-05-9)[32] by Rob Walker and Josh Neufeld. The comic book is a collaboration between a cartoonist and a finance columnist, which casts Wall Street executives and traders as heroes and villains. The lead story features Ronald O. Perelman, and Mike Vranos and Victor Niederhoffer are among those included.[33]

In 2002, a documentary film by the U.S. TV program Frontline was released named Bigger than Enron. It detailed the events that occurred at Sunbeam when Dunlap was CEO and investigated the accounting practices that were implemented.[34]

Publications

By Dunlap:

About Dunlap:

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References
  1. Byrne, James (September 5, 2002). "Chainsaw Al Dunlap Cuts His Last Deal". Bloomberg News.
  2. Smith, Harrison (January 28, 2019). "Albert J. Dunlap, corporate turnaround specialist accused of accounting fraud, dies at 81". The Washington Post.
  3. "Prominent FSU supporter Al Dunlap dies at 81". Tallahassee Democrat. January 26, 2019.
  4. Webber, David H. (April 2018). The Rise of the Working-Class Shareholder: Labor's Last Best Weapon. Harvard University Press. p. 6. ISBN 978-0-674-91946-4. Retrieved November 15, 2019.
  5. Sellers, Patricia (January 12, 1998). "Can Chainsaw Al Really Be A Builder? America's most ferocious cost cutter says he wants to make Sunbeam bigger. With help from Sam Walton's daughter, he's looking at a major acquisition". Fortune. CNN.
  6. Hagerty, James R. (January 27, 2019). "Albert J. Dunlap, Cost-Slashing Sunbeam CEO Known as 'Chainsaw Al,' Dies at Age 81". The Wall Street Journal.
  7. "Portfolio's Worst American CEOs of All Time". CNBC. April 30, 2009.
  8. "Worst CEOs Ever: Al Dunlap". Business Insider.
  9. Deutschmann, Alan (July 1, 2005). "Is Your Boss a Psychopath". Fast Company.
  10. Byrne, John A. (July 1, 2005). "WORKING FOR THE BOSS FROM HELL". Fast Company.
  11. Ronson, Jon (2012). The Psychopath Test: A Journey Through the Madness Industry. Picador. ISBN 9781594485756.
  12. Sider, Don (November 25, 1996). "The Terminator". People.com.
  13. Norris, Floyd (July 16, 2001). "The Incomplete Resume". The New York Times.
  14. Gilpin, Kenneth N.; Purdum, Todd S. (March 6, 1985). "Lily-Tulip President Adds Chairman's Title". The New York Times.
  15. 'The Price of Fortune: The untold story of being James Packer'. Damon Kitney. Harper Collins 2018
  16. "Former Scott Paper Chief Named To Top Position at Sunbeam". The New York Times. July 19, 1996.
  17. Norris, Floyd (September 6, 2002). "Will Justice Department Go After Dunlap?". The New York Times.
  18. Pounds, Marcia H. (January 14, 1996). "DUNLAP: I SAVED SCOTT PAPER". Sun-Sentinel.
  19. Hagerty, James R. (January 27, 2019). "Albert J. Dunlap, Cost-Slashing Sunbeam CEO Known as 'Chainsaw Al,' Dies at Age 81". The Wall Street Journal.
  20. SEC complaint against Dunlap
  21. MULLIGAN, THOMAS S. (March 3, 1998). "Sunbeam Plans to Buy 3 Firms for $2.5 Billion". Los Angeles Times.
  22. Canedy, Dana (June 16, 1998). "Sunbeam's Board, in Revolt, Ousts Job-Cutting Chairman". The New York Times.
  23. "Sunbeam to restate results". CNN. August 6, 1998.
  24. "Sunbeam restates results". CNN. November 12, 1998.
  25. Canedy, Dana (October 21, 1998). "Sunbeam Restates Results, and 'Fix' Shows Significant Warts". The New York Times.
  26. "SEC Sues Former CEO, CFO, Other Top Former Officers of Sunbeam Corporation in Massive Financial Fraud" (Press release). U.S. Securities and Exchange Commission. May 15, 2001.
  27. Countryman, Andrew (September 5, 2002). "Dunlap barred, must pay $500,000". Chicago Tribune.
  28. Norris, Floyd (May 20, 2005). "At Sunbeam, Big Guys Won, Public Lost". The New York Times..
  29. Gallagher, Bill. "Once a Bum, Always a Bum". Niagara Falls Reporter.
  30. "Cutting to the core[videorecording] :Albert J. Dunlap /Hedrick Smith Productions". National Library Board – Singapore. 1998.
  31. "The Mayfair Set, Episode 3 – Destroy the Technostructure (1999) by Adam Curtis". YouTube. 1999.
  32. Walker, Rob; Neufeld, Josh (2007). Titans of Finance: True Tales of Money & Business. ISBN 978-1891867057.
  33. McGeehan, Patrick (June 3, 2001). "Private Sector; Dumbed Down on Wall St.: Junk Finance, With Pictures". The New York Times.
  34. "Introduction: Bigger Than Enron". PBS. Frontline. June 20, 2002.
  35. "Mean Business: How I Save Bad Companies and Make Good Companies Great". Publishers Weekly.
  36. "Chainsaw: The Notorious Career of Al Dunlap in the Era of Profit-At-Any-Price". Publishers Weekly.
  37. "Testosterone Inc.: Tales of CEOs Gone Wild". Publishers Weekly.
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