Name Albert Dunlap Role Executive | Books Aldo Leopold:Living | |
 | ||
Education | ||
Read my book mean business by albert j dunlap
Albert John Dunlap (born July 26, 1937) is a disgraced former corporate executive. He was best known as a turnaround specialist and professional downsizer, although it was later discovered that his reputed turnarounds were elaborate frauds. The ruthless methods he employed to streamline failing companies, most notably Scott Paper, won him the nicknames "Chainsaw Al" and "Rambo in Pinstripes". However, his career was effectively ended after he engineered a massive accounting scandal at Sunbeam Products, now Sunbeam-Oster, that ultimately cost that company its independence. He is barred from serving as an officer of a publicly traded corporation. His widespread layoffs and accounting frauds have put him on several lists of worst CEOs.
Contents
- Read my book mean business by albert j dunlap
- First look inside albert j dunlap athletic training facility
- Early career
- Sunbeam
- Business philosophy
- In popular culture
- Publications
- References
First look inside albert j dunlap athletic training facility
Early career
Born in Hoboken, New Jersey, Dunlap graduated from West Point before being employed by Lily Tulip Cup and Scott Paper.
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 due 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 weren't widely known until reported by the New York Times after the scandals at Sunbeam.
Dunlap mentored James Packer for three years in the late 1980s.
Dunlap was CEO of Scott Paper in the 1990s. He sold Scott Paper to Kimberly-Clark in 1995 for $7.8 billion and walked away with a $100 million golden parachute.
Sunbeam
He took over as chairman and CEO of Sunbeam in 1996. His methods resulted in Sunbeam's reporting record earnings of $189 million in 1997. However, he was unable to find a buyer by 1998. Dunlap then decided to buy controlling interest in camping gear maker Coleman, coffee machine maker Signature Brands (best known for making Mr. Coffee) and smoke detector maker First Alert. Within two days, Sunbeam's stock jumped to an all-time high of $52 per share.
However, industry insiders were suspicious when they discovered certain seasonal items were being sold at higher volume than normal for the time of year. For instance, large numbers of barbecue grills were being sold during the fourth quarter. It turned out that Dunlap had been selling products to retailers at large discounts. The products were stored in third-party warehouses to be delivered later. This strategy, known as "bill and hold", is an accepted accounting practice as long as the sales are booked after delivery. However, Dunlap booked the sales immediately. Many shareholders felt they had been tricked into buying stock that was worth far less than it actually was, and filed a class-action lawsuit against Dunlap and Sunbeam.
Reports of the methods Dunlap used to inflate revenues led the board to review Dunlap's practices in June 1998. It turned out that Dunlap had sold retailers far more merchandise than they could handle. With the stores hopelessly overstocked, unsold inventory piled up in Sunbeam's warehouses. As a result, Sunbeam faced losses of as much as $60 million in the second quarter of 1998. Dunlap's search for a buyer for Sunbeam in 1997 was timed so that the huge inventory-related losses would come to light after the sale had closed. The company's comptroller also told the board that Dunlap had told him to push the limits of accounting principles. On June 13, Dunlap was fired. The shareholder suit against Dunlap dragged on until 2002, when he agreed to pay $15 million to settle the allegations.
In 2001, the 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 LLP. 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". 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.
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. The Justice Department investigated Sunbeam's management during Dunlap's tenure, but ultimately did not file any charges.
Business philosophy
Dunlap believed that the primary goal of any business should be to make money for its shareholders. By all accounts this pursuit of profit was wholly unchecked by any regard for human dignity or compassion. To that end, he believed in making widespread cuts, including massive layoffs, in order to streamline operations. By firing thousands of employees at once and closing plants and factories, he drastically altered the economic status of such corporations as Scott Paper and Crown Zellerbach.
In 2005, the business magazine Fast Company included Dunlap in the article "Is Your Boss a Psychopath", noting he "might score impressively on the Corporate Psychopathy checklist." The magazine's editor. John A. Byrne, noted: "In all my years of reporting, I had never come across an executive as manipulative, ruthless, and destructive as Al Dunlap. Until the Securities and Exchange Commission barred him from ever serving as an officer of a public corporation, Dunlap sucked the very life and soul out of companies and people. He stole dignity, purpose, and sense out of organizations and replaced those ideals with fear and intimidation."
In the book The Psychopath Test, the author, Jon Ronson, recounted an interview he did with Dunlap in which he asked Dunlap if he felt he fit the characteristics of a psychopath, though without initially using the label "psychopath." According to Ronson, Dunlap freely admitted to possessing many of the traits of a psychopath, but that he considered them positive traits such as leadership and decisiveness. In a review of the book, Business Week reported that Dunlap "scores pretty high on the Hare Psychopathy Checklist." Ronson, however, also noted that Dunlap lacked other elements of psychopathy, such as a history of juvenile delinquency or unstable romantic relationships.
In May 2009, Conde Nast Portfolio.com named Dunlap the 6th worst CEO of all time.
In popular culture
A documentary film was made about Dunlap in 1998 called Cutting to the Core—Albert J. Dunlap.
A documentary film by the BBC about business titans in Britain prominently featuring Dunlap called The Mayfair Set was released in 1999.
In 2001, he was caricatured in Titans of Finance (Alternative Comics, 2001, ISBN 1-891867-05-9) by R. 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.
In a 1997 episode of Mystery Science Theater 3000, the featured film Time Chasers depicts a villainous boss shooting his employee with an Uzi after quipping "you're fired." The show's characters retort "he's still a better boss than the Sunbeam guy."
On November 29, 2012, the episode "Frank's Back in Business" of the series It's Always Sunny in Philadelphia (season 8, episode 7) aired. Frank (Danny DeVito), was called back by the board of directors of his old company to take upon the role of the "Warthog" CEO, who would ruthlessly downsize the company and fire individuals. DeVito wore a shirt with a white French cuff and collar, identical to the outfit commonly worn by Al Dunlap.