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News > Companies
'Chainsaw' calls a truce
August 5, 1998: 8:55 a.m. ET

Sunbeam, ex-chief Dunlap to cooperate on suits and probe, report says
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NEW YORK (CNNfn) - After weeks of public acrimony, Sunbeam Corp. and its ousted ex-chairman and chief executive officer, Albert Dunlap, have agreed to work together in fighting a series of shareholder lawsuits against the company and to cooperate in a federal probe of Sunbeam's accounting practices, according to a published report.
     As part of the deal, reported Wednesday by the New York Times, Dunlap also agreed to resign from Sunbeam's board.
     Should both sides follow through on the agreement, it would represent a significant cooling of passions between Sunbeam, a maker of home and outdoor appliances, and Dunlap, whose firebrand style of leadership-by-layoffs dismayed company directors, leading to his dismissal in June.
     Dunlap's removal came after a two-year tenure at Sunbeam, during which he slashed more than half the company's 12,000 jobs.
     In the end, the draconian measures did little to buttress Sunbeam's bottom line. At the time of his dismissal, the company's stock had swooned from a high of $51 in early March to below $10. (Shares of Sunbeam (SOC) ended off 9/16 at 8-1/4 Tuesday on the New York Stock Exchange.)
     Dunlap didn't go quietly. In an interview following his ouster, he expressed "outrage" at the board he said betrayed him and vowed to "clear my good name." He also sued for severance, a claim that is still pending.
     In Wednesday's report, the Times said Dunlap had agreed to put his severance claim on hold. Instead, the report said, citing an anonymous source close to the talks, Dunlap will be paid for an unspecified number of weeks of accrued vacation time.
     Russell Kersh, Sunbeam's former vice chairman and chief financial officer whose removal followed closely on the heels of Dunlap's, also reached a cooperation agreement with Sunbeam and agreed to step down from its board, the Times said.
     A person close to the negotiations told the newspaper Sunbeam had reached an impasse in its efforts to defend itself without Dunlap.
    
Aim: To remove Dunlap from board?

     "It is obvious the company no longer felt it had a legal basis to pursue its defenses without Al," the source said. The source added that Sunbeam's aim in striking the deal was actually to secure the removal of Dunlap and Kersh from the board.
     Sunbeam is currently under investigation by the Securities and Exchange Commission, which has requested various documents related to the company's accounting policies and practices.
     The company is also the target of a string of shareholder lawsuits contending Sunbeam artificially inflated the company's fourth- quarter profits at the expense of the first quarter numbers.
     The suits cite in particular an alleged program under which Sunbeam sold $50 million worth of barbecue grills months before making retailers pay for them. Back to top

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