(FORTUNE Magazine) – From Ed Breen's office at Tyco, high above 57th Street in midtown Manhattan, Central Park looks like a beautiful painting. Forty-three stories up, you gaze down at the entire expanse of the park, a dense thicket of trees dotted with glassy pools of water, one giant green rectangle of nature plopped down in the middle of an urban concrete desert. On a good day you can see up beyond the park, all the way into the Bronx and over on either side to the East and Hudson rivers.

It's easily one of the most spectacular views in all New York City, but Breen, who has occupied the office since he took over as Tyco's CEO last July, hates it. Don't get him wrong: He likes the park as much as anybody. It's just that views like that don't come cheap. In fact, he hates almost everything about Tyco's opulent executive offices--the antique grandfather clock in the reception area, the huge Persian carpets so thick your feet sink into them, the shiny marble floors in the elevator entryway, the floor-to-ceiling mural in the massive boardroom, and the executive kitchen where Tyco's chef used to lay out daily gourmet meals on fine china. And don't get Breen started on his own office, with its private bathroom and a kitchen the size of a New York one-bedroom apartment. When he first laid eyes on it, he recalls thinking, "This is embarrassing."

As you've read in our cover story on executive pay, Breen makes good money--very good money. But he is in nearly every other way a far more modest man than his predecessor. Former Tyco CEO Dennis Kozlowski famously spared no expense in using company funds to adorn his corporate offices and his numerous personal residences. His ten-year reign of greed and extravagance--Kozlowski and his former CFO Mark Swartz have been charged with pilfering $400 million from company coffers--has left the conglomerate's reputation in tatters. If the average person knows one thing about the company called Tyco, it's that Kozlowski had a weakness for $6,000 shower curtains and $15,000 umbrella stands. The company leaped to the top of everyone's list of America's Most Corrupt Companies and has stayed there. "The words Enron, WorldCom, Adelphia, and Tyco are forever strung together. Our clients freaked when we bought Tyco," says money manager Jeff Bronchick of Reed Conner & Birdwell of his decision last year to buy Tyco stock.

One of Breen's most urgent missions is to remove Tyco from that list. To do so he must exorcise the ghost of Dennis Kozlowski, who still rattles around the company. A former cable industry executive who dramatically boosted General Instrument's revenues before selling the company to Motorola in 2000, Breen is confident he can pull that off. To him Tyco is different from Enron, WorldCom, and Adelphia in at least one crucial way--it's got solid businesses that have been relatively unharmed by the shenanigans of the former regime.

A sprawling conglomerate, Tyco is the product of an epic buying spree by Kozlowski. In a bid to create the next GE, he spent $63 billion from 1994 to 2001, acquiring 1,000 companies. Tyco's businesses today are divided into five broad categories: fire and security, health care, electronics, plastics and adhesives, and engineered products and services.

A year or so from now Breen would like nothing more than for Tyco to be thought of as a big, boring company that makes not scandals and headlines but lots of mundane industrial products like duct tape, burglar alarms, sprinkler valves, fire extinguishers, cable wire, and plastic syringes. "If I were to pick a portfolio of where I would want to be for the next five or ten years, most of what Tyco has would be industries I would pick. These are great businesses, many of them No. 1 or No. 2 in their markets," says Breen, who sat down recently with FORTUNE for his first interview since taking over as CEO last July.

During a two-hour discussion Breen was upbeat about Tyco's growth prospects. What the previous regime did to the company has been copiously documented. Less well-known is what it didn't do--namely, manage the place. "Tyco has never had a CIO," Breen marvels. To rectify that, the 47-year-old CEO plans to roll out centralized efficiency programs, such as Six Sigma and supply chain integration. He thinks that within two years Tyco is capable of steady earnings growth of 10% to 12% a year, and revenue growth of 4% to 6%. That's certainly not the wild, acquisition-driven growth of the Kozlowski era, but it's a lot in the current climate.

The goals are especially ambitious when you consider that Tyco lost more than $9 billion on mostly flat revenues of $36 billion last year. But Breen has plenty of supporters who think that if anyone can pull off such a turnaround, he can. Whereas Kozlowski was a larger-than-life idealist who viewed Tyco as his empire, Breen is a down-to-earth, practical collaborator who believes in accomplishing tasks and achieving goals.

In fact, central casting couldn't have picked a better person to run a scandal-racked company like Tyco. A native of suburban Pennsylvania, Breen has lived much of his life in a 30-mile radius from where he grew up. He went to a small Christian school called Grove City College in Grove City, Pa., and married a girl he met there. Today they have three children and live in New Hope, a quaint town 40 miles from Philadelphia. During the week Breen stays at a New York hotel, but on Sundays he's back in New Hope attending church with his family. It's a safe bet that he won't be throwing wild $2 million parties on Mediterranean islands anytime soon. His social life, he says, consists of occasionally having his parents over for dinner. Breen's choirboy qualities have already won a lot of converts. "Ed is full of energy and has impeccable integrity," says Ralph Whitworth, a veteran shareholder activist and money manager at Relational Investors who added more shares to his Tyco holdings after Breen joined. "A real solid, standup guy," says another investor.

That's not to say that Tyco is entirely out of the woods. If Breen wants to get the stock above $15, where it's been stuck for months (down 75% from its $59 high in December 2001), he needs to address a few pressing issues. Like how much might Kozlowski have been playing with Tyco's books to keep earnings growing and the stock soaring? A four-month investigation at the end of last year by law firm Boies Schiller & Flexner attempted to answer that question. It concluded that, yes, numbers games were going on, particularly in the way Tyco had accounted for acquisitions. But the report, which resulted in a $382 million charge to 2002 earnings, concluded that there was no "systemic or significant fraud." Then in March, after a major bond offering to refinance $6 billion of debt, Tyco announced more charges--up to $325 million--for accounting improprieties in the European units of alarm company ADT. Many investors were annoyed, and critics accused the company of concealing the problem until the bond offering was complete.

Breen rejects the notion that he purposely misled anyone. He says he and his team knew about the second charge only several days before it was announced. "We were scrambling day and night to get the range correct. We still didn't have our arms around all the details," he says. Part of the problem is that in a company Tyco's size, finding all instances of suspect accounting is no small chore. After all, Tyco consists of thousands of separate business units that employ 270,000 people in 2,000 locations around the world. Breen says the Boies investigation was never meant to be comprehensive--it looked at records and talked to employees from just 45 of the company's largest business units. He says Tyco is only now having its internal audit staff, which has more than doubled to 55 people, dig into every corner of the company. The process will take at least six months, and Breen admits that more restatements are likely to be found. But he also feels certain that any new charges will relate only to Tyco's previous financial statements, not future results.

The SEC and IRS are also probing Tyco's finances. The former is looking at the ten-year time period ADT uses to capitalize customer acquisition costs and the way in which it accounts for canceled security alarm contracts. If the SEC decides accounting changes are required, future earnings of the fire and security division could suffer. For its part the IRS is looking at, among other things, whether Tyco used its incorporation in Bermuda as well as hundreds of offshore entities to improperly shield income from U.S. taxation. Since Tyco merged with the Bermuda-incorporated ADT in 1997 it has saved between $400 million and $800 million a year in income tax. Large companies shelter income from the tax collectors all the time; the question is how aggressive Kozlowski and his crew were in doing so.

The very fact that Tyco still has its headquarters in Bermuda is a sticking point for some investors. Richard Ferlauto, who represents a pension fund for government employees, sponsored a shareholder resolution at Tyco's annual meeting in March requesting that the company move back to the U.S. The vote didn't pass, but Breen says Tyco's board is going to study the issue in the next few months. He hints that some sort of compromise may be in the works. "There are ways to remain in Bermuda and also provide the protection for shareholders that people are looking for, perhaps by building it into the bylaws," he says.

While auditors dig into Tyco's accounting ledgers, Breen wants to make sure no financial malfeasance happens on his watch. In his first five months on the job he replaced Tyco's executive team and its entire board, something no one can recall a major U.S. company ever having done before. "I didn't know who knew what, who should have known what, and who should have raised their hand, and I was never going to be able to figure that out fast. So I wasn't going to take any chances," he says of his decision to fire everyone who worked in the company's 57th Street offices except one receptionist and two assistants. The board, too, had lost its credibility. The members all sat there while Kozlowski and CFO Swartz allegedly took out one unauthorized loan after another.

In putting together his new team Breen hired a vice president of corporate governance who reports directly to the board, and created an ombudsman's office where employees can register concerns confidentially. Based on the recommendations of corporate governance experts Tyco hired, Breen gave more authority to the board's lead director Jack Krol, a former CEO of DuPont, and created rules prohibiting all corporate loans to senior executives.

Breen has also slashed executive compensation. This year total bonus payouts for executives are limited to $29 million, vs. $79 million last year. But what about Breen's own pay package for 2002? At $62 million, it was the fourth largest among all CEOs. Tyco considers that a one-off deal to compensate Breen for the stock options he left on the table at Motorola, where he stayed on as a senior executive after the General Instrument merger. In 2003, Breen says he won't receive any Tyco options, bringing his total compensation down to a more reasonable $3 million.

In some respects all this corporate governance stuff is easy. The hard part will be making Tyco grow again. Breen has announced ambitious targets for improving operating margins in each of the company's five divisions, in some cases above and beyond those of rivals. For example, Breen wants to boost Tyco's health-care margins to more than 25%; by contrast, in sectors where they compete with Tyco, Baxter and Johnson & Johnson maintain margins in the range of 19% to 23%. At the same time Breen will have to increase R&D spending, which Kozlowski let slide, resulting in a dearth of new products.

Breen is confident he can do all this by dramatically reducing costs. To that end he has assembled a team of 270 people charged with eliminating redundant factories, storage facilities, and offices all across the company. "Just last week, after our second meeting of this team, we saved $700,000 just by two separate businesses talking to each other about real estate and realizing they could move into each other's facilities. There's a lot of this stuff," says Breen enthusiastically. After he bought a company, Kozlowski had a reputation for immediately cutting costs, firing people, and sometimes shuttering facilities. But in reality he never did that across companies or business units. Nor did he use the spending power of all of Tyco's companies to extract better terms from suppliers, something Breen has recently started doing. Over the next few months 18 "strategic sourcing teams" will fan out around the globe to renegotiate contracts with everyone Tyco spends money with, from computer resellers and travel agencies to parts suppliers. In total this adds up to $7 billion a year, and VP of corporate governance Eric Pillmore, who is heading up the effort, figures Tyco could save at least $1 billion.

Of course, it's too soon to tell whether all of that will allow Breen to hit the aggressive targets he's projected. There are still plenty of skeptics. But some think Tyco is worth betting on. One hedge fund manager who watched GI's stock grow from $12 to $52 during Breen's three-year tenure as CEO is a believer. "Ed always did everything he said he was going to do [at GI]. He divested their satellite business in San Diego, did headcount reductions, got product out in a timely basis, and won new customers. He was also a great steward of cash and used it to buy back stock," says this money manager, who is starting a new fund and didn't want to be named, citing SEC regulations.

Breen intends to use cash to pay down some of Tyco's considerable debt. He says that his goal is to have $13 billion in borrowings by 2005, down from $20 billion today. Much of the extra capital--perhaps $3 billion, says Breen--will come from selling off businesses that don't fit in well with the rest. In a couple of years it's likely that Tyco will be a significantly smaller and much more centralized company.

That's not all that will be different. Breen is the process of finally getting out of those baronial 57th Street offices. Tyco is looking to sublet the space and has signed a lease for more humble offices off Highway 1 in Princeton, N.J. In addition to costing one-fourth the price per square foot, the new digs in a two-building office park have the advantage of being some 50 miles closer to Breen's home. Oh, and his office will be on the third floor and look much like everyone else's. His new view? The parking lot below.