VideoMark Swartz, CFO at Tyco International, intends to step down from his post at the troubled conglomerate.
Swartz has served as Tyco finance chief since 1997, having started with the company in 1991. Over the years, he worked closely with former CEO Dennis Kozlowski on dozens of acquisitions. Those deals helped turn the Bermuda-based Tyco into a multi-billion dollar conglomerate and a Wall Street favorite.
Kozlowski resigned from Tyco in June amid charges that he evaded paying New York state sales tax on artwork he had purchased.
In a letter to employees after market close on Thursday, Tyco's new CEO, Edward Breen, said Swart will leave the conglomerate once a successor can be found. "Mark Swartz has talked with me about his plans and said he has decided to leave the company," Breen reportedly wrote. "He will continue to serve in his present role as I settle into my job, and until we complete a search for a new CFO, which we are starting immediately."
Breen, who worked previously from Motorola, started his new job as Tyco CEO on Monday.
Swartz is one of the best known -- and best paid -- finance executives, in the U.S. According to this year's CFO.com/Mercer Compensation Survey, Swartz was the third highest paid finance chief in the country in 2001. Last year, Swartz pulled in total direct compensation of $32 million. In 2000, Swartz's total direct compensation was $62 million, including $49 million from exercised stock options.
(Editor's note: How much did the best-paid CFOs make last year? To see our exclusive CFO compensation ranking, done in conjunction with Mercer Human Resource Consulting, click here.")
Big Board's Big Changes
The governance revolution is spreading to Wall Street.
Less than a week after President Bush signed a sweeping corporate reform bill -- and on the same day two former WorldCom finance executives were taken away in handcuffs -- the New York Stock Exchange board of directors approved a number of dramatic changes to its listing standards. The reason? With the Dow Jones Industrial Average, now trading around 8,500, the answer is obvious.
"American investors have had their faith in corporate America badly shaken in recent months," noted NYSE Chairman Dick Grasso. "Their confidence and participation are essential to the strength of our markets and economy. Our board had 85 million good reasons -- each and every individual investor in the United States -- as the basis to take strong action today."
Under the NYSE's final rules:
- Independent directors must comprise a majority of a board. Companies must have a nominating committee, compensation committee (or committees of the company's own denomination with the same responsibilities) and an audit committee, each comprised solely of independent directors.
- Non-management directors must meet without management in regular executive sessions.
- For a director to be deemed "independent," the board must affirmatively determine the director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company).
- Independence also requires a five-year "cooling-off" period for former employees of the listed company, or of its independent auditor; for former employees of any company whose compensation committee includes an officer of the listed company; and for immediate family members of the above.
- Every listed company must have an internal audit function.
- Director's compensation must be the sole remuneration from the listed company for audit-committee members.
- Listed companies must adopt a code of business conduct and ethics, and must promptly disclose any waivers of the code for directors or executive officers.
- Shareholders must be given the opportunity to vote on all stock-option plans, except employment-inducement options, option plans acquired through mergers and tax-qualified plans such as ESOPs and 401(k)s. Brokers may vote customer shares on proposals for such plans only pursuant to customer instructions.
The NYSE got a bit of a black eye recently when board member and TV personality Martha Stewart was dragged into the insider trading scandal at ImClone. So far, no charges have been leveled against Stewart, the CEO of Martha Stewart Living Omnimedia.
Governance on Parade
Walt Disney has joined a handful of other companies that have voluntarily strengthened corporate governance policies.
The media giant's chairman Michael Eisner Thursday said in a statement accompanying the company's earnings report that he supported the trend toward requiring companies to expense stock options.
But the Disney chairman said such a change "calls for consistent and clear guidelines to be adopted by both FASB and International Accounting Standards Board so that all companies use the same methods to both value and expense options and so that investors may interpret those expenses with confidence as to how they are derived."
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