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Cadillac Man: Tyco Hires CFO

Breen brings in UTC's FitzPatrick to replace Swartz. Former GM vet was finance chief at GM's Cadillac unit.
Lisa YoonSeptember 11, 2002

Troubled conglomerate Tyco International Ltd. named David FitzPatrick its new CFO. FitzPatrick, 48, has been SVP and CFO of diversified manufacturer United Technologies Corp. since 1998. He replaces Mark Swartz, whose name on Wall Street has been somewhat tarnished by his close ties to Tyco’s former chairman Dennis Kozlowski. Tyco announced last month that Swartz was leaving, but would stick around until the Bermuda-based company hired a successor.

As for that successor: earlier in his career, FitzPatrick was VP and corporate controller for Eastman Kodak Co. He also spent 18 years with General Motors Corp. FitzPatrick rose through the finance ranks at GM, culminating with his promotion to finance chief of the company’s Cadillac car division.

“Dave’s respect and reputation among the financial community for uncompromising integrity, and his overall grasp of financial and business issues, are strengths that I value highly,” said Tyco CEO Edward Breen, who was hired to replace Kozlowski.

Tyco has been beset with problems this year, with questions about its accounting and strategic problems, dragging down its stock price. The company became embroiled in scandal when long-time chairman Kozlowski resigned in June just before his indictment on sales-tax evasion charges.

Swartz, who started at Tyco in 1995, was seen as the key architect in Kozlowski’s decade-long buying binge that turned the company into one of the world’s biggest conglomerates. During that time, Swartz garnered a reputation on the Street as a solid finance executive.

But in the past year, he’s had to fend off accusations of opaque and misleading accounting, with some investors even alleging that Tyco falsely inflated earnings.

Still, Swartz was named to Tyco’s board in March 2001. According to CFO.com’s 2002 Compensation Survey, Swartz was the second-highest paid CFO in the U.S. last year, taking home more than $32.3 million in total compensation.

FitzPatrick’s appointment is the latest of several moves by new CEO Breen — apparently part of an effort to restore Tyco’s credibility among investors. Other recent hires include outsider Eric Pillmore in the new position of senior vice president of corporate governance. Last month, Tyco also appointed John A. Krol, a former DuPont Co. chief executive, to take over Swartz’s board seat.

So far, many Tyco watchers have lauded Breen’s hiring choices. One told Dow Jones that Fitzpatrick’s “breadth of understanding of global industrial companies makes him a unique choice for Tyco.”

The news was enough for analysts at investment and research firm Morningstar to rethink its position on Tyco. “We view this as another positive development, given FitzPatrick’s strong showing at United Technologies, a leading multi-industry company,” writes analyst Jonathan Schrader.

Schrader also he sees it as a good sign that Breen and FitzPatrick “have had access to Tyco’s books and weren’t scared off.”

Meanwhile, the Hartford-based United Technologies, which manufactures products ranging from Black Hawk helicopters to Otis elevators, brought back a former CFO to fill FitzPatrick’s shoes.

Steve Page, a current UTC vice chairman and board member — and company CFO from 1993 to 1997 — will take over as finance chief. According to UTC, Page expects to retire in 2004, when the company hopes to replace him with an internal candidate.

(Editor’s note: Examine cost management at Tyco, United Technologies, and their peers with the CFO PeerMetrix interactive scorecards.)