[FOUNTAIN]Chainsaw loses some teeth

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[FOUNTAIN]Chainsaw loses some teeth

"Hair spray day." That was one of the catchphrases that circulated at Sunbeam Corp. about six years ago. If you failed to reach your restructuring target, the commotion from the chairman's office would be enough to leave your hair disheveled. The chief executive was Albert Dunlap, more commonly referred to during the 1990s as "Chainsaw Al." He was also called the "wizard of restructuring."

A graduate of West Point and a distinguished veteran of the Vietnam War, he became famous during the '90s by transforming companies in the red into money-making enterprises.

During his 18-month tenure as CEO of Scott Paper Co., the firm's stock price ballooned 225 percent before its merger with a rival, Kimberley-Clark Corp. That performance netted him a hefty $100 million bonus. Moreover, Sunbeam's stock shot up 60 percent in July 1996, shortly after he took charge of the struggling home appliance company.

Dunlap earned himself the nickname "Chainsaw Al" for his merciless slashing of corporate dead wood. Half of those on the payroll at Sunbeam and 11,000 more at Scott Paper Co. were handed pink slips during his watch. In his best seller, "Mean Business," he justified his decisions by proclaiming that the businessman's first priority is to earn profits for the shareholder and sacrificing all to meet that goal. A local association of entrepreneurs published a Korean version of his book three years ago, and some schools and businesses adopted it as a textbook.

But the full extent of Al Dunlap's dealings as chief executive were not in line with his reputation. In his book, "Chainsaw," the author and journalist John A. Byrne examines how Mr. Dunlap dismissed workers at Sunbeam's electronics sector and outsourced on the pretext of restructuring, only to replace employees whose average salary was $35,000 with outside recruits earning over $125,000. His major blunder was rigging the account books using a technique called "channel stuffing." For two years before the fraud was discovered, Mr. Dunlap inflated profits by selling products at large discounts to induce buyers to buy in advance and boost Sunbeam's books.

Mr. Dunlap settled with the U.S. Securities and Exchange Commission by agreeing to pay a $500,000 fine and never again serve as an officer or director of a public firm. No longer is he seen as a wizard or a hero, but as an incompetent businessman relentless in the aim at restructuring as if pursuing a military operation. Many are curious as to how his book is faring in light of these revelations.

The writer is a JoongAng Ilbo editorial writer.

by Sohn Byoung-soo

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