Stung by a string of scandals that nearly brought the company to its knees last year,
moved Friday to cap the compensation of top executives and directors.
The Bermuda-based conglomerate issued guidelines limiting severance pay, obliging stock ownership and curtailing postretirement benefits. The moves come as CEO Ed Breen strives to show Wall Street that the company has overcome the abuse-ridden tenure of past management, which was led by ex-CEO Dennis Kozlowski and his associates.
Under the new plan, senior executives will be limited to cash severance of two times base salary and bonus at the time of termination, Tyco said. The company hasn't had such a policy before.
In adopting the guidelines, Tyco made a nod toward a nonbinding executive-compensation resolution championed by shareholders in March. That measure called for Tyco's board to seek approval for any severance agreement that promised more than 2.99 times an executive's annual salary and bonuses. The proposal won the backing of 58% of shareholders -- over the opposition of Tyco management.
Breen took over Tyco in the summer of 2002 after Kozlowski, then-CFO Mark Swartz and then-general counsel Mark Belnick were forced out of the company amid charges they looted Tyco of hundreds of millions of dollars. The company has since adopted stricter corporate governance policies and issued a report criticizing former management's accounting. The stock has more than doubled off its lows since Breen took over.
Still, some investors remain concerned about Tyco's accounting lapses in the past and wonder about the company's prospects for future growth. On Friday, Tyco added 31 cents, to $19.09.