Al Dunlap at Sunbeam 2

Only available on StudyMode
  • Download(s) : 585
  • Published : October 18, 2010
Open Document
Text Preview
This memo evaluates the decisions of the Sunbeam Board of Directors during Al Dunlap’s tenure as Chairman and Chief Executive Officer. Important elements of this assessment include an overview of Sunbeam’s goals, an evaluation of the 1996-1997 compensation package, an evaluation of the 1998 compensation package, the decision to fire Al Dunlap, and the governance of the Board of Directors. SUNBEAM’S GOALS

Sunbeam’s goals explicitly showed when they hired Al Dunlap July of 1996. Sunbeam struggled in the business world, and faced thick competition. They saw that they needed a big change if their company wanted to stay in business. Al Dunlap had a reputation for turning failing companies into prospering ones. They cared about becoming profitable fast and Al Dunlap seemed to be suitable for the job. Sunbeam knew the reputation he had, which consisted of ruthlessly laying off thousands of employees and downsizing. The Board of Directors did not exhibit social responsibility due to Dunlap’s supportive stance on shareholders wealth. Stakeholders should be valued in a company. Stakeholders still have interest in the company and contribute to a company’s wealth. If the focus is all on shareholders wealth, then ethics, quality of a product, and a loyal customer base are all important aspects of a company that are sacrificed. Sunbeam should have incorporated a balance between shareholder and stakeholder wealth to align different perspectives. EVALUATION OF 1996-1997 COMPENSATION PACKAGE

Al Dunlap’s 1996-1997 compensation package consisted of a salary a little above $500,000, no signing bonus, and millions of dollars in stock options and awards. The compensation package achieved Sunbeam’s goals of maximizing shareholders wealth. It motivated Dunlap to drive up the price of the stock. Although the short term profits benefited shareholders, no incentives to create a long term, profitable company existed. In fact, it gave Dunlap an even bigger incentive to...
tracking img