Albert John Dunlap (July 26, 1937 – January 25, 2019) was an American corporate executive.
He was known at the peak of his career as a professional
turnaround management Turnaround management is a process dedicated to corporate renewal. It uses analysis and planning to save troubled companies and return them to solvency, and to identify the reasons for failing performance in the market, and rectify them. Turnaround ...
specialist and
downsizer
Downsizer is a virtual community, run on a not-for-profit basis, which describes itself as "a resource for people who want to live more sustainably". Its website includes articles on sustainable living and a popular forum with over 4,500 registere ...
. The mass
layoff
A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the ...
s at his companies earned him the nicknames "Chainsaw Al" and "Rambo in Pinstripes", after he posed for a photo wearing an ammo belt across his chest. It was later discovered that his reputed turnarounds were elaborate frauds and his career was ended after he engineered a massive
accounting scandal
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "language ...
at
Sunbeam Products
Sunbeam Products is an American brand that has produced electric home appliances since 1910. Its products have included the Mixmaster mixer, the Sunbeam CG waffle iron, Coffeemaster (1938–1964) and the fully automatic T20 toaster.
The comp ...
, now a division of
Newell Brands
Newell Brands is an American manufacturer, marketer and distributor of consumer and commercial products. The company's brands and products include Rubbermaid storage and trash containers; home organization and reusable container products; Contig ...
, that forced the company into
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
. Dunlap is on the lists of "Worst CEOs of All Time" published by several business publications. ''
Fast Company
''Fast Company'' is a monthly American business magazine published in print and online that focuses on technology, business, and design. It publishes six print issues per year.
History
''Fast Company'' was launched in November 1995 by Alan Web ...
'' noted that Dunlap "might score impressively on the Corporate Psychopathy checklist" and in an interview, Dunlap freely admitted to possessing many of the traits of a
psychopath
Psychopathy, sometimes considered synonymous with sociopathy, is characterized by persistent Anti-social behaviour, antisocial behavior, impaired empathy and remorse, and Boldness, bold, Disinhibition, disinhibited, and Egotism, egotistical B ...
, but considered them positive traits such as leadership and decisiveness. He was a major benefactor of
Florida State University
Florida State University (FSU) is a public research university in Tallahassee, Florida. It is a senior member of the State University System of Florida. Founded in 1851, it is located on the oldest continuous site of higher education in the st ...
.
Early life and education
Dunlap was born in
Hoboken, New Jersey
Hoboken ( ; Unami: ') is a city in Hudson County in the U.S. state of New Jersey. As of the 2020 U.S. census, the city's population was 60,417. The Census Bureau's Population Estimates Program calculated that the city's population was 58,690 i ...
in 1937.
[ He entered ]West Point
The United States Military Academy (USMA), also known Metonymy, metonymically as West Point or simply as Army, is a United States service academies, United States service academy in West Point, New York. It was originally established as a f ...
in 1956 and graduated with a degree in engineering in 1960.[ He then served in the ]United States Army
The United States Army (USA) is the land service branch of the United States Armed Forces. It is one of the eight U.S. uniformed services, and is designated as the Army of the United States in the U.S. Constitution.Article II, section 2, cla ...
for three years, qualifying as a paratrooper and being posted at a Nuclear Missile Site.
Early career
In 1963, Dunlap entered the business world at Kimberly-Clark
Kimberly-Clark Corporation is an American multinational personal care corporation that produces mostly paper-based consumer products. The company manufactures sanitary paper products and surgical & medical instruments. Kimberly-Clark brand n ...
as part of its manufacturing operations.[ He worked there for four years before being taken on at Sterling Pulp & Paper, where he was put in charge of the family-run business.][
He engineered a massive accounting fraud at Nitec, a paper-mill company in ]Niagara Falls, New York
Niagara Falls is a City (New York), city in Niagara County, New York, United States. As of the 2020 United States Census, 2020 census, the city had a total population of 48,671. It is adjacent to the Niagara River, across from the city of Niagara ...
. He was the company's president from 1974 to 1976, when he was fired owing to his abrasive management style. An audit by Arthur Young (now part of Ernst & Young
Ernst & Young Global Limited, trade name EY, is a multinational professional services partnership headquartered in London, England. EY is one of the largest professional services networks in the world. Along with Deloitte, KPMG and Pricewaterh ...
) revealed numerous irregularities, including inflated inventory and non-existent sales — a situation similar to his later activities at Sunbeam. The final result was that Nitec's $5 million profit for 1976 was actually a $5.5 million loss. Nitec sued Dunlap for fraud but was ultimately forced out of business. Dunlap never mentioned Nitec on his resume, and the scandal was not widely known until reported by ''The New York Times
''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' after the revelation of his dishonesty at Sunbeam. Dunlap maintained his innocence even after a Nitec vice president testified under oath that Dunlap had personally ordered him to report the misleading figures.[
Lily Tulip Cup hired him as the president and CEO in 1983. In 1985, he was given the additional title of chairman of the company.
From 1991 to 1993, he was CEO of the ]Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
n firm Consolidated Press Holdings (CPH), a private company belonging to the Packer family
The Packer family has played a significant role in the Australian media, political and social sphere since the beginning of the twentieth century.
The family has had numerous interests in Australian business, most notably in media, property ...
, after Kerry Packer
Kerry Francis Bullmore Packer (17 December 1937 – 26 December 2005) was an Australian media tycoon, and was considered one of Australia's most powerful media proprietors of the twentieth century. The Packer family company owned a controlling ...
took a leave of absence for health reasons. At the time, CPH had a diverse portfolio in media and publishing, as well as chemical and agricultural operations. During his three years at the company, Dunlap mentored James Packer
James Douglas Packer (born 8 September 1967) is an Australian billionaire businessman and investor. Packer is the son of Kerry Packer , a media mogul, and his wife, Roslyn Packer . He is the grandson of Sir Frank Packer. He inherited control o ...
.
In 1994, Dunlap became the CEO of Scott Paper
The Scott Paper Company was the world's largest manufacturer and marketer of sanitary tissue products with operations in 22 countries. Its products were sold under a variety of well-known brand names, including ''Scott Tissue'', ''Cottonelle'', ...
after Philip E. Lippincott stepped down from the position. In 1995, he sold Scott Paper to Kimberly-Clark
Kimberly-Clark Corporation is an American multinational personal care corporation that produces mostly paper-based consumer products. The company manufactures sanitary paper products and surgical & medical instruments. Kimberly-Clark brand n ...
for $9 billion, making $100 million from the deal via stock options and the appreciation of his holdings.
Sunbeam
Dunlap took over as chairman and CEO of Sunbeam in 1996.[ His methods resulted in Sunbeam's reporting record earnings of $189 million in 1997.][SEC complaint against Dunlap](_blank)
/ref>
However, he was unable to find a buyer by the end of the year. On March 3, 1998, Sunbeam announced the acquisitions of camping gear maker Coleman Company
The Coleman Company, Inc. is an American brand of outdoor recreation products, especially camping gear, now owned by Newell Brands. The company's new headquarters are in Chicago, and it has facilities in Wichita, Kansas, and in Texas. There are ...
, coffee machine maker Signature Brands (best known for making Mr. Coffee
Mr. Coffee is a registered trademark of Newell Brands. The Mr. Coffee brand manufactures automatic-drip kitchen coffee machines, as well as other products. The brand was founded in the early 1970s. Mr. Coffee has often been referenced in popula ...
), and smoke detector maker First Alert
First Alert is the retail brand of American safety equipment manufacturer BRK Brands, Inc., established in 1976 and based in Aurora, Illinois, with a production plant in Juarez, Mexico. Products sold with the brand include carbon monoxide detecto ...
.
Sunbeam’s stock rose 9% on the news; within two days, it jumped to an all-time high of $52 per share.[Sunbeam Corporation: “Chainsaw Al,” Greed, and Recovery]
, ''Daniels Fund Ethics Initiative''
However, industry insiders were suspicious when they discovered certain seasonal items were being sold at higher volume than normal for the time of year. For instance, large numbers of barbecue grills were being sold during the fourth quarter. It turned out that Dunlap had been selling products to retailers at large discounts. The products were stored in third-party warehouses to be delivered later. This strategy, known as "bill and hold A bill and hold transaction occurs when a company recognizes revenue before delivery takes place. Normally a revenue is not recognizable until goods are delivered or services are rendered. Exceptions are made when a customer specifically requests ...
", is an accepted accounting practice as long as the sales are booked after delivery. However, Dunlap booked the sales immediately. Many shareholders felt they had been tricked into buying stock that was worth far less than it actually was, and they filed a class-action lawsuit against Dunlap and Sunbeam.[ When an analyst questioned Dunlap about the matter in May 1998, Dunlap reportedly grabbed him by the shoulder and said, "You son of a bitch. If you want to come after me, I'll come after you twice as hard.][
In the second quarter of 1998, the Sunbeam board of directors investigated aggressive accounting practices and extreme discounting carried out at the direction of Dunlap. It turned out that Dunlap had sold retailers far more merchandise than they could handle. With the stores hopelessly overstocked, unsold inventory piled up in Sunbeam's warehouses. As a result, Sunbeam faced losses of as much as $60 million in the second quarter of 1998. Dunlap's search for a buyer for Sunbeam in 1997 was timed so that the huge inventory-related losses would come to light after the sale had closed. The company's ]comptroller
A comptroller (pronounced either the same as ''controller'' or as ) is a management-level position responsible for supervising the quality of accounting and financial reporting of an organization. A financial comptroller is a senior-level executi ...
also told the board that Dunlap had told him to push the limits of accounting principles.[ On June 13, 1998, Dunlap was fired. According to Charles Elson, one of several directors appointed by Dunlap, the board was angered when Dunlap tried to explain the lackluster financials by claiming 1998 was a "transition year." Elson moved to terminate Dunlap, a motion that carried unanimously. According to a Sunbeam executive close to the board, the directors felt that Dunlap had deceived them about Sunbeam's numbers and intended to withhold his $35 million ]golden parachute
A golden parachute is an agreement between a company and an employee (usually an upper executive) specifying that the employee will receive certain significant benefits if employment is terminated. These may include severance pay, cash bonuses, s ...
. As the fraud was further uncovered in late 1998, Sunbeam was forced a number of times to restate financial results dating back to 1996.
In 2001, the U.S. Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
sued Dunlap, alleging that he had engineered a massive accounting fraud. Also named in the suit were four other former Sunbeam executives and Phillip E. Harlow, the lead partner for Sunbeam's account with Arthur Andersen
Arthur Andersen was an American accounting firm based in Chicago that provided auditing, tax advising, consulting and other professional services to large corporations. By 2001, it had become one of the world's largest multinational corporat ...
. An SEC investigation revealed that Dunlap and others had created the impression of a greater loss in 1996 in order to make it look like the company had experienced a dramatic turnaround in 1997. By the SEC's estimate, at least $60 million of Sunbeam's 1997 earnings were fraudulent. He also offered incentives for retailers to sell products that would have otherwise been sold later in the year, a practice known as "channel stuffing
Channel stuffing is a business practice in which a company, or a sales force within a company, inflates its sales figures by forcing more products through a distribution channel than the channel is capable of selling. Also known as trade loading, ...
", and used illegal bill and hold practices. The SEC also argued that the purchases of Coleman, Signature, and First Alert were made to conceal Sunbeam's growing problems. Sunbeam never recovered from the scandal and was forced into bankruptcy in 2002.
The shareholder lawsuit against Dunlap dragged on until 2002, when he agreed to pay $15 million to settle the allegations.
Dunlap was also suspected of irregularities at Scott Paper. Not long after the shareholder settlement, he reached a settlement with the SEC. Although he did not admit or deny wrongdoing, he agreed to pay a $500,000 fine and accepted a lifetime ban from serving as an officer or director of a public company.[ The ]United States Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
investigated Sunbeam's management during Dunlap's tenure but ultimately did not file any charges.
Death
Dunlap died at his home in Ocala, Florida
Ocala ( ) is a city in and the county seat of Marion County within the northern region of Florida, United States. As of the 2020 United States Census, the city's population was 63,591, making it the 54th most populated city in Florida.
Home to ...
, on January 25, 2019, following a short illness. His death was announced by Florida State University
Florida State University (FSU) is a public research university in Tallahassee, Florida. It is a senior member of the State University System of Florida. Founded in 1851, it is located on the oldest continuous site of higher education in the st ...
.
He is survived by his wife Judy Dunlap and son Troy Dunlap.
In popular culture
A documentary film was made about Dunlap in 1998 called ''Cutting to the Core—Albert J. Dunlap''.
A documentary film by the BBC about business titans in Britain prominently featuring Dunlap called ''The Mayfair Set'' was released in 1999.
In 2001, he was caricature
A caricature is a rendered image showing the features of its subject in a simplified or exaggerated way through sketching, pencil strokes, or other artistic drawings (compare to: cartoon). Caricatures can be either insulting or complimentary, a ...
d in ''Titans of Finance'' (Alternative Comics
Alternative comics cover a range of American comics that have appeared since the 1980s, following the underground comix movement of the late 1960s and early 1970s. Alternative comics present an alternative to mainstream superhero comics which ...
, 2001, ) by Rob Walker and Josh Neufeld
Josh Neufeld (born August 9, 1967) is an alternative cartoonist known for his nonfiction comics on subjects like Hurricane Katrina, international travel, and finance, as well as his collaborations with writers like Harvey Pekar and Brooke Gladsto ...
. The comic book
A comic book, also called comicbook, comic magazine or (in the United Kingdom and Ireland) simply comic, is a publication that consists of comics art in the form of sequential juxtaposed panels that represent individual scenes. Panels are of ...
is a collaboration
Collaboration (from Latin ''com-'' "with" + ''laborare'' "to labor", "to work") is the process of two or more people, entities or organizations working together to complete a task or achieve a goal. Collaboration is similar to cooperation. Most ...
between a cartoonist
A cartoonist is a visual artist who specializes in both drawing and writing cartoons (individual images) or comics (sequential images). Cartoonists differ from comics writers or comic book illustrators in that they produce both the literary and ...
and a finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...
columnist
A columnist is a person who writes for publication in a series, creating an article that usually offers commentary and opinions. Column (newspaper), Columns appear in newspapers, magazines and other publications, including blogs. They take the fo ...
, which casts Wall Street
Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for t ...
executive
Executive ( exe., exec., execu.) may refer to:
Role or title
* Executive, a senior management role in an organization
** Chief executive officer (CEO), one of the highest-ranking corporate officers (executives) or administrators
** Executive dire ...
s and traders as hero
A hero (feminine: heroine) is a real person or a main fictional character who, in the face of danger, combats adversity through feats of ingenuity, courage, or Physical strength, strength. Like other formerly gender-specific terms (like ...
es and villain
A villain (also known as a "black hat" or "bad guy"; the feminine form is villainess) is a stock character, whether based on a historical narrative or one of literary fiction. ''Random House Unabridged Dictionary'' defines such a character a ...
s. The lead story features Ronald O. Perelman
Ronald Owen Perelman (; born January 1, 1943) is an American banker, businessman and investor. MacAndrews & Forbes Incorporated, his company, has invested in companies with interests in groceries, cigars, licorice, makeup, cars, photography, t ...
, and Mike Vranos
Michael W. Vranos is an American hedge fund manager and philanthropist who in the 1990s was referred to by some as the "most powerful man on Wall Street." In 1993, he reportedly earned $15 million from trading mortgage bonds. ''Fortune Magazine ...
and Victor Niederhoffer
Victor Niederhoffer (born December 10, 1943) is an American hedge fund manager, champion squash player, bestselling author and statistician.
Life and career
Niederhoffer was born in Brooklyn to a Jewish family.
His paternal grandfather Martin (M ...
are among those included.
He was interviewed by Jon Ronson
Jon Ronson (born 10 May 1967) is a British-American journalist, author, and filmmaker whose works include '' Them: Adventures with Extremists'' (2001), ''The Men Who Stare at Goats'' (2004), and ''The Psychopath Test'' (2011). He has been desc ...
for his 2011 book The Psychopath Test.
In 2002, a documentary film by the U.S. TV program ''Frontline'' was released named ''Bigger than Enron''. It detailed the events that occurred at Sunbeam when Dunlap was CEO and investigated the accounting practices that were implemented.
Carol Dweck
Carol Susan Dweck (born October 17, 1946) is an American psychologist. She is the Lewis and Virginia Eaton Professor of Psychology at Stanford University. Dweck is known for her work on motivation and mindset. She was on the faculty at Columbia ...
, author of "Mindset: The New Psychology of Success," described Dunlap as an exemplar of the "fixed mindset," a person whose inability to accept feedback from colleagues beneath him and his rabid need to protect his self-image as an infallible "superstar" (his own word) led to his downfall.
References
Further reading
By Dunlap:
*
About Dunlap:
*
*
*
{{DEFAULTSORT:Dunlap, Albert J.
1937 births
2019 deaths
Businesspeople from New Jersey
Corporate scandals
Military personnel from New Jersey
People from Hoboken, New Jersey
United States Military Academy alumni
United States Army officers
20th-century American businesspeople