Chainsaw Al-Dunlap Scandal

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When John Stewart and Thomas Clark established the Chicago Flexible Shaft Company (now Sunbeam Corporation) in 1897, in Dundee, IL, they probably never thought that one day their company would turn into a huge corporation and get involved in unethical and financial dilemmas. Like many other corporations, Sunbeam has also undergone many recessions and crisis. The company has changed its original name, acquired other rival companies, added new SKUs, gone through bankruptcy, restructured itself, relocated, and hired and fired many CEOs, including “Chainsaw Al” Dunlap. Albert Dunlap was a prominent CEO who was known for “rescuing” companies from bankruptcy. In 1996 Sunbeam’s earnings had been declining for years and its stock price was down 52 percent than in 1994 (Drever, 2011). Sunbeam needed help. Therefore, Dunlap was brought to Sunbeam in July of 1996 to turn Sunbeam around and increase its stock prices and profits.…show more content…
Per his own book Mean Business, to achieve this goal, he came up with four business rules: (1) Get the right management, (2) cut back to the lowest costs, (3) focus on the core business, and (4) get a differentiating strategy (Dunlap, 1997). However, he forgot to consider to follow accounting principles. He used a bill-and-hold strategy with retailers which enabled the company to report a revenue before the products were actually delivered. Moreover, with the collaboration of CFO Russell Kersh, Dunlap had used several unethical accounting techniques to artificially overestimate company’s net income and
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    percent. In response, Sunbeam recruited and subsequently hired Al Dunlap, less affectionately known as “Chainsaw Al” as CEO and chairman of the Sunbeam board in 1996. Dunlap had a reputation as a master of corporate restructuring. Upon being named chairman and CEO, Sunbeam’s stock rose from $12.12 per share to $18.58 adding roughly $500 million to Sunbeam’s market share. Stock eventually rose to $52 per share in 1998. Under Dunlap, Sunbeam slashed jobs, closed factories, and reduced product line

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