Ex-Tyco VP says she was told not to disclose Belnick's pay
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NEW YORK — The one-time head of human resources at Tyco testified yesterday she was told not to include the compensation of Mark Belnick, the company's former top lawyer, in the company's 2000 proxy.
Patricia Prue, the Bermuda-based conglomerate's vice president of human resources from 1998 to 2002, said that Dennis Kozlowski, Tyco's former chairman and chief executive, told her that he preferred the compensation of its operating presidents, not staff members, be in the proxy.
"Who was that staff member he was referring to?" asked Assistant District Attorney Amy Swartz.
"Mark Belnick," replied Prue.
Belnick is on trial in New York State Supreme Court in Manhattan, charged with grand larceny, securities fraud and falsifying business records in connection with as much as $32 million in bonuses and loans he received while working at Tyco. He faces up to 25 years in prison on the most serious charge of grand larceny. He has denied wrongdoing.
Prosecutors say Belnick was given a bonus of cash and stock worth up to $17 million by Kozlowski in 2000 for his work to resolve an inquiry by the Securities and Exchange Commission into Tyco's accounting.
Prue testified Tuesday that Kozlowski told her outside a board meeting in April 2000 he was going to recommend Belnick and two other executives receive a special bonus for their work on the probe, but she never saw it reflected in board minutes.
During cross-examination of Prue yesterday, defense attorneys showed W-2 forms of several members of Tyco's management in an effort to demonstrate the company paid millions of dollars to key managers who reported directly to Kozlowski but weren't executive officers elected by Tyco's board.
As an example, Irving Gutin, who headed Tyco's mergers-and-acquisitions business, earned more than $40 million from 1998 to 2002 — the years Belnick worked at Tyco. Michael Robinson, Tyco's former treasurer, earned $15.9 million in that period.
Meanwhile, Prue said yesterday she approached Belnick sometime in 2002 about a relocation loan he received to move to Utah, where he was Tyco's lone employee.
"He said he didn't think it needed to get disclosed," Prue said.
Prosecutors claim Belnick failed to properly disclose as much as $14.9 million in company relocation loans on his annual director-and-officer questionnaire from 1998 to 2002. The loans were used for an apartment in New York and later the Utah home.
Prue also said Kozlowski told her in 2001 — shortly after she learned Belnick moved to Utah — that he wanted to replace Belnick at the company. She later learned the company planned to enter into a retention agreement with Belnick that would pay him $10.6 million.
The agreement was signed by Mark Swartz, Tyco's former chief financial officer, in early 2002 and later approved by the compensation committee in February 2002.
Kozlowski and Swartz are accused of looting more than $600 million from the company and are currently awaiting retrial after their first trial ended without a verdict because a juror received a threatening letter.