Al dunlap sunbeam

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B R I A N J . H A L L

R A K E S H K H U R A N A

Al Dunlap at Sunbeam

Dunlap v. [after Albert J. Dunlap (1937- )] 1. To turn a company around at lightning speed. 2. To focus on the best: to eliminate what is not the best. 3. To protect and enhance shareholder value.

— Al Dunlap, Mean Business

For much of his career before coming to Sunbeam, Al Dunlap was known as the poster child of corporate restructuring. Coming off a highly successful turnaround at Scott Paper, he had recently published a best-selling book, which detailed his career success at his previous jobs and celebrated his latest accomplishment, “rightsizing” the appliance-maker Sunbeam. Dunlap was both famous and infamous for his hard-nosed approach to turnarounds, which typically involved radical restructuring and downsizing. Although he was often criticized in the press, Dunlap was not shy about his “take-no-prisoners” managerial style, which he documented in his aptly titled book, Mean Business.1

His declared victory at Sunbeam (see Exhibit 1), however, may have been premature. Two months after increasing Sunbeam’s stock price to its all-time high of $53 per share, and only two weeks after Sunbeam’s largest shareholder Michael Price stated that Al Dunlap “is an outstanding executive and Sunbeam is fortunate to have him,” Dunlap was fired.2

Sunbeam’s board had hired Dunlap to turn around the company in 1996, in hopes that he could effect the same increase in shareholder value he had at Scott Paper from 1994 to 1995. As his tenure at Sunbeam carried into the second year, board members watched their stock price fall from a high of $53 to less than $16 the day his firing was announced. His cost-cuttings hadn’t panned out, and the companies acquired under his leadership had been much more trouble than the board had anticipated. Given his widely acclaimed history of turning around ailing companies, and the rapidity of his fall, many wondered what had happened. Was he really just a “one trick pony,”3 overrated and overpaid, or would his restructuring of Sunbeam have worked if he had only been given more time?

1 Dunlap, Albert J. Mean Business: How I Save Bad Companies and Make Good Companies Great. (New York: Simon & Schuster, 1996).

2 Business Wire. May 26, 1998.

3 “Al Dunlap: Exit Bad Guy.” Daniel Kadlec. Time, June 29, 1998.

For the exclusive use of J. Hao, 2016.

This document is authorized for use only by Jing Hao in Strategic Management Fall 2016 taught by Mathias Arrfelt, HE OTHER from August 2016 to December 2016.

899-218 Al Dunlap at Sunbeam

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“Rambo in Pinstripes”

The day Sunbeam announced to Wall Street that shareholder-focused Al Dunlap would be its next CEO, the company’s stock price jumped 49%, creating almost $500 million of value for the shareholders, including Michael Price and Michael Steinhardt, the two men who controlled almost 42% of Sunbeam’s shares.4 Price and Steinhardt had pulled the appliance maker out of bankruptcy in 1990 when they bought the company from Allegheny International, a corporation that had acquired Sunbeam in 1981 and had done little to improve it.