Andrew Allentuck
Monday, May 17, 2004

Testosterone Inc.. Stories of CEOs Gone Wild
By Christopher Byron
John Wiley & Sons, 2004

This is surely a first - a glandular history of how big shot CEOs ran their companies variously into ridicule and bankruptcy and themselves into criminal prosecution and infamy.

Christopher Byron, author of the scathing story of convicted felon Martha Stewart, Martha Inc., has trumped that book with this account of the foibles of a gang of four once-esteemed, now ridiculed CEOs. In the cast are "Chainsaw" Al Dunlap, who destroyed Sunbeam Inc.;, Dennis Kozlowski, who awaits retrial after a jury got hung on the question of his guilt in sucking $800 million in personal benefits out of Tyco; Ron Perelman, who used junk bonds to take over Revlon and Revlon to assault Hollywood and not a few blondes; and Jack Welch, who used his brains, personality, and utter lack of restraint to wrest a king's fortune of personal benefits out of General Electric and to give a pretty big fortune to his ex-wife when discovered doing legovers with the editrix of the Harvard Business Review.

With superb scholarship and a novelist's sense of character, Mr. Byron takes his reader into the antics of his cast. He reveals that Al Dunlap, a "beast" as he calls him, wouldn't even buy maternity clothes for his wife or togs for his baby. An artiste both in accounting and issuing pink slips, Al fired everybody in sight, got his factories to turn out barbecues that he shipped out to retailers who didn't want them and would not pay, later rented warehouses to hold all the unsold inventory, then showed the unsold things as sold and paid for. When his financial knitting was undone, Sunbeam unraveled like a cheap suit. Had the board that hired him done their homework, they would have discovered a sociopath who had done much the same thing in a former job at a paper company.

The information about Dunlap and most of what Mr. Byron reveals about Messrs. Welch, Perelman and Kozlowski is known and in the public record. But the motivation - how these guys let their pants do their thinking for them - is instructive for investors.

It is an old adage that when the head of a major industrial company or any outfit doing something intrinsically dull figures he'll sell out and buy a movie studio, what is really going on is that the CEO wants to hump some stars. Think of how Edgar Bronfman dumped chemical maker DuPont and went to Hollywood and lost most of his family's money in movies and Vivendi and you get the point.

Irresistible, wonderfully well written, superbly documented, Testosterone Inc. is a book that can drive any investor to shudders. A few spelling errors in French, in Mafia terminology like consigliore (sic) and the name of a swank New York hotel, the Sherry Netherlands (should be singular) are harmless. A better index would let the reader see how some institutions, such as the Wharton School of Finance, were hatcheries for Wall St. felons). But no matter. This book is a fabulous read.