Sunbeam and "Chainsaw Al"
Chainsaw Al’s Reputation Backfires
Concern caused Dunlap to call an impromptu board meeting on June 9, 1998 to address and rebut the reported charges. A partner of Sunbeam’s outside auditors, Arthur Anderson LLP, assured the board that the company’s 1997 numbers were in compliance with accounting standards and firmly stood by the firm’s audit of Sunbeam’s books. Robert J. Gluck, the controller at Sunbeam, was also present and did not counter the auditor’s statement. The meeting seemed to have be going well until Dunlap was asked if the company was going to make its projected second quarter earnings. His response that "sales are soft" was not what the board expected to hear! Nor was his statement that he had a document in his briefcase outlining a settlement of his contract for his departure from Sunbeam. The document was never reviewed, but the unusual behavior aroused board members’ suspicions, which led to an in-depth review of Dunlap’s practices.
The review took place over the next four days in the form of personal phone calls and interviews between the board members and select employees, unbeknownst to Dunlap. A personal conversation with Executive Vice-President David Fannin revealed that 1998's second quarter sales were considerably below Dunlap’s forecast and, in fact, the company was in crisis. Dunlap had forecasted a small increase, yet the numbers that Fannin revealed showed that Sunbeam could lose as much as $60 million that quarter. Outside the boardroom and away from Dunlap, controller Robert J. Gluck revealed that they had tried to do things in accordance to GAAP, but everything had been pushed to the limit.
These revelations caused the board of directors to call their own emergency meeting. On Saturday, June 13, 1998, the directors, Fannin, and a pair of lawyers discussed the informal findings. They agreed that their confidence in Dunlap and his ability to turnaround Sunbeam was lost. The board of directors unanimously agreed that Dunlap had to go and drafted a letter stating his immediate departure would be necessary. Chainsaw Al was told that same day, via a one-minute conference call, that he was the next person to be cut at Sunbeam.