By Samantha Marshall
Published on December 09, 2002

Imagine: former Tyco Chairman Dennis Kozlowski, facing criminal charges for defrauding his company, tells the public that he made mistakes. He goes underground for some years, maybe even to jail.

Eventually, he resurfaces as a philanthropist with a fund to help find a cure for brain cancer. He goes on to make millions as a venture capitalist, his past forgiven, though not quite forgotten.

As unlikely as this scenario may seem, lessons from the past suggest that chief executives and Wall Street celebrities who have fallen from great heights can recover their tarnished reputations with a healthy mixture of remorse, hard work and time.

Forgiveness possible

"As long as you are sincere, you can rehabilitate yourself through your good actions and what you are known to be about," says Mike Wellman, managing partner of the New York office of executive placement firm Christian & Timbers. "People are prepared to forgive."

The misdeeds of this year's fallen stars range from actions now under criminal investigation, to bad judgment, to nothing more than bad timing. But even the worst culprits of the past year's string of scandals can find redemption if they play their cards right, say recruitment and public relations gurus.

Of course, the difficulty of an executive's climb back depends on just how spectacular his or her flameout was, and whom it burned. Fallen Fortune 500 CEOs rarely make it back into the big leagues, and those whose perceived misdeeds hurt ordinary citizens may have the toughest time of all.

"There's an atmosphere that some of the big company chieftains have abused their positions of trust," notes Mr. Wellman.

But those who follow in the paths of people such as junk bond king Michael Milken, former Merrill Lynch President Herbert Allison and former Ford CEO Jacques Nasser may well be able to edge their way back into the public eye as entrepreneurs, venture capitalists or philanthropists.

A few are already preparing for the future-or at least trying to minimize the current damage. Henry Boerner, managing director of the New York office of crisis management firm Rowan & Blewitt, has been advising several fallen CEOs lately, though he won't say which ones.

Steps to take
For a successful comeback, executives must first take responsibility for what went wrong and be open with the public, unless a legal investigation bars them from speaking publicly. Then they should quietly consider ways to best use their skills constructively, outside a corporation.

This period of reflection might take place in prison. Jail time doesn't necessarily hurt an executive's chances for a comeback. He would be viewed as having paid his debt to society. Acts of charity also help, as long as they are sincere.

The best example can be found in the tale of Mr. Milken, who served 22 months in prison for five counts of securities reporting violations in 1989. But he has since attained near-sainthood in some circles for his philanthropic work.

At the time of his incarceration, he publicly admitted his errors. Once he paid his debt to society, he put his vast personal fortune to work for causes like education and medical research. He set up a $104 million fund dedicated to finding a cure for prostate cancer, with which he was diagnosed.

This summer, he made a comeback on Wall Street through the successful stock debut of toy company LeapFrog Enterprises Inc. His firm Knowledge Universe has a 63% stake in the company.

Timing is critical in a comeback attempt, especially for someone whose misdeeds are perceived as particularly serious. Mr. Milken rebuilt his reputation slowly and steadily, and had the advantage of being involved in philanthropy before his scandal. Even charitable giving, done too soon, could come across as insincere.

A quicker return
"It's a big mistake not to wait until the storm passes," warns PR expert Robert Dilenschneider of The Dilenschneider Group.

CEOs whose reputations were tarnished, not for anything approaching fraud, but by what are perceived as poor business judgments, may be able to climb back more quickly. Taking a salary cut to work for a worthy cause can help. Mr. Allison, who was pushed out of Merrill Lynch & Co. in 1999, joined a Web-based educational nonprofit. He recently resurfaced as CEO of TIAA-CREF.

Making people rich also wins hearts. John Meriwether of JWM Partners was caught up in a trading scandal at Salomon Brothers in 1991, as well as the disastrous collapse of Long-Term Capital Management in 1998. But he made a second comeback this summer by reaching the $1 billion he set for his hedge fund.

Using original skills
Fallen executives should also focus on the skills that put them at the top to begin with. Consider Mr. Nasser, who was ousted by the Ford Motor Co. board in October 2001. He returned to his entrepreneurial roots as a partner with the venture capital arm of Bank One. Through Bank One, he became nonexecutive chairman of Polaroid Corp., a company he's helping to turn around.

"He made a thorough assessment of his skills and where he could apply them," says Mr. Dilenschneider.

The PR executive knows whereof he speaks. A former CEO of Hill & Knowlton, Mr. Dilenschneider left in 1991 amid controversy, in part for leading a pro-life campaign on behalf of the National Conference of Catholic Bishops. His company has since become internationally renowned for crisis management.

"I decided what I wanted to do, and I went out and did it," says Mr. Dilenschneider, who won't comment on the circumstances of his own departure.

Copyright 2003, Crain Communications, Inc

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