DETROIT/NEW YORK (Bloomberg) -- First came the affair. Then the Ponzi scheme. Now -- a $28.8 billion transaction involving two storied American corporations.
It’s been a remarkable -- and remarkably unusual -- run for Alex Molinaroli, CEO of Johnson Controls Inc., which Monday confirmed a deal to join forces with Tyco International, a company that has known controversy on an even grander scale.
After spending 33 mostly quiet years at the Milwaukee-based conglomerate, Molinaroli’s two years at the helm have been marked both by the transformation of Johnson Controls and one lurid headline after another, often in ways few might have ever thought possible. Or possible to survive.
Twice the 56-year-old executive was investigated by his board of directors and once was found in violation of the company’s ethics policy. Even though his company’s stock price has badly lagged the Standard & Poor’s 500 Index, he ended up receiving a big raise and now will run a combined industrial powerhouse that immediately becomes the 14th largest industrial in the U.S. by market capitalization.
“In an era when investors and the public expect earnings performance to be accompanied by ethical conduct, it’s a surprise he’s running JCI let alone the combined company,” said Erik Gordon, a business law professor at the University of Michigan’s Ross School of Business.
No legal wrongdoing
Molinaroli’s personal missteps fell short of legal wrongdoing but nonetheless prompted scrutiny by Johnson Controls. In 2014, 11 months after ascending to the top job, the board cut his bonus by about 20 percent because he failed to disclose an extramarital affair with the principal of a consulting firm that worked with Johnson Controls. Although an external investigation determined that corporate assets weren’t misused, the relationship was deemed to violate the company’s ethics policy.
It also led to divorce proceedings.
Molinaroli found himself touched by controversy again in 2015 when it came to light that he was both the victim of Ponzi scheme artist Joseph Zada and provided financial support after the fraudster was charged. Other marks included retired hockey star Sergei Fedorov and a gaggle of Florida firefighters and doctors.
After Zada’s conviction in September, the federal prosecutor disclosed that Molinaroli had purchased the swindler’s home in ritzy Detroit suburb Grosse Pointe Shores, Mich., and allowed him to continue to live there rent-free, covered Zada’s legal bills and offered to provide millions of dollars in restitution for victims, according to a court transcript.
In an October interview with the Milwaukee Sentinel-Journal, Molinaroli said he didn’t know why he allowed Zada to continue to live in the mansion, which he said he’d purchased as an investment. “I think we all make mistakes in our life,” he told the paper. He also denied offering restitution.
The board hired outside counsel to examine the unusual relationship with a con artist and found the “association was personal in nature, did not involve misuse of corporate assets or a violation of company policies, and did not appear to involve a violation of law,” Jeffrey Joerres, who became lead director Jan. 1, told Bloomberg in a Dec. 14 e-mailed statement.
Johnson Controls took the matter “extremely seriously,” Joerres said, adding Molinaroli enjoys the board’s support.

Pay for performance