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Detroit — Former Visteon Corp. President and CEO Timothy Leuliette recently walked away from a court battle with a $16.7 million golden parachute and a battered reputation after an arbitrator revealed he solicited prostitutes and downloaded pornography on company devices.

Federal court records obtained by The Detroit News detail a legal tug-of-war over porn images found on Leuliette's devices that Visteon wanted released to the public during a civil fight that sheds light on a bitter split between the global automotive supplier and a veteran industry executive.

The $16.7 million severance could have been much bigger. Leuliette sought more than $61 million but an arbitrator determined the porn and prostitution shielded Visteon from the larger payout.

The two-year legal battle largely played out in private as Leuliette fought to keep details about his sexual behavior under wraps. But in January, U.S. District Judge Terrence Berg unsealed an arbitration award that revealed the prostitution activities and pornography.

"Visteon is a public company and has fiduciary duties to its shareholders," Berg wrote. "The public deserves to know why Visteon’s ex-CEO was terminated, and why he is collecting a $15M+ severance package from the company."

Visteon disclosed the payment to investors in a regulatory filing but Leuliette's conduct has never been publicly revealed until now.

A lawyer for Leuliette, 68, did not respond to messages seeking comment Monday. Visteon spokesman Jim Fisher declined comment.

Leuliette had a long history guiding automotive suppliers when he was named to lead Visteon. He was CEO of Dura Automotive Systems Inc. until 2010, the year he became a Visteon director. He was CEO of Metaldyne Corp. from 2001 to 2008.

Before that, he was chief executive officer of ITT Automotive and president of Penske Corp.

Leuliette's tenure as Visteon CEO dates to September 2012 as Visteon, which designs, engineers and manufactures vehicle cockpit electronics, emerged from Chapter 11 bankruptcy with its stock price at barely $27 a share. When he was hired, Leuliette and Visteon signed nondisparagement provisions.

The merger and acquisition expert helped push Visteon's stock to $106.26 on Dec. 26, 2014. 

During Leuliette's tenure, Visteon acquired the electronics business of Johnson Controls and Cooper Standard's thermal and emissions product lines, sold various lighting and interiors divisions, and merged other business units.

The company — once a unit of Ford Motor Co. — became independent in 2000.

David Cole, chairman emeritus of the Ann Arbor-based Center for Automotive Research, met Leuliette when the former CEO was coming up at Bendix Corporation, a manufacturing and engineering company and automotive supplier.

“He had a very specific ambition,” Cole said. “He wanted to be a CEO. I always thought he was a very smart guy. He understood business. He had the ability to be a very significant leader in the industry.”

“His (Visteon) performance was very good,” Cole added. “For a company like Visteon, you had to have somebody who was a serious data-driven executive to make things happen. I saw Tim as a really excellent leader.”

In early 2015, the supplier's board started a process that would lead to Leuliette's departure. 

At the time, Leuliette announced he would remain CEO, possibly until year's end, during a search for his successor. A schism soon developed, however.

On June 8, 2015, Chairman Francis Scricco told Leuliette he was being fired.

Two days later, Leuliette resigned at the board's request. Left unclear was exactly how much severance Leuliette would receive.

In October 2015, four months after his initial termination, Visteon's board members cited five grounds to fire Leuliette with cause, based on a law firm's investigation of allegations against him. 

The reasons the company gave included spending significant time away from company headquarters, operating two other companies and engaging in talks about a potential sale of Visteon's electronics division without board involvement, and obtaining reimbursement for a family trip to Israel.

In February 2016, Leuliette demanded arbitration, as permitted under his employment contract.He sought $61,630,132 in equity awards, retirement payments, severance and other benefits. 

Visteon kept digging and sued Leuliette in federal court in an unsuccessful attempt to block the arbitration.

In May 2016, Visteon advised Leuliette there were additional grounds for termination and referenced the pornography and prostitution allegations after searching his electronic devices.

In his ruling, arbitrator Martin Weisman concluded that the five reasons cited by Visteon were insufficient to justify firing Leuliette with cause.

The arbitrator found, however, there was legitimate cause for Leuliette’s termination "based on his downloading pornography on to company computers, posting obscene messages and pictures on social media, storing obscene photographs on company devices, viewing websites concerning prostitution and soliciting prostitutes," the judge wrote.

Visteon officials wanted the public to see the porn images and fought to have the pictures unsealed in federal court.

"Such material, however, is not relevant to the issue or the decision currently
before the court," Berg wrote.

The arbitrator concluded the porn, alone, provided "justification for a termination for cause. It is also important to note that while no specific damage to Visteon has been offered into evidence, it is clear that this type of conduct would and could rise to a material violation of Visteon's rules, regulations, policies and/or restrictions regarding employee conduct."

Leuliette claimed the "offending material" appeared on his work devices after "syncing" the electronics with his home computer, according to court records.

"This claim is not credible," the arbitrator wrote, citing evidence Leuliette was using various Visteon devices during business trips to the Far East.

"A CEO of a major stock exchange company has a high moral standard to uphold and this conduct was inconsistent with that standard as well as the written policies of Visteon," the arbitrator wrote. "The threat of exposure of this conduct for such a CEO is damage enough."

The allegations should concern shareholders, said Naveen Khanna, chairman of the finance department at Michigan State University’s Eli Broad College of Business.

“If I was a stockholder, I would probably be upset at the board. I’d like to know why he was fired,” Khanna said. “Was he not performing according to the contract? Was his business judgment not very good? As a stockholder, that would be my major concern.”

The Leuliette case is emblematic of new problems facing companies in the social media era, Khanna said.

“Social media activity and the consequences of such behavior have now become much more material than they were before,” he said. “Supposing it comes out that someone is indulging in these pleasures on the side, is that going to cause any value loss to a firm or loss of reputation for a company?”

Visteon revealed the payout in a U.S. Securities and Exchange Commission filing April 26. In a February filing, company officials said they did not expect the payout to hurt the company's operations or finances.

Details about Leuliette's sexual behavior represent an older era, said Cole, the auto-industry veteran.

“He never made dirty jokes or anything like that,” Cole said. “In this day and age, nothing’s surprising to me. That was the old days. I think we’re finding out now that this is much more of a problem than it was then. It was kind of under the radar.”

rsnell@detnews.com

(313) 222-2486

Twitter: @robertsnellnews

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