On the day Albert J. Dunlap was named chairman and chief executive of Sunbeam Corp. last summer, Sunbeam’s stock price soared 59 percent. It is believed to be the single biggest jump in New York Stock Exchange history, based on the naming of a CEO.

Dunlap has made plenty of friends among investors over the years, but has also attracted plenty of heat and derisive nicknames (“Chainsaw Al,” “Rambo in Pinstripes,” “The Shredder”) for his dramatic restructurings, which typically involve sizable layoffs.

His restructurings, while controversial, have been hugely successful from a financial standpoint, making Dunlap one of the most sought-after corporate chieftains in the world.

Dunlap met with the Business Journal during his recent visit to Los Angeles to participate in the Forbes CEO Forum. He discussed a wide range of topics, including executive compensation, directors’ fiduciary duties and corporate restructurings. Some excerpts:

I have very strong views on the whole area of executive compensation. Firstly, I think executives ought to be compensated on wealth they create. There was one survey I saw last year where 73 percent of the companies that lost money incentivized their senior executives.

I can’t understand why you have to incentivize someone to lose money.

It gets back to the board of directors. If you really say what’s wrong with executive compensation, go to the board of directors. That’s where it is. The problem is that boards of directors are too protected.

When I go to companies (in dire situations), the question I raise is, “Why did someone allow the corporation to get to the point it is that I have to go in, and then I have to make all these rather dramatic decisions, and then all of a sudden I become the focal point?”

But what you’ve got to look at is that somebody created a horrendous problem.

So how do you fix this board of directors situation? The real key to boards of directors is they should only be paid in stock and made to take positions in the company.

You can’t deal with the CEO if you don’t deal with the board. You can raise all kinds of hell about the CEO, but the board’s going to protect him. You’ve got to go at the boards. You’ve got to get people on the boards who have an investment. You’ve got to get people on the boards who realize they have a fiduciary responsibility to the shareholders.

It’s absolutely critical, and you cannot have professional directors. If my profession is to be a director and I’m going to serve on 10 boards and get paid $70,000 per board, I’m not going to jeopardize that by taking a strong position, because then somebody’s not going to put me on their board.

Forbes magazine did a story a couple of years ago, and the cover was called “Pigging Out.” It was about boards of directors. They asked CEOs to comment on it, and not one would touch it.

I did. My comment was, “Boards of directors are America’s last dirty little secret.”

The board of directors issue is big. It relates to executive compensation, it relates to proper restructuring. It relates to corporations creating value.

Restructuring is very misunderstood. Let’s take Sunbeam. Sunbeam last year lost roughly $230 million, was losing market share. It was a basket case. I’ve been here 11 months.

What did I do? There are four things you have to do to successfully complete a restructuring.

No. 1, you’ve got to deal with the management issue. If you go to a company that’s very, very poorly run, you don’t just change one or two people and hope that God’s going to come down and say to all the other people, “Now you’re good.”

It doesn’t work that way. They created the problem. So first you’ve got to deal with them.

At Sunbeam, I got in and decided we would have a major meeting on Monday. I get a call from one of the most senior executives and he says, “Al, I’m going on vacation.” And I said, “Oh, yeah? If you’re going on vacation, stay on vacation.” (He probably should have gone on vacation, because on Tuesday I fired him.)

Then I had my meeting and we talked to people. Here’s what you get: “We’ve tried that before and it doesn’t work. Everything is going well.”

The company is losing $230 million! I’d hate to think how it would be if it wasn’t doing so well.

I asked one person to tell me the margin on his products. He said, “Can I get back to you?”

I like a joke, and that was a very funny fellow, but he was serious. He didn’t know.

We got rid of all of them. And the way you do it is, when people are telling you how good the company is and the company is doing awful, when they’re telling you they’ve tried it all before, obviously they’re not going to do anything. When they don’t understand their customers, you figure these people are not going to change.

After the management, the second thing failing companies have is terrible cost structures. We cut out $225 million of cost at Sunbeam. We shut down the company’s six headquarters and put everybody in one floor of a building.

We had an original headquarters staff of 385 people, and now we have a headquarters staff of 98, and we’re all in one building. We had 26 factories. We now have eight. We had 61 warehouses. We now have 18.

We cut the costs dramatically.

Then there’s the third thing: What business am I in?

At Sunbeam we were in outdoor furniture, we were in decorative bedding, we were in clocks and thermometers, we were in gas logs. So we sold all of that. We stayed in appliances, electric blankets, outdoor cooking.

And why? Because of the products we stayed in, over two-thirds of it we are No. 1 or No. 2. I’m a great believer in the core business concept. You find out what your core business is and do it.

Then there’s the fourth thing. You’ve got the management team, you’ve got the cost structure, and you’ve got the core business. The fourth thing the most important is you’ve got to come up with a vision for the future. You’ve got to have a strategy.

A lot of people say, “People like Dunlap just want short-term results. I’ve got a long-term horizon.”

We’ve said we’re at about $1 billion in sales (at Sunbeam). We’ve said we’ll grow a billion dollars over the next three years. We’ve laid out exactly how.

What are we going to do? We’ve come out with 30 new products this year domestically. We’ve come out with 42 new international products. We’ve come out with 18 new distributor agreements around the world Hong Kong, China, Japan, the Philippines, Ecuador, Peru, Colombia.

We have a real vision of where we’re going to go and how we’re going to get there.

When you get down to it, the true description of a restructuring that goes right is a great team, cut your costs, determine what business you’re in and have a vision for the future. Not the rhetoric story that’s always written that’s totally superficial and lazy that you have to fire a lot of people.

When you go to a corporation and it’s clear the corporation is going to go under, everybody is clearly out of a job. I have to go in there and try to save as many people as I can. I’ve saved 6,000 jobs at Sunbeam. I saved 18,000 jobs at Scott Paper.

That’s the way I look at it. Just like going into combat. You try to save as many troops as you can. Some of your people are going to lose it. But somebody created that problem. Someone created the problem that put the whole corporation and everybody’s job in jeopardy. In my view, those people are the culprits.