NEW YORK (Bloomberg) ? Tyco International Ltd.?s former Chief Financial Officer Mark Swartz testified that directors approved numbers that were used to calculate bonuses he and ex-Chief Executive L. Dennis Kozlowski are accused of stealing.

Swartz told a New York jury yesterday that he presented adjusted earnings numbers for 1998 to the Tyco board?s compensation committee a month before he and Kozlowski received extra bonuses totalling $37.5 million in forgiven loans based on those numbers. Swartz and Kozlowski are charged with fraud and larceny.

The two men got bonuses each year if Bermuda-registered Tyco?s earnings and income exceeded goals set annually by the compensation committee.

Because the 1998 numbers were adjusted downward, the 1999 rise in Tyco?s earnings was that much bigger, Swartz said. Prosecutors say the compensation committee never authorised the increased bonuses.

?The targets were based on restated 1998 numbers,? said Swartz in his second day on the witness stand. He said he presented the new numbers to the compensation committee in July, 1999. The extra bonus was paid in August.

Kozlowski, 58, and Swartz, 44, are charged with looting Tyco of $150 million and defrauding its shareholders by selling $575 million of Tyco stock at inflated prices. They are being tried for the second time after their first case ended in a mistrial in April 2004. Swartz also testified in the previous trial.

Because of two acquisitions the company made in 1998, that year?s earnings figures were subject to change when the committee set the 1999 benchmarks, Swartz said.

When Swartz presented the restated numbers to the committee, three directors told him and Kozlowski that ?it looked like we were having a great year as far as compensation?, Swartz said. One expressed surprise about the size of the bonuses called for under the restated numbers, Swartz said, adding that all four members of the committee approved the new numbers.

Swartz also told the jury that Kozlowski told him director Philip Hampton approved their use of the increased payments to pay off loans from Tyco.

?It was my understanding that Phil was speaking on behalf of the compensation committee,? Swartz said. Hampton died in 2001.

Swartz repeatedly denied that he took any money from Tyco without approval of the board?s compensation committee.

?Did you set your own compensation? ? Swartz?s lawyer Charles Stillman asked. ?No,? said Swartz.

?Who set your compensation? ? Stillman asked. ?The compensation committee,? Swartz said.

Swartz and Kozlowski face 31 charges of stock fraud, falsifying business records, grand larceny and conspiracy. The most serious charge carries a 25-year jail term. Both men are free on bond.

Bermuda-based Tyco, which operates out of West Windsor, New Jersey, is the world?s biggest maker of electronic connectors, industrial valves and security systems.

Swartz became finance chief at Tyco in 1995, at age 35. He left the company in September 2002. Kozlowski left Tyco on June 3, 2002, the day before he was indicted on charges of evading taxes on millions of dollars in art purchases. He is to be tried separately on those charges.

Direct examination of Swartz will continue on Monday.