By Grant McCool

NEW YORK (Reuters) - Tyco International Ltd and its former chief executive, Dennis Kozlowski, reached a tentative settlement on Friday in litigation over compensation before he was convicted and jailed in 2005 for a massive fraud.

"An agreement in principle was reached today between the parties," Tyco said in a statement. "Because this is a matter of ongoing litigation, we have no additional comments about the case."

A spokeswoman for the law firm representing Kozlowski, Debevoise & Plimpton in New York, declined to comment.

The civil litigation was filed in 2002 in U.S. District Court in Manhattan. Tyco accused Kozlowski of fraud and breach of fiduciary duty. Two years ago, a judge found Kozlowski liable on most claims and a trial that had been scheduled to start next week would have decided any damages owed to the company.

Kozlowski, who is in his mid-60s, was convicted in June 2005 of securities fraud, grand larceny and falsifying business records in New York State Supreme Court. A jury found that Kozlowski and former chief financial officer Marc Swartz stole $137 million from the conglomerate.

Jurors heard about a lavish $2 million birthday party on the Italian island of Sardinia in 2001 and other extravagances, partly using Tyco money.

Kozlowski was sentenced to 8-1/3 years to 25 years in prison. The New York State parole board denied him parole in April.

The case is Tyco International et al v Kozlowski in U.S. District Court for the Southern District of New York No. 02-7317

(Reporting By Grant McCool; Editing by Kenneth Barry)