International Directory of Business Biographies

International Directory of BUSINESS BIOGRAPHIES International Directory of BUSINESS BIOGRAPHIES VOLUME 4 S-Z Edited ...

Author: Neil Schlager

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International Directory of

BUSINESS BIOGRAPHIES

International Directory of

BUSINESS BIOGRAPHIES VOLUME 4 S-Z Edited by Neil Schlager Produced by Schlager Group Inc.

International Directory of Business Biographies Schlager Group Inc. Staff Neil Schlager, president Marcia Merryman Means, managing editor Project Editor Margaret Mazurkiewicz

Editorial Support Services Luann Brennan

Composition Evi Seoud

Editorial Erin Bealmear, Joann Cerrito, Jim Craddock, Stephen Cusack, Miranda Ferrara, Peter M. Gareffa, Kristin Hart, Melissa Hill, Carol Schwartz, Bridget Travers, Michael J. Tyrkus

Rights Acquisitions Management Mari Masalin-Cooper, Shalice Shah-Caldwell

Product Design Jennifer Wahi

Imaging and Multimedia Dean Dauphinais, Lezlie Light, Dan Newell, Christine O’Bryan

Manufacturing Rhonda Williams

© 2005 Thomson Gale, a part of The Thomson Corporation.

For permission to use material from this product, submit your request via Web at http://www.gale-edit.com/permissions, or you may download our Permissions Request form and submit your request by fax or mail to:

Cover photographs reproduced by permission of AP/Wide World Photos: (from left to right) Richard D. Parsons, chairman and chief executive officer of Time Warner; Carly Fiorina, chairwoman, chief executive officer, and president of Hewlett-Packard Company; William Clay Ford Jr., president and chief executive officer of Ford Motor Company; and Nobuyuki Idei, chief executive officer of Sony Corp.

Thomson and Star Logo are trademarks and Gale and St. James Press are registered trademarks used herein under license.

Permissions Thomson Gale 27500 Drake Rd. Farmington Hills, MI 48331-3535 Permissions Hotline: 248-699-8006 or 800-877-4253, ext. 8006 Fax: 248-699-8074 or 800-762-4058

For more information, contact Thomson Gale 27500 Drake Rd. Farmington Hills, MI 48331-3535 Or you can visit our Internet site at http://www.gale.com ALL RIGHTS RESERVED No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, or information storage retrieval systems—without the written permission of the publisher.

While every effort has been made to ensure the reliability of the information presented in this publication, Thomson Gale does not guarantee the accuracy of the data contained herein. Thomson Gale accepts no payment for listing; and inclusion in the publication of any organization, agency, institution, publication, service, or individual does not imply endorsement of the editors or publisher. Errors brought to the attention of the publisher and verified to the satisfaction of the publisher will be corrected in future editions.

LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA International directory of business biographies / Neil Schlager, editor ; Vanessa TorradoCaputo, assistant editor; project editor, Margaret Mazurkiewicz ; produced by Schlager Group. p. cm. Includes bibliographical references and indexes. ISBN 1-55862-554-2 (set hardcover : alk. paper) — ISBN 1-55862-555-0 (volume 1) — ISBN 1-55862-556-9 (volume 2) — ISBN 1-55862-557-7 (volume 3) — ISBN 1-55862-558-5 (volume 4) 1. Businesspeople—Biography. 2. Directors of corporations—Biography. 3. Executives—Biography. 4. Industrialists—Biography. 5. Businesspeople—Directories. 6. Directors of corporations—Directories. 7. Executives—Directories. 8. Industrialists—Directories. I. Schlager, Neil, 1966- II. Torrado-Caputo, Vanessa. III. Mazurkiewicz, Margaret. IV. Schlager Group. HC29.I57 2005 338.092’2—dc22

2004011756

British Library Cataloguing in Publication Data. A Catalogue record of this book is available from the British Library. Printed in the United States of America 10 9 8 7 6 5 4 3 2 1

Contents

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE vii–viii LIST OF ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix LIST OF CONTRIBUTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi LIST OF ENTRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii–xxii ENTRIES VOLUME 1: A-E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–466 VOLUME 2: F-L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–505 VOLUME 3: M-R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–457 VOLUME 4: S-Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–403

NOTES ON CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405–410 NATIONALITY INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411–417 GEOGRAPHIC INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419–425 COMPANY AND INDUSTRY INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427–447 NAME INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449–465

International Directory of Business Biographies

v

Preface

Welcome to the International Directory of Business Biographies (IDBB). This four-volume set covers more than 600 prominent business people from around the world and is intended for reference use by management students, librarians, educators, historians, and others who seek information about the people leading the world’s biggest and most influential companies. The articles, all of which include bylines, were written by a team of journalists, academics, librarians, and independent scholars. (See Notes on Contributors.) Approximately 60 percent of the entrants are American, while 40 percent are from other countries. Articles were compiled from material supplied by companies for whom the entrants work, general and academic periodicals, books, and annual reports. With its up-to-date profiles of important figures from the world of international business, IDBB complements the popular St. James Press series International Directory of Company Histories (IDCH), which provides entries on the world’s largest and most influential companies. Leaders of many of the companies covered in IDCH are profiled in IDBB.

INCLUSION CRITERIA

The list of entrants in IDBB was developed by the editors in consultation with the academics and librarians serving on IDBB ’s advisory board. (See List of Advisers.) The majority of people profiled here are current or recent chief executives of large, publicly traded companies such as those found on the Fortune 500 and Global 500 lists of companies compiled by Fortune magazine. Among this group are familiar names such as H. Lee Scott Jr. of Wal-Mart, Carly Fiorina of Hewlett-Packard, John Browne of BP, and Nobuyuki Idei of Sony. Retired or former executives like GE’s Jack Welch and Vivendi Universal’s Jean-Marie Messier also make the list, as do a few deceased individuals who were active in the past few years, including Jim Cantalupo of McDonald’s and Chung Ju-yung of Hyundai. In addition, we have included other high-profile individuals whose companies are privately held or are not large enough to make the Fortune lists but whose influence makes them valuable candidates for study, such as Kase L. Lawal of CAMAC Holdings, Oprah Winfrey of Harpo Productions, and Terence Conran of Conran Holdings. We also mix in upand-coming executives who may not currently be chief executives but who are rapidly gaining prominence in the business


world; among this group are Indra K. Nooyi of PepsiCo and Lachlan and James Murdoch of News Corporation. For these latter categories, we have attempted to highlight female and minority executives who, even in the early twenty-first century, continue to be underrepresented in the upper echelons of the corporate world. Readers should note that our aim was to produce balanced, objective profiles of influential executives, and individuals were not disqualified if they or their companies were enmeshed in scandal. Thus, the set includes articles about executives such as Ken Lay of Enron, Dennis Kozlowski of Tyco International, and Martha Stewart of Martha Stewart Living Omnimedia, all of whom were indicted on criminal charges in the early 2000s.

ARRANGEMENT OF SET AND ENTRY FORMAT

The four-volume set is arranged alphabetically by surname. An alphabetical list of subjects is included in the frontmatter. Within each entry, readers will find the following sections: Fact Box: This section provides details about the subject’s birth and death dates, birth and death locations, family information, educational background, work history, major awards, and publications. For entrants affiliated with a specific company at the time of publication, the Fact Box also includes the company address and URL address, except in cases where the subject is no longer affiliated with a company. Main Text: This section provides a narrative overview of the subject’s life, career trajectory, and influence. The text includes subheadings to assist the reader in navigating the key periods in the subject’s life. Sources for Further Information: This section lists books, articles, and Web sites containing more information about the subject. Also included here are sources from which quotations are drawn in the main text. See also: At the end of most articles is a cross-reference to applicable company profiles in the International Directory of Company Histories.

vii

Preface INDEXES

IDBB includes four indexes. The Nationality Index lists entrants according to their country of birth, country of citizenship (if different from country of birth), and country of long-term residence. The Geographic Index lists entrants according to the country of the headquarters of operation or the country where the subject works (if different from country of the headquarters); the index lists entrants according to their employer at the time of publication as well as significant previous companies where they were employed. The Company and Industry Index lists entrants according to their current and former companies of employment as well the industries in which those companies operate; in this latter index, industries are listed in small caps, while companies are listed in roman font with upper- and lowercase letters. The Name Index lists all entrants as well as other significant individuals discussed in the text.

ACKNOWLEDGMENTS

Numerous individuals deserve gratitude for their assistance with this project. I am indebted to everyone at St. James Press

viii

and Thomson Gale who assisted with the production, particularly Margaret Mazurkiewicz, who provided crucial help at all stages of production; I also thank Chris Nasso, Peter Gareffa, and Bridget Travers for their support. At Schlager Group, Marcia Merryman Means elucidated style matters and coordinated the copyediting and fact-checking process, while Jayne Weisblatt and Vanessa Torrado-Caputo provided valuable editorial assistance. Neil Schlager

SUGGESTIONS WELCOME

Comments and suggestions from users of IDBB on any aspect of the product are cordially invited. Suggestions for additional business people to include in future new editions or supplements are also welcomed. Please write: The Editor International Directory of Business Biographies Thomson Gale 27500 Drake Rd. Farmington Hills, MI 48331-3535


Advisers

Vincenzo Baglieri, PhD Director, Technology Management Department Bocconi School of Management Bocconi University Milan, Italy

Karl Moore, PhD Associate Professor Faculty of Management McGill University Montreal, Canada

Lyda Bigelow, PhD Assistant Professor of Organization and Strategy Olin School of Business Washington University in St. Louis St. Louis, Missouri

Mohammad K. Najdawi, PhD Senior Associate Dean and Professor Department of Decision and Information Technologies College of Commerce and Finance Villanova University Villanova, Pennsylvania

Diane Davenport, MLS Reference Manager Berkeley Public Library Berkeley, California

Judith M. Nixon, MLS Management and Economics Librarian Purdue University West Lafayette, Indiana


ix

Contributors

Elisa Addlesperger

Lauri Harding

David Petechuk

Barry Alfonso

Lucy Heckman

Anastasis Petrou

Margaret Alic

Ashyia N. Henderson

A. Petruso

Don Amerman

Eve M. B. Hermann

Luca Prono

William Arthur Atkins

John Herrick

Trudy Ring

Kirk H. Beetz

Jeremy W. Hubbell

Nelson Rhodes

Patricia C. Behnke

Dawn Jacob Laney

Celia Ross

Mark Best

Michelle Johnson

Joseph C. Santora

Alan Bjerga

Jean Kieling

Lorraine Savage

Jeanette Bogren

Barbara Koch

Thomas Borjas

Deborah Kondek

Carol Brennan

Alison Lake

Jack J. Cardoso

Sandra Larkin

C. A. Chien

Josh Lauer

Peter Collins

Anne Lesser

Stephen Collins

David Lewis

Matthew Cordon

Jennifer Long

Peggy Daniels

DeAnne Luck

Amanda de la Garza

Susan Ludwig

Ed Dinger

David Marc

Catherine Donaldson

William F. Martin

Jim Fike

Beth Maser

Virginia Finsterwald

Doris Morris Maxfield

Tiffeni Fontno

Ann McCarthy

Katrina Ford

Patricia McKenna

Stephanie Watson

Erik Donald France

Lee McQueen

Valerie Webster

Lisa Frick

Jill Meister

S. E. Weigant

Margaret E. Gillio

Carole Sayegh Moussalli

Kelly Wittmann

Larry Gilman

Miriam C. Nagel

Lisa Wolff

Meg Greene

Catherine Naghdi

Timothy Wowk

Paul Greenland

Caryn E. Neumann

Ronald Young

Barbara Gunvaldsen

John M. Owen

Barry Youngerman

Timothy L. Halpern

Carol Pech

Candy Zulkosky


M. W. Scott Cathy Seckman Kenneth R. Shepherd Stephanie Dionne Sherk Hartley Spatt Janet P. Stamatel Kris Swank François Therin Marie L. Thompson Mary Tradii Scott Trudell David Tulloch Michael Vandyke Maike van Wijk

xi

List of Entrants

A

Colleen Barrett

F. Duane Ackerman

Craig R. Barrett

Josef Ackermann

Matthew William Barrett

Shai Agassi

John M. Barth

Umberto Agnelli

Glen A. Barton

Ahn Cheol-soo

Richard Barton

Naoyuki Akikusa

J. T. Battenberg III

Raúl Alarcón Jr.

Claude Bébéar

William F. Aldinger III

Pierre-Olivier Beckers

Vagit Y. Alekperov

Jean-Louis Beffa

César Alierta Izuel

Alain Belda

Herbert M. Allison Jr.

Charles Bell

John A. Allison IV

Luciano Benetton

Dan Amos

Robert H. Benmosche

Brad Anderson

Silvio Berlusconi

Richard H. Anderson

Betsy Bernard

G. Allen Andreas Jr.

Daniel Bernard

Micky Arison

David W. Bernauer

C. Michael Armstrong

Wulf H. Bernotat

Bernard Arnault

Gordon M. Bethune

Gerard J. Arpey

J. Robert Beyster

Ramani Ayer

Jeff Bezos Pierre Bilger

B

Alwaleed Bin Talal

Michael J. Bailey

Dave Bing

Sergio Balbinot

Carole Black

Steve Ballmer

Cathleen Black

Jill Barad

Jonathan Bloomer

Don H. Barden

Alan L. Boeckmann

Ned Barnholt

Daniel Bouton


xiii

List of Entrants Martin Bouygues

Chen Tonghai

Jack O. Bovender Jr.

Kenneth I. Chenault

Peter Brabeck-Letmathe

Fujio Cho

Richard Branson

Chung Ju-yung

Edward D. Breen

Carla Cico

Thierry Breton

Philippe Citerne

Ulrich Brixner

Jim Clark

John Browne

Vance D. Coffman

Wayne Brunetti

Douglas R. Conant

John E. Bryson

Phil Condit

Warren E. Buffett

Terence Conran

Steven A. Burd

John W. Conway

H. Peter Burg

John R. Coomber

Antony Burgmans

Roger Corbett

James Burke

Alston D. Correll

Ursula Burns

Alfonso Cortina de Alcocer David M. Cote

C

Robert Crandall

Louis C. Camilleri

Mac Crawford

Lewis B. Campbell

Carlos Criado-Perez

Philippe Camus

James R. Crosby

Michael R. Cannon

Adam Crozier

Jim Cantalupo

Alexander M. Cutler

Thomas E. Capps

Márcio A. Cypriano

Daniel A. Carp Peter Cartwright

D

Steve Case

David F. D’Alessandro

Cássio Casseb Lima

Eric Daniels

Robert B. Catell

George David

William Cavanaugh III

Richard K. Davidson

Charles M. Cawley

Julian C. Day

Clarence P. Cazalot Jr.

Henri de Castries

Nicholas D. Chabraja

Michael S. Dell

John T. Chambers

Guerrino De Luca

J. Harold Chandler

Hebert Demel

Morris Chang

Roger Deromedi

xiv


List of Entrants Thierry Desmarest

Jim Farrell

Michael Diekmann

Franz Fehrenbach

William Dillard II

Pierre Féraud

Barry Diller

E. James Ferland

John T. Dillon

Dominique Ferrero

Jamie Dimon

Trevor Fetter

Peter R. Dolan

John Finnegan

Guy Dollé

Carly Fiorina

Tim M. Donahue

Paul Fireman

David W. Dorman

Jay S. Fishman

Jürgen Dormann

Niall FitzGerald

E. Linn Draper Jr.

Dennis J. FitzSimons

John G. Drosdick

Olav Fjell

José Dutra

John E. Fletcher William P. Foley II

E

Jean-Martin Folz

Tony Earley Jr.

Scott T. Ford

Robert A. Eckert

William Clay Ford Jr.

Rolf Eckrodt

Gary D. Forsee

Michael Eisner

Kent B. Foster

John Elkann

Charlie Fote

Larry Ellison

Jean-René Fourtou

Thomas J. Engibous

H. Allen Franklin

Gregg L. Engles

Tom Freston

Ted English

Takeo Fukui

Roger Enrico

Richard S. Fuld Jr.

Charlie Ergen

S. Marce Fuller

Michael L. Eskew

Masaaki Furukawa

Matthew J. Espe Robert A. Essner

G

John H. Eyler Jr.

Joseph Galli Jr. Louis Gallois

F

Christopher B. Galvin

Richard D. Fairbank

Roy A. Gardner

Thomas J. Falk

Jean-Pierre Garnier

David N. Farr

Bill Gates


xv

List of Entrants David Geffen

George J. Harad

Jay M. Gellert

William B. Harrison Jr.

Louis V. Gerstner Jr.

Richard Harvey

John E. Gherty

William Haseltine

Carlos Ghosn

Andy Haste

Charles K. Gifford

Lewis Hay III

Raymond V. Gilmartin

William F. Hecht

Larry C. Glasscock

Bert Heemskerk

Robert D. Glynn Jr.

Rainer Hertrich

Francisco González Rodríguez

John B. Hess

David R. Goode

Laurence E. Hirsch

Jim Goodnight

Betsy Holden

Fred A. Goodwin

Chad Holliday

Chip W. Goodyear

Katsuhiko Honda

Andrew Gould

Van B. Honeycutt

William C. Greehey

Kazutomo Robert Hori

Stephen K. Green

Janice Bryant Howroyd

Hank Greenberg

Ancle Hsu

Jeffrey W. Greenberg

Günther Hülse

Robert Greenberg

L. Phillip Humann

J. Barry Griswell

Franz Humer

Rijkman W. J. Groenink Andy Grove

I

Oswald J. Grübel

Nobuyuki Idei

Jerry A. Grundhofer

Robert Iger

Rajiv L. Gupta

Jeffrey R. Immelt

Carlos M. Gutierrez

Ray R. Irani

H

J

Robert Haas

Michael J. Jackson

David D. Halbert

Tony James

Hiroshi Hamada

Charles H. Jenkins Jr.

Toru Hambayashi

David Ji

Jürgen Hambrecht

Jiang Jianqing

John H. Hammergren

Steve Jobs

H. Edward Hanway

Jeffrey A. Joerres

xvi


List of Entrants Leif Johansson

Richard Jay Kogan

Abby Johnson

John Koo

John D. Johnson

Timothy Koogle

John H. Johnson

Hans-Joachim Körber

Robert L. Johnson

Richard M. Kovacevich

William R. Johnson

Dennis Kozlowski

Lawrence R. Johnston

Sallie Krawcheck

Jeff Jordan

Ronald L. Kuehn Jr.

Michael H. Jordan

Ken Kutaragi

Abdallah Jum’ah Andrea Jung

L

William G. Jurgensen

Alan J. Lacy A. G. Lafley

K

Igor Landau

Eugene S. Kahn

Robert W. Lane

Akinobu Kanasugi

Sherry Lansing

Isao Kaneko

Jean Laurent

Ryotaro Kaneko

Kase L. Lawal

Mel Karmazin

Bob Lawes

Karen Katen

Ken Lay

Jeffrey Katzenberg

Shelly Lazarus

Jim Kavanaugh

Terry Leahy

Robert Keegan

Lee Yong-kyung

Herb Kelleher

David J. Lesar

Edmund F. Kelly

R. Steve Letbetter

Mikhail Khodorkovsky

Gerald Levin

Naina Lal Kidwai

Arthur Levinson

Kerry K. Killinger

Kenneth D. Lewis

James M. Kilts

Victor Li

Eric Kim

Li Ka-shing

Kim Jung-tae

Alfred C. Liggins III

Ewald Kist

Liu Chuanzhi

Gerard J. Kleisterlee

J. Bruce Llewellyn

Lowry F. Kline

Lu Weiding

Philip H. Knight

Iain Lumsden

Charles Koch

Terry J. Lundgren


xvii

List of Entrants

M

Vittorio Mincato

Ma Fucai

Rafael Miranda Robredo

John J. Mack

Fujio Mitarai

Terunobu Maeda

William E. Mitchell

Joseph Magliochetti

Hayao Miyazaki

Marjorie Magner

Anders C. Moberg

Richard Mahoney

Larry Montgomery

Steven J. Malcolm

James P. Mooney

Richard A. Manoogian

Ann Moore

Mohamed Hassan Marican

Patrick J. Moore

Reuben Mark

Giuseppe Morchio

Michael E. Marks

Tomijiro Morita

J. Willard Marriott Jr.

Angelo R. Mozilo

R. Brad Martin

Anne M. Mulcahy

Strive Masiyiwa

Leo F. Mullin

David Maxwell

James J. Mulva

L. Lowry Mays

Raúl Muñoz Leos

Michael B. McCallister

James Murdoch

W. Alan McCollough

Lachlan Murdoch

Mike McGavick

Rupert Murdoch

Eugene R. McGrath

N. R. Murthy

Judy McGrath

A. Maurice Myers

William W. McGuire Tom McKillop

N

Henry A. McKinnell Jr.

Kunio Nakamura

C. Steven McMillan

Robert L. Nardelli

Scott G. McNealy

Jacques Nasser

W. James McNerney Jr.

M. Bruce Nelson

Dee Mellor

Yoshifumi Nishikawa

Jean-Marie Messier

Hidetoshi Nishimura

Gérard Mestrallet

Uichiro Niwa

Edouard Michelin

Gordon M. Nixon

Charles Milhaud

Jeffrey Noddle

Alexei Miller

Tamotsu Nomakuchi

Stuart A. Miller

Indra K. Nooyi

Akio Mimura

Blake W. Nordstrom

xviii


List of Entrants Richard C. Notebaert

Howard G. Phanstiel

David C. Novak

Joseph A. Pichler

Erle Nye

William F. Pickard Harvey R. Pierce

O

Mark C. Pigott

James J. O’Brien Jr.

Bernd Pischetsrieder

Mark J. O’Brien

Fred Poses

Robert J. O’Connell

John E. Potter

Steve Odland

Myrtle Potter

Adebayo Ogunlesi

Paul S. Pressler

Minoru Ohnishi

Larry L. Prince

Motoyuki Oka

Richard B. Priory

Tadashi Okamura

Alessandro Profumo

Jorma Ollila

Henri Proglio

Thomas D. O’Malley

David J. Prosser

E. Stanley O’Neal

Philip J. Purcell III

David J. O’Reilly Amancio Ortega

Q

Marcel Ospel

Allen I. Questrom

Paul Otellini Mutsutake Otsuka

R

Lindsay Owen-Jones

Franklin D. Raines M. S. Ramachandran

P

Dieter Rampl

Pae Chong-yeul

Lee R. Raymond

Samuel J. Palmisano

Steven A. Raymund

Helmut Panke

Sumner M. Redstone

Gregory J. Parseghian

Dennis H. Reilley

Richard D. Parsons

Steven S. Reinemund

Corrado Passera

Eivind Reiten

Hank Paulson

Glenn M. Renwick

Michel Pébereau

Linda Johnson Rice

Roger S. Penske

Pierre Richard

A. Jerrold Perenchio

Kai-Uwe Ricke

Peter J. Pestillo

Stephen Riggio

Donald K. Peterson

Jim Robbins


xix

List of Entrants Brian L. Roberts

Richard M. Scrushy

Harry J. M. Roels

Ivan G. Seidenberg

Steven R. Rogel

Donald S. Shaffer

James E. Rogers

Kevin W. Sharer

Bruce C. Rohde

William J. Shea

James E. Rohr

Donald J. Shepard

Matthew K. Rose

Yoichi Shimogaichi

Bob Rossiter

Etsuhiko Shoyama

Renzo Rosso

Thomas Siebel

John W. Rowe

Henry R. Silverman

Allen R. Rowland

Russell Simmons

Patricia F. Russo

James D. Sinegal

Edward B. Rust Jr.

Carlos Slim

Arthur F. Ryan

Bruce A. Smith

Patrick G. Ryan

Fred Smith

Thomas M. Ryan

O. Bruton Smith Stacey Snider

S

Jure Sola

Alfredo Sáenz

George Soros

Mary F. Sammons

William S. Stavropoulos

Steve Sanger

Sy Sternberg

Ron Sargent

David L. Steward

Arun Sarin

Martha Stewart

Mikio Sasaki

Patrick T. Stokes

Paolo Scaroni

Harry C. Stonecipher

George A. Schaefer Jr.

Hans Stråberg

Leonard D. Schaeffer

Belinda Stronach

Hans-Jürgen Schinzler

Ronald D. Sugar

James J. Schiro

Osamu Suzuki

Werner Schmidt

Toshifumi Suzuki

Richard J. Schnieders

Carl-Henric Svanberg

Jürgen E. Schrempp

William H. Swanson

Howard Schultz Ekkehard D. Schulz

T

Gerald W. Schwartz

Keiji Tachikawa

Louis Schweitzer

Noel N. Tata

H. Lee Scott Jr.

Sidney Taurel

xx


List of Entrants Gunter Thielen

Ted Waitt

Ken Thompson

Paul S. Walsh

Rex W. Tillerson

Robert Walter

Robert L. Tillman Glenn Tilton

Shigeo Watanabe Fumiaki Watari

James S. Tisch Barrett A. Toan Doreen Toben

Philip B. Watts Jürgen Weber

Don Tomnitz

Sandy Weill

Shoichiro Toyoda

Serge Weinberg

Tony Trahar

Alberto Weisser

Marco Tronchetti Provera

Jack Welch

Donald Trump

William C. Weldon

Shiro Tsuda Kazuo Tsukuda

Werner Wenning Norman H. Wesley

Joseph M. Tucci Ted Turner John H. Tyson

W. Galen Weston Leslie H. Wexner Kenneth Whipple

U

Edward E. Whitacre Jr.

Robert J. Ulrich

Miles D. White

Thomas J. Usher

Meg Whitman

Shoei Utsuda

David R. Whitwam

Akio Utsumi

Hans Wijers Michael E. Wiley

V Roy A. Vallee Anton van Rossum

Bruce A. Williamson Chuck Williamson Peter S. Willmott

Thomas H. Van Weelden Daniel Vasella Ferdinand Verdonck Ben Verwaayen Heinrich von Pierer

Oprah Winfrey Patricia A. Woertz

Y Shinichi Yokoyama

W

Dave Yost

Norio Wada

Larry D. Yost

Rick Wagoner

Yun Jong-yong


xxi

List of Entrants

Z Antoine Zacharias

Zhang Enzhao Zhang Ligui Zhou Deqiang

Edward Zander

Aerin Lauder Zinterhofer

John D. Zeglis

Edward J. Zore

Deiter Zetsche

Klaus Zumwinkel

xxii


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Alfredo Sáenz 1942– Chief executive officer, Banco Santander Central Hispano Nationality: Spanish. Born: November 1942, in Las Arenas, Spain. Education: University of Valladolid, JD; Deusto University, MS. Family: Married; children: three. Career: Tubacex, 1965–1980, board member; Banco Vizcaya, 1980–1983, director of planning; Banca Catalana, 1983–1988, managing director; Banco Vizcaya, 1988–1990, managing director; Banco Bilbao Vizcaya, 1990–1993, first vice president; Banco Español de Crédito (Banesto), 1993–2002, president; Banco Santander Central Hispano, 2002–, CEO. Address: Plaza de Canalejas 1, 28014 Madrid, Spain; http://www.gruposantander.com.

■ Alfredo Sáenz established himself as an expert at saving failing banks in Spain. With degrees in both law and economics, he worked for many years in the industrial sector in his native Basque country. In the 1980s he entered banking and quickly became one of the country’s most influential bankers. He made his reputation by rescuing the declining Banca Catalana. He cemented this reputation by restoring Banesto in the 1990s. Known for his single-minded dedication to whatever task was at hand, Sáenz went to work in the early 2000s to help Banco Santander Central Hispano in its attempt to solve its economic difficulties in Latin America.

EARLY CAREER Born in 1942 in Spain’s Basque country, Sáenz obtained a law degree from the University of Valladolid. He also received a degree in economics from the prestigious Jesuit Deusto University in Bilbao, where he later taught management on occasion. Sáenz turned down such positions as deputy defense minister in the Spanish government to work in the industrial


sector in the Basque country. From 1965 to 1980, he worked for Tubacex, a Basque steel pipe producer. After leaving Tubacex, Sáenz went into banking. In 1980 Pedro Toledo, who ran Banco Vizcaya, hired Sáenz as director of planning. Toledo, who had close ties to Spain’s Socialist government, hired numerous bright and ambitious young Spanish executives, many of whom went on to become some of the country’s most influential bankers. The 1980s were a time of crisis in the Spanish banking sector, and many banks were failing. Among those experiencing financial difficulties was the Banca Catalana. Spain’s Central Bank fired Catalana’s management, and Banco Vizcaya took it over. Toledo sent Sáenz to rescue the failing Catalan bank. He soon made Catalana into one of Spain’s most profitable banks. Sáenz became well liked in Barcelona, an unusual compliment for a Basque. He even went so far as to make his first

1

Alfredo Sáenz

speech to Catalana shareholders in the Catalan language, which he had learned in just nine months. Toledo’s Banco Vizcaya later merged with Banco Bilbao, and soon a cultural clash between the employees of the two banks emerged. Some saw Vizcaya’s managers as too flashy and incapable of running a large bank. Bilbao’s executives had the reputation of being pen pushers who spent too much time counting paper clips. In 1988 Vizacaya’s Toledo and Bilbao’s José Angel Sánchez Asain became copresidents of the new Banco Bilbao Vizcaya (BBV). Then, in 1989, Toledo died. The following year the Central Bank announced that it would pick a single president for BBV. There was some talk that it would select Sáenz to run the bank. However, the Central Bank picked Bilbao’s Emilio Ybarra instead, relegating Sáenz to the position of first vice president. Sáenz accepted the lesser position with grace.

SÁENZ RESCUES BANESTO In December 1993 Sáenz was provisionally named as president of the Banco Español de Crédito (Banesto). Spain’s Central Bank selected Sáenz to replace Mario Conde and to rescue the failing bank. The backing of the Central Bank virtually assured that shareholders would elect Sáenz as president. Many analysts in Spanish banking circles felt that the Central Bank rewarded Sáenz with the Banesto post for graciously accepting the post of vice president at BBV rather than fighting the decision. BBV, Sáenz’s employer, agreed to “lend” the executive to Banesto. Soon both BBV and Banco Santander were competing to take over Banesto. Many analysts thought that since BBV had allowed Sáenz to go to Banesto, it had the inside track to absorb the failing bank. However, in April, Banco Santander won out and took control of Banesto. In an ironic twist, Banco Santander kept Sáenz as president of Banesto with a generous compensation package rather than letting him return to BBV. Banco Santander wanted to keep Sáenz because of his established reputation as a troubleshooter who was capable of restoring the health of failing banks. Once firmly in position at Banesto, Sáenz brought a number of highranking executives from BBV, all of them former employees of Banco Vizcaya before the merger with Bilbao. Sáenz informed the Financial Times that he had to start from scratch in his rescue efforts at Banesto, saying that “when I got here I didn’t know where the bathrooms were, let alone the documents, and the first weeks were horrible. In a question of weeks, I had to discover what the possibilities were and where the bank should go if it did recover” (October 4, 1994). Sáenz established five priorities in his attempt to get Banesto back on its feet. Known for his single-mindedness, he explained to Euromoney (June 1995) that “nobody [was] allowed

2

to talk to me about anything else.” He didn’t even want to hear about a possible sixth priority. Sáenz was very strict in adhering to his five priorities. When all Banesto employees turned on their computers in the morning, after a screen came up saying “Buenos dias,” five windows with the five priorities appeared on their monitors. Each window told the employees how they and their departments were doing in meeting each one of the goals as of that day. Sáenz claimed that such a tactic helped focus his workers on the task at hand. Principal among the priorities was recovering bad debts, of which the bank had many. Sáenz appointed 800 employees to the task of recovering unpaid loans. He also wanted to improve the bank’s risk-management systems, which he felt were inadequate, as was clear from the many bad debts on Banesto’s books. Rather than blame any particular people for the problem, Sáenz claimed that there was a general lack of risk management know-how at the bank. Another step that Sáenz took was to reconstruct the bank’s loan book, establishing credit ratings for all customers in the hope of avoiding future bad loans. Sáenz also sought to raise the fees that Banesto charged its customers for various services. While not popular with clients, the bank’s fees had been much lower than those of other Spanish banks. In addition, Sáenz began to dispose of some of Banesto’s assets not related to banking, such as a battery producer, a mining company, and a winery. In 1995 Sáenz could claim some successes, although his job was not done. He informed Euromoney that “by the year’s end, we will have achieved about 70 percent of our recovery program’s aims, but 1996 will still be a housekeeping year” (June 1995). By 1997 Sáenz had restored Banesto to financial health. The bank was turning a profit, and he had succeeded in cutting the amount of bad loans in half. Ana Patricia Botín, who replaced Sáenz as Banesto CEO, told the Wall Street Journal, that “things have improved so much at Banesto under Alfredo, that finding room for further improvement isn’t easy” (March 27, 2002).

SÁENZ BECOMES CEO AT BANCO SANTANDER CENTRAL HISPANO In March 2002 there was a management shake-up at Banco Santander Central Hispano (SCH), Banesto’s parent company. Sáenz left the Banesto post to accept the position of CEO at SCH. His main concern upon taking over at SCH was the bank’s exposure to Latin America, especially Argentina. An economic crisis in that country had led to a depreciating currency and many restrictions on banking operations. In response, Sáenz stopped providing capital to SCH’s Argentine units until the government there could guarantee a viable financial system. Sáenz also vowed to lower his bank’s profile in Latin America, because he felt poor economic situations in the region were hurting SCH’s share price. To this end, and despite the fact that SCH owned banks in 11 Latin American


Alfredo Sáenz

countries, Sáenz decided to concentrate only on Brazil, Mexico, Chile, and Puerto Rico. Furthermore, he determined to refocus SCH on its European activities.

Burns, Tom, “Banesto Bounces Back to Health with 26 Percent Advance,” Financial Times, January 22, 1998.

SÁENZ THE MAN

———, “Unraveling the Banesto Tangle,” Financial Times, October 4, 1994.

Sáenz established a reputation as a workaholic technocrat. He was also known for his ability to focus on the matter at hand, rarely straying from his current task. He was well like among his peers. While he had a conservative image, Sáenz was known to have a great sense of fun underneath his staid veneer. An avid reader, he typically selected books from his large personal business library. He also frequently delivered speeches on the art of management. Sáenz was known as a family man who spent many summers with his wife and children in Majorca.

See also entries on Banco Bilbao Vizcaya, S.A. and Banco Santander Central Hispano S.A. in International Directory of Company Histories.

SOURCES FOR FURTHER INFORMATION

Bruce, Peter, “The Rise of Alfredo Sáenz,” Financial Times, January 4, 1994.


———, “Sáenz Poaches from BBV,” Financial Times, May 16, 1994.

Crawford, Leslie, “SCH Hit by Exposure in Argentina,” Financial Times, April 30, 2002. Eade, Philip, “They Reign in Spain,” Euromoney (September 1994): 38–42. Levitt, Joshua, “From Industry to Top Banker,” Financial Times October 21, 2003. “Makes Sáenz,” Financial Times, April 28, 1994. Narbrough, Colin, “Banesto Chief Says Revival Is Coming,” Times (London), August 23, 1994. Vitzthum, Carlta, “Santander Head’s Daughter Returns to the Spotlight at Banesto Retail Unit,” Wall Street Journal, March 27, 2002. “Wake-up Call at Banesto,” Euromoney (June 1995): 152. —Ronald Young

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■■■

Mary F. Sammons 1946– President and chief executive officer, Rite Aid Corporation Nationality: American. Born: October 12, 1946, in Portland, Oregon. Education: Marylhurst College, BS, 1970. Family: Daughter of Lee W. and Ann (Cherry) Jackson; married Nickolas F. Sammons, September 12, 1967; children: one. Career: Fred Meyer, 1973–1975, management trainee; 1975–1980, buyer; 1980–1986, vice president, merchandising; 1986–1997, senior vice president and manager of soft goods division; 1997–1998, executive vice president, Apparel, Home Electronics, and Home Group; 1998–1999, president and chief executive officer of Fred Meyer Stores; Rite Aid Corporation, 1999–2003, president and chief operating officer; 2003–, president and chief executive officer. Awards: Named Woman of Achievement, YWCA, Portland, Oregon, 1987; named 2001 Chain Drug Retailer of the Year by Chain Drug Review magazine; named one of America’s 50 most powerful women in business by Fortune magazine, 2003.

Mary F. Sammons. AP/Wide World Photos.

Address: Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011; http://www.riteaid.com.

■ Mary Sammons came to Rite Aid Corporation as its new president and chief operating officer in 1999, a time when the Pennsylvania-based drugstore chain was teetering on the edge of bankruptcy. Part of an infusion of new management blood recruited from Fred Meyer shortly after the latter’s acquisition by Kroger Company, Sammons in less than five years helped to steer the company back to profitability. After years of unbroken losing quarters, in early 2004 Rite Aid posted a profit of $73.6 million on total revenue of $4.11 billion for the third quarter of fiscal 2004, which ended November 29, 2003. These figures were up from a net loss of $16.4 million on sales of $3.87 billion a year earlier. Sammons was widely recognized for the pivotal role she played in engineering the turnaround at Rite Aid. In early

4

2002 Chain Drug Review named Sammons Chain Drug Retailer of the Year for 2001, citing her role in a “dramatic metamorphosis” that had rescued Rite Aid from the brink of extinction and transformed it into a drug chain “within sight of its objective of competing on equal footing with the best drug chains in America” (January 7, 2002). Also lavish in its praise of Sammons’s accomplishments was Fortune, which in October 2003 named her to its list of the 50 most powerful women in American business. Noting that Rite Aid “was a basket case when Sammons arrived in late 1999,” Fortune cited the new president’s contribution to the drugstore chain’s recovery in the closure of more than 400 underperforming stores and the rebuilding of Rite Aid’s relationships with its vendors.


Mary F. Sammons

LAID OUT SHORT-TERM STRATEGY To continue Rite Aid’s return to solid profitability, Sammons in late 2003 laid out her short-term strategy for the company. According to Chain Drug Review (October 27, 2003), Sammons said that Rite Aid would focus on four key priorities: (1) growing pharmacy script counts, (2) achieving front-end sales growth, (3) controlling expenses, and (4) improving customer service. Another focus of Sammons’s campaign to rebuild Rite Aid was to improve the morale of the drug chain’s associates by involving them more deeply in the formulation of company policy. When Sammons took over as president in 1999, she found that previous management had badly neglected this important resource. As she told Chain Drug Review, “Our people had been trampled. They were worried about their futures and uncertain about what was going to happen to the company” (December 10, 2001). Sammons, the daughter of Lee W. and Ann (Cherry) Jackson, was born in Portland, Oregon. After finishing high school in Portland, she enrolled at nearby Marylhurst College, where in 1970 she earned a bachelor’s degree in French as well as a secondary-level teaching certificate. At the beginning of her sophomore year at Marylhurst, Sammons married Nickolas F. Sammons. In 1973, after a brief career in teaching, Sammons entered the management training program at Portland-based Fred Meyer, a major food, drug, and general merchandise retailer in the western United States. For more than a quarter century, Sammons worked for Fred Meyer, leaving only after the Oregon-based retailer was taken over in 1999 by the Ohio-based Kroger Company. After finishing her management training program in 1975, Sammons began work as a buyer for Fred Meyer, a position she held until 1980, when she was named vice president for merchandising. In 1986 she was promoted to senior vice president and named manager of the company’s soft goods division. In 1997 Sammons was appointed executive vice president and assigned the responsibility for managing the company’s Apparel, Home Electronics, and Home Group. A year later she was promoted to president and chief executive officer of Fred Meyer Stores, the Meyer subsidiary that operates the chain’s large one-stop shopping centers.

LEFT FRED MEYER AFTER KROGER ACQUISITION In late 1998 Kroger Company, America’s largest supermarket chain, reached an agreement with the board of Fred Meyer to acquire Meyer for $13 billion in stock and assumed debt. Less than seven months after the acquisition was finalized in late May 1999, Sammons, along with fellow Fred Meyer executives Robert G. Miller, David Jessick, and John Standley, left the newly merged company to help save the foundering Rite Aid from bankruptcy. Sammons joined Rite Aid as president and chief operating officer while Miller took over as the drug-


store chain’s chairman and CEO. Jessick, formerly the executive vice president of finance and investor relations at Fred Meyer, joined Rite Aid as chief administrative officer, and Standley took over as chief financial officer, the same post he had held at Fred Meyer. When Sammons and the rest of the new management team took over at Rite Aid in December 1999, the drugstore chain was in total disarray. Martin L. Grass, the son of the company’s founder, had resigned in October 1999 as chairman and CEO amid growing accounting and legal problems. Rite Aid’s board, led by four of its seven independent directors, renegotiated loan payment schedules to give the company an extra year to repay $3.3 billion in debts, originally due at the end of October. The Los Angeles-based investment banker Leonard Green & Partners contributed $300 million to Rite Aid’s dwindling coffers, giving the company a minority stake in the chain. In mid-November 1999 KPMG, Rite Aid’s longtime auditor, severed its relationship with the drug chain because it claimed it could no longer trust the company’s top managers accurately to portray Rite Aid’s financial status. On the heels of KPMG’s announcement, the Securities and Exchange Commission launched a formal investigation into Rite Aid’s accounting practices.

HELPED TO CREATE NEW CORPORATE CULTURE One of Sammons’s priorities in putting Rite Aid on the road to financial recovery was the creation of a new corporate culture at the drugstore chain. Under her direction, the company’s new management slowly opened new lines of communication with employees at all levels of the chain. Sammons quickly discovered that most of Rite Aid’s employees had been all too aware of the company’s problems under its previous management but had been rebuffed whenever they offered suggestions for change. Sammons worked hard to turn around morale, trying to convince all employees that their input was important and essential if Rite Aid were to recover and prosper once again. As she told Chain Drug Review (December 10, 2001), “There are a lot of great people here. And people bond very quickly when they’re working together to overcome obstacles. It’s exciting to see progress being made” and see how that progress is reflected in improved employee morale. As Miller and the rest of the new management team focused on the critical issues of refinancing and the creation of a reliable financial reporting system, Sammons shouldered the responsibility for getting Rite Aid’s core drugstore business back on track and growing once again. To strengthen the operations of retail outlets throughout the chain, Sammons worked with vendors to ensure a reliable flow of inventory to stores. To recapture some of the business lost during the height of Rite Aid’s financial management crisis, she created pharmacy advisory panels. These panels, made up of company pharma-

5

Mary F. Sammons

cists and pharmacy managers, according to MMR magazine (August 20, 2001), came up with valuable ideas for improving work flow and customer service as well as innovative pricing initiatives.

REVIVED RITE AID Sammons also revived Rite Aid’s advertising circular and put greater emphasis on customer service. Greater investment in technology helped to hasten the chain’s progress on the latter front, with robotics increasing the speed with which prescriptions could be filled and voice messaging systems giving customers a way to order refills easily and select pickup times. The payoff for these improvements was quickly reflected in higher customer counts and prescription counts. For the first full fiscal year of operations under the new management team, Rite Aid reported a net loss of nearly $1.6 billion on sales of $14.5 billion. In fiscal 2002, which ended February 28, 2002, the company’s net loss had been cut almost in half. Rite Aid reported a fiscal 2002 net loss of $828 million on revenue of almost $15.2 billion. A year later the company’s net loss had been significantly reduced to only $112.1 million on total sales of $15.8 billion. In April 2003 Rite Aid chairman Miller passed on his CEO responsibilities to Sammons, whom he said he had decided early on to recommend as his successor. Sammons, along with Miller and the rest of the new management team at Rite Aid, took control of the company at the end of 1999, when most observers felt a Chapter 11 bankruptcy filing was inevitable. Under their direction the company not only avoided bankruptcy but also managed to reinvigorate sales and significantly improve operating results. Of Sammons’s contribution to Rite Aid’s dramatic turnaround, Miller said, “Since we arrived Mary has had responsibility for running the business day to day and leading the change to a new corporate culture,” according to MMR (January 12, 2004).

senior market by test marketing a senior loyalty card that lets older customers earn back 15 percent of their prescription cost as a credit toward a future purchase. In May 2003 Sammons, already the highest-ranking woman executive in the chain drug industry, became the first female ever to serve as chairman of the industry’s National Association of Chain Drug Stores (NACDS) for a year. At NACDS’s Pharmacy and Technology Conference in August 2003, she urged all association members to work together to elevate the role of the pharmacist. According to Drug Store News, Sammons emphasized the central role of the pharmacy in the operation of all drugstore chains. “Simply put, we as an industry cannot honestly talk about the value of pharmacy unless we deliver for our pharmacists by giving them meaningful involvement in business decisions” (September 22, 2003). Sammons and her husband, Nickolas, lived in a home not far from Rite Aid’s headquarters in Camp Hill, Pennsylvania. In addition to her responsibilities at Rite Aid and NACDS, Sammons also served as a member of the board of governors of the Children’s Miracle Network.

See also entries on Fred Meyer, Inc. and Rite Aid Corporation in International Directory of Company Histories.


Belden, Tom, “Rite Aid’s New CEO Aims for Healing from Ground Up,” Philadelphia Inquirer, August 24, 2003. Dochat, Tom, “Camp Hill-Based Rite Aid Demotes Its Finance Chief,” Harrisburg Patriot-News, January 10, 2004. ———, “Rite Aid Executive Receives Payment from Kroger,” Harrisburg Patriot-News, January 13, 2004. Ferraro, Cathleen, “Rite Aid Names New Chief Executive in Turn-Around Effort,” Sacramento Bee, December 8, 1999. “Fortune Cites Sammons,” Chain Drug Review, October 13, 2003.

WORKED TO BUILD UP PHARMACY BUSINESS To help Rite Aid build up its pharmacy business, which accounts for roughly 63 percent of total revenue, Sammons took a series of steps to beef up and streamline the chain’s pharmacy operations. By late summer 2003 Rite Aid had introduced eprescribing into 16 of its markets and announced its intention eventually to bring that capability to all of its stores. To expedite the expansion of e-prescription capability throughout the chain, Rite Aid established relationships with ProxyMed and SureScripts. Another key component of the company’s campaign to increase its pharmacy base was to purchase prescription files from independent drugstores. The chain nearly doubled its budget for prescription file purchases during fiscal 2004. Rite Aid also moved aggressively to capture more of the

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“Four Initiatives Will Take Chain to New Level,” Chain Drug Review, October 27, 2003. Johnsen, Michael, “File Acquisition Lays Foundation for Solid Growth,” Drug Store News, August 18, 2003. ———, “On Steadier Ground, Rite Aid Sets New Goals,” Drug Store News, July 21, 2003. Johnsen, Michael, and James Frederick, “NACDS Chairman Urges Collaboration to Stress Pharmacists’ Role in Patient Care,” Drug Store News, September 22, 2003. Levy, Marc, “After Scandal, Rite Aid Sees Turnaround,” AP Online, April 22, 2003. “Management Instills New Sense of Pride,” Chain Drug Review, December 10, 2001.


Mary F. Sammons “Miller-Sammons Partnership the Catalyst,” Chain Drug Review, October 27, 2003.

“Rite Aid Succeeds in Beating the Odds,” Chain Drug Review October 27, 2003.

“Miller Takes Helm at Rite Aid,” Chain Drug Review, December 6, 1999.

“Sammons Finds More Ways to Grow,” MMR, January 12, 2004.

Nagel, Andrea M. G., “NACDS: Against the Current,” WWD, May 2, 2003.

“Sammons Joins Rite Aid at Critical Juncture,” Chain Drug Review, September 15, 2003.

“New Management Team Aims to Get Rite Aid Back on Track,” Chain Drug Review, May 1, 2000.

“Sammons Makes Sure That People Come First,” Chain Drug Review, January 7, 2002.

Pinto, David, “CDR Names Rite Aid’s Sammons Retailer of Year,” Chain Drug Review, January 7, 2002.

Simon, Ellen, “Rite Aid Names New CEO, Prepares to Confront Multiple Crises,” Newark Star-Ledger, December 6, 1999.

Pressler, Margaret Webb, “Suddenly It’s Right Aid: How One Chain Turned a Corner with Old-Fashioned Retail Virtues,” Washington Post, September 7, 2003.

Sommer, Constance, “Kroger Makes Bid to Buy Fred Meyer; QFC Included in Deal Expected to Close in ‘99,” Seattle Post-Intelligencer, October 20, 1998.

“Rite Aid Finally Gets Back into the Black,” Chain Drug Review, January 19, 2004.

Zwiebach, Elliot, “Kroger Execs Jump Ship to Rite Aid; Stock Sinks,” Supermarket News, December 13, 1999.

“Rite Aid Now Ready, Well Positioned to Compete,” MMR, August 20, 2001.


—Don Amerman

7

■■■

Steve Sanger 1946– Chairman and chief executive officer, General Mills Nationality: American. Born: April 10, 1946, in Cincinnati, Ohio. Education: DePauw University, BA, 1968; University of Michigan, MBA, 1970. Family: Married Karen (maiden name unknown); children: two. Career: Proctor & Gamble Company, 1970–1973, marketing and sales; General Mills, 1974–1983, various positions; 1983–1986, vice president and general manager of Northstar Division; 1986, vice president and general manager of new business development; 1986–1988, president of Yoplait USA; 1988–1991, president of Big G Division; 1989–1991, senior vice president; 1991-1992, executive vice president; 1992–1996, vice chairman of the board; 1993–1995, president; 1995–, chairman and chief executive officer. Awards: Named one of the “Top 25 Managers” by BusinessWeek, 2001; William H. Albers Industry Relations Award, 2002. Address: General Mills, Inc., One General Mills Boulevard, Minneapolis, Minnesota 55426; http://www.general mills.com.

■ Steve Sanger developed a reputation as a savvy marketer in his rise to the position as chairman and chief executive officer of General Mills. Sanger gained an interest in marketing when, as a college student, he promoted Motown concerts being held at DePauw University. After receiving an MBA from the University of Michigan and working for three years at Proctor & Gamble Company, he joined General Mills in 1974. He rose up the management ranks at the company until he was ultimately elected chairman and CEO in 1995. Sanger was known for being a relaxed manager who was cordial to subordinates and who encouraged debate.

8

LEARNING MARKETING BY SELLING CONCERT TICKETS Sanger enrolled at DePauw University in Greencastle, Indiana, where he was elected president of the student union. His first experience in marketing came as an undergraduate student when he began to promote Motown concerts that were being held on campus. The experience changed the direction of Sanger’s career. “The main lesson that I learned is that it’s a lot easier to be a good marketer if you’ve got a good product,” he told BusinessWeek. “It was a lot easier to sell tickets to the Temptations than the Electric Prunes” (March 26, 2001). Sanger considered promoting concerts as a career after graduating from DePauw in 1968. He also considered attending law school. He rejected both ideas, however, and instead enrolled at the University of Michigan, earning an MBA in 1970. After earning his graduate degree, Sanger was hired by Proctor & Gamble Company, where he held a series of marketing and sales positions.

MOVED TO GENERAL MILLS Sanger moved to a position with General Mills in 1974. Over the next nine years he worked in a variety of marketing positions within the company’s consumer food businesses. The company began to take note of his marketing skills, and in 1983 he was promoted to the position of vice president and general manager of the company’s Northstar Division. In 1986 he became the general manager of the company’s new business development division for a time before being named president of Yoplait USA, the company’s yogurt producer. His tenure with Yoplait was successful, and his leadership allowed the company to surpass Dannon Company in yogurt sales. Sanger was rewarded for his success with Yoplait in 1988, when he was named president of the company’s Big G cereal division, the largest and most profitable division in the company. During the following year he was promoted to senior vice president. His ascension continued in 1991, when he was named executive vice president of General Mills with responsibility over both Yoplait yogurt and Big G cereals as well as International Foods.


Steve Sanger

ASSUMED POSITION OF PRESIDENT, THEN CEO OF GENERAL MILLS

TOUGH TIMES FOLLOWING MERGER WITH PILLSBURY

Sanger was named to the General Mills board of directors in 1992. He earned a reputation as a sharp marketer of consumer goods. He was also known for his sense of humor and interpersonal skills. In 1993 Bruce Atwater, chief executive officer of General Mills, was nearing the company’s mandatory retirement age, and Sanger was one of three vice chairmen who were believed to be potential successors. Sanger became the heir apparent in 1993, when company announced that Sanger had been elected to the position of president.

In 2001 General Mills completed a $10.4 billion merger with rival Pillsbury in a move that was supposed to be Sanger’s “crowning achievement” (July 1, 2002). Sanger himself referred to the move as a “transformative event.” However, the merger led to some tough times. After announcing the move in July 2000, the companies had to resolve certain antitrust issues with federal regulators. This process took 16 months, much longer than originally expected.

Sanger’s relaxed demeanor caused some analysts to question whether he would be an effective CEO at General Mills. Nonetheless, the company remained confident in his ability to improve production and sales. “Steve was identified as someone with great potential,” Atwater told BusinessWeek. “He had interesting ideas about how to develop new products and get new business” (March 26, 2001). In 1995 Sanger was elected chairman and chief executive officer of General Mills.

CHANGING THE ATMOSPHERE AT GENERAL MILLS General Mills had long been known as a conservative company, requiring employees to wear a uniform consisting of a dark suit and a white shirt. Upon taking office, Sanger immediately repealed this requirement. He also ordered the company jet to play rock-and-roll music instead of classical music. Moreover, on the night before his first board meeting as chairman, he chose to attend a Rolling Stones concert. He was known to recite song lyrics in board meetings. Said one associate, “He’s like a Doris Day of guys” (BusinessWeek, January 8, 2001). Sanger’s unorthodox philosophy was not limited to dress codes and flight music. Shortly after he became CEO, he sought to improve productivity by sending technicians to watch the performance of pit crews at a NASCAR race. The technicians subsequently devised a method for converting a plant line in 20 minutes, compared to five hours. Sanger was known for being friendly to his subordinates and for welcoming open discussion. Sanger’s relaxed approach belied a more aggressive business strategy. He cut costs in key areas and effectively raised prices of cereals in the late 1990s without affecting sales. The company’s sales increased at a rate of 6 percent per year between 1995 and 2001, and in 1999 General Mills surpassed Kellogg Company as the leading cereal producer. Sanger was recognized and honored within his industry. In 2001 he was named one of the “Top 25 Managers” by BusinessWeek, and he received the 2002 William H. Albers Industry Relations Award, which recognizes industry leadership and community service.


Rivals of General Mills began to make gains. General Mills lost its market lead in the cereal category to Kellogg in 2001 and lost ground in several other categories as well, including refrigerated dough and boxed prepared meals. Moreover, some commentators noted the perception that General Mills did not provide complete support for Pillsbury products. Sanger and General Mills took another hit in 2003 and 2004, when the Securities and Exchange Commission announced that it would investigate potential violations of federal disclosure laws. Supporters and even some critics downplayed the investigation, noting that Sanger and General Mills were not likely types to have violated securities laws. Though Sanger maintained his popularity during 2004, the problems nevertheless tested his mettle as chief executive. Sanger was active in business and civic groups, serving on the boards of Target Corporation, the Donaldson Company, Catalyst, the National Campaign to Prevent Teen Pregnancy, the Minnesota Business Partnership, Grocery Manufacturers of America, and the Guthrie Theatre Foundation. See also entries on General Mills, Inc. and Proctor & Gamble Company in International Directory of Company Histories.


Forster, Julie, “General Malaise at General Mills,” BusinessWeek, July 1, 2002, p. 68. ———, “The Lucky Charm of Steve Sanger,” BusinessWeek, March 26, 2001, p. 75. Kennedy, Tony, “Steven W. Sanger Named General Mills President,” Star Tribune, October 26, 1993. “Sanger Receives Albers Award for Industry Service,” Supermarket News, May 13, 2002, p. 17. St. Anthony, Neal, “The Soldier and the Salesman,” Star Tribune, February 15, 2004. “The Top 25 Managers: Managers to Watch in 2001,” BusinessWeek, January 8, 2001, p. 67. —Matthew C. Cordon

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Ron Sargent 1955– President and chief executive officer, Staples Nationality: American. Born: 1955, in Fort Thomas, Kentucky. Education: Harvard University, BA, 1977; Harvard University Graduate School of Business Administration, MBA, 1979. Family: Son of a mechanic and a housewife; married; children: two. Career: Kroger Company, 1979–1989, various management and planning positions; Staples, 1989–1991, various positions including regional vice president for operations; 1991–1994, executive vice president of Contract and Commercial Division and vice president of Direct Sales Division; 1994–1997, president of Contract and Commercial Division; 1997–1998, president, North American Operations; 1998–2002, president and chief operating officer; 2002–, president and chief executive officer. Address: Staples, 500 Staples Drive, Framingham, Massachusetts 01702; http://www.staples.com.

■ Ronald L. Sargent moved up the ranks of Staples to become its president and chief executive officer (CEO) in 2002. After more than a decade of holding various positions in the corporation, he became CEO during a critical time in the company’s history. Profits and stock prices had stalled after years of growth, and analysts were predicting a bleak future for officesupply superstores. Sargent’s leadership and notorious frugality paid off, however. A smooth transition to the role of CEO was highlighted by effective cost-cutting measures while successfully exploiting growth opportunities, ultimately leading Staples to outpace the industry in operating profit margins.

Ron Sargent. AP/Wide World Photos.

Kentucky branch of the grocery-chain Kroger. Choosing Harvard over a position on a professional Roller Derby team, Sargent eventually returned to Kroger where for ten years he held management positions in operations, human resources, strategy, sales, and marketing. Referring to his decision in 1989 to leave one of the largest grocery chains in the nation to join the then small and barely profitable Staples, Sargent told his wife that either it would be the greatest thing he had ever done or he would find himself unemployed within the year. Time has proven his first instinct to be true.

A SMOOTH TRANSITION ROLLER DERBY OR HARVARD? Ron Sargent’s career in retail sales began when he was a teenager working the cash register and stocking shelves for a

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Before Sargent took over the role of CEO from Staples’s chairman and founder, Thomas G. Stemberg, the two approached Microsoft’s chairman and founder, William H.


Ron Sargent

Gates, and his new CEO, Steven A. Ballmer, for advice. Gates and Ballmer had recently gone through a similar transition themselves. Ballmer, a classmate of Sargent’s from Harvard, urged Sargent and Stemberg to proceed with the transition in spite of the gloomy economic outlook and stalled profits of 2001. Sargent had already proven himself an effective leader when in 1990 he was asked to take over the Contract Division, which was responsible for selling directly to large and midsize companies. At the time, this division brought in $20 million to $30 million annually. Less than ten years later, the unit had ballooned to $3.4 billion in revenues and accounted for Staples’ highest operating profit margins. As CEO, Sargent led Staples to the front of the office-supply business, outpacing the industry in a number of areas.

A FRUGAL FOCUS ON EVOLUTION Sargent compared himself to the 1992 Toyota Camry with over 100,000 miles on it that he drove: steady, inexpensive, and deadly reliable. He kept key financial data inside an aged file folder that was heavily taped to hold it together. This thriftiness did not translate into skimping, however, nor did Sargent plan to implement a whole new vision or strategy for Staples as CEO. One of the key ideas that remained with him from his days at Kroger was that “everything starts with the customer.” Sargent recognized that in order to improve Staples and allow it to evolve naturally he would have to cut costs while neglecting neither the customers nor the company’s sales associates. In an interview with American Executive, he explained the logic behind cutting costs while increasing spending on people: “If you treat your associates well, they’re going to treat the customers well, and that’s going to treat the stockholders well. It’s a virtuous circle.” After taking over as CEO, Sargent refocused Staples in a number of ways. More attention was paid to the small-business and home-office customers that research showed were Staples’s core base and who typically shopped for higher-priced items with higher profit margins. Staples rechanneled some of its marketing budget away from newspaper inserts and into direct marketing in order to better target these customers. The company eliminated over 800 less-profitable items aimed more at the casual consumer, including novelty pens, cartoon notebooks, and inexpensive telephones and shredders, and added over 400 items targeted at the small-business customer, such as multiline telephones, large filing systems, and bulk items. Sargent used his experience in the grocery business, where private-label brands play a big role, to expand the Staples storebrand product mix. Eliminating low-margin items allowed Staples to reduce its inventory and its number of vendors while still maintaining its focus on customers. In a BusinessWeek Online interview, Sargent explained, “We’re going to squeeze the daylights out


of every imaginable cost except two: We are not going to cut back on marketing, and we are not going to cut back on instore service. In fact, we’re spending more in both of these areas.” In keeping with his reputation as an aggressive costcutter, within his first few months as CEO, Sargent set up 45 task forces to find savings anywhere they could, from negotiating price cuts with vendors, to lower rents on building leases, to paper expenses. One change that helped Staples to raise its operating profit margins was to open up its vendor-bidding process to an online-auction format. Where previously they would have two or three suppliers bid on a specific job, such as providing plastic bags for the register area, the onlineauction format brought in triple the number of bids and ultimately saved the company millions of dollars. Pulling back on store-expansion plans, Sargent closed stores in smaller towns and opened new ones in metropolitan areas where they already had a presence. This strategy allowed marketing dollars to be stretched further and higher-volume outlets to thrive. Additionally, approximately one-fourth of the stores were remodeled to look more like boutiques than warehouses, reflecting Staples’s newly intensified focus on customer service. Customers could move around more easily and find items more quickly, and the overall supply-chain processes benefited as well. Initially, this new store format outsold its warehouse-styled counterparts by 8 percent.

HANDS-ON APPROACH TO CUSTOMER AND EMPLOYEE SATISFACTION Sargent liked to keep up with what was happening at the store level by visiting, unannounced, up to three hundred Staples stores every year. On his first day as CEO he paid a visit to the original store in Brighton, Massachusetts, to work the floor dressed in the same red shirt and black pants worn by all of the sales associates. He also visited the competition. This hands-on approach allowed him to observe how changes were affecting the day-to-day life of both customers and sales associates. Sargent eased Staples’s 30-day return policy; he wanted associates to have the flexibility to use their best judgment rather than be held to hard-and-fast rules. He personally emailed clients and once cinched a large bank contract when he impressed the bank president by answering his own phone. Sargent began volunteering at the starting line of the Boston Marathon in 1991, promoting his company by passing out Staples-branded giveaways. In addition to personal visits from the CEO, Staples began keeping track of customer satisfaction through the mysteryshopper program begun under Sargent. A mystery shopper rated each store every month and associates received bonuses based on the scores. Overall store scores improved steadily as a result of this program, reflecting increased customer service. Staples began offering a reward program to its customers, using its sophisticated customer-management system to offer

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Ron Sargent

items of interest and possible savings based upon a customer’s past preferences. And to better serve Staples’s direct-delivery customers, Sargent reorganized the sales force into “hunters,” who acquired new accounts, and “farmers,” who serviced the accounts, with both groups having more time to spend with customers. In his early days as CEO, Sargent also worked to broaden Staples’s commitment to corporate responsibility. He responded to pressures from environmental groups on the entire industry by making environmental leadership a goal for Staples and working to create demand for recycled products. He also worked to start the Staples Foundation for Learning and supported other charitable organizations related to education and youth.

OPPORTUNITIES FOR GROWTH Sargent continued to cut costs while seeking potential growth areas. Staples began opening stores in Europe in 1991; as of early 2004 European stores accounted for 12 percent of sales but only 6 percent of profits. Shortly after becoming CEO, Sargent executed Staples’s successful acquisition of the French mail-order business Guilbert. He replaced Americans with Europeans as heads of European store operations, recognizing that success in Europe required a cultural familiarity that had been lacking under the previous model. He also continued to look for expansion opportunities to boost profitability. Other areas targeted for growth by Sargent included Sta-

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ples’s copy-center operations, its contract sales to large companies, and its delivery operations to small businesses in Europe and the United States.

See also entries on The Kroger Company and Staples, Inc. in International Directory of Company Histories.


Eyriey, Nick, “The Executioner: Does Staples’ Move to the Top of the Sales Charts Signal a New Order?” Office Products International, April 2003, p. 31. Fasig, Lisa Biank, “CEO Returns Staples Chain to Winning Ways of Its Past,” Knight-Ridder Tribune Business News, April 20, 2003. Hilleard, Steve, “Ron Sargent (The Big Interview),” Euromoney, August 2003, pp. 56–63. Rose, Jill, “Out of the Box,” American Executive, http:// www.americanexecutive.com/features/f_05_04_Cover.asp. “Staples: Riding High on Small Biz,” BusinessWeek Online, http://www.businessweek.com/magazine/content/04_14/ b3877642_mz073.htm. Symonds, William C., “Thinking Outside the Big Box,” BusinessWeek, August 11, 2003, pp. 62–64. —Celia A. Ross


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Arun Sarin 1954– Chief executive officer, Vodafone Group Nationality: Indian, American. Born: October 21, 1954, in India. Education: Indian Institute of Technology, BS, 1975; University of California at Berkeley, MS, 1977, MBA, 1978. Family: Son of Krishan Sarin (military officer) and Ramilla (maiden name unknown); married Rummi Anand (homemaker); children: two. Career: 1978–1981, management consultant, environmental analyst; Natomas Company, 1981–1984, corporate development manager; Pacific Telesis Group, 1984–1994, various positions including corporate development, chief financial officer, chief strategic officer, vice president, and general manager; AirTouch Communications, 1994, vice president of human resources; 1994–1995, senior vice president of corporate strategy and development; 1995–1997, president and chief executive officer; 1997–1999, president and chief operating officer; VodafoneAirTouch, 1999–2000, chief executive, U.S.-Asia Pacific region; InfoSpace, 2000, chief executive officer; Accel-KKR Telecom, 2001–2003, chief executive officer; Vodafone Group, 2003–, chief executive officer. Awards: University of California at Berkeley, Haas School Business Leader of Year, 2002; University of California Trust (UK) Award, 2003. Address: Vodafone Group, Vodafone House, The Connection, Newbury, West Berkshire, RG14 2FN, United Kingdom; http://www.vodafone.com.

■ Arun Sarin spent almost his entire working life in the telecommunications industry. He built an enviable professional record by combining various talents and skills: his technical knowledge, his business strategy, and his financial acumen were all legendary. He held several senior-executive-level positions in major U.S. companies in the telecommunications industry. At times, his ascension into top-management positions appeared almost meteoric. Described by superiors and industry analysts as possessing determination and drive, he received International Directory of Business Biographies

Arun Sarin. AP/Wide World Photos.

high marks for his work in the preparation and financial analyses for business mergers and acquisitions in the growing telecommunications industry. His July 30, 2003, appointment as chief executive officer (CEO) of Vodafone, a multibilliondollar British international wireless-communications company, was a tribute to his life’s work and testimony to his broad appeal and respect among various constituents.

THE EARLY YEARS Arun Sarin was born in India to a once-wealthy family. When the British granted sovereignty to India in 1947, his family lost its wealth. In order to sustain a solvent financial position for their families, Sarin’s father and uncles joined the Indian military. His father held the rank of lieutenant colonel in the Indian military. Sarin attended a military boarding

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Arun Sarin

school in Bangalore, India, as a young boy. Early on he proved himself to be a very disciplined student. School played an important part of his life and set the tone for his future career. While in high school Sarin excelled in scholarship and sports, including field hockey, gymnastics, and boxing. His accomplishments gave him a sense of purpose and discipline that continued into adulthood. He wanted to follow his father’s footsteps into the military by pursuing a career as a pilot, but his mother vehemently protested this choice fearing that he could be killed in a future military conflict. To appease his mother, Sarin, an extraordinarily gifted student, especially in mathematics, applied to the Indian Institute of Technology (IIT), a highly competitive elite university in Kharagpur, India. He was accepted at IIT and chose engineering as his major. He graduated in the top 10 percent of his class and received the B. C. Roy gold medal for academic excellence. Upon graduation from the IIT in 1975 with a bachelor of science degree in engineering, Sarin received a full scholarship to the University of California, Berkeley, Graduate College of Engineering. For the Indian-born Sarin, California would become his adopted home and the United States his adopted country. While pursuing his engineering degree Sarin met his future wife, Remmi, also an Indian and a graduate student. She persuaded him to enroll in a finance course in the business school. He performed so well that he decided to pursue an MBA majoring in finance concurrently with his engineering degree. In 1977 he was awarded a master’s degree in engineering, and the following year he received his MBA. The dual degrees gave him a competitive edge in seeking employment and bolstered his career over time.

GROWING UP IN THE WIRELESS INDUSTRY: ALL IN THE FAMILY Sarin started his professional life in 1978, working as an environmental analyst for a Washington, D.C., consulting firm. In 1981 he returned to California to join the Natomas Company in San Francisco as a corporate development manager. A few years later Sarin entered the telecommunications industry, a field he chose by design: “When I graduated I went into the energy industry because it was hot . . . the consultancy I worked for was acquired and in 1984 I looked at the world and saw that telecoms was hot so I joined Pacific Telesis” (Communications Week International, September 11, 2000). At Pacific Telesis Group, a Bell spin-off, Sarin met and started working closely with Sam Ginn, the legendary telecommunications entrepreneur, who helped steer Sarin’s management career in the industry. As a new employee in the industry, his background in finance facilitated his work on cellular-business acquisitions. Sarin worked with Pacific Telesis in various professional and executive positions for 10 years, receiving several important promotions, assuming increasing levels of administrative

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responsibility, and expanding his executive experience. He strengthened the internal financial controls at the company, and Ginn promoted him to chief financial officer after the company completed a major acquisition. Soon he was appointed vice president of corporate strategy, and at the age of 35 he became the youngest corporate officer at Pacific Telesis. Sarin left the company in 1994 when it split its mobile and paging businesses. He followed his mentor Ginn to a newly formed wireless-communications company, AirTouch Communications.

BUILDING SENIOR EXECUTIVE LEVEL EXPERIENCE Sarin had a unique opportunity to hone his executive talents at AirTouch Communications, one of the largest cellular companies in the world. His initial appointment was as vice president of human resources. In less than a year he was promoted to senior vice president of corporate strategy and development, a position that fit him exceedingly well. His responsibilities included working on corporate acquisitions, developing partnerships, and forming strategic alliances with other companies throughout the industry. Sarin’s dedication and commitment to AirTouch were demonstrated by the following incident: While celebrating his 40th birthday at a party, he received word that a major deal was brewing between corporate competitors that had serious implications for AirTouch’s future existence. Despite being the honored guest, Sarin left the celebration to assess the problem and to try to influence its outcome. As a result of his direct intervention, the deal was compromised. Hard work and company loyalty paid off well for Sarin. He continued moving up the corporate ladder very quickly. In less than a year as corporate vice president he was appointed president and chief executive officer of the company. Under his leadership at AirTouch, the company established cellular and paging businesses in more than a dozen countries. In 1997 Sarin was promoted to president and chief operating officer of AirTouch, a position he held for approximately two years. In 1999 AirTouch and Vodafone, a large British wirelesscommunications company, decided to join forces to create Vodafone-AirTouch, which produced greater financial and human resources and enabled the company to compete more effectively in the international wireless-communications marketplace. Sarin was named chief executive of the newly formed corporate entity, responsible for managing operations in the U.S.-Asia Pacific region and for some 20,000 employees. In order to expand services, Sarin, with his years of experience partnering with other companies, created a strategic alliance with InfoSpace, an Internet infrastructure company based in Bellevue, Washington, “to deliver wireless Internet services to mobile customers” who resided in some two dozen countries (Advisor.com, January 11, 2000).


Arun Sarin

Sir Christopher Gent, the fairly young CEO of Vodafone, had always expressed the greatest respect for Sarin’s financial abilities and managerial and leadership skills. He understood Sarin’s value to the newly formed company and wanted Sarin to continue to his employment. Sarin wanted to add the position of chief operating officer (COO) to his corporate resume as a step toward becoming the CEO of Vodafone one day, but Gent decided that there was no pressing need to create the position of COO at the company. Faced with this decision and the fact that the youthful Gent would likely remain CEO for many years, Sarin concluded that his path to top was blocked, and he was unwilling to take a lesser role in the company’s hierarchy. On April 15, 2000, Sarin resigned from VodafoneAirTouch and took the CEO position at InfoSpace. Hedging his bets, Gent then offered Sarin a nonsalaried position as a member of the board of directors at Vodafone-AirTouch, a position that Sarin willingly accepted.

THE INFOSPACE EXPERIENCE InfoSpace’s founder, CEO, and chairman, Naveen Jain, by several accounts “badgered” Sarin until he accepted the CEO position at the company. Said Sarin: “Naveen kept coming up and bugging me. This is classic Naveen, he comes at you and at you and at you. . . . I’m 45, there’s a time in life when you have done what you’re going to do; it’s time to take a bigger chance” (TheStreet.com, April 19, 2000). Despite his easy transition into the CEO position at InfoSpace, however, Sarin expressed concerns about his ability to balance work and family life. He was worried that his new position might impact negatively on his family, which chose not to move from their home in Piedmont, California, to Bellevue, Washington, the headquarters of InfoSpace. Jain had the utmost respect for Sarin’s abilities in the global telecommunications business, and Sarin complemented Jain’s knowledge of the Internet. As CEO, Sarin had an external role, developing partnerships with global companies, and an internal role that focused on recruiting and strengthening the management team at InfoSpace. Sarin led the merger of InfoSpace and Go2Net, a consumer-portal company, for approximately $4 billion in a stock swap. After a short eight-month tenure at InfoSpace, Sarin resigned, citing family obligations, which included weekly travel from his home in Piedmont to InfoSpace headquarters in Bellevue. Although family matters undoubtedly played a significant role in his decision to leave the company, there was talk among industry analysts about discontent at the top. Jain asked Sarin to remain at the company in a nonexecutive capacity, as vice chairman of the board of directors, a position that he accepted. Sarin agreed to meet with customers and not to seek employment at another company for 180 days. Despite his willingness to stay with InfoSpace as a nonexecutive direc-


tor, several industry analysts raised strong concerns about Sarin’s unexpected early departure from InfoSpace and the future of the company without his leadership.

JOINING ACCEL-KKR TELECOM After leaving Infospace in January 2001, Sarin spent some time collecting his thoughts. Despite the fact that he was quite wealthy by now, he refused to lead a simple sedentary life outside of corporate life. On July 18, 2001, having honored his agreement with InfoSpace, Sarin joined Accel Partners and Kohlberg Kravis Roberts (KKR) to lead a new telecommunications venture called Accel-KKR Telecom. As CEO of this new venture, Sarin was responsible for identifying and working with established companies in the telecommunications industry seeking financial and human capital. Upon Sarin’s appointment, Paul Hazen,chairman of AccelKKR Telecom, described Sarin’s management and leadership traits: “His ability to manage, operate, and achieve real world, hands-on results will be invaluable in attracting significant investment opportunities and distinguish Accel-KKR from other investment partnerships in the telecom space” (Accel-KKR press release, July 18, 2001). As with earlier appointments, Sarin’s background in finance and his broad experiences in the telecommunication industry made him a natural choice for this new position. Under his watch as CEO, Sarin assessed potential global business opportunities and worked on the acquisition of the Yellow Pages (Bell Canada) business. In addition, he served as a nonexecutive director on several major corporate boards of directors, including Charles Schwab, Cisco Systems, The Gap, and Vodafone. After approximately 18 months at Accel-KKR Telecom, Sarin resigned to become CEO designate his old firm, now called Vodafone Group.

RETURNING TO VODAFONE AS CEO Under the leadership of Sir Christopher Gent, the Vodafone Group made a number of significant and strategically important corporate acquisitions. In 2002, while only in his early 50s, Gent decided to retire as CEO to spend more time with his family. On December 18, 2002, Lord Ian MacLaurin, the chairman of Vodafone, called on Sarin to rejoin the company. His appointment as CEO designate began on April 1, 2003. MacLaurin said of Sarin’s appointment, “I am delighted that Arun Sarin has made the commitment to take the Group forward to the next phase, and that we have identified an individual with the ability, stature, and knowledge of Vodafone which make him the ideal person for this role” (Vodafone press release, December 18, 2002). Sarin’s appointment drew mixed reviews from telecommunications analysts. Andrew Darley, an analyst at ING Financial Markets, raised concerns about Vodafone’s financial picture:

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Arun Sarin

“We would like to see a continuing cash flow from existing operations as opposed to a continuing acquisition strategy.” Sarin’s finance background undoubtedly gave him the ability to work on maintaining a positive cash flow. On the other hand, despite his many excellent leadership attributes and his wealth of executive experience in the telecommunications business, one analyst questioned his appointment as a replacement for the retiring dealmaker Gent. Damen Maltarp, a telecommunications-industry analyst at Bank of America, commented, “I wouldn’t class him as the ideal replacement for Chris Gent. . . . I think a lot of people will be asking who he is.” Other analysts gave Sarin high marks as Gent’s successor due to his education and experience, his previous experience at Vodafone, and the seamless leadership succession and transition that his appointment created for the company. Darley commented that “effectively he has been part of the global business strategy. This means continuity in strategy and we like the company as it is” (BBC News, December 18, 2002). After several months as CEO designate, Sarin was installed as the CEO of Vodafone on July 30, 2003. After only a month in office, he returned to the business of mergers and acquisitions. He engineered the acquisition of Singlepoint, a mobileservice provider who offered services to Vodafone customers, for $652 million. Several months later, as part of the corporate strategy to move Vodafone into the U.S. market, Sarin vigorously pursued the acquisition of AT&T Wireless Services, but he lost a bidding war with Cingular.

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See also entry on Vodafone Group Plc in International Directory of Company Histories.


“Accel and KKR Form New Telecom Venture; Name Arun Sarin Chief Executive Officer,” http://www.accel-kkr.com/ news/releases/release_071801.html. “Deal Boosts Wireless Internet Services,” Advisor.com, http:// accessadvisor.net/doc/05933. Galambos, Louis, and Abrahamson, Eric, Anywhere, Anytime: Entrepreneurship and the Creation of a Wireless World, New York: Cambridge University Press, 2002. Johnson, Cory, “InfoSpace Lands a New Pilot,” TheStreet.com, April 19, 2000, http://www.thestreet.com/. Malin, George, “The Art of Starting Small But Thinking Big,” Communications Week International, September 11, 2000. “Vodafone Chief Seps Down,” BBC News, December 18, 2002, http://bbc.co.uk/. “Vodafone Selects Its Next Chief Executive,” company press release, December 18, 2002, http://www.vodafone.com/.

—Joseph C. Santora


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Mikio Sasaki 1937– Chairman, Mitsubishi Corporation Nationality: Japanese. Born: October 8, 1937. Education: Waseda University, BS, 1960. Career: Mitsubishi Corporation, 1960–1966, engineer in machinery division; Mitsubishi International, 1966, manager; Mitsubishi Corporation, 1966–1971, manager; 1971–1977, heavy machinery department; Mitsubishi International Corporation, 1977–1979, head; 1979–1981, president; 1981–1985, heavy machinery department; 1985–1989, general manager, heavy machinery department; 1989–1991, general manager, ship and plant division; 1991–1993, executive vice president; 1993–1998, president and chief executive officer; Mitsubishi Corporation, 1994–1998, managing director; 1995–1998, managing director of administration; 1998–2004, president and chief executive officer; 2004–, chairman of the board. Address: Mitsubishi Corporation, 6-3 Marunouchi 2chome, Chiyoda-ku, Tokyo 100-8086, Japan; http:// www.mitsubishi.co.jp.

■ When Mikio Sasaki was hired by the Mitsubishi Corporation in 1963, it was in a very different economic climate than the one in which he became the company’s leader. In those days, Mitsubishi sought out the best college graduates and usually got them; a job with Mitsubishi was not only a secure job for life but was also an elite job with one of Japan’s greatest economic powerhouses. Yet when Sasaki became president and chief executive officer of Mitsubishi Corporation, the company was losing money by the hundreds of millions of dollars, and its once proud Mitsubishi Motors was collapsing in scandal and falling income. Sasaki introduced sweeping reforms to corporate organization and governance and dramatically changed the way Mitsubishi Corporation did business. ENGINEER AND LEADER The company’s symbol of three diamonds touching at a point came from Mitsubishi’s name, which means three dia-


monds. The company was founded in 1870 as a zaibatsu, which meant that it was a family-owned holding company. Its founder was Yataro Iwasaki, a nobleman descended from samurai. By the 1930s Mitsubishi Corporation had become one of Japan’s most powerful keiretsu. The keiretsu were vast holding companies composed of numerous small companies that were interrelated by doing business with each other and that usually owned shares of each other. Member companies of keiretsu were expected to do business with each other first and to consult with each other before doing business with outsiders. Although young for a keiretsu (for instance, Sumitomo’s origins date to the early 1600s), Mitsubishi had become a dominating collection of industries. It and the other keiretsu were blamed by many for the militarism of Japan that instigated World War II, and the power of the keiretsu was curtailed by the United States after World War II. By April 1960, when Sasaki joined the company after having earned a BS degree in industrial engineering and management from Waseda University in Tokyo, Mitsubishi Corporation had recovered much of its economic power and was composed of hundreds of subsidiaries that were linked not only by cross-shareholdings but also by a common corporate culture in which employees were cultivated like family, seniority ruled most promotions, and total income mattered more than profits. Sasaki had a strong scientific bent to his thinking, and over many years he distinguished himself in scientific studies of new technologies. In March 1966 he was briefly assigned to Mitsubishi International in Duesseldorf, West Germany. In November 1966 he was transferred to the London branch of Mitsubishi Corporation in an era in which Mitsubishi was trying to expand its partnerships with British industries. In November 1971 Sasaki was transferred to Tokyo to work in the heavy machinery department of Mitsubishi Corporation. In November 1977 he was sent to Tehran as chief of the Iranian operations of Mitsubishi International Corporation (a subsidiary of Mitsubishi Corporation); in September 1979 he was made president of Mitsubishi International Corporation, Iran. He gained a strong background in the oil and natural gas business that would serve him well in the 2000s, when he expanded Mitsubishi’s oil operations in Russia and natural gas operations in Alaska.

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Mikio Sasaki

THE ECONOMIC BUBBLE Historians often referred to the 1980s as an economic bubble for Japanese businesses because Japanese companies seemed very wealthy but proved to be fragile when the bubble eventually burst. In June 1981 Sasaki was transferred back to the heavy machinery department in Tokyo. In 1984 the Mitsubishi keiretsu pooled its resources to buy shares of its Mitsubishi Oil Company when the U.S. company Getty Oil company tried a hostile takeover of the petroleum development company. This practice was common for Mitsubishi Corporation; it owned banks, life insurance companies, and other potential lending companies, and when a member of the keiretsu was threatened by an outsider or by financial losses, the financial companies would lend it money, and other members of the keiretsu would buy shares in it to protect it. In February 1985 Sasaki was named the general manager of the heavy machinery department. In July 1989 he was appointed general manager of the ship and plant division, a complex interrelationship of keiretsu companies that included the manufacture of luxury ocean liners. During the 1970s and 1980s many American journalists were alarmed by Japan’s increasing economic influence in the United States, and politicians found the issue of Japanese influence to be one that stirred the emotions of American audiences. Mitsubishi Corporation fueled the alarm in 1989 by buying 51 percent of Rockefeller Center in New York City. Mitsubishi Motors had a 27 percent increase in its share of the automobile market in the United States that year, and Mitsubishi Corporation’s electronics companies were gaining large shares of global markets. In Japan this phenomenon was called “Mitsubishification.” Yet the signs of troubles were present. Predicted domination of computer chips by Japanese companies failed to come to pass while such American companies as Intel, AMD, and Cyrex all surpassed Japan’s state-subsidized computer companies. Mitsubishi Corporation made a costly gaffe by insisting on using a proprietary computer operating system rather than one produced by Microsoft, Apple, or IBM; in the 1990s this misjudgment would cost Mitsubishi most of Japan’s own computer consumers.

SASAKI, THE LEADER OF THE FUTURE In March 1991 Sasaki became executive vice president of Mitsubishi International Corporation and was stationed in New York City, where his fluency in English would be of good service. In 1992, although he remained in America, Sasaki was named to the board of Mitsubishi Corporation, which meant that he was by then considered to be a major player in corporate governance. What Sasaki found was a board looking for a plan, with the Mitsubishi Corporation moving from one small crisis to another, as some member companies struggled to survive at home against strong competition from American

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and European companies, even though the Japanese government protected most Japanese industries with high tariffs and sometimes prohibitions against foreign products. In April 1993 Sasaki was named president and CEO of Mitsubishi International Corporation. In this position he invested Mitsubishi’s time and money in new technologies, often with extraordinary foresight. For example, in 1993 he began Mitsubishi Corporation’s research and development in fullerenes, which were molecular clusters of carbon, forming closed shells that Sasaki described as looking like soccer balls. Ten years later Sasaki would say that he could still recall the moment a staff member told him about fullerenes, remembering that he instantly was taken by the potential of the arcane field of study. He took direct charge of the research and manufacture of fullerenes for all the rest of his career at Mitsubishi. In fullerenes Sasaki envisioned the emergence of nanotechnology, a field of microscopic machines. Under Sasaki’s leadership Mitsubishi developed manufacturing techniques that in the 2000s made Mitsubishi the only mass producer of fullerenes, which had a host of applications from cures for some cancers and treatments for other diseases to the manufacturing of super-strong composites of metals and polymers. To develop the possibilities of polymers, Sasaki did something that was very rare for Mitsubishi Corporation—he forged partnerships with companies outside of the keiretsu. In June 1994 Sasaki was made a managing director of Mitsubishi Corporation. This position meant more than being a member of the board of directors; Sasaki had management responsibility for some of the company’s operations, beyond his continuing responsibilities as president and CEO of Mitsubishi International Corporation. In June 1995 his responsibilities were further defined as managing director of administration for Mitsubishi Corporation. At the time, the parent company of the keiretsu, Mitsubishi Corporation, had about eight thousand employees, most of whom were older men who had spent decades rising through the ranks on the basis of seniority. They managed the bewildering mix of hundreds of companies that were separate entities within Mitsubishi Corporation, and Sasaki was responsible for overseeing the organization and communication of these senior managers. In 1997 Mitsubishi Corporation began to unravel. It had invested heavily in Thailand and Malaysia, especially in automobile manufacturing, and in 1997 Thailand suffered a currency crisis so severe that many of Mitsubishi’s holdings in Thailand became almost worthless. The crisis quickly spread throughout Southeast Asia. Mitsubishi Motors, in particular, had to swallow multimillion-dollar losses. The devaluation of Asian currencies continued into the 2000s, damaging Mitsubishi Corporation’s ambitions to develop Asian marketplaces. In April 1998 Sasaki was named president and CEO of Mitsubishi Corporation; a Mitsubishi Corporation president was expected to serve three consecutive two-year terms and


Mikio Sasaki

then leave the post, and Sasaki was a logical choice to be the new president, given his extensive experience in foreign markets and his reputation as having a steady temperament and sound judgment. Of interest was the title of CEO. The chairman of the board had previously had the powers of a CEO, which meant that naming Sasaki to the new position of CEO was a break with tradition and an indication that he was to be given the powers to redirect, to reorganize, and to redefine Mitsubishi Corporation, which was in desperate financial trouble, although how desperate would not become public for another couple of years.

KEEPING THE KEIRETSU ALIVE In 1998 Mitsubishi Electric, which had made the blunder in computer operating systems, lost $870 million. Mitsubishi Rayon, Japan’s largest manufacturer of artificial fibers, was downgraded by ratings companies to the status of a junk stock; the heavy equipment division and 12 other units were downgraded to near-junk stock status. During the summer, without asking the parent company’s permission, as was theoretically required, Mitsubishi Corporation’s Nikko Securities Company found an outside ally in the American company Citigroup, which bought 25 percent of Nikko Securities for $1.8 billion, helping Nikko Securities stay afloat. Perhaps this move was an example of Sasaki’s creating for members of the keiretsu new freedom to take action, although corporate insiders said that within the keiretsu the action of Nikko Securities was regarded as a betrayal. As Sasaki saw matters, he was faced with a failing business model caused by a number of factors, including the Asian currency crisis, which had collapsed Mitsubishi Corporation’s earnings; obsolescence of trading companies, caused by Internet commerce; and a collapse of Japan’s social system, one effect of which, he believed, was not just to make the practice of promotion by seniority obsolete but also to make promotion by seniority a handicap for competing in the global marketplace. In 1998 Sasaki launched MC2000, a plan to correct some of Mitsubishi’s Corporation’s problems by the end of 2000. He wanted not just to reform the company but to transform it, and MC2000 was just the beginning of his broad ambition for the company. He regarded Mitsubishi Corporation as a sogo shosha, a trading company, and he viewed electronic commerce as the transforming power in trading on a global scale. Sasaki wanted, he said, “to encourage management and employees to abandon precedent and embrace selftransformation as the way forward in the 21st century” (“Mitsubishi Corporation,” October 3, 2003). Part of this transformation was to be achieved by radically changing the management personnel of Mitsubishi Corporation. Sasaki laid off two thousand of the parent company’s eight thousand em-


ployees, and he abolished the seniority system for promotions, instead instituting a merit-based program not only for promotions but also for cash bonuses. This reform was resisted throughout the keiretsu but by 2000 had also resulted in numerous managers in their early forties gaining positions of command; it was Sasaki’s goal to promote people into responsible positions at the best time for them, to give each individual employee the chance to do his or her best when he or she was best prepared to do so. To carry out this plan, it was necessary to restructure communications in the company so that upper management would be aware of how employees were performing. It also meant a reform in record keeping because employee performance had to be monitored. On June 26, 1998, Sasaki tried to explain his actions to investors and business analysts, declaring that he intended to create a company that was a global leader by developing its corporate strategy, by improving its decision-making processes, by boosting its appeal to creative and accomplished potential employees by creating an attractive environment for people of all nationalities, and by making it a value-driven company that served shareholders and partners. He saw the global economy as the place where a future Mitsubishi Corporation would thrive by including employees from cultures other than Japanese and giving them the conditions and resources in which to thrive personally. In February 1999 Mitsubishi Electric said that it would lose $330 million for the fiscal year. In March 1999 Mitsubishi Materials Corporation and Mitsubishi Chemicals Corporation each projected losses of $200 million. The Bank of Tokyo–Mitsubishi Ltd. had to raise an emergency $2 billion from other members of the keiretsu in order to keep from failing. Mitsubishi Corporation’s debt was over $132 billion. This news was serious for Japan as a whole because Mitsubishi Corporation accounted for 8 percent of the gross national product. Japan’s economy was flatlining, meaning no growth, and such keiretsu as Dai-Ichi Kangin, Fuyo, Mitsui, Sanwa, and Sumitomo were suffering, too, in part because of poor coordination among member companies. Sasaki responded by cutting and reshaping Mitsubishi Corporation businesses and even allowing new alliances, such as Mitsubishi Oil’s merger outside the Mitsubishi keiretsu with Nippon Oil in April 1999. Sasaki also changed how corporate success was to be judged. Previously most of Japan’s keiretsu had treated gross as more important than net; this approach was one reason why they were huge, perhaps bloated—during the 1970s and 1980s they acquired new businesses just to increase their sales. Sasaki introduced a foreign idea to Mitsubishi Corporation—a value-added strategy that evaluated employees and their businesses on growth in profits. In the late 1990s Mitsubishi Motors went through an embarrassing period during which press reports forced it to reveal that since the 1970s it had covered up design flaws that caused

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Mikio Sasaki

many of its automobiles to malfunction, sometimes leading to injury. It had used threats and bribes to stop people from complaining about accidents caused by the flaws. These revelations led to dramatic drops in sales in Japan because of a loss of consumer confidence in Mitsubishi products. Mitsubishi Motors was forced to recall over two million vehicles in Japan alone. Even sales of its trucks, once very strong, sagged. In 1995 Mitsubishi Motors accounted for 11.4 percent of Japan’s automobile market, but by 2000 its share had declined to 8 percent and was continuing to fall. In 2000 Mitsubishi Motors lost $750 million on sales of $31 billion and was on its way to losing between $2.21 billion and $2.5 billion for 2000 and 2001 combined. Some journalists and business analysts said that Mitsubishi Motors was doomed and should go out of business before it took all of Mitsubishi Corporation with it. Instead, Sasaki looked for a manager who met his requirements for adding value to his company, and he found Takashi Sonobe, the leader of Mitsubishi Motors’ American operations; while the rest of Mitsubishi Motors had declined, its American branch, under Sonobe’s leadership, had prospered. Sonobe was named president and CEO of Mitsubishi Motors in 2001. Further, Sasaki and his team found an outsider to help Mitsubishi Motors: DaimlerChrysler, a German-owned company that had swallowed up America’s Chrysler and whose official corporate language was English—a comfortable fit for Sasaki and Sonobe, who were fluent in English. DaimlerChrysler bought 37.4 percent of Mitsubishi Motors for about $2 billion, with the option to buy all of Mitsubishi after three years, and sent German executives to help oversee the company’s return to profitability. This plan was part of Sasaki’s vision of a company that found talent from other countries.

REBUILDING In 1999 Sasaki created a risk management department to centralize corporate control over investments and loans for Mitsubishi Corporation’s companies. He also established the Fullerenes International Corporation in 1999 to manufacture fullerenes; by 2004 it would be manufacturing 40 tons of fullerenes per year, and Sasaki himself had direct control of the research and development department of Mitsubishi Corporation. In 2000 he began MC2003. He wanted Mitsubishi Corporation aggressively to seek out new business partners and new markets. On April 1, 2000, Sasaki established a department for organizing information about logistics, marketing, and finance that he called the “New Business Initiative Group.” His restructuring of Mitsubishi Corporation became more coherent as he blended several hundred companies in four hundred departments into 190 units, uniting them by strategies and business models. There were still a great many units, but for Mitsubishi it was revolutionary to have a corporate organization that seemed relatively straightforward. Sasaki

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drew up charts that showed how all the units were interconnected, revealing a cohesive corporate structure that could have one clear, unifying strategy. Sasaki had become a national leader, helping the Japanese government negotiate trade agreements with Chile and Mexico. On an international scale he was trying to help Mitsubishi catch up with the 21st century. He said that Mitsubishi Corporation needed to understand and share changes in society at home and abroad. Doing so was a matter of survival for the company, in his view, because in his value-added strategy shareholders’ concerns were paramount, and shareholders wanted environmentally safe, socially responsible companies. Thus he agreed to stop a salt reclamation project in Mexico to preserve a lagoon, and he sought to enhance the friendliness for women employees of Mitsubishi’s companies. Sasaki worked every day. He had what he characterized as 1 1/2 free evenings per week, which he devoted to holding meetings with no more than 10 employees at a time. Holding the meetings was an effort to connect with employees personally, and he missed only two of those meetings while he was president. His personal warmth probably helped when he negotiated with Alaska for more Alaskan rights-of-way for piping liquefied natural gas to Mitsubishi shipping and as he worked in eastern Russia to secure rights to develop Russian petroleum fields. In China, Mitsubishi keiretsu members forged partnerships with financial institutions, a breakthrough for the Japanese, who were still regarded with suspicion in China for their depredations in World War II. “‘Investment Trader with Multiple Functions’ might be an apt description of Mitsubishi Corporation today,” said Sasaki in 2003 (“Mitsubishi Corporation,” October 3, 2003). On April 1, 2004, Sasaki became chairman of the board of Mitsubishi Corporation, his traditional three terms as president having expired. Mitsubishi Motors lost $657 million for the fiscal year ending in March 2004. Rolf Eckrodt, the German business leader who was by then president of Mitsubishi Motors, asked DaimlerChrysler for $1.8 billion as part of a bailout plan that included contributions from Mitsubishi’s keiretsu; DaimlerChrysler refused. Sasaki managed to persuade enough lenders to support Mitsubishi Motors to keep it afloat.

See also entry on Mitsubishi Corporation in International Directory of Company Histories.


Bremner, Brian, and Emily Thornton, with Irene M. Kunii, “Mitsubishi: Fall of a Keiretsu,” BusinessWeek Online, March 15, 1999, http://www.businessweek.com/1999/ 99_11/b3620009.htm.


Mikio Sasaki Sasaki, Mikio, “Message from the President and CEO,” September 2002, www.micusa.com/documents/ MC2002SustainabilityRpt.pdf. ———, “Mitsubishi Corporation—Driven to Create Value,” October 3, 2003, http://www.mitsubishicorp.com/en/ir/ meetings/031003/speech01.html. —Kirk H. Beetz


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Paolo Scaroni 1946– Chief executive officer, Enel Nationality: Italian. Born: November 28, 1946, in Vicenza, Italy. Education: Bocconi University, BA, 1969; Columbia University, MBA, 1972. Family: Married (wife’s name unknown). Career: Chevron, 1969–1971, sales manager; Saint Gobain, 1973–1978, sales manager; 1978–1981, general delegate to Venezuela, Colombia, Ecuador, and Peru; 1981–1984, CEO of Italian operations; 1984, director of Flat Glass division; Technit, 1985–1996, executive vice president; Pilkington, 1996–1997, president of Automotive Products; 1997–2002, CEO; Enel, 2002–, CEO. Address: Enel, Viale Regina Margherita 137, 00198 Rome, Italy; http://www.enel.it.

■ In 2002 the Italian businessman Paolo Scaroni took over at the large energy company Enel. The government had been looking for someone to rescue the failing state-owned company in order to prepare it for privatization; Italian authorities tapped Scaroni because he had previously transformed the declining British glassmaker Pilkington, in the process establishing a reputation as a manager capable of turning around companies in difficult financial situations. Scaroni spoke five languages and worked throughout Europe and the Western Hemisphere. He employed a management style that demanded success from managers in providing them with the proper organization and motivation.

Paolo Scaroni. Maurizio Riccardi/Getty Images.

business administration; when he graduated from Columbia in 1972, he found a job with the French glassmaker Saint Gobain. Scaroni worked in a variety of positions for Saint Gobain from 1973 until 1984, then left the company to work for the industrial firm Technit from 1985 to 1996 as executive vice president.

JOINED PILKINGTON EARLY CAREER Scaroni was born in 1946 in Vicenza, Italy. He attended Milan’s prestigious Bocconi University, where he obtained a degree in economics. Upon graduating in 1969, he took a job as a sales manager at Chevron. After two years there Scaroni went to Columbia University to attain his master’s degree in

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In November 1996 Scaroni joined the British glassmaker Pilkington as the president of Automotive Products worldwide. Pilkington had brought him in to help meet the demands of automakers who wanted to globalize and streamline their purchasing of component parts such as glass. Pilkington, founded in 1826, supplied some 20 percent of the glass found on automobiles around the world. It had established its reputa-


Paolo Scaroni

tion in 1959 when an engineer at the company invented the float-glass process, which led to short-term success and profits but long-term complacency and decline. Scaroni told the Financial Times, “In spite of inventing the float-glass process, developing other good technologies, and being a world player, Pilkington has underperformed the competition for the past 20 years” (March 14, 2000). Scaroni did not stay in his initial Pilkington post for long. In 1997 the company was looking for a new leader to halt financial decline; Scaroni was promoted to CEO. His goal at the head of Pilkington would be to transform the company into a more efficient glassmaker and revitalize worldwide operations. He took a number of steps to accomplish these goals, placing an initial focus on cutting costs. He remarked in the Financial Times, “Pilkington had too many people, too many plants, and excessively high overheads. It lived on royalties from the float-glass process, not from selling glass. When the royalties stopped, the company was close to going bust” (March 14, 2000). Pilkington soon closed numerous glass factories around the world. Scaroni then further reduced the company’s remaining workforce, as too many employees occupied each plant to allow for efficient operations; where Pilkington employed an average of 250 to 260 people per factory, the company’s competitors utilized half that number. Scaroni also sought to make the company’s management more efficient, explaining to the Financial Times, “We will be clarifying our management structure and reducing the overheads, which are killing us” (June 6, 1997). He particularly hoped to get the most out of his managers through enhanced organization and motivation, additionally commenting, “We should be able to have normal managers doing exceptional things. You can give them exceptional tasks, provided you organize them and you motivate them” (June 6, 1997). Scaroni’s term at Pilkington was a success. By 2000 the company could boast that profits had risen by 23 percent over the previous year. He eliminated excess bureaucracy and demanded that the least efficient factories match the performances of the most efficient. In 2002 the company chairman Sir Nigel Rudd told the Financial Times, “In the five years that Paolo’s been here, we’ve completely changed the business” (May 15, 2002). One analyst added, “Pilkington was an oldfashioned, inefficient UK manufacturing company which would have gone into the ground. Paolo saved it” (May 15, 2002).

TAKE OVER AT ENEL In May 2002 Scaroni resigned from Pilkington and returned home to Italy to take the position of CEO at the energy


company Enel. The Italian government had picked Scaroni in the hopes that he could rescue Enel as he had done with Pilkington. Enel was in poor financial shape due largely to an unsuccessful attempt to diversify into the telecommunications market, which move ended up draining more than $1 billion annually. Enel was still 68 percent state-owned when Scaroni took over, and the government hoped that Scaroni could restore the company’s financial health in order for it to be fully privatized. Scaroni announced that he would apply his “Pilkington recipe” at Enel, emphasizing lower costs, higher efficiency, and better quality. He stated that he would try to extricate Enel from the telecommunications market as soon as possible and refocus the company on its core electricity and gas sectors. As he had done with Pilkington, he would have to cut jobs. Analysts predicted that Scaroni would be obligated to eliminate up to 40 percent of the workforce; in the context of an Italian state-run firm, such cuts would not prove easy due to the farreaching influence of politicians and union leaders. The energy analyst Neil Bradshaw told BusinessWeek, “Scaroni’s biggest challenge is cutting costs aggressively and massively improving efficiency. I’m not sure whether he has free rein to do that” (September 23, 2002).

See also entry on Pilkington plc in International Directory of Company Histories.


Batchelor, Charles, “Pilkington Hopes to Look through Glass More Brightly,” Financial Times, March 14, 2000. Betts, Paul, “Unleashing the Power of Experience,” Financial Times, October 3, 2002. Edmondson, Gail, “The Biggest Test for Italy’s Mr. Fix-It,” BusinessWeek, September 23, 2002. Harney, Alexandra, “Stones Rain in on Pilkington’s Glass House,” Financial Times, May 15, 2002. Simonian, Haig, “No-Nonsense Scaroni Takes Pilkington Helm,” Financial Times, June 12, 1997. Skapinker, Michael, “A Clear-Cut Vision of How to Make Profits,” Financial Times, July 19, 2001. Tieman, Ross, “Scaroni Rises at Pilkington,” Financial Times, October 29, 1996. ———, “Singing Sweet Music to Analysts and Shareholders,” Financial Times, June 6, 1997. —Ronald Young

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WORKING-CLASS ROOTS


Schaefer was born in 1946 in the working-class community of West Cincinnati. With five brothers and sisters he developed an extremely competitive personality, which he nurtured by playing high-school football. It was Schaefer’s football coach who gave him an application to West Point during his senior year. Schaefer recalled that his coach had said, “Mr. Schaefer, I think you’re the only person on this team who can read. Why don’t you fill this out and send it in” (American Banker, March 23, 2001). Because he lacked the money to attend a strictly academic university—rather than because he possessed an overabundant sense of patriotism—Schaefer applied to West Point; he was accepted.

1945– Chief executive officer and president, Fifth Third Bancorp Nationality: American. Born: May 17, 1945. Education: West Point Academy, BS, 1963; Xavier University, MBA, 1974. Family: Son of George A. Schaefer Sr. and Mary (maiden name unknown); children: three. Career: Fifth Third Bancorp, 1971–1982, various positions; 1982–1984, senior vice president in commercial-lending department; 1989–1991, president and COO; 1991–, CEO and president. Awards: Bronze Star, U.S. Army; Banker of the Year, American Banker, 1994. Address: Fifth Third Bancorp, 38 Fountain Square Plaza, Cincinnati, Ohio 45263; http://www.53.com.

■ George A. Schaefer Jr., the chief executive officer at the Cincinnati-based Fifth Third Bancorp, was once described as a “numbers-crunching, penny-pinching workaholic” (Insitutional Investor, July 2001). Schaefer drifted into the banking business by mere chance, bearing an unrelated military and engineering background. While Fifth Third had already possessed a hard-working, everybody-sells-all-the-time, frugal corporate culture when he took the helm in 1990, Schaefer added his engineer’s love of gathering data and measuring everything as well as an aggressive leadership style to the mix; he once compared banking to guerrilla warfare. For many people, under Schaefer’s leadership Fifth Third was not an easy place to work; type A people who thrived in meritocracies, on the other hand, were quite at home. Over the span of Schaefer’s tenure Fifth Third’s assets increased from $8 billion to more than $91 billion. Fifth Third had not even been the largest bank in Cincinnati when he took over, but 15 years later it ranked among the 15 largest bank-holding companies in the United States in terms of assets and among the top 10 in market capitalization.

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Regardless of his motivation Schaefer came to appreciate the discipline instilled by the academy in its cadets. After graduating in 1967 with a degree in engineering, he attended the U.S. Army’s elite Ranger School in Fort Benning, Georgia. Schaefer then spent two years in Germany serving with a nuclear-demolition munitions team. During the height of the Cold War his unit was assigned to destroy roads and bridges using small nuclear bombs in the case of an attack launched by the Soviets—a task that brought perspective years later to the pressures of running a bank. Schaefer completed his commitment to the Army by going to Vietnam for two years during the war. While supervising a 280-man crew constructing a strategically important highway, he learned how to perform under pressure and gained lessons about leadership that would influence his business career. In a profile in Insitutional Investor, he explained, “If you take good care of your people, whether they’re soldiers in Vietnam or bankers selling checking accounts in Chicago, then they’ll do a marvelous job for you” (July 2001). The highway construction was dangerous work, with his crew always in jeopardy of being shot at by the enemy as well as mistakenly by fellow Americans. For his service Schaefer was awarded a Bronze Star for valor.

HIRING FREEZE AT NUCLEAR PLANT LEADS TO BANKING CAREER Schaefer had no interest in remaining in the army beyond his West Point commitment; in 1971 he returned home to



Cincinnati. He applied for an engineering job at the nearby Zimmer Nuclear Power plant, which was being built by Cincinnati Gas and Electric, but as a result of a delay in the issuing of the plant’s license a hiring freeze was imposed. With no other engineering positions available in the area, Schaefer decided to become a management trainee at Fifth Third for a salary of $8,500 a year.

tion—a routine follow-up operation would be conducted in 1997—but health concerns did little to delay his advancement at Fifth Third. In 1984 Schaefer became the head of commercial lending and executive vice president. The next major step in his career came in 1989 when he was appointed president and chief operating officer. When Buenger retired on January 1, 1991, Schaefer became Fifth Third’s new CEO.

Fifth Third’s origins could be traced to the 1858 opening of the Bank of the Ohio Valley in Cincinnati. That institution was purchased in 1871 by Third National Bank, which merged in 1908 with Fifth National Bank, forming the Fifth Third National Bank of Cincinnati. Fifth Third Bancorp was formed as a holding company in 1975. When Schaefer joined Fifth Third it was headed by William S. Rowe, the fourthgeneration Cincinnati banker who over his 42-year tenure infused the bank with a frugal, conservative approach. According to Schaefer, “He wouldn’t spend a nickel to see an earthquake” (American Banker, March 14, 1994). Rowe’s successor Clement L. Buenger, who took over in 1979, had a background in the grocery and insurance industries and brought the perspective gained from a sales culture to Fifth Third, with an emphasis on hard work. Both men’s strengths would inform Schaefer’s approach to business, as the trained engineer turned accidental banker worked his way up through the organization.

Schaefer took over a well-established institution with a strong corporate culture. In the words of American Banker, “His challenge was to fill the big shoes of Clement Buenger, who 10 years ago took over a profitable, penny-pinching, conservative bank and turned it into a very profitable, pennypinching, conservative bank” (July 19, 1991). At Fifth Third everyone was a salesperson; employees from any number of departments made calls to attract business. Tellers were paid $10 if they convinced a customer to apply for a Fifth Third credit card. Another legacy from Buenger was the bank’s early move into supermarket locations, which provided a convenient venue through which to do business with a wider range of customers.

Taking the advice of a brother-in-law who worked at the Federal Reserve in Cincinnati, Schaefer at first asked to be assigned to the commercial-loan department. He would later find a better use for his superior mathematical skills in taking over the bank’s data-processing operation. In the mid-1970s Fifth Third became involved in the credit-card business, initially relying on Bank One to do the necessary processing work. When Fifth Third decided to do processing in-house, management discovered that the company lacked both the necessary computer power and programming personnel. During the operation’s overhaul Schaefer was put in charge of the data-processing unit, Midwest Payments Systems. That business would eventually become a profit center for Fifth Third through the processing of credit-card and ATM transactions for other companies. Schaefer’s strong performance in his new role caught the attention of the bank’s upper management and directors.

NIGHT-SCHOOL MBA To help advance his career, Schaefer went to night school, earning an MBA from Xavier University. After several years heading Midwest Payments, in 1979 Schaefer returned to the commercial-loan department; three years later he was named the department’s senior vice president. In 1982, when he was just 36 years old, Schaefer had his first heart-bypass opera-


In keeping with Fifth Third’s cult of salesmanship, one of Schaefer’s first acts as CEO was to lead 20 employees on a door-to-door sales campaign to drum up new business for the bank. The one who knocked on the most doors was awarded a $200 pair of Allan Edmond shoes. Such luxuries, while suitable as sales incentives, were not common at Fifth Third, which was known for its thriftiness. The bank’s headquarters made do with 20-year-old carpeting, executives flew coach, business lunches were a rarity, and Midwest Payment relied on two second-hand IBM mainframe computers to conduct business. Schaefer took penny-pinching at the bank to the next level, disposing of the few cars owned by the bank for company use. From that point on even Schaefer drove his own car on local business and was reimbursed for mileage. Schaefer’s obsession with cost controls resulted in strong profits. While banks spent on average about 65 cents for every revenue dollar, Fifth Third spent just 50 cents. For their hard work and incessant selling, Fifth Third employees were rewarded with a generous share of the profits. Schaefer had assumed control of an institution that was conservative on other levels as well: at the senior ranks Fifth Third was an all-male club, and Buenger was known to send female employees home to change if he deemed their attire inappropriate. Overall, Schaefer inherited a bank that was well run and one of the best performers in the industry. He readily admitted that he had no overarching strategy and that his strength lay in the day-to-day execution of his job. If anything, his vision was to do the same as his predecessor—sell—simply to a greater extent. He proved relentless in riding herd on his employees. One of his first actions was to light a fire under the trust business, which had failed to measure up to his expectations. As an engineer number cruncher, Schaefer eventually took advan-

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tage of Fifth Third’s management-information system to keep tabs on all of the company’s major profit centers, ensuring that all employees were kept abreast of who the “winners” and “losers” were. Schaefer was not known to lose his temper or try to intimidate anyone; he simply let statistics pit executives and their groups against one another. Peer pressure to avoid landing on the bottom of one of Schaefer’s well-circulated lists was more than enough motivation for his employees; if they lacked driven, type A personalities, they generally didn’t stick around very long.

A DECADE OF CONSERVATIVE EXPANSION Schaefer was both ambitious and conservative as he expanded Fifth Third one safe step at a time. In his first two years he completed several small acquisitions, then in 1992 attempted a bolder move, making an unsolicited takeover bid for Star Banc Corporation, Fifth Third’s chief competitor in Cincinnati. When the offer was rejected by Star’s board, Schaefer backed off; somewhat humbled, he returned to his more cautious approach to expansion. Over the course of 10 years Schaefer oversaw the acquisition of more than 50 small banks, thrifts, and branch purchases—mostly institutions with assets in the $500 million range. But as Fifth Third grew larger, so did its capacity to make sizable deals, and Schaefer did not shy away from the challenge. The bank made a pivotal move in 1999 when it completed the $2.4 billion purchase of the Evansville, Indiana–based CNB Bancshares, which placed Fifth Third on the edge of the coveted Chicago market. As the 1990s came to a close, Schaefer was managing an enterprise that ranked among America’s top 25 banks, boasting more than $38 billion in assets. Its core branch network was located in the three states of Ohio, Kentucky, and Indiana and was supplemented by operations in other states, especially Florida. But with the company’s increases in size came complications. To avoid the risk of spreading Fifth Third too thin, Schaefer looked for in-market acquisitions. The dramatic increase in the number of employees threatened to dilute the company’s cherished culture; to address that issue, he expanded the bank’s educational programs: new training facilities were opened, teams from the benefits department made more visits to employees of acquired operations, and a weekly newsletter was created to keep the much larger workforce informed. To manage Fifth Third’s expanding banking enterprise, Schaefer created what one management consultant described as a “model of supercommunity banking” (Insitutional Investor, July 2001). In essence he established a management structure that broke acquisitions into smaller pieces, creating confederations of regional affiliates, each with a great deal of local decision-making power. Field officers were charged with serving customers according to their needs, while the home office set performance goals and provided administrative, marketing,

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and product support. Schaefer tried to put his own people in charge wherever possible. Employees at new acquisitions were quickly inculcated with Fifth Third’s culture, although the assimilation was not always successful. A case in point was Schaefer’s attempt to break into the securities industry: In 1998 Fifth Third acquired the Columbus-based Ohio Company, a regional brokerage firm. According to an American Banker article, “a significant number of brokers reportedly left out of dissatisfaction with the buyer’s operating style, and some took a lot of client assets with them” (March 23, 2001). This case was an exception, however, over Schaefer’s first 10 years at the helm of Fifth Third.

GAMBLES ON OLD KENT ACQUISITION Schaefer displayed a gambling side to his personality in November 2000 when—in the midst of an economic downturn—he agreed to pay $5.5 billion for Old Kent Financial Corporation of Grand Rapids, Michigan. The deal was more than twice the size of the CNB acquisition and was a key addition because it provided Fifth Third with direct entry into the lucrative Chicago market as well as other parts of Illinois and Michigan. The addition of Old Kent brought the value of Fifth Third’s assets to $69 billion, and with $44 billion in deposits and one thousand banking locations Fifth Third was now one of the five largest banks in the five-state area of Indiana, Illinois, Kentucky, Michigan, and Ohio. The acquisition did not come without problems, however. Schaefer announced that a large number of Old Kent’s seven thousand employees would be laid off, which made the task of persuading the remaining employees to buy into Fifth Third’s culture, which was not geared toward people adverse to meritocracy, a difficult one. As he had done with previous acquisitions, Schaefer reorganized Old Kent, forming three affiliate banks, two of which (including one in the all-important Chicago market) would be headed by trustworthy Fifth Third executives. Schaefer hoped to break up Old Kent’s culture, allowing him to more easily convert employees to the Fifth Third way of conducting business.

LOOKING FOR GROWTH OPPORTUNITIES After Old Kent, Schaefer continued to look for opportunities to spur Fifth Third’s growth by way of acquisitions; yet he reverted to a more cautious approach, looking for deals which would merely provide toeholds in new markets. From there the bank could employ a technique that it had used successfully in the past: expanding outward and building market share. New markets that Schaefer considered opportunistic existed in the St. Louis, Pittsburgh, and Milwaukee areas; he was also interested in the cities of Charleston, West Virginia, and



Knoxville, Tennessee. In 2002 Fifth Third agreed to acquire the Tennessee-based Franklin Financial Corporation, a bank with $954 million in assets. However, the $240 million deal was held up because of concerns on behalf of the Federal Reserve Bank of Cleveland and the Ohio Department of Commerce’s Division of Financial Institutions in light of the bank’s September 2002 admission to the Securities and Exchange Commission that it was unable to account for $54 million worth of internal investment funds. The matter hung over Fifth Third for the next 18 months, delaying the Franklin Financial acquisition and tarnishing to a certain extent the reputations of both Schaefer and Fifth Third. When regulatory concerns were finally resolved, Schaefer was able to continue his quest to spur Fifth Third’s growth. He maintained that he planned to retire before he turned 65, a decision he said was unrelated to his previous heart problems; yet as long as he was in charge at Fifth Third, it remained likely that he would continue to expand the bank’s operations, by and large opting for the conservative route but occasionally exhibiting a willingness to take chances. He told Forbes, “This business is like playing poker. You have to ante up or get out of the game” (January 8, 2001).

See also entry on Fifth Third Bancorp in International Directory of Company Histories.


Bennett, Robert A., “Happy Warrior,” U.S. Banker, January 2002, p. 30. Engen, John R., “Boss George,” Insitutional Investor, July 2001, p. 40. Layne, Richard, “Cincinnati Bank’s CEO Has Tough Act to Follow,” American Banker, July 19, 1991, p. 1. Milligan, Jack, “Second-Act Rewrite for Fifth Third’s Chief Exec,” American Banker, March 23, 2001, p. 1. Slater, Robert Bruce, “Banking’s Cincinnati Kid,” Banker’s Monthly, January 1993, p. 14. Wherry, Rob, “Fifth Third Bancorp: The Supermarket Sell,” Forbes, January 8, 2001, p. 104. Zack, Jeffrey, “Fifth Third First Rule: Stick with the Basics,” American Banker, March 14, 1994, p. 1A. —Ed Dinger


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Leonard D. Schaeffer 1945– Chairman and chief executive officer, WellPoint Health Networks

Point became one of the largest publicly owned healthmaintenance organizations. Throughout his career Schaeffer displayed bold, decisive leadership in health-care administration, in both the public and private sectors. He was active with many health-care public-policy organizations and foundations, including as the founding chairman of the Coalition for Affordable and Quality Healthcare.

Nationality: American. Born: July 28, 1945, in Chicago, Illinois. Education: Princeton University, BA, 1969. Family: Son of David Schaeffer and Sarah Levin; married Pamela L. Sidford, 1968; children: two. Career: Arthur Andersen, 1969–1973, management consultant; Illinois Department of Mental Health/ Developmental Disabilities, 1973–1975, deputy director; Illinois Bureau of the Budget, 1975–1976, director; Citibank, 1976–1978, vice president; U.S. Department of Health, Education, and Welfare, 1978, assistant secretary for management and budget; 1978–1980, administrator of the Health Care Financing Administration; Student Loan Marketing Association, 1980–1982, executive vice president and chief operating officer; Group Health, 1983–1986, chief executive officer; Blue Cross of California, 1986–1996, president and chief executive officer; 1989–1996, chairman; WellPoint Health Networks, 1992–, chairman and chief executive officer. Awards: Distinguished Public Service Award, U.S. Department of Health, Education, and Welfare, 1980; Executive Leadership Award, UCLA Anderson School of Management; CEO Information Technology Achievement Award, Modern Healthcare, 2004. Address: WellPoint Health Networks, 1 WellPoint Way, Thousand Oaks, California 01362-3893.

■ As chairman and chief executive officer of WellPoint Health Networks, Leonard Schaeffer led the health-care industry’s conversion from nonprofit, indemnity-based healthinsurance coverage to for-profit, managed care. Under Schaeffer’s leadership WellPoint became the first Blue Cross company to convert to for-profit managed care, operating on streamlined operations and cost-containment strategies; Well-

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BOLD INTELLIGENCE DEFINES CAREER Schaeffer gained high-level management experience early in his career. After graduating from Princeton University in 1969 and working as a management consultant for Arthur Andersen, he entered the health-care field in 1973 as deputy director of the Illinois Mental Health Department. During his two years there, Schaeffer became known for cost management that sustained a triple-A bond rating while public-health finance floundered in other states. Success earned him a promotion to director of the State of Illinois Bureau of the Budget. After two years as a vice president at Citibank, in 1978 Schaeffer was approached to work on health-care reform in the federal government, first as assistant secretary in Management and Budget at the Department of Health, Education, and Welfare, then, at the age of 33, as administrator of the newly formed Health Care Financing Administration (HCFA), later renamed the Centers for Medicare and Medicaid Services. HCFA integrated Medicaid and Medicare under one organization, separating Medicare from the Social Security Administration. Schaeffer instituted operational changes that enabled federal health care to become cost effective. He relocated Medicare from the Social Security office in Washington, D.C., to the Medicaid office in Baltimore in order to foster worker interaction for further problem solving. Long before global fees (one-time fees that cover a course of care) became a standard practice of managed-care organizations, he substituted costly fee-for-service payments with a global fee for dialysis. In 1980, as the election-year hampered potentially controversial activity, Schaeffer returned to the private sector. Then, in 1983, he became chief executive officer of Group Health in Minneapolis. At that company Schaeffer learned the principles of a health-maintenance organization, which had evolved from Group Health’s origins as a cooperative association.


Leonard D. Schaeffer

LEADING HEALTH-CARE MANAGEMENT When Schaeffer became president and chief executive officer of Blue Cross of California in 1986, the nonprofit organization was on the edge of bankruptcy, with $2 billion in revenues and more than $150 million in annual losses. As a first step toward providing cost-effective health-care delivery, Schaeffer immediately eliminated redundant bureaucratic positions, reducing staff from 6,000 to 3,100 employees. Longterm changes involved converting the company’s orientation from indemnity-based health insurance to a managed-care service capable of earning a profit. Toward this end, Schaeffer created WellPoint Health Networks as a for-profit subsidiary. A health-maintenance organization, WellPoint instituted managed-care practices, such as global fees, and addressed lifestyle issues that improved personal health for the long term. The next step toward becoming a for-profit company involved a public offering of 20 percent of WellPoint stock in 1993. The offering provided funds for expansion through acquisition, transforming Blue Cross into a profitable company. Schaeffer oversaw 17 acquisitions over the following decade, expanding WellPoint’s reach to Texas, the Midwest, the Southeast, and the Mid-Atlantic states. During recapitalization in 1996, involving the transfer or exchange of cash, assets, and stock, Blue Cross of California became a subsidiary of WellPoint. Thus, WellPoint became the first Blue Cross company to convert to for-profit status. (Recapitalization provided $4 billion in funding for new and existing health-care foundations as well.) By the end of 2003 WellPoint revenues reached $21.2 billion and garnered a net profit of $935 million. To the controversy over whether the market could provide affordable, good-quality health care and ethically earn a profit, Schaeffer noted, “In our current system, there isn’t enough money in the world to deliver all of the care that can be delivered, to all of the people who could consume it. So the concept of improving healthcare’s administrative underpinnings so that we can concentrate more resources on its actual delivery is a very powerful notion to me” (Managed Healthcare Executive, July 2001).

ACTION-ORIENTED MANAGEMENT STYLE Throughout his career Schaeffer displayed a decisive, selfconfident management-style, but many interested parties sometimes viewed him as extremely aggressive. For instance, in 1998 Schaeffer addressed a health-care cost issue in an un-


conventional manner in order to improve the availability of three antihistamines: He petitioned the U.S. Food and Drug Administration (FDA) to transfer Claritin, Allegra, and Zyrtec from a prescription formulary status to over-the-counter status. The FDA took two years to decide the matter, uncertain of the appropriateness of a health-care organization making such a request. WellPoint’s lawyers examined FDA law thoroughly and came to the conclusion that WellPoint could, indeed, petition for change. Schaeffer’s stand on the issue related to the cost and safety of the three products. The three antihistamines do not have sedative effects while some over-thecounter drugs, such as Benadryl, do. The cost of a doctor’s visit and the higher cost of a prescription drug compared with an over-the-counter drug, unnecessarily raised the price of health care. Schaeffer believed that consumers were capable of deciding for themselves whether to use one of the drugs. Much to the dismay of pharmaceutical companies, the FDA voted 19–4 in his favor. Another example of Schaeffer’s style involved WellPoint’s acquisition of Atlanta-based Cerulean Companies in March 2001. In 1998 WellPoint offered $500 million to acquire the company, but by late 2000 several other bids had been offered and Cerulean’s performance had improved. While Schaeffer noted that a counteroffer of $700 million reflected Cerulean’s increased value as well as a desire to make the acquisition, some observers viewed the bid as aggressive.

See also entries on Group Health Cooperative, Student Loan Marketing Association, and WellPoint Health Networks Inc. in International Directory of Company Histories.


Berkowitz, Edward, “The Centers for Medicaid and Medicare Services Website,” http://www.cms.gov/about/history/ schaeffer.asp. Lubman, Sarah, “Is Leonard Schaeffer Destined To Be Victim of His Own Success? CEO of California Blue Cross and WellPoint Is at Hub of HMO Takeover Moves,” Wall Street Journal, March 28, 1995. McCue, Michael T., “Changing the RULES,” Managed Healthcare Executive, July 2001, p. 19. —Mary Tradii

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Hans-Jürgen Schinzler 1940– Chairman of the board, Münchener Rückversicherungs-Gesellschaft Nationality: German. Born: October 12, 1940, in Madrid, Spain. Education: Attended University of Würzburg; University of Munich, JD, 1969. Career: Internships in France and the Netherlands, 1964–1968; Bayerische Vereinsbank, 1968–1969, banker’s training; Münchener RückversicherungsGesellschaft, 1969–1981, position in finance and loan reinsurance; 1981–1993, member of the management board; 1993–2004, CEO; 2003–, chairman of the board. Address: Münchener Rückversicherungs-Gesellschaft, Königinstrasse 107, D-80802 Munich, Germany; http:// www.munichre.com.

■ Hans-Jürgen Schinzler was a very private man and yet one of the most powerful figures in the German finance industry in the 1990s. Reluctant to step into the limelight, Schinzler preferred to focus on business and grew Münchener Rückversicherungs-Gesellschaft (Munich RE) into the largest reinsurance company worldwide. Through Schinzler’s creation of ERGO Insurance Group, Munich RE also became the secondlargest primary insurer in Germany. Allianz was the market leader in primary insurance, but Munich RE and Allianz owned 21 percent of each other’s corporate assets. This link proved detrimental to Munich RE in the early 2000s, resulting in Schinzler’s resignation as CEO of the company in 2004. He continued to serve as chairman of the board, however, and saw Munich RE settle back into stability and profitability.

Hans-Jürgen Schinzler. AP/World Wide Photos.

in legal work via internships in France and the Netherlands from 1964 to 1968. This experience prompted Schinzler to seek out similar international exposure in his new hires to Munich RE. At the end of his internships, he wrote his doctoral dissertation and took his second state examination in Munich. He entered the training program of Bayerische Vereinsbank in 1968.

STEPPING INTO A LIFETIME CAREER FROM LAW TO BANKING Schinzler was born in Madrid, Spain, on October 12, 1940, and studied law in Würzburg and Munich. Upon completion of his first state examination, he took practical training

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After his banker’s training, Schinzler joined Munich RE in 1969. At age 29, Schinzler was responsible for finance and loan reinsurance. In 1981 he was named to the board of Munich RE. His disciplined and calm approach earned him an appointment as CEO in 1993. The previous CEO, Horst Jan-



nott, was considered the firm’s patriarch. “Schinzler’s calm style was much different from the sometimes rumbling Jannott—but hardly less effective,” wrote the Financial Times Deutschland reporter H. Fromme (April 29, 2003). Signifying a new leadership style, Schinzler commissioned the sculpture of the 17-meter high Walking Man by Jonathan Borofsky, which would become a landmark sculpture to grace the entrance of the company’s newly built Building 5 on the Leopoldstrasse in 1995. In a speech and letter to shareholders (1995/1996 Annual Report), Schinzler said: “This figure allows many interpretations. What we chiefly associate with it are presence, progress, vigour, strength and confidence—the very qualities that are important both to our clients and to our shareholders.”

A SISTERHOOD OF COMPANIES Munich RE was known for other investments in art and architecture, including an underground network of tunnels that connected various business buildings. These connections symbolized other alliances as well. Munich RE and Allianz had been intertwined since their inception. Both founded by Carl Thieme in the late 19th century, the companies owned up to 25 percent of each other’s shares. Schinzler also had close ties with Allianz’s CEO, Henning Schulte-Noelle, resulting in frequent private meetings. German media speculated that the companies followed each other’s corporate moves closely and tended to take cues from each other. Schinzler denied such speculation. Marc Brost quoted him (“‘Ich mag keinen Personenkult’—Der Chef will nicht ins Fernsehen”) as saying, “Although we are culturally similar companies, we are both conservative in a positive way and we have a long, linked history. Both companies are marked by the knowledge of being very good in their respective markets and having employees that may be a bit better than others. But we do not divide [the market] between ourselves. In some areas we are harsh competitors, today more than ever.” A 1992 investigation by the German Federal Cartel Office prompted a realignment in the insurance business, causing Allianz to cede its controlling interests in three life insurers (HamburgMannheimer Versicherungs, Karlsruher Lebensversicherung, and Berlinische Lebensversicherung) to Munich Re.

all of Munich RE’s revenues. Fromme reported (April 29, 2003): “He slimmed down the reinsurer comprehensively, ensured that it maintained its leading position in the global market, and skillfully arranged the creation of the German secondlargest primary insurance firm, wholly-owned ERGO, in 1996, at minimal cost to the Munich-based parent company.” Munich RE acquired American RE in 1996 as well, thus expanding into the American market. Further diversifying its operations, Schinzler coordinated the creation of MEAG MUNICH ERGO Asset Management in 1999, a joint venture between Munich RE and ERGO to provide asset management of all the insurance companies in the group and also manage investments for third parties. Owing to a significant number of natural disasters, 1999 proved to be a difficult and costly year for reinsurers. To recoup its significant losses, Munich RE expanded both its reinsurance and primary insurance operations into key markets in Europe, North and South America, and Asia. The company bought CNA Financial’s life reinsurance operations. In conjunction with Swiss RE, Internet Capital Group, and Accenture, Munich RE founded an electronic market place, inreon, in December 2000.

SHUNNING THE LIMELIGHT Schinzler did not like analyst conferences or public appearances of any kind. He did not believe in justifying his business to outsiders. However, as a result of changing legislation in Germany, Schinzler organized the first analyst conference in the history of Munich RE in 2000. In a rare interview, with Mark Brost, Schinzler said, “One cannot consider oneself unimportant enough. . . . I don’t like a personality cult” (“‘Ich mag keinen Personenkult’—Der Chef will nicht ins Fernsehen”). Schinzler felt that the focus should be on the team and the company as a whole: “What makes a reinsurer strong is the work as a team, as important as it is that everyone gives their best,” he said. “My best certainly isn’t to self-promote. I don’t seek out public appearances.” Although Schinzler shunned the media, he did not mind involvement with other companies. He has held positions on the boards of Allianz Lebensversicherungs, Aventis S.A. Schiltigheim, MAN, and METRO and has been the chairman of Dresdner Bank, Dresdner Kleinwort Wasserstein, and ERGO Versicherungsgruppe.

STRATEGIC DIVERSIFICATION WITHOUT FANFARE In 1996 Schinzler expanded on the primary insurance business by taking over Deutsche Krankenversicherung (DKV). Schinzler combined DKV, Victoria, Hamburg-Mannheimer and D.A.S. Versicherungen into a new subsidiary, ERGO Insurance Group. In 1998 ERGO accounted for 50 percent of


CREATING A FINANCIAL POWERHOUSE In 2001 Schinzler forged an alliance with HypoVereinsbank by acquiring a 25 percent stake in the company. The alliance would allow Munich RE to cross-sell banking and insurance products for further diversification. According to CFO

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Magazine (June 20, 2002), this turned Munich RE into “a full-blown financial-services firm.” “Recognizing and controlling risk is our core business,” said Schinzler in an Edit Value interview (March 2002). “To meet it with the highest standard of prevention for people, environment and valuables is intrinsically tied to our economic success.” Although Munich RE touted its significant expertise in the monitoring and forecasting of natural disasters, it was not prepared for the terrorist attacks of September 11, 2001. The company paid out $2 billion in claims. In response, Schinzler said the company would be forced to allocate for future events “that one doesn’t even consider possible” (Netzeitung, December 18, 2003). The changes in risk management did not deter Schinzler, however. “Munich RE intends to play an active role in the growth, consolidation, and convergence of the financial sector,” Schinzler said in 2002 (BusinessWeek Online, February 18, 2002). In 2002 Munich RE announced the acquisition of a 10.4 percent stake in Frankfurt-based Commerzbank. “The quiet giant has awakened and is on the move,” said Brian Shea, a Merrill Lynch analyst (BusinessWeek Online, February 18, 2002). The excitement proved to be short-lived. American RE required a $2 billion infusion in 2003, and stock prices of Munich RE’s major holdings were on a steady decline. Schinzler came under pressure to decrease the company’s holdings. Standard &: Poor’s downgraded Munich RE’s credit rating from AA− to A+ because of weak profits, a diminished capital base, and its exposure to Allianz and HypoVereinsbank, which were both struggling financially. Credit rating is a key factor in a reinsurer’s standing, size and tradition being the other two important criteria. In 2003 Schinzler announced his resignation as CEO, appointing Nikolaus von Bomhard as his successor. Schinzler became chairman of the board in 2004, continuing to offer guidance to the company he had served for his entire career.

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Brost, Marc, “Die Bruderschaft des Geldes,” Die Zeit, December 2001, http://www.zeit.de/archiv/2001/24/ 200124_muenchener.rueck.xml. ———, “‘Ich mag keinen Personenkult’—Der Chef will nicht ins Fernsehen,” Die Zeit, December 2001, www.zeit.de/ archiv/2001/24/200124_interv._schinzle.xml. Calabro, Lori, and Alix Nyberg, “The Global 100: Risk Managers,” CFO Magazine, June 20, 2002, http:// www.cfo.com/article/ 1,5309,7296%7C%7CA%7C8%7C,00.html. “Eine Frage der Glaubwürdigkeit,” Edit Value, March 2002, pp. 12–13, http://www.kpmg.de/library/periodicals/pdf/ editvalue_03_02.pdf. Fairlamb, David, “Picking Up the Pace at Munich RE,” BusinessWeek Online, February 18, 2002, http:// www.businessweek.com/magazine/content/02_07/ b3770143.htm. Fromme, H., “Hans-Jürgen Schinzler: Der ruhige Arbeiter,” Financial Times Deutschland, April 29, 2003. “Münchener Rück: Abschied des grauen Imperators,” Spiegel Online, April 28, 2003, http://www.spiegel.de/wirtschaft/ 0,1518,246516,00.html. ”Münchener-Rück-Chef steht zu Erstversicherung,” Netzeitung, December 18, 2003, www.netzeitung.de/wirtschaft/ 266035.html. Schinzler, Hans-Jürgen, “Letter to Shareholders,” 1995/1996 Annual Report, http://www.munichre.com/publications/30200658_en.pdf.

—Maike van Wijk


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James J. Schiro 1946– Chief executive officer, Zurich Financial Services Nationality: American. Born: January 2, 1946. Education: St. John’s University, BS, 1967; graduate of the Amos Tuck School Executive Program, Dartmouth College. Family: Married Tomasina (maiden name unknown); children: two. Career: Price Waterhouse, 1967–1982, various positions; 1982–1991, chairman, Mining Special Services Group; 1991, national director, mergers and acquisitions; 1991–1995, vice chairman and managing partner, New York metropolitan region; 1995–2001, deputy chairman, World Executive Group and World Board; 1995–1997, chairman and senior partner, U.S. firm; Pricewaterhouse Coopers, 1997–2001, chief executive officer; Zurich Financial Services, 2002, chief operating officer; 2002–, chief executive officer. Address: Zurich Financial Services, Mythenquai 2, Zurich, Switzerland; http://www.zurich.com.

■ James J. Schiro, a trained accountant and former CEO of Pricewaterhouse Coopers, used basic financial discipline to transform Zurich Financial Services. With 2002 revenues of $40.4 billion, Zurich was Europe’s third-largest insurer, and its staff of 62,000 offered insurance and risk-management solutions and services for individuals and businesses in more than 50 countries. The United States, the United Kingdom, and Switzerland were key markets for Zurich, together accounting for about three-fourths of sales.

James J. Schiro. AP/Wide World Photos.

this transaction was not creating a size of 1 plus 1 equals 2 and being the biggest from that standpoint. The goal of this transaction was to give us the critical mass and platform from which we can change the competitive landscape. We can deploy resources and move them around to meet changing needs in different parts of the world” (Accounting Today, September 28, 1998).

FROM SCANDAL TO PROSPECTIVE SEC CHAIRMAN A MEGAMERGER TRANSFORMED AN INDUSTRY A company man for 30 years, James Schiro oversaw the successful 1998 merger of Price Waterhouse with Coopers & Lybrand, one of the biggest and most influential mergers in the professional-services industry. Said Schiro: “The goal of


Schiro presided over an embarrassing scandal that arose after the Securities and Exchange Commission issued a report in January 2000 regarding the investments held by partners of Pricewaterhouse Coopers in companies that the firm was auditing. He also oversaw a failed attempt to sell the firm’s consulting arm to Hewlett-Packard, a deal that would have taken

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James J. Schiro

care of at least some corporate-governance concerns in the wake of the scandal at Enron, once the largest U.S. buyer and seller of natural gas. At Enron, Arthur Anderson’s flawed auditing led to new industry-wide practices of separating consulting from auditing. Schiro persuaded accountants to negotiate new rules with the SEC governing the independence of auditors from their clients, and his efforts for a time made him a prospective candidate to replace former SEC chairman Arthur Levitt. After four years as its CEO, Schiro left Pricewaterhouse Coopers at the end of 2001 and was succeeded by Samuel A. DiPiazza Jr. Schiro said that he chose to leave the firm when he did because he had accomplished most of what he had set out to do.

AN OUTSIDER-TURNED-INSIDER TAKE OVER AT ZURICH Schiro joined Zurich in March 2002 as one of the company’s two COOs in charge of finance. Just two months later he was named CEO. Analysts saw him as a safe choice, someone with the potential to restore stability to the insurer. Zurich’s problems began in the late 1990s when the company lost focus of its core insurance business and embarked on a program of acquiring of ancillary business, such as banking and asset management. Tim Dawson, an analyst at Pictet & Cie in Geneva, remarked, “At least we know there won’t be some new guy coming in with all sorts of harebrained schemes to take the group off in all sorts of strange new directions” (CNN.com, May 14, 2002). Still, Schiro did not seem like an obvious choice. Not only was he the first foreigner to head the firm, he did not speak German and lacked experience in the insurance industry.

A FINANCIALLY DISCIPLINED EXECUTIVE Schiro vowed to return the company to profitability and implemented strict cost-control measures. An increase in claim disputes served as evidence of Schiro’s discipline; the company was paying closer attention to payouts, scrutinizing any claim that pushed the boundaries of the client’s coverage. Employees were also instructed to teach clients risk-management practices that would prevent them from having to file a claim. This benefited both the client and the company since fewer claims meant lower costs and premiums. “Large customers expect you to help them more and more with risk engineering and to be proactive,” said Schiro. “This is a good partnership. If we can reduce the losses, this will improve overall profitability” (Reactions, September 1, 2003).

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SACRIFICING MARKET SHARE FOR PERFORMANCE In 2003 Schiro continued his cost-cutting measures in earnest. He eliminated thousands of jobs, Zurich left the banking business, and Schiro engineered the sale of nine Zurich businesses. He sacrificed the renewal of $800 million in business that the company underwrote in 2003 because it was not profitable. “The culture driving the new Zurich is sacrificing market share for performance and return. We’re better off giving up market share than losing capital,” Schiro said (Reactions, September 1, 2003). In 2003 the Swiss insurance group generated $2.1 billion in profit, a remarkable turnaround from a record $3.4 billion loss in 2002 due to the write off of assets and strengthening of non-life insurance-related cash reserves. Still, the company laid off some 4,500 people in 2003.

ON THE RIGHT TRACK Once Schiro had stabilized Zurich, he outlined plans for new growth opportunities. Those included repositioning Zurich Advice Network, the company’s low-performing UK sales force, to sell a wide range of financial products from other companies. As a performance incentive, he offered agents equity stakes in the company. Schiro also implemented a new management culture built on four components: risk management, underwriting discipline, internal auditing, and matching rewards with performance. As a result, new underwriting standards were introduced throughout the company. “I don’t believe you can run a financial services company in a decentralized way. We want group-wide standards in underwriting and claims management and a marrying of the compensation of underwriters to their underwriting performance,” Schiro said (Financial Times, April 7, 2004). In early 2004 the company’s long-term prospects finally seemed sound. Schiro had an opportunity to relish his accomplishments, but chose not to get too comfortable. “My job is to prevent Zurich from going back to its old ways. The new culture and drive of Zurich is to be more performance oriented. We are driving for profitability in our core business” (Reactions, September 1, 2003).

See also entries on PricewaterhouseCoopers and Zurich Financial Services in International Directory of Company Histories.


Markram, Bianca, “Control is the Key; Special Report: Zurich’s Survival Strategy,” Reactions, September 1, 2003, p. 20.


James J. Schiro Telberg, Rick, and Laurence K. Zuckerman, “Moore, Schiro: ‘We Changed the Competitive Landscape,’” Accounting Today, September 28, 1998, p. 5. “Zurich Financial Names New CEO,” CNN.com, May 14, 2002.


“Zurich to Build on its Strengths,” Financial Times, April 7, 2004.

—Tim Halpern

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Werner Schmidt 1943– Chief executive officer, Bayerische Landesbank Girozentrale Nationality: German. Born: July 13, 1943, in Sindelfingen, Germany. Family: Son of a foreman; married; children: two. Career: Landesbank Stuttgart, 1971–1974, manager; 1974–1986, member of the board of managing directors; 1986–1989, deputy chairman; Südwestdeutsche Landesbank, 1989–1999, chairman; Landesbank Baden-Württemberg, 1999–2001, chairman; Bayerische Landesbank Girozentrale, 2001–, CEO. Address: Bayerische Landesbank Girozentrale, Brienner Strasse 18, 80333 Munich, Germany; http:// www.bayernlb.de.

■ Werner Schmidt rose from humble beginnings to become the leader of the number-one Landesbank in Germany. Regional banks were partly owned by the German government, which proved problematic during integration into the European Union. After successfully merging several regional banks throughout his career, Schmidt was charged with privatizing the Bayerische Landesbank Girozentrale (BayernLB) within four years so as to meet the EU deadline of 2005. Although Schmidt was sometimes considered rough, his goal orientation, determination, and perseverance would serve him well in accomplishing the monumental task.

HUMBLE BEGINNINGS Werner Schmidt was born to a foreman on July 13, 1943. As he completed coursework in only the midlevel track of the three-tiered German high-school system—the upper tier of which prepared students for university, the lower tier for occupational training—few would have predicted that Schmidt would ascend to the head of the most powerful bank in Bavaria. Upon graduating from high school, Schmidt entered a

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Werner Schmidt. AP/Wide World Photos.

practical-training program at Kreissparkasse Böblingen, a regional savings bank. Exhibiting potential early in his career, Schmidt became manager of the Landesbank Stuttgart in 1971. Three years later he was named a member of the bank’s board of managing directors; in 1986 he became deputy chairman. In 1989 Schmidt led the merger of Landesbank Stuttgart and Badische Kommunale Landesbank in Mannheim, forming Südwestdeutsche Landesbank (SüdwestLB). Schmidt was appointed chairman of the board of SüdwestLB, which became the central operator among the savings banks in Baden-Württemberg, and thusly had achieved a top rank in the German banking industry.


Werner Schmidt

FROM REGIONAL TO INTERNATIONAL MANAGEMENT SüdwestLB was the first Landesbank to be wholly owned by the state’s savings banks; in 1990 SüdwestLB became the first regional bank to take a stake in WestDeutsche Landesbank, at the time Germany’s largest public-sector financial institution. The move was intended to increase SüdwestLB’s presence abroad. SüdwestLB then joined with WestDeutsche Landesbank Girozentrale in 1992 to purchase Chartered WestLB, a pan-European corporate-finance company. In 1998, following increased national and international competition, SüdwestLB merged with Landesgirokasse and the commercial-banking unit of Landeskreditbank; Schmidt was credited with facilitating a smooth transition. The merger took effect on January 1, 1999, resulting in the formation of Landesbank Baden-Württemberg (LBBW), which immediately became one of the top public-sector banks in Germany. As chairman of LBBW’s board of managing directors Schmidt led the business units of Controlling, Group Development/Equity Interests, Communications, and Accounting/Tax. In addition to leading LBBW and later BayernLB, Schmidt served on the boards of directors for DekaBank, Bank für Arbeit und Wirtschaft, Lufthansa, Jenoptik, Wieland-Werke, Herrenknecht, Drees & Sommer, and others. He also served on the board of regents of the Univerity of Hohenheim and as chairman of the Freundeskreises der Ägyptischen Sammlung in Munich, a German-Egyptian alliance club. While living in Stuttgart he was honorary consul to the Empire of Japan for Baden-Württemberg.

FROM RETIREMENT TO NEW CHALLENGES In February 2001 Schmidt handed over leadership of LBBW to Hans Dietmar Sauer, preparing to settle into retirement. The LBBW Web site quoted him as saying, “Now that LBBW is on a good course, the first helmsman can leave the ship. It is important to stop at the right moment, but one should never hesitate to start something new” (February 16, 2001). Schmidt’s departure from the world of banking proved temporary: in June 2001 he became chairman of the board of management of Bayerische Landesbank Girozentrale (BayernLB), the number-two bank in the nation. He was brought to Munich to restructure the bank in anticipation of new EU legislation. In 2000 the European Commission investigated the German regional banks (Landesbanken) for breach of antitrust laws; consequently the partially government-owned banks were issued a mandate to dissociate themselves from the state as a guarantor of funds by 2005. BayernLB was jointly owned by the Association of Bavarian Savings Banks and by the government of Bavaria; thus Bayerische Landesbank Girozentrale acted as the principal bank to the


state of Bavaria and as the central clearing house for Bavarian savings banks (Sparkassen). BayernLB also offered privatebanking services to individuals and corporations in the form of deposits, loans, and insurance. In 2001, led by Schmidt, the company announced its privatization plan. Schmidt’s determination, follow-through, and ability to integrate were cited as key elements in the successful accomplishment of the transformation. Schmidt noted in Die Welt Am Sonntag, “In cooperation with our shareholders, the free state of Bavaria and the Bavarian Sparkassen, we considered the future of BayrenLB early on. It is likely that Bavaria would be the first German State to fulfill the new legal requirements” (September 30, 2001). In 2002 BayernLB created a holding concern, through which speculators could invest in up to 49.9 percent of company shares. The bank’s joint owners, the Association of Bavarian Savings Banks and the government of Bavaria—each holding a 50 percent stake—transferred their stock in BayernLB to BayernLB Holding. The French state banks Caisse des Dépôts et Consignations (CDC) and La Caisse Nationale des Caisses d’Épargne et de Prévoyance would acquire a 5 percent stake. CDC and BayernLB planned to eventually coordinate privateequity, asset-management, and capital-markets operations. BayernLB had already worked closely with Landesbank Hessen-Thüringen, having created joint ventures in financing, information technology, and a security depository called Transaktionsbank Frankfurt-München.

INHERITING CORPORATE CHALLENGES Schmidt initially planned to focus BayernLB’s operations on Bavaria and the bordering regions of Austria and Switzerland in addition to continuing its alliances with France and Hessen-Thüringen. Some of those stakes had to be sold off, however; when Schmidt took over the helm at BayernLB, the company was steeped in numerous bankruptcy scandals. Among its clientele were SchmidtBank, Enron, WorldCom, Fairchild Dornier, Holzmann, Herlitz, and Kirch Media, all of which filed for bankruptcy between 2001 and 2003. To counteract the associated losses, Schmidt started a “return to our roots” campaign in which international offices were systematically sold in order to generate cash flow. The largest transaction was the 2004 sale of BAWAG, the fourth-largest bank in Austria, in which BayernLB had held a 46.4 percent stake. The chain-smoking Schmidt did not mind the challenge; he told Fidelius Schmid of the Financial Times Germany, “I always wanted to be an entrepreneur” (February 12, 2004). The self-proclaimed cultural revolutionary Schmidt waned in popularity in early 2004 when he withdrew funding from Aero Lloyd, stranding committed passengers and forcing the airline into bankruptcy. Due to downgrades from credit bureaus—from A minuses to BBB—Schmidt was forced to di-

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Werner Schmidt

minish risk, implement cost savings, and further reduce offices and personnel. Although the initial integration plan called for a two-year transition period through 2005, Schmidt accelerated the time frame in order to complete the privatization by the end of 2004. In Schmid’s Financial Times Germany article, the delegate Peter Kahn called Schmidt “a doer, impatient, and decisive. He is the right man for this task” (February 12, 2004).

OPTIMISM FOR A SUCCESSFUL PRIVATIZATION By mid-2004 BayernLB had doubled its financial performance from the prior year. Still Schmidt planned to eliminate five hundred positions by 2005 in addition to the five hundred that had already been scrapped by 2003. Schmidt noted that the remaining reductions would require voluntary resignations, a move generally frowned upon in the German business world. Schmidt assured the public that no additional job eliminations would occur. In early 2004 Schmidt declared that BayernLB had already met some of its goals for the year, such as reaching the core-capital quota of 7.8 percent. Capital interest was expected to meet the pretax figure of 15 percent by 2005, up from 4.9 percent in 2003. Although he had known the transition from state-backing to privatization would prove challenging, Schmidt had embraced the task. He inspired camaraderie from counterparts, such as his successor Hans Dietmar Sauer at LBBW and Thomas Fisher at WestLB, whose firms were the second- and third-largest regional banks, respectively, and who faced the same transition that Schmidt did. When asked about the sort of legacy he wanted to leave behind, Schmidt portrayed himself as interested not exclusively in the business world. He described how a mix of professional expectations; private life, in spending time with his wife and

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two sons; and hobbies, including skiing and other sports, together brought him tremendous joy.


“BayernLB beschleunigt Stellenabbau” (BayernLB Accelerates Layoffs), Financial Times Germany, May 4, 2004, http:// www.ftd.de/ub/fi/1083399493565.html?nv=se. Ehrensberger, Wolfgang, “Landesbank-Chef sucht Partner” (Landesbank-Chief Seeks Partner), Die Welt Am Sonntag, September 30, 2001, http://www.welt.de/daten/2001/09/30/ 0930mu285573.htx?search=LandesbankChef+sucht+Partner&searchHILI=1. “LBBW: Mr. Schmidt Hands Over the Helm to Mr. Sauer, Limbach Leaves the Ship Sailing on Course,” Landesbank Baden-Württemberg, February 16, 2001, http:// www.lbbw.de/lbbw/html.nsf/webdokumente/ framebooster.htm?OpenDocument&url=SPIT4TZLE7_fs.htm. Reitz, Ulrich, “Stoibers Bank für alle Fälle” (Stoibers Bank for All Occasions), Die Welt Am Sonntag, May 5, 2002, http:// www.welt.de/daten/2002/05/05/ 0505wi330155.htx?search=werner+schmidt&searchHILI=1. Schmid, Fidelius, “Werner Schmidt, der Kulturrevolutionär” (Werner Schmidt, the Cultural Revolutionary), Financial Times Germany, February 12, 2004, http://www.ftd.de/cms/ gate2?pAssettype=FtdArticle&pAssetID=1077011637585& pStyle=plainhtml?nv=se. “Werner Schmidt feiert seinen 60. Geburtstag” (Werner Schmidt Celebrates His 60th Birthday), Bayerische Landesbank Girozentrale, July 10, 2003, http:// www.bayernlb.de/p/_de/idx/presse/presse/ meldung.jsp?pmoid=12366. —Maike van Wijk


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HIRED AT SYSCO IN MEMPHIS


Schnieders was born in Remsen, Iowa, in 1948 and grew up in Iowa. He graduated from the University of Iowa with a bachelor of arts degree in mathematics in 1970. For the next 12 years he served in various management capacities for other companies within the food industry. He caught the attention of Charles H. Cotros, who wanted to hire Schnieders at Hardin’s Sysco, SYSCO’s operation in Memphis, Tennessee. Though the Memphis subsidiary did not have an opening at the time, Cotros decided to create the position of vice president of business development, hiring Schnieders in 1982. Schnieders “was on his own from there,” Cotros told the Houston Chronicle (March 19, 2002).

1948– Chairman and chief executive officer, SYSCO Corporation Nationality: American. Born: March 6, 1948, in Remsen, Iowa. Education: University of Iowa, BA, 1970. Family: Married Elizabeth (maiden name unknown); children: two. Career: SYSCO Corporation, 1982–1988, various positions for Hardin’s Sysco operation including director of supplies and equipment, vice president of merchandising services, and executive vice president; 1988–1992, president and chief executive officer of Hardin’s Sysco; 1992–1997, corporate senior vice president, merchandising services; 1997–1999, senior vice president, merchandising and multiunit sales; 1999–2000, executive vice president, food-service operations; 2000–2003, president and chief operating officer; 2003–, chairman and chief executive officer. Address: SYSCO Corporation, 1390 Enclave Parkway, Houston, Texas 77077-2099; http://www.sysco.com.

■ Richard J. Schnieders spent his career in the food-service industry, eventually becoming the chairman and chief executive officer for SYSCO Corporation, the largest distributor and marketer of food-service products and services in North America. After he graduated from the University of Iowa in 1970, he worked in management with several companies in the foodservice industry before he was hired in 1982 by Hardin’s Sysco of Memphis, Tennessee, a subsidiary of SYSCO. He worked at the Memphis facility for 10 years, including four as chairman, chief executive officer, and president. The company moved him to its headquarters in Houston, Texas, in 1992 as a senior vice president. He assumed the position of president and chief operating officer in 2000, and three years later he became the company’s chairman and CEO. Schnieders, like his predecessors, promised that the company would continue to be ambitious in its pursuit of growth. International Directory of Business Biographies

After starting in SYSCO’s executive development program in Memphis, Schnieders moved on to positions as director of supplies and equipment, vice president of merchandising services, and executive vice president. During Schnieders’s tenure at Hardin’s Sysco, its parent company continued to grow at a steady pace. By 1988 SYSCO was the largest food-service distributor in North America, and it continued to grow. In 1988 the company acquired one if its competitors, CFS Continental, adding a large truck fleet and significantly increasing the geographic scope of its business. Schnieders’s rise to the top of the ladder at the Memphis facility became complete when he was promoted to president and chief executive officer of the local branch of the company. He was later named chairman. He ran the Hardin’s Sysco operation for four years.

MOVING TO SYSCO’S CORPORATE HEADQUARTERS In 1992 SYSCO moved Schnieders to its company headquarters in Houston, appointing him to the position of senior vice president of merchandising services. After he had spent five years in that position, his responsibilities increased to include oversight of multiunit sales. In 1997 he was elected to SYSCO’s board of directors. During the following year, he continued his rise through the company when SYSCO announced his appointment as executive vice president for foodservice operations. In this position he was responsible for overseeing five senior vice presidents of operations, who were each responsible for about one-sixth of the SYSCO operating companies in the United States and Canada. He assumed this position on January 1, 1999.

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SYSCO’s growth continued through the 1990s, and the company made a number of significant acquisitions in 1999. Annual sales continued to increase, jumping from $15 billion in 1998 to $22.6 billion in 2001. In 1999 the company announced that Cotros would replace Bill Lindig as SYSCO’s chief executive officer in 2000. SYSCO selected Schnieders to replace Cotros as the company’s president and chief operating officer.

CONTINUING SYSCO’S SUCCESS AS PRESIDENT AND CEO By 2000 SYSCO was providing services and products to approximately 400,000 customers, including restaurants, health-care and educational institutions, and other operations in food services. During Schnieders’s tenure as the company’s president and COO, the economy of the United States suffered a significant downturn. Schnieders recognized that the growth of his company, as well as the food-service industry in general, related to the “ability of several other industries to prosper” (Business Wire, May 16, 2002). Nevertheless, SYSCO continued its steady growth. During fiscal year 2002 the company experienced five record-breaking sales weeks, including sales of more than $500 million during the week preceding Mother’s Day, representing the first time that the company’s sales had surpassed a half-billion dollars in a single week. Cotros, who worked in the food-service industry for more than 30 years, announced his retirement in March 2002. The company selected Schnieders to succeed Cotros as the company’s chairman and chief executive officer, the fifth in the company’s history. Like Cotros, Schnieders promised that the company would continue to be ambitious regarding its growth. “The industry we serve is now approaching $200 billion annually and I am bullish on the future of our industry,” Schnieders said in a company press release. “I am equally excited about the opportunities that [lie] ahead for SYSCO” (March 18, 2002). Analysts said that Schnieders had reason for optimism. SYSCO’s plan for success involved a series of acquisitions as well as continued expansion of its products and services. Industry insiders marveled at SYSCO’s achievements in the marketplace, with one executive commenting to the New York

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Times that SYSCO “is one of the great uninterrupted growth stories in American business” (April 27, 2003). Schnieders said he would stay the course in leading the company. “We will continue to operate with the same direction and same strategy as we have in the past,” he said in an article in BusinessWeek Online in April 2003. “Our biggest opportunity is to sell more to our existing customers and find new, good customers. We also want to identify good acquisition candidates that match up well to our business” (April 14, 2003). Schnieders surprised some industry analysts in 2003 by claiming that the company could double its revenues by 2008. In addition to his position with SYSCO, Schnieders served on the boards of Aviall and the NRA Education Foundation.

See also entry on SYSCO Corporation in International Directory of Company Histories.


Forest, Stephanie Anderson, “Sysco: Ready to Serve,” BusinessWeek Online, April 14, 2003. Kaplan, David, “Steady, Gradual Growth Keeps Sysco on Track,” Houston Chronicle, April 29, 2003. ———, “Sysco Announces Promotion of One of Its Own to Top Spot,” Houston Chronicle, March 19, 2002. Murphy, Kate, “A Deft (Some Say Heavy) Hand in the Kitchen,” New York Times, April 27, 2003. “Richard J. Schnieders to Become Chairman and CEO,” Press Release, SYSCO Corporation, March 18, 2002, http:// www.corporatewindow.com/preleases/Archives/syypra.html#Mar18-02. “Sysco Names New Chair, CEO,” Feedstuffs, April 8, 2002, p. 6. “SYSCO Weekly Sales Eclipse Half Billion Dollars for the First Time in Company’s History,” Business Wire, May 16, 2002. Wahlgreen, Eric, “Why Sysco Looks Appetizing,” BusinessWeek Online, August 15, 2002. —Matthew C. Cordon


■■■

Jürgen E. Schrempp 1944– Chief executive officer, DaimlerChrysler Nationality: German. Born: September 15, 1944, in Freiburg, Germany. Education: University of Applied Science, ME (mechanical engineering), 1967. Family: Married Renate (maiden name unknown); married Lydia Deininger; children: three (first marriage, two; second marriage, one). Career: Daimler-Benz auto dealer, 1960–1967, apprentice mechanic; Daimler-Benz, 1967–1974, sales representative; Mercedes-Benz subsidiary of DaimlerBenz, 1974–1982, customer services representative in South Africa; Euclid subsidiary of Daimler-Benz, 1982–1984, chief executive; Daimler-Benz, 1984, South Africa; 1985–1987, chief executive officer of South African operations; Deutsche Aerospace subsidiary of Daimler-Benz, 1987–1995, chief executive officer; Daimler-Benz, 1995–1999, chief executive officer; DaimlerChrysler, 1999–2000, co–chief executive officer; 2000–, chief executive officer. Awards: Order of Good Hope, South Africa, 1999. Address: DaimlerChrysler, Epplestrasse 225, 70546, Stuttgart, Germany; http://www.daimlerchrysler.com.

■ Jürgen Schrempp sought to be an important player on the world stage, and he hoped to change the course of history. As CEO of Daimler-Benz he tried to make his company and himself part of the new global economy that he thought was arriving in the late 1990s. Believing that the most successful companies of the future would transcend cultures and national boundaries, he strove to make sure that his corporation would not be left behind to be remembered only in histories. To keep Daimler-Benz strong, he chose to opt for a bold restructuring of the company and daring acquisitions that would make the company a universal presence throughout the world and a leader in every kind of auto manufacturing. Among his most important contributions to the automobile manufacturing business was his leadership in creating automobiles that were International Directory of Business Biographies

Jürgen E. Schrempp. AP/Wide World Photos.

not dependent on the internal combustion engine, which he believed might disappear as petroleum supplies were depleted.

STYLE Schrempp was a charismatic leader who enjoyed being the center of attention. He relied heavily on his magnetic personality to secure the loyalty of management and labor alike and to push forward his business initiatives. He was called “Neutron Jürgen” in the German press, an allusion to Neutron Jack Welch, who earned the nickname because, like a neutron bomb, he left buildings standing while eliminating personnel at General Electric. While head of Deutsche Aerospace, Schrempp had cut operations that were losing money, most notably Fokker, Holland’s aerospace company, and while leader of Daimler-Benz he had cut subsidiaries, earning the “neu-

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Jürgen E. Schrempp

tron” nickname. But the ruthlessness implied by his nickname was undeserved; he usually agonized over his decisions to cut jobs, often thinking not in terms of profits and losses but in terms of what would benefit workers and customers. He was often compared to American business leaders because of his boldness. He wanted to change the world, and he was a German patriot who wanted Germany to remain a great economic power. Because of this vision, he often scorned such short-term concerns as stock market gains and losses to emphasize a long-term outlook that extended beyond his own lifetime. His insistence that Daimler-Benz research experimental power supplies, especially fuel cells, was part of his vision for the future. In the short term, these alternative power supplies represented financial losses for the company, but Schrempp hoped that over time they would keep his company strong and healthy as petroleum-powered vehicles became obsolete.

OBJECTIVES To secure his place in history and to secure a profitable future for Daimler-Benz and later DaimlerChrysler, Schrempp emphasized one of the traditions of Mercedes-Benz automobiles: technical excellence. Advanced technology and craftsmanship buoyed the companies’ reputations and made the expensive Mercedes automobiles attractive to consumers. In sales, strong brand recognition and loyalty are important for long-term success. Schrempp worked hard to keep brand names such as Mercedes and corporate names such as Daimler prominent and distinct in the minds of the public. In Germany the name Daimler is especially important because it represents the inventor of an automobile that brought prestige to the country and represented German engineering excellence.

ROUGH BEGINNINGS Schrempp’s father was captured by the Soviet army in 1944 and held as a prisoner of war until 1949, when Schrempp was five years old. The family of two parents and three boys lived in a small apartment while the father earned a meager living administering college admissions tests at the University of Freiburg. At age 15 Schrempp dropped out of high school to take a job as an apprentice mechanic at a local Mercedes-Benz dealership. At age 20 he married his first wife, a high schooler named Renate, who recalled being overwhelmed by Schrempp’s expansive personality. In 1964 Schrempp enrolled in the University of Applied Science at Offenburg, Germany, supporting himself and his wife not only by working as an auto mechanic but also by playing trumpet in a band at weddings and other events.

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Upon receiving his mechanical engineering degree in 1967, he accepted a job offer to work as a sales representative for Mercedes-Benz, the most notable subsidiary of Daimler-Benz. Schrempp was an activist whose brilliant sales work was matched by his outspokenness on labor issues, which called him to the attention of the upper management of MercedesBenz. He was sent to South Africa not for punishment but for a chance to expand his corporate horizons by working in positions that were unavailable to him in Germany. In South Africa, Schrempp drove hundreds of miles a day, visiting manufacturing plants, auto dealers, and consumers. He became the chief salesman for Mercedes-Benz’s South African operations. During 1974–1982 he was an outspoken opponent of apartheid, the South African regime’s policy of segregating races to keep whites as the social elite. For the South African operations of Mercedes-Benz, he advocated treating all races equally in pay, benefits, and opportunities for advancement. So famous were his denunciations of apartheid that he came to the attention of the top management of DaimlerBenz, who selected him to head the operations of Euclid, a subsidiary that manufactured heavy trucks in Cleveland, Ohio, in the United States. When Schrempp and his wife looked up Cleveland on a map and saw that it was near one of the Great Lakes, they imagined it to be like Lake Geneva in Switzerland; however, when they arrived in Cleveland in 1982, it was winter, and the cold, ice, and snow were bitter beyond their experience. It was a tough 1982–1984 for Schrempp, who had envisioned himself a builder of a business and a protector of the jobs of employees. Euclid was losing money because it had failed to find a niche in the North American truck market, and Schrempp presided over its slow dissolution and demise. His managing to end Euclid’s operations with little fuss earned Schrempp a job in management in the Daimler-Benz South African operations, and he quickly became the CEO of Daimler-Benz in South Africa. Social activists urged him to close down Daimler-Benz in South Africa, to withdraw as had Ford and General Motors in protest of apartheid. However, Schrempp resisted pressure to put an end to Daimler-Benz’s presence in the country, insisting that Daimler-Benz would do more good by continuing to employ black Africans as well as other races. When the African National Congress (ANC), which resisted apartheid, demanded that Daimler-Benz withdraw, Schrempp met with Nelson Mandela, the leader of the ANC, and received Mandela’s endorsement of his efforts to treat all races equally. As president of a liberated South Africa, Mandela showed his thanks to Schrempp by awarding Schrempp South Africa’s foremost civilian award, the Order of Good Hope, in 1999. Schrempp remained driven by a love for South Africa, where he eventually purchased an estate and where he vacationed whenever he could.


Jürgen E. Schrempp

REMAKING DEUTSCHE AEROSPACE Daimler-Benz was a vast corporation that owned much more than just Mercedes-Benz automobile manufacturing. One field in which it was prominent was aerospace technology. When Schrempp was named CEO of the Deutsche Aerospace subsidiary of Daimler-Benz in 1987, Deutsche Aerospace was losing money. It had long been a policy of Daimler-Benz to support Deutsche Aerospace with profits from other subsidiaries, and there was much reluctance on the Daimler-Benz governing board to cut jobs. A German governing board was required by law to have an equal number of members representing management and representing labor; Daimler had 12 for each side. The results of this system were slow responses to problems and a reluctance to make any members of the governing board unhappy by cutting jobs. Moreover, the strong sense of national pride in German corporations translated into the belief that cutting back companies was shameful and dishonorable not only to the corporation and its leaders but also to the nation. Thus Schrempp struggled to keep Deutsche Aerospace afloat, even though it continued to lose money. The division that was losing the most money was Fokker Aircraft, a Dutch company that was acquired in 1993 by Daimler-Benz at Schrempp’s urging. In 1995 the Dutch government refused to contribute $800 million to keep Fokker afloat for the short term, and Schrempp foresaw Fokker requiring $4 billion at the end of the year just to survive. To cease keeping Fokker afloat would have significant political implications. The company was a source of pride to Holland, and its failure would suggest that a German company had bought it just to put it out of business. After conferring with his close confidant Manfred Bischoff, Schrempp decided to eliminate the Fokker division and place the blame on himself. By taking the blame he helped to defuse the political repercussions and to persuade the governing board of Daimler-Benz to do as he wished. This strategy also produced the side effect of earning him the admiration of some members of the governing boards of Daimler-Benz and Deutsche Bank, the largest shareholder of Daimler-Benz. When Daimler-Benz CEO Edzard Reuter retired, the governing boards of both companies wanted a dynamic leader who had shown he had the intestinal fortitude to make the tough decisions required to return to profitability because DaimlerBenz was losing over $700 million in 1995. That year they chose Schrempp.

“A MERGING OF EQUALS” AND THE END OF CHRYSLER Schrempp proved himself adept at persuading the governing board to approve his plans. He was energetic, eloquent, and charismatic, and his arguments were well researched and well organized. He went to few meetings without volumes of research, and he had a cosmopolitan view that gave him a bet-


ter understanding of Daimler-Benz’s role as a European corporation than most board members had. He tried to surround himself with people who shared his view of Daimler-Benz as more than a German entity, and he sought people who would think and act boldly to break from antiquated business practices. He relied on secrecy to help his initiatives succeed, making his decisions known to only a few close aides until they were almost at fruition, then springing them on the governing board and the public as nearly done deals. Schrempp called Daimler-Benz headquarters in Stuttgart “Bullshit Castle” and tried to circumvent the multilayered management system that would take years to allow new ideas to percolate through its bureaucracy; in fact, he cut the number of top managers in half. Then he sold off several divisions, earning the nickname of “Neutron Jürgen.” It was his view that leading by committee was foolish, and he wished to consolidate control of Daimler-Benz. Over the long term, he saw to it that allies replaced members of the governing board, a move that would prove crucial to his remaining CEO. He also wished to pull management of all divisions into the Stuttgart headquarters for greater efficiency and easier planning of cooperation among different divisions. Crucial to this plan was taking Mercedes-Benz, the crown jewel of Daimler-Benz and its most profitable division, into Schrempp’s direct control. Until Schrempp became CEO of Daimler-Benz, Mercedes-Benz had been an autonomous corporation with Daimler-Benz acting as a holding company. Helmut Werner was CEO of MercedesBenz and was credited with keeping the division a big moneymaker, but Schrempp proved more adept at the politics of governance, managing to sway governing board members to his view that Werner should be fired and Mercedes-Benz merged fully into Daimler-Benz’s hierarchy. When the vote came in 1997, the only member of the board to vote against Schrempp was Werner, and Werner was forced to resign. In 1995 Daimler-Benz began “Project Blitz,” a plan to take control of America’s Chrysler automobile manufacturer, but it had stalled during Schrempp’s period of consolidating power. With his usual secretiveness, Schrempp revived “Project Blitz” in 1997. He wanted to make Daimler-Benz a global power, and he saw acquiring Chrysler as an important step toward that goal. He asked his aides to conduct deep studies of foreign automobile manufacturers, with an eye to finding one that best complemented Daimler-Benz’s automobile business; their studies favored Chrysler. Chrysler favored not only because it was an American company but also because it specialized midpriced cars and small trucks, which Mercedes-Benz did not. Chrysler had scored big successes with its Jeep Grand Cherokee and its minivans; in fact, it had been a big moneymaker throughout the 1990s up through 1997. Schrempp made overtures to Robert Eaton, CEO of Chrysler. The two men became friends, making Schrempp’s efforts easier. What Schrempp hoped to find at Chrysler was not only

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Jürgen E. Schrempp

manufacturing success but also the personnel responsible for that success; he viewed Chrysler as run by people who shared his boldness of vision, who would be “cowboys” and aggressive in building business. Schrempp called the merger of Chrysler and Daimler-Benz a “merging of equals” repeatedly, although making Chrysler a division of Daimler-Benz seems to have been his plan all along. He would later admit in an interview that buying, not merging with, Chrysler had been his only plan; Daimler-Benz had to have control. Daimler-Benz employed Schrempp’s usual tactics of maintaining secrecy and revealing his real plans only when they had almost finished their objective. He even promised Eaton that the new corporate name would be ChryslerDaimler-Benz, only to insist with only a few hours before the deal was complete that he would back out of the deal if the name were not DaimlerChrysler. Further, he persuaded Chrysler’s leadership to incorporate in Germany for tax purposes. As a result, the new company was DaimlerChrysler AG (Aktiengesellschaft) and was governed by German laws. This move was catastrophic for Chrysler’s management, who discovered that German incorporation meant control by a governing board under German rules and that they formed a minority on the board. By 1999 Schrempp had taken control of Chrysler, and he slowly put Germans in charge of Chrysler’s operations, replacing American managers. Schrempp’s behavior was perceived as duplicity by many workers at Chrysler, and morale dropped. Further, the very Americans Schrempp wanted to keep refused to work for him. The aggressiveness he had admired in Chrysler was gone by the end of 1999, and so were Chrysler’s profits as the company plunged into losses. DaimlerChrysler was the world’s fifthlargest automobile manufacturer (after General Motors, Ford, Toyota, and Volkswagen), but the Chrysler division was being hammered by Toyota’s new line of trucks, Ford’s new minivans, and an assortment of all-terrain vehicles from Japan, and the new management team did not react aggressively. By mid-2000 DaimlerChrysler’s stock had dropped 40 percent as Chrysler slid into confusion. Kirk Kerkorian, the largest private shareholder of DaimlerChrysler, lost $600 million as the stock dropped. In November 2000 he filed suit against Schrempp and DaimlerChrysler, claiming that Schrempp had lied when he promised a “merger of equals,” instead planning all along to make Chrysler a subsidiary of Daimler-Benz. Two class action lawsuits were filed against DaimlerChrysler, one of which was settled out of court for about $300 million in August 2003. German journalists portrayed the lawsuits as merely products of litigation-crazy Americans, but many German shareholders demanded that Schrempp be fired.

DALLYING WITH HYUNDAI Chrysler had briefly toyed with the idea of forming a bond with South Korea’s Hyundai, and Schrempp used this possibil-

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ity to distract from his next big venture. DaimlerChrysler bought 10 percent of Hyundai’s stock and gave Hyundai and outsiders the impression that a deal for joint manufacture of trucks for Asia was in the works. This move made sense because DaimlerChrysler was the world leader in manufacturing trucks and would certainly want new markets for its successful brands. However, Schrempp was secretly dealing with Mitsubishi Motors. In March 2000 DaimlerChrysler purchased 37 percent of Mitsubishi’s shares and told Hyundai that it would join with Mitsubishi and would expand into Southeast Asia.

THE ACQUISITION OF MITSUBISHI In September 2000 DaimlerChrysler announced that it was taking over Mitsubishi. Mitsubishi president Katsuhiko Kawasoe resigned and was replaced by Rolf Eckrodt, who had been in charge of the dismantling of DaimlerChrysler’s moneylosing Adtranz railroad division. Schrempp wanted to add the manufacturing of small cars to DaimlerChrysler’s line, and Mitsubishi had a full line of small vehicles. Mitsubishi was $13 billion in debt and would lose $600 million in 2000, but Schrempp hoped to use DaimlerChrysler’s distribution system to market the small cars worldwide. A worldwide recession dampened sales.

THE WORLD’S WORST CEO? By the end of 2003 DaimlerChrysler had $157 billion in assets and was a formidable corporation in spite of its troubles. One trouble was that Chrysler lost much of its American market share to Japanese imports. The Chrysler automobiles featured some parts from Mercedes-Benz and were mechanically sound, but Chrysler’s once renowned marketing seemed to have left with its top management in 1999. It lost about $360 million in 2003. Mitsubishi was doing well in the United States, but it was losing its market share in Japan to Toyota, Honda, and the revamped Nissan. It lost over $400 million in 2003. Further, Kerkorian’s lawsuit finally went to trial in December 2003. In mid-February 2004, Schrempp took the stand for three days. He was caught contradicting himself on key issues, most notably whether he had lied about making Chrysler an equal partner in DaimlerChrysler or had planned all along to make Chrysler just a subsidiary. He said that he would have been happy to incorporate the new company in the United States but that it was incorporated in Germany because it would receive better tax breaks there. Later he admitted that he and Daimler-Benz would not have made any deal without making the new company a German AG, and he admitted that


Jürgen E. Schrempp

at all times it was his intention that Daimler run Chrysler. Under American law, shareholders of a company that is bought by another company must receive a premium on top of the value of their shares, but not if the merger is one of equals. Schrempp’s testimony could only be bad news for DaimlerChrysler because it implied that DaimlerChrysler would have to pay all former Chrysler shareholders additional money beyond the original $36 billion purchase. On December 11, 2000, Newsweek called DaimlerChrysler “the worst-executed big takeover since God invented corporations.” On December 18, 2000, Time International called Schrempp a “subpar” manager because by then DaimlerChrysler was worth less than Daimler-Benz alone had been in 1998. On January 12, 2004, BusinessWeek named Schrempp as one of the world’s worst managers, citing the mismanagement of Chrysler and the losses DaimlerChrysler had suffered under his leadership. In the last week of February 2004, after Schrempp’s testimony, the governing board of DaimlerChrysler delivered its own verdict by extending Schrempp’s contract as CEO through 2008.


See also entries on Daimler-Benz AG and DaimlerChrysler AG in International Directory of Company Histories.


Edmondson, Gale, and Kathleen Kerwin, “Stalled: Was the Daimler-Chrysler Merger a Mistake? Many Say Yes—and Call for Schrempp’s Head,” BusinessWeek online, September 29, 2003, http://www.businessweek.com/magazine/content/ 03_39/b3851016_mz044.htm. Schrempp, Jürgen E., “Thriving on Global Economic Changes: A European Review,” Vital Speeches of the Day, March 1, 1997, pp. 306–309. Taylor, Alex III, “Is The World Big Enough for Jürgen Schrempp?” Fortune, March 6, 2000, pp. 140–142. Vlasic, Bill, and Bradley A. Stertz, Taken for a Ride: How Daimler-Benz Drove Off with Chrysler, New York: William Morrow (HarperCollins), 2000. —Kirk H. Beetz

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Howard Schultz 1953– Chairman and chief global strategist, Starbucks Corporation Nationality: American. Born: July 19, 1953, in Brooklyn, New York. Education: Northern Michigan University, BS, 1975. Family: Son of Fred Schultz and Elaine (maiden name unknown); married Sheri, an interior designer (maiden name unknown). Career: Xerox Corporation, 1976–1979, sales; Hammarplast, 1979–1982, manager of U.S. operations; Starbucks Corporation, 1982–1985, director of retail operations and marketing; Il Giornale, 1985–1987, founder and CEO; Starbucks Corporation, 1987–2000, chairman and CEO; 2000–, chairman and chief global strategist. Awards: Top 25 Best Managers, BusinessWeek, 2001; Top Six Entrepreneurs of the Year, Restaurant Business, 2001; Botwinick Prize in Business Ethics, Columbia Business School, 2000; Executive of the Year, Restaurants and Institutions, 2000.

Howard Schultz. AP/Wide World Photos.

Publications: Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, 1997.

FINDING HIS NICHE

Address: Starbucks Corporation, 2401 Utah Avenue South, Seattle, Washington 98134; http:// www.starbucks.com.

■ When Howard Schultz acquired Starbucks’ assets in 1987, the company consisted of six retail and wholesale coffee shops in the Pacific Northwest. When Schultz gave up his position as CEO 13 years later to become chief global strategist, Starbucks cafés could be found all over Europe, the Middle East, and the Far East, as well as in over two thousand locations across North America. Though he often shunned prevailing wisdom, Schultz’s original vision of providing specialty coffee and old-world charm to the masses eventually became a multibillion dollar reality.

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Schultz grew up in the Carnisie housing projects of Brooklyn, where he was deeply affected by his father’s struggle to provide for his family. Looking for a way to stand out and be successful, Schultz turned to sports and gained a football scholarship to Northern Michigan University in 1971. He was an unmotivated student, however, and didn’t discover his foremost talent until he took a sales position with the Xerox Corporation. Schultz flourished in competitive environments and rose quickly when he joined the housewares company Hammarplast in 1979. As a general manager with Hammarplast he traveled to Seattle in 1981 to investigate a small coffee company that was ordering an extraordinary number of speciallyshaped coffee filters. This was his first encounter with Starbucks.


Howard Schultz

Schultz was immediately captivated by the passion of Starbucks’ founders, Gordon Bowker and Jerry Baldwin, who talked about coffee as if they were discussing the various qualities of fine wine. Fired with enthusiasm, Schultz soon talked them into hiring him as their director of retail operations and marketing. Despite the misgivings of his family, Schultz gave up a respectable job in Manhattan to immerse himself in the arcane business of gourmet coffee. He even found himself attracted to the countercultural aura of Seattle that had given birth to the American coffeehouse. Most importantly he had found a business he could be passionate about, and he threw himself into it wholeheartedly. On a buying trip to Italy in 1983 Schultz’s growing obsession with coffee took another step with his discovery of Italian coffee bars, where the experience of enjoying espresso drinks was woven into the fabric of daily business and social life. Schultz thought that the coffee-bar experience could be the next evolutionary step for Starbucks in America; when the founders disagreed, he reluctantly left the company and opened his own Italian-style espresso bars in the Seattle area. He called his new enterprise Il Giornale, Italian for “daily.” Three years later, in 1987, Il Giornale was successful enough for Schultz to find investors when the opportunity arose to buy Starbucks from Bowker and Baldwin. Schultz had optimistically promised investors that Starbucks would expand rapidly, even though Seattle was already filled with coffee stores and the rest of the country had yet to show interest in espresso drinks. During the new corporation’s first year, expansion amounted to 15 additional stores; by 1992 there were nearly 150 Starbucks locations, including in such trendsetting cities as Chicago, Los Angeles, and San Diego. A markedly growing mail-order business paved the way for the Starbucks brand in many other areas outside of the Pacific Northwest, such that the only advertising the company needed was word of mouth. While it might have seemed like Schultz was merely cashing in on a new fad for specialty coffee, he built for long-term success by acting on principles that were uniquely his own. The example of his father’s struggles prompted him to offer health coverage to all employees who worked at least 20 hours per week in 1988. While he tried to maintain the atmosphere of the Italian coffee bar as much as possible, he was flexible enough to give in to American customers’ requests for in-store seating and for nonfat milk in their lattes and cappuccinos.

DIVERSIFICATION AND EXPANSION In 1992, after the company had shown profits for two straight years, Schultz completed the initial public offering of Starbucks common stock on the NASDAQ national market.


The following year Starbucks began its relationship with Barnes & Noble, which placed the company in the center of the growing trend toward combining coffeehouses with large bookstores. This combination was in line with Schultz’s abiding vision of the coffeehouse experience, which was to provide an oasis for busy people in the midst of hectic and fragmented lives. He wanted to build the Starbucks brand into a trademark experience that people could trust. Building that trust entailed ensuring Starbucks quality in every product that the company offered. The desire for impeccable quality control caused Schultz to reject franchising as a way of raising extra capital in the mid-1990s, when Starbucks expansion was at its peak. It did not hinder him from attaching the Starbucks name to a growing number of products, however. In 1994 Starbucks began to sell music CDs in its outlets in response to customers’ requests to purchase the music they heard in the stores. In 1995 Schultz approved the development of Frappuccino, a cold milk and coffee drink that would prove popular in warmer climates. That same year Starbucks entered into partnership with Dreyer’s to produce coffee-flavored ice cream. In 1996 Starbucks expanded into the Far East with its first location in Japan. Against the predictions of market experts, the Japanese were eager to carry Starbucks cups as they walked down the street. Within a few years there would be locations in Singapore, Thailand, New Zealand, Taiwan, Malaysia, China, Korea, Kuwait, and even Lebanon. The increasingly global nature of Starbucks prompted Schultz to relinquish his CEO duties in 2000 in order to focus on larger worldwide issues as chief global strategist. Three years later Starbucks opened its thousandth Asia-Pacific store. The global success of Starbucks allowed Howard Schultz to once again immerse himself in sports, the passion of his youth, with his purchase of the National Basketball Association’s Seattle Supersonics in January 2001.

See also entry on Starbucks Corporation in International Directory of Company Histories.


Koehn, Nancy, Brand New: How Entrepreneurs Earned Consumers’ Trust from Wedgewood to Dell, Boston, Mass: Harvard Business School Press, 2001. Schultz, Howard, Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, New York, N.Y.: Hyperion, 1997. —Michael T. Van Dyke

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■■■

Ekkehard D. Schulz 1941– Chairman, Thyssen Krupp Nationality: German. Born: July 24, 1941, in Bromberg, Germany (now Poland). Education: Clausthal Technical University, PhD, 1971. Career: Clausthal Technical University, 1967–1972, member of scientific staff and chief engineer; Thyssen Group, 1972–1984, technology manager; Thyssen Stahl, 1985–1986, deputy member of executive board; 1986–1988, member of executive board; 1988–1991, director; 1991, chairman; Thyssen, 1991–1998, member of executive board; 1998–1999, chairman; Thyssen Krupp Stahl, 1997–, chairman; Thyssen Krupp, 1999–2001, cochairman; 2001–, chairman. Address: Thyssen Krupp, August-Thyssen-Strasse 1, 40211 Düsseldorf, Germany; http:// www.thyssenkrupp.com.

■ Ekkehard Schulz helped guide the merging of two of the oldest and largest European steelmaking companies in the late 1990s. Fried Krupp AG Hoesch-Krupp and Thyssen were longtime rivals whose histories could be traced back over nearly two centuries. Both companies were founded as family firms and were still controlled by the heirs of their original founders well into the 20th century. The company that resulted from the merger, Thyssen Krupp, became the third-largest steelmaker in the world, a conglomerate that dominated the production of steel, car parts, and elevators. Schulz’s watch, coming as it did during the first decades of the European Union, took the combined steelmakers into the 21st century. He tried to make the traditional heavy-industry companies more competitive by selling off, refinancing, or spinning off new companies out of less profitable segments. In 2000 Schulz opposed his cochairman Gerhard Cromme’s idea of putting forth an initial public offering (IPO) of stock in the company’s steel business, which had been plagued by seasonal fluctuations in prices and profitability; when the IPO deal collapsed, Cromme left the management team and Schulz became sole chairman of the combined company. Within months

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Ekkehard D. Schulz. AP/Wide World Photos.

Thyssen Krupp’s stock, which had fallen to nearly half of its value at the beginning of 2000, had completely recovered and, according to the Financial Times contributor Peter Marsh, had “outperformed the German Dax index by 90 percent” (December 5, 2003).

STEELING HIMSELF FOR CHALLENGES When Ekkehard Schulz took the helm of Thyssen Krupp in 1999, he was continuing along a path that he had been following for over a quarter of a century. He began his career as a professor and engineer at his alma mater, Clausthal Technical University. In 1972 he moved to Thyssen Group in Düsseldorf, where he worked as a manager in steelmaking technology. In 1985 he joined the board of Thyssen’s steelmaking branch, eventually rising to become the chairman of the execu-


Ekkehard D. Schulz

tive board of the joint Thyssen Krupp Stahl, the world’s largest producer of stainless steel, as of 1997. In his capacity as the head of one of the world’s largest steelmaking companies Schulz dealt with economic downturns, accusations of “dumping”—or selling steel in foreign markets below the market price in order to reduce competition—by the United States, problems associated with integrating the heavy industrial economy of East Germany with that of West Germany, and the unification of Thyssen with Krupp in 1999. The most complicated situation that Schulz faced in the late 1990s was the gradual establishment of a close relationship between the two German industrial giants Thyssen Group and Fried Krupp AG Hoesch-Krupp. Each company had a long and complex history going back over one hundred years. They had been owned and controlled by members of the Thyssen and Krupp families through the mid-20th century; they had been founded and led by men and women of strong character, and each had its own traditions and corporate cultures. Bringing the two firms together would be one of Schulz’s toughest challenges.

WELDING TOGETHER Of the two companies that merged to form Thyssen Krupp, the older was Krupp. That company was begun in 1811 when the German entrepreneur Friedrich Krupp started a factory in his hometown of Essen in the Ruhr river valley— soon to become the heartland of German industrial production—to produce high-quality cast steel for tools and dies. Although Friedrich Krupp died in 1826, his wife Therese continued the business with the help of their son Alfred Krupp. The transportation revolution, and especially the development of railroads in Europe after 1850, caused the demand for steel to skyrocket. Alfred Krupp earned his reputation through the company’s production of seamless railroad tires, axles, and springs. In 1859 he ventured into the production of munitions after the company received an order from the government of Prussia—at that time the military powerhouse of continental Europe—for three hundred blanks for gun barrels.

FIREPOWER Munitions quickly became an important aspect of Krupp’s production. The firm produced some of the most successful German weaponry used during the Franco-Prussian War of 1870–1871. Alfred’s son Friedrich Alfred Krupp made millions by constructing the armor plating that protected German battleships during the arms race leading up to World War I. Between 1914 and 1917 the Krupp firm produced the steel and fabricated the guns that kept Germany and its allies actively fighting. Huge cannons—in particular the “Big Bertha,” a large gun named after Friedrich Alfred’s daughter, who was


heading Krupp Steel at the time—further enhanced the firm’s reputation; that reputation, however, played against the company’s interests following the signing of the treaty of Versailles in 1919. The terms of the treaty specifically forbade German companies to manufacture munitions, and Krupp was forced to shut down many of its factories and lay off portions of its workforce. The Krupp family was still left with huge assets, however. They owned chains of hotels, banks, mines, cement works, and a large proportion of shares in many European companies. When Adolf Hitler rose to power in 1933, the Krupps drew on these resources to rebuild their munitions businesses in the Ruhr. Bertha Krupp’s son Alfried, a Nazi supporter, took over the company during World War II and expanded its operations to include the manufacture of trucks, tanks, and submarines in addition to guns and munitions. At the close of the war Alfried was accused of exploiting slave labor and during the Nürnberg trials was convicted of war crimes. The company’s assets were seized by the Allies, who in 1953 ordered Alfried to sell 75 percent of the company. The assets went unpurchased, however, and within a decade Alfried had turned the firm around. By the time of his death in 1967 the value of Krupp’s holdings amounted to more than a billion dollars. Alfried’s death marked the end of the Krupp family dynasty. His only son, Arndt Krupp, refused to lead the company— nevertheless receiving a lifetime stipend. In January 1968, five months after Alfried Krupp was found dead in his hometown of Essen, the family firm incorporated as a limited-liability corporation—ending about one hundred and fifty years of Krupp family domination. In 1992 Krupp merged with Hoesch, and the company changed to a joint-stock corporation.

RUNAWAY SUPPORTER Thyssen was founded at the end of the 19th century; the company had its origins in the rolling mill in the Ruhr that was purchased by August Thyssen in the 1860s. Thyssen quickly built an empire that rivaled that of the Krupp family. Within 50 years of buying his first mill and establishing the firm of Thyssen & Company, August was worth an estimated $100 million and had property and business interests around the globe; Thyssen had become Germany’s largest producer of steel, iron, and coal. August Thyssen even managed to lure some of the German munitions business away from Krupp’s industry stranglehold during World War I. He died in the late 1920s and was succeeded in the family operation by his son Fritz. August Thyssen had been a noted republican, detesting the autocratic power of the German aristocracy; Fritz on the contrary was a conservative, a fervent opponent of Communism, and a supporter of Adolf Hitler early in his career. Fritz Thyssen provided the politician Hitler with financial backing dur-

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Ekkehard D. Schulz

ing his drive for the chancellorship. Fritz was a sharp businessman who restructured the myriad Thyssen family holdings into a single trust, Vereinigte Stahlwerke. Through its mines and factories Vereinigte Stahlwerke controlled a majority of Germany’s iron-ore interests and became one of the foremost companies in the country. By the end of the 1930s, however, Fritz Thyssen had become disillusioned with Hitler’s megalomania and targeted persecutions of religious and ethnic groups. In 1939 he left Germany for Switzerland; Hitler promptly seized Fritz’s property, worth an estimated $88 million. In 1941 Thyssen was captured in France, and he spent the rest of the war in a variety of camps, ranging from the infamous concentration camp Dachau to a small detention camp in northern Italy. After the war the Allies put the industrialist on trial for his original support of the Nazis—disregarding the fact that he had also been one of the dictator’s victims. He was ordered to pay a total of 15 percent of his holdings as restitution for his Nazi past. Fritz Thyssen died in 1951, a broken and embittered man, while on a visit to his daughter in Argentina. While the Allies were trying to dissolve Krupp’s holdings, they were also breaking Vereinigte Stahlwerke into a series of separate companies. In 1953 August Thyssen-Hütte, the ancestor of the modern Thyssen Stahl, emerged from the breakup as a publicly traded company. Fritz’s widow, Amelia, continued to run the company until her death in 1965, leading Thyssen Stahl to become the largest steel producer in Europe and the third-largest company in Germany. By the 1990s Thyssen had passed Krupp in both size and profitability. By that decade both industrial giants were in their second centuries of existence and were facing new challenges and increased competition—especially beginning in the 1970s— from cheaper third-world steel and the advent of new metals in industrial sectors previously dominated by steel. Soon both Thyssen and Krupp had to diversify their interests, moving away from steel production into areas as disparate as finance. The tough business climate of the 1970s along with a large decline in European steel production led to discussions of a possible merger in 1983. The unification did not occur at that point, but the discussions brought both companies closer together.

ENTRY OF SCHULZ It was about that time that Schulz came to Thyssen from Clausthal Technical University. His education and career made him an ideal candidate to work with both firms; he was appointed a board executive of the two companies’ already merged steel businesses, Thyssen Krupp Stahl, in 1997, making him a key figure in further discussions about a possible comprehensive merger. Two years later, when Thyssen and Krupp fully combined their operations, Schulz was one of the primary contenders to lead the new company.

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On paper the merger promised to serve the interests of both companies well. German production had been threatened throughout the decade by cheap steel from Communist bloc nations such as the Czech Republic and Slovakia. Western European governments responded to the crisis in which their domestic steel industries found themselves by providing subsidies—which amounted to about $80 billion in the two decades between 1973 and 1993. While these tactics may have kept domestic European steelmaking afloat, they also rewarded noncompetitive strategies, as Schulz noted in a speech delivered in 1993 before the American Institute for International Steel, which was excerpted in American Metal Market. When the subsidies were discontinued, steel companies were forced to find new ways of making profits without the benefit of government assistance. The merger of Thyssen and Krupp was one such tactic. Savings produced by the merger were estimated in the range of $300 million per year; despite opposition from some stockholders, the deal went through relatively quickly. Three figures emerged in the subsequent struggle over leadership. Schulz’s rivals included the head of Thyssen, Dieter Vogel, and the head of Krupp, Gerhard Cromme. Vogel was eliminated from the restructured company’s leadership fairly early on, and for a time Schulz and Cromme served as cochairmen. Cromme’s fall came somewhat later, after he engineered an ultimately unsuccessful IPO for a spin-off of Thyssen Krupp’s steel businesses. Cromme and his team had overestimated the price companies would be willing to pay by about 50 percent; they had expected to raise between EUR 4 and 4.5 billion, but actual sales information suggested that they would be hard pressed to raise more than EUR 3 billion. By October 1, 2001, Cromme had left, and Ekkehard Schulz was the sole chairman of Thyssen Krupp. Under Schulz’s leadership Thyssen Krupp prospered. The chairman’s team refocused the company on its core activities: the production of steel car parts and elevators and related goods and services. Noncore activities, as Schulz explained in an interview with Peter Lamprecht in the German periodical Die Welt am Sonntag, were slated for disposal. Still, Schulz noted that the company’s remaining businesses were not just centered in his home country: “In 1999 we were still a German group with international activities. By contrast, today’s Thyssen Krupp is an international technology group with its home base in Germany” (March 14, 2004). Of Thyssen Krupp’s core activities the most profitable was perhaps the trade in automobile parts. In an effort to reduce body weight and improve gas mileage, manufacturers had moved away from relatively heavy steel auto bodies, replacing them with lighter aluminum and magnesium; in 2003 Thyssen Krupp challenged this trend with what they called the NSB—the New Steel Body. By changing the way that auto bodies were constructed, Thyssen Krupp engineers cut the


Ekkehard D. Schulz

weight of steel bodies by almost a quarter. The new, innovative steel body, which was put together using laser-welding technology and hollow compartmentalized sections, proved very efficient in collision simulations, meeting or exceeding European standards for automobile safety.

Fuhrmans, Vanessa, “German Obstacles Produce a Slew of Failed Mergers,” Wall Street Journal, September 15, 2000. ———, “Thyssen Krupp Calls Off IPO of Steel Unit as Shares Fall,” Wall Street Journal, August 17, 2000. Honeywill, Tristan, “Steely Resolve,” Professional Engineering, October 1, 2003, p. 37.

MAN OF STEEL Despite the fact that the German economy remained depressed through 2003, Schulz held high hopes for Thyssen Krupp’s future. In 2004 the company announced that it would merge its extensive shipyards—an inheritance from its founding companies’ munitions-producing history—with those of Howaldtswerke-Deutsche Werft, the German submarine manufacturer. A writer in the Economist speculated that a cross-border merger with the French defense contractor Thales could be the next step in creating a truly pan-European industrial economy. As had been the case throughout its founding companies’ long history, Thyssen Krupp remained at the center of debates about the future of the world’s economy.

See also entries on Thyssen AG and Thyssen Krupp AG in International Directory of Company Histories.


“Business Brief—Thyssen Krupp AG: Net Profit More Than Doubles, but 2004 Outlook Is Lowered,” Wall Street Journal, December 5, 2003. “Business: Creating Euro Giants; Industrial Policy,” Economist, May 22, 2004, p. 67. Deveney, Paul J., “World Watch,” Wall Street Journal, January 12, 1998.


Kohl, Christian, “Thyssen Krupp: 59,000 Workers, $13 Billion in Sales,” Iron Age New Steel, March 1999, p. 70. Lamprecht, Peter, “Five Years Thyssen Krupp—Interview with Prof. Schulz,” Die Welt am Sonntag, March 14, 2004. Marsh, Peter, “Thyssen Krupp Defends Conglomerate Status,” Financial Times, December 5, 2003, p. 29. “Prof. Dr. Ekkehard D. Schulz, Chairman of the Executive Board,” ThyssenKrupphttp://www.thyssenkrupp.com/ index.html?lang=eng&id;=konzern/schulz.html Schulz, Ekkehard, “Capacities Require Rationalization,” American Metal Market, December 27, 1993, p. 14. Selland, Kerri J., “Thyssen Chief Sees U.S. Focus on Imports of EC Steel ‘Fuzzy,’” American Metal Market, December 1, 1993, p. 2. Sims, G. Thomas, “Europe Posts Dismal Quarter but Sees an Upturn: Euro-Zone Growth Is Flat as Brussels Sticks to View That Output Will Edge Up,” Wall Street Journal, August 15, 2003. “Thyssen Krupp,” Appliance, September 2001, p. 24. “Thyssen Krupp Gives Up Ambitious IPO Plan,” Euroweek, August 18, 2000, p. 14. —Kenneth R. Shepherd

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Gerald W. Schwartz 1941– Cofounder, chairman, president, and chief executive officer, Onex Corporation Nationality: Canadian. Born: November 24, 1941, in Winnipeg, Manitoba, Canada. Education: University of Manitoba, BC, 1962; University of Manitoba, LLB, 1966; Harvard University, MBA, 1970. Family: Son of Andrew and Lillian (Leith) Schwartz; married Heather Reisman (chief executive officer of Indigo Books & Music), May 15, 1982; children: four. Career: Estabrook & Company, 1970–1973, vice president; Bear Stearns & Company, 1973–1977, vice president; CanWest Capital (later CanWest Global Communications), 1977–1984, cofounder and president; Onex Corporation, 1984–, founder, chairman, president, and chief executive officer. Awards: International Distinguished Entrepreneur Award, University of Manitoba Faculty of Management, 2003. Address: Onex Corporation, 161 Bay Street, 49th Floor, PO Box 700, Toronto, Ontario, Canada M5J 2S1; http:/ /www.onex.com.

■ Gerald W. Schwartz founded Onex Corporation, a diversified holding company, in 1983 and became chairman, president, and chief executive officer. Onex grew to become one of Canada’s largest companies, with annual revenues of approximately $16 billion and 89,000 employees around the world. As one of Canada’s wealthiest executives, Schwartz was regarded not only as a highly motivated, perfectionistic, and shrewd business leader but also as a generous philanthropist and a well-connected socialite.

EARLY YEARS Raised in Winnipeg, Manitoba, Schwartz was the only son of a lawyer and an auto parts dealer and had early ambitions

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Gerald W. Schwartz. AP/Wide World Photos.

to make it big in the business world. In high school he aspired to be “an executive and to have a big job that would pay at least $10,000 a year.” He recalled, “I thought $10,000 was a big deal” (Maclean’s, October 11, 1999). He attended the University of Manitoba, earning degrees in commerce and law. He remained in Winnipeg for two years, articling with the respected tax lawyer Izzy Asper, before embarking on a master’s degree from the elite Harvard Business School in Boston. One summer job took Schwartz to Switzerland as an executive assistant to the U.S. financier Bernard Cornfeld, founder and head of the mutual fund investment firm Investors Overseas Services (which collapsed in 1973 following allegations of fraud). After graduating in 1970 with a master’s degree in business administration, Schwartz began working for the New York brokerage firm Estabrook & Company. In 1973 he joined the corporate finance department at Bear Stearns & Company, a


Gerald W. Schwartz

global investment bank and brokerage firm based in New York City. Working alongside such investment bankers as Jerome Kohlberg, Henry Kravis, and George Roberts (who later left Bear Stearns to form the investment company KKR), Schwartz learned deal-making techniques from the pioneers of the leveraged buyout (LBO)—the buyout of a target company with borrowed money, using the company’s asset value as security for the loan. Schwartz said of his days at Bear Stearns, “Back then it used to be Kohlberg, Kravis, Roberts & Schwartz” (Forbes, September 7, 1987). In 1977 Schwartz took the skills he had learned on Wall Street back to Canada, partnering with his former employer Izzy Asper to form CanWest Capital Corporation. Over the next seven years CanWest acquired several small companies, but by the early 1980s the partners’ business relationship had deteriorated over differences in strategy. Asper said of his colleague at the time, “I believe in planting trees, growing them and then eating the apples. Gerry believes in growing trees, selling them and then looking for other trees” (Canadian Business, March 2, 2003). Schwartz was not deterred; with $2 million of his own money and nearly $50 million from investors, he left CanWest in 1983 and moved to Toronto to form his own holding company, Onex.

ONEX: A NEW CHAPTER Schwartz’s vision for Onex was to acquire undervalued and mismanaged companies, then to sell the acquisitions for a profit after streamlining their infrastructures or adding to their asset base. Over Onex’s first few years, purchases included Purolator Courier, American Can Canada, and Sky Chefs. By the time Onex went public in 1987, Schwartz had acquired five companies for $1.3 billion. The initial public offering in April 1987 raised $246 million, with Schwartz retaining 60 percent control over the company. Later that year, Onex completed another major acquisition—Beatrice Foods Canada. Then in the late 1980s the pace at which Schwartz had been tackling acquisitions slowed to a standstill in the face of a generally frenzied LBO market. Explaining his reluctance to rush into acquisitions (in 1988, for example, he turned down about one hundred), Schwartz said, “We take an excruciating length of time to buy an asset. We did nothing in the late 1980s because of all the pressure to do deals. That’s not our game” (Maclean’s, August 2, 1993). Despite Schwartz’s efforts to distance Onex from his former LBO connections, the company suffered setbacks in the early 1990s as the popularity of the LBO waned and Canada entered an economic recession. Onex’s executive compensation system also came under fire when it became evident that Schwartz was assessing a 20 percent fee on the company’s profits. Shareholders protested, and Onex’s stock dropped from its 1988 peak of $20.50 to $4.75 in 1990. Schwartz restructured


the compensation program and asked investors to remain patient. “I don’t feel much need to prove anything to anybody,” he said. “I think Onex will speak for itself” (Canadian Business, March 2, 2003). Schwartz sold Beatrice Foods in 1991, garnering a large profit, in addition to several other acquisitions. By the mid-1990s the tides had begun to turn, and many of Onex’s holdings began to pay off. Two attempted acquisitions in particular kept Schwartz in the headlines in the 1990s. In 1995 Schwartz lost a bid to buy out John Labatt, a major brewer and entertainment company. Then in 1999, in another heavily publicized effort, Schwartz attempted to acquire and merge Canada’s two largest airlines; the deal fell through after a Quebec court deemed the bid illegal. Several of Schwartz’s successful bids in the late 1990s, however, later became some of Onex’s most profitable holdings, including Celestica and ClientLogic.

IN THE LIMELIGHT Schwartz generated headlines not only for his aggressive bids but also for his lavish lifestyle and political ties. He and wife, Heather Reisman (founder and chief executive officer of Indigo Books & Music), were known for throwing elaborate parties at their home in the affluent Rosedale neighborhood in Toronto and for giving extravagant gifts. Schwartz was well connected in Canadian political circles, fund-raising for Liberal leaders and counting eminent politicians as his personal friends. One Liberal strategist said of Schwartz’s involvement in politics, “Gerry has been involved with just about everybody in power. But you also have to realize that this stems in part from a strong sense of public service. And that it’s real, not fake” (Maclean’s, October 11, 1999). That sense of public service also drove Schwartz and his wife to contribute major gifts to such organizations as Mount Sinai Hospital in Toronto and St. Francis Xavier University in Nova Scotia, which established the Gerald Schwartz School of Business and Information Systems in 1999.

MANAGEMENT STYLE Onex’s success was due in large part to Schwartz’s entrepreneurial and collaborative style of management. His team was loyal and collegial, and as a leader Schwartz maintained a nonhierarchical, team-spirited environment: “One of the hallmarks of Onex is that since I started the company in 1983, every professional who has joined the company at our Toronto head office is still here. We’ve had no turnover” (Ivey Business Journal, July 2000). Schwartz was widely admired in the business community for his leadership and personal commitment. Honored by the Harvard Business School in 2000, Schwartz was described as a “brilliant entrepreneur, a distinguished son of Harvard, a beautiful friend, a remarkable man, a committed citizen, and a proud Canadian” (HBS Bulletin, June 2000).

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Gerald W. Schwartz

See also entries on Bear Stearns Companies, Inc., Estabrook & Company, and Onex Corporation in International Directory of Company Histories.

“Learn from the Best: Onex,” Canadian Business, March 2, 2003. McMurdy, Deirdre, “Southern Accent,” Maclean’s, August 2, 1993, pp. 26–28.


Newman, Peter C., “Gerry Schwartz Has the Right Stuff,” Maclean’s, September 13, 1999, p. 17.

“A Canadian Hero,” Harvard Business School Bulletin, June 2000.

Noble, Kimberley, “Why Gerry Schwartz Needs Air Canada,” Maclean’s, October 11, 1999, p. 46.

Condon, Bernard, “Kravis of the North,” Forbes, March 6, 2000, p. 76.

Pearce, Ed, “Flying High,” Ivey Business Journal, July 2000, p. 18.

Jereski, Laura, “Can-Do Canadian,” Forbes, September 7, 1987, p. 124.

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—Stephanie Dionne Sherk


■■■

Louis Schweitzer 1942– Chief executive officer and chairman of the board, Renault Group; chairman of the board, AstraZeneca Nationality: French. Born: July 8, 1942, in Geneva, Switzerland. Education: Institut d’Études Politiques de Paris (IEP), BA, 1968. Family: Son of Pierre-Paul Schweitzer (economist) and Catherine Hatt; married Agnès Schmitz, December 20, 1972; children: two. Career: French government, Office of the Director of General Public Assistance, 1970–1971, inspector; Office of the General Inspector of Finance, 1971–1974, inspector; Ministry of the Budget, 1974–1979, inspector; 1979–1981, deputy director; 1981–1983, chief of staff; Institute d’Études Politiques de Paris, 1982–1986, professor; Ministry of Industry and Research, 1983, chief of staff; Office of the Prime Minister of France, 1984–1986, chief of staff; Régie Nationale des Usines Renault, 1986–1990, vice president of finance; 1988–1990, chief financial officer; 1989–1990, executive vice president; 1990–1992, president and chief operating officer; 1992–, chief executive officer and chairman of the board; AstraZeneca, 2004–, chairman of the board. Awards: Ordre National du Mérite, 1992; Légion d’Honneur, 1998. Address: Renault Group, 13–15 quai Alphonse Le Gallo, 92513 Boulogne-Billancourt cedex, France; http:// www.renault.com.

■ In Louis Schweitzer’s official photographic portraits, he looked solemn or even stern, but he also looked as if he were about to laugh. Shy, diffident, studious, and low-key, he was a great success as a self-effacing bureaucrat in successive French governments. Even after he became the leader of one of the most successful businesses in France, he preferred to let others have the limelight. Unlike many bureaucrats, he did not believe in the benefits of government intervention in business; International Directory of Business Biographies

Louis Schweitzer. AP/Wide World Photos.

and unlike the usually diplomatic chiefs of staff of successful politicians, he said what he thought. Amid the storms of politics and controversial business decisions, he was calm. In his leisure time he preferred evenings at the theater or quiet forays to art galleries to livelier forms of entertainment. Yet as bookish as he was, he led not one but two of the most remarkable business turnarounds of his era.

A WELL-KNOWN NAME Schweitzer was born into a family with several famous members. He was the grandnephew of Dr. Albert Schweitzer, the famous New Testament scholar, missionary, physician, musician, and winner of the 1952 Nobel Peace Prize. He was also a cousin of Jean-Paul Sartre, the novelist and philosopher. Schweitzer’s father served as the managing director of the In-

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Louis Schweitzer

ternational Monetary Fund (IMF) from 1963 to 1973. At the time of Schweitzer’s birth in 1942, however, his prospects were not the best. Schweitzer’s father had been a member of the French Resistance during World War II; he was captured by the Germans and sent to Buchenwald, where he was one of the few who survived the concentration camp. After the war, the French government nationalized the automobile company Renault and called it a régie, meaning that it was regarded as a branch of government. Renault was considered a source of employment and other services to French society. Although Louis Schweitzer remembered being fond of cars when he was a child, as an adult he found his initial calling in government rather than the automobile business. Schweitzer earned a degree in law in 1968 and married Agnès Schmitz in 1972. He also took his first job as a government inspector. Stories vary about how he met the Socialist politician Laurent Fabius, but the two men probably became acquainted on a plane trip in the late 1970s. Fabius tried to persuade Schweitzer to join the Socialist Party, but Schweitzer never became a member even though he served under Socialist governments. Indeed, Schweitzer seemed fairly apolitical, although he did advocate the formation of the European Union as a way to prevent a third world war. From 1981 to 1984 Schweitzer moved up through the ranks of the government bureaucracy along with Fabius. He served Fabius as chief of staff and eventually became the chief of staff in the office of the prime minister when Fabius assumed that high position. Schweitzer worked 16 hours a day; intelligent as well as loyal, he became famous for helping Fabius shape French government policy. Meanwhile, Régie des Usines Renault had 98,000 employees in 1984 and was manufacturing automobiles that it could not sell.

EARLY CAREER AT RENAULT By 1986 Renault was a company in trouble known for the low quality of its products; it lost $3.5 billion between 1984 and 1986. Inefficient and $9 billion in debt, it survived only because of government support. In 1986, however, the French government finally told the company that it had to start turning a profit. Schweitzer was dispatched to Renault to oversee its finances. He laid out firm objectives of profitability and required that managers of factories account for all their income and expenditures. Schweitzer worked at first for Renault’s CEO Georges Besse, who shared his view that Renault had to change its corporate culture from that of a branch of government to that of a privately owned business. At the same time Schweitzer began urging the government to privatize Renault. Sadly, Besse was assassinated in November 1986 by anticapitalist terrorists. In 1987 Renault stopped selling cars in the United States, where its name had become synonymous with shoddy prod-

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ucts. Schweitzer was always reluctant to reenter Renault in the United States market on the grounds that its sales would be damaged by its previous low reputation. Even so, 1987 marked a turning point for Renault, which began a string of nine straight years of earning a profit. In 1988 Schweitzer and Besse’s replacement Raymond Levy announced “total quality management,” a concept based on the writing of American economist Dr. W. Edwards Deming, meaning a steady focus on producing well-made cars. Improving the company’s products went together with an emphasis on giving customers what they wanted. This was a victory for Schweitzer, who had advocated customer-oriented automobile development as a way to improving Renault’s financial health. In 1988 Renault gave Patrick le Quément the job of director of design. Le Quément, who answered only to the chairman of the board, was responsible for Renault’s innovative designs during Schweitzer’s tenure as the company’s chief executive officer. Schweitzer was appointed president and chief operating officer of Renault in December 1990. He was then named CEO in May 1992, replacing Raymond Levy, and was elected chairman of the board of Renault. Schweitzer passed two of his most challenging hurdles that same year. He first persuaded the French government to begin privatizing Renault. He then succeeded in closing the factory at Boulogne-Billancourt near Paris through careful diplomacy with those affected by the move without much fuss, even from unions that had been known to take to the streets to protest management decisions. The factory closing was one of many steps that Schweitzer took to make Renault more efficient by disposing of outmoded facilities.

TAKING THE OFFENSIVE Schweitzer’s next move at Renault was to begin changing its corporate culture from what he saw as a defensive mindset to one that was more aggressive. Some of his initiatives did not succeed; for example, his attempt to buy Volvo in order to make Renault a global rather than regional company fell apart over details at the last minute. On the other hand, Renault made its presence felt in the marketplace when it introduced the Twingo, a small automobile aimed at the market for budget cars. Schweitzer had a vision of Renault positioning itself in emerging world markets by producing automobiles that people at the low end of the income scale could afford. The Laguna, a larger model that was aimed at upscale car buyers, was released in 1994. The company began its privatization that same year.

A POLITICAL SCANDAL Schweitzer was sidetracked from his projects at Renault in the late spring of 1995, when he was charged with “complicity


Louis Schweitzer

in poisoning” in a public health scandal related to the use of blood tainted with the AIDS virus in transfusions. In 1985 the French government had delayed the screening of donated blood, a decision that led to the transmission of the AIDS virus to over four thousand people, most of them hemophiliacs. Although Schweitzer had been in charge of Laurent Fabius’ private office in 1985, he was connected only tangentially to the officials who had dragged their feet about blood screening. Nevertheless the French government announced on May 22, 1995 that Schweitzer as well as Fabius was under investigation for his part in the scandal. The investigation seemed to be politically motivated because Schweitzer had served under a Socialist prime minister. The Gaullist party had come into power when Jacques Chirac became president on May 17, 1995— just five days before Schweitzer’s investigation was announced. Schweitzer responded to the accusations by threatening to resign from Renault if the public health scandal took up too much of his time. In May 1999 he was formally charged with involuntary homicide, but on June 18, 2003, the charge was dismissed by the Court of Cassation, France’s highest appellate court, for lack of evidence. While the government’s investigation went nowhere, Schweitzer remained focused on his goals to make Renault more profitable. Renault had cut a third of its workforce and eliminated three layers of management between 1986 and 1995. Schweitzer also continued to pressure the government to divest itself of Renault. By the end of 1995 the government owned only 53 percent of the company’s shares. In addition, Schweitzer urged the French government to behave like a shareholder rather than a manager. To cut costs even further, Renault made an effort to shorten the development time of new automobiles from 58 months to 38 months, thus lowering costs by 20 percent. This move also allowed the company to introduce five new car models in 1995—which made an exciting impression on visitors to the annual automobile show in Geneva.

RESTRUCTURING AND TURBULENCE Schweitzer made one of his most celebrated personnel changes in 1996, when he recruited Carlos Ghosn from Michelin to become Renault’s executive vice president of Renault. Ghosn was hired to help improve the company’s manufacturing process. Both Schweitzer and Ghosn emphasized reliability in their products. By 1996, Renault’s workforce had been trimmed to 58,500 employees. The Mégane Scénic was introduced in 1996 in six different versions and sold well. Worldwide Renault sold about two million vehicles of all makes. In pursuit of a global strategy, the company began building a factory in Curitiba, Brazil. In spite of signs of financial health, however, Schweitzer’s restructuring cost the company $900 million in 1996, when Renault posted its first annual loss after nine consecutive years of profitability. There were calls in the


press for Schweitzer to be ousted from Renault because of the losses, but the board of directors supported him. In 1997 Schweitzer served as president of the European Automobile Manufacturers’ Association (ACEA), making him the spokesman for the European automotive industry. In what he referred to several years later as the hardest decision of his career, Schweitzer closed Renault’s assembly plant in Vilvoorde, Belgium, because the company had surplus production capacity. He agonized over throwing the plant’s 3,100 employees out of work but stuck to his decision. The Vilvoorde employees held demonstrations and burned Schweitzer in effigy. He faced considerable hostility from the press, with many journalists believing that he had betrayed the socialist notion of the company’s purpose as a régie. Schweitzer stood his ground while facing the reporters’ antagonism.

RENAULT GOES GLOBAL Toward the end of the 1990s Schweitzer committed his company to becoming a global presence in earnest. His plans received a boost when Renault returned to profitability; the company grossed $40 billion and netted $1.4 billion in 1998. On December 17 of that year, Renault purchased a Romanian company based in Pitesti, Automobile Dacia, with an eye to having Dacia manufacture inexpensive cars for the emerging economies of Eastern Europe. In addition to acquiring Dacia, Schweitzer looked for another way for Renault to enter the global market in 1998. Japan’s Nissan had accumulated $19.4 billion in debt that year, paying $1 billion in interest on the debt. It lost $5.7 billion in 1998 alone. Nissan’s management was looking for a rescuer as the huge corporation threatened to collapse. Schweitzer negotiated with the leaders of both Dacia and Nissan in 1999. He visited Pitesti, met with Romanian government dignitaries, and entered tough negotiations to gain tax breaks for Dacia. His negotiations with Nissan were difficult as well, even though Nissan was not in a strong bargaining position. Schweitzer agreed to invest $5.4 billion in Nissan in March 1999, which helped the company to retire some of its debt, in exchange for 36.8 percent of Nissan’s shares and control of the company. “For us, it was a choice between staying regional or going global,” Schweitzer said about the Nissan agreement (BusinessWeek, November 15, 1999). Although Renault was calling the shots at Nissan at the time of the interview, Schweitzer characterized the agreement as an alliance rather than a merger. He wanted Nissan to retain its separate identity, its own corporate culture, and its own goals. He had observed the disaster that occurred when the German company Daimler took over Chrysler in 1998 and tried to force a merger of two distinctive corporate cultures. Schweitzer did not want similar troubles to befall Nissan. Schweitzer decided to make English the common language for Renault and Nissan for all communications and meetings

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Louis Schweitzer

involving both Renault and Nissan personnel, partly because he saw the measure as a way to avoid turning Nissan into a clone of a French automobile company. Apart from the language issue, however, Schweitzer was convinced that Nissan had to make major changes in how it did business. He saw its troubles as stemming from a combination of incompetent management and inferior products. Schweitzer put Ghosn in charge of overseeing the changes at Nissan. Ghosn brought with him 17 other Renault managers, including a new chief financial officer for the Japanese company. Some of Nissan’s managers preferred the way the company had been run, however, and resisted Schweitzer’s restructuring. For instance, they had received bonuses for production, not profits, which motivated them to keep running outmoded plants that produced cars no one bought. In addition, the Renault team found problems with Nissan’s accounting; the company’s books had been doctored for years to show profits where there had actually been losses. In June 1999 Schweitzer’s contracts with Renault as CEO and chairman of the board were renewed to run through 2005. Nissan’s president and CEO, Yoshikazu Hanawa, was appointed to Renault’s board of directors for a term expiring in 2005. Schweitzer hoped that adding Hanawa to the Renault board would strengthen the alliance between Nissan and Renault. Meanwhile, Ghosn closed five Nissan plants and cut production by 30 percent. Renault planned to eliminate 21,000 Nissan jobs altogether. This drastic restructuring resulted in an annual savings of $3 billion. Schweitzer had also made plans in 2000 for Renault and Nissan to share the platforms (the basic undercarriages) of their models by 2010, enhancing their efficiency as partners and helping to ensure that both companies had a common focus on quality. In the fiscal year that ended in March 2000, Nissan actually showed a net of $778.9 million, mostly attributable to Ghosn’s cuts. When Schweitzer visited Japan in November, he feared a storm of protest and was surprised to find Japanese officials and journalists reacting favorably to his efforts to reinvent Nissan’s corporate culture by focusing it on profits and customer satisfaction. Amid all the media attention to changes at Nissan, Renault’s buying a controlling interest in Korea’s Samsung Motors almost escaped notice. Just as Schweitzer wanted Nissan to keep its Japanese identity, he wanted Dacia to remain Romanian in character, retaining Romanian management, and to concentrate first on its local customers before looking to larger markets. In spite of Renault’s initial successes with Nissan and Dacia, however, not all was going well: Renault had little success entering the Chinese market, found the Indian market mystifying, and wrote off the United States market as too expensive to penetrate. Still, by the end of 2000 the French government had reduced its ownership of Renault to 44.2 percent.

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RENAULT BECOMES A GLOBAL GIANT The next step in Renault’s becoming a global presence was to tap the potential of the Internet. Renault announced its plan to sell automobiles over the Internet on February 8, 2000. The company’s web site, which became active in October 2000, allowed customers to configure their vehicles and work out financing online. The Internet was also used within Renault and Nissan, especially by their sales forces, as well as for communicating with customers. Renault and Nissan then formed an alliance with Ford, General Motors, and DaimlerChrysler in March 2000 to create a common web site to sell their products. “We wanted to become a world player,” said Schweitzer (The Carconnection.com, March 13, 2000). The web site alliance meant that Renault now ranked among the world’s major automobile manufacturers. The Renault Foundation was established in March 2001 to promote better understanding of French culture and the French language in foreign countries, beginning with Japan. The foundation opened a program in Tokyo on March 27, 2001, to train Japanese managers for working in multinational companies. At that point in time there were 32 Renault managers including Ghosn working in Japan. Schweitzer was sensitive about this issue; he considered 32 managers to be a small number given Nissan’s overall size (about 140,000 employees), and he wanted to keep the number low to avoid giving Nissan employees the impression that Renault had simply absorbed their company. To underscore the fact that the relationship between Renault and Nissan was an alliance rather than a conquest, Renault added Nissan’s senior vice president and advisor to the chairman Tsotumo Sawada to its board of directors. Schweitzer hoped Renault’s employees would learn about consistency in production from Nissan and that Nissan would learn about experimentation in design from Renault. Nissan reported a fiscal year net of $2.04 billion on March 31, 2001. Meanwhile, Renault became the principal shareholder of Volvo in January 2001 to collaborate on industrial vehicles. At that time Volvo was the second largest truck manufacturer in the world. In 2002 Renault introduced the Mégane hatchback, designed by Patrick le Quément. It created a sensation with the distinctive vertical drop of its back. On the other hand, the new Avantime minivan, a high-end vehicle, was less successful. In addition to bringing out new car models, Schweitzer had been advocating cross-shareholding as a way to create balance between Renault and Nissan. In March 2002 Nissan bought 15 percent of Renault, a sign of the Japanese partner’s improving balance sheet. Schweitzer also directed the establishment of a joint governing board for Renault and Nissan. He announced that he would be replaced by Ghosn in 2005 but would continue to serve as the chairman of the new joint governing board. With regard to Dacia, Schweitzer focused its output on a $5,000 automobile to be marketed in developing nations.


Louis Schweitzer

Schweitzer served for a second time as president of ACEA in 2003. He wanted the ACEA to use its influence to help reduce carbon dioxide emission levels from European vehicles. In addition to his work with the association, Schweitzer was plainly delighted with the results of the partnership between Renault and Nissan. “The alliance with Nissan has delivered faster than I expected—and much more than anybody expected,” said Schweitzer (BusinessWeek Online, January 13, 2003). Nissan was profitable; it completed the construction of a $930 million plant in Mississippi; and the Mégane compact was named the Car of the Year for Europe in 2003. Schweitzer had much to be happy about. Still, Schweitzer was wary of changes in the marketplace, saying that diesel technology was the most important aspect of 2003’s automobile market.

second-largest drug manufacturer in Europe, with a branch in the United States. He became chairman of AstraZeneca’s board later in 2004, replacing Percy Barnevik. The AngloSwedish pharmaceutical company’s best-selling products in the early 2000s included treatments for adult-onset diabetes and asthma.

“Corporate governance is also a rather new concept in France,” Schweitzer remarked to BusinessWeek Online on January 13, 2003. His comment seemed to refer to American-style corporate governance, with a board of directors more responsible to shareholders than to management, although since his company was headquartered in a country of state-supported industries, he might have meant governance by any group other than the government. Renault expanded its board of directors from 17 to 18 members in 2004; it also named six outsiders to the board, which also gave the board more independence from management. With regard to car design, Renault made plans to replace the Twingo. Le Quément was optimistic about future models, asserting, “We like adventure in design.” Le Quément also said, “Chairman Louis Schweitzer is totally committed to design” (BusinessWeek Online, February 11, 2004). Nissan agreed to buy Toyota’s hybrid automobile technology, even though Nissan and Renault had no immediate models planned that could use the technology. In addition, Schweitzer said that Renault planned to reenter the American market by 2010.

Carlioz, Remi, “Louis Schweitzer,” Journal du Net, March 3, 2000, http://www.journaldunet.com/itws/ it_schweitzer.shtml.

See also entries on AstraZeneca PLC, Nissan Motor Co., Ltd., Renault S.A., and AB Volvo in International Directory of Company Histories.


Eisenstein, Paul A., “One on One: Louis Schweitzer,” The Carconnection.com, March 13, 2000, http:// www.thecarconnection.com/ index.asp?n=156,193&sid=193&article=1543. Gil, Iñaki, “Louis Schweitzer,” Motor & Viajes, March 22, 1997, http://www.el-mundo.es/motor/MVnumeros/97/ MV009/MV009schweitzer.html. Harbrecht, Douglas, “Renault’s ‘Adventure in Design,’” BusinessWeek Online, February 11, 2004, http:// www.businessweek.com/bwdaily/dnflash/feb2004/ nf20040211_7740_db053.htm. O’Connell, Patricia, “The Man Who Steered Renault to Japan,” BusinessWeek Online, January 13, 2003, http:// www.businessweek.com/bwdaily/dnflash/jan2003/ nf20030113_1789.htm. “Statecraft at Renault,” The Economist, May 27, 1995, p. 65.

A NEW CHALLENGE In addition to Schweitzer’s duties at Renault, he was named in March 2004 to the board of directors of AstraZeneca, the


Taylor, Alex, III, “The Man Who Vows to Change Japan Inc.,” Fortune, December 20, 1999, pp. 189–198. —Kirk H. Beetz

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■■■

H. Lee Scott Jr. 1950– Chief executive officer and president, Wal-Mart Nationality: American. Born: 1950, in Joplin, Missouri. Education: Pittsburg State University, BA, 1971. Family: Married Linda (maiden name unknown); children: two. Career: Yellow Freight Systems, 1977–1979, terminal manager, Springdale, Arkansas; Wal-Mart, 1979–1995, assistant director of transportation, director of transportation, vice president of transportation, vice president of distribution, and senior vice president of logistics; 1995–1998, executive vice president of merchandising; Wal-Mart Stores division, 1998, president and chief executive officer; Wal-Mart, 1999, vice chairman and chief operating officer; 2000–, chief executive officer and president. Awards: Named by BusinessWeek as one of the “Top 25 Managers of 2002” and one of the “Best Managers of 2003.”

H. Lee Scott Jr. AP/Wide World Photos.

HUMBLE BEGINNINGS Address: Wal-Mart Stores Inc., 702 Southwest Eighth Street, Bentonville, Arkansas 72716; http:// www.walmart.com.

■ As only the third CEO of the retail giant Wal-Mart, H. Lee Scott Jr. maintained a low profile while steering the company to increased good fortune. Scott joined Wal-Mart in 1979, overseeing the company’s trucking fleet. He gained a reputation as a master of logistics, moved into sales and merchandise, and became CEO in 2000. An aggressive businessman and a risk-taker, Scott managed to increase company profits at a time when many retailers were forced to scale down and cut back. Engineering an ambitious expansion program both in North America and abroad, Scott maintained the legacy and culture of the company’s founder, Sam Walton.

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Born in Joplin, Missouri, Scott was the second of three sons. During Scott’s boyhood, his family moved to the small town of Baxter Springs, located in southeastern Kansas, where his father ran a gas station and his mother taught music at the local elementary school. Scott’s early working life was spent helping at his father’s Phillips 66 station. After graduating from high school, Scott attended college at the nearby Pittsburg State University. To pay for his tuition, he began working full-time at a local company, making tire molds and earning $1.95 an hour. By the time he was 21, Scott was married, had a child, and was trying to finish school. He lived with his wife and son in a small trailer. To get to work and school, Scott drove a broken-down Ford Falcon with no heater. In 1971 Scott completed his studies, graduating with a degree in business administration.


H. Lee Scott Jr.

With a wife and a son to support, Scott applied for a management training position at Yellow Freight System—a large, Kansas-based trucking company. He was turned down, but thanks to a family friend’s intervention, Scott was eventually hired on. By 1977 Scott and his family were in Springdale, Arkansas, where he worked as a terminal manager for Yellow Freight. During his time there, Scott had his first encounter with Wal-Mart, a fledging Arkansas company founded by Sam Walton in Bentonville, Arkansas, in 1962. In trying to collect a disputed $7,000 bill owed to the trucking company by WalMart, Scott met with David Glass, head of distribution and finance and future CEO of the company. Glass refused to pay the bill, but he was impressed with Scott and offered him a job at one of the company’s new distribution centers. Scott recalled that he turned Glass down flat, stating, “I’m not going to leave the fastest-growing trucking company in America to go to work for a company that can’t pay a $7,000 bill” (BusinessWeek, November 15, 1999).

AN IMPORTANT CAREER MOVE Despite his initial rocky encounter with Wal-Mart, by 1979 Scott had left Yellow Freight to take a job with Wal-Mart as head of the transportation department. But again, Scott’s first day at the company offices was anything but smooth. Upon arriving to start his new job, he learned that Glass still had not moved out Scott’s predecessor. Instead, Scott would have to take on the number two position in the transportation department until other arrangements could be made. Instead of walking out, Scott agreed to the temporary arrangement, impressing Glass with his willingness to be flexible and his notable lack of ego, qualities that helped Scott immensely throughout his career. Scott also earned Walton’s stamp of approval. When Scott was hired, Walton looked him over and asked, “Do you think you can do this job?” Scott said yes, at which point Walton looked at him, and after a long pause Walton agreed, telling Scott, “Yes, I think you can” (London Sunday Times, June 10, 2001). Yet Scott found working at Wal-Mart anything but easy. He became known as a stickler for the rules. Whenever a driver was late delivering a load or was caught drinking on the job, Scott fired off a letter to all drivers, threatening to terminate anyone who broke company rules. His heavy-handed tactics earned him few friends among the drivers, many of whom believed they were being unfairly singled out because of the inappropriate actions of a few. Finally, several went to Walton, complaining of Scott’s actions and asking that he be fired. Walton talked to Scott and ordered him to listen to the drivers’ complaints. Walton advised Scott to ask the drivers what he could do to fix the problem instead of simply complaining about the infractions. Then Walton told Scott that he was to shake the hands of all the drivers who came to see him and thank them for using the company’s “open-door” policy to talk to management. It was a lesson that Scott never forgot.


Over the years Scott was promoted to positions of greater responsibility within Wal-Mart. He was pivotal in developing the automated distribution system that linked suppliers and stores by computer. He served as director of transportation, making him possibly the only Wal-Mart executive ever to have driven a Wal-Mart delivery truck and to have spent time in a distribution center. Scott demonstrated to higher management that he not only understood his job but also understood what made Wal-Mart work: respecting customers and employees alike and keeping prices as low as possible.

THE MEGAMERCHANT In October 1995 Scott was in Europe for the company looking at distribution centers and logistics technologies. One evening he returned from making a presentation to find a fax from Wal-Mart’s CEO, Don Soderquist, asking Scott to call the Bentonville office. When Scott reached Soderquist the next day, Soderquist asked Scott if he would be interested in taking over the merchandising branch of the company. Scott agreed and was promoted to vice president of merchandising shortly thereafter. Despite having virtually no experience in merchandising, Scott took the same kinds of risks he had taken while working in distribution. In his first two years, sales within the division increased. Scott also showed how greater profits could be realized by cutting back on inventory. To make Wal-Mart buyers savvier in choosing products for the company, Scott implemented better training programs. He also pushed for improved store design and packaging to make working areas more manageable for store employees. In addition, he studied ways to carry even more merchandise in the stores and to increase customer traffic to the stores during the week. He also stepped up customer service in all stores, making them more accessible. Scott opened four “concept” discount stores throughout the country. The stores featured different fixtures and carried a mix of Wal-Mart products and other merchandise. While the products and setup were nothing out of the ordinary, the experiment again demonstrated Scott’s willingness to take chances on new things. In monitoring the concept stores’ performance, Scott applied those ideas that worked in new WalMart stores.

A SPOKESMAN EMERGES The year 1996 proved to be important for Scott. That spring the company faced allegations over the use of sweatshop labor in the production of one of Wal-Mart’s more popular lines of clothing endorsed by the celebrity Kathie Lee Gifford. As a result, the company came under intense media scrutiny. Executives met in Bentonville to discuss what to do to reverse the bad publicity. The company had by now cultivated a group

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H. Lee Scott Jr.

of young but experienced senior executives, including Scott. It was decided that Scott would handle the media and act as the company’s spokesman. Scott suggested that the company ask the Clinton administration to create a government panel, consisting of industry and government officials, to be chaired by Clinton’s secretary of labor, Robert Reich. Before the television cameras, Scott pledged that Wal-Mart would begin policing its suppliers’ factories more closely. Although the issue remained a touchy topic for the company, Scott successfully defused what might have been a public relations and economic disaster for Wal-Mart. In the meantime, Scott continued to work diligently to improve Wal-Mart’s apparel sales. Almost from the beginning, Wal-Mart had floundered within the clothing market, controlling only about 12 percent of the national clothing market, making it a far less important player than other store chains. Under Scott, Wal-Mart overhauled its apparel-buying policy to emphasize quality, durability, and fashion. In time WalMart’s volume of apparel sales grew to between 20 and 25 percent of the company’s total sales volume, almost double what it had been when Scott took over. By 1998 Scott had been named president and CEO of the Wal-Mart Stores division, overseeing the merchandising and operations of the more than 2,300 Wal-Mart stores. That same year, as the company posted a drop in profits, there were those who wondered whether Wal-Mart was in for some hard times ahead. Scott took immediate and vigorous action to counter the trend, cutting costs by $2 billion and thereby saving the company $150 million in interest costs. The following year, Scott was promoted again, this time to vice chairman and COO of Wal-Mart. Falling under Scott’s purview were the company’s stores, supercenters, Sam’s Club outlets, and international operations. To keep in touch with the company, Scott visited stores at least once a week, observing everything from displays to cleanliness to interactions between customers and Wal-Mart employees. He spoke with employees and managers and, in many cases, made suggestions about how the store could be run more efficiently. Scott proved himself invaluable in other ways as well. A team player, he encouraged the general managers to do their jobs, take risks, and stay focused on the company’s goals. In an environment in which retailers and suppliers were often at odds, Scott labored to remove the barriers and work as a team rather than as adversaries. He also created “supplier councils,” high-level discussion groups that provided a forum for new ideas and approaches as well as a place where concerns could be heard.

TAKING THE REINS In 1999 David Glass, then CEO of Wal-Mart, announced that he was stepping down in 2000. To insiders it was not sur-

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prising when in late 1999 Scott was tapped as Glass’s success– or and the first chief executive not to have been appointed to the top job by Walton himself. In early 2000 the announcement was made that Scott was to become the new CEO and president of Wal-Mart. He was only 50 years old. As a leader, Scott was very similar to his predecessors. A workaholic and a networker, Scott maintained relationships with people throughout the company. He watched over the company from Walton’s old office, a room little larger than a child’s bedroom, sparsely furnished and crowded with papers and reports. Initially Scott drove a BMW to work every day, until he noticed that there was an increasing number of BMWs parked in the Bentonville headquarters parking lot. Scott then traded in his car for a 1999 Volkswagen bug. For Scott, driving the car was about more than appearances; he felt that it was his responsibility to set a tone for the employees, discouraging them from indulging in status symbols or other signs of ostentatious wealth. Compared to many other CEOs, Scott’s annual salary was paltry. In 2002 he earned $1.8 million, which was well within the range of Wal-Mart’s salary structure for upper management. Like his predecessors, Scott maintained a deliberately low profile. He did not seek out the press but did not shy away from the media when asked to comment on company policies or events. He admitted when the company blundered, but he also defended the company against accusations of low pay, poor morale, and other problems. Still, Scott must have been doing something right, as Wal-Mart was named one of the best places to work in the United States during 2002 and 2003. Scott also believed in encouraging his workers to take risks and stressed that failures provide an opportunity to learn. On his store visits, he actively sought input from employees. Known for his quick jokes and sarcastic wit, Scott learned to make his point without being heavy handed. Many industry watchers believed that Wal-Mart’s success or failure was to be decided in three areas: people, supplier relations, and globalization. Further, many believed that for the company to succeed, Scott had to lead effectively. Many observers pointed out that Scott was responsible for building the systems that cut costs so dramatically during the 1980s and 1990s. Given Scott’s history with the company, he was uniquely qualified to supervise a more integrated approach to training the millions of new employees whom the company needed as it undertook massive expansion. In an address to the U.S. Department of Labor colloquium in 2002, Scott pointed out that Wal-Mart watched carefully the changing demographic trends in gauging the future needs of the company, including older workers not ready to retire and the growing Hispanic and African American populations as sources of new employees. Scott also planned to build a better benefits package, using the offer of health-care coverage for both full- and part-time workers as a major recruiting tool.


H. Lee Scott Jr.

Scott hoped to continue the company’s program of rapid advancement designed to attract younger workers as well as touting Wal-Mart’s flexible scheduling for women with children. Although not as pressing an issue, drawing talented executives to the company was also a priority for Scott. Traditionally Wal-Mart had chosen its leadership from its own ranks. However, with the company’s rapid national and international growth, it needed to find qualified people to oversee operations in the United States and abroad. In recruiting executives, Scott showed a real flair and was able to lure away top employees from such competitors as Best Buy, Target, and Kohl’s as well as from department stores and specialty retailers. Scott faced other challenges. As of 2004 Wal-Mart was the world’s most-sued entity, after the U.S. government. The company’s lawyers faced an astonishing array of legal challenges from tort cases—often referred to as “slip-and-fall” suits—to large, class-action suits filed by employees. In many of these situations, Scott demonstrated the ability to compromise, even when it was clear that Wal-Mart was in the right. Scott positioned Wal-Mart to grow internationally. The company was already well established in western Europe when he became CEO and had developed plans to expand into Asia. But Scott also continued with expansion throughout North America, particularly in the United States, despite criticism from those who believed that the company had saturated the American market.

See also entry on Wal-Mart Stores, Inc. in International Directory of Company Histories.



Hisey, Pete, “Leading from the Trenches: With a Comprehensive Knowledge of the Inner Workings, Scott Keeps a Steady Hand on Wal-Mart’s Helm,” Retail Merchandiser, February 2003, p. 27+. “Lee Scott, Jr.” BusinessWeek, January 14, 2002, p. 71. Longo, Don, “Mastering the Art of Passing the Torch,” Retail Merchandiser, May 2001, p. 23. Moin, David, “Wal-Mart’s New CEO Seen Pivotal in Apparel Strategies,” WWD, January 18, 2000, p. 2. “Mr. Sam: The Folksy Tycoon with a Killer Instinct,” Sunday Times (London), June 6, 2001. “New CEO Doesn’t Mean New Style for Wal-Mart,” Arkansas Business, January 24, 2000, p. 10. Rushe, Dominic, “Wal-Martians,” Sunday Times (London), June 10, 2001. Saporito, Bill, “Lee Scott: Walking in Mr. Sam’s Footsteps,” Time, April 26, 2004, p. 74. “Scott Takes Helm at Wal-Mart,” MMR, June 26, 2000, p. 165. Troy, Mike, “Lee Scott’s Leadership Legacy,” DSN Retailing Today, June 5, 2000, p. 19. ———, “Mega-merchant with Grass Roots,” Discount Store News, December 8, 1997, pp. 25–26. Zellner, Wendy, “Retailers: Someday, Lee, This May Be All Yours,” BusinessWeek, November 15, 1999, http:// elibrary.bigchalk.com/libweb/elib/do/ results?firsttime=y&set=search&referer=. —Meg Greene

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Richard M. Scrushy 1952– Former chairman and chief executive officer, HealthSouth Corporation Nationality: American. Born: 1952, in Selma, Alabama. Education: University of Alabama at Birmingham, BA, 1974. Family: Son of Gerald Scrushy (cash register salesman) and Grace (nurse); married Leslie (third wife); children: eight. Career: Lifemark Corporation, 1979–1984, vice president; HealthSouth Corporation, 1984–2003, chairman and chief executive officer. Awards: Honorary doctorate from Troy State University; Man of the Year, Birmingham Business Journal, 1996.

■ Richard M. Scrushy represents the true American success story, albeit one with a less-than-happy ending. From his days as a gas station attendant in Selma, Alabama, he rose to become the CEO of HealthSouth Corporation, the nation’s largest provider of outpatient rehabilitation services. Scrushy also became one of the highest paid executives in the country, with a lavish lifestyle to match. However, in 2003 a massive accounting scandal threatened to derail his career, erase his millions, and send him to jail for the rest of his life.

BLUE-COLLAR BEGINNINGS Richard Marin Scrushy (he went by his middle name as a child) grew up in Selma, Alabama, the middle child of a modest family. He loved music and played in a garage band as a teen. However, at age 17, married and with a child to support, Scrushy dropped out of high school and got a job pumping gas. When his wife became pregnant a second time, he got a higher-paying job as a bricklayer. Although he was literally living a trailer park lifestyle, Scrushy emanated high class. “You went over to Marin’s trailer, and he didn’t serve Pabst, he served wine and cheese,” his friend Gary West told Fortune magazine (July 7, 2003).

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Richard M. Scrushy. © Larry Downing/Reuters NewMedia Inc./ Corbis.

According to Scrushy, he became dissatisfied with his job and one day just walked off the site. He walked all the way to his parents’ house, where he told his mother he wanted to earn his high school diploma and go to college. His mother, a nurse, encouraged him to pursue a career as a respiratory technician. He studied for a year at Jefferson Community College in Birmingham while working nights at a local hospital’s respiratory therapy program to support his family. After completing his clinical training at the University of Alabama at Birmingham, Scrushy got a job there teaching respiratory therapy. Then Scrushy’s transformation from blue-collar worker to corporate executive began. He cut his long hair, divorced his wife, and started going by his first name, Richard. Scrushy eventually took over the respiratory therapy unit at a Birmingham hospital and started a new department at Wallace Community College in Dothan, Alabama. However, he was still far


Richard M. Scrushy

from well off, living with his second wife in governmentsubsidized housing. In 1979 Scrushy started working for Houston-based Lifemark Corporation, a company that owned and managed hospitals. He held various operational and management positions, including vice president of corporate development and vice president of Lifemark Shared Services. By age 28 he was running the company’s pharmacy, physical therapy, and respiratory therapy departments.

STARTING HEALTHSOUTH When Lifemark was acquired in 1983, Scrushy had to find a new opportunity. While he was still at Lifemark, he had framed an idea for a company that would offer outpatient rehabilitation services, helping patients return to work more quickly, and for less expense, than a traditional inpatient hospital. With an investment of $50,000 and the help of four friends, Scrushy formed HealthSouth. Starting as a single outpatient clinic in Little Rock, Arkansas, the company soon grew into a small chain of clinics. Scrushy had bigger plans, however. He wanted his company to be the first to provide widespread rehabilitation services outside the hospital setting. As he told a friend, “I’m either going to make it big or go flat broke” (Fortune, July 7, 2003). In his drive Scrushy relentlessly pushed his employees. At one meeting he reportedly drew a picture of a wagon and ten stick figures. Eight figures were inside the wagon; two were pulling it. “Everyone has to pull the wagon,” he told his staff. The company’s motto eventually became, “Pulling the wagon together” (Fortune, July 7, 2003). Scrushy’s perseverance paid off. His company began to grow. By 1986 HealthSouth had gone public and its revenues had grown to $20 million. As his company increased in size, Scrushy tightened his reins. He controlled every aspect of HealthSouth, from human resources to construction, from his Birmingham office. He attended every investment conference, even flying into a blizzard to make a conference at a Utah ski resort, and he personally handled most of his company’s investor relations. Because of his tight control—and temper—many who worked for Scrushy regarded him as a tyrant. At Monday management meetings, he was regularly known to respond to a manager’s report with the phrase, “That was the stupidest thing I ever heard” (Fortune, July 7, 2003). As difficult as Scrushy was to work for, however, most HealthSouth employees stuck with him. Their commitment was not surprising, given that HealthSouth paid well and offered generous stock options. Moreover, the clinics had become somewhat glamorous places to work. Bo Jackson, Hershel Walker, and other sports figures and celebrities regularly came in for treatment.


By 1992 HealthSouth was operating 145 clinics and making $400 million in revenue. Scrushy began expanding his company even faster. He gobbled up competitors and increased efficiency at his clinics to offer reduced-rate health care to a market that was crying out for it.

A NEW BUSINESS VENTURE Scrushy also took advantage of a new trend in health care— physician-practice management companies, or PPMs. At a time when doctor’s clinics were struggling to deal with HMOs, these new companies offered a welcome relief. PPMs would manage doctor’s offices to increase their bargaining clout with the HMOs plus take over many of the administrative responsibilities that tended to overwhelm many doctors. In 1992 HealthSouth invested $1 million in a new PPM called MedPartners. Scrushy became one of the company’s biggest shareholders as well as its director. The idea behind MedPartners was that it would not only create its own profits but also feed patients into HealthSouth facilities, boosting that company’s earnings along the way. Scrushy hired a HealthSouth executive, Larry House, to run MedPartners. House quickly took the company public, and within three years it was a Fortune 500 company and the country’s largest PPM. House gobbled up other companies—sometimes orchestrating as many as 20 acquisitions at once. However, he was ill prepared for his position, and as a result the company was disorganized. MedPartners’ internal structure could barely keep pace with its rapid acquisitions. In 1998, after a failed merger attempt with HealthSouth and an announcement that the company would not meet earnings expectations, MedPartners stock plunged nearly 50 percent. House was out, and Scrushy became MedPartners’ chairman and acting CEO. As head of the ailing company, Scrushy tried to bring it back to life, even investing his own money to buy a million shares of the company’s stock. However, MedPartners was battling hundreds of millions of dollars in losses, as well as lawsuits from shareholders and physicians. Scrushy was finally forced to close MedPartners.

ROCK ‘N ROLL LIFESTYLE Despite MedPartners’ downfall, HealthSouth remained highly profitable. Its stock rose at an annual rate of 30 percent between 1987 and 1997. In 1994 Scrushy began acquiring other rehabilitation companies, making HealthSouth number one in the industry, with 70 percent of the market in rehabilitation services. By the beginning of the 21st century, the company boasted more than 50,000 employees and 2,000 outpatient surgery and rehabilitative facilities across the United States and the United Kingdom. HealthSouth also began competing with hospitals, launching its own line of inpatient hos-

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pitals and surgery centers. In 2003 it was busy constructing a $300 million, high-technology hospital near its headquarters. While expanding his company, Scrushy was also attending to his other passion—music. Those who knew him say he craved the applause almost as much as he craved financial success. His band, Proxy, would often perform at company and local functions. Before performances, employees were often asked to attend to fill out the halls. The practice became known as “purchased applause.” In the early 1990s Scrushy started another band called Dallas County Line and stocked it with professional musicians from the Oak Ridge Boys and Sawyer Brown. Dallas County Line released a CD and an accompanying video that featured Scrushy in an all-black outfit and cowboy hat singing “Honk if you Love to Honky Tonk.” Not content to merely perform, Scrushy also wanted to be a music entrepreneur. He spent $1 million of HealthSouth’s money to bankroll a band of female singers called 3rd Faze, which at one time opened for Britney Spears. The HealthSouth board approved a grant of 250,000 stock options to the head of Sony Records, Tommy Mottola, who subsequently signed the band. Scrushy even accompanied the women of 3rd Faze to the Grammy Awards. Scrushy was not only part of the music scene—he was living the rock-star lifestyle. In 1998 he made BusinessWeek‘s list of the nation’s highest paid CEOs, having raked in more than $106 million in salary and bonuses and exercising more than $90 million in stock options. He used the money to buy mansions, racing boats, a fleet of cars (including a $135,000 bulletproof BMW), and a G-5 jet. “You always knew when Richard Scrushy was around,” Mark S. Williams, a staff physician for HealthSouth told the Atlanta Journal and Constitution (March 22, 2003). “That’s when the bodyguards started showing up.” Scrushy liked to hobnob with celebrities, including sports figures like the former football star Bo Jackson. He hired former Wonder Years actor Jason Hervey (he played the older brother, Wayne Arnold, on the show) to help him with a radio show and then put him in charge of marketing and communications at HealthSouth. When Scrushy married his third wife, Leslie, in 1997, he flew 150 guests to Jamaica and had Emmylou Harris perform at the reception.

Scrushy built his own self-monument—a museum behind the HealthSouth headquarters in Birmingham that was devoted to his career. In it was the company’s first lease, an exact replica of the original boardroom and office Scrushy used in 1984 when he founded HealthSouth, and a book by Scrushy titled, How I Changed the Rehab Industry. Scrushy supported a number of charitable organizations, including the Arthritis Foundation, United Cerebral Palsy, and the March of Dimes. He also served on the boards of Troy State University, Birmingham-Southern College, and the University of Alabama.

SCANDAL AT HEALTHSOUTH At the turn of the 21st century, HealthSouth was flying high, but that high was about to come crashing down. In July 2002 HealthSouth’s CFO, William A. Massey Jr., committed suicide after it was revealed that he was embezzling money from the company to pay for expensive dinners and gifts for his mistress. The day after the suicide, Scrushy sold $25 million in HealthSouth stock. This was not the first time he had dropped a large amount of company stock. The previous May he had sold $74 million worth of stock. Altogether, Scrushy discarded one-third of his stock value in HealthSouth, while announcing to the public the company’s stellar earnings. Just a few weeks after Scrushy’s $25 million stock sale, HealthSouth lowered its earnings estimates by $175 million because of a change in the Medicare reimbursement policy. When the announcement came, the company’s stock prices fell 58 percent to $5. Stockholders angrily filed lawsuits against HealthSouth. Scrushy claimed he did not know about the policy claim before selling his stock. Still, HealthSouth removed Scrushy from his position. Just a few months later, the company reinstated him.

Scrushy’s lavish lifestyle prompted many to call him Birmingham’s Donald Trump, or King Richard. “He’s one of the most visible and flamboyant leaders in health care,” Peter Emch, a health-care analyst with Credit Suisse First Boston told Chief Executive (December 1, 2001).

On March 18, 2003, the FBI raided HealthSouth’s office and took away documents. The Justice Department charged HealthSouth with inflating earnings by more than $2 billion to make it appear as though the company was meeting Wall Street expectations. According to investigators, the scheme had gone on since the mid-1990s, and Scrushy and other executives had been selling their stock to cash in on the company’s inflated share prices. More than a dozen executives of the company pleaded guilty to fraud, and all pointed the finger at Scrushy, saying the CEO had forced them to falsify the company’s financial statements.

Scrushy was certainly visible in Birmingham, thanks to his many charitable donations. There few places in the city that did not carry his name—from the Richard M. Scrushy Building at the University of Alabama to the Richard M. Scrushy Parkway; even an entire campus of Jefferson State Community College bore his name. As if those tributes were not enough,

In November 2003 Scrushy was indicted on 85 criminal counts of fraud. The charges included wire fraud, money laundering, conspiracy, and making false statements. Assistant Attorney General Christopher Wray charged Scrushy with using “threats, intimidations and pay-offs” to get HealthSouth executives to change the books. Scrushy was the first CEO charged

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Richard M. Scrushy

under the new Sarbanes-Oxley Act, passed in July 2003, which holds CEOs and CFOs criminally responsible for signing false earnings statements. The charges carried a maximum penalty of up to 650 years in prison and a $36 million fine. The government pounced on Scrushy’s homes, including his mansion in Palm Beach, Florida, in an attempt to seize roughly $267 million in ill-gotten assets. The judge set bail at $10 million, ordered the CEO to turn in his passport, and made Scrushy wear an electronic ankle bracelet that tracked his whereabouts. Scrushy maintained his innocence throughout the investigation, saying that he had no knowledge of the ongoing fraud. He contended that the company’s executives overstated earnings to line their own pockets. “There was no motive for me to destroy a . . . company that I built, a company that I loved,” he told 60 Minutes (American Medical News, November 3, 2003). Like his embattled friend Martha Stewart, Scrushy launched a Web site to plead his own case. His biography page begins, “Born in 1952 in Selma, Alabama, a town known as the birthplace of the civil-rights movement—Richard Scrushy is now fighting for his own rights and freedoms in the face of false allegations” (http://www.richardmscrushy.com/ biography.aspx). He even hosted his own morning television show called Viewpoint on WTTO-TV in Birmingham. His wife, Leslie, cohosted the show. In the half-hour program, Scrushy showcased himself as a religious and family man, and he referred to the media that had criticized him following the fraud charges as “old Satan sneaking in the back door” (Los Angeles Times, March 2, 2004). Lawyers representing HealthSouth stockholders charged that the show was merely an attempt to sway voters before Scrushy’s trial. Lawyers were also skeptical of Scrushy’s decision to join the Guiding Light, a predominantly black church in Birmingham. Although Scrushy said he was “born again,” critics said it was an attempt to influence a predominantly African American jury at his trial. After the scandal broke, HealthSouth nearly went bankrupt, and a team was brought in to “clean up.” The new managers tried to save the floundering company by fully cooperating with the government’s investigation. They ousted Scrushy from his CEO post on March 31, 2003, although he was al-


lowed to remain on the company board. Two statues of Scrushy that once stood outside the company’s headquarters were removed. In May 2003 Scrushy sued HealthSouth to enforce his contract, which would have indemnified him for all legal costs and expenses incurred in his fraud battle with the Securities and Exchange Commission. Then in June he sued the company’s directors for excluding him from board meetings and failing to provide him with information about the company. In November of that year his former company fired back, forcing Scrushy to repay a $25 million loan from 1999 that he had used to buy HealthSouth shares. Scrushy was scheduled to go to court to face his charges in August 2004. See also entry on HealthSouth Corporation in International Directory of Company Histories.


Bond, Patti, “CEO’s Troubles Like a Country Song,” Atlanta Journal and Constitution, March 22, 2003. Cherry, Brenda, and Patricia Neering, “The Insatiable King Richard. He Started as a Nobody. He Became a Hotshot CEO. He Tried to be a Country Star. Then It All Came Crashing Down. The Bizarre Rise and Fall of HealthSouth’s Richard Scrushy,” Fortune, July 7, 2003, p. 76. “HealthSouth CEO Launches New TV Show,” Los Angeles Times, March 2, 2004. Pellet, Jennifer, “HealthSouth’s Digital Dream,” Chief Executive, December 1, 2001, pp. 33–36. “Statement from HealthSouth Chairman Richard Scrushy and HealthSouth Chief Executive Officer Bill Owens,” PR Newswire, September 25, 2002. Vogt, Katherine, “Ousted HealthSouth Chief Invokes the Fifth,” American Medical News, November 3, 2003, p. 29. —Stephanie Watson

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Ivan G. Seidenberg 1946– Chairman and chief executive officer, Verizon Nationality: American. Born: December 10, 1946, in New York City, New York. Education: City University of New York, BA, 1972; Pace University, MBA, 1980. Family: Son of Howard (owner of an electrical supply shop) and Kitty (Zaretsky) Seidenberg; married Phyllis A. Maisel; children: two. Career: New York Telephone, 1966, cable splicer’s assistant; New York Telephone, 1968–1974, various engineering positions in the field; AT&T, 1974–1976, district manager, transmission design; 1976–1978, district manager, technical planning; 1978–1981, division manager, federal regulatory; 1981–1983, assistant vice president of rates and tariffs; NYNEX, 1983–1994, worked as an engineer, vice president of external affairs, and senior vice president; 1995–1997, president, chief executive, and chairman; Bell Atlantic, 1997–1998, chief operating officer and vice chairman; 1998–2000, chairman of the board and chief executive officer; Verizon, 2000–2002, president and co–chief executive officer; 2002–2003, president and chief executive officer; 2003–, chairman and chief executive officer. Address: Verizon, 1095 Avenue of the Americas, New York, New York 10036; http://www.verizon.com.

■ Ivan G. Seidenberg, who started at the bottom of the telecommunications industry and worked his way to the top, transformed Verizon into a leader in both the traditional phone market and the wireless industry. The company’s history can be traced back to the breakup of AT&T in the mid1980s, when the Baby Bells were born. Originally there were seven Baby Bells, but they ultimately merged into four giants, including Verizon (formed in 2000 when Bell Atlantic merged with GTE), SBC, BellSouth Corporation, and Qwest Communications International. These companies controlled the local phone service market and were even awarded free radio

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Ivan G. Seidenberg. AP/Wide World Photos.

wave spectrum licenses to start cellular phone services. But at the end of the 20th century, Verizon and the other Baby Bells watched their monopolies dissipate as they faced competition from the cable industry. Verizon remained the biggest of all the Baby Bells. In 2004 it led the local market—dominating the Northeast with 35 million local phone customers, more than any other telecom— and was the number two long-distance provider, behind AT&T. Verizon boasted 2003 sales of $68 billion and a market capitalization of nearly $100 billion. Meanwhile, Verizon Wireless, the company’s joint venture with Vodafone, was the number one U.S. wireless provider. As for the future, Seidenberg bet on broadband. Hoping to thwart attacks from cable companies, Seidenberg fought back on broadband, investing heavily on the belief that customers would pay to bring the technology into their households.


Ivan G. Seidenberg

STARTING FROM THE GROUND UP Seidenberg, who grew up in the blue-collar Gun Hill section of the Bronx, New York, worked his way into the upper echelons of the telecom industry. Having failed out of college during his first matriculation, Seidenberg found few doors open to him. He took a job with New York Telephone, climbing into manholes and splicing cable. But the country was at war, and Seidenberg was drafted into the U.S. Army.

WINNERS NEVER QUIT Wounded at Khe Sahn, Vietnam, Seidenberg returned home a decorated war veteran and resumed work with the telephone company. While working in series of operations roles, Seidenberg was on a quest for self-improvement. Attending night school for 14 consecutive years, he earned an undergraduate degree and an MBA.

HARD WORK PAYS OFF In 1974 he joined A&T, working in that company’s engineering and federal regulatory departments. He rose to assistant vice president of rates and tariffs. In 1982 he was assigned to AT&T’s divestiture transition team responsible for developing access charge proposals for its local telephone companies. Following the breakup of AT&T and the subsequent birth of the Baby Bells, Seidenberg joined NYNEX and worked his way up the ladder. At NYNEX he was vice president of external affairs, responsible for integrating all aspects of NYNEX’s external activities involving public relations, corporate communications, federal government relations, and corporate advertising. He assumed the president and CEO position in January 1995 and the chairman title in April 1995.

THE DEAL MAKER Seidenberg was instrumental in reshaping the communications industry. In the period after the AT&T breakup, pieces of the old company were recombined in a flurry of mergers and acquisitions. But no one in the industry shifted the landscape as much as Seidenberg. Beginning in 1997 he led a series of deals, including two of the largest mergers in business history at the time, that would ultimately link five major players under the Verizon brand. In 1997 NYNEX merged with Bell Atlantic in a deal worth $23 billion. Then, in 2002, Bell Atlantic merged with GTE in a $50 billion deal. Ultimately the successor entity was renamed Verizon. Seidenberg spoke about the business climate that drove both mergers: “There are tons of competitors, and we have to keep moving. We’re like a car stranded on the Cross Bronx Expressway. Every time we stop for a minute, somebody takes off another hubcap” (New York Times, April 3, 1995).


SHORT-TERM SACRIFICE WINS THE GAME In both mergers he orchestrated, Seidenberg sacrificed the top job in the merged companies. His choice helped the deals obtain regulatory approval and close more quickly than they would have had there been a power struggle. Said the former FCC chairman William E. Kennard, “He’s a master boardroom player” (BusinessWeek, August 4, 2003). After the first merger, Ray Smith, the CEO of Bell Atlantic, took over the newly created company. As for the Bell Atlantic merger with GTE, Seidenberg became co-CEO with Charles R. Lee of GTE. In both cases, an agreement was struck that would guarantee Seidenberg the top position within a specified period of time after the deals were finished. Commenting upon his decision, Seidenberg said, “Sharing responsibility for a three-, four-, or five-year period in the history of the world was not a big deal” (Fortune, May 31, 2004).

CONSOLIDATION IS THE MARKETING PLAN The goal of the newly created Verizon was to provide customers with one-stop telecom shopping, where they could get local, long-distance, international, and wireless calls as well as high-speed Internet access. Said Seidenberg, “We’re bundle freaks” (Forbes, April 16, 2001). The bundled approach offered considerable cost savings—instead of enlisting cold callers to sell long distance, the company could pitch long distance to existing customers who called in with questions about their local service. What is more, a customer with bundled service was less likely to switch providers. Still, the strategy had its detractors. Said Scott Kriens, chief executive of Juniper Networks, which made Internet protocol routers, “There are two worldviews competing here. One is that you can be all things to all people. The only problem is that I am unaware of any case in history where that has worked. The execution of that strategy is harder than the declaration” (Forbes, April 16, 2001).

PATIENCE PAYS OFF In the spring of 2002 Seidenberg’s wait was over, and he became the sole CEO of Verizon. But he was never in a position to rest on his laurels. The rapidly consolidating telecom business faced a new threat: cable. Between 1995 and August 2003 the cable industry spent more than $75 billion to prepare its networks for high-definition television, high-speed Internet access, and telephone service. David N. Watson, executive vice president for marketing at Comcast, the nation’s cable leader at the time, said, “Phone companies would have to make hefty investments to catch up. And we won’t be standing still” (BusinessWeek, August 4, 2003).

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THE FUTURE IS WIRELESS

MAKING MONEY BY DEALING WITH COMPETITORS

Verizon began readying itself for an onslaught of competition, exploiting growth in newer businesses, such as wireless. Seidenberg had a formidable head start, having led a strategy in September 1999 to form Verizon Wireless, a joint venture with Vodafone of Germany. In 2004 Verizon Wireless was the nation’s number one wireless provider with more than 26 million mobile phone customers nationwide. Verizon’s investments in the technology continued in 2003 as the company outfitted the Manhattan section of New York City with more than one thousand wireless fidelity hotspots. These allowed broadband subscribers near a Verizon telephone booth to access the Internet wirelessly with their laptops. Another project on the horizon was 3G, which would allow customers to make speedy online connections using their mobile phones. By 2004 wireless accounted for 33 percent of Verizon’s total revenues, and Seidenberg planned to invest an additional $5 billion into the technology.

One immediate focus was the company’s wholesale business, in which it leased its lines at reduced rates to other companies that wanted to offer local phone service. Baby Bells were once accused of stalling this process—after all, they would rather sell the service themselves—but in a new regulatory arena, they faced fines if they did not meet requirements for fair and speedy access.

A COMPANY MAN TURNS ON THE UNIONS As Verizon faced increasing competition from cellular phones and cable modem services, the company was also forced to take a closer look at its balance sheet. In spite of the fact that Seidenberg prided himself on having come up through the rank and file of the company, in December 2002 Verizon laid off 2,700 workers in New York and New Jersey, about 10 percent of the company’s frontline repair and installation workforce. These cuts were the first major layoffs in New York by Verizon, which at the time had 46,000 employees in the state, including those in its wireless division. Seidenberg called the cuts unavoidable in a telecommunications industry that had been crippled by an economic slump, saying, “The union leadership is standing at a crossroads. They can hold on to the old industry, and accelerate the flow of jobs and investment away from traditional telecom companies to the newer companies. Or they can join the fight for our mutual survival and help us find a new model that will help us preserve jobs and compete in the marketplace” (New York Times, July 31, 2003).

EFFICIENCY IS KEY At Verizon each of the wholesale orders traditionally took about an hour. The orders arrived by fax, and then employees manually entered the details into the company’s systems. Next they would send the orders back so that customers could check them for accuracy. That route, which was repeated thousands of times a year, was eliminated. In its place was a more direct process in which Verizon allowed its customers to access its computer directly and place the orders themselves. Said Tom Maguire, who oversaw Verizon’s wholesale operations, “It’s cheaper to get a machine. Machines don’t call in sick and are consistent in quality” (Wall Street Journal, May 28, 2004). As a result of the change, Verizon was processing more than 92 percent of its orders automatically through proprietary software it had developed. The system was so easy to use that Verizon was able to train several temporary workers, whom they hired because of a threatened strike, to use it in a week and a half. Training the old way took more than a year.

PLAYING OFFENSE As Verizon continued to lose traditional customers, Seidenberg remained focused on transforming the industry. In 2003 Verizon became the first Baby Bell to offer the now ubiquitous flat-rate plans that offered unlimited long-distance and local calls. Not long after, every other Baby Bell introduced its own plan. Said Seidenberg, “When you’re the market leader, part of your responsibility is to reinvent the market” (BusinessWeek, August 4, 2003).

BETTING ON THE FUTURE OF BROADBAND SEARCHING FOR SAVINGS By the end of 2002 the company had lost nearly two million lines to the defection of consumers and businesses to such alternatives as wireless and telephone via cable TV wires. In May 2003 Seidenberg gathered his top managers for an emergency meeting, instructing them to cut costs so that the company could invest in newer businesses and match price cuts by competitors. He gave awards to employees who could find the biggest savings.

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Seidenberg’s biggest move by far was his aggressive push into the broadband market. According to him, the age-old telecom model was completely obsolete. The future relied on what he called a “broadband industry” that offered consumers video and voice features with the potential of transforming the way various demographics accomplished everyday tasks. For example, high school students could use the technology to download a missed algebra class while doctors could use stateof-the-art videoconferencing to communicate with patients in rural areas. Said Seidenberg, “The cable industry focuses on


Ivan G. Seidenberg

entertainment and games. The broadband industry will focus on education, health care, financial services, and essential government services. I think over the next five to 10 years, you will see five, six, seven [segments of the economy] reordering the way they think about providing services” (BusinessWeek, August 4, 2003).

had so much trouble getting financing” (Fortune, May 31, 2004). Verizon also made a push into the corporate market, building a national network that could accommodate the vast numbers of bits and bytes on which corporations rely to communicate with their disparate offices. The company expected the new services to generate $250 million per year; it hoped to increase that figure to $1 billion by 2007.

TAKING ON CABLE In 2004 Seidenberg backed up his vision of the future by announcing a multibillion-dollar initiative to bring high-speed fiber lines into millions of customers’ homes. Those lines could one day carry television programs, allowing Verizon to compete with cable companies. At the January 2004 Consumer Electronics Show, Seidenberg declared that his investment would be the start of the “all-broadband, all-the-time lifestyle” (Fortune, May 31, 2004). Unlike other telecoms that were bringing “fiber to the curb,” Seidenberg planned to go one step further by bringing it to the house. It was a much costlier strategy but one that promised networks with higher speed. Seidenberg relied on a crucial Verizon asset to fund his grand scheme: its tremendous cash flow. By 2003 the company’s operations were generating about $22 billion annually in cash—50 percent more than SBC, twice as much as Bell South, and triple AT&T’s number. In fact, Seidenberg planned to pay for his fiber plan without increasing his capital budget. Seidenberg said that “funding is not an issue” (BusinessWeek, August 4, 2003). Another benefit of “fiber to the curb” was of a regulatory nature. In 2003 the Federal Communications Commission ruled that it would not force Baby Bells to give access to competitors on fiber networks that ran into the home—the same might not hold true for networks that stopped at the curb.

PIONEER OR POKER PLAYER? In the first stage of his initiative, Seidenberg planned to bring fiber to one million homes by the end of 2004, an ambitious project that would cost $1 billion—more than 8 percent of the company’s total capital expenditure budget for that year. He hoped to have another two million homes wired by 2005. Some analysts calculated that outfitting the homes of Verizon’s other 32 million customers with fiber would cost $40 billion. Some called Seidenberg’s plan nothing more than a bluff. Said Susan Kalla, a telecom analyst at Friedman Billings Ramsey, “He’s not going to do it. The numbers, they just don’t make sense” (Fortune, May 31, 2004). Seidenberg contended that he was planning to move slowly at first, to test his strategy. As for investors’ concerns, he was not really worried: “Most investors only understand that which has already been done. They never really like things that haven’t been done before. That’s why Christopher Columbus


AN UNPREDICTABLE LEADER Seidenberg’s leadership style was a study in paradoxes. He was known for his soothing, persuasive voice that came in handy during those times when he had to sell employees and investors on his seemingly quixotic strategies. Yet he could also be incredibly abrupt. A mutual fund investor, who remained anonymous, recalled Seidenberg’s answer to the question from another investor about whether the company would acquire the long-distance company Sprint: “Real condescendingly, he responded that he didn’t know why he even bothered to answer these types of questions. This was an investor who owned something like six million shares in the company. I always wondered what he did with them the following Monday” (Fortune, May 31, 2004). One distinguishable hallmark of Seidenberg’s style was his commitment to diversity. Under his leadership the company increased minority employment and created a partnership with the U.S. Small Business Administration to increase the company’s purchasing from minority suppliers. Fortune magazine cited the company in its list of the “50 Best Companies for Minorities.” Seidenberg was equally passionate about education and implemented measures to help connect students and teachers to technology, including pushing for a special rate for schools and libraries to get online.

A PERSONAL INVESTMENT Some industry insiders gave Seidenberg favorable longterm projections. The analyst Simon Flannery of Morgan Stanley expected the company’s revenues to reach $70 billion in 2005. And Brian Adamik, chief executive of the market researcher Yankee Group, called Verizon “the industry’s future” (BusinessWeek, August 4, 2003). Seidenberg rose to the top of an industry in which most of the companies did not exist in their present form a decade before. But even in the face of rapid change that had personally enriched him, Seidenberg remained a company man. Looking back on his career with Verizon, he remarked, “It’s hard to believe, but I’ve been here for 37 years, more than one-third of this company’s history. I feel an obligation to make sure this company is well positioned for the next 100 years” (BusinessWeek, August 4, 2003).

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Ivan G. Seidenberg

See also entries on AT&T Corp., Bell Atlantic Corporation, NYNEX Corporation, and Verizon Communications in International Directory of Company Histories.


Creswell, Julie, “Ivan Seidenberg, CEO of Verizon, Vows to Overpower the Cable Guys by Plowing Billions into a ‘90sStyle Broadband Buildout,” Fortune, May 31, 2004, p. 120. Greenhouse, Steven, “Talk of Partners, Rumblings of Battle at Verizon,” New York Times, July 31, 2003.

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Landler, Mark, “The Man Who Would Save NY for NYNEX,” New York Times, April 3, 1995. Latour, Almar, “After 20 Years, Baby Bells Face Some GrownUp Competition Cable,” Wall Street Journal, May 28, 2004. Rosenbush, Steve, “Verizon’s Gutsy Bet,” BusinessWeek, August 4, 2003, p. 52. Woolley, Scott, “The New Ma Bell,” Forbes, April 16, 2001, p. 68.

—Tim Halpern


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THIRTY YEARS WITH THE SAME COMPANY

Donald S. Shaffer

Like many of his generation, Shaffer began his career with a long-term commitment to one company. For 30 years Shaffer’s success as a manager and executive was tied to the success of Sears and its affiliates. Sears had insignificant roots. In 1886 Richard Sears, a delivery agent, bought and then sold an order of watches that had been refused by a Minneapolis jewelry store. Growing from this almost accidental beginning, more than a century later Sears was operating more than eight hundred mall-based retail stores and auto centers, more than 1,200 stores in non-mall specialty retail markets, and operations that included product installation and repair, home improvement, catalog and direct response, and online shopping.

1943– Former president, chief operating officer, and acting chief executive officer, Dollar General Nationality: American. Born: 1943. Education: University of West Virginia, BS, 1965. Family: Married. Career: Sears, Roebuck and Company, 1969–?, various positions; ?-1989, general manager of Detroit region retail stores; 1989-1994, national manager for women’s apparel; Sears Canada, 1994-1997, president and chief executive officer; Western Auto Supply Company, 1997-1999, chairman and chief executive officer; Heilig-Meyers Company, 1999-2000, president and chief operating officer; 2000-2001, president and chief executive officer; Dollar General, 2001-2003, president and chief operating officer; 2002-2003, chief executive officer .

■ At Sears, Roebuck and Company, Donald S. Shaffer moved through the ranks holding various positions, including general manager of the Detroit region retail stores. He joined the executive ranks with his appointment in 1989 to the position of national manager for women’s apparel. This appointment was a defining point for Shaffer’s career with Sears and beyond. As Sears continued its restructuring into the 1990s, Shaffer alternately took on the leadership of Sears Canada and the Sears subsidiary Western Auto Supply. His guidance helped to redefine both organizations and laid the groundwork for their more recent strong market positions. When he ended his career with Sears, Shaffer took on leadership roles in two more companies in need of major change—the furniture retailer Heilig-Meyers and the discount retailer Dollar General.


Shaffer joined the Sears team when the megaretailer was at the tail end of several decades of major expansion that changed the company’s focus from mail-order to retail outlets and turned a catalog retailer into a conglomerate. In the 1980s and 1990s, the rapid growth enjoyed by the company since its inception slowed markedly. The resulting restructuring eliminated approximately eight hundred field management positions and provided incentives for early retirement to hundreds of associates. In 1989 Shaffer was one of six national managers appointed when the retailer refocused the structure of its retail business units into vertical groups. Under the new structure district managers and retail stores were accountable to and reported directly to Shaffer. This arrangement enhanced business-to-business expertise within retail departments. As the national business manager for women’s apparel, Shaffer was responsible for “implementing the business group’s plans, goals, and directions through regional and district business managers,” according to Weekly Home Furnishings Newspaper. The chairman and CEO of Sears Merchandise Group, Michael Bozic, said in the same article, “The new structure will allow us to better execute strategies that will make us more competitive and more profitable.” Bozic gave Shaffer the task of being a creative, responsive, efficient, and accountable executive, goals Shaffer apparently reached, because he was named president and CEO of Sears Canada in 1994. Sears Canada was one of Canada’s largest multichannel retailers. In the year 2000 the Canadian retailer operated 125 full-line stores, 176 specialty stores, 1,500 independently owned catalog agents and dealer stores, a merchandise catalog with a circulation to 4.1 million households, and online shopping.

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Donald S. Shaffer

CAREER EXPERIENCE LEADS TO TURNAROUND EXPERTISE Shaffer remained at Sears Canada until 1997, when he became chairman and CEO of the troubled Western Auto Supply division of Sears. Under Shaffer’s leadership, this wholesaler of auto parts merged with Advance Auto Parts. Shaffer’s brokering of this merger set up a win-win situation for the two major auto parts chains, providing Sears with a 40 percent share in Advance Auto Parts and taking the Western Auto Supply parts stores under the Advance umbrella. According to the Advance Auto Parts 2001 annual report, the merger negotiated by Shaffer secured the position of Advance Auto Parts “as the second-largest retailer in the automotive aftermarket. . . . This acquisition alone almost doubled the number of stores we operated and expanded our trade area by 20 new states in the Midwest and Northeast. Within eleven months, six months ahead of schedule, we converted 545 [Western Auto Supply] stores into Advance Auto Parts stores” (http://www.advanceautoparts.com/investor/financial_info/ index.html?page=/investor/financial_info/AR_menu.html).

END OF THREE DECADES WITH SEARS His job with Western Auto Supply completed, Shaffer left Sears in April 1999 to become president and COO of HeiligMeyers Company, a furniture company based in Richmond, Virginia. This choice proved to be more challenging than expected when Heilig-Meyers filed for Chapter 11 bankruptcy protection in August 2000, one month after Shaffer assumed the additional duties of CEO. Shaffer brought his considerable expertise to bear in an effort to guide the furniture retailer through the bankruptcy process to a financial comeback. His goal was to restructure the organization and move forward with a viable business. During the year leading up to the bankruptcy and after the filing, Shaffer instituted a number of modifications of business practices, including changing the accounting method and completely revising the company’s longstanding credit policy, which had the company holding so much consumer debt that it operated as a bank. The Heilig-Meyers policy of providing credit to its customers had been known to generate as much as one-third of the company’s profit in the 80 years it had been doing business. With the growth of credit cards, the once profitable practice had become a liability, one that Shaffer considered long overdue for removal. In an article in Twice, Shaffer described his leadership goals by saying, “Heilig-Meyers accomplished several objectives relating to the implementation of the strategic initiatives associated with a core-store turnaround plan. Among these was the reopening of four Las Vegas and ten St. Louis test stores.” For a company operating under Chapter 11 bankruptcy, it is important to gain time for restructuring and to retain control of the business resources needed for restructuring. Shaffer’s leadership was not enough to bring the furniture

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giant out of the red; however, a bold decision and executive action saved the only profitable division.

DECISIVE ACTION SAVES PART OF HEILIG-MEYERS “Despite our significant progress,” Shaffer stated in an April 2001 press release, “we determined that based on the slowing of the economy and considerable weakening of the retail market, a successful reorganization of the traditional Heilig-Meyers furniture stores could not be completed within a time frame that would allow us to fulfill our fiduciary responsibility to our creditors and other stakeholders.” With this decision, Shaffer and his team gave in to the overwhelming challenges created by disappointing earnings, an inability to secure alternative financing sources, and two major debt payments totaling $140 million. Saying that they “will be in a much better position to come out of this with a viable, healthy and sound company rather than go through another 12–18 months of potential further deterioration,” Shaffer closed the 375 remaining Heilig-Meyers retail stores, and the furniture giant, in a little more than a year, almost ceased to exist. Shaffer did meet his goal of emerging from the bankruptcy with a viable business, even though Heilig-Meyers itself was no more. He decided that the RoomStore format would be the centerpiece of the company’s recovery efforts. The RoomStore chain was acquired in 1997 and launched as a Heilig-Meyer division in 1998. The RoomStore concept allowed customers to purchase entire rooms of furniture and accessories. Sales for the 67 outlets were profitable in 2000 with an estimated $300 million annual revenue. Although Shaffer was not as successful with Heilig-Meyers as he had been with Sears Canada and Western Auto Supply, industry analysts admitted that he arrived at the company too late to have much of an impact. Shaffer’s efforts and the changes he made in the Heilig-Meyers operations were too late to save the retailer. The inexorable slide into bankruptcy began as early as 1994 when the company began an overly ambitious and ill-advised acquisition campaign. By closing down the rest of the company, Shaffer ensured that the specialty RoomStore division would have the chance to succeed. In mid-2001 Shaffer, turnaround expert that he was, handed over the task of dismantling Heilig-Meyers and moved on.

OUT OF THE FRYING PAN AND INTO THE FIRE In May 2001 Shaffer was appointed president and COO of Dollar General. The company had plenty of troubles for Shaffer to solve. Only a month before Shaffer joined the executive staff, Dollar General announced an internal investigation of accounting fraud and a restatement of its earnings for the previous three years. Before Shaffer set the company on the road to recovery, class action lawsuits were filed, and the Secur-


Donald S. Shaffer

ities and Exchange Commission became involved. Eventually Cal Turner Jr. voluntarily paid $6.8 million to the company to repay performance bonus overages due to the overstatement of earnings on his watch. Dollar General was a discount retailer of general merchandise. The company’s annual report dated April 2003 listed 6,276 stores operating in 27 states. Merchandise sold included health and beauty aids, packaged food products, home cleaning supplies, housewares, stationery, seasonal goods, basic clothing, and domestics to a market targeting low-, middle-, and mixed-income communities. In January 2001 Dollar General agreed to pay $162 million to settle shareholder lawsuits related to approximately $100 million in overstated earnings for fiscal 1998–2000. The company stated that it had incorrectly accounted for leases and liabilities. In November 2002 in a shakeout of Dollar General’s leadership, Shaffer was appointed to the post of CEO on an interim basis. When the former Reebok executive David A. Perdue Jr. was named in April 2003 to replace Turner as CEO and board chairman, Shaffer initially agreed to remain president and COO for at least 270 days. However, only a month later Shaffer resigned from Dollar General to provide the new CEO with a clear leadership path. Perdue praised Shaffer’s integrity and steady leadership in steering Dollar General through two difficult years.

See also entries on Heilig-Meyers Company and Sears, Roebuck and Co. in International Directory of Company Histories.



“Advance Auto Parts 2001 Annual Report,” http:// www.advanceautoparts.com/investor/financial_info/ index.html?page=/investor/financial_info/AR_menu.html. Cramer, James J., “A Word on Heilig-Meyers: Doh!” TheStreet.com, http://www.thestreet.com/comment/ wrongtactics/1045466.html. Gilligan, Gregory J., “Former Richmond, VA–Based Furniture Executive Goes to Retail Chain,” Richmond Times-Dispatch, May 17, 2001. ———, “Richmond, VA, Furniture Giant Files Bankruptcy Papers,” Richmond Times-Dispatch, August 17, 2000. “Heilig-Meyers,” Home Accents Today, August 2001, p. 70. “Heilig-Meyers 1st Qtr. Sales Edge Up 1,” Twice, http:// www.twice.com/article/ CA39739.html?display=Business+News. “Sears Appoints Six National Managers: Set to Head Vertical Business Groups,” Weekly Home Furnishings Newspaper, April 10, 1989. Simons, David, “In Praise of Inventory,” Forbes.com, http:// www.forbes.com/columnists/2000/08/24/0824.html. Taub, Steven, “Awarding Bonuses in Bankruptcy,” CFO.com, http://www.cfo.com/article/1,5309,1115,00.html.

—C. K. Zulkosky

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■■■

Kevin W. Sharer 1948– Chief executive officer, Amgen, Inc. Nationality: American. Born: March 2, 1948, in Clinton, Iowa. Education: U.S. Naval Academy, BS, 1970; MS, 1971; University of Pittsburgh, MBA, 1982. Family: Son of Keith Sharer (navy pilot); married Carol (maiden name unknown; second wife); children: five. Career: U.S. Navy, 1970–1978, began as lieutenant, became lieutenant commander; AT&T 1978–1982, executive; McKinsey & Company, 1982–1984, consultant; GE 1984–1989, executive; MCI Telecommunications, 1989–1992, executive vice president; Amgen, 1992–2000, president and chief operating officer; 2000–, chief executive officer. Address: Amgen, Inc., One Amgen Center, MS 275-D, Thousand Oaks, California 91320-1799; http:// www.amgen.com.

■ Kevin W. Sharer, CEO of Amgen, a global leader in pharmaceuticals developed using biotechnology, got his leadership skills and personal drive from his training at the U.S. Naval Academy. He developed his ambitions through a series of corporate executive positions (none of them the top position) after he left the U.S. Navy as a lieutenant commander in 1978. Determined to rise to the top position in some company, Sharer saw potential in the position of president and COO at Amgen when he took the job in 1992. Sharer got the top job, CEO, in May 2000. His goal was to move Amgen from its leadership position in biotech pharmaceuticals to a top position among all pharmaceutical companies, putting him as CEO of Amgen on a par with CEOs of such major health-care leaders as Johnson & Johnson.

DEVELOPING LEADERSHIP AMBITION At the U.S. Naval Academy in Annapolis, Maryland, Sharer majored in aeronautical engineering, receiving a bachelor’s degree and a master’s degree. His initial ambition was to be

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Kevin W. Sharer. Getty Images.

a navy pilot like his father, but his eyesight precluded that goal, and he went into the submarine service instead. He told Arlene Weintraub in an interview for an article in BusinessWeek Online (March 18, 2002) that “he decided he was meant to be a leader just about the time he started taking orders” in the navy. Sharer served on two nuclear fast-attack submarines during the cold war. As chief engineer he oversaw the construction and trained the crew for the second sub, the Memphis. Admiral Hyman G. Rickover had to approve the ship before it was launched. When Rickover, known as the creator of the “nuclear navy,” questioned the young officer, Sharer told Weintraub, “I had to tell him I was right” (BusinessWeek Online, March 18, 2002).


Kevin W. Sharer

In 1978 Sharer left the navy as a lieutenant commander. He was impatient to move ahead, but he realized that it would take years of service to rise to the top job in submarine service. Moreover, a career in the navy required too much time away from family. Sharer decided to redirect his ambitions to be at the top in the corporate world. His first job was with AT&T, where he worked from 1978 to 1982. During that time he earned an MBA degree from the University of Pittsburgh, graduating in 1982. With a new MBA in hand, Sharer talked his way into a consultant position with McKinsey & Company, a management consulting firm that serves top management in major companies and institutions on issues of strategy, organization, and operation. Sharer’s navy experience and his tremendous ambition to lead caught the attention of Ron Bancroft, also a Naval Academy graduate and a partner in McKinsey’s Washington, D.C., office. General Electric (GE) recruited Sharer for a position in corporate development in 1984. Sharer made an impression on Jack Welch, GE’s CEO, who offered him a chance to lead the GE jet engine division. Sharer refused the job because that position was not high profile enough. Sharer left GE for an executive vice president position in marketing at MCI Telecommunications Corporation in 1989. At MCI, Sharer became convinced that internal politics would keep him in a number three position and that he would never get to be the CEO. He left MCI in 1992 to join Amgen as president and COO because he could see the potential in the Amgen job to match his ambition to become the company’s CEO. Amgen was the world’s largest biotech company, but it was a midsize company when compared to the major pharmaceutical and health-care products companies.

SHARER ARRIVES AT AMGEN Amgen (the name stands for Applied Molecular Genetics) was founded in 1980 to develop effective human therapeutics in the form of proteins from recombinant DNA technology. The company produced its first major drug in 1984. The company focuses its research and development efforts on human therapeutics delivered in the form of proteins, monoclonal antibodies, and small molecules. Sharer became president of Amgen with science training limited to high school biology and college chemistry. When he was contacted by a recruiter about the position, he had never heard of Amgen. To his credit, he did put himself through a crash course in biotechnology so that he could talk to the scientists who are at the heart of the business. Although there were some in the company who questioned whether Sharer was the right person to lead Amgen when he was hired, his predecessor, Gordon Binder, said the company already had people with strong science backgrounds. It needed, he noted, people with basic business experience as the com-


pany entered an intensive commercial environment. Sharer did not lack confidence in himself. He told Charles Fishman, the author of the article “A Dose of Change: Face Time with Kevin Sharer,” that he was not in the slightest concerned about moving into a leadership position in a biotechnology company. He said, “Moving among different environments has been a pattern in my life, and I’ve been able to succeed in all of them” (FastCompany Magazine, August 2001). Sharer said that he was not cocky but that he had no hesitation about his ability to learn the new technology. At Amgen, Sharer was determined to become an insider and to avoid making dramatic moves, as he had done in some of his previous jobs. When he felt he could reasonably expect to get the CEO position, he put himself on a partial sabbatical to learn all he could about the management of the research and development end of the business. Sharer noted that strategic competence is critical to success. An October 2001 article titled “Amgen’s CEO Provides Candid Reflections on Leadership” (a report on an earlier speech) quotes Sharer as saying, “Get the operational stuff under your belt early” (Harbus Online, October 29, 2001). Sharer spent a lot of time reading textbooks and visiting the laboratories at Amgen. He hired a tutor from McKinsey & Company to instruct him in pharmaceuticals and biotechnology. Sharer made no claim to be qualified in the science end of the business, but he felt he could participate in any discussion at a level that was appropriate for the company’s CEO.

AMGEN GETS A NEW CEO In May 2000 Sharer was made CEO of Amgen. He brought with him a goal he had for Amgen to become a major competitor in health-care markets, comparable to Johnson & Johnson. He used Johnson & Johnson as a benchmark because Amgen, as a young and less experienced company, had licensed a successful drug to Johnson & Johnson and had to sue to regain the U.S. marketing rights. Sharer was known for both grand ambitions and little patience. Under his leadership Amgen acquired another biotech company with a blockbuster drug, Immunex Corporation, in July 2002, making Amgen’s sales on the order of three times those of its nearest U.S. biotech competitor. With sales in 2002 of over $5.5 million, Amgen was competitive with the pharmaceuticals division of Johnson & Johnson, although Johnson & Johnson’s total sales were over eight times Amgen’s sales for the same period. In the foreword to the book Building Global Biobrands: Taking Biotechnology to Market, Sharer says that Amgen is reaching a certain critical mass, something that he predicts will make Amgen a “world-scale biopharma” company. He credits success to the company’s having scientific expertise, technical

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Kevin W. Sharer

depth, focused infrastructure, customer-focused commercialization, and a world presence on the market. Under Sharer, Amgen had three key objectives: portfolio diversification, technology integration, and geographic expansion. In addition to acquiring Immunex Corporation, the company accelerated its alliances and licensed technologies to complement in-house capabilities.

AN AGGRESSIVE STYLE Described variously as being blunt, having blustery confidence, and demonstrating an unflappable certainty of purpose that carried over from his navy experience, Sharer admitted to being a “little intimidating, so people don’t feel comfortable giving their true opinions” (Harbus Online, October 29, 2001). He expanded the sales force and at the same time tightened the demands on reporting efforts so that any ineffective sales tactics could be quickly corrected. Sharer initiated luncheon meetings to teach strategy and leadership to the company vice presidents. He also planned ski outings with some of them, and then he insisted that they take ski lessons. One vice president commented, “Even when you relax with Kevin, you’re working” (BusinessWeek Online, March 18, 2002). Sharer had enormous self-confidence, but he did not try to be a one-man show. He used the expertise of a handpicked executive committee when he made decisions. He put together a team of experts that included a former research executive from Merck & Company to oversee R&D, a head of marketing who developed his skills at what was the drug giant GlaxoWelcome in the 1990s, and a longtime veteran from Amgen who grew up in the business to be in charge of operations. Sharer believed in making decisions as a team because he said the business is so complicated that “no one person alone can be maximally effective in making those decisions” (FastCompany Magazine, August 2001).

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So that he would never forget the dangers of overconfidence, Sharer hung a stark portrait of General George A. Custer, who led the doomed battle of Little Big Horn, across from his desk in his office at Amgen. He said of the picture, “It’s good when you have a job like this to look at someone who overestimated his ability, underestimated his enemy, and lost everything” (BusinessWeek Online, March 18, 2002).

See also entries on Amgen, Inc., AT&T Corp., General Electric Company, and MCI Communications Corporation in International Directory of Company Histories.


Fishman, Charles, “A Dose of Change: Face Time with Kevin Sharer,” FastCompany Magazine, August 2001, http:// pf.fastcompany.com/magazine/49/facetime.html. Lashinger, Brett, “Amgen’s CEO Provides Candid Reflections on Leadership,” Harbus Online: The Student Newspaper of the Harvard Business School, October 29, 2001, http:// www.harbus.org/news/2001/10/29/Features/ Amgens.Ceo.Provides.Candid.Reflections.On.Leadership134001.shtml. Simon, Françoise, and Philip Kotler, Building Global Biobrands, New York: Free Press, 2003. Tichy, Noel M., The Leadership Engine: How Winning Companies Build Leaders at Every Level, New York: HarperCollins, 1997. Weintraub, Arlene, and Amy Barrett, “Amgen: Up from Biotech: Kevin Sharer Wants to Turn the 22-Year-Old Company into Another Johnson & Johnson,” Business Week Online, March 18, 2002, http://www.businessweek.com:/ print/magazine/content/02_11/b3774080.htm?mz. —M. C. Nagel


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William J. Shea 1948– Chief executive officer and president, Conseco Nationality: American. Born: February 9, 1948. Education: Northeastern University, BA, 1970; MA, 1972. Career: Coopers & Lybrand (now known as PricewaterhouseCoopers), 1974–1993, held several positions, eventually becoming senior partner and vice chairman; Bank of Boston, 1993–1996, vice chairman and CFO; BankBoston (now merged into FleetBoston Financial Corporation), 1996–1998, vice chairman and CFO; DeMoulas Super Markets, 1998–1999, board chairman; View Tech, 1999–2000, CEO; Conseco, 2001–2002, president and COO; 2002–, CEO and president. Address: Conseco, 11825 North Pennsylvania Street, Carmel, Indiana 46032; http://www.conseco.com.

■ William J. (Bill) Shea, who first earned his turnaround stripes at the Bank of Boston in the 1990s, proved he could pull off another rescue when he led financially troubled Conseco through the maze of reorganization under Chapter 11 of the Bankruptcy Code in only nine months. The fact that as of the fall of 2002 Conseco’s Chapter 11 filing was the third largest in U.S. history, surpassed only by those of WorldCom and Enron, made this accomplishment particularly noteworthy. Although Conseco’s plan for reorganization received the stamp of approval from U.S. Bankruptcy Court Judge Carol Doyle in September 2003, Shea’s work was far from over. The company, based in Carmel, Indiana, had first found trouble when it attempted to branch out from its core insurance businesses into consumer finance. With that costly misadventure behind it, Conseco’s newly streamlined insurance subsidiaries needed to quickly increase profitability in order to earn improved financial-strength ratings from such insurer-rating services as A.M. Best. Shea cautioned investors and analysts against reading too much into Conseco’s report of an $18.9


William J. Shea. AP/Wide World Photos.

million profit in October 2003, suggesting that the figure amounted to too little data for too short a period upon which to base a proclamation of recovery. As he told the Indianapolis Star, “It’s been a hectic 12 months that we’ve all been through. But we plan to prove over the next few years that it was all worth it” (November 20, 2003).

SETS GOAL FOR PROFIT GROWTH In November 2003 Shea set a goal for Conseco of annual profit growth of between 7 and 10 percent. He predicted such growth could be achieved through a combination of increased sales of its core insurance products and reductions in costs. Much of Conseco’s hopes for long-term recovery were pinned on its most profitable insurance unit, Bankers Life & Casualty, based in Chicago. Some doubts about the soundness of Conse-

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William J. Shea

co’s recovery plan arose in mid-February 2004 when Edward M. Berube, the president and CEO of Bankers, abruptly resigned following a brief meeting between Shea and Bankers’ senior management. What, if anything, his resignation would mean for Conseco in the long run at the time remained uncertain.

are you going to do it?” (July 11, 1997). Although some outside observers speculated that Shea might have been forced out of BankBoston because he had served as a director for scandaltainted Centennial Technologies, the high-tech company based in Billerica, Massachusetts, Gifford denied that such was the case.

Born in New England on February 9, 1948, Shea earned his bachelor’s degree in economics at Northeastern University in 1970. He continued his studies at Northeastern until 1972, when he received his MBA. He began his business career at the international accounting firm of Coopers & Lybrand (which in 1998 merged with Price Waterhouse to form PricewaterhouseCoopers) in 1974. Over the next 19 years, Shea held a series of jobs of increasing responsibility at Coopers, rising eventually to senior partner and vice chairman. In his final years at Coopers & Lybrand he was responsible for the accounting firm’s National Industry Programs, which were involved in marketing services to Coopers’s two hundred largest customers. During this period he focused largely on companies in the high-tech and financial-services sectors.

The Centennial scandal, which erupted when the company was charged with securities fraud for overstating its financial results, did slightly besmirch Shea’s otherwise spotless record. The company agreed in 1998 to reimburse almost $18 million to investors who claimed they’d been defrauded, and three of those involved in the scandal, including the CEO Emanuel Pinez, spent time in jail. In 2000, after the Securities and Exchange Commission issued a report charging Pinez and the former CFO James Murphy with orchestrating a “massive fraud,” Shea called it “a painful public reminder of a difficult chapter in the history of our company” (September 27, 2000), according to a story that appeared on Boston.Internet.com. Business Week chastised Shea in print, suggesting that, as a director of Centennial and a top executive with the troubled firm’s principal lender, he should have realized that something was amiss.

In 1993 Shea, who had worked closely with the Bank of Boston during his years at Coopers, joined the bank as vice chairman and CFO. Long a major commercial banking institution, the Bank of Boston had established a far-flung network of global subsidiaries and enjoyed a strong reputation as an industry leader. By the early 1990s, however, the bank’s lack of a strong franchise in consumer-banking activities was beginning to be reflected in the company’s financial performance. To further enhance the bank’s areas of strength and beef up its weaker sectors, Shea helped engineer the acquisition of the Boston-based BayBanks in a $2 billion stock merger. When the merger was finalized in 1996, the product— BankBoston—combined the Bank of Boston’s international presence and corporate sophistication with BayBank’s consumer innovation and world-class technology. (In 1999 BankBoston merged with Fleet Financial Group of Boston to create FleetBoston Financial Corporation.)

RETAINS TITLES AT MERGED BANK Within the corporate structure of the newly created BankBoston, Shea retained his titles of vice chairman and CFO and was assigned responsibility for global banking and finance. In those roles, as the BankBoston CEO Chad Gifford told the Boston Herald, Shea’s “tenacity and drive helped us to engineer a dramatic improvement in our operating performance and market valuation” (July 11, 1997). After five years with BankBoston and its predecessor company, Shea decided it was time to pursue new opportunities. He told the Boston Herald he was looking for a smaller, more entrepreneurial firm that might be able to use his services. “I’d like to see if I can really run a company. At 49 years old, if you’re not going to do it now, when

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TAKES OVER AS CEO OF VIEW TECH In April 1998 Shea replaced the founder Robert G. Hatfield as the CEO of View Tech, a leading provider of video, voice, and data solutions with offices in both Camarillo, California, and Boston. Under Shea’s direction, View Tech launched a major restructuring plan designed to cut costs and increase profitability by shutting down marginal or unprofitable operations and streamlining and integrating those operations that continued to exist. In announcing implementation of the restructuring plan in July 1998, Shea said that as a result the company was poised to become a leader in the market for voice, video, and data communication services. In October 1999 Shea and the View Tech President Franklin A. Reece III removed themselves from the day-to-day operations of the company when a decision was made to centralize View Tech’s operations—including all administrative functions—to Camarillo. Because neither Shea nor Reece was able to relocate at the time, the company announced the appointment of S. Douglas Hopkins as interim president and CEO. Although Shea remained with View Tech through 2000, his role in the company’s direction was significantly reduced. During this period he also served on the board of Demoulas Super Markets, a chain of 57 stores based in Tewksbury, Massachusetts. For Shea, the biggest challenge of all lay just ahead. In September 2001 Gary Wendt, the chairman and CEO of financially troubled Conseco, announced Shea’s appointment as president and COO and a member of the office of the CEO.


William J. Shea

Before coming on board as a full-time employee, Shea had worked as an outside consultant for Conseco and was well aware of the company’s difficulties, which had it teetering on the edge of bankruptcy. Explaining the decision to add Shea to the company’s top management, Wendt said, “Bill Shea is a perfect fit for us. His experience in turnaround situations is unsurpassed, and he can provide senior leadership across many business functions,” according to a Conseco press release (September 25, 2001).

setts Society of Certified Public Accountants, the Financial Executives Institute, and the American Institute of Certified Public Accountants. He once served as a trustee of the Children’s Hospital in Boston.

See also entry on Conseco Inc. in International Directory of Company Histories.


SHOPPING SPREE GETS CONSECO IN TROUBLE Conseco had gotten itself into trouble in the 1990s when it embarked on a frenzied shopping spree for acquisitions, amassing a huge debt load in the process. According to many observers and market analysts, the straw that broke the camel’s back was Conseco’s 1998 purchase of Green Tree Financial Corporation, the largest U.S. lender to buyers of mobile homes, for $6 billion. The company’s latest attempt to diversify proved to be its undoing, for it failed to realize the riskiness of the venture into the realm of consumer finance. Conseco set up its newly acquired consumer-finance operation as a subsidiary entitled Conseco Finance Corporation. In early October 2002, less than 13 months after he joined Conseco, Shea was given the added responsibilities of CEO by Wendt, who remained Conseco’s chairman. Two months later Conseco and a few of its key subsidiaries, under Shea’s direction, filed for protection from their creditors under Chapter 11 of the U.S. Bankruptcy Code. At the same time, the company announced that it had reached a tentative agreement with its banks and bondholders on a financial restructuring plan that would sharply reduce Conseco’s debt. The plan called for Conseco to spin off its noninsurance operations—most notably Conseco Finance Corporation—so that the core company would return, after reorganization, to being a purely insuranceoriented business.

Andrews, Greg, “Conseco Still Confronting Challenges,” Indianapolis Business Journal, December 29, 2003. “Board and Management: William J. Shea, President and Chief Executive Officer,” http://www.conseco.com/conseco/ selfservice/about/cprofile/ boardbio.jhtml?cat=cprofile&subcat=bm&personId=600002. “Company Overview for Conseco, Inc.,” Reuters Investor, http:/ /www.investor.reuters.com/CompanyOverview. Connolly, Jim, “Conseco, Out of Bankruptcy, Unveils Recovery Roadmap,” National Underwriter, November 24, 2003. “Conseco Files for Bankruptcy,” http:// www.consumeraffairs.com/news02/conseco_bkrpt2.html. “Conseco, Inc.,” Hoover’s Online, http://www.hoovers.com/ conseco/—ID__10391—/free-co-factsheet.xhtml. “Conseco, Inc.: Key Developments,” MSN Money, http:// news.moneycentral.msn.com/ticker/ sigdev.asp?Symbol=CNO. “Conseco Names Shea President and COO,” Conseco press release, http://www.findarticles.com/cf_0/m0EIN/ 2001_Sept_25/78558957/print.html, September 25, 2001. “Conseco Sells Former Green Tree Unit for $1 Billion,” National Underwriter, March 10, 2003.

In the nine months following its Chapter 11 filing, Shea worked diligently to hammer out and implement various elements of the company’s reorganization plan. On September 10, 2003, Conseco announced that its sixth amended jointreorganization plan had been approved by the U.S. Bankruptcy Court and was now in effect. On January 29, 2004, Conseco filed a registration statement with the SEC for the offer and sale of $800 million in common stock and $350 million in a new class of mandatorily convertible preferred stock. Although Conseco faced a wide array of challenges in the days ahead, it appeared by early 2004 that the company had embarked on the road to recovery.

“Former Centennial CEO Fined $5.3 Million,” Boston.Internet.com, http://boston.internet.com/news/ print.php/470731, September 27, 2000.

Away from his responsibilities at Conseco, Shea was active in both industry and civic affairs. He continued to serve on the board of DeMoulas Super Markets as well as that of AIG/ Sun America Funds. He was also a member of the Massachu-

Munroe, Tony, “BankBoston Exec Resigns from Post,” Boston Herald, July 11, 1997.


Hornaday, Bill W., “Carmel, Ind.–Based Insurer Conseco Sees Month’s Profit as Step toward Rebound,” Indianapolis Star, November 20, 2003. ———, “Conseco Chief Is Skilled at Task,” Indianapolis Star, December 22, 2002. ———, “Sudden Departure of Conseco Executive Raises Questions about Firm’s Future,” Indianapolis Star, February 13, 2004.

———, “Ex-BankBoston Exec to Fill Centennial Chief Post,” Boston Herald, December 16, 1997.

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William J. Shea O’Malley, Chris, and Bill W. Hornaday, “Turnaround Expert in Charge,” Indianapolis Star, October 4, 2002.

Wilcox, Gregory J., “Founder, CEO of View Tech Quits His Post,” Los Angeles Daily News, April 22, 1998.

Penticuff, David, and April Marciszewski, “Insurer Conseco Celebrates Emergence from Bankruptcy with Some Changes,” Indianapolis Star September 18, 2003.

“William J. Shea,” Marquis Who’s Who, New Providence, N.J.: Marquis Who’s Who, 2004.

Pham, Alex, “Mass. Banks’ Merger Proved Difficult,” Boston Globe, May 27, 1997. Smith, Geoffrey, “Commentary: Why Didn’t Anyone Smell a Rat at Centennial?” BusinessWeek, March 24, 1997.

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“William J. Shea, President, Chief Executive Officer, Director at Conseco, Inc.,” Forbes.com, http://www.forbes.com/ finance/mktguideapps/personinfo/ FromPersonIdPersonTearsheet.jhtml?passedPersonId=227025. —Don Amerman


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Donald J. Shepard 1946– Chairman of the executive board, AEGON N.V. Nationality: American. Born: 1946. Education: University of Chicago, MBA. Family: Married Rosie (maiden name unknown). Career: Life Investors, 1970–1985, various positions; 1985–1989, executive vice president and chief operating officer; AEGON USA, 1989–1992, president and chief executive officer; 1992–2002, chairman, president, and chief executive officer; AEGON N.V., 2002–, chairman of the executive board. Address: AEGON N.V., AEGONplein 50, P.O. Box 202, 2501 CE The Hague, The Netherlands; http:// www.aegon.com.

■ Donald J. Shepard, who earlier served as the first chairman, president, and chief executive officer (CEO) of AEGON USA, in April 2002 took over as chairman of its parent company, AEGON N.V. A member of the Dutch-based company’s executive board since 1992, Shepard replaced Kees J. Storm, who in his nine years as chairman aggressively transformed AEGON into one of the world’s top life-insurance companies. For Shepard it was a tough act to follow. However, despite a worldwide economic downturn and the resulting weakness in financial markets, Shepard acquitted himself well, guiding AEGON through troubled times and expanding into new markets. In 2003, the first full year under Shepard’s watch, AEGON N.V.’s net income increased by nearly 39 percent, rising to $2.25 billion from $1.6 billion the previous year. Revenue in 2003 totaled $36 billion, up almost 10 percent from about $32.8 billion in 2002. AGEON’s net profit margin improved from 5 percent in 2002 to 6.3 percent in 2003 but was still well below the 2001 profit margin of 7.5 percent. In announcing AEGON N.V.’s financial results for 2003, Shepard observed in a company press release: “We feel better about busi-


Donald J. Shepard. © Najlah Feanny/Corbis.

ness than a year ago. The profitability of our business has been strengthened by our actions to improve margins,” as well as “improvements in the equity and credit markets” (March 12, 2004).

BIGGEST OPERATING GROUP WAS IN THE UNITED STATES Although based in The Hague, capital of the Netherlands, AEGON N.V. conducted roughly 70 percent of its business in the early 2000s outside the tiny European country. By far its biggest operating group, AEGON USA, which Shepard headed for more than a decade, accounted in 2003 for just over 60 percent of its parent’s total revenue, while operations in the Netherlands and the United Kingdom generated roughly 30 percent and 7.5 percent of total net income, respectively. The company also maintained smaller operations in a number

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Donald J. Shepard

of other countries, including Canada, China, Germany, Hungary, Spain, and Taiwan. Born in 1946 in the United States, Shepard in 1970 earned a master’s degree in business administration from the University of Chicago. Shortly after receiving his degree, he went to work for Life Investors, an insurance holding company headquartered in Cedar Rapids, Iowa. Over the next 15 years, Shepard held a wide variety of management positions, gradually working his way into the company’s top executive ranks. In 1985 he was appointed executive vice president and chief operating officer of Life Investors, which in 1982 had been sold by founder Ronald Jensen to AEGON N.V. for $200 million. At the end of the 1980s, when AEGON N.V. consolidated its far-flung U.S. holdings into AEGON USA, Shepard was named president and chief executive officer of the newly formed company. In 1992 he was given the added title of chairman of AEGON USA and joined the executive board of AEGON N.V. Over the next decade, under Shepard’s direction, AEGON USA expanded aggressively, most notably acquiring the insurance units of Providian Corporation for roughly $3.5 billion in January 1997 and San Francisco-based Transamerica Corporation for $9.7 billion two years later. By the end of the 1990s AEGON USA, which was then headquartered in Baltimore, had moved into the top three American life insurance groups in terms of total assets and premiums written.

ASSESSED 9/11’S IMPACT ON BUSINESS On September 11, 2001, while Shepard was still serving as chairman, president, and chief executive officer of AEGON USA, terrorists attacked America, delivering a blow to the country that was to have a widespread impact on the worldwide economy. In an interview with Chief Executive magazine shortly after 9/11, Shepard predicted that business-security concerns in the wake of the attack were likely to lead to an overreaction, resulting in sharply reduced business travel. Although he said he expected the American business community would eventually get past the crisis, he suggested that important lessons might be learned from countries like Israel. “It’s interesting to see that there are a number of successful businesses in Israel and they have had to deal with terrorism in the streets for a long time,” he said (November 2001). Less than two months after the attack, AEGON N.V.’s supervisory and executive boards announced on November 8, 2001, that Shepard would succeed Kees J. Storm when the latter retired in April 2002. For Shepard, the timing of his appointment was less than auspicious; AEGON saw its capitalization fall 11 percent at the end of June 2002. As a result, Standard & Poor’s announced that it would be forced to cut the company’s credit rating unless AEGON could boost its capital. Dutch-based Vereniging AEGON, the insurer’s largest

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shareholder, came to the rescue, announcing it would sell a 25 percent interest in the company in a bid to bolster AEGON’s capitalization.

AEGON’S NET INCOME FELL IN 2002 The combined effects of weakness in the equity markets, low interest rates, and bond-credit defaults took their toll on AEGON N.V.’s bottom line in 2002. The company’s net income fell to $1.6 billion, down more than 24 percent from $2.1 billion in 2001. Revenue in 2002, however, rose almost 15 percent to $32.7 billion from about $28.5 billion the previous year. In announcing AEGON’s 2002 financial performance, according to a company news release, Shepard said: “By continuation of our strategy we are enhancing our distribution capabilities in existing and new markets to reach more customers while improving the operating efficiency of our organization” (March 6, 2003). In a July 2003 interview with the Wall Street Transcript, Shepard attributed increased competition in the international insurance market to changes in government policy and financial markets. “It’s always been competitive,” he said, “but we are now experiencing the most rapid changes to our business model in a generation.” As examples of the changing competitive landscape, Shepard cited “greater cost efficiencies, changing product design and pricing [and] adjusting commissions and product benefits” (July 22, 2003). At AEGON’s November 2003 Analyst and Investor Conference in Orlando, Florida, Shepard elaborated on the important role played by distribution, which he called the insurer’s “most important driver of growth,” according to a report carried on the Fair Disclosure Wire (November 10, 2003). He said that key to AEGON’s distribution strength in the United States and Netherlands, its two biggest markets, had been the company’s multichannel distribution system. Shepard said AEGON was moving to introduce similar distribution systems in other markets.

PERFORMANCE IMPROVED IN 2003 In March 2004 Shepard announced sharply improved results for AEGON N.V. in 2003. The insurer’s profit jumped nearly 39 percent on an increase in sales of just under 10 percent. According to a company press release, Shepard credited the company’s strategy of aggressively expanding its multichannel distribution system into more and more of its markets. As an example he cited the successful implementation of that system into AEGON’s Taiwan market. Looking ahead, he said the company was well positioned to strengthen its core activities in such new markets as China, Slovakia, and Spain. The insurer moved to gain a foothold in the Chinese market in mid-2002 when it reached agreement with China National


Donald J. Shepard

Offshore Oil Corporation to launch a joint-venture lifeinsurance business in China, which opened for business in Shanghai in 2003. AEGON also use joint ventures to enter the Spanish market, reaching a strategic agreement in January 2004 with Caja de Ahorros del Mediterraneo (CAM), one of Spain’s leading financial-services companies. Under the terms of the agreement, CAM’s insurance subsidiary, Mediterraneo Vida, was to be spun off into a new holding company, to which AEGON would supply both its insurance-marketing expertise and a substantial infusion of capital. In August 2003 Shepard, along with eight other international insurance-company executives, was elected to the board of directors of the New York-based International Insurance Society. The AEGON chairman also served on the boards of directors of CSX Corporation, Baltimore Symphony Orchestra, Financial Services Roundtable, U.S. Chamber of Commerce, Mercantile Bankshares Corporation, and Walters Art Gallery. He also served as a trustee of Johns Hopkins University and Johns Hopkins Health System Corporation.

See also entry on AEGON N.V. in International Directory of Company Histories.


“AEGON Buys Transamerica,” United Press International, February 18, 1999. “AEGON Completes Acquisition of Transamerica,” http:// www.aegon.com/top-1-4.html. “AEGON Moves to Boost Its Capital,” Birmingham Post (England), September 16, 2002. “AEGON Reports on Full Year 2003 Results, Positive Developments in Earnings,” http://www.aegon.com/top-14.html. “AEGON Sells Transamerica Subsidiary to GE,” Associated Press, August 7, 2003. “AEGON’s Analyst & Investor Conference—Day 1—Final,” Fair Disclosure Wire, November 10, 2003. “CAM and AEGON Have Reached Final Agreement on Strategic Partnership,” http://www.aegon.com/top-1-4.html.


“CNOOC Marches into Life Insurance Market Together with AEGON,” AsiaInfo Services, May 17, 2002. Crosson, Cynthia, “Dutch, U.S. Managers Blend Styles at AEGON,” National Underwriter, April 8, 1991. D’Allegro, Joseph, “Financial Service Reform Can Benefit Insurers,” National Underwriter, November 8, 1999. “Dutch Insurer AEGON Doubles Earnings,” Associated Press, May 12, 2004. “Dutch Insurer Launches JV,” http://www.cnooc.com.cn/ english/newsnotice/chinadaily.htm. “Executive Chairman of AEGON Discusses Strategy within Changing Competitive Landscape,” Wall Street Transcript, July 22, 2003. Fairlamb, David, “Insurance: Full of Holes,” BusinessWeek, September 23, 2002. Ford, George C., “AEGON USA, Cedar Rapids, Iowa, Builds on Acquisition Strategy,” Cedar Rapids Gazette, September 23, 1997. ———, “Cedar Rapids, Iowa, Insurance Company Grows Revenues, Employment,” Cedar Rapids Gazette, March 10, 1999. “Grupo Financiero Banamex Agrees to Purchase 48 Percent of AEGON’s Share in Seguros Banamex AEGON and Afore Banamex AEGON,” http://www.citigroup.com/citigroup/ press/2002/data/020118a.htm. “Kees J. Storm, Chairman of the Executive Board of AEGON N.V. to Retire; Donald J. Shepard Appointed as His Successor,” http://www.aegon.com/displayframe-1-4-084.html. “Net Income EUR355 Million for Fourth Quarter; Net Income per Share EUR0.23,” http://www.aegon.com/ displayframe-1-4-0-119.html. “Patrick S. Baird Named President and CEO of AEGON USA, Inc.,” http://www.transamericareinsurance.com/ press_release.asp?Id=11. Young, Eric, “CEOs in an Age of Terrorism: Executives Weigh the Impact of a Long Military Retaliation and a Changing National Psyche,” Chief Executive, November 2001. —Don Amerman

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Yoichi Shimogaichi 1934– President, JFE Holdings Nationality: Japanese. Born: August 26, 1934, in Tokyo, Japan. Education: Attended University of Tokyo. Career: NKK Corporation, 1958–1981, various positions; 1981–1986, general manager of sales coordination in export and corporate planning departments; 1987–1989, general manager of corporate planning department; 1989–1991, managing director; 1991–1994, senior managing director, deputy director of steel division; 1994–1997, executive vice president, executive director of steel division; 1997–2002, president; JFE Holdings, 2002–, president. Address: JFE Holdings, 1-1-2 Marunouchi, Chiyoda-ku, Tokyo 100-0005, Japan; http://www.jfe-holdings.co.jp/ en/index.html.

■ In 2002 Yoichi Shimogaichi became the president of JFE Holdings, the Japanese steel company that was listed as one of Fortune‘s Global Most Admired Companies in 2004. Shimogaichi spent his entire professional career in the steel industry, working his way up the corporate ladder at Japan’s number-two steelmaker NKK Corporation for 44 years. After earning the position of president there Shimogaichi organized a merger with the number-three Japanese steelmaker Kawasaki Steel. The new company, JFE Holdings, quickly became a model for successful megamergers. Shimogaichi was named president of JFE Holdings and thenceforth set about reforming Japan’s steel industry into a modern, competitive marketplace.

SAW THE PROMISE OF STEEL Yoichi Shimogaichi was born on August 26, 1934, in Tokyo, Japan. He spent all of his childhood in that city and received his education at the University of Tokyo. Upon finishing his studies, Shimogaichi took the Japanese exam to become a civil servant; after passing the test, however, he decided

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Yoichi Shimogaichi. © AFP/Corbis.

that he did not care much for bureaucracy. He briefly considered pursuing careers in banking and trading but decided that those careers as well would turn him into a bureaucrat. He eventually grew interested in the steel industry in large part because of its potential for growth; he told Leo Lewis of Japan Inc., “It was an era before the mass production of cars. The shipbuilding and cement industries were healthy, with promising futures” (February 2004). Shimogaichi started his steel career with NKK Corporation in 1958. The steel company had been founded in 1912 as Japan’s first manufacturer of seamless pipes and then expanded into steelmaking, shipbuilding, steel fabrication, construction, industrial machinery, and engineering. Shimogaichi was also attracted to the company because of its location; he had hoped to find a job near his hometown of Tokyo, and NKK was headquartered in nearby Kawasaki.


Yoichi Shimogaichi

Shimogaichi worked in a variety of positions throughout his long career with NKK, including general manager of sales coordination, export operations, and corporate planning. In June 1987 he was appointed to NKK’s board; four years later he was promoted to senior managing director and deputy director of the steel division. In 1994 he assumed the role of vice president of the company. In 1997 the NKK president Shunkichi Miyoshi decided to step down and passed his role on to Shimogaichi.

CHALLENGED AS PRESIDENT OF NKK STEEL By the time Shimogaichi became president of NKK, the steel industry was facing serious economic challenges. Steel was an old industry trying to adapt to a technologically advanced global economy. In order to adjust to the ever-changing modern landscape and growing competition, Shimogaichi and NKK instituted new business practices, such as adopting international accounting standards for assessing companies on group bases, rather than focusing solely on parent companies, and consolidating subsidiaries in the financial sector. Over time Shimogaichi and other top steel leaders became increasingly concerned with improving profitability and reducing liabilities. Although NKK was Japan’s second-largest steel company, it was struggling financially by the end of the 1990s. In 1999 NKK was unable to meet its profit forecast because of an unexpected drop in steel prices. The overall global economy was suffering and the car and construction industries were hit especially hard. That same year one of NKK’s electric-furnace subsidiaries, Toa Steel, went out of business and NKK had to absorb Toa’s liabilities.

SUCCESSFULLY COORDINATED MEGAMERGER In order to remain competitive in the tightening steel market, Shimogaichi and NKK decided to join forces with Japan’s third-largest steel company Kawasaki Steel. In 2000 the two companies began to share transportation and purchasing functions; a year later NKK and Kawasaki announced plans for a merger. Shimogaichi explained in the Financial Times, “We felt that NKK and Kawasaki, as they exist now, did not have the sufficient presence to compete successfully as our rivals, material suppliers, and steel customers have become extremely large through consolidation” (September 27, 2002). The unification of NKK and Kawasaki Steel was the most significant move in the steel industry since the 1970 merger between Yawata Iron and Steel Company and Fuji Iron and Steel Company, which formed Nippon Steel Corporation. After the merger Nippon grew to become not only Japan’s but also the world’s largest steelmaker. In 2002 NKK and Kawasaki merged to become JFE Holdings, short for Japan Iron


Holdings (where Fe is the chemical symbol for that element). Shimogaichi became the president of the new company, while the Kawasaki Steel chairman Kanji Emoto assumed the role of JFE chairman. At first JFE Holdings wholly owned both NKK and Kawasaki Steel; by 2003 the company was reorganized into JFE Steel Corporation, JFE Engineering, JFE Urban Development Corporation, JFE Research and Development, and other firms. JFE Steel merged the operations of NKK’s Fukuyama steel mills and Kawasaki’s Mizushima steel mills into a regional production center in western Japan. The successful merger made JFE Holdings, with total annual production totaling 30 million tons, comparable in size to Nippon Steel and South Korea’s Posco Steel.

CREATED A COMPETITIVE ADVANTAGE WITH JFE Shimogaichi saw the merger with Kawasaki as a way to increase the scale of his steel company in order to compete amid poor market conditions, such as low steel prices and overcapacity in Japan. Through the merger Kawasaki and NKK could share technologies, reduce redundancies in investments, and cut costs. They were also able to consolidate production, increasing efficiency and improving their bargaining power with suppliers, automakers, and electronic groups. The goal of the newly formed JFE Holdings was to cut annual costs by ¥80 billion by 2006. Shimogaichi told Japan Economic Newswire, “I expected it to be difficult due to differences in corporate cultures, but members of both companies are willing to go forward to achieve one goal” (August 31, 2002). By 2004 JFE Holdings had exceeded expectations and had become a model for the successful coordination of a megamerger. Based on market value alone, in only two years JFE Holdings became the biggest steelmaker in the world. The secret to the company’s success was the way in which it took the old industry of steel and made it appealing in the modern global market, often touting its technological advantages over competitors. Shimogaichi explained to Leo Lewis of Japan Inc., “The secret is our technology, which came from both NKK and Kawasaki and is now strongly united” (February 2004). In investing heavily in research and development, JFE Steel relied on new technologies and new techniques to develop types of steel that would be highly valued by automakers and other manufacturers. High-tensile steel was an example of a high-value-added product showcasing JFE’s technological strengths. The strong, lightweight steel was potentially a very attractive material for the automotive industries. JFE engineers worked with their clients from the early design stages in order to tailor steel products to their needs. The challenge for Shimogaichi was to keep JFE’s technological advances ahead of the competition. He acknowledged that technology could be stolen or passed on to competitors—particularly in China—

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Yoichi Shimogaichi

but he was not especially concerned about the problem because he was confident that JFE would stay ahead of the game regardless. Shimogaichi further credited the success of JFE to the facility with which it moved outside of the Japanese domestic market and became an international competitor; in particular Shimogaichi sought to increase JFE’s position in the Asian market. He explained to Nikkei Weekly, “The volume of steel used in Japan is decreasing. Since our plan is to maintain or even slightly increase production, we need to think of East Asia as our home market” (February 24, 2003). Economic growth in China, especially in construction and automobiles, opened new markets for JFE, and Shimogaichi expected the demand for steel in China to double that in Japan.

LIMITLESS VISION Shimogaichi did not limit his visions of expansion to Asia. He speculated in Nikkei Weekly, “We also need to take a stab at the huge U.S. market. Maybe we can take advantage of the North American Free Trade Agreement” (February 24, 2003). While the steel industry in the United States was heavily protected by the American government, President George W. Bush revoked steel import tariffs in 2003, opening the market to foreign competition from companies like JFE Steel. Shimogaichi was a grounded and practical businessman who made difficult and far-reaching decisions based upon careful consideration of market conditions and business practices. He appreciated the value of his employees—and their happiness—as well as the need for employee loyalty during

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major company changes. After over 40 years of experience in the steel industry, Shimogaichi emerged as a powerful leader; his bold vision and calculated risk taking was paying off with JFE Holdings. In 2003 the company debuted on the Fortune Global 500 list at number 226 with over $19 million in revenues.

See also entry on NKK Corporation in International Directory of Company Histories.


Furukawa, Tsukasa, “Japanese Steelmakers Map Long-Range Strategies,” Business and Industry, October 3, 2000, p. 7A. Hijino, Ken, “JFE President Hopes Merger Will Add Steel,” Financial Times, September 27, 2002, p. 29. “JFE Holdings Cleans Slate to Avoid Factionalism,” Nikkei Weekly, May 26, 2003. “JFE Holdings Prepares to Steal Top Position,” Nikkei Weekly, February 24, 2003. “JFE Holdings to Tackle China Issue,” Japan Economic Newswire, August 31, 2002. Lewis, Leo, “Man of Steel: An Exclusive Interview with Japan’s Steelmaking Giant,” Japan Inc., February 2004, pp. 48–55. Tanikawa, Miki, “Steelmakers in Japan Plan Joint Effort,” New York Times, April 14, 2001. —Janet P. Stamatel


■■■

Etsuhiko Shoyama 1936– President and chief executive officer, Hitachi Nationality: Japanese. Born: March 9, 1936, in Japan. Education: Tokyo Institute of Technology, BS, 1959. Career: Hitachi, 1959–1982, power plant engineer at Hitachi Works; 1982–1985, deputy general manager of Hitachi Works; 1985–1987, general manager of Kokubu Works; 1987–1990, general manager of Tochigi Works; 1990–1991, general manager of Household Appliances Division; 1991–1993, general manager of Consumer Electronics Division; 1993–1994, executive managing director of Hitachi and group executive for Consumer Products Group; 1994–1995, executive managing director of Hitachi and group executive for Consumer Products & Information Media Systems Group; 1995–1997, senior executive managing director of Hitachi and group executive for Consumer Products & Information Media Systems Group; 1997–1999, executive vice president and representative director; 1999–2003, president and representative director; 2003–, president, chief executive officer, and representative director.

Etsuhiko Shoyama. AP/Wide World Photos.

Address: Hitachi, 4-6, Kanda-Surugadai, Chiyoda-ku Tokyo, 101-8010, Japan; http://www.hitachi.com.

■ Etsuhiko Shoyama started working for Hitachi in 1959, became its president in 1999, and in June 2003 took over as chief executive officer of the giant Japanese electronics conglomerate. For Hitachi, and Shoyama, the closing years of the 20th century and the early 2000s brought new challenges as the grim realities of doing business in an increasingly competitive international market became apparent. The wake-up call came in the form of a shocking $3 billion loss for fiscal year 1998, which was announced at almost the same time that Shoyama became the company’s president in April 1999. The loss, the first posted by Hitachi since it adopted consolidatedaccounting practices in 1963, made clear that business as usual would no longer be enough to keep the company in the black. Hitachi’s crushing loss for fiscal year 1999 was made all the more painful by a decline of 8 percent in its worldwide sales. International Directory of Business Biographies

Although Shoyama struggled feverishly to return Hitachi to the days of steady profitability, numerous obstacles made it difficult for him to achieve his goals. The worldwide economic downturn in the wake of the September 11, 2001, terrorist attacks in the United States, coupled with a decline in the demand for information-technology products, dealt Hitachi another body blow in fiscal year 2001. For that 12month period Hitachi posted a net loss of more than $3.8 billion on sales of $60.1 billion, down sharply from $67.9 billion the previous year. Under Shoyama’s direction, Hitachi battled back in fiscal year 2002, posting net income of $372 million on revenue of $69.3 billion. Fiscal year 2003, however, proved disappointing, as Hitachi struggled to eke out a profit of $150 million on sharply higher sales of $81.4 billion.

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Etsuhiko Shoyama

GOALS OUTLINED FOR HITACHI Shoyama’s goals for Hitachi, as outlined on the company’s Web site (www.hitachi.com), focus on helping to “make people’s lives more convenient and comfortable” through its offerings of “New Era Lifeline Support Solutions,” designed to enhance and fuse information systems and social infrastructure systems, and “Global Products Incorporating Advanced Technology.” In the latter category are included competitive hardware and software solutions that incorporate Hitachi’s advanced knowledge and technologies. Born on March 9, 1936, Shoyama studied electrical engineering at the prestigious Tokyo Institute of Technology, earning his degree in March 1959. A month after graduation he went to work for Hitachi as a power-plant engineer in the company’s Hitachi Works. After working more than two decades as an engineer at the Hitachi Works, in August 1982 Shoyama was named deputy general manager at the plant. In June 1985 he was transferred to Kokubu Works, where he took over as general manager. In February 1987 he became general manager at Hitachi’s Tochigi Works. In August 1990 Shoyama was named general manager of Hitachi’s Household Appliances Division, a position he held until June 1991 when he was appointed general manager of the company’s Consumer Electronics Division and named to Hitachi’s board of directors. Two years later he took over as group executive for the company’s Consumer Products Group and was named executive managing director of Hitachi. In August 1994 Shoyama, who remained executive managing director of Hitachi, was named group executive for the company’s Consumer Products & Information Media Systems Group.

CONTINUED CLIMB TO TOP In June 1995 Shoyama, while continuing as group executive for the Consumer Products & Information Media System Group, was promoted to senior executive managing director of Hitachi. In June 1997 he moved into the upper ranks of management as Hitachi’s executive vice president and representative director. He assumed the presidency of Hitachi in April 1999, while remaining a representative director. Not long after his appointment as president, Shoyama and Koji Nishigaki, the newly appointed president of NEC Electronics, took their competitors in the semiconductor industry by surprise when they announced a strategic alliance. Under the terms of the Hitachi-NEC agreement, announced in June 1999, the core DRAM (dynamic random-access memory, the most common kind of RAM in personal computers) operations of the two companies were merged. At the time of the merger NEC claimed about 11 percent of the worldwide DRAM market, while Hitachi had a share of roughly 6 percent. The partners said that working together they hoped to

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be able to claim one-fifth of the international market in DRAM chips. Both companies had posted sharp losses in their semiconductor business for fiscal year 1998. While NEC’s DRAM revenue dropped from $2.5 billion to $1.6 billion, Hitachi was hit even harder, seeing its DRAM sales fall to $903 million from $1.7 billon in fiscal 1997. Under Shoyama’s leadership, Hitachi posted a profit in fiscal year 1999 of $160 million, up sharply from net income of $29 million the previous year. Things improved further in fiscal year 2000 when the company posted net income of nearly $1.3 billion. All of Shoyama’s efforts to improve Hitachi’s financial performance were swept away, however, in fiscal year 2001 when Hitachi suffered a staggering loss of nearly $3.9 billion, much of it attributable to the worldwide business decline that followed the 9/11 terrorist attacks in the United States.

PRESSURE INCREASED AFTER BIG LOSS In the wake of Hitachi’s heavy losses in fiscal year 2001, the pressure increased on Shoyama to move decisively to return the company to profitability. Unlike his counterparts in most Western countries, however, Shoyama was constrained by Japanese business traditions from cutting payrolls within his country. Payrolls at Hitachi facilities outside Japan, however, could be—and were—trimmed. As early as 1999 Hitachi had closed a semiconductor plant in Irving, Texas, resulting in the layoff of 650 employees. Interviewed by Benjamin Fulford of Forbes, Shoyama was asked what options were open to him in dealing with Japanese employees who could no longer be productively occupied in business sectors that were stagnating. The Hitachi president explained that in such cases the only solution was to redeploy the workers. “We took 4,000 people, retrained them for six months, and moved them from [analog] businesses into the information sector. . . . It is amazing to see how energized people become when they are taken out of a stagnant division” (June 14, 1999). In June 2002, only months after Hitachi had posted its big loss for fiscal year 2001, Shoyama negotiated a 12-month wage cutback averaging 5 percent with its labor union. Six months later the Hitachi president told Kyodo World News Service that he would probably have to seek another wage cut. “It may be a matter of course to conduct a wage cutback since the company is going through deflation,” he said (December 17, 2002).

MANAGEMENT STRUCTURE REORGANIZED In January 2003 Hitachi announced a major reorganization of its corporate-governance structure, a move made possible by


Etsuhiko Shoyama

changes in Japan’s commercial code. Under the reorganization, which was implemented in June 2003, the company adopted the committee system, which it hoped would create a more agile management system better able to implement its core strategies. The reorganization affected Hitachi and its 18 publicly held group companies. In announcing the restructuring, Shoyama indicated that the move was undertaken to dramatically speed management decisions, render management practices more transparent, improve oversight of group companies by bringing them under the umbrella of a unified management system, and adopt a corporate-governance system more widely understood by investors outside Japan.

Hara, Yoshiko, “Pact Signals New Game in DRAM,” Electronic Engineering Times (Japan), June 28, 1999.

In a further refinement of its management restructuring, Hitachi in March 2004 announced the establishment, effective April 1, 2004, of Hitachi Group Headquarters. Designed to develop and execute management strategy for Hitachi’s group companies, the new headquarters was divided into three divisions: Global Business, headed by Hiroaki Nakanishi, vice president and executive officer; Legal and Corporate Communications, headed by Takashi Hatchoji, vice president and executive officer; and Corporate Strategy, headed by Makoto Ebata,executive officer. Despite its disappointing financial performance in fiscal year 2003, weighed down in part by heavy tax payments, Hitachi looked for a dramatic improvement in fiscal year 2004 based on sharply increased demand for hightech products.

“Hitachi, Ltd. President Etsuhiko Shoyama Reviews Company Performance and Outlook,” http://www.hitachi.com/New/ cnews/E/2001/0710d/index.html.

See also entry on Hitachi, Ltd. in International Directory of Company Histories.

“Message from the President,” http://www.hitachi.com/about/ corporate/intro/index.html.

“Hitachi Announces Changes to Top Management,” http:// www.hitachi.com/New/cnews/E/1998/981224B.html. “Hitachi Changes Top Brass in Bid to Stem Losses,” Computergram International, December 31, 1998. “Hitachi Establishes ‘Hitachi Group Headquarters;’” Aims to Improve Group Management System and Expand Group Synergy,” http://www.hitachi.com/New/cnews/040311.html. “Hitachi Head Suggests More Wage Cuts at Annual Wage Talks,” Kyodo World News Service, December 17, 2002.

“Hitachi Net Profit Down 43 Percent,” Agence France Presse, April 28, 2004. “Hitachi Returns to Black on Robust Sales of Consumer Digital Electronics,” Agence France Presse, February 4, 2004. “Japanese Company Chiefs More Bullish on Economic Outlook: Survey,” Agence France Presse, February 26, 2004. Kageyama, Yuri, “Japan’s Hitachi Dropping Money-Losing Businesses to Clinch Profits,” Associated Press, January 30, 2003.

“Philosophy & Strategy,” http://www.hitachi.com/about/vision/ index.html. SOURCES FOR FURTHER INFORMATION

“Financial Results for the Year Ended March 30, 2002,” http:// www.hitachi.com/New/cnews/E/2002/0426/index.html. Fulford, Benjamin, “Jack Welch Lite (Etsuhiko Shoyama to Restructure Ailing Hitachi),” Forbes, June 14, 1999.


“Reinforcing Corporate Governance, Hitachi, Ltd. and Major Group Companies Adopt Committee System,” http:// www.hitachi.com/New/cnews/E/2003/0130a/0130a.pdf. —Don Amerman

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■■■

Thomas Siebel 1952– President, Siebel Systems Nationality: American. Born: November 20, 1952, in Chicago, Illinois. Education: University of Illinois, Urbana-Champaign, BA, 1975; MBA, 1983; MS, 1983. Family: Son of Arthur F. (lawyer) and Ruth Siebel (homemaker); married Stacy (former Oracle sales representative; maiden name unknown); children: four. Career: Oracle, 1984–1990, sales representative and marketer; Gain Technology, 1991–1993, chief executive officer; Siebel Systems, 1993–2004, chief executive officer; 1993–, chairman. Awards: One of the Top 25 Managers in the World, Business Week, 2000, 2001; CEO of the Year, Industry Week, 2002; David Packard Award, Business Executives for National Security, 2002. Publications: Virtual Selling: Going Beyond the Automated Sales Force to Achieve Total Sales Quality (with Michael S. Malone), 1996; Cyber Rules: Strategies for Excelling at E-Business (with Pat House), 1999; Taking Care of eBusiness: How Today’s Market Leaders are Increasing Revenue, Productivity, and Customer Satisfaction, 2001. Address: Siebel Systems, 2207 Bridgepointe Parkway, San Mateo, California 94404; http://www.siebel.com.

■ During the early 1990s Thomas Siebel pioneered the development of customer relationship management (CRM), a revolutionary approach to sales that involved the use of computer software to automate sales and customer service activities. As CEO of Siebel Systems, founded in 1993, Siebel presided over one of the fastest growing and most consistently profitable companies in the information technology sector. Siebel’s CRM software and related marketing strategy spawned an entire industry, earning Siebel recognition as a visionary entrepreneur.

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Thomas Siebel. AP/Wide World Photos.

EARLY LIFE AND EDUCATION Siebel was born in Chicago, the sixth of seven children in an upper-middle-class family. He was reared in Wilmette, Illinois, an exclusive suburb on Chicago’s north shore. His father, a Harvard-educated corporate attorney, sent Siebel to Shattuck Military Academy (later Shattuck–St. Mary’s) in Fairbaut, Minnesota, when he was 15. Siebel disliked the strict regulations that governed the school but stayed to appease his father. He grew to appreciate the self-dependence that the experience forced upon him. Siebel attended the University of Illinois at UrbanaChampaign, where he earned a bachelor’s degree in history in 1975. Unsure of his career interests after graduation, Siebel headed west in his pickup truck and found work as a ranch hand in Idaho. Siebel eventually returned to Chicago and worked for a trade book publisher before enrolling in the mas-


Thomas Siebel

ter of business administration program at the University of Illinois. While in graduate school Siebel became fascinated with computing and ultimately earned two degrees, an MBA and a master’s degree in computer science, both in 1983.

ORACLE In 1984 Siebel was hired by Oracle Corporation, then an upstart distributor of relational database software that had 40 employees. Beginning as a presales representative in Oracle’s Chicago office, Siebel was responsible for setting up database demonstrations for Oracle sales representatives and their prospective clients. However, he was quickly recognized as a superior salesman in his own right. Within a year Siebel earned distinction as Oracle’s top salesman, outperforming his coworkers largely on the strength of his technical knowledge and ability to translate complex computer jargon for nonspecialist clients. Siebel’s success attracted the attention of the Oracle cofounder and CEO Lawrence Ellison, who moved the rising star into the company’s upper ranks. During the next several years Siebel held various marketing positions and contributed toward Oracle’s growth as a leading provider of management software. In 1987, while heading Oracle’s direct-marketing division, Siebel noticed that his sales reps were wasting time and effort as a result of poorly coordinated customer information. Seeking to eliminate the inefficiencies, Siebel developed a program that streamlined communication within Oracle’s sales. The results were impressive. In 1989 Siebel suggested to Ellison that the program, called Oasis (Oracle automated sales information system), could be marketed externally. Ellison, failing to see the program’s commercial potential, was not interested. Siebel took a leave of absence from Oracle in 1990 and never returned. He cashed in his company shares soon thereafter, a fortunate move that netted him millions just ahead of a major accounting scandal that caused Oracle’s market value to plummet.

ny and become a hallmark of CRM. Rather than rushing to develop a product, Siebel and House spent months consulting with companies about their individual business operations and software needs before even beginning the design phase. The resulting product, Siebel Sales Enterprise, was a highly customizable computer program that automated sales activity and, in subsequent versions, integrated sales, customer service, and marketing functions. In essence, Siebel’s sophisticated software served as a central database capable of distributing customer information among its sales representatives and call centers. Use of the software prevented duplicated efforts and provided a powerful tool for monitoring accounts, tracking purchase decisions, and gauging customer preferences in the interest of developing client-tailored marketing. Siebel’s reputation and key connections helped him land major clients such as Charles Schwab and Andersen Consulting (later Accenture), whose former CEO, George T. Shaheen, joined Siebel’s board of directors in 1995. Siebel took his company public in June 1996, a move that inflated his personal worth to more than $280 million and made 40 of his employees into instant millionaires. With a 15 percent stake in the company, by 1999 Siebel had a net worth in excess of $1 billion.

LEADERSHIP IN THE CRM INDUSTRY Between 1995 and 2000 Siebel headed one of the most profitable and rapidly expanding companies in the United States, posting successive annual gains over 100 percent and controlling as much as 70 percent of the CRM software market. Clients included Compaq, IBM, and Cisco Systems. In 2001 Siebel Systems reported annual sales of $2 billion with a net income of more than $254 billion. Siebel’s rise attracted the ire of Ellison, Siebel’s former boss at Oracle. A bitter public feud was waged between the two outspoken rivals as Oracle sought to close in on Siebel’s core CRM business.

In 1991 Siebel was hired as CEO of Cayenne Systems, a small, privately owned multimedia software company that was renamed Gain Technology and sold by Siebel to Sybase, for $110 million in 1992. Flush with the $10 million he received in the deal, Siebel returned to his earlier idea of marketing Oasis. In 1993 he founded Siebel Systems with Patricia House, a former Oracle marketer. Siebel personally provided the lion’s share of the company’s seed money, but he accepted start-up investments from a few close associates, including the brokerage mogul Charles Schwab, who received a seat on the Siebel Systems board of directors in return.

Siebel’s success was largely attributed to his intense focus on sales-based performance and solicitous customer service. He applied firsthand the CRM principles that he sold. Siebel contracted third-party research firms to assess the satisfaction levels of his clients. The reports were used to award bonuses and incentives to employees. Siebel also conducted semiannual performance reviews that resulted in the summary firing of employees ranked in the bottom 5 percent. A harsh taskmaster and unabashed micromanager, Siebel demanded the highest levels of professionalism from his employees. In contrast to the business-casual atmosphere of many Silicon Valley start-ups of the 1990s, Siebel insisted on a formal dress code, forbade employees from eating at their desks, and even dictated the color of the walls and carpets in the company’s offices.

From the beginning, Seibel demonstrated a personal commitment to customer satisfaction that would define his compa-

A consummate salesman and influential trendsetter, Siebel often appeared as an industry spokesperson. He published sev-

SIEBEL SYSTEMS


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Thomas Siebel

eral books in which he advocated CRM and its applications in the information economy. Facing an economic downturn in 2002 and growing pressure from competitors such as SAP, PeopleSoft, Salesforce.com, and the archenemy Oracle, Siebel was forced to slash his workforce and reposition his company in the changing CRM environment. In May 2004 he stepped down as CEO of Siebel Systems, although he remained at the company’s helm as chairman.

Hawn, Carleen, “The Man Who Sees around Corners,” Forbes, January 21, 2002, pp. 72–77.

See also entry on Siebel Systems, Inc. in International Directory of Company Histories.

McHugh, Josh, “The Hardwiring of a Salesman,” Forbes, May 19, 1997, pp. 248–249.


Pitta, Julie, “Grudge Match,” Forbes, September 20, 1999, pp. 50–52.

Bartholomew, Doug, “The King of Customer,” Industry Week, February 2002, pp. 41–42, 44.

Warner, Melanie, “Confessions of a Control Freak,” Fortune, September 4, 2000, pp. 130–137.

Dillon, Pat, “Tom Siebel,” Fast Company, June-July 1997, p. 82.

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“Keeping Customers Satisfied,” Economist, October 19, 2002, p. 65. Kerstetter, Jim, “Can Siebel Stop Its Slide?” BusinessWeek, June 2, 2003, pp. 48–49. Lashinsky, Adam, “This Time Siebel Guessed Wrong,” Fortune, September 16, 2000, pp. 138–142.

—Josh Lauer


■■■

Henry R. Silverman 1940– Chairman and chief executive officer, Cendant Nationality: American. Born: August 1, 1940, in New York City, New York. Education: Williams College, BA, 1961; University of Pennsylvania, JD, 1964; New York University, postgraduate study, 1965. Family: Son of Herbert Robert (chief executive of James Talcott) and Roslyn (Moskowitz) Silverman; married Susan H. Herson, June 13, 1965 (divorced January 1977); married Nancy Ann Kraner, January 1978; children: three (first marriage, two; second marriage, one). Career: White, Weld & Company, 1965–1966, practice lawyer; Oppenheimer & Company, 1965–1966 general partner; Trans-York Securities Corporation, 1970–1972, founder and president; Ladenburg, Thalmann & Company, 1972, executive vice president and chairman; Vavasseur, 1973, president and chief executive officer; Brisbane Partners, 1974–1975, general partner; Silverman Energy Company, 1977–2004, principal; NBC Channel 20 (Springfield, Illinois) 1977–1983, principal; ABC Channel 9 (Syracuse, New York), 1977–1981, principal; Delta Queen Steamboat Company, 1977–1981, principal and director; outdoor advertising, music publication, motion picture production, radio broadcasting, and hardware manufacturing companies, 1977–1986, principal; Reliance Group Holdings, 1982; Reliance Capital Group, 1983–1989, president and chief executive officer; Telemundo Group, 1986–1990, president and chief executive officer; Blackstone Group, 1990–1991, partner; Cendant, 1997–, chairman and chief executive officer. Address: Cendant, 9 West 57th Street, New York, New York 10019; http://www.cendant.com.

■ Henry R. Silverman’s tenure at Cendant was marked by both lavish praise and sharp criticism; after acquiring numerous franchised brands that made him wealthy, Silverman recklessly led his company into a failed merger, and Cendant was International Directory of Business Biographies

Henry R. Silverman. © James Leynse/Corbis.

crippled by a serious accounting scandal. Rebuilding his company and his image, Silverman was driven by a powerful force: the future of his legacy. With 2003 sales of more than $18 billion, Cendant was involved in several businesses that crossmarketed to millions of customers worldwide. By 2003 Cendant had become the world’s top hotel franchisor, with over 6,400 locations under the AmeriHost Inn, Days Inn, and Super 8 brands, among others. Cendant also owned Avis Group Holdings, Budget Rent A Car, and Fairfield Resorts (timeshare resorts). The company’s Cendant Real Estate Franchise Group included such franchised brokerages as Century 21 and Coldwell Banker. It also provided mortgage and corporate relocation services and owned Jackson Hewitt (a tax preparation service).

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Henry R. Silverman

A CHILDHOOD THAT AFFORDED BIG DREAMS Silverman’s childhood was privileged. He attended prep school and dreamed of one day playing baseball for the New York Yankees. When his athletic skills failed to match his dreams, he set his sights on the family business: commercial finance. Silverman accompanied his father on business trips, and after his father made one particular presentation to analysts, Silverman quizzed him on his approach. Said the elder Silverman, “For a 15-year-old, it was amazing” (BusinessWeek, February 28, 2000).

By 1995 HFS had become the nation’s largest hotel franchisor, topping Holiday Inn Worldwide with its 4,226 hotels—about one of every nine hotel rooms in the United States. Hotel owners purchased the brand name from HFS for a flat fee ranging from $20,000 to $36,000 plus 7.5 percent of per-night revenues in royalties and fees. Said Mike Leven, CEO of Holiday Inn and former president of Days Inn, “Henry has changed the basics of the hotel industry. No one has had a greater impact on this number of hotels” (USA Today, January 16, 1995).

TIMING IS EVERYTHING

FOCUSING ON FRANCHISES, NOT CUSTOMERS

After graduating from the University of Pennsylvania Law School, Silverman joined the U.S. Naval Reserve to avoid going to Vietnam. Next he practiced tax law but ultimately left the safe legal world for corporate finance and specifically “deal making.” The time was the 1980s: merger mania had swept the country, and Silverman wanted a piece of the action.

Ultimately HFS became a group of brands in such related services as cars and hotels and real estate and mortgages. But while outsiders viewed these as separate entities—the hotel business or real estate—Silverman thought differently. He felt he was in the business of building franchises. He earned his money not from customers who bought his services but from franchisees who paid royalties to use his coveted brands. In other words, filling beds and cars was not Silverman’s concern. That was the problem of his franchisees. HFS franchise owners received such support services as national advertising campaigns, discounts on computers, and even help in setting up employee retirement plans.

COACHED BY MOGULS Silverman’s father had good connections and put them to use for his son. Silverman secured a job as an assistant to Steve Ross, who was then assembling the future Warner Communications. But intent on emerging from his father’s shadow, Silverman went to the investment banking firm White, Weld & Company. Silverman noted, “You want to be recognized for what you achieve rather than what your parents achieved” (BusinessWeek, February 28, 2000). Following White, Weld & Company, Silverman branched out on his own in a series of ventures ranging from entertainment to hardware, working for diverse companies that prepared him to lead a business empire. In 1984 he landed a job as assistant to the corporate raider Saul Steinberg at Reliance Group Holdings. During his stint at Reliance, Silverman closed his first major deal, buying the Days Inn of America hotel chain, which then included about two hundred hotels, for $590 million. He sold it five years later for a $125 million profit.

SPOTTING VALUE IN AN OUT-OF-FAVOR BUSINESS In 1990 Silverman was a partner in the investment firm Blackstone Group, and the hotel industry had fallen into a deep slump. Sensing value where others refused to look, Silverman bought well-known brands, including Ramada Inn and Howard Johnson, at ultracheap prices. He also bought Days Inn—for the second time. After the company filed for bankruptcy in 1991, Silverman purchased it for $290 million. He assembled these brands under the umbrella of Hospitality Franchise Systems (HFS) and took HFS public in 1992.

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Silverman’s tactics had their critics. Some saw him as a greedy executive who lined up interested hotel owners with little regard for the quality of their businesses. Consumer Reports even rated a few of his brands as some of the worst in value and condition in the moderately priced category. Said one hotel owner, “At some point Mr. Silverman will know when to get out, and he’ll leave the rest of the stockholders holding the bag” (USA Today, January 16, 1995). Silverman conceded that he had let in a few slackers in the name of growth, but the hotels still delivered superior quality for the customers they served.

IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS HFS exploded from sales of $413 million in 1995 to around $1.8 billion just two years later. The Smith Barney analyst Michael Rietbrock observed, “You’d have a lot of difficulty finding another company this size that is growing this fast” (Time, March 17, 1997). Wall Street rewarded Silverman for a track record of delivering exceptional earnings and stock price gains through a series of acquisitions. After years of building wealth quietly, he was suddenly a Wall Street celebrity. Said Lawrence Auriana, a portfolio comanager of the Kaufman Fund, “He was golden. It’s like a guy who is 40 years old being asked to pitch the opening game of the World Series, and he pitches a shutout”


Henry R. Silverman

(BusinessWeek, February 28, 2000). The metaphor was not lost on Silverman, a baseball fan. HFS had grown to include such brands as the real estate brokerage Century 21 and the Avis car rental system. The company’s stock soared from an initial public offering price of 4 in late 1992 to 77 in 1998. Silverman relished the validation: “Any CEO who says he doesn’t enjoy running a successful company is lying. It’s very ego gratifying. The market instantly grades you. It either buys you or throws up on you by selling your shares” (USA Today, January 16, 1995).

WOOING WALL STREET WITH A MERGER Like a rookie of the year trying to prove that he is no fluke, Silverman was still hungry for more action. He identified a deal that would leave Wall Street drooling: combining HFS with the direct marketing company CUC, which sold memberships in discount buying clubs, such as Shoppers Advantage and Travelers Advantage. His strategy was that HFS customers could be funneled into the CUC direct marketing machine, which would bombard these customers with offers to buy memberships in its discount buying clubs and eventually financial services, such as insurance. But more than synergy, Silverman was interested in the effect the deal would have on his stock price. In the early years of the company, HFS had generated 10 to 15 percent in annual earnings growth. But much of that growth was driven from acquisitions, and the HFS buying spree had tapered off. With a bigger company, HFS could once again generate the numbers that were rewarded with stellar price-earnings ratios. It would also show Wall Street that the company was recession proof since discount clubs were seen as countercyclical. With those advantages too tantalizing to pass up, Silverman forged ahead and formed a new company, Cendant Corporation, in a $14 billion deal that closed in December 1997. Finally, Cendant was designed to allow Silverman to take a much-needed break. In January 2000 he would assume the post of chairman, handing over the reins to the CUC founder Walter A. Forbes.

WALL STREET KING LOSES HIS CROWN But Silverman’s stock would soon fall. In April 1998 Cendant uncovered massive accounting improprieties that wiped out $13 billion of the company’s market capitalization. According to an investigation by Cendant’s auditing committee, CUC executives used “creative” accounting methods to inflate earnings before charges by $500 million over three years. Errors accounted for an additional $200 million. The scandal, which involved 17 of the company’s 22 business units and 20 CUC comptrollers, was the biggest to hit the 1990s—the


opening act to the Enron saga that would mark the next decade. Said Silverman, “My own sense of self-worth was diminished” (BusinessWeek, February 28, 2000). Perhaps Silverman’s self-worth was not as diminished as the empty portfolios of misled investors. Cendant’s stock sank to 7 1/2 and investors were not ready to let Silverman off the hook for his part in the debacle. Some wondered whether Silverman, in his rush to please Wall Street, had done his homework. John W. Ballen, a portfolio manager of MFS Emerging Growth Fund, who bought into HFS’s initial public offering in 1992, noted, “Obviously the due diligence wasn’t there” (BusinessWeek, February 28, 2000). Silverman countered that no amount of due diligence would have uncovered the fraud. But the condemnation did not end there. Investors sharply criticized how a board stocked with directors who had ties to Cendant or Forbes could maintain proper governance. And they lambasted the board’s decision to reprice 17.2 million of Silverman’s shares to his benefit in 1998, calling it egregious.

IN OVER HIS HEAD? The focus on the accounting scandal and the incredible amount of market capitalization that was lost in the process proved that trying too hard to impress Wall Street leads to trouble. In his quest for a bigger market cap, Silverman found himself at the center of what Fortune called the “decade’s dumbest deal” (Fortune, November 9, 1998). Silverman ignored the warning signs of a merger headed for disaster. The company’s corporate cultures—one unwieldy and entrepreneurial, the other buttoned up and obsessed with measuring performance—clashed. Forbes was reluctant to share hard numbers about his business with HFS executives, flatly denying access to important nonpublic financials. Deep mistrust quickly grew between Forbes and Silverman. Yet Silverman plugged ahead with the merger. Silverman remarked, “Every time I was nervous, they would show up with another quarter of spectacular earnings” (Fortune, November 9, 1998).

REBUILDING HIS IMAGE Still, Silverman survived. After the scandal broke, Silverman ultimately forced Forbes out the door. Scarred from the experience, he was intent on redemption. Not long after Forbes’s departure, Silverman told a money manager, “I’m going to get my reputation back” (BusinessWeek, February 28, 2000). To put the company back on solid ground, he sold 18 noncore assets to help finance a $3 billion stock repurchase plan. In December 1999 he struck a deal with Liberty Media Corpo-

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ration that would enable Cendant to play catch-up with its paltry Internet presence as well as boost the company’s reputation. Liberty’s chairman, John Malone, was a discerning investor, and the deal was a vote of confidence for Cendant’s comeback. In 2002 and 2003 Cendant’s stock outperformed market indexes by more than 10 percent.

suits against executive compensation that is significantly above peer compensation levels” (Wall Street Journal, April 20, 2004).

See also entries on Cendant Corporation and Hospitality Franchise Systems, Inc. in International Directory of Company Histories.

A SYMBOL OF CORPORATE EXCESS Despite his obligation to turn around the company he nearly destroyed, Silverman generated more negative attention in early 2004 over his pay. In 2003 he received a compensation package worth $60.1 million, including a $13.8 million bonus, $4.6 million in premiums on a $100 million life insurance policy, and $37.2 million in exercised stock options. According to a 10-year contract, signed in July 2002, lifetime benefits included medical and welfare, office support, use of corporate aircraft, access to a company car and a driver, and security when traveling on company business. Paul Hodgson, a research associate at the Corporate Library, a governance research organization, remarked, “This level of benefits is more appropriate for a lord and his fiefdom, rather than the C.E.O. of a publicly held company” (New York Times, April 4, 2004). After a shareholder lawsuit placed pressure on Cendant’s board to rein in the exorbitant package, Silverman’s benefits and contract were sharply cut. Said Mark M. Reilly, a partner with Compensation Consulting Consortium LLC of Chicago, “I think this case will continue to encourage other shareholder

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Barrett, Amy, “Henry Silverman’s Long Road Back,” BusinessWeek, February 28, 2000, p. 126. Chittum, Ryan, “Cendant Cuts Silverman’s Benefits,” Wall Street Journal, April 20, 2004. Elkind, Peter, “A Merger Made in Hell,” Fortune, November 9, 1998, p. 134. Greenwald, John, “HFS Stands for Growth,” Time, March 17, 1997, p. 40. Morgenson, Gretchen, “Executive Pay: A Special Report; Two Pay Packages, Two Different Galaxies,” New York Times, April 4, 2004. Schmit, Julie, “He Built a Fortune from Inexpensive Lodging,” USA Today, January 16, 1995. —Tim Halpern


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Russell Simmons 1957– Founder, president, and chief executive officer, Rush Communications of NYC; founder, chairman, and chief executive officer, Phat Fashions; chairman, Def Jam/Def Soul division, Universal Music Group; vice chairman, BET Interactive; director, Brilliant Digital Entertainment Nationality: American. Born: October 4, 1957, in New York, New York. Education: Attended City University of New York, 1975–1979. Family: Son of Daniel Simmons (public-school attendance supervisor), and Evelyn (maiden name unknown; recreation director); married Kimora Lee (fashion model); children: two. Career: Rush Productions/Rush Artist Management, 1977–1991, president; Def Jam Recordings, 1984–1999, president; Rush Communications of NYC, 1991–, president and chief executive officer; Phat Fashions, 1992–2004, chief executive officer; 2004–, chairman and chief executive officer; Def Jam/Def Soul division, Universal Music Group, 1999–, chairman; BET Interactive, 2001–, vice chairman; Brilliant Digital Entertainment, 2001–, director. Publications: With Nelson George, Life and Def, 2001. Address: Rush Communications of NYC, 512 Seventh Avenue, No. 43–45, New York, New York 10018.

■ Russell Simmons, founder of Def Jam Recordings and Rush Communications, two highly influential African American–owned entertainment businesses, was instrumental in bringing rap music into the American mainstream in the 1980s. Simmons’s efforts encompassed record labels, artist management, film and television production, advertising, publishing, clothing labels, and other projects. Notable successes include the hit series Def Comedy Jam for HBO, films such as The Nutty Professor, the Phat Farm clothing line, and the discovery and promotion of rap artists such as LL Cool J, RunDMC, Public Enemy, and Ludacris. International Directory of Business Biographies

Russell Simmons. AP/Wide World Photos.

Simmons based his success on introducing trends started among African American youth to a broader audience, and prided himself on retaining this ability even as a middle-aged business leader. He tended to delegate day-to-day management and executive tasks to a handful of trusted advisors, focusing instead on creative and entrepreneurial aspects of his operations. Among the hip-hop community he was regarded as a pioneer—an architect of the entire movement—and he spawned many imitators.

THE HIP-HOP ENTREPRENEUR Russell Simmons was born in the Jamaica section of Queens, New York, in 1957 and grew up in the middle-class Hollis neighborhood. Simmons spent part of his youth dab-

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bling in a street gang and dealing marijuana and imitation cocaine—his first business. In the late 1970s, intrigued by the new phenomenon of rap music, Simmons formed Rush Productions (“Rush” being a childhood nickname) to promote concerts featuring rap artists in and around New York City. In 1975 Simmons enrolled at the City College of New York, but he dropped out just shy of graduation as concert promotion grew more lucrative for him. By this time he had formed Rush Artist Management to manage the careers of some of the artists he worked with. The company’s roster eventually included many important artists in rap’s first wave, including Kurtis Blow, LL Cool J, the Beastie Boys, and RunDMC (featuring Simmons’s brother Joey). In 1986 Simmons scored a major coup when Run-DMC released “My Adidas,” a single extolling the virtues of the group’s favored footwear. Simmons negotiated a multimillion-dollar endorsement deal for Run-DMC with Adidas, the first of many synergies between hip-hop culture and mass-market branding he would engineer. In 1984 Simmons joined with New York University student Rick Rubin to found Def Jam Recordings, a record label initially run out of Rubin’s dorm room. Simmons and Rubin combined their tastes for raw, hard rap music with a strong sense of “street” style, and the duo made Def Jam the first label to successfully introduce hardcore rap into the American mainstream. In 1985 CBS signed a distribution deal with the label, giving Def Jam a national retail profile. This arrangement allowed the label to flourish in 1986 when the Beastie Boys’ first album, Licensed To Ill, became the first rap album to top the national pop charts. Between 1985 and 1990, Def Jam grew into the biggest and most influential rap label in the music business. In 1987 Rubin departed Def Jam, and Simmons promoted longtime employee Lyor Cohen to replace him. Simmons and Cohen quickly parlayed Def Jam’s continued success into a lucrative joint-venture deal with Sony that would become the template for many future hip-hop label entrepreneurs. A series of fallow years followed, but Def Jam returned to prominence in the late 1990s with hits by artists such as DMX and Ludacris. In 1999 Simmons sold his remaining stake in Def Jam to Universal Music Group for $100 million, staying on as chairman of Def Jam/Def Soul, now a part of the Island/Def Jam label group. Thanks to a string of successful projects and profitable distribution deals, such as with influential rap labels Roc-A-Fella and The Inc., Island/Def Jam ended 2002 as the second-largest record label in the United States.

SIMMONS DIVERSIFIES Between 1985 and 1987 Simmons oversaw the production of two films, Krush Groove, adapted from his own life story,

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and Tougher Than Leather, both featuring the music of Def Jam and Rush Artist Management artists. Though neither film was a hit, the experience laid the groundwork for future ventures. Two rare setbacks occurred in 1989–1990. The first came when Simmons lost out on a bid to produce the 1991 John Singleton film Boyz ‘N the Hood because Columbia Pictures president Frank Price balked at doing business with a man in a track suit and sneakers, Simmons’s preferred business uniform. In the same period, Will “The Fresh Prince” Smith, then a popular rap star and a Rush Artist Management client, left the company’s roster, claiming Simmons was too busy with other projects. Under new management, Smith soon signed on to the successful sitcom The Fresh Prince of Bel Air, eventually becoming one of the biggest stars of the 1990s. In 1991 Simmons formed Rush Communications to coordinate his various non–Def Jam projects. Success was not long in coming. In 1992 Simmons teamed with veteran producer Simon Lathan and the Brillstein/Gray Company to launch the hit HBO series Def Comedy Jam, featuring the comedy of African American comedians such as Chris Rock, Bernie Mac, and Martin Lawrence. Much as he had done with Def Jam Recordings, Simmons invested in Def Comedy Jam to bring talented but controversial black comedians into the mainstream of American culture. The success of the show boosted Rush’s revenues from $31 million in 1993 to $65 million in 1994. Renewed success came in 1996 when Rush produced the hit film The Nutty Professor, starring Eddie Murphy. Also in 1996 Simmons entered the publishing world with OneWorld, a music and culture magazine that aimed to compete with hiphop publications such as Vibe and the Source. An accompanying syndicated television show was short-lived.

BUILDING BRANDS In 1992 Simmons founded the clothing company Phat Fashions LLC and its flagship brand, Phat Farm, with the hopes of creating the Def Jam of fashion—a bridge between “street” style and popular culture. As Def Jam’s day-to-day operations demanded less of his time, Simmons focused on Phat Farm as an outlet for his energies, overseeing design and marketing and introducing Baby Phat, a women’s line featuring designs by his wife, Kimora. Although Phat Fashions failed to make a profit for the first six years of its existence, the company eventually won over consumers and ended 2002 with revenues of $263 million. In 2004 Simmons sold the company to clothing giant Kellwood Group for a reported $140 million. As with Def Jam, Simmons’s success blazed a trail for other hiphop entrepreneurs to follow, notably Sean “P-Diddy” Combs’s Sean John clothing line and Shawn “Jay-Z” Carter’s RocaWear.


Russell Simmons

In 1996 Rush Communications added advertising to its list of services, producing television commercials for Coca-Cola and ESPN, and partnering in 2000 with advertising giant Deutsch to form dRush. In 2001 Rush Communications entered the dot-com arena, launching 360HipHop.com. Intended to be a one-stop source of music, culture, and information for hip-hop fans, the site never gained an audience and was soon sold to Black Entertainment Television’s online operation BET.com, of which Simmons was named vice chairman. In the same year Simmons joined the board of Brilliant Digital Entertainment, partnering with the company to produce online video content featuring Def Jam recording artists. In 2001 Simmons returned to the spirit of Def Comedy Jam with Def Poetry Jam, a showcase for young urban poets. The show ultimately ran on Broadway to good reviews but poor receipts, and won a Tony award in 2002. Rush Communications finished 2002 with earnings of $500 million, and in 2003 and 2004 Simmons used this success to fund various projects based on extending established brands. He teamed with Motorola to market the i90 and i95 cellular phones featuring the Phat Farm and Baby Phat logos, respectively, and entered a collaboration with jewelry merchants M. Fabrikant & Sons to create jewelry featuring the Phat Farm, Baby Phat, Def Jam, and Russell Simmons brand names. At the same time, Simmons was taking Rush into the financial-services industry, introducing the Rush Visa, a prepaid debit card intended for people without bank accounts, and founding UniRush in association with Jackson Hewitt to provide low-cost tax-preparation services to the same consumers. Simmons also began a foray into the specialty beverage market, selling DefCon3 soda exclusively through 7-Eleven stores.

MANAGEMENT STYLE Throughout his career, Simmons capitalized on his ability to anticipate and guide emerging trends, believing that street culture was the source of his inspiration and success. In a Miami Herald interview he asserted that “in the cultural business . . . you must build a movement before you get capital” (November 24, 2003). Always alert to the connection between hip-hop and fashion, he worked to ensure that the brands he managed stayed relevant to the tastes of hip-hop consumers. Believing that he was his own strongest brand, Simmons never surrendered his designer track suits and white sneakers for traditional business wear. Simmons took a hands-on approach to the creative and interpersonal sides of his businesses, delegating day-to-day tasks to a handful of longtime partners. As he put it in the Miami Herald interview, “I wouldn’t be here if I didn’t count on everybody around me being smarter than me.” For instance, longtime associate Lyor Cohen handled Def Jam’s operations from 1987 on, freeing Simmons to work closely with the label’s artists and to develop the brand. Veteran producer Stan Lathan worked with Simmons in a partnership called Simmons-Lathan Media Group, which handled Simmons’s film and television ventures, and when Simmons started Phat Farm he asked fashion-industry veteran Ruby Azrak to manage the operation. Simmons encouraged entrepreneurship among his employees and willingly promoted talented newcomers to positions of responsibility, believing that the closer his companies remained to the street and to youth culture, the better their prospects. One lead designer for Phat Farm, Kevin Leong, was only 25 when given the job. Simmons’s impact can be seen in the many imitators he and Def Jam spawned, many of whom worked for him at some point, including Damon Dash and Shawn “Jay-Z” Carter of Roc-A-Fella Records and Sean “PDiddy” Combs of Bad Boy Entertainment.

POLITICAL ACTIVISM Simmons was politically active and started several charitable organizations. The Rush Philanthropic Arts Foundation donated money to arts programs in predominantly black public schools, and the Simmons Brothers Arts Scholarship gave scholarships to young black men who had served time for drug offenses in New York State. In 2001 Simmons founded the Hip-Hop Summit Action Network (HHSAN) to sponsor voting initiatives among young African Americans. In its first three years, HHSAN registered one-half million new voters. A portion of the profits from DefCon3 soda and Phat Farm sneakers funded slavery-reparations efforts and the HHSAN, and Simmons spent part of 2003 campaigning against New York State’s “three-strikes” drug laws. In 2004 Simmons was investigated by the state of New York for possible violation of lobbying laws after failing to secure a permit for a HHSAN fundraiser.


See also entries on Phat Fashions and Rush Communications in International Directory of Company Histories.


Berfield, Susan, “The CEO of Hip-Hop,” BusinessWeek, October 27, 2003, p. 90. Leger, D. E., “Entrepreneur of Cool Shares His Start-up Secret,” Miami Herald, November 24, 2003. Ogg, Alex, The Men Behind Def Jam: The Radical Rise of Russell Simmons And Rick Rubin, London: Omnibus Press, 2002. Siegal, Nina, “Rapping at Capitalism’s Door,” Pittsburgh PostGazette, September 26, 2003.

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Russell Simmons Simmons, Russell, and Nelson George, Life and Def, New York: Crown, 2001. Vaughn, Christopher, “Simmons’ Rush for Profits,” Black Enterprise, December 1992, p. 67. —John Owen

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James D. Sinegal 1936– Chief executive officer and president, Costco Wholesale Corporation Nationality: American. Born: January 1, 1936, in Pittsburgh, Pennsylvania. Education: San Diego Junior College, AA, 1955. Family: Married Janet (maiden name unknown), 1961; children: three. Career: Fed-Mart Corporation, 1954–1979, bagger, then later executive vice president in charge of merchandising and operations; Price Company, 1979–1983; Costco Wholesale Corporation, 1983–, CEO and president. Awards: Best Managers, BusinessWeek, 2003. Address: Costco Wholesale Corporation, 999 Lake Drive, Issaquah, Washington 98027; http://www.costco.com.

■ James Sinegal cofounded Costco Wholesale Corporation in 1983. During his tenure as president and chief executive officer Costco became the top warehouse-club retailer in the nation, with more than four hundred stores in the United States and abroad, amassing $40 billion in sales in 2003 alone. Known as much for his voluntarily low salary as for his insistence that adequate employee compensation was good for business, Sinegal was a controversial figure among some investors and analysts.

LEARNING A BUSINESS PHILOSOPHY Raised in a working-class Catholic family, Sinegal once dreamed of going to medical school. Although his test scores were good, his high-school grades were mediocre; he was advised to attend San Diego Junior College, where he earned an associate’s degree. Later, while working his way through San Diego State University, Sinegal discovered his true vocation: retailing. He started at the discount chain Fed-Mart as a bagger in 1954; when he received a promotion, he discontinued his studies.


James D. Sinegal. AP/Wide World Photos.

Under the tutelage of the Fed-Mart head Sol Price, Sinegal rose through the company ranks, eventually holding the position of executive vice president. He credited Price with teaching him not only the basics of retailing but also the importance of establishing relationships with customers based on trust. In an interview with Fortune, Price recalled, “We tried to look at everything from the standpoint of, is it really being honest with the customer?” (November 24, 2003). Price’s other business principles had a clear influence on the culture Sinegal would create at Costco: obeying the law, taking care of employees, and keeping inventory lean. In 1979 Sinegal moved to Sol Price’s next venture, the membership-based warehouse chain Price Company, also known as Price Club. Price Club was initially conceived as a provider to small business owners, but membership was quickly extended to the general public. By 1982 the company had established 10 outlets and garnered sales of $366 million.

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HIGH QUALITY AND LOW PRICES In 1983 Sinegal left Price Company to found Costco Wholesale Corporation with fellow entrepreneur Jeffrey Brotman. The first Costco store opened in a Seattle warehouse; like Price Club the venture charged a small membership fee to its customers. In 1993, after 10 years of success, Costco acquired Price Company. Early on Sinegal noticed that customers were willing to purchase higher-end consumer goods along with the bulk goods usually associated with discount warehouses. Instead of being put off by pallets stacked with dissimilar merchandise, customers seemed to find the mix enticing. A typical Costco shopping trip might include a purchase of lawn furniture, cashmere sweaters, and jumbo packs of paper towels. Sinegal held down costs by keeping sales staff, store fixtures, and backup inventory to a minimum, thus allowing him to shave markups to between 12 and 15 percent. The combination of quality merchandise at low prices created a loyal customer base that some members of the business press dubbed “the cult of Costco.” In 2003 the renewal rate for club members was an impressive 86 percent.

AN OPEN-DOOR POLICY Sinegal’s management style reflected his egalitarian business philosophy. Callers to the executive offices in Issaqua were surprised to find him answering his own phone. Cluttered and furnished with a second-hand desk and chair, his office was always open to staff who wished to stop in and talk. Sinegal felt that an open-door policy throughout Costco fostered more managerial accountability. He told Ethix magazine, “If warehouse managers know that their own regional bosses have open-door policies and will talk to any employees about their issues, then they are going to be a little faster to talk to the troubled employees themselves. They don’t want the problems to come back to them through their bosses” (March 2003). Sinegal tried to personally visit every Costco warehouse at least once a year, ensuring that every company employee would in theory have a chance to talk to the CEO himself. At the same time Sinegal was not soft when it came to adherence to company performance benchmarks. He was known for running tough budget meetings, dressing down buyers and managers who failed to meet profit-margin goals.

CONTROVERSY ON WALL STREET Among analysts reviews of Costco’s performance were mixed. In 2002 sales in established stores grew by 6 percent and exceeded those of its nearest competitor, the Wal-Mart

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owned Sam’s Club. However, the figures were not good enough for many investors, who pointed out Costco’s relatively low earnings on the dollar. According to critics, the problem was that Sinegal was too generous to his employees. A cashier at Costco could earn up to $40,000 per year after four years of service, an unheard-of salary in the world of discount retail. Other retail-industry experts countered that Costco’s generous compensation structure actually increased productivity and reduced loss due to turnover and theft. Sinegal viewed the sizable salaries as a way to build a consumer base. He told the Los Angeles Times, “I don’t see what’s wrong with an employee earning enough to be able to buy a house or have a health plan for the family. We’re trying to build a company that will be here 50 years from now” (February 17, 2004). Sinegal chose to give himself a salary and bonus that equaled only about twice that of one of his store managers. In 2003 he made $350,000 and declined a bonus, though he did hold $16.5 million worth of Costco stock options. An anomaly in a corporate world filled with bloated executive compensation and ethical dodges, James Sinegal was named one of BusinessWeek‘s “Best Managers” in 2003.

See also entry on Costco Wholesale Corporation in International Directory of Company Histories.


“Best Managers,” BusinessWeek, January 13, 2003, pp. 60–69. Branch, Shelly. “Inside the Cult of Costco,” Fortune, September 6, 1999, pp. 184–190. Byrnes, Nanette, et al., “The Bargain Hunter,” BusinessWeek, September 23, 2002, pp. 82–83. Erisman, Al, “IBTE Conversation: A Long-Term Business Perspective in a Short-Term World,” Ethix: The Bulletin of the Institute for Business, Technology & Ethics, March 2003, http://www.ethix.org/article.php3?id=116, (June 15, 2004). Flanigan, James, “Costco Sees Value in Higher Pay,” Los Angeles Times, February 17, 2004. Gerhardt, Pamela. “Costco: A World of Big Buys,” The Washington Post, April 12, 2004. Helyar, John, and Ann Harrington, “The Only Company WalMart Fears,” Fortune, November 24, 2003, pp. 158–163. Morgenson, Gretchen, “Two Pay Packages, Two Different Galaxies,” New York Times, April 4, 2004.

—Elisa Addlesperger


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Carlos Slim 1940– Former chairman, Telmex Nationality: Mexican. Born: 1940, in Mexico. Education: National Autonomous University of Mexico, BS. Family: Son of a merchant and realtor (name unknown); widowed (wife’s name unknown); children: six. Career: Grupo Carso, ?–1998, chairman; Telmex, 1990–2004, chairman.

■ Carlos Slim used his holding company Grupo Carso to become involved in a wide variety of economic activities, ranging from telecommunications to retail sales. With a personal fortune that reached $11 billion in 2002, Slim was the richest person in Latin America and one of the wealthiest people in the world. He established a reputation for buying failing companies at low prices and then restoring them to profitability. By the late 1990s Slim had begun to slowly hand the reins of his business empire over to his sons. Carlos Slim. AP/Wide World Photos.

EARLY BUSINESS SENSE Slim was born in Mexico in 1940 to a Lebanese immigrant who had entered the country in 1902. His father enjoyed success as a merchant and then made a fortune in real estate during the Mexican Revolution of 1910–1920. When Slim was 12 years old, his father gave him the equivalent of about $20; he soon found ways to make the money multiply, keeping detailed records of his transactions. By the time Slim was 17, he was already investing in the stock market. Slim went on to receive a degree in engineering from the National Autonomous University of Mexico and by the mid1960s was investing in a variety of businesses that became the foundation for Grupo Carso. His conglomerate comprised 30,000 employees involved in activities and products such as mining, manufacturing, paper, and tobacco. After an economic crash in 1982 the Mexican government, defaulting on for-


eign debts in light of the devalued peso, began nationalizing banks and scaring business investors away. During this period Slim bought controlling interests in a wide variety of companies at low prices; he then set out to restore those companies to financial health. He managed his investments so efficiently that within a decade their value—and his—had greatly increased.

BUYS TELMEX In 1990 Slim led a consortium that bought the state-owned telephone company Telmex from the Mexican government. Slim’s Grupo Carso was the biggest investor in a consortium that also included France Telecom and Southwestern Bell. Slim and his own partners committed to investing up to $10 billion in the inefficient telephone company over the next five

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years; in exchange for this guarantee Slim was protected from a hostile takeover, in that his controlling shares would be offlimits for the coming 10 years. Slim was widely credited with transforming the former state-owned company, in part because the $10 billion investment served to modernize the once inefficient utility. However, Slim still had to deal with the bad memories that Mexicans had of Telmex from its days as a government monopoly. He lamented to Julia Preston of the New York Times, “We have a problem between the time you make corrections and the time the public perceives them” (November 14, 1996). Another challenge Slim faced came about in 1997, when Telmex’s monopoly on long-distance telephone service expired, and a series of foreign and domestic competitors sought to gain shares of the Mexican market. Slim and Telmex launched an aggressive, nationalistic advertising campaign against the new competitors. Slim told Preston, “If our competitors are going to be aggressive, we are going to be just as aggressive” (November 14, 1996). Slim was upset by the fact that competitors were allowed by the Mexican government to use Telmex’s network at low costs in areas of the country where they lacked their own networks. Nevertheless Slim remained optimistic that Telmex would be able to withstand the new competition, even creating a new holding company called Carso Global Telecom to buy Telmex stock. One analyst commented in the New York Times, “He’s putting his money where his mouth is. His view is that Telmex will continue to be the dominant player in its market” (November 14, 1996).

PASSING THE REINS By the late 1990s, Slim began to pave the way for his three sons to succeed him. The transition may have been initiated in part because in 1997 Slim had heart surgery and also suffered from pneumonia. In 1998 his oldest son, Carlos Slim

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Domit, became the chairman of Grupo Carso. Meanwhile Slim stayed on as chairman of both Telmex and Carso Global Telecom. He spent several years training his sons to eventually take over his vast business holdings, putting his oldest son in charge of a retail chain, while a younger son ran a mining company; he steadily handed increasing amounts of responsibility over to his sons. In 2004 Slim stepped down as chairman of Telmex, retaining the title of honorary lifetime chairman. Beyond his business dealings Slim became a noted philanthropist and art collector—his collection in fact became so large that he was obligated to open a museum. He also played a prominent role in the revitalization of the historic center of Mexico City and supported anticrime efforts there. In late 2002 he led a group of Mexican businessmen who invited the former New York City mayor Rudolph Giuliani to Mexico’s capital to help combat crime. Slim eventually devoted more and more time to the charitable foundations that he created. See also entries on Grupo Carso, S.A. de C.V. and Telmex in International Directory of Company Histories.


Graham, Robert, and Richard Johns, “Consortium Wins Control of Telmex,” Financial Times, December 11, 1990. Malkin, Elisabeth, “Reins Are Passed, Somewhat, at Mexican Empire,” New York Times, May 4, 2004. Preston, Julia, “Mexican Business Giant Begins Transition to Sons,” New York Times, October 15, 1998. ———, “Mexican Retail Conglomerate Buying Rest of CompUSA,” New York Times, January 25, 2000. ———, “Mexico’s Telephone Revolution,” New York Times, November 14, 1996. —Ronald Young


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Bruce A. Smith 1943– Chairman, president, and chief executive officer, Tesoro Petroleum Corporation Nationality: American. Born: October 12, 1943, in Coffeyville, Kansas. Education: Westminster College, BA, 1965; University of Kansas, MBA, 1967. Family: Son of George Alfred Smith and Isabel Andrews; married Cynthia Denton Doughat, 1969 (divorced, 1987); married Gail Hutchison, 1990; children: five. Career: Ford Motor Company, 1967–1969; Continental Illinois National Bank and Trust Company of Chicago, 1971–1973, banking officer; 1973–1975, second vice president, Multinational Division; 1975–1977, vice president, Mining Division; 1977–1980, vice president and section manager; 1980–1982, vice president and manager, International Energy Division; 1983–1986, vice president and manager, Southwest commercial banking group; Valero Energy Group, 1986–1992, corporate vice president and treasurer; Tesoro Petroleum Corporation, 1992–1993, vice president and chief financial officer; 1993–1995, executive vice president, chief financial officer, and manager of the exploration and production segment; 1995, executive vice president, chief financial officer, chief operating officer, and manager of the exploration and production segment; 1995–1996, president and chief executive officer; 1996–, chairman, president, and chief executive officer. Address: Tesoro Petroleum Corporation, 300 Concord Plaza Drive, San Antonio, Texas 78216-6999; http:// www.tesoropetroleum.com.

■ Bruce A. Smith became chief executive officer (CEO) of Tesoro Petroleum Corporation of El Paso, Texas, in September 1995. In his years at the helm, he led the oil refiner to sharp increases in revenue. Tesoro’s sales grew from just under $1 billion in 1995 to nearly $9 billion in 2003. During this same period, the company’s earnings experienced a series of ups and downs, reflecting both the volatility of petroleum International Directory of Business Biographies

prices worldwide and the industry’s susceptibility to the ebb and flow of the economy at home and abroad. Tesoro’s bottom line was also affected dramatically in 2002 and 2003 by Smith’s expansion of the company’s refining and marketing operations. Smith was named Tesoro’s president and CEO in 1995 and assumed the additional responsibilities of chairman the following year. Under his direction, Tesoro significantly streamlined its operations, spinning off its exploration and production interests to focus solely on oil refining and marketing. The company’s six petroleum-refinery operations, all located in the western United States, produced a wide variety of products, including gasoline, fuel oil, diesel fuel, and jet fuel. In 2004 Tesoro’s six refineries boasted a daily capacity of approximately 560,000 barrels of crude. On the retailing side, the company marketed its products through a network of more than 550 outlets, most of them located in the western United States, Hawaii, and Alaska. Approximately half of these outlets were owned and operated by Tesoro. In addition to its retail outlets, the company sells jet and marine fuels to the aviation and marine industries serving both the trans-Pacific and transpolar transportation routes. Tesoro also markets wholesale motor fuels to unbranded dealers. The son of George Alfred and Isabel (Andrews) Smith, Bruce Smith was born on October 12, 1943, in Coffeyville, a medium-sized town in southeastern Kansas. After graduating from high school, he enrolled at Westminster College in Fulton, Missouri, from which he received his bachelor’s degree in liberal arts in 1965. He next attended the University of Kansas and two years later received his MBA. Fresh out of college, Smith went to work for Ford Motor Company in Dearborn, Michigan, in late 1967 but left two years later to serve in the U.S. Army. On August 7, 1969, Smith married Cynthia Denton Doughat. The couple divorced in January 1987. In 1971, following his discharge from military service, Smith briefly pursued postgraduate studies at the University of Chicago. He also began work for Continental Illinois National Bank and Trust Company, serving as a banking officer from 1971 until 1973. In 1973 Smith was named second vice president of the bank’s Multinational Division. Two years later he was promoted to vice president of Continental Illinois’s Mining Division. In 1977 Smith was named a corporate vice president and section manager. Three years later he was

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Bruce A. Smith

selected to head the bank’s International Energy Division while still retaining his corporate vice presidency. In 1983 Smith, still a vice president, was appointed manager of commercial banking for Continental Illinois’ Southwest group.

LEAVES BANKING FOR ENERGY SECTOR For much of his banking career, Smith worked closely with customers in the energy sector, in the process becoming increasingly familiar with the workings of the petroleum industry and related industries. In 1986 he left Continental Illinois to become vice president and treasurer of Valero Energy Corporation and Valero Natural Gas Partners, headquartered in San Antonio, Texas. Six years later Smith left Valero to join Tesoro Petroleum Corporation, also based in San Antonio, as vice president and chief financial officer (CFO). In 1993 he was promoted to executive vice president of both Tesoro Petroleum Corporation and its subsidiary, Tesoro Exploration and Production Company. Smith was named a director in 1995 and given the added responsibilities of chief operating officer. He retained his positions as executive vice president and CFO. In September 1995 Smith succeeded Michael D. Burke as Tesoro’s president and CEO. Less than a month after his appointment, Smith announced a company-wide reorganization and accelerated debt-reduction plan that he said could reduce costs by about $10 million annually. Roughly half of the savings, Smith said, would come from an organizational restructuring that would result in a workforce reduction of about 7 percent. The remaining savings would be accounted for by an annual savings in interest costs of $4 million to $6 million by reducing the company’s public debt and outstanding borrowings on its credit facility. In 1996 Smith was given the added responsibility of chairman. One of Smith’s most ambitious initiatives was unveiled in May 1999, when he announced that the company had decided to spin off, sell, or trade its exploration and production operations despite the success enjoyed by that segment of its business. In announcing the decision, according to a company press release (May 26, 1999), Smith pointed out that Tesoro saw “tremendous opportunities” for both its refining and marketing activities and its exploration and production operations, noting, however, that “growth requires additional investment.” He said that concentrating its resources on refining and marketing would “improve our capital structure, provide additional financial flexibility, and add focus to the downstream business.” By the end of 1999 Tesoro had sold its U.S. exploration and production business to EEX Corporation and its Bolivian-based E&P operations to BG International Ltd.

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MAPS OUT STRATEGY FOR “NEW” TESORO Much of Smith’s energy in 2000 was focused on hammering out a strategy for the newly streamlined Tesoro, which by then had been pared to the refining, distribution, and marketing of petroleum products and providing marine logistics services. In January 2000 the company announced that it had reached a lease agreement with Wal-Mart Stores that would allow Tesoro to build and operate retail fuel outlets on sites at existing and future Wal-Mart stores in 11 Western states. As of early 2004 Tesoro operated more than 75 such outlets at Wal-Mart sites, all of which market gasoline and other petroleum products under the Mirastar brand name. To expand its core refining business, in 2001 Smith announced Tesoro’s plans to acquire two refineries as well as retail outlets in the intermountain West from BP. The BP refineries, located in Mandan, North Dakota, and Salt Lake City, Utah, had a combined daily refining capacity of 110,000 barrels of crude, increasing Tesoro’s total refining capacity to 390,000 barrels per day. The biggest expansion, however, was yet to come. On February 5, 2002, Smith announced that Tesoro had reached a definitive agreement with Valero Energy Corporation to acquire Valero’s Golden Eagle refinery in Martinez, California, along with about 70 Valero retail outlets throughout Northern California. Before it could be finalized, the deal almost fell through. According to Greg Jefferson of the San Antonio Express-News, plummeting profit margins forced Smith to tell analysts on May 1, 2002, that Tesoro would not complete the purchase if it cut too deeply into liquidity. Shortly thereafter Valero and Tesoro recast the terms of the transaction in such a way as to minimize its impact on cash flow. The Golden Eagle facility had a daily refining capacity of about 168,000 barrels of crude and brought Tesoro’s total refining capacity to nearly 560,000 barrels per day. Perhaps most importantly, the Golden Eagle acquisition ended Smith’s quest for a California presence for Tesoro.

TESORO NARROWLY AVERTS CASH CRISIS The $1.1 billion cost of the acquisition from Valero, combined with a slump in the refining business, brought Tesoro to the brink of bankruptcy, threatening a cash crisis that was narrowly averted when Tesoro reached agreement with its lenders on a new loan package in late September 2002. According to Jefferson, the refiner won lenders’ approval for a suspension of cash-flow requirements through June 30, 2003, in return for tougher spending limits and debt-repayment requirements, along with a higher interest rate for the $1.275 billion loan package. One of Smith’s primary focuses was the reduction of Tesoro’s debt load, which soared to nearly $2.1 billion in 2002


Bruce A. Smith

after the purchase of three new refineries. Shortly after the company closed on its 2002 purchase of the Golden Eagle refinery, Smith pledged the company to pay down $500 million of its debt by the end of 2003. In his February 3, 2004, report on Tesoro’s 2003 financial performance, according to a company press release, Smith reported that the company had met its debt-reduction goal and ended the year with $77 million in cash. He also reported that Tesoro had “negotiated a more flexible, less expensive credit agreement and rationalized our asset base by trimming non-core and underperforming assets. In addition, despite higher utility expenses, we made good progress in right-sizing our cost structure.”

See also entries on Ford Motor Company, Tesoro Petroleum Corporation, and Valero Energy Corporation in International Directory of Company Histories.

In time, Tesoro’s gamble on the giant Golden Eagle refinery paid off, contributing the lion’s share of the company’s net income of $20.4 million in the first quarter of 2003. Although the Martinez refinery represented only 40 percent of Tesoro’s total refining capacity, it generated $68 million, or 62.3 percent, of Tesoro’s $109.2 million in operating income from refining during the quarter, according to Alan Doyle of East Bay Business Times. Another major factor in Tesoro’s return to profitability in early 2003 was the resurgence in crude prices, refining margins, and profits throughout the industry.

———, “Valero, Tesoro Seen Near New Deal on Golden Eagle,” East Bay Business Times, May 3, 2002.

In the final quarter of 2003, Smith announced the sale of its marine-services unit to Martin Midstream Partners and Midstream Fuel Services for $32 million. The sale represented the end to all operations outside of Tesoro’s core refining and marketing business. Interviewed by Elizabeth Allen of the San Antonio Express-News, Jacques Rousseau, a securities analyst with Friedman Billings Ramsey, hailed Tesoro’s progress in reducing its debt burden, but he cautioned that it was important for the refiner to continue its efforts to pay down its debts. “The key thing is to focus on debt reduction so the next time the cycle turns, they’ll be in good enough shape to avoid the same problems.” Smith married Gail Hutchison on November 10, 1990. Away from his responsibilities at Tesoro, Smith was active in both industry and civic affairs. He was a member of the Financial Executives Institute and served as the president of the organization’s San Antonio chapter. He also served on the board of trustees of San Antonio’s University of the Incarnate Word.



Allen, Elizabeth, “San Antonio-Based Tesoro Petroleum To Shed Its Marine Services Unit,” San Antonio Express-News, October 29, 2003. Doyle, Alan, “Golden Eagle Puts Tesoro Back in Black,” East Bay Business Times, May 2, 2003.

Jefferson, Greg, “Loan Agreement Saves Tesoro Petroleum Corp. from Potential Cash Crisis,” San Antonio ExpressNews, September 26, 2002. ———, “Stockholders, Analysts Leery of Competitive Effort by Tesoro Petroleum,” San Antonio Express-News, June 17, 2002. McGurty, Janet, “Tesoro Scraps Williams Deal,” Reuters Business, November 22, 2002. Oberbeck, Steven, “BP Selling Salt Lake City Refinery in $677 Million Deal,” Salt Lake Tribune, July 18, 2001. Parmelee, Catherine, “Tesoro Alaska: Customer-Driven Strategies Fuel Tomorrow’s Standards Today,” Alaska Business Monthly, April 1, 2002. “Tesoro Petroleum Corporation Reports Fourth Quarter and Full Year Results,” company press release, January 21, 2004, http://www.tesoropetroleum.com/2004/20040203.html. “Tesoro Posts Unexpected Loss; Poor Margins Blamed,” Reuters, February 3, 2004. “Tesoro to Focus on Refining and Marketing,” company press release, January 21, 2004, http://www.tesoropetroleum.com/ 1999/990526.html. —Don Amerman

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Fred Smith 1944– Founder, chairman, chief executive officer, and president, FedEx Corporation Nationality: American. Born: August 11, 1944, in Marks, Mississippi. Education: Yale University, BA, 1966. Family: Son of Frederick C. (businessman) and Sally (Wallace) Smith; married Linda Black Grisham, 1969 (divorced 1977); married Dianne Avis; children: ten (two from first marriage). Career: Ark Airlines, 1969–1971, owner; Federal Express Corporation, 1971–, founder and president; 1975–, chairman, president, and chief executive officer. Awards: Peter F. Drucker Strategic Leadership Award, 1997; named “CEO of the Year” for 2004 by Chief Executive magazine. Address: FedEx Corporation, 942 Shady Grove Road, Memphis, Tennessee 38120-4117; http:// www.fedex.com.

■ In 1971 Frederick Wallace (Fred) Smith came up with a revolutionary idea: delivering packages reliably overnight. With the creation of Federal Express Corporation, Smith not only offered an alternative to the mail and more traditional and slower delivery services, but he also created an industry that almost single-handedly changed the way business was conducted. In the process, Smith’s company became the first American business to earn $10 billion in profits. By 2004 FedEx was delivering to 210 countries using over six hundred aircraft, 46,000 vehicles, and 141,000 employees. But Federal Express and Smith were not just about providing fast and dependable deliveries to clients worldwide. At the root of the company’s success was Smith’s tried and true philosophy: people, service, profit (P-S-P). To that end, Smith worked hard at being accessible to his employees and clients with a management style that combined vision, risk-taking, a sense of community, and a tough-minded approach.

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Fred Smith. AP/Wide World Photos.

EARLY LIFE Smith was born in Marks, Mississippi, on August 11, 1944. The younger of two sons, Smith was named after his father, an entrepreneur and businessman who established the Dixie Greyhound Bus Lines, later a part of Greyhound Bus Lines. To further supplement the family fortune, the senior Smith and his older son established the Toddle House Restaurant chain, which offered Southern-style cooking at locations throughout the United States. In 1948, when Smith was only four years old, his father died. Fortunately for the family, Smith senior had made enough money to ensure his family— which now consisted of a wife, two sons, and two daughters—a comfortable existence. However, it would be a long time before the children would see any of their father’s money. Concerned that his children would squander their fortunes and waste their lives and talents, Smith senior had his money


Fred Smith

placed into a trust fund to be released to the children upon their 21st birthdays. From early childhood, Smith was troubled by a birth defect known as Calve Perthes disease, a peculiar form of childhood arthritis of the hips caused by a temporary loss of blood supply to the hip. The ailment was such that Smith spent much of his early years on crutches and in braces to stabilize his hip joint sockets. However, by the time he was 10, Smith had outgrown the disease. Smith attended Memphis University Prep, where he participated in athletics and was an excellent student. He also developed a keen interest in the American Civil War. But Smith’s true passion was flying; by the age of 15 he was learning the ropes while operating a crop duster. In time he became known as a skilled amateur pilot. Smith’s business acumen started early; while in high school, he and a group of friends founded the Ardent Record Company, a small recording studio that later went on to become a legitimate company. In 1962 Smith left Memphis to attend Yale University.

THE ROAD TO FEDEX While at Yale, Smith intended to study economics and political science. Unfortunately he found himself more drawn to campus social activities, which affected his scholastic performance. However, one incident in his junior year stood out, providing the germ of an idea that later carried Smith to success. For an economics class Smith wrote a term paper that outlined his idea for a company that would guarantee overnight delivery of small, time-sensitive goods, such as replacement parts and medical supplies, to major U.S. cities. The professor was not impressed and gave Smith a grade of C for his work. But Smith’s idea stayed with him, though it would be a few more years before he would have the opportunity to try it out. In 1966 Smith graduated with a degree in economics and shortly thereafter enlisted in the U.S. Marine Corps. As a second lieutenant, Smith was sent overseas to fight in Southeast Asia during the Vietnam War. Smith would do two tours in Vietnam, enrolling in flight school and eventually flying more than two hundred ground support missions. In July 1969 Smith was honorably discharged at the rank of captain with numerous honors, including a Silver Star, a Bronze Star, and two Purple Hearts. In August, Smith married Linda Black Grisham. However, the marriage would not last, and the couple divorced in 1977. Upon returning to the United States in 1970, Smith decided to revisit the idea he had written about in his economics paper. The need to create something was also spurred in part by his time in Vietnam. As he later told an interviewer, “I got so sick of destruction and blowing things up . . . that I came back determined to do something more constructive” (Current Biography Yearbook 2000). To get his fledgling business underway, Smith began by purchasing the controlling interest in Ark


Aviation Sales, an aircraft maintenance company owned by his then father-in-law. By 1971 Smith had expanded the company’s venue, turning the focus from airplane maintenance to a company that bought and sold used corporate jets. But even the success of posting over $9 million in revenue and the company’s seeing profits for the first time were not enough to satisfy Smith.

A RADICAL IDEA By now Smith had devised a well-thought-out strategy to implement his idea while making the most of his resources. Originally Smith wanted to do contract work for the Federal Reserve System, transporting, sorting, and rerouting checks. His business plan called for a fleet of planes that would pick up packages for delivery. The planes and cargo would be flown at night, when air traffic was minimal; packages would then be dropped at a central location or hub, where they would be sorted. From there the parcels, using both ground and air, would be routed to their destinations within a 24-hour period. Smith chose Memphis as the hub city because of its central location, moderate climate, and labor resources. Smith also wanted the company to own its own planes in order to bypass federal shipping regulations. Despite Smith’s proposals, which he calculated would have saved the nation’s banking system an estimated $3 million a day, many financial institutions, while interested, were not convinced that Smith’s ideas could realistically be carried out. On paper Smith’s delivery system was simple and practical. However, there were many problems to overcome to make it work. Financially, the business required a tremendous amount of money for planes, pilots, and insurance. Smith also needed to design a transportation system that could not only link any two parts of the country but also ensure that packages going back and forth could be delivered within the promised 24hour window—something that had never been tried before in cargo delivery. Although Smith was unable to convince the Federal Reserve that his plan would work, he decided to spend money on an intensive advertising campaign to persuade anyone else who might be interested in such a venture. Smith also realized that by using both air and ground transport, package deliveries did not have to take the most direct route, as long as they made it to their destinations within 24 hours. Over time a web of interconnecting cities was established that would provide Federal Express service. Finally, on June 18, 1971, Smith, then 27 years old, created the Federal Express Corporation. His startup funds consisted of $91 million from venture capitalists in addition to his own $4 million inheritance. By 1973 Smith was ready to go; Federal Express, with a fleet of 14 jets and several vans, began offering service to 25 cities. Still, as Smith later recalled, few people were encouraged by his new venture.

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Fred Smith

In a 1979 interview, Smith said, “People thought we were bananas. We were too ignorant to know that we weren’t supposed to be able to do certain things” (New York Times, January 7, 1979). Federal Express’s first two years were grim. In fact, on its first night of business, the fledgling company shipped only 186 packages onto its 14 Falcon jets routed to 22 cities. Within the first three months of operation, the company had lost almost a third of its start-up cash. It was not uncommon for Federal Express drivers to dig into their own pockets to pay for gas. The company also lost money because of high advertising costs (Smith believed advertising to be essential for his company’s survival) and because of increased aircraft fuel and gasoline prices resulting from the Arab Oil Embargo of 1973. Smith’s sisters also brought suit against their brother for misappropriating their trust fund monies. These and other factors, such as outdated federal aviation restrictions and run-ins with the International Brotherhood of Teamsters, caused FedEx to lose $29 million in its first two years of operation. However, by 1976 the company had begun to show a profit as it delivered everything from documents and computer parts to sensitive parcels, such as blood and organs. Despite competition from UPS and other delivery companies, the Federal Express customer base was growing as well; besides counting several businesses among its clientele, Federal Express was also handling deliveries for the federal government. By 1978 the company had proven itself financially stable enough to begin selling shares on the New York Stock Exchange. In 1984 Federal Express reached a milestone not only for itself but also for American business when it surpassed $1 billion in revenues.

GOING GLOBAL Not content just to oversee his growing delivery network, Smith cast about for other ideas that would maintain Federal Express’s position as the fastest-growing and speediest delivery service. To that end, the decades of the 1980s and 1990s were characterized by adaptation and experimentation. In 1984, to aid clients in sending documents anywhere in the United States within a short period of time, Smith created ZapMail, a satellite-based system of linked stations that guaranteed delivery of documents by fax machines and courier within two hours. Unfortunately ZapMail never really caught on with customers, and by the end of the decade, fax machines were becoming more commonplace in businesses. Finally, in 1989 Smith discontinued ZapMail, but not before it had ended up costing the company over $300 million. Federal Express also continued to suffer severe financial losses, in part because of increased competition from UPS. To combat the problem, Smith became more aggressive in dealing with the competition. In 1988 Federal Express bought the Los Angeles–based international heavy freight carrier Flying Tigers for $880 million, thereby becoming the largest all-cargo airline in the

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world. Now Smith had his own network of overseas delivery routes and no longer had to rely on outside contractors to make his foreign deliveries. He also negotiated the purchase of several trucking companies in an attempt to make Federal Express a more diversified freight and parcel powerhouse. Still, Smith’s entry into the foreign markets suffered. Even though the company’s international traffic had grown to include over 560 planes flying out of three hubs, Europe as a whole was slow to develop as an express market. In 1994 the company changed its name to FedEx. That same year Smith, sensing the importance of the Internet and trying to recuperate from losses in his international division, introduced InterNetShip, a service that allowed customers to coordinate their domestic deliveries via Internet-linked computer software. Smith also developed BusinessLink, a marketing service that provided businesses with an online catalogue of their goods directly linked to FedEx. Despite financial setbacks, the company continued to grow. By 1997 FedEx employed 120,000 employees worldwide; delivered an average of 2.5 million packages a day in 211 countries and territories through one of its 37,000 trucks; and had made Smith one of the four hundred wealthiest people in the world. In 1998 FedEx formed the FDX Company, which served as a holding company that oversaw both domestic and international operations of the organization.

A VISION OF THE FUTURE Despite intense competition and financial setbacks, Smith continued to persevere. His success came in part because of his ability to understand the changing needs of business and the importance of such things as the Internet, deregulated trade, and changing business practices. But Smith found that he had to wait for American and European business owners to understand his vision of a delivery system that promised savings, increased productivity, and improved efficiency. Smith also saw the possibilities with the Internet and the growing potential of e-commerce for the shipping industry. Toward the end of the 1990s Smith leveraged the company to take advantage of ecommerce opportunities by fostering partnerships with Webbased companies such as Sun Data, a $200 million computer company, which through its Internet sales increased the customer base for FedEx. In speeches and interviews Smith also acknowledged that the business of doing business was rapidly changing as the 20th century came to a close. With the increased availability of express shipping, Smith foresaw a trend in which companies would reduce their inventory as they became more dependent on express shipments. This development would in turn make the intermediary warehousing and distribution facilities less necessary. Smith pushed for the United States in cooperation with other countries, such as Japan, to work on fashioning a model of such a network that other countries could follow. Smith continued to increase his


Fred Smith

hold on the express delivery market. In 2003 FedEx purchased Kinko’s, a large office and print store chain, for $2.4 billion. With the purchase of the company, all 1,200 Kinko’s locations worldwide offered FedEx shipping services and increased FedEx’s share of the express document and delivery business, helping FedEx to build an even larger customer base. By 1999 FedEx was shipping three million packages every day with annual sales totaling $16.7 billion. In 2000 the company changed names once more to the FedEx Corporation. Once again, though, the company stumbled. In streamlining company operations, Smith decided to let various divisions of FedEx operate more independently. In April 2000 it was discovered that a number of FedEx drivers and couriers had been using company vehicles to deliver more than 120 tons of marijuana in a delivery system that went back and forth between the East Coast and the West Coast.

out of the limelight; when necessary, however, he showed that he was capable of impassioned and thoughtful analysis on the state of business in America and the world. A true believer in the advent of the global economy, Smith saw the future with the creation of Federal Express; his risk-taking set the standard by which other companies were often forced to measure themselves. Unafraid of new technology, Smith instead saw it as a challenge to be mastered, implemented, and used as means of furthering the global community. By following this philosophy, FedEx continued to shape the very face of global communications. See also entry on FedEx Corporation in International Directory of Company Histories.


A COMPANY CULTURE

Buttner, Brenda, “FedEx—CEO Interview,” America’s Intelligence Wire, December 30, 2003.

Certainly one of Smith’s most resounding successes was in the creation of a corporate culture that inspired an intense loyalty to the company and its founder. Smith operated his company on a basic premise that he called P-S-P: people, service, profit. The idea was that the three concepts work in a circle, each supported by the others.

“Chief Executive Magazine Names FedEx’s Fred Smith CEO of the Year,” Internet Wire, May 25, 2004.

From the company’s earliest beginnings, Smith strove to provide for his workers, even when times were tough. Even when money was tight, Smith made sure that his employees were given medical coverage. A position with FedEx remained one of the most sought-after jobs in the Memphis area, partly because of the generous wages, overtime, and benefits the company offered its employees. Smith acknowledged the importance of his workers. For instance, during the 1990s, when UPS workers went on strike, thousands of FedEx employees worked numerous hours to process the additional 800,000 packages that flooded into FedEx centers. Smith rewarded his employees with special bonuses while taking out full-page newspaper ads to thank them for their hard work.

Hafner, Katie, “Fred Smith: The Entrepreneur Redux,” Inc., June 1984, pp. 38–40.

By all accounts, Smith was a boss who worked hard at being accessible to his employees. He was known to visit the Memphis site late at night, greeting many of the employees by name. He also offered a standing invitation to any employee with 10 years of service to come to Memphis for breakfast with the boss. Although gregarious by nature, Smith tended to stay


Geci, John, “Presenting the Winner of the 1997 Peter F. Drucker Strategic Leadership Award: FedEx’s Frederick W. Smith,” Strategy and Leadership, September-October 1997, pp. 30–31.

Hirschman, Dave, “FedEx Founder Has Been a Vocal Critic of Postal Service,” Knight Ridder–Tribune Business News, September 11, 2000. Linden, Eugene, “Frederick W. Smith of Federal Express: He Didn’t Get There Overnight,” Inc., April 1984, pp. 88–89. “Smith, Frederick,” Current Biography Yearbook 2000, pp. 517–520. Tatge, Mark, “Start the Ground War,” Forbes, November 26, 2001, p. 146. Tucker, Robert B., “Federal Express’s Fred Smith,” Inc., October 1986, pp. 34+. Williams, Winston, “Interview,” New York Times, January 7, 1979. —Meg Greene

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O. Bruton Smith 1927– Chairman and chief executive officer, Sonic Automotive; chairman and chief executive officer, Speedway Motorsports Nationality: American. Born: 1927, in Oakboro, North Carolina. Family: Son of Lemuel Smith, a cotton farmer, and wife, name unknown; married Bonita Harris, 1972 (divorced); children: four. Career: Began career as a car salesman while promoting local car races; partnered in the late 1950s with Curtis Turner to build Charlotte Motor Speedway (now Lowe’s Motor Speedway), which opened in June 1960; returned to auto sales after Charlotte speedway went into court receivership and Smith was fired by the court-appointed trustee; in 1969 bought his first auto dealership and by 1974 had built a network of 10 dealerships and two insurance companies; began buying shares in the Charlotte speedway in the early 1970s and by 1975 had amassed 82 percent of the company’s stock; in 1990 bought his second racetrack—Atlanta Motor Speedway; Speedway Motorsports, 1994–, chairman and CEO; Sonic Automotive, 1997–, chairman and CEO.

As of 2004 SMI’s six racetracks—Atlanta Motor Speedway, Lowe’s Motor Speedway in Charlotte, North Carolina, Texas Motor Speedway, Las Vegas Motor Speedway, Bristol Motor Speedway in Tennessee, and Infineon Raceway in California—hosted some of the most prestigious events on the NASCAR stock-car racing circuit. Smith, however, was very unhappy with the treatment NASCAR, controlled by the France family, had given SMI and auto racing in general. As Smith told Mark McCarter of Sporting News, “NASCAR continues to take too much out of the sport. It’s ridiculous what they’re doing. They ought to be ashamed of themselves. Absolutely ashamed” (June 30, 2003). Smith’s anger over NASCAR’s failure to award a second race to his Texas Motor Speedway gave rise to a massive lawsuit by two SMI shareholders against NASCAR and increasingly hostile relations between Smith and the NASCAR Chairman Brian France. In early spring 2004 reports from ongoing talks to settle the legal dispute indicated that the SMI rival International Speedway Corporation (ISC), also controlled by the France family, would possibly sell its North Carolina Speedway at Rockingham and Darlington Raceway to SMI. If that transfer occurred, Smith would move two annual Nextel Cup race dates from those two tracks to two of his own tracks west of the Mississippi—the Texas and Las Vegas Motor Speedways.

Awards: Award of Excellence, NASCAR, 1997.

BITTEN BY RACING BUG AT AN EARLY AGE

Address: Sonic Automotive, 5401 East Independence Boulevard, Charlotte, North Carolina 28212; Speedway Motorsports, 5555 Concord Parkway, Concord, North Carolina 28027-0600; http://www.sonic automotive.com; http://www.speedwaymotorsports.com.

The son of a cotton farmer, Smith was born in 1927 in Oakboro, North Carolina. His childhood was happy but difficult, as he told Ed Hinton of Sports Illustrated: “We had plenty of food, a great family, but no money. My parents worked hard and went to church. That was it. I never had things. And we all desire something” (December 22, 1999). For Smith, the object of his greatest desire was a racecar. After seeing his first auto race at the age of six or seven, he was hooked on the sport and dreamed of the day when he could become a professional driver.

■ When his mother’s objections persuaded O. Bruton Smith to abandon his dream of becoming a racecar driver, the North Carolina teenager poured all his energies into forging a career as close to automobiles and racing as possible without actually getting behind the steering wheel. Today he proudly serves as chairman and chief executive officer of his two most impressive creations: Sonic Automotive, a nationwide network of 187 automotive franchises and 47 collision-repair centers, and Speedway Motorsports (SMI), holding company for six of the nation’s top auto racetracks.

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At the age of 17 Smith bought a racecar, the first step in realizing his dream. But his mother was not at all happy with her son’s potential career track. “She didn’t just put her foot down,” Smith told Sports Illustrated, “she started praying on it. I said, ‘Well, Mom, you’re fighting dirty when you start


O. Bruton Smith

that.’ I quit racing then” (December 22, 1999). After graduating from high school, Smith worked briefly at a local hosiery mill but by the early 1950s was working as a car salesman as well as promoting dirt-track races at the nearby Charlotte Fairgrounds. Smith’s involvement in race promotion brought him into contact with veteran dirt-track driver Curtis Turner (1924–1970). Together the two conceived a grand plan to build a state-of-the-art racecar track in Charlotte. In June 1960 the partners’ Charlotte Motor Speedway opened with a sixhundred-mile NASCAR race. Although the Charlotte speedway attracted hordes of racing fans, Smith had difficulty generating the cash flow necessary to keep the racetrack in operation. Not long after its splashy debut the Charlotte Motor Speedway was forced to file for bankruptcy. When a court-appointed trustee was brought in to run the speedway, Smith was fired; although he continued to provide counsel behind the scenes, Smith had no official connection to the speedway’s operation. When the speedway was released from the protection of the court and returned to the control of its shareholders, Smith was denied a seat on the track’s executive board.

FOCUSED ON SELLING CARS With his ties to auto racing at least temporarily severed, Smith devoted all his energy to selling cars, acquiring a Ford dealership in Rockford, Illinois, by the end of the 1960s. It was in Rockford that Smith met Bonita Harris when she was shopping at the dealership for a Thunderbird. Instantly smitten, Smith was soon dating his customer, who was 21 years his junior; on June 6, 1972, Smith and Harris married in Las Vegas. Their marriage produced four children, one of whom succumbed to crib death at the age of six months. The couple separated in 1988 and officially divorced on February 5, 1990. The divorce was followed by acrimonious litigation that eventually culminated in a 1994 settlement of more than $19 million, the largest of its kind in North Carolina history. Not long after marrying Harris, Smith began mapping a strategy to get back into auto racing. Convinced that the NASCAR circuit would soon achieve an unprecedented level of popularity, he began quietly buying up shares of the Charlotte speedway he and Turner had founded more than a decade earlier; in less than two years he had won control of the company. To run his prized acquisition, Smith hired H. A. “Humpy” Wheeler as president and general manager in 1975. Wheeler, like Smith, first became involved in racing on the dirt-track circuit, and he had later worked as director of racing at Firestone Rubber & Tire Company. While back in the racing business that he loved, Smith remained dedicated to his network of auto retail outlets, which by the mid-1970s had expanded from a single Ford dealership in Rockford to include retail operations in Illinois and Texas.


Over the next two decades Smith continued to increase his holdings in auto-dealership franchises, and in late 1997 he took his network public as Sonic Automotive, with a total of 23 dealerships. As of early 2004 Sonic Automotive, America’s third-largest automotive dealer group, controlled nearly 190 auto dealerships as well as 45 collision repair centers in 15 states, mostly in the Southeast and Southwest.

DEVELOPED RACETRACK INTO SHOWPLACE Smith, convinced as he was that auto racing was on track for a sharp jump in attendance figures nationwide, realized that he might have been able to speed up that growth by offering greater amenities at the speedway. As he told Sports Illustrated, “We knew if we could ever fix up a track to be as nice as a modern stadium, this sport would be three or four times as big. We didn’t know it would be 10 times as big” (December 22, 1999). Together with Wheeler, Smith underwent an effort to make Charlotte Motor Speedway a more inviting venue for racing fans, male and female alike. Attractive landscaping, VIP suites, a nighttime lighting system, and classy restaurants were all added at the racetrack. Its capacity was increased with significant grandstand expansion and was enhanced by the addition of enclosed clubhouse seating. To further add to the allure of his speedway, Smith staged inventive prerace shows, featuring everything from a “car-eating, fire-spitting ‘robosaurus’” to “parachuting Elvis impersonators,” according to Forbes magazine (October 9, 2000). In 1990, 15 years after he’d gained control of Charlotte Motor Speedway, Smith added a second racetrack—Atlanta Motor Speedway—to his holdings and took over as president, chief executive officer, and director. Control of both the Charlotte and Atlanta racetracks was consolidated under the umbrella of Speedway Motorsports, incorporated by Smith in December 1994 and taken public two months later. SMI, trading on the New York Stock Exchange as TRK, thus became the first motorsports company to be listed on the Big Board. In his boldest move yet, Smith next began construction on the mammoth Texas Motor Speedway (TMS) in Fort Worth. With grandstand seating for more than 150,000 and built at an estimated cost of $250 millon, TMS would become the second-largest motor raceway in the United States, surpassed in seating capacity only by the Indianapolis Motor Speedway. At the time it was being built, however, Smith had obtained no commitments for major races at TMS. To secure a date on the NASCAR calendar, Smith purchased a 50 percent interest in North Carolina’s North Wilkesboro Speedway and transferred one of its existing NASCAR dates to TMS. Smith’s claim that NASCAR failed to follow through on a promise of an extra race date for TMS formed the basis for a multimillion-dollar lawsuit against NASCAR by two SMI shareholders.

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O. Bruton Smith

RIFT BETWEEN SMITH, NASCAR WIDENS Litigation over a second race date for TMS was not the only source of friction between Smith and the France family, founders of NASCAR. Despite its impressive physical layout, TMS was criticized by NASCAR and drivers on the NASCAR circuit for safety considerations. In April 2001 the inaugural Firestone Firehawk 600 CART race at TMS was abruptly cancelled after race drivers and NASCAR officials decided that the cars were too fast for the track. Three years earlier, the then NASCAR Chairman Bill France Jr. had threatened to pull its races from TMS if specified safety shortcomings were not addressed. In the latter half of the 1990s Smith further expanded SMI’s network of racetracks, acquiring existing speedways in Bristol, Tennessee; Las Vegas, Nevada; and Sears Point Raceway in Sonoma, California. The Sears Point facility was subsequently renamed Infineon Raceway. Another name change among SMI racetracks occurred in February 1999 when SMI awarded the naming rights at Charlotte Motor Speedway for one decade to Lowe’s Companies, the home improvement giant, in return for a winning bid of $35 million. In early spring 2004 the outlines of a possible out-of-court settlement in the suit against NASCAR for an additional cup race at TMS had begun to emerge. Under the terms of the reported accord, ISC, the France-family-controlled operator of 12 major racetracks, would sell its Talladega, Alabama, and Darlington, South Carolina, speedways to SMI. If this sale were to go through, it was widely reported, SMI would take two of the cup race dates from the newly acquired ISC tracks and transfer them to existing SMI tracks—namely, TMS and Las Vegas Speedway. This would give SMI the second cup race for TMS that it had long pursued. Smith, in his late 70s in early 2004, lived in the Charlotte area. Although he professed to have no plans to retire in the near future and remained chairman and CEO at both Sonic and SMI, Smith was apparently grooming his son, Scott, to eventually succeed him at Sonic Automotive. Early in the 2000s the younger Smith had been promoted to the post of vice chairman and chief strategic officer at Sonic. Despite the pressure of the elder Smith’s existing responsibilities, he managed to find time to serve as chairman of the Charlotte-based Speedway Children’s Charities, which he founded in 1984. With chapters at each of SMI’s six racetracks, the charity awarded grant funds to nonprofit groups providing direct services to children in need.


Berger, Ken, “Lawsuit against NASCAR Picks Up Speed,” Newsday, May 24, 2002. Biography Resource Center, Gale Group, http:// galenet.galegroup.com/servlet/BioRC. “Curtis Turner,” International Motorsports Hall of Fame, http://www.motorsportshalloffame.com/halloffame/1992/ Curtis_Turner_main.htm. Dyer, Leigh, “Charlotte, N.C.–Based Sonic Automotive to Curb Expansion,” Charlotte Observer, February 25, 2004. Fabrizio, Tony, “At Texas Motor Speedway, Expect the Unusual,” Tampa Tribune, April 4, 2004. ———, “Smith Seen as Visionary, Radical,” Augusta Chronicle, April 6, 1997. Frew, Alex, “This Wheeler-Dealer Has Lots of Potential,” Business North Carolina, July 1, 1999. Hinton, Ed, “Big Wheel: By Staying Ahead of the Curve, Bruton Smith Has Made Himself One of the Most Powerful Men in Racing,” Sports Illustrated, December 22, 1999. Jenkins, Chris, “France Welcomes Trial on Scheduling Issue,” USA Today, February 12, 2004. Johnson, Cecil, “Author Profiles Rags-to-Riches Success Stories,” Fort Worth Star-Telegram, January 18, 2001. “King of the Road,” NYSE Magazine, July 1, 2002. Long, Dustin, “NASCAR Could Shift Two More Races to West,” Virginian Pilot, March 24, 2004. Lowe’s Motor Speedway, http:// www.lowesmotorspeedway.com/track_info. Lowry, Tom, “Sports Biz: The Prince of NASCAR,” BusinessWeek, February 23, 2004. Mayoros, Diane, “Speedway Motorsports, Inc. Chairman & CEO: Interview,” Wall Street Corporate Reporter, December 23, 1998. McCarter, Mark, “Big Fish in a Big Pond,” Sporting News, June 30, 2003. “O. Bruton Smith,” Marquis Who’s Who, New Providence, N.J.: Marquis Who’s Who, 2004. “Ollen Bruton Smith,” Business Leader Profiles for Students, vol. 2, Farmington Hills, Mich.: Gale Group, 2002. Poole, David, “NASCAR’s Smith Still Not Short on Varying Opinions,” Charlotte Observer, January 24, 2004. “Profits Fall at Charlotte, N.C.–Based Sonic Automotive,” Charlotte Observer, February 24, 2004. Sonic Automotive, http://www.sonicautomotive.com.

See also entry on Speedway Motorsports, Inc. in International Directory of Company Histories.

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Speedway Children’s Charities, http:// www.speedwaycharities.org/about_us.


O. Bruton Smith Speedway Motorsports, http://www.speedwaymotorsports.com. Spiegel, Peter, “Life in the Fast Lane,” Forbes, November 1, 1999. “Sports Stars (Franchise Owners),” Forbes, October 9, 2000. Zeller, Bob, “Tracking the Master Builder’s Next Moves,” Virginian Pilot, March 9, 1997. —Don Amerman


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Stacey Snider 1961– Chairman and chief executive officer, Universal Pictures Nationality: American. Born: April 29, 1961, in Philadelphia, Pennsylvania. Education: University of Pennsylvania, BA, 1982; University of California, Los Angeles, JD, 1985. Family: Married; children: two. Career: Gruber–Peters Entertainment Company, 1986–1990, director of development; TriStar Pictures, 1990–1996, executive vice president; 1992–1996, president of production; Universal Pictures, 1996–1998, copresident of production; 1998, president of production; 1998–, president; 1999–, chairman and chief executive officer. Address: Universal Pictures, 100 Universal City Plaza, Universal City, California 91608-1002; http:// www.universalpictures.com.

■ After becoming chairman in 1999, Stacey Snider led Universal Pictures to increased market share and profits. Because of her management skills, creative talents, and film selecting abilities, at age 39 she became one of the few women appointed to head a major motion picture studio.

EARLY LIFE AND CAREER Snider was not a fan of movies as a child. She was much more interested in reading and books. “I always loved books, and that was my escape,” she told Variety. “My nose has been in a book pretty much my whole life, and I’ve always held the storytelling process in the highest regard” (August 17, 2001). She always dreamed of being an influential editor, guiding some famous author. However, after graduating from the University of California, Los Angeles, law school in 1985, she landed her first entertainment job in the mailroom of talent agency Triad Artists. She then became a secretary to Don Simpson and Jerry Bruckheimer, producers of Beverly Hills

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Stacey Snider. © Ron Sachs/CNP/Corbis.

Cop and Top Gun. A year later she went to work for Gruber–Peters Entertainment, a production company, where she tracked literary properties for Peter Gruber. In 1989 Gruber and Peters were named cochairmen of Sony’s Columbia Pictures, and Snider went with them. Considered a protégé of Gruber, Snider worked her way up to president of production at Sony’s TriStar Pictures.

EXECUTIVE POSITIONS At TriStar, Snider worked with the TriStar chairman, Marc Platt, overseeing many successful films such as Jerry Maguire, Sleepless in Seattle, Philadelphia, and My Best Friend’s Wedding. Platt was forced out of TriStar in 1996, becoming president of production at Universal. Snider followed Platt, joining Universal as copresident of production. She quickly moved up to


Stacey Snider

sole president of production, cochairman, and then sole chairman in 1999. Universal was a very successful, “hot” studio during Snider’s tenure. In her first two years as chairman, nine of Universal’s films grossed more than $100 million in domestic box office sales, and the studio passed Disney to become the top market shareholder. Snider worked closely with Ron Meyer, the studio’s president and COO. Meyer, an industry veteran, brought his experience and many entertainment industry contacts to the partnership while Snider contributed creative instincts and the ability to pick successful films. Together their goal was to produce quality, crowd-pleasing films that do not patronize the audience, such as Erin Brockovich, The Fast and the Furious, the Mummy movies, A Beautiful Mind, and American Pie.

MANAGEMENT STYLE Snider was described in Time as not only “a shrewd political operative, but . . . also a gentle general who has inspired great loyalty in her troops” (July 29, 2002). Snider improved morale at Universal not only by giving bonuses and days off for successful films but also by delegating authority. She and Meyer distributed much of the control that was held in “the black tower” (the Universal administration building) to the individual units. Marc Shmuger, the vice chairman of Universal Pictures, said of Snider’s approach, “Stacey is an extraordinary leader who never stops asking questions. She has a great creative and legalistic mind, and she has challenged everyone in the organization to be responsible all the time: have they thought of everything, followed through on everything, have they been flawless in the undertaking on all of their projects, all of the time” (Variety, August 27, 2001). Snider was also commended for her “clarity and decisiveness” (Variety, August 27, 2001). Her creative decisions were informed and firm, such as rejecting a climactic courtroom scene in Erin Brockovich. Brian Grazer, cochairman of Imagine Entertainment, praised Snider’s help in the creation of such films as The Grinch and A Beautiful Mind. “She is a complete work machine and does all of her homework all of the time. The creative bridge I need is always there with her because she has always read every draft of the script” (Variety, August 27,


2001). In business decisions she can be tough, like refusing to grant Brendan Fraser, the star of The Mummy, a big salary for the sequel since “the special effects computers did most of the heavy lifting anyway” (BusinessWeek Online, July 9, 2001). Snider also nurtured relationships, convincing director Ron Howard to stay with Universal. The French corporation Vivendi Universal Entertainment, Universal’s parent company until May 2004, was enthusiastic about the Meyer–Snider leadership. “In America, the saying is that you stick with a winning team, I think,” said COO Pierre Lescure. “We have a winning team” (BusinessWeek Online, July 9, 2001). Lescure further praised Snider as “a young talented moviemaker who is 101% engaged and involved” (Variety, August 27, 2001). Universal Picture’s parent company was merged with NBC in May 2004 to form NBC Universal. The new company announced no changes in “one of the most stable and experienced leadership teams in the industry” (May 12, 2004). As one of the new women Hollywood executives following Sherry Lansing’s lead, Snider continued Universal’s success into 2004.

See also entries on Columbia TriStar Motion Pictures Companies and Universal Studios in International Directory of Company Histories.


“At Universal, the Hits Are Coming Fast and Furious,” BusinessWeek Online, July 9, 2001. Cagle, Jess, “The Women Who Run Hollywood,” Time, July 29, 2002, pp. 52–55. Dunkley, Cathy, “Showmen of the Year,” Variety, August 27, 2001, p. 45. “NBC Universal: In the News,” company press release, May 12, 2004, http://www.nbcuni.com/About_NBC_Universal/ In_the_News.

—DeAnne L. Luck

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Jure Sola 1951– Chairman and chief executive officer, Sanmina-SCI Corporation Nationality: American. Born: 1951, in Croatia. Education: San Jose State University, BS, 1972. Family: Married Michelle (maiden name unknown); children: three. Career: Lika Corporation, 1972–1980, various management positions; Sanmina Corporation, 1980–1991, various management positions; 1991–2001, chairman and president; Sanmina-SCI Corporation, 2001–2002, cochairman and CEO; 2002–, chairman and CEO. Address: Sanmina-SCI Corporation, 2700 North First Street, San Jose, California 95134; http:// www.sanmina.com.

■ Jure Sola founded Sanmina Corporation in 1980 for the manufacture of advanced electronic-circuit cards, back planes, and enclosures for the telecommunications market. In 2001 Sanmina completed its acquisition of the competitor SCI, and in 2002 Sola became the chief executive officer and chairman of the newly named Sanmina-SCI Corporation. As of 2004 the merger was the largest ever in the electronic manufacturing services industry. The combined company was a leading global electronics contract manufacturer, building parts and providing manufacturing-management services for originalequipment manufacturers in the communications, industrial and medical instrumentation, and computer-technology sectors.

BUILDING THE ELECTRONIC MANUFACTURING SERVICES BUSINESS Born in Croatia, Sola came to the United States as a 17year-old in 1968. After receiving an engineering degree from San Jose State University, he joined the management of the

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electronic manufacturing company Lika, producing electronic transducers and control instruments for factory automation. In 1980 he cofounded Sanmina and began serving the company in various management capacities. Sola became chairman and president of Sanmina in 1991. For most of its history the contract manufacturing business received little respect. Many engineering firms preferred to design products and then let original-equipment manufacturers (OEMs) build the parts. In the 1990s most of the companies that manufactured end products decided to reduce redundant resources and staff by seeking out other firms with which to outsource ongoing production. Sola took advantage of this trend early on to advance Sanmina. Ranked ninth among contract manufacturers in 1997, the company avoided consumer products in order to concentrate on high-end networking and telecommunications applications. Sola stated his business strategy in Electronic Business: “We go after the products that are more difficult to manufacture internally” (August 1, 1998). Throughout much of its existence Sanmina maintained a 15 percent operating margin, a figure that impressed other contract manufacturers. Sola credited the company’s results to the niches that he chose, good management, and a history of closely watched costs. Comparing Sanmina’s operations from well after it became profitable to those of its infancy, when the company had almost as much debt as it did revenue, Sola remarked, “We don’t run any differently” (Electronic Business, August 1, 1998).

MERGING SANMINA WITH SCI In the 1990s OEMs and contract manufacturers had begun to operate like identical companies—both had become truly cooperative and integrated. Contract manufacturers like SCI joined OEM design sessions and provided services throughout the supply chain, from designing to box building. SCI was a pioneer in vertical integration, once designing and producing almost everything for the Apollo space project. By the latter part of the 1990s SCI derived most of its revenue from personal computers and government contracts. In the late 1990s Sola decided that he needed to give Sanmina a more diversified revenue stream by appealing to a broader group of customers; he pursued a friendly merger with the larger SCI. Sola noted, “We built the company to a certain


Jure Sola

level with niche technology, but we needed to have the fundamentals of system assembly in place” (Electronic Buyers News, December 17, 2001). Acquiring SCI would result in quicker improvements than would developing such capabilities internally. Sanmina derived more than two-thirds of its revenue from the communications market, which was highly depressed at the time; the substantially cyclical nature of that business as well as high operating leverages made diversification necessary for Sanmina’s survival. In July 2001 Sola and Sanmina took over SCI in a stock swap valued at about $6 billion, making it the largest acquisition in the history of the electronic manufacturing services industry. The merger saved the new Sanmina-SCI about $150–200 million annually through combined operational efficiencies and the internal sourcing of components. The new company operated manufacturing facilities in 23 countries and had annual revenue in the $12 billion range. It was ranked among the five largest electronic manufacturers in the world. Sanmina-SCI generated revenue from communications, highend computing, personal computers, multimedia, and medical/aerospace/industrial sales. With a technical-sales organization that he now personally deemed the largest in the electronic manufacturing industry, Sola set his sights on Asia, planning to take advantage of the cheaper labor available in China. He explained, “Our ap-


proach is winning new-product introductions and designs in Japan, but doing the manufacturing in China” (Electronic Buyers News, December 10, 2001). Analysts expressed concerns over Sola’s ability to blend the business models of Sanmina and SCI. Sanmina provided high levels of manufacturing technology to clients, while SCI specialized in high-velocity assembly; the two platforms required different customer interactions and pricing strategies. Sola maintained that the potential of the acquisition outweighed the risks.


Ristelhueber, Robert, “Sanmina-SCI Begins to Take Shape as Merger Is Completed,” Electronic Buyers News, December 10, 2001, p. 2. ———, “Special Report: Companies to Watch,” Electronic Buyers News, December 17, 2001, p. 52. Roberts, Bill, “The Electronic Business Top 200 Ties That BIND,” Electronic Business, August 1, 1998, http:// www.reed-electronics.com/eb-mag/article/ CA67571?pubdate=8%2F1%2F1998 —Caryn E. Neumann

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George Soros 1930– Chairman, Soros Fund Management Nationality: American. Born: August 12, 1930, in Budapest, Hungary. Education: London School of Economics, BS, 1952; Oxford University, DCL, 1990. Family: Son of Tivadar (lawyer) and Elisabeth Szucs; immigrated to United States, 1956; naturalized citizen; married Annaliese Witschak on September 17, 1960 (divorced June 1983); children: three; married Susan Weber (former art magazine publisher who ran Bard College’s Graduate Center for Decorative Arts, Manhattan) on June 19, 1983; children: two. Career: F. M. Mayer, 1956–1959, arbitrage trader; Wertheim & Company, 1959–1963, analyst; Arnhold and S. Bleichroeder, 1963–1973, vice president; Soros Fund Management, 1973–2000, sole proprietor; Soros Fund Management, 1996–, chairman. Awards: Honored by Lawyers Committee for Human Rights, New York, 1990; Laurea Honoris Causa (highest honor, in recognition of efforts to promote open societies throughout the world), University of Bologna, 1995. Publications: Opening the Soviet System, 1990; Underwriting Democracy, 1991; The Alchemy of Finance: Reading the Mind of the Market, 1994; The Crisis of Global Capitalism: Open Society Endangered, 1998; Open Society: Reforming Global Capitalism, 2000; George Soros on Globalization, 2002; The Bubble of American Supremacy: Correcting the Misuse of American Power, 2004. Address: Soros Fund Management, 888 Seventh Avenue, 33rd Floor, Suite 3300, New York, New York 100160001; http://soros.org.

■ In the early 2000s the billionaire financial, philanthropic, and philosophical speculator George Soros was known on Wall Street as the greatest hedge-fund investor in modern times. (Wealthy individuals and institutions often employ hedge funds as an aggressive strategy for investments, with managers using such techniques as arbitrage, derivatives, lever-

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George Soros. AP/Wide World Photos.

age, program trading, selling short, and swaps.) Soros’s management style was that of a short-term speculator who made huge gambles on the directions of financial markets. In 2000, at the age of seventy and after a career of successfully speculating on currency with billions of dollars of other people’s money, Soros retired from active investing within his company, Soros Fund Management, a private investmentmanagement firm. At the time Soros began to invest with his Quantum Fund in 1969, an initial investment of $1,000 would have grown into $4 million by the time Soros retired. In fact, the Quantum Fund was generally recognized as one of the most successful investment funds ever, returning, on average, 31 percent annually throughout its 30-year history (up to 1999). After making billions of dollars and often moving entire financial markets, Soros—who was sometimes called “Soros the Specu-


George Soros

lator”— turned to working full-time through his foundations to give away all of his wealth. Not a man to compromise his principles, Soros actively made himself a powerful and (sometimes) the most infuriating philanthropist of modern times.

SURVIVING NAZISM AND COMMUNISM Soros was born in Budapest, Hungary, in 1930 and survived the Holocaust despite the German occupation of his country in the spring of 1944. His father, Tivadar, a Jewish attorney, had already survived one deportation as a prisoner in Russia during the Russian Revolution. To avoid the Nazis as they gathered up Jews and deported them to concentration camps, Tividar bought false identity papers for his family members, who then separated and went into hiding. Soros, then fourteen years old, helped his father formulate thousands of fake documents for many of their fleeing countrymen. Soros remembered that his father would provide free documents for people he knew or who were in immediate danger, would request money only to cover his expenses from people whom he felt a moral obligation to help, and would ask for as much money as the wealthy could afford. Soros reflected on his father’s honesty during the Holocaust, but he also remembered the number of laws his father had to break in order to provide safety for his family and countrymen. Soros learned the art of survival from his father, and he came out of the experience resolved to be undaunted by challenges.

EARLY EDUCATION AND DEVELOPMENT Soros left Soviet-controlled Communist Hungary in 1947 for London, where he attended the London School of Economics. There he studied with the philosopher Karl Popper, the originator of the term “open society.” (Unlike a dictatorship, an “open society” is one in which debates and arguments are encouraged.) Popper influenced Soros’s thinking and ultimately his investment and philanthropic activities. Soros graduated in 1952 but could find only unskilled jobs. He eventually secured an entry-level position with an investment bank in London. In 1956 he moved to the United States, where he worked as an arbitrage trader with F. M. Mayer from 1956 to 1959 and as an analyst with Wertheim and Company from 1959 to 1963. Throughout this time, but mostly in the 1950s, Soros developed a philosophy of “reflexivity” based on the ideas of Popper. (Reflexivity, as used by Soros, is the belief that self-awareness is part of the environment. Actions tend to cause disruptions in economic equilibriums, which may run counter to the progression of free-market systems.) Soros realized, however, that he would not make any money from the concept of reflexivity until he went into investing on his own. He began to investigate how to deal in investments. From 1963 to 1973 he worked at Arnhold and S. Bleichroeder,


where he attained the position of vice president. Soros finally concluded that he was a better investor than he was a philosopher or an executive. In 1967 he persuaded the company to set up an offshore investment fund, First Eagle, for him to run; in 1969 the company founded a second fund for Soros, the Double Eagle hedge fund. When investment regulations restricted his ability to run the funds as he wished, he quit his position in 1973 and established a private investment company that eventually evolved into the Quantum Fund.

THE QUANTUM FUND By the end of the 1960s Soros had thoroughly studied the discipline of arbitrage, the simultaneous buying and selling of instruments in different investment markets in order to profit from differences between the transactions’ prices (that is, buying the underpriced assets and selling the overpriced ones). Using this new skill and his concept of reflexivity, which promised that rising prices would continue to rise (even up to a point that ran counter to traditional economic analyses), Soros realized that he could move money around the world as a way to profit from the constant rise and fall of currencies. Through the Quantum Fund, which was registered outside the United States to give it maximum trading flexibility, Soros took major global positions for or against currencies, derivatives, commodities, emerging markets, stocks and bonds, private markets, and almost anything he thought would be financially advantageous to him. Soros then used massive amounts of leverage to strengthen his positions. Although this strategy was enormously volatile, Soros’s results were outstanding, and he accumulated a large fortune through his management of the fund. At the same time, he became a target for various bankers and government leaders who perceived that they were being harmed by his actions. However, he was also renowned publicly as “the world’s greatest money manager” in such publications as Institutional Investor, which in 1981 put him on its cover.

THE PHILANTHROPIST By the end of the 1970s Soros was very rich but also very unhappy and unfulfilled. He quit his business relationship with his long-time investment partner, Jim Rogers, and divorced his first wife, Annaliese; he likewise felt that he had failed in his relationship with his children. In a small apartment in Manhattan, Soros became a recluse. After profiting so much in earlier years, Soros began to lose money and felt guilty about his actions. He sought out therapeutic counseling but did not solve his personal problems until he discovered philanthropy. In the 1980s Soros began to develop his philanthropic empire. Initially, he pursued endeavors in central and eastern Eu-

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George Soros

rope. Near the end of the cold war (at about the end of the 1980s), for instance, Soros supplied organizations in his native Hungary with photocopiers, to counter the censorship of the Soviet Union. As democratic countries were set up across Europe after the fall of the former Soviet Union, Soros acted as a type of central bank for countries in need. He established philanthropic offices in eastern European countries, providing hundreds of millions of dollars to help individuals and countries struggle to free themselves from the old Soviet bloc. After Russia reorganized as an independent country, Soros invested $100 million in scientific and technological endeavors in that country. In Yugoslavia, at about the same time, Soros spent $50 million to help revive war-torn Sarajevo. Soros’s philanthropic headquarters, the Open Society Institute, in New York directed a network of foundations located in numerous nations and employed about 1,300 people. Soros spent billions of dollars funding Open Society foundations around the world, which promoted political pluralism, financed education, strengthened freedom of speech and media, and defended human rights projects.

“THE MAN WHO BROKE THE BANK OF ENGLAND” Although he was well known in Europe in the early 1990s, Soros did not feel that he had much financial clout in the Western Hemisphere. When President George H. W. Bush and Prime Minister Margaret Thatcher ignored his plan to rebuild countries destroyed by the demise of the former Soviet Union, Soros decided that he would create a public personality that leaders would heed. He realized that he possessed the key for formulating his plan when he heard a German bank president talk about possible instability among European currencies. In September 1992 Soros bet $10 billion that the British pound would fall. First, he sold the Italian lira short, and it proceeded to devalue. Then he made a similar move with respect to the British pound, assuming that it would decline against other currencies. In a twenty-four-hour period Soros reaped $1 billion, and he eventually made $2 billion on the deal. This risk-taking approach earned him international acclaim as he came to be known as “the Man Who Broke the Bank of England.” Soros had established himself as a man to contend with, a man to be heard by presidents and prime ministers.

MOVING MARKETS From this point on, Soros held a certain godlike status with many traders, who believed that he could move markets with a wave of his hand. Leaders of countries feared that if he traded against their currencies, he could cause an economic crisis. In fact, Prime Minister Mahathir Mohamad of Malaysia accused

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Soros of destabilizing his country’s economy during the Asian financial panic of 1997–1998. Mohamad also declared to the Association of Southeast Asian Nations, a regional political and trade organization, that Soros had committed a crime when he “attacked” currencies after leaders of Southeast Asian governments recognized the Burmese military regime, which Soros opposed for humanitarian reasons. For better or worse, Soros had gained international status as a man who could change major sectors of the world’s financial market.

LOSSES LEAD TO SHIFT IN STRATEGY By 1998, however, Soros had lost $2 billion in the collapse of the Russian economy. The situation turned even worse in 1999, when Soros bet that fledgling Internet stocks would fall. He lost about $700 million more when the emerging sector continued to rise. When he did buy technology stocks, the real downturn that he had predicted a year earlier finally occurred. He lost almost $3 billion when the NASDAQ crashed in the spring of 2000. At that time, Soros withdrew from actively managing his Quantum Fund. In July of that year Soros merged his flagship Quantum Fund with the Quantum Emerging Growth Fund to form the Quantum Endowment Fund, a switch from high-risk speculation to conservative investment.

IMPACT ON PROBLEMS IN THE UNITED STATES In the late 1990s and early 2000s Soros was concerned with certain problems in the United States, including ineffective drug laws, containment of mental patients in prisons, unfair immigration laws, welfare reform, and inadequate care for the dying. Soros gave $15 million over five years (toward the end of the 1990s) to groups that opposed the U.S. war on drugs; provided $5 million in 1997 to his Center on Crime, Communities, and Culture, which gives grants to service and research organizations; committed $50 million to the Emma Lazarus Fund to help fellow immigrants acquire full citizenship and to campaign for their rights; and dedicated $20 million to improving the care of the dying.

THE GLOBAL REACH OF PHILANTHROPY Soros took up active philanthropy in 1979, when he began providing funds to help black students attend the University of Cape Town in apartheid South Africa. He founded the Open Society Fund in 1979, the Soros Foundation-Hungary in 1984, and the Soros Foundation-Soviet Union in 1987. As of 2004 he was chairman of the Open Society Institute and founder of a network of philanthropic organizations that were active in more than 50 countries. Based primarily in central and eastern Europe and Russia, but also in Africa, Latin Amer-


George Soros

ica, Asia, and the United States, these foundations were dedicated to building and maintaining the infrastructure and institutions of an open society through the support of a variety of educational, cultural, and economic restructuring activities.

See also entry on Soros Fund Management LLC in International Directory of Company Histories.

In 1992 Soros founded Central European University, with its primary campus in Budapest and other campuses in Prague and Warsaw. The university was designed to offer postgraduate programs in art history, economics, history, political science, and the social sciences and served as the centerpiece of Soros’s educational initiatives in eastern Europe. In 2001, at the age of seventy, Soros retired from active investing, although he retained the chairmanship of Soros Fund Management. He had given away $2.8 billion to his foundations but was still worth some $5 billion. Soros promised to give away the rest of the money before he turned eighty.



Kaufman, Michael T., Soros: The Life and Times of a Messianic Billionaire, New York: Knopf, 2002. Slater, Robert, Soros: The Life, Times, and Trading Secrets of the World’s Greatest Investor, Burr Ridge, Ill.: Irwin Professional Publisher, 1996.

—William Arthur Atkins

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William S. Stavropoulos 1939– Chairman and chief executive officer, The Dow Chemical Company Nationality: American. Born: May 12, 1939, in Bridgehampton, New York. Education: Fordham University, BA, 1961; University of Washington, PhD, 1966. Family: Married Linda S.; children: two. Career: The Dow Chemical Company, 1967–1970, research chemist in Pharmaceuticals; 1970–1973, research chemist in Pharmaceuticals and Diagnostics; 1973–1976, research manager in Diagnostic Products; 1976–1977, business manager in Diagnostic Products; 1977–1979, business manager in Polyolefins Plastics; 1979–1980, director of marketing in Plastics; 1980–1984, commercial vice president of Dow Latin America; 1984–1985, president of Dow Latin America; 1985–1987, commercial vice president of Basics and Hydrocarbons; 1987–1990, group vice president of Dow USA; 1990, president of Dow USA; 1990–1991, vice president; 1991, senior vice president; 1992–1993, president; 1993–1995, president and COO; 1995–2000, 2002–, chairman and CEO. Awards: Ellis Island Medal of Honor, 1998; CEO of the Year Kavaler Award, 1999; Man of the Year, Hellenic American Chamber of Commerce, 2000; American Section Award, Society of the Chemical Industry, 2001; Chemical Industry Medal Award, 2001; Business Management Award, Society of Plastic Engineers, 2003. Address: The Dow Chemical Company, 2030 Dow Center, Midland, Michigan 48674; http://www.dow.com.

William S. Stavropoulos. AP/Wide World Photos.

24, 2001), leading a major reorganization of the company when he became chairman and CEO in 1995. He retired in 2000 after a five-year tenure, but his successor failed to maintain the momentum he had created; Stavropoulos returned to his former position in 2002 to again move the company into a strong leadership position in the industry.

A PROUD GREEK HERITAGE

■ William Stavropoulos, the chairman and CEO of The Dow Chemical Company, was a driving force behind responsible as well as profitable production at the largest chemical company in the United States and the second largest in the world. As described by David Hunter of Chemical Week, Stavropoulos received numerous prestigious awards for his commitment to restoring “respect and respectability to the industry” (October

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William Stavropoulos was raised on Long Island, New York, where he lived with his immigrant Greek parents above their family restaurant. At one time in his youth Stavropoulos was on the same team as the future Major League Baseball–Hall of Famer Carl Yastrzemski. Stavropoulos eventually went off to study pharmacy at Fordham University, earning a bachelor’s degree in 1961, then attended the University of


William S. Stavropoulos

Washington, receiving a doctorate in medicinal chemistry in 1966. Stavropoulos started his career with Dow in 1967 as a pharmaceutical research chemist. He moved steadily up through the organization, going first to Pharmaceuticals and Diagnostics, then moving into plastics to become business manager for Polyolefin Plastics in 1977. He eventually became director of marketing for the Plastics Department in 1974. After a few years as vice president and then president of Dow Latin America, Stavropoulos was named commercial vice president for Dow USA Basics and Hydrocarbons in 1985. Continuing his rapid climb through the organization, he went from vice president to senior vice president to president of Dow by 1992; he became COO in 1993, then CEO in 1995. The outstanding success Stavropoulos enjoyed in leading The Dow Chemical Company to its global position was recognized by a number of prestigious groups, among them three Hellenic organizations: he was named Man of the Year in 1995 by the American Hellenic Education Progressive Association, in 1998 by the Hellenic American Bankers Association, and in 2000 by the Hellenic American Chamber of Commerce. He also received the Ellis Island Medal of Honor in 1998.

A GLOBAL STRATEGY While Stavropoulos was COO, he and some of his colleagues saw a need to completely reorganize the company in order to meet the challenges of a growing global economy. Later, as CEO, he reengineered the company from one based on geographic organization to one designed around business units. Rather than discarding the original organization, he simply rebalanced it, placing business first in importance, followed by geography, then by job function. Stavropoulos reduced 12 layers of management to five and put in a system-wide computer-based communications system. He told Beth Belton of BusinessWeek, “We can communicate better and network better. It allows us to have global processes—have global meetings with everyone sitting in their office” (May 3, 2000). Stavropoulos also added a 13-member management board. The company’s more than two thousand products all fell within the 15 specific business units, which were operated quite independently, with the head of each unit responsible for that business worldwide. In addition to the internal restructuring of the organization, Stavropoulos reshaped Dow’s external operations, selling some units and acquiring others to focus growth on chemicals sold by tank car. The biggest acquisition was Union Carbide, as that merger made Dow the largest chemical company in the United States, second worldwide only to the Germany-based BASF. Union Carbide unfortunately came with the legacy of


asbestos-exposure claims and a disastrous chemical accident in Bhopal, India, in 1984; however, Dow accepted no responsibility for either the tragedies or the cleanup of the accident site. As Dow had a mandatory five-year limit to the CEO position, Stavropoulos had no choice but to retire in 2000, leaving the company in a strong position in the industry. His successor, Michael D. Parker, did not have the intense personality that drove Stavropoulos, and the company started to flounder as the economy worldwide moved into difficult times. Chemical & Engineering News noted that Parker was described as too “patient” by Dow insiders, where Stavropoulos was “not a very patient guy in making decisions” (December 23, 2002). After two years of an ever-worsening scenario Dow reinstated Stavropoulos, and Parker was retired.

RESTORING THE IMAGE OF CHEMICAL COMPANIES As Stavropoulos was a chemist before he became an executive, he was ambitious for Dow to become an industry leader with a commitment to ethical practices. He focused research and development on bringing new products to market using the chemical-industry standards of Responsible Care and strived to adhere to sustainable development—that is, the use of raw material and energy obtained from biomass rather than petroleum. Stavropoulos received the prestigious American Section Award from the Society of the Chemical Industry in 2001, not only for his role in making Dow a global leader in the chemical industry but also for the high standards he imposed on the industry in the process.

See also entry on The Dow Chemical Company in International Directory of Company Histories.


Belton, Beth, “Dow’s Boss on Why It’s Sticking with Chemicals,” BusinessWeek Online, May 3, 2000, www.businessweek.com/bwdaily/dnflash/may2000/ nf00503e.htm. Brandt, E. N., Growth Company: Dow Chemical’s First Century, East Lansing, Mich.: Michigan State University Press, 1997. Dolan, Kerry A., “Chemical Transformation,” Forbes, November 1, 1999, pp. 97–100. Hunter, David, “In Support of Research,” Chemical Week, October 24, 2001, http://www.chemicalweek.com. Storck, William, “Dow’s Parker Out after Two Years,” Chemical & Engineering News, December 23, 2002, http:// pubs.acs.org/cen/topstory/8051/8051notw1.html. —M. C. Nagel

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Sy Sternberg 1943– Chairman and chief executive officer, New York Life Insurance Company Nationality: American. Born: June 24, 1943, in New York City, New York. Education: City College of New York, BS, 1965; Northeastern University, MS, 1968. Family: Son of Max Sternberg (telegraph operator) and Mollie Sternberg (homemaker); married Roslyn Jacobowitz, 1965 (divorced); married Laurette Zolty, 1980; children: three (first marriage, two; second marriage, one). Career: Raytheon Company, 1965–1971, engineer and researcher; 1971–1973, director of Management Information Systems Department; Data Architects, 1973–1975, manager; Massachusetts Mutual Life Insurance Company, 1975–1976, director of information services; 1976–1977, second vice president; 1977–1981, vice president, information services; 1981–1984, senior vice president of Group Life and Health Division; 1984–1987, executive vice president of Group Life and Health Division; 1987–1988, senior executive vice president; New York Life Insurance Company, 1989–1991, senior vice president, group health operations; 1991–1995, executive vice president; 1995, vice chairman; 1995–1997, vice chairman, president, and chief operating officer; 1997–2002, chairman, president, chief executive officer, and chief operating officer; 2002–, chairman and chief executive officer. Awards: 5th Annual Engineering Alumni Awards, Egan Research Center, 2004. Address: New York Life Insurance Company, 51 Madison Avenue, New York, New York 10010; http:// www.newyorklife.com.

■ Seymour (Sy) Sternberg, chairman and chief executive officer of New York Life Insurance Company, derived a great deal of satisfaction from his decision to buck industry trends and keep the company in the shrinking ranks of mutual insurance companies, which are operated and maintained for the benefit

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of their policyholders. The late 1999 decision to reject proposals to take the company public served New York Life well. In Fortune magazine’s 2004 ranking of the 500 largest companies in the United States, New York Life, with 2003 revenues in excess of $25.7 billion, was accorded the number 70 position, ahead of such well-known companies as Coca-Cola, Federal Express, and Merck. Sternberg also distinguished himself among top life insurance company executives in his decision to focus New York Life on its core products of life insurance, annuities, and longterm care insurance, resisting the temptation to transform New York Life into a widely diversified financial services company. In a 2002 appraisal of New York Life’s financial performance, according to a company press release (March 11, 2002), Sternberg attributed the company’s success to two factors: “a clear strategic focus and a great team of employees and agents.” He pointed out that while most of the insurer’s competitors had aggressively expanded into other financial services during the bull market, New York Life had continued its traditional focus on life insurance. “That focus is paying off.” Sternberg also observed that the company’s “decision to remain a mutual is proving to be a competitive advantage because a mutual can best deliver on the promise to policyholders of longterm safety and stability.”

EARLY YEARS Sternberg was born in Brooklyn, New York. The son of Max and Mollie Sternberg, he grew up in Brooklyn’s Bensonhurst neighborhood. His father, an immigrant from Romania, worked as a telegraph operator while his mother was a homemaker. She pressed Sternberg to do well in school. As he told Jacqueline Gold of Institutional Investor (November 2002), “‘God forbid I came in with a report card that wasn’t quite right.” While in junior high school, he worked on the school newspaper and was leaning toward a career in journalism. However, his discovery that he liked math more than writing soon took him in a new direction. After completing high school, Sternberg enrolled at the City College of New York (CCNY) to study electrical engineering. After four years of making the three-hour round-trip commute between his Brooklyn home and the CCNY campus in upper Manhattan, Sternberg earned his bachelor’s degree in


Sy Sternberg

1965. Less than a week after receiving his degree, he went to work as an engineer for the defense contractor Raytheon Company in Bedford, Massachusetts. He recalled, “They saw me as the kind of guy who learned quickly, so they gave me the opportunity to work on independent development projects” (Institutional Investor, November 2002); in one of these projects he helped pioneer computer-assisted design technology. While working for Raytheon, Sternberg earned a master’s degree in computer science from Boston’s Northeastern University in 1968.

TAPPED TO HEAD RAYTHEON’S MIS DEPARTMENT In 1971 Raytheon tapped Sternberg, who was then 28, to be the director of its Management Information Systems Department. Sternberg noted, “We did some of the earliest work in online systems anywhere in the United States—purchasing, inventory control, billing, and inspection systems” (Institutional Investor, November 2002). In his new position, Sternberg had occasion to work with Norman Zachary, a computer consultant who had been hired to help on some Raytheon projects. In 1973 Zachary invited Sternberg to join his firm, Data Architects, which was based in nearby Waltham, Massachusetts. Sternberg jumped at the opportunity, convinced that his future prospects in the information systems business would be brighter with Zachary’s company than it was with Raytheon, the primary business of which was the manufacture of military defense systems.

JOINED DATA ARCHITECTS One of Sternberg’s first assignments at Data Architects was to oversee the development of an online network for Massachusetts Mutual Life Insurance Company (MassMutual). During the course of the project, designed to link the insurer’s 140 field offices with its headquarters in Springfield, Massachusetts, Sternberg met William Clark, who was then president of the insurance company and later served as its CEO from 1980 to 1988. Clark later recalled that Sternberg was “a very smart young man—not the most polished individual in the world, but he was so damned intelligent. In a short time he knew more about our health business than I did” (Institutional Investor, November 2002). Two years after joining Data Architects, Sternberg accepted an offer to join MassMutual as its director of information systems. In his new post he reported to David Blackwell, who then headed the insurance company’s Information Technology Department. Blackwell noted that he first assigned Sternberg to try to fix the troubled claims-processing system of MassMutual’s Group Life and Health Division. “Sy developed a very good system. He soon knew more about it than those who came out of the actuarial or sales side of the company” (Institutional Investor, November 2002).


NAMED SENIOR VICE PRESIDENT AT MASSMUTUAL In 1981, as MassMutual’s group operation continued to falter, losing $15 million a year, Blackwell once again called on Sternberg. This time Sternberg was named senior vice president of the group division and tasked either to turn it around or to get it ready for sale. Sternberg proved himself more than equal to the task, setting up a new pricing structure for the operation. Within a year the division had turned the corner. In 1984 Sternberg was promoted to executive vice president of the division, a post he held until 1987. In 1987 Sternberg was named senior executive vice president of MassMutual and assigned to a specially created office of the chairman. However, Clark, who was now chairman, had already tapped Thomas Wheeler, head of MassMutual’s life and annuity business, as his successor. A year later, when Wheeler succeeded Clark, Sternberg, seeing no short-term opportunity to move higher in the organization, left MassMutual. Although he left with no new job lined up, Sternberg’s transition was made more comfortable by a $1 million severance package that Clark had convinced the board to grant.

JOINED NEW YORK LIFE After mulling over job offers from a number of insurers, Sternberg in 1989 decided to join New York Life as senior vice president for group health operations. Although he had hoped for a higher position, he noted that New York Life’s top executives “said that I had to prove myself, that if they made me an executive vice president, it would offend people” (Institutional Investor, November 2002). As he had done at MassMutual, Sternberg quickly engineered a turnaround for New York Life’s group health business. Sternberg merged the health maintenance organization business with group indemnity, expanded the operation’s agent force, expanded its product line, and invested heavily in software to support the sales push. As a result of his efforts, the company’s group health operations went from a loss of $30 million in 1989 to a profit of $24 million three years later.

CONTINUED TO CLIMB LADDER AT NEW YORK LIFE In 1991 Sternberg was named executive vice president and assigned responsibility for New York Life’s operation in Canada. After a short time on the job, he concluded that New York Life was too small to compete effectively in the Canadian market, and in April 1994 the Canadian operation was acquired by Canada Life Assurance Company for $186 million. Sternberg was appointed vice chairman in charge of New York Life’s life and annuity business in February 1995 and later that same year was given the additional responsibilities of president and chief operating officer. For his next challenge, Sternberg was assigned to head off a possible revolt among New York Life’s agents, most of whom

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Sy Sternberg

were up in arms over a newly imposed company directive that all sales materials had to be reviewed by a separate compliance department. He said, “Sales fell like a rock. I had to get in there and kind of smooth some feathers and send the right message to our agents” (Institutional Investor, November 2002). To accomplish his goal, Sternberg instituted new training courses and videos, and he mandated more frequent visits to agents from New York Life’s upper management ranks. Under the new system instituted by Sternberg, the company’s sales of insurance and annuities rose dramatically, climbing from $2 billion in 1995 to $2.4 billion the following year. “The agency system is our key market differentiator,” Sternberg remarked (Institutional Investor, November 2002). On April 1, 1997, at the age of 53 Sternberg became New York Life’s chairman and CEO. He also held on to his positions as president and COO. Just two weeks after taking the reins at New York Life, Sternberg was interviewed by Christine Dugas of USA Today. Asked if he saw banks and insurance companies as a natural fit, Sternberg said, “The businesses are very different. Banking is a transaction business. The insurance business is a relationship business.” He predicted that attempts to merge banks and insurance companies into a single financial services company would ultimately come to grief and that “both will conclude that it’s best to stick to their fundamental businesses” (April 15, 1997). As part of Sternberg’s strategy, in March 1998 New York Life sold its health-care business to Aetna for $1.05 billion. In announcing the sale, according to Samuel Goldreich of the Washington Times, Sternberg said, “This sale allows New York Life to focus on its own growth strategy in building on our core strengths in the domestic life insurance and annuity businesses” (March 17, 1998).

DECIDED TO KEEP NEW YORK LIFE A MUTUAL An even more pressing question facing Sternberg and New York Life was whether to take the company public—as more and more of the company’s competitors were doing—or remain a mutual. For a time it appeared that the insurer might pursue a course that would give it the best of both worlds by becoming a mutual holding company (MHC). This would allow New York Life to raise capital and still maintain a policyholder focus and protect against takeover. In 1998, when New York state legislators let die legislation that would pave the way for MHC conversions, New York Life was left with no option but to demutualize or retain its longtime mutual structure. In January 1999 New York Life’s 16-member board of directors announced that the company would remain a mutual. As Sternberg told Joseph D’Allegro of National Underwriter, a mutual orientation is part of a company’s culture, allowing it to differentiate itself in the marketplace. He pointed out that going public would make it difficult for the company to sup-

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port participating products because shareholders would have a significant voice in deciding how dividends were to be used. “We’ve had a commitment to our policyholders,” Sternberg said (January 25, 1999). In further explaining the decision to retain New York Life’s mutual structure, Sternberg told Ron Panko of Best’s Review that the company’s customers get nothing from New York Life except a promise that somewhere down the line the insurer will pay a claim. “Therefore, my stewardship must assure that this company be a vibrant, vital, and financially sound institution 30 years from today. That’s my most important responsibility” (September 2001). Making it easier for New York Life to remain a mutual, Sternberg told Panko, was its comfortable financial position. At the time of the decision to reject taking the company public, New York Life boasted a strong cash flow and a free surplus of $2.5 billion, meaning that it had no pressing need for additional capital. Another factor, of course, was the question of retaining its independence. As Sternberg told Panko, “If we were to go public, we could very well see a hostile takeover because the company is so strong” (Best’s Review, September 2001). NEW YORK LIFE FLOURISHED AS A MUTUAL The company’s decision to remain a mutual did nothing to slow its financial growth. In early 1998 New York Life, under Sternberg’s direction, had decided to pursue top-line revenue growth through emerging international markets, a strategic move that paid off quickly. In March 2002 Sternberg, in announcing the company’s financial results for 2001, reported that more than a quarter of New York Life’s total insurance sales had been derived from nine countries outside the United States. As of early 2004 the company’s International Division had operations in Argentina, China, Hong Kong, India, Mexico, the Philippines, South Korea, Taiwan, and Thailand. The company also maintained a representative office in Hanoi, Vietnam. In late 2003 Sternberg, who a year earlier had relinquished his responsibilities as president and COO to Frederick J. Sievert, announced the formation of an office of the chairman, in which he would be joined by Sievert. According to a company release, Sternberg said of this change in the company’s executive structure, “With Fred’s new expanded role, I will be able to tap his vast experience for the management of our entire enterprise” (November 24, 2003). In 2003 the company posted net income of about $1.1 billion on revenues of $25.7 billion, up from a profit of approximately $1 billion on sales of $24.7 billion the previous year. In 2001 New York Life reported net income of just under $1.1 billion on revenue of $22.5 billion, down from a profit of $1.2 billion on sales of almost $22 billion in 2000. Away from his responsibilities at New York Life, Sternberg was an avid tennis player and stamp collector. He was also ac-


Sy Sternberg

tive in a wide variety of civic and professional organizations. He was a member of the U.S.–China Business Council and City University of New York Business Leadership Council, and he served on the board of the Partnership for New York City, a network of business leaders that seeks to promote the city as a global center for commerce, culture, and innovation. Sternberg also sat on the boards of United Way of Tri-State; Hackley School in Tarrytown, New York; Springfield College; and Big Brothers–Big Sisters of New York City.

See also entries on Massachusetts Mutual Life Insurance Company, New York Life Insurance Company, and Raytheon Company in International Directory of Company Histories.


Goldreich, Samuel, “Aetna Buys New York Life Insurance’s Health Business for $1.05 Billion,” Washington Times, March 17, 1998. Higgins, Barry, “CEOs Share Their Views of the Future,” National Underwriter, April 22, 2002. Hollmer, Mark, “Liberty Mutual Under Fire over Holding Company Bid,” Insurance Times, March 6, 2001. “New York Life Creates Office of the Chairman,” company press release, November 24, 2003, http:// www.newyorklife.com/cda/0,3254,13032,00.html. “New York Life Is Still Ahead on the Fortune 500,” company press release, http://www.newyorklife.com/cda/ 0,3254,11576,00.html. “New York Life Net Income Rises 10% in 2003,” company press release, March 16, 2004, http://www.nyl.com/cda/ 0,3254,13692,00.html.

“Aetna Buying N.Y. Life’s Health Care Business,” Seattle Post–Intelligencer, March 17, 1998.

“New York Life’s Net Income Exceeds One Billion Dollars,” company press release, March 11, 2002, http:// www.newyorklife.com/cda/0,3254,11561,00.html.

D’Allegro, Joseph, “New York Life Will Keep Mutual Structure,” National Underwriter, January 25, 1999.

“NY Life Promotes Annuity Chief to President,” Annuity Market News, November 1, 2002.

Dugas, Christine, “Sternberg Prepared to Put Policies in Place,” USA Today, April 15, 1997.

Panko, Ron, “The Company He Keeps,” Best’s Review, September 2001.

“Frequently Asked Questions about New York Life,” company press release, http://www.newyorklife.com/cda/ 0,3254,8409,00.html.

Piontek, Stephen, “What Keeps You Up at Night?” National Underwriter, October 20, 2003.

Gold, Jacqueline S., “Mutual Admiration: New York Life CEO Sy Sternberg Decided to Go Abroad Rather Than Go Public,” Institutional Investor, November 2002.


Sternberg, Seymour, “Banks, Agents Can Work Together,” American Banker, June 6, 2003. —Don Amerman

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David L. Steward 1951– Founder and chairman, World Wide Technology Nationality: American. Born: 1951, in Chicago, Illinois. Education: Central Missouri State University, BS, 1973. Family: Son of Harold Steward (mechanic) and Dorothy (maiden name unknown; homemaker); married Thelma (maiden name unknown; nurse); children: two. Career: Wagner Electric, 1974–1975, production manager; Missouri Pacific Railroad, 1975–1979, sales representative; Federal Express, 1979–1984, senior account executive; Transportation Business Specialists, 1984–1993, owner; Transport Administrative Services, 1987–1990, owner; World Wide Technology, 1990–, founder, chairman; Telcobuy.com, 1997–, founder, chairman; First Banks, 2000–, director; Centene Corporation, 2003–, director. Awards: Business Person of the Year for Missouri, Small Business Administration, 1998; regional Ernst & Young Technology Entrepreneur of the Year, 1998; named one of the 100 Most Influential Black Americans, Ebony. Publications: With Robert L. Shook, Doing Business by the Good Book, 2004. Address: World Wide Technology, 60 Weldon Parkway, St. Louis, Missouri 63043; http://www.wwt.com.

■ David L. Steward founded and served as chairman of World Wide Technology, a private company majority-owned by Steward, with reported revenues in excess of $1 billion. World Wide Technology specialized in procuring, building, and deploying information technology infrastructure for customers. In 2000 and 2001 Black Enterprise recognized World Wide Technology as the largest business in the United States with majority African-American ownership.

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EARLY INFLUENCES Steward credited his work ethic to his father, a mechanic and small farmer who also worked a variety of odd jobs to support his large family. Steward himself had farming chores before school each day, and mowed lawns, shoveled snow, and sold Christmas cards door-to-door to make extra money. Born in Chicago but raised in Clinton, Missouri, Steward faced poverty and discrimination as an African-American during his childhood. “I vividly remember segregation—separate schools, sitting in the balcony at the movie theater, being barred from the public swimming pool.” Steward was among a small group of African-American high-school students who integrated the public swimming pool in Clinton in 1967. “These experiences had a profound effect on the man I am today. I am not one to back down when it comes to taking a stand for what I believe.” Steward found a purpose for the hardship he encountered in his early years—it strengthened his character and taught him perseverance. “The adversities I encountered during my youth served as my training ground for hard times I eventually faced as a struggling entrepreneur” (Doing Business by the Good Book, 2004).

BUILT CORPORATE CAREER After graduating from college, Steward worked as a substitute teacher and for the Boy Scouts of America while searching for a permanent position. He was a manufacturing supervisor at Wagner Electric, but was laid off. In 1976 Steward accepted a marketing and sales position with the Missouri Pacific Railroad Company. Later Steward worked for Federal Express as a senior account executive. He was recognized as salesman of the year and inducted into the company’s hall of fame in 1981. He was presented with a trophy—an ice bucket with his engraved initials. When he looked inside the bucket, he noticed that it was empty. Steward saw this as a defining moment in his career, and he asked himself if that was what he wanted out of life. At the time Steward had two small children, a mortgage, and “all the trappings of success that keep you locked into a job” (Doing Business by the Good Book, 2004), but he was ready to venture out as an entrepreneur.


David L. Steward

STARTED FIRST BUSINESS Steward had done marketing work for the owner of a consulting firm that audited and reviewed freight-bill charges. Steward bought the firm in 1984 and renamed it Transportation Business Specialists. In 1987 he founded a sister company, Transport Administrative Services. Steward first audited overcharges for railroad customers, seeking refunds for customers who were charged too much. Then he found a new approach, auditing undercharges for the railroad companies. In 1987 Transport Administrative Services was hired by Union Pacific Railroad to audit three years’ worth of freight bills for undercharges, which meant managing $15 billion of rate information for a single client. Steward’s company built a local area network to handle the data.

FOUNDED WORLD WIDE TECHNOLOGY Steward founded World Wide Technology in 1990 because of this successful experience in integrating technology to solve business problems. The first years were difficult. Steward never missed an employee payroll, but many times could not pay himself. The company’s debt reached $3.5 million, and in 1993 a collection company repossessed his car from the company parking lot. Steward persevered because of his belief “that what we were doing for our employees and customers was meaningful. I had faith that our company was capable of providing exceptional value” (Doing Business by the Good Book, 2004). As a small minority-owned firm, World Wide Technology was approached by the St. Louis office of the Small Business Administration (SBA) about serving government customers. The SBA provided introductions and support that helped World Wide Technology land its first federal contracts. Steward remained grateful to the SBA for opening doors for his business. A turning point for the company came in 1995 with a contract to supply computer workstations for U.S. troops in Bosnia. Since no commercial software existed for the purpose, World Wide Technologies developed an Internet program to help the military track the equipment. The program proved successful, and the company began developing other Internetbased applications for its customers. In 1999 World Wide Technology spun off its telecommunications division to form Telcobuy.com. Sales for the two companies continued to grow, although revenues slipped in 2002 as World Wide Technology felt the impact of the technology recession. In 2003 combined reported revenues passed $1 billion, and Steward formed World Wide Technology Holding Company as the parent company for the two firms.

FAITH INFLUENCED BUSINESS PRACTICES St. Louis Commerce magazine found Steward’s defining qualities to be “an enduring curiosity about technology, a tal-


ent for motivating others, a genuine interest in people and their well-being, a willingness to take risks, and the vision to build a company infrastructure that can sustain tremendous growth” (July 1, 1998). Steward based his business practices on his Christian faith. A St. Louis Post-Dispatch article described Steward as “a religious man who sprinkles his conversation with Bible verses but never comes across as preachy” (June 14, 2000). Maximizing profit was never Steward’s sole motivation; his objective was to serve others, and financial success was a byproduct. He found great satisfaction in providing his employees with opportunities to succeed and prosper. “I can’t wait to come to work each morning so I can make a difference in the lives of others. . . . I feel sorry for people who just go through the motions at work” (Doing Business by the Good Book, 2004). Steward emphasized customer service at World Wide Technology. Each paycheck bore the imprint, “A satisfied customer made this check possible.” ADDED ROLE OF AUTHOR In 1999 Steward and his wife were asked by their pastor to conduct a weekly Sunday school class for businesspeople. In 2004 Steward published Doing Business by the Good Book, with Bible passages and personal interpretations drawn from the class. Steward served on the boards of numerous community and nonprofit organizations and in leadership roles with the United Way in St. Louis. See also entry on Federal Express Corporation in International Directory of Company Histories.


Cranon, Angela M., “The Possible Dream: David Steward Has Come a Long Way from Milking Cows and Selling Christmas Cards Door-to-Door,” Minority Business Entrepreneur, April 30, 2000, pp. 9–20. Muhammad, Tariq K., “David Steward, CEO of World Wide Technology, Has Propelled His Company by Focusing on Internal Growth,” Black Enterprise, June 1999, pp. 118–128. Nicklaus, David, “Homegrown Values Cultivate Success for Firm—Tech Company Ranks No. 1 among Black-Owned Businesses,” St. Louis Post-Dispatch, June 14, 2000. “1998 Entrepreneur of the Year,” St. Louis Commerce, July 1, 1998, p. 16. Steward, David L., and Robert L. Shook, Doing Business by the Good Book, New York: Hyperion, 2004. —Jean Kieling

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Martha Stewart 1941– Founding editorial director, Martha Stewart Living Omnimedia Nationality: American. Born: August 3, 1941, in Jersey City, New Jersey. Education: Barnard College, BA, 1963. Family: Daughter of Edward Kostyra (pharmaceutical salesman) and Martha Ruszkowski (elementary school teacher); married Andrew Stewart (attorney and publisher; divorced, 1989); children: one. Career: Monness, Williams, and Sidel, 1968–1973, stockbroker; The Uncatered Affair, 1975, caterer (cofounded company with Norma Collier); Market Basket, 1976–1979, gourmet food store manager; Martha Stewart Inc., 1977–1990, caterer; 1982–, author of food, gardening, and decorating books; Martha Stewart Living magazine, 1990–1997, editorin-chief; Martha Stewart Living television program, 1993–2004, host; Martha Stewart Living Omnimedia, 1997–2003, chairman and chief executive officer; 2004–, founding editorial director. Awards: Daytime Emmy Awards, “Outstanding Service Show Host,” 1994–1995 and 1996–1997, and “Outstanding Service Show,” 1994–1995, 1998–1999, and 1999–2000; named one of “America’s 25 Most Influential People” by Time, 1996; named one of the “50 Most Powerful Women” by Fortune magazine, 1998 and 1999; Edison Achievement Award, American Marketing Association, 1998; National Sales and Marketing Hall of Fame, inducted 1998. Publications: Entertaining (with Elizabeth Hawes), 1982; Weddings (with Elizabeth Hawes), 1987; Martha Stewart’s Christmas, 1989; Martha Stewart’s Gardening, Month by Month, 1991; Martha Stewart’s Quick Cook: Two Hundred Easy and Elegant Recipes, 1992; Martha Stewart’s New Old House: Restoration, Renovation, Decoration, 1992; The Martha Stewart Cookbook: Collected Recipes for Every Day, 1995. Address: Martha Stewart Living Omnimedia, 11 West Forty-second Street, 25th Floor, New York, New York 10036; http://www.marthastewart.com.

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Martha Stewart. AP/Wide World Photos.

■ Martha Stewart transformed a home-based catering business into a multibillion-dollar media franchise centered upon her image as a consummate hostess, food expert, and do-ityourself decorator. A trusted tastemaker and icon of American domesticity, Stewart skillfully cultivated one of the most recognizable and powerful brands through her award-winning television program, best-selling magazine, and more than 20 books on cooking, gardening, and home decor. In 1997 she founded Martha Stewart Living Omnimedia, an umbrella company for her diverse publishing, television, online, and merchandising ventures. Stewart’s credibility was tarnished in 2002 when she was indicted, and subsequently convicted, on four counts of conspiracy, obstruction of justice, and making false statements to government investigators, bringing the future of her company into question.


Martha Stewart

EARLY LIFE, MODELING, AND MARRIAGE The second of six children, Stewart was raised by her Polish-Catholic parents in a small, single-family home in Nutley, New Jersey, a working-class suburb near New York City. By all accounts Stewart’s father was a strict disciplinarian who instilled in Stewart the value of self-sufficiency as well as a domineering perfectionism. Because of the family’s modest means, Stewart and her siblings were required to perform various household chores, through which Stewart became adept at cooking, sewing, and gardening. Though acquiring these skills out of necessity, Stewart later embraced her former chores as hobbies and made a living by showing others how to parlay domestic know-how into evidence of refinement and the good life. While in high school, Stewart began modeling for upscale department stores in New York City and subsequently appeared in several television commercials and fashion magazines. Intelligent as well as photogenic—traits that would propel her career as a media star—Stewart was offered a full scholarship to New York University but declined in order to attend Barnard College, where she studied art history while supporting herself through modeling. Stewart’s modeling career was given a boost in 1961 when she was named by Glamour magazine as one of America’s 10 best-dressed college students. Later that year she married Andrew Stewart, a student at Yale Law School. Stewart graduated from Barnard in 1963 and continued modeling in New York while her husband established his law career.

HIGH FINANCE TO HAUTE CUISINE With the birth of her daughter in 1965, Stewart ceased modeling and decided to pursue an interest in Wall Street trading. Despite her lack of formal training, she landed a position as a stockbroker with Monness, Williams, and Sidel—a small firm at which she excelled and was energized by the sales environment and six-figure salary. Stewart’s intuitive business sense and ambition were immediately apparent. However, an economic downturn in 1973 convinced Stewart to abandon high finance, leaving her temporarily unattached as she contemplated alternate career paths. A year earlier the Stewarts had moved from New York to Westport, Connecticut, a bucolic suburb in which they purchased an old farm house on Turkey Hill Road. Stewart turned her boundless energy to renovating the dilapidated house that would become famous as Stewart’s showpiece and base of business operations. During the mid-1970s Stewart began teaching cooking classes out of her home and taking on small catering jobs, through which she quickly established a word-of-mouth reputation for excellence. In 1975 Stewart and Norma Collier cofounded the Uncatered Affair, a catering business that flourished despite ten-


sions between Stewart and Collier, who resented Stewart’s overbearing work style. Over time many of Stewart’s business associates and employees would accuse her of being overly demanding, manipulative, and verbally abusive, presenting a seemingly irreconcilable foil to her public persona as a warm and charming hostess. While Stewart’s lofty standards and meticulous attention to detail were keys to her success, they also incurred significant personal costs, including the breakup of her marriage in 1989. After parting ways with Collier, Stewart was hired as the manager of Market Basket, a gourmet food court in a small Westport shopping mall, which she transformed into a booming success. Stewart simultaneously developed her own catering business, Martha Stewart Inc., impressing her celebrity and well-to-do clients with elegant menus and creative presentations that featured her homegrown ingredients and distinctive personal touch. Displaying a knack for self-promotion, Stewart enhanced her reputation by pitching stories about her work and home to local newspapers and by contributing occasional articles on food, gardening, and home decor to such national magazines as Good Housekeeping, House Beautiful, and Country Living.

RISE TO NATIONAL PROMINENCE In 1979 Stewart received a $25,000 advance from Crown Publishing to write her first book, Entertaining, hiring the freelance writer Elizabeth Hawes to assist her. The finished product, a lavish cookbook and decorating guide embellished with photographs of Stewart’s immaculate Turkey Hill home and table settings, was published in 1982. This best-selling book established Stewart’s trademark aesthetic—genteel sophistication merged with casual intimacy and everyday practicality— and catapulted her into the media limelight with a national book tour, speaking appearances, and television interviews. Over the next several years, Stewart published additional food books and a popular wedding planner that extended her name recognition and provided the foundation upon which the Martha Stewart “brand” was built. In 1986 she made her debut as a featured television hostess on “Holiday Entertaining with Martha Stewart,” a public television special in which she cheerfully prepared a sumptuous, home-cooked Thanksgiving dinner for her family. The success of the program, which Crown Publishing distributed as a mail-order video, encouraged Stewart to set her sights on additional television opportunities. In 1987 Stewart signed a lucrative contract with the discount retailer Kmart to serve as the company’s lifestyle consultant. While helping Kmart elevate its down-market image by endorsing and promoting an exclusive line of home products, Stewart received valuable national exposure through Kmart’s expansive advertising campaign and attracted a growing fol-

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lowing of admirers. A long-lasting and highly profitable relationship for Stewart, she continued to sell her popular “Martha Stewart Everyday” products in Kmart stores through 2004.

CREATING A MEDIA FRANCHISE During the late 1980s Stewart sought to capitalize on her growing fame with a new lifestyle magazine based on the same entertaining and decorating concepts in her best-selling books. In 1990 she convinced Time Warner to publish the magazine Martha Stewart Living, which was an instant success and paved the way for subsequent celebrity-based women’s glossies, such as Oprah Winfrey’s O and Rosie O’Donnell’s Rosie. The next year Stewart signed a 10-year contract with Time Warner for the magazine and spin-off television programs, videos, and books. Stewart’s Time Warner deal also included regular appearances on the NBC morning program The Today Show, which enlarged her fan base and provided a prominent crosspromotional platform for her publications. Stewart’s keen entrepreneurial instincts included an ability to understand the advantages of “synergy,” a business concept that became popular during the 1990s as such media corporations as Time Warner became increasingly consolidated. Synergy occurs as a product or line of products is marketed cooperatively across multiple advertising and media outlets so that the sum of the various outlets—for example, television, publishing, and retailing—provides greater marketing power than any one medium in isolation. In Stewart’s case, her relationships with both Time Warner and Kmart provided opportunities for promoting her publications and products in interrelated news programs, television and magazine features, advertising campaigns, and sponsor tie-ins.

called “Ask Martha”; and a mail-order catalog business, Martha by Mail. Stewart caused a major stir on Wall Street when she took her company public in an initial public offering in October 1999. Stock prices for Martha Stewart Living Omnimedia skyrocketed, and Stewart, owner of 60 percent of the company’s shares, amassed paper assets worth more than $1 billion almost overnight. In 2000 Martha Stewart Living Omnimedia reported profits in excess of $21 million with annual sales of over $285 million. The company continued to grow and prosper over the next two years.

INDICTMENT AND PUBLIC FALL In 2002 Stewart came under federal investigation for insider stock trading as a result of her suspicious sale of nearly four thousand shares of ImClone stocks on December 27, 2001, the day prior to a Food and Drug Administration (FDA) announcement declaring that a promising cancer drug produced by ImClone would not be considered for review. In light of the FDA decision, ImClone’s stock price abruptly tumbled. Prosecutors for the Securities and Exchange Commission alleged that Stewart was acting on a tip from her stockbroker, Peter Bacanovic, who reported that ImClone CEO Sam Waksal, one of Stewart’s close friends, was dumping his stock in the company. (Waksal subsequently pleaded guilty to six counts of insider trading.)

In 1993 Stewart launched a television version of her magazine, also titled Martha Stewart Living, which was produced through a subsidiary of Time and syndicated throughout the country. The program initially aired as a weekly, half-hour series but was soon expanded into a daily, hour-long show as a result of its enormous popularity. With Stewart as the show’s wholesome host, the series became one of the most watched morning programs among female viewers and earned several Emmy awards before it was discontinued in 2004.

As a result of the investigation and the intensifying scandal, Stewart relinquished her seat on the board of directors of the New York Stock Exchange in late 2002. On June 4, 2003, Stewart and Bacanovic were officially indicted by a federal grand jury on nine counts of securities fraud, obstruction of justice, and conspiracy—serious criminal charges that carried prison sentences. Though vigorously denying the allegations and defending herself on her Web site and in a paid, full-page editorial in USA Today, Stewart stepped down from her position as chairman and CEO of Martha Stewart Living Omnimedia on the day of her indictment. She subsequently inserted herself into a newly created position, founding editorial director, from which she continued to head the company.

In 1997 Stewart leveraged her profits from Kmart to buy back her magazine from Time Warner for an estimated $75 million. At the same time, she founded a new company, Martha Stewart Living Omnimedia, over which she presided as chairman and chief executive officer. Martha Stewart Living Omnimedia would serve as the parent company of her various media holdings, including Martha Stewart Living magazine and a series of derivative “Best of Martha Stewart Living” books; the spin-off magazines Martha Stewart Weddings, Martha Stewart Kids, and Food Everyday; her television program, daily radio show, Web site, and syndicated newspaper column

Amid a media frenzy, Stewart’s trial began in a Manhattan courtroom on January 20, 2004. Stewart refused to testify but maintained her innocence throughout the proceedings, despite witness testimony as well as evidence of doctored documents suggesting foul play. Her prior experience as a stockbroker precluded the possibility of arguing that she was ignorant of trading regulations. On March 5, 2004, Stewart was convicted of four counts of obstruction of justice and lying to investigators. On July 16, 2004, Stewart was sentenced to five months in prison, followed by five months of house arrest. She remained free on bail pending an appeal.

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IMPACT ON AMERICAN CULTURE AND BUSINESS Stewart built a media empire and a world-class brand through her superior aesthetic sense and ability to present herself as a living embodiment of simple elegance. During the 1980s and 1990s her quick tips for fine cooking and better decorating appealed to many American women—traditional as well as professional and liberated women—who sought to emulate Stewart’s gentrified version of modern homemaking. Instructing her audiences from the staged comfort of her renovated colonial home and beautifully maintained gardens, Stewart showed how sophisticated cuisine and understated home luxury were not the exclusive domain of upper-class New Englanders but were accessible to anyone willing to heed her recommendations. Stewart’s judicious taste was encapsulated in her trademark epithet “It’s a good thing.” Part of Stewart’s business success can be attributed to her realization that she was selling not only products but also information. Her publications and television series were popular because the information Stewart provided was perceived as consistently reliable and useful by her audience. Moreover, she conjured an idealized home life that demonstrated how timestrapped, modern working women could have it all. In contrast to such staid predecessors as Betty Crocker and Julia Child, Stewart represented a thoroughly modern woman— smart, ambitious, and attractive—whose judgments on food, home decor, and style became the unofficial equivalent of the Good Housekeeping seal of approval. By distilling this authority into a powerful brand, Stewart was able to expand into new product lines—from paint to bedding to stationary—on the strength of her name and endorsement alone. Despite her remarkable business accomplishments and rise as a major player in the male-dominated media industry, Stewart was often the subject of scorn and ridicule. Mocked for her cloying graciousness and condescending explanations of difficult recipes and projects that she performed with effortless perfection, she was also accused in numerous published accounts of displaying a cruel temper and brazen selfishness. It is worth noting, however, that criticism of Stewart’s aggressive personality and tendency to micromanage her business suggested a


double standard, as these same traits were often deemed praiseworthy in male executives. Stewart’s complex identity as a business leader and celebrity had serious implications for Martha Stewart Living Omnimedia in the wake of her conviction. Because of Stewart’s status as the irreplaceable core figure of the company, the fate of her media enterprises—and her own reputation as a pathbreaking entrepreneur—rested heavily upon her continuing popularity in the face of a notoriously fickle public.

See also entry on Martha Stewart Living Omnimedia L.L.C. in International Directory of Company Histories.


Brady, Diane, “Martha Inc.: Inside the Growing Empire of America’s Lifestyle Queen,” BusinessWeek, January 17, 2000, pp. 62–69. Byron, Christopher M., Martha Inc.: The Incredible Story of Martha Stewart Living Omnimedia, New York: John Wiley, 2002. Crossen, Cynthia, “Martha Stewart Living: Fantasies for $3,” Wall Street Journal, March 28, 1991. Fine, John, “Martha’s World,” Advertising Age, October 16, 2000, pp. 1–3. Hales, Linda, “Living Large: Martha Stewart’s Global Recipes,” Washington Post, January 23, 1997. Hays, Constance L., “Imagining Business without Stewart,” New York Times, March 12, 2004. ———, “Stewart Quits Her Post at Company,” New York Times, March 16, 2004. Henriques, Diana B., “The Cult of Personality vs. Needs of the Market,” New York Times, October 12, 1999. Oppenheimer, Jerry, Martha Stewart—Just Desserts: An Unauthorized Biography, New York: William Morrow, 1997. —Josh Lauer

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Patrick T. Stokes 1942– Chief executive officer, Anheuser-Busch Companies Nationality: American. Born: 1942, in Washington, District of Columbia. Education: Boston College, BS, 1964; Columbia University, MBA, 1966. Family: Son of an FBI agent (name unknown) and Carolyn Stokes; married AnnaKristine (maiden name unknown); children: three. Career: Shell Oil Company, 1966–1967; Anheuser-Busch, 1969–1981, corporate planner; 1981–1985, vice president and group executive, materials acquisition; 1985–1990, head, food subsidiaries Campbell Taggart and Eagle Snacks; 1990–2002, president, brewery; Anheuser-Busch Companies, 2002–, president and chief executive officer. Awards: Award of Excellence in Commerce, Boston College Alumni Association, 1991. Address: Anheuser-Busch Companies, One Busch Place, St. Louis, Missouri 63118; http://www.anheuserbusch.com.

■ Over the course of 30 years Patrick T. Stokes worked his way up the corporate pipeline of Anheuser-Busch Companies, becoming president and chief executive officer in July 2002. His promotion to the top spot represented a break from 142 years of tradition in which a member of either the Anheuser or the Busch family had run the business. Known as a capable, no-nonsense manager, Stokes continued the Anheuser-Busch family tradition of pumping out both beer and profit. As the chief officer Stokes was in charge of an operation that included 12 United States–based breweries, producing more than 100 million barrels of beer a year under such labels as Budweiser, Michelob, and Busch. Stokes also oversaw the company’s other interests, including the Sea World, Sesame Place, and Busch Gardens theme parks. Stokes’s colleague Steve Price told Adweek that Stokes was successful in the corporate world because he was not afraid to

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Patrick T. Stokes. Jacob Silberberg/Getty Images.

delegate key responsibilities to his managers and could therefore stay focused on broader goals. “He lets his managers handle things, but he steps in when appropriate,” Price told Richard Brunelli of Adweek. “He’s very bright and he has a way of cutting to the heart of the matter.”

JOINS ANHEUSER-BUSCH IN 1969 A second-generation Irish American, Stokes was born in Washington, D.C., in 1942. An only child, he lived in Memphis, Tennessee, and Philadelphia, Pennsylvania, before the family settled in a working-class neighborhood in the borough of Queens in New York City in 1947. Stokes, whose father was an FBI agent, attended a local military high school run by Jesuit priests. He also attended Boston College, earning a bachelor’s degree in mathematics in 1964.


Patrick T. Stokes

In 1965, between semesters at Columbia University, Stokes journeyed to Sweden to work. While there, he met his future wife, AnnaKristine. In 1966 Stokes graduated from Columbia with a master’s degree in business administration. He found work as a financial analyst for Shell Oil Company but left in 1967 for a two-year stint in the Army, in which he attained the rank of first lieutenant. In 1969 Stokes landed a job in corporate planning at Anheuser-Busch. Two decades later the former Anheuser-Busch executive R. S. Weinberg told Judith VandeWater of the St. Louis Post-Dispatch that when he hired Stokes, he knew Stokes would go far. “I came home that night, and I told my wife I may have hired a future brewery president,” Weinberg recalled. He described Stokes as “very sharp and very tough” (March 29, 1990). Weinberg’s predictions were correct. Stokes moved quickly into the company’s inner circle. After only two years at Anheuser-Busch, Stokes became a personal executive assistant to August Busch III. Working alongside Busch from 1972 to 1974 Stokes had unlimited access to the inner workings of the company. In 1974 Stokes joined the brewery’s policy committee, which acted as a group of advisers to Busch. That same year Stokes took responsibility for the company’s raw materials acquisition and transportation operations. In 1981 Stokes became vice president and group executive in charge of materials acquisition.

TURNS AROUND COMPANY’S UNPROFITABLE BAKERY SUBSIDIARY As Stokes climbed the corporate ladder, his challenges grew. In 1985 he was tapped to lead the company’s two food subsidiaries, Campbell Taggart, the nation’s second-largest bakery firm, and Eagle Snacks, which produced roasted peanuts, chips, and pretzels to complement the company’s beer. Campbell Taggart was a money guzzler when Stokes took over, but he managed to turn it into a profit center by revamping its production facilities and distribution systems. Under Stokes, Campbell Taggart generated profits for AnheuserBusch second only to those of its domestic brewery division. Campbell Taggart later became The Earthgrains Company and was sold in 1996 to Procter & Gamble. “With Campbell Taggart, Pat turned a pig’s ear into a silk purse,” a former colleague told VandeWater (April 1, 1990). Riding the tide of his success with Anheuser-Busch’s food companies, Stokes was made president of the company’s U.S. beer subsidiary in 1990. Although Stokes had never worked in the brewery before, during his five years at Eagle Snacks, he had built relationships with hundreds of beer wholesalers throughout the United States who also handled the snack line. These connections served him well as brewery president.


PROPELS BREWERY INTO RECORD PRODUCTION In 2002 Stokes became head of the brewery’s parent company, Anheuser-Busch Companies, making him the first person from outside the families to run the business. Friends were not surprised. “Stokes is a guy who is well organized, someone who is capable of developing long-term strategies,” Weinberg told VandeWater. “He is imaginative and creative, as well as being a good administrator” (April 1, 1990). These skills served Stokes well. Under Stokes’s stewardship AnheuserBusch demonstrated phenomenal growth. In 2003 the brewer sold a record 102.6 million barrels of beer domestically, marking 26 consecutive years of growth. In a market that became increasingly competitive, Anheuser-Busch continued to hold its own and accounted for nearly 50 percent of the domestic beer industry. Budweiser, billed as “the king of beers,” outsold all other beers combined: One in five beers sold in the United States is a Budweiser. The company had a 2003 fiscal year profit of $2.1 billion, up 7.4 percent on sales of $14.1 billion. Stokes felt the success in his pocketbook, earning a $3.1 million bonus in 2003. Stokes made Anheuser-Busch into a respected entity. The company received accolades from Fortune. The company ranked first overall in quality of products and services among more than 500 companies in the magazine’s listing of “America’s most admired companies” for 2004. The list was compiled from surveys of 10,000 business leaders and securities analysts. In addition to his work at Anheuser-Busch, Stokes was a member of the boards of Barnes-Jewish Hospital in St. Louis, the YMCA of Greater St. Louis, and U.S. Bancorp and of the national board the Boys Hope/Girls Hope. He also served on the Boston College board of trustees. SOURCES FOR FURTHER INFORMATION

Brunelli, Richard, “ ‘No-Nonsense Guy’ to Lead A-B Brewing Division,” Adweek, April 2, 1990. Bruss, Jill, “August Busch III Retires,” Beverage Industry, July 2002, p. 10. Leahy, Molly, “Corporate Chieftains,” World of Hibernia, Spring 1998, pp. 14–16. “Public Company Profiles,” St. Louis Post-Dispatch, May 17, 2004. VandeWater, Judith, “Brewery Gets President: Patrick Stokes Will Replace Longtime Boss, August Busch,” St. Louis PostDispatch, March 29, 1990. ———, “New Brewery Chief ‘In Control’,” St. Louis PostDispatch, April 1, 1990.

See also entry on Anheuser-Busch Company, Inc. in International Directory of Company Histories. —Lisa Frick

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Harry C. Stonecipher 1936– President and chief executive officer, The Boeing Company Nationality: American. Born: May 1936, in Scott County, Tennessee. Education: Tennessee Polytechnic Institute, BS, 1960. Family: Married Joan (maiden name unknown), 1954; children: two. Career: General Motors, Allison Division, 1955–1959, laboratory technician; General Electric, Evendale Aircraft Engine division, 1962–1979, program engineer; 1979–1984, general manager; 1984–1987, head of division; Sundstrand, 1987, executive vice president; 1987–1994, president; 1989–1994, chief executive officer; 1991–1994, chairman; McDonnell Douglas, 1994–1997, president and chief executive officer; Boeing Company, 1997–2001, president and chief operating officer; 2001–2002, vice chairman; 2003–, president and chief executive officer. Awards: Air Force Association, General Ira C. Eaker Historical Fellow Award, 1996; Navy League, Rear Admiral John J. Bergen Leadership Medal for Industry, 1996; Royal Aeronautical Society, fellow, 1998; Wings Club, Distinguished Achievement Award, 2001; America-Israel Chamber of Commerce and Industry, tribute, 2002; U.S. Army Association, John W. Dixon Award, 2002; Washington University, honorary doctorate of science, 2002. Address: The Boeing Company, 100 North Riverside Plaza, Chicago, Illinois 60606; http://www.boeing.com.

■ Harry Curtis Stonecipher embodied the consummate corporate manager. Throughout his career, he emphasized three essential goals: manufacturing efficiency, consistent profit margins, and fair dealing with customers. This corporate code was never better articulated than in 1994, when as the new head of McDonnell Douglas Stonecipher promised the deputy U.S. secretary of defense, “I’m going to build you a great airplane, and I’m going to get it on schedule. And it’s going to be done at a fair price” (Chicago Tribune, February 29, 2004).

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Harry C. Stonecipher. AP/Wide World Photos.

Although Stonecipher ruffled many feathers with his blunt, no-nonsense style and all-capitals e-mail messages, even opponents conceded he was a strong leader.

EARLY YEARS AT GENERAL ELECTRIC AND THE EXAMPLE OF JACK WELCH Stonecipher knew early in life that one had to be tough to succeed. Having been graduated from high school at age 16 and completed two years at Tennessee Polytechnic Institute, he met the woman he wanted to marry. To marry he had to leave school, so he worked as a laboratory technician in the Allison Division of General Motors, gaining hands-on experience with large engines and the factory system for four years before saving enough money to return to Tennessee Tech and complete his degree in physics in 1960. Stonecipher then went to work for General Electric as an entry-level engineer in the



Evendale Aircraft Engine division. After a brief lateral move to Martin Aircraft in 1961–1962, Stonecipher rejoined GE, where he spent the next 25 years. The young engineer moved steadily through the ranks, demonstrating his ability to master the disparate demands of the modern company: customer support, marketing, and program management. Stonecipher played an instrumental role in the development of large jet engines for the Boeing 747 and 737 aircraft and of more specialized engines for military applications. In 1996 Stonecipher was awarded medals by both the Navy League and the Air Force Association for these contributions to military aviation and national defense, and he received another medal from the U.S. Army Association in 2002. During his years at GE, Stonecipher learned from the example set by the managerial legend Jack Welch. Stonecipher acknowledged his debt to Welch many times, but perhaps his clearest acknowledgment was his consistent introduction of Welch’s patented managerial innovations in every company he managed. These policies included centralized financial controls, emphasis on a smaller but better rewarded labor force, sale of underperforming units, and creation of what Stonecipher called centers of excellence, managerial cadres whose performance served as models for those around them. By 1979 Jack Welch had tapped Stonecipher to be general manager of commercial and military transport operations. Five years later Stonecipher became head of the division.

SUNDSTRAND CORPORATION: THE FIRST TURNAROUND In 1987 Stonecipher was hired as executive vice president of Sundstrand Corporation, a company that made alternators, compressors, and instruments for the military and civilian aerospace markets. He was promoted to president later that year and to CEO in 1989. For years Sundstrand had made artificially low bids on contracts then relied on cost overruns and sales of spare parts to make a profit. The company had just pled guilty to fraud charges and paid a $200 million fine. Draconian measures were called for, including layoffs of 3,500 workers and the sale of several corporate divisions, but Stonecipher also engineered the acquisition of two new companies and a joint venture with a French maker of auxiliary power units. Furthermore, Stonecipher introduced into Sundstrand the management style he had learned at GE, including selfdirected work teams and measures to assure quality control. Within five years Sundstrand’s operating margin had doubled, and with both civilian aerospace and industrial markets accounting for 40 percent of sales, the company’s reliance on defense contracts had been cut in half. When he left the company in 1994, Stonecipher was remembered as “a strongly opinionated man” but “a strong leader” (Defense Daily, September 27, 1994).


MCDONNELL DOUGLAS AND THE BOEING MERGER Stonecipher left Sundstrand to become president and CEO of McDonnell Douglas Corporation, the third largest commercial airplane manufacturer in the world. He came into a company that had already experienced drastic cost-cutting measures. Two-thirds of McDonnell Douglas’s 1991 workforce was gone, and debt had been pared down to 27 percent of capital, but the company held only 10 percent of the commercial airplane market, and its military contracts for planes such as the F-15 fighter and the F/A-18 attack aircraft were winding down. Again Stonecipher initiated work teams, established centers of excellence, reemphasized quality, and offered an employee incentive plan to reward executives and labor alike for success. He also determined to pursue commercial contracts more aggressively. In 1995 Stonecipher signed a $1 billion order from ValuJet for the MD-95 aircraft. It was the first order for the plane, a new design based on the proven DC-9, and it allowed the production line to begin operating. Stonecipher had billboards erected around the McDonnell Douglas plant in Long Beach, California. The boards bore Stonecipher’s picture next to a signed declaration: “I want to see us . . . become No. 2.” However, when he understood that making McDonnell Douglas competitive again would require massive capital investment, on the order of $15 billion over the next decade, in a market with growth projected at only approximately 5 percent, Stonecipher changed his projected course and began to seek either an asset swap or an outright merger with the largest company in aerospace, The Boeing Company. “Gentlemen,” he announced to his senior executives, “We’re going to merge our way out or sell our way out” (Defense Daily, September 27, 1994). In August 1997 McDonnell Douglas and Boeing merged, and Stonecipher became COO, just under Philip M. Condit, the Boeing CEO. It was an excellent move for both companies. McDonnell Douglas gained the capital reserve that only a $25 billion company could provide. Boeing gained access to the military contracts and the government backing for research and development that had underlain Boeing’s original rise to prominence but which the company had lost in recent years. In addition, Boeing had recently been shaken by its own costcontrol problems, and an executive who had overseen two financial shake-ups was likely the one to restore Boeing’s delivery schedules and make every branch of operations a profit center again. As Stonecipher put it, “The underlying cost [of our products] was eating away at us. . . . You can’t talk to me for more than five minutes without talking about cost” (Interavia Business and Technology, September 1998). Under Stonecipher’s leadership, Boeing scrapped its old configuration control system of numbering parts, which had been based on a process developed for production of B-17 aircraft during World War II, in favor of a specific configuration table, which listed parts not as unique variations of an original

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design but as stratified option sets. In a modern airplane, which has more than three million parts, this change alone was expected to reduce Boeing’s costs 25 percent. Stonecipher also echoed his previous success at Sundstrand, where expansion into new, profitable areas had helped turn the company around. He led a drive into the aircraft services business, using his four decades of experience working with the military to obtain a contract to upgrade planes originally built not by Boeing but by Lockheed Martin. Stonecipher pushed Boeing to compete for a lead role in upgrading the aging U.S. air traffic control system. Although Stonecipher reached retirement age in 2001, Boeing’s board asked him to stay on an additional year as vice chairman to complete what he had begun. Stonecipher retired in 2002 but returned in December 2003 after ethics scandals had led to a top-level shakeup. With Stonecipher in charge, a $9.5 billion military contract immediately followed. Stonecipher immediately set out to restore Boeing’s image both with the public and with the U.S. government and to work one on one with military and political leaders to restore Boeing’s domestic dominance in the aerospace business. In the commercial aircraft market Stonecipher still had to face heated competition from Airbus Industries, which surpassed Boeing in market share in 2003. Stonecipher was betting heavily on the new-generation 737 and the proposed 7e7 aircraft. An agreement he reached with the International Association of Machinists recognized that the union’s High Performance Work Organization proposal complemented Stonecipher’s vision of self-directed work teams while assuring Boeing that it could outsource more and more subassembly work. Stonecipher was committed throughout his career to the role of the corporate leader as public spokesperson. His public speaking schedule rivaled that of any major business executive. In one speech he listed his secrets for making good decisions in bad times. The five maxims he passed along epitomized his

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lifelong approach to business: “Do not tolerate complacency.” “Change the people, or change the people.” “Don’t try to please everyone.” “Be prepared to alter your plans and make new ones without delay or regret.” At the end of the day, however, “Have fun.” Stonecipher received many awards during his career. In addition to medals from military associations, he won the Wings Club Distinguished Achievement Award in 2001, an award from the America-Israel Chamber of Commerce and Industry in 2002, and an honorary doctorate of science from Washington University, St. Louis, in 2002. He was made a Fellow of the Royal Aeronautics Society in 1998. Stonecipher’s interests ran the gamut from skeet shooting to lyric opera. He brought to the recreational aspects of his life the same intensity and desire to excel that he showed in his vocational efforts.

See also entries on The Boeing Company, General Electric Company, and McDonnell Douglas Corporation in International Directory of Company Histories.


“Hard Man Harry,” The Economist, June 7, 2001, p. 68. “Rehabilitated,” Forbes, November 23, 1992, p. 88. “So Why Does Harry Stonecipher Think He Can Turn Around Boeing?” Chicago Tribune, February 29, 2004. “Stonecipher: On Point,” Aviation Week & Space Technology, February 16, 2004, pp. 40–43. “Stonecipher’s Boeing Shakeup,” Interavia Business & Technology, September 1998, pp. 14–18. —Hartley S. Spatt


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Hans Stra ˚ berg 1957– President and chief executive officer, Electrolux Nationality: Swedish. Born: 1957. Education: Master’s of Science degree. Career: Swedish Embassy (Washington, D.C.), assistant to the technical attaché; Electrolux, 1983–1987, floorcare division manager; 1987–1995, global head of dishwasher and laundry engineering; 1995–1998, head of production and development of North American white-goods operations; 1998–2001, executive vice president of floor care and light appliances; 2001–2002, chief operating officer; 2002–, president and chief executive officer. Address: AB Electrolux, St. Göransgatan 143, SE-105 45 Stockholm, Sweden; http://www.electrolux.com.

■ Hans Stra˚berg became president of the Swedish appliancemaking company Electrolux in 2002 following nearly 20 years spent in engineering and managing the corporation’s operations worldwide. He made a point of rationalizing the corporation’s plethora of brand names: more than 50 different brands were made by the company when his term in office began, including Eureka, Frigidaire, Kelvinator, Kenmore, McCulloch, Tappan, WeedEater (in North America), Flymo (in Great Britain), and Husqvarna and Zanussi (in Europe). He launched a program to revitalize the company’s own brand name, changing its advertising and bringing products marketed under the name Electrolux back to the United States for the first time since the 1960s, using it to market to upscale customers wanting high-end equipment on a level with competitors like Viking and SubZero. A hearty promoter of globalization, he also launched strong cost-control measures, closing inefficient factories and shifting production from traditional areas, such as Sweden, to take advantage of cheaper labor costs in Latin America, Eastern Europe, and Asia. Stra˚berg’s management philosophy drew on his vision of the historic aims of Electrolux. The company, he declared in


Hans Stra ˚berg. © AFP/Corbis.

a 2004 address to stockholders, had a relatively simple aim: to make housework, yard work, and food preparation easier. “Electrolux,” he said, “provides easy-to-use products that make life simpler and more enjoyable” (UK Whitegoods). Stra˚berg proposed to return to the company’s original vision, with the idea of making common household tasks both easier and more affordable by reducing manufacturing costs and pursuing high-technology solutions where appropriate. People whose diminishing amount of free time was being devoured by mindless household tasks, he stated, wanted machines that would reduce their labor load. “It is essential,” he told a reporter for Dealerscope magazine, “to be guided by the wants and needs of consumers. . . . We all work for them” (October 2003).

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Hans Stra˚berg

FROM THE GROUND UP With the exception of a short stint in a diplomatic post, as assistant to a technical attaché in Washington, D.C., Stra˚berg spent his entire professional career at Electrolux. The holder of degrees in both science and engineering, he started with the company in 1983 as a floor-care division manager. Four years later he was promoted to global head of dishwasher and laundry engineering. In 1995 he was promoted again, this time to the leadership of production and development of white goods in North America, headquartered in the United States. Three years later he became executive vice president of floor care and light appliances. In 2001 Stra˚berg became Electrolux’s chief operating officer, and the following year he was promoted to president and chief executive officer. The company Stra˚berg took over in 2002 had a long, proud history of creating and manufacturing labor-saving devices for world-wide markets. Axel Wenner-Gren created Electrolux in 1919 through the merger of two other Swedish appliance companies, Elektromekaniska and Lux. Wenner-Gren recognized the potential of the primitive, hugely expensive vacuum cleaners and refrigerators available in the 1920s, and he guided the corporation to develop new, more powerful appliances run by electric engines that would be affordable for ordinary people, but would also do their jobs more efficiently and cheaply. The president of the company before Stra˚berg took the office, Michael Treschow, had begun refurbishing Electrolux’s image even before Stra˚berg entered the highest ranks of the corporation. Like many other European firms, Electrolux had tried to protect itself from the fluctuations of the market economy—especially from the recession that hit Europe during the early 1990s—by buying shares in other businesses, some unrelated and others from competitors. Over time, however, those diverse interests interfered with Electrolux’s ability to meet the needs of its customers. During his five-year tenure as president, Treschow began selling off the corporation’s interests in some of those other companies and refocused Electrolux to concentrate on its core products: white goods, lawn and yard products, and professional-grade appliances for demanding users. Treschow’s efforts raised Electrolux’s profit margin two percentage points, to around 5 percent by 2001.

CUT TO THE CORE Stra˚berg continued the trend of cost reduction begun by his predecessor, eliminating still more redundant factories and personnel. He also began moving production to locations where labor costs could be reduced. He told shareholders at the 2003 annual general meeting that he had begun moving production of some North American refrigerators from the United States to Mexico, on the grounds that Mexican production offered significant cost advantages. In Europe, he made the decision to move vacuum-cleaner production from

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Vastervik, Sweden, to Hungary—a tricky thing to do in Europe, where local labor unions wield strong political clout. Stra˚berg explained to shareholders that, although he sympathized with the concerns of labor and management at the plant, where he himself had been a manager early in his career, the cost savings were too great to be ignored. He also announced plans to open new plants in Hungary, Russia, Thailand, and Poland, continuing the globalization of an already global corporation. While Stra˚berg was shifting production to areas with cheaper labor costs, he was also retooling older factories to fit the needs of the modern, flexible appliance industry. The Vastervik factory, for instance, was reconfigured so that it could produce appliances based on a variety of different branded models with only a minimum number of changes. At the same meeting Stra˚berg declared that the company would increase capital investment on new-product development, concentrating on high-end, high-tech appliances. Some of the new gadgets released by Electrolux in 2003 included an automatic lawnmower, a convertible trimmer and edger for lawn care, and a variety of kitchen appliances. The latter included a refrigerator with a built-in wine cooler (designed for the Chinese market), the Electrolux Molteni podium cooker for professional chefs, and a new stovetop produced as part of the Teppen Yaki model line. The great hit of the season, however, was the company’s robotic vacuum cleaner, marketed in Europe under the name Trilobite. The Trilobite—named after an extinct invertebrate that is one of the most common fossils—was the first robotic vacuum cleaner developed and marketed specifically for home use. Although the vacuum was originally introduced in Europe in 2002, the 2003 version included significant upgrades, such as a sensor system that prevented it from falling down stairs. The robotic mower, first released in 2003 under the name Automower, was among the first outdoor appliances to be marketed specifically under the Elextrolux brand name.

GOING GLOBAL The marketing of lawn products and other gadgets under the Electrolux name, Stra˚berg told company shareholders, was part of his attempt to make the corporate name the most recognizable of all the brand names owned by the company, “strongest global brand in the industry” (UK Whitegoods). Succeeding in that goal, the company president argued, would give Electrolux a huge advantage over other appliance manufacturers because it would create strong global name-brand recognition. That in turn would give the company, in the words of a BusinessWeek contributor, “more bang for its buck” (September 22, 2002). In addition, reintroducing Electrolux into the United States was expected to attract upmarket buyers, for whom Electrolux suggested sleek European styling. At the same time, Stra˚berg pushed for programs that would promote the retention of long-term brand names in order to keep


Hans Stra˚berg

the corporation’s more downscale customer base. For example, in July 2003 the company celebrated the 85th anniversary of its Frigidaire line of kitchen appliances, launching special dealer and customer promotions and searching for the longestrunning brand dealerships in the United States.


Despite his background in engineering Stra˚berg remained focused on the needs of customers as the primary aim of the business. Innovations alone, he pointed out, were pointless unless they met the needs of the people that were interested in the production. Research and development, he said, have to focus on the desires of the consumers. “My personal dream,” he confided, “is a household machine that washes, irons and folds my shirts and then puts them away” Dealerscope, October 2003). In addition to his duties at Electrolux, Stra˚berg served as a board member of the Association of Swedish Engineering Industries Board and of Ph. Nederman & Company.

“Electrolux Sweeps into America: CEO Hans Straberg Explains the Swedish Appliance Giant’s Plan to Raise the U.S. Profile of Its Brand-Name White Goods,” BusinessWeek, September 22, 2002.

“Business: Brand Challenge; Electrolux,” Economist, April 6, 2002, p. 68. “CE Leaders Who Rock,” Dealerscope, October 2003, p. 40.

Stra˚berg, Hans, “Electrolux: Speech by Hans Straberg at AGM,” UK Whitegoods, http://www.ukwspares.com/ article657.html. “The Top 30 in Profile: Hans Straberg,” Marketing Week, January 29, 2004, p. 26. Wolf, Alan, “Major Appliance Business Rebounded In 2003,” TWICE, December 22, 2003, p. 86.

See also entry on Electrolux Group in International Directory of Company Histories.


—Kenneth R. Shepherd

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Belinda Stronach 1966– Former chief executive officer and president, Magna International Nationality: Canadian. Born: May 2, 1966, in Aurora, Ontario, Canada. Education: Attended York University, 1984–1985. Family: Daughter of Frank Stronach (founder and chairman of Magna International) and Elfrieda (maiden name unknown); married Donald Walker (named CEO of Magna International in 1994), 1990 (divorced 1995); married Johann Olav Koss (Olympic-champion speed skater), 1999 (divorced 2002); children (first marriage): two. Career: Magna International, 1985–1999, eventually vice president; 1999–2001, executive vice president of human resources; 2001–2002, CEO; 2002–2004, CEO and president. Awards: 2nd Most Powerful Woman in International Business, Fortune, 2002, 2003; Beth Shalom Humanitarian Award, 2003; 100 Builders and Titans, Time, 2004. Belinda Stronach. Kevin Winter/Getty Images.

■ Belinda Stronach left York University in 1985 to join the management of Magna International, a successful and expanding auto-supply conglomerate founded and guided by her father, Frank Stronach. Over the years she learned the technical workings of Magna and was given increasing responsibility. In 1990 she married the Magna executive Donald Walker and continued to develop leadership skills that led to further promotions. Walker became chief executive officer in 1994; the couple divorced amicably in 1995; Stronach replaced Walker as CEO when he became head of the interior-parts subsidiary Intier. As CEO from February 2001 until January 2004 Stronach presided over a decentralized global structure made up of five main divisional subsidiaries. She worked primarily from the Aurora, Ontario, corporate headquarters, while her father, living in Switzerland, served as chairman of the board. Stronach was characterized by business analysts and observers as gregari-

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ous, loyal to her father’s aims and principles, and energetic in pursuing expanded market share and profits. Critics harshly dismissed her as a dilettante. Some executives left the company during her tenure because they felt constricted by the family culture. Stronach left Magna to run for political office in January 2004, coming in second in the race to become the leader of Canada’s Conservative Party.

BORN INTO THE BUSINESS Belinda Stronach was raised in Newmarket, Ontario, north of Toronto and close to Aurora, the location of the corporate headquarters of her father Frank’s hugely successful auto-parts company Magna International. She attended public and Catholic schools and spent a year at York University studying business and economics. In 1985, still in her late teens, Stronach


Belinda Stronach

dropped out of York and was hired by her father to learn management skills. Informally Stronach had always been part of her father’s milieu; she told a reporter for Time International, “I joined Magna at birth” (July 2, 2001). During her first years with the company Stronach was eased into positions of responsibility; she headed philanthropy and outreach programs and honed her people skills, also sitting on the board of directors. In 1990 she married Donald Walker—with whom she had two children, Frank and Nikki—before he became CEO in 1994, at which time Stronach’s father began to oversee the company as board chairman from a new principal residence in Switzerland. Stronach and Walker divorced in 1995; both remained with Magna.

CUSTODIAN OF THE CULTURE In 1999, at age 33, Stronach began serving as executive vice president of Magna’s human resources. On New Year’s Eve of that year she married the Norwegian Olympics celebrity and activist Johann Olav Koss. She cultivated many celebrity friendships with figures such as Arnold Schwarzenegger and Bill Clinton, which proved useful in terms of public relations, ensuring an exciting media profile for both Magna and herself. Stronach replaced Donald Walker as chief executive officer in February 2001. At that time the core company and its major subsidiaries were worth approximately $10.5 billion, employed some 62,000 people, and had offices and factories in 18 countries. Shortly after her appointment Stronach informed a reporter for Ward’s Auto World that she considered her “role as being custodian of the culture. I think our track record proves it’s a recipe for success” (April 2001). She maintained her father’s basic management style, rewarding entrepreneurial innovations, seeking a greater share of the autoparts market and profits, and extending profit sharing to employees—who received 10 percent of Magna’s pretax profits as stipulated in the corporate constitution, which originated in the 1970s; 20 percent of post tax profits, meanwhile, went to investors. The primary workforce remained nonunionized. As head of the executive strategy committee, Stronach presided over the five principal worldwide subsidiaries, which were further overseen by the board of directors—of which her father was the chair. While revenue increased under Stronach’s watch, upsetting shakeups in executive management also occurred. Two executive vice presidents and one divisional president were either fired or resigned in 2001. James Nicol, the president and chief operating officer, resigned early in 2002, at which time Stronach expanded her duties to include the


presidency; the position of chief operating officer was eliminated altogether. Mark Heinzl of the Wall Street Journal wrote, “The Stronachs’ tight grip on the company’s direction has sometimes led to clashes over strategy, governance, and compensation between the chairman and Magna’s executives or investors” (March 14, 2002). Frank Stronach, earning some $33 million in 2001, remained chairman of the company board, but the position of vice chairman was also created. Meanwhile Belinda Stronach divorced her second husband. With the reorganized management chart in place, Stronach continued to promote entrepreneurship and new business contracts. Taking advantage of Magna’s international scope, breadth, and relatively low wage costs, she approved contracts for the European subsidiary Magna Steyr to provide outsourced engineering and production for specific makes of Saab, BMW, and Mercedes-Benz automobiles. She had less success in negotiating contracts with U.S. car makers. In January 2004 Stronach resigned from Magna International in order to run for the leadership of the Conservative Party of Canada. She had already received substantial publicity as one of the most powerful women in Canada as well as the rest of the world. She left Magna on a successful note, though she fell short of her goal of doubling the corporation’s revenues in five years; only two years before she had told the Wall Street Journal that her “heart and soul are with this company” (March 14, 2002). As a neophyte politician she campaigned energetically and came in second place; she also ran for a seat on the Canadian Parliament. Stronach’s father Frank predicted that her entry into politics was only temporary, and that she would be back at Magna International within five to 10 years.


Frank, Steve, “Belinda Stronach: Magna International,” Time International, July 2, 2001, p. 39. Handelman, Stephen, “Belinda Stronach: From Boardroom to Politics,” Time, April 26, 2004, p. 80. Heinzl, Mark, “Magna’s Chairman Gives Auto-Parts Concern Some Spin—Stronach’s Tenure Marked by Clashes over Strategy and Governance,” Wall Street Journal, March 14, 2002. Mayne, Eric, “Another Stronach Takes the Helm,” Ward’s Auto World, April 2001, p. 46. Turrettini, John, “Made to Order,” Forbes, September 1, 2003, p. 78. —Erik Donald France

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Ronald D. Sugar 1948– President, chief executive officer, and chairman, Northrop Grumman Corporation Nationality: American. Born: 1948, in Toronto, Ontario, Canada. Education: University of California, Los Angeles, BS, 1968; MS, 1969; PhD, 1971. Family: Son of a hair-salon owner (name unknown); married Valerie (maiden name unknown); children: two. Career: Aerospace Corp., 1971–?, design engineer; TRW, 1981–1983, engineer; 1983–1987, chief engineer; 1987–1992, general manager of Space Communications; 1992–1994, vice president of strategic business development; 1994–1996, CFO; 1996–1998, general manager of Automotive Electronics; 1999–2000, COO of Aerospace and Information Systems and president; Litton Industries, 2000–2001, president and COO; Northrop Grumman Corporation, 2001–2003, president and COO; 2003–, president, CEO, and chairman. Awards: Engineering Alumnus of the Year, University of California, Los Angeles, 1996; Daniel Epstein Engineering Management Award, University of Southern California, 2003; Foundation Award, U.S. Marine Corps, 2003. Address: Northrop Grumman Corporation, 1840 Century Park East, Los Angeles, California 90067; http:// www.northgrum.com.

■ A banker described Ronald D. Sugar, the CEO of Northrop Grumman Corporation, as “the only PhD I know with extraordinary common sense” (Wall Street Journal, September 21, 2001). Sugar embodied the spirit of social mobility. When he was six, his family drove from Toronto, Canada, to Los Angeles where his father intended to open a hair salon. Growing up in South Central Los Angeles was no easier in the 1960s than it was at the end of the 20th century; nevertheless, Sugar succeeded in making the rare and difficult climb from the poverty-riddled neighborhood of his childhood to Westwood, the upscale neighborhood where he attended college.

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Ronald D. Sugar. AP/Wide World Photos.

Sugar studied electrical engineering at the University of California, Los Angeles, earning a bachelor’s degree and graduating summa cum laude and first in his engineering class in 1968. He obtained a master’s degree the following year and a doctorate in 1971. He then worked for Aerospace Corporation, Hughes Aircraft Company, and Argosystems before joining TRW in 1981 as director of advanced research and development programs. During this period and throughout his career at TRW, Sugar attended several executive education programs to hone his management skills, completing courses at Harvard, Stanford, and the Wharton School of the University of Pennsylvania.

FROM PROGRAM ENGINEER TO COO Sugar spoke nostalgically of his time as a program engineer. In a speech to an Air Force Association (AFA) national sympo-


Ronald D. Sugar

sium, as quoted by John A. Tirpak in Air Force magazine, he said, “In industry a program manager is a high-stress, highrisk, high-reward job, and those who are successful often go on to general management” (January 2003). This statement perfectly described Sugar’s career path at TRW, where he rose to chief engineer on the Milstar Satellite payload program from 1983 to 1987, general manager of Space Communications from 1987 to 1992, vice president of strategic business development in the space and defense sector from 1992 to 1994, and to CFO from 1994 to 1996. Sugar then transferred to TRW’s other main operating division, Automotive Electronics, serving as general manager until 1998; after several months as executive vice president for special projects, Sugar was named president of TRW and COO of TRW Aerospace and Information Systems in 1999.

RISING TO THE TOP AT LITTON, THEN NORTHROP GRUMMAN The payoff for Sugar’s two decades of contributions to TRW was the opportunity to become president and COO of Litton Industries, a position he retained when Litton was acquired by Northrop Grumman in 2001. When Kent Kresa, the chief executive officer of Northrop Grumman, retired in 2003, Sugar stepped into his position. Sugar’s main challenge in his first years would be to oversee the integration of Northrop Grumman’s many recent acquisitions: a total of 14 companies had been acquired in a threeyear span. He noted that part of his job was getting these separate entities to work together and produce a stronger result than they would have if they worked separately. He declared that realigning the components of a modern conglomerate took strong leadership and a clear sense of the goals he was trying to reach. Sugar reshuffled a number of Northrop Grumman’s seven operating divisions, particularly Information Technology and Mission Systems. His goal in undertaking these restructuring efforts was to ensure that Northrop Grumman did not fall victim to the complacency and slipshod efforts that had plagued the defense industry in the early 2000s. As Sugar stated in his speech to the AFA, “The low bid is what I sometimes call the original sin. Sometimes corners are cut because while we do need to find ways to do things faster, better, and cheaper, often we are able to pick only one or two of these three and not get all three right” (January 2003).


COMPANY MAN AND PUBLIC MAN Sugar took readily to his public role and was active within and without the corporate walls. He was a participant in defense-related conferences, with titles ranging from “The Role of Aerospace Power in U.S. National Security” to “Competing for Missile Defense Solutions.” He made frequent appearances with organizations such as the National Press Club and the American Institute of Aeronautics and Astronautics. Sugar was named by President Clinton to the National Security Telecommunications Advisory Committee in 2000 and was elected to the National Academy of Engineering in 2004. He served as a governor of the Aerospace Industries Association and as a fellow of the Royal Aeronautical Society and the National Defense Industrial Association. His wider interests were represented by his directorship of the Los Angeles Philharmonic Association and by his trusteeship with the Boys & Girls Clubs of America. In 1996 UCLA named Sugar the Engineering Alumnus of the Year. Sugar made a reputation for himself within the aerospace industry as a man equally at ease with bankers and engineers. His combination of technical and financial experience allowed him to oversee significant cost reductions at the Newport News Shipbuilding division, which he was familiar with from his time at the helm of Litton Industries; he was instrumental in resolving construction delays on the U.S.S. Ronald Reagan. He also promoted work on a large-aircraft infrared countermeasures program designed to protect commercial aircraft from missile attacks. His rare fusion of engineering expertise and management skill made him one of America’s most effective corporate leaders.

See also entry on Northrop Grumman Corporation in International Directory of Company Histories.


“Northrop Grumman CEO-Elect Ron Sugar” Defense Daily, February 21, 2003. “Northrop Grumman Corporation: Sugar of Litton Unit Is Named President, on Way to Top Spot,” Wall Street Journal, September 21, 2001. Sellers, Patricia, “The Sweetest Revenge,” Fortune, September 2, 2002, p. 113. Tirpak, John A., “Challenges Ahead for Military Space,” Air Force 86, no. 1 (January 2003), p. 22. —Hartley S. Spatt

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Osamu Suzuki 1930– Chairman, Suzuki Motor Corporation Nationality: Japanese. Born: January 30, 1930, in Gero, Japan. Education: Graduated from Chuo University, 1953. Family: Son of Shunzo and Toshiki S. Matsuda; married Shoko Suzuki; children: three. Career: Suzuki Motor Corporation, 1958–1963, various management positions; 1963–1966, director; 1967–1971, junior managing director; 1972–1977, senior managing director; 1978, president; 1978–2000, president and chief executive officer; 2000–, chairman. Awards: Sitara-i-Pakistan award, Pakistan government, 1984; Middle Cross with the Star Order of Merit, republic of Hungary, 2004. Address: Suzuki Motor Corporation, 300 Takatsuka-Cho, Hamamatsu City, Shizuoka Prefecture, 432-8611, Japan; http://www.globalsuzuki.com. Osamu Suzuki. AP/Wide World Photos.

■ Osamu Suzuki spent 22 years as president and chief execu-

MARRIED INTO SUZUKI FAMILY

tive officer of Suzuki Motor Corporation, making him one of the auto industry’s longest-serving leaders. During this time he turned Suzuki into a global powerhouse by producing rugged, low-cost minicars for the less wealthy but more populated areas of the world, such as India, China, and Eastern Europe. Known as a fiscally conservative hands-on manager, Suzuki involved himself in nearly every aspect of the business and was often seen inspecting the company’s plants personally in search of cost-cutting measures. He once directed a factory to use white instead of yellow paint for floor lines, to save a few cents per can. Because of his close involvement, workers viewed him more as a father than a CEO. When Suzuki stepped down as president of the company in 2000, he stayed on as chairman. Friends and family urged him to retire, but Suzuki had other ideas. “I want to die in battle,” he told Automotive News (November 6, 2000).

Suzuki was born in Gero, Gifu Prefecture, Japan, on January 30, 1930. He graduated from Japan’s Chuo University in 1953 and then found work at a local bank. Suzuki once said he was more of a loan shark than a loan officer, noting that he made loans that paid him 30 percent interest. His entry into the business world came courtesy of his arranged marriage to Shoko Suzuki, granddaughter of the man who had founded Suzuki. The founder had three daughters, and his eldest daughter had five daughters. With no male heirs in sight, Osamu Suzuki, once Osamu Matsuda, took his wife’s name, as is Japanese custom in this situation.

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Suzuki began working at Suzuki in 1958, filling various management positions. He became the company’s fourth president in 1978 and turned Suzuki, which was founded as a loom maker, into a major global manufacturer of small cars.


Osamu Suzuki

Suzuki had a vision—instead of battling the industry giants, he focused on capturing buyers in the world’s developing markets, such as India, China, and Hungary.

FORGED AUTOMOTIVE VENTURES ACROSS THE GLOBE Suzuki built the company by working as a diplomat. He spent a lot of time traveling to other countries to forge partnerships, sometimes with government entities. Like a general, Suzuki marched across Indochina and the surrounding areas, setting up satellite assembly plants. In 1967 Suzuki opened a plant in Thailand and by 1974 had set up shop in Indonesia, where he had negotiated a joint venture for parts manufacturing. In 1975 Suzuki opened a production plant in the Philippines. By 1980 Suzuki was in Australia and in 1982 opened a plant in Pakistan. In the early 1980s Suzuki formed an alliance with General Motors to help get its foot in the door to Europe and North America. One of the most successful ventures came in 1982, when Suzuki teamed with India’s government-controlled manufacturer Maruti Udyog. By 1994 the Maruti Udyog plant in India was churning out 200,000 units, many for export to Eastern Europe, Nepal, and Bangladesh. In 1984 Suzuki hit New Zealand and in 1989 stretched into Canada. That same year total aggregate car production was 10 million units. Through the 1990s Suzuki expanded into Korea, Egypt, Hungary, and Vietnam. By 1993 the company had a 76 percent market share in India and a 66 percent market share in Pakistan and sold more cars in China than any other Japanese manufacturer, beating out even Toyota. Suzuki’s pint-sized, no-nonsense vehicles sold well in these regions because they were fuel-efficient and affordable. In places where gas could cost more than $4 per gallon and percapita income was measured in hundreds of dollars instead of thousands, Suzuki cars ruled. When other big-name automakers tried to break into the developing-world market, they found it hard to compete. As G. Richard Wagoner of General Motors told the Wall Street Journal, “I’m not sure there’s anybody better at making low-cost cars. And it starts at the top with Osamu” (February 26, 1998).

conservatism. As chief executive, Suzuki was forever in search of cost-cutting measures. He visited each factory each year to check up on operations. After visits, Suzuki made suggestions. Once, a three-day factory inspection generated a list of 215 possible cost-saving measures from Suzuki, among them, getting rid of 1,900 of the plant’s 18,000 lights to save $40,000 annually on electricity. He also saw receptionists as an unnecessary cost. Instead of being greeted by a person, visitors to Suzuki’s headquarters were met with signs directing them to a lobby telephone to contact the person they wanted to see. In other cost-saving measures, Suzuki employees traveling by bullet train to Tokyo for business had to purchase three separate tickets in stopover cities instead of one direct fare, saving the company $2 on the $60 two-hour trip. Suzuki also made efforts to design vehicles that used the same parts as its bigger competitors, because parts suppliers already had these items in stock. As Suzuki told Forbes, “We make small cars, so we worry about cutting costs by even one yen” (September 27, 1993). Suzuki’s formula was successful. By the early 2000s Suzuki was operating 60 plants in 31 countries while exporting its cars to 190 countries. In 2003 sales reached $16,815.7 million on the back of a one-year growth spurt of 33.7 percent. At the start of 2004 Suzuki was clearly Japan’s number-one minicar producer. Its motorcycle line was third, behind Honda and Yamaha, and its outboard marine engines enjoyed brisk sales as well. Like his company, Osamu Suzuki showed no signs of slowing down either, vowing to work until he died.

See also entry on Suzuki Motor Corporation in International Directory of Company Histories.


Eisenstodt, Gale, “A 4 Billion People Market,” Forbes, September 27, 1993, pp. 48–49. “‘I Want to Die in Battle,’ the CEO says,” Automotive News, November 6, 2000, p. 32. Reitman, Valerie, “Frugal Head of Suzuki Drives Markets in Asia,” Wall Street Journal, February 26, 1998. “Suzuki Motor Corp.: Cost Cuts, Strong Sales Abroad,” Wall Street Journal, November 10, 2003.

HELPED COMPANY DRAW PROFIT THROUGH FISCAL CONSERVATISM

Yamaguchi, Yuzo, “44-Year-Old Suzuki Moves to Boardroom,” Automotive News, April 14, 2003, p. 31.

Although Suzuki sold low-end cars at a nominal cost, the company still made a profit, thanks to Osamu Suzuki’s fiscal

—Lisa Frick


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Toshifumi Suzuki 1932– Chairman and chief executive officer, Ito-Yokado Group and its subsidiary, Seven-Eleven Japan Company Nationality: Japanese. Born: December 1, 1932, in Nagano prefecture, Japan. Education: Chuo University, Tokyo, BA, 1956. Career: Worked in a publishing sales company until 1963, when he joined Ito-Yokado Co.; first president of its subsidiary, Seven-Eleven Japan, in 1973; has remained with Ito-Yokado group through 2004. Awards: Voted the fifth most respected business leader in Japan, Nikkei Industrial News, January 2004. Publications: Coauthor, The Essence of Management: Spontaneous Managerial Decisions Based on Conviction [in Japanese], 2000; The Starting Point of Business, 2003. Address: Ito-Yokado Company, 8-8, Nibancho, Chiyoda-ku, Tokyo 102-8455, Japan. Toshifumi Suzuki. © AFP/Corbis.

■ Toshifumi Suzuki, head of the giant Ito-Yokado Group of Japan, helped revolutionize his country’s retail sector, previously known for its inefficient, hidebound practices. He introduced franchising to the Japanese retail industry in 1974, as founder of Japan’s Seven-Eleven convenience stores, which eventually grew to a chain of over 10,000 units by 2003, many of them operating 24-hours a day. He pushed the franchise concept in new, creative directions, and then turned around in 1991 to rescue the U.S. company that originated the brand. He has been a pioneer in the gradual introduction of businessto-consumer e-commerce and a forceful public spokesman for economic liberalization and reform.

tion system and helped introduce a more consumer-driven orientation to product development and manufacturing. Perhaps his most forward-looking achievement was Seven-Eleven Japan’s integrated data systems, whose up-to-the-minute sales, customer, inventory, and supply-chain information dramatically improved productivity, profitability, and responsiveness to consumer needs. Suzuki devoted more than 40 years to finding creative ways to wring ever-more value from his company’s assets for stockholders and customers alike.

Suzuki belied all the stereotypes of the consensus-based Japanese business style and was never deterred by opposition within or outside his company or by appeals to tradition. Using the leverage of his growing retail empire, with over $28 billion in worldwide sales in 2003, he succeeded in streamlining much of Japan’s multilayered consumer-product distribu-

LESSONS FROM ABROAD

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Born in 1932 in the then-rural Nagano, 125 miles northwest of Tokyo, Toshifumi Suzuki moved to the capital after finishing high school. He received an economics and commerce degree from Chuo University in 1956, where, by his


Toshifumi Suzuki

own later description, he was a student protestor; he also did a stint as labor-union leader. Suzuki left a promising career in publishing sales after a fateful 1963 meeting with the legendary retailer Masatoshi Ito, who was then in the process of parlaying his family’s modest 40-year-old clothing business into one of the first chains of superstores under the company name ItoYokado. This new type of consumer emporium combined separate food, clothing, and other stores into one unified location. It proved to be a successful attempt to work around retail laws that limited department stores. These laws, passed originally in the 1930s and strengthened in the 1950s, were designed to protect the omnipresent mom-and-pop neighborhood markets. Suzuki became a director of the company in 1971. By then, the small markets had succeeded in imposing legal limits to the superstores too, and Ito-Yokado began shopping around for other growth options. In 1973 Suzuki was instrumental in licensing the Denny’s name for a chain of restaurants. During his repeated visits to the United States to clinch that deal, he became enamored with the country’s thriving conveniencestore chains, especially the brand leader 7-Eleven of Dallas, Texas. He immediately recognized the potential of convenience stores for Japan. Japanese consumers had long been in the habit of shopping several times a day for small quantities of food. They placed a high value on freshness, and their homes tended to be small, with tiny kitchens and little storage space. Frequent shopping and crowded roads reinforced the need for small, local food shops carrying a limited range of staples. The small shops suffered, however, from antiquated management styles, poor capitalization, and a weak position in the face of distributors and manufacturers. It had become conventional wisdom, shared by most Ito-Yokado executives, that only large stores could achieve productivity, through economies of scale and professional management. Backed by economic consultants and industry experts, Suzuki’s colleagues saw no demand for any additional small markets in the crowded Japanese retail scene. Acting the part of visionary, Suzuki argued that Southland, the 7-Eleven parent company, could supply the management expertise and systems that might transform the Japanese momand-pop markets. Rather than continually fight these politically well-connected entrepreneurs, a well-run chain might tempt many of them into buying franchises, trading their valuable locations and customer loyalty for security and higher revenues. Suzuki managed to win over the company boss, Ito; the franchise ideal may have appealed to a man who always preferred leasing his locations rather than incurring the high bank debt typical of land-hungry Japanese retailers. Suzuki still had to convince Southland executives, who had imbibed the same conventional wisdom about Japanese retail, but again his dogged determination won the day. In November 1973 Southland agreed to license its name and supply ex-


pertise and systems, in exchange for a 0.6 percent gross-profit royalty and a pledge to open 1,200 stores within eight years.

7-ELEVEN WITH A JAPANESE FACE Aware that their new venture was unprecedented, Ito and Suzuki set up a new subsidiary, Seven-Eleven Japan, with Suzuki as president and Ito as chairman, and staffed it from outside the retail field. The new company copied two of Southland’s key policies: it would not try to match the low prices of nearby supermarkets, and it would keep its accounting system transparent to franchisees in order to maintain their trust. Suzuki also brought over 7-Eleven’s innovative computerized point-of-sale registers, which Southland used primarily for inventory control. In his hands, this technology acquired a far more important role. Constantly upgraded with software developed by outside contractors including Microsoft, rather than by a large in-house information-technology department, using hardware codeveloped with industry leaders such as NEC, these simple point-of-sale terminals and their successors evolved into one of the most sophisticated integrated systems of any company in the world. Seven-Eleven Japan’s system eventually came to link tens of thousands of cash registers, hand-held computers, and other equipment throughout the supply chain. Every employee was trained to use the system’s analytic tools, which exploited a wealth of customer, sales, weather, and other relevant data, as a guide to daily ordering. The integration of suppliers and distributors led to unprecedented response times, as freshly made products ordered in the morning were delivered before the evening rush. With such accurate data on sales trends, Suzuki was able to forgo the standard Japanese practice of returning unsold goods; in exchange, he gained full control of shelf space and a lower wholesale price. The system also facilitated realtime two-way communication. By 1981, with over one thousand stores in operation, Seven-Eleven Japan was listed on the First Section of the Tokyo Stock Exchange, which includes only large, established companies. Several other convenience-store chains had emerged by then but none could shake Suzuki’s market domination, especially in the Tokyo area. By the late 1980s SevenEleven Japan (along with other Ito-Yokado initiatives like the Mary Ann specialty stores for women, founded in 1978, and Robinson’s department stores in 1984) had grown so large and profitable that it began to outshine its U.S. namesake. When Southland ran into trouble later in the decade, Seven-Eleven Japan helped out by taking over the chain’s 58 Hawaii units in 1989. In 1991, in exchange for a $430 million investment, Ito-Yokado acquired 70 percent ownership in Southland, along with the right to retrofit Suzuki’s key innova-

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tions in the U.S. network. With Suzuki as a very active president and chief executive officer and Itoas chairman, Southland closed some 1,200 of its 6,700 stores; the firm’s internaldistribution network was replaced by a third-party wholesaler; product selection was improved and pricing rationalized; and most important, an integrated information system modeled on Japan’s was installed across the chain. Despite sustained opposition from many franchisees, who objected to losing their right to choose manufacturers, products, and distributors, Suzuki plowed ahead. By 1994 the U.S. unit was again making money. Profits—and new stores—continued to pile up throughout the decade and into the new century, and the company’s name was formally changed to 7-Eleven, Inc.

MANAGEMENT STYLE

initiatives. In 2001 he won rare approval from the cautious government financial authorities for an innovative idea; he launched the independent IY Bank, offering credit cards, loans, and ATMs, all at existing convenience stores. The company’s forays into Internet marketing began with a bookselling partnership with Softbank and a book wholesaler in 1999; most books are paid for and picked up at local Seven-Elevens. The next year he engineered a $375 million partnership with NEC, Nomura Research, and Sony, called 7-dream.com, that promised to offer 100,000 products and services over the Internet. The local stores were again expected to be the key— most products would be picked up there and even ordered over public-access terminals. While still a very active chairman, in the twenty-first century Suzuki took on an elder-statesman role in Japan. He served as vice chairman of the prestigious Keidanren business organization and sat on important commissions on the environment, business ethics, and long-term economic strategy. He also worked to expand Ito-Yokado’s presence in China.

Suzuki was always known for being hard on staff, loudly demanding they “adapt to change” and “listen to the customer.” He never missed an opportunity to proselytize on the value of information technology among employees, franchisees, and suppliers. During all the years of expansion Suzuki held firm to a horizontal management structure, with only a handful of levels between franchisee and top management. He enforced a similar streamlined product-distribution system with regional depots and specialized trucks delivering similar products just in time to all units in an area; this network was organized by Seven-Eleven Japan, but the components (e.g., warehouses, trucks) were all third-party owned, in keeping with Suzuki’s goal of profitability rather than volume or assets.

See also entry on Ito-Yokado Co., Ltd. in International Directory of Company Histories.

Suzuki enforced his faith in communication through regular meetings with managers at all levels. Some 160 “zone managers” were summoned every Tuesday to the modest, rented Tokyo headquarters to share experiences and opinions about even the smallest details of marketing, a practice followed by no other Japanese firm. Several thousand other employees and franchisees were brought in for weekly meetings and twiceyearly conferences.

Earl, M. J., and D. Feeny, “How To Be a CEO for the Information Age,” MIT Sloan Management Review 41, no. 2 (2000), pp. 11–23.

CHANGE AS A PERMANENT FIXTURE In an interview reported in the book Creating Modern Capitalism (1997), Suzuki said, “I don’t feel any sense of achievement. The world changes too much. A marathon has an end, but the world does not stop.” Even in his late sixties and seventies he remained actively involved in many Ito-Yokado Group

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Bernstein, Jeffrey R., “7-Eleven in America and Japan,” in Thomas K. McCraw, ed., Creating Modern Capitalism: How Entrepreneurs, Companies, and Countries Triumphed in Three Industrial Revolutions, Cambridge, Mass.: Harvard University Press, 1997, pp. 490–529.

Sakamaki, Sachiko, “Ito-Yodako is Shaking Up Japan’s Staid Retailing World,” Far Eastern Economic Review, April 4, 1996, pp. 54–55. “Seven-Eleven Japan: Blending E-commerce with Traditional Retailing,” Economist, May 24, 2001. “Suzuki Toshifumi on Consumer Preferences,” Look Japan, August 1998, pp. 24–25. —Barry Youngerman


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Carl-Henric Svanberg 1952– Chief executive officer, Telefon LM Ericsson Nationality: Swedish. Born: May 29, 1952, in Porjus, Sweden. Education: Linköping Institute of Technology, MS, 1977; Uppsala University, BS, 1983. Family: Married Agneta Skoog (nurse midwife); children: three. Career: Asea, 1978–1985, various foreign assignments in project exports; Securitas Group, 1986–1990, president of alarm division; 1990–1994, first executive vice president; Assa Abloy Group, 1994–2003, president and chief executive officer; Telefon LM Ericsson, 2003–, president and chief executive officer. Awards: Business Leader of the Year, PA Consulting Group and Affärsvärlden, 1998; Best CEO, Stockholm Stock Exchange “Dreamteam,” Veckans Affärer, 2001. Address: Telefonvägen 30, SE 126-25 Stockholm, Sweden; http://www.ericsson.com.

■ Carl-Henric Svanberg in 2003 was named president and CEO of Telefon LM Ericsson, the world’s leading maker of wireless telecommunications infrastructure equipment. One of Sweden’s historically most important and globally successful corporations, Ericsson abandoned its long-standing preference for selecting a CEO from the internal ranks. Svanberg was admired as a perennially successful leader, notably as president and CEO of Assa Abloy, the world’s leading lock manufacturer. Svanberg, with no previous experience in the telecommunications industry, took the reins at Ericsson as the fourth CEO in five years in the wake of a severe industry and corporate downturn. There were skeptics among analysts and the media, but many looked to Svanberg as a golden boy who would use his considerable personal skills and abilities to turn around the venerable Swedish telecommunications company. Coworkers and analysts described Svanberg as an exceptional communicator with a remarkable ability to inspire and motivate others. International Directory of Business Biographies

Carl-Henric Svanberg. AP/Wide World Photos.

LEARNING VALUABLE LESSONS Svanberg cultivated his social skills while growing up in northern Sweden. His father was a bookkeeper for the Swedish State Power Board, and the family moved frequently, as many as 10 times before Svanberg was 10 years old. The constant change of those years taught Svanberg to become rapidly familiar and comfortable with new surroundings and to quickly develop a rapport with new people. Svanberg discovered early in life that he enjoyed working with other people and leading them as a team. Through a long and active involvement with the Boy Scouts, Svanberg observed that the best way to lead was to influence people through the power of persuasion and to create a common vision and purpose. He discovered on hikes and around the campfire that authority alone was neither sufficient nor effec-

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tive and that employing the authority of command meant impoverished ideas and failed communication. Svanberg readily recognized his experience with the Boy Scouts, in which he had learned to listen and to respect others, as instrumental to forming his leadership style. A defining trait in Svanberg’s character was his willingness to work hard. As a student he held several jobs doing manual labor in construction, on the docks, and in garbage collection. At the Linköping Institute of Technology, Svanberg chose to study engineering after an initial period of interest in teaching. He considered engineering a difficult subject and chose it for that reason. According to Svanberg, he was always drawn to a challenge and to doing things that seemed hard.

ASEA After graduating from Linköping Institute, Svanberg joined the Swedish engineering export firm Asea in 1978. (Asea merged with the Swiss company BBC to form Asea Brown Boveri in 1988.) Svanberg knew little about business, but the prospect of working abroad and the challenge of project leadership attracted him. Svanberg moved up the ladder quickly, and by the age of 28 he had begun managing a threeyear SEK 100 million project to build power plants in Colombia. In an interview with the Swedish business publication Affärsvärlden, Svanberg described the project in Colombia and his early years at Asea, a company that served as a management training ground for many of Sweden’s top CEOs: “I was not very prominent, but that’s how it all worked. And you grew with the responsibility” (October 2, 2002). During this period Svanberg studied business administration in the evening to complement his education in engineering. He found that the practical business experience he gained at Asea was an enormous help and facilitated his studies. While others struggled with concepts such as forward currency exchange contracts and accounting, Svanberg already had real-world experience with such subjects.

SECURITY SERVICES In 1986 Securitas, a Swedish security company, recruited Svanberg to run its alarm division. As president, Svanberg turned the losing operation into a profitable success, although not without encountering difficulties. Svanberg acknowledged that he learned an important basic fact about running a company during this period: The only way to avoid outside interference was to be successful and profitable. In 1987 Securitas developed a strategy for expansion built on the company’s core operations in guard and security services. It began with the purchase of Assa, a Swedish lock company, in 1988. By 1990, when Svanberg was promoted to first executive vice president in charge of alarm solutions and locks,

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the company’s acquisition campaign was under way. Working closely with the CEO, Melker Schörling, and later his successor, Thomas Berglund, Svanberg helped hone the formula for success that propelled Securitas to greater heights—a series of acquisitions in Scandinavia, Europe, and the United States. The moves resulted in dramatically increased growth and a sharply rising share price that reflected the market’s enthusiasm for the company’s strategy. By 1994 Securitas’s sales exceeded SEK 6 billion, more than a sixfold increase from its preacquisition days in 1988.

ASSA ABLOY In 1994 Securitas spun off its Swedish lock-making operations to form a joint venture with Finland-based Abloy. Svanberg became president and CEO of the merged company, Assa Abloy. The company was listed on the Stockholm Stock Exchange later that year. Unlike the security services industry, which enjoyed comparatively high growth in the early 1990s, the lock industry experienced cyclical demand more or less in concert with the construction industry. In 1994 Assa Abloy struggled when the lock industry declined considerably. Svanberg took a personal risk and demonstrated his commitment to Assa Abloy and his strategy and vision for its future by borrowing SEK 25 million to invest in the company. To compete in the low-growth, mature lock industry, Svanberg employed an acquisition strategy, as he had at Securitas. Svanberg approached potential acquisitions in a friendly manner and focused on mutual benefit. Dubbed the “gentle conqueror,” Svanberg never instituted a hostile takeover. Acquisitions brought market share gains and sales growth. But owing to diverse national standards and requirements, there was minimal potential for the manufacturing efficiencies normally associated with greater size and economies of scale. By the end of 2001 Assa Abloy was manufacturing 500,000 types of locks in dozens of factories that mainly produced products unique to their local markets. Svanberg focused on achieving synergy, efficiency, and productivity gains through shared learning. This approach to shared learning across markets enabled Assa Abloy to benefit from its global reach and identify ways to operate more efficiently. Assa Abloy succeeded in effectively and quickly integrating new acquisitions despite the obstacles encountered in the combination of companies with diverse strategies, operations, accounting systems, corporate cultures, and national heritages. Svanberg established a disciplined method for achieving the desired results. According to Svanberg, he focused on creating the right organizational structure, offering the proper product mix, and ensuring that accounting practices were identical to allow for comparison across the company. Svanberg structured operations in individual business units charged with focusing on local markets and running their own



businesses. The ongoing role of the head office was to promote cross-fertilization and knowledge sharing. Svanberg instituted regular, monthly meetings with business unit managers to focus on financial and operational results and to stimulate the flow of ideas. In addition, Svanberg fervently advocated benchmarking, the statistical comparison of operations as a tool for continuous improvement, and used it diligently to help the business units share and apply best practices. Using a business model not commonly seen in Europe, Svanberg gave business unit managers freedom to run their own businesses and set their own goals. He enthusiastically urged the managers to stretch their goals as much as possible without being unrealistic. He rewarded the managers for positive results by linking employee compensation to business unit measures for efficiency and profitability. In 1998 Fabrizio Pierallini, the portfolio manager of Vontobel International Equity fund, told David Franecki of Barron’s that Svanberg was a “productivity pioneer.” Assa Abloy regularly added companies—more than one hundred around the world during Svanberg’s time as CEO. Uniting Assa Abloy’s companies and getting employees to identify with the larger organization presented a recurring challenge. In 2000 Assa Abloy became the world’s leading lock company when it acquired the lock brand Yale and doubled the number of employees to 24,000. To address the size of this integration challenge, Svanberg committed SEK 100 million to sponsor a sailboat in the Volvo Ocean Race in 2002. Assa Abloy had newly acquired companies in nearly all of the ports where the race made stops. The race offered an unusual opportunity for accelerating the integration process through a common project that united employees, management, and customers. During Svanberg’s nine-year tenure, Assa Abloy produced impressive results. Svanberg made 45 acquisitions, totaling more than one hundred companies, and increased the number of employees to 28,750 from 4,700. The company achieved 30 percent annual sales growth to SEK 25 billion and pretax profit that increased 50 percent annually to SEK 2 billion from SEK 70 million. The share price increased more than 20 times. At the start of 2003, however, opportunities for acquisition-led growth were declining. Analysts expressed concern that Assa Abloy would not be able to grow at the established pace as the company shifted its focus toward generating growth from internal operations.

LEADERSHIP STYLE Svanberg, relaxed, self-assured, and successful, fit the image of the modern leader. He was an excellent communicator and an accomplished speaker who had a head for numbers and felt at ease in front of any audience. Such skills combined with a track record of success endeared him to analysts, investors, and


the news media. Svanberg’s style of leadership exemplified the informality and teamwork typically favored in Scandinavia. He was self-confident but also humble and unpretentious. His door was always open, and he encouraged dialogue, gladly trading ideas with colleagues in the hallways. Having fun was part of the equation when working with Svanberg. Assa Abloy’s chief financial officer Göran Jansson in 2002 told the Swedish business weekly Veckans Affärer that Svanberg was a “very positive and enthusiastic boss. . . . It is so much fun to work with Carl-Henric. My wife usually points out that every time I talk with him on the phone, we laugh!” Observers attributed Svanberg’s success as a leader to his ability to get the maximum effort from others and to get them working together toward common and well-understood goals. Svanberg provided direction through clear and consistent communication. To motivate and inspire, Svanberg relied, in part, on the person’s natural desire to succeed. Svanberg’s ability to tap this reservoir and help others achieve their goals was rewarded with dedication, commitment, and enthusiasm. Anna Bernsten, a vice president at Assa Abloy, described Svanberg to Dagens Nyheter as “a boss that you would work day and night for” (February 8, 2003).

ERICSSON In April 2003 Svanberg joined LM Ericsson as president and CEO and purchased Ericsson shares for SEK 100 million. For three years before the management change, Ericsson had endured the ill effects of a rapid decline in the telecommunications infrastructure industry. Employees were weary from aggressive cost-savings and restructuring programs that included 50,000 layoffs. Ericsson suffered stunning losses—a combined SEK 30 billion after taxes in 2001 and 2002—and its share price plummeted to 5 percent of its all-time high. Analysts and market watchers reacted with surprise when Ericsson announced Svanberg’s appointment. Ericsson traditionally had hired from within. Svanberg was the first CEO from outside the company in 60 years. Most observers believed that bringing in new blood at Ericsson was a good move, but many analysts questioned Svanberg’s complete lack of telecommunications experience. Others wondered how his experience leading a low-tech company that made its name and generated its growth through acquisitions would translate to an industry marked by rapidly changing technology and a company that needed to generate internal growth. Svanberg maintained that his experience restructuring struggling companies would be useful. As for lacking telecommunications experience, he promised to dedicate himself to learning all that he needed. A colleague expressed confidence that Svanberg would transform the technology-driven company, telling Nicholas George of the Financial Times: “Ericsson has remained a very traditional engineering company, with lots

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of handbooks, papers and bureaucracy. Carl-Henric will revolutionise it” (February 7, 2003). The market believed or at least wanted very badly to believe in Svanberg. Nearly one in every two Swedish households owned Ericsson shares, the value of which rose 14 percent after the announcement and was up 4.5 percent at the close of trading. Assa Abloy shares declined 14.6 percent for the day. When Time reporter Charles P. Wallace asked Svanberg why he wanted “such a migraine” as the top job at Ericsson, Svanberg replied, “The headache is what’s so attractive. I felt prepared to take on a challenge of this magnitude.” Svanberg made it clear that the customer would play a more central role than in Ericsson’s technology-focused past. Responding to a question regarding the possible sale of poorly performing divisions, Svanberg declared that he saw no reason to shed Ericsson’s money-losing wireless handset joint venture Sony Ericsson. Svanberg saw benefits in ownership, which provided customer insight not easily gained through other means. Svanberg intended to understand customer needs at all points in the sales and distribution chain. Understanding the customer’s customer was critical to working with direct customers as business partners. Profitability was Svanberg’s goal, even if depressed market conditions persisted. He did not plan to wait for an upturn in demand for infrastructure equipment (the networks that wireless operating companies used to provide wireless service to end users). To achieve profitability without the promise of growth meant more cost cutting. Svanberg accelerated costsavings programs already in place and announced additional job cuts to lower the total work force to 47,000, the lowest number in 35 years. Efforts to improve operational efficiencies followed. Svanberg established a program called “Operation Excellence” to identify opportunities for greater precision in operations from research and development through sales effectiveness to manufacturing and distribution. Svanberg wanted Ericsson to be a strong and more efficient company that was well prepared to take advantage of increased growth but that was not in need of it. Svanberg planned to rid Ericsson of its long-entrenched bureaucratic ways and create a simpler organization with more direct lines of responsibility. Organizational changes introduced at the beginning of 2004 eliminated management layers and reflected the importance Svanberg placed on understanding and responding to customer needs. Svanberg established a separate group function for marketing and sales and split the

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systems business unit into two separate units to reflect different sets of customer needs and manufacturing processes. One unit focused on low-volume, specialized products; the other unit focused on high-volume, standardized products. In 2003 Ericsson reported a quarterly gross profit, not including restructuring costs, for the first time in three years. Cost-cutting programs implemented before Svanberg took over showed results. The measures Svanberg implemented to achieve operational efficiencies accelerated cost reductions, and Svanberg reported improved profit for the fourth quarter of 2003. The joint venture Sony Ericsson also returned to profit in 2003. Encouraged by Ericsson’s positive and better than expected results by the middle of 2004, some analysts and investors regarded improving market demand forecasts for network infrastructure equipment as a sign Ericsson would show strong growth as early as 2004. Svanberg, wary of premature or excessive optimism, responded cautiously to suggestions of market growth and strength.


“ASSA ABLOY CEO change from Carl-Henric Svanberg to Bo Dankis,” Dagens Nyheter, February 8, 2003, http:// www.assaabloy.com/artarchive.php?id=1343. Brown-Homes, Christopher, “Ericsson Sets Sights on Better Times Ahead,” Financial Times (London edition), October 7, 2003. Franecki, David, “Mutual Choice: Generating Gains by Avoiding Losses,” Barron’s, August 10, 1998, pp. 43–44. George, Nicholas, “Fresh Face to Front Floundering Ericsson,” Financial Times (London edition), February 7, 2003. “The Last Executives in the Barnevik School,” Affärsvärlden, October 8, 2002, http://www.assaabloy.com/ artarchive.php?id=999. Pringle, David, Buster Kantraw, and Silvia Ascarelli, “Ericsson Picks Assa Abloy CEO as its New Head,” Wall Street Journal (Europe edition), February 7, 2003. “The Second Guy,” Veckans Affärer, November 4, 2002, http:// www.assaabloy.com/artarchive.php?id=1137. Wallace, Charles P., “Ericsson’s Wake-Up Call,” Time (Europe edition), May 12, 2003. —Catherine L. Naghdi


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William H. Swanson 1949– Chairman, chief executive officer, and president, Raytheon Company

missile systems, marine electronics (such as commercial fish finders), and air-combat infrared imaging systems. On the aircraft side of the business, the company was the leading U.S. manufacturer of small passenger aircraft as well as turboprop and piston aircraft, under such names as Beech, Hawker, King Air, and Baron.

Nationality: American. Born: 1949. Education: California Polytechnic State University, BS, 1972. Family: Married Cheryl (maiden name unknown). Career: Raytheon Company, 1972–2002, various positions, including manufacturing manager of equipment division, chairman and CEO of Raytheon Systems Company, senior vice president and general manager of missile systems division, executive vice president, and president of Electronic Systems; 2002–2003, president; 2003–2004, CEO and president; 2004–, chairman, CEO, and president. Awards: Semper Fidelis Award, Marine Corps Scholarship Foundation, 2002; Honorary Doctorate of Laws, Pepperdine University, 2002.

FROM DRIVING GOLF BALLS TO DIRECTING DEFENSE MISSILES Swanson gained employment with Raytheon in 1972, just one week after his graduation from California Polytechnic State University with a degree in industrial engineering, which he earned with the assistance of a golf scholarship. After joining Raytheon, Swanson held a wide variety of leadership positions, including manufacturing manager of the company’s equipment division, senior vice president and general manager of the missile systems division, general manager of Raytheon Electronic Systems (an $8 billion defense electronics business), and chairman and CEO of Raytheon Systems Company. Swanson was named president of Raytheon in July 2002, chief executive officer on July 1, 2003, and chairman on January 28, 2004.

Address: Raytheon Company, 870 Winter Street, Waltham, Massachusetts 02451; http://www.raytheon.com.

MERGING TECH GIANTS

■ William H. Swanson was the chairman and chief executive officer of Raytheon Company, an industry leader in government and defense electronics, information technology, aerospace systems, technical services, and business and specialmission aircraft. Swanson directed about 78,000 employees in a company with 2003 sales of $18.1 billion.

In 1997 Swanson received a most difficult assignment while serving as corporate vice president: he was to integrate into Raytheon the newly acquired defense businesses of Texas Instruments (TI) and Hughes. With the two acquisitions, Raytheon’s overall revenues nearly doubled, but the assimilation of the two former rivals into the Raytheon culture was not predicted to be easy. Thanks at least in part to Swanson’s leadership, Raytheon emerged three years later as the leader in hightech warfare and remained a corporate dynamo during the economic downfall of 2000–2002.

In 2004 the Raytheon Company was the third-leading U.S. defense contractor, behind Boeing and Lockheed Martin. The company was divided into four segments: electronics, aircraft, engineering and construction (specializing on industrial projects), and appliances (including Speed Queen, Amana, and Caloric). The largest segment was electronics, which accounted for almost 75 percent of corporate sales; Raytheon was ranked sixth nationwide in that field, primarily serving the U.S. Department of Defense. The electronics segment comprised air traffic control systems, semiconductors, Patriot and Hawk


Swanson did not generally receive positive feedback during those first three years, however. Employees frequently criticized him when they were laid off, and angry members of the U.S. Congress often bemoaned him when dismayed over declining state revenues. During this time Swanson endeavored to steadily transform the company using his philosophy about building a good foundation in one’s working and personal life and having fun doing it.

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His efforts at Raytheon were fully realized when the United States began to engage in the war on terror after the attacks on the Pentagon and the World Trade Center on September 11, 2001. Realizing that the military was insufficiently prepared in its existing capacity to handle the new technologically advanced ways with which the war on terror would have to be fought, Swanson expected that many billions of dollars would be awarded to defense contractors in the immediate future. Thanks to Swanson’s steady buildup of the company’s foundation, Raytheon was handsomely awarded many contracts from the military. While working for Raytheon’s Electronic Systems division, Swanson had put the organization in an advantageous position to gear up to provide key products to the new high-tech military; Raytheon sales eventually increased by 40 percent. The acquisitions of TI and Hughes, as recommended by Swanson, proved to be very beneficial to Raytheon, which was then seen as the defense company best able to provide high-tech products. The military was indeed moving away from heavily mechanized, capital-intensive artillery, ground forces, and missile systems and toward advanced information technology.

SWANSON’S UNWRITTEN RULES OF MANAGEMENT Swanson was well known for his management skills, being highly principled throughout his career. His typical workday lasted about 14 hours, and more than half of his weekends were spent on the job. He was a very outgoing, humanoriented person, eager to shake hands with his employees, able to remember small details like the names of their children, and willing to personally answer nearly all of his e-mail. He was also one of the toughest defense executives in recent history. Tyrone Taborn reported that the retired General Lester L. Lyles, who had been the air force’s only African American four-star general, said of Swanson, “Raytheon is clearly in the top echelon of Department of Defense contractors because of his leadership” (January/February 2004). Swanson’s leadership style was formulated on 25 management rules that he developed over his four-decade long career at Raytheon. Taborn cited a number of these rules: “Learn to say, ‘I don’t know’; if used when appropriate, it will be often. If you are not criticized, you may not be doing much. Look for what is missing. Many know how to improve what’s there, but few can see what isn’t there. Don’t be timid; speak up; express yourself, and promote your ideas. Don’t ever lose your sense of humor.” Perhaps the most amusing of Swanson’s rules: “No one likes a grump except another grump” (January/ February 2004).

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EMPHASIS ON ETHICS AND INTEGRITY Swanson spoke openly about his emphasis on integrity and ethics in the business place. During his 2002 commencement speech at Pepperdine University in Malibu, California, when he received an honorary doctorate, he told the audience, “In today’s business world, ethics, integrity and honesty are the new mantra of every successful venture; unfortunately, not everybody ‘gets it.’” He went on to say, “American business has never needed to focus on ethical behavior more than today. And that’s an area in which you as Pepperdine graduates with your strong background in ethics can help us make a difference right from the start—because business ethics isn’t something you can just put on like a raincoat when the weather gets a bit stormy; you need to make a commitment to business integrity from Day One, even when the sun isn’t shining” (December 7, 2002). Swanson went as far as to compare unethical behavior in the United States with unpatriotic behavior, especially in view of the tragic events of September 11, 2001. Swanson also commented, during the same speech, on the importance of making mistakes. He reminded the audience that he often said that if a person did not make mistakes, then that person was not working hard enough and not taking enough risks to beat the global competition. Swanson related an experience he had had early on in his career at Raytheon: one of his first bosses wrote on his performance review, “This young man never makes the same mistake twice, but I do believe he has made them all at least once” (December 7, 2002).

DIVERSITY THROUGHOUT Many outside experts and inside managers credited Swanson with saving Raytheon, both financially and socially. When Swanson secured the top job at Raytheon, he immediately went to work incorporating greater diversity into the company. Realizing that women, African Americans, Latinos, Native Americans, and persons with disabilities made up two-thirds of the U.S. work force but held only about 25 percent of the technical jobs, Swanson made an unwavering commitment to increasing the number of minorities employed by Raytheon and by the technology community as a whole. As evidence of the importance he placed on minority employment, Swanson’s first speaking engagement on a college campus was at Tuskegee University in Alabama, a prominently black institution; over 40 Tuskegee alumni were on Swanson’s staff.

SERVING THE COMMUNITY AND NATION In addition to his professional endeavors, Swanson served on the advisory council of the California Polytechnic State University School of Engineering and the board of regents at


William H. Swanson

Pepperdine University. Swanson was also a member of the Editorial Advisory Board of the Journal of Electronic Defense. He was a member of the Secretary of the Air Force Advisory Board and a trustee of the Association of the U.S. Army. Swanson served as a member of the National Defense Industrial Association, the Navy League, the Air Force Association, and the Board of Governors of the Aerospace Industries Association. He was a member of the CIA Officers Memorial Foundation board of advisors and an associate fellow of the American Institute of Aeronautics and Astronautics.

See also entry on Raytheon Company in International Directory of Company Histories.



Scott, Otto J., The Creative Ordeal: The Story of Raytheon, New York, N.Y.: Atheneum, 1974. Swanson, William H., “Ethics and Pepperdine: Setting Your Moral Compass,” December 7, 2002, http:// www.raytheon.com/newsroom/speeches/whs120702.pdf. Taborn, Tyrone D., “Swanson’s Rules: Raytheon’s CEO Does Management Right, by the Numbers,” U.S. Black Engineer, January/February 2004, http://www.raytheon.com/ newsroom/articles/USBE_magazine.pdf.


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Keiji Tachikawa 1939– Retired president and chief executive officer, NTT DoCoMo Nationality: Japanese. Born: 1939, in Gifu prefecture, Japan. Education: Tokyo University, bachelor’s degree, 1962; Massachusetts Institute of Technology, MBA, 1978; Tokyo University, PhD, 1981. Family: Married; children: two. Career: Nippon Telegraph and Telephone (NTT), 1962–1986, various positions; 1986–1987, director of New York office, assisted in founding NTT America; 1989–1990, senior manager, business strategy planning headquarters; 1990–1991, senior executive, NTT mobile communications; 1991–1992, executive manager, technology research department; 1992–1995, senior vice president and general manager, Kant regional communications center; 1995–1996, executive vice president, service engineering headquarters; 1996–1997, senior executive vice president, business communication headquarters; 1997–1998, senior executive vice president, NTT Mobile Communications Network; 1998–2004, president and chief executive officer, NTT Mobile Communications Network (became NTT DoCoMo in 2000); 2004–, advisor. Publications: Kodo joho shakai no kiban tekunoroji: 3 C (Computer, Communication, and Control), 1991; Komyunikeshon no kozo: nengen, shakai, gijutsu kaisono yoru bunseki, 1993; Ido tsushin Handobukku, 2000; W-CDMA: Mobile Communications System, 2002.

■ Keiji Tachikawa rode the telecommunications bubble of the late 1990s to introduce and push new wireless- (cellular-) phone technologies. In an attempt to standardize the wirelessphone industry, he proselytized W-CDMA technology as a wireless standard around the globe. In Japan he was responsible for the immensely popular wireless-phone Internet service called i-Mode. Though responsible for pushing DoCoMo to the forefront of wireless technologies, he also expanded the

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Keiji Tachikawa. AP/Wide World Photos.

company’s international ventures, which mostly met with unfavorable results when the telecom-business bubble burst.

EDUCATION AND EARLY CAREER Tachikawa was born in 1939 in the Gifu prefecture of Japan. He received both his bachelor’s degree and doctorate in engineering from Tokyo University. He also received a scholarship to attend the Massachusetts Institute of Technology, where he received an MBA. Immediately after receiving his undergraduate degree, he began to work for the then-stateowned Nippon Telegraph and Telephone (NTT) Corporation. The Japanese telecommunications industry was deregulated in 1984, opening the way for competition to NTT. By 1986 Tachikawa was in the United States as director of the New York office of NTT. He assisted in the establishment


Keiji Tachikawa

of NTT America in 1987. He then held various management positions, including vice president, before being named senior vice president of NTT Mobile Communications Network in 1997. In 1998 he became president and CEO of NTT Mobile, which was renamed NTT DoCoMo in April 2000. “DoCoMo” has a dual meaning; it is an acronym for Do Communications over the Mobile Network, and it is a Japanese word, docomo, which means “everywhere.” In 1998 NTT Mobile Communications Network was the largest cell-phone company in the world.

DEVELOPS I-MODE SERVICE In February 1999, in an effort to expand business by moving the company’s cellular services beyond just voice capabilities, Tachikawa launched his very successful i-Mode service. Along with services such as restaurant guides, news, and cartoons, i-Mode offered pared-down Web pages and e-mail services through a wireless phone. In just over one year after launching in Japan, i-Mode had five million subscribers; within two years it had over 17 million subscribers. The service was so successful that NTT’s i-Mode servers crashed several times due to heavy volume. The cost of the service was a modest $3 a month. Each e-mail of five hundred words or less was only 4¢. Approximately 30,000 companies provided content. In late 1998 NTT Mobile went public, and the company’s stock rose alongside the rise of the i-Mode service. By early 2000 the stock value had increased 290 percent.

LAUNCHES THE FOMA Not content with the success of i-Mode, Tachikawa began to push a new wireless Internet service offered by the company called FOMA, based on W-CDMA, or wireless broadband. W-CDMA technology had enough bandwidth to support video and music streaming over wireless phones. These capabilities were often referred to as 3G, for the third generation of wireless service. The service was launched in 2001 with Tachikawa’s hopes that it would produce DoCoMo’s next financial boon. Some in the company felt he launched the service too soon; that there were major quality issues yet to be solved. Michiyo Nakamota quoted Tachikawa as saying, “in this world, there is nothing that is 100 percent perfect. So we are going to do it” (Financial Times, October 1, 2001). Tachikawa noted that cell phones took some years to become successful and argued the same would happen with FOMA. In the wake of the success of i-Mode, Tachikawa sought to extend the service internationally. He bought stakes in international wireless companies such as AT&T Wireless in the United States, KPN Mobile of the Netherlands, and Hutchison 3G in the United Kingdom. He also forged deals with America Online and investigated ventures with Coca-Cola and Hewlett


Packard. With his stature as well as his stakes in other European companies, he persuaded them to buy initial, expensive licenses for utilizing 3G. Most, however, did not invest in the infrastructure necessary for the service to succeed, preferring to wait and see how it did in Japan with DoCoMo. With the exception of AT&T Wireless, the U.S. wireless industry utilized a different technology. Unfortunately, 3G was not the great success that Tachikawa had hoped it would be. Experts stated that the product was ahead of what the marketplace needed, and it was slow to be accepted. The foreign investments Tachikawa had undertaken began to lose large sums of money. DoCoMo had to take a $2.5 million write-down on its stake in KPN, and a deal with the Korean wireless operator SK fell through. By 2002, “investors [had] already given up the idea that these oversees investments will make sense from a financial return point of view,” according to Yasumasa Goda (Mobile Communication International, February 2002). At the same time, the telecommunications business plummeted. By 2004 the $17 billion that DoCoMo had invested to spread its service around the world had nearly vanished. FOMA did begin to grow, but slowly. By November 2003 it had 1.6 million subscribers and the company still had an ambitious goal of reaching 25 million by 2006. Another agreement with AT&T Wireless guaranteed that at least four U.S. cities would have W-CDMA networks installed. But Tachikawa’s vision for the global adoption of W-CDMA was far from met. In addition, competitor KDDI began taking market share away from DoCoMo in Japan.

MANAGEMENT STYLE Tachikawa stepped down as CEO and president in May 2004. “Tachikawa has forged a reputation as a nimble, openminded manager who isn’t afraid to hire experienced outsiders,” wrote a contributor to BusinessWeek (January 10, 2000). His years in the United States also changed his management style from the typical Japanese style of teamwork and general consensus to a more entrepreneurial, ambitious, and selfreliant approach. He enjoyed golfing and reading.

See also entry on Nippon Telegraph and Telephone Corp. in International Directory of Company Histories.


“Casting Japan’s Net,” BusinessWeek, January 10, 2000, p. 77. “Chatroom: Dr. Keiji Tachikawa,” Mobile Communications International, December-January 2001, p. 42. Herskovitz, Jon, “‘Visionist’ Puts Internet Phone in 25,000 New Hands Per Day,” Advertising Age International, July 2000, p. 22.

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Keiji Tachikawa “Keiji Tachikawa,” BusinessWeek, January 8, 2001, p. 65. Nakamoto, Michiyo, “The Last Man Standing Plays a Waiting Game,” Financial Times, January 14, 2003. ———, “A Pioneering but Risky Mobile Call: Interview Keiji Tachikaaw, NTT DoCoMo,” Financial Times, October 1, 2001.

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“Phone Pioneer Hangs on for Mobile Success,” America’s Intelligence Wire, March 4, 2004. “Stranger in Strange Lands,” Mobile Communications International, February 2002, p. 12.

—Deborah Kondek


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Noel N. Tata 1957– Managing director, Trent Limited Nationality: Indian. Born: 1957, in India. Family: Son of Naval Tata and Simone (maiden name unknown); married Aloo Mistry. Career: Tata Group, ?–1997, various positions at Tata International; 1997–1999, director of Trent Limited; 1999–, managing director of Trent Limited; 2003–, director of Titan Industries and of Voltas. Awards: Named to Time magazine–CNN 2003 Global Influentials List. Address: Tata Group, Bombay House, 24, Homi Mody Street, Fort, Mumbai 400 001, India; http:// www.tata.com .

■ Noel Tata was an influential figure in one of India’s largest business conglomerates, the Tata Group. After beginning his career at Tata International, the group’s arm for the products and services it offered abroad, Tata joined Trent, Tata Group’s retail arm, of which he became managing director in 1999. Praised as an intelligent and candid businessperson, Tata earned his reputation largely by developing Trent’s department store, Westside, from a single unprofitable shop to a chain of fourteen highly successful outlets. He was one of the favorites to assume the Tata Group’s top post of group chairperson after the retirement of his half brother, Ratan Tata.

SUCCESS IN RETAIL One of India’s most diverse and successful companies, the Tata Group was involved in industries ranging from information services to manufacturing. Tata’s mother Simone founded the Tata Group’s retail company, Trent, after her famous cosmetic company, Lakme, the first of its kind in India, was bought out by Hindustan Lever in 1997. Simone Tata was


Trent’s chairperson, and her son, who became a director when it was founded, became the company’s managing director in June 1999. By this time Trent had acquired the department store Littlewoods International, UK, changed its name to Westside, and taken over its infrastructure. Tata Group leaders and many in the Indian business community considered the retail area to have great potential for growth, so Tata immediately began to gain attention for his ambitious plans to turn Westside into a large and profitable venture. Under Tata’s direction Westside carefully researched its market and concentrated on affordable clothing, housewares, toys, and cosmetics aimed at the middle and upper-middle classes, which made up 25 percent of India’s population. One of Westside’s distinguishing features was its use of the Westside brand name for 90 percent of its product range, and nearly all of its clothing and furnishings. This allowed for a higher profit margin as well as the ability to offer a unique option to consumers, and it combined with the reputation of the Tata name to give Westside an edge over its competitors. Westside may also have been successful because of its customer-service policies, such as not requiring a receipt for returns; its avoidance of heavy losses from theft, which the stores addressed by paying the staff higher wages than competitors and implementing high-tech security systems; and its successful merchandise sourcing, which required buyers to keep up on the latest trends. Tata emphasized the need for careful research into an area before opening a store, something in which he was always personally involved, and he advocated opening many new stores in order to reduce the percentage of corporate costs and drive profits. Westside’s most significant obstacle between 1999 and 2004 was the expensive real-estate market that made expansion less profitable. By the summer of 2004, however, due in great part to Tata’s leadership, Westside had expanded to 14 stores and shares in Trent were performing very well. In October 2002 Tata had outlined plans for Trent’s foray into food retail, a major business venture that was immediately attractive to investors. The first of Trent’s grocery stores was planned to open in late 2004, and Tata claimed that the venture would grow by 100 percent in each of the following years. Food retail made up a large percentage of retail sales in India, and Tata emphasized the opportunity for diversification and expansion in the business.

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Noel N. Tata

PROSPECTS AND FAMILY CONNECTIONS Tata was the son-in-law of the largest single shareholder in Tata Sons, the Tata Group’s holding company, as well as the half brother of its group chairperson, Ratan Tata, and these connections were a significant factor in his becoming one of the most likely successors to the group’s highest post upon his half brother’s retirement. Tata’s success with Westside was the key factor in raising him from a lesser-known candidate to the front of the list of possibilities, which also included his brother-in-law Shapoor Pallonji Mistry. In 2003 Tata was appointed a director of Titan Industries, the Tata Group’s manufacturer of watches, clocks, and jewelry, and an additional director of Voltas, the Tata Group’s air-conditioning giant. After Ratan Tata announced his upcoming retirement in December 2002, his half brother received increased media attention and was characterized as an intelligent manager of apt

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business sense. Business India characterized him as a “streetsmart, single-focused manager” (September 2, 2002), and Time magazine commented on his good managerial record.


Ardiga, Aravind, “He’s Got Connections,” Time, December 1, 2003, pp. 80–81. Gupta, Indrajit, and T. Surendar, “The Enigma called Pallonji Mistry,” Businessworld, August 11, 2003. “Lots in Store,” Business India, September 2, 2002. “Tata Sons Board May Get Two New Faces This Year,” Times of India, Economic Times, March 2, 2004. —Scott Trudell


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Sidney Taurel 1949– Chairman and chief executive officer, Eli Lilly and Company Nationality: American. Born: February 9, 1949, in Casablanca, Morocco. Education: École des Hautes Études Commerciales, 1969; Columbia University, MBA, 1971. Family: Son of Jose Taurel and Marjorie Afriat; married Kathryn H. Fleischmann, 1977; children: three. Career: Eli Lilly and Company, 1971–1972, marketing associate for Eli Lilly International Corporation; 1972–1976, marketing-plans manager for Brazilian affiliate; 1976–1981, marketing and sales in Eastern Europe and France; 1981–1983, general manager of Brazilian affiliate; 1983–1986, vice president of European operations; 1986, president of Eli Lilly International; 1991–1993, executive vice president of pharmaceutical division; 1993–1998, president of pharmaceutical division and executive vice president; 1998, CEO; 1999–, chairman and CEO. Address: Eli Lilly and Company, Lilly Corporate Center, Indianapolis, Indiana 46285; http://www.lilly.com.

■ With 2003 sales of $12.6 billion, Eli Lilly and Company was best known for its widely popular antidepressants Prozac and Serafem. In addition to neurological, oncological, and diabetes drugs, the company also made antibiotics, growth hormones, antiulcer agents, and cardiovascular therapies as well as animal-health products. As CEO of Eli Lilly beginning in 1998 Sidney Taurel placed a heavy emphasis on research and development, helping the company to establish one of the most promising pipelines in the industry. His other primary contributions as CEO were turning Eli Lilly into a strong business partner and attracting and retaining top executives in the pharmaceutical industry.

AN INTERNATIONAL EXECUTIVE FOR A GLOBAL AGE Born in Casablanca, Morocco, Taurel lived and worked in the farthest corners of the world. He spoke French, English,


Sidney Taurel. AP/Wide World Photos.

Portuguese, and Spanish and was married to a native of Brazil. Taurel proposed to his wife in Heidelberg, Germany; they became officially engaged in Casablanca; legalized their union in a civil ceremony in Columbus, Ohio; and took part in a religious service in Paris. Taurel noted in Pharmaceutical Executive, “Home has always been wherever I am living at the moment” (March 1, 2001). After obtaining his MBA in 1971, Taurel, by then a seasoned world traveler, found himself in an unlikely place: Indiana. He told Indiana Business Magazine that he remembered having “no particular desire to work in the pharmaceutical industry. I came to Indianapolis for an interview out of curiosity” (June 1, 1999). Taurel joined the Lilly subsidiary Eli Lilly International Corporation in 1971 as a marketing associate and was named marketing-plans manager for the Brazilian affiliate the follow-

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Sidney Taurel

ing year. He held various international sales and marketing positions over a 15-year world tour, the highlights of which included helping to engineer turnarounds of Lilly’s operations in Brazil and also in Europe. Taurel returned to company headquarters in 1986 as the president of Eli Lilly International. Under his watch the international division’s annual sales rose from $500 million to $2 billion, and international sales increased from 30 percent of the parent company’s overall sales to 42 percent.

THE TALENT WAR Taurel expressed an acute awareness of the difficulty of recruiting and retaining the industry’s best and brightest; he was a proponent of several aggressive human-resources initiatives. According to Pharmaceutical Executive, as president of Lilly International, Taurel started a program to “globalize the company and tap all talent wherever it comes from” (March 1, 2001). The initiative was a success; by 2001 half of the senior executives working at Lilly’s corporate headquarters were foreignborn. Those executives were treated with great reverence— Taurel even helped found the International School of Indiana, in Lilly’s home town, so that the children of Lilly employees and other members of the community could receive a bilingual education.

DIAGNOSIS UNCLEAR FOR A POST-PROZAC COMPANY Taurel became CEO in July 1998 and chairman on January 1, 1999. Despite a track record of consistently profitable performance, success in his newest role would not be a foregone conclusion. In 2001 patents on Prozac, which accounted for nearly one-third of Lilly’s 1998 sales, would expire. Taurel estimated that generic versions of the drug would cause Prozac’s sales to drop by about 80 percent. His strategy for surviving the blow included identifying more promising drugs in Lilly’s labs that could be quickly brought to market and establishing partnerships with other companies. Regarding the latter approach, Taurel created an office of “alliance management,” which analyzed best practices in working with partners. The team of Lilly executives assessed the competition as well as companies outside the industry; surveyed prospective partners for their evaluations of Lilly; and suggested ways to make the company more partner friendly.

KEEPING LILLY INDEPENDENT Noticeably absent from Taurel’s strategy—particularly during the era that saw the unions of Pharmacia and Pfizer and of Sandoz and Ciba-Geigy—was the possibility of a merger. While noting that no other pharmaceutical company had emerged from a similarly devastating top-of-the-line-drug ex-

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piration without being forced to merge, Taurel believed that his company would be the exception. He told BusinessWeek, “We really want to write the book on how to do it differently; 2001, the year Prozac would expire, has brought a sense of urgency to everything we’re doing” (May 24, 1999). Lilly’s surviving independently would require rapid innovation; Taurel was undaunted by the task he set for himself. He said in Pharmaceutical Executive, “If you look at all the mergers and acquisitions that have occurred, they have been driven by a lack of innovation in the companies—either a big patent expiration or not enough in the pipeline to produce growth that meets investors’ expectations. Because we are a very fragmented industry, a merger provides an opportunity to rationalize, reduce expenses, and boost earnings in the short term. But so far, nobody has shown that you can put two research organizations together and make them more productive” (March 1, 2001).

A STRONG PRODUCT PIPELINE Taurel’s focus on R&D and innovation was illustrated by Lilly’s possession of one of the most promising pipelines in the pharmaceutical industry—on which Lilly spent more money than did any other such company. At one point Lilly offered a total of eight new products in a mere two-and-a-half-year period. In November 2001 the FDA approved Xigris (drotrecogin alfa), which was projected to be a $1 billion blockbuster drug for the treatment of septic infections caused by chemotherapy. Xigris would be the first biotechnology treatment for the most serious stages of sepsis. In 2003 the company launched the first products to spur bone growth in patients with osteoporosis. Lilly also launched Cialis, which treated erectile dysfunction and allegedly worked faster than Viagra, and Strattera, the first nonstimulant for patients with attention deficit hyperactivity disorder. In 2004 Lilly got approval for Alimta, the first product for mesothelioma, a rare form of cancer, as well as for Symbyax, a combination of Prozac and Zyprexa, which would be the first product indicated for the treatment of bipolar depression. The company was preparing to launch Cymbalta, an antidepressant, and was waiting for approval of the first product to treat stress-related urinary incontinence. Taurel remarked in Pharmaceutical Executive, “I want to make sure we continue to invest very strongly in R&D, and that we maintain a good balance between science and marketing. This is one of Lilly’s key strengths that I want to preserve and nurture” (March 1, 2001).

See also entry on Eli Lilly and Company in International Directory of Company Histories.


Sidney Taurel SOURCES FOR FURTHER INFORMATION

Beck, Bill, “The Pipeline: Sidney Taurel’s World Vision for Eli Lilly and Co.,” Indiana Business Magazine, June 1, 1999, p. 8. Melcher, Richard A., “Fighting Off Depression at Eli Lilly,” BusinessWeek, May 24, 1999, p. 77.


Sellers, L. J., “Lilly’s International Family: Sidney Taurel Takes His Global Team Beyond Prozac,” Pharmaceutical Executive, March 1, 2001, p. 40.

—Tim Halpern

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Gunter Thielen 1942– Chairman and chief executive officer, Bertelsmann AG Nationality: German. Born: August 4, 1942, in Quiershied, Germany. Education: Technical University of Aachen, mechanical engineering and economics; PhD. Family: Married (wife’s name unknown). Career: BASF, 1970–1976, various management positions; Wintershall Refinery, 1976–1980, technical director; Maul-Belser (division of Bertelsmann), 1980–1985, chief executive officer; Arvato, 1985–2001, chief executive officer and member of Bertelsmann AG’s executive board; Bertelsmann’s Verwaltungsgesellschaft (BVG), 1999–2001, member; Bertelsmann Foundation and BVG, 2001–2002, chairman; Bertelsmann AG, 2002–, chairman and chief executive officer. Address: Carl-Bertelsmann-Strasse 270, D-33311 Gütersloh, Germany; http:// www.bertelsmann.com.

Gunter Thielen. AP/Wide World Photos.

EARLY SUCCESS IN LEADERSHIP

■ Gunter Thielen was chairman and CEO of Bertelsmann AG, a privately held company located in Gütersloh, Germany. Belying its small-town base of operations, Bertelsmann AG is one of the world’s largest media corporations, consisting of more than four hundred companies with interests in publishing, broadcasting, music, printing, and many other endeavors. Thielen first came to Bertelsmann in 1980 as CEO of MaulBelser, the leading rotogravure printing company in Europe. His abilities to streamline companies and focus on profits helped him in his position as CEO of Arvato—a printing and industrial services company. Thielen’s core values could be summarized as decentralization, entrepreneurship, and consensus leadership. It was his ability to lead his divisions to profit and success that motivated the supervisory board members of Bertelsmann to lure him out of his impending retirement to become CEO.

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Thielen always had a goal to lead a company. Studying mechanical engineering and economics at the Technical University of Aachen led him first to management at BASF, a leading chemical company. Before that job, though, Thielen had shown his skill at turning companies around, although on a small scale. For a short time he worked at his wife’s family’s sausage factory, Holl Feine Fleische and Wurstwarem. In his short tenure there he took the small, struggling company to an enterprise with annual sales of more than EUR 100 million. As CEO of Arvato for 17 years, Thielen focused on profits, helping to grow the division. When he took the helm of Arvato, the division’s printing and industrial services were not in great demand. By the time he left in 2002, the company had gone from operating results of approximately EUR 61 million to EUR 217 million. Its staff had grown from nine thousand


Gunter Thielen

employees to 30,000, and demand had increased to provide services for clients worldwide.

REDIRECTING COMPANY POLICY In 2002 Thielen stepped down as CEO of Arvato and was preparing to take the leading role in the Bertelsmann Foundation, Bertelsmann’s philanthropic arm, which focuses on education, health care, and international relations, among many other concerns. Hours before his retirement, he was called upon to replace Thomas Middlehoff,who had resigned under pressure from Bertelsmann’s board of directors, which included members of the Mohn family, who were the primary owners of Bertelsmann stock. Middlehoff had engaged in buyouts, purchases, and investments that had driven Bertelsmann’s debt to more than $2.8 billion. Thielen’s long and close association with the Mohn family led to his succession. His profile on the Bertelsmann Web site noted, “He is known as a pragmatist with a circumspect and down-to-earth approach . . . . Streamlined structures, quick decisions and direct communications are the ingredients he cites for his recipe for success.” The Mohn family held these qualities in high regard. With Thielen at the helm, they knew that their corporation would be run according to their standards. Thielen’s first move was to announce that Bertelsmann was getting out of the Internet business, on which Middlehoff had focused heavily. Two prominent investments—Bol.com, an online retailer, and Napster.com, a music delivery company— were sold immediately. In 2003 Thielen sold off Bertelsmann’s stake in BarnesandNoble.com. He also sold the Bertelsmann Springer division, which published scientific and academic books. With a focus on streamlining and increasing profits, Thielen was lauded for the numbers he generated. Selling BarnesandNoble.com and the Springer division added EUR 761 million to Bertelsmann’s bottom line in the third quarter of 2003. At the same time, Thielen had to face other numbers that were declining. Sales fell from EUR 4.2 billion to EUR 3.9 billion, and revenues went from EUR 13 billion to EUR 11.7 billion. Eventually the numbers began to turn around. Under Thielen’s command, by 2004 Bertelsmann had seen a 20 percent rise in profits to EUR 1.12 billion.

HARD LINE ON PROFITS While in some quarters Thielen was being praised, in others his hard-line stance on the numbers created controversy and questions. Turnover of high-ranking executives was reaching alarming numbers. Three executives were fired in January 2004 for failing to meet goals set by Thielen. Three others


were fired for not being as fiscally conservative as Thielen thought they should be. According to Thomas L. McLane of the Directorship Search Group, an executive search firm, the sense of instability created by these firings could lead to problems for the company’s public image. He explained to Jack Ewing of BusinessWeek, “Whenever there’s an exorbitant amount of turnover, questions have to arise about what’s going on at the very top” (February 9, 2004). Although Thielen had a reputation for slashing unproductive divisions, he also sought to acquire new markets and companies. When asked about mergers, Thielen told James Robinson of the Observer, “It’s very hard to bring two big companies together with different corporate cultures. That’s why I think it’s much easier to acquire smaller companies and integrate them very fast into your organisation” (April 11, 2004). Despite this belief, Thielen announced in 2003 Bertelsmann’s plans to form a merger with the music division of the industry giant Sony Corporation, bringing it under the umbrella of Bertelsmann’s music division, BMG. If approved by the European Union, the merger would make Sony-BMG the music industry leader. Thielen’s tenure as CEO of Bertelsmann’s was originally supposed to last only two years. In 2004 the supervisory board unanimously approved Thielen’s contract until 2007.

See also entries on BASF Aktiengesellschaft and Bertelsmann A.G. in International Directory of Company Histories.


Benoit, Bertrand, “Media Chief Determined to Keep It in the Family,” Financial Times (London), March 24, 2003, p. 30. Bertesmann—media worldwide, http://www.bertelsmann.com/ bag/management/bio.cfm?id=1139, (July 15, 2004). Ewing, Jack, “Reckoning at Bertelsmann,” BusinessWeek, February 9, 2004, p. 44. Hall, Allan, “Bertelsmann, under New CEO, to Return to Its Traditional Roots,” Sunday Business (London), September 8, 2002. Lottman, Herbert, “Thielen Takes on Turnaround,” Bookseller, April 16, 2004, p. 11. Robinson, James, “This Is Germany Calling,” Observer (London), April 11, 2004, p. 6. Spahr, Wolfgang, and Matthew Benz, “Bertelsmann Chief Aims to Rein in Debt,” Billboard, August 10, 2002.

—Eve M. B. Hermann

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Ken Thompson 1950– Chief executive officer and president, Wachovia Corporation Nationality: American. Born: November 25, 1950, in Clarksville, Virginia. Education: University of North Carolina at Chapel Hill, BA, 1973; Wake Forest University, MBA, 1975. Family: Son of Maynard (manager, textile factory) and Stacy Kennedy Thompson (teacher and homemaker); married Kathylee; children: three. Career: First Union Corporation, 1976–?, manager New York loans office; 1980s, senior vice president, human resources; 1980s, president of First Union Georgia; 1990–1996, vice chairman of First Union Florida; 1996–1998, executive vice president and codirector of First Union Capital Markets Group; 1998–1999, vice chairman and head of global capital markets; 1999–2000, president; Wachovia Corporation, 2001–, chairman and president; 2003–, chief executive officer. Awards: One of the Best Managers of 2003, BusinessWeek, 2003.

Ken Thompson. AP/Wide World Photos.

Address: 301 South College Street, Charlotte, North Carolina 28288; http://www.wachovia.com.

EDUCATION AND EARLY CAREER

■ After assuming the leadership of Wachovia Corporation, G. Kennedy “Ken” Thompson rewrote the rule book on bank mergers. In his short time as head of First Union Bank, Thompson took an ailing bank and overhauled it through cost-cutting, retuning strategies, shutting down underperforming institutions, and acquiring profitable enterprises. When First Union merged with Wachovia, another underperforming bank, Thompson boosted its fortunes, making Wachovia the fourth largest bank in the United States, the fifth largest broker-dealer institution, and the largest bank on the East Coast. A strong believer in the importance of giving back to the community, Thompson was active in many charitable organizations and encouraged employees to volunteer in their communities.

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Born in Clarksville, Virginia, and reared in Rocky Mount, North Carolina, where his father managed a textile mill, G. Kennedy (Ken) Thompson attended the University of North Carolina at Chapel Hill as a Morehead Scholar majoring in American studies. He graduated in 1973 and went on to study at Wake Forest University, from which he earned a master of business administration degree in 1975. Thompson joined First Union Bank in May 1976 and over the next 23 years held various positions with the company, becoming president in 1999 and CEO in 2000. When First Union merged with Wachovia Bank in 2001, Thompson stayed on as president and chairman of the board of the new Wachovia Corporation. In 2003 he became CEO of Wachovia.


Ken Thompson

AN AILING BANK Thompson assumed control of First Union at a time when the bank was in serious financial jeopardy. In 1997 a merger with CoreStates Financial Corporation, for which First Union paid $20 billion, a sum that was six times book value, deflated First Union stock prices more than 50 percent and twice diminished earnings estimates. To compound the problem, later that year First Union purchased the Money Store, a subprime lender, for $2.1 billion. As head of global capital markets, the position he held prior to becoming president and CEO, Thompson had generated enough revenue to keep First Union’s profits at a respectable level, mitigating a crisis that otherwise would have been much worse. As president Thompson set about boosting company morale, improving customer relations and service, and raising income and profits. When Thompson replaced Edward E. Crutchfield Jr., who was retiring because of ill health, as CEO in April 2000, First Union stock values increased 5.63 percent at the news. Investors and analysts alike warmed to Thompson’s diversified strategy, which included investment banking, capital and asset management, and commercial banking. They had long been disenchanted with Crutchfield’s acquisitions strategy, which critics characterized as recklessly expensive without yielding an adequate return.

survive, Wall Street analysts reserved judgment. Thompson still had to prove his mettle. He knew from the start that he faced daunting challenges in restoring the credibility of First Union and that he was in a race against time. The patience of disgruntled shareholders, especially large institutional investors, was not infinite. “There is nothing I can say that is going to make our stock price a lot higher next week,” Thompson acknowledged in 2000 to Irwin Speizer of Business North Carolina. “But if we perform, if we execute the plan we’ve got in place, I think our stock price can be a lot higher 24 or 36 months from now.” Prospects looked bleak. First Union stock values declined 4 percent in the nine months after Thompson took over as CEO, and by the end of 2000 First Union stock was trading at 10 times less than estimated earnings. Investors remained understandably wary, more so since the economy itself had turned sluggish. To cushion the bank against worsening economic conditions, Thompson slashed in half, to $0.96, the annual dividend per share of $1.92. This action saved $1 billion. The focus, Thompson declared, was on creating shareholder value, and a stronger balance sheet and lower dividend payments were attractive. By February 2001 the price of First Union stock had risen to $33 per share, the first indication that shareholders approved the reduction and that the fortunes of the company were at last beginning to turn around.

QUESTIONS OF STYLE AND SUBSTANCE Thompson made deliberate efforts to distinguish his management style from that of his predecessor. At his first presentation to Wall Street analysts, in June 2000, Thompson made it clear that he would not pursue the aggressive acquisitions policies that had become the hallmark of Crutchfield’s tenure as CEO. Thompson did not eschew acquisitions but indicated that he planned to pursue a more conservative strategy. With a management style that emphasized teamwork, cooperation, and flexibility, Thompson promised that under his leadership First Union would grow more slowly and commit more intently to customer service and retention. He revealed plans to divest First Union of its mortgage operation and credit card business; to close 90 branch banks and the Money Store, taking a $3.8 billion tax write-off on the capital loss; to dispose of $900 million of nonperforming corporate loans; to jettison $13 billion in low-yielding securities; and to sell other holdings that were performing poorly. Thompson insisted that First Union would concentrate on capital markets, asset and capital management, and general banking, all of which promised to be safe and lucrative.

CARRYING OUT REFORM Impressed at Thompson’s initial restructuring but not convinced it would work or that Thompson or First Union would


THE PAYOFF Thompson’s campaign to restore confidence in First Union took an unexpected direction in 2001, when First Union acquired its North Carolina rival Wachovia for $13.4 billion, a mere 6 percent premium over the value of Wachovia stock. The deal created a banking corporation that with 19 million customers and $330 billion in assets was the fourth largest in the United States. Although a surprise given Thompson’s announced strategy, the acquisition of Wachovia made good business sense for First Union, especially given the low price. Thompson’s careful planning and conservative approach enabled the integration of the two companies to proceed smoothly. The merger was a resounding success. In 2002 the new Wachovia Corporation recorded an increase in profits of 121 percent, to $3.6 billion. Operating income doubled to $4.9 billion, and the value of stock shares rose to $43.82, a return of 40 percent to investors. The deal also gave Thompson considerable influence. In February 2002 he announced another bold, unorthodox move: the acquisition of Prudential Financial. The deal, completed in July 2002 for only $400 million in upfront integration costs, made Wachovia Securities the fourth largest brokerage firm on Wall Street, trailing only Merrill Lynch, Salomon Smith Barney, and Morgan Stanley Dean Witter. Wachovia’s earnings rose approximately 30 percent in

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2003, to $6.09 billion. The merger with Prudential Financial was Thompson’s foremost coup to date. For his accomplishments Thompson earned recognition from BusinessWeek as one of the best managers of the year for 2003. In lauding Thompson, BusinessWeek noted that even in the competitive world of banking, finance, and corporate acquisitions, nice guys sometimes do finish first.

Herubin, Danielle, “New First Union President Seen as Brilliant, Team-Oriented Leader,” Charlotte News & Observer, August 2, 1999. Milligan, Jack, “Thompson on a Short Rope,” US Banker, March 2001. Minton, Mark, and Chris Serres, “Charlotte, N. C.–Based Wachovia May Need to Catch Bank-Merger Fever,” Charlotte News & Observer, January 16, 2004.

See also entry on Wachovia Corporation in International Directory of Company Histories.

Moyer, Liz, “New Chief Exec Struggles to Show He’s Not a Clone,” American Banker, June 27, 2000.


Padgett, Tania, and Louis Whiteman, “Numbers Man to Bring a New Style to 1st Union,” American Banker, March 13, 2000.

“Alumni Profiles,” Wake Forest University Babcock Graduate School of Management Alumni Magazine, Fall/Winter, 1999. Atlas, Riva D., “First Union’s Work in Progress,” New York Times, December 29, 2000.

“Q & A with Wachovia’s G. Kennedy Thompson,” BusinessWeek Online, March 24, 2003, http:// www.businessweek.com/bw50/content/mar2003/ a3826033.htm.

Boraks, David, “At Wachovia, Talk Shifts to Revenues,” American Banker, September 10, 2002.

Rehm, Barbara A., “The Corporate Community,” American Banker, January 10, 2003.

———, “Price Makes Sense for 1st Union,” American Banker, April 17, 2001.

Speizer, Irwin, “Reluctant Rebel,” Business North Carolina, November 2000.

Foust, Dean, Brian Grow, and Emily Thompson, “Wachovia’s $400 Million Hunch,” BusinessWeek, September 1, 2003.

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—Meg Greene


■■■

Rex W. Tillerson 1952– President, ExxonMobil Corporation Nationality: American.

graduating from high school, he enrolled at the University of Texas at Austin, where he earned a BS degree in civil engineering. He began his career with Exxon in 1975, when he accepted a position as a production engineer. Throughout the next 12 years, he took on numerous responsibilities in positions related to engineering, technical assignments, and supervisory roles within the Exxon production department.

Born: March 23, 1952, in Wichita Falls, Texas. Education: University of Texas at Austin, BS. Family: Married Renda St. Clair. Career: Exxon Company, U.S.A., 1975–1987, production engineer and various engineering, technical, and supervisory assignments; 1987–1989, business development manager in the natural gas department; Exxon central production division, 1989–1992, general manager; 1992–1995, production adviser; Exxon Yemen and Esso Exploration and Production Khorat, 1995–1998, president; Exxon Ventures and Exxon Neftegas, 1998–1999, president; ExxonMobil Development Company, 1999–2001, executive vice president; ExxonMobil Corporation, 2001–2004, senior vice president; 2004–, president. Address: ExxonMobil Corporation, 5959 Las Colinas Boulevard, Irving, Texas 75039-2298; http:// www.exxonmobil.com.

■ Rex W. Tillerson became ExxonMobil Corporation’s president in 2004, after spending nearly 30 years with that company and with Exxon. After graduating from the University of Texas at Austin, he joined the company as a production engineer in 1975. He rose through the ranks at Exxon in several executive positions, including a period in which he led Exxon’s operations in Yemen and Russia. He returned to the United States in 1999 as executive vice president for ExxonMobil Development Company. The company named him senior vice president in 2001 while the company searched for a new chairman and chief executive officer, and in 2004 he was promoted to president of the company. Tillerson was regarded as a solid manager in the exploration and production aspects of Exxon’s business. RISING AS AN EXECUTIVE IN EXXON COMPANY Tillerson was a native of Texas, growing up in Wichita Falls, located to the northwest of Dallas/Fort Worth. After


In 1987 the company promoted Tillerson to the position of business development manager in Exxon’s natural gas department. In that position he was responsible for developing long-range planning to commercialize gas from Alaska and the Beaufort Sea in Canada. Two years later he was named general manager of the central production division at Exxon, where he was charged with overseeing oil-and-gas production in large portions of Texas, Arkansas, Oklahoma, and Kansas. He continued his rise through the company in 1992, when the company moved him to Dallas to the position of production adviser for Exxon Corporation. He thereafter moved to New Jersey, where he served as coordinator of affiliate gas sales in Exxon Company, International.

RESPONSIBILITY FOR UPSTREAM OPERATIONS OVERSEAS Tillerson worked in New Jersey until 1995, when he took over as president of Exxon Yemen and Esso Exploration and Production Khorat. In January 1998 he became vice president of Exxon Ventures (CIS) and president of Exxon Neftegas. In these roles Tillerson oversaw the company’s holdings in Russia and the Caspian Sea, dealing with the Commonwealth of Independent States (CIS) comprised of several former republics of the Soviet Union, in addition to operations off the shore of Sakhalin Island in Russia. Tillerson’s primary experience came in the so-called upstream side of Exxon’s business, that term referring to the company’s exploration and drilling for oil. He developed numerous connections in Russia, including relationships with top officials. His success overseas led to another promotion and a return to the United States. In 1999 he was named vice president in charge of developing and producing new oil-and-gas reserves.

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Rex W. Tillerson

PART OF A SEARCH FOR A SUCCESSOR Oil company executives have traditionally been tightlipped regarding their businesses or issues affecting their businesses. Lee R. Raymond, who became Exxon’s chairman and chief executive officer in 1993, was an exception. He was widely known for speaking out on controversial issues, including global warming. Nevertheless, his tenure at Exxon was considered an overwhelming success. In 1999 Exxon, already the world’s largest publicly traded oil company, announced a major purchase of Mobil Oil Company for a reported $81 billion. The merger created a company with more than $200 billion in annual sales. By 2001 Raymond was planning for retirement. The company’s board, however, persuaded Raymond, who was nearing the company’s mandatory retirement age of 65, to remain as chairman until the company could find a suitable successor. The search for this successor generated a significant amount of news and speculation. Shortly after it was announced that Raymond would remain as the company’s chairman and CEO, both Tillerson and Edward G. Galante, who was involved in Exxon’s refining and chemical businesses, were promoted to the position of senior vice president. Tillerson and Galante met with the company’s board regularly, with both men making presentations at a company retreat in 2003. Both executives also represented the company at a number of important conferences. Tillerson’s experience in the upstream side of Exxon’s business was considered by analysts as his biggest strength. He was largely responsible for an estimated 80 percent of the company’s $11 billion profit in 2002, and as one analyst told Cathy Booth Thomas for an article in Time magazine (December 1, 2003), the company’s future was “predicated on success in oil and gas exploration and production.” Tillerson also earned respect as an oil executive. The same article in Time noted that “when he walks into the room, Rex Tillerson radiates competence and stability.” In an Oil Daily article (February 27, 2004), another analyst said that “Tillerson has a reputation as a good ‘hands-on’ guy and a solid exploration and production manager. He’s a Texas engineer type in a company with a history of being run by engineers.” Exxon ended several months of speculation in February 2004 when the company named Tillerson president of the

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company, a position that had remained vacant since 1996. Most industry analysts viewed the move as an indication that Tillerson would eventually succeed Raymond as the company’s chairman and chief executive officer, though company officials declined to comment. When he was named president, Tillerson also earned a seat on the company’s board. Raymond remained the company’s primary spokesperson in the months that followed Tillerson’s appointment. However, Tillerson became more visible after he took over as president. At the company’s annual meeting in Dallas in 2004, Tillerson joined Raymond on the stage, fielding questions from some of the shareholders. Tillerson’s business relationships in Russia were viewed by analysts and insiders as critically important, since the company expressed interest in developing partnerships to explore for oil in Siberia. Tillerson was also a member of the U.S.-Russia Business Council, the Engineering Foundation Advisory Council for the University of Texas at Austin, the Society of Petroleum Engineers, and the American Petroleum Institute.


Koenig, David, “Exxon Mobil Names President,” Associated Press Newswires, February 27, 2004. Piller, Dan, “President Named by Exxon Mobil,” Fort Worth Star Telegram, February 28, 2004. Reedy, Sudeep, “Next in Line at Exxon?” Dallas Morning News, February 27, 2004. Schwartz, Nelson D., “Goodbye, Mr. Exxon,” Fortune, September 15, 2003, p. 116. Thomas, Cathy Booth, “An Oilman Who Still Gets Respect,” Time, December 1, 2003, p. 84. “Tillerson Seen as Next CEO at Exxon Mobil,” Oil Daily, February 27, 2004. Warren, Susan, “Exxon Signals Succession Plan by Naming Tillerson,” Wall Street Journal, February 27, 2004. —Matthew C. Cordon


■■■

Robert L. Tillman ca. 1944– President, chairman, and chief executive officer, Lowe’s Companies Nationality: American. Born: ca. 1944. Education: University of North Carolina, BS, 1967. Family: Married Sandy (maiden name unknown). Career: Lowe’s Companies, 1962–1994, entry level office manager trainee, executive vice president, chief operating officer, executive vice president of merchandising, and senior vice president of merchandising and marketing; 1994–1996, CEO, 1996–, president and CEO; 1998–, chairman. Awards: Named one of the Best Managers, BusinessWeek, 2003. Address: Lowe’s Companies, 1605 Curtis Bridge Road, Wilkesboro, North Carolina 28697; http:// www.lowes.com.

■ Robert Tillman’s vision of what a home-improvement store can be and do transformed Lowe’s from a chain of small North Carolina hardware stores into a Fortune 100 company of stateof-the-art home improvement superstores. As head of the nation’s second-largest home-improvement chain, Tillman not only spearheaded the store’s expansion into markets nationwide but also created new niches for Lowe’s.

JOINS LOWE’S Tillman came to Lowe’s in 1962 as an office manager trainee, working his way to the top. Tillman’s many jobs with the company included a number of management positions, such as executive vice president and chief operating officer, executive vice president of merchandising, and senior vice president of merchandising and marketing. With each position, Tillman gained more knowledge of the company’s inner workings while striving to improve the chain’s position among home improvement stores. Tillman joined the company’s board of


directors in 1994, was named president and CEO in 1996, and in 1998 became chairman of the board.

FROM HARDWARE STORE TO BIG BOX STORE Shortly before Tillman took over Lowe’s, the chain lagged behind the newer and bigger Home Depot chain. Tillman, however, saw a chance to revitalize Lowe’s and put the company in the number-one slot as well as improve the overall standards and reputation of the chain. He began by conducting extensive consumer research. Based on those efforts, Tillman recognized an important market that had been largely overlooked: women. According to the studies, women initiated approximately 80 percent of home projects. To capitalize on that fact, Tillman moved aggressively to court female customers to Lowe’s stores. He initiated an overhaul of many of the chain’s existing stores and a design of new outlets with women in mind. The result was larger and cleaner stores (on average, new Lowe’s stores cover 115,000 square feet with an additional 35,000 square feet for lawn and garden areas), with wider aisles, better lighting, and more home appliances, high-end bathroom fixtures, and signature paint collections from such noted fashion and home designers as Laura Ashley and Alexander Julian as well as a children’s paint collection based on cartoon characters featured on the children’s cable network Nickelodeon. In essence, Lowe’s began to offer a greater variety of upscale products. For instance, Lowe’s has an extensive blindsand-draperies section; in appliance sales alone, Lowe’s is second behind Sears. The chain also stepped up its installation services. As Tillman remarked in an interview for the New York Times, “We want to do your whole house, and deliver it to you” (May 4, 2003). Beginning in 1998 Tillman undertook an aggressive expansion program for the chain. The chain began moving out of the South and into markets in the Northeast, such as New York City, and also into the Midwest and Southwest. Tillman then directed the expansion of Lowe’s stores into more urban settings in midsize to large cities. To spark expansion in the West, Tillman bought Eagle Hardware, a chain of warehouse home-improvement stores. The acquisition of Eagle also marked the first time that Lowe’s had expanded by acquiring other store chains instead of simply building its own stores. Under Tillman’s guidance, Lowe’s began a remarkable turnaround. By 2001, just three years after Tillman took control

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Robert L. Tillman

of the company, Lowe’s had posted a record $1 billion in net earnings for the first time and was named a Fortune 100 company. Lowe’s stock also emerged as second-best performer of all large-cap stocks. By 2003 the chain had reported sales of $30.8 billion and was serving approximately 10 million customers a week in more than 950 stores in 45 states. Lowe’s also earned the distinction of being named by Fortune magazine the Most Admired Specialty Retailer for 2003 and 2004. By the end of the 2004 fiscal year Lowe’s operated 952 stores in 45 states, with approximately 108.8 million square feet of retail space stocking more than 40,000 items and with hundreds of thousands of other items available through Lowe’s special-order system. But as Tillman noted, what made Lowe’s success so remarkable was not that the company took away business from Home Depot but rather that it was carving out new markets for itself. After 41 years with the company, Lowe’s announced that Robert Tillman was to retire as president. However, Tillman remained with Lowe’s as its chief executive and chairman of the company.

the ideal executive’s office should be in the center of the building, with all the company’s operating areas fanning out from it. As president and CEO, Tillman made a point of having dinner with Lowe’s customers every month, in an effort to find out what could be done to make Lowe’s the first choice in home-improvement shopping. Ultimately, while Tillman worked to make Lowe’s the top home-improvement store in the country, he saw no reason to compete with Home Depot in terms of demographics. Instead of going after men, who make up a large part of the Home Depot trade, Tillman instead focused on making Lowe’s the family store among homeimprovement chains.

See also entry on Lowe’s Companies, Inc. in International Directory of Company Histories.


“Interview,” Atlanta Business Chronicle, October 10, 1997. Nowell, Paul, “Lowe’s Success Coming at Least Partly at Home Depot’s Expense,” Associated Press State & Local Wire, June 5, 2002.

MANAGEMENT STYLE Tillman’s management style favored a low-key approach. Employees addressed him simply as “Bob,” which he preferred. His first office as head of merchandizing, in the company’s two-story headquarters in North Wilkesboro, North Carolina, was toward the back of the building, near the merchandising staff he headed. When he was named CEO in 1994, Tillman was asked to move to the company’s Executive Row at the front of the building. He refused and instead chose a windowless office in the middle of the building, stating that

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Pascual, Aixa M., “Lowe’s Is Sprucing Up Its House,” BusinessWeek, June 3, 2002, p. 56. Rozhon, Tracie, “So, Which Man Will Sell You That Drywall?” New York Times, May 4, 2003. Stewart, Thomas, “Get the New Power Game If You Want to Get Ahead of the Curve and Stay There,” Fortune, January 13, 1997, p. 58+. —Meg Greene


■■■

Glenn Tilton 1948– Chairman, chief executive officer, and president, UAL Corporation and United Airlines Nationality: American. Born: April 9, 1948, in Washington, D.C.. Education: University of South Carolina, BA, 1970. Family: Married Jacqueline Morris; children: two. Career: Texaco, 1970, sales trainee; 1970–1978, marketing; 1978–1979, assistant to the vice president for the Northeastern Region; 1979–1981, marketing manager of Philadelphia division; 1981–1983, staff coordinator in Corporate Planning and Economics Department; 1983–1984, assistant general manager for sales of Texaco Europe; 1984–1987, general manager for marketing of Texaco Europe; 1987–1988, vice president for marketing of Texaco USA; 1988–1989, president of Texaco Refining and Marketing; 1989–1991, vice president; 1991–1992, chairman of Texaco Ltd.; 1992–1994, president of Texaco Europe; 1994–1995, president of Texaco USA; 1995–1997, senior vice president; 1997–2001, president of Global Business Unit; 2001, chairman and CEO; ChevronTexaco, 2001–2002, vice chairman; UAL Corporation and United Airlines, 2002–, chairman, CEO, and president. Address: UAL Corporation, PO Box 66100, Chicago, Illinois 60666; http://www.united.com.

■ For Glenn Tilton, three decades of senior-management experience in the oil industry led to the unlikely post of CEO at one of America’s largest airlines. Despite his obvious lack of airline-industry experience, Tilton was aggressively courted in 2002 by the directors of UAL Corporation, the holding company for United Airlines, who apparently hoped that the oil industry veteran’s widely touted people skills and management expertise could help turn the troubled airline around. This task proved to be a challenge that Tilton was unable to resist. Taking over as chairman, chief executive officer, and president of both UAL and United Airlines in September 2002,


Glenn Tilton. AP/Wide World Photos.

Tilton first dedicated his time to steering the corporation away from bankruptcy. When, only a few months later, it became clear that bankruptcy could not be avoided, Tilton began the tortuous duty of guiding the airline through the maze of reorganization incurred under Chapter 11 of the U.S. Bankruptcy Code. By early 2004 UAL, under Tilton’s direction, had made significant progress in its campaign to return to profitability. Still operating under Chapter 11 protection from its creditors, UAL’s net loss during the final quarter of 2003 remained the largest in the airline industry, but the figure had been pared to $476 million, down roughly $1 billion from the $1.47 billion loss posted a year earlier. In announcing the sharp reduction, Tilton told the Rocky Mountain News that UAL was continuing to build “a dramatically different company” but acknowledged that much remained to be done.

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GROWS UP IN LATIN AMERICA Born in Washington, D.C., on April 9, 1948, Tilton spent very little time in the American capital, instead growing up in the various Latin American countries where his father was stationed as a CIA agent. Not until he had entered his late teens did Tilton learn the true nature of his father’s job. During an extended period in Brazil, Tilton attended high school at the Escola Americana do Rio de Janeiro, from which he graduated in 1966. While a student there, Tilton met and began dating Jacqueline Morris, who was two grades behind him. The couple later married. After finishing high school in Brazil, Tilton returned to the United States and enrolled at the University of South Carolina to major in international relations. Shortly after he received his bachelor’s degree in 1970, Tilton was hired as a sales trainee by Texaco’s marketing division in Washington, D.C. Over the next eight years, he quickly rose through the ranks at Texaco, holding a series of marketing positions of increasing responsibility in both Washington, D.C., and Pennsylvania. In 1978 Tilton was named assistant to the vice president for Texaco’s Northeastern Region. A year later he was appointed marketing manager for the company’s Philadelphia division. In 1981 Tilton continued his climb up the management ladder when he was named staff coordinator for the company’s Corporate Planning and Economics Department, headquartered in Harrison, New York. He was appointed assistant general manager of sales for Texaco Europe in 1983 and a year later took over as the division’s general manager of marketing. In 1987 he returned to the United States to serve as vice president of marketing for Texaco USA, based in Houston. He was promoted to president of Texaco Refining and Marketing in 1988 and the following year was named a vice president of the entire corporation.

NAMED CHAIRMAN OF TEXACO LTD. In 1991 Tilton was appointed chairman of Texaco Limited, giving him responsibility for overseeing Texaco’s upstream (exploration and production) and downstream (refining and marketing) operations in the United Kingdom, which included a number of major exploration and development projects in the North Sea. His responsibilities were further broadened in 1992 when he was selected to be president of Texaco Europe, managing Texaco’s operations in 22 European nations. Two years later Tilton found himself back in the United States, having been named president of Texaco USA, where he became responsible for all of Texaco’s integrated businesses in the United States, including exploration, production, refining, marketing, trade, and transportation. In April 1995 Tilton assumed an even higher profile within the executive hierarchy at Texaco when he was named senior

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vice president. Two years later he was appointed president of the oil giant’s Global Business Unit. In early 2001 Tilton was finally named chairman and chief executive officer, a position he held for only a brief period before Chevron and Texaco merged to form ChevronTexaco Corporation. He was named vice chairman of the newly merged company in late 2001 and a few months later assumed additional responsibilities as interim chairman of Dynegy, in which ChevronTexaco held a 26.5 percent stake. As Tilton rose to the highest ranks of oil-industry management in the early 2000s, United Airlines, long one of the world’s major air carriers, was experiencing a significant reversal in its fortunes. In 2000 the Chicago-based airline managed to eke out a profit in only one of four quarters, its bottom line increasingly squeezed by competition from low-fare carriers and labor costs that were among the highest in the industry. Matters grew worse in 2001 when the entire industry was shaken to its roots by the September 11 terrorist attacks. In the wake of the attacks, in which two hijacked United passenger jets were involved, the U.S. airline industry experienced its biggest decline in passenger traffic in recent history. To help reverse the downward spiral in UAL’s finances, in October 2001 the company replaced its chairman and CEO, James Goodwin, with the former Weyerhaeuser CEO Jack Creighton, who had served on UAL’s board since 1998.

UAL CALLS ON TILTON TO LEAD When it became apparent that Creighton, who was appointed to serve as UAL’s interim chairman and CEO, was having little success in turning the company around, his fellow board members once again began searching for a replacement. In early September 2002 Tilton accepted the daunting challenge of trying to reverse UAL’s continuing decline. Although he knew that bankruptcy was a distinct possibility, he carefully avoiding broaching the subject when he took on the job, according to John Schmeltzer of the Chicago Tribune. Instead, he focused on the need for all parties at the carrier to work together “to benefit everyone with a stake in United— employees, shareholders, travelers, everyone” (September 4, 2002). Tilton had conditioned his acceptance of the top job at UAL on the removal of the company president Rono Dutta and the CFO Andy Studdert. In the months that followed his appointment, he disposed of another half-dozen senior executives and handpicked the team of managers that would assist him. Tilton’s top lieutenants became Frederic Brace, who was named executive vice president and CFO, and Douglas Hacker, Brace’s predecessor, who was given the newly created post of executive vice president of strategy. To help stave off bankruptcy, Tilton and his team went to work putting together a plan to cut annual labor expenses by


Glenn Tilton

$1.5 billion; in the end, an agreement with United’s employees was reached on a plan that shaved costs by only $1 billion. Tilton hoped that this would be enough to convince the federal government to grant the carrier $1.8 billion in guaranteed loans, thus avoiding the need for a Chapter 11 filing. However, to his dismay, UAL’s application for governmentguaranteed financing was rejected on December 4, 2002, by the federal Air Transportation Stabilization Board (ATSB), which claimed the bid was based on unreasonable assumptions. Less than a week later, on December 9, 2002, UAL sought protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. Further complicating matters for UAL was an ultimatum from its lenders threatening to deny further advances on its existing credit lines if Tilton was unable to negotiate an additional $300 million in savings over the next few months. Tilton worked feverishly during this time to slash United’s operating costs and trim its losses. In outlining UAL’s restructuring progress during 2003, Tilton pinpointed some of the savings that the airline achieved through cutting costs or negotiating with its unionized employees as well as steps taken to increase profitability. One of the most important achievements in 2003, said Tilton, was the adoption of six-year labor agreements with United unions that, between productivity improvements and wage and benefit reductions, would ideally result in annual cost savings of about $2.5 billion. Tilton reported that UAL also achieved annual savings of roughly $900 million in negotiations with some of its equipment lessors and providers under Section 1110 of the U.S. Bankruptcy Code. The internal Business Transformation Office’s reassessment of every aspect of UAL’s operations with an eye to maximizing productivity was successful; initiatives and strategies put in place by that office resulted in a $1.2 billion increase in profit, exceeding the goal of $1 billion that had been set. Tilton said that the office had laid the groundwork for roughly $1.4 billion in profit improvements for 2004.

REVISED APPLICATION FILED WITH ATSB In order to meet its mid-2004 target for exiting bankruptcy proceedings, UAL filed an updated application with the ATSB in mid-December 2003 for a federal loan guarantee. The revised application sought a total of $2 billion in new financing, $1.6 billion of which would be guaranteed by the federal government. Two major banking institutions, JPMorgan and Citigroup, each agreed to supply $200 million of the nonguaranteed portion of the financing as well as $800 million of the guaranteed funding. Only days after submitting its revised application to the ATSB, UAL filed its monthly operating report with the U.S. Bankruptcy Court showing that it had met the requirements of its bankruptcy loans for the 10th consecutive month in November 2003. UAL’s cash balance, as of November 30, 2003, had risen to roughly $2.6 billion, of which $633 million was restricted.


In summing up the company’s progress toward restructuring, Tilton said UAL had made significant advances in creating a company that was far more customer focused, competitive, and cost effective than it had been in the past. Tilton credited much of the progress to the dedication of United’s employees. In January 2004 company press release, he said, “Our work is not done yet. We have made significant progress on restructuring this company, and we will continue to make the tough decisions to successfully exit from Chapter 11” (January 27, 2004).

SEEKS TO ATTRACT MORE PASSENGERS Throughout the reorganization process, Tilton launched a series of innovative marketing strategies to help United retain—and hopefully to expand—its share of the air-passenger market. A 10 percent increase in passenger revenue during the fourth quarter of 2003 over the figure from the same period in 2002 reflected the company’s success on this critical front, which outpaced the industry average. Tilton’s attempts to attract more of the flying public to United took on many forms. During the final months of 2003 and early 2004, the airline unveiled new routes, strengthening United’s global network, as well as incentives and special features designed to attract more flyers. In December 2003 United announced significant improvements to its EasyCheck-in program, allowing customers to use self-service units to manage their itineraries when flying with multiple carriers and also when faced with flight irregularities, such as cancellations due to bad weather. January 2004 brought a number of route expansions for United Express, the airline’s network of regional airlines offering more than 1,600 flights daily, mostly short hauls connecting with longer-haul United flights. On January 15, 2004, United announced that United Express was introducing service over five new routes: between Austin, Texas, and both Washington Dulles International Airport and San Francisco; between Birmingham, Alabama, and Denver; between Denver and Raleigh-Durham, North Carolina; and between Dulles and Minneapolis–St. Paul. Days later, the airline offered an additional incentive for members of Mileage Plus, its frequent flyers club, to travel more often: those who flew two round-trip flights from the Northeast to California before April 15, 2004, would receive a free round-trip economy-class ticket to any destination served by United.

GLOBAL FLIGHT NETWORK EXPANDED In late January 2004 United expanded its international flight network, announcing two new global routes to be inaugurated in June 2004 and a third to be added in October 2004. The new routes would link Chicago’s O’Hare International

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Airport with Osaka, Japan; Dulles with Zurich, Switzerland; and O’Hare with Buenos Aires, Argentina. On February 12, 2004, United unveiled its biggest initiative by far in UAL’s campaign to bolster the airline’s passenger traffic: years in the planning, and one of Tilton’s pet projects, United’s new lowfare service Ted took off on its inaugural flight from Denver to Fort Lauderdale, Florida. By March 2004 Ted, designed to answer growing competition from low-fare carriers, was providing low-cost flights between Denver and Reno, Las Vegas, Phoenix, New Orleans, Tampa, Orlando, and Fort Lauderdale, as well as between Las Vegas and Los Angeles, Las Vegas and San Francisco, and San Francisco and Phoenix. In early April Ted began flights between Dulles and Fort Lauderdale, Orlando, Tampa, and Las Vegas. In a look back at Tilton’s performance in his first year as UAL’s CEO, Greg Griffin of the Denver Post found opinions to be mixed. Tilton received a strong endorsement from Douglas Baird, the University of Chicago law professor and specialist in bankruptcy law: “United Airlines is still in business, so he’s done very well. If you made a list of the things he’s absolutely had to do, he’s done them” (August 31, 2003). Less charitable in his assessment was Robert Mann, the president of R. W. Mann & Company, an airline consulting firm, who unfavorably contrasted the performance of UAL’s CEO with that of the US Airways CEO David Siegel. “After a year, you knew what Siegel could accomplish at US Airways. There are still huge issues at United. The albatross is still circling” (August 31, 2003). BusinessWeek gave a mostly upbeat review of Tilton’s performance, noting that he had “won big cuts from United Airlines unions” and also that the airline’s lowfare carrier Ted was, figuratively, about to take off (January 12, 2004).

Tilton and his wife, Jackie, lived in the Chicago area, not far from UAL’s headquarters in the suburban Elk Grove Village, Illinois. The couple had two grown children. The Tiltons maintained a small ranch outside Santa Fe, New Mexico, where they raised and rode horses, and Tilton enjoyed playing golf in his spare time. In addition to his corporate responsibilities at UAL and United Airlines, he was involved in a wide variety of other professional and civic affairs. He served on the board and executive committee of the British American Chamber of Commerce and also sat on the boards of the American Petroleum Institute and Lincoln National Corporation. Outside of the business sector, he served on the board of directors of the Metropolitan Opera Association.

See also entries on ChevronTexaco Corporation, UAL Corporation, and United Airlines in International Directory of Company Histories.


Arndt, Michael, and Patricia O’Connell, “Glenn Tilton’s Plan to ‘Transform’ United,” BusinessWeek, December 13, 2002. “The Best Managers: Managers to Watch,” BusinessWeek, January 12, 2004. Carpenter, Dave, “United Airlines’ Parent Company Loses $476M,” AP Online, January 27, 2004. “Embattled Head of United Airlines Is Ousted; Goodwin Replaced by Retired Weyerhaeuser Chief Creighton,” Seattle Post-Intelligencer, October 29, 2001. Fieweger, Kathy, “Low-Cost Ted May Help United Fly out of Bankruptcy,” Reuters Business, February 12, 2004.

UAL’S FINANCIAL PERFORMANCE Under Tilton’s direction, UAL’s financial performance most definitely improved. The company’s $476 million loss in the fourth quarter of 2003, although largest among major U.S. carriers, was down dramatically from its 2002 fourth-quarter loss; the figure was comparable to the $111 million and $327 million losses reported by United’s two biggest competitors, American Airlines and Delta Airlines, respectively. In fact, although UAL posted the industry’s largest losses in all four quarters of 2003, only the January–March period, the first full quarter after the Chapter 11 filing, was not an improvement from 2002 figures. A note of cautious optimism about UAL’s future was sounded by Stuart Klaskin, the principal in Miami’s KKC Aviation Consulting, who told Denver’s Rocky Mountain News, “They’ve got more people getting on airplanes, and they’ve got unit costs coming down pretty significantly” (January 28, 2004). However, he projected that it would take at least another nine to 12 months for United to return to profitability.

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———, “United Airlines Parent Narrows Quarterly Loss,” Reuters Business, January 27, 2004. ———, “United Names Another Outsider as CEO,” Reuters Business, September 2, 2002. “Glenn F. Tilton,” http://www.chevrontexaco.com/news/ archive/texaco_press/2001/bio_tilton.asp. “Glenn Tilton,” Marquis Who’s Who, New Providence, N.J.: Marquis Who’s Who, 2004. Griffin, Greg, “Analysts Disagree over Performance of United Airlines CEO,” Denver Post, August 31, 2003. Kesmodel, David, “UAL Losses Big but Falling: Airline Posts Worst Record in Industry, but Progress Noted,” Rocky Mountain News, January 28, 2004. ———, “United Team Stirs Division: Tilton Shakes Up Ranks, but Critics Say It’s Not Enough,” Rocky Mountain News, February 22, 2003. Reed, Dan, “United CEO’s People Skills Get High Marks,” USA Today, September 17, 2002.


Glenn Tilton Schmeltzer, John, “United Airlines’ New Chief Stresses Working Together, Not Bankruptcy,” Chicago Tribune, September 4, 2002. “Ted Takes Off,” http://www.united.com/press/detail/ 0,5137,51663,00.html.

“UAL Corporation Restructuring on Track,” United Airlines press release, October 30, 2003, http://united.com/press/ detail/0,1442,51399-1,00.html. “UAL Meets Bankruptcy Loans Requirements,” AP Online, December 23, 2003.

“UAL Corporation,” Hoover’s Online, http://www.hoovers.com/ free/co/factsheet/xhtml?ID=11520. “UAL Corporation Reports Significant Restructuring Progress,” United Airlines press release, January 27, 2004, http:// www.united.com/press/detail/0,1442,51608,00.html.


—Don Amerman

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James S. Tisch 1953– Chief executive officer and co-president, Loews Corporation Nationality: American. Born: January 2, 1953, in Atlantic City, New Jersey. Education: Cornell University, BA, 1975; Wharton School of the University of Pennsylvania, MBA, 1976. Family: Son of Laurence A. Tisch (a co-chairman of Loews Corporation) and Wilma Stein (a trustee of Skidmore College); married Merryl Hiat (a professional volunteer and civic leader); children: three. Career: Loews Corporation, 1977–1982, various positions; 1982–1994, vice president; 1986–, chairman and CEO of Diamond Offshore Drilling; 1994–1998, president and COO; 1999–, CEO and president. Address: Loews Corporation, 667 Madison Avenue, New York, New York 10021; http://www.loews.com.

■ James Tisch, a shrewd investor, inherited from his father and uncle and commanded one of the largest family businesses in corporate America. With 2002 sales of $19.4 billion Loews was a diversified holding company with a primary interest in the insurance business of the publicly traded subsidiary CNA Financial. Receiving more attention—primarily negative— was the Loews subsidiary Lorillard Tobacco, which marketed the Kent, Newport, and True U.S. cigarette brands. Professionally, James Tisch defended his company against a slew of lawsuits; personally he was obligated to contend with detractors who viewed his family’s philanthropy as a calculated strategy to cover up their affiliation with tobacco.

A FAMILY EMPIRE IS FORMED In 1947 James Tisch’s father, Laurence, and his uncle, Preston, entered the lodging industry with the purchase of a winter resort that was popular in the New York metropolitan area. The two brothers bought the Laurel-in-the-Pines vacation spot in Lakewood, New Jersey, for $375,000 with help

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James S. Tisch. © James Leynse/Corbis.

from their parents. From that modest family business the Tisch brothers eventually built Loews Corporation. From 1995 to 2002 the two Tisch brothers appeared on the Forbes 400 list of the most affluent Americans with estimated net worths of $1–2.2 billion. As a child in Scarsdale, New York, James found summer employment in two of the family businesses: at age 10 he lugged suitcases for bellhops at the Americana Hotel in Miami Beach, which later became the Sheraton Bal Harbour; as a student at Cornell University he was a route salesman for Lorillard tobacco. Tisch was quoted in the New York Times as remarking, “It was never said that I was to work at Loews, but I always assumed it was something I would do. It was instinctive” (May 30, 1999).


James S. Tisch

LEARNING TO SIT ON HIS INVESTMENTS Tisch majored in economics at Cornell University and graduated as a member of Phi Beta Kappa. He earned an MBA with distinction from the Wharton Graduate School of the University of Pennsylvania. After his time at Wharton he completed a stint in the Loews training program; his father then brought him to work in the investment department. As Tisch told it, his father neglected to inform Joseph Rosenberg, the longtime head of the department, about the new trainee until the day before he arrived. The elder Tisch’s simple instructions to the department head were, “Do me a favor. Take an hour and teach him the business” (May 30, 1999). James Tisch was said to have inherited his father’s talent for investing in out-of-favor businesses; his office nickname quickly became “Little Larry.” In 1982, when he was vice president at Loews, he initiated the new venture Majestic Shipping through the purchase of about half a dozen supertankers for the scrap-value price of $42 million. He waited until 1986— when shipping rates improved—to unload them: in 1990 Loews sold a 51 percent interest in the tanker operation for about $150 million. By 2004 the company’s 49 percent stake was worth around $85 million, and James Tisch envisioned a profitable future for the business.

TWO EMPIRE BUILDING BROTHERS CREATE A TENABLE FAMILY STRUCTURE Preston and Laurence Tisch carefully groomed the next generation of their family to lead Loews. James, his brother Andrew, and their cousin Jonathan all started working at Loews while in their 20s. Loews’s enormous structure allowed all three men plenty of room to find something they could control—and to stay out of one another’s way. James would manage the company’s investments; bottom-fishing was a prevalent and successful business strategy in the 1980s and 1990s, and Tisch quickly mastered it. In 1989 he led the acquisition of what became Diamond Offshore Drilling; by the early 2000s the company was one of the world’s largest offshore drilling companies and the deal remained Tisch’s crowning investment.

A CHOSEN SON TAKES OVER In November 1998 Laurence and Preston Tisch relinquished the helm of the diversified holding company that they had begun half a century before, handing the reins over to the next generation. They each retained the title of co-chairman and established the office of the president for their sons to comanage. On January 1, 1999, James Tisch assumed the leadership role, becoming chief executive. Tisch denied that there was ever any resentment on the part of his brother or his cousin: “While I may be CEO, Jonathan, Andrew, and I operate


collegially in any or all decisions that are made. This works because there’s a bond that’s been built up not over the short term or even over a career, but over entire lives” (May 30, 1999). One of Tisch’s first projects as CEO was the restructuring of CNA, the insurer that contributed roughly a third of Loews’s 1998 net income. CNA’s acquisition of Continental Insurance in 1995 had hampered its balance sheet and a reorganization was in order. Tisch ordered up a turnaround that included plans to jettison unprofitable business lines, consolidate operations, and cut 2,400 employees from the payroll. As a result CNA expected savings of more than $300 million a year starting in 2000. A SAGGING STOCK SIGNALS FORMIDABLE CHALLENGES The portfolio of businesses and investments that made up Loews, one of the market’s most celebrated long-term bets, floundered at the turn of the century, crippled by its out-offavor tobacco, insurance, and oil industry holdings and a bearish investment stance. Analysts criticized the Tisches for exacerbating the company’s poor performance by placing risky bets. Said Tisch of the company’s bets against the market, “We shouldn’t have done it. Our entire short enterprise has been an example of poor investing” (May 30, 1999). Furthermore, the tobacco affiliate Lorillard suffered from an image problem. Following the settlement between tobacco companies and 46 states Lorillard dealt with a new litigation onslaught. In one year alone the business was a defendant in 520 suits. Yet Tisch had no plans to spin or sell off the business. Cigarettes may have contributed to millions of deaths each year, but they were a lucrative business. In 1998 tobacco pumped $352 million into Loews’s net income. CIVIC CONTROVERSY Much of the Tisches’ tobacco money found its way into charities. Laurence Tisch gave the New York University Medical Center $30 million, and a $7.5 million gift led to the creation of NYU’s Tisch School of the Arts. Still, other prominent philanthropists took issue with what they perceived to be “dirty money.” James Tisch was elected president of the UJAFederation of New York, a Jewish social services organization; in 1998 Edith and Henry Everett had battled Tisch’s election on the grounds that any executive who profited from the sale of cigarettes was unfit to promote the values of Jewish life. As cited in the New York Times, in a letter opposing Tisch’s nomination Henry Everett wrote, “Morality, ethics, Jewish law against self-destruction, and common sense mandate that it would be repugnant for a tobacco executive to be cast as the president and role model for any Jewish federation” (May 20, 1997).

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In a surprising coda to the feud, the Everetts later withdrew a $3 million gift to the Children’s Zoo in New York’s Central Park that was then replaced by a $4.5 million gift from Laurence Tisch. The zoo was named the Tisch Children’s Zoo, rather than the Everett Children’s Zoo. The elder Tisch said that he made his gift without knowing the identity of the original donor, but his contention didn’t quell criticism. Said Mrs. Everett, “It is deeply distressing that any venue that is dedicated to children should be supported by people who work in an industry that tries to induce children to smoke” (May 20, 1997).

spun off 20 percent of the cigarette unit Lorillard in a tracking stock called the Carolina Group. While shares of the Carolina Group did not do particularly well after they were issued in early 2002, they at least helped Loews determine the public value of the cigarette business—which would be crucial if Loews decided to sell its tobacco operations at a time when the cigarette business was out of favor and its value to Loews had been difficult to quantify.

See also entry on Loews Corporation in International Directory of Company Histories.

MORAL AMBIGUITIES DON’T STOP BIG BUSINESS SOURCES FOR FURTHER INFORMATION

While some may have been troubled by the source of that wealth that went into the Tisches’ charitable contributions, the enormity of the historical impact the Tisch family made upon New York City remained unquestioned. Perhaps the more relevant question facing James Tisch was whether or not the business engine that drove those profits was running out of gas. In 2003 Loews was forced to take reserves at its CNA insurance business and was deeply invested in the increasingly troubled cigarette industry. That year, while the Standard & Poor’s 500 index was up 14.8 percent, Loews’s stock was down 3.37 percent. Analysts such as Richard Pzena of Pzena Investment Management said that in general James Tisch made intelligent decisions in addressing the company’s problems. In 2002 he named a new chief executive at CNA, Stephen Lilienthal. He

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Condon, Bernard, “Unrepentant Bear,” Forbes, October 16, 2000, p. 222. Fabrikant, Geraldine, “Loews Executives Facing Some Difficult Choices,” New York Times, November 18, 2003. “Loews Corporation Announces Senior Management Succession Plan,” PR Newswire, November 4, 1998. Miller, Judith, “Tisch to Match, and Raise, Revoked Gift to Children’s Zoo,” New York Times, May 20, 1997. Rosenberg, Hilary, “Like Fathers, Like Sons: As the Generations Shift, the Loews Style Remains,” New York Times, May 30, 1999. —Tim Halpern


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Barrett A. Toan 1947– President, chair, and chief executive officer, Express Scripts Nationality: American. Born: 1947, in Briarcliff Manor, New York. Education: Kenyon College, BA, 1969; Wharton School of Finance and Commerce at the University of Pennsylvania, MPA, 1974. Family: Married Polly (maiden name unknown); children: two. Career: State of Illinois, c. 1970–1973, budget analyst; state of Pennsylvania, c. 1973–1974, budget analyst; PriceWaterhouse, consultant to state and local governments, c. 1974–1979; campaign office of Arkansas gubernatorial candidate Bill Clinton, 1979, budget adviser; state of Arkansas, 1979–1981, commissioner of social services; Missouri Department of Social Services, 1981–1985; director; Sanus Health Plan of St. Louis, 1985–1991, executive director and chief operating officer; Express Scripts, 1986–1989, manager; 1989–, president and chief executive officer, 2000–, chairman of the board. Awards: Named Entrepreneur of the Year, Inc., 1994. Address: Express Scripts, 13900 Riverport Dr., Maryland Heights, Missouri 63043; http://www.expressscripts.com.

■ Barrett A. Toan helped make Express Scripts into one of the leading pharmacy-benefits management (PBM) companies in the United States. Thanks to savvy acquisitions and the changing prescription drug market, Toan’s Missouri company posted revenues of $13.3 billion in 2003, with earnings of $249.5 million. It was the third-largest PBM company in the United States and was poised to take a lucrative share of the new Medicare prescription-discount card. SERVED IN CLINTON CABINET Toan was born in 1947 and grew up in Briarcliff Manor, New York. He was schooled at Kenyon College in Ohio and


at the University of Pennsylvania’s Wharton School of Finance and Commerce, from which he earned a master’s degree in public business administration. His first job was with the state of Illinois in its Bureau of the Budget. He also held a similar post in Pennsylvania’s capital and then worked as a publicpolicy consultant in Washington, D.C. Toan’s Beltway experience led to a position on the campaign staff of an Arkansas gubernatorial candidate in 1979. When the Democratic candidate, a young attorney general named Bill Clinton, won the election, Toan was named to his cabinet as commissioner of Arkansas’s division of social services. After two years in Little Rock, Toan moved on to a post as the director of the Missouri Department of Social Services. He left the public sector in 1985 to take a position at a new company, Sanus Health Plan in St. Louis, a health maintenance organization. He served as its executive director and chief operating officer for the next six years. In 1986 he took a third position, running a mail-order pharmacy company within Sanus called Express Scripts, which was a joint venture between Sanus and a St. Louis–based retail drugstore chain.

THE ORIGINS OF THE PHARMACY DISCOUNT CARD Express Scripts struggled during its first few years in business. It changed hands more than once but eventually became a stand-alone company in the early 1990s. At that point Toan was serving as president and chief executive officer. The company went public in 1992, and only when Toan decided to branch out into the new field of PBM did Express Scripts begin to turn a profit. “We created the first, to our knowledge, national program that had uniform pricing for retailers and for mail order in all 50 states,” he told Pam Droog in an interview with St. Louis Commerce (August 2001). Revenues at Express Scripts grew steadily during the 1990s, and Toan’s company quickly became a leader in the field. Its clients were government agencies or employers that offered prescription drug coverage in their employee health insurance plans. Express Scripts then negotiated discounts with drugmakers to lower the prices of prescriptions purchased at the retail level. Its dual goal was to save the employers and employees money and to ensure that drugmakers would be able to profit from steady sales of its products in return.

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OVERSAW CAUTIOUS GROWTH STRATEGY Other PBMs came onto the playing field in the 1990s but later merged with the drugmakers themselves, which some viewed as potential conflict of interest. Toan, however, was committed to keeping Express Scripts independent. He later made several savvy acquisitions of competitors when the drugmakers decided to unload them, including a 1999 purchase of Diversified Pharmaceutical Services from SmithKline Beecham. The $715 million price paid was far less than SmithKline Beecham had paid for it some years earlier. In 1998 Forbes magazine named Toan one of America’s most underpaid executives, based on his salary over a five-year period in relation to the excellent performance of Express Scripts stock, which is traded on the NASDAQ under the ticker ESRX. When one of the original backers, New York Life, sold its stake in the company in 2000, Toan was given the title chairman of the board and received a $7.9 million bonus package of stock and retirement benefits. Toan kept abreast of Express Scripts’ rivals in the PBM field—Medco Health Solutions, AdvancePCS, and Caremark—from his office at company headquarters in Maryland Heights, Missouri. His company also became involved in the new prescription drug card feature of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Although by the early 2000s he was no longer considered one

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of corporate America’s most undercompensated CEOs, he still kept a modest office of just one hundred square feet, comparable to the many of the workspaces of the five thousand other Express employees. The dean of the graduate business school at Washington University in St. Louis, Stuart Greenbaum, told Droog in the St. Louis Commerce article that Toan was “able to strategize at a high level of sophistication,” He added, “Express Scripts has grown dramatically and been able to weather a few speed bumps, which Barrett has navigated with exquisite adroitness.”

See also entry on Express Scripts Inc. in International Directory of Company Histories.


Droog, Pam, “Pharmaceutical Genius,” St. Louis Commerce, August 2001. MacDonald, Elizabeth, “Drug Lord,” Forbes, February 16, 2004, p. 72. Manning, Margie, “Moving Up,” St. Louis Business Journal, March 30, 2001, p. 2. —Carol Brennan


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Doreen Toben 1949– Chief financial officer and executive vice president, Verizon Corporation Nationality: American. Born: 1949, in Curaçao, Netherlands Antilles. Education: Rosemont College, BA; Fairleigh Dickinson University, MBA. Family: Married Edmund (chief information officer, Colgate-Palmolive); children: two. Career: AT&T treasury division, 1983–1986, executive; Bell Atlantic–Pennsylvania, 1986–1992, various positions; Bell Atlantic–New Jersey, 1992–1993, assistant vice president and comptroller; Bell Atlantic–New Jersey, 1993–1995, chief financial officer; Bell Atlantic–New Jersey, 1995–1997, vice president, corporate finance, and controller; Telecom Network, 1997–2002, vice president and chief financial officer; Verizon, 2002–, executive vice president and chief financial officer. Awards: Named one of the 50 Most Powerful Women in American Business, Fortune, 2002, 2003. Address: Verizon Corporation, 1095 Avenue of the Americas, New York, New York 10036; http:// www.verizon.com.

■ In the early 2000s the chief financial officer Doreen Toben guided Verizon Corporation through a challenging and volatile era in the telecom market. She was credited with leading Verizon’s successful efforts to reduce its heavy debt, increase the company’s cash flow, and divest itself of nonstrategic assets. Toben met these goals without making any additional company acquisitions or incurring any additional debt.

marketing from Fairleigh Dickinson University. Joining AT&T’s treasury department in the early 1980s, Toben quickly rose through the ranks. Her subsequent 1986 move to Bell Atlantic–Pennsylvania allowed her to hone her leadership skills in a variety of management positions, seeing firsthand the workings of the equipment engineering, operations, small business management, and consumer market departments. This breadth of experience served Toben well as her career as an executive progressed. As Toben told Jane Black of BusinessWeek (May 29, 2003), “The best advice I ever got was to move around and do different jobs.” In 1992 Toben moved to Bell Atlantic–New Jersey, where she assumed the position of assistant vice president and comptroller. Her strong leadership and management skills led to her appointment as chief financial officer very soon after her move there. Then just another year later she was named vice president of corporate finance. By 1995 Toben had become vice president of finance and controller of Bell Atlantic. In the meantime, Doreen Toben had married Edmund Toben and had two children. Edmund Toben had his own demanding job as chief information officer of Colgate-Palmolive. Both husband and wife commuted to their respective companies’ New York City headquarters, typically a one-hour trip each way from their home in Princeton, New Jersey. Toben described to Jane Black the limits that high-powered careers and family obligations placed on her time: “Lots of people talk about having cocktails with the Bradys. My whole life is work. If I’m not at work, I’m with my kids. . . . [Success] doesn’t come easy.”

VERIZON

A TELECOM START

In 1997 Bell Atlantic merged with NYNEX, and Toben’s position in the newly combined company became senior vice president and chief financial officer of the telecom network. Just three years later, in the middle of 2000, Bell Atlantic and GTE agreed to merge, creating what became Verizon Corporation. Toben’s career continued to rise with this merger, and she was named Verizon’s chief financial officer in 2002.

Doreen Toben was born on the island of Curaçao and raised in Harding Township, New Jersey. She graduated from Rosemont College in Pennsylvania with a bachelor’s degree in political science and went on to earn an MBA in finance and

In her first year at the newly formed Verizon, Toben successfully decreased the company’s staggering $530 billion in borrowings by $12 billion. Many analysts noted this to be an unprecedented drop in such a short period of time, and it


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caused the industry to take notice of her strategic planning decisions. Fortune placed Toben number 25 on its list of the 50 Most Powerful Women in Business 2002.

“Doreen knows the numbers better than anyone in the telecom industry.”

In the mid-2000s Verizon continued to face considerable financial challenges: to expand its subscriber base, to make high-speed Internet access profitable, and to reduce the company’s debt. Observers expressed confidence that Toben, with her strategic planning acumen and long tenure in telecommunications, was well suited to help her company meet these tasks. As Tim Horan, a telecom analyst with the Canadian Imperial Bank of Commerce, told BusinessWeek (May 29, 2003),


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Black, Jane, “Minding Verizon’s Bottom Line,” BusinessWeek, May 29, 2003. Morris, Betsy, “Trophy Husbands,” Fortune, September 27, 2002. —Susan French Ludwig


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Don Tomnitz 1948– Chief executive officer, president, and vice chairman, D. R. Horton Nationality: American. Born: 1948, in St. Louis, Missouri. Education: Westminster College, BA, 1970; Western Illinois University, MBA, 1975. Family: Married Sharon (maiden name unknown); children: two. Career: U.S. Army Signal Corps, 1971–1974, second lieutenant and captain; Western Illinois University, 1975–1976, professor of business; RepublicBank of Dallas, 1976–1981, vice president; Crow Development Company, 1981–1983, vice president and partner in the Land Acquisition and Development and Custom Home divisions; D. R. Horton, 1983–1994, vice president of various divisions; 1994–1996, vice president of Western Region; 1996–1998, president of Homebuilding Division; 1998–2000, executive vice president; November 1998–, chief executive officer, vice chairman; 2000–, president. Awards: Winner of the Alumni Achievement Award, Westminster College, 2004. Address: D. R. Horton, 1901 Ascension Boulevard, Suite 100, Arlington, Texas 76006; http://www.drhorton.com.

■ Home construction executive Donald J. “Don” Tomnitz was the CEO, president, and vice chairman of the home construction company D. R. Horton. With over $8.7 billion in revenues in 2003, Tomnitz led the company that had been building houses since founder and chairman Donald Horton built his first house in 1978 with a $33,000 loan. Tomnitz began working with D. R. Horton in 1983 and rose rapidly within its ranks, helping to take it public in 1992.

D. R. HORTON D. R. Horton was a national leader among U.S. homebuilders. The company constructed and sold single-family


homes in metropolitan areas throughout the United States: the Mid-Atlantic, the Midwest, the Southeast, the Southwest, and the West. It also sold upper-end, luxury, and active-senior housing, which can cost up to $900,000 per unit, but 80 percent of its sales in the early 21st century came from entry-level and first-move-up single-family houses (that is, homes priced under $250,000). The company closed on over 40,000 homes annually in the early 2000s. Houses ranged in size from 1,000 to 5,000 square feet, with an average selling price of $232,000. In the early 2000s D. R. Horton operated through 53 divisions that built together in 44 markets within 20 states. The company built and sold homes under the D. R. Horton, Cambridge, Continental, Dietz-Crane, Emerald, Melody, Milburn, Schuler, Stafford, Torrey, Trimark, and Western Pacific names. It also provided mortgage financing and title services to homebuyers. Its competitors included Beazer Homes USA, Centex Corporation, KB Home, Lennar Corporation, M.I. Schottenstein Homes Inc., Pulte Corporation, Ryland Group Inc., and Standard Pacific Corporation.

FROM AIR FORCE TO LAND DEVELOPMENT Tomnitz grew up traveling around the world with his father, an air force officer. Later, while living with his aunt and uncle in Missouri, Tomnitz decided he wanted to become a physician. He attended Westminster College in Fulton, Missouri—financing 75 percent of his collegiate expenses while receiving a two-year Reserve Officer Training Corps scholarship—where he completed his BA degree in economics and earned honors as a distinguished military graduate. After college, from 1971 to 1974, Tomnitz served in the U.S. Army Signal Corps, first as a second lieutenant and eventually as a captain. During college Tomnitz did not perform well in premed classes, so he decided not to pursue a medical degree. Instead, he received his MBA degree in finance from Western Illinois University (WIU) in Macomb, Illinois. After graduation in 1975, Tomnitz taught at WIU’s College of Business for one year. In 1976 he became a vice president of RepublicBank of Dallas, Texas. In 1981 Tomnitz began his real estate and home construction career when he became vice president of Crow Development Company (a Trammell Crow Company) and partner in the Land Acquisition and Development and Cus-

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tom Home divisions, working in land development around Forth Worth, Texas. In 1983 a land development associate introduced Tomnitz to Donald R. Horton, a small homebuilder in Fort Worth, who owned a number of building companies in Tarrant County. Within about six months Tomnitz had joined Horton to form a development company within D. R. Horton (Horton owned 51 percent and Tomnitz owned 49 percent) that would sell property to other builders. Tomnitz was a vice president in charge of various divisions of D. R. Horton from 1983 until he was elected vice president of the Western Region in August 1994, a position he held until 1996. From 1996 until 1998 Tomnitz was president of D. R. Horton’s Homebuilding Division; in January 1998 he was selected to be executive vice president of D. R. Horton. In November of that same year he was elected vice chairman and CEO of the company, and in March 2000, he became president as well.

KISS Even though they were very different in personality, Tomnitz and Horton complemented each other while running the company. They both agreed that their business was run best under the slogan KISS: Keep It Simple, Stupid. Throughout the company’s history, they operated by keeping land no longer than was necessary. Tomnitz and Horton also continued a specific business strategy that was set early in the company’s history. Both men agreed that the majority of buyers would be in the middle-income group of people. They continued to build most of their homes at that under-$250,000 level.

SIMPLE IN ACTION Tomnitz developed a corporate culture of frugality. During the early years, Horton told Tomnitz to start every morning like the company was broke, because if that were true, then they would not spend any more money than was absolutely necessary. This philosophy helped them survive the difficult times, especially the hard Texas real estate market of the late 1980s and early 1990s. When times improved, the two men continued to operate under the same thrifty attitude: no private jets or company cars, no company cell phones, and no first-class airplane travel (unless they or the employees paid for it personally). Tomnitz aimed to keep total expenses under 10 percent of total overhead, and as of April 2004 the company was at 9.6 percent, the lowest overhead in the home-building industry. Tomnitz compared D. R. Horton to Wal-Mart, calling it the Wal-Mart of the housing industry in its ability to keep expenses as low as possible.

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CUSTOMER SATISFACTION Tomnitz gave each D. R. Horton customer a one-year general–ten-year structural warranty on all of the company’s houses. However, company policy stated that the company would go beyond those minimum requirements if customers were unhappy. Tomnitz realized early that it did not matter who was right and who was wrong: the company’s reputation would be hurt with respect to public opinion if they did not satisfy every customer. In fact, Tomnitz often remarked that one unhappy customer would result in at least ten lost referrals. As a result, D. R. Horton implemented no fancy slogans about quality and value, only calling itself “America’s builder.” Instead, Tomnitz preferred to build value and quality into the company’s homes and let the homes advertise themselves. This marketing strategy worked well for both Tomnitz and D. R. Horton. Besides the attention to quality and customer service, Tomnitz offered many more choices within D. R. Horton houses than did its competition. About 50 percent of revenue came from these custom options. Floor-plan changes were built into any standard home, even at the entry-level house, a feature not available with D. R. Horton competitors. Tomnitz proudly stated that such degree of customization within its homes had not been successfully duplicated anywhere else in the industry.

EXPERT MANAGEMENT TEAM Tomnitz developed authority on a regionalized basis throughout his company’s structure. That is, each of its 53 division presidents was empowered to respond quickly to whatever happened within their local areas. In return, each division president could count on fast action from Tomnitz and his staff in making decisions based on his or her recommendations. Tomnitz disliked bureaucratic layers that often paralyzed other companies. For instance, Tomnitz realized that he could close a land deal much more quickly when the already informed and experienced division president was able to act fast to secure all the necessary information. As a result, there was always a direct link between him and his staff and the senior field managers. In addition, division presidents averaged about 13 years of Horton experience, and regional presidents averaged about 15 years. Senior management positions were filled by promotions, and prospective new employees were hired only if management believed they would fit in with the company’s culture. Tomnitz stressed on-the-job training— making sure that the right people were in the right positions— and then calibrated their success with such statistics as customer satisfaction ratings and sales performances. Aggregate (total) purchasing was instituted in 1998, and when Tomnitz took over in 2000, he enhanced the strategy. His initiative was a three-part approach to save over $3,000 on a $250,000 house. First, national contracts were negotiated


Don Tomnitz

for products that were used across the country. Second, regional purchasing managers were responsible to negotiate for products only applicable for their own region. Finally, manufacturers were given larger contracts when they provided better prices and were more efficient. Tomnitz reported that the company saved about $100 million in 2003 with such costsaving practices.

ACQUISITIONS About 40 companies had been added to D. R. Horton by the early 2000s, with 17 of them acquired since 1994. In 1998 Tomnitz purchased Phoenix, Arizona-based Continental Homes, which helped to generate sales of both customized and standardized houses, both with lower per-square-foot costs. The acquisition enabled Tomnitz to make national purchases. In 1999 he directed the acquisition of Chicago, Illinois-based Cambridge Properties. Tomnitz secured the largest acquisition in 2002 when the company purchased El Segungo, Californiabased Schuler Homes for $1.2 billion. In that year the addition of Schuler doubled D. R. Horton’s sales; they sold 31,584 homes, making the company the largest builder of houses in the country, based on closings.

CONCENTRATING ON INTERNAL GROWTH Beginning in 2003 Tomnitz focused on internal growth rather than acquisitions by increasing market share, reducing debt, and improving margins. In 2003 D. R. Horton was among the top five builders in 70 percent of its markets. Tomnitz felt that success was in part due to providing bonuses for his division presidents if they made the list of top five builders or accomplished double-digit market share in their area.

OLD-FASHIONED VALUES ARE HOMEMADE Tomnitz ran his life both personally and professionally with old-fashioned values. His well-ordered and disciplined


life began early as he ran five or six miles before arriving at the office at 7:30 a.m. for a workday that usually lasted 12 hours. Most of his day involved strategy and organizational meetings with his divisional presidents, members of various company departments, legal professionals, and members of investor relations. He usually spent at least two weeks per month visiting salespersons and construction people in the 20 states where the company did business. When time allowed, he also liked to snow ski, hunt, and fish. Due to a consistent work plan, honest ethics, and a very effective management strategy, Tomnitz saw the company grow to $8.7 billion in revenues in 2003 with a net income of $929 million. Along with these impressive results, the company produced 105 consecutive quarters (as of April 2004) of increased revenues and profits. Alone among publicly traded companies, D. R. Horton had never lost money in any quarter, a statistic that Tomnitz was proud to state. Tomnitz also predicted that the company would have revenues of $10.2 billion to $10.4 billion in 2004. Tomnitz headed an expert management team that had been the country’s fastest-growing homebuilder for 10 years, a statistic that seemed likely to continue into the future.

See also entries on D. R. Horton, Inc. and Trammell Crow Company in International Directory of Company Histories.


Aleshire, Ilene, “D. R. Horton’s Success Rests on Relentless Focus on Basics,” Knight-Ridder Tribune Business News, June 28, 2004. “D. R. Horton: America’s Builder,” http://www.drhorton.com.


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Shoichiro Toyoda 1925– Honorary chairman, Toyota Motor Corporation Nationality: Japanese. Born: February 17, 1925, in Nagoya, Japan. Education: Nagoya University, BS, 1947; Tohoku University, PhD, 1955. Family: Son of Kiichiro Toyoda (founder, Toyota Motor Corporation) and Hatako (maiden name unknown); married Hiroko Mitsui, 1952; children, two. Career: Toyota Japan Motor Company, 1952–1961, director; 1961–1967, managing director, corporate planning office; 1967–1972, senior managing director; 1972–1981, executive vice president; 1981–1982; president; Toyota Motor Sales Company; 1982–1992, president, Toyota Motor Corporation; 1992–1999, chairman; 1999–, honorary chairman; Keidanren, chairman, 1994–1998. Awards: Blue Ribbon, government of Japan, 1972, 1984; Deming Prize, 1980; Honorary Doctorate, Asian Institute of Technology, 2003.

Shoichiro Toyoda. AP/Wide World Photos.

Address: Toyota Motor Corporation, 1 Toyota-cho, Toyota, Aichi 471, Japan.

TOYOTA’S CROWN PRINCE

■ Shoichiro Toyoda was president of the Toyota Motor Corporation from 1982 to 1992. In the early 1960s he was influential in instituting total quality control in all company operations. He approved and furthered the expansion of Toyota’s production system into the United States, and he approved the development of the Lexus and the Prius hybrid. He was Toyota’s first genuinely global manager. Deferential and reserved on the outside, Shoichiro ran the company with a stronger hand than his cousin and predecessor, Eiji Toyoda. After retiring in 1992 Shoichiro became chairman of Toyota in 1992 and later honorary chairman of the company. Between 1994 and 1998 he served as chairman of the Keidanren. In the early 2000s he was considered Japan’s leading voice on international cooperation and globalization.

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Shoichiro Toyoda was born in Nagoya on February 17, 1925, to Kiichiro and Hatako Toyoda. Being the eldest son in a traditional Japanese family firm, Shoichiro seemed destined to run the company from the time of his birth. His grandfather Sakichi Toyoda founded Toyoda as a textile company. Shoichiro’s father was responsible for creating the Toyota Japan Motor Company. Growing up under the tutelage of his mother, Shoichiro learned all that was going on in his father’s car and truck company, and he absorbed the lessons. Shoichiro graduated from high school in 1945. He wanted to learn engineering at Nagoya University, but World War II and the American occupation of Japan changed the destinies of both Toyota and of Shoichiro. Kiichiro was making trucks for the Imperial Japanese Army, and his plant was within a few days of being bombed by American B-29s when Japan surren-


Shoichiro Toyoda

dered. There might well have been no Toyota for his son Shoichiro to return to. Like many other young Japanese men, Shoichiro was conscripted to labor in the fields, raising potatoes and barley to feed the army, navy, and civilian population. This interrupted his education and he did not receive his BS in engineering until 1947. Shoichiro then entered Tohoku University in Sendai, about five hundred miles north of Tokyo, where he continued his studies in engineering. In the meantime, his father involved him in a project to produce a reliable passenger car for the world market. When he would come home to visit, Kiichiro would have his son study and work with Toyota’s designer, Shisaburo Kurata. He also worked with the Toyota keiretsu (network) of suppliers. In 1955 he received his doctorate. By this time he had become a family man, having wed Hiroko Mitsui in 1952 and become the father of two children. In the last years of Kiichiro’s life, Toyota Japan Motor Company resumed making trucks and passenger cars. General Douglas MacArthur, though, brought unionization to Japan, and F. Edwards Deming introduced quality control. Toyota was unionized, and its workers demanded job security, which Kiichiro could not provide because the company was losing money. Kiichiro resigned shortly before his death in late March 1952. Shoichiro had been ready to travel to America to manage a sewing-machine manufacturing operation, but his father’s death changed that. He was 27, and he was not yet ready to run Toyota. He was made a director. Toyota soon began to prosper by making trucks for the American army fighting in Korea.

SHOICHIRO CHAMPIONS TOTAL QUALITY CONTROL The company presidency passed into the hands of Taizo Ishida, who was not a member of the Toyoda family. This proved to be an important lesson for Shoichiro; it showed him that Toyota could remain a family firm even when it was necessary temporarily to turn to someone outside the family to run the company. The major influence on the maturing Shoichiro would be Eiji, who was now the most powerful family member in the company. Eiji would shepherd Shoichiro as a young executive and, over two decades later, shape him into his successor as company president. Eiji was responsible for giving Shoichiro his grand vision, to make Toyota a global automotive company, and training him to realize that vision. Under Ishida, Toyota began to export cars to Europe and America. The Toyota Corona Crown was the first Japanese car to be marketed abroad. Its success in the 1950s and early 1960s was limited. The Motomachi plant was opened in 1959 to produce Toyota cars. The director of the construction committee was Shoichiro, supervised by Eiji. Shoichiro was sent


abroad to gain expertise on how to construct a plant for passenger cars. In 1961 he was promoted to managing director of the corporate planning office. Shoichiro quickly recognized that Toyota’s cars and trucks were not of the quality foreign consumers were looking for. Americans would not buy what many of them saw as underpowered, unattractive, and undependable vehicles. Toyota would have to improve its entire production process, but doing so was easier said than done. While the company talked about improving quality control, it had little contact with American experts on the matter, and its workers were still inexperienced in this area. Shoichiro saw a solution: Quality-control operations needed to be integrated into every step of production. They had to be systematic and a part of every Toyota department and operation. In the early 1960s he prevailed upon Eiji and Ishida to implement a total-quality-control program. The board agreed, and Shoichiro set the goal of having a program in operation by 1964. He brought in experts, but the company’s workers complained and revolted. Production expert Taiichi Ohno felt that Shoichiro was wasting his time and Toyota’s money. Within a year, though, Shoichiro’s critics knew he had been right. The number of defects in Toyota cars fell by half. Ohno discovered that quality control actually enhanced his lean, just-in-time assembly-line process. Toyota was on its way to global competitiveness and Shoichiro, more than any other individual, was responsible. TOYOTA’S FIRST GLOBAL MANAGER Eiji served as president of Toyota from 1967 to 1981. He was highly skilled both as a car person and a manager. He was determined to make Toyota a global motor company and believed that it could supersede General Motors to become the leading automaker in the world. Eiji felt that this could be accomplished by marketing highly reliable, fuel-efficient cars primarily in the North American market, and rising oil prices after 1974 encouraged this belief. He sought to gradually conquer market share, first from Chrysler, then from Ford, and ultimately from General Motors. Toyota entered the American market again in the mid-1960s with the Corona, but sales began to really mushroom in the 1970s as American baby boomers sought more fuel-efficient cars. By the time Eiji stepped down as president, millions of Americans were now turning away from Chryslers, Fords, and Chevrolets to Corollas. Shoichiro did not take full control of the company until 1985. In the meantime, Eiji continued to guide Toyota’s worldwide success. Eiji reorganized Toyota’s manufacturing and sales divisions to form the Toyota Motor Corporation in 1982, and he named Shoichiro to be its first president. Shoichiro continued to refine the philosophy he learned from Eiji. Years later, he summed up his views in an address

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Shoichiro Toyoda

he gave before the Asian Institute of Technology. Production, said Shoichiro, required human capability, whether it was in building motor vehicles or nations. Human capability added value to economies and societies, and it induced and sustained technological progress. Basic technology and applied technology, though, had to work together. Building high-quality cars, moreover, was a rewarding act in itself that “brings excitement and joy to the people involved.” The Toyota production system built people was well as vehicles. “We have to prepare people and help people develop themselves through the accumulation of experience by performing round and round of work day after day,” said Shoichiro, who noted the need for “building human beings by going through the process of building products.” Shoihiro saw Toyota’s highly trained and motivated workforce as an enormous investment in the future, for “skilful people thus developed can then rise up to yet greater product-building challenges. This is a continuous process of building human capability through OJT, or on-the-job training.” In the same speech Shoichiro recalled how he learned that “building people” meant more than just giving them skills and the ability to work with precision. Building people also meant inculcating a strong sense of mutual responsibility and teamwork directed to ever-higher goals. Long-term thinking had to take precedence over short-term profits. Investing in Toyota’s people was investing in Toyota’s future. Problems had to be observed by managers personally on the spot in order to fully understand them; this was known as genchi gembutsu (Go and see for yourself). Solutions must be arrived at via the process of nemawashi, in which alternatives are discussed and weighed until a final course of action is decided upon through consensus. At this point the decision must then be implemented quickly. Shoichiro had always been attentive to the “four S‘s of the Toyota production system: sifting, sorting, and spickand-span. Thorough attention to them helped “identify glitches on shop floors and visualize troubles caused by overburdening, non-value-adding activity and unevenness.” The right procedure was destined to yield the right results. The lesson of kaizen (continuous improvement) remained integral to Shoichiro’s management philosophy. Shoichiro then recalled another series of lessons learned during his presidency in the 1980s and his chairmanship in the 1990s: “Global competition is growing increasingly fierce, and we are right in the middle of it.” Toyota had to become a global power and maintain its power by institutionalizing its philosophy. In order to stay competitive and become even more competitive, Shoichiro had to “find suitable ways to pass on our ‘management philosophy’ firmly rooted in the idea of making things, to later generations of Toyota workers” in Japan and elsewhere. Guided by this philosophy, Shoichiro took part in several key decisions during his presidency that would forever change

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the face of Toyota. He recognized that he presided over a company that in many ways was still quite conservative, even provincial. In contrast to companies based in cosmopolitan Tokyo, Toyota was rooted in Aichi Prefecture, the Midwest of Japan. Shoichiro recognized that Toyota would have to become a truly global company and he its first truly global manager. If the company was to meet his goal of capturing 10 percent of worldwide vehicle sales by the year 2000, it would have to become less provincial. The key to Shoichiro’s new global strategy was the United States. Here Shoichiro saw enormous investment opportunities, as American consumers were beginning to recognize the quality of Japanese cars—and American producers the danger. Americans were now writing books such as Theory Z and The Art of Japanese Management showing how Shoichiro’s countrymen were upstaging American companies and attracting American consumers. The most important and central decision of Shoichiro’s presidency was therefore to begin making cars in America for Americans. Shoichiro set the goal of capturing 10 percent of worldwide vehicle sales by the year 2000. He recognized that he was setting out to challenge not only Detroit but possibly also Washington. As American steel and auto plants closed down, a protectionist backlash began to surge in the United States, and even the Japanese Ministry of International Trade and Industry (MITI) strongly recommended Toyota reduce its exports to the United States. Eiji and Shoichiro agreed to voluntary limits on Japanese cars exported to the United States, a move that could seriously cripple Toyota’s profits. The first step in Toyota’s global strategy was taken when Eiji signed an agreement with General Motors to set up a joint production venture, New United Motor Manufacturing, Incorporated (NUMMI), in Fremont, California. NUMMI went into operation at the end of 1984 producing Toyotas and Chevy Novas under the titular leadership of Shoichiro’s brother Tatsuro. The venture was a prime example of genchi gembutsu. Shoichiro was reassured that Americans could learn the Toyota production system and would buy cars made by Japanese companies in America. He could see that Toyota, in order to become more global, would have to become more American. Shoichiro would hire Americans, learn from their expertise, venture into their markets, and discover what they wanted in a car or truck. Robert McCurry of Chrysler became executive vice president of Toyota Motor Sales USA in 1984. Gary Convis came from Ford, via NUMMI, and in 1999 became president of Toyota Motor Manufacturing in Kentucky. Within a year after NUMMI began production, Shoichiro was ready for the next step, and it was a major one: Camrys, which heretofore had been made in Japan, would now be made at an American plant. Toyota opened the Camry plant in Georgetown, Kentucky, in 1988. Shoichiro entrusted the operation to one of his brightest production experts, Fujio Cho, and the plant became the prototype for five other Toyota


Shoichiro Toyoda

plants in North America. Now firmly in charge of his company, Shoichiro knew the American business culture better than most of his colleagues.

SHOICHIRO’S MANAGEMENT STYLE Shoichiro’s goals were the same as Eiji’s but his management style contrasted sharply. Shoichiro was very closemouthed and less prone to listen to others than Eiji. Shoichiro was a little less “Japanese” and slightly more “American” in his approach than the more consensus-bound Eiji. He gradually replaced the board and upper-management ranks with his own people. He sometimes disagreed with his mentor. When Eiji wanted to market a luxury car in America, Shoichiro rejected the idea for almost a decade. Finally, he listened, and the result was the Lexus. Listening to Americans such as McCurry and Convis provided valuable knowledge about what their countrymen wanted to buy, which was cars with Japanese quality and American flashiness. Despite his great power and accomplishments, Shoichiro rejected any efforts at self-promotion, coming from a culture in which the individual was subordinate to the company. Author Maryann Keller, in her 1996 book Collision, quotes the deferential Shoichiro: “I am a son unworthy of his father. I am surrounded by these worthy souls and that is how I manage to get by even though I am mediocre.” Notwithstanding his grand push into the United States, Shoichiro remained fluent only in Japanese. While he could rely upon Cho and others for English proficiency, he remained highly intuitive in his conversations with Americans, trying to make sense of a gesture here and there to determine what was being discussed. Shoichiro faced a double challenge in the 1990s. The Japanese economic miracle suddenly began to evaporate when the Nikkei crashed in 1989. By 1990 the stock exchange had lost two-thirds of its value. The yen rose in value, strangling Japanese exports. The Japanese home market entered a prolonged period of recession that lasted through into the 2000s. Shoichiro now faced a resurgent U.S. auto industry that was far ahead of Japan in marketing trucks and SUVs. A more serious threat was emerging at home from Honda, whose trendy, popular cars sold well with young Japanese who found the Toyota Corolla reliable but a bit too functional for their taste. Toyota’s market share in Japan slipped from 40 percent in 1993 to 38 percent in 1996. To carry out the great investment offensive of the 1980s, Shoichiro had expended a lot of capital on new plants in the United States, Japan, and the United Kingdom. The development of the luxury-brand Lexus was also very expensive. Protectionist pressures were rising in the United States, causing the Japanese government to persuade Shoichiro to slowdown his expansion plans. Also, Shoichiro could not find enough young Japanese to work for Toyota, in spite of Japan’s now


chronic recession. The company seemed to be aging, as was its chairman, Eiji, who turned 79 in 1992. Shoichiro was compelled by the unwritten rules (kata) of the company to replace Eiji as chairman and choose a successor himself. He was further motivated to find a successor due to his new and growing responsibilities as chairman of the Keidanren, the Japanese Federation of Economic Organizations. Toyota needed a new full-time president. At first Shoichiro could not find anyone qualified to succeed him. Toyota shikata (protocol) required that a member of the Toyota family take over, but Akio, Shoichiro’s son, was not yet experienced. The succession devolved to Shoichiro’s brother Tatsuro, whom Kiichiro and Hatako had never prepared for the job. The board crowned Tatsuro president in 1992, but Shoichiro pledged that his brother would receive strong direction. Shoichiro continued in the early and mid-1990s to direct the firm from above while executive vice presidents Hiroshi Okuda and Fujio Cho aided Tatsuro from below.

TOYOTA EMERITUS: JAPAN’S GLOBAL CONSCIENCE Shoichiro’s vision extended beyond Toyota. Just before turning the leadership of the company over to Okuda, who had become Toyota president in 1999, Shoichiro was elected chairman of the Keidanren, where he devoted himself to addressing the problems of globalization on a grander scale. He joined forces with Robert Rubin of the United States and Dominique Strauss-Kahn of France in defending free trade. In a Financial Times article of May 19, 2003, the three insisted that the right kind of free-trade system would help both rich and poor, so long as its benefits were widely shared and felt. Shoichiro, writing on the eve of the 2003 U.S. invasion of Iraq, stressed that any global trading system of which Japan was a part had to further the economic development of poorer countries. As Toyota moved, now under his and Okuda’s protégé Fujio Cho, toward becoming both Japan’s and the auto industry’s most global corporation, Shoichiro insisted that globalization must benefit all. In their article in the Financial Times, Shoichiro, Rubin, and Strauss-Kahn averred that the leadership of the industrial powers must “make clear to everyone why helping the world’s poor is in the interest of us all.” Knowing that both Japan and Toyota were highly vulnerable in any collapse of the global trading system, with economic nationalism, competitive devaluations, and imposition of trade barriers, Shoichiro joined forces with those who rejected what Thomas Friedman called the “let them eat cake” approach to globalization. As Shoichiro and colleagues noted in the Financial Times, the world’s industrial powers “must ensure that the global economy works for rich and poor alike, and also address a parallel agenda of improving education, access to healthcare and social safety nets.”

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Shoichiro Toyoda

See also entry on Toyota Motor Corporation in International Directory of Company Histories.

Togo, Yukiyasu, and William Wartman, Against All Odds: The Story of the Toyota Motor Corporation and the Family that Created It, New York: St. Martin’s Press, 1993.


Toyoda, Eiji, Toyota: Fifty Years in Motion: An Autobiography of the Chairman, Eiji Toyoda, Tokyo: Kodanshi International, 1987.

Dreyfuss, Joel, “Slow Decision, Quick Action,” Fortune, August 3, 1987, p. 35. Ingrassia, Paul, and Joseph B. White, Comeback: The Fall and Rise of the American Automobile Industry, New York: Simon and Schuster, 1995. Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century, New York: Currency Doubleday, 1993.

Toyoda, Shoichiro, “Commemorative Speech by Dr. Shoichiro Toyoda, Honorary Chairman of Toyota Motor Corp., on the Occasion of Award of Honorary Doctorate by the Asian Institute of Technology,” Bulletin, Asian Institute of Technology, http://www.misu.ait.ac.th/newsandevents/ NewsById.cfm?NewsID=2721

Liker, Jeffrey K.,The Toyota Way, 14 Management Principles from the World’s Greatest Manufacturer, New York: McGraw-Hill, 2004.

Toyoda, Shoichiro, Robert Rubin, and Dominique StraussKahn, “Sharing the Benefits of Global Trade,” Financial Times, May 19, 2003.

Maynard, Micheline, The End of Detroit: How the Big Three Lost their Grip on the American Car Market, New York: Currency Doubleday, 2003.

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—David Charles Lewis


■■■

Tony Trahar

(Sunday Times Business Times, October 12, 2003). He also initiated the first program in South Africa that provided free antiretroviral therapy to employees with HIV infection.

1949– Chief executive officer, Anglo American Nationality: South African. Born: June 1, 1949, in Johannesburg, South Africa. Education: University of the Witwatersrand, St. John’s College, BC, 1970. Family: Son of Thomas Walter and Thelma AshmeadBartlett Trahar; married Patricia Jane (maiden name unknown); children: two. Career: A. Whiteley Brothers (now Deloitte & Touche), 1973, served articles; Anglo American Corporation of SA Ltd., 1974, management trainee, finance division; 1991–, executive director; 1976–1977, public accountant; Anglo American Industrial Corporation, 1982–1986, finance director; 1992–, deputy chairman; Mondi Ltd., 1984–2003, chairman; Mondi Paper Co., 1989–, executive chairman; Neusiedler AG, 1990–, deputy chairman; Frantschach AG, 1992–, deputy chairman; Mondi Europe 1993–2003, chairman; South African Motor Corporation Ltd., 1996–2000, chairman; AECI Ltd., 1999–2001, chairman; Anglo Forest Products, 1999–2003, chairman; Anglo Industrial Minerals Division, 1999–, chairman; Anglo American PLC, 1999–2000, executive director; 2000–, chief executive officer; Mondi International, 1999–, chairman. Awards: Business Leader of the Month, Sunday Times Business Times, 2003. Address: Anglo American, 20 Carlton House Terrace, London SW1Y 5AN, United Kingdom; http:// www.angloamerican.co.uk.

■ Anthony (“Tony”) Trahar was chief executive officer of Anglo American, the world’s second-largest mining conglomerate, operating in more than 60 countries. Anglo American was world leader in platinum mining and a major player in the harvest of other natural resources, including gold, diamonds, coal, building aggregates, and forestry products. Trahar instituted a major structural change that took the company from what industry analysts called a “stuffy post-colonial institution” to a highly diversified and well-balanced conglomerate International Directory of Business Biographies

DIVERSE CAREER WITH A DIVERSIFIED COMPANY According to an article in the Sunday Times of Zambia, Trahar intended to be an architect but ended up “redesigning and overseeing one of the worlds biggest resource companies” (October 12, 2003). His plethora of titles included chairmanships of the Anglo American executive committee, the South African Motor Corporation, Anglo Forest Products, Anglo Industrial Minerals, and Palaeo Anthropological Scientific. Directorships included AngloGold, Anglo Platinum, Highveld Steel, Scaw Metals, Del Monte Royal Foods, and McCarthy Retail. Trahar was managing director and executive chairman of the Anglo American’s paper company, Mondi Packaging, and deputy chairman of Frantschach, the largest pulp and paper group in Austria. Trahar was a member of the Anglo American safety, health and environment committee, the South African Foundation, the executive committee of the World Wildlife Fund for southern Africa, and the South African Institute of Chartered Accountants. Trahar firmly believed in free enterprise and market economy. He developed clear-cut structures and staff incentives for transforming Anglo American into a disciplined, stable, and diversified industry leader. Trahar said, “The group offers a unique mix of geographic and product diversity which insulates it from the volatility associated with single product cycles,” according to an article posted on the Anglo American Web site (February 25, 2004). One of Trahar’s first major accomplishments as chief executive was to simplify the complicated cross-shareholding relationship between Anglo American and De Beers, the world’s largest diamond-mining company, with which Anglo American had had a relationship since the 1920s. Trahar described as transformational and risky the 2001 deal in which Anglo American invested US$19 billion for 45 percent of De Beers shares, but he also called it a deal that paid off handsomely in the end. The De Beers contribution to Anglo’s profits for the six months to June 2003 was $248 million, or 29 percent of Anglo’s $856 million headline profits.

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Tony Trahar

SOCIAL, POLITICAL, AND RACIAL CHALLENGES By 2002 Anglo American was one of only two high-profile international companies with a strong South African heritage that was run by a South African. Yet Trahar continued to draw criticism from some sectors: “For anyone with the slightest tendency towards political correctness, Tony Trahar has to be a hate figure from central casting. Not only does he preside over Anglo American—for some a neat shorthand for economic imperialism—he is white, male, South African and, at 54, old enough to have prospered under apartheid,” read an article in the Sunday Times (March 8, 2004). Trahar was challenged with keeping his massive conglomerate on track financially while addressing serious social, political, and racially charged issues. Evidence of Trahar’s skill was that in 2002 Anglo American was the only South African company to make the Forbes Global 500 list of the world’s largest public companies. Heidi Brown noted that although Anglo American was still managed entirely by whites while its 140,000 miners laboring underground were black, “Under Anthony Trahar, it plans to offer African employees treatment for the HIV virus. The company also has a venture-capital program that is aimed at developing black-owned suppliers to Anglo American. Just as impressive has been the outfit’s financial performance, helping the London-listed shares outperform the FTSE [Financial Times Stock Exchange] 100” (July 22, 2002). Perhaps the most widely praised social initiative implemented by Trahar was in regard to HIV/AIDS. Although originally opposed to the idea, Trahar initiated a program under which Anglo became the first corporation in South Africa to provide free antiretroviral treatment to employees with HIV infection. Trahar ultimately acknowledged that perhaps the biggest challenge the company faced in South Africa was HIV/ AIDS. “No one can afford to be complacent about the devastating social consequences of AIDS in sub-Saharan Africa. We believe that businesses, governments and society need to urgently join forces in a massively scaled up effort to turn the tide of the epidemic,” he wrote in an article on Mineweb in which he defined Anglo’s development vision (August 29, 2002). At that time, an estimated 25 percent of Anglo’s 130,000 southern African employees were infected with the virus. Anglo subsequently partnered with LoveLife, a national HIV prevention program, and contributed R 30 million in 2002. In 2002 Trahar faced another challenge. The government enacted the South African Mining Charter, a black empowerment legislation that mandated racial employment and stock ownership quotas. Mining companies were to attain 40 percent black management within five years. Trahar acted swiftly. In 2003 he appointed Lazarus Zim, the former managing director of the cellular service provider MTN International, as his right-hand man. The hiring was contrary to Anglo’s traditional policy of appointment from within. Asked in an inter-

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view with Mineweb whether the appointment was prompted by the charter, Trahar answered, “It certainly is, and it’s at a very senior level. If we are asking our operating businesses to undergo transformation, I think we have to show willingness at the center of Anglo American to be part of that process” (August 24, 2003). Trahar also acknowledged that achieving the 40 percent quota so quickly while retaining quality leadership would be a major challenge. Trahar had the ability to act swiftly when necessary but also developed a reputation as a long-term thinker. The latter was apparent in 2004 when Anglo’s iron ore mining project at Hope Downs, Pilbara, Australia, was delayed. Trahar watched rival companies BHP Billiton and Rio Tinto expand rapidly to supply a heavy Chinese demand for iron. Trahar commented to James Chessell, of the Sydney Morning Herald, “Anglo American is a long-term player and some of the great strategic positions have been built over 20, 30 years. So if it takes us 10 years to build a position in iron ore then we are prepared to take that long-term view” (March 19, 2004).

NATURAL RESOURCE EXPLOITATION AND SUSTAINABLE DEVELOPMENT Trahar’s extensive experience with a huge conglomerate in a widely diversified international environment overflowed into a larger arena. He became a spokesman and advocate for the natural resources industry, particularly in developing countries, while displaying a heightened sense of awareness regarding corporate responsibility. Trahar believed that while the first responsibility of a company was to provide secure returns for shareholders, long-term success could be attained only with a sustainable development agenda that included political, social, and economic issues germane to each country in which any multinational corporation operated. Trahar criticized greed and short-term pressures to perform, which in the early twenty-first century sank share prices of several major corporations, brought demise to others, and wrecked public confidence in corporate ethics and accountability. “There should be no contradiction between healthy capitalism and a vision of development which is sustainable. By which I mean a realistic attempt to strike a balance between the economic, social and environmental aspects of the bottom line,” he commented in his Mineweb article (August 29, 2002). Observing in the article that there remained an “instinctive suspicion” from many sectors about profit motive, Trahar declared that while companies such as WorldCom and Enron heightened such suspicion, profit was pivotal to the market economy. Profit not only paid employees’ wages but also had to fund the pensions of “our ultimate investors. Immediate profit maximization will not always be the right answer in ensuring the long-term sustainability of a business. But without economic viability, the other elements of the triple bottom line are lost.”


Tony Trahar

Trahar addressed criticism by the Extractive Industries Review, which represented antiglobalization protesters. The Review declared that mineral wealth was detrimental to a country’s development because it concentrated wealth too narrowly, created opportunities for corruption, and provided resources for people to fight over. In addition, the export of resources caused inflation that adversely affected other economic sectors. Trahar countered in his Mineweb article: “I believe that [the Review’s] analysis is profoundly wrong and that the wise exploitation of mineral wealth has great potential to drive development. It is poor governance, corruption and macro-economic mismanagement which have dissipated the beneficial effects of mineral development in some countries, not the exploitation of mineral deposits” (August 29, 2002). Trahar continued that the industrialization of the United States, Canada, Australia, and South Africa was grounded in the exploitation of natural resources and was paramount in Australia, South Africa, Chile, and Botswana: “There is unquestionably a need for wise macro-economic management of the revenues and Chile’s revenue stabilisation fund is one successful model for doing this.”

STANDARDS OF GOVERNANCE AND CORPORATE ACCOUNTABILITY Addressing concerns for developing nations, Trahar outlined in the Mineweb article (August 29, 2002) concepts he believed imperative if private investment flows to those nations were to increase. First, the developed world must “play fair” in the world trade system. Trahar criticized the European Union and U.S. agricultural subsidies for wrecking food trade operations and blamed tariffs for effectively keeping many products out of Latin America and Africa. Second, Trahar challenged governments of developed countries to keep promises made in early 2002 to ensure the more efficient and effective flow of aid to health, education, and poverty alleviation. Third, Trahar spoke to the need for standards of governance, particularly in relation to human rights, corruption, and the law. Fourth, he said a more collaborative effort was needed between multinational companies and leading nongovernment organizations because “despite their ‘bogeyman’ status in some quarters, the evidence suggests that multinationals pay better, work to high environmental standards and bring extra benefits to their host countries through technology transfer.” On the other hand, Trahar acknowledged in his article fears surrounding globalization and corporate accountability, loss of local control, and what he called cultural imperialism. He quoted President Bill Clinton as saying, “The benefits [of globalization] are all general, while the pain is all specific.” Trahar declared that in return for benefits, companies must grapple with new levels of accountability. He cited as an example Anglo’s Good Citizenship business principles—guidelines that clearly outlined to employees just what they could expect of


the company. Trahar said the company had become more transparent about safety, health, environment, and community issues by extended and increased reporting, particularly at a local level. As to sustainable agendas, Trahar pointed to Anglo’s policies pertaining to biodiversity, climate change, and emissions reduction programs. For example, sulfur dioxide emissions from the Anglo Platinum Waterval smelter were expected to be reduced 85 percent and emissions from a cement plant in Buxton, United Kingdom, 60 percent by the end of 2004. Another goal was to receive International Organization for Standardization 14001 certification in all Anglo American operations by the end of 2004. Trahar also wrote of the company’s intention of maximizing beneficial economic and social impact: “I regard getting relations right between an operation and its local communities as amongst the most important management responsibilities. Although mines may produce significant benefits, like jobs and better schools and health care, they are not always easy neighbours” (August 29, 2002). Trahar commented on a personal success in that arena with the Forest Products division of Mondi, which he ran for several years. Through a voluntary, industry-wide initiative with other stakeholders that brought notable improvements in social and environmental issues, Mondi became the leading Forestry Stewardship Councilcertified operator in the entire southern hemisphere. “I hope the mining industry can achieve similar results through voluntary initiatives and peer group pressure,” he wrote.

See also entry on Anglo American PLC in International Directory of Company Histories.


“Anglo American’s Resilient Performance Reflects Underlying Strength of Geographic and Product Diversity,” February 25, 2004. http://www.angloamerican.co.uk/press/2004/ 25022004.asp. Brown, Heidi, “The Global 500: Winners and Losers,” Forbes, July 22, 2002. http://www.forbes.com/global/2002/0722/ 036.html. Chessell, James, “Anglo Has Time on Its Side,” Sydney Morning Herald, March 19, 2004. http://www.smh.com.au/articles/ 2004/03/18/1079199365547.html?from=storyrhs. “Chief Executive’s Statement: A Powerful World of Resources,” Anglo American annual report, 2001, http:// www.angloamerican.co.uk/review2001/review/chiefexec.asp. “Company News: Anglo’s Top Man Goes to the Heart of Transformation,” Sunday Times Business Times, October 12, 2003, http://www.suntimes.co.za/2003/10/12/business/ companies/comp03.asp.

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Tony Trahar “The Quintessential Anglo Man,” Sunday Times Business Times, March 8, 2004, http://www.bullion.org.za/ DailyMiningNews/2004notd/March/080304.htm. Trahar, Tony, “Anglo’s Development Vision—Trahar,” Mineweb, August 29, 2002, http://www.mineweb.net/ events/conferences/2002/by_invitation/70642.htm. —Marie L. Thompson

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Marco Tronchetti Provera 1948– Chairman, Telecom Italia Nationality: Italian. Born: 1948, in Milan, Italy. Education: Bocconi University, BA, MBA. Family: Married Cecilia Pirelli, 1978 (divorced) children: three. Career: Pirelli, 1986–1988, managing partner; Société Internationale Pirelli, 1988–1992, CEO and general manager; 1991–1992, general manager of finance and administration; 1992–1996, CEO and executive vice chairman; 1995–1999, chairman; Telecom Italia, 2001–, chairman. Address: Corso d’Italia 41, 00198 Rome, Italy; http:// www.telecomitalia.it.

■ After more than a decade at the Italian Pirelli company, Marco Tronchetti Provera became chairman of Telecom Italia in 2001. He had an advantage over the competition at Pirelli: he had married the chairman’s daughter. Some observers assumed that he had obtained his position through family connections, but Tronchetti Provera proved to be an astute businessman who revitalized the declining Pirelli. In 2001 Pirelli was part of a group that took control of Telecom Italia, and Tronchetti Provera began to put his skills to the test once again in an attempt to restore a failing firm. He was part of a new wave of Italian executives who were more aggressive in their business dealings than their more laid-back predecessors.

EARLY CAREER Tronchetti Provera was born in 1948 in Milan, Italy. He came from a relatively wealthy family with an entrepreneurial background. Furthermore, his family had longstanding ties to the Pirelli family that had established the well-known tire and cable company of the same name. Tronchetti Provera graduated from Milan’s prestigious Bocconi University. Then, in 1978, he married Cecilia Pirelli, daughter of Leopoldo Pirelli,


Marco Tronchetti Provera. AP/Wide World Photos.

chairman of the Pirelli firm. He worked for a time in his family’s maritime transport business and established his own holding company.

GOES TO WORK FOR PIRELLI In 1986 Tronchetti Provera went to work for his father-inlaw at Pirelli. He initially held the position of managing partner. In 1988 he was appointed CEO and general manager of the Société Internatioanle Pirelli, a position he held until 1992. From 1991 to 1992 he was also CEO and general manager of finance and administration at Pirelli S.p.A. Then, in 1992, moving past a number of more experienced executives at the company, Tronchetti Provera was appointed executive vice chairman and CEO of Pirelli. He also served as chairman of Pirelli from 1995 to 1999.

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Marco Tronchetti Provera

When Tronchetti Provera took the reins as CEO at Pirelli, the company was close to bankruptcy. The firm had attempted numerous acquisitions during the 1980s, leaving it with a heavy debt. While Pirelli did acquire Armstrong Tire in 1988, it failed in expensive attempts to take over Firestone and Continental. Furthermore, a weak car market reduced the demand for tires. Tronchetti Provera implemented a number of key changes that restored the financial health of Pirelli. He began to dramatically cut costs by closing factories, eliminating jobs, and selling a division of the company. He also moved Pirelli’s headquarters to a more modest building. To improve the company’s image, he hired the actress Sharon Stone to lead the company’s new advertising campaign. Proving his doubters wrong, Tronchetti Provera continued at Pirelli even after divorcing his wife. Tronchetti Provera was aware that to compete in the global economy, companies such as Pirelli would have to change or perish. Acknowledging the growing economic power of Asian countries, he told Fortune that “the power of Japan cannot be fought by doing business in Europe as usual. We have to fight as if we were starting from scratch” (September 6, 1993). Tronchetti Provera took several steps to reposition Pirelli in the global economy. Realizing that he could not compete in the mass tire market with larger manufacturers, he focused Pirelli on high-performance tires, which had higher profit margins. Pirelli also developed “intelligent” tires, with sensors that monitored road conditions and tread wear. He promoted the use of robot-driven factories that cut costs and sped up production. Tronchetti Provera also took a risk by funding company researchers who asked for more money to develop a fiberoptic network. His investment paid off, and in 1994 Pirelli developed the technology that formed the backbone of the Internet. In 2000 Tronchetti Provera sold the fiber-optics division to Corning for $3.6 billion. His changes at the company restored the financial health of Pirelli, prompting many brokers to switch their recommendations on the company to “buy.” By 1996 Pirelli was once again profitable.

THE TELECOM ITALIA PURCHASE In 2001 Pirelli and the Benetton company bought Telecom Italia for $6.1 billion. Pirelli and Benetton shared many traits, making them good partners in the deal. Both companies and families largely shunned the political scene, while combining discretion in business with a sense of style. Tronchetti Provera told the Wall Street Journal that “it has been an easy relationship from the beginning. We understand each other. We go straight to the point and don’t waste time. And we’re both interested in creating value” (July 31, 2001). He went on to point out that both he and Pirelli brought expertise in industry, marketing, and information technology, all of which could be used to revitalize what had been an inefficient state-run monopoly. Telecom Italia would provide Tronchetti Provera with

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a chance to show his skills in turning around a declining company. Tronchetti Provera’s job was not easy at the start. Some shareholders were not happy with the takeover, because it did not pay a premium to minority investors. Also, one of Tronchetti Provera’s first moves was to ask for a capital increase, leading many shareholders to assume that the new management expected them to pay for the company’s debt. Furthermore, the terrorist attacks of September 11, 2001, in the United States negatively affected the industry, and share prices dropped. Tronchetti Provera said that the first several months after the takeover had been the most difficult of his career. By late 2001 Tronchetti Provera had begun to regain investor confidence with the presentation of a detailed new industrial strategy. He told the Wall Street Journal that “my goal is to regenerate confidence in the company and regenerate selfconfidence in the people who work for this company” (October 16, 2001). By the end of 2002 Telecom Italia had posted a $1.7 billion profit after losing nearly the same amount in 2001. His formula for turning around Telecom Italia including selling off assets, reducing debt, bringing in new managers, and succeeding in the mobile phone sector.

MANAGEMENT STYLE Tronchetti Provera was part of a changing of the guard in European business circles. In Italy, especially, executives had always been easygoing and collegial. Tronchetti Provera was part of a wave of young managers who were more aggressive in their business dealings, similar to the way executives in the United States operated. He was known to work long hours and have a competitive spirit. He also was at the forefront of technological changes. Outside the business world, Tronchetti Provera enjoyed music (attending performances at La Scala opera house) and sports and had a passion for sailing and soccer.

See also entry on Pirelli S.p.A. in International Directory of Company Histories.


Ball, Deborah, “A Tale of Blue Blood, Sweaters, and Tires: Stylish Telecom Deal Cut by Benetton and Pirelli Marks a Coming of Age,” Wall Street Journal, July 31, 2001. ———, “Telecom Italia’s Marco Tronchetti Provera Wins Some Points, Faces Big Challenges,” Wall Street Journal, October 16, 2001. Banks, Howard, “The (Almost) Perfect Son-in-Law,” Forbes, May 19, 1997, pp. 106–110. Edmondson, Gail, “The Cuts Worked, But . . . ,” BusinessWeek, December 2, 2002, p. 28.


Marco Tronchetti Provera “Getting a Grip,” Economist, April 21, 2001, p. 59. Hofheinz, Paul, “Europe’s Tough New Managers,” Fortune, September 6, 1993, pp. 111–114. Jewkes, Stephen, “The Rise of Tronchetti Provera,” Europe, September 2001, p. 45. Kapner, Fred, “Hanging On in Hope of Better Times,” Financial Times, July 19, 2002.


Keeler, Dan, “Italy: Keep It in the Family,” Global Finance, September 2001, p. 9. “Marco Tronchetti Provera: CEO-Pirelli-Italy,” BusinessWeek, June 19, 2000, p. 184.

—Ronald Young

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Donald Trump 1946– Chairman, president, and chief executive officer, Trump Organization Nationality: American. Born: June 14, 1946, in New York City, New York. Education: University of Pennsylvania, BA, 1968. Family: Son of Frederick C. Trump (real estate developer and builder, self-made millionaire) and Mary (MacLeod) Trump (homemaker who raised five children); married Ivana Zelnickova Winkimayr (a New York fashion model), 1977 (divorced 1991); children: three; married Marla Maples (an actress), 1993 (divorced June 1999); children: one. Career: Trump Organization, president, chairman, and CEO, 1975–. Awards: Entrepreneur of the Year, Wharton Entrepreneurial Club, 1984; Ellis Island Medal of Honor, 1986; Developer of the Year, Construction Management Association of America, 1999; Hotel and Real Visionary of the Century, UTA Federation, 2000. Publications: Trump: The Art of the Deal (with Tony Schwartz), 1987; Trump: Surviving at the Top (with Charles Leerhsen), 1990; Trump: The Art of the Comeback (with Kate Bohner), 1997; The America We Deserve (with Dave Shiflett), 2000. Address: Trump Organization, 725 Fifth Avenue, New York, New York 10022-2519; http://www.trump.com.

■ By the early 2000s the American real estate development and construction businessman Donald John Trump had designed a billion-dollar empire with his name branded on luxury properties to identify them as international symbols of wealth and privilege. Trump even summoned a court to protect his surname from being used by anyone else in connection with real estate. He built his empire in a big way, making his name synonymous with the hustle, money, and glamour of New York City and other U.S. locations.

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Donald Trump. AP/Wide World Photos.

LEARNED FROM HIS FATHER Trump learned his deal-making and entrepreneurial skills from his father, Frederick, who was forced at eleven years of age—upon his father’s death—to run the family business. acquired the ability to recognize good deals when he constructed and operated 24,000 affordable housing units in Brooklyn, Queens, and Staten Island. As a child, Trump assisted his father with the rental property business; at age five he was taken along to inspect building sites, and at thirteen he drove a bulldozer. Even at this early stage, Trump was described as self-assured, determined, and positive. He was strongly influenced by his father in his decision to make a career in real estate, but he envisioned buying and selling rather than collecting rents. He learned showmanship and how to advertise himself from his mother, Mary, who liked to be in the center of the spotlight.


Donald Trump

GROWING UP TRUMP Trump spent his high school years at the New York Military Academy, where his energetic aggression and competitiveness were encouraged. He performed well academically and socially, but he never formed close relationships because his drive to win repelled friendships. After graduating in 1964, Trump entered Fordham University, where he learned a valuable lesson. With his father he attended the opening ceremonies for the Verrazano-Narrows Bridge, which connects Brooklyn and Staten Island, and noticed that the bridge’s designer was not being honored. In Gwenda Blair’s biography, Trump is quoted as saying: “I realized then and there, that if you let people treat you how they want, you’ll be made a fool. I realized then and there something I would never forget: I don’t want to be made anybody’s sucker.” Trump left Fordham to study at the University of Pennsylvania’s Wharton School of Finance because it possessed one of the country’s few real estate departments. He studied accounting, finance, money and banking, and mortgages while working with his father during the summers. He learned construction details and paid close attention to detail, even noticing that his father kept busy with paperwork while on coffee breaks. The Trump family soon realized that Fred and Donald were happiest when they were talking real estate. Upon graduation (with a degree in economics) in 1968, Trump joined his father’s company, with a clear view of what he wanted to do: develop real estate in the biggest way possible. He persuaded his father to expand the company’s holdings by taking loans against their equity, which then stood at $200 million. Trump became president in 1975 and changed the company’s name to Trump Organization. The climate in Queens was competitive, and profit margins were narrow, so Trump decided that he could make more money in elegant Manhattan.

INFLUENTIAL MANHATTAN Without much money, Trump was still able in 1971 to use his negotiating skills to join an exclusive social club. He was introduced to many influential people and leaped at the opportunities given to him. Trump convinced himself that his wealthy Manhattan clientele would provide him with both money and power.Trump entered the stagnant Manhattan real estate market in 1974 after becoming interested in large, attractively designed buildings. When the Pennsylvania Central railroad entered bankruptcy, Trump quickly learned to outmaneuver the opposition, obtaining the option on Grand Central Terminal, abutting the unprofitable Commodore Hotel. The 1975 deal included the dilapidated 119-acre railroad yards located on the west side of Manhattan along the Hudson River from West 30th Street to West 39 Street and West 59th Street to West 72nd Street. Although his initial plans to build apart-


ments proved to be economically unfeasible, Trump promoted the location for a convention center. Trump was responsible for the designation and construction of the complex, subsequently named for Senator Jacob Javits. During his early wheeler-dealer days, Trump learned well how to combine his father’s political connections, his advisers’ wisdom, and his growing knowledge of real estate development. Trump made up his mind, delved totally into a project, acted like a salesman, and never doubted himself. In addition, it was common for Trump to work out no formal business plan or development strategy for new projects, storing ideas and preliminary calculations in his head. He also viciously controlled his employees, so that those who stayed the longest learned not to argue with him.

SEEING OPPORTUNITIES EVERYWHERE One of Trump’s strengths was recognizing opportunity where others saw nothing. Trump looked past the bleak Commodore Hotel and realized that many wealthy people passed by it every day. To everybody except Trump, the redevelopment seemed impossible. Nevertheless, he purchased the hotel from Penn Central for $10 million and began negotiating his first big deal. Regarding the excellent location next to Grand Central Station, Trump and Hyatt Hotel brokered a deal with the city, which included critically needed and brilliantly secured 40-year tax abatements. Trump arranged financing and completely renovated the exterior of the Grand Central Terminal and the entire hotel. The Commodore, renamed the Grand Hyatt Hotel, opened in 1980, by which time Trump was regarded as the city’s bestknown developer. But Trump was far from satisfied. He wanted to create unique buildings that people would talk about and admire, and he wanted to place his name on these buildings. In 1979 Trump leased a site on Fifth Avenue adjacent to Tiffany’s on which to build a $200 million apartment-retail complex. In 1982 Trump’s world-renowned 58-story skyscraper, Trump Tower, was finished. When the building attracted well-known retail stores and celebrity renters, Trump received national acclaim. After legalized gambling arrived to New Jersey in 1977, Trump investigated the lucrative casino business. He began buying up properties in Atlantic City in 1980, a complex project that involved acquiring land, winning gambling licenses, and obtaining permits and financing. Trump attended regulatory hearings and hired local attorneys to ensure the success of his ventures. Holiday Inn, the parent of Harrah’s casino hotels, agreed to be a partner in the $250 million developmental complex, which opened in 1982 as Harrah’s at Trump Plaza. In 1986 Trump bought out Holiday Inn and renamed it Trump Plaza Hotel and Casino. When Hilton Hotels failed to obtain a gambling license, Trump purchased the Hilton

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Donald Trump

Hotels casino-hotel and renamed the $320 million complex Trump’s Castle. Trump acquired the Taj Mahal, which at the time of its opening in 1990 was the world’s largest hotelcasino. Concurrently, Trump bought a 37-story apartment building and the adjacent Barbizon-Plaza Hotel, which overlooked Central Park. Unable to tear down the building due to tenant opposition, Trump changed direction and renovated the Barbizon into luxury residential buildings, renaming it Trump Parc. In 1988 Trump acquired the 37-story Plaza Hotel, at 59th Street and Fifth Avenue, for $407 million and spent $50 million refurbishing it. The Plaza’s grandeur gave Trump added prestige.

GOING AGAINST THE BUSINESS NORM Competition was fierce during these developments. Even though Trump had studied business in college, he often went against basic economic principles when pursuing deals. One principle, for instance, is to lower prices with extreme competition. However, when competitors lowered prices to outmaneuver him, Trump saw through his clientele’s psychology and instead raised prices, believing that the wealthy would pay for luxury.

CHALLENGED WITH BANKRUPTCY At his peak in the late 1980s Trump’s estimated $1 billion empire was one of the world’s most powerful real estate organizations, and Trump was well known worldwide as a rich entrepreneur who found, bought, and turned around losing properties. He was known in Manhattan as one of the world’s most controversial builders, often called “the P. T. Barnum of Finance.” In 1990 Trump drew up plans in Los Angeles for building a $1 billion commercial and residential project featuring a 125-story office building. Despite his experiences at making deals and recognizing good investments, however, Trump could not counter a downward real estate market. Trump faced bankruptcy when he was unable to make massive loan payments of over $2 billion. He had regularly convinced financial institutions that his name raised the worth of his assets, so they could ignore their usual lending and collateral guidelines. At that point, however, the market was contracting, and banks were not eager to agree to his demands and invest in what was then considered risky. Trump lost control of some of his real estate to creditor banks and was forced to trade part of his empire to restructure debts. Although he secured emergency financing, his worth was reduced from an estimated $1.7 billion to $500 million. Perhaps worse, Trump’s expertise was questioned. Trump found this uncertain period a challenge. Although disaster loomed, the skillful wheeler-dealer had his talents, experiences,

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personality, and name, and they were still valued. Trump remained optimistic as he secured favorable loan terms, renegotiated bond obligations, and sold his most unprofitable holdings.

MANAGEMENT STYLE THAT WORKED A COMEBACK Even though his empire was crumbling, Trump managed to bounce back with the help of revised bankruptcy laws that favored debtors. Maintaining his usual business decorum while talking with bankers and lawyers, he acted like a professional man who was still at the top of his game. Since creditors had no interest in losing their investments, they worked with Trump to broker deals. He was forced to appoint a chief financial officer, live on a budget, and standardize operations. In return, Trump was offered a bailout that lowered or suspended his debt interest and, in essence, allowed him to retain most of his valuable assets, namely, his casinos, the rail yards, his residences, and partial interest in the Plaza Hotel. By the early 1990s Trump was reportedly worth $900 million, and by 1997 his worth was estimated to be almost $2 billion. In fact, Trump was making a comeback when he acquired the Trump Building at 40 Wall Street, a 72-story building located across from the New York Stock Exchange. Real estate experts said the purchase, which took place at the nadir of the 2000s financial downturn, was one of the best deals made in the previous 25 years. In 1998 Trump built a 52-story luxury hotel and residential building on Manhattan’s Central Park West. The Trump International Hotel and Tower received some of the highest sale and rental prices in the United States. The former West Side Railroad Yards, which Trump had secured in the early 1970s, became a $5 billion project known as Trump Place. The site comprised 5,700 residential units, more than five million square feet of commercial space, and 18 buildings. Trump Place was the largest development ever approved by the New York City Planning Commission. Trump also successfully converted into luxury condominium apartments the property at 610 Park Avenue (at 64th Street) formerly known as the Mayfair Regent Hotel. In addition, he completed construction on the Trump World Tower, adjacent to the United Nations, a 90-story luxury residential building. It was described as the most successful condominium tower ever built in the United States and reaped critical acclaim in architectural reviews. Trump entered into a joint venture with the Chicago Sun Times to build a three-million-square-foot skyscraper directly west of Michigan Avenue, which was anticipated to be one of the biggest buildings in Chicago. In 2002 Trump purchased the Delmonico Hotel at 59th Street and Park Avenue in New York City. Developed in partnership with General Electric, the building was destined to be a luxury high-rise condominium,


Donald Trump

called Trump Park Avenue. Trump planned to make it the most luxurious building ever built in New York City. In 2002 Trump also entered into partnerships to build the $600 million Trump Grande Ocean Resort and Residences in Miami Beach, Florida, and a luxury condominium tower on the Las Vegas strip.

See also entry on Trump Organization in International Directory of Company Histories.


Barrett, Wayne, Trump: The Deals and the Downfall, New York: HarperCollins Publishers, 1992.

“THE DONALD” Trump, or “the Donald,” as he was nicknamed, finely crafted his persona over the years with an intense drive to place “Trump” on everything he bought. He issued a stream of news bulletins about his every move, putting himself constantly in the public eye. He was a hands-on businessman who liked to know every detail of his ventures. Considered driven, arrogant, and intelligent, Trump understood the psychology of real estate speculation. He made himself famous with his flamboyant skills at selling himself to the media and personified the American business success story. He thrived on conflict and the ultimate challenge, doing his best when problems seemed insurmountable to others.


Blair, Gwenda, The Trumps: Three Generations That Built an Empire, New York: Simon & Schuster, 2000. Hurt, Harry, Lost Tycoon: The Many Lives of Donald J. Trump, New York: Norton, 1993. O’Donnell, John R. (with James Rutherford), Trumped!: The Inside Story of the Real Donald Trump—His Cunning Rise and Spectacular Fall, New York: Simon & Schuster, 1991. Tuccille, Jerome, Trump: The Saga of America’s Most Powerful Real Estate Baron, New York: Donald I. Fine, 1987.


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Shiro Tsuda 1946– Former founding employee and senior executive vice president and director, NTT DoCoMo Nationality: Japanese. Born: 1946. Education: Keio University, master’s degree in engineering, 1970. Career: Nippon Telegraph and Telephone (NTT) Public Corporation, 1970–1992, engineer; NTT DoCoMo, 1992–2004, company director; 1996–1998, senior vice president; 1998–2001, executive vice president; 2001–2004, senior executive vice president; 2002–2004, managing director of the Global Business Division.

■ Considered a pioneer and a visionary in the mobile phone industry, Shiro Tsuda began his career in 1970 as an engineer for Nippon Telegraph and Telephone (NTT) Public Corporation. When the company spun off a mobile phone division 20 years later, Tsuda was a founding employee. In 1992 he was a driving force in developing NTT DoCoMo, which handles NTT’s mobile communications operations and sales. DoCoMo came to be considered an independent company, with NTT retaining ownership of 63 percent. DoCoMo quickly dominated the cell phone market in Japan. One of its early successful ventures was developing imode, the first e-mail and Internet service for mobile phones.

RISES THROUGH THE RANKS In his rise through the DoCoMo executive ranks, Tsuda made significant contributions to the company’s growth and development, especially in strategic planning. Throughout his tenure, he proved consistently that he was a problem solver, able to battle through difficulties to achieve his final goal. Tsuda was also a risk-taker and could handle the heat of criticism and propel his company into world leadership. European

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telecommunications companies had to play catch-up to DoCoMo, thanks to Tsuda’s vision. Market analysts generally looked on Tsuda favorably, saying that he achieved a good balance between technology and marketing.

INTRODUCES NEW TECHNOLOGY One of Tsuda’s most important accomplishments was his leadership in 2001, when DoCoMo launched a new technology that was the first of its kind in the world. FOMA 3G was DoCoMo’s third-generation wireless Internet service. Globally, other telecommunications giants had held back on developing the new technology because of economic worries, but under Tsuda’s direction, DoCoMo took the lead—and the risk—of bringing a new product into an already saturated market. Because FOMA 3G service was based on wideband code division multiple access (W-CDMA) technology, it was necessary for Tsuda first to lead an effort to establish W-CDMA as an IMT-2000 global standard. IMT-2000 is a set of globally harmonized standards (defined by the International Telecommunications Union) for third-generation (3G) mobile telecommunications services and equipment. Once that was accomplished, the 3G mobile network was set to launch early in 2001. Last-minute technical glitches and debugging problems plagued DoCoMo, and the launch was delayed, but Tsuda announced in July 2001 that the biggest problems had been solved. The new network was finally launched in October 2001. It offered wireless phone users video conferencing, high-speed data transmission, music and video download, easy access to the World Wide Web, and even TV-style advertising. The service met with initial criticism because of faulty handsets, short battery life, and incomplete network coverage, and Tsuda was battered by complaints and speculation as the world’s market leaders watched DoCoMo’s risky rollout. Under Tsuda’s leadership, most of those problems had been solved by 2003, and subscriptions rose. Satisfied with the results at the time, Tsuda said that DoCoMo’s forecasts were good and that DoCoMo would do its best to meet the stated targets. Tsuda said that by 2004 he expected DoCoMo to have in place an advanced service that would allow transmission speeds


Shiro Tsuda

of up to 14 megabits per second. He expected six million users for 3G service by 2005. When Tsuda became managing director of DoCoMo in 2002, his eager comment to Time magazine was, “I like—no, I love—this company.” His goals for his directorship were to provide new services to Japanese customers, and to expand the company’s overseas efforts. To that end, he was looking closely in 2004 at AT&T Wireless, at that time ranked third in the U.S. market. DoCoMo had acquired 16 percent of AT&T shares. Tsuda expressed interest in maintaining the relationship and keeping a close watch on AT&T’s performance.

Market analysts speculated that the rejection was part of a power struggle between DoCoMo and its parent company, which still held a majority share of 63 percent. On May 14, 2004, DoCoMo announced its new slate of officers, topped by Masao Nakamura as president and CEO, and Tsuda resigned.

See also entry on Nippon Telegraph and Telephone Corporation in International Directory of Company Histories.


LOSES BID AS COMPANY PRESIDENT In April 2004 Tsuda’s visionary work at DoCoMo appeared to be about to pay off, as he was tapped to replace the current DoCoMo president, Keiji Tachikawa. Japanese market analysts were impressed with Tsuda’s vision and were satisfied with what many saw as an obvious and expected choice. Shinji Moriyuki, a senior telecom analyst at Daiwa Research Institute in Tokyo, made his support public by commenting to Time magazine in 2003 that “Tsuda has a good sense of balance between technology and marketing, and he has the confidence of his co-workers.” But later that month, NTT, DoCoMo’s parent company, rejected DoCoMo’s first choice, saying officially that the decision was because of Tsuda’s background as an engineer rather than as an administrator.


Alderman, John, “DoCoMo’s First Choice for Next Leader Nixed by NTT,” Feature, April 22, 2004. “Another DoCoMo First: Running into Trouble with 3G,” Wired, September 2001. “DoCoMo Plots Switch at the Top,” Japan Times, April 9, 2004. Frederick, Jim, and Toko Sekiguchi, “He Made Japan CellPhone Crazy,” Time, December 1, 2003. “Japan Rolls Out 3G Phones,” Economist Global Agenda, September 3, 2001. Williams, Martyn, “NTT DoCoMo Again Raises 3G Target,” IDG News Service, February 4, 2004. —Cathy Seckman

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Kazuo Tsukuda 1943– President, Mitsubishi Heavy Industries Nationality: Japanese. Born: September 1, 1943. Education: University of Tokyo, BS, 1966; University of Tokyo, MS, 1968.

Mitsubishi Heavy Industries was one of the largest and most powerful parts of one of Japan’s largest and grandest keiretsu, Mitsubishi Corporation, which was composed of hundreds of smaller companies. A keiretsu is a group of Japanese companies that are united not only by their parent company but also by owning shares of each other. Members of a keiretsu were expected to do as much of their business as possible with each other, while excluding outsiders; more than most keiretsu, Mitsubishi Corporation was extremely devoted to keeping business within the member companies, which contributed to it financial difficulties in the 1990s and 2000s.

Family: Married Yoshiko (maiden name unknown). Career: Mitsubishi Heavy Industries, 1968–1979, engineer; 1979–1981, liaison to Westinghouse; 1982–1995, steam-turbine engineer; 1995–1999, deputy general manager, Takasago Machinery Works; 1999–2000, general manager, Nagoya Machinery Works; 2000–2002, general manager, industrialmachinery division; 2002–2003, managing director and general manager, Global Strategic Planning and Operations Headquarters; 2003–, president. Address: Mitsubishi Heavy Industries, 16-5 Konan 2chome, Minato-ku, Tokyo, Japan 108-8215; http:// www.mhi.co.jp.

■ Kazuo Tsukuda became president of Mitsubishi Heavy Industries at a time when Japan’s economy was struggling. He believed that his company’s best chance for growth was to look overseas for new markets. His earlier work at Mitsubishi Heavy Industries had contributed to its recovery from a downslide in 1999, helping to make the company a pillar of strength upon which much of the larger Mitsubishi Corporation relied. A friendly, relaxed man, he had an incisive mind and a willingness to make tough decisions that belied his modesty.

JOINING A POWERHOUSE As a child, Tsukuda was curious about how the world worked. He listened to the radio, but rather than focus on the program, he would wonder how the sounds could travel all the way to his little radio. As he grew up, his curiosity took a scientific direction, and he became an engineer. One month after graduating from the School of Engineering of the University of Tokyo in March 1968 with an advanced degree in engineering, Tsukuda joined Mitsubishi Heavy Industries.

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Mitsubishi Heavy Industries was one of the largest and most powerful members of the Mitsubishi keiretsu. It had been founded in 1884 by Yataro Iwasaki, who leased the Nagasaki shipyard from the Japanese government; he called his new venture the Nagasaki Shipyard and Machinery Works. He created a shipbuilding business that in 1934 was renamed Mitsubishi Heavy Industries. It was Japan’s biggest company, making heavy machinery for transportation, especially ships, as well as for manufacturing. During the previous 50 years, Iwasaki and his successors drew together many other manufacturing companies, that were united because all were owned by family members. An organization of companies held by a single family was called a zaibatsu; a keiretsu was not necessarily bound by family but was held together by member companies owning shares in one another. During World War II, Mitsubishi Heavy Industries built warplanes, including the infamous Zero, warships, and other weapons for the Japanese military. Some in Japan, as well as the Allies, viewed the Mitsubishi zaibatsu as having promoted the war in order to expand its sales. After Japan’s defeat, the zaibatsu was broken up. On January 11, 1950, a recently passed Japanese law that was intended to prevent companies from achieving such immense economic power led to the breakup of Mitsubishi Heavy Industries into three parts, the Central, West, and East Japan Heavy Industries. The company was rebuilt, however, through the mutual shareholdings of the companies, reappearing in 1964 as Mitsubishi Heavy Industries, Limited. By the time Tsukuda joined it, Mitsubishi Heavy Industries was a powerhouse; it was one of the elite companies for engineers to work for, and any college graduates who were fortunate enough to join it were supposedly secure for life.


Kazuo Tsukuda

Mitsubishi Heavy Industries became a builder of huge machines and huge projects; it built nuclear-power plants, aerospace rockets, high-end aircraft, industrial machines, steel plants, and chemical plants. Tsukuda worked mostly on power plants, becoming a specialist in the design and manufacture of the turbines that generate electricity. He also became an expert in making efficient designs, creating ever-more elegant generators that became smaller while generating more energy and less pollution. In 1979 Tsukuda was sent to the United States, where he spent three years as one of Mitsubishi Heavy Machinery’s representatives at Westinghouse as part of a manufacturing partnership. He worked on steam turbines. The period in the United States changed much of his outlook on business. He later recalled that he went to America while Japan was a rising economic power, with people regarding Japanese businesses as examples of how businesses should be run efficiently, but he discovered something different: the great depth of research and development at Westinghouse, which created a deep background of technical know-how that Mitsubishi Heavy Industries did not have. He regarded his experiences at Westinghouse as a revelation, and when he returned to Japan, he became an advocate for in-depth basic research such as he had observed in the United States. His outspoken advocacy probably made life occasionally difficult for him, because for many years thereafter the leaders of Mitsubishi Heavy Industries expressed hostility at conducting business like Americans, regarding the idea of doing so as un-Japanese.

MOVING UP In 1998 a reporter asked the chairman of the board of Mitsubishi Heavy Industries, Kentaro Aikawa, whether Americanstyle management might help Mitsubishi Corporation recover from a decline in its fortunes, and Aikawa replied, “We are not concerned with return on equity . . . if foreign investors don’t see merit in our stock, they can sell it” (Forbes.com, April 20, 1998). Given that attitude, it is remarkable that Tsukuda advanced at all, because he was advocating that his company not just satisfy present customer needs, but that it get a jump on the future by anticipating what customers would want in years to come. In December 1995 Tsukuda became deputy general manager of Takasago Machinery Works. At that time, promotions were usually determined mostly by seniority rather than achievements or ability, which gave Tsukuda an edge as a 27year employee who had patiently waited his turn. In 1998 Mitsubishi Heavy Industries owned 24 percent of Mitsubishi Motors, a matter that changed the fortunes of many in the Mitsubishi keiretsu. Mitsubishi Motors was in trouble as revelations of misconduct and cover-ups of defects in its automobiles sent sales plummeting and threatened to take Mitsubishi Heavy Industries with it into bankruptcy.


Mitsubishi Heavy Industries grossed $26.943 billion while losing $1.284 billion. It had $43.805 billion in assets and a market value of $11.702 billion. That meant it was large, but not large enough to continue to endure yearly losses roughly equal to 11 percent of its market value. Tsukuda found himself moving up the corporate ranks with extraordinary speed. In April 1999 he became general manager of Nagoya Machinery Works, and the following June he also a member of the board of directors. In April 2000 he became general manager and a member of the board of directors for the industrial-machinery division of Mitsubishi Heavy Industries. Two months before that promotion, Princess Cruises ordered two cruise ships from Mitsubishi Heavy Industries; they would be the first large passenger ships built in Japan in a decade. With the industrial-machinery division in Meiki, Tsukuda ran a factory the size of a city and supervised 1,300 employees. It was in some ways an example of what Tsukuda had spent most of his career developing—ever-smaller equipment doing ever-bigger jobs. The factory manufactured engines that themselves were increasingly small and efficient; in August 2001 it introduced an engine that was 40 percent lighter and 35 percent smaller than its forerunner, producing the same power with less pollution. Tsukuda wore the same blue uniform as all of his employees, but he stood out as a visionary. He saw the smaller, more efficient engines as part of his company’s contribution to saving the global environment by reducing waste and pollution. In April 2002 Tsukuda took a big step up into Mitsubishi Heavy Industries’ leadership when he was appointed a managing director and the general manager for the Global Strategic Planning & Operations Headquarters. He stayed on as general manager for the industrial-machinery division until October. That month there was a fire at the Nagasaki shipyards, in which the first of the two cruise ships under construction was damaged. Also during that period, F-4 aircraft were sabotaged at the company’s Nagoya Aerospace Systems Works. After negotiations with Princess Cruises, Mitsubishi Heavy Industries arranged to have the second of the planned ships delivered first. In response to the F-4 sabotage, security was increased; security would be a special concern for Tsukuda when he became president.

PRESIDENT On March 31, 2003, Tsukuda became president of Mitsubishi Heavy Industries, replacing Takashi Nishioka, who became chairman of the board; the company did not have a chief executive officer. It was the end of the fiscal year, and Mitsubishi Heavy Industries had grossed $21.643 billion and netted $286.5 million, an increase of 43.7 percen over the previous yeart. It had 61,292 employees and 14 divisions. About 90 percent of Mitsubishi Heavy Industries’ sales were in Japan,

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with 19 percent of sales in aerospace manufacturing, 25 percent in building nuclear-power plants, 40 percent in construction and heavy machinery, and the rest in marine industries such as freighters, offshore platforms, and cruise ships. Tsukuda’s international outlook quickly showed itself: On June 18, 2003, Mitsubishi Heavy Industries won a bid to build a $1.54 billion power plant in Taoyuan, Taiwan. By the end of the year Tsukuda expressed confidence that Japan’s economy, which had been flat for several years, would improve along with the U.S. economy. On February 26, 2004, the Diamond Princess cruise ship was launched in Nagasaki. Tsukuda’s wife, Yoshiko Tsukuda, christened the ship, and she was named its godmother in a Shinto ceremony. The 116,000-ton ship was a symbol of pride for Mitsubishi Heavy Industries, as was its sister ship the 116,000-ton, 18-story-high Sapphire Princess, which was launched on May 27, 2004. On April 23, 2004, Kazuo Tsukuda announced that Mitsubishi Heavy Industries would build a new factory, probably in Nagoya, to manufacture wings for Boeing’s B7E7 passenger aircraft beginning in 2008. He said that the factory would be a start toward the objective of having Mitsubishi Heavy Industries build its own small civilian aircraft. On June 17, 2004, Mitsubishi Heavy Industry formed a partnership with Hitachi by merging parts of their airconditioning-manufacturing units. With over nine thousand

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employees, the merged firm created Japan’s second-largest manufacturer of air conditioners, which Tsukuda hoped would be able to prepare for an expected boom in China’s demand for air-conditioning. In an example of Tsukuda’s anticipating the needs of the marketplace with new technology, in 2004 the company introduced a robot designed to help elderly and handicapped customers. It could speak and understand 10,000 words, and its camera eyes could be accessed by telephone; if the person it cared for was unresponsive, it summoned help.

See also entry on Mitsubishi Heavy Industries, Ltd. in International Directory of Company Histories.


“Always One Step Ahead of the Market,” Forbes.com, http:// www.forbes.com/specialsections/japan/17_tsukuda.html. “An Interview with President Kazuo Tsukuda,” Mitsubishi Heavy Industries, http://www.mhi.co.jp/efin/a2003/ interview.htm. Weinberg, Neil, “Setting Sun,” Forbes.com, April 20, 1998, http://www.forbes.com/global/1998/0420/0201038a.html. —Kirk H. Beetz


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Joseph M. Tucci 1947– Chief executive officer and president, EMC Corporation Nationality: American. Born: 1947, in Brooklyn, New York. Education: Manhattan College, BA, 1968; Columbia University, MBA, 1984. Family: Married Maureen (maiden name unknown). Career: RCA Corporation, 1970–1986, systems programmer, followed by several other positions; Unisys Corporation, 1986–1990, president of U.S. Information Systems; Wang Global, 1990–1993, executive vice president of operations; 1993–1999, chairman and CEO; Getronics, 1999, deputy CEO; EMC Corporation, 2000, president; 2000–2001, president and COO; 2001–, CEO and president. Address: EMC Corporation, 176 South Street, Hopkinton, Massachusetts 01748; http://www.emc.com.

■ Joseph M. Tucci became president of EMC Corporation in January 2000 and a year later was also named chief executive officer. EMC was a leading provider of products, services, and solutions for information storage and management, most importantly including RAID (redundant array of independent disks) storage systems as well as a comprehensive number of NAS (network attached storage) file servers and a full line of software designed to manage, share, and protect data. EMC sold its products both directly and through distributors and manufacturers such as its largest partner, the personalcomputer company Dell, which sold cobranded EMC systems. When Tucci joined EMC, after a decade of strong financial gains the company was no longer the uncontested market leader in information storage. Three factors—the economic downturn that began in 2000, the tragic terrorist attacks of September 11, 2001, and increased competition from IBM, Hitachi Data Systems, and others—proceeded to reverse the onceprosperous direction of EMC. Fortunately, Tucci was experienced at turning companies hit by financial hardships around; during his period of leadership at EMC, he proved that he could indeed weather any economic storm.


Joseph M. Tucci. AP/Wide World Photos.

BEGINNING HIS CAREER Tucci earned a bachelor’s degree in marketing from Manhattan College, of Riverdale, New York, in 1968 and a master’s in business administration from Columbia University in 1984. Tucci began his professional career in 1970 as a systems programmer at RCA Corporation. Later Tucci became president of U.S. Information Systems at Unisys Corporation, after the company was formed by a merger between Burroughs and Sperry in 1986.

TURNING WANG AROUND In 1991 Tucci joined Wang Global, an informationtechnology services company, as an executive vice president of operations in charge of all marketing, sales, service, and support. He became chairman of the board and chief executive of-

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ficer in December 1993 and remained at those positions until June 1999. Tucci directed the operational and financial reorganization of Wang Global over the six-year period beginning in 1993, during which the company went through Chapter 11 bankruptcy. Tucci called Wang a “business execution failure,” as the company had entered too many segments of the officecomputer market and failed to notice the industry shift from mainframe computers to local area networks connecting arrays of personal computers. Tucci began Wang’s turnaround by identifying the company’s past strengths: a large and loyal customer base, a global identity, a comprehensive range of services, superior service delivery, strategic alliances with industry leaders, and retention of key technical employees. He guided Wang through a costly but successful emergence from bankruptcy protection and, eventually, transformed the company from a manufacturer of midrange computers into a service provider of network- and desktop-technology services and solutions. Between 1995 and 1999, Tucci spearheaded acquisitions of 10 companies in order to complement Wang’s existing service-provider capabilities, moves that increased the number of Wang employees to 20,000 and raised its annual revenues from under $1 billion in 1994 to $3.5 billion in 1999. At the end of this period, Tucci arranged a $2 billion acquisition of Wang by the Netherlands-based information-technology services company Getronics, where Tucci served as deputy CEO from June to December 1999. Tucci gained valuable leadership and management experience while directing the reorganization of Wang; the lessons he learned there proved useful when he was faced with similar problems at EMC.

NEW ARRIVAL In January 2000 at EMC, the then CEO Mike Ruettgers hired Tucci as his CEO-in-training (in the newly created position of president and COO) after a four-month recruitment effort, saying Tucci was the only person he considered qualified for the job. When Tucci assumed the leadership role a year later, he was handed a company with a terrific financial record. Ruettgers had successfully spurred the company’s growth for a decade, at an average annual revenue increase of 37 percent. Between 1997 and 1999 the data-storage powerhouse doubled its revenues to $8.87 billion; by 2000 EMC was the clear market leader in information storage. When Ruettgers stepped down in January 2001, the bull stock market that had helped support the company’s 10 years’ worth of fabulous returns disappeared. However, Tucci was not disheartened when EMC failed to meet its first-quarter earnings projections in April 2001—for the first time in five years—due to the collapse of the technology industry. He wisely adhered to the same formula he had successfully employed at Wang, strenuously slashing expenses and comprehensively renovating the existing business model.

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CHALLENGES CONFRONTED Faced with a different economic world, one of Tucci’s biggest challenges would be to change the company’s culture of isolation to one of effective cooperation with both customers and rivals. Prior to Tucci’s joining the company, employees at EMC had developed an exaggerated superior attitude with respect to the company’s products, complete with a “take it or leave it” approach with regards to product sales. Tucci ushered in a more customer-friendly attitude when he relinquished the company’s exclusive use of direct, competitive sales in order to adopt the additional strategy of selling products indirectly through partners, which lowered expenses. Tucci also initiated sales of storage software to customers who used rival hardware, rather than only to its own hardware customers.

EXTENDING PRODUCTS AND SERVICES Another of Tucci’s rescue tactics was to forcibly drive the company to extend its market and technology leadership, beyond high-end information-storage systems and software and into comprehensive information-management solutions. Tucci also directed the company to reduce staff, refocus business units, tighten expenses, and reduce inventories in order to ensure its future profitability. Keeping in mind a long-term commitment to cutting expenses while continuing to invest in new technology, Tucci instituted the most enterprising schedule of new-product introductions in EMC’s history, remodeling the company’s existing product line in the process. Successful innovations included the CLARiiON CX series, which positioned EMC as the price and performance leader in midlevel storage; the visionary highend storage architecture of the Symmetrix Direct Matrix; the Centera Content Addressed Storage, which established a new category of storage for the fixed-content market; and the expansion of the Celerra series of network-attached storage. Tucci also ushered EMC into the field of open-storage management software, overseeing the introduction of an expanded line of multiplatform software that was eventually recognized by analysts as as being the best in the industry. In 2003 Tucci led EMC’s acquisition of three leading independent software providers: Documentum, specializing in enterprise content management; LEGATO Systems, specializing in backup, recovery, and other storage; and VMware, specializing in server virtualization.

END RESULTS In the latter part of 2001 Tucci was able to begin lowering EMC’s cost structure, increasing cash and investments, and strengthening management through the hiring of executives from other major technology companies. Tucci expanded


Joseph M. Tucci

EMC’s Global Alliances and Professional Services programs and acquired six additional software companies. He committed about three-fourths of EMC’s 2001 research and development budget to strengthening the company’s informationstorage software and focused the company on delivering information-storage solutions, which reduced the total expense of operations and created additional value for EMC’s stockholders. After the two terrible years of 2001 and 2002 had resulted in more than $620 million in total losses, thousands of employee layoffs, market-share reductions, and a lessening of pricing power, EMC regained its footing in 2003. Tucci spent more than $3.6 billion to strengthen its product line, acquire five software companies, and further shift its revenue ratio toward higher-margin software rather than hardware. Lisa DiCarlo of Forbes.com reported that the Merrill Lynch analyst Steven Milunovich stated in a research report, “EMS appears well positioned in that storage remains a high spending priority, and execution has been excellent” (January 22, 2004). In an article by Sean Kelly for Communication News, Tucci was quoted, in reflecting on the troubling times at Wang and EMC, as saying, “Leading through those times can be extra challenging, but also extra rewarding. If you have strong leadership, people look up” (January 2002). As of 2004, thanks to Tucci’s leadership, EMC continued to be the world leader in information storage, retrieval, and management, helping organizations such as retailers, banks, Internet service providers, manufacturers, and government agencies incur low costs and receive premium value from EMC’s comprehensive spectrum of information services. Revenues from 2003 totaled $6.24 billion.

TYPE A AGGRESSIVE Tucci described himself as type A aggressive and was significantly more outspoken than his predecessor at EMC. While in training for the CEO position, he told analysts that EMC would be the leader in the network-attached storage market by the end of 2001 (it was ranked second at the time). The news


media widely reported the bold, attention-grabbing prediction. In recalling that incident, Tucci gave credit to his employees for believing in his goal and making it become a reality. By the end of the first quarter of 2001, EMC had posted revenues of $285 million, which was tops in the networkattached storage market; the former leader had dropped to second with revenues of $226 million.

OTHER DUTIES Tucci was also a director of Paychex, a provider of payroll, benefits, and human-resources solutions. He was chairman of EMC’s Stock Repurchase and Bond Redemption Oversight Committee and a member of the Mergers and Acquisitions Committee. He was one of 150 CEO members of The Business Roundtable and chaired its Task Force on Education and the Workforce. He was one of eight chief executives who directed the Computer Systems Policy Project, the leading technology-advocacy organization within the industry. Tucci was also a member of the Board of Advisors of the Carroll School of Management at Boston College and the School of Economics and Management at Tsinghua University in Beijing. His hobbies included skiing, golf, scuba diving, boating, and other water-related activities.

See also entries on Getronics NV and EMC Corporation in International Directory of Company Histories.


DiCarlo, Lisa, “The Return of EMC,” Forbes.com, January 22, 2004, http://www.forbes.com/2004/01/22/ cx_ld_0122emc.html. Kelly, Sean, “Storage: The EMC Way,” Communications News, January 2002, http://www.findarticles.com/cf_dls/m0CMN/ 1_39/82350315/p1/article.jhtml. —William Arthur Atkins

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Ted Turner 1938– Chairman, Nuclear Threat Initiative; former president and chairman of the board, Turner Broadcasting System; former president, Atlanta Braves; former chairman of the board, Atlanta Hawks Nationality: American. Born: November 19, 1938, in Cincinnati, Ohio. Education: Attended Brown University, 1956–1959. Family: Son of Robert Edward Turner Jr. and Florence (Rooney) Turner; married Judy Gale Nye, 1960 (divorced, 1962); married Jane Shirley Smith, 1964 (divorced, 1988); married Jane Fonda, 1991 (divorced, 2001); children: five (first marriage, two; second marriage, three). Career: Turner Advertising Company, 1960–1962, branch manager; 1962–1963, assistant general manager; 1963–1970, president, chief executive officer, and chairman of the board; Turner Broadcasting System, 1970–1996, president and chairman of the board; Atlanta Braves, 1976–2003, president; Atlanta Hawks, 1977–2003, chairman of the board; Time Warner, 1996–2001, vice chairman of the board; AOL Time Warner, 2001–2003, vice chairman of the board. Awards: Regional Employer of the Year, Atlanta Chapter of the National Association for the Advancement of Colored People, 1976; President’s Award, National Cable Television Association, 1979; Outstanding Entrepreneur of the Year, Sales Marketing and Management magazine, 1979; Hall of Fame inductee, Promotion and Marketing Association, 1980; Salesman of the Year, Sales and Marketing Executives, 1980; Private Enterprise Exemplar Medal, Freedoms Foundation at Valley Forge, 1980; Ace Special Recognition Award, National Cable Television Association, 1980; Communicator of the Year, Public Relations Society of America, 1981; Communicator of the Year, New York Broadcasters, 1981; International Communicator of the Year, Sales and Marketing Executives, 1981; National News Media Award, Veterans of Foreign Wars, 1981; Distinguished Service in Telecommunications Award, Ohio University College of Communications, 1982; Carr Van Anda Award, Ohio

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Ted Turner. Steve Granitz/WireImage.com.

University School of Journalism, 1982; Special Award, Edinburgh International Television Festival, 1982; Media Awareness Award, United Vietnam Veterans, 1983; Special Olympics Award, Special Olympics Committee, 1983; World Telecommunications Pioneer Award, New York State Broadcasters Association, 1984; Golden Plate Award, American Academy of Achievement, 1984; Outstanding Supporter Award, National Boy Scout Council, 1984; Distinguished Achievement Award, University of Georgia, 1985; Lifetime Achievement Award, New York International Film and Television Festival, 1984; Tree of Life Award, Jewish National Fund, 1985; Hall of Fame inductee, National Association for Sport and Physical Education, 1986; Life Achievement Award, Popular Culture Association, 1986; Golden Ace Award, National Cable Television Academy, 1987; Sol Taishoff Award, National


Ted Turner Press Foundation, 1988; Citizen Diplomat Award, Center for Soviet-American Dialogue, 1988; President’s Award, National Cable Television Association, 1989; Paul White Award, Radio and Television News Directors Association, 1989; Business Marketer of the Year, American Marketing Association, 1989; Distinguished Service Award, Simon Wiesenthal Center, 1990; Man of the Year, Time magazine, 1991. Publications: The Racing Edge (with Gary L. Jobson), 1979; Lead, Follow, or Get Out of the Way (with Christian Williams), 1981; Ted Turner Speaks: Insights from the World’s Greatest Maverick (with Janet Lowe), 1999. Address: Nuclear Threat Initiative, 1747 Pennsylvania Avenue NW, 7th Floor, Washington, D.C. 20006; http:// www.nti.org.

■ Few business leaders have been as eccentric and unpredictable as Robert Edward (Ted) Turner III. He took pleasure in choosing goals that seemed impossible to achieve. He created the first “superstation” television station, WTBS, which broadcast nationwide through a network of local cable television operators. He invented live television broadcasting of news events as they happened. In addition to making himself one of the world’s foremost businessmen, he became the dominant figure in sailboat racing, winning an unprecedented number of ocean sailing events. He did this despite a severe mental handicap and a tendency to be tactless on any occasion, which earned him the enduring nickname of the “Mouth of the South.”

REJECTION AND ABUSE Turner’s father, Robert Edward (Ed) Turner Jr. made a fortune in billboard advertising. He may have suffered from bipolar disorder, sometimes called manic depression, a disease of mood swings from mania to depression that makes it difficult for sufferers to form close personal relationships. Ed abused his son with severe, often unmotivated beatings using coat hangers and straps. When Japan attacked Pearl Harbor in 1941, Ed enlisted in the navy and was posted to bases along the Gulf Coast. He took his wife and daughter with him but left his son, Ted, behind in a Cincinnati boarding school. Isolating his son from his family would become a pattern for Ed. In 1947 Ed moved his family to Savannah, Georgia, where he purchased a billboard advertising company. Ted was placed in the Georgia Military Academy near Atlanta. In a rare moment of generosity, Ed gave his son a Penguin sailing dinghy in 1949. One of the family’s African American domestics, Jimmy Brown, taught Ted how to sail and would become the man Ted regarded throughout his life as his true father. In September 1950 Ted was sent to McCallie School in Chattanooga, Tennessee. Considered an elite boarding


school, McCallie included military training and discipline in its curriculum. Ted immediately set about breaking rules. For every demerit a student earned, he was to walk a quarter mile on a weekend, but Ted racked up so many demerits—1,000— that he could not have possibly walked the required miles, and the school had to find new ways to punish students. Eventually, Ted advanced from troublemaker to student leader at McCallie. Ted wanted to attend the United States Naval Academy, but his father demanded that he attend Harvard. A “C” student, Turner was rejected by Harvard, but Brown University accepted him in 1956. Ed’s pleasure in his son’s attending an Ivy League school turned to rage when he learned that Ted, who loved reading, planned to major in the classics. In 1959 Ted’s parents divorced, and Ted was expelled from Brown for having a woman visit him in his room. On June 23, 1960, Ted married Judy Gale Nye, a young woman he had met while pursuing his passion for sailing. She proved to be his match as a sailor and was tough and outspoken, but the marriage became a rivalry so intense that Ted once rammed her boat during a race to prevent her from beating him. The couple divorced in 1962. In 1960 Ed made his son branch manager at Turner Advertising’s office in Macon, Georgia. Ted’s skills in sales more than doubled the office’s revenue in a year, and in 1962 he became assistant manager of the Atlanta branch. As Ted proceeded to increase the company’s customer base in Atlanta, Ed continually expanded Turner Advertising, eventually buying out a competitor. However, the buyout generated a significant amount of debt, making Ed fearful of going bankrupt. On March 5, 1963, seemingly in good spirits, he had a pleasant breakfast and then went into the bathroom and shot himself in the head.

YOUNG TYCOON After his father’s death, Ted Turner became president and chief executive officer of Turner Advertising. The suicide also left him without the person he most wanted to impress with his success and a feeling that he might someday emulate his father’s death. Turner immediately fought to retain his father’s company intact, fighting efforts to buy pieces of it. With brilliant salesmanship he expanded Turner Advertising’s clientele, thereby bringing in enough money to pay debts and stabilize the company’s finances. On June 2, 1964, Turner married Jane Shirley Smith. Almost from the start, the marriage was unhappy, with Turner’s compulsive womanizing a torment to his wife. He plunged himself into work and sailboat racing, winning many tournaments. By 1970 Turner owned the largest advertising company in the southeast, but he worried about inroads into the billboard

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business made by radio and television. That year he made one of his typical leaps of faith by buying the Atlanta UHF television station WJRJ, which had lost $800,000 in 1969. Turner renamed his company Turner Communications Group and the station to WTCG. Six months later he bought the Charlotte, North Carolina, UHF station WRET, which was also losing money. In 1971 WTCG lost $500,000, but Turner started buying old black-and-white motion pictures, adding them to the station’s programming and increasing its viewership. Because Turner bought the movies outright, he could show them endlessly without paying royalties. In 1972 WTCG broke even. That year the Federal Communications Commission (FCC) changed its regulations to allow cable television services to import signals from distant stations, and WTCG began using microwave transmissions and relays to send its signal to cable television operators. WTCG became a moneymaker, netting $1 million in 1973. On December 2, 1975, RCA’s SATCOM II communications satellite was launched, and Turner immediately rented a channel on it. He had a huge broadcasting dish erected in a small hollow in Georgia to send WTCG’s signal to the satellite, from which it was beamed to cable television stations throughout the United States, mostly in isolated, rural areas. On January 6, 1976, Turner made a surprise bid for and bought the Atlanta Braves major league baseball team, which was losing money and was probably headed for another city. At the same time, Turner hired satellite expert Ed Taylor, a vice president at Western Union, to oversee his satellite operations. When FCC rules forbade Turner to own a station and the service that sent its signal to cable operators, he created Southern Satellite, which he then sold to Taylor for one dollar (eventually making Taylor very rich), and on December 27, 1976, the FCC approved Southern Satellite as a common carrier. Turner renamed WTCG to WTBS (for Turner Broadcasting System) and began broadcasting motion pictures and, in 1977, Atlanta Braves games all over the United States. This made WTBS the first superstation—a station that reached a large audience outside its home region. By 1978 WTBS reached more than 2 million homes. Late in 1976 Turner bought 95 percent of the Atlanta Hawks basketball team, and he created Turner Enterprises to look after his land holdings. In addition, he announced he was going to sign the left fielder Gary Matthews to the Atlanta Braves, taking the player from the San Francisco Giants in violation of a rule against tampering with another team’s personnel. Baseball commissioner Bowie Kuhn threatened to suspend Turner, and he spent much of baseball’s winter meetings seemingly drunk out of his mind and threatening to kill Kuhn. Eventually, two of Turner’s company officers had to drag Turner out of harm’s way, and Kuhn suspended him for the entire 1977 season.

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He took advantage of the time away from his baseball team by entering the 1977 America’s Cup race. In a dramatic series of contests in mild weather, his outdated yacht Courageous defeated its competition with clever, bold tacking to win the right to defend the America’s Cup against the world’s challenger. In somewhat less calm weather, Turner and a crew comprising veterans in their fifties and young men won the America’s Cup. Turner was too drunk to stand up during the victory celebration and was remembered for falling from his seat to the floor during presentations of the competition’s awards. Turner’s greatest feat of sailing was probably in the August 1979 Fastnet race. This venerable competition required boats to sail 605 nautical miles from Plymouth, England, around Fastnet Rock near the coast of Ireland, and back to Plymouth. In 1979 a terrible storm hit; only 92 of the 302 boats that started finished the race. Twenty-two lives were lost, and many more were injured. Turner’s attitude was one of win or die, and he kept his boat Tenacious at full sail even as other boats were flipped over by the gale-force winds. Tenacious itself seemed swamped at one time, but Turner refused to abandon ship. The Tenacious won one of the deadliest sailboat races in history.

MEDIA GIANT In June 1980 Turner sold WRET for $20 million to help finance his latest idea, an all-news cable network. He launched the Cable News Network (CNN) to mostly negative press. Most journalists believed that no one wanted to watch news all day, a view with which the major networks, ABC, CBS, and NBC, agreed. Further, the prevailing view was that covering news for television required spending a huge amount of money that only the major networks could afford to spend. CNN originally included many long feature stories into its mix of news coverage, and it received some criticism for covering too much soft news—that is, news without much presentation of data. On January 1, 1982, Turner responded to this with CNN II, also called Headline News, which repeated the top stories of the day every half hour. CNN did not make a profit until 1985, but by then it was evident that the bottom line did not motivate Turner as much as his unrelenting desire to be the first to do something. Nonetheless, wealth seemed to flow to him. In 1985 he launched CNN International, offering his broadcast services to cable and satellite television services around the world, and he founded a companion network, CNNRadio. In an effort to put some of his social ideas to work, he founded and funded the Better World Society, through which he advocated disarmament of nuclear weapons, environmental protection, and peaceful international relations. In that year his wife persuaded him to see psychiatrist Dr. Frank Pittman, who diagnosed


Ted Turner

Turner as having bipolar disorder and put Turner on heavy doses of lithium to try to control the disease. After several months Turner’s colleagues noted improvement in his behavior, although Turner never completely let go of some of his wild impulses. In 1986 CNN introduced flyaway dishes—satellite dishes that could be folded up for transport in aircraft or trucks and then set up anywhere—allowing CNN reporters to broadcast from anywhere in the world in real time, with no delays between when events occurred and when television viewers could see them. Turner tried to buy CBS, but CBS’s management successfully fought him off with a harsh negative publicity campaign. On March 25, 1986, Turner gave up his effort to buy CBS and instead purchased MGM Entertainment Company, including United Artists (MGM/UA), from Kirk Kerkorian for $1.6 billion, acquiring 3,650 motion pictures, including popular classics such as Gone with the Wind, Citizen Kane (Turner’s favorite), and Casablanca. Lacking the financing to hold MGM/UA together, he retained all the rights to the motion pictures while selling everything else back to Kerkorian, losing $100 million on the deal and generating much negative press about the bad deal he had made. However, that year alone, he made $125 million in revenue from the old MGM motion pictures. Next, hoping to buy the broadcasting rights to the 1988 Olympics, he approached the Soviet Union to become partners with WTBS in purchasing the world broadcasting rights. The Soviet Union turned down that offer but joined Turner in creating the Goodwill Games, an opportunity for the world’s athletes to measure themselves against each other in a non-Olympic year. The first Goodwill Games were held in Moscow in 1986, and Turner lost $26 million on the venture. In 1987 Turner began colorizing MGM black-and-white motion pictures, generating protests from film critics and filmmakers. Eventually, Turner made millions of dollars from colorizing old favorites such as Miracle on 34th Street, and he applied the technology to Gone with the Wind to bring back the vibrant colors that had faded on the original print. In 1988 he expanded his cable network empire by creating Turner Network Television, which quickly became a staple of cable offerings. That year he and his second wife divorced. In 1989, as Communism waned, more than a million young Chinese filled Beijing’s Tiananmen Square, calling for a democratic government. On May 20 that year the Chinese army, led by tanks, plowed into the square, killing thousands of young people. CNN covered the event live, showing everything exactly as it happened. It marked a revolutionary moment in broadcasting that not only made people immediately aware of faraway events but also made CNN indispensable for governments everywhere. Direct feeds were installed in government buildings and embassies. The CNN crew was even able to broadcast Chinese officials shutting down CNN’s broadcasting site, up to the moment of ending transmission.


In 1990 the Goodwill Games were staged in Seattle, and Turner lost $44 million on them. In 1991 he was named Time magazine’s Man of the Year for his influence on broadcast communications. He purchased the cartoon collection of Hanna-Barbera, consisting of more than 8,500 cartoons, and used them to help launch his Cartoon Network in 1992. In addition, he closed the Better World Society and created the Turner Family Foundation, which gave away $10 million in 1992. Amidst this flurry of activity, he started dating Jane Fonda in 1991 and married her on December 21, 1991.

TED AND JANE Few relationships elicited more press coverage than the marriage of Turner and Fonda, two wounded but domineering personalities. Fonda found in Turner a man who paid attention to her, who gave her respect and romance. Turner thought Fonda cute and found in her an intelligence equal to his own—an irresistibly challenging woman. They attended Atlanta Braves games, giving photographers indelible images such as Turner asleep, head on Fonda’s shoulder as his team rallied in the World Series, and Fonda doing the tomahawk chop during Braves rallies. In 1993 Turner Broadcasting System bought Castle Rock Entertainment and New Line Cinema, expanding the company’s motion picture holdings and its production capacity with new studios. In 1994 Turner founded the cable channel Turner Classic Movies, taking advantage of his huge film library. The Goodwill Games were held in St. Petersburg, Russia; Turner lost $40 million on them. By this time his attention was turning away from business toward social causes, particularly environmentalism. By 1996 he owned more than one million acres of land in the United States and Argentina, becoming America’s second largest landowner. In Montana he bought thousands of acres and started returning the land to the state it was in 200 years earlier, including introducing a herd of bison. In 1996 Turner Broadcasting System merged with Time Warner, with Turner becoming vice chairman of the board of Time Warner, running all of the company’s cable and production operations. He was the company’s largest shareholder with 11 percent of its stock. He had long wished to found an all-sports network, and in late 1996 began CNNSI (combining CNN and Time Warner’s publication, Sports Illustrated). His fortune grew by $1 billion in nine months, and in accordance with his impulsive style, he pledged it to humanitarian services of the United Nations, at the rate of $100 million per year for ten years. On March 17, 1997, he launched CNN en Español, an all-Spanish cable channel. In 1999 Time Warner paid Turner $700,000 in salary and a $6.9 million bonus, as well as stock options.

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CRASH Turner detested Christianity and often made fun of it, a result of witnessing the horribly agonizing death of one of his sisters when he was young. When Fonda became a born-again Christian in the late 1990s, Turner was outraged because they had never discussed her conversion before it happened; she had worried that the brilliantly persuasive Turner would talk her out of it. The couple divorced in 2001. On January 8, 2001, Turner and former United States Senator Sam Nunn launched the Nuclear Threat Initiative, an organization dedicated to lessening the dangers of nuclear and other weapons. That year Time Warner merged with AOL to become AOL Time Warner. AOL was in dire financial straits, costing the company hundreds of millions of dollars. Even after dropping AOL from the company’s name, Turner saw his stock value drop $7 billion. In 2002 Turner helped organize the firing of the company’s chairman, Steve Case, but he was not named to replace Case as he had hoped. In late January 2003 he resigned his vice chairmanship.

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See also entries on Turner Broadcasting System, Inc. and Time Warner Inc. in International Directory of Company Histories.


Bibb, Porter, It Ain’t as Easy as It Looks: Ted Turner’s Amazing Story, New York: Crown, 1993. Brands, H. W., Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey, New York: Free Press, 1999. Landrum, Gene N., Profiles of Genius: Thirteen Creative Men Who Changed the World, Buffalo, N.Y.: Prometheus Books, 1993.

—Kirk H. Beetz


■■■

John H. Tyson 1953– Chairman and chief executive officer, Tyson Foods Nationality: American. Born: September 5, 1953, in Springdale, Arkansas. Education: Southern Methodist University, BA, 1975. Family: Son of Donald John Tyson (a food company executive) and Twilla Jean Womochil; married Kimberly McCoy; children: two. Career: Tyson Foods, 1975–1993, North Carolina complex manager, vice president of marketing for corporate accounts, purchasing manager, retail-sales manager for Northeast Region; 1993–1998, president of Beef and Pork division; 1998–2000, chairman; 2000–, chairman and CEO. Awards: Man of the Year, Arkansas Poultry Federation, 1994; Citizen of the Year, March of Dimes, Little Rock, Arkansas, 2000. Address: Tyson Foods, 2210 West Oaklawn Drive, Springdale, Arkansas 72762-6999; http:// www.tysonfoodsinc.com. John H. Tyson. AP/Wide World Photos.

■ Expectations were not particularly high when in 2000 John H. Tyson was confirmed as chairman and chief executive officer of Tyson Foods, the giant poultry-processing company founded 65 years earlier by his grandfather. Tyson had a somewhat checkered past, having been effectively sidelined from business by nasty twin addictions to cocaine and alcohol in the late 1980s. Although he had worked in the family business since his teens, through much of his early career he had been given relatively marginal responsibilities. Tyson had been named chairman of the company in 1998 but had shared responsibilities for leading the company with the then CEO Wayne Britt; it was Britt who won praise for leading Tyson Foods to a sharp jump in earnings in the late 1990s. To some outside observers it seemed that Tyson had little more going for him than the family name.

protein-processing company largely on the strength of its 2001 acquisition of the South Dakota–based IBP, a giant processor of beef and pork. That acquisition, as engineered by John Tyson, accomplished what his father, Donald J. Tyson, had attempted but failed to do during his tenure as chairman and CEO—namely, to successfully diversify beyond the confines of the poultry business. As of early 2003 Tyson Foods was producing roughly 25 percent of all the meat products consumed in the United States, according to Greg Lee, the company’s co–chief operating officer and group president for food service and international business.

The skeptics and naysayers were in for a surprise. Under Tyson’s direction, Tyson Foods emerged as the world’s largest

Even more impressive, especially for company shareholders, was the impact of Tyson’s achievements on the company’s


COMPANY PROFITS CLIMB IN WAKE OF ACQUISITION

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bottom line. In the fiscal year ending September 30, 2002, the company’s sales more than doubled to $23.4 billion from the roughly $10.8 billion of the previous year. Profits for fiscal 2002 totaled $383 million, more than three times the company’s profits of $106.6 million in fiscal 2001. In fiscal 2003, despite a 75 percent jump in fourth-quarter earnings, profits for the year totaled only $337 million, or $0.96 a share, down from 2002’s $383 million, or $1.08 per share. However, revenue in fiscal 2003 was up, topping $24.5 billion, as compared with the $23.4 billion of the year before. John H. Tyson, grandson of the Tyson Foods founder John W. Tyson, was born in Springdale, Arkansas, home of the family business, on September 5, 1953. At the time of Tyson’s birth his father, Donald J. Tyson, was manager of the company’s Springdale plant. His mother, Twilla Jean, devoted her energies to raising Tyson and his sisters, Cheryl and Carla. Two years after Tyson’s birth his father was promoted to president, a post he held until 1967 when he succeeded John W. Tyson, who had passed away, as chairman and chief executive officer. While attending Springdale High School, John H. Tyson began working weekends in the family company’s plants. In the summer of 1969 Donald Tyson arranged for his 16year-old son to spend the summer working at a company poultry-processing plant in Green Forest, Arkansas. According to a 2002 profile of John H. Tyson in Fortune, part of his responsibilities involved the unloading of chicken coops from a truck and placing them on a conveyor belt. After watching a longtime plant employee demonstrate each step in this process, Tyson noted, “I said to myself, ‘That didn’t look difficult’”; when the teenager attempted to replicate the task, he grabbed onto a coop and hefted it head-high but made the mistake of tilting it the wrong way. As a result, the chicken excrement lining the bottom of the coop slid in his direction. “It hit me right in the face,” Tyson recalled, “and slid down the front of my shirt” (May 13, 2002).

STUDIES BUSINESS ADMINISTRATION AT SMU After graduating from high school, Tyson enrolled at Southern Methodist University in Dallas, Texas, to study business administration. When he received his bachelor’s degree in 1975, he returned to Springdale to take his place in the family business. Over the next several years he worked his way through a series of farm, sales, and purchasing positions, none of which were particularly demanding from a management standpoint. Largely on the strength of his family ties, Tyson was appointed to the company’s board of directors in 1984. The latter half of the 1980s found Tyson in the grip of a double addiction to alcohol and cocaine. Fortune reported that during a 1998 legal proceeding Tyson acknowledged the magnitude of his substance-abuse struggle: “The only reason I was

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on the payroll was because I was the son of the boss. Any other corporation, I would have been thrown to the wolves” (May 13, 2002). With the support of his family Tyson entered a drug rehabilitation program where he successfully conquered his addictions. He returned to Tyson Foods with renewed energy and determination to succeed. In 1993, as a measure of confidence in his son, Donald Tyson appointed John as president of the company’s fledgling meat and seafood businesses, segments in which the older Tyson placed great hope for the future. According to Fortune, Tyson Foods’ early foray into nonpoultry processing was abandoned by the late 1990s as impractical; the company ran into problems adapting its time-tested poultryprocessing techniques to other meats and seafood. Despite this disappointing failure Donald Tyson remained confident that his son was ready for greater responsibility. Effective October 1, 1998, John succeeded the outgoing Leland Tollett as chairman. At the same time the company tapped the chief financial officer Wayne Britt to assume Tollett’s responsibilities as CEO. Tollett expressed confidence that both of his successors would carry the company to greater heights. According to a corporate press release, after citing the achievements of John H. Tyson’s grandfather and father, Tollett observed: “I believe that our shareholders, team members, and associates will continue to prosper and grow with continued family leadership at the highest level” (September 25, 1988).

SUCCEEDS BRITT AS CEO Roughly 18 months after taking over as chairman, Tyson succeeded Britt as CEO when the latter abruptly resigned in April 2000. According to a report by Kyle Mooty in Arkansas Business, Britt said that although his adult life had been dedicated exclusively to Tyson Foods, “I am leaving because our transition to a new generation is complete and, frankly, I would like time to pursue other interests” (April 17, 2000). Britt’s resignation ended the split management of the company and gave Tyson complete control. Assessing the company’s future prospects for Arkansas Business, the New York–based security analyst John McMillin said he thought Tyson would turn in a creditable performance as CEO: “I think he’ll be highly motivated, and he’s walking into the job at a good time in the cycle. There should be less competing proteins around next year” (April 17, 2000). In October 2000 Britt was named nonexecutive chairman of Spectral Fusion Technologies, based in the United Kingdom. Although it was originally his father’s dream to successfully move Tyson Foods beyond the boundaries of the poultryprocessing business, it fell upon John to get the job done. Only months after he took over as CEO of Tyson Foods, word spread through the food-processing industry that IBP, the giant meatpacker based in South Dakota, was entertaining ac-


John H. Tyson

quisition offers. The first bid for IBP came in the form of a leveraged-buyout proposal from a coalition of IBP executives and investment bankers from the Wall Street firm of Donaldson, Lufkin & Jenrette. That offer, valued at $3.8 billion ($2.4 billion in cash and stock plus $1.4 billion in refinancing of IBP debt), was soon topped by an offer of $4.1 billion from the Virginia-based Smithfield Foods, the country’s largest pork producer. Tyson Foods was the last prospective buyer to join the bidding for IBP; on December 4, 2000, it brought to the table what was then the most attractive offer, valued at a total of $4.2 billion, including $2.8 billion (or $26 a share) in cash and stock and $1.4 billion in assumed debt. Not surprisingly, Tyson’s entry into the fray set off not only a war of words but an all-out bidding war between the two leading contenders. Smithfield Foods publicly characterized Tyson’s bid as a hostile tender offer despite the decision of IBP’s board to consider it. By the end of December 2000 Tyson had sweetened its bid to a total of $4.3 billion, preemptively topping an anticipated bid increase from Smithfield.

BIDDING WAR INTENSIFIES Over the 2000–2001 New Year’s holiday, Smithfield increased its offer to $32 in stock for each share of IBP; however, IBP’s board opted for the final bid from Tyson at $30 a share in equal parts cash and stock, which was considered more attractive because of the cash. Another factor in IBP’s decision was the fear that a merger into Smithfield would be closely scrutinized by federal regulators because of implications for the U.S. pork market. A few days into the new year Smithfield publicly acknowledged that it had been outbid. Tyson Foods’ final offer was valued at a total of $4.7 billion. In early spring the much-anticipated marriage of Tyson and IBP hit a snag that for the next few months threatened to tear the companies apart. On March 30, 2001, John Tyson, alleging that IBP had supplied misleading information, announced that Tyson Foods was terminating its merger agreement and filing suit to collect damages. At the center of the controversy was IBP’s announcement days earlier that an internal probe of its DFG Foods subsidiary had uncovered mismanagement, possible manipulation of financial records, and product theft. In response to Tyson’s announcement IBP declared that it was filing its own lawsuit in a Delaware chancery court to force Tyson Foods to complete the acquisition. In the end IBP prevailed. In mid-June 2001 a Delaware judge handed down an order requiring Tyson Foods to follow through with its acquisition of IBP; Tyson Foods quickly made clear its intentions to obey the judge’s order. During the trial in Delaware both John Tyson and Bob Peterson, IBP’s chairman and CEO, testified that the combination of the two companies still made strategic sense. After the court proceed-


ings, according to a report by Victor Epstein in the Omaha World-Herald, Tyson said, “Despite the trial, we believe the management teams of IBP and Tyson can work together” (June 19, 2001). FOCUSES ON INTEGRATING IBP INTO COMPANY For Tyson one of the first orders of business after the finalization of the IBP acquisition in the fall of 2001 was the streamlining and rationalization of the newly combined company. By early 2003 John Tyson seemed satisfied that most areas of redundancy had been—or were scheduled to be— eliminated. At the company’s annual shareholders meeting in February 2003 Tyson reported that $50 million in savings had been achieved during 2002 with another $100 million in savings expected to be realized before the end of 2003. He told shareholders that the company’s focus for the short term would be on paying down its debt, which had jumped sharply in the wake of the IBP acquisition. Twice in the early 2000s Tyson Foods came under the close scrutiny of federal regulators. In December 2001 the company and three of its managers were indicted on charges that they had conspired to smuggle illegal immigrants into the United States for work in company plants. The case went to trial in federal court in Chattanooga, Tennessee, in early 2003; the company and the three executives were acquitted of all charges. In March 2004 the company revealed that it was under investigation by the Securities and Exchange Commission over benefits paid to top executives, including John H. Tyson. Tyson and his wife, Kimberly, lived in northwestern Arkansas with their two children, John Randal and Olivia Laine. Away from the corporate offices Tyson managed to find time to serve on the board of the National Council on Alcoholism and Drug Dependence and was also involved with the Walden Woods Project, formed in 1990 to protect wooded areas surrounding Thoreau’s Walden Pond. In 1994 Tyson was named Man of the Year by the Arkansas Poultry Federation. In 2003 under his direction Tyson Foods was named by National Provisioner magazine as its first Poultry Processor of the Year. Also in 2003 Fortune selected Tyson Foods as the most admired company in the food-production industry. According to a report in Arkansas Business, in acknowledging this honor Tyson said, “It’s incredibly gratifying to have the hard work of our people recognized by others in the industry” (March 3, 2003). See also entry on Tyson Foods, Inc. in International Directory of Company Histories.


Edwards, Greg, “South Dakota–Based Meat Processor Rejects Sale to Smithfield, Va., Firm,” Richmond Times-Dispatch, January 2, 2001.

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John H. Tyson Epstein, Victor, “Tyson Foods Calls Off Deal with IBP,” Omaha World-Herald, March 30, 2001. ———, “Tyson Foods to Obey Judge’s Order to Acquire IBP for $4.7 Billion,” Omaha World-Herald, June 19, 2001. Garrison, Bob, “Leading by Example: Tyson Foods Steps Up Its Commitment to Food Safety Research with a $5.2 Million Laboratory Expansion and Renovation,” Refrigerated & Frozen Foods, August 1, 2003. McIntire, Stephen, “Tyson Foods, Inc. (The Bottom Line),” Des Moines Business Record, January 12, 2004. Mooty, Kyle, “Third Generation of Tysons to Lead Company,” Arkansas Business, April 17, 2000. ———, “Tyson Acquitted on All Charges,” Arkansas Business, March 31, 2003. Shean, Tom, “IBP Meatpacking Company Entertains Buyout Offers,” Norfolk Virginian-Pilot, December 12, 2000. Stein, Nicholas, “Son of a Chicken Man,” Fortune, May 13, 2002. “Tyson Foods 4Q Profits Soar 75 Percent,” AP Online, November 10, 2003.

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“Tyson Foods Inc. Has Been Named the Most Admired Company in the Food Production Industry by Fortune Magazine,” Arkansas Business, March 3, 2003. Tyson Foods press release, September 25, 1998, http:// tysonfoodsinc.com. Wood, Jeffrey, “Tyson Foods Says M&As Likely Over,” Arkansas Business, February 17, 2003. Yeong, Choy Leng, “SEC Probes Benefits for Tyson Top Execs,” Bloomberg News, March 30, 2004. Young, Barbara, “Challenge, Opportunity, Growth,” National Provisioner, January 1, 2003. ———, “The Measure of a Man,” National Provisioner, June 1, 2002. ———, “Tyson Foods’ Karma,” National Provisioner, June 1, 2002.

—Don Amerman


■■■

Robert J. Ulrich 1944– Chairman and chief executive officer, Target Corporation Nationality: American. Born: 1944, in Minneapolis, Minnesota. Education: University of Minnesota, BA, 1967. Family: Son of a 3M executive (name unknown); married (wife’s name unknown; divorced); children: two. Career: Dayton Corporation, 1967–1969, merchandising; Dayton Hudson Corporation, 1969–1976, merchandising; 1976–1978, vice president and general-merchandise manager at Dayton’s Department Stores; 1978–1981, senior vice president of stores at Dayton’s; 1981, executive vice president for merchandise, sales promotion, and presentation at Dayton’s; 1981–1984, president and CEO of Diamond’s Department Stores; 1984, co-president of Dayton Hudson department-store group with responsibility for merchandising, marketing, and distribution; 1984–1987, president of Target Stores; 1987–1994, chairman and CEO of Target Stores; 1994–2000, chairman and CEO; Target Corporation, 2000–, chairman and CEO. Awards: Discounter of the Year, DSN Retailing Today, 1989, 1992, 1995; Mass Market Retailer of the Year, Mass Market Retailer, 2000; Gold Medal Award, National Retail Federation, 2001. Address: Target Corporation, 1000 Nicollet Mall, Minneapolis, Minnesota 55403-2005; http:// www.targetcorp.com.

■ In the bleak discount-retailing landscape littered with the ruins of countless low-price chains that found survival impossible in the era of Wal-Mart, Target Stores managed not only to survive but to prosper. The chain’s success had to be credited in large part to the genius of Robert Ulrich, the chairman and chief executive officer of the parent Target Corporation for more than a decade. While Bradlees, Caldor, Montgomery Ward, and others fell by the wayside and once-mighty Kmart was forced to reorganize under Chapter 11, Ulrich found a International Directory of Business Biographies

way for Target to distinguish itself from the rest of the pack. Most importantly for Target’s shareholders, Ulrich managed not just to keep Target alfoat but to generate impressive growth in sales and profits. One measure of Ulrich’s success, of course, was his compensation, which for both 2001 and 2002 was declared the highest in the U.S. retailing industry by Home Textiles Today. The magazine reported on January 30, 2004, that Ulrich’s 2002 pay—including salary, bonus, and stock options— totaled $18.2 million, up just over 20 percent from the $15.1 million of the year before. A distant second on the magazine’s list of 2002’s top-paid retailing executives was Lawrence Montgomery, the CEO of Kohl’s, who pulled in a total of $12.2 million; Lee Scott, Ulrich’s counterpart at Wal-Mart, was paid a total of $4.4 million.

MANY BELIEVED ULRICH COULD CHALLENGE WALMART Although talk of Target mounting a serious challenge to Wal-Mart’s supremacy in the discount market may have elicited derisive chuckles in some circles, there were those who thought that if it could be done at all, Ulrich was the man to make it happen. After several years of pressure from Wall Street, Ulrich announced in March 2004 that Target Corporation was putting its Marshall Field’s and Mervyn’s divisions on the auction block. Both divisions operated department stores, the earnings of which accounted for less than 15 percent of Target Corporation’s total annual revenue. Marshal Cohen,the chief analyst at NPD Group, the market-information company based in Port Washington, New York, told Janet Moore of the Minneapolis Star Tribune that the evolution of a leaner, meaner Target suggested that WalMart might have been in for “a rude awakening” (March 11, 2004). Cohen predicted that Target was going to “aggressively pursue the Wal-Mart customer.” On the other hand, the retailing analyst Eric Beder of Northeast Securities in New York seemed skeptical that Target would fare well in a head-to-head battle with Wal-Mart. Beder said that in contrast to management’s portrayal of the company, “People are going to be a little surprised maybe when they clean off all these negatives to see that the Target chain is not exactly that consistent growth vehicle” (March 11, 2004).

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The son of a 3M executive, Robert J. Ulrich was born in Minneapolis, Minnesota, in 1944. He grew up in and around the Twin Cities and after high school enrolled at the University of Minnesota, from which he earned his bachelor’s degree in 1967. Fresh out of college Ulrich joined a merchandising trainee program at Dayton Corporation, the Minneapolisbased operator of the upscale Dayton’s department stores. After completing training, he advanced through the company’s merchandising ranks in a series of positions of increasing responsibility. Posts held by Ulrich included sales manager, buyer, group manager, and divisional merchandise manager. In 1969, two years after Ulrich joined Dayton, the company merged with the Detroit-based J.L. Hudson Company to form Dayton Hudson Corporation. Like Dayton’s, Hudson’s department stores catered to a more affluent market.

One of the first innovations in the Target franchise during Ulrich’s tenure was the introduction of the Greatland store. Sensing a strong consumer appetite for larger stores, in the fall of 1990 the upscale discount chain opened its first Target Greatland store in the Minneapolis suburb of Apple Valley; others soon followed. The Greatland stores differed from other Targets in size: they were typically 20 to 50 percent larger than traditional outlets. The average Target Greatland covered roughly 150,000 square feet, more than three football fields. About half of the increased area was used for the display of additional merchandise, with the remaining half used to create a feel of greater spaciousness, allowing wider aisles, a larger restaurant, and more open areas.

ULRICH FACES OFF AGAINST WAL-MART CONTINUES TO CLIMB LADDER AT DAYTON HUDSON By 1976 Ulrich had earned himself a vice presidency and the post of general-merchandise manager for the Dayton’s division of Dayton Hudson. Two years later, after completing an executive training program at Stanford University, he was promoted to senior vice president for stores. In 1981 Ulrich was named president and chief executive officer of Diamond’s Department Stores, another division of Dayton Hudson that was later sold to Dillard’s. In early 1984 he became one of three presidents at Dayton Hudson. While his two copresidents were each responsible for regional groups of stores, Ulrich was charged with overseeing merchandising, marketing, and distribution for the entire chain. Later that same year Ulrich was named president of Dayton Hudson’s Target Stores division, a chain of discount retail outlets that by the mid1980s was generating annual revenues of more than $3 billion, making it the company’s largest operating division. In 1962, five years before Ulrich joined the company, Dayton’s had opened its first Target store in Roseville, Minnesota. The Target outlets were Dayton’s response to what it saw as a growing demand for brand-name goods at discounted prices in a convenient shopping environment. By the time Ulrich assumed Target’s presidency in 1984, the chain had grown to 216 stores and was already being widely described as an upscale discounter, differentiating it from the other leading retail discounters such as Wal-Mart and Kmart. Further distinguishing Target from discount competitors was its early decision to refer to shoppers as “guests.” Much of the chain’s future growth and profitability would be predicated on just such distinctions. Under the direction of Ulrich, who in 1987 was named chairman and CEO of the Target division, Target stores more than doubled in number, growing to a total of 506 by November 1992. By the end of 1993 that number had grown to 554.

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In the spring of 1993 a classic David-versus-Goliath confrontation came to a boil when Ulrich fired back at Wal-Mart in response to marketing tactics he considered unfair. WalMart ran a series of ads misrepresenting Target prices in markets served by both chains; Ulrich then launched a counteroffensive with ads headlined, “This never would have happened if Sam Walton were alive.” (Sam Walton, the founder of the larger chain, had died in April 1992.) Of Wal-Mart’s ad campaign, Ulrich told Women’s Wear Daily, “I believe customers are being misled by Wal-Mart’s inaccurate price comparisons” (March 25, 1993). Target contended that in some cases WalMart had offered price comparisons on products not even available at the smaller chain. With Target contributing an increasingly large proportion of Dayton Hudson’s total revenues, it came as little surprise when in 1994 Ulrich was named to succeed the outgoing Kenneth Macke as chairman and CEO of Dayton Hudson Corporation. Commenting on the differences between the marketing styles of Macke and Ulrich, a Twin Cities retailing consultant familiar with both executives made an interesting observation when speaking to Aron Kahn of the St. Paul Pioneer Press: “If they were at a lemonade stand that was running into competition, Macke would try to get the customers in by charging three cents instead of five, and Ulrich would try to get them in with two varieties of lemonade” (April 14, 1994). By the time Ulrich took over the reins of the parent company, Dayton Hudson was operating not only the Dayton, Hudson, and Target outlets but also Mervyn’s department stores, acquired in 1979, and Marshall Field’s, purchased in 1990. As had been the case for more than a decade, the Target stores continued to contribute the biggest share of Dayton Hudson earnings. In the mid-1990s Ulrich introduced SuperTarget, his answer to the giant retailing centers that had been launched earlier by Wal-Mart and Kmart. These supercenters blended the discounters’ regular displays of general merchandise with the food and grocery offerings of a full-service supermarket.


Robert J. Ulrich

Target’s first supercenter, with 195,000 square feet of retailing space, opened in Omaha, Nebraska, and was soon followed by others in the Midwest.

TARGET MARKETS “A HIP IMAGE” By the late 1990s Ulrich’s campaign to carve out a special niche for Target was winning praise from such distinguished American business publications as Forbes and Fortune, both of which profiled Target in lengthy articles during the first half of 1999. Michelle Conlin, writing in the January 11, 1999, issue of Forbes, observed that the chain’s stores had managed “to market a hip image despite their discount prices.” Some of Target’s success could be credited to the interchange of information between Dayton Hudson’s department stores and its discount chain. Of Target’s success in attracting higherincome consumers to its stores, Ulrich told Conlin, “Our research shows that the higher the income, the better educated, the more the guests like to shop our stores” (January 11, 1999). In her profile of Target in the May 24, 1999, issue of Fortune, Shelly Branch wrote, “The image of Target stores has gradually been transformed from typical discount chain to a hip store where even the rich and trendy can save money.” Keeping the upscale discounter abreast of changing fashion trends and consumer tastes was a 22-member trendmerchandising team, the only such advisory panel of its kind in the discount business. Members of the team—affectionately called “Targeteers” by the Target designer Michael Graves —tracked trends, visiting stores around the globe, and tried wherever possible to anticipate the directions in which consumer tastes were headed. Ulrich told Branch, “We’re constantly challenging our people to reinvent. Our guests have started to say, ‘Hey, it’s a lot more clever to shop at Target than it used to be’” (May 24, 1999). A critical element in Ulrich’s campaign to expand the Target franchise was the chain’s edgy marketing campaign. Reporting on a February address to the 2003 Retail Advertising Conference by Michael Francis, Target’s senior vice president of marketing, Lisa Bertagnoli of Women’s Wear Daily described the chain’s multilevel strategy to generate buzz for its stores and merchandise. The typical Target customer, according to company demographics, was about 44 years of age and had a household income of $54,000. Of its core constituency, 80 percent had attended college, 41 percent had children, and 80 percent were female. Target’s goal was to retain its core consumer base while increasing business with younger customers. According to Bertagnoli, Francis told the National Retail Federation–sponsored conference that the discounter’s future lay in the hands of trendsetters in terms of “style, haircuts, tattoos, body piercing—you name it” (February 10, 2003).


TARGET’S BULL’S-EYE NATIONALLY RECOGNIZED Target’s efforts to make its bull’s-eye trademark recognizable around the country got a solid vote of confidence in a brand-awareness poll conducted in 2002. Poll results showed that 96 percent of all Americans recognized and associated the red-and-white bull’s-eye logo with Target, a higher level of recognition than the Ralph Lauren Polo pony or even the Nike swoosh. When the good news was delivered to Ulrich, as Francis reported at the conference, the Target CEO tasked his marketing chief to track down the remaining 4 percent of the populace and find out what the company was doing wrong. “And he wasn’t kidding,” Francis assured his audience (February 10, 2003). Reflecting Target’s dominant role in the financial fortunes of Dayton Hudson Corporation, on January 13, 2000, Ulrich announced that the company’s name henceforth would be Target Corporation. At the time of the name change Target Stores accounted for a little over 75 percent of the corporation’s total revenue. In announcing the name change, according to an Associated Press report, Ulrich said, “Target Corporation is a more appropriate name for the company and is also a more widely recognized brand name” (January 13, 2000). A year later Target consolidated its department store holdings, folding its Dayton and Hudson department stores into the Marshall Field’s division. This reorganization left the company with three main retail divisions: Target, Mervyn’s, and Marshall Field’s. As more and more price-savvy Americans turned to the socalled discounters to fill their consumer needs in the latter half of the 1990s, the contributions of Target’s department-store brands—Mervyn’s and Marshall Field’s—to the corporation’s bottom line shrank; Mervyn’s in particular fell upon hard times. According to Janet Moore of the Minneapolis Star Tribune, in a 1998 presentation to security analysts Ulrich laid out an ultimatum for Mervyn’s: he warned that the corporation “would pursue alternative ways to generate shareholder value” if the department-store chain failed to improve samestore sales over the following 12 to 18 months (March 11, 2004). Mervyn’s failed to deliver, but Ulrich was reluctant to act, perhaps because of the intelligence the department stores offered Target Stores on changing consumer trends. But in early 2004 he could no longer ignore the decline in the department stores’ fortunes and announced that both Mervyn’s and Marshall Field’s would be put up for sale.

DEPARTMENT STORES’ SHARE OF PROFITS SHRINKS As of early March 2004, according to the Minneapolis Star Tribune, Mervyn’s had a total of 266 stores and 29,000 employees. In fiscal 2003 it had managed to post a pretax profit of $160 million on sales of $3.6 billion, down from the pretax

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Robert J. Ulrich

profit of $238 million in fiscal 2002. Marshall Field’s, with 62 stores and 25,000 employees, reported a pretax profit of $107 million on revenue of $2.6 billion in fiscal 2003, off sharply from its fiscal 2002 profit of $135 million. In contrast, Target Stores in fiscal 2003 earned almost $3.5 billion before taxes, up significantly from the nearly $3.1 billion of fiscal 2002. Revenues per square foot at Target outlets edged up to $282 in fiscal 2003 from $278 the previous year, while revenues per square foot were down at both Mervyn’s ($165, down from $178) and Marshall Field’s ($178, down from $180) during the same period. Some security analysts speculated that Target Corporation’s stock would be likely to rise if it succeeded in selling off its department-store brands, allowing it to focus exclusively on its successful Target franchise. Spelling out his vision for Target Stores in the short-term future, Ulrich projected in the company’s 2003 annual report that the discount chain would add 95 to 100 new stores in 2004, for a net increase of 80 to 85 stores after taking into consideration closings and relocations. Ulrich also promised that Target’s new store design, scheduled to be introduced in 2004, would be “more pleasant and inviting and promote our goal of being the preferred shopping destination for our guests” (“On Target: Full Speed Ahead”). Ulrich was not without his critics. His high level of compensation predictably drew fire from union workers protesting what they considered unfair treatment at the hands of Target management. At Target’s annual shareholders meeting in May 2003, labor organizers handed out leaflets contrasting Ulrich’s $19.2 million compensation package with the reduced pay, benefits, and hours of store employees. At about the same time Ulrich was sharply criticized by Corporate Library, one of the country’s leading shareholder-advocacy groups, according to a report by Neal St. Anthony in the Minneapolis Star Tribune. Corporate Library gave Target’s CEO low marks for slipping out of the company’s annual meeting without answering a single question from shareholders. Ulrich, who was divorced, lived in a lavish home in the Minneapolis suburb of Edina. He had two grown children, Curt and Jacqueline. A member of the Committee to Encourage Corporate Philanthropy, Ulrich worked hard to see that Target made a positive contribution to the communities in which it operated. One of the corporation’s pet causes was education, as exemplified by its Take Charge of Education program, which was launched in 1997. Under the program each week the company gave $2 million back to communities across America. According to the company’s Web site, “portions of these funds are dedicated to specific education programs and initiatives, created by Target, to directly improve funding for schools and opportunities for students” (“Community Giving: Take Charge of Education”). Ulrich also served on the board of the National Retail Federation and in early 2001 received the federation’s Gold Medal Award.

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See also entry on Target Corporation in International Directory of Company Histories.


Associated Press, “Retailer to Change Name to Target,” Wisconsin State Journal, January 13, 2000. Conlin, Michelle, “Mass with Class: Retailing Discounting Has a Dowdy Image, but Target Is Making Low-Price Shopping Hip,” Forbes, January 11, 1999. Bertagnoli, Lisa, “The Buzz around the Bulls-Eye,” Women’s Wear Daily, February 10, 2003. Branch, Shelly, “How Target Got Hip,” Fortune, May 24, 1999. Chakravarty, Subrata N., “Planning for the Upturn,” Forbes, December 23, 1991. “Community Giving: Take Charge of Education,” Target Corporation, http://target.com/target_group/ community_giving/take_charge_of_education.jhtml. “Dayton Hudson: Farewell to a Much-Honored Name,” Minneapolis Star Tribune, January 14, 2000. “Everything about Target Corporation,” Target Corporation, http://www.targetcorp.com/targetcorp_group/about/ about.jhtml. Kahn, Aron, “Dayton Hudson’s CEO Resigns,” St. Paul Pioneer Press, April 14, 1994. Kragen, Pam, “Target Greatlands Store in California Promotes Customer-Friendly Service,” North County (CA) Times, February 26, 1997. Moore, Janet, “Bull’s-Eye Meets the Smiley Face: Target Gets Ready to Take On Wal-Mart,” Minneapolis Star Tribune, March 14, 2004. ———, “Castoff Flagship: Targeted; Marshall Field’s and Mervyn’s Stores Up for Sale,” Minneapolis Star Tribune, March 11, 2004. “On Target: Full Speed Ahead,” Target Corporation, http:// ccbn.mobular.net/ccbn/7/524/573/. Palmieri, Jean E., “On Target: With Exclusive Merchandise and Edgy Marketing, America’s Coolest ‘Upscale Discounter’ Hits the Mark,” Daily News Record, April 15, 2002. Pinto, David, “Ulrich Is MMR Retailer of the Year,” Mass Market Retailer, January 8, 2001. Pogoda, Dianne M., “Macke to Exit Dayton Hudson: Ulrich Is Named Successor,” Women’s Wear Daily, April 15, 1994. St. Anthony, Neal, “Behind the Bull’s-Eye: Bob Ulrich Transformed Target, but the Chain Still Faces Tough Competition,” Minneapolis Star Tribune, November 30, 2003.


Robert J. Ulrich “Target Raps Wal-Mart on Price Claims,” Women’s Wear Daily, March 25, 1993. Tosh, Mark, “Supercenters: The Race Is On,” Women’s Wear Daily, June 7, 1995. “Ulrich Holds On to Top Spot,” Home Textiles Today, January 30, 2004.


“Ulrich Named President of Target Stores,” Daily News Record, November 14, 1984.

—Don Amerman

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Thomas J. Usher 1942– Chairman and chief executive officer, United States Steel Corporation

Usher’s direction, focused on its core competency. When the company regained its independence at the beginning of 2002, Usher laid out his strategy in clear-cut terms, according to a company press release: “U.S. Steel must be 100 percent focused on being a world-competitive company capable of meeting any competitor head-on with the markets we choose to be in” (January 2, 2002).

Nationality: American. Born: September 11, 1942, in Reading, Pennsylvania. Education: University of Pittsburgh, BS, 1964; MS, 1965; PhD, 1971. Family: Married Sandra L. Mort, 1965; children: three. Career: United States Steel Corporation, 1965–1975, industrial engineer, Pittsburgh headquarters; 1975–1978, assistant, general superintendent, and superintendent, South Works in Chicago; 1978–1979, assistant division superintendent of primary mills, Gary Works in Indiana; 1979–1981, director of corporate strategic planning, Pittsburgh headquarters; 1981, assistant to the president; 1981–1982, managing director of facility planning, engineering, research, and industrial engineering, Resource Development Group; 1982–1983, vice president of engineering and research, U.S. Steel Mining Company; 1983–1984, president, U.S. Steel Mining; 1984, vice president for engineering, steel; 1984–1986, senior vice president for operations, steel; USX Corporation, 1986–1990, executive vice president, heavy products; 1990–1991, president, Steel Division; 1991–1994, president, U.S. Steel; 1994–1995, president and chief operating officer; 1995–2001, chairman and chief executive officer; United States Steel Corporation, 2002–2003, chairman, president, and chief executive officer; 2003–, chairman and chief executive officer. Address: United States Steel Corporation, 600 Grant Street, Pittsburgh, Pennsylvania 15219-2800; http:// www.ussteel.com.

■ Thomas J. Usher became chairman and chief executive officer (CEO) of United States Steel Corporation when it was spun off from USX Corporation in 2001. In April 2004 he announced his plans to step down as CEO at the end of September 2004. Although U.S. Steel in the early 21st century was a mere shadow of what it had once been in the glory days of the U.S. steel industry, the Pittsburgh-based steelmaker, under

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GLOBAL POSITION STRENGTHENED Although U.S. Steel posted a net loss of $463 million in 2003, Usher was heartened by the progress the company had made “in strengthening our position as a leading global provider of value-added steel products,” according to a company press release (January 30, 2004). He said the steelmaker’s 2003 acquisitions of National Steel in the United States and Sartid in Serbia increased U.S. Steel’s annual steelmaking capacity to nearly 27 million tons, up roughly 50 percent from what it had been the previous year. Thomas J. Usher was born on September 11, 1942, in Reading, Pennsylvania. After graduating from high school, he enrolled at the University of Pittsburgh to study industrial engineering. He received his bachelor’s degree in 1964 and a master’s degree in operations research the following year. On August 14, 1965, he married Sandra L. Mort. That same year he went to work as an industrial engineer in the Pittsburgh headquarters of U.S. Steel. A decade later he was transferred from Pittsburgh to U.S. Steel’s South Works in Chicago. He started as an assistant to the plant’s general superintendent and over the next three years was promoted to superintendent of transportation and general services before finally being named superintendent of the 30-inch plate mill at South Works. In 1978 Usher was named assistant division superintendent of the primary mills at the steelmaker’s Gary Works in Indiana.

RETURNED TO PITTSBURGH HEADQUARTERS Returning to U.S. Steel’s Pittsburgh headquarters in 1979, Usher served for two years as director of corporate strategic planning before being named assistant to the corporate president in 1981. Later that same year he was appointed managing director of facility planning, engineering, research, and industrial engineering for the corporation’s Resource Development


Thomas J. Usher

Group. In 1982 Usher went to work for U.S. Steel Mining Company, a wholly owned subsidiary, as vice president of engineering and research. The following year he was named president of the subsidiary, a position he held until 1984, when he was named vice president for engineering of the Steel Division. By the end of 1984 he was promoted to senior vice president for steel operations. In 1986 U.S. Steel became a division of USX Corporation, a holding company formed to oversee its operations. That same year Usher was named executive vice president, heavy products, for the Steel Division. In 1990 he became president of the Steel Division and joined USX’s Corporate Policy Committee. The following year he was appointed president of U.S. Steel and named to USX’s board of directors. In 1994 he was promoted to president and chief operating officer of USX, a position he held until the following year when he was named chairman and CEO of USX. He continued in that position through the end of 2001 and took over as chairman, president, and CEO of U.S. Steel Corporation at the beginning of 2002 when the company was spun off from USX. In early 2003 he surrendered his responsibilities as president to John P. Surma but continued as chairman and CEO.

PROFIT POSTED FOR 2002 In the first year after regaining its independence, U.S. Steel, under Usher’s direction, posted a profit of $61 million on total sales of $6.95 billion, a sharp improvement from a loss of $218 million on revenue of roughly $6.3 billion the previous year. In 2003 U.S. Steel’s sales were up sharply, climbing more than 34 percent from revenue of $6.3 billion in 2002. The company, however, posted a net loss $463 million. Usher and his wife, Sandra, had three children. In addition to his responsibilities at U.S. Steel, Usher found time to partic-


ipate in numerous professional and civic activities. He was a member of the Business Council and served as chairman of the International Iron and Steel Institute, American Iron and Steel Institute, SteelAlliance, and U.S.-Korea Business Council. He sat on the boards of the University of Pittsburgh, Boy Scouts of America, and the Extra Mile Education Foundation. Usher also served on the corporate boards of H. J. Heinz Company, PPG Industries, and PNC Financial Services Group.

See also entry on United States Steel Corporation in International Directory of Company Histories.


Mandak, Joe, “USX Plans Energy, Steel Split,” Associated Press, April 24, 2001. “United States Steel Corporation Begins New Year as Independent Company with a Century of Experience,” http://www.prnewswire.com/cgi-bin/micro_stories.pl? ACCT=929150&TICK=X&:STORY=/www/story/ 01-02-2002/0001640794&EDATE=Jan+7,+2002. “United States Steel Corporation Reports 2003 Fourth Quarter and Full-Year Results,” http://www.prnewswire.com/cgi-bin/ micro_stories.pl?ACCT=929150&TICK=X&STORY=/ www/story/01-30-2004/0002099637&EDATE=Jan+30, +2004. “U.S. Steel Chairman and CEO Thomas J. Usher to Retire at End of September,” http://www.prnewswire.com/cgi-bin/ micro_stories.pl?ACCT=929150&TICK=X&STORY=/ www/story/04-27-2004/0002160884&EDATE=Apr+27, +2004. —Don Amerman

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Shoei Utsuda 1943– President and chief executive officer, Mitsui & Company Nationality: Japanese. Born: 1943, in Japan. Education: University of Tokyo, BS, 1967. Career: Mitsui & Company, 1967–; 2000–2002, senior executive managing officer; 2002–, president and chief executive officer. Address: Mitsui & Company, 22-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-0004, Japan; http:// www.mitsui.co.jp/tkabz/english/index.html.

■ Shoei Utsuda found himself unexpectedly thrust into the leadership of Mitsui & Company, Japan’s second largest conglomerate, in September 2002, when scandals fomented a dramatic shakeup in the company’s upper management. At age 59 Utsuda had seemed likely to reach retirement age before the offices of president, CEO, or chairman of the board became available. Yet in a matter of a few weeks, he was in charge of a vast organization with almost 900 member companies and subsidiaries with multimillion-dollar international businesses in foods, textiles, mining, petroleum, natural gas, chemicals, electronics, energy, machinery, metals, and information technology. Utsuda wasted no time in making his imprint on Mitsui & Company. Within a month he was making sweeping changes in the outlook and goals of the company. Utsuda was a stern leader who demanded that business be conducted in a disciplined manner.

MITSUI ZAIBATSU The story of Mitsui & Company was part of the story of Japan. Mitsui began with the rise of the Fujiwara family in the 600s, a period almost predating recorded Japanese history. The Fujiwaras intermarried with the royal family, and for approximately four hundred years they helped rule Japan. In 1100 one of the Fujiwaras, a samurai, visited Omi province,

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and there he found three wells. In one was a treasure trove. He renamed himself Mitsui (“three wells”), founding a new branch of the Fujiwara family. The discovery of the treasure launched the Mitsuis into mercantile businesses. In the 1600s the head of the Mitsui family, Sokubei Mitsui, observed that the fortunes of samurais were waning and that commoner businessmen were often prospering. He renounced his samurai status, proclaimed himself a commoner, and declared that he and his family would focus on being merchants. Sokubei Mitsui’s youngest son, Hachirobei, launched the Mitsuis into a new era of prosperity. Hachirobei’s father had died young, but his mother had held together the family businesses of sake and sauce brewing and taught her children how to be thrifty. Hachirobei set up business in Edo (later called Tokyo) and quickly established the hallmarks of the Mitsui business. First, he refused to sell to members of the nobility, because nobles often failed to pay for what they bought. Second, he refused to sell on credit; every transaction was cash only. This practice allowed Mitsui to sell his wares for a lower price than his competitors, who had to finance the credit they had extended, mostly to noblemen. Third, Mitsui tracked every purchase of supplies he made and every sale he made, to see what was profitable and what was not. Furthermore, he charged only one price for each of his wares. There was no haggling; what a shopper saw was what a shopper got. Finally, Mitsui introduced customer service. In his huge main shop, where from his time onward a Mitsui building always stood, Mitsui had numerous employees available to wait on customers, and he focused on customer needs. For example, unlike his competitors, Mitsui did not insist that cloth be sold in one 12-foot-long size suitable for kimonos. Instead, his cloth was cut to order, so someone wanting to sew a small item did not have to spend a fortune on cloth. Mitsui codified his principles for commerce in his will, and one of his sons transcribed the principles, calling them a family “constitution,” to which every Mitsui for 200 years had to swear obedience. By 1900 the Mitsui family owned hundreds of companies, all united by family rather than formal agreements. This system was known as a zaibatsu. The Mitsui zaibatsu was huge. Historians disagree about its exact size, but by World War II, Mitsui controlled approximately 15 percent of Japan’s economy and employed approximately 3 million people. During World War II the Mitsui zaibatsu profited from sales to Japan’s military, and it used tens of thousands of con-


Shoei Utsuda

scripted Chinese and Korean laborers in its coal mines. After Japan’s defeat the Allies were determined to break up the huge Japanese corporations that had used war as an excuse to make money. The huge Mitsui zaibatsu was broken into hundreds of parts. The new Japanese government then instituted a stern property tax that forced Mitsui family members to sell most of their possessions. During the 1950s former member companies of the old Mitsui zaibatsu bought shares in one another. By the 1960s the interrelated companies had formed Mitsui & Company, which was a keiretsu, a gathering of companies that owned parts of each other, although most of Mitsui’s leaders thereafter insisted that Mitsui & Company was just a sogo shosha, a trading company. Mitsui & Company was remarkable among Japan’s keiretsu because it remained profitable through the 1990s and 2000s, even though Japan’s economy was flat and other keiretsu were suffering losses. By then, Mitsui & Company was the second largest private corporation in Japan, after Mitsubishi Corporation.

REORGANIZATION AND SCANDAL In 1999 Mitsui & Company built an off-shore petroleum drilling platform near Sakhalin. The Sakhalin project was complex because the region was in the possession of Russia but claimed as a possession by Japan. This situation required Mitsui & Company to go through two government bureaucracies for licensing. That year Mitsui & Company grossed $4.789 billion. In spite of the promising Sakhalin project, Mitsui & Company found itself at a competitive disadvantage because of the difficulty it had in responding to rapid changes in the global marketplace. Thus in 2002 Utsuda was put in charge of reorganizing the vast holdings of the Mitsui keiretsu. Utsuda had a daunting task. Mitsui & Company had 857 subsidiaries and affiliates, 390 in Japan and 467 overseas. From 2000 to 2002 Utsuda organized Mitsui & Company’s vast holdings into five units: one unit encompassed petroleum and natural gas; one encompassed information technology, electronics, and power plants; one encompassed chemical production; one encompassed minerals and metals; and one encompassed consumer services such as food and textiles. Mitsui & Company grossed $5.22 billion in 2000. A sign of troubles to come, however, arrived in October 2000, when a Mitsui & Company employee was arrested in China for bribing with $35,000 the director general of the state power company to win a contract to build a power plant. In 2001 Mitsui & Company’s revenues plummeted to $4.541 billion. In April 2002 Utsuda’s reorganization reached the top of Mitsui & Company when he reduced the size of the company’s board of directors from 38 to 11. Even as his reorganization began to take hold, events outpaced Utsuda. Journalists revealed that Mitsui & Company


had been involved in bribery and other illegal activities at least since 1997. On July 3, 2002, prosecutors arrested three Mitsui executives for rigging bidding on a government contract to build a project on Kunashiri, an island possessed by Russia but claimed by Japan. The employees were accused of bribery and of possessing secret information that showed what the government regarded as an acceptable bid on the project. On July 24, 2002, two of those arrested were indicted. Mitsui & Company’s top executives, the chairman of the board, Shigehi Ueshima, and the president and CEO, Shinjiro Shimizu, offered to take 20 percent pay cuts for three months to take responsibility for being in charge when the crimes were committed. By September 2002 upper management at Mitsui & Company was in chaos. Matters worsened in August, when Mitsui & Company employees bribed officials in Mongolia to win a power plant contract. The outcry in the press and the anger of shareholders were so great that on September 4, 2002, Ueshima and Shimizu were forced to resign, effective September 30, 2002. In a major reshuffling of executives, Nobuo Ohashi became chairman of the board, and Utsuda was named president and CEO. When asked why he did not resign with his former bosses to show his responsibility as their advisor, Utsuda declared that he believed he was fated to lead Mitsui & Company. On September 16, 2002, Utsuda told a press conference, reported in Asian Economic News, “There was an absence of a strong sense of morality and of high ideals” in Mitsui & Company’s management, and he intended to introduce ethical behavior to the company. What Utsuda had in store for Mitsui & Company was more than a code of ethics: He would try to change the keiretsu‘s entire view of its place in the world. On October 8, 2002, Utsuda forbade Mitsui & Company from bidding on contracts that involved grants-in-aid from the Japanese government. He then doubled the number of outside auditors and members of the board of directors and directed that transactions be made public to achieve transparency in Mitsui & Company’s finances. Furthermore, Utsuda reorganized the structure of corporate management so that the leaders of the company’s five divisions reported directly to him. He also created a new subsidiary, Carbon Nanotech Research Institute, to manufacture molecules called “nanotubes,” which could be used in medicine, lubricants, and electronics.

PRESIDENT AND CEO In 2003 Utsuda began articulating his vision for what he wanted Mitsui & Company to become. He laid out three goals. The first was to expand Japan’s economy and the global economy. The second was to develop both sound businesses and sound local communities. The third was to make day-today life better around the world. He also wished to give new life to an old Mitsui & Company slogan, Hito no Mitsui,

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roughly meaning “Mitsui’s strength lies in its people.” In January 2003 Utsuda created the service business unit. Its mission was to change Mitsui & Company’s outlook from that of a trading company focused on acquisition and delivery of goods to that of a full-service company that identified the needs of customers and then created complete packages of goods and services to satisfy those needs. By the end of March 2003 Utsuda’s reorganization of Mitsui & Company had reduced the overall number of subsidiaries and affiliates to approximately 750. These 750 companies had approximately 100,000 business partners around the world. Utsuda was especially proud of Mitsui & Company’s work in China, where his company had established eight subsidiaries and was the largest trading company. In the fiscal year ending March 31, 2003, Mitsui & Company grossed $4.829 billion (an increase of 15.9 percent) and netted $264 million (an increase of 36.5 percent). Mitsui & Company had 37,734 employees (an increase of 4.5 percent). In June 2003 Utsuda increased outside oversight of Mitsui and Company by introducing an outside auditor. On May 15, 2003, Utsuda gave his approval for the building of a massive liquid natural gas facility on Sakhalin Island that would produce 9.6 million tons of liquid natural gas per year, to be sold in Asia. Through its subsidiary Mitsui Sakhalin Holdings, Mitsui & Company was a partner in the production company Sakhalin Energy Investment Company with Shell Sakhalin Holdings and Diamond Gas Sakhalin (Mitsubishi Corporation). The project was expected to cost $10 billion. Mitsui and Company owned 25 percent of the Sakhalin project. That month the Sakhalin project already had signed con-

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tracts for 25 percent of its anticipated production, scheduled to start in 2006. In early 2004 Brazil was negotiating a freetrade agreement with the European Union, and Japanese trade with Brazil was expected to suffer. With 1.4 million people of Japanese ancestry, Brazil had strong ties to Japan. On May 19, 2004, as chairman of the Japan-Brazil Economic Committee, Utsuda asked the Japanese government to negotiate a JapanBrazil economic partnership agreement that would be a step toward making South America a free-trade area for Japanese businesses.

See also entry on Mitsui & Co., Ltd. in International Directory of Company Histories.


“New Mitsui President Vows Change in Company Mentality,” Asian Economic News, September 16, 2002, http:// www.findarticles.com/p/articles/mi_m0WDP/ is_2002_Sept_16/ai_91757598. Utsuda, Shoei, “Mitsui Moving Forward with People and Society,” Sustainability Report 2003, 2003, http:// www.mitsui.co.jp/activity/sustainability/sr2003e.pdf. Weston, Mark, “The House of Mitsui: Merchants for Four Centuries,” in Giants of Japan: The Lives of Japan’s Greatest Men and Women, New York: Kodansha International, 1999, pp. 3–11. —Kirk H. Beetz


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Akio Utsumi 1942– Director, Mitsubishi Tokyo Financial Group Nationality: Japanese. Born: September 7, 1942. Career: Mitsubishi Trust and Banking Corporation: 1991–1993, director; 1993–1995, managing director; 1995–1998, senior managing director; 1998–1999, deputy president; 1999–, president; Mitsubishi Tokyo Financial Group: 2001–2004, director, chairman, and co–chief executive officer; 2004–, director. Address: Mitsubishi Tokyo Financial Group, 5 Floor Yurakucho Building, 4-1 Marunouchi 2-Chome ChiyodaKu, 100-6326 Tokyo, Japan; http://www.mtfg.co.jp/ english/.

■ Akio Utsumi was cofounder, director, chairman, and coCEO of the Mitsubishi Tokyo Financial Group (MTFG), a holding company that, at its inception in April 2001, was Japan’s fourth-largest banking group. MTFG was conceived in 2000 when Mitsubishi Trust and Banking, of which Utsumi had been president since 1999, and Bank of Tokyo–Mitsubishi (a.k.a. Tokyo Trust Bank) agreed to integrate their operations. The two banks became MTFG’s directly held subsidiaries. In a second stage of the integration, a merger agreement with Nippon Trust Bank, a subsidiary of the Bank of Tokyo–Mitsubishi, brought Nippon under MTFG’s management umbrella. Assets of the three firms totaled 90.1 trillion yen (US $866 billion) at the end of 1999, making the stock-for-stock exchange alliance the world’s fifthrichest following the mega-mergers of several other Japanese banks. As of 2004 MTFG provided trust and banking services in more than 40 countries, including the United States, where it owned approximately two-thirds of Union Bank of California. MTFG was one of approximately 30 companies that were part of the Mitsubishi group. Before World War II these companies shared common ownership, but they began operating independently after the war. International Directory of Business Biographies

TROUBLED JAPANESE BANKING INDUSTRY By the late twentieth century, Japanese bank loans exceeded 100 percent of the nation’s GDP, compared with 40 percent in the United States. When the bubble economy of the 1990s burst late in the decade, Japan’s banking industry suffered immensely from a huge number of bad debts that amounted to well over a trillion U.S. dollars. Commenting on the subsequent mergers and alliances in Japan’s banking sector, analysts wrote in the Economist: “These mergers or as they call it ‘restructuring’ are largely the product of the ‘Big-Bang’ style financial deregulation plan initiated by the government, and the effect of the banking sector’s continuing debt problems. These bank mergers are dramatically reshaping the landscape of one of the world’s most important financial centers” (May 27, 2000).

ALLIANCE AND INDEPENDENCE Rather than merging, as so many other financial institutions were doing, Mitsubishi Trust and Banking and Bank of Tokyo–Mitsubishi formed a holding company and undertook a management integration program that allowed each institution to maintain its individual identity and function autonomously under a common owner and coordinated strategy. According to the Economist, in a briefing to journalists Utsumi admitted that the idea of being able to maintain that independence was what allowed him to consider an alliance. Another reporter quoted Utsumi as saying, “We could lose our identity if we chose to do a merger. The precondition for our alliance was to leave Mitsubishi Trust and Banking as an individual entity” (Yomiuri Shimbun—Daily Yomiuri Online). With the Bank of Tokyo–Mitsubishi already a major commercial banking operation domestically and internationally, and Mitsubishi Trust and Banking a leader in services such as trust, personal investment, real estate, personal estates, and wills in Japan, Asia, the United States, and Europe, the integration enabled the holding company to go well beyond the limitations imposed on each individual company. Combined, they could provide a complete range of financial services to each bank’s domestic, international, individual, and corporate customers alike. While Bank of Tokyo–Mitsubishi serviced many thousands of individuals each day through their hundreds of branches in Japan, Mitsubishi Trust Bank had few

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branches nationwide. Once integrated under the holding company, Bank of Tokyo–Mitsubishi could introduce its daily branch customers to Mitsubishi Trust Bank’s products and provide a central arena for a wide range of customer services. The group also launched new services, such as discounted fees for customers who maintained specified minimum balances—a service that quickly became extremely popular. An international card allowed customers quick access to their accounts at cooperating banks around the world, and Japanese expatriates could readily manage their accounts through Internet banking links. MTFG considered Union Bank of California—their only major retail operation outside Japan—a valuable resource for tracking trends and cutting-edge personal financial services, allowing MTFG to implement these in other countries. And while most Japanese banks were cutting back their international operations, Utsumi and his senior management team considered their global network one of their core strengths. Expanding on his decision to form a holding company rather than to merge, Utsumi told the Yomiuri Shimbun: “If we had only a tie-up with Bank of Tokyo–Mitsubishi, we would only distribute documents to their branches and sales offices, and simply instruct them to pass on jobs to Mitsubishi Trust and Banking. Through the integration, both Bank of Tokyo–Mitsubishi and Mitsubishi Trust and Banking will be forced to produce profits together.” He firmly believed the alliance meant that each bank would contribute to the other’s performance, which in turn would increase the company’s competitive edge.

BATTLING IN A COMPETITIVE MARKETPLACE For Utsumi, creating and maintaining a competitive edge in the market-driven industry was an important consideration in creating the holding company. According to a May 24, 2001, news release posted on the MTFG Web site, the overall strategy was to “pursue further development as part of a highly competitive, diversified financial services group.” When asked during the Yomiuri Shimbun interview how he planned to invest the money slated for information technology development—an area in dire need of upgrading in the Japanese banking industry in general—Utsumi stressed the importance of avoiding investment duplication. “Most of our share of IT investment, totaling 50 billion yen for the next three years, will be spent on the investment and management of entrusted funds. We won’t invest it in our banking business because we can use Bank of Tokyo–Mitsubishi’s infrastructure,” he commented. Utsumi and other MTFG senior management officials believed that the holding company created three particular areas of strength: a quality clientele, a global network more extensive than any other Japanese bank’s, and a sound balance sheet.

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MTFG management claimed that their institution was the only large Japanese bank able to manage its problem loans independent of government assistance. As of March 2002, MTFG’s total liabilities were $691.3 billion; $3.94 billion in bad loans was slated to be sold to a government-backed debtcollection agency by the end of that year. The company posted a $1.1 billion loss for the fiscal year ended March 2002, but by September 2003 it reported a net profit for the fiscal half year of $2.43 billion.

A FIRST AMONG THE “BIG FOUR” FINANCIAL INSTITUTIONS On March 19, 2004, the Wall Street Journal reported that MTFG announced it would bring Japan’s second-largest consumer financing company, Acom, into its operations. Acom targeted in particular the “lucrative market for high-margin consumer lending as corporate business dries up,” the article said. In the early 2000s, finance providers such as Acom mushroomed by providing easy-access, high-interest loans—even through ATM machines—to individuals and owners of small businesses in need of quick cash. Quick to see the financial potential, MTFG became the first of Japan’s “big four” financial institutions to incorporate a finance provider into its operations. MTFG agreed to purchase some 20 million Acom shares, including new shares, for 140 billion yen. A joint statement published on Channel NewsAsia’s Web site read: “MTFG and Acom have agreed on a business and capital tieup in order to strengthen our competitiveness in the retail sector . . . by making use of each other’s know-how and operation bases as much as possible” (March 23, 2004). At an April 28, 2004, meeting of MTFG’s board of directors, it was announced that Utsumi’s position as chairman and co-CEO would end on June 29 that year. Utsumi and MTFG’s president and co-founder, Shigemitsu Miki, chose to retire from their positions due to strengthened earnings and the anticipation of being in the black by year-end March 31, 2004. Both said they would remain with the company as directors. By the close of fiscal 2004, the company’s balance sheet showed a gain of 72.9 billion yen, compared with a 538.7 billion yen loss the previous year. The improvement was attributed to lower-than-expected costs for reducing nonperforming loans, an upswing in Japan’s stock market that increased MTFG’s share value, and an out-of-court settlement between the Tokyo government and major banks.


“Big Bang: Bank’s Chiefs Outline Strategy Behind Integration Plan,” Yomiuri Shimbun—Daily Yomiuri Online, http:// www.yomiuri.co.jp/intview/0502dy21.htm.


Akio Utsumi “Japan’s MTFG Ties Up With Acom Consumer Finance Firm,” March 23, 2004. Channel NewsAsia, http:// www.channelnewsasia.com/stories/afp_asiapacific_business/ view/76864/1/.html. “Japan’s Troubled Bank Mergers,” Economist, May 27, 2000, http://www2.gol.com/users/coynerhm/ japans_troubled_bank_mergers.htm.

news.moneycentral.msn.com/ticker/ sigdev.asp?Symbol=MTF. “The Mitsubishi Trust and Banking Corporation, Nippon Trust Bank Limited and Tokyo Trust Bank, Ltd. Sign Merger Agreement,” May 24, 2001, http://www.btm.co.jp/ english/press/news2001/pdf/news_104e.pdf.

“Mitsubishi Tokyo Financial Group, Inc. May Increase Stake in Acom—WSJ,” March 19, 2004, http://

—Marie L. Thompson


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Roy A. Vallee 1953– Chief executive officer and chairman, Avnet Nationality: American. Born: 1953, in Southbridge, Massachusetts. Education: Don Bosco Technical Institute, AS, 1971. Family: Married Cindy (maiden name unknown); children: two. Career: Radio Products, 1971–1972, sales; Cramer, 1972–1977, field salesman, inside sales manager, operations manager, branch manager; Hamilton/Avnet, 1977, field sales representative; 1977–1989, systems manager, systems business manager, general sales manager, general manager of the San Diego branch, regional director of Southwest; 1989–1990, vice president; Hamilton/Avnet Computer, 1990–1991, president; Avnet, Inc., 1991–1992, senior vice president, director worldwide electronics operations; 1992–1998, president, chief operating officer, vice chairman; 1998–, chairman, chief executive officer. Awards: Named in 1997, 1999, and 2000 to Electronic Buyers’ News list of Hot 25 Executives, in recognition of his industry leadership; honored as Executive of the Year in 2000 by Arizona State University’s College of Business, Dean’s Council of 100. Address: Avnet, Inc., 2211 South 47th Street, Phoenix, Arizona 85034-6403; http://www.avnet.com.

■ Electronics distribution executive Roy A. Vallee was the CEO and chairman of the Phoenix, Arizona-based Avnet, a Fortune 500 company. When Vallee became CEO, his predecessor, Leon Machiz, described Vallee’s leadership quality as one that clearly used critical management strategies in a way that inspired confidence, which Machiz insisted was essential for a successful leader.

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AVNET Avnet, which Vallee described as a technology marketing and services company, was one of the world’s largest distributors of computer products and electronic components; it was an authorized business distributor for the goods of more than 250 of the world’s top technology and systems manufacturers. Some of the products that Avnet provided were semiconductors; interconnect, passive, and electromechanical components; enterprise network and computer equipment; and embedded subsystems. In the early 21st century Avnet distributed these suppliers’ products to about 100,000 other manufacturers and served customers in 68 countries. Its primary and longtime rival was Arrow Electronics. (For many decades, the two companies had been aggressive competitors in their battle for market share.) In the early 2000s Avnet had two operating groups: Avnet Electronics Marketing and Avnet Technology Solutions. Avnet Electronics Marketing was a global distributor of electronic components such as semiconductors; interconnect, passive, and electromechanical components; radio frequency and microwave devices; and other products. Avnet Technology Solutions emerged from the combination of two previous organizations: the Computer Marketing Group (which dealt in computer products and services for resellers and large end users) and the Applied Computing Group (which operated with system-level components such as motherboards). This combination was formed in order to institute additional efficiencies of operations. Together the new group was composed of a distribution unit and an information-technology architect unit, which concentrated on enterprise computing systems and products.

STARTING YOUNG Vallee grew up selling, organizing, and leading. At age 12 he sold cosmetics and household products door-to-door in his Los Angeles neighborhood. He also organized his friends into groups for jobs such as mowing lawns and washing cars. During his high school years Vallee was the lead singer in a rock band called “Betsy Ross.” While attending the Don Bosco Technical Institute in San Gabriel, California, he spent a semester away from school in a work-study program at the small Los Angeles electronics distributor, Radio Products.


Roy A. Vallee

CAREER IN ELECTRONICS DISTRIBUTION Vallee began his career in electronics distribution in 1971, when he joined Radio Products. He worked his way up from stocking shelves to the shipping dock and eventually established a sales office for the company in San Diego, California. However, Vallee realized that Radio Products was a small, unimportant company in a new, exciting industry called “electronics” that was quickly developing into something very special. After discovering Cramer, a new San Diego distributor that appeared to have a bright future, Vallee began working for that company in 1972. He started as a field salesman and was later promoted, successively, to positions as an inside sales manager, operations manager, and finally a branch manager. However, he realized the company had financial problems and began looking elsewhere. Vallee wanted to open his own business, but he lacked the capital to do so. He had been recruited for several years by a successful company called Hamilton, and he finally decided to join them. In February 1977 he started as a field sales representative for Hamilton/Avnet with the goal of starting his own business in five years. Within six months he was promoted to systems manager. The semiconductor-maker Intel, which was supplying the company with systems that needed qualified specialists to maintain and operate them, trained Vallee because he had some technical education as well as experience working as a computer operator. Vallee soon became a systems business manager, and through subsequent promotions (going through 1989), he became general sales manager, general manager of the San Diego branch, regional director of the Southwest, and finally vice president. During this period Vallee was honored as Hamilton/Avnet’s General Manager of the Year and on two occasions was named Regional Director of the Year. One of the most important tasks that Vallee accomplished during this time was to organize and plan the implementation of a successful sales force as well as develop the management structure of the team’s territory. Vallee liked to help people establish career paths while providing more value to customers and gaining additional market share. All of these learned tasks became useful for Vallee as he climbed the corporate ladder.

TURNING AROUND A CULTURE In February 1989 (about one year after the company separated the computer and components businesses), Vallee was appointed president of the computer division, which was called Hamilton/Avnet Computer. In 1990 he was named senior vice president and director of worldwide electronics operations for Avnet, where he was responsible for all worldwide marketing. At this time he realized that the culture at Avnet was what is commonly called a “meat grinder” or “pressure cooker,” where employees were not stimulated to perform well but were simply told to do their jobs as fast as possible. Instead


of promoting an atmosphere where employees wanted to stay onboard and build a career, the company forced staff simply to produce more and more without providing incentives for the additional demands. Vallee decided to focus on changing this culture. Thanks to Vallee’s initiatives, Avnet in the early 21st century was a place where talented people wanted to work and create a career in a stimulating environment. Vallee accomplished this turnaround by recognizing and communicating that people are important. He also worked very hard to develop and invest in sophisticated technology tools like automated warehouses; however, he realized that these tools only worked when a company understood that its employees are its most important assets.

ELEGANT BUT EASYGOING CEO Vallee was appointed to Avnet’s board of directors in November 1991 and, in March 1992, was selected president and COO. In November of that year he was appointed vice chairman. In July 1998 Vallee was named chairman and CEO, taking over from an industry pioneer, Leon Machiz. Vallee, a distant relative of Rudy Vallee, a singer and matinee idol from the 1920s, was characterized as having smooth good looks that went along with his elegant dark suits, starched shirts, cufflinks, and silk ties. Despite looking like a movie star, he easily interacted with people in a low-profile, sincere, and easygoing manner.

OVERSEEING COMPLETE RESTRUCTURING PLAN Soon after taking the helm at Avnet, Vallee orchestrated a complete corporate restructuring plan, which was initially delayed by the beginning of a downturn in the electronics industry. This effort—to strengthen its market share, streamline all the businesses, and carry out additional coordinated projects to improve its capital-to-debt ratio—centered around two structural and organizational changes: the merger of the Avnet Computer Marketing and Avnet Applied Computing operating groups and the centralization of the company’s information technology resources. In addition, Vallee aggressively acquired several smaller distributors to expand its operations and to eventually become one of the leading electronics distributors in the world. Vallee felt that making Avnet into a global company would contribute the most to the company’s growth in the future.

CHANGES DURING 1998 AND 1999 Vallee took advantage of his leadership position to make sweeping changes that he believed were necessary to take Avnet into the 21st century. First, he moved the company’s head-

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quarters from Great Neck, New York, to Phoenix, Arizona, where its main U.S. warehouse and other operations were already located. Next he combined the company’s three main components and distribution businesses—Hamilton Hallmark, Penstock, and Time Electronics—in order to eliminate duplication and establish a single global brand. He doubled the size of the Phoenix warehouse and consolidated European and Asian warehouses into new, centralized facilities in Belgium and Singapore. In April 1999 Vallee organized a joint venture that included Avnet’s old nemesis, Arrow Electronics, and two other companies, Aspect Development and CMP Media. This union was designed to compete in the e-commerce world of the Internet. Named ChipCenter LLC, customers could come directly to the Web site to purchase components. As a result of this innovation, Vallee realized that the company no longer needed a catalog, so he eliminated that part of the business. Now positioned to move aggressively into the international market, Vallee replaced the entire board of directors, excepting himself, and hired independent outsiders, some of whom had global business exposure and experience. In June 1999 he announced the $830 million purchase of Marshall Industries, which combined one of the largest distributors of North American semiconductor supplies (Avnet) and the leading distributor of Asian semiconductor lines (Marshall). In September he announced his intent to purchase the remaining shares of the European distributor Sonepar Electronique Internationale, or SEI, and the SEI Macro Group. He also formed a third operating arm within Avnet, the Applied Computing Group. Finally, he initiated a company-wide migration to a common enterprise-software system from Germany’s SAP AG, which was an international developer and supplier of integrated business application software designed to provide comprehensive and cost-effective business solutions for internal applications like human resources, payroll, purchasing, and related functions.

China and laid plans to enter the markets of Korea and Japan. Vallee emphasized that his company must strive to become as strong as possible globally in order to be most efficient. His goal was to ship a package anywhere around the world within 48 hours. By 2000 Vallee had grown Avnet to sales of $8.4 billion, making the company the leading North American distributor of technology components. Starting in 2000 and through the next couple of years, Vallee instituted acquisitions of Kent Electronics (announced March 2001), Veba’s European operations EBV (announced August 2000), and Sunrise (announced May 2001). The $1 billion Kent Electronics acquisition in late 2001 strengthened Avnet’s financial position after the two businesses were fully integrated, generating savings of $60 million in 2002. Vallee liked Kent because it was a well-managed, profitable distributor that dealt with interconnect, passive, and electromechanical components. Kent also had a reputation for good customer service. On the other hand, the Kent acquisition complicated Avnet’s market position as Vallee had to immediately start cost-cutting measures to counterbalance the downward sales expectations due to the slow economic market. Vallee also invested heavily in Avnet’s Integrated Materials Services division, which by 1999 had grown at a compound annual rate of 40 percent, and the newly formed (1999) Avnet Design Services, which provided Vallee with early research and development of products. At the end of fiscal year 2003, Vallee reported revenues of $9.05 billion. With a solid senior management team and a carefully planned organizational strategy, Vallee was leading Avnet into a strong future.

See also entry on Avnet Inc. in International Directory of Company Histories.


RESULTS AND ADDITIONAL CHANGES The acquisition of Marshall saved the company between $40 million and $60 million (as reported in 2000), with total acquisitions saving between $80 million and $90 million. Along with these initiatives, Vallee expanded in 2000 into

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Yaverbaum, Eric, Leadership Secrets of the World’s Most Successful CEOs: 100 Top Executives Reveal the Management Strategies That Made Their Companies Great, Chicago, Ill.: Dearborn Trade Publishing, 2004.



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Anton van Rossum 1945– Chief executive officer, Fortis Nationality: Dutch. Born: 1945. Education: Attended Erasmus University, Rotterdam, The Netherlands (date of graduation unknown). Family: Married; children: three. Career: McKinsey & Company, 1972–2000, variety of roles including cofounder of the Brussels office, senior partner; Fortis, September 2000–, chief executive officer; Fortis Bank and Fortis Insurance, chairman; Fortis, Inc., 2001–2003, chairman. Address: Fortis, Rue Royale 20, 1000 Brussels, Belgium; http://www.fortis.be.

■ In 2000, Anton van Rossum was selected from an outside company to become CEO of Fortis, the Belgo-Dutch financial-services giant born in 1990 of a merger between the Belgian insurance company AG and the Dutch banking and insurance group AMEV/VSB. Focusing on the fields of banking, insurance, and investment, Fortis offered a comprehensive range of products to private individuals, businesses, and institutions through wholly owned distribution channels and intermediaries. Through a policy of mergers and acquisitions and by creating an operating niche in specialty marketing segments, van Rossum led the corporation to realize a net profit of EUR 1,275 million in first-quarter 2004—its best-ever quarterly result. Early that year, the corporation’s market capitalization was EUR 24.8 billion, its assets EUR 523 billion; it employed approximately 54,000 people in some 200 companies worldwide and ranked in the top 20 European financial institutions.

OUTSTANDING RECORD Van Rossum was personally chosen and recommended to the Fortis board by the corporation’s cochairmen, Hans Bartelds (former chairman of AMEV/VSB) and Maurice Lippens


Anton van Rossum. © Tronnel Thierry/Corbis SYGMA.

(former chairman of AG). Factors contributing to van Rossum’s selection included his outstanding leadership abilities and people skills and extensive experience gained in his 28-year career with McKinsey & Company in The Netherlands, Belgium, and Scandinavia. At McKinsey he cofounded the company’s Brussels office, which he ran for seven years. His primary responsibilities were in the banking and insurance industries. When he left the firm, he was a leader in its European banking and insurance practice. Van Rossum was elected CEO of Fortis on September 1, 2000, assuming responsibility for the day-to-day management of the corporation; he also served as chair of the executive committee. Fortis’s entire upper management supported van Rossum’s appointment, believing that it would help the company to become one of Europe’s leaders in providing bancassurance (insurance products sold through banks).

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“THE ROAD AHEAD” In December 2000 van Rossum announced in a statement titled “The Road Ahead” that Fortis would follow a clearer strategic direction. His plan included streamlining management and holding managers more accountable. He introduced performance targets and tied executive pay scales more directly to the performance of individual business units and of the group in its entirety. He also announced that allocation of capital would be reassessed, that some businesses would be dropped or sold, and that in some instances the emphasis would shift from one line of product to another. He said the corporation would also consider mergers and acquisitions to enhance its overall growth and stability. Fortis would look to consolidate its position in the Benelux region (Belgium/ Netherlands/Luxembourg) and expand its regional presence in the United States and Asia. He stressed a renewed focus on enhancing customer interaction, improving brand perception, and increasing product distribution channels. In discussing the need to achieve greater overall operating efficiency, van Rossum referred to recent acquisitions and mergers that brought a cost savings of EUR 900 million, including the 2000 acquisition of Dutch insurer ASR shortly before he took over at Fortis. That particular acquisition made Fortis the industry leader in the Benelux countries. Brendan Noonan reported in the International Insurance News Update (December 26, 2000) that some analysts questioned whether van Rossum’s statement actually brought anything new to the strategy Fortis already had in place, while others called for more specificity. According to Noonan, analyst Lewis Phillips with Fox-Pitt, Kelton, said that the statement contained “a lot of generalities” that revealed “precious little that hadn’t already been said.” Phillips compared Fortis with its Dutch rival the ING Group, which usually “set[s] the flags out as to what they want to do.” However, Noonan also quoted analyst Ton Gietman with HSBC Securities in Amsterdam: “I think the change with the past is that they are going to make management much more accountable for their actions.” He also said that van Rossum’s strategy of not divulging what businesses Fortis planned to sell was smart in that it “lowers the exit price” when Fortis decided to sell those businesses. Noonan wrote that although van Rossum acknowledged, the CEO also told critical analysts to “judge us by our deeds” over the coming months.

STRATEGY NETS HUGE PROFITS Just one month after presenting his “Road Ahead” strategy, van Rossum announced that Fortis, Inc.—one of Fortis’s financial-services companies with leadership positions in several specialty insurance market segments in the United States— would sell its annuity and variable life insurance business, Fortis Financial Group (FFG), and FFG’s proprietary mutual

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fund. In the company’s press release, Van Rossum pointed out that FFG was a “niche business” in variable universal life and variable annuities in the late 1980s and had experienced solid growth and profitability in that arena. However, the products had since become so popular that they were no longer specialty businesses, and FFG only held a small market share in each. Selling FFG, he said, was “consistent with Fortis’ strategy in the United States to build and manage a select portfolio of specialty businesses that are leaders in their respective markets” (January 25, 2001). The sale, to the Hartford Financial Services Group in the second quarter of 2001 in a cash transaction of $1.12 billion, produced significant profits that improved Fortis’s balance sheet, in part by reducing recently incurred acquisition debt. Fortis also retained FFG’s $200 million statutory surplus. On May 7, 2001, Fortis announced that, in addition to his other responsibilities, van Rossum had been elected chairman of the board of directors of Fortis, Inc. At that time, Fortis, Inc. managed approximately $25 billion in assets and provided individual, small group, temporary health, group life, dental, and disability insurance as well as credit-related insurance services. Little more than two years later, in keeping with strategies presented in his “Road Ahead” plan, van Rossum announced that Fortis would spin off Fortis, Inc. “Given the non-core nature and the independent organization of our U.S. insurance business, we have decided to divest these activities,” he was quoted as saying on the Insurance Newscast Web site (September 25, 2003). “By focusing on our key strengths and skills, we will continue to develop our businesses by investing in autonomous growth opportunities, value added acquisitions and partnerships to achieve improved returns over time.” While Fortis retained its presence in banking products and services in the United States, the objective behind the insurance business spin-off was to focus resources and assets on further developing banking and insurance businesses in Fortis’s Benelux home markets and on expanding selected businesses beyond the Benelux borders, particularly in Europe and Asia. “We cannot do everything everywhere,” said van Rossum (Milwaukee Journal Sentinel Online, September 30, 2003.) Fortis, Inc. thus began the process of becoming Assurant, a publicly traded company, and in October 2003 van Rossum resigned as chairman of Fortis, Inc. to allow the position to be filled by an outside director. The February 2004 IPO on the New York Stock Exchange netted Fortis a total profit of over $2 billion. Fortis also retained an approximately 35 percent stake in Assurant.

SPECIALIZED IN SPECIALTY MARKETS Fortis’s presence in Asia began in 1902 when its ancestors opened a banking branch in Shanghai, China. Van Rossum considered the region a major growth platform for his corpora-


Anton van Rossum

tion, particularly in bancassurance. In an August 28, 2003, interview printed in The Cantos Transcript, van Rossum was asked about Fortis’s expanding life assurance business in Asia. His response reflected his concept of creating and operating specialty markets: “We do that in a very modest way by not spending significant amounts of money but creating very nice initiatives that can flourish and develop. . . . And all of our ventures, be it in bank insurance in China, in asset management in China, or in Malaysia in bank insurance, are doing very, very nicely and over-delivering in terms of promise.” Encouraged by its successful entry into insurance activities in Malaysia and China, in March 2004 Fortis signed an agreement with Muang Thai group, a leader in the Thailand insurance sector. Fortis acquired 25 percent of Muang Thai Life Assurance, 25 percent of Muang Thai Insurance, and 20 percent of Muang Thai Holding. Announcing the agreement, van Rossum said: “Muang Thai is the ideal strategic partner to jointly develop Fortis’ presence in Thailand, which is one of Asia’s most promising countries in terms of economic growth potential. We are delighted about this new strategic step [which] will help us make the partnership a resounding success” (Start-up.es, March 8, 2004).

PRAISE AND SUPPORT On June 11, 2001, BusinessWeek announced its choice of fifty European business leaders with exceptional expertise in managing change in an economic environment of both great promise and great uncertainty. Van Rossum was one of those selected. The article noted that his greatest success up to that point was creating a giant insurance sales operation of Belgium’s Generale Bank, which Fortis acquired two years before he became CEO. The bank sold more than $900 million in life insurance in the final quarter of 2000—$500 million more than Generale had predicted. The BusinessWeek article noted that Fortis was “known for its knack in executing one of the trickier acts in finance—selling insurance products through a bank,” and that “Fortis owes a good bit of that success to its CEO, Anton van Rossum.” The article pointed out that, inspired by Fortis’s success, other companies were tempted to enter the bancassurance arena. As van Rossum commented, however, “It took us a long time to get there”; he added that cultural differences between the banking and insurance industries made success in the bancassurance business difficult and that a great deal of persuasion was necessary to get them to cooperate. “You have to show you get better results by unifying the whole range of products and selling them through all the distribution channels,” he said.


Following speculation in a Belgian newspaper in early 2004 about the security of van Rossum’s position with Fortis, the company immediately posted a statement that read: “The Chairmen of Fortis, Jaap Glasz and Maurice Lippens, hereby want to expressly confirm their trust in Anton van Rossum as CEO and in the strategy being implemented” (La Bourse, January 16, 2004).

See also entry on Fortis, Inc. in International Directory of Company Histories.


“Fortis Announces Proposed Initial Public Offering of U.S. Insurance Operations,” Insurance Newscast, September 26, 2003, http://www.insurance-portal.com/092603.htm#6. “Fortis CEO Open to Bids for U.S. Insurance Ops,” Insurance Newscast, September 26, 2003, http://www.insuranceportal.com/092603.htm#5. “Fortis Chairmen Confirm Trust in CEO Anton van Rossum,” La Bourse, January 16, 2004, http://bourse.tf1.fr/ detail_actualite.phtml?news=153781. “Fortis—Interim Results,” The Cantos Transcript, August 28, 2003, http://www.cantos.com/system/newtypes/eurotopwrapper.jhtml?mainStoryId=24400072&_requestid=197248. Manning, Joe, “Fortis to Spin Off U.S. Insurance Arm in IPO,” Milwaukee Journal Sentinel Online, September 30, 2003, http://www.jsonline.com/bym/news/sep03/ 173830.asp. “Muang Thai Is the Ideal Strategic . . . ,” March 8, 2004. Start-up.es, http://www.start-up.es/ affiche_noticia.php?l=LAN&source=IN_84537.xml. Noonan, Brendan, “Fortis Reveals Few Landmarks as it Maps Future,” International Insurance News Update, December 26, 2000, p. 5. “Press Release: The Hartford to Purchase Fortis Financial Group for $1.12 Billion,” January 25, 2001, http:// ir.assurant.com/pressroom/ releaseDetail.cfm?ReleaseID=127825. “Stars of Europe—Financiers: Anton van Rossum, Chief Executive, Fortis,” BusinessWeek Online, June 11, 2001, http://www.businessweek.com/magazine/content/01_24/ b3736628.htm.

—Marie L. Thompson

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Thomas H. Van Weelden 1955– Chairman, chief executive officer, and president, Allied Waste Industries Nationality: American. Born: 1955, in Chicago, Illinois. Family: Son of Henry (an owner of a small commercial waste collection company) and name unknown. Career: 1975–1992, hauling-company and landfill owner; Allied Waste, 1992, vice president of development; 1992–1997, president and COO; 1997–1998, CEO; 1998–1999, chairman and CEO; Allied Waste Industries, 1999–2001, chairman and CEO; 2001–, chairman, CEO, and president. Address: Allied Waste Industries, 15880 North Greenway–Hayden Loop, Suite 100, Scottsdale, Arizona 85260-1649; http://www.alliedwaste.com.

■ Waste-industry executive Thomas H. Van Weelden helped to found the company that eventually became Allied Waste Industries when in January 1992 he became its vice president in charge of development. He was elected to its board of directors in March 1992 and was promoted to president and chief operating officer in December of the same year. Van Weelden served as chief executive officer of Allied Waste beginning in July 1997 and as chairman beginning in December 1998. Additionally, Van Weelden reassumed the position of president in October 2001. During his years of leadership, Van Weelden concentrated on making key acquisitions to strengthen the company’s core assets—divesting the company of peripheral interests gained in the process—and expanding operating regions through internal growth and vertical integration. Van Weelden’s actions steadily improved the strength of the company.

THE GARBAGE COMPANY As of 2004 Allied Waste Industries was the second largest nonhazardous solid-waste management company in the United States (behind only Waste Management), with 2003 reve-

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nues of over $5.2 billion, assets of nearly $14 billion, and a workforce of approximately 29,000 employees. Headquartered in Scottsdale, Arizona, Allied Waste was serving approximately 10 million residential, industrial, and commercial customers in 118 major markets across 38 states. Van Weelden operated Allied Waste as a vertically integrated company, providing key services in the interrelated areas of collection, transfer, disposal, and recycling, along with other support areas. Collection services represented about 62 percent of the business’s revenues, disposal and transfer 31 percent, recycling 3 percent, and other support services 4 percent. Van Weelden was proud of the fact that the company did not deal in hazardous waste, medical waste, or waste-to-energy conversion, all noncore operations that Allied Waste eliminated through the end of the 1990s.

AREAS, REGIONS, DISTRICTS In 2001 Van Weelden reorganized Allied Waste operations into four areas—Western, Central, Eastern, and Southern— and further divided those four areas into eight geographic operating regions. Such major reorganizations as engineered by Van Weelden helped tremendously to streamline the operations of the rapidly growing company. Reporting to the company’s eight regions were 58 districts, each comprising specific local organizations of independent companies. By 2004 the company collected garbage through a network of 323 collection companies, 168 transfer stations, 169 active landfills, and 61 recycling facilities.

COLLECTION COMPANIES AND THEIR SERVICES Residential, commercial, and industrial customers were all served by the network of collection companies set up by Van Weelden. Residential customers were served both on an individual basis and, more rarely, collectively through municipal contracts, while commercial and industrial customers received disposal services tailored to their needs at the local, regional, and national levels. Allied Waste’s transfer stations were a crucial link in the company’s overall operations, as they maximized efficiency in disposing of waste to both landfills and recycling facilities. Allied Waste’s countrywide sanitary landfills had average remain-


Thomas H. Van Weelden

ing lives of 40 years in 2004, and Van Weelden offered assurances that the company’s waste management experts employed the most up-to-date methods in minimizing the effects on the environment produced by their landfills, all of which strictly adhered to federal, state, and local regulations. Allied Waste also ran customized programs for managing the disposal of special nonhazardous wastes. The company’s recycling facilities, meanwhile, provided handling and collection services as well as educational programs in some areas. The company annually recycled upward of 2.5 million tons of waste, including paper, glass, plastics, and construction debris. The educational programs set up by Van Weelden ensured that the latest recycling information would be circulated both within his organization and to customers.

trash—what Van Weelden called vertical integration. Second, they would decentralize management, providing experienced field personnel with the latitude to make decisions about collections, transfer, landfilling, and recycling. Third, both men felt that the company would benefit from internalization, specifically through owning all of its trucks and landfills. Another of Ramsey’s and Van Weelden’s growth requirements was to stay away from hazardous waste and large, privatized municipal-collection contracts. Instead, they decided to concentrate on individual commercial and residential accounts, where rates could be raised without governmental approval. They estimated that they could raise rates by about 4 percent each year, assuming the company’s growth to average 6 percent.

BUYING AND SELLING TRASH GARBAGE IN THE BLOOD Henry Van Weelden—Thomas’s father—started a small commercial trash-collection company in Chicago, Illinois, in 1948. Thomas began working for his father at the age of fourteen, in 1969, and became a driver only two years later. Coming from a family of garbagemen, the younger Van Weelden saw a chance to make his own way in waste management when in 1975 he moved 120 miles south to Danville, Illinois, and bought a two-truck operation from a retiring owner. Van Weelden fondly remembers those early days of his career: starting trash collection at four o’clock in the morning, finishing at noon, showering and taking a nap, and then spending the rest of the day wearing a shirt and tie and looking for new customers. Van Weelden learned valuable lessons that he would make use of later in his career—generally about achieving goals, and specifically about gaining permission to build trash dumps while fighting local opposition. In the early 1990s Van Weelden met Roger Ramsey, who was operating a small garbage collection company in Houston, Texas. In 1992 Van Weelden, Ramsey, and other operators merged into Allied Waste and placed the company’s headquarters in the Phoenix, Arizona, area. Ramsey became Allied Waste’s chairman. At this time the company was small compared to many other waste management companies in the country, such as Waste Management and Browning-Ferris Industries. In fact, on one financial report the company creatively listed the increasing values of life-insurance policies taken out on top executives among its assets.

CREATING OPTIMAL CONDITIONS Van Weelden and Ramsey felt that their company could expand respectably if they adhered to some general growth guidelines. First, they would build an infrastructure capable of handling the entire process of collecting and disposing of


By the end of 1995 Van Weelden and Ramsey had made more than 120 small acquisitions. By 1996 they were ready for a $1.5 billion acquisition—four times its size at the time—of the North American trash operations of Laidlaw. Following that purchase, they bought the municipal landfills of San Diego, California, for $184 million. After the company was formed in 1992, it garnered about $35 million in annual revenues. By 1998 annual revenues had reached nearly $1.6 billion, and in 2003 revenues were in excess of $5.2 billion. Between 1993 and 2004 Weelden was directly or indirectly involved in securing 275 acquisitions, including 50 in the year 2000 alone.

BUYING BFI The largest of Van Weelden’s acquisitions occurred when Allied Waste bought larger rival Browning-Ferris Industries (BFI) in 1999 for $9.1 billion in cash, in a deal that brought together the second- and third-largest trash-hauling operations in North America. Van Weelden saw the new combination as smart merger of two companies whose respective operating bases had very little overlap. The deal enabled Allied Waste, which operated primarily in the Midwest and the Northeast, to expand into BFI’s territory in the western United States, creating a national network of landfill, collection, transfer, and recycling concerns. The new company, headed by Van Weelden as chairman and chief executive officer, was renamed Allied Waste Industries and was based in Scottsdale, Arizona. Van Weelden expected the combination of the companies to save more than $250 million yearly through the cutting of overhead costs. Van Weelden was able to substantially achieve those annual savings goals by June 30, 2000, when he had reduced the number of employees by about 2,900, closed 51 facilities, and instituted other cost-saving measures.

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Thomas H. Van Weelden

SELLING NONCORE BUSINESSES To accompany these direct savings, Van Weelden pawned off nearly $1 billion in nonstrategic businesses. In April 2001 he sold the company’s interests in three American Ref-Fuel operations, to American Ref-Fuel Company, and restructured relationships with its four remaining waste-conversion facilities so that Ref-Fuel could assume operational control. Van Weelden announced that the transactions completed the program that the company had initiated to divest itself of all noncore assets, which resulted in debt reduction of about $300 million and the freeing of about $130 million in committed letters of credit. After a decade of running Allied Waste, Van Weelden had built a company that earned $5.6 billion in revenues in 2001. The company generated $1.9 billion in earnings before interest, taxes, depreciation, and amortization and had an operating margin of 34 percent—the highest in the industry.

LOCAL MANAGEMENT Van Weelden was dedicated to the business principles used to successfully increase the breadth of Allied Waste. With customers all across the country, Van Weelden knew that garbage operations would necessarily differ on the west coast, in the middle of the country, and on the east coast. Thus, he placed local executives in charge of each particular region, giving them the responsibility to handle day-to-day decisions that would affect both employees and customers. Van Weelden found that such discretionary authority allowed the company to have the lowest sales, general, and administrative expenses as a percentage of revenues in the industry in 2001, at 7.5 percent. Most of Van Weelden’s top personnel had worked in waste management for at least 25 years and were former owners and multiple-generation industry professionals—like him, they had gotten their starts hauling trash out of trucks.

INVESTMENT AND SUSTAINABLE BUSINESS Van Weelden was able to consistently provide excellent service by regularly investing in equipment, technology, and training programs that maximized operational performance and minimized conditions that were hazardous for customers, employees, and the environment as a whole. Allied Waste provided ample company-wide resources, including technical support, recommended practices, direction in regulated areas, and the benefits of economies of scale.

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On the negative side, Allied Waste held a large amount of debt, especially as a result of the BFI acquisition. Van Weelden did not consider this large amount a weakness, however, because his use of vertical integration facilitated better control of cash flow. He described this with a real-life garbage example: when Allied Waste invested money in the development of a landfill, they could be assured that ample garbage would be put into that landfill if they were operating waste collection in that area—thus, adequate revenue would be generated from the new expense. Van Weelden called such a scenario sustainable business. In 2004 the activities directed by Van Weelden continued to generate a strong cash flow, along with a better stock price and volume statistics, for Allied Waste. Although the company had yet to experience the benefits of the economic recovery that began in 2003 (the waste-collection industry normally lags behind such recoveries), Van Weelden declared that the year resulted in the successful implementation of its financing plan, with strengthening of capital structure, increasing of liquidity, and improving of cash flow, including a $100 million reduction in interest for the following year. Since the acquisition of BFI, Allied Waste generated positive free-cash flow for nearly every financial quarter. Looking at 2004, Van Weelden continued to cut costs and improve the company’s efficiency, even as it increased capital spending to drive future growth.

OTHER ACTIVITIES Van Weelden was a member of the board of directors of the Environmental Research and Education Foundation, based in Alexandria, Virginia. Van Weelden kept Allied Waste active in the greater Phoenix area for over 10 years. He partnered a multiyear agreement beginning in 2003 with the National Hockey League’s Phoenix Coyotes and Glendale Arena, a state-of-the-art entertainment facility, to provide exclusive waste-management services.

See also entry on Allied Waste Industries, Inc. in International Directory of Company Histories.

SOURCE FOR FURTHER INFORMATION

Allied Waste Industries Web site, http://www.alliedwaste.com. —William Arthur Atkins


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Daniel Vasella 1953– Chairman, Novartis AG Nationality: Swiss. Born: November 1953, in Fribourg, Switzerland. Education: University of Berne, PhD, 1980. Family: Married Anne-Laurence (trustee, Foundation Switzerland di Cardiologia); children: three. Career: Sandoz Pharma, 1993, head of worldwide development; 1995–1996, CEO; Novartis, 1999–, chairman. Address: Novartis AG, 608 Fifth Avenue, New York, New York 10020-2303; Lichtstrasse 15, Basel, Switzerland CH 4002; http://www.novartis.com.

■ Daniel Vasella led one of the largest corporate mergers in history, the $41 billion 1996 union of Sandoz and CibaGeigy, which formed Novartis, a leading worldwide pharmaceutical firm. At that time, all pharmaceutical firms were affected by the high cost of developing drugs and the demand for lower-priced drugs by health maintenance organizations (HMOs). The Ciba-Sandoz merger was one of five major mergers between 1991 and 1996. (The other four mergers were Pharmacia and Upjohn, Glaxo and Wellcome, Roche Holding and Syntex, and Bristol-Myers and Squibb.) In 2002 Novartis delivered record results and had consistent growth for the sixth straight year. Vasella’s intensely competitive nature helped convince early doubters regarding the wisdom of the merger. However, his work as an executive was a dramatic contrast to his early career as a medical doctor.

EARLY PROFESSIONAL LIFE After marrying in 1978, Vasella completed medical school and a string of residencies. In 1984 he began working as a physician at a university hospital in Bern, Switzerland. While he enjoyed direct care of patients, he wanted to learn more about the business of medicine. In 1987 Vasella sought the advice of Max Link, a senior executive of Sandoz, the Swiss conglom-


Daniel Vasella. AP/Wide World Photos.

erate, and subsequently he was offered a job at the company’s New Jersey headquarters. At age 34 Vasella joined Sandoz as a trainee. He became product manager for a new drug, Sandostatin, approved to treat a rare pancreatic cancer. The head of Sandoz’s U.S. pharmaceutical unit joked that Vasella could consider his job well done if he made Sandostatin a $5 million product, a minuscule amount for a branded drug. But it was no joke to Vasella, who realized that to make Sandostatin a commercial success he had to find new uses for it. He believed he could do that only by radically streamlining and integrating the drug-development process.

IMPACT ON DRUG DEVELOPMENT PROCESS At Sandoz, as at most pharmaceutical companies in the 1980s, new products came to market through a three-step se-

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Daniel Vasella

quence. Researchers sought out potential drugs. Development teams tested and refined them in the hope of winning regulatory approval. Finally, the approved drugs were marketed to physicians. These steps were typically conducted in isolation, so developers sometimes found out too late that a candidate drug had severe side effects or could not be mass-produced economically. Sometimes marketers discovered late in the process that there was little demand for the new drug that they would soon be asked to sell. Vasella changed this three-step system. He had clinical researchers, chemists, and production and marketing managers collaborate to locate profitable new uses for Sandostatin. His efforts paid off, as Sandostatin won approval for treating the side effects of certain cancers, and sales rose rapidly, reaching $486 million in 2001. In 1993 Vasella returned to Switzerland to head corporate marketing at Sandoz’s headquarters in Basel, Switzerland. The next year he briefly led the company’s global drugdevelopment programs, and he was COO before becoming CEO of Sandoz’s drug business in 1995. Vasella applied the lessons he had learned while managing Sandostatin to all the company’s drug-development efforts.

CONSOLIDATION LEADS TO MERGER During 1996 the forces conducive to industry consolidation were apparent. To survive in an intensely competitive new environment, drug companies had to cut overlapping costs while developing profitable new treatments. Specialized effective drugs offered the highest margins and best price protection against HMOs and other health-care consumer groups, which sought to force drug costs down. By 1996 Sandoz and Ciba-Geigy, Swiss companies founded in Basel at the end of the 19th century, were both still profitable enough to survive on their own. But Vasella saw the potential for economies of scale. Sandoz had divisions in pharmaceuticals, nutrition, agribusiness, and chemicals; CibaGeigy had divisions in health care, agriculture, and industrial chemicals. The two firms reasoned that a merger would strengthen their combined position in the fast-consolidating pharmaceutical industry, enabling them to exploit new synergies between pharmaceuticals and agrichemicals. In a PR Newswire statement made on March 7, 1996, Vasella predicted: “We will build our company based on a common spirit of entrepreneurial energy, teamwork, and enthusiasm for our new future.” When the Sandoz–Ciba-Geigy merger was announced, Sandoz managers reiterated the fact that this action was not a takeover but a marriage of equals. Following regulatory approval, Vasella was named CEO of the new company. The combined company was named Novartis, a word Vasella appears to have invented himself from novae artis, Latin for “new skills.” Novartis aimed to maintain its core industries of pharmaceuticals, agribusiness, and nutri-

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tion. When the merger was completed, health care represented 59 percent of Novartis’s business; agribusiness, 27 percent; and nutrition, 14 percent. Under the terms of the transaction, Novartis was a tax-free combination that absorbed both CibaGeigy and Sandoz. Sandoz shareholders received 55 percent, and Ciba-Geigy shareholders received 45 percent of the merged company.

POSTMERGER MANAGEMENT STYLE Vasella described his own management style as a “Top Down, Bottom Up, Top Down” process with a two-pronged focus: being clear in decision making and getting the best from good people. TD-BU-TD—as it was known in the company—meant that top management decided what it wanted, sent those targets down through the organization for consultation, and then issued the final plan. The Financial Times (London) on February 10, 1997, quoted Vasella as saying: “We want to send clear signals that outstanding success will be outstandingly rewarded. We have set written targets and compensation for the top 400 people for the next three years, payable in either half cash, half options or two-thirds cash and one-third options.” Vasella also set a new goal: Novartis would aim to become the leader in life sciences and establish a strong healthcare position in the therapy and product areas as well as emerging technologies. Novartis generally outperformed the market. Emphasis on innovative products combined with strong marketing made the company highly competitive. In the United States, Novartis’s pharmaceutical sales grew 12 percent in 2001, making Novartis one of the fastest-growing major pharmaceutical companies. In 2002 the U.S. market accounted for 42 percent of the company’s global pharmaceutical business sales. Analysts at Sanford C. Bernstein & Company predicted that Novartis’s total sales would grow at a combined annual growth rate of 9 percent between 2002 and 2007. Gross profit was expected to grow 10 percent during that period, reflecting increased efficiency. Novartis finished 2002 with high profit margins and a strong cash position. Novartis was initially successful with the introduction of its breakthrough cancer drug, Gleevec, a capsule that combated certain types of leukemia and stomach tumors. The company also answered the global economic downturn that began in 2001 by laying the foundation for future growth, having spent heavily on research and development. Its prescription drugs included treatments for nervous system and ophthalmic disorders, cardiovascular diseases, and cancer; it also made dermatological products and drugs to prevent organ-transplant rejection. Novartis’s consumer health unit included such brands as Gerber baby foods, ExLax, Maalox, Tavist, and Theraflu. The Ciba Vision Unit made eyedrops, contact lenses (Focus), and contact lens solutions. Its animal health unit of-


Daniel Vasella

fered parasite control products (Sentinel) and pharmaceuticals for pets and farm animals.

optimistic overall, as all early indicators were that the merger Vasella led was substantively successful.

CONTROVERSY OVER NOVARTIS

See also entries on Sandoz Ltd. and Novartis AG in International Directory of Company Histories.

Despite its success, Vasella’s firm had its share of controversy. In 2001 Novartis announced that it would give Gleevec away to people around the world who could not otherwise afford it. Experts estimated that as many as 600,000 patients— most of them in poor countries—could benefit. At the time, Gleevec cost an average of $27,000 a year. Novartis created an international patient-assistance program, run by the Max Foundation, a tiny nonprofit that Novartis selected after established charities turned down the job. But critics said that Novartis distributed the drug to just over 1,500 patients outside the United States. They contended that Novartis’s so-called charity was a ploy for its commercial goal of building Gleevec sales to $1 billion annually. Moreover, as of 2003, Novartis was the target of a lawsuit regarding its role in South Africa and the regime’s policy of apartheid. The suit, brought under the U.S. Alien Tort Claims Act, which was also used to pursue Holocaust claims, accused 34 companies of having supported and financed apartheid. Nonetheless, Vasella continued to be



Capell, Kerry, “Healing Novartis,” BusinessWeek, November 8, 1999. ———, “Novartis: CEO Daniel Vasella Has a Hot Cancer Drug and Billions in the Bank. What’s His Next Big Move?,” BusinessWeek, May 26, 2003. Fallon, Padraic, “Dr. Vasella Revives Novartis,” Euromoney, November 2000, p. 44. Frey, Odette, “Drug Lord,” Time, July 29, 2002. Leaf, Clifton, and David Pilling, “‘Temptation Is All around Us’,” Fortune, November 18, 2002, p. 109. Tagliabue, John, “Already a Giant, Novartis Wants to Bulk Up,” New York Times, February 23, 2003. —Tim Halpern

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Ferdinand Verdonck Former managing director, Almanij Nationality: Belgian. Education: Catholic University of Leuven, BS; LLD; University of Chicago, MA. Career: Continental Illinois Bank of Chicago; Lazar Freres; Bekaert, 1984–1992, operational and administrative duties; Almanij, 1992–2003, managing director; AgfaGevaert, 2002–2003, managing director.

■ Ferdinand Verdonck was born in Belgium and left his country to attend an American university. After graduation he stayed in the United States for a few years to work at large corporations. He returned to Belgium and in 1992 was appointed the managing director of Almanij, a Belgian financial holding company. Verdonck stayed at Almanij for the rest of his career, leading the company and its subsidiaries to financial success.

STARTING IN THE UNITED STATES Verdonck received a degree in economics and a doctorate in law from the Catholic University of Leuven. He also received a master of arts degree in economics from the University of Chicago. Finished with his education Verdonck entered the business world at the Continental Illinois Bank in Chicago. He worked there for several years before moving to Lazar Freres and Company in New York. In 1984 Verdonck returned to Belgium to work for Bekaert, where he had operational and administrative duties. In 1992 Verdonck was appointed to the post of managing director and member of the executive committee of Algemene Maatschappij voor Nijverheidskrediet (General Company for Industrial Credit), otherwise known as Almanij. Almanij was started in 1931 as part of a restructuring during financial crisis. Once a commercial bank, the company regrouped its industrial assets in Belgium and Hungary into a new holding company called Almanij. From the beginning the company focused on long-term stability and profitability. Under Verdonck’s guidance and into 2004 those were the characteristics for which the company was known. Almanij be-

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came an international system of financial organizations and groups. In 2004 it consisted of four sections headed by four companies operated independently of one another, each having its own purpose. One of the largest companies was the KBC Groupe de Bancassurance, a private banking and insurance company in Belgium that focused mainly on small and medium-sized businesses. Another company was Kredietbank Luxembourg, a group of private banks mainly in Spain, Luxembourg, Germany, France, Great Britain, Ireland, and Monaco. The third company, Gevaert, was an investment company with stakes in many leading media and technology sector stocks, one of the largest of which was Agfa-Gevaert, the printing and image specialist. The last group was Almafin, a leasing and financing company focused on the leisure and theme park sector.

EXPANDING ALMANIJ INTERESTS Interested in new ways to improve business for Almanij, in 1998 Verdonck worked on a complex merger to create Belgium’s largest banking and insurance group. This merger fused Kredietbank (managed by Almanij), CERA (a cooperative), Fidelitas (also managed by Almanij), and ABB (owned by MRBB) into two companies. The new group, which was controlled by the shareholders of Almanij and the holding entity CERA Holding, became the market leader in a number of banking segments. In 2000 Verdonck discussed the idea of opening a bank in Argentina, a country open to such opportunities. The objective was to transfer a model of the bank specialized to Argentina, because the market in Argentina seemed rife for a service such as the one Urquijo Bank had to offer. Argentina seemed to have gained some stability, and the prospects were very good. In 2004 the options were still being discussed. In 2002 Verdonck became managing director of Agfa-Gevaert. The supervisory board of NASDAQ Deutschland met in 2003 to elect its chairman and to appoint the members of the management board, and Verdonck (NASDAQ Europe) was elected. According to the Exchange Handbook Web site Jim Weber, NASDAQ Deutschland, commented, “The make-up of the Supervisory and Management Boards reflects a high degree of national and international expertise. The market model gives banks and private investors a tailor-made trading vehicle


Ferdinand Verdonck

that offers efficiency, transparency, and competitive prices” (February 26, 2003). On June 30, 2003, Verdonck retired as managing director and member of the executive committee of Almanij. Verdonck was a director at other companies and was involved in a number of cultural and social organizations.

See also entry on Almanij NV in International Directory of Company Histories.


“Almanij: The Financial Sector,” April 6, 2003, http:// uk.biz.yahoo.com/p/a/almb.br.html. “Almanij NV,” http://www.hoovers.com/free/co/ factsheet.xhtml?COID=102178.


“Bayer Parts with 30 Percent Agfa Share,” Printing World, June 10, 2002, http://www.dotprint.com/newspast/ 02_06_10.shtml. “Commission Merger Task Force Nod for Big Belgian Banking Group,” European Report, May 27, 1998. “Goldman Sachs Buys Agfa Share,” Printing World, June 10, 2002, p. 6. “Newly Established NASDAQ Deutschland Announces Board Appointments,” February 26, 2003, http://www.exchangehandbook.co.uk/news_story.cfm?id=41514. “Profile,” http://www.almanij.be/r3dengine.asp?reference= 01%2D01%2E01%2D01&lang=en&sess=375479352&.

—Catherine Victoria Donaldson

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Ben Verwaayen 1952– Chief executive officer, BT Group Nationality: Dutch. Born: February 1952, in The Netherlands. Education: Utrecht University, MS. Family: Married (wife’s name unknown); children: two. Career: ITT Nederland, 1975–1983, manager of public relations; 1983–1988, executive vice president and director of operations; Koninklijke PTT Nederland, 1988–1997, president and managing director of PTT Telecom; Lucent Technologies, 1997–1999, executive vice president of international operations; 1999, chief operating officer; 1999–2001, vice chairman of the management board; BT Group, 2002–, CEO. Address: BT Group, BT Centre, 81 Newgate Street, London EC1A 7AJ, United Kingdom; http://www.btplc.com.

■ In early 2002 Bernardus “Ben” Verwaayen, well known as Ben, became chief executive officer of BT Group, which was known as British Telecom prior to a November 2001 name change. Before joining BT, Verwaayen recorded a long history of employment in the telecommunications industry. At BT he faced one of his greatest challenges as a business leader: resurrecting a venerable European telecommunications company. While always striving to maintain a view of the bigger picture, Verwaayen remained a modest business executive with an open-door policy.

BEGINNING YEARS IN THE TELECOMMUNICATIONS INDUSTRY Verwaayen was born and raised in the Netherlands. He received a master’s degree in law and politics from Utrecht University; in 1975 he began his career with ITT Nederland. There he served in a variety of management positions, becoming director of operations and executive vice president by the time he left in 1988. He then became president and managing director at PTT Telecom, a division of Koninklijke PTT Ne-

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Ben Verwaayen. © Reuters NewMedia Inc./Corbis.

derland (KPN), the national telecommunications company of the Netherlands. Verwaayen remained with PTT Telecom until 1997, when he left for the United States to become executive vice president of international operations for Lucent Technologies. He was a cofounder of Unisource, an alliance of telecom companies that eventually failed. Lucent Technologies, spun off from AT&T in 1996, was one of the largest suppliers of hardware and software to the telecommunications industry. Due primarily to the explosion of the Internet, Lucent had a remarkable rise in the business world—as, coincidentally, did Verwaayen. The massive changes in the telecommunications industry involved shifts from the support of traditional phone and fax businesses to the support of the burgeoning need for the transmission of data, specifically networked computer data, across the world. Telecommunications companies put the necessary infrastructure in


Ben Verwaayen

place and expanded and innovated the associated technology. As Verwaayen told the interviewer Martyn Warwick of Communications International, “Basically, all the distribution channels and methods of working that have been built up during the past two hundred years are about to become redundant. Broadband access is on the way and it will be all-important. Broadband will enable all the new technologies, services and applications that will drive e-business, e-commerce, in fact, eeverything” (November 1999). Verwaayen understood that the price-conscious customer would always look for value, even when purchasing new technology. Responding to the interviewer Ian Grayson in the Australian, he remarked that one of Lucent’s strengths was its ability to “incorporate new technology into existing networks without having to throw away existing investments” (October 13, 1998). Lucent possessed the well-respected research and development facility Bell Labs—where Nobel Prize winners were employed—which would lead the company into the future. In speaking to Warwick, Verwaayen described Bell Labs as “a real jewel in our crown. R&D is at the epicenter of Lucent’s ability to innovate. I cannot emphasize enough how important that is” (November 1999). Verwaayen related that Lucent spent $4 million a year on R&D at that time he felt that the key to a company’s success was its ability to innovate in addition to providing top-notch customer service. He noted in another interview, however, that it was difficult to expect Nobel Prize winners to be concerned with such business-centered concepts as the speed with which products are brought to market.

and had to make some tough decisions while at Lucent” (December 13, 2001). A little over a year after his appointment, in April 2002, Verwaayen announced layoffs of 17 percent of the company’s workforce over three years as well as the goal of eliminating more than $14 billion in debt over the same time period. Verwaayen put a stop to BT’s expansion, pulling the company’s focus back to its core business: serving customers through land lines in Great Britain. BT spun off its mobile-phone unit, mmO2, and withdrew from ventures and alliances in foreign markets. Verwaayen especially strove to highlight the need for good service—especially to provide the right service in new ways. Emphasizing his vision for high-speed Internet access, he set forth the goal for BT to have five million new broadband customers by 2006. To assist in the attainment of this goal, BT cut prices for broadband products; analysts liked what Verwaayen was doing. A contributor to the Economist wrote, “BT’s moves have been welcomed as sensible, responsible, and pragmatic, rather than revolutionary” (April 13, 2002). Verwaayen did not completely abandon the possibility of BT’s forging ventures and partnerships in the future; he did cut those that had been failing and would thenceforth wait for alliances that made sense. By April 2004 BT had already met its goal of establishing two million wholesale broadband connections over the course of the year. Also in 2004 BT and Hewlett Packard announced a global technology alliance that would allow businesses to obtain information technology and phone services together as a bundled package. With the landline and customer-service business core back to full strength, as well as through broadband access and well-crafted, targeted partnerships, Verwaayen and BT aimed to attract new clients and construct a new business model for the company.

ON TO BT On February 1, 2001, Verwaayen was installed as the chief executive of BT, formerly British Telecom. He agreed to a two-year contract wherein he would make approximately $1 million annually, with bonuses based on performance. In the few years prior to Verwaayen’s joining BT the company had aggressively pursued new ventures, but those forays had brought the company large amounts of debt. The previous CEO had begun to rein in the company’s expansion; the analyst Andrew Darley remarked in Communications Today, “Verwaayen has come in at a time when he can make an okay company better instead of an awful company better right away. He has a hell of a challenge to make sure the company keeps growing” (December 13, 2001). Darley commented on Verwaayen’s impressive knowledge of broadband and on his credentials—as well as on his anonymity: “The problem is that he is from God knows where and he could take the company God knows where. He sounds like the right type of guy” (December 13, 2001). The BT chair Sir Christopher Bland told London’s Daily Star, “Ben was our unanimous first choice by some margin. He has a good background in culture change


VERWAAYEN STAYS CONNECTED TO HIS STAFF AND CUSTOMERS Verwaayen maintained close relations with his employees by traveling to all of the company’s offices in order to preach the goals and vision of BT. Richard Tomlinson wrote in Fortune International, “Verwaayen has his own Web site, where he answers an average of two hundred e-mails a day from staff” (October 14, 2002). When attending business presentations on new products and services he was quick to ask about public response, highlighting his pro-customer service mentality.

See also entry on BT Group plc in International Directory of Company Histories.


Donegan, Michelle, “BT Chief: No Network Sale, but Yes to Global Partners,” CommunicationsWeek International, March 18, 2002, p. 1.

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Ben Verwaayen Grayson, Ian, “The World According to Ben Verwaayen,” Australian, October 13, 1998, p. 56.

Tomlinson, Richard, “BT, Phone Home,” Fortune International (Asia Edition), October 14, 2002, p. 82.

Pringle, Rodney L., “BT Selects Verwaayen as New CEO,” Communications Today, December 13, 2001.

“The Verwaayen Ahead: BT,” Economist, April 13, 2002.

Schenker, Jennifer L., “BT Lost It, and We Have to Get It Back,” Time International, March 18, 2002, p. TD10.

Warwick, Martyn, “E Is for Everything,” Communications International, November 1999, p. 84.

“Seven Million Pounds Sterling Bill for Ben,” Daily Star (London), December 13, 2001, p. 40.

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—Deborah Kondek


■■■

Heinrich von Pierer 1941– President, chief executive officer, and chairman, Siemens Nationality: German. Born: January 26, 1941, in Erlangen, Germany. Education: University of Erlangen-Nuremberg, Germany, JD, 1968; diploma in economics, 1969. Family: Married. Career: University of Erlangen-Nuremberg, 1965–1969, academic assistant and later assistant professor; Siemens: 1969–1977, staff attorney in Corporate Finance Department; 1977–1987, sales and marketing positions, Kraftwerk Union Group; 1988–1989, head of business administration, Power Generation Group; 1989–1991, president of Power Generation Group; 1991–1992, deputy chairman of Managing Board; 1992–, president, chief executive officer, and chairman. Awards: Corporate Leadership Award, Siemens Information and Communications Networks, 2001; Global Leadership Award, American Institute for Contemporary German Studies, 2002; Award for Understanding and Tolerance, Jewish Museum Berlin, 2002. Address: Siemens, Witelsbacherplatz 2, 80333, Munich, Germany; http://www.siemens.com.

■ In the years since Heinrich von Pierer took over as chief executive officer of Germany’s Siemens in the fall of 1992, the giant electronics and electrical engineering company dramatically increased its sales and assets worldwide. Although von Pierer’s relationship with the company’s investors was occasionally a bit rocky, in the end he had the satisfaction of seeing his company outpace the competition on almost every front. Under von Pierer’s direction, the company’s net return on sales climbed from 2.4 percent the year after he took over as CEO to 4 percent in the first quarter of fiscal 2004 (October 1, 2003–December 31, 2003). As of mid-2004 von Pierer’s future with Siemens was in doubt. Although his contract was scheduled to expire in Sep-


Heinrich von Pierer. AP/Wide World Photos.

tember 2004, he was expected to accept a two-year extension that would keep him in control until the fall of 2006. Investors, many of whom had called for his resignation only a few years earlier, now found the prospect of his departure more than a little daunting. Even if von Pierer stayed on until 2006, as seemed likely, speculation was rife about his eventual successor. According to a report by Jack Ewing in BusinessWeek, the leading candidates were Klaus Kleinfeld, Johannes Feldmayer, and Thomas Gaswindt. Both Kleinfeld and Feldmayer were members of Siemens’s Corporate Executive Committee. Kleinfeld had distinguished himself by turning around the company’s American operations as head of Siemens’s U.S. division, while Gaswindt had won praise for his leadership of the company’s fixed-line telecommunications equipment operations. Feldmayer was considered the least likely of the three to be tapped as von Pierer’s successor, since his background was

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in the financial side of the company, which traditionally has chosen its top executives from among the ranks of its engineers.

CRITICIZED FOR MANAGEMENT STYLE Von Pierer’s management style frequently came under fire in the mid-1990s from investors who felt that he moved too slowly and cautiously in shaping the company into a sleek international competitor. In the end von Pierer was vindicated when his slow, deliberate approach to management led Siemens to significantly better performance than such competitors as the Dutch-based Philips Group and Swiss-Swedish ABB. Both Philips and ABB fared poorly during the worldwide economic recession of the early 2000s, while Siemens posted impressive earnings despite the global downturn. In fiscal 2003 Siemens posted net income of more than $2.9 billion on sales of roughly $86.5 billion, up from a profit of just under $2.6 billion on revenue of approximately $82.9 billion in fiscal 2002. Philips managed to eke out a profit of $961 million on sales of $36.5 billion in 2003, up from a net loss of more than $3.3 billion on $33.4 billion in revenue the previous year. ABB in 2003 earned $168 million on sales of $18.8 billion, unchanged from its 2002 net income on revenue of $18.3 billion. Von Pierer was born on January 26, 1941, in Erlangen, Germany, into a family with a long military tradition. His father served as a colonel in the German army, and his grandfather had attained the rank of major general. Von Pierer, however, had his sights set on a career in either the law or business. He enrolled at the University of Erlangen–Nuremberg to study law and economics. He received his law degree in 1968 and a diploma in economics a year later. While still a student at the university, he worked as an academic assistant and later was promoted to an assistant professorship. After earning his diploma in economics in 1969, he went to work for Siemens in the legal division of the company’s Corporate Finance Department. After eight years of legal work, von Pierer moved to Siemens’s Kraftwerk Union Group, where he began to learn more about the company’s sales and marketing operations and, over the next decade, held a series of positions in various of the group’s departments. Having learned more about the business side of the company’s operations, he was tapped in 1988 to be head of business administration for Siemens’s Power Generation Group. After only a year in that position he was promoted to president of the Power Generation Group and named to the corporation’s Managing Board. In 1990 he joined the company’s Corporate Executive Committee. He climbed higher on the ladder in 1991 when he was named deputy chairman of Siemens’s Managing Board. In September 1992 von Pierer reached the top at Siemens when he was named

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president and chief executive officer and elevated to the chairmanship of the company’s Managing Board.

SIEMENS, GERMANY UNDERWENT MAJOR CHANGES Von Pierer’s elevation to chief at Siemens came at a time of dramatic change for both the company and Germany. Just two years before he took over as CEO, Germany was reunified after more than four decades of separation. And at Siemens the corporate structure had been dramatically realigned in the final quarter of 1989. To better meet the competitive challenges of the changing global marketplace, the company’s large business units had been broken into smaller entities. Following the corporate restructuring, Siemens had in 1990 created SiemensNixdorf Informationssysteme, the largest European company in the computer industry. It further enhanced its standing in the international information technology market with the acquisition of Britain’s Plessey in 1991 and America’s Rolm Corporation in 1992. Under von Pierer, Siemens continued to expand into the international arena, albeit a little too slowly and tentatively to suit some of the company’s investors. By the mid-1990s Siemens had made a massive investment in a new semiconductor manufacturing facility in the United Kingdom and also had begun to expand aggressively into China. Still the investors wanted more. They also were calling for von Pierer to get the company out of business lines that were dragging it down and hampering its competitiveness in the global marketplace. By early 1997 Siemens shares had dropped dramatically, weighed down by company predictions that sales, orders, and profits for fiscal 1997 would be essentially unchanged from the previous year. In an interview with David Brierly of the European, von Pierer expressed surprised at the market’s interpretation of the company’s fiscal 1997 projections. “It was apparently expected that every year we would see profits increase in line with the past two years,” von Pierer said. “That is unrealistic. We have just raised our profits by 50 percent” (January 16, 1997). In the fall of 1998 von Pierer announced a sweeping reorganization at Siemens. To streamline the company for the increasingly competitive high-tech marketplace, he said he would divest most of Siemens’s components businesses and spin off its semiconductor unit. The move stripped the electronics giant of units that generated a total of $10.2 billion in sales and employed roughly 60,000 worldwide. The decision to get out of the semiconductor business was widely applauded, since the company’s chips unit had suffered a loss of more than $700 million in the previous fiscal year, a dramatic reversal from a profit of $65.7 million a year earlier. Asked by Electronic Buyer News to assess the Siemens reorganization plan, Anita Farrell, an analyst with Merrill Lynch in London, observed: “It makes sense to try to rationalize the business. It’s too big and too diverse” (November 9, 1998).


Heinrich von Pierer

ACQUISITION CAMPAIGN IN THE U.S. In the late 1990s von Pierer launched a large-scale acquisition campaign in the United States, where the company had not been well known previously. Between early 1997 and early 2002 Siemens spent roughly $9 billion to acquire U.S. properties. As a result of the acquisition foray, its U.S. unit became the company’s single largest operations center. Even more important, the United States also became Siemens’s largest market, accounting for nearly $19 billion in sales in fiscal 2001, up 23 percent from the previous year. This sharp jump occurred despite the start of an economic recession in the American market. Asked by Adam Aston, industrial management editor of BusinessWeek, how the company had done so well in a declining economy, von Pierer explained that many of Siemens’s groups, including power generation, infrastructure, and medical solutions, served stable, noncyclical markets. “Other groups are more cyclical, such as our information and communications divisions” (February 4, 2002). Of Siemens’s many acquisitions in the United States, von Pierer cited the purchase of Westinghouse’s non-nuclear power-generation operations as one of its most successful. The acquisition included Westinghouse’s fuel-cell activities as well as its power-line and power-generation businesses. Von Pierer told Aston that after the acquisition Siemens had halted its own R&D on fuel cells and decided to focus future activities in this area on the Westinghouse design. He said that the company had also adapted Westinghouse’s power-services businesses as a model for its operations elsewhere. He pointed out that it was a line of business in which Siemens had been unsuccessful in the past. “But I found that our Westinghouse friends had a lot of experience and enthusiasm for this business. So we transferred what we call the ‘center of competence’ for worldwide power services from Berlin to former Westinghouse managers in London.” Another major market for Siemens in the early 2000s was China, which by early 2002 had become the company’s thirdlargest market after the United States and Germany. Von Pierer told Aston, “I’m especially pleased about China,” which in fiscal 2001 accounted for roughly $3.5 billion of Siemens’s total sales. He said that the company’s strongest growth in China was being recorded by its three main infrastructure businesses—power transmission and distribution, transportation systems, and telecommunications. In the latter area, von Pierer said, Siemens ranked among the top three suppliers of cellular infrastructure in China.

FOCUSED ON COST-CUTTING In fiscal 2003 von Pierer stepped up efforts to reduce costs at Siemens, which like most of its competitors was still feeling the lingering effects of the global economic downturn. The cost-cutting strategy paid off in the fourth quarter of fiscal


2003 when Siemens posted a net profit of $917 million, beating analysts’ predictions of $780 million by almost 18 percent and up substantially from the same period a year earlier. Siemens also outperformed most of its major competitors. Making the company’s performance all the more impressive was the fact that it had been accomplished on much weaker sales, which totaled only $23.9 billion, 7 percent lower than in the fourth quarter of fiscal 2002. The surprisingly strong performance was built largely on von Pierer’s aggressive cost-cutting efforts, which involved the imposition of profit-margin targets on all of Siemens’s divisions and the discontinuation of thousands of jobs. In announcing the company’s results, according to the Birmingham (U.K.) Post, von Pierer exultantly announced, “There is no better company than Siemens. I have been having fun here for 34 years now” (November 14, 2003). In early 2004, with the worldwide economic recession behind it, Siemens appeared ready to step up its acquisition pace once again. According to a report in Tech Europe, von Pierer told the Financial Times that the company was considering acquisitions similar to the recent purchase of the British medical firm Amersham by U.S.-based General Electric for $9.5 billion. The Siemens chief revealed that areas being considered for possible acquisitions were power generation, automation and controls, and medical equipment, all businesses that von Pierer believed had promising growth prospects. Reports circulated that the German company was looking in particular at acquisition targets that would strengthen its market position in Japan and Eastern Europe. One strategic alliance that seemed almost a done deal for Siemens came unraveled in late May 2004 when Alstom, France’s troubled engineering group, turned thumbs down on any relationship with the German company. Alstom, which manufactured power generation plants, trams, railway locomotives, and railroad infrastructure technology, was teetering on the edge of bankruptcy and desperately in need of a white knight. But despite French government approval for a rescue plan in which Siemens played a part, Alstom’s chairman, Patrick Kron, rejected such an arrangement on the grounds that it was not in the best interests of the French company’s customers or shareholders. Alstom was best known for its production of France’s famed TGV (Très Grande Vitesse) trains.

FURTHER GOALS IN CHINA In May of 2004 Siemens announced plans to ramp up its presence in China, more than doubling its regional offices from 28 to 60. Von Pierer told Agence France Presse that he saw “good chances of doubling today’s sales volume in the next three years” (May 17, 2004). He predicted that China’s market would grow approximately 10 percent a year for the short term. To increase its share of the Chinese mobile handset market, Siemens partnered with Ningbo Bird Company, one of

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China’s largest manufacturers of handsets. Under their agreement, Ningo Bird was to sell Siemens mobile phones through its network of 30,000 shops throughout China. In the realm of mobile technology Siemens was working with state-owned Datang Telecommunications to develop China’s thirdgeneration mobile technology standard, TD-SCDMA.

Boston, William, and Frederick Kempe, “Siemens CEO Plays to Win, No Matter Who He Opposes,” CareerJournalAsia.com, http://www.careerjournalasia.com/ myc/management/20010216-boston.html.

In an article on globalization written for the 2003 issue of Global Agenda, von Pierer observed, “The global challenges of our times—whether political, economic, or social—can be mastered only through intelligent, targeted, and responsible international cooperation.” He wrote that Siemens, as a world leader in electrical engineering and electronics, was dedicated to developing and providing “life technologies” that could secure, ease, protect, and enrich lives. He said that as more and more people around the world, particularly in developing countries, benefited directly from such technologies, they would become less apprehensive about globalization. “It is the task of globally operating companies to spread such benefits and make certain this positive side of globalization is known to all.”

Culp, Eric, “Siemens Sings the Same Old Song,” The European, July 20, 1998.

Brierley, David, “Chairman Who Refuses to Be Radical,” The European, January 16, 1997.

Ewing, Jack, “Germany: All Eyes on the Corner Office,” BusinessWeek, March 1, 2004. ———, “Germany: Is Siemens Still German?” BusinessWeek, March 17, 2004. ———, “Siemens Proves Prudence Is a Virtue,” BusinessWeek, November 11, 2002. Fagerfjall, Ronald, “Germany Joins the Big Boys to Play the International Field,” The European, August 25, 1995. “France Backs Siemens Role in Alstom Plan,” Associated Press, April 28, 2004. “Germany’s Siemens Eyeing Big Acquisitions,” Tech Europe, March 5, 2004.

See also entry on Siemens AG in International Directory of Company Histories.


Gold, Steve, “Siemens Reveals Ambitious Sales Plans for Next Decade,” Newsbytes, June 2, 1992. Richtmyer, Richard, “Why Siemens Is Exiting the Chip Business—Enough Already,” Electronic Buyer News, November 9, 1998.

“Alstom Rules Out Alliance with Siemens,” Xinhua News Agency, May 26, 2004.

“Siemens Reaps Benefits of Cost Cutting with Profit,” Birmingham (U.K.) Post, November 14, 2003.

Aston, Adam, “Industry Insider: He’s Putting Siemens on the American Map,” BusinessWeek, February 4, 2002.

“Siemens to Invest One Billion Euros in China in Near-Term,” Agence France Presse, May 17, 2004.

Baker, Stephen, et al., “Europe: A Case of Too Little Too Late?” BusinessWeek, November 16, 1998.

Von Pierer, Heinrich, “Taking Responsibility for Corporate Actions,” Global Agenda, 2003.

Barker, Paul, “Siemens and the New Germany,” Computing Canada, August 3, 1993.

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—Don Amerman


■■■

Norio Wada 1940– President and chief executive officer, Nippon Telegraph and Telephone Corporation Nationality: Japanese. Born: August 16, 1940, in Japan. Education: Kyoto University, BS, 1964. Career: Nippon Telegraph and Telephone Public Corporation, 1964–1985, series of management positions; Nippon Telegraph and Telephone Corporation, 1985–1992, series of management positions; 1992–1996, senior vice president and general manager of Tohoku Regional Communications Sector; 1996–1997, executive vice president and senior executive manager of Affiliated Business Development Headquarters; 1997–1998, executive vice president and senior executive manager of Affiliated Business Development Headquarters; 1998–1998, executive vice president, senior executive manager of Affiliated Business Development Headquarters, and executive manager of NTT Holding Organizational Office; 1999, executive vice president and senior executive manager of NTT Holding Organizational Headquarters; 1999–2002, senior executive vice president; 2002–, president and chief executive officer. Address: Nippon Telegraph and Telephone Corporation, 3-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8116, Japan; http://www.ntt.com/index-e.html.

■ After almost four decades as an employee of Nippon Telegraph and Telephone Corporation (NTT), in mid-2002 Norio Wada took over leadership of Japan’s telecommunications giant as president and chief executive officer (CEO). Wada, who had previously served as senior executive vice president of NTT, was propelled into office in the wake of a shattering loss of nearly $6.3 billion, the biggest in the company’s history. Although Wada’s predecessor, Junichiro Miyazu, attributed the huge loss for fiscal year 2001 to the worldwide economic downturn, he stepped down in favor of Wada to pave the way for a fresh start at NTT. International Directory of Business Biographies

Norio Wada. AP/Wide World Photos.

Under Wada’s direction NTT came roaring back. Earnings of the world’s largest telecommunications company recovered in fiscal year 2002, reaching roughly $1.95 billion, and in fiscal year 2003 hit $5.6 billion, the company’s best showing in history. Making the fiscal year 2003 performance all the more remarkable was the fact that profits nearly tripled on a revenue increase of only 1.6 percent.

BEGAN AS A STATE-OWNED COMPANY NTT, which was incorporated as a private company in 1985, started in 1952 as Nippon Telegraph and Telephone Public Corporation, a state-owned company. Although the Japanese government retained a 46 percent stake in the company, its stock was publicly traded on both the Tokyo and New York stock exchanges. A holding company, not unlike

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American Telephone & Telegraph Company before its breakup, NTT controlled the operations of NTT East and NTT West, Japan’s regional local telephone companies; longdistance carrier NTT Communications; and one of Japan’s largest Internet service providers. NTT also owned a controlling share in DoCoMo, the leading Japanese cellular service provider. Born on August 16, 1940, Wada studied economics at Kyoto University, from which he received his bachelor’s degree in 1964. Shortly after graduation he went to work for Nippon Telegraph and Telephone Public Corporation. For the first three decades of his career, Wada moved through a series of junior-management positions with NTT. In June 1992 he broke into the ranks of senior management when he was named a senior vice president of NTT and general manager of the company’s Tohoku Regional Communications Sector. Four years later Wada was named senior executive manager of NTT’s Affiliated Business Development Headquarters. He continued as a senior vice president of NTT. In June 1997 Wada was promoted to executive vice president of NTT, while retaining his position as senior executive manager of the company’s Affiliated Business Development Headquarters. A year later he was given the added responsibility of executive manager of NTT Holding Organizational Office. In January 1999, while still executive vice president of NTT, Wada was promoted to senior executive manager of NTT Holding Organizational Office. In July 1999 he was appointed senior executive vice president of NTT, a position he held until June 2002 when he took over direction of the company as its president and CEO.

operating companies. “A redistribution of business would be carried out under the existing framework of operating companies,” Wada said. “How to do it would be a matter of discussion based on the nature of their businesses.” Although Wada offered no examples of such overlap within the NTT family, analysts told Kyodo World News that the provision of Internet service, offered by several of NTT’s group companies, might be a possible target for such streamlining (June 27, 2002). Although Wada guided NTT back to profitability in his first year as CEO, he acknowledged in May 2003 that the turnaround in fiscal year 2002 had been accomplished largely through aggressive cost-cutting, including a reduction of 7 percent in the company’s workforce from 223,500 to 207,400. NTT managed to post net income of roughly $1.95 billion although the company’s total sales were down slightly from the previous year. Both of NTT’s fixed-line regional local telephone companies, NTT East and NTT West, were in the black for fiscal 2002 but only because of sharp cuts in their operating costs. Wada said the fixed-line segment of NTT’s overall business would continue to be a major challenge as more and more consumers turned to mobile phones and Internet telephone service. In announcing the company’s results for fiscal 2002, according to an Associated Press report, Wada said: “We must completely change the content of our business in three to five years” (May 13, 2003). In an unusual collaboration, NTT joined with Hitachi and Mitsubishi Electric Corporation to successfully research and develop a new encryption technology. In late July 2003 the three companies announced they had succeeded in developing an implementation technology for an elliptic curve cryptosystem, which they dubbed CRESERC.

DEVELOPED STRUCTURAL REFORM PLAN OUTLOOK GLOOMY FOR FIXED-LINE SECTOR Even before he became CEO, Wada had been instrumental in developing a plan for the structural reform of the NTT’s regional local telephone companies NTT East and NTT West. The primary goals of the reform plan were reductions in personnel costs, capital investment outlays, and other expenditures. To trim personnel costs the plan mandated adoption of a fundamental outsourcing strategy, reallocation of personnel within the group, and an accelerated program of voluntary retirements. As part of the new outsourcing strategy, activities such as order taking, equipment maintenance and operations, and repair work were moved to outsourcing companies, the staffs of which were supplemented by the addition of employees transferred from both NTT East and NTT West. Shortly after his appointment as president and CEO, Wada told Kyodo World News Service that he planned to streamline the operations of all of NTT’s group companies to eliminate the “wasteful” overlapping of businesses. He told reporters that he believed it was the duty of NTT, as the holding company, to control how businesses were distributed among its member

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Even after announcing record-setting profits for fiscal year 2003, Wada made clear that the company’s future would have to be built on its businesses outside the fixed-line telephone sector. Of NTT’s three group companies in the fixed-line sector, two (NTT East and NTT West) managed to make money, but again only because of sharp reductions in their operating costs. NTT Communications, the company’s fixedline long-distance carrier, lost money in fiscal year 2003. A major factor in NTT’s impressive showing for the year was a big jump in the earnings of DoCoMo, Japan’s leading cellular operator in which NTT holds a 63 percent stake. To compensate for the shrinking business of its fixed-line companies, Wada shifted NTT’s focus to video-communications technology and high-tech Internet services. In early 2004 Wada denied that NTT planned to break directly into the television broadcasting business. Responding to reports in a Japanese newspaper that his company and Sky Perfect Communications were going to jointly launch a broad-


Norio Wada

band television service as early as the summer of 2004, Wada said NTT’s role would be limited to supplying technical support for such a service. “We will not enter the broadcasting industry,” Wada told a press conference, according to Kyodo News International. “We have neither the capacity nor knowhow” (January 22, 2004).

“Japan Telecommunications Carriers’ Association Picks Chairman,” Knight Ridder/Tribune Business News, March 12, 2004.

In May 2004 Wada announced a change in strategy for NTT DoCoMo. He said that DoCoMo would henceforth focus on technological partnerships with other international mobile-phone operators rather than investing directly in such operations. In a telephone interview with Kyodo World News Service, Wada reported that DoCoMo’s capital investments in AT&T Wireless Services of the United States and other mobile phone operators outside Japan had resulted in significant losses in fiscal 2003.

“Japan Telescene,” http://www.icr.co.jp/telescene/2002-22.html.

In March 2004 Wada was elected to a one-year term as chairman of Japan’s Telecommunications Carriers Association, succeeding Satoshi Shirashi, president of PoweredCom. In addition to his responsibilities at NTT, Wada was active in a number of other professional organizations. He served as a member of the executive committee of the Japan-U.S. Business Council and also served as an expert consultant to the Japanese prime minister’s Strategic Headquarters for the Promotion of an Advanced Information and Telecommunications Network Society. In March 2003 Wada was among seven Japanese business leaders named to become vice chairmen of Nippon Keidanren (Japan Business Federation), which was formed in May 2002 when Japan’s Federation of Economic Organizations (Keidanren) merged with the Japan Federation of Employers Associations (Nikkeiren).

“Japan Telecommunications Giant Denies Intent to Enter Broadcasting Directly,” Kyodo News International, January 22, 2004.

“Japan’s Top Telecom NTT to Pick Vice President as Next President,” Associated Press, April 16, 2002. “Keidanren: Sony’s Idei,” Kyodo World News Service, February 25, 2003. Kgeyama, Yuri, “Japanese Telecom Returns to Profitability,” Associated Press, May 13, 2003. “New NTT President Vows to Streamline NTT Group Business,” Kyodo World News Service, June 27, 2002. “NTT and Nippon Travel Agency Begin Joint Trials of ‘World Wide Navi,’” http://www.ntt.co.jp/news/news04e/0401/ 040113.html. “NTT DoCoMo Lists on New York Stock Exchange,” http:// www.nttdocomo.com/presscenter/pressreleases/press/ pressrelease.html?param[no]=72. “NTT DoCoMo to Shift Global Strategy to Technological Tieups,” Kyodo World News Services, May 24, 2004. “NTT Hits Record Profits on Booming DoCoMo Mobile Phone Business,” Agence France Presse, May 14, 2004. “NTT Reports US$6.35 Billion Loss, Appoints New President,” Asia Pacific Telecom, June 2002. “NTT Suffers Worst Ever Loss in Year to March, Targets Future Profit,” Agence France Presse, May 14, 2002.

See also entry on Nippon Telegraph and Telephone Corporation in International Directory of Company Histories.

“Structural Reform of NTT East and NTT West,” http:// www.ntt.co.jp/news/news01e/0111/011122g_1.html.


“World’s First Success! Three Leading Japanese Firms Jointly Develop a New Encryption Technology,” http:// www.ntt.co.jp/news/news03e/0307/030728.html.

“Forbes Ranks Nissan’s Ghosn Top Earner among CEOs in Japan,” Kyodo World News Service, August 27, 2003.


—Don Amerman

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Rick Wagoner 1953– Chairman and chief executive officer, General Motors Corporation Nationality: American. Born: February 9, 1953, in Wilmington, Delaware. Education: Duke University, BA, 1975; Harvard University, MBA, 1977. Family: Married Kathleen “Kathy” Kaylor, 1979; children: three. Career: General Motors Corporation: 1977–1981, various positions in GM’s Treasurer’s Office; 1981–1984, treasurer of General Motors do Brasil (GMB); 1984–1987, executive director of GMB; 1987–1988, vice president and finance manager of GM of Canada; 1988–1989, group director, strategic business planning, Chevrolet-Pontiac-Canada Group; 1989–1991, vice president, finance, for GM Europe; 1991–1992, president and managing director of GMB; 1992–1994, executive vice president and chief financial officer; 1994–1998, executive vice president of GM and president of North American Operations; 1998–2000, president and chief operating officer; 2000–2003, president and chief executive officer; 2003–, chairman and chief executive officer. Awards: Named Executive of the Year by Automotive Industries, 2001. Address: General Motors Corporation, 300 Renaissance Center, Detroit, Michigan 48265-3000; http:// www.gm.com.

■ G. Richard “Rick” Wagoner Jr., who in June 2000 at the age of 47 became General Motors’s youngest CEO in history, took on the additional responsibilities of chairman on May 1, 2003. The world’s largest automaker, General Motors ranked second among all American companies in terms of annual revenues, topping the $185.5 billion mark in 2003. However, it remained locked in a no-holds-barred battle with the rest of the worldwide auto industry for market share, and Wagoner

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Rick Wagoner AP/Wide World Photos.

was determined to take whatever steps were necessary to increase GM’s piece of the auto buyer’s dollar. After two years of U.S. market share gains, GM in 2003 experienced a reversal as its share of the American automotive market shrank from 28.4 percent to 28 percent on a 2.4 percent decline in U.S. revenues. Undaunted by the small decline, Wagoner in early 2004 told security analysts he was optimistic that the automaker would once again increase its market share in 2004. He predicted 2004 earnings of $6 to $6.50 a share. Of what it would take to succeed in the international auto marketplace, Wagoner told the Associated Press: “The winners in tomorrow’s global auto industry will be those companies that best combine the efficiencies of global scale with a superb focus on local markets. I like GM’s position” (January 8, 2004).


Rick Wagoner

AN UPHILL BATTLE Although GM held 15.2 percent of the global automotive market, Wagoner faced an uphill battle in keeping the company profitable and growing its market share, according to a November 2003 report in Fortune magazine. In addition to the cutthroat competition of the automotive business worldwide, the company was staggering under the multiple burdens of government regulation, overcapacity, and massive pension and health care financing costs. Wagoner was particularly outspoken about the Japanese government’s efforts to keep the yen artificially weak, which gave some of GM’s biggest competitors—notably Toyota, Nissan, and Honda—a decided advantage in the international marketplace. Interviewed by Mark Haines on CNBC cable television in early 2004, the GM CEO said that the latest data indicated Japan had spent roughly $150 billion over the previous year to keep the yen down against the U.S. dollar and the euro. Born in Wilmington, Delaware, on February 9, 1953, Wagoner spent most of his childhood in Richmond, Virginia. His father, a graduate of Duke University, extolled the virtues of the prestigious private North Carolina university to both Wagoner and his younger sister. Wagoner, an enthusiastic and promising basketball player in high school, took his father’s advice and enrolled at Duke, which for decades had fielded a standout basketball team. Although he was majoring in economics with an eye to a career in business, Wagoner, who stood six feet four, secretly dreamed of becoming a professional basketball player. Those dreams, however, were dashed before his first year at Duke had ended. Wagoner played on the freshman basketball team but, as quoted in the Chronicle, Duke’s daily newspaper, in early 2004, “learned pretty quickly I would not be pursuing a career in the NBA.”

EARLY YEARS AT GM While at college, Wagoner met Kathleen Kaylor, who was two years behind him at Duke’s undergraduate Trinity College. The couple married in 1979; they have three sons. Wagoner in 1975 earned his bachelor’s degree in economics from Duke and enrolled in the MBA program at Harvard University. In 1977, shortly after receiving his MBA, he took a job as a financial analyst with GM’s Treasurer’s Office in New York City. According to the Chronicle (February 2, 2004), Wagoner found New York a bit overwhelming at first, but in time the job there proved to be “a great working environment with great people.” For the next four years Wagoner steadily worked his way up the ladder at GM’s Treasurer’s Office. In 1981, encouraged by his wife, he accepted a position as treasurer with General Motors do Brasil (GMB), the automaker’s Brazilian subsidiary. This job, Wagoner told Automotive Industries, gave him an excellent overview of GM’s entire business but on a scale


that was easier to grasp than it would have been at GM headquarters in Detroit. “Manufacturing, engineering, how to deal with the government and banks . . . there were even days we had to get loans to meet our payroll” (February 2001). In 1984 Wagoner was promoted to executive director of GMB, a post he held until 1987, when he was named vice president and finance manager of GM of Canada. In 1988 Wagoner was named group director for strategic business planning at the Chevrolet-Pontiac-Canada (C-P-C) supergroup. After participating in a broad range of business decisions at GMB and GM of Canada, he found the job at C-P-C less than satisfying. C-P-C had a huge central office but was very compartmentalized. “My ability to contribute wasn’t the same,” Wagoner told Automotive Industries (February 2001). “These were independent groups, stapled together. C-P-C gave us no economies of scale or efficiencies—not a winning strategy for the future.” Although he spent only a year at C-P-C, Wagoner took a very valuable lesson away from the experience, one that would serve him well in the future.

HIGH-LEVEL POSTS IN EUROPE, BRAZIL After his brief stint with C-P-C, Wagoner was posted to Zurich, Switzerland, as vice president, finance, for GM Europe. After two years in Zurich, he returned to Brazil in 1991 as president and managing director of GMB. As the leader of GM’s Brazilian operations, Wagoner was credited with updating the company’s operations in this key South American market. According to Forbes magazine, Wagoner championed the “get current, stay current” strategy at GMB, scrapping GM’s previous practice of selling older-model cars in Brazil; instead, he brought the latest models to market there. It was in these two high-level jobs, Wagoner told Automotive Industries, that he learned about the importance of integrating a great product, close cost control, lean manufacturing, and global purchasing. “Both experiences showed me what we could do when we leverage GM’s global resources. It significantly molded my thinking and still does today” (February 2001) In 1992, 15 years after going to work for General Motors, Wagoner finally made his way to GM’s corporate headquarters in Detroit, as executive vice president and chief financial officer. His success on the financial side of the company’s operations had made him a logical choice for this post. His appointment as CFO put him on the team being assembled by John G. Smale, the lead director on GM’s board, and John F. “Jack” Smith, then president and CEO, to return the automaker to profitability. The early 1990s, under the leadership of Robert Stempel, had seen big losses for GM: $2 million in 1990, $4.5 billion in 1991, and a whopping $23.5 billion ($20.8 billion from an accounting charge) in 1992. Late in 1992 Stempel was replaced by Smith after a boardroom coup. A year after his appointment as CFO, Wagoner was given the added responsibility of overseeing GM’s worldwide pur-

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Rick Wagoner

chasing operations. From 1994 until 1998, he served as executive vice president of GM and president of the automaker’s North American Operations (NAO). Wagoner has described himself as something of an outsider, coming as he did from the financial side of GM’s operations. “I didn’t tear down engines at 16,” he told Irene Gashurov of Fortune (February 21, 2000). “But I think my product instinct is pretty good. . . . I work here because I have the same passion for product that any CEO does.” In the latter half of the 1990s Wagoner was an ardent supporter of GM’s advanced design system called APEX (Advanced Portfolio Exploration). Under APEX a team of more than 120 engineers and marketing specialists actively designed, engineered, and test-marketed 50 new vehicles at a time. Of Wagoner’s contribution to the new direction in GM vehicle design and marketing, GM designer Wayne K. Cherry told Fortune (February 21, 2000), “Rick is the reason our product-development strategy has turned around.”

ENGINEERING A MAJOR TURNAROUND As president of NAO, Wagoner engineered a major turnaround in this most crucial of GM’s markets. At the time he took over at NAO, the division had suffered three consecutive years of losses, totaling in excess of $11 billion. In 1994, his first year in the post, NAO managed to squeeze out a profit of roughly $680 million. For 1995 NAO’s earnings jumped to $2.4 billion. Work stoppages in the first and fourth quarters of 1996 held NAO’s earnings down to $1.2 billion that year, but the division bounced back in 1997 with a profit of $2.3 billion. Wagoner’s success in turning things around at NAO made him an ideal candidate for higher office within GM’s corporate structure, and in 1998 he was tapped to serve as the company’s president and chief operating officer. In his new post, Wagoner spearheaded a campaign to centralize the giant automaker’s sales, marketing, and other operations. For decades the company had been operated as a collection of semi-autonomous fiefdoms, but under CEO Jack Smith and Wagoner GM’s management took pains to coordinate its multivarious functions more closely. Wagoner told Bill Koenig of the Indianapolis Star and News (November 17, 1998) that such centralization had “never been an objective until Jack took over,” referring to Smith’s appointment as CEO in late 1992. Another top priority for GM in the late 1990s was labor relations, an area in which the giant automaker lagged its competitors. Wagoner told the Star and News that GM was making an effort to repair its strained relationship with the United Auto Workers (UAW): “My sense is people are working hard on (labor) issues” (November 17, 1998). Early on in his dealings on labor issues, Wagoner was perceived as a hardliner. In the period between the beginning of 1996 and the end of 1998, according to BusinessWeek, Wagoner’s efforts to boost

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productivity and outsource some manufacturing operations helped to trigger 13 work stoppages with a collective cost to the automaker of $4 billion. In what was probably his worst error of judgment, Wagoner in the spring of 1998 ordered dies removed from a Flint, Michigan, plant that was about to begin manufacturing critical truck components. Workers were so infuriated by the move that they shut down all of GM’s manufacturing operations. Of that misstep, Wagoner told BusinessWeek: “Just add that to the list of the other million things where we probably made the wrong call” (February 1, 1999).

A GENTLER LINE ON LABOR Stung by the consequences of his hard line on labor issues, Wagoner in late 1998 began softening his approach. BusinessWeek (February 1, 1999) reported that Wagoner had consulted with top UAW leaders before naming Gary Cowger to head GM’s worldwide manufacturing and labor relations. UAW president Stephen P. Yokich told the magazine that the UAW was pushing “for someone who could work well with the union,” and Cowger’s years on the factory floor had earned the union’s respect. Wagoner also made it a point to maintain closer ties with union leaders, participating in meetings and telephone consultations. “We’re opening up the dialogue a lot more,” he told BusinessWeek. On June 1, 2000, Wagoner became GM’s youngest CEO in history when he succeeded Jack Smith in that position. Wagoner retained his post as president, while Smith remained GM’s chairman but handed over responsibility for leading the corporation on a day-to-day basis to his protégé. Smith told the Richmond Times-Dispatch that the younger man’s appointment was not just a reward for what Wagoner had already accomplished but also “a vote of confidence that he can take GM to even greater heights in terms of products, services, and shareholder value” (February 4, 2000). Wagoner had already distinguished himself from his predecessors by breaking with a long-running GM tradition of promoting from within. Wagoner’s first major hire from outside GM’s ranks actually came in February 1999, more than a year before his promotion to CEO. Steve Harris, one of the auto industry’s most widely respected spokespersons, was lured away from his job as senior vice president of communications at DaimlerChrysler to become GM’s vice president of communications. Less than six months after taking over as CEO, Wagoner brought longtime Ford Motor Company executive John Devine on board at GM as vice chairman and chief financial officer. Perhaps the most daring of Wagoner’s hires from outside came in early August 2001 with the appointment of Robert Lutz, a former vice chairman at Chrysler Corporation, as GM’s vice chairman for product development. The Swiss-born Lutz had worked closely with Lee Iacocca to lead Chrysler’s second comeback in the late 1980s and early 1990s


Rick Wagoner

by bringing to market such innovative products as the Dodge Ram, Dodge Viper, and Plymouth Prowler.

OUTSIDE HIRES WIN PRAISE In naming Wagoner its Executive of the Year in February 2001, Automotive Industries interviewed a handful of widely respected auto industry observers, all of whom applauded the GM CEO for his willingness to hire from outside in order to put together the best possible team. Dave Cole, director of the Center for Automotive Research, said, “Rick has already broken the historic, internalized culture at GM. He’s brought in key outside executives like Steve Harris and John Devine. Equally lavish in praising Wagoner’s outside hires was auto industry analyst and author Maryann Keller: “Hiring John Devine to be GM’s chief financial officer was a terrific move by Wagoner. It shows he’s willing to pick his own team. Devine knows the car business.” The impact of Wagoner’s bold moves on GM’s bottom line was perhaps the clearest sign that the new CEO was moving in the right direction. In 2001 GM posted a profit of $601 million on worldwide sales of $177.3 billion, a net profit margin of only 0.3 percent. The company’s net profit margin jumped to 0.9 percent in 2002, when net income hit $1.7 billion on revenue of $186.8 billion. Most impressive of all was the company’s performance in 2003, when net earnings rose to $3.8 billion on sales of $185.5 billion for a net profit margin of 2.1 percent. Although GM faces a wide array of new and continuing challenges in its quest to pad its bottom line and increase its market share, Wagoner seemed confident when he was interviewed on the CNBC cable network on January 5, 2004. He expressed his belief that the auto market in the United States would run “at a higher annualized rate” in 2004 than in 2003. One of the biggest challenges facing GM—and Wagoner— was finding a way to increase the earning power of its automotive sector. In recent years much of the company’s earnings came from GMAC, its financing division, which finances not only autos but homes as well, a business that boomed in a time of record low mortgage rates. Wagoner and his family lived in suburban Detroit. Away from his responsibilities at GM, he served as chairman of the board of visitors for Duke University’s Fuqua School of Business and also sat on the board of trustees of the Detroit Country Day School.


Brooke, Lindsay, “The New Playmaker,” Automotive Industries, February 2001. Ellis, Michael, “Finance Operation Powers GM Earnings,” Reuters Business, January 20, 2004. Evanoff, Ted, “Incoming CEO Helped Lead General Motors’ Turnaround,” Detroit Free Press, February 3, 2000. “G. Richard Wagoner, Jr.,” Marquis Who’s Who, New Providence, N.J.: Marquis Who’s Who, 2004. Gashurov, Irene, “GM’s Big Decision: Status Quo: Can an Insider Jump-Start the World’s Largest Corporation? Rick Wagoner, the New CEO, Is About to Try,” Fortune, February 21, 2000. “George Richard ‘Rick’ Wagoner Jr. T’75: The Secret to His Success: Keep It Simple,” BenchMark, June 2001. Gilligan, Gregory J., “General Motors Names Richmond, Va., Native CEO,” Richmond Times-Dispatch, February 4, 2000. “GM’s Motor Man,” Economist, March 18, 2000. Gorman, Chrissie, “GM Chair Offers Job Guidance,” Chronicle, February 2, 2004. Haines, Mark, “General Motors, Chairman & CEO Interview,” CNBC/Dow Jones Business Video, January 5, 2004. Kerwin, Kathleen, and Joann Muller, “Reviving GM,” BusinessWeek, February 1, 1999. Koenig, Bill, “General Motors to Centralize Company’s Sales, Marketing Efforts,” Indianapolis Star and News, November 17, 1998. McCracken, Jeffrey, and Jamie Butters, “General Motors Gains New Vice Chairman for Product Development,” Detroit Free Press, August 3, 2001. Meredith, Robyn, “Digital Drive,” Forbes, May 29, 2000. Porretto, John, “GM in Overdrive: Automaker Raises Its Profit Estimate, Foresees Record Sales,” Grand Rapids Press, January 9, 2004. Smith, David C., “What’s Next for GM’s Rick Wagoner?” Ward’s Auto World, January 1, 1996. Taylor, Alex, III, “GM’s Over-the-Hill Gang,” Fortune, September 3, 2001. ———, “Looking Out for No. 1: General Motors CEO Rick Wagoner Speaks Out on the Yen, Health Care—and Why He Doesn’t Think Much about the Rest of the Big Three,” Fortune, November 24, 2003. ———, “No. 25: Rick Wagoner: General Motors,” Fortune, August 11, 2003.

See also entry on General Motors Corporation in International Directory of Company Histories.


—Don Amerman

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■■■

Ted Waitt 1963– Founder and chairman, Gateway Nationality: American. Born: January 18, 1963, in Sioux City, Iowa. Education: Attended University of Iowa, 1982–1984. Family: Son of Norman Waitt Sr. (cattle broker); Married Joan (maiden name unknown); children: four. Career: Century Systems, 1984–1985, salesman; Gateway, 1985–, founder and chairman; 1985–1999, 2001–2004, chief executive officer. Address: Gateway, 14303 Gateway Place, Poway, California 92064; http://www.gateway.com.

■ Theodore W. (Ted) Waitt revolutionized the personalcomputer (PC) business in the 1990s. His company, Gateway, succeeded by keeping costs low with a direct-marketing model, assembly-on-demand, and innovative marketing. Following Waitt’s creative and customer-savvy instincts, Gateway grew into a $10-billion company before declining along with the slowing U.S. economy.

EARLY LIFE Ted Waitt was born in Sioux City, Iowa, into a family that had been in the cattle business for four generations. After a reportedly wild period in high school (during which he failed computer science), he ended up at the University of Iowa majoring in marketing. During a trip to Des Moines with some friends he met someone who worked for the computer retailer Century Systems. Intrigued, Waitt decided to drop out of school and learn the computer business on the job. During his nine months with Century Systems, he learned the basics and became fascinated by the fact that some of his colleagues could sell $3–thousand systems over the phone, without ever meeting the customer. Together with Mike Hammond, a fellow salesman, Waitt hatched a plan to start his own company, focusing initially on a niche market of Texas Instruments computer owners. Unable to secure financing from a bank, Waitt

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Ted Waitt. AP/Wide World Photos.

convinced his grandmother to put up a $10-thousand CD as collateral. With this financing, a vacant office on the family cattle farm, and two aliases (due to noncompete clauses in their contracts with Century Systems), they started business in 1985 as TIPC Network.

GATEWAY GROWTH TIPC Network supplied add-ons for Texas Instruments computers that allowed them to run software written for the IBM PC. Waitt and Hammond charged users a $20 membership fee, which provided them with more capital. Waitt was the sole owner at first; after six months his brother Norman became a 45 percent owner and financial manager (he later became a silent partner). Hammond was the technical expert, while Waitt drove the marketing and strategic vision. In mid-


Ted Waitt

1987 Texas Instruments offered owners of their computers a new IBM-compatible PC for $3 thousand. Waitt and Hammond knew they could beat this price and rolled out a system with two disk drives and other features for only $1,995. By the end of 1987 Waitt renamed the company Gateway 2000 and moved the growing operation to the Sioux City, Iowa, Livestock Exchange Building. Waitt’s strategy for selling PCs was simple: provide the most bang for the buck, which Waitt called the “value equation.” The strategy worked, as sales rose from $1 million in 1988 to $12 million in 1989 and $275 million in 1990. To keep prices low, Waitt strove to keep costs and overhead to a minimum. PCs were assembled after they were ordered, and the inventory of components was kept very low, reducing storage costs and allowing Gateway to always offer current technology. Gateway had no research and development budget at all. As the company grew, Waitt kept it in the low-cost area, moving across the border to South Dakota where there was no personal- or corporate-income tax. Gateway’s first employees were paid $5.50 per hour, and labor costs stayed low even including profit-sharing bonuses for employees that Waitt instituted in 1988. Waitt also kept marketing and advertising in-house. From the beginning he emphasized Gateway’s unusual location by asking, “Computers from Iowa?” The focus on its Midwestern location and its black-and-white spotted-cow theme were designed to establish Gateway as a stable, trustworthy company at a time when many PC vendors started and failed in a matter of months. Waitt designed, executed (with in-house and local help), and starred in several unusual ads, with Robin Hood, saloon, and other themes not related to PCs. These ads went against the conventional wisdom of the advertising world, but they were very effective. Waitt was the visionary behind most of these ads, gambling on his instincts and winning. Waitt’s instincts also guided crucial decisions regarding which products and features to offer. In the rapidly evolving PC business, the timing of bringing new technologies to market was crucial for success. Waitt’s gut feelings, supported by the knowledge derived from the company’s direct contact with consumers, seemed almost foolproof. Gateway was the first to offer many features as standard on their systems, including color monitors and CD-ROM drives. These new technologies, offered at a price comparable to or even lower than the competition in the burgeoning PC market, fueled Gateway’s tremendous growth in the early 1990s. Gateway’s sales soared to $627 million in 1991, passing Dell as the leader in direct marketers, and then to $1.1 billion in 1992 and $1.7 billion in 1993. In 1991 Gateway moved to a new 44,000-square-foot production facility and suffered order backlogs and quality problems due to the explosive growth. In February 1992 Waitt hired several managers from Compaq to set up quality-assurance programs and help with


the transition from a small operation to a large company with thousands of employees. Gateway started selling software and peripherals such as printers and also worked to improve support for corporate buyers. Shortages of sales and support staff and order backlogs were still concerns, but low costs and overhead enabled Waitt to keep a 9 to 10 percent profit margin on the still-increasing sales.

INCORPORATION AND MATURITY At the end of 1993 Waitt decided to turn Gateway into a publicly traded company. Gateway’s initial public offering (IPO) was a success, making Waitt, who had been paying himself only $200 per week, an instant billionaire. From 1994 to 1999, despite a few down quarters, Waitt, now CEO and board chairman, expanded Gateway’s sales, staff, facilities, reach, and focus. In 1999 Gateway brought in $9 billion in revenues and employed 19,000. It entered the world markets, building production facilities in Ireland and Malaysia. Gateway Country Stores, showrooms offering support, service, and training, debuted in 1996 and grew to the hundreds in the United States and 40 overseas. Gateway tried to increase its revenue from sales to large businesses, with mixed success. In 1996, 35 percent of U.S. revenue was from major accounts, but a targeted ad campaign and the acquisition of Advanced Logic Research (a server company) failed to overcome concerns about support, quality, and standardization. Waitt, recognizing that the PC business was changing, shifted Gateway to a diversification “hexagon strategy,” which included systems, software and peripherals, service and training, Internet access, portals and content, and financing. Gateway was the first to “bundle” PCs with software, printers, and other peripherals as a package. In 1998 Gateway became an Internet service provider for its customers, later making a deal with AOL to administer Gateway.net while Gateway promoted AOL on its PCs. Gateway also instituted the YourWare program, which offered PC financing, software, Internet access, service, and a trade-in option for a fixed monthly charge. To achieve these goals and manage the growth of Gateway, Waitt brought in a succession of executives and managers from other companies. In 1998, feeling that a drastic change was needed to continue Gateway’s growth, Waitt changed the Gateway 2000 name to simply Gateway, moved the company’s headquarters to the San Diego area in order to attract more executive talent, and replaced 10 of the 14 top-level executives. One of the new hires, brought from AT&T to be Gateway’s president and chief operating officer, was Jeff Weitzen. Waitt and Weitzen worked closely together the next two years, becoming close friends and collaborators. Gateway’s stock went up 200 percent in 1999, and Waitt bought a $14-million home on the ocean. Feeling secure in Gateway’s future under Weitzen’s leadership and worth more than $8 billion, Waitt stepped down as CEO at the end of 1999.

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Ted Waitt

DECLINE

MANAGEMENT STYLE

Through the first half of 2000, everything seemed to be going smoothly, with Waitt serving as board chairman and long-range visionary. He left the general operation to Weitzen, who Waitt described in BusinessWeek as “probably a better manager and CEO” than himself (June 5, 2000). After a disastrous performance in the second half of the year, however, Waitt ousted Weitzen and was reinstated as CEO on January 24, 2001. Weitzen had attempted to change the corporate culture through very unpopular policies, which lowered morale and caused many long-term employees to quit. He also instituted commission and support policies that cost millions and hurt customer satisfaction. Anticipating continued growth in the market, Weitzen opened more than a hundred new Gateway Country Stores and stockpiled a large inventory for the holiday season. When demand fell and Gateway was unable to match Dell’s prices, it posted a $94 million loss for the fourth quarter of 2000. Waitt became increasingly frustrated with Weitzen’s decisions through the year, culminating in Weitzen’s retirement in January. Waitt immediately fired eight top managers, rehired or reinstated his earlier staff, and revoked a series of initiatives and policies.

Waitt was described by a Gateway shipping operator as “a normal dude, an everyday guy you’d go out and have a pizza with” (Fortune, April 30, 2001). Charismatic and energetic, he was able to inspire loyalty from his employees with his laid back, rock-n-roll style. He often visited production, sales, and support facilities, sometimes jumping in to take customer calls himself. While always cost conscious and profit driven, he stuck with his basic values, which he even spelled out (respect, caring, teamwork, common sense, aggressiveness, honesty, efficiency, and fun) in 1997 when outside executives were being brought in to manage the company’s growth. Said a source close to Waitt, “Anyone who really knows Ted Waitt knows that there are things more important to him than money. Two of those things are Gateway and its people” (Time, May 19, 1997). He expected the same of his employees, according to Bart Brown, one of Gateway’s early hires. “He’s patient, but demands a lot of others,” Brown told BusinessWeek. “If you miss a beat, you’ll get a second chance. But if honesty and integrity are not there, he’s got zero tolerance” (June 5, 2000). Waitt always embraced input from rank-and-file employees, holding company-wide pizza-party meetings at first, and then soliciting ideas for improvement through team meetings. When he reinstated himself as CEO in 2001, he offered employee bonuses for ideas that cut costs or improved service.

Gateway entered a long period of retrenchment and reinvention. Waitt declared a “back to basics” plan in 2001, “selling one computer, one customer, at a time” (Fortune, April 30, 2001). However, the lower demand and slim-to-nonexistent margins on PC sales resulted in a new emphasis on other products and services a short time later. Gateway’s share price tumbled from a high of $80 at the beginning of 2000 to $2.10 in March 2003. Waitt lost more than $7 billion in personal net worth, but continued to search for a successful niche for his company. In 2003 he told Business 2.0, “The glory days of the PC business are gone, over, done, finito” (August 2003). Instead, Gateway tried offering products and services to small and medium-sized businesses and hoped to transform itself into “branded integrator,” offering consumer electronics for the digital home environment. Gateway had success with a top-selling plasma TV, but profitability still eluded the company, and in March 2004 it announced the purchase of eMachines, a company specializing in low-end PCs sold through retailers. Still hoping to regain profitability and increase the consumer-electronics line, Waitt once again stepped down as CEO, appointing eMachines CEO Wayne Inouye in his place. At least six other top eMachines executives took positions at Gateway, ousting many who were hired the year before to support Gateway’s transformation to a consumer-electronics company. Waitt remained as board chairman. Inouye quickly announced the closing of all 188 Gateway Country Stores, a new headquarters location in Orange County, California, and the end of manufacturing at the South Dakota facility, although other functions continued to employ 1,500 there. As of mid2004 the ability of Gateway to thrive or even survive was still in question.

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An entrepreneurial free spirit, Waitt gave up a $7 billion buy-out offer from Compaq in 1997, which would have personally netted him $3 billion, in order to remain the head of his company. Waitt’s vision and instincts grew Gateway in the last century, but as of 2004 they had not succeeded as well in the new millennium.

See also entry on Gateway, Inc. in International Directory of Company Histories.


Brooker, Katrina, “I Built This Company, I Can Save It,” Fortune, April 30, 2001. Brull, Steven V., “Gateway’s Big Gamble,” BusinessWeek, June 5, 2000. Heilemann, John, “Out of the Frying Pan,” Business 2.0, August 2003. Kadlec, Daniel, “The Price of Freedom,” Time, May 19, 1997. Warshaw, Michael, “Guts and Glory: From Farm Boy to Billionaire: Ted Waitt’s Inspiring Story of Incredible Growth,” Success, March 1997, pp. 28–33. —DeAnne Luck


■■■

Paul S. Walsh 1955– Chief executive officer, Diageo

der, becoming a finance director in 1986, then chief financial officer for Inter-Continental Hotels in 1987 and for the food division in 1989. In 1992 Walsh was appointed chief executive officer of Pillsbury, which was then owned by GrandMet, a position he kept until 2000. In 1995 he was made a member of GrandMet’s board.

Nationality: British. Born: May 15, 1955, in United Kingdom.

DIAGEO IS BORN

Education: Manchester Polytechnic University.

In 1997 Grand Metropolitan merged with Guinness UDV, the brewing company most famous for its dark stout beer. The combined company was dubbed Diageo, a name that merged the Latin for “day”—dia—with the Greek for “earth”—geo. At the time of the merger GrandMet owned Burger King Corporation, Pillsbury Company, and a range of drinks brands, including Baileys and Smirnoff. Walsh was immediately made a member of the board of Diageo and in 2000 became its chief operating officer. That same year he became chief executive officer of Guinness UDV.

Family: Married (wife’s name unknown); children: one. Career: Grand Metropolitan, 1982–1986, financial planning and accounts manager for Watney, Mann and Truman Brewers; 1986, finance director; 1987–1988, CFO of Inter-Continental Hotels; 1989–1992, CFO of food division; 1992–2000, CEO of Pillsbury; Diageo, 2000–2001, CEO of Guinness UDV and COO; 2001–, CEO. Address: Diageo, 8 Henrietta Place, W1M 9AG, London, United Kingdom; http://www.diageo.com.

WALSH REFOCUSES DIAGEO

■ Paul Walsh made an immediate impact when he took over the direction of the food-and-drinks firm Diageo in 2000. By selling off the company’s food concerns and concentrating on the marketing and innovation of its core premium drinks brands he refocused and reenergized the company. Walsh took successful ideas from other markets, such as the soft-drink industry, and combined them with an aggressive and innovative sales and promotion campaign. A merger with Seagram’s made Diageo the world’s largest spirits marketer.

EARLY CAREER The young Paul Walsh wanted to become a fighter pilot—a dream inspired by a mathematics teacher who had served with the British Royal Air Force in World War II—but poor eyesight kept him out of the cockpit. Instead Walsh turned to business management and after studying accounting at Manchester Polytechnic found employment with the food-anddrinks firm Grand Metropolitan (GrandMet). Walsh first joined GrandMet as a financial planning and accounts manager for the company’s Watney, Mann and Truman Brewers division in 1982. He quickly climbed GrandMet’s corporate lad-


While shareholders were supportive of the 1997 merger, by 1999 doubts had surfaced over the logic of Diageo owning both a U.S. food group and a U.S. fast-service restaurant. Walsh opted to redefine his company by shedding its food holdings and focusing solely on premium drinks. As he told NYSE Magazine, “Strategically, you never want to be in the middle. You either want to be full-scale or you want to be niche. If you look at our positions in food, we were in the middle of the pack” (August 3, 2003). Pillsbury was sold off to General Mills in October 2001 for $10.5 billion, and the company’s Burger King holdings were sold to a private consortium in December 2002 for $1.5 billion. Diageo next purchased in conjunction with Pernod Ricard the Seagram’s spirits-and-wine business from Vivendi Universal in December 2001. This added the brands of Captain Morgan rum and Crown Royal whiskey to Diageo’s line of liquors. The purchase would not prove to be the start of an acquisitions spree; Walsh considered the addition of Seagram’s to be organic growth and noted that very few other noteworthy brands were available. Naming their overall plan the Next Generation Growth (NGG) strategy, Walsh and his fellow executives devised an

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Paul S. Walsh

ambitious strategy to modify the relationship between supplier and distributor by training 2,500 dedicated salespeople. The new sales force’s role was to target specific bars and restaurants using analyses of regional and ethnic preferences. A new emphasis was also given to on-premise promotions, such as Jose Cuervo or Smirnoff nights featuring unique drinks tailored to the locations. The plan rationalized Diageo’s wholesale operation, which had been fragmented and had often left distributors of Diageo products also handling the brands of major competitors. For U.S. operations a single distributor was established in each state. Diageo also introduced a uniform way of measuring returns gained from marketing investments; Walsh saw the approach as providing increased efficiency and a new ability to respond to consumer needs. In 2001 Diageo was operating in over 180 markets; thus such sweeping changes proved complex and involved many employees and clients. The changes were modeled after those used by the successful soft-drink and beer companies CocaCola and Anheuser-Busch, producer of Budweiser beers. The tactics had proven successful in those markets but had never been tried in the premium alcoholic beverage market. With such moves in place Walsh was able to concentrate on innovative marketing and brand extension for Diageo’s eight highest-priority products: Smirnoff premium vodka, Johnnie Walker scotch, Guinness stout, Baileys liqueur, J&B scotch, Captain Morgan rum, Jose Cuervo tequila, and Tanqueray gin. With many of these brands positioned as longstanding market leaders, the challenge for Diageo was to maintain those positions while finding new directions for growth. Walsh was forthright about his goals, describing his growth strategy as “audacious” (NYSE Magazine, August 3, 2003). His long-term aim was to convert adults everywhere into people he referred to as “adorers” of the brands: customers who willingly chose—and even sought out—Diageo products over the competition. Walsh helped introduce the “Diageo way of brand building,” which ignored existing categories and instead looked at the product range from a consumer point of view, taking into consideration the feelings, desires, and social interactions of the target market. Beyond its top eight global brands Diageo sought to promote another 30 local-priority brands that had dominance in one or two markets but were not well known around the world. Diageo also had 450 additional smaller brands that accounted for 30 percent of the company’s sales but would be difficult to promote outside of their respective regional marketplaces. Walsh and his team decided that while those brands were important, the investments that would be needed to expand sales would not be worth the expected returns. Industry analysts widely considered Walsh’s moves to be successful, putting the fizz back in the world’s largest alcohol business during a flat market and thus pleasing investors. The refocusing produced immediate financial returns; sales of Di-

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ageo’s premium brands rose by 23 percent in the latter half of 2002.

RESEARCH AND RESPONSIBILITY While promotion of existing products and brands was essential, at the same time Diageo was extensively committed to research and development, spending $46 million in that department over the fiscal year ending June 30, 2002. For Walsh the introduction of the ready-to-drink beverage Smirnoff Ice was the most successful example of Diageo’s commitment to innovation. Brewed like beer but tasting like lemonade, packaged in a single-serving bottle, and promoted with clever advertising, Smirnoff Ice proved itself to be a popular alternative to beer—or “malternative” as such products were known in the industry—breaking into a market previously thought to be impenetrable. Smirmoff Ice quickly became a billion-dollar brand. Another successful innovation was the introduction of Diageo drinks packaged in plastic containers, allowing them to be served in glass-free environments such as sports stadiums. Such renovations of the core Diageo brands help to keep the product image fresh and vibrant. Not all of Diageo’s projects met with such success, however; their ready-to-drink Captain Morgan Gold beverage did not meet customer expectations. Walsh and Diageo were careful to promote responsible drinking and took their policy of devotion to the community seriously. They adopted stringent global standards for advertising campaigns—such as only using mediums in which more than 70 percent of viewers could be expected to surpass the legal drinking age and never using actors aged under 25 in promotions—that were more strict than most of the requirements of the markets in which they operated. Walsh noted in NYSE Magazine, “We’re in this for the long term and therefore want a nice steady market in which our products can be responsibly enjoyed” (August 3, 2003). Both GrandMet and Guinness had long histories of altruism, and Walsh ensured that Diageo continued those trends; the company was regularly one of the United Kingdom’s top corporate donors. The Diageo Foundation was set up to contribute 1 percent of the company’s worldwide profits to charity and social-investment programs. In 2001 the company began sponsoring the Prince of Wales’ International Business Leaders Forum Award for International Corporate Citizenship, which aimed to recognize companies showing responsible business practices and having positive impacts on wider society. Walsh even set up an internal Diageo committee on corporate citizenship that focused on alcohol education, the environment, and community work. Diageo signed on to the United Nations’ Global Compact, a set of human-rights standards that held multinational companies responsible for securing and promoting human rights wherever they operated.


Paul S. Walsh

MANAGEMENT STYLE Walsh, an admirer of the motivational skills of the wartime leader Winston Churchill, was called in the Financial Times “an excellent hands-on chief executive, a very good team player and team leader” (October 21, 2000). A practical manager, not a “blue-sky” thinker, Walsh cultivated an open, honest, and very human style that was evident in his approach to the Seagram’s merger, when Diageo brought over two thousand of that company’s employees into their own workforce of 25,000. Walsh’s openness and ability to communicate with workers at all levels in his organization helped keep the merger smooth and prevented conflicts from arising between the two groups of employees. Although unable to chase his childhood dream of piloting fighter planes, Walsh’s career necessitated his spending many hours in the air; he once estimated that his Diageo job took him from the United Kingdom to North America an average of once a month. Walsh was able to sleep with little effort on such journeys, thereby avoiding the curse of many other transAtlantic executives: jet lag. While Walsh was a driven, successful business executive who was often away on business trips, he was also a committed family man who endeavored to maintain a healthy balance in his life. In his days at Pillsbury he once delayed the closing of a business deal so that he could keep a promise to his son and go on a fishing trip. Walsh, who admitted enjoying the occasional Johnnie Walker Black with soda or a pint of Guinness, was also a director of the Scotch Whisky Association, a nonexecutive director for General Mills, Federal Express Corporation, and Centrica, and governor of the Henley Management Centre.


See also entry on Diageo plc in International Directory of Company Histories.


“Diageo: In High Spirits?” ebusinessforum.com, November 27, 2001, http://www.ebusinessforum.com/ index.asp?doc_id=4904&layout=rich_story. “Diageo Confirms Change at the Top,” This Is Money, July 24, 2000, http://www.thisismoney.com/20000724/ nm18216.html. Finch, Julia, “Brewing a Set of Standards,” Guardian, November 17, 2003. Johar, Samuel, “A Powerful Mix of Tenacity and Focus,” Financial Times, October 21, 2002. Rohan, Mike, “Diageo Increases Its Potency in Premium Drinks,” January 3, 2002, http://www.itsfood.com. Walsh, Dominic, “Drinks Giant’s Cup of Cheer Runs Over,” Times Online, October 7, 2002, http:// www.timesonline.co.uk. “What’s Brewing at Diageo,” NYSE Magazine, August 3, 2003, http://www.nyse.com. Williams, Sam, “Diageo, Straight Up,” New York Post, May 30, 2004, http://www.nypost.com/business/24840.htm.

—David Tulloch

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Robert Walter 1945– Chairman and chief executive officer, Cardinal Health Nationality: American. Born: July 13, 1945, in Columbus, Ohio. Education: Ohio State University, BS, 1967; Harvard University, MBA, 1970. Family: Son of a food broker in Ohio; married Peggy McGreevey, 1967; children: three. Career: North American Rockwell, 1968, engineer; Cardinal Foods, 1971–1980, CEO; Cardinal Distribution, 1980–1994, CEO; Cardinal Health, 1994–, CEO. Awards: Honorary Doctorate, Ohio University, 1997; Christopher Columbus Award, Greater Columbus Chamber of Commerce, 2001. Address: Cardinal Health, 7000 Cardinal Place, Dublin, Ohio 43017; http://www.cardinal.com.

■ Robert Walter founded the food-distribution business Cardinal Foods in 1971. In 1980 he began diversifying the company to pharmaceutical distribution and in 1987 sold off its food distribution component; in 1994 the company’s name was changed to Cardinal Health. By the late 1990s, after acquiring numerous other companies under Walter’s direction as CEO, Cardinal had become a large, highly profitable healthcare conglomerate engaged in the manufacture and distribution of drugs and medical and surgical supplies. Walter remained the CEO of Cardinal through 2004. Analysts and friends described him as modest, highly competitive, and a superb deal-maker, and he repeatedly attributed his success with Cardinal to “sneaking up” on his competition and to carefully avoiding the pitfalls of big-company culture.

EDUCATION AND FORMATIVE EXPERIENCE WITH ROCKWELL As an undergraduate at Ohio State University Robert Walter never missed a class. A classmate who eventually became

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Robert Walter. AP/Wide World Photos.

a CEO himself said that Walter showed a knack for dealing with complexity and prioritizing. Walter graduated summa cum laude in 1967 with a BS in mechanical engineering and went straight to work for the missile maker North American Rockwell (which later became Rockwell International). The experience was formative: Walter loathed Rockwell’s corporate culture, where individual initiative was swallowed up in bureaucracy. As Walter saw it, the company was overstaffed, hampered by a rigid seniority system, and made lazy by riskfree, cost-plus government contracts. He was later to describe his stint at Rockwell as the worst and scariest experience of his career. After only six months Walters left for Harvard Business School, determined never to work for an oversized company again.


Robert Walter

FOUNDS CARDINAL AS A FOOD DISTRIBUTOR Fresh out of Harvard’s MBA program Walter decided to acquire and rehabilitate a mismanaged company in a simple line of business. He returned to Columbus, borrowed $1.3 million, and acquired the ailing food-distribution division of Consolidated Foods in a leveraged buyout in 1971; he christened his new company Cardinal Foods. Its business was indeed simple: to truck food from wholesale outlets to retail stores. Walter managed Cardinal into a major regional food distributor, increasing its sales tenfold by 1980. At that point, however, he ran out of headroom. The U.S. food-distribution business had been consolidated into the hands of a few large companies—too large for Cardinal to acquire or compete with for market share. As a food-distribution business Cardinal was poised to diversify into the realms of either food or distribution alone. Walter tried to diversify within the food business by starting a supermarket chain but failed, an experience that he later characterized as his most humbling.

DIVERSIFIES CARDINAL Diversifying into food retailing had been unsuccessful, but Walter reasoned that he could still translate his understanding of food distribution into the distribution of other items. Researching the industry, he found that although food distribution had already been heavily consolidated, drug distribution was still highly fragmented. At that time there were 354 independent distributors in the United States and only three public companies. (Thanks in large part to Walter himself, drug distribution would eventually go the way of food distribution: by 2003 Cardinal and its two biggest competitors controlled 90 percent of the drug-distribution market.) In 1980 Walter purchased Baily Drug, the Ohio company that distributed drugs to pharmacies, and renamed his own company Cardinal Distribution to reflect its expanded scope. Three years later he purchased four midwestern drug-distribution centers and took his company public. In the next few years Cardinal swiftly expanded—always by acquisition, always under Walter’s personal control, and always in the drug distribution business, which remained simple: Cardinal bought drugs from makers like Pfizer and trucked them to customers like hospitals or the pharmacy chain CVS. In 1988 Walters sold off the food-distribution segment of Cardinal; for the next six years he concentrated on expanding Cardinal’s drug distribution business beyond the Midwest. By 1994 Cardinal had been doing nothing but transporting drugs and acquiring smaller distributors for some 14 years. Concerned that Cardinal’s narrowness made it vulnerable to market instability and declining profit margins in drug distribution, Walters decided to diversify. He changed the company’s name to Cardinal Health and in 1995 made his first nondistribution acquisition, Medicine Shoppe International (a large


franchiser of retail pharmacies). In the following years Cardinal continued to diversify, expanding into higher-margin businesses like drug manufacture and the distribution of nondrug medical, surgical, and laboratory products. In 1996 it purchased Pyxis, the maker of automated drug-dispensing machines used by nurses in hospitals. In 1999 Cardinal purchased Allegiance Corporation, the manufacturer and distributor of medical-surgical products, for $5.4 billion. By 2001 Cardinal had increased its earnings by more than 20 percent annually for 15 consecutive years. By 2004 it was the third-largest health-care service provider in the United States, worth approximately $44 billion and employing about 50,000 people (40 percent of whom worked abroad, mostly in manufacturing).

ACQUISITION AS A BUSINESS: HIGH STANDARDS, CALCULATED RISKS Walter established Cardinal by acquisition and spurred its growth through acquisition. His skill was not in the creation of brand-new businesses or industries but in the gluing together of existing pieces. As Walter himself told the industry journal Modern Healthcare in 1999, “I don’t think my expertise ever has been to start businesses up. What I want to focus on is finding good base businesses that I think I can improve” (April 19, 1999). Indeed, between 1983 and 2001 Walter oversaw more than one hundred acquisitions; in 1996 he went as far as to state that acquisition was a line of business at Cardinal. Walter succeeded at the notoriously risky business of company-buying through a blend of ambition and conservatism. Friends and colleagues described him as intensely ambitious, both at work and at play—he was consistently ranked among the top five CEO golfers in the United States in the late 1990s and early 2000s—but he tempered his urge to get ahead with cautious deal-making. Once Cardinal had gained recognition as a national company, Walter instituted a policy of never acquiring businesses that were not ranked first or second in their market areas, shunning high-risk deals. He also took an approach to acquisition—first in food distribution and later in health care—that was plodding compared to those of other diversifiers. He only acquired companies that his existing customer base already depended on and trusted, thus continually increasing Cardinal’s indispensability to those who relied upon it. Cardinal acquired one of every 50 companies it considered buying; Walters said in 2003 that the mark of successful risk takers was that they calculated the odds well. In 2003 Euromoney Institutional Investor characterized Walter as “methodical in the way he seeks out higher-margin opportunities that complement the core business” (January 2003). Lawrence Marsh, the senior vice president at Lehman Brothers in New York, said in 1999 in Modern Healthcare that Walter and his team were “stellar in my book” because they

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Robert Walter

took “calculated, prudent bets” (April 19, 1999). According to Walter, another guiding principle of his expansion strategy was to always acquire businesses with a higher profit margin than Cardinal already had. Yet in 2002, 56 percent of Cardinal’s operating earnings still came from drug distribution, its least-profitable major asset, underlining the conservatism of Walter’s acquisition philosophy. Walter never forgot his youthful loathing of the corporate culture at North American Rockwell. Even when his own company had become undeniably large, Walter adamantly maintained a smaller-business feeling. He allowed executives from acquired companies to retain a large degree of autonomy; as a result Cardinal became a conglomeration of small segments, with the people in charge of each segment given a high degree of authority and responsibility and asked to act quickly and decisively, as if they were the owners.

BUMPS IN THE ROAD Walter’s upward course was not without setbacks. In 1998 the Federal Trade Commission brought a successful antitrust suit against Cardinal’s attempt to acquire Bergen Brunswig Corporation, the competing health-supplies distributor. The following year Walter unhesitatingly turned to planning the purchase of another distributor, Allegiance—despite the fact that on the strength of the Internet bubble of the late 1990s some analysts were saying online ordering would eliminate distributors altogether. When the Internet bubble burst at the end of the 20th century, Walter’s actions were deemed more reasonable. In June 2002 Cardinal announced that it was buying Syncor International Corporation for $1.1 billion in a bid to expand its business in nuclear pharmaceuticals (radioactive materials used for diagnostic purposes in hospitals). Then the news broke that Syncor had made improper payments to stateowned health-care employees in Taiwan. After researching the matter, Walter and his team decided that the bribery had been small-scale and not connected with Syncor’s main business; Walter gave the deal the go-ahead and the acquisition proved stable. Also in 2002 Walter was obligated to take a conference call with major investors to assure them that the fact that Arthur Andersen had been Cardinal’s auditor did not mean that a Cardinal scandal was about to break. (Andersen had just been convicted of obstructing the federal Securities and Exchange Commission’s investigation of its client bankrupt energy-giant Enron.)

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In March 2004, in the wake of a string of disasters involving overreporting of income by large corporations, BristolMeyers announced that it had incorrectly recorded incentives paid to Cardinal to accept excess inventory. Once again Walter’s caution paid off: he was able to prove to Cardinal’s investors that the company had only recorded revenues for merchandise actually sold to retailers and that there would be no need for restatements of income. Throughout this string of near disasters, Walter’s attachment to basic business—comprising tangible goods and services, low debt, and straightforward accounting—stood Cardinal, its investors, and its employees (who owned 10 percent of the company) in good stead. As of 2004 Cardinal was the world’s largest provider of health-care products and services. Its success reflected to an unusual degree the cautious dealmaking practices of its lifetime CEO Robert Walter. “He’s one of the best managers I’ve ever seen,” said Peter Lynch, the vice chairman of the investment-advisor arm of Fidelity Investments, in Fortune, “and I’ve seen thousands” (April 14, 2003).

See also entry on Cardinal Health, Inc. in International Directory of Company Histories.


“America’s Best CEOs,” Euromoney Institutional Investor, January 2003. Borden, William, “Interview: Cardinal CEO Quietly Builds a Giant,” Reuters, August 19, 2002. Carter, Ron, “Shopping Spree: Cardinal Health Ringing Up Purchase after Purchase,” Business Today, August 5, 1996. Casey, Mary Alice, “Hard Work, High Standards: Fortune 100 CEO Remains Committed to His University,” Ohio Today, Spring 2001. Hensley, Scott, “The Cardinal Rules: Growth, Agility,” Modern Healthcare, April 19, 1999. Lashinsky, Adam, “Big Man in the Middle,” Fortune, April 14, 2003. Williams, Mark, “Cardinal CEO Quietly Builds Powerful Company,” Associated Press, February 26, 2003. —Larry Gilman


■■■

Shigeo Watanabe ca. 1943– Chairman, president, and chief executive officer, Bridgestone Corporation Nationality: Japanese. Born: ca. 1943. Career: Bridgestone Corporation, 1965–1983, various positions; Bridgestone/Firestone, 1983–1988, technical advisor; Bridgestone/Firestone Europe, 1988–2001, various positions; Bridgestone Corporation, 2001–, chairman, president, and chief executive officer. Address: Bridgestone Corporation, 10-1, Kyobashi 1chome, Chuo-ku, Tokyo, 104-8340, Japan; http:// www.bridgestone.co.jp/english/info.

■ Shigeo Watanabe was thrust into the leadership position at Bridgestone Corporation in March 2001 following the resignation of his predecessor, Yoichiro Kaizaki, on the heels of Bridgestone/Firestone’s massive recalled of 6.5 million tires in the United States in 2000. The recalls were due to defects the U.S. government said led to rollover accidents in Ford Explorer sport-utility vehicles (SUVs). One hundred and forty-eight people died as a result of the accidents. In a departure from their usual practice of choosing a person with generalized experience, Bridgestone executives elected Watanabe—a senior managing director and long-time technical and quality-control advisor with Bridgestone/Firestone—to lead their company through the crisis and a critical period in its history. Analysts speculated that Watanabe was chosen for his special expertise, which, they said, the corporation sorely needed to address technical difficulties experienced by its U.S. operations and to rebuild confidence in that operation. Under Watanabe’s steady and focused leadership, Bridgestone Americas made a dramatic return to profitability in 2002.

TRAGEDIES END BRIDGESTONE/FIRESTONE ALLIANCE WITH FORD Bridgestone Corporation was established in 1931 and by the early 21st century had become the world’s largest manufac-


Shigeo Watanabe. AP/Wide World Photos.

turer of tires for trucks, buses, cars, and motorcycles. It supplied tires to almost all major automobile manufacturers, for aircraft and off-road mining vehicles, and became racing’s Formula One tire supplier after Goodyear withdrew in 1998. Its diverse line of products included industrial-rubber components, building materials, and recreational products. In 2003 the corporation operated more than 100 plants in 24 countries, employed more than 108,000 people, had close to $22 million in sales, and showed a net income of $828 million. The alliance between Firestone and Ford began with the founders of the two companies, Harvey Firestone and Henry Ford. Since then, Firestone provided tires for Ford vehicles, including Ford’s Explorer. In early August 2000 reports began linking Firestone tires with the unprecedented number of rollover accidents involving Explorers. The death toll from those accidents would reach 148. Ford was quick to place full blame

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Shigeo Watanabe

on the Firestone tires. Bridgestone/Firestone eventually admitted that poor tire design and manufacturing at its Decatur, Illinois, plant was partially responsible for the accidents and, by the close of 2001, had settled court cases with more than six hundred plaintiffs and was continuing good-faith negotiations to settle others. When the reports first began linking Firestone tires to the accidents, Bridgestone—under the leadership of Kaizaki —stonewalled the press and the public alike until a congressional hearing in the United States forced the company to respond. Kaizaki sent a representative in his place who could neither speak English nor adequately address questions regarding technical issues. Amid a barrage of bad press and serious damage to its American tire business, Bridgestone announced in January 2001 that three top executives, including Kaizaki, would resign. “It was a tacit admission of how badly Kaizaki and his team handled the crisis in the early days,” wrote a reporter for the Los Angeles Times (bankrupt.com). Following Watanabe’s appointment, Bridgestone began addressing its part in the Explorer tragedies and to respond to Ford’s swift and damaging finger-pointing. Bridgestone accused Ford of defective design in their 1996 and 2000 Explorer four-doors that resulted in understeering and oversteering problems. In an emergency, charged Bridgestone, these defects caused drivers to lose control of the vehicle. Bridgestone asked that the U.S. National Highway Traffic Safety Administration investigate the safety of the SUVs. Ford faced fierce litigation, settling much of it out of court. In May 2001 Ford recalled about 50,000 2002 Explorers and Mercury Mountaineers because of tires damaged during the assembly process. Watanabe commented: “We have been saying it’s strange there are that many accidents with the Explorer. We are asserting what should be asserted, not picking a fight” (ChannelCincinnati.com). In late May 2001, in what Watanabe called an “excruciating” decision, Bridgestone/Firestone ended its almost century-long alliance with Ford in the Americas following Ford’s decision to replace a further 13 million Firestone tires (CNN.com). Watanabe said Ford’s action left Bridgestone no other option but to sever the alliances. According to Bridgestone’s 2001 annual report, Watanabe said the decision was made because “the relationship’s foundation of mutual trust had eroded” (www.bridgestone.co.jp). He noted that he had personally discussed with Ford executives the issues that undermined the relationship. According to the CNN.com reporter, Japan’s auto analyst for J. P. Morgan, Steve Usher, noted that Bridgestone did all it could to avoid the breakup, and he credited the company for finally taking a proactive role: “[Previously] they didn’t feel it was as serious a problem [in Japan] as it was in the United States. They also took a more Japanese approach, which is not to flay your opponents. . . . The decision to sever the ties with Ford and take a more aggressive

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stance with regard to the allocation of blame is a very positive one.”

FROM RELATIVE OBSCURITY TO GLOBAL SPOTLIGHT Following Watanabe’s appointment as Kaizaki’s successor, the Los Angeles Times reporter quoted analyst Shigeharu Kimishima of Kokusai Securities as commenting: “Always hanging over Kaizaki’s head was the question of accepting responsibility. . . . The change is needed and the company can now begin to rebuild its image” (bankrupt.com). Analysts believed that his appointment was a signal to shareholders and consumers alike that Bridgestone was taking charges against their product seriously. A reporter with CNNmoney quoted analyst Howard Smith of ING Baring Securities in Tokyo as commenting of Bridgestone’s decision to place Watanabe in the top slot: “I’m presuming he will be a safe pair of hands, and they can use him to rebuild the brand and deal with the technical issues on the investigation in America” (money.cnn.com). While his prior years of employment with Bridgestone remained relatively obscure to the general public, following his appointment as CEO, Watanabe’s every action was heavily scrutinized in the press. Watanabe focused firmly on Bridgestone’s future and his role in it. His first message as new leader was posted on Bridgestone’s Web site. He said: “My 36-year career at Bridgestone and its subsidiaries has centered on product development and has included nine years in the United States and Europe. I will draw fully on my experience on the technological side of the tire business in working to reinforce and revitalize our brands.” He stressed that the most immediate challenge for the corporation was to restore confidence in and revitalize Firestone, the achievement of which he openly admitted was absolutely necessary to Bridgestone’s strategy. “So let this be my inaugural pledge as chief executive officer: We are committed to the Firestone brand and to Bridgestone/ Firestone’s North American operations. To fulfill our global vision, it is necessary to rebuild the value of those precious assets” (www.bridgetsone.co.jp). Watanabe added that charges against their 2000 balance sheet for potential liabilities and other legal costs and the cost of replacing the 6.5 million recalled tires led to a decline in net earnings of 80 percent that “obscured an otherwise strong business performance worldwide.” Having addressed the downside, he proceeded to build confidence in the corporation as an entirety by listing its strong performance in other subsidiaries and countries. “We are determined to translate our fundamental strengths into renewed growth in sales, earnings, and shareholder value,” he said. He implemented a far more open approach and exchange of ideas among all sectors, regions, and individuals within the group and streamlined his board of directors by reducing it from 28 to 8 members. This,


Shigeo Watanabe

he asserted, would transform it into “a forum of meaningful, constructive debate” and enable much swifter responses to issues and opportunities. He also expressed his “great personal sadness” at the deaths and injuries sustained during the use of products manufactured at Bridgestone’s subsidiaries, and he said that “Maximizing safety is manufacturers’ most fundamental responsibility. . . . This is a time for redoubling efforts to ensure that all of our companies fulfill that responsibility, consistently, conscientiously, and completely.”

A MORE AGGRESSIVE AND OPEN APPROACH In the 2001 annual report Watanabe outlined plans that encompassed three priorities: Rebuilding in the Americas, Reinforcing Confidence, and Defining a Vision. As to the first, he commented that Bridgestone/Firestone employees were working “hard and well” to restore profitability under the corporation’s new “Making it Right” slogan. As evidence that the plan was working, he noted an upswing in demand for Firestone tires. As to the second priority, he said that while his predecessors shared “an unspoken understanding of common values,” unspoken was insufficient. “We have spelled out our philosophy in words that everyone can understand. The core concepts are trust and pride: the trust that we earn from customers and from everyone in the community. And the pride that we feel in earning that trust.” He stressed that safety and the customer were of primary importance, that that goal could only come from quality products, and that he personally would head up a program to promote quality improvements throughout the entire group. As to vision, he said that tires and new technologies would remain the company’s core business, and he committed the company to more aggressive handling of intellectual property. “No longer will we let promising technologies lie fallow simply because they don’t mesh with our in-house development programs.” Watanabe firmly believed in open communication to keep shareholders and stakeholders apprised and updated, and he held 10 press conferences in the first 12 months as CEO. In the Americas, he oversaw a sweeping restructuring aimed at regaining profitability. New companies were established to oversee all North American tire-manufacturing and wholesaling operations under a common holding company headed a by newly instated American CEO (replacing Masatoshi Ono) at Bridgestone/Firestone’s Nashville, Tennessee, subsidiary.

“GROWTH, YES, BUT STRATEGIC, QUALITATIVE GROWTH” In his 2002 annual report Watanabe stressed strategic, qualitative growth, stating that, while the company would continue to “pursue and attain” growth in the industry, part of that growth would be due to a greater emphasis on profitability. “In the past, we chased every kind of business with


more or less equal fervor. Now, we are shaping our business portfolio more carefully in original equipment tires and in replacement tires” (www.bridgestone.co.jp). While principal focus would be on larger-sized, high-performance tires and the high-value niche for run-flat tires, commodity-grade tires would remain a large part of their worldwide business. Following Watanabe’s visit to Bridgestone’s South American subsidiary, a reporter noted that Watanabe stressed the group’s mission of “Serving Society with Superior Quality.” He outlined the group’s 10-year plan and reiterated and reinforced their global vision: “to have 140,000 employees focused on achieving trust and pride. . . . Through pride in the company’s achievements, and each employee’s personal contribution, Bridgestone earns the respect of stakeholders at every level, be they the families of employees, shareholders, suppliers or ultimately, our most precious partners, our customers,” he commented (www.firestone.co.za). Watanabe assured stakeholders in a message in the 2003 annual report that continuing emphasis would be placed on global brand-building in 2004 under the message “Passion for Excellence.” He concluded: “Team members at all the Bridgestone Group companies are genuinely passionate about excellence—in products and services and in all of our activities. I invite you to watch us fulfill our slogan” (www. bridgestone.co.jp).

See also entry on Bridgestone Corporation in International Directory of Company Histories.


“Bridgestone: Announce Resignation of Three Top Executives,” http://bankrupt.com/CAR_Public/010115.MBX. “Bridgestone Annual Report 2001,” http:// www.bridgestone.co.jp/ir/ar/2001/02conts.html. “Bridgestone Boss Quits: CEO of Troubled Tiremaker is Second Top Exec to Leave Since Firestone Recall,” CNNmoney.com, http://money.cnn.com/2001/01/11/asia/ bridgestone/index.htm. “Bridgestone Faces Hefty Cost in Tire Spat,” CNN.com, http:// cnn.com.tr/2001/BUSINESS/asia/05/22/japan.bridgestone/ #3. “Firestone Wants Ford Investigated: Tiremaker Claims Deaths Were Caused by Steering Problems,” ChannelCincinnati.com, http://www.channelcincinnati.com/ money/799823/detail.html. “Product Strategy: Focusing on High-Value Segments, Annual Report 2002,” http://www.bridgestone.co.jp/ir/ar/2002/ product.html. “To Our Stakeholders, Annual Report 2003,” http:// www.bridgestone.co.jp/ir/ar/2003/president.html.

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Shigeo Watanabe “Trust and Pride—the BF Vision,” http://www.firestone.co.za/ news_article.asp?id=448. “A Word from the New President,” company press release, http://www.bridgestone.co.jp/ir/ar/2000/02message.html. —Marie Thompson

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Fumiaki Watari President and chief executive officer, Nippon Oil Corporation Nationality: Japanese. Education: Keio University, BA. Career: Nippon Oil, 1960–1995, marketer; 1995–1998, marketing director; 1998–1999, vice president; Nippon Mitsubishi Oil, 1999–2000, vice president; Nippon Oil Corporation, 2000–, president. Address: 3-12 Nishi Shimbashi 1-chome, Minato-ku, Tokyo 105-8412 Japan; http://www.eneos.co.jp.

■ Fumiaki Watari began working at Nippon Oil in 1960. He worked his way up through the company and became president in 2000. In a world whose economy was uncertain and whose oil industry fluctuated dramatically, Watari managed to keep Nippon Oil successful and viable. He worked consistently to expand business internationally and was always on the lookout for new sources of oil. Watari started his career with a bachelor’s degree in economics from Japan’s prestigious Keio University. After graduation Watari joined Nippon Oil; he spent 20 years in the marketing division learning the ropes, becoming the marketing director in 1995. In 1998 he was made vice president and then assumed the same position at Nippon Mitsubishi Oil, which was created in 1999 after a merger of Nippon Oil and Mitsubishi Oil. Nippon Mitsubishi Oil became Japan’s largest oil company. After 40 years of service Watari was promoted to president of Nippon Mitsubishi Oil on June 29, 2000. It was the ultimate honor after years of good and faithful service. At about this same time Nippon Mitsubishi Oil was renamed Nippon Oil Corporation.

TAKING ON THE PRESIDENCY Watari began his job as president at a time when the economy in Japan was bad and the world’s oil production uncertain. With many challenges to face Watari made drastic changes at Nippon Oil. In 2001 Watari consolidated Nippon Oil’s


13,000 service stations under a new name: Eneos. The new name combined the English word “energy” with the Greek word for “new,” neos. Crude oil prices became unstable in 2003 when the war in Iraq started, so Watari lowered the percentage of oil it procured from the Middle East and instead increased its dependence on African and Russian oil. Watari reversed this decision later, however, because he was worried that the neglect of Middle Eastern suppliers would cause Middle Eastern and Persian/ Arabian Gulf producers to desert Nippon Oil for oil from other Asian countries. On October 23, 2003, Nippon Oil opened an Eneos Car Centre, a one-stop automotive supply and services shop, at the Jusco Bandar Utama shopping center in Malaysia. It was the first such shop Nippon opened outside Japan. The center sold a complete line of car products and offered inspection and maintenance services. The shop did so well that in 2004 Watari, always aggressively seeking new venues for business, made plans to open a second shop at the new Jusco Metro Prima shopping center. When he was asked why Malaysia was the second country into which Nippon expanded, Watari cited an increase in demand for cars and their parts.

EXPANDING OIL SOURCES Watari was interested in expanding Nippon Oil reserves. The MLNG Tiga plant in Bintulu, Malaysia, processed gas from the Helang gas field off the shore of Sarawak, Malaysia. When the opportunity arose, Watari quickly seized the chance to develop the area. Production began on November 18, 2003. It cost Nippon approximately $500 million to develop the field. According to Watari the plant was able to process 6.8 million tons of liquefied natural gas (LNG) annually. In 2004 the company sold 5.5 million tons of LNG to buyers from Japan and South Korea. Watari reported that negotiations were under way with companies in Japan to sell the remaining 1.3 million tons of LNG from the plant. Not satisfied with this growth, Watari was planning to open the Jintan Gas Field in Malaysia in mid-2004. By 2004 Nippon Oil had production facilities in Malaysia, the North Sea (United Kingdom), Canada, Myanmar, Vietnam, Indonesia, Papua New Guinea, and Australia. While Watari was busy helping Nippon Oil flourish in uncertain economic times, in 2002 the Petroleum Association of

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Fumiaki Watari

Japan invited him to be a director. The association was a group consisting of the top oil companies in Japan. Watari soon became the vice president of the Petroleum Association and in 2003 was chosen president. As his first duty Watari said he wanted actively to put forward proposals for the government’s energy policies.

See also entry on Nippon Oil Company, Limited in International Directory of Company Histories.


“Asian Buyers Hope to Avoid Brunt of Apec [sic] Cut,” September 26, 2003, http://biz.thestar.com.my/news/ story.asp?file=/2003/9/26/business/6361843&sec=business. “Bank Pembangunan Targets Total Loan Approval of RM1b, Business Times,” The America’s Intelligence Wire, February 6, 2004. “Crude Oil Price to Stabilize at 25 Dlrs: Nippon Oil Pres,” Asia Africa Intelligence Wire, March 25, 2003. “DJ Oil Update: Asian Mkts Breathe Easier following OPEC News,” FWN Select, December 5, 2003.

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“HLA Life, General Divisions Receive ISO Accreditation,” The America’s Intelligence Wire, February 7, 2004. “Japan Changes Tack on Middle East Dependence,” Weekly Petroleum Argus, September 30, 2002, p. 10. “Japan’s Oil Ind. Body Picks Nippon Oil Pres. as New Chief,” Asia Africa Intelligence Wire, May 21, 2003. “Moving Places in Japan People on the Move,” Financial Times, May 16, 2000. “Nippon-Mitsubishi Relaunches Brand,” NPN International, July 2001, p. 8. “Nippon Oil Buys 6 mln Barrels of Oct-Dec Iraqi Oil,” November 19, 2002, http://asia.news.yahoo.com/031119/3/ 18292.html. “Nippon Oil Corporation,” http://www.hoovers.com/nipponoil/—ID__52297—/free-co-factsheet.xhtml (2004). “Petroleum Product Prices Climbing in Japan,” AsiaPulse News, August 30, 2000. Shimizu, Kaho, “Carbon Tax Proposal Short on Specifics—But Not on Skeptics,” Japan Times, August 28, 2003. —Catherine Victoria Donaldson


■■■

Philip B. Watts 1945– Former chairman of Royal Dutch/Shell Group of Companies Nationality: British. Born: June 25, 1945, in Leicester, England. Education: University of Leeds, BS, 1968; MS, 1970. Family: Son of hosiery factory worker; married Janet (maiden name unknown); children: two. Career: Royal Dutch/Shell Group of Companies: 1969–1983, seismologist; 1983–1987, exploration director, Shell U.K.; 1987–1991, series of positions in Shell’s production liaison and planning operations; 1991–1994, managing director, Shell Nigeria; 1994–1995, regional coordinator, Shell Europe; 1995–1998, director for strategic planning, sustainable development, and external affairs, Shell International; 1998–2001, chief executive officer, Exploration and Production Division; 2001–2004, chairman. Awards: Knighted by Queen Elizabeth II for services to British business and to the World Business Council for Sustainable Development, which he served as chairman, 2003.

■ Less than three years after taking over the chairmanship of the Royal Dutch/Shell Group, the world’s third-largest oil and gas company, Sir Philip Watts was swept out of office in early 2004 by revelations that the company had overstated its proved reserves by nearly 25 percent. Ousted with Watts was Walter van de Vijver, head of Shell’s exploration and production operations. A third top Shell executive, chief financial officer Judy Boynton, was forced from office shortly after the departure of Watts and van de Vijver. It was alleged that Watts, van de Vijver, and Boynton had been aware of the reserves shortfall since early 2002 and had conspired to keep the problem a secret from investors. Watts, knighted in January 2003 by Queen Elizabeth II for his services to British business, succeeded Sir Mark MoodyStuart in mid-2001 as chairman of Shell’s committee of managing directors. Although his appointment was at first wel-


Philip B. Watts. © AFP/Corbis.

comed as a sign that the company was going to move aggressively to reduce costs, Watts soon fell into disfavor with Shell’s investors, in large part because of his aloof and uncommunicative manner. Watts had, however, distinguished himself among oil industry executives by speaking out forcefully in favor of developing renewable sources of energy, such as wind and solar.

WARNED OF GLOBAL WARNING Delivering the keynote address at the opening of the Shell Center for Sustainability at Houston’s Rice University in March 2003, Watts called upon the international energy industry to act decisively to solve the problem of global warming. “We stand with those who are prepared to take action to solve that problem,” Watts said, according to the Houston Business

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Philip B. Watts

Journal (March 12, 2003). The Shell chairman said, however, that large-scale development of renewable energy resources probably would not occur until it became widely apparent that hydrocarbons were growing scarce. He predicted that by 2050 roughly one-third of all energy used would come from renewable sources. Born in Leicester, England, on June 25, 1945, Watts grew up in England’s Midlands. His father was a lifetime worker in the region’s hosiery mills. Watts attended Wyggeston Boys and Dixie Grammar schools in Leicestershire. He enrolled at the University of Leeds, from which he earned a bachelor’s degree in physics in 1968. Taking a brief break from academia, Watts taught briefly in the small West African country of Sierra Leone, a former British colony. He returned to the University of Leeds and earned his master’s degree in geophysics. Shortly afterward, he took a job as a seismologist with Shell. In his early years with Shell, Watts worked as a seismologist in exploration operations in Indonesia and Europe. Among the discoveries in which he was heavily involved was the vast Troll gas field in the North Sea near Norway, discovered in 1979. To familiarize Watts with other areas of Shell’s development operations, he was next assigned to head the Shell division responsible for activities in Malaysia, Brunei, and Singapore. In this position he served as a liaison between shareholders and Shell’s operating companies in that region.

EXPLORATION DIRECTOR FOR SHELL U.K. Watts returned to England in 1983 to assume a position as exploration director for Shell U.K. During the next few years he was heavily involved in the development of Shell’s holdings in the North Sea. He also played a significant role in developing Shell’s highly sophisticated three-dimensional seismic exploration technology. Far superior to the 2-D seismic investigation techniques previously used, the 3-D technology made it easier for those involved in exploration operations to “pinpoint” subsurface hydrocarbon reserves. Although almost all oil companies eventually moved to some form of 3-D seismic exploration, Shell’s technology was widely considered the best in the business, sharply increasing the odds of a strike. In Africa’s Niger Delta, Shell’s methods were so effective that two out of three wells hit oil. In a 1998 speech to a Rio de Janeiro conference of the American Association of Petroleum Geologists, Watts reviewed the evolution in the exploration and production of deepwater reserves that began in the late 1940s. He revealed that over the previous two decades Shell and its affiliated companies had invested more than $500 million in deepwater research, seeking to find—by trial and error—the ideal designs for platforms, pipelines, and risers to be used in deepwater exploration and production. “We remain committed to such long-term investment—even in tough times,” he told the con-

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ference. “This industry’s commercial dynamic drives the relentless pursuit of innovation and improvement.” After his stint as exploration director for Shell U.K., Watts went to corporate headquarters in the Hague, where he worked his way through a series of positions in production liaison and planning that got him more deeply involved in Shell’s worldwide exploration and production activities. In 1991 he returned to West Africa, where he had taught briefly in the late 1960s. This time he was based in Nigeria as managing director of Shell’s growing operations in that country.

ALLEGED CONSPIRACY IN NIGERIA Watts’s tenure as managing director of Shell Nigeria in the early 1990s was to come back to haunt him a decade later. One of Shell’s major areas of exploration in Nigeria under Watts targeted the oil-rich Niger River delta. During the course of that development, Shell came into conflict with the Ogoni people who lived in the region. According to a Reuters wire service report (March 25, 2004), a class action lawsuit was filed in 2002 by the Philadelphia law firm of Berger & Montague alleging that Shell “engaged in militarized commerce in a conspiracy with the former military government of Nigeria.” The suit, Reuters said, charged Shell with “purchasing ammunition and using its helicopters and boats and providing logistical support for . . . a military foray into Ogoniland designed to terrorize the civilian population into ending peaceful protests.” Although a spokesman for Shell dismissed the allegations as groundless, Watts was questioned in London by representatives of Berger & Montague in mid-April 2004. Watts was not named a defendant in the lawsuit, which was brought solely against the company. Other major oil producers that were active in the same region of Nigeria included ChevronTexaco, Exxon Mobil, and France’s Total. The conflict with the Ogonis eventually culminated in the execution by Nigeria of Ogoni activist Ken Saro-Wiwa. Nigeria also figured prominently in the scandal that swept Watts from office. Roughly 1.3 billion barrels of the company’s overstated reserves were booked in the African country. After three years in Nigeria, Watts returned to the Hague to become the company’s regional coordinator for Europe. After a year in that position, he was named director for strategic planning, sustainable development, and external affairs of Shell International. During the late 1990s Shell found itself at the center of increasing environmental concerns because of its involvement in two earlier projects. The company came under fire for its failure to clean up after its exploration operations in Nigeria and in 1995 went head to head with Greenpeace over Shell’s plan to sink its abandoned Brent Spar oil storage platform in the North Sea. Eventually Greenpeace prevailed in the latter standoff, and Shell agreed to tow the platform to shore in Norway, where it was dismantled and recycled for use as the foundation for a ferry terminal at Mekjarvik.


Philip B. Watts

DEFENDING EXPLORATION IN RAINFORESTS After Shell’s confrontations with environmentalists over its activities in Nigeria and the North Sea, it came as something of a shock when the company began drilling for oil in the rainforests of eastern Peru, one of the world’s last untouched wilderness areas. Shell tapped Watts to explain to the world the steps the company was taking to ensure that the Peruvian project’s impact on the environment would be minimal. He announced that Shell, along with its partner in the venture, Mobil, had agreed to independent, third-party monitoring of the project. The oil companies also commissioned studies of the region’s existing species by local universities and the Smithsonian Institution to help determine how drilling might affect these populations. According to Fortune, Watts promised that to discourage other development in the area, no roads would be built. “This is a whole new approach. We know the eyes of the world are on us there” (August 4, 1997). In a major management shakeup in December 1998, Watts was named chief executive officer of Shell’s Exploration and Production Division. At the same time, Mark Moody-Stuart, chairman of Shell’s committee of managing directors, announced the appointment of Paul Skinner to lead the company’s Oil Products Division. With the oil industry under increasing pressure worldwide, Moody-Stuart said, “we have entered a new period where executive decisions have to be made rapidly and business accountability must be absolutely clear” (Birmingham [U.K.] Post, December 11, 1998). Over the next couple of years, under Watts’s direction, Shell aggressively expanded its worldwide exploration and production operations. In 1999 the company announced its intention to focus Nigerian exploration on the search for offshore reserves, reducing its activities in the Niger River delta area, where it had encountered considerable resistance from the local population. In 2000 Shell’s oil production increased 5 percent from the previous year, while gas production jumped by 7 percent. The increase in oil production reflected not only output from new fields in the Canada, Oman, the United Kingdom, and the United States but a reduction in the local community disturbances that had limited the company’s Nigerian production in previous years. The increased oil flow from Nigeria and new fields more than offset production declines attributable to decreased flow from older fields. Gas production increases in 2000 were attributed to gains in Egypt, Nigeria, Oman, the United Kingdom, and the United States that more than made up for lower output in Germany and the Netherlands.

TAKING OVER AS CHAIRMAN In late December 2000 Watts was named to succeed Moody-Stuart as chairman when the latter retired in mid2001. The announcement of Watts’s imminent elevation to


the top post at Shell was generally welcomed by analysts and investors. According to a report (December 19, 2000) posted on the Web site of Alexander’s Gas & Oil Connections, a Merrill Lynch research bulletin observed that “Watts is keen on cost cutting and is seen by us as a good replacement.” Equally upbeat was an assessment from a fund manager who attended the Shell strategy presentation at which Watts’s appointment was announced: “He’s the cost cutter, and he’s the one for the upstream. All in all, I think it will be good for (Shell).” For Watts, the honeymoon with investors and analysts was short-lived. In August 2002, just a little more than a year after he took the helm at Shell, Watts came under fire for the company’s disappointing performance during his first year as CEO. Singled out for criticism was Watts’s downward revision of Shell’s targets for increases in oil and gas production, a decision that was made shortly after Watts became chairman but that was not disclosed to the market for several weeks. Watts also took flak for his failure to communicate well with investors, one of whom told the Independent of London (August 23, 2002) that he found Shell’s new chairman “brusque, a poor communicator, and generally defensive when dealing with critical questions.” Although he was winning few friends among Shell’s investors, Watts did make environmentalists happy with his dire warnings about the dangers of global warming. In his keynote address at the opening of the Shell Center for Sustainability at Rice University, Watts announced that Shell was investing heavily in the development of such renewable sources of energy as solar and wind. Of the continuing debate over global warming, Watts said, “We can’t wait to answer all questions beyond reasonable doubt,” according to the Houston Business Journal (March 12, 2003). He said that Shell, for its part, had seen enough to accept that emissions of greenhouse gases, “largely from burning fossil fuels,” were behind climatic changes that threatened the world.

CRISIS AND RESIGNATION Over the next year or so, pressure on Watts increased as Shell failed to meet its goals for expanding oil and gas production, but those difficulties paled by comparison with the shocking revelation on January 9, 2004, that the company was cutting its estimate of proven oil and gas reserves by roughly 3.9 billion barrels, close to 20 percent of total reserves. Investors began calling for Watts to resign, but at a London analysts’ meeting on February 5, 2004, the beleaguered Shell chairman was still hanging tough, telling analysts that he fully intended to finish out his term, which was not scheduled to end until August 2005. Particularly galling to many Shell shareholders was the fact that the bulk of the overstatement of reserves had occurred during Watts’s tenure as CEO of the company’s Exploration and Production Division.

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Less than a month after announcing his intention to stay on at Shell, Watts abruptly resigned on March 3, 2004. Walter van de Vijver, who had succeeded Watts as head of the company’s Exploration and Production Division, also tendered his resignation. Two days after Watts and van de Vijver stepped down, Jeroen van der Veer, Watts’s successor as chairman, refused to rule out the possibility that the ousted executives had acted illegally. Shortly after van der Veer’s pronouncement, the Associated Press on March 9, 2004, carried reports of internal memorandums indicating that many of Shell’s senior executives had been alerted about 18 months earlier to the likelihood that the company’s proven reserves had been overestimated. In April 2004, the U.S. law firm of Davis, Polk and Wardwell released a report on its independent review of Shell’s reserves overbooking crisis. The report, commissioned by Shell’s non-executive directors, revealed that top company executives, including Watts, had known about the reserves shortfall for years and had begun to worry in the fall of 2002 about how much longer the situation could be kept a secret. According to a Reuters report (April 19, 2004), van de Vijver had outlined his concerns about the problem in a September 2002 memo to top Shell executives. In part the memo read: “The market can only be fooled if (1) credibility of the company is high, (2) medium- and long-term portfolio refreshment is real, and/or (3) positive trends can be shown on all key indicators.” Van de Vijver went on to say that at that time Shell was struggling in all three areas, making it problematic how much longer the secret could be maintained.

April he was grilled by a U.S. law firm in London about his role in Shell’s alleged conspiracy with the former military government of Nigeria in a scheme to deprive the Ogoni people of their human rights. On top of that, Shell and Watts were both under investigation by the U.S. Justice Department and the Securities and Exchange Commission for allegedly misleading the stock market by allowing the overstated reserves figures to stand. On the brighter side, Shell announced in late May 2004 that, despite the circumstances of his hasty departure, Watts would receive a severance package of £1 million.

See also entry on Royal Dutch/Shell Group in International Directory of Company Histories.


“As the Commanders Scuffled on the Bridge, the Shell Supertanker Sailed Blindly On,” Daily Telegraph (London), April 20, 2004. Barker, Sophie, “Cost-Cutting Scientist Chosen to Take Helm at Shell,” Daily Telegraph (London), December 19, 2000. Beaton, Graeme, “Shell Chief ‘Had a Private Army,’” Mail on Sunday (London), April 4, 2004. Becker, Elizabeth, “Shell Strives to Clean Up Its Act,” New York Times, December 3, 2003. Callus, Andrew, and Janet McBride, “Shell Report Exposes Lies; CFO Sacked,” Reuters, April 19, 2004.

The law firm’s report also disclosed that in a November 2003 memo to Watts, van de Vijver had declared that he was “sick and tired about lying about the extent of our reserves issues,” Reuters reported (April 19, 2004). It was also revealed that the CEO of Shell’s Exploration and Production Division had instructed staff members in December 2003 to destroy a document that outlined the extent to which 2.3 billion barrels of reserves were out of line with regulatory guidelines.

“Cool City Response to Shell’s Strategy Move,” Evening Standard (London), December 17, 2001.

AFTER THE FALL

Foss, Brad, “Report: Shell Execs Hid Reserves Problem,” Associated Press, March 9, 2004.

In April 2004 Shell lowered its reserves estimate even further, indicating that the total overbooked to reserves was roughly 4.85 billion barrels–4.35 billion for 2002 and an additional 500 million in 2003. In issuing the downward revision in proven reserves, Shell also announced the firing of Judy Boynton, the company’s chief financial officer. Despite Shell’s attempts to come clean on the reserves problem, many in the financial community questioned whether the company could weather the storm, suggesting that it might have to reorganize to win back investor confidence. As for Watts, his unceremonious departure from Shell in March 2004 seemed unlikely to end his problems. In mid-

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Cope, Nigel, “Business Analysis: City Attacks Shell’s ‘Brusque” Chairman,” Independent (London), August 23, 2002. Drawbaugh, Kevin, “Ex-Shell Head Watts to Face Nigeria Case Questions,” Reuters, March 25, 2004. “Executive Seeks to Put Shell Back on Top of the World,” Sunday Business (London), April 7, 2002.

Gardiner, Beth, “Shell Woes Could Force Reorganization as Company Tries to Rebuild Trust,” Associated Press, April 20, 2004. Guyon, Janet, “From Green to Gold: Shell’s Improving SocialResponsibility Record Makes the Oil Giant Attractive to Investors,” Fortune, November 10, 2003. ———, “The Game’s On at Shell,” Fortune, February 23, 2004. Hoover’s Online, “Royal Dutch/Shell Group of Companies,” http://www.hoovers.com/royal-dutch/shell-group/— ID__50019—/free-co-factsheet.xhtml.


Philip B. Watts “Investment: Phil Watts,” Independent (London), October 5, 2002. “It’s Not Easy Being Green,” Fortune, August 4, 1997. Labaton, Stephen, and Heather Timmons, “Tug-of-War at Top Crippled Shell; Revisions on Reserves Spurred Bitter Feud among Ex-Chiefs,” International Herald Tribune, April 21, 2004. Mbachu, Dulue, “Nigeria Threatens to Halt Shell Production,” Associated Press, March 26, 2004. Olive, David, “What? Me Tell Lies?” Toronto Star, March 28, 2004. “Outlook: Phil and Judy Show Keeps Us Guessing at Shell,” Independent (London), December 18, 2001. “Outlook: Shell/Phil Watts,” Independent (London), August 23, 2002. Pfeifer, Sylvia, and Robert Peston, “Shell Gives Watts a £1M Golden Farewell,” Sunday Telegraph (London), May 23, 2004. Reed, Stanley, “Can Shell Put Out This Fire?” BusinessWeek, May 3, 2004. Ringshaw, Grant, “Shell in the Path of a Legal Whirlwind,” Sunday Telegraph (London), April 25, 2004. “Royal Dutch/Shell Chief Addresses Global Warming,” Houston Business Journal, March 12, 2003. Royal Dutch/Shell Group of Companies, “Shell Chairman to Lead World Business Council for Sustainable Development,” http://www.shell.com/home/


Framework?siteId=media-en&FC2=/media-en/html/iwgen/ news_and_library/press_releases/2001/zzz_lhn.html&FC3=/ media-en/html/iwgen/news_and_library/press_releases/2001/ chairman_to_lead_wbcsd.html. Shah, Saeed, “Shell under Pressure to Publish Independent Nigeria Report,” Independent (London), May 29, 2001. “Shake-up at Shell Puts Tiger in Its Think Tank,” Birmingham (U.K.) Post, December 11, 1998. “Shell Oil Reserve Cut Boosts Pressure on Watts, Investors Say,” Bloomberg, January 10, 2004. “Shell Shock: Oil,” Economist, January 17, 2004. “This Time, Sorry May Not Be Enough,” Economist, January 31, 2004. Timmons, Heather, “Shell Silent on Investigation of Former Head,” International Herald Tribune, March 6, 2004. Tooher, Patrick, and Graeme Beaton, “Shell’s Top Bosses Named in £8 Billion Lawsuit,” Financial Mail on Sunday (London), April 25, 2004. Warner, Jeremy, “Outlook: Shell’s Whodunnit Script Is Worthy of Fiction,” Independent (London), April 20, 2004. “Watts to Take Place of Moody-Stuart at Shell, Alexander’s Gas & Oil Connections, http://www.gasandoil.com/goc/company/ cne10456.htm. World Business Council for Sustainable Development, “Sir Philip Watts KCMG,” http://www.wbcsd.ch/web/press/biophil.htm. —Don Amerman

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■■■

Jürgen Weber 1941– Chairman of the supervisory board, Deutsche Lufthansa Nationality: German. Born: October 17, 1941. Education: Stuttgart Technical University, BS, 1965; Massachusetts Institute of Technology, MBA, 1980. Career: Lufthansa, Hamburg, 1967–1974, engineering division; 1974–1978, line–maintenance director; 1978–1987, chief engineer in charge of aircraft maintenance; 1987–1989, chief operating officer, technical services; 1989–1990, deputy member, executive board; 1990, chief executive, technical services, and full executive board member; 1990–1991, deputy chairman, executive board; 1991–2003, chairman, executive board, and chief executive officer; 2003–, chairman, supervisory board. Awards: Bambi Award, Burda media group, 1994; Aerospace Laureate for 1997, US Aviation Week & Space Technology magazine; fellow, Royal Aeronautical Society, London, 1997; honorary doctorate of engineering, Aerospace Faculty, Stuttgart University, 1998; named Manager of the Year, manager-magazin, 1999; Champion of Liberty Award, Anti-Defamation League, 1999; Aerospace Laureate for 2000, US Aviation Week & Space Technology magazine; named Germany’s Best Manager, Wirtschaftswoche magazine, 2002; Airline Business Award, Airline Business magazine, 2003; L. Welch Progue Award, US Aviation Week & Space Technology magazine, 2003. Address: Deutsche Lufthansa AG, Von-Gablenz-Strasse 2-6, Cologne, 50679, Germany; http:// konzern.lufthansa.com/en/index.html.

■ Jürgen Weber, known in business circles for leading the German airline Lufthansa in an unprecedented turnaround, spent his entire career with the company. By 2004 Lufthansa was a global aviation group with more than 350 subsidiaries and associated companies operating in the air-transportation, maintenance, and catering industries as well as informationtechnology industries in ground-handling and tourist markets.

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Jürgen Weber. AP/Wide World Photos.

During his 12 years as chairman and CEO, Weber brought Lufthansa from an almost insolvent, state-run airline operating at monthly losses as great as DM 230 million to the privately owned, world aviation leader it became. Renowned for always exercising foresight, Weber initiated many projects during his tenure as chairman and CEO that would only come to full fruition well after his retirement. Upon his retirement, an extensive tribute was posted on Lufthansa’s Web site outlining and expressing thanks for “his outstanding achievements.” Weber remained with the corporation as chairman of the group’s supervisory board.

TOUGH MEASURES FOR A TROUBLED AIRLINE When Weber became chairman and CEO of Lufthansa in 1991, the airline—which had come to be known as “the pa-


Jürgen Weber

tient”—was suffering huge losses in a declining world economy and backlash from the war in the Persian Gulf. Weber immediately swung into action. He grounded 23 aircraft, cut staff by one thousand, slashed 3.5 percent from the expense budget, and set out to boost sales and earnings. To kick-start the company’s revival, in 1993 he launched “Programme 93,” an in-house structural plan that cut six thousand more jobs, primarily at the administrative level, and called for cutbacks in materials costs. The company’s earnings were boosted by DM 700 million in 1993 alone. The 1990s saw swift and significant changes in the airline industry worldwide and, thanks to Weber’s foresight and penchant for taking swift but well-thought-out action, Lufthansa went from being simply a local airline into what the company called on its Web site a “high-performance network of cooperating subsidiaries.” In 1993 rapid changes were occurring in the world economy, changes that eventually became known as globalization. Some of those changes were affecting the aviation industry in the form of deregulation. Weber decided that the only way his company could compete in the long term was to expand globally, and he believed the best way to do that was to form strong strategic alliances with airlines from other countries. He set about negotiating a cooperation agreement with United Airlines, the U.S. company that in 1992 had signed a similar agreement with Air Canada. United and Lufthansa signed the agreement despite strong opposition from the U.S. Federal Aviation Administration. This was just Weber’s first step in implementing his vision to create a global alliance of airlines, a vision that came to fruition on May 14, 1997, when the CEOs of Lufthansa, United Airlines, SAS, Thai Airways, and Air Canada signed an agreement that launched the Star Alliance. Then, in late 1998, Weber announced that Lufthansa would metamorphose from a traditional airline into an aviation group with the goal of becoming a world leader in air-traffic services. The group created seven business segments: passenger business, logistics, leisure travel, machine-repair operations, catering, ground services, and information technology.

A MAN OF FORETHOUGHT AND ACTION In 1999 American Airlines attempted to purchase Air Canada, and again Weber swung swiftly into action with a brandnew policy. World Airline News reported him as commenting at Lufthansa’s third-quarter-results meeting in Frankfurt: “The incident has promoted us [Star Alliance members] to strengthen cooperation by binding agreements to thwart takeover attempts like that against Air Canada. . . . That’s why we are willing to undertake the financial commitments in specific situations, leaving our determination in no doubt.” As evidence of the strength of the alliance, Weber also noted in his address that Austrian Airlines and British Midland would soon join.


“We are delighted at the coming membership, since both were wooed by competitors and both opted for the Star Alliance only after scrutinizing all the alternatives,” he said. The alliance, the strongest in the entire airline industry, eventually offered customers seamless global travel: By the early 21st century, 16 airlines were flying under the Star Alliance banner to 130 countries and more than 800 destinations. “Weber’s early vision of the competition that would thrive between airline alliances of the future has proved correct,” read the tribute on Lufthansa’s Web site. “Today strong alliance systems with their hubs and networks dominate the playing field in the international air travel sector.”

ALWAYS IN CONTROL Weber faced many tough situations during his tenure with Lufthansa. Yet regardless of the situation, he kept a positive outlook and saw opportunities in situations that others saw simply as crises. In 1999 the airline reported a 17 percent rise in sales along with financial gains from its operations in Asia when many other airlines in that region were reporting losses. “We remained loyal to our markets there,” Weber was reported as saying. “The motion of crisis in Asia is synonymous with opportunity. We have seized that opportunity (World Airline News). By the early 2000s, when other European airlines were experiencing huge losses, Weber’s leadership not only avoided similar losses but saw Lufthansa through four consecutive years of operating performances that were better than any other European airline. In 2000 the company posted a 9 percent increase in profits—to $620 million—and despite a 65 percent increase in fuel costs, posted a 44 percent operating-profit increase that amounted to $940 million. In 2001 Lufthansa pilots called a strike. A BusinessWeek Online reporter called the action a “shocking development” because the airline had a long history of avoiding worker unrest. The strike lasted two-and-one-half days and cost the company more than $50 million before both sides agreed to arbitration on May 22. “Weber will have to work hard to recover from that blow to maintain Lufthansa’s recent sterling record,” wrote the reporter. However, Weber had already planned the implementation of a new strategy that he named “D-check” after the most intensive, top-to-bottom overhaul given to aircraft. The BusinesWeek Online reporter, referring to the CEO’s legacy of “tough-love restructuring,” commented: “Weber, an engineer with a blunt approach, is about to give all of Lufthansa a D-check.” Under this initiative, Weber planned to increase cost savings by $1 billion every year beginning in 2003. “There’s a very thin line between dazzling success and failure in the airline business,” the reporter quoted Weber as commenting, and noted that workers—and pilots in particular— struck because they were concerned that D-check would implement cost-cutting at their expense.

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D-check was implemented, however, and proved to be an effective tool for implementing fast and flexible responses, especially in times of crisis. It was also used effectively to meticulously and intensely scrutinize and overhaul the entire corporation in the interest of efficiency and profitability. “Success has justified the programme’s introduction,” read a statement in Lufthansa’s tribute. D-check not only allowed the corporation to show far better results than others in the industry in 2002 but also to avoid an operating loss in 2001, one of the most disastrous years in airline-industry history. On September 11 of that year terrorists hijacked four U.S. airliners full of passengers, flew two planes into the Twin Towers at the World Trade Center in New York City, one into the Pentagon in Washington, D.C., and one crashed into a field in Pennsylvania. There was also a significant weakening of the world economy as the so-called “technology bubble” burst. Subsequently, the entire airline industry was plunged into its worst-ever crisis. But Weber, with his past crisis experience, led his management team and the Lufthansa group through the storm to show an operating profit of EUR 28 million, even though the company experienced an overall loss. Lufthansa’s site tribute read: “Jürgen Weber has thrift in his blood. Stringent and far-sighted cost management—true to the maxim of providing in good times for the bad—runs like a red thread through his era as Chairman and CEO of Lufthansa.”

PREPARES TO HAND OVER THE CONTROLS At a December 2002 meeting of the Lufthansa supervisory board, the announcement was made that Wolfgang Mayrhuber would become chairman and CEO following Weber’s retirement, which would become effective at the June 18, 2003, annual general meeting. Excerpts from Weber’s final annual report, presented at the meeting, were published on Lufthansa’s Web-site tribute to its retiring CEO. Never afraid to look reality directly in the face, Weber wrote: “Despite the industry crisis, we have maintained supply, quality and service on a high level. A crisis is hardly the time for highfalutin visions. It is the time for down-to-earth action.” Among the many down-to-earth actions initiated by Weber in the months and years before his retirement was the operational start-up of the first Lufthansa terminal at Munich airport; installation of broadband Internet access on all long-haul aircraft beginning mid-2004; and the favorable financial negotiation in December 2001 of fifteen Airbus A380s, the world’s largest aircraft, which were scheduled to go into service in 2007. Weber also put into place procedures to develop corporate structures to ensure strong management continuity after his retirement. “Respected analysts and the international press all concur that Lufthansa’s house is in order and well-equipped with financial resources,” read the tribute on Lufthansa’s Web site.

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HONORING PEOPLE AND THE PLANET Weber was not one to take all the credit for himself, however. When accepting awards he preferred having other Lufthansa employees, and often entire aircraft crews, beside him at the podium. He would then symbolically hand the award to the staff. “It’s like in sport,” he was quoted in the Web-site tribute. “The team captain can only be as good as his team.” In his final annual report he wrote a tribute to the entire Lufthansa staff: “Putting things right, acknowledging and rectifying wrong decisions is a strength that has repeatedly helped us over the past twelve years. By practising restraint at the right time, we managed to safeguard the success of the Group in 2002. That success manifests the competence, realism and entrepreneurial mindset of Lufthansa staff.” And Weber had a high sense of responsibility to the planet. Part of the company’s mission statement read: “Business success does not rule out a corporate policy that subscribes to sustainability and environmental protection. We are committed to maintaining a balance between them. Protecting the environment is therefore a top-priority corporate goal, which we support with total conviction” (“Responsibility for the Environment,” Lufthansa.com). Weber held firmly to that conviction, and Lufthansa expanded its environmental policies and became firmly situated in the indexes for stock-market investors interested in adding environmentally friendly corporations to their portfolios. In fact, protecting the endangered crane—called the “herald of joy,” a depiction of which is the symbol on the tail of Lufthansa’s aircraft—was a particular passion for Weber: Lufthansa joined the World Wildlife Fund Germany and the German nature conservation society NABU as a major supporter of the national crane-protection working group.

BUSINESS INVOLVEMENT ELSEWHERE Weber was a member of the supervisory boards for AllianzLebensversicherungs, Deutsche Bank, Loyalty Partner, Bayer, and Thomas Cook. Committee memberships included the Association of European Airlines and the International Air Transport Association, of which he sat on the strategy committee of the board of governors. In 2003 Germany’s federal minister of economics and labor, Wolfgang Clement, announced a comprehensive set of reforms called “Agenda 2010” and the formation of the “Invest in Germany” agency, the task of which was to promote Germany as a business location. Three renowned business personalities were named as foreigninvestment commissioners, and Weber was one of them. Clement wrote in Invest in Germany Newsletter: “With our foreign investment commissioners on the job, we know that Germany’s image is in good hands.” Then, in early 2004, Weber was appointed Germany’s federal commissioner for foreign investment in charge of North America. When asked in an inter-


Jürgen Weber

view for This Week in Germany what advice he could give Chancellor Schroeder to help the government turn around Germany’s economy, Weber replied: “I think there’s no difference between turning around a company and turning around a state. . . . We’re giving him advice—but not only advice. Sometimes we make requests. In particular, we want the good reform package that is now underway to be moved along a little bit faster.”

See also entry on Deutsche Lufthansa Aktiengesellschaft in International Directory of Company Histories.


“Business & Technology: Roundtable Highlights Investment Opportunities in Germany,” This Week in Germany, http:// www.germany-info.org/relaunch/info/publications/week/ 2004/040227/e-list.html.


Clement, Wolfgang, “Editorial,” Invest in Germany Newsletter, http://www.invest-in-germany.de/en/news/newsletter/ print.php?cat=10676070091041601863. “Jürgen Weber, A Life for Lufthansa,” http://213.198.75.194/ en/html/magazin/weber_special/. “Lufthansa’s Weber Sends a Message: Don’t Mess with Star Alliance,” World Airline News, http:// articles.findarticles.com/p/articles/mi_m0ZCK/is_46_9/ ai_57772909. “Responsibility for the Environment,” Lufthansa.com, http:// 213.198.75.194/en/html/magazin/weber_special/ umweltschutz.html. “The Stars of Europe—Survivors,” BusinessWeek Online, http:// www.businessweek.com/magazine/content/01_24/ b3736664.htm.

—Marie Thompson

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Sandy Weill 1933– Chairman, Citigroup Nationality: American. Born: March 16, 1933, in Brooklyn, New York. Family: Son of Max Weill (a dressmaking-business owner) and Etta Kalika; married Joan Mosher (1955); children: two. Career: Bear Stearns, 1955, runner; 1955–1956, broker; Burnham & Company, 1956–1960, broker; Carter, Berlind, Potoma & Weill, 1960–1962, partner, president, and CEO; Carter, Berlind & Weill, 1962–1967, partner, chairman, and CEO; Cogan, Berlind, Weill & Levitt, 1967–1970, partner, chairman, and CEO; CBWL Hayden Stone, 1970–1972, chairman; Hayden Stone & Company, 1972–1974, chairman; Shearson Hayden Stone, 1974–1979, chairman; Shearson Loeb Rhoades, 1979–1981, chairman; American Express, 1981–1983, chairman of the executive committee; 1983–1985, chairman and CEO of Fireman’s Fund Insurance Company and president; Commercial Credit Company, 1986–1988, chairman, president, and CEO; Primerica Corporation, 1988–1993, chairman and CEO; Travelers, 1993–1995, chairman and CEO; Travelers Group, 1995–1998, chairman and CEO; Citigroup, 1998–2000, co-CEO; 2000–2003, chairman and CEO; 2003–, chairman. Awards: Chief Executive of the Year, Chief Executive, 2002. Address: Citigroup, 153 East 53rd Street, New York, New York 10043; http://www.citigroup.com.

■ The legendary Wall Street deal-maker Sanford I. (Sandy) Weill did the unexpected in the fall of 2003: dubbed by analysts and friends as the CEO Most Likely to Live Forever, according to Chief Executive magazine, Sandy Weill stepped down from his position as chief executive officer of Citigroup, surrendering that responsibility to his longtime protégé Chuck Prince. He would, however, stay on as chairman of the world’s largest financial-services firm until April 2006. Weill, whose climb to the very pinnacle of the financial industry began with a job as a $35-a-week Wall Street runner

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Sandy Weill. AP/Wide World Photos.

in the mid-1950s, engineered the creation of Citigroup when he encouraged John Reed of Citicorp to merge that institution with his Travelers Group in 1998. Although at first Reed and Weill shared CEO responsibilities at Citigroup, the former stepped aside two years later to make Weill the undisputed leader of the financial-services giant. Under Weill’s direction Citigroup’s assets grew to more than $1 trillion in the first half of the new millennium. Questions persisted about Weill’s willingness to sit back and leave the day-to-day decision-making to the new Citigroup CEO Prince; some doubted that Weill would make good on his pledge to step down as chairman in 2006. Citigroup’s board had been pressuring Weill since the early 2000s to put a succession plan in place. Although Weill finally succumbed to that pressure in the summer of 2003, many close to Citigroup expected that he would continue to play an active role in determining the firm’s future course.


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GROWS UP IN BROOKLYN The son of Jewish immigrants from Poland, Weill was born in Brooklyn, New York, on March 16, 1933. His father, Max, owned a dressmaking business, and his mother, Etta, was a homemaker. Weill and his younger sister, Helen, grew up in the Bensonhurst neighborhood of Brooklyn. Short and chubby as a boy, Weill was a ready-made target for neighborhood bullies, according to the Wall Street Journal reporter Monica Langley’s 2003 book, Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World . . . And Then Nearly Lost It All. The boy’s failure to stand up for himself brought Weill into conflict with his father, who belittled him for running to his mother whenever the bullies struck. Life improved for Weill when at the age of 14 his parents enrolled him at the Peekskill Military Academy, not far from his grandparents’ upstate farm. Although at five feet, nine inches, he was too short to make the school’s football team, he found an athletic niche on the tennis team. He had learned to play the game at summer camps and went on to captain the Peekskill squad. In the late 1940s his father left the dressmaking business to open up a steel-importing company, which Weill told fellow students he planned to join after college. A stellar student at the military academy, Weill easily won acceptance to the Ivy League’s Cornell University. Still holding onto his dream of working with his father, he decided to major in metallurgical engineering. When the demands of that course of study began to interfere with his extracurricular activities, Weill switched to a liberal-arts program. Although he dated frequently, he had not yet met the woman of his dreams; that changed when a matchmaking aunt back in Long Island introduced Weill to her neighbor Joan Mosher, a student at Brooklyn College.

PARENTS’ SPLIT IMPERILS PLANS After their first date, Weill “vowed to friends that he was going to marry Joan Mosher and, true to that pledge, he never dated anyone else,” Langley wrote in her profile of Weill (2003). Although the two came from very different backgrounds, Weill and Mosher began making plans to marry soon after the groom-to-be received his degree from Cornell. However, those plans seemed likely to collapse in the spring of 1955, only weeks before Weill’s scheduled graduation, when he received an anguished telephone call from his mother reporting that his father had left her for a younger woman. Weill left college, missing a critical exam, and picked up his sister, who was studying at Smith College, and together they drove to confront their father. Not only was Max unyielding in his determination to end his marriage to Etta, but he had yet more devastating news for his son: he had secretly sold his steelimporting business months earlier, thus robbing his son of the position for which he had worked so hard to prepare.


For a time Max’s abrupt abandonment of wife and family threatened to destroy both Weill’s career plans and his marriage to Mosher. When Cornell announced plans to block his graduation because of the missed exam, the Moshers threatened to withdraw their blessing for the union between their daughter and Weill. In the end Cornell relented and allowed Weill to take a make-up exam, clearing the way for his graduation as well as the wedding, which took place on June 20, 1955. Weill was still left without a job, however; he decided to try his luck on Wall Street. After having a number of doors slammed in his face, Weill accepted a job as a runner for the Wall Street brokerage firm of Bear Stearns. The lowly job, which paid a meager $35 a week, involved the delivery of security certificates from the brokerage to other companies in lower Manhattan. In the performance of his duties Weill saw stockbrokers in action and soon decided he would like to join their ranks. When he promised to study for his brokerage license on his own time, Bear Stearns gave him the green light to give it a try. Within a year Weill had passed the exam and became a licensed broker at Bear Stearns.

JOINS WITH THREE OTHERS TO SET UP OWN FIRM After earning his stripes as a broker, Weill moved on to Burnham & Company, where he continued to fine-tune his brokerage savvy for the next few years. In 1960 he and the investment banker Arthur Carter, a close friend, joined forces with the stockbrokers Roger Berlind and Peter Potoma to launch a brokerage firm of their own. With little to build upon except the customers the four partners had brought with them, the new firm of Carter, Berlind, Potoma & Weill might have foundered had it not been for Weill’s financial-research prowess. Soon institutional investors—most notably mutual funds and pension funds—were beating down the firm’s doors for Weill’s highly touted investment research reports. Fidelity, the up-and-coming Boston-based mutual fund, was the firm’s first major institutional client; as the firm’s reputation grew, so did its client base. After Peter Potoma was disciplined by the New York Stock Exchange in late 1962, his three partners bought him out, and the firm became Carter, Berlind & Weill. Two of the early hires at the firm were Arthur Levitt Jr., son of the longtime New York state comptroller, and Marshall S. Cogan. When Arthur Cooper left the firm after a disagreement with his partners, Cogan and Levitt signed on, and the firm became Cogan, Berlind, Weill & Levitt (CBWL). Having carved out a niche for itself on Wall Street, CBWL, with Weill at the helm, launched an ambitious expansion drive. In 1970 CBWL acquired the prestigious, old-line brokerage firm of Hayden Stone to become CBWL Hayden Stone. Two years later the firm’s name was changed to Hayden Stone & Company. In 1973 and 1974 the firm expanded further with the ac-

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quisitions of Hentz & Company and Faulkner, Dawkins & Sullivan, respectively. In its biggest acquisition yet, Hayden Stone later in 1974 purchased Shearson Hammill & Company to become Shearson Hayden Stone. After its 1979 acquisition of Loeb Rhoades, Hornblower & Company, the firm became Shearson Loeb Rhoades with Weill as its chairman and CEO.

TALKS MERGER WITH AMERICAN EXPRESS Although it was Weill’s research and deal-making skills that had transformed the small start-up brokerage firm into a Wall Street powerhouse through strategically planned acquisitions, someone else first came up with the idea for Weill’s next big deal. According to Amey Stone and Mike Brewster, authors of King of Capital, in late 1979 the investment banker Salim Lewis approached the American Express CEO James Robinson III to suggest that a merger between American Express and Shearson made sense. Although he was not immediately taken by Lewis’s proposal, Robinson thought it over for several months; preliminary merger talks between Robinson and Weill eventually began. The acquisition of Bache by Prudential in early 1981 energized the talks, and on June 19, 1981, American Express shareholders approved the $900 million stock deal. The deal with American Express significantly increased Weill’s wealth, but it also left him in a position of far less influence. In the days immediately following the merger he was the number-three man at American Express, behind the chairman and CEO Robinson and the president Al Way. As a result Weill’s ability to freely wheel and deal was significantly constrained. In 1983 Weill succeeded Way as president and not long thereafter proposed that American Express buy Investors Diversified Services (IDS), the Minneapolis-based mutual funds/insurance company, in a $1 million stock deal. Although Robinson was initially cool to the proposal, he eventually approved the IDS acquisition for $773 million. Weill was next assigned to rescue American Express’s faltering insurance subsidiary Fireman’s Fund, a task he successfully accomplished, though it took longer than he had expected. However, he remained unhappy at American Express and hoped that his proposal for a leveraged buyout of Fireman’s Fund might give him a chance to be the boss again. Robinson ultimately rejected the proposal to buy the insurance subsidiary; in 1985 Weill resigned from the giant financial-services firm.

TAKES COMMERCIAL CREDIT PUBLIC Temporarily unemployed, Weill cast about for a new venture. In 1986 he approached the Minneapolis-based Control Data Corporation, which was struggling financially, with a proposal to spin off its Commercial Credit Company subsid-

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iary. Control Data gratefully accepted Weill’s suggestion and authorized him to lead the initial public offering (IPO) of Commercial Credit. Control Data retained a share of roughly 20 percent in Commercial Credit but sold off the rest to the public; Weill bought heavily into the spun-off company and took over as CEO. To whip Commercial Credit back into shape, Weill cut costs sharply, giving earnings of the Baltimore-based consumer-credit/insurance firm a much-needed boost. He next set his sights on Primerica Corporation, an insurance/moneymanagement company that had recently acquired the brokerage firm of Smith Barney Harris Upham. He acquired Primerica in a $1.5 billion acquisition in 1988. Among Primerica’s holdings was its A.L. Williams Corporation insurance subsidiary, which Weill combined with Smith Barney to form Primerica Financial Services. As he had done in the past, Weill moved aggressively to expand his new prize by acquisition. Over the next couple of years he acquired the receivables and branches of Landmark Financial Services and the consumerlending operations of Barclays American/Financial. At the same time he took steps to sell off Primerica’s nonstrategic assets. Weill’s next big move came in 1992 when he oversaw Primerica’s purchase of a 27 percent share in Travelers Corporation. This was followed in 1993 by the realization of a dream for Weill. He regained control of Shearson, the massive brokerage firm he had struggled to build, when Primerica acquired the company’s retail-brokerage and asset-management operations from American Express for $1.2 billion. Weill then combined Shearson and Smith Barney to create one of the world’s largest investment-banking/brokerage firms. On the heels of this acquisition Weill led Primerica’s purchase of the remaining 73 percent of Travelers Corporation common stock, after which the two companies were merged and renamed Travelers.

ASSUMES LEADERSHIP OF TRAVELERS Weill took over as chairman and CEO of the newly created Travelers, while Edward Budd, the chairman and CEO of Travelers Corporation before the merger, became chairman of the new company’s executive committee. Weill said that the merger would create “dominant positions and strong brand franchises in four major businesses—insurance, securities brokerage, asset management, and consumer lending,” according to a report by Jim Connolly in National Underwriter (September 27, 1993). In 1994, in an attempt to expedite integration of the newly merged company, Weill sold its American Capital Management & Research subsidiary to Clayton, Dublier & Rice for $430 million and its Bankers and Shippers Insurance Company to Integon Corporation for $142 million. In 1995 Travelers Insurance completed the sale of its group-life and re-


Sandy Weill

lated businesses to Metropolitan Life Insurance Company. In a new venture the Travelers insurance subsidiary and Metropolitan Life joined forces to establish MetraHealth Companies, a new health-care operator. Later that same year MetraHealth was sold to United HealthCare in a transaction that yielded $831 million in cash for Travelers. Renamed Travelers Group in 1995, the company in 1996 paid roughly $4 billion in cash to acquire the domestic property and casualty insurance operations of Aetna Life and Casualty, which were combined with the corresponding operations at Travelers to create a holding company named Travelers/ Aetna Property Casualty Corporation. Weill next engineered a takeover of Salomon. This $9.1 billion stock deal gave Travelers control of the prestigious investment-banking firm Salomon Brothers, which Weill merged with Smith Barney to create the world’s second-largest securities firm, Salomon Smith Barney. In taking Commercial Credit Company and transforming it in just over a decade into a financial-services giant, Weill had once again managed to build a middling-sized firm into a powerhouse. But for Weill, the biggest deal of all lay just ahead. In a 1997 brainstorming session with his top lieutenants at Travelers Group, as Weill told Daniel Kadlec of Time, the idea of buying a globally positioned commercial bank was first raised. One of the candidates most favorably put forward was Citibank, of which Citicorp was the parent. As Weill told Kadlec, “It was a real wheel spin. No one thought it would go anywhere, but everyone liked the idea. So I decided to call the CEO of Citicorp John Reed” (April 20, 1998).

On May 17, 2001, Weill announced plans for Citigroup to purchase Mexico’s second-largest financial group for $12.5 billion in cash and stock. In announcing the purchase of Grupo Financiero Banamex-Accival, widely known in Mexico as Banacci, Weill said the deal made sense in view of the increasing integration of the U.S. and Mexican economies. According to an Associated Press report, Weill said, “This combination positions both Banacci and Citigroup to capitalize on this important trend, and thus is a natural next step for both of our companies” (May 17, 2001). Only seven months later, in December 2001, Weill announced plans to sell off 20 percent of Citigroup’s Travelers property and casualty group in an early 2002 IPO. The sale, which was prompted by the insurance unit’s disappointing performance, produced between $4 billion and $5 billion for Citigroup.

WIDELY RESPECTED BY HIS PEERS Although Weill managed to ruffle feathers in some quarters and even received some unwelcome government scrutiny for Citigroup’s dealings with Enron Corporation and other companies that had cooked their books, the deal-maker was almost universally respected—if not loved—by his peers. When Chief Executive named Weill its 2002 Chief Executive of the Year, judges on the magazine’s CEO panel were lavish in their praise of the Citigroup chief. Robert Nardelli, the chairman and CEO of Home Depot, saluted Weill’s “proven track record at multiple companies,” while Michael Dell, the founder and CEO of Dell, hailed Weill for his “fantastic career running complex financial institutions” (July 1, 2002).

TRAVELERS, CITICORP MERGE To almost everyone’s surprise, Reed liked the idea. In April 1998 Weill and Reed announced plans to combine Travelers and Citicorp in the biggest merger in history. According to Time, the newly created company, dubbed Citigroup, offered a full range of financial services to roughly 100 million customers in one hundred countries through a network of more than three thousand offices staffed by 162,600 employees. At the time of the merger the new company’s assets were estimated at $700 billion, a figure that topped $1 trillion by early 2004. The megamerger was officially finalized on October 8, 1998. In the early days of the newly created company, having cooperatively hammered together the massive merger of their respective companies, Weill and Reed shared power; however, it was not long before a power struggle between the two broke out. Weill emerged on the winning side of that struggle when Reed announced his decision to step down in February 2000. Reed’s departure left Weill as undisputed chairman and CEO of Citigroup. As he had done with all of his acquisitions in the past, Weill continued to pave the way for strategic takeovers by carefully cutting costs wherever possible.


Whether Weill would live up to his promise to leave Citigroup in 2006 remained to be seen, but it was considered likely that he would continue to be a force to be reckoned with at least until then. The Citigroup chairman and his wife, Joan, lived in Connecticut and together were well known for extensive philanthropic activities. The Weills contributed the financing necessary for the construction of a new education center at Cornell University Medical College. The medical college was eventually named in their honor, and Weill served as chairman of its board of overseers. He also served as a trustee emeritus for Cornell University. A member of both the Business Roundtable and Business Council, Weill also sat on the board of trustees of New York Presbyterian Hospital and the board of overseers of the Memorial Sloan-Kettering Cancer Center. The Weills had two grown children, Marc and Jessica.

See also entries on Citigroup Inc., American Express Company, Commercial Credit Company, Primerica Corporation, and Enron Corporation in International Directory of Company Histories.

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Sandy Weill SOURCES FOR FURTHER INFORMATION

Associated Press, “Citigroup Buys Second-Largest Financial Group in Mexico,” Cincinnati Post, May 17, 2001. Connolly, Jim, “Primerica Buys Travelers for $4.2B,” National Underwriter, September 27, 1993. Creswell, Julie, “No. 4 Sandy Weill: Citigroup,” Fortune, August 11, 2003, p. 62. English, Simon, “Sandy Weill Given Package of $45M,” Daily Telegraph, March 17, 2004.

Protos, John, “In Business This Week: Citigroup’s Long Adieu to Travelers,” BusinessWeek, December 31, 2001. “Sanford I. Weill, Chairman,” Citigroup, http:// www.citigroup.com/citigroup/profiles/weill/bio.htm. “Sanford I. Weill: Financier and Philanthropist,” Academy of Achievement, Hall of Business, http:// www.achievement.org/autodoc/page/wei0bio-1. Saporito, Bill, “Sandy’s Story,” Time, March 24, 2003.

“History of Citigroup,” Travelers Life & Annuity, http:// www.travelerslife.com/html/History_Of_Citigroup.shtml.

Serwer, Andy, “It’s Taken a Weill: Citigroup’s Legendary Dealmaker Deals Himself Out,” Fortune, August 11, 2003, p. 36.

Johnson, Cecil, “Hold the Lettuce: Weill’s Success Started Out Small and Flourished,” Fort Worth Star-Telegram, July 3, 2002.

Sloan, Allan, “A Perfect Chance to Take a Bow: Sandy Weill, King of Wall Street, Installs a Prince,” Newsweek, July 28, 2003, p. 44.

Kadlec, Daniel, “Making a Money Machine,” Time, April 20, 1998.

Smith, Marguerite T., “Betting on Weill’s Takeover of Primerica,” Money, November 1, 1988.

Langley, Monica, Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World . . . And Then Nearly Lost It All, New York, N.Y.: Simon & Schuster, 2003.

Stone, Amey, and Mike Brewster, King of Capital: Sandy Weill and the Making of Citigroup, Hoboken, N.J.: John Wiley amp; Sons, 2002.

Loomis, Carol J., “Sandy Weill’s Life in the Slow Lane,” Fortune, January 12, 2004, p. 34. ———, “Whatever It Takes,” Fortune, November 25, 2002, p. 74. Powers, Steve, “Tearing Down the Walls on a Deal-maker,” San Jose Mercury News, March 23, 2003. Prince, C. J., “The Deal-maker,” Chief Executive, July 1, 2002.

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“Weill Education Center: The Weills,” Cornell Medical Education, http://edcenter.med.cornell.edu/weill/ weills.shtml. Wigmore, Barry, “Sandy Might Earn £140M a Year but When He Wears a £2,000 Suit, It Looks like He’s Been Sleeping in It,” Sunday Mirror, April 19, 1998. —Don Amerman


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Serge Weinberg 1951– Chairman and chief executive officer, Pinault-Printemps-Redoute Nationality: French. Born: February 10, 1951, in Boulogne-Billancourt, France. Education: University of Paris, Institut d’études politiques, law degree, 1971; École nationale d’administration, 1974–1976. Family: Married; children: two. Career: Home office of France, 1976, civil servant; 1976–1977, official representative to general manager of administration; office of the prefect, Haute Normandie region; 1977–1979, subprefect and chief of staff; 1979–1981, chief of staff to delegate in charge of national and regional development; 1981–1982, chief of staff to the budget minister; FR3 Television Network, 1982–1983, deputy managing director for finances; Havas Tourisme, 1983–1986, general manager and chief executive officer; Banque Pallas, 1987–1990, managing director of Pallas Finances; Pinault Group, 1990–1991, chief executive officer; Compagnie francaise de l’afrique occidentale; 1991–1995, chairman and chief executive officer of Compagnie de distribution de materiel electrique (known as Rexel after 1993); Pinault-PrintempsRedoute, 1995–, chairman and chief executive officer.

Serge Weinberg. © AFP/Corbis.

Address: Pinault-Printemps-Redoute, 10, Avenue Hoche, 75381 Paris Cedex 08, France; http://www.pprinteractive.com.

■ Serge Weinberg became chairman and chief executive officer of France’s Pinault-Printemps-Redoute (PPR) in 1995, leading the widely diversified retailer’s head-long charge into the luxury market by engineering PPR’s takeover of the Gucci luxury-goods empire. The victory, however, turned bittersweet when Weinberg crossed swords with Domenico De Sole and Tom Ford, who together had rescued Gucci from the brink of bankruptcy in the early 1990s. Angered by Weinberg’s attempts to assert his control over the house of Gucci, De Sole and Ford both left the company in early 2004, leaving PPR with the Gucci brand but without the creative geniuses responsible for its recent success. International Directory of Business Biographies

The abrupt departure of De Sole and Ford put a crimp in Weinberg’s strategy for PPR, which was based on moving the retailing giant into increased concentration on the luxury market. Moving quickly to repair the damage done by the departure of the flamboyant designer Ford, Weinberg brought in a quartet of unknown designers to replace him at Gucci. It was, however, a move viewed with skepticism by fashion industry observers. Defending his move, according to Newsday, Weinberg said, “The star is the brand. Before becoming a star, Tom Ford worked inside Gucci for several years and was totally unknown” (March 10, 2004). Even more surprising was Weinberg’s selection of Unilever ice-cream executive Robert Polet to replace De Sole as Gucci’s president and CEO.

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PPR GOT ITS START IN TIMBER BUSINESS In many ways, PPR’s foray into the luxury-fashion market seemed an unlikely route for a company that had its beginnings as a timber-trading business in the early 1960s. Founded by Francois Pinault in 1963, Pinault Group focused on timber for the first quarter century of its existence. It began to expand aggressively into other lines of business in the early 1990s. One of its first moves outside the timber and construction business came in 1990 when Pinault acquired Compagnie francaise de l’afrique occidentale (CFAO), an African trading company that then specialized in the distribution of electrical and electronic equipment. Pinault’s entry into the retail sector came in 1991 with the acquisition of Conforama, a chain of homefurnishings stores. The company became Pinault-Printemps in 1992 shortly after its acquisition of au Printemps, a major Paris-based department-store chain. That same year it also acquired a majority share in la Redoute, a mail-order retail operation. When la Redoute was merged into the group in 1994, the company’s name was changed to Pinault-PrintempsRedoute. By 2004 the company, under Weinberg’s direction, had virtually eliminated all traces of its beginnings in timber and construction and was focused on the general retail and luxury-fashion markets. The son of workers in the French garment industry, Weinberg was born on February 10, 1951, in the Paris suburb of Boulogne-Billancourt. As a teenager he dreamed of a career as an actor but began to look elsewhere after a disappointing turn as Cyrano de Bergerac in a school production. After graduating from secondary school, Weinberg enrolled in a prelaw program at the University of Paris. In 1971 he received his law degree from the Institut d’études politiques in Paris. Looking to find a post in government, he next studied at France’s wellknown École nationale d’administration (ENA), which is the training ground for civil servants from around the world.

BEGAN CAREER AS A CIVIL SERVANT After completing his studies at ENA in 1976, Weinberg took a job as an entry-level civil servant with the French national government’s home office. Later that same year he was named the official representative for the home office’s general manager of administration, a job he held until 1977 when he went to work as subprefect and chief of staff in the office of the prefect of the Haute Normandie region. In 1979 he was named chief of staff to the delegate responsible for national and regional development. Two years later Weinberg was named chief of staff to French budget minister Laurent Fabius, a leader in the French Socialist party. Weinberg left government service in 1982 to take a job as assistant general manager for finances with the FR3 television network. After his brief stint in the television business, Weinberg in 1983 went to work for Havas Tourisme, a leading French trav-

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el-agency company, as its general manager and CEO. He left Havas at the end of 1986 and began work at the beginning of 1987 for France’s Banque Pallas. He was named manager of Pallas Finances, the bank’s subsidiary responsible for mergers and acquisitions. During his years with Pallas Finances, Weinberg first became familiar with the African trading company CFAO. In 1990 he left Pallas to accept a job as general manager of CFAO at almost the same time that Pinault acquired the trading company. The following year he left CFAO to become chairman and CEO of another Pinault subsidiary, Compagnie de distribution de materiel electrique (CDME), which in 1993 changed its name to Rexel.

TAPPED TO REPLACE BLAYAU AS CHAIRMAN By the mid-1990s Francois Pinault had clearly identified Weinberg as a strong leader, so in 1995 when the chairman of PPR, Pierre Blayau, resigned after a disagreement with Pinault over management strategy, Weinberg was tapped to replace him. Over the next fews years the new PPR chairman continued to expand the company’s retail operations on a number of different fronts. In 1995 PPR launched its first Web site, the online home of its Redoute catalog operation. In 1996 the company launched Orcanta, a lingerie chain, and its Fnac Web site, an Amazon.com-like online vendor of books, music, videotapes, DVDs, travel, and gift items. PPR moved into the Scandinavian mail-order market with its 1997 acquisition of Ellos. In 1998, under Weinberg’s leadership, PPR moved into the office-supplies market with its acquisition of Guilbert and its Niceday subsidiaries. Through its Redcats mail-order business, the company expanded into the American mail-order market by acquiring a 49.9 percent share in U.S.-based Brylane, the remaining shares of which were acquired in 1999. In 1998 PPR also launched a sporting-goods retail chain called Made in Sport. Weinberg’s big leap into the luxury market came in 1999 with the acquisition of a 44 percent share in the Gucci Group. At the outset, Gucci welcomed PPR as an ally in its battle to fend off an unwelcome takeover attempt mounted by LVMH Moet Hennessy Louis Vuitton, the world’s largest luxurygoods company. To expand PPR’s share of the luxury market, Gucci, which was headquartered in the Netherlands but operated mostly from its offices in Florence and London, in 1999 acquired Yves Saint Laurent, YSL Beaute, and Sergio Rossi. Gucci in 2000 added Boucheron and Bedat et Compagnie. In 2001 PPR won control of Gucci when it increased its holding in the luxury-goods company to 53.2 percent. Meanwhile, Gucci continued its expansion in the luxury market with the 2001 acquisitions of Balenciaga and Bottega Veneta. It also signed a partnership agreement with up-and-coming designers Stella McCartney and Alexander McQueen.


Serge Weinberg

SPLIT DEVELOPED OVER STRUGGLE FOR CONTROL The honeymoon between Weinberg and Gucci’s De Sole and Ford was relatively long-lived, lasting from their two companies’ first involvement in 1999 until 2003. When the breakup finally came, however, it was extremely bitter and acrimonious. Even as PPR was gathering up the rest of Gucci’s outstanding shares to give it virtually total control of the company, Weinberg faced off with De Sole and Ford in a battle over who would determine the future direction of Gucci. Weinberg prevailed but in the process lost the two men who had rescued and revitalized Gucci over the previous decade. While many observers of the luxury market questioned whether Gucci would continue to grow and prosper without Ford and De Sole, Weinberg seemed confident that the resurrected fashion house would provide PPR with a dynamic center for its expansion into the luxury market. Despite the naysayers, early indications were that Weinberg might succeed. In Gucci’s fiscal year 2003 fourth quarter, the luxury-group’s sales climbed 3.8 percent. Almost all of these sales were recorded after Ford and De Sole announced their intention to leave on November 4, 2003.

GUCCI ACQUISITION OPENED NEW MARKETS In late April 2004 Weinberg, interviewed on France’s Radio BFM, said that PPR’s entry into the luxury-goods market, via its acquisition of Gucci, had given the company far greater access to international markets, such as Asia, in which it previously had little or no presence. He vigorously defended PPR’s new focus on the luxury market, which he said represented “the strategic intention that we have had since 1999.” Weinberg said the Gucci acquisition had also given PPR a number of retail outlets in the United States, where its presence had been previously limited largely to home shopping. “The luxury goods market is growing three times faster than the rest of the economy,” he said. “It is a global market” (April 30, 2004).

Brown, Heidi, “Jacques Welch?” Forbes, September 3, 2001, p. 70. “A Costly Luxury: Pinault-Printemps-Redoute and Gucci,” Economist, February 8, 2003. “Facing the Music: Pinault-Printemps-Redoute,” Economist, February 23, 2002. “First Quarter 2004 Sales: Outstanding Sales Performance in the First Quarter,” http://international.pprfinance.com/ frontint__sectionId-631969034319531250_ControllerFicheProduit_View-anglais_Productid632180412261718750.html. “4 Designers to Replace Tom Ford at Gucci,” Newsday, March 10, 2004. “Gucci Group Appoints New Chief Executive Officer,” http:// international.pprfinance.com/frontint__sectionId631969034319531250_Controller-FicheProduit_Viewanglais_Productid-632181334652500000.html. “History,” http://international.pprgroup.com/ print.aspx?sectionId=631842993973750000. Menkes, Suzy, “Divorce, Gucci-Style: The Spin and Counterspin,” International Herald Tribune, March 8, 2004. Murphy, Robert, “A Legend Unfolds,” WWD, November 5, 2003. ———, “An Inside Look at PPR,” WWD, September 9, 2002. ———, “PPR Sales Drop in Quarter,” WWD, April 21, 2004. ———, “Weinberg Quells PPR Debt Fears,” WWD, July 19, 2002. Robinson, James, “France’s Pinault Tightens Belt as Luxury Goods Lose Their Shine,” Sunday Business (London), September 2, 2001. “Serge Weinberg, Chairman of the Management Board of PPR: Extract-BFM 30/04/2004,” April 30, 2004, http:// en.pprlive.com/ index.php?action=article&id_article=42089&print=1.

Weinberg was married and the father of two sons. Away from his responsibilities at PPR, he also served as president of the Institut de relations internationales et strategiques (IRIS), a Paris-based think tank dedicated to research in the fields of international relations and strategic issues.

“Serge Weinberg, Chairman of the PPR Management Board: Comments on the Group’s 2003 Sales,” http:// en.pprlive.com/ index.php?action=article&id_article=23782&print=1.

See also entry on Pinault-Printemps-Redoute S.A. in International Directory of Company Histories.

“Weinberg Rebuts Tom Ford Comments,” WWD, March 8, 2004.

Shamoon, Stella, “My Gamble with Gucci,” Mail on Sunday (London), February 1, 2004.

Weisman, Katherine, “Weinberg Sees Luxe and Web Adding Dollars to PPR’s Coffers,” WWD, May 24, 2000. SOURCES FOR FURTHER INFORMATION

“Blayau Exits Pinault-Printemps Post,” WWD, July 7, 1995.


—Don Amerman

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■■■

Alberto Weisser 1956– Chairman and chief executive officer, Bunge

America, Asia, and Australia. However, the talented but oldfashioned family management team could not compete against the world’s emerging multinational corporations. Also, the team could not appease the feuding factions of family shareholders and could not deal with the changing political climate in South America. To save the company, outside management was recruited—Alberto Weisser was a part of that influx.

Nationality: Brazilian. Born: 1956. Education: Universidade de Sa õ Paulo, BA. Career: BASF, 1979–1993, various finance-related positions; Bunge, 1993–1999, CFO; 1999–2001, CEO; 2001–, chairman and CEO. Address: Bunge, 50 Main Street, Sixth Floor, White Plains, New York 10606; http://www.bunge.com.

■ Alberto Weisser was appointed chief executive officer of Bunge in January 1999 and was elected chairman of the board in May 2001. He had joined Bunge in July 1993 as its chief financial officer and had been elected to the board of directors in 1995. During his years with Bunge, Weisser helped to expand the conservative, once family-owned agribusiness company through numerous key acquisitions, including its largest acquisition of the French agribusiness company Cereol in 2003. Though the name Bunge is scarcely known to the average American, its raw foods go into many well-known and popular brands, including products made by General Mills, Frito-Lay, Kellogg Company, and Nestlé.

BEFORE BUNGE Weisser earned a bachelor’s degree in business administration from the University of Sao Paulo in Brazil and participated in several postgraduate programs at the Harvard Business School in Cambridge, Massachusetts. He also attended the Management Development Program at INSEAD in Cedex, France. Before his relationship with Bunge, Weisser worked for 15 years, from 1979 to 1993, in various finance-related positions with the German petrochemicals giant BASF in Brazil, Germany, the United States, and Mexico. In 1990, with the global marketplace expanding after physical and ideological barriers were broken down at the end of the Cold War, the family-owned Bunge changed its general strategies in order to have access to more financial capital and to end the bickering that continued between family members. Professional management was brought in beginning in 1992, and the company prepared itself to become a publicly traded company in order to gain access to equity markets. Weisser joined Bunge in July 1993 as its chief financial officer.

DUTCH FOUNDER

DIRECTING FINANCIAL CHANGE

In 1818 Johann Peter Gottlieb Bunge, a Dutch grain trader, founded Bunge in Amsterdam, the Netherlands, as a graintrading business. The company grew to become a leading commodity-trading company within the consumer/noncyclical sector of the food-processing industry. The company’s headquarters was eventually moved south to Rotterdam; in 1859 it relocated still further south to Antwerp, Belgium. Bunge later made a major move to Buenos Aires, Argentina, and still later to Sao Paulo, Brazil, in both of which countries it capitalized on the rapidly growing grain trade.

Weisser immediately began to focus Bunge on agribusiness and food production while divesting the company of noncore assets. To emphasize the trading of soybeans, grain, and fertilizer, Weisser directed the sale of all of the company’s consumer food-processing firms, except Bunge Alimentos in Brazil, which dealt with soybeans and margarine.

Over the next century descendants of the Bunge founder built a thriving international business, expanding into North

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In 1999 Weisser—who had become chairman of the board and chief executive officer—moved the company to White Plains, New York, in order to be closer to New York City, the center of international finance and trade. In August 2001 Weisser listed the now publicly traded Bunge on the New York Stock Exchange under the ticker symbol BG.


Alberto Weisser

Weisser concentrated on three principles that he felt would best sharpen the company’s focus within the agribusiness industry. Knowing that Bunge needed to grow in order to survive and prosper, he carefully acquired companies that matched Bunge’s strategic plan; he reduced expenses; and he emphasized efficiency. Weisser coordinated ocean shipments more concertedly to allow for intermediate pick-up and dropoff spots along any particular route, and he implemented the backhauling of cargo to its point of origination in order to save costs. Weisser also helped to consolidate the company into three main divisions: agribusiness, food products, and fertilizers. Integration across the company helped Bunge to take advantage of the synergies among these divisions; the resulting cohesion made Bunge an efficient, low-cost operator— Weisser’s original intent.

AGRIBUSINESS Bunge’s agribusiness division was its largest, accounting for about 78 percent of sales. The division comprised three subdivisions: grain origination, soybean production/oilseed processing, and international marketing. Weisser helped Bunge to develop processes in which commodities such as soybeans and other oilseeds, grown primarily in North and South America, were processed as animal feed, food products, and vegetable oil in the Americas and in Europe. These operations were about equally divided between North America, South America, and Europe, providing a continuous supply of raw and processed oilseeds in all locations. Bunge Global Markets—the international sales and marketing subdivision within agribusiness—sold commodities throughout the world, including in the largest growth markets: the European Union, China, and India. It operated 21 offices in 18 countries in Asia, Europe, and the Americas in order to provide worldwide coverage to all of the major oil consumption markets.

FOOD PRODUCTS The production of shortenings, edible oils, mayonnaise, and baked goods made up the majority of operations within Bunge’s food-products division. Its subdivisions were origination, processing, and global logistics. The food-products division used raw materials and processed products from the agribusiness division to reduce overall external procurement and logistics costs. Weisser developed this ability to the point where almost three-quarters of the raw materials used to manufacture these products were sourced from within Bunge’s network. With better quality control in place due to the company’s ability to track foods through the entire production process, Weisser concluded that food retailers and food-service providers would be much more likely to choose Bunge over its com-


petitors. Weisser believed that such an integrated process would also provide a safer and more accessible food supply.

FERTILIZER As of 2004 Bunge was the only vertically integrated fertilizer producer in South America and was Brazil’s leading manufacturer and seller of fertilizer and phosphate-based animalfeed products. Weisser expanded the company’s ability to extend credit to farmers in the form of fertilizer, which was then repaid with crops, in order to guarantee supplies, strengthen relationships, and reduce risks. Further efficiencies were instituted when the same transport vehicles imported fertilizers to inland elevators and exported grains to ships waiting at coastal ports. These strategies and the company’s positive relationship with Brazilian and Argentine farmers helped Bunge maintain a unique and dominant position in its South American markets. In 2004 Brazil was the world’s fastest-growing fertilizer market, increasing at an average rate of 7 percent during the last half of the 1990s and into the 2000s. Unforested, arable lands were being rapidly cultivated for soybean and corn production. Since Brazil had the world’s largest reserve of such lands, these two crops were projected to account for more than 60 percent of the country’s fertilizer demand between 2005 and 2010. Under the direction of Weisser, Bunge was poised to take advantage of these future demands.

CEREOL ACQUISITION The July 2002 acquisition of Cereol, the France-based company also running operations in North America and Europe, made Bunge the world’s leading oilseed-processing company, principally processing soybeans, canola, rapeseed, and sunflower seed. Cereol was also involved in the integrated manufacturing, distribution, and sale of food oils, meals for animal nutrition, and food ingredients such as lecithins and proteins. The acquisition orchestrated by Weisser increased Bunge’s efficiency as a result of refined logistics and increased volumes. The deal also expanded Bunge’s global customers base, enabled the company to position itself to maximize its growth rate, increased employee opportunities, and resulted in a more stable financial profile due to a wider product portfolio. Weisser realized at the time of purchase that the Cereol acquisition would help to partially offset the volatile operating environment in agribusiness.

SOLAE JOINT VENTURE In 2003, Weisser directed a joint venture between Bunge and DuPont: The Solae Company would leverage each company’s respective strengths in soy protein isolates and concen-

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trates. Anticipating the future demand for soybean-based products, Weisser helped develop a biotechnology alliance in order to develop enhanced soybeans. This technology-based partnership was expected to turn into one of the world’s leading developers and marketers of branded, soy-based specialtyfood ingredients.

THE SOYBEAN AND OILSEED COMPANY In 2004, under the direction of Weisser, Bunge produced more bottled salad and cooking oils than any company in the world. It was also the leading soybean producer in the Americas and was either a regional or international producer in everything from animal feed and fertilizers to pie fillings and cake mixes. Through its North American subsidiary, Bunge was a major U.S. food processor. The company operated a variety of businesses throughout the world in a number of the most rapidly expanding markets, processed one-fifth of the world’s soybeans, and distributed oilseeds and grains throughout five continents. The acquisition of Cereol in 2003 made Bunge the world’s largest oilseed producer, with net sales of $22.165 billion in 2003 and about 24,000 employees at over four hundred facilities in 29 countries around the world. With the help of Weisser, the company became the world’s leading bottled vegetable oil seller, corn dry miller, and canola oil producer; North America’s top supplier of edible oil and premium shortenings to the foodservice industry and a leading oilseed processor; South America’s largest wheat miller and vegetable oil producer, largest overall exporter of agricultural products, and a leading fertilizer producer; Brazil’s top manufacturer and seller of flours and mixes; Europe’s leading supplier of soybean meal; China’s leading supplier of soybean products; and India’s leading exporter of soybean oil.

areas contained more than 50 percent of the world’s population; Weisser acknowledged that they would increasingly demand more of Bunge’s products. However, Weisser knew that mere expansion for the sake of expansion would not be beneficial, so he carefully investigated each country or area to ensure expansion would make sense and provide the company with the correct opportunities. In China, for instance, Weisser developed a large team that dealt directly with customers. Although no processing plants had yet been built there, Weisser closely assessed the market, which consisted of about two thousand crush factories receiving soybeans from the half billion farmers throughout the nation. Weisser expected that opportunities in the market, which had a projected annual value of $2 billion, would soon become apparent as economic and political factors unfolded. These opportunities could come through consolidation, outright purchasing of existing assets, or the building of new facilities. In an article with Lyle Niedens, Weisser referred to his careful planning of long-term strategies in saying, “We have two hundred years of history. We plan to be in business another two hundred years, at least” (February 11, 2004).

OUTSIDE FUNCTIONS Weisser was a member of the board of directors of Ferro Corporation in Cleveland, Ohio, a global producer of performance materials for manufacturers. He was also a member of the Rabobank North American Agribusiness Advisory Board. The advisory board was composed of food and agribusiness leaders from academic and research institutions who provided guidance on industrial and political developments to Rabobank, a global company based in the Netherlands, which provided financial services to agribusiness organizations.

CAPITALIZING ON WORLD DEMAND


Under Weisser’s leadership, Bunge became well positioned to capitalize on the world’s growing demand for soybeans and other oilseed products. In the past, only one company— Archer Daniels Midland Company (ADM)—had dominated the grain-processing market; Bunge joined ADM in a strong position within the industry. Weisser then took a cautious approach in leading Bunge into processing expansion around the world.

Bunge Web site, http://www.bunge.com.

The company was already operating in India and Southeast Asia and was making some inroads into China. These three

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Caplen, Brian, “Latin America: Decline of an Argentine Dynasty,” Euromoney, January 1999, http://salsa. babson.edu/Pages/Articles/99-01%20EM%20Bunge.htm. Niedens, Lyle, “Regarding Opportunities in China, Bunge Wants to Stay ‘Relaxed,’” BakingBusiness.com, February 11, 2004, http://www.bakingbusiness.com/headline_stories.asp? ArticleID=69839. —William Arthur Atkins


■■■

Jack Welch 1935– Former chairman and chief executive officer, General Electric Company Nationality: American. Born: November 19, 1935, in Peabody, Massachusetts. Education: University of Massachusetts–Amherst, BS, 1957; University of Illinois–Champaign, MA, 1958; PhD, 1960. Family: Son of John Welch (a railroad conductor) and Grace Andrews; married Carolyn Osburn, 1959 (divorced 1987); married Jane Beasley (an attorney), 1989 (divorced 2002); children (first marriage): four. Career: General Electric Company, 1960–1968, engineer; 1968–1971, vice president and head of GE Plastics; 1971–1973, vice president of Chemical and Metallurical Division; 1973–1977, head of strategic planning; 1977–1979, senior vice president and head of Consumer Products and Services Division; 1979–1981, vice chairman; 1981–2001, corporate chairman and CEO and chairman of National Broadcasting Corporation. Awards: Junior Achievement National Business Hall of Fame, 1997; Manager of the 20th Century, Fortune, 1999; 400 Richest Americans, Forbes, 2001–2004. Publications: Jack: Straight from the Gut, 2001.

■ John F. Welch, Jr.—who went by the name Jack—was among America’s most recognized and controversial chief executives. During his 41 years at General Electric (GE) Welch rose from his position as an entry-level junior engineer to become the company’s youngest vice president and later its youngest CEO and chairman. Throughout his 20 years leading GE Welch garnered a reputation for having a no-nonsense and dynamic style that was at times considered abrasive by employees and the public alike. While the merits of Welch’s management tactics were the subject of debate, none could argue with the results produced by his leadership. Welch took GE into international markets at a scale never before attempted while leading the company away from manufacturing and into International Directory of Business Biographies

Jack Welch. AP/Wide World Photos.

services. GE’s market value grew 40-fold, to $500 million, between 1981 and 2001. At the end of 2001, which was the beginning of Welch’s retirement, GE was the most valuable company in the world.

EARLY LIFE, EARLY LESSONS Jack Welch was born in Peabody, Massachusetts, to a bluecollar Irish-Catholic family and was raised in Salem. An only child, the young Welch was the exclusive beneficiary of his parents’ attention, for better or for worse. He attributed many of the fundamental life lessons he learned to growing up in his Salem neighborhood; some he learned from his parents, others from the neighborhood boys through sports. At an early age Welch discovered the premium he placed on winning and the bad taste left in his mouth by losing.

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The role of sports in Welch’s early life was profound; he would rely on lessons taken on the field time and again throughout his career. In his autobiography, Jack: Straight from the Gut, Welch described one instance in particular when his hockey team lost a game, to which he responded by throwing his stick and pouting. Immediately afterward Welch’s mother marched straight into the locker room and took him to task in front of the team: “If you don’t know how to lose, you’ll never know how to win. If you don’t know this, you shouldn’t be playing” (2001). After earning a bachelor’s degree in chemistry from the University of Massachusetts and graduate degrees from the University of Illinois, Welch headed back to Massachusetts for a position with GE developing new plastics. Welch recalled work as an engineer at the Pittsfield, Massachusetts, facility as being fast paced and exciting; he was able to explore the limits of materials technology with only limited interference from distant management. The labs were small and intimate, and a charged, excited atmosphere encouraged achievement. Welch would remember that atmosphere and try to keep the same level of enthusiasm throughout his career. But Welch’s first job with the company was almost his last. He felt underpaid and undervalued, due partly to what he saw as a bloated GE bureaucracy, partly to the standard bonus he received when he felt he deserved more. In fact, Welch accepted a job offer from another company; however, only days before he was to leave GE he was convinced to stay by Reuben Gutoff. Gutoff, who later served as the president of Standard Brands and started his own consulting firm, was at the time a burgeoning executive who saw potential in the young engineer and sympathized with his position. Although he stayed on, Welch had not changed his mind about GE’s administration, which he saw as unresponsive at best and debilitating at worst. Welch would struggle for the next 40 years to balance the need for effective administration against the needs for efficient production and market agility. By 1968 Welch was running General Electric’s entire plastics business, then a $26 million operation. He oversaw the production and marketing of Lexan and Noryl, trademarked materials developed in GE labs. The plastics became common in consumer goods thanks in no small measure to Welch’s relentless sales efforts. The position was ideal for an energetic engineer with a doctorate in chemical engineering as well as an understanding of the business of science. Through the early 1970s Welch held increasingly challenging positions and moved swiftly through the company’s ranks: he led the chemical and metallurgical division from 1971 to 1973; served as head of strategic planning for a $2 billion portfolio of businesses from 1973 to 1977; and was sector executive in the consumer-products division, a $4.2 billion operation, from 1977 to 1981.

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LEADING GE In 1981 Jack Welch was not considered a leading contender for GE’s top job. However, his performance and earnings record ultimately won him the position over six other candidates. Even though he had no formal master plan for GE’s reorganization, he did have a vision of what he wanted the company to be. The first step in realizing that vision was a dismantling of the bureaucracy. At the start of Welch’s tenure GE administration was built around three hundred separate businesses, a recipe for inefficiency. Welch tore into the ossified corporate structure with a vengeance and by the mid-1980s had overseen nearly 120,000 layoffs and earned the nickname “Neutron Jack.” The name was derived from the neutron bomb, a weapon designed to minimize heat and blast effect but maximize dispersal of lethal neutron radiation—in effect, eliminating people but leaving buildings and equipment intact. Welch was never fond of the moniker. Entire lines of business were dismantled or sold off under Welch’s doctrine of exclusively maintaining operations that were ranked first or second in their given field. By 1985 billions of dollars had been made or saved through sales and layoffs. Welch sought opportunities for growth by reinvesting those billions and considered possible takeover targets. He eventually settled on RCA, originally a GE startup but at the time of the merger a top competitor in the high-tech and defense industries. The merger made sense as an effort to consolidate American manufacturing in those fields against Japanese competition. The deal was the largest merger of its kind in the history of American business, with RCA selling for nearly $6.3 billion. Within three years half of RCA’s premerger workforce was gone, as well as most of its businesses, including the radio network, which had been in operation virtually since radio was born. By the late 1980s only the National Broadcasting Corporation (NBC) television network and RCA’s defense businesses remained. As the 1990s progressed Welch instituted the Six Sigma program at GE. Initially implemented at Motorola and AlliedSignal, the program was developed to maximize the efficiency of manufacturing processes through the minimization of production of defective units. When applied at General Electric it became the largest quality-control measure ever adopted in corporate America. The program required a huge investment in training and tracking but ultimately led to great gains in profit and productivity. By the end of the century GE had developed an electronicbusiness program; another of Welch’s initiatives, the system electronically tied the company directly to suppliers and customers. The e-business was just one aspect of what Welch dubbed the “boundaryless company,” a company without administrative walls between separate business units and where


Jack Welch

knowledge applied to one area could be applied companywide. At the time of his retirement Welch had only begun to see his vision of a boundaryless company come to fruition.

MANAGEMENT STYLE Jack Welch firmly believed that top performers deserved to be handsomely rewarded, an attitude he had retained since his first job at GE. He established a performance-review program to identify the top 20 percent of employees, who were accorded bonuses, as well as the bottom 10 percent, the “lemons,” who were typically fired and replaced. Welch supported the distribution of wealth as far as possible throughout the company and understood when considering bonuses that lifechanging fortunes were sometimes at stake. Besides the raw numbers measuring efficiency and profits, more personal aspects also characterized Welch’s leadership. He brought an air of informality to the company that stemmed from his belief that General Electric was little different in practice from a small local market. Customer satisfaction and positive relationships with both customers and employees were what ultimately made a business successful. Whether the product for sale was turbines or apples, the customer would determine the success of the enterprise. Thus, Welch made efforts to cultivate relationships with suppliers, customers, and employees alike. Knowing his employees had a direct impact on productivity, Welch communicated with workers often enough for them to feel that at any moment they could receive a note or a visit from the boss. His efforts at communication engendered senses of value and pride in employees, in that if a task was important enough for Welch to care about, it was important enough to perform with the utmost effort. As a result of his personability, everyone knew Welch simply as “Jack.” Informality was also standard in company correspondence. Welch faxed handwritten notes to anyone in the company who he felt deserved personal communication, whether to motivate, correct, or congratulate, from top management to laborers. Welch also personally reviewed everyone who worked directly for him, handwriting extensive performance evaluations that sometimes ran several pages. This exercise not only gave specific and ongoing feedback to employees but was a chance for Welch to reflect on the businesses that each employee was leading. The atmosphere of informality was perhaps most critical among GE’s top leadership, where the confidence that came from being in familiar company encouraged executives to openly praise or criticize each other—or even Welch himself.

THE CULTURE OF COMPETITION But informality could not have been mistaken for laxity, or kindness for weakness. Previous GE leadership had delineated


management concepts designed to guide the company through the subsequent year in formal annual presentations. As part of his sustained war against entrenched bureaucracy Welch dispensed with this system entirely in favor of more continual general guidance. Under Welch’s leadership formal meetings and deliberative committees were no longer needed in order to implement change. More authority was entrusted to lowerechelon leaders, who were more familiar with immediate problems and possible solutions than were distant senior executives. The new system allowed greater latitude for managers and the opportunity for swifter responses in order to meet rapidly changing conditions. Within this system of fast-moving goals and changing tactics, Welch sometimes felt as though he were back in the vacant lot of his youth. In the “Pit,” where he and his neighborhood friends often played their games, the future GE chief executive first learned both to lead and to follow. Later he frequently applied sports metaphors to his thinking and in his relations with managers. At times he considered himself a team captain, picking the best players for the GE team and drawing the most out of them once the game had begun. Welch consistently forced executives to argue in meetings, often heatedly, the idea being to force management to know their businesses, processes, and issues thoroughly before engaging in discussion with the boss. Under such conditions Welch could determine a manager’s level of commitment or enthusiasm for a project or policy by noting the extent to which he was willing to argue. Welch was typically curt and had little patience for half measures and was similarly combative in performance-review meetings, in which company leaders would discuss the employees within their respective divisions. Welch could be quick to make judgments with seemingly limited knowledge, but he sought to provoke advocacy from his management and ultimately trusted them to tell him when he was wrong. Despite media perceptions of him as an ogre, Welch himself disputed the notion that he was a particularly brash boss. He insisted that there was a difference between being “tough minded” and “bullying” and deplored the notion that GE inculcated an atmosphere of bellicosity or machismo for its own sake.

EDUCATION Ivy League educations and MBAs were no guarantees of success at GE under Jack Welch, which would come as no surprise considering that his training was in science and his degrees were from state schools. He took education seriously but was more concerned with cultivating talented managers who could run successful businesses. As evidence of the seriousness with which Welch viewed corporate education, he developed an executive-training facility at Croton-on-Hudson, dubbed “Crotonville,” in upstate

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New York. Welch turned the 52-acre facility that was originally designed and built by earlier company leadership into a prep school for current or potential leaders. The move was a bold one, as Crotonville training had not traditionally been a valuable commodity and had not necessarily attracted the company’s best and brightest. Furthermore, in the midst of GE’s downsizing the site required millions in order to be refurbished, upgraded, and expanded. Welch persuaded the board to fund the project, to which upwards of $40 million was eventually committed. To Welch the cost was negligible; he gambled that the return on the investment—talent—would be more valuable than money. Welch originally spent several hours every month leading discussion in what became called the new “Pit,” the large, sunken lecture hall at Crotonville. In time, advisors from Harvard and the University of Michigan were brought in to restructure the Crotonville experience, starting with the general curriculum and later with specific coursework. They dispensed with case studies of other companies in favor of the study of specific problems within GE. There were several three-week programs developed for leaders at various stages in their careers, with others built around the study of a particular country or industry. Over time GE enlisted a cadre of experts who were already on the payroll to make themselves available to advise on the issues and questions studied at Crotonville. Within 10 years of Welch’s Crotonville redevelopment only the top performers landed the increasingly competitive slots to attend the training programs; by 2001, 85 percent of the Crotonville faculty were GE executives. THE “BOUNDARYLESS” COMPANY While thousands of students attended training at Crotonville in order to devise solutions to business problems, implementation of the lessons taken there remained unenthusiastic. Characteristically, Welch blamed bureaucracy for thwarting his vision—in this case managerial holdouts from the previous era who did not share Welch’s broader vision for the company. Those managers were not nearly as impressed by Crotonville alumni as Welch was. Frustrated, Welch applied the “Pit” experience across the entire company. Welch wanted not large, formal classrooms and management training but forums for the same types of exchanges of ideas that he deemed so valuable at Crotonville. Welch named the gatherings “WorkOuts” and modeled them on the traditional New England–style town meeting. The twist was that management would be excused from the discussion. Facilitators hired from academia to lead discussion helped workers develop solutions to ongoing problems within the business. At the ends of the meetings managers were brought back and presented with the results of the discussion. On the spot they had to decide to either implement the arrived-at solutions or not; they had to be prepared to either argue against the proposals or, if unable to execute them immediately, construct a timetable for doing so.

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As “Work-Outs” spread throughout GE and Welch saw more good ideas being implemented, he started to ponder his notion of the “boundaryless” company. Welch envisioned a system where not only the inventor of a good idea but all the others who recognized and developed that idea would be rewarded. In practical terms this meant that knowledge needed to be shared across all lines of business, which in turn necessitated more sharing of the employees themselves across different businesses. “Knowledge” in this context referred not only to factual information but to methods of improving profitability, the insight to recognize problems, and experience in correcting past problems. With maximum communication, lessons and ideal practices learned in one division could be applied to any other division. In essence three methods encouraged this continuous redistribution of knowledge. Firstly, Welch broadened the granting of stock options beyond GE’s top leadership. Options were far more valuable than cash bonuses in a strong market and thus were a strong incentive to employees. These options also tied the success of GE to the promotion of the best ideas produced within the company. Secondly, meeting and planning sessions held throughout the year at all levels of management allowed new ideas to be presented, refined, and applied. Finally, Welch brought in human resources, adding consideration of boundaryless behavior to performance reviews. Whoever was insufficiently imaginative or reluctant to embrace Welch’s vision was dismissed. Welch believed that if he wanted his messages to have the desired impact he needed to disseminate them himself. He recognized, however, that it was impossible to develop personal relationships with every employee in the company. What Welch chiefly achieved through his corporate-education initiatives and his pursuit of the boundaryless company was the institution of a means of communication. Welch’s messages and visions were learned and reinforced first at Crotonville, then through the sharing of employees across businesses and in ongoing meetings; ultimately these concepts were tied to employee promotion and retention. Welch trusted managers to relay leadership messages throughout the company, but he did not rely solely on them to do so.

See also entry on General Electric Company in International Directory of Company Histories.


Byrne, John, “How Jack Welch Runs GE,” BusinessWeek, June 8, 1998. Lowe, Janet, Jack Welch Speaks: Wisdom from the World’s Greatest Business Leader, New York, N.Y.: Wiley & Sons, 1998.


Jack Welch Slater, Robert, Jack Welch and the GE Way: Management Insights and Leadership Secrets of the Legendary CEO, New York, N.Y.: McGraw Hill, 1998. Slater, Robert, The New GE: How Jack Welch Revived an American Institution, Homewood, IL: Business One Irwin, 1993.


Welch, Jack, Jack: Straight from the Gut, New York, N.Y.: Warner Books, 2001.

—Thomas R. Borjas

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William C. Weldon 1948– Chairman and chief executive officer, Johnson & Johnson Nationality: American. Born: November 26, 1948, in Brooklyn, New York. Education: Quinnipiac University, BS, 1971. Family: Son of a Broadway stagehand (father) and a theater costume seamstress (mother); married Barbara Dearborn, 1969; children: two. Career: Johnson & Johnson, 1971–1982, sales and marketing positions with McNeil (later Ortho-McNeil) Pharmaceutical division; 1982–1984, manager of ICOM Regional Development Center in Southeast Asia; 1984–1986, executive vice president and managing director of Korea McNeil; 1986–1989, executive vice president and managing director of Ortho-Cilag Pharmaceutical; 1989–1992, vice president for sales and marketing of Janssen Pharmaceutica; 1992–1995, president of Ethicon Endo-Surgery; 1995–1998, Johnson & Johnson company group chairman and worldwide franchise chairman of Ethicon Endo-Surgery; 1998–2001, member of Johnson & Johnson’s executive committee and worldwide chairman of Pharmaceuticals Group; 2001–2002, vice chairman of the board of directors and member of the executive committee; 2002–, chairman and chief executive officer. Awards: One of two men honored by Chief Executive magazine for heading the Best Company for Leaders, 2003. Address: Johnson & Johnson, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933; http:// www.jnj.com.

■ William Weldon, who went to work for Johnson & Johnson (J&J) fresh out of college in 1971, assumed leadership of the international health-care giant in April 2002. Weldon became only the sixth chairman in the company’s 116-year history and took on the daunting challenge of leading one of America’s most consistently successful companies into the 21st century. In Weldon’s first full year as chairman and chief exec-

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William C. Weldon. © Najlah Feanny/Corbis.

utive officer, J&J posted a profit of nearly $7.2 billion on worldwide sales of just under $41.9 billion. This represented an increase of roughly 9.1 percent in net income and a 15.3 percent increase in total revenue. In leading J&J to yet another sales increase, Weldon honored a long tradition of the company, which had not seen a revenue decline in more than 70 years. Although Weldon spent his entire working life with J&J, he first attracted widespread attention in the spring of 2001 when, as vice chairman and head of the company’s pharmaceuticals group, he engineered the takeover of Alza Corporation in what was then J&J biggest acquisition ever. Alza, which became a member of the J&J family but continued to operate under its own name, specializes in the development of drugdelivery systems, primarily transdermal patches. Analysts viewed the Alza deal favorably. Jerry I. Treppel, an analyst with


William C. Weldon

Bank of America Securities, told Carey Krause of Chemical Market Reporter that J&J’s acquisition of Alza’s Concerta, Ditropan XL, and Doxil pharmaceuticals would provide “high-margin, high-growth, new pharmaceutical revenues.” Equally positive in his assessment of the deal was David Lothson, an analyst with UBS Warburg, who told Krause, “The acquisition makes terrific sense for J&J and is being done at a price that is attractive for both sets of shareholders” (April 2, 2001).

J&J BEST KNOWN FOR BAND-AIDS AND TYLENOL Johnson & Johnson, headquartered in New Brunswick, New Jersey, is perhaps best known to consumers as the company behind such everyday health-care standbys as Band-Aid bandages, Tylenol, and Johnson’s Baby Powder. But J&J is, in fact, a family of more than two hundred operating companies in countries around the globe. Its workforce numbers more than 110,000, about half of whom work in the United States. Founded by Robert Wood Johnson in 1886, the company was family-owned until 1944 when its stock was first offered on the New York Stock Exchange. Although the company is immediately recognizable to the public for its popular over-the-counter health-care products, it also developed and markets such top-selling prescription drugs as Procrit (marketed as Eprex in Europe) for anemia, Remicade for rheumatoid arthritis, Risperdal for schizophrenia, and Topamax for epilepsy. The son of a Broadway stagehand and a costume seamstress who both worked in the New York theater, Weldon was born in Brooklyn, New York, on November 26, 1948. The family later moved to nearby northern New Jersey, where young Weldon attended Ridgewood High School. A student of no particular distinction during his high-school years, Weldon excelled at athletics and played on the basketball and football teams. After graduating from high school in 1967, Weldon enrolled at Quinnipiac University in Hamden, Connecticut, to study biology. Midway through college, he married Barbara Dearborn, whom he met while in high school, after which, he told BusinessWeek, he grew more serious about his studies. After earning his bachelor’s degree in 1971, Weldon interviewed for a job as sales representative with J&J’s McNeil Pharmaceutical unit, which is now known as Ortho-McNeil Pharmaceutical. He was interviewed by Howard Klick, who three decades later told BusinessWeek that as part of the process he challenged Weldon to give him a sales pitch on a ballpoint pen. “He was hungry,” recalled Klick. “He had fire in the belly” (May 5, 2003). Klick said the young college graduate outdid himself in selling the pen to his interviewer, taking it apart to demonstrate how it worked and extolling its writing properties. Klick hired him on the spot.


MOVES QUICKLY UP THE LADDER AT MCNEIL After a couple of years as a sales representative, Weldon began climbing the ladder at McNeil, taking on a series of marketing management positions of increasing responsibility. In 1982 he was named manager of J&J’s ICOM Regional Development Center in Southeast Asia, a post he held until 1984, when he was named executive vice president and managing director of Korea McNeil. Two years later Weldon was named executive vice president and managing director of Ortho-Cilag Pharmaceutical in the United Kingdom. In 1989 he returned to the United States as vice president for sales and marketing of J&J’s Janssen Pharmaceutica. In 1992 Weldon was appointed president of Ethicon Endo-Surgery (EES), a newly created J&J company specializing in the development and marketing of surgical instruments and related medical devices used in both minimally invasive and traditional surgery. This was a change for Weldon, whose previous J&J experience had been in the pharmaceutical end of the business. But he adapted quickly. J&J had big plans for EES and decided that Weldon was the man to help lead the fledgling company into a leadership position in the field of endoscopic surgery, an area of medical therapy with a vast potential for growth. As J&J infused the new company with millions to get it off the ground, Weldon worked doggedly to make EES a major force in the medical-instruments market. To develop new products, Weldon brought in a large number of engineers and equipped them with cutting-edge computer-aided design (CAD) systems. He also called on expert counsel from the Harvard Business School to help EES put in place a multifunctional, team-based environment that was able to sharply reduce the time it took to develop new products. To market its rapidly growing product line, the company hired a worldwide force of two hundred sales representatives. In a little over a decade the size of the EES sales team roughly tripled.

WELDON GROWS EES MARKET SHARE Weldon spearheaded EES’s drive for market share, traveling extensively to discuss the company’s products with surgeons and hospital administrators. According to BusinessWeek, he delayed a flight from San Diego back to EES’s Cincinnati headquarters so that he could further press his company’s case with a potential customer who was having second thoughts about committing to EES products. During his years with EES, Weldon earned a reputation for setting even higher goals for the company than the top managers back at J&J headquarters in New Brunswick. As Nick Valeriani, vice president of sales and marketing for EES, told BusinessWeek, “We’d have a great year and Bill would say, ‘Nice job. Why couldn’t it have been 25 percent higher?’” (May 5, 2003). Weldon’s hard work paid off. Under his direction, by 1996 EES had propelled itself into the market leadership position

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in both endoscopic and traditional surgical instruments, surpassing United States Surgical Corporation, the previous market leader. Although Weldon was a hard taskmaster at EES, he also ensured that his best-performing employees at the J&J subsidiary were amply rewarded and, thus, better able to resist the temptation of offers to go elsewhere. Not everyone flourished under Weldon’s style of leadership. Those who failed to adequately convince him of their willingness to be team players, according to BusinessWeek, felt alienated by Weldon. Of his former boss at EES, one former executive told the magazine that Weldon was “an intimidator and a dominator” (May 5, 2003). In 1995, three years after he joined the newly founded EES as its president, Weldon was named a J&J company group chairman and the worldwide franchise chairman of EES. Three years later he returned to the pharmaceutical side of the company as worldwide chairman of J&J’s Pharmaceuticals Group and a member of the company’s executive committee.

J&J PHARMACEUTICALS BUSINESS LAGS In the late 1990s J&J’s pharmaceuticals business badly needed a shot in the arm. In 1998 five promising drugs on which the Pharmaceuticals Group was pinning much of its hopes for the future were shot down in the late stages of development. According to a report by Robert Langreth in Forbes, new J&J medications for the treatment of stroke and diabetes failed in large-scale human trials, while drugs designed to combat multiple sclerosis and premature labor were rejected by federal regulators. To make matters even worse, J&J lost in a battle over the rights to a new formulation of Procrit, its bestselling anemia medication. Impressed by what Weldon had done at EES, Ralph Larsen,then chairman and CEO of J&J, hoped the Brooklyn native could find a way to reinvigorate the giant company’s pharmaceuticals business. Weldon moved quickly to get the pharmaceuticals business moving again. By the end of 1999 he had helped engineer J&J’s purchase of Centocor, a Malvern, Pennsylvania, biotechnology company that had within its product line three drugs of particular interest to J&J. Heading the list was Remicade, which was already being marketed for the treatment of Crohn’s disease and was expected to soon receive approval for treating rheumatoid arthritis. The other two drugs were ReoPro, an anticlotting medication, and Retavase, a form of tissue plasminogen activator (tPA) used in the early treatment of heart attacks. J&J was also attracted by Centocor’s position as the world’s leading producer of monoclonal antibodies, technology that could be used as a platform for a wide variety of potential applications. The Centocor deal was valued at roughly $5 billion. In February 2001 J&J’s board of directors elected Weldon and James T. Lenehan, worldwide chairman of J&J’s Medical

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Devices & Diagnostics Group, vice chairmen of the corporation. Under terms of their new appointments, Weldon and Lenehan joined J&J’s chairman and CEO Larsen and senior vice chairman Robert N. Wilson in the Office of the Chairman, J&J’s top management group. In his new position Weldon continued to be responsible for the Pharmaceuticals Group and the Consumer Pharmaceuticals & Nutritional Products Group but was given the additional tasks of overseeing corporate-business development and the Corporate Office of Science & Technology.

ENGINEERS J&J’S ACQUISITION OF ALZA Less than two months after taking over as a corporate vice chairman, Weldon announced an agreement to acquire Alza Corporation, headquartered in Mountain View, California. Ernest Mario, Alza’s chairman and CEO, told Paul Jacobs of the San Jose Mercury News that he and Weldon had begun talks only a month earlier about “putting the two businesses together to reach more patients with our products” (March 28, 2001). Under the terms of the acquisition agreement, Alza was to continue operations under its own name from its California base. Weldon said he expected that the merger would create for Alza more markets for its pharmaceutical products as well as new applications within the larger J&J family for the company’s drug-delivery systems. The latter segment of Alza’s product line included transdermal patches, which deliver measured dosages of medication through the skin, implants, and time-release capsules. On January 22, 2002, seven months to the day after J&J finalized its acquisition of Alza, Larsen announced that after 13 years at the helm of J&J he was stepping down and would be succeeded as chairman and CEO by Weldon, effective April 25, 2002. Larsen stayed on for a few months after passing the torch to Weldon but left the company completely on July 1, 2002. At the same time Weldon was named to succeed Larsen, the company announced that Jim Lenehan, Weldon’s fellow vice chairman, would become J&J’s president, succeeding Robert Wilson. In assessing the task that lay ahead of him, Weldon told Lewis Krauskopf of the Bergen Record that “the challenges are going to be to build on the outstanding record that Ralph [Larsen] has built going forward” (January 23, 2002). Weldon singled out the regulatory environment as one of the more daunting challenges facing not only J&J but the health-care industry as a whole. He pointed to the insistence by federal officials on broader studies with greater numbers of subjects before giving the green light to new drugs.

A CLUE TO J&J’S FUTURE? Although Weldon said that J&J’s widely diversified product base would serve it well in the future, many outside observ-


William C. Weldon

ers speculated that the selection of the head of its Pharmaceuticals Group to lead the company offered a clue to the direction in which the company was moving, at least in the short term. Analysts observed that Weldon’s selection made sense in view of the large investments J&J had made in its acquisitions of both Centocor and Alza.

jumped 33 percent to 62¢ per share from 46¢ in the comparable period a year earlier. Of the company’s impressive showing, Weldon told the Associated Press that “each of our business segments made important contributions to the overall growth while continuing to invest in building our businesses for the future” (AP Online, January 20, 2004).

Industry observers agreed, however, that Weldon’s biggest challenge would be maintaining healthy earnings growth at J&J, a task made progressively more daunting as the company’s revenue base continued to expand. The company’s performance in 2002, two-thirds of which occurred on Weldon’s watch, was reassuring for J&J stockholders. The company posted net income of nearly $6.6 billion on sales of roughly $36.3 billion. Diluted earnings per share in 2002 came in at $2.16, compared with $1.84 a year earlier. This represented an increase in earnings per share of about 17.4 percent, continuing J&J’s lengthy string of double-digit annual earnings gains.

Weldon and his wife, Barbara, lived in Somerset County, New Jersey, not far from J&J’s headquarters in New Brunswick. The couple had a daughter and a son. According to a profile of Weldon in BusinessWeek, the J&J CEO maintained a strong interest in basketball. He reportedly insisted on the last-minute addition of a basketball court to plans for a new J&J facility. In November 2003 Weldon was elected treasurer of the Pharmaceutical Research and Manufacturers of America. He was also a member of the Business Council and served on the board of trustees of Quinnipiac University, his alma mater.

Under Weldon’s direction, J&J continued to grow through acquisition. By far the biggest purchase during Weldon’s first 18 months as CEO came with the news in February 2003 that J&J had outbid two other major pharmaceutical companies for Scios, a major force in the biotechnology industry headquartered in Sunnyvale, California. Although the CEO of Scios, Richard B. Brewer, declined to reveal the names of the other suitors to the San Jose Mercury News, he made it clear that J&J’s all-cash offer of $2.4 billion was too good to turn down. The deal represented further expansion into the biotechnology field by J&J and brought into the company’s growing family of life-saving drugs Natrecor, a genetically engineered medication developed by Scios for the treatment of patients with congestive heart failure. Under the terms of the acquisition, Scios would continue to operate under its own name in Sunnyvale.

See also entry on Johnson & Johnson in International Directory of Company Histories.

SMALLER ACQUISITIONS MADE

“Investments in Research Help J&J Sustain Growth,” Chain Drug Review, February 17, 2003.

Although they were dwarfed by the Scios deal, J&J made two smaller acquisitions before the end of 2003. In November 2002 the company announced its plan to purchase OraPharma, a small drug company in Warminster, Pennsylvania. OraPharma developed Arestin, a time-release antibiotic used in the treatment of gum disease. Two months later J&J announced that it was acquiring 3-Dimensional Pharmaceuticals, which had developed technologies that J&J researchers felt could be used to enhance the larger company’s drug-research capabilities. In early 2004 Weldon announced J&J net income of $7.2 billion on sales of $41.9 billion for 2003. Diluted earnings per share for the year were $2.40 in 2003, up 11.1 percent from the previous year. Particularly impressive was the company’s performance in the final quarter of 2003, when earnings



Barrett, Amy, “Johnson & Johnson: A Shopping Spree Waiting to Happen,” BusinessWeek, June 17, 2002. ———, “Staying on Top: William Weldon Has Taken Over Johnson & Johnson, One of the Best-Run Companies Around,” BusinessWeek, May 5, 2003. Brinkerhoff, David, and Jed Seltzer, “New CEO Weldon May See Long Reign at J&J,” Reuters Business Report, January 22, 2002. Cooper, Porus P., “Johnson & Johnson to Buy Warminster Pa., Drug Company,” Philadelphia Inquirer, November 14, 2002.

Jacobs, Paul, “Johnson & Johnson Outdoes Bidders for Sunnyvale, Calif., Biotech Firm,” San Jose Mercury News, February 11, 2003. ———, “Mountain View, Calif.-Based Drug Delivery System Retains Name under Merger,” San Jose Mercury News, March 28, 2001. Johnson, Linda A., “Johnson & Johnson 4Q Profit Up 33 Pct.,” AP Online, January 20, 2004. Krause, Carey, “Johnson & Johnson Bags Drug Delivery Maker Alza for $12.3 Billion,” Chemical Market Reporter, April 2, 2001. Krauskopf, Lewis, “Johnson & Johnson’s CEO to Hand Reins Over to Chairman in April,” Bergen Record (Bergen County, New Jersey), January 23, 2002.

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William C. Weldon Langreth, Robert, “J&J an Unfinished Symphony,” Forbes, December 10, 2001. Shaw, Donna, “Johnson & Johnson to Merge with Malvern, Pa.-Based Biotechnology Firm,” Philadelphia Inquirer, July 21, 1999.

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Silverman, Edward R., “Johnson & Johnson Agrees to Buy Biotechnology Firm,” Newark Star-Ledger, July 21, 1999. Spiro, Leah Nathans, “In Search of Leaders,” Chief Executive, October 2003. —Don Amerman


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Werner Wenning 1946– Chairman and chief executive officer, Bayer AG Nationality: German. Born: October 21, 1946, in Leverkusen-Opladen, Germany. Family: Married Ursula; children: two. Career: Bayer AG, 1966–1996, various positions; 19961997, head of Corporate Planning and Controlling; 1997-2001, chairman of board of management committee for finance; 2001–, chairman of board and CEO. Address: Bayer AG, 51368 Leverkusen, Germany, +49(0)5214/30-1; http://www.bayer.com.

■ Werner Wenning grew up in the shadow of the Bayer Company in Leverkusen-Opladen, Germany—the town that the company started over a century ago—and began to work there as a young man. He entered a Bayer training program in 1966 and never looked back. Wenning worked his way up through the ranks in a variety of locations around the globe and eventually became the company’s CFO in 1997. In 2002 Wenning took over as CEO of Bayer at a critical point in the company’s history, when profits were dwindling and the company was under worldwide scrutiny because of litigation. He made improvements from the time he became CEO—some were deemed radical for a company once considered staid— and won the respect of his colleagues for his open and honest approach. Martin J. Evans, an analyst at Credit Lyonnais Securities in London, told BusinessWeek, “His direct management style is really refreshing” (May 6, 2002).

BEGINNING AT BAYER Werner Wenning was born on October 21, 1946, in Leverkusen-Opladen, Germany. The town outside Cologne was started over a century ago by the Bayer Company, a researchbased chemical and pharmaceutical firm. The company fi-


Werner Wenning. AP/Wide World Photos.

nanced many community activities, including social clubs, a mandolin orchestra, a ballroom dancing club, and the professional Bayer Leverkusen soccer team. Wenning went to the local high school and then attended a Hochschule, or higher professional school, but skipped college, preferring instead to join the Bayer Company as a commercial trainee in April 1966. At that time the Bayer Company had four major divisions: HealthCare, CropScience, Polymers, and Chemicals. Wenning trained in Bayer’s finance and accounting department for a year, followed by an additional year in the company’s Corporate Auditing Department. He did so well that he was given the opportunity in 1970 to manage finance and accounting for Bayer International, a new company that had recently been formed in Lima, Peru. He remained in Peru until 1975. After Wenning returned to Germany, he rejoined the Corporate Auditing Department, where he stayed for another

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three years before he returned to Lima in 1978—this time as the managing director and administrative head of Bayer’s Peruvian branch. In 1983 Wenning moved back to Leverkusen to direct the staff of the HealthCare Sector. He later moved to the Plastics Business Group to head Bayer’s thermoplastics marketing within Germany. After Wenning had proved his competence in this area, he acquired the additional responsibility of the plastics group’s international marketing in 1987. Wenning then moved to Barcelona in 1992 as Managing Director of Bayer Hispania International; while living there he also took over the position of Senior Bayer Representative for Spain. During Wenning’s stay in Spain, he developed an interest in the country and its culture that he continued to pursue after he returned to Germany. In 1996 he moved back to Leverkusen, this time to head the Corporate Planning and Controlling Department. Wenning’s hard work was again rewarded on February 1, 1997, when he was appointed to the Board of Management of Bayer AG. He became CFO, chairman of the board’s committee for finance, and a member of the board’s committees for corporate coordination and human resources. At the same time he was also appointed the representative of Bayer’s Central and South American, African, and Middle Eastern markets. As Bayer’s chief financial officer, Wenning introduced the principle of value management, a way to increase corporate value by getting the most out of the money the company spends. Value management had already gained a reputation as an innovative and practical business strategy, but it was just beginning to take root at Bayer when problems arose for the company.

A DIFFICULT TIME After 36 years of hard and dedicated work, Wenning got the break of his life in 2001 when Bayer announced that he would become the company’s chief executive officer and chairman of its board of management. Wenning took over in April 2002 from Manfred Schneider, who had held the position for the 10 years between 1992 and 2002. Wenning took charge of Bayer during one of the most difficult periods in the company’s 140-year history, but the board expressed great confidence in him from the start. The chairman of the supervisory board, Hermann Josef Strenger, said, “I firmly believe that Werner Wenning is the right man for the job. His decisiveness and perseverance are convincing arguments in his favor.” Bayer had lost large sums of money in the last few years of Schneider’s tenure in addition to confronting serious legal problems related to one of its drugs, Baycol. Unlike some observers, Wenning saw Bayer’s financial difficulties as mostly growth-related. New drugs take a long time from their research and development phase through testing and regulatory ap-

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proval before they are ready to market. Bayer had some drugs at the clinical trial stage in 2002, but they were not yet ready for government approval and marketing. Wenning also acknowledged that the company had been slow to change in the past and therefore slow to respond to the public’s needs—a problem that he wanted to correct. He told BusinessWeek, “In the future, we have to act more quickly” (May 6, 2002). Such candor and responsiveness to public opinion was new to the old company; many analysts were pleased with Wenning’s approach. According to The Economist, “Part of [the CEO’s] job is public relations, not one of Bayer’s strongest suits. Mr. Wenning is widely considered to be more approachable and cooperative than the daunting Mr. Schneider. He is one of the few top executives who actually enjoys talking to analysts, and looks forward to his role as Bayer’s public face” (April 27, 2002). The first task that Wenning took up after he became CEO was to raise the profits of Bayer’s pharmaceuticals business. In 2001 Bayer had taken a heavy loss when its best-selling drug, a cholesterol-lowering medication sold as Lipobay in Europe and Baycol in the United States, had to be withdrawn from the market because it had been linked to over a hundred deaths. The number of lawsuits filed against Bayer in America eventually rose to over eight thousand—an intimidating and potentially damaging number. By 2002, however, Wenning received some good news when Bayer was cleared of liability in a case tried in an American court. According to Chemistry and Industry magazine, “A US jury cleared Bayer of liability in a $550m lawsuit filed by 82-year-old Hollis Haltom, who alleged his muscle-wasting disease was caused by Baycol” (April 7, 2003). As of 2004, however, the company was uncertain about the total amount of its liability payments elsewhere in the world. Wenning’s second task involved the possibility of forming an alliance with another pharmaceutical company for research and marketing. Many of the other major companies (such as DuPont, Hoechst, and ICI) that had once had a four-pillared approach to the marketplace—pharmaceuticals, crop science, chemicals, and polymers—had divided their companies. Wenning did not favor this course of action. He preferred to form a partnership with another drug company but could not attract a potential partner. Bayer did, however, purchase the Aventis CropScience company in 2002, which was credited with raising Bayer’s sales in the agricultural science sector.

A RADICAL DECISION In 2003 Wenning finally made the difficult decision to split the Bayer Company in half—grouping the chemical unit together with part of the polymers unit to form a new company separate from the pharmaceutical division. This partition was expected to allow Bayer itself to focus on health care, agro-


Werner Wenning

chemicals, and material sciences while the new chemical company would be freer to respond quickly to world needs. Wenning said about the split, “With our stronger focus, we will in future be able to dedicate the financial and management resources of the Bayer Group exclusively to the development and expansion of the three subgroups.... Bayer is an inventor company and we aim to continue concentrating on these abilities.” When asked whether the restructuring would lead eventually to more spin-offs, Wenning emphatically told the press no. The new company was to be named Lanxess and led by Alex Claus Heitmann, a member of the executive committee of Bayer Polymers and head of the Asia Pacific region. The Chemical Market Reporter quoted Wenning as saying that Lanxess would “have a rating and valuation which will enable it to finance itself independently. We will not invest any more in classical chemistry” (November 17, 2003). Bayer intended to market the new company as a competitive firm that would add value to any company. Lanxess was scheduled to be listed on the stock market by early 2005. At the time of the decision to form Lanxess, Bayer had some new drugs in the pipeline, including Cipro XR, an antibiotic used to treat anthrax, and Kinzalmono, a medication for treating hypertension. After the announcement about Lanxess appeared, Bayer’s stock price in Frankfurt went up 10 percent in just two days—an indication that consumers had regained confidence in the company. Also in the works was a challenger to Viagra—another drug for erectile dysfunction called Levitra, which was expected to bring in over $900 million in annual sales. Wenning reported that Levitra had made a good start after its release, gaining 14 percent of new prescriptions by October 2003. Even with this good news, however, 2003 was not a stellar year for the Bayer Company, which continued to lose money. After record losses in 2003, Wenning announced that the company expected a turnaround in 2004. He stated that he saw “signs of a gradual economic recovery, driven mainly by the United States and Asia.” In addition to Wenning’s duties at Bayer, he served on the supervisory boards of the Gerling Konzern Versicherungsbeteiligungs-AG and Henkel as well as acting as vice president of the German Industry Association (VCI) in Frankfurt. Wenning was also an avid sports fan, participating when time permitted—he enjoyed jogging, playing soccer, and watching the Bayer Levenkusen soccer team.


“Bayer AG Names Wenning Chairman,” Rubber World, October 2001, p. 74. “Bayer Faces 3,500 Lawsuits over Drug Recall,” Independent (London, England), October 22, 2002. “Bayer Still Not in the Clear,” Chemistry & Industry, April 7, 2003, p. 7. Capell, Kerry, “Bayer’s Big Headache; Can Its New Chairman, Werner Wenning, Provide a Cure?” BusinessWeek, May 6, 2002, p. 30. Firn, David, and Bettina Wassener, “Bayer’s Slow Move toward Separating Its Businesses: The Company Will Create a Unit Called MaterialScience,” Financial Times, November 10, 2003, p. 27. Harnischfeger, Uta, “Lipobay Problems Put Bayer ‘In Limbo,’” Financial Times, March 14, 2003, p. 26. Harnischfeger, Uta, and Klaus Max Smolla, “Bayer Risks Local Ire While Fighting Fires,” Financial Times, October 18, 2002, p. 31. “In Brief: Bayer Loses Pounds 1bn,” Guardian (London, England), March 19, 2004. “Making Up for Lost Time; Face Value,” Economist (US), April 27, 2002. Milmo, Sean, “Bayer Breakup Rekindles Investor Confidence in the Company,” Chemical Market Reporter, November 17, 2003, pp. 6, 36. “Viagra Challenger To Be in U.S. Soon,” Cincinnati Post (Cincinnati, OH), June 24, 2002. Wassener, Bettina, “Bayer Sticks with Stated Restructuring Chemicals/Pharmaceuticals,” Financial Times, November 12, 2003, p. 33. “Wenning Is New Bayer CEO,” European Rubber Journal, December 2001, p. 16. “Werner Wenning Continues Systematic Realignment: Bayer Plans Stock Market Flotation for Chemicals Activities and Strategic Refocus of Health Care Business,” Canadian Corporate News, November 11, 2003. “Werner Wenning Will Be New Bayer CEO,” PR Newswire, September 13, 2001. Withers, Malcolm, “Lawsuits May Hit Earnings at Bayer,” Evening Standard (London, England), March 13, 2003.

See also entry on Bayer A.G. in International Directory of Company Histories.



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FORTUNE BRANDS: FOUR WAYS TO GO

Norman H. Wesley

In 2004 Fortune Brands was a leading company in the consumer-products industry, with especially high standing in home and hardware products, office products, golfing equipment, and distilled spirits and wine. The company, which changed its name from American Brands to Fortune Brands in 1997, is traded on the New York Stock Exchange under the ticker symbol FO and is included in the S&P 500 index. Its brands are some of the most recognized and trusted brands in the world. The company’s total 2002 sales surpassed $5.6 billion, with 90 percent of sales coming from first- and secondmarket positions.

1949– Chairman and chief executive officer, Fortune Brands Nationality: American. Born: 1949. Education: University of Utah, BS, 1972; MBA, 1973. Family: Married Kim (maiden name unknown); children: three. Career: Crown Zellerbach Corporation, 1973–1983, vice president and general manager of Office Products group; ACCO World Corp., 1983–1987, vice president of corporate development; 1987–1990, president and COO; 1990–1997, president and CEO; Home & Office, 1997–1999, president and CEO; Fortune Brands, 1999, president and COO; 1999–2001, chairman and CEO. Awards: The Spirit of Life Award, City of Hope, 1999. Address: Fortune Brands, 300 Tower Parkway, Lincolnshire, Illinois 60069-3640; http:// www.fortunebrands.com.

■ In 2004 metal-products executive Norman H. Wesley was chairman of the board of directors and chief executive officer of Fortune Brands, the $5.6 billion consumer-products company with such popular brand names as Day-Timer, Jim Beam, Master Lock, Moen, Swingline, and Titleist. Wesley brought many years of management experience to the top job at Fortune Brands, having previously led the company’s home and hardware and office products businesses, operating under the name of ACCO Brands. In January 1990 Wesley was elected president and chief operational officer of the home and office products unit; in 1997 he became its chairman and chief executive officer. He continued on in these positions when, on January 1, 1999, he added the titles of Fortune Brands president, chief operating officer, and member of the board of directors and of the executive committee. Later that same year he became chairman and chief executive officer of Fortune Brands, while retiring from his position with the home and office unit. He later became chairman of the executive committee.

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The company’s four major divisions together were the leading U.S. producers in many areas. For home and hardware products, sales in 2002 surpassed $2.5 billion, representing 45 percent of total sales. Products included Moen faucets (the number one faucet in North America and the company’s bestselling brand), Aristokraft and Schrock cabinets, Master Lock padlocks, Therma-Tru doors, and Waterloo (the world leader in tool storage). Fortune was also a global leader in the design, development, manufacture, and marketing of office products, for which sales in 2002 exceeded $1.1 billion, representing 19 percent of total sales. Products included Wilson Jones bindery supplies, report covers, and labels; Swingline staplers and hole punches; Day-Timer personal organizers; Kensington computer accessories; ACCO business accessories; Perma storage boxes; MACO labels; Apollo presentation equipment; and Boone presentation accessories. For golf equipment, sales in 2002 exceeded $1 billion, representing 18 percent of total sales. Brands included Titleist (number one in golf balls), FootJoy (number one in shoes), Cobra (a game-improvement innovator), and Pinnacle. Finally, for spirits and wines, 2002 sales exceeded $1 billion, representing 18 percent of total sales. Brands included Jim Beam (the world’s most popular bourbon), DeKuyper, Knob Creek (the world’s most popular ultrapremium bourbon), Old Grand Dad, Old Crow, Vox vodka, and Geyser Peak wines. Fortune Brands also distributed Absolut vodka in the United States through a joint venture with the Sweden-based Vin & Sprit. Although the company seemed to extend in four different directions with its four divisions, Wesley was adamant that distinctions between them were not noticeable within the compa-


Norman H. Wesley

ny. The common thread, Wesley pointed out, was that all four units possessed leading consumer brands in which funds were aggressively invested in order to continue market dominance and to maintain double-digit growth in earnings. In all, 90 percent of Fortune Brands’ sales were derived from an array of brands that were ranked first or second in their respective product categories.

entry doors, Wesley declared that the new addition would expand Fortune Brands’ fast-growing home and hardware business. Wesley was excited with the innovative and growing Therma-Tru brand and its strategic fit within a division already populated by Moen, MasterBrand Cabinets, Master Lock, and Waterloo Industries. Indeed, Wesley’s addition of Therma-Tru created opportunities for valuable sales growth and cost reductions within the division.

LEADING FOR THE FUTURE The former Fortune Brands chairman and CEO Thomas C. Hays and the former president and COO John T. Ludes selected Wesley in order to allow for an orderly management transition. With the approval of the board of directors the company showed the utmost confidence in Wesley as its future leader. In a press release Hays noted of Wesley when he became chief executive officer, “Over the 11 years that he’s been associated with our Company, Norm has performed superbly well in a series of key assignments, including nine years as Chief Executive Officer of our office products business. Most recently, he has led our home and office businesses to strong growth, capitalizing on overall opportunities while also successfully integrating high return add-on acquisitions. Under Norm’s leadership, the home and office brands, which generated 55 percent of our 1997 sales, have flourished” (September 29, 1998). One of the first belt-tightening actions taken by Wesley was to move the corporate headquarters from its lavish property in Old Greenwich, Connecticut, to utilitarian surroundings in suburban Chicago, Illinois, and to lay off one-third of the company’s 185-member corporate staff. Wesley said that these cost-saving measures, which cut $30 million in annual expenses, showed company shareholders that top management did not need to live in such opulent surroundings.

GROWTH INITIATIVES In the following years during which Wesley acted as the head of Fortune Brands, he saw the company grow thanks in large part to his aggressive investments in its leading brands. The company also gained strong market shares with new products and expanded customer relationships. Wesley was able to supplement the company’s growth initiatives with high-return acquisitions, such as the Maumee, Ohio–based Therma-Tru Company (a leading U.S. designer and manufacturer of residential entry doors) and Omega Holdings (a maker of cabinets); with divestitures, such as the sale of the European division of Jim Beam Brands; and with share-gain initiatives, such as winning the contract to build Thomasville cabinets for Home Depot, the well-performing home-center chain. With the completion of the acquisition of Therma-Tru, a market-leading company in the design and manufacture of


STRONG MOMENTUM Wesley reported that annual results in 2003 benefited from extensive share gains, supply-chain efficiencies, high-return acquisitions, and favorable foreign exchange. In fact, Wesley said that the company finished another excellent year with strong momentum as each of its businesses performed at or above expectations. Specifically, Wesley saw strong demand with Aristokraft, Kensington, Master Lock, Moen, Omega, Titleist, and its premium liquors, which provided the strongest sales growth within the year. In a press release, Wesley stated, “In all, 2003 was a year of broad-based success that extended Fortune Brands’ track record of consistently strong performance and that significantly surpassed the goals we set a year ago” (January 23, 2004). Wesley reported at the end of 2003 that for the full year the company’s net income grew 10 percent to $579 million. Net sales were at $6.21 billion, up 9.5 percent. Acquisitions and divestitures helped sales by about 2.5 percent, and positive foreign exchange rates benefited sales by about 2 percent. Wesley reported that the company’s operating income was $918 million, up 17 percent; free cash flow was $437 million after dividends and capital expenditures; and return on invested capital was 16 percent. Fortune Brands’ prosperity was partially due to Wesley’s emphasis on advertising. Wesley regularly reduced costs within the company, whether the economy was good or bad, so that when demand eventually slacked off—as it did in the first few years of 2000—the company was financially able to continue spending on advertisements. Such expenditures were critical, in Wesley’s opinion, to the long-term success of the company.

DOUBLE-DIGIT GROWTH At the beginning of 2004 Wesley reported that the company was expecting to comfortably achieve its long-term goal of double-digit growth in diluted earnings per share before charges and gains, along with expecting a continuation of improvements in returns. Great results for the branded business came from the reinvigorated management team Wesley developed during his reign. He was regularly called a very straight shooter and cared passionately about his shareholders, making sure that they continued to respect and believe in Fortune

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Brands. The quality of the business and the quality of the management—especially Wesley—consistently gave Fortune Brands a positive long-term valuation in the industry.

OTHER FUNCTIONS AND ACTIVITIES Wesley served on the corporate boards of R.R. Donnelley and Sons Company in Chicago, Illinois, since 2001 and Pactiv Corporation in Lake Forest, Illinois, since December 2001. His commitment to community and philanthropic programs included membership on the Civic Committee of the Commercial Club of Chicago, which promoted civic and educational projects in the area. Wesley was also a Trustee of the Glenwood School and the Lake Forest Academy, served as 2002 Campaign Co-chair for the United Way of Suburban Chicago, and was the 1999 recipient of The City of Hope’s Spirit of Life award. In that year Wesley led a council that raised more than $4.3 million for the construction and maintenance of the Center for Biomedicine and Genetics, a stateof-the-art gene therapy center at City of Hope’s campus located in Los Angeles, California. Wesley enjoyed the challenge of golf, having taken up the game around 1985. He often went to the Conroy Farms Golf Club in Lake Forest, Illinois, but his favorite golf hole was

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number eight at Pebble Beach Golf Links in California, which runs along beautiful Monterey Bay overlooking a deep canyon. According to Golf Digest magazine’s “CEO Golf Handicap Ranking,” Wesley was listed, as of July 2002, 63rd (with a handicap of 18.6) among the top 270 golfing CEOs of all the publicly traded Fortune 500 and S&P 500 companies.

See also entries on ACCO World Corporation and Fortune Brands, Inc. in International Directory of Company Histories.


Euronext Brussels, “Fortune Brands Reports Record FourthQuarter and Full-Year Results,” Euronext, January 23, 2004, http://www.euronext.com/news/companypressrelease/ 0,4616,1732_11894_124737446,00.html. “Fortune Brands Elects Wesley President and Chief Operating Officer,” Fortune Brands, press release, September 29, 1998, http://www.fortunebrands.com/news/199809294824.htm?ReleaseID=4824. Fortune Brands Web site, http://www.fortunebrands.com. —William Arthur Atkins


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W. Galen Weston 1940– Chairman of the board and chief executive officer, George Weston Limited; chairman of the board, Loblaw Companies; chairman of the board, Holt Renfrew; chairman of the board, Brown Thomas Group; chairman of the board, Whittington Investments; and chairman of the board, Selfridges Nationality: Canadian. Born: October 29, 1940, in Marlow, Buckinghamshire, England. Education: Attended University of Western Ontario. Family: Son of Willard Garfield Weston and Reta Lila Howard; married Hilary Mary Frayne, 1966; children: two. Career: George Weston Limited, 1974–1996, president; 1978–, chairman of the board and chief executive officer; Holt Renfrew, 1986–, chairman of the board. Awards: Officer of the Order of Canada, 1990. Address: Suite 20001, George Weston Limited, 22 St. Clair Avenue East, Toronto, Ontario M4T 2S7, Canada; http://www.weston.ca; http://www.loblaw.com; http:// www.holtrenfrew.com.

■ W. Galen Weston was an optimistic, cheerful man who remembered his childhood as happy and who had a successful, dynamic marriage of equals. He was a daring businessman with an entrepreneurial spirit that drove him constantly to try to build new businesses. Honest and forthright in his dealings with others, he won the trust of England’s royal family, political leaders in Canada, and members of the business and social elites from several countries. His hobbies included polo, which he played well into his 50s, and collecting the art of the eccentric artist Christo. As the leader of the Weston-family’s holdings of over two hundred companies, he saved George Weston Limited from bankruptcy and built the family fortune while International Directory of Business Biographies

becoming one of the world’s richest people. During the late 1990s and early 2000s, he led an expansion of family holdings that increased the family fortune by billions of dollars per year.

FAMILY George Weston, the American son of an immigrant, founded a bread bakery in Toronto, Canada, in 1882. He expanded his bakery into a food-processing and distribution business that served most of Canada. His son W. Garfield Weston was exceptionally gifted at making business deals, and from 1944 to 1974 he expanded the family business into supermarkets, fisheries, frozen goods, and other retail businesses, while buying over two thousand companies all over the world. Although he always thought of himself and his family as Canadian, Garfield Weston lived in England during the 1930s and 1940s. In 1936 he was elected a Member of Parliament, and he represented Macclesfield through World War II. During the war Garfield Weston kept his three sons and six daughters in England, refusing to abandon his constituents and insisting that if a bomb hit the family, they would all die together. He and his family were Methodists, and they had a Puritanical streak that included valuing hard work for its own sake. Born in 1940, Galen Weston was the youngest of the nine children, and his six sisters doted on him. He and his siblings did not follow the English tradition for members of the social elite and attend boarding schools; instead, Garfield Weston had his children attend local day schools, ostensibly so that they could learn how his business was conducted and visit him in his places of business, but love of the company of his children was probably a significant reason as well. Galen was taught the family business by his father, but he had fun. He recalled going to Fortnum & Mason after the store closed for the day, where he and his siblings would make ice-cream treats for themselves. He attended 17 different schools in Canada, England, South Africa, and the United States. Jobs in his youth included selling Christmas trees and picking tobacco, as well as working in stores. Galen Weston was a restless young man, eager to go into business, which was why he quit college while one credit short of earning his bachelor’s degree. He went to Ireland, bought a grocery store with an inheritance from one of his grandmothers, and built the store into the Power grocery-store chain, later

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renamed Quinnsworth. He then bought a clothing store, Brown Thomas, and built it into a 20-store chain. In 1963 Weston met Hilary Frayne on a blind date; she was a fashion model, and he had already seen her on billboards in Ireland. In 1966 the two were married. Immediately, she became his partner in business as well as in life by modernizing the fashions of Brown Thomas, turning the chain’s stores into havens of contemporary style. In January 1972 Galen and Hilary’s first child, daughter Alannah, was born. In December 1972, their son Galen Jr. was born and that year Galen Sr. returned to Canada because George Weston Limited was in a financial crisis. In 1972 Galen and his second-oldest brother, Garry, who was 14-years older than Galen, quarreled. Where Galen was upbeat, outgoing, and eager to make deals, Garry was quiet, somber, and preoccupied primarily by numbers and accounting. In 1974 Garry went to England to manage the family’s businesses there, much to the relief of his father, who remarked that separating Galen and Garry with an ocean was for the best. “In the food business you’re constantly dealing with demographics, constantly asking where people are going with their desires and wants,” Weston later noted (Vanity Fair, May 1994), and he took action to update the business, especially the grocery chains owned by his family’s Loblaw Companies. He built Loblaw Companies into Canada’s largest chain of supermarkets. Weston still liked living in Ireland, but in August 1983 the Provisional Irish Republican Army tried to murder him, Hilary, and their two children. The Westons lived south of Dublin, in a 17th-century castle in a 245-acre estate called Roundwood, from which they fled to England after the police learned of the plot from an informant. Seven masked terrorists had a gunfight with police at Roundwood, during which five of the terrorists were shot. The Westons gave up living in Ireland, choosing to reside primarily in Canada and the United States, while shunning publicity for several years.

BUILDING THE FAMILY BUSINESS In 1984 Weston introduced the President’s Choice brands, which by 1994 had eight hundred premium products selling in the United States and Canada. In 1986 Weston bought Holt Renfrew. Originally a Canadian company, the clothing retail chain had been owned by foreigners for a decade and was in decline. Hilary became deputy chairman of the board and helped develop new lines of clothing for the chain, including the Holt Renfrew Private Brand. She held her position until the end of 1996. Wanting to build a business enterprise from scratch rather than taking a failing enterprise over and saving it, as he had been doing, Weston decided to create a resort, perhaps inspired by his oldest brother, George, who had built resorts in the Caribbean. He and Hilary looked first for a location in the

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Bahamas, where they liked to vacation, but he settled on a location on a former citrus orchard in Vero Beach, Florida, 85 miles north of Palm Beach, because the location offered shopping and other amenities near a beach. In 1989 he named the new resort Windsor, reflecting his close association with England’s royal family, especially his close friendship with Prince Charles. Admittedly a frustrated athlete, Weston quickly developed a polo field, tennis courts, and a golf course, while laying out plots for houses on the 416-acre resort. Only select people—wealthy, well connected, and approved by Hilary— were allowed to build there, and they had to follow strict guidelines regarding architectural style, house size, and placement within lots. By 1996 houses with lots were selling for $500,000 to $3 million each. In England, Weston built Belvedere Farm, near Fort Belvedere, where he kept horses in stables for himself and for others, including Prince Charles. His nearby home was once occupied by King Edward VIII, who abdicated his throne in what was now the Westons’ sitting room. Weston said that he liked the speed and glamor of polo, and in England he owned the Maple Leafs polo team, for which Prince Charles played. When not in Florida or England, the Westons lived in the Forest Hills section of Toronto, and in 1989 England’s Queen Mother resided with them for two weeks. Amid a life full of social occasions, visits from notables such as Prince Charles and Jordan’s Queen Noor, charitable work (education was Weston’s primary charitable interest), and playing polo, Weston still found time to tend to the family business, and in 1993 George Weston Limited and its more than two hundred subsidiaries grossed $8.7 billion. By 1994 Loblaw Companies, 61 percent owned by Weston, included the chains Valu-Mart, Ziggy’s, Zehrs, and Loblaw No Frills. By 1996 he had expanded George Weston Limited’s holdings and was distributing food in 50 countries. Reflecting Weston’s international outlook, homeowners in his Windsor resort communities came from at least 10 different nations.

DAZZLING GROWTH Already a prominent model, Hilary Weston was featured in many magazines, even on covers, although her husband seemed uncomfortable with seeing her displayed in magazines. Hilary had become a canny businesswoman, as well. Then came politics: On December 12, 1996, the Canadian prime minister, Jean Chrétien, appointed Hilary lieutenant governor of Ontario; she took office January 24, 1997. There was a hue and cry in the press about her appointment being made because she was socially well connected, but she worked hard at her new job and distinguished herself in social causes such as health care, aid for the poor, and education, with a special interest in youth programs. By the time she left office in 2002, she had proven to be one of the most active lieutenant governors in Ontario’s history.


W. Galen Weston

In 1998 George Weston Limited grossed $12 billion; Galen Weston’s own share was 62 percent. In 1999 the company grossed $14 billion, and Galen Weston had built the family fortune to $1.9 billion; it reached $2 billion the next year. He added Florida’s Orchid Island resort to his holdings, while giving up polo for golf. The subsidiary Weston Foods was a major supplier of baked goods in the United States. Subsidiaries Stroehmann Bakeries, suppliers of fresh-baked goods; Interbake Foods, bakers of cookies; and Maplehurst Bakeries, supplier of frozen dough to bakeries, were doing well. In 2001 Weston bought Bestfoods from Unilever for $1.8 billion, and the family fortune was $4 billion.

the purchase price came from Weston’s own funds; the Royal Canadian Bank loaned the rest.

With the death of Garry, Galen Weston gained control of his family’s English holdings, and in 2002 he took the family’s Fortnum & Mason department store private. In January 2002 he sold his Orowheat division to Grupo Bimbo of Mexico for $610 million, which helped defray the cost of buying Bestfoods. In March 2002, just as Hilary’s term as lieutenant governor was ending, Galen Weston entered a fierce bidding war for England’s department-store chain Selfridges. Through his company Whittington Investments, Weston made several bids and counterbids. On May 12, 2002, Selfridges’ management supported Weston’s $958 million bid for the company, which was 60 percent above the company’s stock value on April 8, 2002, and in July Selfridges’ stockholders approved the sale to Weston. Selfridges brought with it a booming business, a huge London store, and a 250-bedroom hotel. Only $5 million of

See also entries on George Weston Limited, Loblaw Companies Limited, and Selfridges Plc in International Directory of Company Histories.


In 2002 the Weston family was worth $4.2 billion and Galen Weston was the second-richest man in Canada. As Weston developed his new businesses, the family fortune exploded in size to $6.2 billion in 2003 and $7.7 billion in 2004. In 2004 Weston was the 46th-richest person in the world. In 2003 and 2004 George Weston Limited had the highest gross of any Canadian company, and it had 120,000 Canadian employees, with another 22,850 worldwide.


Cantrell, John, “Windsor, American-Style,” Town & Country, November 1996, pp. 172–182. Filler, Martin, “Weston Civilization,” Vanity Fair, May 1994, pp. 124–132, 164–166. “History,” http://www.holtrenfrew.com/english/history. —Kirk H. Beetz

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Leslie H. Wexner 1937– Chief executive officer, The Limited Nationality: American. Born: September 9, 1937, in Dayton, Ohio. Education: Ohio State University, BS, 1959. Family: Son of Harry L. Wexner, a budget clothing-store manager, and Bella Cabakoff, a department-store buyer and philanthropist; married Abigail Koppel, formerly a corporate attorney, 1993; children: three. Career: Leslie’s, 1961–1963, clerk; The Limited, 1963–, chairman and CEO; Easton Town Center, 1987–, developer. Awards: Honorary LLD, Hofstra University, 1987; Honorary LHD, Brandeis University, 1990; Honorary PhD, Jewish Theological Institute, 1990; Gold Medal Award, National Retail Federation, 1993. Address: The Limited, Three Limited Parkway, Columbus, Ohio 43230; http://www.limitedbrands.com.

■ One of the greatest of American entrepreneurs, Leslie Wexner reinvigorated the business of selling women’s clothes by offering fashionable separates (e.g., skirts, blouses, and pants) that evoked particular lifestyles, such as lounging in the Italian countryside or roaming through the Australian outback. He began The Limited with $5,000 and one women’s apparel store in 1963; by the start of the 21st century, Limited Brands had grown to comprise more than four thousand stores and seven retail divisions offering everything from children’s clothing to sexy lingerie to perfumed soaps. For innovativeness and quality of management, Fortune magazine ranked Limited Brands the World’s Most Admired Company in 2003.

THE FAMILY BUSINESS Wexner learned clothing business from his parents. In 1951 Bella and Harry Wexner opened a small women’s clothing store, Leslie’s, in downtown Columbus, Ohio, which would become the younger Wexner’s training ground. He

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Leslie H. Wexner. AP/Wide World Photos.

worked there after he left Ohio State University and credited the experience with teaching him the importance of paying attention to detail. One of the details that Wexner observed involved the buying preferences of American women. He noticed that sportswear sold best and suggested to his parents that they specialize in that line of apparel. Harry Wexner refused, telling his son that he would never be a merchant. The younger Wexner subsequently borrowed $5,000 from an aunt and opened The Limited—the name coming from Wexner’s notion to limit his stock to sportswear only—at the Kingsdale Shopping Center in the Columbus suburb of Upper Arlington on August 10, 1963. The store’s design of used brick, dark wood, stained glass, and charred cork in a rustic old-world motif displayed Wexner’s characteristic attention to atmosphere. Sales on the


Leslie H. Wexner

first day of business were $473; by the end of the first year The Limited had sold $160,000 worth of sportswear. Upon expanding to six stores in 1969, Wexner took The Limited public and used the proceeds from the stock sale to finance a massive expansion into malls.

MASTER OF THE MALLS By the 1960s enclosed malls had replaced downtowns as centers of business throughout the United States by offering visual spectacle, convenient parking, and a safe shopping environment. Wexner used the popularity of malls to fuel the growth of The Limited, as he believed that the success of a store was dependent more upon location than advertising. He found ideas for new products and store designs by traveling to Europe at least four times every year and by looking through magazines. As a result of Wexner’s flair for merchandising and design, and in spite of his refusal to engage in national advertising and other forms of marketing, The Limited thrived. It soon became the dominant specialty retailer in American malls by selling not just sportswear but something for everyone. From his initial focus on women’s sportswear, Wexner expanded The Limited into the realms of lacy bras and sexy lingerie with Victoria’s Secret, sporting goods with Galyan’s Trading Company, and soaps with Bath & Body Works. Limited Too focused upon children; The White Barn Candle Company offered home decor items; and Aura Science provided skin care products. Henri Bendel served the high-income, thirty-something New York woman, and Express marketed apparel to single, chic shoppers of both sexes. An entrepreneur at heart, Wexner enjoyed delving into new retail concepts. He had a knack for acquiring companies, refocusing their niches, and targeting new audiences. Abercrombie & Fitch was one of his successes. Wexner bought the company in 1986 when it was a sporting goods store on the verge of bankruptcy and began reversing its fortunes by selling conservative men’s wear. He then shifted to selling clothing to trendy youth in the 14 to 24 age group; by 1998 Abercrombie & Fitch was thriving, at which point Wexner established the company as public and fully independent by offering Abercrombie & Fitch stock for Limited stock and spinning-off the new business.

AN ENTREPRENEUR, NOT A MANAGER A temperamental man who once sued his own mother, Wexner was known for being autocratic and for constantly bouncing from one project to another. He conceded that he did not always work well with others. In an interview with the New York Times, Wexner reflected, “I’ve always lived in my own world, and that world is very much in the future” (December 8, 1996). Boredom with the here and now eventually


led Wexner to make decisions that hurt the sales growth and stock price of The Limited. The very breadth of Wexner’s retail portfolio triggered the decline of his empire. To many investors and stock analysts, Wexner appeared to enjoy creating new stores more than running established businesses—he had difficulty switching from an entrepreneurial style to a managerial one. The Limited fell into a pattern of developing new retail concepts, nurturing stores into industry leaders, then watching them flounder as something shinier caught the chairman’s eye. As a result of inattention Wexner’s divisions began to look alike, with customers unable to differentiate between the goods of the flagship store and those sold by other ventures. Additionally, Wexner received criticism from Wall Street for seeming to alternate between micromanagement and overdelegation of authority to corporate accountants. By 1993 The Limited had run into serious difficulties. Sales of women’s apparel dropped as the company lost both its fashion direction and its customers. Investors blamed Wexner for the troubles, but Wexner blamed everyone else. According to him, subordinates had made poor buying decisions, investors had lost faith, and mall developers had taken the fun out of shopping by ignoring tenant mixes and building cookie-cutter sites. Seeking to revive the company, Wexner recalled the words of a former Ohio State University marketing professor who had said that change should be a habit. Accordingly, he changed both his management style and the internal structure of The Limited. Under the guidance of a Harvard Business School professor he centralized certain functions, including financial management and marketing, while sharpening the company’s focus on core brands, where the most value could be added. The divisions were then encouraged to work together and share information through monthly meetings of divisional heads, who had been fierce rivals under the old structure. Wexner sold Lane Bryant, a clothing store for plus-size women; to complete the revamping, Wexner closed more than one hundred other stores, including those with flagging sales, oversized spaces, and locations in dying malls. The Limited became Limited Brands in 2002 to reflect the change in focus from developing specialty stores to developing brand recognition. The changes met with a mixed reception. The creation of fashion teams to design clothes and styles specific to each division antagonized merchandising executives accustomed to independently identifying emerging trends. The increased bureaucracy stifled creativity and prompted many executives to leave. Wexner responded to employee resistance by taking more interest in personnel decisions and making sure that he met with all of the new executive-level hires.

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Leslie H. Wexner

NEW VENTURES While he assured investors of his commitment to bolstering the profits of his core business, Wexner continued to follow his pattern of being distracted by new toys—he entered the field of property development. His largest and most innovative project was the 1,200-acre Easton Town Center located 12 miles east of Columbus, Ohio. Starting in 1987 he had used his personal funds to buy thousands of acres of countryside for a combined residential, entertainment, and commercial development. Opened in 1999, the complex pioneered the new trend of open-air malls that mimicked old-fashioned downtowns. Reflecting the qualities that made malls popular, it was a visually dazzling and safe playground for shoppers. In contrast to many other captains of business, Wexner was not solely focused on his work. After marrying at the late age of 55, he assembled an art collection studded with Picassos and de Koonings, bought mansions in Palm Beach, Florida, and Aspen, Colorado, took cruises on his yacht, The Limitless, and made a hobby out of redecorating homes. A philanthropist of considerable note, he was a generous supporter of Jewish charities and donated $25 million to establish the Wexner Center for the Arts at Ohio State University.

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See also entry on The Limited, Inc. in International Directory of Company Histories.


Editors of the Wall Street Journal, Boss Talk: Top CEOs Share the Ideas That Drive the World’s Most Successful Companies, New York, N.Y.: Random House, 2002. Logan, Rochelle, and Julie Halverstadt, 100 Most Popular Business Leaders for Young Adults: Biographical Sketches and Professional Paths, Greenwood Village, Colo.: Libraries Unlimited, 2002. Steinhauer, Jennifer, and Edward Wyatt, “The Merlin of the Mall Tries Out New Magic,” New York Times, December 8, 1996. Zinn, Laura, “Did Leslie Wexner Take His Eye off the Ball?” BusinessWeek, May 24, 1993, p. 104.

—Caryn E. Neumann


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Kenneth Whipple 1934– Chairman and chief executive officer, CMS Energy Corporation Nationality: American. Born: 1934. Education: Massachusetts Institute of Technology, BA. Career: Ford Motor Company, ca. 1959–1986, various positions including president of Ford Credit and vice president and head of corporate strategy; Ford Europe, 1986–1988, chairman and chief executive officer; Ford Motor Company, 1988–1999, executive vice president and president of Ford Financial Services Group; Ford Credit, 1997–1999, chairman and chief executive officer; CMS Energy and Consumers Energy, 2002–, chairman and chief executive officer; Glenlore Enterprises, chief executive officer. Awards: Max Fisher Community Service Award, 1999. Address: CMS Energy Corporation, One Energy Plaza, Jackson, Michigan 49201; http://www.cms energy.com.

■ After almost 30 years with Ford Motor Company, Kenneth Whipple became Ford’s executive vice president and Ford Financial Services Group president in 1988. President of Ford Credit was added to his responsibilities in 1997. He remained in those positions until he retired in 1999. Retirement did not last long, however. In May 2002, at the age of 67, he was asked to become interim president of the scandalized Michiganbased CMS Energy when the company’s chairman, William T. McCormick Jr., resigned. CMS was teetering on the brink of bankruptcy and reeling from charges of unethical energy swaps called “round-trip trading.” Whipple accepted the challenge, and the position quickly turned permanent. In an interview he refused to comment on when he planned his second retirement. “I don’t believe in picking retirement dates,” he said. “The day you do that you become less effective” (Knight/ Ridder Tribune Business News, April 12, 2003). International Directory of Business Biographies

AILING COMPANY CHOOSES FINANCIAL WIZARD Effectiveness and a proven ability to attain results were the reasons Whipple was chosen to head CMS, which was Michigan’s second-largest utility. With nose-diving stocks, a debt of $7 billion, hostile employees and shareholders, three top executives ousted, and a loss of credibility, CMS was in trouble. Its board of directors desperately needed a strong and experienced leader. Whipple had been on the board since 1993, so he was no stranger to other directors or to the company. Along with being chairman and a board member of many other organizations, he was chief executive officer (CEO) of Glenlore Enterprises, a Michigan-based company that specialized in private investment and strategic consulting to chief executives. According to an article by Laura Bailey in Crain’s Detroit Business, Whipple’s colleagues in other organizations had experienced his tenacity and determination and described him as “a financial wizard with the requisite diplomacy and finesse” to lead the company back into the light (May 27, 2002). Bailey noted that Whipple, a board member of Detroit Public Television since 1988, had been heralded by the station’s chief operating officer (COO) and manager Dan Alpert. “With Ken, it’s integrity and energy and this piercing ability to analyze a situation and figure out how to strategically attack it.” Alpert said that Whipple’s financial expertise and influence helped the station succeed in paying out $14 million following an unfunded federal mandate to update its broadcasting system from analog to digital. According to Bailey, Virgil Carr, CEO of the United Way Services Committee, described how that organization came into being under Whipple’s guidance: In less than a year, Whipple persuaded two of Detroit’s largest human-services agencies—United Way for Southeastern Michigan and United Community Services of Metropolitan Detroit—to meld their entirely different philosophies, cultures, and volunteers into a large and effective service organization. Whipple set the tone for the new organization, helped choose its executives, and led one of the most successful campaigns in United Way’s history, which raised over $65 million.

THE BUCK STOPS HERE Whipple’s interim appointment at CMS became permanent once the full complexity and seriousness of the company’s financial position became obvious. “I was a little naive in those

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Kenneth Whipple

first couple weeks,” Whipple said, “but I was hired to try to turn the place around and I’m 100 percent focused on that” (Knight/Ridder Tribune Business News, April 12, 2003). According to Amy Lane of Crain’s Detroit Business, shortly after Whipple took office at CMS he announced that the board would take full responsibility for the company’s financial and ethical credibility and that “the buck stops here” (May 27, 2002). CMS was by this time under investigation from three federal agencies, including the U.S. Securities and Exchange Commission, due to highly unethical “round-trip” buy-back electricity trades by its energy-marketing unit. The unit sold power to another company and immediately bought it back at the same price. The “swaps,” which artificially inflated revenue by more than $4.4 billion between May 2000 and midJanuary 2002, caused CMS’s shares to rise sharply. Under Whipple’s leadership the CMS board quickly appointed a committee to investigate the trades. Included on that committee were Kenneth Way, chairman of Lear Corporation, Kathleen Flaherty, former president and COO of WinStar International, and Whipple. Following the investigation the company announced that they found no evidence of a deliberate attempt to manipulate share prices. Lane reported that when Whipple was asked about the legality of including revenues from the swaps in their income statement, he said: “It was legal as I understand it. I believe it met accounting standards. It didn’t meet the standards of this company” (Crain’s Detroit Business, May 27, 2002). CMS subsequently implemented new trading policies and tighter controls to ensure that similar trades would not happen again. In a June 2, 2002, Detroit News article, James V. Higgins noted that Whipple apologized for the corporation’s actions. “It’s wrong, and we’re sorry. And we’re doing everything in our power to make sure it doesn’t happen again.”

whether or not foreign governments would stick to their stated deregulation schedules. As a result, the company suffered more than $620 million in losses in 2001. Its stock prices plunged to below $4 in 2002 from a high of around $40 in 1998. In July 2002 dividends were cut in half and then totally eliminated in January 2003 for a savings of $100 million a year. “I, and the board, couldn’t stomach the idea of borrowing incremental money only to pay the dividend,” Whipple said. Taking a tough but realistic stance, he added that the dividends would not be reinstated until it was prudent, which he estimated would be a “couple years. . . . I wish it was gonna be sooner. But you don’t take that kind of drastic action and then say two quarters later that everything’s fixed, because it’s not” (Knight/ Ridder Tribune Business News, April 12, 2003). Under Whipple’s stewardship, the company was confident it could eventually return to profitability and provide attractive dividends to entice investors. A similar confidence was beginning to show among major debt-rating agencies and the company’s bankers. Banks had committed $1.4 billion to help CMS pay off debts due between mid-2003 and mid-2004. In a further cost-savings move, CMS consolidated its Dearbornbased headquarters with the headquarters of their subsidiary, Consumers Power, a gas and electric operator in Jackson, Michigan. “I like the fact that I can see well into 2004 now without having to worry about where the money’s going to come from. . . . We’re well on our way to achieving liquidity peace,” Whipple remarked (Knight/Ridder Tribune Business News, April 12, 2003). He added that he personally would not be satisfied until CMS had regained its reputation as an “honest company that makes good on its promises” (Detroit News, June 2, 2002).

INSTALLS A SIMPLISTIC APPROACH AN EVEN BIGGER TASK AHEAD Higgins believed Whipple had a much greater task ahead of him than simply righting a wrong. “His greater task is to repair the damage to the company’s balance sheet and image from a seriously flawed program installed several years ago by McCormick.” Higgins stated that the company’s major problems began with deregulation of the power industry and CMS’s decision to expand from a local utility company into a global enterprise. He noted that working in foreign political and financial environments, some of which are often unstable, is always risky business, and it proved disastrous for CMS. Whipple was not one to point fingers at any one individual: “If you look at our ventures, the successful and the unsuccessful ones, there aren’t any cases where we didn’t do a good job. Where we weren’t so good . . . was figuring out what the environment was going to be like,” Higgins reported. In particular, Whipple said, that meant what prices they could get and

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To achieve that goal Whipple introduced a “back-tobasics” strategy that would return the company to a format similar to one followed when it was Consumers Power. In little less than a year, Whipple stabilized the listing CMS and its subsidiary Consumers Energy. In September 2002 CMS sold its 66 percent ownership in a Thailand power plant, which Whipple described as just one step in the company’s ongoing effort to optimize asset proceeds of $2.9 billion. In December 2002 the company announced that it would sell its U.S. Panhandle Companies and their interstate natural gas pipeline business and accompanying subsidiaries to Southern Union Panhandle for $1.828 billion ($662 million in cash and $1.166 billion in debt assumed by the purchaser). The transaction would bring total sales or sales agreements to $3.6 billion in 2002 alone. Whipple’s aggressive asset-sales program was on track, and he was quoted in a Panhandle Energy news release as commenting: “We will continue to pursue strategies that support


Kenneth Whipple

our back-to-basics approach and our focus on improving our balance sheet, reducing risk, and strengthening our liability” (December 22, 2002). Proceeds of the sale would further reduce the company’s debt, which had by that time been reduced by $860 million, including the pay down of $239 million in bank debt. Whipple went on to direct the sale of almost all of the company’s businesses outside of Michigan, which restored the faith of investors and bankers alike. Jeff Bennett, who interviewed Whipple for Knight/Ridder Tribune Business News, said the new chief introduced a “simplistic approach to what has always been a complex company” (May 6, 2003). In the interview Whipple outlined his strategy that, for 2003 at least, included focusing on making the company smaller and leaner, cutting three hundred positions, suspending the 401K employer-matching program, offering a $2,500 bonus for early retirement to provide positions for displaced workers. He noted also that the company sold all of its corporate jets the previous year. He said that while remaining employees were paid competitively, they were being asked to make sacrifices, such as receiving their merit-increase awards in restricted stock rather than cash. To ease employee unrest and uncertainty Whipple implemented a series of meetings to open communication, which he said would continue even after the company was back on its feet. “You can’t let folks feel that they aren’t part of a place or not part of management. You have to continue to have a shot at management,” he added.

SLOW BUT SURE In the third quarter of 2003, CMS announced a $77 million loss. Thanks to Whipple’s ongoing asset-sales program, however, debt dropped from $7.3 billion in 2002 to a projected $6.2 billion at the end of 2003. In a May 6, 2004, press release Whipple said that, although their quarterly financial results were down—several reasons for which were beyond the company’s control, such as cooler summer weather, a slow economic recovery in the state of Michigan, and consumers purchasing their power from competitors—he believed the company’s business plan was solid and that it continued to affect financial flexibility and debt reduction while meeting financial commitments. Although the company reported a loss for the


first quarter of 2004 of $11 million, that was $66 million less than the previous quarter. The company netted a $44 million income in 2003 and saw a one-year sales growth of 36.5 percent. Whipple reiterated his steady philosophy: “We are maintaining our focus on operation excellence, increasing our financial flexibility, and reducing debt. Our goal is to become a smaller, stronger company with more predictable earnings and we’re making progress toward that goal” (CMS Energy Media Center).

See also entry on CMS Energy Corporation in International Directory of Company Histories.


Bailey, Laura, “Whipple Lauded for Financial and Diplomacy Skills,” Crain’s Detroit Business, May 27, 2002, p. 38. Bennett, Jeff, “Michigan’s Second-Largest Utility Alters Focus to Overcome Debt, Scandal,” Knight Ridder/Tribune Business News, May 6, 2003, p. 1. “CMS Energy Reaches Agreement to Sell CMS Panhandle Companies for $1.8 Billion to Southern Union Panhandle: Proceeds to Accelerate Debt Reduction and Bolster Liquidity Improvement Plan,” Panhandle Energy, http:// www.panhandleenergy.com/ newsreleases_dtl.asp?page=NR_122202.htm. “CMS Energy Reports First Quarter Results and Reaffirms Ongoing Earnings Guidance,” CMS Energy Media Center, http://www.consumersenergy.com/apps/ NewsArticleCMS.asp?ID=1127. Higgins, James V., “Ford, CMS Execs’ Chance Encounter Shows Industry Likeness,” Detroit News, June 2, 2002. Lane, Amy, “CMS Board: ‘Buck stops here’; Interim CEO Whipple Seeks to Restore Credibility,” Crain’s Detroit Business, May 27, 2002, p. 3. Walsh, Tom, Knight Ridder/Tribune Business News, April 12, 2003, p. 1. —Marie Thompson

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Edward E. Whitacre Jr. 1941– Chairman and chief executive officer, SBC Communications Nationality: American. Born: November 4, 1941, in Ennis, Texas. Education: Texas Tech University, BS, 1964. Family: Son of a railroad engineer and wife, names unknown; married Linda, a university regent (maiden name unknown); children: two. Career: Southwestern Bell Telephone Company, 1963–1977, facility engineer; 1977–1982, assistant vice president in engineering and network services; 1982–1985, president of Kansas division; 1985–1986, group president; 1986, vice president of revenues and public affairs; 1986–1988, vice chairman and CFO; 1988–1989, president and COO; 1990–1994, chairman and CEO; SBC Communications, 1994–, chairman and CEO. Awards: Inductee, American Academy of Achievement, 1997; Business Hall of Fame, Texas, 1997; Freeman Award, Greater San Antonio Chamber of Commerce, 1997; International Citizen of the Year, San Antonio World Affairs Council, 1997; Spirit of Achievement Award, National Jewish Medical and Research Center, 1998; Top 25 Executives of the Year, BusinessWeek, 1998; Best CEOs in America, Worth, 1999; Business Hall of Fame, San Antonio, 2000; Silver Buffalo Award, Boy Scouts of America, 2000; Corporate Leadership Award Nominee, National Minority Diversity Council, 2001. Address: SBC Communications, 175 East Houston, San Antonio, Texas 78205-2233; http://www.sbc.com.

■ Edward E. Whitacre Jr., the six-foot-four-inch native Texan known by friends and colleagues as “Big Ed,” was chairman of the board and chief executive officer at the global telecommunications giant SBC Communications as of 2004. During his reign at SBC, which began in January 1990, Whitacre led the company—with his trademark focus on di-

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Edward E. Whitacre Jr. AP/Wide World Photos.

versification, financial control, strategic acquisitions, and shareowner value—from being the smallest of the regional Baby Bell companies into one of the leading full-service telecommunications companies in the world. SBC was one of 30 prestigious companies factored into the Dow Jones Industrial Average in 1999 and was consistently ranked high on the Fortune 500 list, amassing operating revenue of $40.8 billion and a net income of $8.5 billion with the help of over 175,000 employees. Through the company’s powerful affiliates—including Southwestern Bell, Ameritech, Nevada Bell, Pacific Bell, Southern New England Telecommunications, and Sterling Commerce—Whitacre and SBC delivered a comprehensive set of telecommunications services, including local and long-distance telephone, wireless communications, high-speed DSL (digital subscriber line) Internet,



web hosting, network integration, and business-to-business ecommerce solutions. As of 2003 nearly half of the Fortune 500 companies were headquartered in states served by SBC companies.

depart. At length the manager reconsidered and hired him to hammer in fence posts and measure telephone wire.

While SBC serviced about 57 million access lines nationwide in 2004, covering about one-third of the U.S. population, the company concentrated primarily in the 13 states with its largest markets: California (formerly served by Pacific Bell), Texas (Southwestern Bell), Illinois (Ameritech), Arkansas, Connecticut, Indiana, Kansas, Michigan, Missouri, Nevada, Ohio, Oklahoma, and Wisconsin. Other wire services provided by SBC included long-distance telephone, with over 14.4 million access lines, and Internet access, with about 3.5 million subscribers to DSL broadband services. SBC companies have telecommunications investments in 26 other countries worldwide.

SOUTHWESTERN BELL

In 2000 the company combined its U.S. wireless operations with those of BellSouth to form Cingular Wireless, the secondlargest U.S. wireless company—behind Verizon Wireless— serving more than 24 million customers. As of 2004 SBC companies owned 60 percent of Cingular, the leading U.S. provider of high-speed DSL Internet-access services and one of the country’s leading internet service providers.

GROWING UP AVERAGE Whitacre was the son of a railroad engineer and spent much of his early years shooting rabbits in the fields and trapping frogs along the creeks near the tiny railroad town of Ennis, Texas, about 40 miles south of Dallas. He displayed a competitive but cooperative nature even in grade school, when after receiving a new football uniform he gave his old one to a friend so that they could practice against one another. In high school Whitacre was a first baseman and a defensive end in baseball and football, respectively; he was remembered as a player who could easily overpower his opponents. Most classmates expected that the popular Whitacre would find a job at the local railroad, perhaps going as far as middle management. As quoted by Roger Crockett in BusinessWeek, one childhood friend later remarked, “I would never in a million years have thought that he would go on to do such big things’” (April 12, 1999). But someone else did want something better for him: his father told him to go to college; he would eventually be the first person in his family to do so.

WOULDN’T TAKE NO FOR AN ANSWER Whitacre gained direction during the summer after his junior year in college, when he looked for work at the Dallas telephone company Southwestern Bell. The manager told him that there was nothing to be done; but Whitacre was stubborn, offering to do even the most menial of tasks and refusing to


Whitacre began his career with Southwestern Bell Telephone Company under more legitimate terms in September 1963 as a facility engineer in Lubbock, Texas. In 1964 he earned his bachelor’s degree in industrial engineering from Texas Tech University. He progressed through numerous assignments within Southwestern Bell’s operational departments in Arkansas, Kansas, and Texas. In July 1977 Whitacre was named assistant vice president of engineering and network services in Dallas, Texas. Beginning in September 1982 Whitacre was made president of Southwestern Bell’s Kansas division, which he led through the breakup and sale of the Bell conglomerate. In March 1985 he moved to corporate headquarters, where he served as group president in charge of all of the company’s nontelephone operations. In April 1986 he was named vice president of public affairs and revenues and had responsibilities for Southwestern Bell’s federal and state regulatory and legislative initiatives. In October of the same year Whitacre joined Southwestern Bell’s board of directors and was named vice chairman and chief financial officer. In October 1988, after convincing the board members of his cooperability, straightforwardness, and toughness, Whitacre was made president and chief operating officer of Southwestern Bell. In that position he was responsible for the operation of the company’s six main subsidiaries. On January 1, 1990, Whitacre became chairman of the board and chief executive officer. He had also been a director of Southwestern Bell since October 1986, the chairman of the Executive Committee, and a member of the Corporate Development Committee and the Finance/Pension Committee.

LEADING SBC TOWARD GROWTH Whitacre initially began his company’s drive for growth in September 1994, when a name change occurred—the new name, SBC Communications, would better identify the company as a diversified, global communications company. The passing of the Telecommunications Act in February 1996 provided Whitacre with the ability to rapidly increase SBC’s growth as a national communications provider. (The Telecommunications Act of 1996 allowed any communications company to compete in any market in the United States, thus removing the restrictions that had previously limited where such companies were allowed to operate.) Whitacre guided SBC through an era of unbelievable expansion, leading a series of mergers, acquisitions, and formations that dramatically changed the telecommunications landscape. Among these ac-

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quisitions were those of Pacific Telesis Group in 1997 for $17 billion (the first merger of former Bell companies); Southern New England Telecommunications in 1998 for $4.4 billion; Comcast Cellular in 1999; Ameritech in 1999 for $62 billion (at the time, the largest telephone-industry deal); and BellSouth in 2000. The deal struck by Whitacre to obtain the San Francisco–based Pacific Telesis formed an 118,000-employee telecommunications company serving the country’s two most populous states, California and Texas, and seven of the country’s top 10 markets. The Comcast deal introduced additional service areas in Pennsylvania, Delaware, and New Jersey and 800,000 customers. The Ameritech deal allowed Whitacre to enter the $80 billion long-distance business and 30 U.S. markets outside its existing regions—making the company the leading U.S. provider of local telecommunications service and giving it access to the top 50 markets in the United States. In 1999 the company engaged in a $6 billion initiative called Project Pronto that allowed fiber-optic networks to become available to about 80 percent of its customers, many of them rural customers without previous access to such advanced products and services. Whitacre expanded SBC into the worldwide wireless communications business with investments in Teléfonos de México (Telmex), Bell Canada, and Telkom South Africa. The Telmex partnership, which provided local, long-distance, and wireless service to Mexican customers, solidified SBC’s position as a strong international player and acted as a catalyst for additional global ventures. Such expansion allowed Whitacre, once dubbed Baby Bell’s Acquisition King, to offer long-distance service in all of the 13 states in SBC’s primary region. As a result the company was capable of capitalizing on new opportunities in voice and data revenue, maximizing market competitiveness, markedly strengthening the company’s already impressive portfolio of products, upgrading its national data and Internet Protocol strategy and networks, and improving efficiency throughout its network.

DIFFERENTIATION AND ESTABLISHING A NATIONAL BRAND When uncertain times prevailed within the telecommunications industry during the recession years of 2000–2002, Whitacre set SBC apart from other telecommunications companies by promoting its financial strength and stability. Such advertising campaigns as “Who We Are” aggressively emphasized SBC’s commitment to the customers and communities it served. Whitacre proudly touted SBC’s system of world-class networks across the United States and the common desirable qualities that each affiliate brought to the SBC family of companies.

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In 1999 Whitacre introduced the SBC brand to customers across the country, eliminating regional brands—such as Southwestern Bell, Pacific Bell, Nevada Bell, and Ameritech— to make way for the single, unifying national brand of SBC. Whitacre wanted to make it as easy as possible for SBC’s customers to find and do business with SBC companies nationwide. With the introduction of the nationally recognizable name, Whitacre had fully transformed SBC into a major communications-services company.

FOCUS ON SUCCESS Whitacre had a soft-spoken Texas drawl that often hid his fiercely competitive nature. After 1998 earnings climbed 20 percent to $3.9 billion on sales of $27 billion and the first two of his major acquisitions were finalized in the late 1990s, Whitacre said in BusinessWeek, “We can sit here and get picked on or get bigger and have more clout” (January 11, 1999). SBC was named the World’s Most Admired Telecommunications Company by Fortune magazine for the sixth consecutive year in 2003, having held the top spot since the award was first introduced. Fortune also named SBC as America’s Most Admired Telecommunications Company for the seventh time in eight years. Whitacre continued to create long-term value for company shareowners by providing reliable and innovative telecommunication services—a task that was successfully accomplished by Whitacre and his predecessors for over one hundred years. Whitacre was once named among the Top 25 Executives of the Year by BusinessWeek and was listed as one of the Best CEOs in America by Worth magazine. Within his company, Whitmore was a member of SBC Pioneers, a volunteer group dedicated to making a significant difference in communities served by SBC companies. He also earned a number of awards for his contributions to business, educational, and civic programs, including the Greater San Antonio Chamber of Commerce’s Freeman Award, the Spirit of Achievement Award from the National Jewish Medical and Research Center, and the International Citizen of the Year Award from the San Antonio World Affairs Council. He was inducted into the Texas Business Hall of Fame and the American Academy of Achievement. Whitacre concentrated on promoting diversity within SBC companies and suppliers. Fortune and Working Woman magazines, along with the Women’s Business Enterprise National Council, the National Minority Business Council, and the National Minority Supplier Development Council, recognized these efforts. Whitacre and SBC Communications were presented with the Ron Brown Award, the sole presidential corporate-leadership award, to commend the company’s supplier diversity program.



OTHER DUTIES


To accompany his responsibilities within SBC, Whitacre served on the board of directors of Anheuser-Busch Companies, Burlington Northern Santa Fe Corporation, Emerson Electric Company, and The May Department Stores Company. He was also on the board of the Institute for International Economics and a member of The Business Council.

Crockett, Roger, “The Last Monopolist,” BusinessWeek Online, April 12, 1999, http://www.businessweek.com/1999/99_15/ b3624005.htm.

See also entry on SBC Communications Inc. in International Directory of Company Histories.


“Edward E. Whitacre Jr.: The Busiest Bell,” BusinessWeek Online, January 11, 1999, http://www.businessweek.com/ 1999/02/b3611052.htm.


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Miles D. White 1955– Chairman and chief executive officer, Abbott Laboratories Nationality: American. Born: 1955, in Minneapolis, Minnesota. Education: Stanford University, BS, 1978; MBA, 1980. Family: Married (wife’s name unknown). Career: McKinsey and Company, 1980–1984, management consultant; Abbott Laboratories, 1984–1994, sales manager in medical diagnostics, then various management positions; 1994–1998, senior vice president of diagnostic operations; 1998–1999, executive vice president; 1999–, chairman and CEO. Address: Abbott Laboratories, 100 Abbott Park Road, Abbott Park, Illinois 60064-3500; http:// www.abbott.com.

■ As chairman and chief executive officer of the major pharmaceutical and health-care products company Abbott Laboratories, Miles D. White aggressively pursued new research and acquisitions strategies for his firm. He oversaw a substantial increase in research funding for the development of new pharmaceuticals while trimming Abbott’s drug portfolio to focus on the most promising therapies. Under his leadership Abbott’s management team was restructured, and working conditions were improved in order to attract and retain the best scientific talent. Analysts and colleagues described White as creative and driven and as an intelligent strategist who was a catalyst for change.

DEVELOPING AS A LEADER White gained his earliest experiences as a leader when he was a high-school student at Culver Military Academy in Indiana. There White was taught leadership skills based on the servant-leader model, which emphasized the importance of serving others before taking any directive action. He was able to

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Miles D. White. Stefan Zaklin/Getty Images.

put these skills into practice in his roles as captain of a sports team and club president. Such opportunities inculcated White with the keen awareness that being an effective leader entailed acquiring an understanding of the needs of others, whether they be fellow team members or stakeholders, and then working to meet those needs. Although he majored in mechanical engineering at Stanford, White was drawn to leadership positions that inevitably led him in different directions. As a senior White served as the financial manager for all student businesses at Stanford—he was the first undergraduate to ever hold that position. White’s taste for executive-level work led him to attend business school, though he remained uncertain about the direction in which he would ultimately go. Rather than accepting a managerial position directly after earning his MBA, White joined McKinsey and Company in 1980 as a consultant. He honed


Miles D. White

his skills in critical thinking at McKinsey and then looked for management positions in Silicon Valley. He interviewed with the Chicago-based Abbott only as a favor to a mentor; yet Abbott proved to be the first company to offer White a management position, and in 1984 he became sales manager in Abbott’s domestic diagnostics division, with responsibility for eight people and $80 million in sales.

RACE TO THE TOP White was then promoted through a series of management positions in Abbott’s diagnostics division, including in marketing and research, before being named head of the division in 1994. As revenues from diagnostics had been growing at less than 4 percent annually when he took charge, White was aggressive in pushing the division into new markets. In 1996 he spearheaded the $867 million acquisition of MediSense, allowing Abbott to move into the expanding area of blood-glucose monitoring for diabetics. Under his guidance Abbott’s diagnostic sales grew 11 percent in 1998—four times the industry average—and the division’s overall business grew from $2.1 billion in 1993 to $2.7 billion in 1997 in an increasingly competitive market. Amid concerns about the firm’s earnings growth and its position in relation to larger competitors such as Pfizer, Abbott’s chairman and CEO Duane Burnham as well as the president and COO Thomas Hodgson announced their planned retirements in 1998. Abbott set up a horse race for succession by elevating White and two other divisional chiefs to executive vice president positions. The performance of White’s diagnostics division was viewed by analysts as relatively flat in comparison to Abbott’s growing pharmaceuticals business, which accounted for almost half of the company’s sales and profits; White also lacked any pharmaceutical experience and was regarded by many observers as the candidate least likely to be awarded the top job. Despite such predictions White’s detailed plan for invigorating Abbott and his confidence in handling pressure impressed the company’s board of directors, who ultimately tapped him for the post. In 1999 White assumed leadership of the $12.5 billion firm, where he would face the challenge of reenergizing a company that analysts saw as vulnerable.

THE CHALLENGES OF REVIVING ABBOTT Although the company White inherited had produced steady earnings for decades, it had also failed to keep pace with competitors in terms of spending on research and acquisitions. At the time of White’s appointment Abbott spent $600 million on pharmaceutical R&D, well under the $1–2 billion analysts thought the company needed to spend in order to maintain a steady pipeline of new drugs. Abbott’s existing pipeline


was especially tight when White took the reins, with one drug, Hytrin, going generic and production of another, Abbokinase, being halted by the FDA because of manufacturing problems—the two situations together would lead to losses of about $700 million in sales. Unlike other pharmaceutical and health-care product companies, Abbott had yet to pursue any large mergers to either expand its product line or ease pricing pressures. White quickly took action to address Abbott’s research problems, indicating that he would double R&D funding for pharmaceuticals within the first three years of his tenure. To bring discipline to the previously fragmented research program, White restructured Abbott’s management team to coordinate research at the companywide level and recruited the well-known scientist Jeffrey Leiden to head the pharmaceuticals group. White’s high expectations for results shaped his decision to cut back in fields of drug development that were less promising for Abbott, including cardiology, urology, and renal disease. Most controversially White halted the majority of Abbott’s basic research on HIV—beyond the one protease inhibitor already in the pipeline—an area in which he thought the company could not successfully compete. He remarked, “I think if we are going to spend $1 billion on research and development, I should expect scientists who think they are exceptional to do better than come up with a me-too product” (Klein, January 13, 2003). In order to quiet talk of a looming takeover and further fill Abbott’s weak drug pipeline, White pursued an aggressive acquisitions strategy, completing over 60 acquisitions, licensing agreements, and marketing arrangements in the early years of his tenure. The deals included an option to buy 50 percent of SuperGen, a developer of cancer drugs, and a $17 million payment to NeuroSearch A/S for the right to develop its drugs for nervous-system disorders. Not all of White’s acquisitions went so smoothly, however: In June 1999 he sought to acquire Alza Corporation, a company with several drug-delivery technologies, for $7.3 billion. The deal collapsed due to antitrust concerns and a drop in Abbott’s share price in the wake of FDA sanctions. The failed Alza acquisition along with continuing regulatory problems at Abbott’s manufacturing facility raised concerns about White’s leadership. Although praised for bringing vitality and initiative to the historically conservative Abbott culture, analysts noted White’s rough start and questioned his ability to effectively change the company’s direction in a highly competitive environment.

WHITE AND ABBOTT TURN A CORNER Although doubts lingered about White’s leadership, Abbott’s stock rebounded by 2001, rising to $50 a share from a low of $29; company earnings rose as well. Hence, despite the collapse of the Alza deal, White was in a position to continue

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aggressively pursuing acquisitions. In 2001 he successfully engineered a nearly $7 billion agreement with BASF to buy its Knoll Pharmaceuticals division. With the purchase of Knoll, Abbott became the ninth-largest pharamceutical company in the world, up from its prior rank of 14th. Although the deal dramatically increased Abbott’s debt while adding only $400 million to its operating income, Knoll brought an interesting drug pipeline that included Humira, a not-yet launched therapy for treating rheumatoid arthritis. As appealing as drugs like Humira were, White had also sought Knoll out in order to provide Abbott with a global infrastructure and expanded R&D capacity, including a new manufacturing facility in Massachusetts. After the acquisition White and his management team were under pressure to quickly integrate the two firms in order to move Humira quickly to market. As described in Pharmaceutical Executive, analysts credited White and other Abbott executives with facilitating a smooth transition through their careful hands-on approach and “commitment to preserving and empowering personnel” (December 2003). Humira was successfully launched in early 2003, with sales projected to reach $650 million in 2004. Along with acquiring other firms, White strongly emphasized the importance of attracting and retaining the best scientific talent. He improved working conditions at his company by increasing vacation time and adding child-care services. As was consistent with his own informal style, White ordered the construction of volleyball and soccer fields at Abbott headquarters. To create a workforce that better reflected the company’s stakeholders, White oversaw a number of diversity initiatives, increasing the number of minority personnel in management positions by 78 percent in five years and fostering leadership opportunities for women. Abbott was named to Fortune‘s list of the “50 Best Companies for Minorities” every year since the list was conceived in 1998; the firm was also placed among the top 10 on Working Mother’s list of the best companies for working mothers. After several years of acquisitions and a ramping up of research operations, in 2004 White announced that no new

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major purchases lay in Abbott’s immediate future. Still White began the year with the $1.2 billion acquisition of TheraSense, the maker of diabetic testing tools, moving Abbott from the number-five to the number-three position in the bloodglucose monitoring market. In lieu of looking for more external opportunities, White then focused on consolidating Abbott’s operations to concentrate resources on core areas of strength—a strategy which entailed spinning off the $2.5 billion hospital-products division, Hospira. After years of struggling to meet regulatory standards, Abbott was informed by the FDA in 2004 that its manufacturing facility was largely in compliance with industry regulations, allowing the company to move forward with its medical-diagnostics division. Although analysts remained uncertain about the long-term effects of White’s strategies, several agreed that Abbott was strong enough to no longer be considered a serious takeover target and that White’s aggressive and creative leadership had made a substantially beneficial impact on the company.

See also entry on Abbott Laboratories in International Directory of Company Histories.


Barrett, Amy, and Richard A. Melcher, “Drugmaker, Heal Thyself,” BusinessWeek, October 11, 1999, p. 88. Burton, Thomas M., “Abbott’s White Wins CEO Job: Clark to Leave,” Wall Street Journal, September 16, 1998. Clinton, Patrick, “From Good to Great, Act Two,” Pharmaceutical Executive, December 2003, pp. 42–52. Gibbs, Lisa, “Building a Promising Pipeline,” Money, February 2003, p. 48. Klein, Sarah A., “Medicine Man,” Crain’s Chicago Business, January 13, 2003, pp. 1, 4. —C. Pech


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Meg Whitman 1956– President and chief executive officer, eBay Nationality: American. Born: August 4, 1956, in Cold Spring Harbor, New York. Education: Princeton University, BA, 1977; Harvard Business School, MBA, 1979. Family: Married Griffith R. Harsh IV (neurosurgeon); children: two. Career: Proctor & Gamble, 1979–1981, brand assistant, brand manager; Bain & Company, 1981–1989, consultant; Walt Disney Company, 1989–1992, senior vice president of marketing; Stride Rite Company, 1992–1995, division president; Florists’ Transworld Delivery (FTD), 1995–1997, president and chief executive officer; Hasbro, 1997, general manager; eBay, 1998–, president and chief executive officer. Awards: CEO of the Year, CBS/MarketWatch, 2003. Address: eBay, 2125 Hamilton Avenue, San Jose, California 95125; http://www.ebay.com. Meg Whitman. AP/Wide World Photos.

■ As president and CEO of eBay, Margaret (Meg) Whitman helped the company to become the leading consumer ecommerce site in the world. Whitman’s extensive knowledge in brand building, combined with her knowledge of consumer technology, had a dramatic effect on the global market. In the process of transforming the way in which people buy and sell, Whitman became one of the wealthiest Internet CEOs in the United States.

EARLY LIFE Born in 1957 in Cold Spring Harbor, an affluent community located on the north shore of Long Island, New York, Meg Whitman was the youngest of three children. Her father was a businessman and her mother was a homemaker, whom Whitman later described as a free-spirited and adventurous soul. Because her father worked long hours and was often away


from home, Whitman and her siblings spent a great deal of time with their mother. When she was six, Whitman’s mother and her three children joined a family friend and her five children for a three-month camping trip in Canada and Alaska. Whitman later recalled that when the children became restless and unruly, Whitman’s mother made them all get out of the camper and run ahead while she followed close behind. Sometimes, passing truckers, seeing the children running, stopped to ask if the group needed help. In an interview Whitman explained how her mother “finally put a sign on the back of the camper that said “We’re okay” (New York Times, May 10, 1999). In 1974 Whitman entered Princeton University thinking she wanted to pursue a career in medicine. After taking many of the required premed courses, however, she decided that medicine was not in her future. A summer spent selling adver-

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tising for a campus publication convinced Whitman to study economics. Her interest in business became so keen that she had the Wall Street Journal delivered daily to her dorm room. After graduating from Princeton in 1977, Whitman earned an MBA from Harvard Business School in 1979.

EARLY SUCCESSES Whitman’s employment history consisted of short but productive stints with many of the nation’s top companies. Her first job was with the Proctor & Gamble Company in Cincinnati, where she worked as a brand assistant. By 1981, she had been promoted to brand manager. During her time with the company Whitman learned a great deal about marketing and brands. While with Proctor & Gamble, Whitman met and married Griffith R. Harsh IV, a neurosurgeon. In 1981, when Harsh took a residency position at the University of California at San Francisco, Whitman moved with him. She then took a position as vice president with the consulting firm of Bain & Company, where she worked for the next eight years. In 1989 Whitman moved to the Walt Disney Corporation, where she served as a senior vice president of marketing at Disney’s consumer-products division. During her tenure with Disney, Whitman was instrumental in helping the company move into publishing with the acquisition of Discover magazine. She also launched the first Disney store in Japan. Working for Disney enabled Whitman to understand how to run a business, knowledge that proved invaluable later on. In 1992 Whitman’s husband accepted a position as codirector of the Brain Tumor Center at Massachusetts General Hospital in Boston. The family moved back east. Whitman accepted a position with Stride Rite, a children’s shoe manufacturer, where she helped to revitalize the famous but moribund Keds line of sneakers. Four years later, Whitman left the company to become CEO of Florists’ Transworld Delivery (FTD), one of the world’s largest floral-delivery companies in the world. The company was in the midst of severe fiscal crisis and fighting competition from new Internet florist services such as 1-800Flowers and Florists.com. Whitman oversaw FTD’s conversion from a money-losing, florist-owned cooperative to a profitable company, but not without encountering serious problems along the way. Continual infighting among her subordinates and employees and severe criticism from private florists about transforming the company from a cooperative to a privately held enterprise left Whitman feeling stifled, even as she brought the company back from the brink of financial ruin. In 1997 Whitman resigned, taking a position as general manager with Hasbro, one of the leading toy manufacturers in the United States. She headed the Playskool division, which marketed toys for toddlers and preschoolers. A year later a corporate headhunter approached Whitman about taking a job with an Internet start-up company located in Silicon Valley.

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TAKING ON eBAY The fledgling company that approached Whitman was eBay, an online auction site. Begun in 1995, eBay was the brainchild of Pierre Omidyar, a computer programmer from San Jose, California. Omidyar launched the site as a means for his girlfriend, who collected Pez candy dispensers, to contact other collectors to buy, sell, and trade. The premise was simple: for a $3 fee paid to eBay, then called Auction Web, a seller could list an item for auction. Potential buyers could then bid on the item, with the highest bidder winning the auction. Omidyar’s idea proved so successful that soon people were listing items other than Pez dispensers. The site also fostered a strong sense of community among those who participated. To prevent scams and fraud, Omidyar instituted message boards where buyers and sellers could rate each other. By 1997 the site was attracting more shoppers than any other site on the Web. The company began charging a 6 percent commission on all items listed and by 1998 had grown to 20 employees. The company became too big for Omidyar to handle by himself, and so he sold a portion of it to the capital investment firm Benchmark Capital. Benchmark began looking for someone to supervise daily operations and direct the company’s growth. According to Robert Kagle, one of Benchmark’s partners and one of eBay’s largest investors, it was essential to find someone who understood the technology, but more important was a person who understood the “emotional component of the customer experience in your gut” (New York Times, May 10, 1999). Kagle also wanted someone who would transform eBay into a brand name. And so it was that the headhunter approached Whitman. At first, Whitman refused even to consider the offer. She was overseeing six hundred employees at Hasbro, and she enjoyed her job. She also saw no reason to move her family to the West Coast. As she later stated in an interview, the idea of working for a “no-name Internet company” simply held no appeal for her (Salon.com, November 27, 2001). Kagle and the headhunter persisted, however, and finally Whitman agreed to meet with Omidyar at the eBay offices in San Jose. While there, Whitman took in the day-to-day operations of the company, even sneaking out of business meetings to monitor the online auctions. She also listened to eBay users, known as eBayers, who were enthusiastic about the company. It occurred to Whitman that eBay had tremendous potential. Already aware of the growing popularity of shopping on the Internet, Whitman agreed to consider the job offer. In March 1998, she joined eBay.

REMAKING A COMPANY One of Whitman’s first tasks was to make the eBay site more professional and more profitable. Omidyar also had made clear to her his desire to take the company public. But


Meg Whitman

before Ebay could issue stock, Whitman advised that the company undergo substantial structural changes. Whitman walked a fine line between making the site more attractive to businesses without alienating those individual buyers who had helped the site to become a success. Until Whitman took over as CEO, the company had relied more on word-of-mouth advertising. She launched a national advertising campaign and created an anthropomorphic apple as the official eBay mascot. Whitman’s ability to make quick decisions soon had eBay on the fast track. One of her first personnel moves was to hire Brian Swette, head of marketing at Pepsi, to take charge of eBay’s marketing division. She redid the Web-site graphics, making the designs brighter and separating firearm and pornography offerings into age-restricted areas. (eBay has since discontinued the sale of firearms along with alcohol, tobacco, drugs, and human organs.) In 1999 Whitman negotiated the purchase of Butterfield & Butterfield, a 134-year-old auction house in San Francisco that ranked a distant third behind more notable houses Sotheby’s and Christies. With the purchase of Butterfield & Butterfield, eBay moved into the business of auctioning fine art and expensive collectibles. Still, Whitman’s changes threatened to alienate smaller buyers and sellers who had played such an important role in building eBay. While trying to court the small buyers and sellers, Whitman also pushed to expand the company’s boundaries. She persuaded stores to sell on eBay, and began to offer specialty items under the eBay umbrella, a strategy she had developed at FTD. On September 24, 1998, eBay went public, with the initial public offering selling at $18 a share. By day’s end, eBay stock closed at $47, an increase of 163 percent. Whitman was a millionaire. The initial public offering also thrust her into the limelight as the CEO of one the fastest-growing Internet companies in the world. Thanks to Whitman’s advertising and marketing strategies, the eBay customer base increased from 750,000 members to more than seven million by 1999. Whitman continued to tinker with the eBay formula. That year she instituted additional measures to protect eBay customers from fraudulent buyers and sellers by offering free insurance through Lloyd’s of London. Any purchase up to $200 was guaranteed to the customer. Whitman also pledged to help law-enforcement agencies to identify and prosecute individuals, whether buyers or sellers, who attempted to defraud customers or the company. In addition, for a small fee, eBay offered a stamp of approval for sellers from Equifax, one of the nation’s largest credit bureaus. Whitman thus took steps to improve eBay’s overall reliability. Periodically plagued by technical problems that caused the site to be down for extended periods of time, Whitman hired Sun Microsystems to maintain the network, while improving the company’s own technical support staff.


FENDING OFF THE COMPETITION Among Whitman’s greatest challenges was fighting off the competition from other Internet auction sites. Seeing the success of eBay, several popular Internet providers and commerce sites, such as America Online, amazon.com, and Yahoo, could have copied Whitman’s formula and started their own online auctions, threatening to crush eBay during Whitman’s early tenure. To prevent that from happening, Whitman extended the company’s relationship with AOL, which, in turn, made eBay AOL’s exclusive auction provider. The move was critical because it forestalled AOL from starting its own auction site and allowed Whitman to continue building the company. However, in 1998, Yahoo did begin offering free auctions in an attempt to lure customers away from eBay. Despite the challenge, Whitman held firm to maintaining eBay’s fees for listing, which often discouraged sellers from offering less than desirable merchandise and thus provided a quality control that the Yahoo auctions could not match. Soon, megacommerce site amazon.com also jumped into the online-auction game, but by this time eBay had entrenched itself as the leading online-auction site. Still, there was something to be learned from Amazon and its abilities to handle large numbers of credit-card transactions. Whitman decided to buy Billpoint, an online system that allowed payments by e-mail, offering another enticement for prospective eBay buyers and sellers. To help eBay move into other markets, Whitman also negotiated the purchase of Kruse International, a collectible car house, and Alando de AG, the largest online-auction house in Europe. By the end of the third quarter 1999, eBay reported sales of more than $741 million, up from just $195 million the year before. The company had also virtually cornered the online-auction business, accounting for 90 percent of all online-auction sales. Even though its earnings fell short of projections, the company managed to accomplish what many other high-profile Internet companies such as amazon.com could not: eBay made a profit.

REVOLUTIONIZING THE MARKETPLACE Whitman credited much of eBay’s success to its basic business model, which combined the elements of yard sales, newspaper classified ads, and auctions. This approach appealed to a wide spectrum of customers, from those who list yard-sale finds to large companies such as movie studios that auction off memorabilia to dealers who specialize in items from books to electronics and office equipment to collectibles and antiques. Whitman perfected the model: the company’s role was simply to bring buyers and sellers together and to facilitate commerce. eBay carries no inventory nor does it ship items. The success of the site rests solely with its users. Though by auction-house standards the fees that eBay charges are low, often amounting to as little as 6 percent on each sale, almost all the monies gen-

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erated are pure profit. As Whitman has pointed out, the eBay model works perfectly for Internet commerce geared as it is to high volume and low overhead. Although the business model has proven to be a gold mine, many analysts are quick to point out that eBay would likely not have succeeded had it not been for Whitman’s efforts and expertise. By listening to customers and responding to their needs, Whitman could tailor the site to meet the expectations of both buyers and sellers while ensuring a healthy profit for the company. During Whitman’s first two years at the company, for example, the site was often plagued by power outages, sometimes lasting a day because the high volume of traffic overwhelmed the technology. Whitman’s staff, and even Whitman herself, responded to customer queries and complaints by emailing or calling them directly and by refunding millions of dollars in fees. In creating the eBay brand name, Whitman built a fanatically loyal customer base, one that keeps growing by referrals from satisfied customers. This fidelity is crucial to the company’s continued success, a reality that Whitman took so seriously that she had an expensive customer-service system created to respond to customer emails within 24 hours. eBay workshops, offered online and in person, provide information and help on how to make the most of the site. Message boards and calendars listed on the site itself offer an opportunity for buyers and sellers to connect. The company also helped charitable organizations with auctions to raise funds for various causes. In creating this radically new approach to commerce, Whitman managed to expand eBay’s base of operations without destroying the strong sense of community that the company fostered. But in steering the company to its phenomenal success, Whitman occasionally stumbled. When she cut back opportunities for users to post complaints on the site, many customers were enraged. After the terrorist attacks of September 11, 2001, Whitman organized a charity auction that critics called self-serving. The company also come under fire for allowing certain items, such as Nazi memorabilia, to be listed for sale, a policy that angered many in the Jewish community. However, Whitman pointed out that the primary purpose of eBay was to offer a forum where anyone could sell just about anything that was not prohibited by law, even though some listings might be offensive to certain individuals or groups.

KEEPING CLOSE WATCH Through the company’s highs and lows, Whitman remained a steadying presence. Her colleagues found her hard working, dedicated, consistently upbeat, and relentlessly optimistic. She met problems head on and sought realistic solutions. At company headquarters in San Jose, she kept in close contact with employees, using a cubicle as an office and, on occasion, fielding phone calls and emails from customers. She

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avoided authoritarian management practices and never assumed that she knew everything. Indeed, one of Whitman’s greatest strengths as a CEO was that she remained open to advice, criticism, and opportunity. As customers began to gravitate toward the fixed-price sales at Half.com as opposed to the more fluid auctions, for example, Whitman offered fixed-price sales on eBay through the option to “buy it now.” She spent hours on the road promoting the company and talking to people. An ardent supporter of eBay and its philosophy, Whitman in one interview revealed that she was an avid customer, admitting that she had bought Beanie Babies, Pokemon cards, and even a car through eBay. Whitman was ambitious as well. She guarded the company’s reputation even as she sought continually to broaden eBay’s reach in an effort to make the company a truly global enterprise. In 2001 Whitman acquired iBazar, an onlineauction company with sites in eight European countries, and she also made inroads in New Zealand, South Korea, and other countries. In 2003 Whitman opened negotiations with EachNet in a bid to lure Chinese customers to eBay. Whitman’s ability and willingness to listen to customers and employees led her to make decisions that industry analysts believe were critical to eBay’s continued success. Whitman took the advice of customers when, in 2003, she acquired PayPal, an online checking and banking site, for $1.5 billion. At the same time, Whitman added new site categories and cleared the way for corporate purchasing departments to set up eBay accounts. eBay entered into an agreement with GE Business Credit Services that will provide financing to help small businesses deal with unexpected expenses and replace high-interest loans or retire credit-card debt. For Whitman, the Internet and ecommerce was the wave to the future, and she continued to work to ensure that eBay would serve its customers and remain a major force in the global marketplace.

See also entries on Bain & Company, eBay, Inc., Florists’ Transworld Delivery, Inc., Hasbro, Inc., Proctor & Gamble Company, and Walt Disney Company in International Directory of Company Histories.


“CBS MarketWatch Names eBay’s Meg Whitman as its First CEO of the Year,” Business Wire, September 18, 2003, p. 56. “Company Overview,” eBay web site, June 10, 2004, http:// pages.ebay.com/community/aboutebay/overview/ management.html. Fox, Loren, “Meg Whitman,” Salon.com, November 27, 2001, http://dir.salon.com/people/bc/2001/11/27/whitman/ index.html (June 9, 2004).


Meg Whitman Hansell, Saul, “Meg Whitman and eBay, Net Survivors,” New York Times, May 5, 2002.

Taylor, Chris, “Meg Whitman: Host of eBay’s Passionate Party,” Time, April 26, 2004, p. 74.

Holson, Laura, “Defining the On-Line Chief; Ebay’s Meg Whitman Explores Management, Web Style,” The New York Times, May 10, 1999.

Taylor, Neil, “EBay Bullish on Asian Growth: The Online Auction Company is Taking a Long-Term View of China Opportunities,” Asia Africa Intelligence Wire, April 20, 2004.

Ratigan, Dylan, and Becky Quick, “eBay: Pres. & CEO Interview,” America’s Intelligence Wire, April 21, 2004.


—Meg Greene

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David R. Whitwam 1942– Former chief executive officer and chairman of the board, Whirlpool Corporation

marketing in 1979 and vice president of builder marketing in 1980. He took over as vice president of Whirlpool sales in 1983, and in 1985 he was promoted to vice chairman and became the company’s chief marketing officer. 1n 1987 he became president, chief executive officer, and chairman of the board. He served as president until 1999.

Career: Whirlpool Corporation, 1968–1975, marketing management team; 1975–1977, general manager of sales, Southern California division; 1977–1979, merchandise manager of ranges; 1979–1980, director of builder marketing; 1980–1983 vice president of builder marketing; 1983–1985, vice president of Whirlpool sales; 1985–1987 vice chairman and chief marketing officer; 1987–1999, chairman, president, and chief executive officer; 1999–2004, chairman and chief executive officer.

On June 30, 2004, at the age of 62, Whitwam retired as chairman and chief executive officer. Whirlpool’s board of directors elected Jeff Fettig, the company’s president and chief operating officer, as his replacement. Whirlpool performed well under Whitwam’s direction, had a good strategic direction and a firm operating foundation, and created value for its stockholders. Probably best known for his global thinking, Whitwam led the expansion of Whirlpool’s U.S. appliance business into Latin America, Europe, Asia, Australia, and Africa by creating value through the building of brands. At the beginning of the expansion in the late 1980s, Whirlpool was the second-largest U.S. appliance manufacturer, with sales of approximately $4 billion. During his long and successful tenure with Whirlpool, sales grew to $12.2 billion in 2003 and Whirlpool became the world’s leading manufacturer and marketer of home appliances, with major brands and operations in North America, Latin America, Europe, and Asia.

■ David R. Whitwam became chairman and chief executive

CAREER SUCCESSES AND CHALLENGES

Nationality: American. Born: January 30, 1942, in Stanley, Wisconsin. Education: University of Wisconsin, BS, 1967. Family: Married Barbara Lynne Peterson, 1963; children: three.

officer of Whirlpool Corporation, a major appliancemanufacturing company, in 1987. Founded in 1911, Whirlpool manufactures home appliances such as refrigerators, stoves, and laundry equipment and had sales of $12.2 billion in 2003. Whitwam joined the company’s board of directors in 1985 and served as company president from 1987 to 1992. He retired in 2004.

ENTIRE CAREER WITH WHIRLPOOL David Whitwam, a native of Madison, Wisconsin, received a BS degree (with honors) in economics from the University of Wisconsin and served in the U.S. Army. He went on to spend his entire career with one company. Joining Whirlpool’s marketing management team in 1968, he became general manager of sales at its Southern California division in Los Angeles in 1975. He moved on to a managerial position in 1977 at company headquarters and then became director of builder

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In 1987 Whitwam succeeded Jack Sparks as Whirlpool’s president and CEO. He focused on increasing manufacturing productivity, reducing costs, and applying new technology to appliance production. When Whitwam took over as CEO, the company operated primarily in North America. Seven years later Whirlpool was marketing its wares around the world and manufacturing products in 11 countries. Whitwam was credited with integrating the international businesses and, through a series of reorganizations, creating a truly global company and not just a series of independent operations. In the 1980s Whitwam oversaw joint ventures and strategic business moves that prepared the company for global expansion in the years to come. In 1987 he signed a contract with McDonnell Douglas Astronautics Company to develop appliances for space stations. In 1988 Vitromatic was formed in a joint venture with Vitro of Monterrey, Mexico. Until 1988 Whirlpool operated under a centralized structure, with deci-


David R. Whitwam

sion-making concentrated at the senior management level. In 1988 the company reorganized its activitites into seven units in order to maximize efficiency and market responsiveness: the Whirlpool, KitchenAid, and Kenmore appliance groups; Whirlpool International; Inglis Limited; Whirlpool Finance Corporation; and the company’s export group. Additionally, dishwashers and trash compactors from Emerson Electric were added to the product line. In 1988 Whitwam sought and acquired the rights to GE’s Roper brand name for Whirlpool, while GE kept its manufacturing facilities. In 1989, Whitwam engineered his first major international purchase, opening the European appliance market to Whirlpool International with a joint venture with N. V. Philips of the Netherlands. Both the Philips and Whirlpool brands were marketed in Europe, and revenues exceeded $6 billion. During the 1990s significant events changed the course of Whirlpool and added to Whitwam’s reputation as a globalist. In 1990 Whirlpool formed a joint venture with the Japanese company Matsushita Electric Industrial Company to produce vacuum cleaners, the brand name Estate was added in the United States, and the brand names Ignis, Laden, and Bauknecht were maintained internationally. In 1991 stock options were offered to full-time employees for the first time, a new joint venture brought production to Czechoslovakia, sole ownership of the European Philips division was acquired, and earnings increased 38 percent on revenues of $6.77 billion. In 1992 Whirlpool acquired Sagad of Argentina and Whirlpool Hungarian Trading was established in Hungary. In 1993 Whirlpool provided jobs for approximately 38,000 people and reported $7 billion in revenues. In 1994 Whitwam announced that Whirlpool would build European-style washing machines in the United States. Whirlpool Washing Machines and Kelvinator of India merged in 1996 to form Whirlpool of India. The following year, poor performance overseas caused Whitwam to close plants and layoff 10 percent of the workforce. In 1998 Whirlpool divested its appliance-financing unit to Transamerica and earnings rose 37 percent to $310 million and sales increased 20 percent to $10.3 billion. A further reorganization in 1999 created two market-oriented divisions, product delivery and brand management, in North America. At the end of the 1990s, European operations were back on track. The head of Whirlpool Europe, Jeff Fettig, was promoted to president and chief operating officer in June 1999, while Whitwam continued as CEO. Whirlpool ended the decade with record revenues of $10.51 billion and record net earnings of $347 million.

LEADERSHIP STYLE Utilizing a traditional approach with a special focus on efficiency, David Whitwam’s leadership style was described by industry reviewers as outstanding and notable, but he also re-


ceived some criticism. Supporters say that he was determined to make whatever changes were necessary to secure real growth for the future and that his vision and courage resulted in global success. The editor of the Harvard Business Review, Regina Fazio Maruca, described him as ambitious for having transformed “two parochial, margin-driven companies into a unified consumer-focus organization capable of using its combined talents to achieve breakthrough performance in markets around the worlds” (March-April 1994). In an article on the country’s most admired CEOs, Industry Week writer Joseph F. McKenna described Whitwam as one who “knows how to stick to his knitting. He’s a true believer when it comes to productivity and cost containment” (December 6, 1993). At the same time, however, Whitwam’s long tenure at Whirlpool raised some eyebrows. According to an article by Gerry Beatty in HFN, several promising younger executives left the company because of Whitwam’s “domination” (May 10, 2004). Whitwam was a member of the board of directors of PPG Industries, Convergys Corporation, Combustion Engineering, and the Business Roundtable Policy Committee and Education Task Force, and participated in the Business Roundtable’s educational reform initiatives on the national and local levels. A trustee of the University of Wisconsin Alumni Research Foundation, he was chairman of the Michigan Business Leaders for Educational Excellence. Whitwam was a member of the National Council of the Housing Industry in Washington and was president of the board of directors of the Soup Kitchen in Benton Harbor, Michigan. SOURCES FOR FURTHER INFORMATION

Beatty, Gerry, “Whirlpool’s Whitwam to Retire, Fettig to Succeed Him As CEO,” HFN: The Weekly Newspaper for the Home Furnishing Network, May 10, 2004, p. 4. Dukcevich, Davide, “Whitwam: Whirlpool CEO to Retire,” http://www.forbes.com/2004/05/04/ 0504autofacescan03.html. McKenna, Joseph F., “America’s Most Admired CEOs,” Industry Week, December 6, 1993. Maruca, Regina Fazio, “The Right Way to Go Global: An Interview with Whirlpool CEO David Whitwam,” Harvard Business Review, March-April 1994, p. 134. “The Washer Wars,” http://www.keepmedia.com/ ShowItemDetails.do?itemID=27888&extID=10032&oliID=213. “Whirlpool CEO David Whitwam to Retire June 30; Board Elects Current President and COO Jeff Fettig to Top Post,” http://www.rtomagazine.com/Content/Article/May04/ WhirlpoolCEORetires050404.asp.

See also entry on Whirlpool Corporation in International Directory of Company Histories. —Patricia McKenna

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Hans Wijers 1951– Chairman of the board, Akzo Nobel Nationality: Dutch. Born: January 11, 1951, in Oostburg, Netherlands. Education: University of Groningen, MA, 1976; Erasmus University of Rotterdam, PhD, 1982. Career: Erasmus University of Rotterdam, 1976–1982, assistant professor of economics; Dutch Ministry of Social Affairs and Employment, 1982–1984, worked for think tanks; Bakkenist, Spits & Company, 1984–1986, senior consultant; Horringa and De Koning, 1986–1993, managing partner; Boston Consulting Group, 1993–1994, managing partner of the Amsterdam office; Dutch government, 1994–1998, minister for economic affairs; Boston Consulting Group, 1999–2002, senior vice president and chairman of the Dutch office; Akzo Nobel, 2003–, chairman and CEO. Address: Akzo Nobel, Velperweg 76, POB 930, NL-6800 SB Arnheim, Netherlands; http://www.akzonobel.com/.

■ In 2003 Gerardus Johannes (Hans) Wijers became chairman, CEO, and managing director of Akzo Nobel, a multinational company whose history dates back to 1777 (although the present name was adopted in 1994). The company has three major areas of focus: coatings, chemicals, and pharmaceuticals (including veterinary medicines). Wijers was a multifaceted man whose route to corporate leadership was complex.

BACKGROUND AND BUSINESS EXPERIENCE Wijers was born in Oostburg, a small town in Zeeland in the Netherlands. His education and inclinations seemed to steer him toward an academic career: having earned a doctorate in economics (with a concentration in industrial management), he took a position as lecturer at Erasmus University in Rotterdam. Six years later, in 1982, he was employed at the Ministry of Social Affairs and Employment in The Hague and participated in two think tanks for the Dutch government. He was a member of the Democraten 66 (D66) party, which had social priorities that were to resurface later in his life.

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From 1984 to 1993 Wijers was a consultant for two Dutch firms: he first worked for Bakkenist, Spits & Company and, later, as managing partner of Horringa and De Koning. In 1994 he was named managing partner for the Amsterdam office of the Boston Consulting Group (BCG); with the exception of the years 1994–1998, he remained with BCG until 2000, when he resigned as senior vice president and chairman of the Dutch office. Wijers’s work during these years included surveys and studies on business environment. He became convinced about two things: that a thriving natural environment was essential to a prosperous business and that technology (most specifically the Internet) played a major role in shaping the corporate world. As chairman of the Dutch office for BCG, Wijers continued his involvement in technological communication. He became a member of the Platform Internet voor Alledag (Platform Internet for Every Day) which supported the use of the Internet by everyone in the Netherlands. The group was headed by the Prince of Orange (heir to the Dutch throne) and included many leading businesspeople.

MINISTER FOR ECONOMIC AFFAIRS From 1994 until 1998 Hans Wijers was the minister for economic affairs for the Dutch government. These were highprofile years, during which he became a prominent spokesperson for emerging technology. Predicting a doubling of the world population by 2040, he argued for the importance of a sustainable economy. He predicted that electronic commerce (the Internet) had enormous potential for economic, political, and social benefits, and he claimed that the Internet ought to be allowed to be driven by market forces. He was committed to a “digital marketplace,” and he met with various European and international countries (including the United States) to promote the “development of a market-driven, deregulated, private sector–led environment for electronic commerce,” as he put it in a joint statement (with William Daley, U.S. secretary of commerce) on the development of the Internet and the promotion of global electronic commerce (made in Washington, D.C., on October 21, 1997). Under Wijers’s leadership, the ministry became an advocate for the Twinning Network (which is a network of Dutch and international people to promote and develop communications technology). It was the Dutch intention to become the forerunner in information and communication technology in Europe.


Hans Wijers

AKZO NOBEL On May 1, 2003, Wijers succeeded Cees J. A. van Lede as chairman of the board of management of the old Dutch conglomerate Akzo Nobel. Only two weeks later he announced that his first priority was a realignment of the pharmaceutical segment. He said that it was necessary to adjust cost levels to lower sales and to reassess the company’s strategy for healthcare business. (Organon, the company’s health-care arm, was experiencing declining sales volume.) To do this, he announced (Business Wire, May 15, 2003) a reduction in the workforce and the establishment of R&D and marketing alliances. A second priority was maintaining the coatings division as the world’s leader. Wijers put into effect a policy of “selective divestiture,” in an effort to make the division “efficient and lean.” In light of these remarks, it came as no surprise when Akzo expressed its intention to sell three of its business operations (catalysts, coating resins, and phosphorus chemicals). The proceeds of the sales would be applied to debt reduction and preservation of Akzo’s good credit rating. In an article on corporate responsibility in the Financial Times (July 10, 2003), Wijers stated that codes of conduct could not be imposed from above. He said the Akzo was giving responsibility for ethical conduct to those people who actually ran the individual businesses and that these managers had been given a “direct line” to him. In January of 2004 Wijers went to New York, where he addressed Akzo employees in that city. He told them that while the economy seemed to be improving, a robust recovery was not assured. For this reason, he said, the next year’s focus would again be on lowering debt and cost levels, along with increasing the use of assets. This was promising to be a challenging future.

DEFINING INTERESTS Hans Wijers was a passionate advocate of technological advance (especially the Internet) as a tool for Dutch and Europe-


an success. He was a member of Platform Internet voor Alledag and chairman of the Advisory Council of the PPP Knowledge Centre. His faith in government as the embodiment of people in their quest to bring social benefits was shown by his membership in the IDI Foundation and his chairmanship of the National Orange Fund. Finally, his commitment to conservation was reflected by his chairmanship of the Dutch branch of the World Wildlife Fund International.

See also entries on Akzo Nobel N.V. and The Boston Consulting Group in International Directory of Company Histories.


“Akzo Nobel Chief Hones Internal Growth Strategy,” European Chemical News, 80 (January 12/14, 2004): 6. “Akzo Nobel Management Ensures Management Continuity,” Business Wire, February 22, 2002. “Akzo: Room to Maneuver,” Euromoney Institutional Investor, 9 (October 1, 2003): 11. Daly, William, and Hans Wijers, “Joint Statement of the Development of the Internet and the Promotion of Global Electronic Commerce,” October 21, 1997, http:// www.technology.gov/digeconomy/dalwijrs.htm. “How Do We Make the Company Do the Right Thing? We Delegate,” Financial Times, July 10, 2003. Milmo, Sean, “Akzo Nobel plans more job cuts; new chairman could explore breakup,” Chemical Market Reporter, March 4, 2002, http://www.findarticles.com/p/articles/mi_m0FVP/ is_9_261/ai_83583037. “New CEO at Akzo Nobel Spring Analyst Meeting,” Business Wire, May 15, 2003. —Barbara Gunvaldsen

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EARLY CAREER

Michael E. Wiley

Upon graduating from high school in 1968, Wiley entered the University of Tulsa as a student in the newly created Petroleum Engineering Undergraduate Scholarship program on a scholarship from ARCO. His summers were spent working for ARCO, one of the nation’s largest oil companies, and he began full-time employment there after graduating in 1972. After serving in numerous engineering capacities in production, operation, drilling, planning, and research and development in Alaska, the continental United States, and internationally, in 1991 he became vice president and began his rise in senior management.

1951– Chairman, president, and chief executive officer, Baker Hughes Nationality: American. Born: 1951, in Oklahoma. Education: University of Tulsa, BS, 1972; University of Dallas, MBA, 1982. Career: Atlantic Richfield Company (ARCO), 1972–1990, domestic and international oil and gas operations, various engineering positions in planning, research and development, drilling, and production; 1991, vice president, senior vice president; ARCO Oil and Gas, 1993, president; Vastar Resources, 1993, president; 1994–1997, president, chairman, and chief executive officer; ARCO, 1997–1998, executive vice president; 1998–2000, president and chief operating officer; Baker Hughes, 2000–2004, president, chairman, and chief executive officer; 2000–, chairman and chief executive officer. Awards: Inducted into the College of Engineering and Natural Sciences Hall of Fame, University of Tulsa, 1998. Address: Baker Hughes, 3900 Essex Lane, Suite 1200, Houston, Texas 77027-5177; http:// www.bakerhughes.com.

■ Michael E. Wiley spent his entire career in the oil and gas industry, and industry analysts regarded him as one of the top two or three executives in the entire field. Because of his highly successful 28-year career with the Atlantic Richfield Company (ARCO), Wiley was chosen to head up the world’s thirdlargest oil and gas company, Baker Hughes Incorporated (BHI) at a time when the company was experiencing a serious slump in profits. After turning the ailing company around, he announced in 2004 that he would retire in April 2005. Responding to the announcement, lead BHI director H. John Riley said: “The entire board is extremely appreciative of Mike Wiley’s outstanding leadership and his significant contributions to the success of Baker Hughes” (press release, April 28, 2004).

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When ARCO created Vastar Resources in 1993—a 100 percent domestic exploration and production company with a presence in some of the most attractive oil and gas basins in the United States—Wiley became its first president. The following year he became its chairman and CEO as well. Houston-based Vastar was 82.3 percent owned by ARCO, and Wiley’s direction made the fledgling company a leader in domestic exploration, production, and marketing and substantially strengthened ARCO’s presence in the Gulf of Mexico. In an interview with Leslie Haines of Oil & Gas Investor, Wiley commented: “The thing that really differentiates Vastar is that it has a very focused but broad-based exploration program that is significant compared to most of its peers” (January 1996). Wiley added that the cornerstones of his strategy were, first, to be a low-cost full-cycle company in all respects, from exploration to marketing. He said Vastar’s cash-cost structure was as good as any in its peer group, and at startup their expenses were even lower than they had expected. Second, focused and disciplined exploration coupled with aggressive exploitation would drive internal growth. Apart from 5 percent “seed money” slated for expansion into new areas and technologies, 95 percent of their efforts would be concentrated on their regional focus areas—the rich fields in the Gulf of Mexico, the Gulf Coast, the San Juan Basin in New Mexico, and the Midcontinent Region extending from the Texas Panhandle into Michigan. His third strategy was value-added marketing: they were already a top producer-marketer in the United States, marketing nationally and selling more than two billion cubic feet daily. His fourth strategy was to keep the company financially strong and flexible. This would be achieved, he said, by keeping the balance sheet solid and by funding operations with internally generated cash.


Michael E. Wiley

FOCUS AND EXPERTISE LEADS TO THE TOP In 1998 ARCO was the seventh-largest oil company in the United States and employed 20,000 people globally. On September 30 of that year, following an internal memo announcing planned budget cuts and layoffs to offset decreased oil prices globally and increased competition from larger companies, ARCO undertook a major management shake-up. Two top executives, including president William Wade, retired suddenly. Wiley was chosen to replace Wade and fill a newly created position as COO. ARCO chairman Mike Bowlin commented that the changes would help the company execute its core strategies, one of which was to focus on businesses in which they could maintain a leadership position in the industry. In May 2000 ARCO was acquired by BP Amoco, and thus ended Wiley’s association with the company. Two months later, however, he was chosen by BHI, the world’s third-largest oil-service company by market capitalization, to become president, chairman, and CEO. The position became vacant following the resignation of Max L. Lukens, under whose stewardship accounting blunders had caused the company to restate earnings. Industry analysts applauded the appointment, and James K. Wicklund of Dain Rauscher Wessels in Dallas summed up the enthusiasm: “We believe it will be very well received by investors, due to his CEO experience with a large, public oil and gas company and extensive oil field operating experience. Wiley is highly respected for his leadership ability and is considered one of the top two or three executives in the oil and gas industry” (Hart’s Petroleum Finance Week, July 24, 2000).

STRONG LEADERSHIP FOR A LANGUISHING COMPANY BHI, based in Houston, Texas, was a global provider of petroleum products and services. Apart from manufacturing well-drilling equipment, submersible oil pumps, and equipment to maintain oil and gas wells, it specialized in oil discovery and recovery, tested potential well sites, and drilled and operated wells. It also manufactured specialty chemicals for petroleum and wastewater-treatment industries. Its Oilfield segment alone was comprised of six operating divisions: Baker Atlas, providing down-hole well logging and services; Baker Oil Tools, providing down-hole completion, fishing equipment, and services; Baker Petrolite, providing specialty chemicals such as drilling fluids and stimulation additives; Centrilift, specializing in electric submersible pumps; Hughes Christensen, manufacturer of drill bits; and INTEQ, providing drilling and evaluation services. BHI was languishing in several areas, however, and Wiley’s assignment was to turn the company around. Retired Mara-


thon Oil chairman Victor G. Beghini, who led the search committee for BHI, commented that Wiley was “a strong leader and a tough-minded businessman, with hands-on technical and operating knowledge of the oil field. At Vastar, he demonstrated that he could mobilize people, assets, and technology to achieve change, growth, and solid profitability. Mike clearly has the qualities we are looking for in our CEO search” (Hart’s Petroleum Finance Week, July 24, 2000). A BHI press release quoted Wiley as saying: “I have long respected the products and services of Baker Hughes. I am looking forward to working closely with our employees, customers, and stockholders as we become the premier performer in our industry” (July 19, 2000). In reporting his interview with Wiley for Oil & Gas Investor, Bill Pike wrote: “Michael E. Wiley . . . brings enthusiasm—and the fresh viewpoint of a former customer—to the task of reversing the fortunes of BHI. . . . A veteran executive from the exploration and production sector crosses over to inject new life into Baker Hughes Inc.” Pike noted that confidence in Wiley’s leadership was so high that, of 25 industry analysts, 12 rated BHI’s stock a strong buy while another 12 rated it a buy. He quoted analyst Wicklund as commenting: “During [Wiley’s] tenure at Vastar Resources, the company had the lowest finding costs in the Gulf of Mexico for four consecutive years.” Wicklund felt that, while BHI still had “issues,” they were now being addressed far more effectively and directly than many analysts had previously anticipated. Meanwhile, according to Pike, an analyst for A. G. Edwards & Sons said that the “weakness in stock price created a good opportunity to by a company that has become the purest play in the oilfield-service business and is finally on the right track” (May 2001). Just nine months after Wiley joined BHI, the company’s debt of $2.9 billion in 1999 had been reduced and the target for the end of 2001 was set at $1.9 billion. That target was attained. When asked by Pike how his management style affected BHI’s turnaround, Wiley responded: “I do not believe there is any one formula or methodology for management and leadership. I think each industry, each business has its own set of issues and opportunities. You have to be flexible. . . . The key is to build a culture of performance that creates value over a long period of time.” He also said he felt sure the industry had not seen the end of fluctuating economic cycles, and that those inevitable cycles needed to be managed in a manner that attracts, maintains, and motivates the workforce: “That is a big one,” he said.

MISSION ACCOMPLISHED On April 28, 2004, Wiley announced to the BHI board that he would not seek reelection as its chairman when his

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term expired in April 2005, nor would he remain on as CEO. In a BHI press release, he said: “I will be nearing the end of five years as the leader of Baker Hughes. We have accomplished essentially all of the major objectives I set . . . and I am very proud to have shared this success with our outstanding employees and management team. . . . As a Best-in-Class leader in the oilfield services industry, Baker Hughes is well positioned for the future.” H. John Riley, BHI’s lead director, commented: “[Wiley] has implemented a strategy for growth and improved performance that has reenergized the Company. We are grateful to Mike for his dedicated efforts on behalf of the Company and look forward to working with him throughout the year on the succession process” (press release, April 28, 2004).

See also entries on Atlantic Richfield Company and Baker Hughes Incorporated in International Directory of Company Histories.

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“ARCO’s Former President Will Take the Helm of Baker Hughes in August,” Hart’s Petroleum Finance Week, July 24, 2000, p. 1. “Baker Hughes Announces Results of Annual Stockholders Meeting and Succession Plans, ” press release, April 28, 2004, http://biz.yahoo.com/prnews/040428/daw080_1.html. “Baker Hughes Names Michael E. Wiley New CEO,” press release, July 19, 2000, http://nocache.corporate-ir.net/ireye/ ir_site.zhtml?ticker=BHI&script=460&layout=6&item_id=105509. Haines, Leslie, “From the Driver’s Seat,” Oil & Gas Investor, January 1996, p. 2. Pike, Bill, “New Boss at BHI,” Oil & Gas Investor, May 2001, p. 41.

—Marie Thompson


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Bruce A. Williamson 1959– President and chief executive officer, Dynegy Nationality: American. Born: 1959, in Great Falls, Montana. Education: University of Montana, BS, 1981; University of Houston, MBA, 1995. Family: Son of George Williamson and June (maiden name unknown); married Kim (maiden name unknown); children: two. Career: Royal Dutch/Shell Group, 1981–1995, executive then assistant treasurer of Shell Oil Company; PanEnergy Corporation, 1995–1997, treasurer; 1997, vice president of finance; Duke Energy Corporation, 1997–1998, senior vice president of business development and risk management for Duke Energy International; 1998–2001, president and CEO of Duke Energy International; 2001–2002, president and CEO of Duke Energy Global Markets; Dynegy, 2002–, president and CEO. Awards: Chancellor’s National Advisory Council, University of Houston, c. 2002. Address: Dynegy, 1000 Louisiana, Suite 5800, Houston, Texas 77002-5050; http://www.dynegy.com.

■ Bruce A. Williamson, an energy executive with over 20 years of experience in finance and energy, became president and chief executive officer of former energy dynamo Dynegy in October 2002, at which time he also became a member of the company’s board of directors. Upon his appointment, the interim chief executive officer Dan Dienstbier, who remained as the company’s chairman, said of Williamson, “Bruce has a proven track record of building and sustaining successful businesses throughout his career. His industry knowledge, financial acumen, and broad experience in commercial operations and customer relationships will provide the company with capable leadership as it continues to rebuild” (October 23, 2003). With over two decades of experience with four Fortune 500 energy companies, Williamson needed all of his talent when


Bruce A. Williamson. AP/Wide World Photos.

taking over Dynegy, which was nearly bankrupt in 2002. After years of operating very profitably with risky projects in energy trading and broadband Internet, Dynegy experienced a disastrous reverse in fortunes. Williamson came on in order to restructure the company and develop and execute a new business strategy. He went about improving Dynegy’s financial state, strategically repositioning the company, and restoring and protecting value for shareholders.

DYNEGY TODAY As of 2004, Dynegy focused on oil and gas operations, generating and delivering regulated and unregulated energy (in the forms of electricity, natural gas, natural gas liquids, and coal) to wholesale U.S. customers and retail Illinois customers through its owned and contracted-for network of pipelines and

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Bruce A. Williamson

other facilities. The company came into existence following the 1997 merger of Duke Power and PanEnergy Corporation; the name Dynegy was adopted in 1998. The company owned and operated a varied group of energy assets, including diversified power plants with a total net generating capacity of about 13,000 megawatts, approximately 40,000 miles of electric transmission and distribution lines, and gas-gathering plants that processed more than two billion cubic feet of natural gas per day in the states of Louisiana, New Mexico, and Texas.

EXPERIENCE GAINED, TALENTS EARNED BEFORE DYNEGY After graduating from the University of Montana in Missoula, Williamson was unable to find in-state jobs that paid more than $10,000 a year; he went to work for the Shell Oil Company in Texas. Over the next 14 years, from 1981 to 1995, Williamson held positions of increasing managerial responsibility at Royal Dutch/Shell Group, ultimately advancing to the position of assistant treasurer of the Shell Oil Company. He was responsible for banking and rating-agency relationships, corporation-wide financial risk management and strategy, and cash management. Williamson was also actively involved in marketing, corporate audits and controls, and exploration and production. Beginning in 1995 Williamson served as treasurer of the Houston-based PanEnergy Corporation; two years later he became vice president of finance, responsible for corporate development, commodity risk management, and strategic supervision of the treasury. He was also the overall transaction manager and led the negotiation of PanEnergy’s $7.7 billion merger with Duke Power Company in 1997. The merger created the country’s second-largest natural-gas marketing and electric-power company, the Charlotte, North Carolina–based Duke Energy Corporation. Williamson became senior vice president of business development and risk management at Duke Energy International and one year later was appointed president and chief executive officer, directing strategy, business development, and asset management for global operations. His areas of focus included exploration and production; natural gas collection, processing, and liquids marketing; gas transmission; and power generation. Under Williamson’s leadership the business expanded from one with 35 employees posting a net loss to one with over one thousand employees earning $300 million before taxes and interest. In August 2001 Williamson secured the position of president and chief executive officer of Duke Energy Global Markets, which was headquartered in Houston, Texas. In this newly created organization Williamson was responsible for all Duke Energy units with international business and commodities positions. These units included Duke Energy Internation-

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al, Duke Engineering and Services, Duke Energy Merchants, and Duke Solutions. Williamson helped to position the company for increased integration and synergy as those units flourished in the global energy marketplace.

LEADING REORGANIZATION AND SAVING THE COMPANY Before the economic downturn occurred in 2000, Dynegy had successfully cloned the rich ventures in energy trading and broadband Internet that had been pioneered by the energy merchant leader Enron Corporation of Houston, Texas. Within a year Dynegy saw its energy-trading revenues fall flat, after Enron was publicly exposed with illegally hiding debt and inflating profits in 2001. Like Enron, Dynegy faced investigations, indictments, and investor accusations during 2002 over irregularity of trading practices and finances. Dynegy was on the brink of sharing Enron’s fate but was fortunate enough to hire Williamson to lead it out of its precariously downwardspiraling position. Dynegy began to restructure before Williamson arrived and was struggling to continue as he accepted the helm position. Realizing that company executives had taken positive strides toward substantially improving Dynegy’s financial condition and properly restructuring its business, Williamson felt confident that the company could reestablish itself as an energyindustry leader. He quickly announced that Dynegy, whose stock value had slipped to less than a dollar per share, would not declare bankruptcy; he was confident that problems could be corrected. He stated that the company would save as many jobs as possible, continue to serve its customers, pay suppliers, and work with banks and other creditors to pay off debts. As reported by the Associated Press, Williamson was of the opinion that filing for Chapter 11 bankruptcy was akin to saying, “I borrowed money and now I don’t have to pay it back” (November 27, 2003); he was adamantly unaccepting of such a position. During the first year of his reign Williamson concentrated on successfully arranging bank refinancings and restructuring capital so as to postpone the paying off of company debt. His approach to management involved witnessing first-hand the state of the struggling company; as a testament to his dedication he once traveled more than three thousand miles in two days in order to visit Dynegy facilities in West Texas. His reorganization plans helped Dynegy reduce debt from nearly $9 billion to $7.4 billion, thereby extending maturities, and increase the value of its bonds from only 20 cents on the dollar to the price at which they were originally sold. On the negative side Williamson was forced to layoff more than 1,100 employees, fire or accept the resignations of many from top management, watch the credit rating go to junk status, and endure a miserable energy market.


Bruce A. Williamson

RETURNING TO CORE BUSINESSES Through the end of 2002 and into 2003 the pragmatic Williamson made dynamic changes to Dynegy’s core business operations. He fired several traders and disciplined others for deceptive data reporting to commodity price-index publishers. He later closed down the company’s energy-trading unit, which included its online-trading platform. In May 2003 Williamson sold the company’s telecommunications business, including a high-capacity broadband network of about 16,000 route miles with access points in 44 U.S. cities. Williamson restructured the company’s remaining operations around the natural gas production of Dynegy Midstream Services and the electricity production of Dynegy Generation. Williamson tried to divest the company of its smallest subsidiary and only regulated business, Illinois Power, which dealt in the transmission and distribution of electricity and natural gas, serving about 590,000 electricity customers and about 415,000 natural gas customers in its home state. The company was eventually sold to Ameren Corporation in 2004, helping to further stabilize Dynegy’s financial position.

REVIEWING WILLIAMSON’S ACTIONS Jim Hackett, the president and chief operating officer of Devon Energy Corporation in Oklahoma City, who had previously worked with Williamson, perceived the swiftness of his moves with Dynegy. As reported by Kristen Hays in the St. Louis Post-Dispatch, Williamson’s actions prompted Hackett to say, “Several years down the road, we’ll see how effectively Dynegy can compete as power markets come back and business improvements allow them to start looking for growth” (October 29, 2003). Larissa Poindexter, head of the Poindexter Investment Management Group in Houston, added her comments about Williamson: “He has really been good at making a clean sweep, but Dynegy still has a lot of problems. Enron’s a casualty, but Dynegy’s probably going to make it, because Williamson has vision” (October 29, 2003). Although Dynegy’s credit ratings were still at junk levels in 2004, creditrating agencies had increased the status of Dynegy’s future outlook to “positive” or “stable.”

against former Dynegy employees, said that Williamson’s cooperation aided in locating and identifying possible wrongdoers: “He changed the standard operating procedures in such a way that honesty and candor is part of the company’s business plan” (November 27, 2003). Williamson reformed Dynegy from a company once dealing in high-risk initiatives to a steady business focusing on reliable power generation. Following the company’s stabilization, the issues facing Williamson involved market strategy rather than financial restructuring. He continued to stress the importance of debt reduction and the building up of remaining businesses. Stan Luckoski, the spokesperson for the United States’ second-largest integrated oil and gas company ChevronTexaco and Dynegy’s largest shareholder, said with regard to Williamson, “ChevronTexaco management believes that under Bruce’s leadership, Dynegy has made very good progress in addressing the many difficult issues facing the company” (November 27, 2003). Stock analysts who researched Dynegy remained unsure as to whether the company would fully recover, preferring to wait until at least 2006 to see how debt reduction and profit margin on power generation would turn out and to see how the energy sector as a whole would fare. Although Dynegy’s future was unclear, the outlook was promising as a result of Williamson’s disciplined management and reorganization of the company.

OTHER FUNCTIONS Williamson was active at the University of Houston, serving as a member of the Dean’s Executive Advisory Board for the Bauer School of Business, and was honored with an appointment to the Chancellor’s National Advisory Council. He also served on the board of directors of Houston 2012, the Children’s Museum of Houston, and the executive committee of Ronald McDonald House.

See also entries on Duke Energy Corporation and Dynegy Inc. in International Directory of Company Histories.


ESTABLISHING A FOUNDATION By the third quarter of 2003 Williamson had taken Dynegy from near bankruptcy to a solid financial foundation. His vision allowed Dynegy to be the first energy distributor to resolve the investigations into illicit accounting and trading conducted by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The U.S. Attorney Michael Shelby,who led the criminal investigation


Associated Press, “CEO Returns Dynegy from Brink of Bankruptcy,” Alexander’s Gas and Oil Connections, November 27, 2003, http://www.gasandoil.com/goc/ company/cnn34814.htm. “Bruce A. Williamson Named Dynegy President and CEO,” HoustonXL.net, October 23, 2003, http:// www.houstonxl.net/article.php?sid=106. Dynegy, http://www.dynegy.com.

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Bruce A. Williamson “Dynegy Taps Former Duke Exec as CEO,” Houston Business Journal, October 23, 2002, http://www.bizjournals.com/ houston/stories/2002/10/21/daily26.html. Hays, Kristen, “A Year after Nearing the Brink, Dynegy Moves Ahead,” St. Louis Post-Dispatch, October 29, 2003. —William Arthur Atkins

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Chuck Williamson 1948– Chairman and chief executive officer, Unocal Corporation Nationality: American. Born: September 1948, in Akron, Ohio. Education: University of Utah, MS, 1973; University of Texas at Austin, PhD, 1978. Family: Married Cathy (maiden name unknown); children: two. Career: Exxon Corporation, 1975–1977, geologist; Unocal Corporation, 1977–1983, research associate for Science and Technology Division; 1983–1986, chief exploration geologist for United Kingdom; 1986–1989, exploration manager and director for Unocal Netherlands, 1989–1992, vice president, exploration, for Unocal Thailand; 1992–1994, vice president, technology, of Energy Resources Division; 1994–1995, vice president of planning and information services; 1995–1996, vice president of corporate planning and economics; 1997–1999, group vice president of Asia Operations; 1999–2001, executive vice president of International Energy Operations and member of Unocal’s Executive Committee and board of directors; 2001–, named CEO in January 2001 and chairman in October 2001. Address: Unocal Corporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245; http:// www.unocal.com.

■ After more than two decades helping Unocal Corporation explore for and bring into production new oil and gas reserves around the world, Charles (Chuck) R. Williamson in January 2001 took over the reins of the company as CEO. In October of that year, he was given the additional responsibilities of chairman.

BACKGROUND ON UNOCAL Unocal, which was founded in 1890 as the Union Oil Company of California in Santa Paula, was in the early 2000s


an independent oil and gas exploration and production company headquartered in El Segundo, California. Its business was divided into four major segments—exploration and production, trade, midstream operations, and geothermal and power operations. Before taking over the helm at Unocal, Williamson spent much of his career in exploration and production. In the early 2000s Unocal’s exploration and production operations were scattered around the globe. Separate business units of Unocal oversaw regional and national operations in the Far East, the Indian subcontinent, West Africa, central Asia, Brazil, and North America. As reserves in the United States and Canada were gradually drawn down, Unocal stepped up its exploration and production activities outside North America, particularly in Southeast Asia. The trade segment of Unocal was responsible for externally marketing the company’s output of hydrocarbon products, which included not only the marketing function but the transportation of those products as well. To minimize the company’s exposure to the volatility of oil and gas price fluctuations in the commodity markets, the trade segment was also involved in the trading of futures, swaps, and options that served as a hedge against sudden price movements, up or down. Unocal’s midstream operations were focused on the company’s wholly owned pipeline systems as well as its equity interests in other petroleum pipeline companies. The company held a 23.44 percent equity interest in the Colonial Pipeline Company, which operated the Colonial Pipeline running from Texas to New Jersey. Unocal Pipeline Company, a wholly owned subsidiary, held a 1.36 percent participation interest in the TransAlaska Pipeline System (TAPS), which carried oil from Alaska’s North Slope to the Port of Valdez. The midstream operations segment also oversaw Unocal’s interests in natural gas storage facilities in Texas and western Canada. Although the world’s reserves of oil and gas were expected to continue to provide output for a number of years, Unocal was also investing in the exploration and exploitation of international geothermal resources. Through subsidiaries, Unocal operated large geothermal fields that produced steam used to generate power at projects in Indonesia and the Philippines. Williamson took over the leadership of Unocal only months before the beginning of the economic recession of 2001–2003. Despite the general economic weakness world-

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wide, which was accompanied by softness in oil and gas prices, Unocal managed to post creditable financial results for both 2001 and 2002. After peaking at about $9.2 billion in 2000, partly on the strength of a spike in oil prices that year, Unocal’s revenue slipped to $6.8 billion in 2001 and $5.3 billion in 2002. The end of the recession in 2003 was reflected in an upsurge in sales, which in the first three quarters of the year totaled just under $5 billion. Unocal’s net income of $615 million in 2001 was down from $760 million the previous year. Profit fell to $331 million in 2002, the full 12 months of which were mired in recession.

WILLIAMSON’S EDUCATION AND PROFESSIONAL DEVELOPMENT A geologist by training, Williamson earned his master’s degree at the University of Utah in 1973 and then enrolled in the geology doctoral program at the University of Texas, Austin. Even before he earned his PhD in 1978, he began putting his training to work. In 1975 Williamson joined Exxon, where he worked for two years as a geologist, and in 1977 he joined Unocal as a research associate with the company’s Science and Technology Division in Brea, California. In 1983 Williamson was named the company’s chief exploration geologist for the United Kingdom, a job he held until 1986, when he became the director and exploration manager at Unocal Netherlands, headquartered in the Hague. Williamson next went to Southeast Asia, taking over in 1989 as vice president, exploration, for Unocal Thailand, based in Bangkok. Although he returned to the United States in 1992 after being named vice president of technology in Unocal’s Energy Resources Division, his interest in Southeast Asia and its energy reserves was to resurface again in the years to come. Williamson moved quickly up the executive ladder at Unocal, being named vice president of planning and information services in 1994. A year later he was appointed vice president for corporate planning and economics, and in 1996 he was named group vice president for International Energy Operations. In 1997 Williamson became group vice president for Asia Operations. In February 1999 he was named executive vice president of International Energy Operations, and he also became a member of Unocal’s management committee. In late 1999 Roger Beach, then Unocal’s chairman and CEO, named Williamson to the company’s board of directors. In making the announcement, according to a company press release, Beach said that “Chuck’s leadership skills and technical expertise are critical to our future success as we pursue extraordinary growth opportunities in Asia, South America, and West Africa” (December 9, 1999). In December 2000 Williamson was tapped to succeed Beach as Unocal’s CEO, effective January 1, 2001. An outside

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director, John W. Creighton Jr. was selected to serve as nonexecutive chairman of Unocal’s board. In October 2001 Williamson took over the additional responsibilities of chairman. In its first year under Williamson’s direction, Unocal suffered a significant blow to its earnings as a result of dramatic declines in international prices for crude oil and North American natural gas prices. However, beyond its financial performance, Unocal managed to show significant gains in production of both oil and gas, which were up 8 percent in the year. The company’s reserves grew even more sharply, jumping 15 percent, largely “as a result of our highest reserve replacement rate in a decade,” according to Unocal’s 2001 Annual Report. Before 2001 most of Unocal’s operations in Southeast Asia were centered in Thailand, where Williamson had worked from 1989 until 1992 as Unocal Thailand’s vice president for exploration. Under Williamson, Unocal expanded its operations to other areas of southern and Southeast Asia, making significant investments and promising discoveries in Bangladesh, Indonesia, and Vietnam. The company also began negotiations in 2001 with the Chinese government for a 20 percent participation in the development of China’s Xihu Trough natural gas fields in the East China Sea. However, when those negotiations faltered in late 2001, it seemed that the deal might fall through. China’s Sinopec, its major oil refiner, and CNOOC Ltd., the country’s leading offshore oil producer, suggested that they might develop those resources on their own. Negotiations continued off and on until the summer of 2003, when an agreement was struck giving Unocal and Shell each a 20 percent share in the project, with the remaining 60 percent split evenly between Sinopec and CNOOC. In 2002, overshadowed by the worldwide economy for the entire year, Unocal experienced declines in its worldwide production of oil and gas and in its replacement of oil and gas reserves. Output of oil and gas was down 6 percent in 2002 compared with 2001, and Unocal’s oil and gas reserves declined 3 percent.

WILLIAMSON’S EFFORTS FOR GROWTH IN ASIA PACIFIC Against this backdrop of lower production worldwide, Williamson moved aggressively to increase Unocal’s investments in the Asia Pacific region. In an interview with Supunnabul Suwannakij of Dow Jones Newswires in April 2002, Williamson said: “Unocal continues to invest heavily in the Asia region with a focus on (natural) gas business as there is lots of room for investment opportunities.” Roughly half of the company’s 2002 capital spending budget of $1.6 billion was allocated to the Asia Pacific region. Williamson projected that Unocal would increase its investment of $6 billion in Thailand by $4.3 billion over the next decade. The Unocal CEO also indicated


Chuck Williamson

that the company would seek to expand its investment in the Southeast Asian regional power-generation business. Unocal’s operations in Southeast Asia got unwelcome highprofile coverage in December 2003 when villagers from Myanmar (formerly Burma) took the company to court, charging that Unocal was responsible for human rights abuses committed against them by Myanmar’s military during a 1990s pipeline project. Speaking on behalf of the villagers, Terry Collingsworth, executive director of the International Labor Rights Fund, said Unocal was well aware of the methods used by Myanmar’s military and thus should be held responsible for abuses suffered by the villagers. Daniel Petrocelli, lead counsel for Unocal, argued that the subsidiaries that built the pipeline—and not Unocal—should have been targeted by the suit. Interviewed by the Bangkok Post in October 2003, Williamson reaffirmed Unocal’s commitment to its pipeline project in Myanmar. Of the Yadana pipeline that carried gas to Thailand from offshore Myanmar, Williamson said: “We still believe in what we are doing for that country. We know that Thailand needs the gas, and from the perspective of shareholders, it is a profitable project.” Another indication of Unocal’s commitment to Southeast Asia came in February 2002 with Williamson’s election as chairman of the U.S.-ASEAN Business Council, the leading American business group promoting trade between the United States and 10 countries of ASEAN (Association of Southeast Asian Nations). In accepting the position, Williamson pledged to use business channels to help bring the United States and Southeast Asia closer together. According to a press release from the Business Council, he noted, “It will be an honor for me to lead this important group as we work with our partners and colleagues in the region to move to full economic recovery in Southeast Asia” (“Charles R. Williamson Elected New Chairman of the US-ASEAN Business Council”).

DISCOVERIES ELSEWHERE Short-term prospects for Unocal brightened further in 2003. In addition to improved earnings, the second half of 2003 brought a flurry of positive news. In November the company announced that it had made a natural gas discovery at its Happy Valley field on Alaska’s Kenai Peninsula. The previous month Unocal had reported two promising developments from its exploration activities in the Gulf of Mexico. A major hydrocarbon discovery on the company’s deepwater St. Malo prospect was called “a significant milestone” in Unocal’s Gulf deepwater program. Also encouraging was the completion of a successful appraisal well on the company’s Harvest deep shelf field in the Gulf. In July, Williamson announced that the company’s Unocal Ganal Ltd. subsidiary had made a significant discovery of gas condensate and oil in its Ganal productionsharing contract area 3.5 miles south of the Rangaas field off


East Kalimantan in Indonesia. Williamson said in a company press release that the find was “potentially the most significant well we have drilled in the deepwater since the Seno discovery well in 1998” (July 23, 2003). The Unocal CEO also said the discovery opened up “a new, deeper oil and gas trend for us across our huge acreage holdings in the deepwater Kutei Basin,” which was also the site of the Seno find. In addition to his responsibilities at Unocal and as chairman of the U.S.-ASEAN Business Council, Williamson sat on the boards of the American Petroleum Institute and the U.S.China Business Council. A member of both the National Petroleum Council and the American Geological Institute Foundation, he also served on the advisory panels of the U.S.Indonesia Society and California Asia Society. On the academic front, Williamson served on earth science–related advisory boards at the University of Texas at Austin and Stanford University.

See also entry on Unocal Corporation in International Directory of Company Histories.


Changsorn, Pichaya, “Unocal, Ministry Differ on Gas Prices,” Nation (Thailand), October 24, 2003. “Charles R. Williamson Elected New Chairman of the USASEAN Business Council,” U.S.-ASEAN Business Report, 13, no. 2 (second quarter, 2002), http://www.us-asean.org/ UABR/UABR202.htm. “Charles Williamson Named CEO of Unocal,” Petroleum News, December 28, 2000. Eviatar, Daphne, “Profits at Gunpoint: Unocal’s Pipeline in Burma Becomes a Test Case in Corporate Accountability,” Nation (Thailand), June 30, 2003. “Human Rights Trial over Unocal Project in Myanmar Opens in Los Angeles,” AP Worldstream, December 10, 2003. Kositchotethana, Boonsong, “Unocal Chief Sees Expanded Role for Thailand, Asia,” Bangkok Post, October 21, 2002. Suwannakij, Supunnabul, “Unocal Plans to Invest Heavily in Asia Pacific,” Dow Jones Newswires, April 29, 2002. “Thailand to Push Energy Integration among Asian Countries,” Bangkok Post, October 22, 2003. Unocal Appoints Ling, Williamson to Board of Directors; Imle Resigns as Vice Chairman,” Unocal press release, December 9, 1999, http://www.unocal.com/uclnews/99news/ 120999.htm. “Unocal Chief Is New Head,” Nation (Thailand), February 28, 2002.

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Chuck Williamson “Unocal Makes Significant Discovery on First Deeper Test in Kutei Basin,” Unocal press release, July 23, 2003, http:// www.unocal.com/uclnews/2003news/072303.htm. —Don Amerman

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■■■

FLEMING COMPANIES

Peter S. Willmott

Headquartered in the Lewisville suburb of Dallas, Texas, Fleming Companies supplied branded and private-label consumer grocery and nonfood items to convenience stores around the country. Fleming handled such items through its Core-Mark International convenience distribution business based in South San Francisco, California. Though by 2004 Fleming focused on the convenience industry, before its 2002 bankruptcy it supplied supermarkets, supercenters, discount stores, concessions, drug stores, and military commissaries and exchanges nationwide. It also served mass merchandisers and independents under Fleming’s franchised names, IGA and Piggly Wiggly.

1937– Chairman and chief executive officer, Willmott Services Nationality: American. Born: 1937, in Glens Falls, New York. Education: Williams College, BA, 1959; Harvard University, MBA, 1961. Family: Married Bonnie (maiden name unknown, divorced); married Michele (maiden name unknown); children (from first marriage): four.

HOW FLEMING GOT INTO TROUBLE Career: American Airlines, 1961–1962, senior financial analyst; Booz, Allen & Hamilton, 1962–1966, management consultant; ITT Continental Baking Company, 1966–1974, vice president; Federal Express Corporation, 1974–1977, senior vice president of finance and administration; 1977–1980, executive vice president; 1980–1983, president and COO; Carson Pirie Scott & Company, 1983–1989, chairman, CEO, and president; Willmott Services, 1989–, chairman and CEO; Zenith Electronics Corporation, 1996–1998, CEO and president; Fleming Companies, 2003, interim CEO and president. Address: Willmott Services Inc., 919 N. Michigan Avenue, Suite 1220, Chicago, Illinois 60611.

■ Fleming Companies, a leading wholesale grocery distributor, announced on April 2003 that it had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. During the previous two years Fleming had undergone federal investigation by the U.S. Securities and Exchange Commission (SEC) concerning questionable business and accounting practices, faced a class-action shareholder lawsuit concerning the validity of its public statements, severed its relationship with its biggest customer Kmart Corporation, and saw its stock price plunge to less than one dollar per share. In 2003 Peter S. Willmott, who was already a member of the company’s board of directors, was brought in to lead reorganization, assuming the position of interim chief executive officer and president. International Directory of Business Biographies

Mark Hansen was removed from the position of chief executive officer at the troubled Fleming on March 3, 2003, a week after the SEC upgraded an informal accounting and tradepractices inquiry to a formal investigation. Hansen had long been criticized for taking Fleming’s retail stores into the lowprice food business dominated by Wal-Mart. Under Hansen, Fleming came to face shareholder lawsuits and the forced loss of its largest customer, the Troy, Michigan–based Kmart Corporation, which had itself been involved in bankruptcy proceedings. In January 2003 Kmart ended a major supply agreement with Fleming, which had accounted for about 20 percent of its $15.5 billion in 2002 revenues. With listed book assets of $4.22 billion and debts and liabilities of $3.54 billion as of October 2003, the Fleming board of directors—which included Willmott—and senior management made a thorough analysis of its condition, taking into consideration the loss of Kmart as a customer. It was decided that a Chapter 11 filing would allow the company to continue functioning with minimal impact on operations. Willmott declared bankruptcy for Fleming on April 1, 2003, and sold its grocery wholesale business in August of the same year. As stated in its bankruptcy filing, Fleming’s largest unsecured creditors included financial institutions with claims ranging from $150 million to $400 million. Far smaller were claims by vendors, including several of the largest names in the grain-based foods industry. Campbell Soup Company, ConA-

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Peter S. Willmott

gra Foods, General Mills, Kellogg Company, and Kraft Foods were among the 20 largest unsecured creditors, with the largest of these claims totaling $5.8 million.

PREVIOUS LEADERSHIP EXPERIENCE Willmott admitted that after graduating from Harvard University with an MBA he worked in shirtsleeves until a friend gave him a book on dressing for success. At that point he changed his image, wearing suit coats on a daily basis. Willmott realized that his new image and his new determination to succeed in the business world helped him receive three major promotions early in his professional career. He had extensive stints in the senior ranks of several leading companies, steadily gaining a good reputation with his self-effacing style. Industry experts identified him as someone who could modify his management style to suit the needs of his employer—that is, he had the ability to strictly control and direct employees of a company that needed a strong guiding hand in management, and he also had the ability to bring out his personality when a charismatic leader was needed in a particular company. Willmott began his career in 1961 as a senior financial analyst at American Airlines, next spending the period between 1962 and 1966 as a management consultant at Booz, Allen & Hamilton. He joined ITT Continental Baking Company in 1966 to become a vice president; in 1974 he moved to Federal Express Corporation, where he served in a number of executive positions: senior vice president of finance and administration (1974–1977), executive vice president (1977–1980), and finally president and chief operating officer (1980–1983). Willmott next became chairman and president of department-store and retail-services conglomerate Carson Pirie Scott & Company, based in Chicago, Illinois, from June 1983 to June 1989. Beginning in late 1983 Willmott also served as the company’s chief executive officer. While with Carson, Willmott focused on developing ways to offer better goods and services to the company’s customers. He acquired County Seat Stores, a chain of 275 stores in 32 states that sold casual clothes to young people, in order to expand Carson into a new retailing segment. Willmott also purchased a direct-marketing firm that specialized in mail-order sales. Although acquisitions forced Carson’s retail division to post a net loss in 1984, the company showed marked overall improvement after hiring Willmott. Profits increased 60 percent in 1985 over the previous year, with net sales increasing by more than 15 percent in the same period. Willmott sold Carson Pirie Scott in 1989 to P.A. Bergner & Company, operator of the Bergner’s and Boston Store chains. In 1989, after his stint with Carson, Willmott founded and served as chairman and chief executive officer of Willmott Services in Chicago, a retail-holding and consulting company where he continued to work as of 2004. From July 1996 to

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January 1998 Willmott was chief executive officer and president of Zenith Electronics. Willmott believed that communication was very important to management. He sometimes paced in his office, pondering the state of the immediate business world—often then emerging to discuss his concerns with staff and employees. In order to build a great company, Willmott ensured that he was close enough to his employees to be able to manage them properly. When referring to his management style, he often compared himself to a sports coach drilling a promising team in the fundamentals of winning.

REORGANIZING In April 2003 Fleming’s board of directors decided that an immediate change in management was necessary; Willmott was appointed to the top position of chief executive officer. While the board conducted an extensive search for a new CEO, Willmott coordinated the initial restructuring of the company’s business operations and finances. Willmott hoped that his actions would allow the company to establish an improved capital and cost structure and position itself for longterm success upon emergence from bankruptcy. He focused on returning Fleming to its core business of providing both food and nonfood items to convenience stores and other related establishments, activities which the company had veered away from, contributing to its financial difficulties.

RESTRUCTURING EXPERTS The board of directors determined that Fleming’s reorganization process would require that experienced businessturnaround professionals be assigned to top financialmanagement positions in order to assist Willmott. Robert Allen was named to the position of acting chief operating officer; together, Willmott and Allen directed day-to-day operations. Ted Stenger of AlixPartners, an international leader in corporate restructuring and turnaround services, assumed the position of chief restructuring officer. Additional experts appointed to Fleming’s new management team included the interim chief financial officer Becky Roof and the interim treasurer Mike Scott. As principals of AlixPartners they assisted Willmott in Fleming’s reorganization while remaining in the employment of AlixPartners, so as to take advantage of the firm’s resources. Willmott also used Blackstone Group, a leading financial and restructuring consultant, as Fleming’s financial advisor.

LAYING OUT THE PLAN Even before securing a bridge loan, Willmott stated to Fleming’s employees and customers and to the general public


Peter S. Willmott

that the company would continue to conduct business at all of its facilities. While concentrating on the company’s reorganization requirements, he would attend to improving customer and vendor services, operational efficiency, and financial flexibility. Willmott specifically worked toward renewed tradecredit support, negotiating with creditors for an adjustment in debt level that would be more consistent with the company’s assets, operations, and active business model. Willmott declared that the company planned on filing motions with the bankruptcy court in order to implement a vendor program that would allow the company to pay all of its associates in a timely manner.

BRIDGE LOAN AND DIP FINANCING Fleming described an interim $50 million debtor-inpossession (DIP) financing commitment as a bridge to a permanent $150 million DIP financing package. The interim DIP loan was subject to, among other conditions, the approval of the U.S. Bankruptcy Court. Fleming projected that the $150 million DIP package would provide the company with necessary financing throughout the Chapter 11 process and worked with creditors who were required to sign off on the interim $50 million loan. Willmott publicly announced that new financing and the support of its vendors would ensure that Fleming would be able to deliver on commitments to customers. Willmott secured approval for the needed loan from the Bankruptcy Court in May 2003. At the same time he announced that in order to cut additional costs, Fleming would indefinitely suspend stock-dividend payments and rescind a previously declared but unpaid quarterly dividend payment that had been scheduled for June 10, 2003.

SELLING PROPERTY Willmott announced in June 2003 that the Bankruptcy Court approved of agreements to sell 40 company-owned retail stores, including 31 Minnesota-based Rainbow Foods stores that would be sold to Roundy’s for approximately $40 million, six California-based Food4Less stores that would be sold to Save Mart Supermarkets for approximately $5 million, and three Food4Less stores that would be sold to Kroger Supermarkets for $2.4 million. On August 23, 2003, Willmott announced that virtually all of the assets from the company’s wholesale-grocery business had been sold. Grocers Supply acquired the Garland Division of Fleming, while Associated Grocers of Florida acquired the Miami Division; Associated Wholesale Grocers of Kansas City acquired the Nashville, Memphis, Memphis GMD, Tulsa, Lincoln, and Topeka Divisions, and C&S acquired the Hawaii, Fresno, Sacramento, Sacramento GMD, LaCrosse, LaCrosse GMD, Massillon, and Milwaukee Divisions. Promis-


ing to provide long-term solutions to wholesale customers, associates, and creditor constituents, Willmott remarked that the $400 million gained from these purchase agreements would be applied to the company’s $2 billion of debt. Willmott also announced that the company had reduced the number of executive positions by about 350 in order to cut expenses by about $40 million a year.

THE RESULTS With sales finalized, the company announced in August 2003 that Willmott had completed his tenure as Fleming’s interim chief executive officer and president; he would continue to serve as a member of the board of directors, as he had before he assumed his interim positions. Archie R. Dykes, the nonexecutive chairman of the board, then assumed the responsibilities of chief executive officer. As reported by PR Newswire, upon transfer of power Dykes said of Willmott, “Pete has served Fleming with much distinction under very difficult circumstances and at considerate disruption to his personal life. He has been instrumental in helping make the best of a challenging situation at Fleming. The board of directors is grateful for all that Pete has done in service to the company, and we appreciate his continued role as a member of the board of directors” (August 25, 2003). The leadership team headed by Willmott had successfully reorganized the company with its restructuring and operating expertise.

OTHER FUNCTIONS Willmott sat on the boards of Federal Express Corporation and Security Capital Group, an international real-estate research, investment, and operating company. Willmott also served as chairman of the board for MacFrugal’s Bargain Close-Outs and as a member of the board for Browning-Ferris Industries, First Tennessee Corporation, International Multifoods Corporation, Zenith Electronics, Maytag Corporation, Morgan Keegan & Company, and FDX Corporation. He was a member of the board of several civic organizations in both Chicago, Illinois, and the Berkshires, Massachusetts, and a former chairman of the board of trustees at Williams College in Massachusetts. Willmott was a member of the Society of Entrepreneurs beginning in 1992.

OUTSIDE OF WORK Peter Willmott was an avid fancier of racehorses. In 1989, after selling Carson Pirie Scott, Willmot began buying racehorses in order to breed and race them under the name of Willmott Stables in Kentucky. Willmott was also in partnership with his cousin Thomas Willmott of Boston, Massachusetts, in the Waterfall Stable, named for the New York cities where each were born—Watertown for Thomas and Glens Falls for Peter.

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Peter S. Willmott

See also entries on Carson Pirie Scott & Company, Zenith Electronics Corporation, and Fleming Companies, Inc. in International Directory of Company Histories.

“Fleming Completes Grocery Wholesale Transaction,” PR Newswire–First Call, August 25, 2003, http:// www.forrelease.com/D20030825/ dam036.P1.08252003175355.01558.html.


Fleming Companies, http://www.fleming.com (site discontinued as of March 2, 2003).

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■■■

Oprah Winfrey 1954– Producer, chief executive officer, and chairman, Harpo Productions Nationality: American. Born: January 29, 1954, in Kosciusko, Mississippi. Education: Attended Tennessee State University. Family: Daughter of Vernon Winfrey (sailor and barber) and Vernita Lee (maid and dietician). Career: WVOL Radio (Nashville), 1971–1972, news reader; WTVF-TV (Nashville), 1973–1976, news anchor and reporter; WJZ-TV (Baltimore), 1976–1977, news anchor; 1977–1983, talk show host; WLS-TV (Chicago), 1984, talk show host; King World Productions, 1985–, host of the Oprah Winfrey Show; Harpo Productions, 1986–, producer, chief executive officer, and chairman; Oxygen Media, 1998–, partner; Hearst Magazines, 2000–, editorial director of O: The Oprah Magazine. Awards: Woman of Achievement Award, National Organization for Women, 1986; named one of the Ten Most Admired Women, Playgirl, 1986; Emmy Award for best daytime talk show host, Academy of Television Arts and Sciences, 1987, 1991, 1992, 1994, 1995, and 1997; named Broadcaster of the Year, International Radio and Television Society, 1988; Entertainer of the Year Award, NAACP, 1989; Image Award, NAACP, 1989, 1991, 1992, and 1994; Industry Achievement Award, Broadcast Promotion Marketing Executives/Broadcast Design Association, 1991; Horatio Alger Award, Horatio Alger Association of Distinguished Americans, 1993; named to the Television Academy Hall of Fame, Academy of Television Arts and Sciences, 1994; Gold Medal, International Television and Radio Society, 1996; Lifetime Achievement Award, Academy of Television Arts and Sciences, 1998; National Book Awards 50th Anniversary Gold Medal, National Book Foundation, 1999; Bob Hope Humanitarian Award, 2002; named to the Hall of Fame, Broadcasting & Cable, 2002. Publications: Make the Connection: Ten Steps to a Better Body—and a Better Life (with Bob Greene), 1996; The Uncommon Wisdom of Oprah Winfrey: A Portrait in Her Own Words (edited by Bill Adler), 1996; Journey to


Oprah Winfrey. AP/Wide World Photos.

Beloved, 1998; Oprah Winfrey Speaks: Insight from the World’s Most Influential Voice (edited by Janet Lowe), 1998. Address: Harpo Productions, 110 North Carpenter Street, Chicago, Illinois 60607-2145; http://www.oprah.com.

■ Coming from life in a home with no electricity or running water and having suffered misery and severe abuse, Oprah Gail Winfrey became one of the most influential people in history as host of The Oprah Winfrey Show, which reached more than 20 million Americans five days a week and tens of millions more in 107 other countries. By age 49 she was a self-made billionaire, ruler of a vast entertainment and communications empire. Indeed, she was a symbol of what an individual person could achieve in America, and around the world were people

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Oprah Winfrey

who, when asked, declared that the person they most wished to be like was “Oprah Winfrey.”

MISERY Winfrey was born out of wedlock to an impoverished young woman, Vernita Lee, in Mississippi at a time when segregation in that state denied basic civil rights to African Americans. Her mother named several different men as potential fathers to Winfrey, but only one man, Vernon Winfrey, a sailor in the U.S. Navy, took responsibility for the child. Throughout her life, Winfrey would refuse to have the tests done that would determine whether Vernon was her biological father. Lee left her baby daughter with her own mother, the owner of a remote pig farm. Her grandmother provided Winfrey with a stern disciplinary environment in which church played a big role. In 1956 Winfrey astonished church members by delivering a reading and interpretation of a part of the Bible. Her grandmother had taught her to read, and reading would always be a source of inspiration and solace for Winfrey. In 1960 she was sent from the farm that lacked electricity and running water to her mother’s Milwaukee home, which was tiny; Winfrey missed being able to play with animals but kept roaches as pets. Unable to care for her daughter, Lee soon sent her to Nashville to live with her father and his wife, Zelma, who loved the little girl. When Lee asked to have her daughter back for a summer’s visit, the Winfreys reluctantly let her go; she would not return until 1968. At first, Winfrey did well in school; she skipped over kindergarten to first grade and then over second grade to third grade. But in 1963 Winfrey was raped by a 19-year-old cousin; at least two other relatives molested her. To encourage boys to like her, she was sexually promiscuous. She was very rebellious; her mother tried to have her put in juvenile hall, which had no room to spare, so she sent Winfrey back to her father. At 14, Winfrey became pregnant, and, at first, she named several possible fathers. Eventually she insisted the father had to be her own father’s brother. The baby was stillborn. Her father was a remarkable man, who accepted Winfrey as his daughter without question and who made it clear to her that he wanted her to be his daughter. He and his wife gave Winfrey a disciplined home environment. She was required to read books and, every two weeks, to write a report about what she had read, instilling a habit of reading that Winfrey continued for the rest of her life. She had to wear conservative, standard schoolgirl clothing at all times, to do her homework, and to behave respectfully toward grownups. Winfrey would often tell others that her father had saved her life.

TALKING FOR A LIVING Even as a small child, Winfrey would say that she wanted to make her living by talking, for she was a gifted, quick-witted

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speaker. In 1971, partly on the basis of her brilliant public speaking, she won the Miss Nashville Fire Prevention beauty and talent contest, which led to a job reading the news at the WVOL radio station. She chafed under her father and stepmother’s curfew rules, because she was earning $15,000 per year—a good salary at the time—and felt that she was demonstrating grownup responsibility. Even after she took a job anchoring the news broadcasts of Nashville’s WTVF-TV, the restrictions required by her parents remained. When, in 1976, Baltimore’s WJZ-TV offered her a job anchoring the news, she leaped at the chance. She was a senior at Tennessee State University with only a few months to go for her degree, but as a friend pointed out to her, the WJZ-TV job was the chance of a lifetime. Her bosses at WJZ-TV wanted her to have plastic surgery to move her eyes closer together and to narrow her nose (she refused). They sent her to a hairdresser to make her hair more chic; the hairdresser burned the hair off her head, making her bald save for three little hairs over her forehead; her head proved too big for wigs, so she wore scarves while she was on the air, until her hair grew back. In 1977 she was switched to cohosting a morning talk show; her gift of gab and her knack for asking the questions most listeners wanted to have answered turned the show into a hit. In 1984 her producer at WJZ-TV, Debra DiMaio, took a job in Chicago at WLS-TV. She brought with her a tape of Winfrey at work and showed it to Dennis Swanson, who immediately wanted to hire Winfrey to host the morning talk show A.M. Chicago. Winfrey was afraid that a heavyset black woman would be unwelcome on television in Chicago, which had a reputation for racial conflict, but Swanson insisted. Winfrey accepted the job, and WJZ-TV let her out of her contract. She then visited a Chicago lawyer, Jeff Jacobs, to gain his help with her contract negotiations; he became her lifelong adviser and business manager. Smart, honest, and devoted to Winfrey’s well-being, he had a hand in all of her business dealings from 1984 onward. Within four weeks, opposite the dominating Donahue talk show (with host Phil Donahue), Winfrey’s show went from last in the ratings in Chicago to first for its time slot. She had shown that her appeal transcended ethnicity.

GOING NATIONAL The year 1985 was momentous for Winfrey. Her talk show was renamed The Oprah Winfrey Show, and Jacobs negotiated a national syndication deal with the owners of syndication company King World, Mike and Roger King, two persuasive salesmen who quickly sold the show to 138 stations in the United States. Jacobs got Winfrey 25 percent of the gross King World made from the show, and from a salary of $230,000 per year at WLS-TV, Winfrey’s income leaped to over $30 million for her first year in syndication. Also in 1986 The Color Purple, a motion picture based on one of her favorite books,


Oprah Winfrey

came out. In it, she played Sofia, and her dazzling performance received Golden Globe and Academy Award nominations for best supporting actress, although she did not win. She played the mother of the protagonist in the motion picture Native Son; though she was praised for her performance by critics, she was unhappy with the motion picture, which quickly died at the box office. Wanting to control the content of her productions, in 1986 Winfrey founded Harpo Productions, giving a 5 percent share to Jacobs. (“Harpo” was “Oprah” spelled backward.) This studio was set up in a former ice-skating rink and became a large production company that made motion pictures and miniseries for the ABC network and eventually produced The Oprah Winfrey Show. It was in May 1986 that she met Stedman Graham Jr., a tall, moviestar-handsome, successful businessman, and the two fell in love. Although they announced their engagement in 1992, they did not marry. In 1989 Winfrey made Jacobs president of Harpo. Like Winfrey, he had a great deal of common sense, and he gave the young business stability. That year Winfrey produced and acted in the television miniseries The Women of Brewster Place, based on one of her favorite novels. It did well, and a dramatic series Brewster Place starring Winfrey was spun off in 1990, but it failed after only a few episodes were aired.

EMPIRE In 1992 Winfrey began a series of prime-time specials called Oprah: Behind the Scenes, about Winfrey’s interviews of famous people. In a separately produced show, syndicated to more than 50 countries by King World, Winfrey interviewed the singer Michael Jackson for prime time; the interview aired February 10, 1993, and 39 percent of American homes tuned in to the show. Winfrey typically hired friends for jobs at Harpo Productions, people whose characters she knew and whom she trusted. This may be why by 2000 her top 10 executives each had logged over 10 years’ employment at Harpo Productions. One such friend was Tim Bennett, who had been program director for Chicago’s WLS-TV when Oprah first worked there. Bennett became chief operations officer for


Harpo Productions, and he organized the company into departments and clarified the company’s capital structure. Ever since coming to Chicago, Winfrey had given 10 percent of her income to charities, mostly having to do with youths, education, and books. In 1996 she began Oprah’s Book Club to promote reading, for which she recommended a recently published book each month. One show each month would focus discussion on the book. Such was her influence that within minutes of her recommendations, booksellers would be swamped with orders for the books; sales for the books typically increased by 500,000 to one million copies, and previously obscure authors would become major literary figures. In 2000 Winfrey began O: The Oprah Magazine, which topped two million in circulation. In 2001 the magazine grossed over $140 million. On April 4, 2002, Winfrey announced that she was exhausted by reading so many books to single out ones to recommend, and she ended her book club, but in March 2003 she announced that she was going to start a classics book club, featuring three authors per year. She called it “Traveling with the Classics.” In 2002 Harpo Productions began producing Dr. Phil, featuring a forensic psychiatrist who had frequently appeared on Winfrey’s show as a family counselor, becoming a fixture. In 2003 her personal fortune topped $1 billion.

See also entries on Harpo Entertainment Group, The Hearst Corporation, and King World Productions, Inc. in International Directory of Company Histories.


Mair, George, Oprah Winfrey: The Real Story, New York: Birch Lane Press, 1994. Sellers, Patricia, “The Business of Being Oprah: She Talked Her Way to the Top of Her Own Media Empire and Amassed a $1 Billion Fortune: Now She’s Asking, ‘What’s Next?’” Fortune, April 1, 2002, pp. 50–64. —Kirk H. Beetz

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Patricia A. Woertz 1953– Executive vice president, ChevronTexaco Corporation, Global Downstream Nationality: American. Born: March 17, 1953, in Pittsburgh, Pennsylvania. Education: Penn State University, BS, 1974; completed Columbia University’s International Executive Development Program, 1994. Family: Married; children: three. Career: Ernst & Young, 1974, accountant; Gulf Oil Corporation, 1977–mid-1980s, various finance-related positions; Chevron Information Technology Company, 1989–1991, finance manager; Chevron Canada, 1993–1996, president; Chevron International Oil Company, 1996–1998, president; Chevron Products Company, 1998–, president; ChevronTexaco Corporation, Global Downstream, executive vice president, 2001–. Awards: Alumni Fellow Award, Penn State’s Smeal College of Business, 2002. Address: ChevronTexaco Corporation, 6001 Bollinger Canyon Road, San Ramon, California 94583; http:// www.chevrontexaco.com.

■ In 2001 Patricia Woertz became an executive vice president at ChevronTexaco Corporation, making her the highestranking woman in the male-dominated oil industry. Woertz had entered the oil industry in 1977 and used her excellent cost-cutting and team-building skills to barrel her way to the top. Her performance consistently earned her a spot on Fortune magazine’s list of the 50 Most Powerful Women in American Business. In 2003 Woertz ranked ninth on that list.

BEGAN CAREER AS ACCOUNTANT A native of Pittsburgh, Pennsylvania, Woertz earned an accounting degree from Penn State University in 1974. That same year, she landed a job as a certified public accountant at

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an Ernst & Young office in Pittsburgh. Her work as a numbercrunching auditor there helped set the foundation for the rest of her career. At Ernst & Young, Woertz learned to look at the books and see where money was flowing in and where it was not. Three years later she joined Gulf Oil Corporation, also in Pittsburgh, where she held jobs in finance and strategic planning as well as refining and marketing. In 1981 she left Gulf Oil’s Pittsburgh office and transferred to Houston, where she oversaw an audit group. From 1985 to 1987 Woertz was heavily involved in the financial aspects of the merger between Gulf Oil and Chevron. By 1989 she was finance manager of the Chevron Information Technology Company. In 1991 Woertz became strategic planning manager for Chevron Corporation. In this capacity, she worked side by side with the company’s planning and management committees, evaluating both their long-term and short-term strategies.

BECAME HIGHEST-RANKING FEMALE EXECUTIVE AT CHEVRON In 1993 Woertz transferred to Vancouver, British Columbia, as president of Chevron Canada, a refining and marketing subsidiary of Chevron Corporation. By 1996 she was president of Chevron International Oil Company and vice president of logistics and trading for Chevron Products Company. These positions put her in charge of the company’s supply, distribution, and worldwide trading operations. Chevron leaders took note of Woertz’s success and in 1998 named her president of Chevron Products Company, making her the highest-ranking female executive in the company. As president of Chevron Products Company, Woertz oversaw a fuel-refining and marketing operation that included 8,600 employees, eight thousand service stations, and six major refineries. Despite her success, Woertz refused to see herself as a trailblazer. “I’ve always been gender-blind in my career,” she told the San Francisco Chronicle (August 11, 1993). At the start of the 2000s Woertz weathered another merger, this time between Chevron and Texaco, and in 2001 became an executive vice president for ChevronTexaco Corporation. As such, she was put in charge of the company’s worldwide operations in lubricants, refining, marketing, supply, and trading. In this position, Woertz found herself in charge of 26,000 employees in 180 countries employed at 25,000 service sta-


Patricia A. Woertz

tions and 20 refineries, producing 2.2 million barrels of petroleum products daily. The operation was generating more than $80 billion in sales a year. Running this behemoth of a company was no small task. As some of the company’s operating earnings plummeted in 2002, Woertz used her accounting background to identify $100 million in refining savings. She studied operations at both Chevron and Texaco to identify where merging operations would save money. For example, she moved operations for refining inexpensive high-acid crude from a Texaco plant in Wales to a Chevron plant in Cape Town, South Africa. The move saved the company $10 million.

KNOWN AS A DYNAMIC LEADER Like the oil her company refined, Woertz herself became a much-sought-after commodity. At times, Woertz fielded three job offers a week from search firms interested in hiring her for other companies. “She exudes leadership,” one corporate headhunter told the Wall Street Journal (January 31, 2003). “She’s dynamic without being flashy.” She also possessed a hands-on management style. As a leader at ChevronTexaco Corporation, Woertz’s plan for profitability was simple—keep the refineries safe and reliable, and profits would follow. To this end, she decided to visit the company’s refineries. In the fall of 2002 she visited the El Segundo refinery in Southern California, mixing casually at a barbecue with the mostly male workforce. During this time, Woertz listened to what the workers had to say. “They used to never listen to us guys in coveralls,” the plant’s head operator, Tony Holmquist, told the Wall Street Journal (January 31, 2003).


Woertz also used the gathering to hit upon the importance of safety, and she asked the workers to ensure there would be no environmental accidents and no emergency shutdowns. She told them if they did that, it would push up the company’s stock prices so they could all retire a little earlier. Industry analysts anticipated that Woertz might one day become chief executive of ChevronTexaco Corporation. Such a promotion would make her the first woman to head a global energy company. In addition to her work duties, Woertz served on the board of directors of the Western States Petroleum Association and the California Chamber of Commerce of Sacramento.

See also entry on ChevronTexaco Corporation in International Directory of Company Histories.


“ChevronTexaco Aims to Boost Downstream Performance,” Octane Week, July 22, 2002. Herrick, Thaddeus, “Refining Chief Vows to Rally ChevronTexaco,” Wall Street Journal, January 31, 2003. Watson, Lloyd, “Chevron Exec Is Industry’s Top Female Operating Chief,” San Francisco Chronicle, August 11, 1993. Wilson, Lizette, “Making a Tough Job Look Easy,” San Francisco Business Times, April 18, 2003. “Woertz to Head Chevron Products,” Oil Daily, October 30, 1998. —Lisa Frick

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Shinichi Yokoyama President, Sumitomo Life Insurance Company Nationality: Japanese. Career: Sumitomo Life Insurance Company, 1966–1997, various positions; 1997–2000, managing director; 2000–2001, vice president; 2001–, president. Address: 1-4-35, Shiromi, Chuo-ku, Osaka, 540-8512, Japan, 81-6-6937-1435; http://www.sumitomolife. co.jp.

■ Shinichi Yokoyama was employed for most of his life at the same company—Sumitomo Life Insurance, rising from an entry-level position to become the president of the company. He gained so much respect from colleagues as he climbed the company ladder that when the head of the Life Insurance Association of Japan stepped down, Yokoyama was immediately asked to fill the position. As head of the association, Yokoyama was the spokesman for all five major insurance companies in Japan. When the Japanese economy began to decline in the late 1990s and the Japanese government passed laws to allow insurance companies to lower their yields to insurers, Yokoyama took a strong stand by calling the change “socially and legally unacceptable” (Asia Africa Intelligence Wire, July 19, 2002). His first concern was always for his company’s customers. Yokoyama joined the Sumitomo Life Insurance Company in 1966. There he worked his way up through the company, showing such an instinctive understanding of the insurance industry that by 1997 he had become the managing director of Sumitomo. At that time he decided to purchase the most advanced software for company business, leading the way for other Japanese insurers.

A NEW PRESIDENT Yokoyama was promoted to vice president of Sumitomo Life in April 2000. He held the position for only a year, however, as he became the company’s president in 2001 when

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Koichi Yoshida retired. Yokoyama was quoted in the Japan Weekly Monitor as saying that he aimed “to make the company ‘reliable and strong’ while increasing its profitability by pursuing in-house reforms” (May 14, 2001). Yokoyama took charge of Sumitomo Life at a time when its customers had been made anxious by lower rates of return on their policies. He saw his first duty as strengthening the company so that customers could purchase life insurance without fear. He was also true to his interest in technological advances in that he learned more about mobile communications devices in order to improve sales. The Yomiuri Shimbun said that Yokoyama “got off to a good start in his new post” (July 10, 2001). At the same time that Yokoyama became president of Sumitomo Life, the Sumitomo Mitsui Banking Corporation was launched as a joint venture of the Mitsui and Sumitomo Groups. The Mitsui Banking Corporation had an affiliated life insurance company known as Mitsui Mutual, and some observers suggested merging Mitsui Mutual with Sumitomo Life. Yokoyama, however, told the press that his company would not participate in a merger that held no benefits for it. He stated that Sumitomo Life would not object to future cooperation with Mitsui, but had no intention of a formal merger. He was confident that his company could stand on its own. The Life Insurance Association of Japan announced in 2002 that it was replacing its current vice-chief Yuzuru Fujita, who wished to leave, with Yokoyama. The position had always been held on a rotating basis by the presidents of the five major life insurance companies in Japan. It was an honor to be chosen for the job, which had the side benefit of giving Yokoyama more frequent opportunities to promote his ideas.

PROBLEMS WITH THE GOVERNMENT In 2003 the Japanese government intervened to help life insurance companies threatened with financial ruin due to the combination of a troubled stock market and high-yield insurance settlements. The law permitted the insurance companies to lower yields on existing accounts and make lower payouts. Most companies, however, did not approve of the government’s measure. Yokoyama, as the new head of the Life Insurance Association, was adamantly opposed to the law, choosing to protect his insured customers instead. Despite falling stock market prices, Yokoyama told insurers that he did not think


Shinichi Yokoyama

it was either right or possible for life insurance companies to lower guaranteed yields. He told the Asia Africa Intelligence Wire that “Cutting yields would mean breaking promises to policyholders” (September 20, 2002). This statement was consistent with Yokoyama’s position throughout his career. He was reported in the Europe Intelligence Wire as having said, “Japan’s life insurers should resolve not to use the new law . . . . ‘Management must be determined not to use it’” (July 31, 2003). Yokoyama was afraid that a cut by one insurer would result in a wave of policy cancellations. He told the Japanese House of Representatives that “. . .discussions about a law revision should be conducted from the standpoint of investor protection,” according to the Asia Africa Intelligence Wire (June 4, 2003).


As head of the Life Insurance Association, Yokoyama also asked the Bank of Japan in 2003 to buy banking shares owned by insurers and nonprofit companies to help stabilize the country’s weakened stock market. According to the Asia Africa Intelligence Wire, Yokoyama “stressed that the health of domestic life insurers remain sound despite recent weakness in stock prices” (November 15, 2002). Although the markets had not improved significantly by 2004, Yokoyama was still protecting policyholders across Japan.

“No Problem in Japan Life Insurer’s Solvency Margins: Ind. Leader,” Asia Africa Intelligence Wire, October 18, 2002.

“BOJ Should Buy Bank Shares: Life Insurance Ind. Head,” Asia Africa Intelligence Wire, April 18, 2003. “Company Heads Face Challenges with Optimism,” Yomiuri Shimbun, July 10, 2001. “Guaranteed Yield Cut Impossible: Japan Life Insurers’ Leader,” Asia Africa Intelligence Wire, July 19, 2002. “Guaranteed Yields Cannot Be Lowered: Life Insurance Ind. Leader,” Asia Africa Intelligence Wire, September 20, 2002. “Industry Head Urges Insurers Not to Cut Guaranteed Yields,” Japan Weekly Monitor, June 24, 2003. “Japan Life Insurers in Sound Health: Yokoyama,” Asia Africa Intelligence Wire, November 15, 2002.

“Paying a High Price?” Europe Intelligence Wire, July 31, 2003. “Sumitomo Life Not to Join Holding Firm Eyed by Sumitomo Mitsui,” Japan Weekly Monitor, July 22, 2002. “Sumitomo Life Pres. Says No Merger Planned with Mitsui Mutual,” Asia Africa Intelligence Wire, July 2, 2003. “Sumitomo Life to Promote Yokoyama to President,” Japan Weekly Monitor, May 14, 2001.

See also entry on Sumitomo Life Insurance Company in International Directory of Company Histories.



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Dave Yost 1947– Chief executive officer, AmerisourceBergen Corporation Nationality: American. Born: 1947. Education: United States Air Force Academy, BS, 1969; University of California at Los Angeles, MBA, 1970. Family: Married (wife’s name unknown). Career: United States Air Force, 1969–1974, captain; Kauffman-Lattimer Company, 1974–1989, a variety of operational, sales, and executive positions including cochief operating officer, executive vice president of operations, and president; Alco Health Systems Corporation, 1989–1995, group vice president and group president of central region; AmeriSource Health Corporation, 1995–1997, executive vice president of operations; 1997–2000, president and chief executive officer; 2000–2001, chief executive officer and chairman; AmerisourceBergen Corporation, August 2001–October 2002, president; August 2001–, chief executive officer. Address: AmerisourceBergen Corporation, 1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania 190875594; http://www.amerisourcebergen.com.

Dave Yost. AP/Wide World Photos.

LEADING PHARMACEUTICAL DISTRIBUTOR

largest pharmaceutical services companies, along with associated services to pharmaceutical manufacturers and healthcare providers, in the early 2000s. Specifically, the company provided pharmaceutical distribution and other services throughout the United States to managed-care facilities, hospitals, drugstores and chain retail pharmacies, nursing homes and assisted-living centers, mail-order facilities, physicians, supermarkets, clinics, and mass merchandisers from about 38 distribution centers. It also provided pharmaceuticals to long-term care, workers’ compensation, and specialty drug patients. The company distributed primarily generic, branded, biotechnology and specialty drugs and over-the-counter pharmaceuticals, but it also offered beauty and health aids, medical supplies, toiletries, and sundries. AmerisourceBergen had 14,800 employees as of September 2003.

AmerisourceBergen was the world’s leading wholesale distributor of pharmaceutical products and one of the country’s

PharMerica, the company’s subsidiary, was one of the largest U.S. providers of pharmaceuticals, infusion therapy (the

■ Healthcare manufacturing administrator R. David “Dave” Yost was the chief executive officer and a member of the board of directors of the healthcare, biotechnology, and drug company AmerisourceBergen Corporation, an organization based in Chesterbrook, Pennsylvania. With 30 years of experience in various sales, operations, and management positions within the pharmaceutical distribution field, Yost in the early 2000s was one of the country’s most respected leaders in the healthcare services industry.

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Dave Yost

practice of administering liquids through a drip feed), and other services to long-term and residential facilities. It also delivered pharmaceuticals and provided services through 125 institutional pharmacies that served 300,000 patients in 40 states.

FLYING UP THE CORPORATE LADDER Yost graduated from the U.S. Air Force Academy in 1969. He served as an active-duty member of the United States Air Force from 1969 to 1974 and eventually attained the rank of captain. In 1970 Yost earned his MBA degree from the University of California at Los Angeles. After leaving the Air Force in 1974, Yost joined the Columbus, Ohio-based KauffmanLattimer Company—an AmeriSource predecessor firm—in a variety of operational, sales, and executive positions including cochief operating officer, executive vice president of operations, and president. In 1989 Yost began working for Alco Health Systems Corporation, formerly associated with Kauffman-Lattimer, that was based in Malvern, Pennsylvania. In 1989 Alco Standard spun off Alco Health Services; the newly formed company increased its sales dramatically through key acquisitions and expanded product lines and went public as AmeriSource Health Corporation in 1995. During this period of expansion, Yost held the positions of group vice president and group president of the central region. In 1995 Yost became executive vice president of operations for Malvern, Pennsylvania-based AmeriSource Health Corporation. Two years later, in May 1997, Yost was promoted to president and CEO and remained as president until December 2000, at which time he added the position of chairman. During this period (1998) he led a reorganization of AmeriSource after the U.S. Federal Trade Commission blocked a proposed merger with McKesson Corporation.

FIRST PRESIDENT AND CEO OF NEWLY MERGED COMPANY AmeriSource Health Corporation and Orange, Californiabased Bergen Brunswig Corporation merged on August 29, 2001, in a $7 billion deal. Yost became the president, CEO, and a member of the board of directors of the new company, which was called AmerisourceBergen Corporation. At the time of the merger, Yost felt that the coming together of the two service-oriented companies would provide many new kinds of services and programs for its customers along with saving the new company about $125 million to $150 million annually in synergies, or combined efforts, mostly from a consolidation of its distribution centers. He remained as AmerisourceBergen’s president until October 2002, then continued as CEO and director.


SIMPLE, SINGLE FOCUS As the new head of the largest purchaser of generic drugs in the United States, Yost began to concentrate on improving AmerisourceBergen’s position in the pharmaceutical supply sector by bringing new and innovative products and services to its customers and increasing efficiencies throughout its giant distribution network. Yost committed himself to the company’s only agenda: dedicating itself to the distribution business within the healthcare and pharmaceutical industry. In fact, Yost believed AmericsourceBergen differentiated itself from its competitors (such as Cardinal Health, McKesson, and Owens & Minor) by not competing with its customers in services to the end user. And with this simple focus, Yost promoted the idea throughout his organization about how to make its retailers more competitive in the market, how to increase their revenues, cut their costs, and improve their margins.

MAXIMIZED EFFICIENCY AND CUSTOMER SERVICE With $36 billion in projected annual revenues in 2001 and operations in almost every U.S. state, Yost was given the job of improving the company’s overall efficiency while focusing on customer service throughout its 25,000 chain and independent pharmacies, as well as thousands of hospitals, nursing homes, and mail-order pharmacies. Yost began this strenuous task in a number of different key areas. Yost used a unique, decentralized organizational structure that dealt with national sales at the distribution-center level. In fact, Yost made sure that customer service was handled at the operating-unit level, the level closest to the customer, which was managed by Yost’s team of regional vice presidents and general managers. This management team had final decision-making authority to handle most customer situations that arose within its region. While Yost talked with these vice presidents on a weekly basis, his chief operating officer talked with them every business day. While this was happening, the vice presidents, who had years of experience at their jobs, were talking with the customers on a daily basis. Although Yost dealt with customers in a decentralized arrangement, he implemented a technology-based program for centralized procurement, data processing, and other administrative functions throughout his operational structure in order to achieve greater efficiencies. Yost integrated this technology so that tens of thousands of customers could easily and effortlessly submit millions of daily transactions into its nationwide system. Such technology included order-entry platforms, automated receivables accounting systems, and warehouse management systems. With such an infrastructure, Yost wanted to respond rapidly to deliveries, improve warehouse efficiencies to a just-in-time model (where products are left in warehouses for a minimal amount of time), and provide greater forecasting of product demands, all without sacrificing customer service.

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Dave Yost

Yost also dealt with the two well-established drugstore membership buying and marketing programs—Bergen’s Good Neighbor Pharmacy and AmeriSource’s Family Pharmacy— that together had about 4,000 independently owned drug stores. He combined the two programs into one unified, datadriven package that reduced the increasingly heavy workloads of its pharmacists. Yost also expanded many of the services offered by its pharmacies, including a diabetic-care business. Yost reduced the number of the company’s distribution centers from 52 in 2001 (at the time of the company’s merger) to 38 in 2003, and projected to reduce them further to 30 by 2007 in an effort to become as efficient as possible. The average AmeriSource center, according to Yost, handled about $700 million a year in products in 2001, but, now in 2003, took care of more than $2 billion per year. These increased levels of activities were also enhanced with the use of new robotic machines and computer systems that could handle many more products involving advanced, state-of-the-art automation; paperless ordering, picking up, and tracking; and faster turnaround. Yost also predicted at that time that errors would be greatly reduced with such efficiency efforts.

healthcare facilities while increasing their operating efficiencies. The third purchase brokered by Yost was of the Washington, D.C.-based U.S. Bioservices Corporation, a $160 millionplus deal made in January 2003. Bioservices, with 2002 revenues of about $125 million, was a specialty pharmaceutical services company that distributed complicated medications for such diseases as AIDS (acquired immune deficiency syndrome), cancer, multiple sclerosis, and hepatitis C to patients across the country. The reason that Yost purchased Bioservices was to expand AmerisourceBergen’s ability to support pharmaceutical manufacturers with complicated products that targeted small markets, such as in the biotechnology arena. Yost continued his acquisition activities with the June 2003 agreement to purchase Anderson Packaging, a privately held, contract pharmaceutical packaging company headquartered in Rockford, Illinois. The complete purchase amount totaled $100 million, including assumed debt of about $18 million. In the early part of 2004, Yost brokered a deal to buy Alpharetta, Georgia-based MedSelect, a privately held provider of automated medication and supply dispensing cabinets, for $13.4 million, including assumed debt.

EXPANSION PLANS In 2002 Yost directed AmerisourceBergen through several major acquisitions. He began to acquire smaller drug companies related to, but outside, its core business area in order to strengthen the company’s position in the pharmaceutical supply chain with regards to both customers and suppliers. Yost specifically stayed away from billion-dollar purchases, but instead concentrated on acquisitions in the $100 million to $200 million range that he thought would help earnings in the most efficient way possible. In July 2002 Yost acquired the Chicago, Illinois-based AutoMed Technologies for $120 million. Yost bought the company in order to use its automated drug dispensing system to lower AmerisourceBergen’s costs for dispensing drugs in pharmacies. With only about 10 percent of retail pharmacies and fewer than 50 percent of outpatient hospital pharmacies using automation, Yost planned to employ AutoMed’s software, equipment, and workflow design to automate pharmacy dispensing equipment throughout AmeriSource. Yost signed an order for his intent to purchase Bridge Medical, a company based in Solana Beach, California, in December 2002. He intended to take advantage of the company’s barcode-enabled, point-of-care software, a bedside scanning system that coordinated the correct medication with a patient’s bar-coded wristband. The base price for the acquisition of Bridge Medical was $27 million, with an incentive option of up to $55 million depending on future earnings. Yost liked the company because its products helped to reduce medication errors and, as a result, decreased the costs of the company’s

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TWO-YEAR RESULTS Within a year of taking the helm, Yost proudly declared that AmerisourceBergen’s management team had progressed greatly with integrating its service programs, establishing a common technology platform in many of its pharmacies, and raising the amount of use of its programs among its customers. After about two years of streamlining activities, acquisitions, and improved technology within its services, Yost reported total revenues for AmerisourceBergen of $49.7 billion in 2003, a 10 percent increase over 2002, and a net income of $441.2 million, a 27.9 percent increase over 2002. With a 25 percent share of the U.S. drug-distribution market, Yost positioned AmerisourceBergen as a major player in the healthcare, biotechnology, and drug industry.

See also entry on AmeriSource Health Corporation in International Directory of Company Histories.


“CEO Portrait: David Yost,” Philadelphia Business Journal, April 28, 2000, p. 16. Moukheiber, Zina, “Easy Pill to Swallow,” Forbes, October 29, 2001, p. 74.


Dave Yost Teosoriero, Heather Won, “Big Drug Wholesaler Fights Charges of Fakes, Price Fixing,” Wall Street Journal, October 7, 2003. —William Arthur Atkins


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Larry D. Yost 1938– Chairman and chief executive officer, ArvinMeritor Inc. Nationality: American. Born: 1938, in Ohio. Education: Milwaukee School of Engineering, BS, 1977.

Yost, who weeks earlier had told Wall Street analysts that a marriage between ArvinMeritor and Dana “would make us much stronger and more competitive than we are today,” according to Automotive News (December 1, 2003), announced on November 23, 2003, that the offer was being withdrawn. It was considered unlikely that this unsuccessful attempt to expand his company’s market share would permanently dash Yost’s hopes of growth through expansion. The ArvinMeritor CEO had long insisted that the key to survival in the auto parts industry was through consolidation, which he considered “necessary and inevitable.”

Family: Married Joann. Career: Warner & Swasey Co., ?–1971, started as machinist, eventually graduating to junior management positions in production; Rockwell Automation, 1971–1976, production and inventory control manager of the Industrial Control Group (ICG) of the division Allen-Bradley; 1976–1979, manufacturing manager; 1979–1982, manufacturing director; 1982–1990, vice president of ICG operations; 1990–1994, senior vice president of ICG; 1994–1997, president of Heavy Vehicle Systems for Rockwell Automotive; 1997, president of Rockwell Automotive; Meritor Automotive, 1997–2000, president and CEO; ArvinMeritor Inc., 2000–, chairman and CEO. Awards: World Trader of the Year, Detroit Regional Chamber, 2001; CEO of the Year, Automation Alley, 2001. Address: ArvinMeritor Inc., 2135 West Maple Road, Troy, Michigan 48084-7186; http://www.arvinmeritor.com.

■ Larry Yost in 2000 engineered the creation—through what was then widely billed as a “merger of equals”—of one of the world’s major suppliers of components to the automotive industry. ArvinMeritor Inc., the company Yost led as chairman and chief executive officer in the early 2000s, manufactured parts for both commercial and light vehicles, including brakes, axles, clutches, and transmissions for heavy vehicles and lightvehicle roof, door, and suspension systems. In 2003, however, Yost was frustrated in his ambitious effort to more than double the size of the company, when ArvinMeritor’s hostile takeover bid for its even bigger rival, Dana Corporation, was abandoned after Dana’s board repeatedly refused to negotiate a possible consolidation.

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EARLY EDUCATION AND PROFESSIONAL DEVELOPMENT Yost, who was born and raised in rural Ohio, went to work as a machinist’s apprentice after graduating from high school. He was 39 years old when, in 1977, he earned his bachelor’s degree in industrial management from the Milwaukee School of Engineering. In the interim, after his apprenticeship as a machinist, Yost had taken a job with the industrial toolmaker Warner & Swasey Company, where he worked in a number of positions until 1971, when he joined Rockwell Automation’s Allen-Bradley Division as production and inventory control manager of its Industrial Control Group. In 1976 Yost took over as Allen-Bradley’s manager of manufacturing; three years later he was promoted to director of manufacturing. In 1982 he was named vice president of operations for AllenBradley’s Industrial Control Group, a post he held until 1990, when he became senior vice president. In 1994 Yost was named president of Rockwell Automotive’s Heavy Vehicle Systems (HVS). Three years later, in 1997, he was appointed to serve as president of Rockwell Automotive. In the fall of that year Yost oversaw the successful transition of Rockwell Automotive from its proud place as the century-old heart of Rockwell’s automotive operations to independence as Meritor Automotive. At the time of the spin-off, Meritor ranked as the 26thlargest automotive components supplier. Interviewed by Mark Phelan of Automotive Industries about a year after Meritor’s birth, Yost described his vision for newly created company as becoming “the best in the world in terms of engineering, innovation, and our customers’ satisfaction with our place in the value chain.” From the outset, Yost made it clear that he saw


Larry D. Yost

consolidation as the wave of the future for the automotive parts business. Moreover, he indicated that he wanted Meritor to play an active role in spearheading that consolidation, rather than becoming a company that is picked up by its rival.

YOST’S STRATEGY OF CONSOLIDATION In short order, Meritor, under Yost’s direction, had acquired a number of smaller auto components companies, slowly expanding its share of the automotive parts market. Among the strategic acquisitions and partnerships engineered by Yost were the purchases of Lucas-Varity’s heavy-vehicle braking operations and Volvo AB’s heavy-truck axle business, as well as a joint venture in transmissions with ZF Friedrichshafen of Germany. But Yost had his sights set on still bigger targets. In July 2000, less than three years after its spin-off from Rockwell, Meritor merged with Arvin Industries, a similarly sized auto parts supplier based in Columbus, Indiana. Under the terms of the merger agreement, Yost was to lead the combined company for the first year or so, after which he would be succeeded by Arvin’s former CEO Bill Hunt, eight years his junior. However, only a year after the merger, Hunt left ArvinMeritor, and Yost continued to lead the company. In engineering Meritor’s merger with Arvin, Yost had promised that integration synergies in the new company’s first year of existence would deliver after-tax cost savings of $30 million. Only 100 days after the merger’s finalization, ArvinMeritor managers had already identified after-tax savings of $40 million. Realizing that the key to a merger’s success or failure is often integration, Yost directed that merger integration be treated as a core corporate competency rather than simply a one-time event.

EMPHASIS ON MERGER INTEGRATION Even before the merger was completed, Yost had formed 19 integration teams, made up of key personnel from both Arvin and Meritor. Beginning two months before the merger itself, these integration teams met weekly to plan integration strategies for the combined company’s many operational areas, including engineering, sales, procurement, operations, finance, human relations, quality control, and facilities management. According to an ArvinMeritor corporate press release, Yost credited the new company’s strong management team for ArvinMeritor’s early success in surpassing its ambitious integration goals: “These hardworking individuals have a strong track record of managing successful integration processes, and that expertise is paying off handsomely in integrating our operations.” At the end of ArvinMeritor’s first year—a year marked by weak automotive markets worldwide—the company had far exceeded its cost synergy targets and had significantly strength-


ened its market position as a leading supplier to global automotive markets. In addition to the early start on integration strategizing, Yost said ArvinMeritor’s first-year success could be attributed to its ability to quickly adopt and implement cost-saving and quality initiatives, a diverse product mix serving both the primary and aftermarket areas of the automotive market, and a merger that was completed without incurring debt or premium.

MANAGEMENT STRATEGIES OF COMMUNICATION AND GROWTH Central elements in Yost’s successful management strategy at ArvinMeritor included an emphasis on internal communications designed to engage all employees more fully and continued investment in new technologies that would benefit fleets and original-equipment-manufacturer (OEM) customers in a number of industry segments. As part of its internal communications program, ArvinMeritor held quarterly meetings for all employees. Each of these meetings took place in one of the company’s more than 150 facilities worldwide and was broadcast live to employees at all other company plants and offices. Further supporting ArvinMeritor’s communications program were a global internal Web site and an employee newsletter. The newsletter, translated into five languages, focused on the achievements of individual employees, automotive industry trends, and other business issues. As part of ArvinMeritor’s strategy to ensure continuing growth and a successful future, the company sought to differentiate itself from its competitors by offering its customers creative technological solutions. Such solutions included investment in “new modules and systems that address critical safety and environmental demands,” according to Yost’s second-in-command, Terry O’Rourke, ArvinMeritor’s president and chief operating officer (Skydel, March 1, 2003). Further elaborating on the company’s “culture of continuous improvement,” Yost said the company’s management was confident “our growth strategies will leverage our leading market positions in those areas that directly support our customers’ needs for safe, environmentally friendly vehicles” (Skydel, March 1, 2003). In fiscal 2001, which ended September 30, 2001, a year after the merger of Arvin and Meritor, the combined company announced net earnings of $35 million on total revenue of about $6.8 billion. The following year, ArvinMeritor’s net income jumped to $107 million on total sales of approximately $6.9 billion. In fiscal 2003 ArvinMeritor’s total sales rose more than 13 percent to nearly $7.8 billion, producing a net income of $136 million, up just over 27 percent from the previous year.

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PURSUIT OF ADDITIONAL MERGERS Not content to rest on his laurels, Yost, the “mergermeister,” in July 2003 launched a hostile takeover bid for Dana Corporation, a rival automotive parts supplier based in Toledo, Ohio. From the outset, the reaction from Dana, an even larger auto supplier than ArvinMeritor, was anything but encouraging. Dana’s board flatly rejected ArvinMeritor’s initial tender offer of $15 a share and continued to refuse to discuss merger plans after the offer was increased to $18 a share. Dana was not alone in its cool reaction to Yost’s offer, which also drew skepticism from Wall Street analysts, who were worried by the proposed deal’s debt burden, and from federal regulators. Yost continued to press his courtship—unwelcome though it was—of Dana until late November 2003, when he finally gave up the effort. The merger, had it gone through, would have made the combined company the third-largest U.S. automotive parts supplier, behind Delphi Corporation and Visteon Corporation, which were spin-offs of the auto parts units of giant automakers General Motors and Ford, respectively. As of 2004, it was unclear whether Yost would seek out another merger candidate for ArvinMeritor. Although he turned 65 in 2003, Yost set aside his plans for retirement to see through the campaign to acquire Dana. According to Automotive News, the ArvinMeritor CEO faced no mandatory retirement age and could perhaps pursue yet another merger for the company. Even if Yost was to retire before pushing through another acquisition, it was anticipated that the culture he had put in place at ArvinMeritor would eventually move to achieve new economies of scale through acquisition or merger. In the meantime, ArvinMeritor was expected to continue to survive through continuing efforts to make its production ever more efficient. As Philip Siekman of Fortune observed, “Making parts for the world’s car and truck manufacturers is a high-investment, low-margin business. Participants are continually squeezed by a shrinking group of customers worldwide” (December 29, 2003). To achieve its goals of continuous improvement in production, the company used the internal communications network put together under Yost to spread the message to its employees in every corner of the globe. According to Siekman, the company had occasionally found pockets of resistance to its continuous-improvement

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goals. Of such resistance O’Rourke said, “There have been cases of insufficient embracing of the program. You go through coaching and educating, and if nothing works you suggest that maybe there’s an alternative,” namely, getting another job (December 29, 2003). In addition to his responsibilities at the helm of ArvinMeritor, Yost was active in both community and industry affairs in the Detroit area. He sat on the boards of Kennametal Inc. and UNOVA and also served on the boards of the Economic Club of Detroit, the Automotive Hall of Fame, United Way Community Services, Detroit Renaissance, and the National Center for Educational Accountability. Yost and wife, Joann, served as chairs for the 18th Annual Barbara Ann Karmanos Dinner to benefit the Karmanos Cancer Institute.

See also entries on Rockwell Automation and ArvinMeritor, Inc. in International Directory of Company Histories.


“Arvin and Meritor Merge to Form $7.5 Billion Company,” Aftermarket Business, May 1, 2000. Kaplan, Robert S., ed., Measures for Manufacturing Excellence, Boston: Harvard Business School Press, 1990. Pfeffer, Jeffrey, The Human Equation: Building Profits by Putting People First, Boston: Harvard Business School Press, 1998. Phelan, Mark, “Meritor Fights for Its Place,” Automotive Industries, July 1998. Sherefkin, Robert, “News Analysis: Dana Fight Proved Too Much for Yost,” Automotive News, December 1, 2003. Siekman, Philip, “The Struggle to Get Lean,” Fortune, December 29, 2003. Skydel, Seth, “Disciplined Approach,” Fleet Equipment, March 1, 2003. Walsh, Tom, “Yost Ready to Prove Merger Prowess Again,” Detroit Free Press, July 15, 2003. —Don Amerman


■■■

Yun Jong-yong 1944– Chief executive officer, Samsung Electronics Company Nationality: Korean. Born: January 21, 1944, in Yonchun, Korea. Education: Seoul National University, BS, 1966. Family: Married (wife’s name unknown); children: two. Career: Samsung Group, 1966–1969, entry-level positions; Samsung Electronics Company, 1969–1977, Television Business Division, Video Business Division; 1977–1980, branch-office manager; 1980–1981, director of Television Business Division; 1981–1985, director of Video Business Division; 1985–1988, director of Research and Development Division; 1988–1990, vice president of Electronics Group; 1990–1992, vice president and representative director of Consumer Electronics Business Group; 1992, president and representative director of Consumer Electronics Business Group; Samsung ElectroMechanics Company, 1992–1993, president and CEO; 1993–1995, head of Display Devices Division; Samsung Japan, 1995–1996, president and CEO; Samsung Electronics, 1996–, president and CEO; Samsung Group, 1996–1999, president. Awards: Bronze Medal for Contribution to Industry, Republic of South Korea, 1990; Gold Medal for Contribution to Industry, Republic of South Korea, 1992; Honorable Engineering Alumnus Award, Seoul National University, 1995; Outstanding Achievement in Management Award, Institute of Industrial Engineers, 1998; Most Successful CEO in Korea, Korea Management Association, 1999; Top 25 Managers of the Year, BusinessWeek, 2003; Asia’s Businessman of the Year, Fortune, 2000; Asia Business Leader Award, CNBC, 2002. Address: Samsung Group, 250, 2-ga, Taepyung-ro, Chung-gu, Seoul, 100-742, South Korea; http:// www.samsung.com.

■ The soft-spoken Yun Jong-yong, the CEO of Samsung Electronics Company since December 1996, led his company International Directory of Business Biographies

Yun Jong-yong. © AFP/Corbis.

to the forefront of the keenly competitive consumerelectronics industry, surpassing key rivals Sony and Nokia in terms of market value by early 2004. According to a report from the Agence France Presse news service, South Korea’s Daishin Securities reported on April 14, 2004, that the market capitalization of the South Korean electronics giant had topped $88 billion, compared with Nokia’s $80 billion and Sony’s $39 billion. Samsung Electronics not only shot to the front of the pack internationally but also lifted its parent Samsung Group to the number one spot in South Korea’s all-important business rankings. Thanks in large part to Yun’s efforts, which drew heavily on industrial engineering (IE) concepts, Samsung Group stood at the top of South Korea’s giant industrial conglomerates, or chaebols. In many ways the Asian economic crisis of the late 1990s helped pave the way for Samsung’s climb

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to the top of South Korea’s increasingly high-tech business world. When the dust from that massive recession had finally settled in 2001, Hyundai had tumbled from its leadership position, and the number three Daewoo was essentially swept away on a tide of scandal. In the five years between 1997 and 2002, 19 of South Korea’s 30 chaebols went under while Samsung made its way into the number-one position. As of late 2003 Samsung accounted for roughly 25 percent of South Korea’s gross domestic product and 20 percent of the country’s total exports.

GOES TO WORK FOR SAMSUNG GROUP

TAKES OVER TROUBLED COMPANY

In January 1977 Yun was sent to Tokyo to take over as manager of Samsung Electronics’ Japanese branch office. In the middle of 1980 he returned to South Korea to become director of the company’s Television Business Division. A little over a year later, when Samsung Electronics decided to launch its own Video Business Division to produce video cassette recorders (VCRs) for sale worldwide, Yun was tapped to direct the operation. Samsung was forced to develop its own VCR technology to get the job done, since no other countries were willing to share their know-how with the South Korean company.

An engineer by trade, Yun took over as CEO at Samsung Electronics when the company was in deep trouble in December 1996. The world’s largest producer of memory chips was hurting because of a sharp decline in chip prices and was also losing money on sales of low-priced microwave ovens and televisions. According to Fortune magazine, the situation at Samsung was so dire that top management authorized Yun to take drastic measures not usually seen in South Korean business circles. The new CEO moved quickly to restore the electronics company to financial health, slashing its payrolls by a third, selling off almost $2 billion in corporate assets, and replacing about half of the company’s division managers. To punch up Samsung’s consumer appeal, Yun introduced a wide range of cutting-edge products, including flat-panel displays, MP3 music players, and a new line of lightweight cell phones with Internet access and voice-activated dialing. Yun Jong-yong was born on January 21, 1944, in Yongchun, Korea, a small town in the not-yet-divided country’s southeastern province of Kyungsangpukdo. Interviewed by Eric Minton for a profile in Industrial Management, Yun said that as far back as he could remember he had always loved to learn, “more out of curiosity than a thirst for knowledge. I just think I was very curious about everything ever since I was young, and curiosity leads you to natural science” (July 1, 1999). When it came time for Yun to make a decision about his course of study at college, he was forced to reject his first choice—philosophy—as being unlikely to prepare him to earn a living and opted instead for electrical engineering. He had to fight for that choice, however, as revealed in Minton’s profile: one of Yun’s high-school teachers was so convinced that the young man should pursue the study of physics that he at first refused to submit Yun’s college application until he changed his choice of major. Yun was obligated to use all his powers of persuasion to get the teacher to relent; in the end Yun got what he wanted.

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Graduating from Seoul National University in 1966 with a bachelor’s degree in electrical engineering, Yun went to work for Samsung Group, one of South Korea’s leading industrial conglomerates. In his first three years with the company he worked as a member of the administrative staff in the Office of the Chairman; in 1969, on the strength of his engineering background, Yun was selected to join Samsung’s newly created electronics subsidiary. For the next several years he worked in the television division of Samsung Electronics, holding positions in such areas as manufacturing, materials handling, engineering, and administration.

Named director of Samsung Electronics’ Research and Development Division in 1985, Yun began to increase his use of IE principles to boost productivity and shrink production time. According to the Institute of Industrial Engineers (IIE), industrial engineering focuses on the design, improvement, and installation of integrated systems of people, materials, information, equipment, and energy. “It draws upon specialized knowledge and skill in the mathematical, physical, and social sciences together with the principles and methods of engineering analysis and design to specify, predict, and evaluate the results to be obtained from such systems,” IIE explains (“Definition of Industrial Engineering”).

SETS UP COMPANY IE CENTER Elevated to the ranks of senior management in 1988 when he was named vice president of Samsung’s Electronics Group, Yun established an IE center designed to apply IE principles to all phases of the manufacturing operation, including materials handling, supply chain, and engineering. Not everyone at Samsung was as ready to embrace IE as Yun, however. As he told Minton, “There was resistance because people thought this was very cumbersome in the beginning. The introduction of the new tools entailed big changes, and I think people are intrinsically adverse to change” (July 1, 1999). To accelerate understanding and acceptance of IE concepts at Samsung Electronics, Yun held in-house training sessions for shop supervisors and managers. Even more effective in win-


Yun Jong-yong

ning the hearts and minds of Samsung factory personnel was Yun’s implementation of industrially engineered solutions to existing problems on the assembly line. One such project involved shortening the length of the company’s VCR production line from 180 meters to 120 meters. Yun was told there was no way the project could be completed in fewer than 60 to 90 days; he proved it could be done in five days. Before long skeptics and naysayers were transformed into outspoken advocates of IE. Only a month after his promotion to vice president in May 1988 Yun completed the Senior Executive Program at the Massachusetts Institute of Technology’s Sloan School of Management. His efforts to introduce IE principles throughout the Samsung Electronics culture were redoubled after his return to South Korea. In March 1990 Yun was named vice president and representative director of Samsung’s Consumer Electronics Business Group. Two years later he was promoted to president while retaining his position as representative director.

TAKES OVER AS PRESIDENT AND CEO In December 1992 Yun was tapped to serve as president and chief executive officer of Samsung Electro-Mechanics (SEM), thus beginning what would stretch into four years away from Samsung Electronics, which had been his home since 1969. SEM, established in 1973 as a manufacturer of key electronics components, was focusing in the early 1990s on the production of such products as chip components, multilayer circuit boards, and mobile communication and optical components. During his tenure at SEM Yun managed to smooth out the supply chain for Samsung operations using SEM components by improving assembly-line productivity. He also implemented just-in-time production operations. After about a year at SEM Yun took over as president and CEO of Samsung Display Devices Company (now known as Samsung SDI). This Samsung subsidiary, which manufactured a wide variety of display devices, including computer monitors and flat-screen displays, in the early to mid-1990s was focusing much of its energy on the development of a cathode-ray tube for use in a 32-inch high-definition TV. In November 1995 Samsung executives appointed Yun to serve as president and CEO of Samsung Japan, headquartered in Tokyo. At the end of 1996 Yun returned to Samsung Electronics, this time as its new president and CEO. There could hardly have been a less propitious time for Yun to take over the company. By the middle of 1997 South Korea, along with most of East Asia’s industrialized countries, found itself in the midst of a massive financial crisis. In South Korea much of the blame for the country’s financial difficulties—which brought the national treasury to the brink of default—was laid at the door of its system of chaebols. As the country teetered on the edge


of bankruptcy, it became apparent that for the previous two decades a large chunk of the national wealth had been funneled into the coffers of the giant conglomerates in order to keep them up and running. With that support sharply reduced—or withdrawn altogether—many of the country’s chaebols were forced out of business. In other cases they were reduced to mere shadows of their former selves.

BEEFS UP IE TEAM Yun, convinced that the financial crisis was more of an opportunity than an obstacle, moved aggressively to put industrial engineering to work throughout the company. With an IE team of 120 full-time employees, Samsung Electronics already had the only IE-dedicated corporate staff in South Korea. But Yun decided the team still needed to be beefed up; the IE staff was more than doubled to 280 employees. To further instill the company’s employees with an understanding of the applicability of IE techniques, Yun personally trained a total of 1,550 general managers and other executives. He also oversaw the refinement of IE principles to fit the specific circumstances of the company’s operations. This gave birth to Samsung Layout Planning, which used computer simulation software to design factory layouts and give specific manufacturing operations the greatest logistical efficiency. Another by-product of Yun’s all-out implementation of IE was the Samsung Production System, which, according to Minton, “incorporated various production lines and cells into a mixed-mode production system designed to meet particular customer demands” (July 1, 1999). While others among South Korea’s chaebols were foundering, Yun oversaw a 100 percent increase in productivity at Samsung Electronics in his first year as CEO. The company’s inventories of finished goods were cut by a third, and its asset turnover rate rose by more than 50 percent. This was just the beginning for Yun, who reduced the company’s workforce by roughly a third and replaced many senior managers with younger, more innovative thinkers. For his creative use of IE management techniques to weather South Korea’s financial crisis, Yun was given the Award for Outstanding Achievement in Management in 1998 by the Institute of Industrial Engineers.

THE THREE PS At the heart of Yun’s strategic plan for Samsung Electronics were the three Ps: product, process, and personnel innovation. In the area of product innovation Yun moved quickly to extract Samsung from those businesses that were marginal or no longer producing an acceptable rate of return. As a result Samsung Electronics sharply reduced its television output and did

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away with such marginal product lines as dishwashers, electronic pagers, and juicers. These products were replaced with such high-tech, high-margin goods as flat-panel displays, MP3 music players, and advanced mobile phones. Among the processes streamlined by Yun was the global supply chain, which was changed from a monthly to a weekly system. Under the new system the company shifted focus from make-to-stock to make-to-order production. With the reduction in inventories cash flow improved. In the area of personnel innovation Yun instituted a system of global product management under which each of Samsung Electronics’ 14 divisions was directed by a global product manager who was responsible for every phase of that division’s operations. Of his decision to give his subordinates greater autonomy, Yun told Minton, “I believe the organization should be simple, speedy, and autonomous. By autonomous, I mean empowering the employees” (July 1, 1999). The company’s financial performance testified to the effectiveness of Yun’s policy changes. For 2002 Samsung Electronics posted a net income of nearly $5.9 billion, up dramatically from the $2.2 billion of 2001. Profits for 2003 were expected to top $5 billion, down slightly from 2002 because of sharp declines in chip prices. Analysts predicted a strong rebound in the company’s net income for 2004, forecasting a profit of $7.5 billion or higher. Yun was married and the father of two children, a son and a daughter. His achievements in masterminding the sharp turnaround at Samsung Electronics were widely recognized both inside and outside of South Korea. In 1990 he received his government’s Bronze Medal for Contribution to Industry; two years later the South Korean government honored Yun with a Gold Medal for Contribution to Industry. In June 1995 he was saluted by his alma mater, Seoul National University, which presented him with its Honorable Engineering Alumnus Award. Yun received IIE’s Outstanding Achievement in Management Award in May 1998. The following year the Korea Management Association named Yun the Most Successful CEO in Korea. Fortune magazine selected Yun as Asia’s Businessman of the Year in 2000, noting that the Samsung Electronics CEO “had used Asia’s current chaos to reinvent a company that seemed near death” (January 24, 2000). In 2002 he was honored by the cable-television network CNBC, which gave him its Asia Business Leader Award. In its January 12, 2004, issue, BusinessWeek named Yun one of the Best Managers of 2003.

See also entry on Samsung Electronics Co., Ltd. in International Directory of Company Histories.

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Barber, Ben, “South Korea’s Troubles Are Blamed on ‘Chaebols,’” Washington Times, December 25, 1997. “The Best Managers: Yun Jong Yong,” BusinessWeek, January 12, 2004. Brooke, James, “Samsung Tries to Keep Outgrowing Economic Woes,” International Herald Tribune, April 28, 2003. Brown, Heidi, “Look Out, Sony (Samsung Aims to Be Leading Electronics Brand),” Forbes, June 11, 2001. Dempsey, Michael, “Jong-Yong Yun of Samsung Electronics,” Financial Times, February 4, 2002. “The Future of Asia 2002: Mr. Jong-Yong Yun,” Nikkei Net Interactive, http://www.nni.nikkei.co.jp/FR/NIKKEI/inasia/ future/2002/2002pro_yun.html. Institute of Industrial Engineers, “Definition of Industrial Engineering,” http://www.iienet.org/public/articles/ details.cfm?id=468. Kraar, Louis, “The Man Who Shook Up Samsung,” Fortune, January 24, 2000. Lee, B. J., “The Revenge of the Nerds,” Newsweek, April 1, 2002. Minton, Eric, “A Philosophy of Change,” Industrial Management, July 1, 1999. “PICMET ‘03 Awards: Leadership in Technology Management,” PICMET, http://www.picmet.org/ conferences/2003/Awards.asp. “The Players: Jong-Yong Yun, CEO, Samsung Electronics,” Oracle, http://www.oracle.com/tvplayers/player_13/ about_player_profile.html. “President & CEO of Samsung Electronics Receives ’98 Award for Outstanding Achievement in Management,” Samsung, May 11, 1998, http://www.samsung.com/PressCenter/ PressRelease/generalnews/ generalnews_19980511_0000000078.htm. “Samsung Group Names Jong-Yong Yun New President and CEO of Samsung Electronics,” Samsung, December 18, 1996, http://www.samsung.com/PressCenter/PressRelease/ PressRelease.asp?seq=19961218_0000000161&type= CorporateNews. “Samsung Electronics Exceeds Rivals Nokia, Sony in Market Value,” Agence France Press English, April 14, 2004. “Speaker at the ICT World Forum @ CeBIT in 2003,” http:// www.ictwf.com/0a04/ 02content_main_speaker.php?speak03=026.

—Don Amerman


■■■

Antoine Zacharias 1939– Chairman and chief executive officer, VINCI SA Nationality: French. Born: June 6, 1939, in Sarreguemines, France. Education: École Nationale Supérieure d’Electrotechnique, d’Electronique, d’Informatique, d’Hydraulique, et des Télécommunications (ENSEEIHT), BS. Family: Married Rose; children: two. Career: Compagnie Générale des Eaux (CGE), 1971–1974, hydraulic engineer; 1974–1991, regional manager, Lyons; Société Générale d’Entreprises (SGE), 1991–1997, chief executive officer; CGE, 1994–1995, deputy general manager; Vivendi, 1995–2000, member of executive committee; SGE, 1997–2000, chairman and CEO; VINCI, 2000–, chairman and CEO. Awards: Grand Benefactor Medal, French government, 2003. Address: VINCI, 1 cours Ferdinand-de-Lesseps 92851 Rueil-Malmaison Cedex, France; http://www.vinci.com. Antoine Zacharias. © AFP/Corbis.

■ Antoine Zacharias, the first chairman and chief executive officer of the giant French construction company VINCI, guided the company to a steady increase in revenues and profits in the years following its 2000 spin-off from Vivendi, a widely diversified, Paris-based conglomerate. The key to VINCI’s improving fortunes was Zacharias’s forward-looking decision to diversify the company in the direction of airport and highway services and move it away from its previous dependence on construction projects. Although Zacharias continued to capitalize on VINCI’s core competencies and long history in construction, his strategy for increasing the company’s profitability was based on expanding it into airport service and toll road concessions. Under the direction of Zacharias, VINCI was organized into four main divisions: VINCI Construction, Eurovia, VINCI Energies, and VINCI Concessions. While the company’s construction division continued to account for the biggest share


of VINCI’s revenues in 2003, the operating margin of its concessions company—31.7 percent—dwarfed those of its other divisions. VINCI Concessions, which made use of the parent company’s expertise in project design, turnkey construction, financing, and management, provided management services for parking garages, airports, and highway systems—including some of France’s toll roads. VINCI ranked first in the 2003 top global contractors listing of Engineering News Record. VINCI was ranked third in the journal’s list of leading international contractors. Both listings, released in the Record‘s issue of August 25, 2003, were based on the companies’ 2002 revenues. Rankings in the top global contractors list were based on companies’ total 2002 construction contracting revenue, while the top international contractors list ranked companies on the total of their contracting revenues generated outside their home countries.

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EDUCATION AND EARLY CAREER Zacharias was born on June 6, 1939, in Sarreguemines, a small city in the Moselle region of France near the FrancoGerman border. His father was an architect. Zacharias grew up in a village not far from Sarreguemines. After graduating from high school, he enrolled at the École Nationale Supérieure d’Electrotechnique, d’Electronique, d’Informatique, d’Hydraulique, et des Télécommunications (ENSEEIHT) in Toulouse, where he completed a bachelor’s degree in hydraulic engineering. Zacharias was then hired for a series of public works construction projects in and around the city of Forbach, which is also in the Moselle region. Zacharias went to work in 1971 as a hydraulic engineer for the Compagnie Générale des Eaux (CGE), France’s massive water distribution company. Three years later he was named CGE’s regional manager for Lyons and its environs—a position he held for the next 17 years. In 1991 Zacharias was named chief executive officer of the Société Générale d’Entreprises (SGE), the public works construction division of CGE. In 1994 he was named deputy general manager of CGE while he retained his position as CEO of SGE. CGE was renamed Vivendi in 1995. Zacharias continued as SGE’s CEO and was named to Vivendi’s executive committee. Two years later, he was given the added responsibility of serving as chairman of SGE.

Independent (London). Keith Brooks, the CEO of TBI, told the Independent that VINCI’s offer did not reflect his company’s “underlying value” (August 16, 2001).

CONCESSIONS EXPANSION Despite TBI’s rebuff, VINCI managed to expand its position in the airport management business. As of mid-2004, VINCI Airports, a subsidiary within the company’s concessions division, managed 16 airports around the world either directly or with a partner. VINCI Airports also owned an equity stake in a number of airport management companies, giving the French company a presence in nearly 30 airports worldwide. In addition, the subsidiary operated cargo handling services at roughly a hundred world airports through its Worldwide Flight Services network. VINCI Concessions operated in three other business sectors: road and motorway infrastructure; parking garages; and the management of Stade de France, a giant stadium in Paris, in which VINCI held a 67-percent interest. In the area of road and motorway infrastructure, VINCI managed roughly 1,300 kilometers of toll roads, of which 928 kilometers were maintained by Confiroute, a company in which VINCI held a 65percent interest. VINCI was the world leader in parking garage management as of 2004, with more than 810,000 parking spaces under its control.

A SPIN-OFF AND A NEW NAME In 2000 Vivendi spun off SGE, which was renamed VINCI in honor of Leonardo da Vinci, who had been not only a renowned artist but one of history’s most visionary draftsmen and engineers. Zacharias remained the chairman and CEO of the newly created company. He moved aggressively to expand and diversify VINCI, engineering a friendly takeover of Groupe GTM, one of VINCI’s major competitors and the construction arm of another large water distribution company, Suez Lyonnaise des Eaux. Other acquisitions included Norwest Holst and Ringway in the United Kingdom; Emil Lundgren in Sweden; Teerbau, Obag, and Klee in Germany; and Sogeparc in France. The company also began to move more forcefully into other fields. In 2002 VINCI finalized its acquisition of a 16.4-percent share in Autoroutes du Sud de la France (ASF), the second largest European manager of highway and toll road systems. Under Zacharias’s direction, VINCI also entered the field of airport and parking garage management. Zacharias was frustrated, however, in his bid to acquire a controlling interest in TBI, a regional airport operator in the United Kingdom. Although VINCI had managed to acquire a 14.9 percent stake in TBI in August 2001, the British company’s board of directors rejected VINCI’s bid for control of the company as “opportunistic,” according to a report in the

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ONGOING CONSTRUCTION The success that VINCI experienced outside its core construction and engineering businesses tempted some business observers to wonder if the company might eventually move out of these sectors altogether. In an interview with Engineering News Record, Zacharias made clear that he would never sanction an abandonment of its core competency. Although the concessions segment of VINCI’s business had proved to be far more profitable, Zacharias saw important benefits in the firm’s remaining an integrated company. As he told Engineering News Record, “...there are a lot of synergies, even if you do not see them immediately” (August 25, 2003). VINCI Construction accounted for roughly 43 percent of the parent company’s total revenue of approximately $22.7 billion in 2003. Eurovia generated roughly 29.4 percent of VINCI’s sales, while the company’s energy division brought in about 17.1 percent of its total revenue. VINCI Concessions supplied about 10.5 percent of VINCI’s total sales. In terms of operating margin, however, VINCI Concessions far outstripped its sister divisions, coming in at 31.7 percent, compared to 4.1 percent for VINCI Energy, 3.8 percent for Eurovia, and 2.9 percent for VINCI Construction. About 39.2 percent of VINCI’s total revenue was generated outside France in 2003, down slightly from 41.2 percent in 2002.


Antoine Zacharias

LIMITED PRESENCE IN THE UNITED STATES


VINCI’s approach to construction “as more than pouring concrete and erecting steel is a tough sell across the Atlantic,” according to Engineering News Record. Although the company acquired several highway construction contractors in the United States, its construction business in that country remained relatively small as of mid-2004. Zacharias noted that VINCI’s approach to road construction—handling the entire process from design through maintenance—was not standard practice in the United States, where different road-building tasks are typically handled by different companies. “We want to design, to build, and to maintain,” Zacharias told the magazine. “A French company can bring nothing to America. The way [Americans] think is so different” (August 25, 2003).

“Antoine Zacharias: Vinci a l’oeil sur les autoroutes du sud,” Investir.fr, October 23, 2003, http://www.investir.fr/ exclusivite/chat.phtml?idChat=59742.

Zacharias was honored in early 2003 by the government of France, which awarded him its Grand Benefactor Medal for his support of the renovation of the Galerie des Glaces (Hall of Mirrors) at the Château de Versailles, one of the country’s most hallowed historical sites. The renovation project, which got underway in 2004 and was scheduled for completion by the end of 2008, had a price tag of almost $11 million and was underwritten completely by VINCI. In an interview with the Associated Press about the company’s involvement, Zacharias said, “My conviction is that durable development starts with taking charge of the jewels we inherited, our national patrimony.” He added, “I regret that Louis XIV isn’t here to contract the work.”

See also entries on Alcatel Alsthom, Vinci, and Vivendi Universal S.A. in International Directory of Company Histories.


De la Roque, Jean-Pierre, “Antoine Zacharias: Bâtisseur obstiné,” Challenges (France), March 2004. “The Global 500: Winners and Losers,” Forbes.com, July 22, 2002, http://www.forbes.com/global/2002/0722/036.html. “Investir—10/17/2003: Our Plans with ASF Would Result in a French Group of European Dimensions,” press release, http://www.vinci.com/appli/vnc/vncus.nsf/web/news.htm. “Luton Airport Owner Rejects ‘Opportunistic’ Vinci Bid,” Ananova.com, http://www.ananova.com/business/story/ sm_375378.html. Mesure, Susie, “Battle Looms as TBI Rejects Vinci Offer,” Independent (London), August 16, 2001. “Priority at Vinci is More Diversification,” Financial News (London), March 18, 2002. Reina, Peter, “Teaming Construction and Concessions, Vinci Can Pick the Plums,” Engineering News Record, August 25, 2003. Tieman, Ross, “VINCI Broadens Airport Horizons,” Evening Standard (London), August 16, 2001. “Versailles’ Hall of Mirrors Will Get Facelift,” Associated Press, January 27, 2003. —Don Amerman

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Edward Zander 1947– Chairman and chief executive officer, Motorola Nationality: American. Born: January 12, 1947, in Brooklyn, New York. Education: Rensselaer Polytechnic Institute, BS, 1968; Boston University, MBA, 1975. Family: Married Mona (maiden name unknown); children: two. Career: Raytheon Company, 1968–1973, engineer; Data General Corporation, 1973–1982, senior marketing positions; Apollo Computers, 1982–1988, vice president for marketing; Sun Microsystems, 1988–1991, vice president for corporate marketing; 1991–1995, president of SunSoft; 1995–2002, president and COO; Silver Lake Partners, 2003, managing director; Motorola, 2003–, chairman and CEO. Address: Motorola, 1303 East Algonquin Road, Schaumburg, Illinois 60196; http://www.motorola.com.

■ After spending 15 successful years at Sun Microsystems, Edward Zander was elected to serve as chairman and chief executive officer at Motorola in 2003. Zander began his career as an engineer but before long switched his focus to marketing. During his successful stints in the marketing departments at Data General Corporation and Apollo Computers during the 1970s and 1980s he earned a reputation as one of the top salesmen in the computer industry. He was hired by Sun in 1988 and later served as the president of Sun’s software company, SunSoft, before being named corporate president and chief operating officer in 1995. He spent time as a managing partner for a private-equity fund before being hired by Motorola in December 2003. The Brooklyn native was known for being an outspoken leader and a no-nonsense manager.

DEVELOPING STREET SMARTS Zander was the son of Jewish immigrants from Poland and Greece; his father reportedly dreamed of being a lawyer but in-

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Edward Zander. AP/Wide World Photos.

stead settled for a job as a furrier in order to support his ill parents. Zander was given the nickname “Fast Eddie” by his friends largely because of his Brooklyn roots. According to a Boston Globe article, he frequently demonstrated the “hustle of a street kid spoiling for a good fight”; Zander himself remarked, “I’m from New York, so I’m New York fast” (June 19, 2000). Zander’s first career choice was electrical engineering, which he studied at Rensselaer Polytechnic Institute in Troy, New York. After graduating in 1968, he moved to Boston to fill a position as an engineer at the defense supply firm Raytheon Company. However Zander quickly learned that he was, as he described to the Boston Globe, a “lousy engineer” (June 19, 2000). After spending five years with Raytheon he accepted a position as a marketer with Data General Corporation, one of the pioneers of microcomputing. Two years later


Edward Zander

he had earned his MBA at Boston University. His time with Data General proved successful, with the company’s sales increasing from $7 million in 1973, when he joined the company, to $500 million in 1982.

MAKES HIS NAME WITH APOLLO, CATCHES THE ATTENTION OF SUN Although Data General grew during the 1970s and early 1980s, the company had difficulty competing in the rapidly growing computer market. In 1982 Zander accepted a position as vice president of corporate marketing at Apollo Computers, based in Chelmsford, Massachusetts. Apollo made its name as the developer of the first networked workstation, the market for which Apollo led throughout much of the decade. During the 1980s Apollo focused on selling to engineering firms, which required a great deal of computing power to run graphics programs. In 1987 Zander demonstrated foresight in proclaiming, “The idea of putting a workstation on everyone’s desk is coming. The day of the computer as a competitive and strategic weapon has arrived—and the workstation is the backbone of the revolution” (July 27, 1987). In his first year with Apollo, Zander caught the attention of Scott McNealy, the cofounder of Sun Microsystems, which had also developed a workstation during the early 1980s. Zander later said that he was both amused and annoyed when McNealy continued to call him about joining Sun, which grew at a faster rate than Apollo during that decade; by 1985 the two companies were direct competitors. Three years later Sun had become a $1 billion business, and Apollo, which was acquired by Hewlett-Packard in 1989, had lost much of its market share. Zander finally agreed to join Sun as its vice president of corporate marketing in 1988.

as which he became responsible for the company’s computer division. Within six months Zander completely restructured the division, shifting its focus from workstation machines alone to a broader product base. Under Zander’s direction Sun marketed a more complete vision of networked computing that included less emphasis on stand-alone computers and more emphasis on the creation of Web sites and corporate networks. In four years Sun’s computer servers became an industry standard. Between 1995 and 2000 the company’s market value increased from $9 billion to $146 billion. Like many high-tech companies Sun fell upon hard times in the early 2000s. The company had planned to further develop its Internet presence, but the dot-com boom collapsed in 2001, and Sun suffered. Zander made clear that he wanted to run his own company, and McNealy had no plans to leave his job. In May 2002 Zander announced the he was leaving Sun.

REEMERGES AS MOTOROLA’S CHAIRMAN AND CHIEF EXECUTIVE OFFICER After leaving Sun in 2002, Zander spent a year as a managing partner for Silver Lake Partners, a private-equity fund. During this time Motorola was struggling with its top two businesses, computer chips and cell phones; in December 2003 Motorola announced the election of Zander as the company’s chairman and chief executive officer. Analysts expected Zander to reinvigorate the company through the use of his broad leadership skills. Since his days with Sun, Zander had developed a reputation as an extroverted, no-nonsense manager. After Motorola announced that he would lead the company, Zander noted in the Wall Street Journal Europe, “We need a sense of urgency. The execution is not what it should be. I have this Motorola camera phone; it’s a great product, but it should have been out a while ago, and we should have been marketing the heck out of the thing” (December 18, 2003).

BECOMES THE FORCE BEHIND SUN’S GROWTH When Zander joined Sun, the company was still in the business of producing workstations. After three years in corporate marketing Zander was promoted to serve as president of SunSoft, the company’s software branch. Sun had established the subsidiary to develop and market the Solaris UNIX operating system, a competitor to Microsoft’s Windows. Although the branch experienced some setbacks—such as its inability to establish the software as a standard on many Intel-based systems—by 1995 SunSoft had emerged as a $500 million business, and Zander had earned a reputation as a top-notch salesman. One analyst observed in PC Week, “He has been a part of very significant events in the workstation industry and instrumental in the acceptance of UNIX in commercial computing” (October 16, 1995). Zander’s success as president of SunSoft led to his appointment in 1995 as Sun’s president and chief operating officer,


Zander served on the board of directors at Seagate Technology and as the director of several educational and nonprofit organizations, including the Jason Foundation for Education, the science advisory board for Rensselaer Polytechnic Institute, and the advisory board for the School of Management at Boston University.

See also entries on Motorola, Inc. and Sun Microsystems, Inc. in International Directory of Company Histories.


Drucker, Jesse, and Joann S. Lublin, “Computer-Industry Veteran to Shake Telecom Firm Out of Its Complacency,” Wall Street Journal Europe, December 18, 2003.

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Edward Zander Feder, Barnaby J., “New Chief to Take Reins as Motorola Takes on Challenge of Rivals,” New York Times, January 3, 2004. Flynn, Laurie, “Coming from the Shadows,” PC Week, October 16, 1995, p. A8. Kukec, Anna Marie, “Zander Seeks Stronger Focus for Motorola,” Chicago Daily Herald, June 20, 2004.

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Patterson, William Pat, “The Power of the Workstation,” Industry Week, January 27, 1987, pp. 29–33. Pham, Alex, “‘Fast Eddie,’ the Man Who Lit a Fire Under Sun,” Boston Globe, June 19, 2000.

—Matthew C. Cordon


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John D. Zeglis 1947– Chairman and chief executive officer, AT&T Wireless Nationality: American. Born: 1947, in Momence, Illinois. Education: University of Illinois, Urbana-Champaign, BS, 1969; Harvard University, JD, 1972. Family: Son of Donald D. (lawyer) and Dorothy Ann Joost Zeglis (English teacher); married Carol Jane Hamm; children: three. Career: Sidley and Austin, 1973–1978, associate; 1978–1984, partner; AT&T, 1984–1996, general counsel; 1997–1999, vice chairman and president; AT–T Wireless, 1999–2004, chairman and chief executive officer. Address: AT&T Wireless, 7277 164th Avenue NE, Building 1, Redmond, Washington 98052; http://www.att wireless.com.

■ A seasoned telecommunications attorney, John D. Zeglis was appointed president of AT&T in 1997 and chairman and CEO of AT&T Wireless in 1999. Despite his lack of formal business training, Zeglis rose to the top ranks of AT&T management owing to his vast knowledge of regulatory policy and long acquaintance with the company’s executive inner circle. Zeglis drafted the momentous divestiture plan that broke up AT&T in 1984, and he masterminded the company’s legal strategy during the telecommunications revolution of the 1990s.

John D. Zeglis. AP/Wide World Photos.

alma mater, the University of Illinois in Urbana-Champaign, where he earned a business degree in 1969. He then went to Harvard University to study law, graduating magna cum laude in 1972 and serving as senior editor of the prestigious Harvard Law Review. Zeglis then spent a year studying antitrust law and economics in Europe on a postgraduate Knox Memorial fellowship.

BEGINS CAREER AS ATTORNEY EARLY LIFE AND EDUCATION Zeglis was born and reared in Momence, Illinois, a small farming town where his father was a respected local attorney for more than five decades. The eldest of three boys, all of whom followed their father into law, Zeglis distinguished himself as a basketball player and golfer in high school. After graduating at the top of his class, Zeglis enrolled at his parents’


Zeglis’s impressive credentials and intelligence attracted the attention of partners at Sidley and Austin, a prominent Chicago law firm whose clients included AT&T. Zeglis was hired as an associate in 1973 and made partner in 1978. During his early years at the firm Zeglis gained valuable experience in telecommunications legislation while working on an important Federal Communications Commission rate case.

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John D. Zeglis

In 1982, when AT&T acted to settle a massive antitrust suit brought by the U.S. Department of Justice, Zeglis was placed in charge of writing the court-ordered divestiture plan that broke AT&T into seven regional, or “baby Bell,” telephone companies. AT&T (American Telephone and Telegraph) was the parent company of the monopoly Bell telephone system, making it one of the nation’s largest corporations. Zeglis’s key role in devising the complex breakup plan, implemented in 1984, was regarded as an ingenuous feat that solidified his relationship with AT&T, a company he had served for many years as outside counsel.

JOINS AT&T In 1984, after the breakup took effect, Zeglis was hired by AT&T to work on its legal staff and within 10 months became the company’s general counsel. During the next decade Zeglis was intimately involved in the formulation of AT&T’s government and regulatory policies as the company defended itself against new long-distance competitors and reorganized its corporate structure in the face of a rapidly changing telecommunications industry. While working behind the scenes as AT&T’s chief legal advisor, Zeglis gained access to the company’s power center as a trusted and indispensable witness to high-level strategy sessions and board meetings. Zeglis also formed a close relationship with Robert E. Allen, who became the CEO of AT&T in 1988. As Allen’s right-hand man, Zeglis took on an increasingly vital role in the company’s business planning and management activities. During the mid-1990s Allen placed Zeglis in charge of orchestrating a second AT&T divestiture, at the time the largest voluntary corporate breakup in U.S. history. The result was the creation of two publicly traded spin-offs, Lucent Technologies in 1996 and NCR Corporation in 1997. Zeglis was also a key decision maker behind AT&T’s purchase of McCaw Cellular Communications Corporation in 1994 and AT&T’s failed bid to merge with SBC Communications in 1997.

helped manage AT&T’s newly acquired cable television assets with the 1998 purchase of Tele-Communications Incorporated (TCI). In 1999 Zeglis assumed a new position as the chairman and CEO of AT&T Wireless. Under Zeglis’s guidance, AT&T Wireless upgraded its networks, improved customer service, and went public as a tracking stock in 2000, a move that raised $10.6 billion. In 2001, with AT&T stock plunging, AT&T Wireless was spun off from its parent company, leaving Zeglis to head one of the largest independently owned and operated mobile phone companies in North America, with 22 million subscribers. By 2004 AT&T Wireless had become the third largest U.S. mobile service provider, behind Verizon Wireless and Cingular Wireless, and had begun to lose customers as a result of botched upgrades and a new federal regulation that permitted cellular customers to switch services without changing their phone numbers. After posting first-quarter losses in 2004, the company was sold to Cingular Wireless for $41 billion. With the dissolution of AT&T Wireless, Zeglis indicated that he would leave the telecommunications business to pursue other interests. Well liked and praised for his brilliant legal mind, Zeglis was an avid hiker and sports fan who won many friends during two decades of loyal service to AT&T. What he lacked in starpower charisma Zeglis made up with his good-natured personality and wry sense of humor. He was known to carry Trivial Pursuit game cards in his pocket for recreational quizzing and, if needed, to defuse tense business meetings. Zeglis described himself as “the Forrest Gump of the telecommunications industry.” Recalling his central position amid the regulatory and technological upheavals that transformed AT&T, Zeglis told Commerce InSight, “By sheer dumb luck, I’ve been right in the eye of the storm of every major controversy in telecommunications in the last quarter of the twentieth century.”

See also entry on AT&T Corp. in International Directory of Company Histories.

ASSUMES TOP LEADERSHIP AT AT&T SOURCES FOR FURTHER INFORMATION

When Allen resigned as CEO in 1997, it was widely speculated that Zeglis would be tapped as his successor. However, concern over Zeglis’s lack of experience, as well as his leading role in the SBC Communications debacle, caused him to be passed over in favor of C. Michael Armstrong,the former CEO of Hughes Electronics Corporation. As consolation, and in an effort to keep Zeglis from accepting an offer to become the CEO of the power company Illinova, Zeglis was named the vice chairman of AT&T in June 1997. Later that year, in a gesture of confidence, Zeglis was promoted by Armstrong to president of AT&T. Over the next two years Zeglis presided over AT&T’s wireless, consumer, and international operations and

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Cauley, Leslie, and Stephanie N. Mehta, “Can Zeglis and Hindery Work Together?” Wall Street Journal, June 26, 1998. Horovitz, Bruce, “How the Leaders, Their Firms Stack Up Zeglis,” USA Today, June 25, 1998. “John Zeglis: A Standout,” Commerce InSight, University of Illinois Commerce Alumni Association, Summer 1999, http://www.business.uiuc.edu/insight/summer99. Keller, John J., “Legal Eagle: Who Is John Zeglis and Why Is a Lawyer on AT&T’s Short List?” Wall Street Journal, September 5, 1997.


John D. Zeglis Mills, Mike, “The No. 1 Question at AT&T,” Washington Post, September 10, 1997.

Woolley, Scott, “Zeglis the Zealot,” Forbes, May 27, 2002, pp. 58–59.

Rosenbush, Steve, “AT&T’s Zeglis Is Likely Front-Runner for CEO Post,” USA Today, July 21, 1997.

Young, Shawn, “Wireless Leader: In Zeglis, AT&T Trusts,” USA Today, May 4, 2000.

Schiesel, Seth, “AT&T’s New No. 2 is Without Rivals,” New York Times, July 17, 1997.

—Josh Lauer


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Deiter Zetsche 1953– Board of management, DaimlerChrylser; chief executive officer and president, Chrysler Group Nationality: German. Born: May 5, 1953, in Istanbul, Turkey. Education: University of Karlsruhe, MS, 1976; Technical University of Paderborn, PhD, 1982. Family: Married Gisela (maiden name unknown); children: three. Career: Daimler-Benz, 1976–1981, research division; 1981–1984, assistant to chief engineer, commercialvehicle division; 1984–1986, coordinator, commercialvehicle development activities; 1986–1987, senior manager, chief engineer of cross-country vehicle unit; 1987–1988, head of the development department and chief engineer, Mercedes-Benz Brazil; 1988–1989, member of management; 1989–1991, president, Mercedes-Benz Argentina; 1991–1992, president, Freightliner Corporation; 1992–1997, deputy member of the Mercedes-Benz board of management, chief engineer, development division in passenger-cars business unit; 1997–1998, member of the board of management, sales division, Daimler-Benz; 1998–1999, member of the board of management, sales division, DaimlerChrysler; 1999–, member of the board of management, commercial vehicle division; 2000–, chief executive officer and president, Chrysler Group. Awards: Named World Trader of the Year, Detroit Regional Chamber of Commerce, 2003. Address: DaimlerChrysler Corporation, Auburn Hills, Michigan 48326-2766; http://www.daimler chrysler.com.

Dieter Zetsche. AP/Wide World Photos.

Daimler’s management board. In November 2000 Zetsche was appointed president of the Chrysler Group, the first German executive to head Chrysler since its takeover by DaimlerBenz in 1998. Commenting on his appointment, Zetsche said, “I had neither a foreboding nor forewarning nor suspicion I was considered” (Ward’s Dealer Business, November 2002). This may have been a blessing, as Chrysler was a mess. Sales of key models were off despite a booming market, incentive programs were costing too much, and the company had lost $3 billion in the three previous quarters.

■ At age 23, Dieter Zetsche, a graduate of the University of Karlsruhe, joined Daimler-Benz. Over the next 10 years he rose through the company’s engineering and management ranks, holding a variety of positions—none of which lasted very long before a promotion. In 1982 he completed a doctorate in engineering and 10 years later he was a member of

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MANAGEMENT STYLE Zetsche’s assignment at the Chrysler Group was simple: Fix it. He had done it before. In 1992 Zetsche played a key role in guiding Mercedes-Benz through the toughest transforma-


Deiter Zetsche

tion in its one-hundred-year history. In three years Zetsche, as chief engineer, changed Mercedes from a company that introduced three new cars every ten years into one that introduced ten new cars every three years. At Freightliner, Zetsche took a mere 14 months to turn the ailing company into the leading heavy-truck manufacturer in the United States. His success was attributed to a combination of an open, contemporary management style, good engineering skills, and swift decision-making. Peter Pfieffer, chief designer of Mercedes, described Zetsche’s management style as spontaneous, friendly, and direct. That is not to say that Zetsche lacked a “common touch.” At Chrysler he avoided traditional executive perks. He ate in the employee cafeteria, discouraged managers from calling him “Doctor,” parked in the employee parking lot, and avoided the executive elevator. Zetsche’s populist management style was not unique to his Chrysler assignment. In the early 1990s he did away with executive dining rooms at DaimlerBenz’s German headquarters in Stuttgart and made sure that there were no separate offices for senior managers; he favored a freewheeling communication style. An intensely private man, Zetsche had a good sense of humor and a flair for the dramatic. At the 2002 Detroit Auto Show, Zetsche piloted a 2002 Ram truck through a mock wall in a Chicago restaurant. Offered a plate of sushi after the entrance, he grinned and asked, “What is this shit? Bring on the beer!” (USA Today May 3, 2001).

In an effort to overcome Chrysler’s reputation for inconsistent quality, Zetsche installed the “12 Gates of Quality” program, which was copied from Mercedes-Benz. When designing a new model, engineers were required to pinpoint 12 landmarks en route to the launch date and assign a deadline to each. Every department working on a project had to meet its designated targets before the project could move to the next phase. Zetsche’s strategy, while it did not yield immediate results, proved to be a success. While Chrysler-brand sales fell by 3.5 percent in 2003, they rebounded in 2004 and several models experienced record sales.

COMMUNITY INVOLVEMENT Zetsch immersed himself in the community. He served on a variety of boards, including the Economic Alliance for Michigan, Greater Downtown Partnership, Detroit Symphony Orchestra, Detroit Renaissance, and the Detroit Institute of Arts. He chaired the Automotive Youth Educational System, Economic Club of Detroit, and the 2003 dinner for the National Association for the Advancement of Colored People.

See also entry on DaimlerChrysler AG in International Directory of Company Histories.


BUSINESS STRATEGY When Zetsche arrived at Chrysler in 2000 employees were still smarting from the Daimler-Benz takeover of their company and anxious over their collective futures. The restructuring plan announced by Zetsche in February 2001 did little to allay their fears. He fired 26,000 employees, closed six plants, and wrestled major discounts from suppliers. While cost-cutting measures were an important part of the plan, the real focus was on product. A “car guy” at heart, Zetsche recognized that “product is the most important part of any auto company” (Automotive Industries, February 2001). He devoted significant resources to reviving leading-edge concept cars and revitalized the tradition of engineering excellence that had once been the hallmark of Chrysler. Zetsche was a driving force in Chrysler’s decision to reintroduce the legendary V-8 hemi (hemispherical combustion chamber) engine and showcased it in premium Chrysler products. Quality issues also needed to be addressed.


Brooke, Lindsay, “Time to Turn It Around (Dieter Zetsche Interview),” Automotive Industries, February 2001, p. 11. Healey, James R., and David Kiley, “Surprise: Chrysler Loves Its German Boss,” USA Today, May 3, 2001. Howes, Daniel, and Bill Vlassic, “Can This Man Save Chrysler: DaimlerChrysler Believes That Zetsch, with Deft Human Touch, Can Get the Job Done,” Detroit News, December 24, 2000. Smith, David C., “Herr Heir?” Ward’s Dealer Business, November 2002, p. 15. Webster, Sarah A., “Dieter Zetsche: His Business and His Life Are Driven by a Humble Heart,” Detroit News, May 4, 2003. —Timothy J. Wowk

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Zhang Enzhao 1946– President, China Construction Bank Nationality: Chinese. Born: December 1946, in Juxian, China. Education: Graduated from Fudan University. Career: China Construction Bank, 1964–1984, various positions; China Investment Bank, 1984–1985, deputy general manager; China Construction Bank, 1986–1987, deputy general manager; 1987–1999, general manager; 1999–2000, deputy president; 2000–2002, first deputy president; 2002–, president. Address: China Construction Bank, 25 Finance Street, Beijing, 100032, China; http://www.ccb.cn/portal/en/ home/index.jsp.

■ Zhang Enzhao was the president of China Construction Bank (CCB), one of China’s four large state-owned commercial banks and, at the same time, the chairman of China International Capital Corporation, the secretary of China Cinda Asset Management Company, and the deputy president of the China Banks Association. By the time he became president, Zhang had worked in the banking industry for over 40 years and had used his extensive experience in management and the financial sector to transform CCB into a modern bank capable of competing on the international banking scene.

CLIMBED THE CORPORATE LADDER Zhang was born in December of 1946 in Juxian, Shandong Province, China. He earned a degree in financial management from Fudan University and then began his career at CCB in 1964. CCB is a state-owned bank founded in 1954 to manage investments for large construction projects. In the 1970s and 1980s the bank expanded its products and services to include credit loans, household savings deposit, foreign exchange services, credit cards, and home mortgage financing. In the early 21st century the bank focused on medium- and long-term lending. In 1984 Zhang spent a brief period as the deputy general manager of China Investment Bank in Shanghai. In 1986 he

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returned to CBB as deputy general manager. Zhang worked his way up the ranks of CBB, becoming the first deputy president in February of 2000. In 2002 the president of CBB, Wang Xuebing, was removed from office because he was being investigated by Chinese authorities, as well as the U.S. Treasury Department, for financial scandals that had occurred during his tenure at the Bank of China. In the midst of these political and financial scandals, Zhang assumed the office of president of CBB. He was responsible for guiding the bank through numerous changes at a time when the entire Chinese economy was experiencing extensive reforms.

TRANSFORMING CHINA’S BANKS In an attempt to branch out into global markets, China joined the World Trade Organization (WTO) in 2001, which opened China’s domestic markets to foreign goods and services. As a result of this arrangement, China agreed to lift restrictions on overseas banks doing business in China by the end of 2006. This meant that China’s four major banks— China Construction Bank, Bank of China, the Industrial and Commercial Bank of China, and the Agricultural Bank of China—had to quickly prepare for stiff competition from international banking rivals, such as HSBC Holdings and Citigroup. The Chinese government began pressuring these four major banks, which accounted for more than 60 percent of the country’s banking assets, to restructure, attract foreign partners, sell shares, and modernize in anticipation of the changes in the banking industry that was to come from the presence of foreign banks after 2006. Even before China jointed the WTO, CCB had been transforming its operations to become a modern commercial bank. In particular, it significantly reformed its treasury management, credit management, financial control, and accounting systems. It also introduced a new corporate identity in 1996 to reflect its new operating style. The major challenges for China’s banks, including CCB, in the 21st century were to improve corporate governance structure, lower the rate of poorly performing loans, and raise capital to meet international standards. CCB has traditionally been responsible for financing infrastructure and basic industries, such as highway, railway, telecommunication, and urban construction. Under Zhang’s lead-


Zhang Enzhao

ership, CCB consolidated its competitive advantage in these areas, while also increasing lending to medium- and smallsized companies with strong growth potential. Zhang also expanded financial services to information-related industries and other quickly growing sectors that have been highly profitable.

BUSINESS STRATEGIES Zhang worked to effect CCB’s reforms after becoming deputy president in 1999. In particular, he was a strong advocate of information technology. He encouraged the financial support of infrastructure and high-technology industries, to spark the technical development of state-owned enterprises. He also emphasized the importance of using advanced technologies within CBB, such as networking bankwide operations and improving Internet banking. Zhang also expanded CCB’s relationships with international businesses. For example, he introduced a special client manager system for multinational customers as a way to facilitate customized and favored treatment to important clients. Zhang also encouraged preferential treatment in loan policies to certain economic zones and coastal cities where multinational firms were highly concentrated. In the early 2000s CCB had 600 correspondent banks worldwide in 80 countries to serve as a bridge between China and international markets. As leader of CCB, Zhang was an innovator who continually sought to improve business at the bank. For example, in 2003 Zhang introduced a new system of internal control mechanisms to improve risk identification and evaluation. He also proved to be a bold leader. In 2004 Zhang publicly announced that his bank would be the first state-owned commercial bank in China to be listed on the stock market. He understood the difficulties involved in transforming China’s banks and was willing to commit to changing CCB’s business practices accordingly.

SUCCESSES AND STRUGGLES When Zhang took over as president of CCB in 2002, the bank was doing well. In the first half of 2002 CCB reported a pretax profit of $740.9 million. Zhang was committed to continuing this success. “Our final goal is to establish a modern commercial bank with good corporate governance and sound performance that will make us a competitive heavyweight in the global financial market,” Zhang told the Business Daily Update (May 13, 2002). To meet this goal, Zhang introduced a securitization plan of housing mortgage assets. Housing financing had become one of the CCB’s best-selling products, as China’s housing needs were quickly expanding. By 2004 CCB controlled over 70 percent of the market share in home mortgage financing.


However, in 2003 and 2004 CCB began to struggle financially. In 2004 operating profits increased 32.4 percent, but after-tax profits fell by 90 percent. Large debts were hampering the bank’s reform efforts. The downturn that CCB experienced was felt by all of China’s major banks. In 2004 the Chinese government chose CCB and Bank of China to participate in a pilot project to turn around their performance and make them strong enough to face international competition in 2006. The plan involved a controversial $45 billion bailout that was funded from the country’s foreign exchange reserves. In order for CCB to go public, it first had to improve its asset quality. In the beginning of 2004 CCB had about $506 million in nonperforming assets consisting of 162 mortgaged real estate projects in 58 major cities in China. Zhang courted international investors, particularly in the United States and Japan, to purchase some of these assets and ease CCB’s burden. Zhang also considered a proposal to divide CCB into two separate entities before its listing on the stock market. Under this proposal, China Construction Bank Holdings Corporation was to be the parent company and China Construction Bank Company was to be the listing unit. This strategy would allow the parent company to deal with the bad load while having a financially sound listing company. Despite the challenges of this endeavor, Zhang was an optimistic leader, and he believed that the company was succeeding in its transformation to a modern banking institution. In the China Construction Bank annual report for 2003, Zhang wrote that with careful planning, the restructuring program was well under way and headed in the right direction. However, it still was not clear whether Zhang would fulfill his promise of making CCB the first publicly listed state-owned bank in China. The Bank of China was planning to go public in 2005, and as of early 2004 Zhang not announced a date for listing CCB. “The location, size, and timetable for the listing will be decided when internal and external conditions are ripe,” Zhang cautiously stated to AFX-Asia (April 27, 2004). After 40 years as a leader in the banking industry in China, Zhang faced an enormous amount of political, public, and financial pressure to quickly modernize CCB so that it could withstand international competition. Banking reform in China was a major aspect of the country’s overall economic restructuring in the early 2000s, and Zhang’s legacy would depend on how well he could lead the bank during those uncertain times.


“CCB Vows to Cut NPL Ratio by Half,” Business Daily Update, May 13, 2002. Chan, Christine, “Big Four Can’t Walk Tall as Reforms Stall,” South China Morning Post, April 12, 2004.

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Zhang Enzhao “China Construction Bank Preparing for Public Listing,” Asia Pulse, April 28, 2004.

“Construction Bank Fulfills Year’s Profit Plan in Six Months,” Business Daily Update, July 23, 2002.

“China Construction Bank President Dismissed, Probed over BoC Role,” AFX-Asia, January 14, 2002. “China Construction Bank Says No IPO Timetable; Mulls Second NPL Split-off,” AFX-Asia, April 27, 2004.

Pottinger, Matt, “U.S. Authorities Investigate Bank of China— Probe by Comptroller Office Coincides with Ouster of High-Profile Official,” Wall Street Journal, January 14, 2002.

“China’s CCB Needs More Loan Provisions to Ensure IPO Success,” AFX-Asia, February 25, 2004.

—Janet P. Stamatel

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Zhang Ligui President, China Mobile Communications Corporation Nationality: Chinese. Education: Beijing University of Posts and Communications.

length division multiplexing (DWDM) for some of its upcoming projects. Zhang wanted to contribute to the deployment of the nationwide long distance, high capacity, and highspeed transmission network in China. Also in 1998 Zhang signed an agreement with Sir Iain Vallance, the chairman of British Telecom, that would allow the two companies to trade technologies and explore business prospects.

Address: 53A Xibianmen Avenue, Xuanwu District, Beijing, 100053, China; http://www.chinamobile.com.

In 1999 Zhang took over the position of director of the State Post and Telecommunications Bureau of the People’s Republic of China. In this role he offered a short-term plan for the development of telecommunications in China. Zhang’s plan was simple: speed up network assembly and fortify the capacity of the network; try to grow business by taking advantage of the prospective market and enlarging the advantage of enterprises; develop the management of these enterprises by increasing money coming in and lowering costs; and strengthen the perception and augment the quality of telecommunications service. The result was an increase in electronic commerce in China.

■ With 37 years of management experience in the telecom-

PRESIDENT OF CHINA MOBILE

munications industry, Zhang Ligui led China Mobile Communications Corporation into the 21st century with innovations and expanding technologies. He made deals with several companies to help expand China Mobile’s services and to help build an all-inclusive mobile network throughout China. By 2004 China Mobile had the largest network in the world and the largest number of customers.

In 2000 China restructured its telecommunications industry so that it was ready to enter the World Trade Organization. China Mobile Communications became China Telecommunications Corporation, and Zhang became president of the megacompany. Later in 2000 the government broke up the telecommunications monopoly, splitting China Telecommunications Corporation into two groups—the China Telecommunications Group (China Telecom), for fixed-line services, and China Mobile Communications Group (China Mobile), for wireless services. Zhang became president and party chief of China Mobile. China Mobile offered not only cell phones but also services such as Internet telephony (IP) and multimedia as well as Internet services. China Mobile operated China’s GSM network and provided many value-added services, including fax and data, voice mail, caller identification, call transfer, call waiting, call barring, prepaid telephone cards, multiple network availability, information gathering, mobile banking, and mobile Internet. At the beginning of 2000 China Mobile had 38 million mobile telephone users, who made up 90 percent of China’s market.

Career: Beijing Telecommunication Administration, 1994–1998; China Telecommunications Corporation, 1998–1999, director general; State Post and Telecommunications Bureau of People’s Republic of China, 1999–2000, director; China Telecommunications Corporation, 2000, president; China Mobile Communications Corporation, 2000–. Awards: Chairman’s Award, 3GSM World Congress, 2004.

EXPANDING CHINA’S MOBILE TECHNOLOGY After graduating from Beijing University of Posts and Communications, Zhang entered the communications world. In 1994 he became the chief of the Beijing Telecommunication Administration. He contracted with the Motorola Cellular Infrastructure Group to have Motorola supply base-station equipment to create the largest global system for mobile communications (GSM) digital cellular organization in China. Zhang left this position to take over as director general of China Telecommunications Corporation (China Telecom). In 1998 Zhang announced that the company would be using Alcatel, a French telecommunications equipment maker, to supply synchronous digital hierarchy (SDH) and dense wave-


The introduction of the Exoteric Mobile Architecture Plan was announced in 2001, and China Mobile joined the plan

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in 2002. Zhang was quoted in Alestron as saying that the “Exoteric Mobile Architecture Plan is a very important international industrial cooperation plan. It can provide consumers with rich and colorful operations rapidly. As the largest mobile client operator in the world now, China Mobile will support and join the plan actively” (January 2, 2002). In 2003 China Mobile announced it was reshuffling managers in the upper echelons of the company. Zhang was asked to serve as nonexecutive director of China Mobile (Hong Kong) Limited, starting in March 2003. In 2003 Zhang was also involved in the Science and Technology Circles of the 10th National Committee of the Chinese People’s Political Committee Conference. In 2003 China Mobile made a deal with Bandai Networks Company, the largest supplier of online media for China, whereby Bandai would provide online content for mobile phones in China. In February 2004 Zhang went to Cannes, France, for the 3GSM Conference, the industry’s annual summit. According to the Financial Times, “The Chinese ascendancy was confirmed as one industry executive after another visited the table of Zhang Ligui, president of China Mobile . . . to pay court during the GSM association’s awards dinner” (February 28, 2004). Zhang, attending the 3GSM congress for the first time, won the Chairman’s Award for his involvement in the growth of China’s economy and the international success of GSM. Zhang served as director general of telecommunications of the Ministry of Posts and Communications and as director general of the Gansu Posts and Telecommunications Administration, of the Beijing Telecommunications Bureau, and of Posts and Telecommunications.


“About CMCC: Company Profile,” www.chinamobile.com/ ENGLISH/Profile.html. “Bandai Networks and SINA Team-Up to Provide Content Delivery to Mobile Phones in China,” May 29, 2003, http:/ /www.bandai-net.com/english/pressrelease/index.html. “BT Signs Deal with China Telecom,” The Independent, March 19, 1998. “China: Agency Outlines Correct ‘Mental Attitude’ for Communist,” Asia Africa Intelligence Wire, November 12, 2002. “China: Breakup of China Telecom,” International Market Insight Reports, May 19, 2000. “China: Electronic Commerce Promoted,” China Daily, May 18, 1999.

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“China Mobile Awarded GSM Association President Award,” Alestron, February 27, 2004. “China Mobile Communications Corporation,” http:// www.hoovers.com/china-mobile-communictions/— ID__102715—/free-co-factsheet.xhtml (2004). “China Mobile Signs Cooperative Agreement with China Netcom,” China Telecom, November 2000, p. 3. “China Mobile Supports and Joins ‘Exoteric Mobile Architecture Plan’,” Alestron, January 2, 2002. “China Netcom and China Mobile Sign Long-Distance Electric Circuit Lease Agreement in Beijing,” China Business News, June 26, 2003. “China Released Name List of 10th CPPCC National Committee,” Asia Africa Intelligence Wire, January 30, 2003. “China Telecom Firms Shuffle Top Executives,” Australasian Business Intelligence, June 27, 2003. “China-IT-Telecom,” China Business News, June 4, 2002. “China’s three major anti-virus software firms prepare for IPOs,” China IT & Telecom Report, June 7, 2002. “GSM Association Awards Winners Take Centre Stage at Cannes,” M2 Presswire, February 25, 2004. “Ligui Zhang,” http://www.forbes.com/finance/mktguideapps/ personinfo/ FromPersonIdPersonTearsheet.jhtml?passedPersonId=320275. “Matsushita (Panasonic), NEC and Huawei Announce the Establishment of a Joint-venture Company in China to Expand 3G Mobile Handset Business,” June 3, 2002, http:/ /www.nec.co.jp/press/en/0206/0301.html. “Motorola Expands Cellular Systems in Beijing and Shanghai,” PR Newswire, June 21, 1994. “News and Business Opportunities, May 2000, http:// www.asialinks.com/USFCSBids21.html. Nuttall, Chris, “High Spirits but 3G Ship Is Yet to Sail: Optimism at 3GSM Was Justified by Restored Growth in Mobile Industry,” Financial Times, February 28, 2004. “One-Third of Board Replaced in Sweeping Reshuffle,” Asia Africa Intelligence Wire, March 19, 2003. “Short-term Plan for China’s Telecom Development,” Alestron, September 2, 1999. Williams, Martyn, “Alcatel Wins Chinese Optical Backbone Contracts,” Newsbytes, July 10, 1998. —Catherine Victoria Donaldson


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Zhou Deqiang 1941– Chairman of the board and chief executive officer, China Telecom Nationality: Chinese. Born: 1941. Education: Nanjing Institute of Posts and Telecommunications, BS, 1968. Career: Beijing Long Distance Telephone Bureau, deputy chief engineer; Anhui Posts and Telecommunications Administration, deputy director general, director general; Ministry of Posts and Telecommunications; Ministry of Information Industry, vice minister; China Telecom, 2000–, president, chairman, and chief executive. Address: China Telecom, 33 Er Long Lu, Xicheng District, Beijing 100032, China; http://www.chinatelecom. com.cn.

■ In May 2000, after more than 30 years’ experience in various local and national branches of China’s telecommunications industry, Zhou Deqiang went from a high governmental post in the Chinese Ministry of Information Industry to a chief position at China Telecom, the communications giant founded in 1994 and repeatedly restructured since then to meet the guidelines of the World Trade Organization (WTO), which China had joined in 2001. Zhou was one of the key figures in the process of creating a competitive market in telecommunications and thus facilitating the country’s economic adaptation as a recent member of the WTO. Despite the restructuring of China Telecom to break up its monopoly in the industry, the company remained a dominant presence in the market and retained strong ties to the Chinese government— its top officials were former ministry employees, and Zhou continued to be part of the government structure. Zhou was also at the helm of developments and expansion of services provided by China Telecom, which was still largely regarded as an expensive and inefficient provider. International Directory of Business Biographies

FROM ENGINEERING TO ADMINISTRATION Born in 1941 in China of the Han nationality, Zhou studied engineering at the Nanjing Institute of Posts and Telecommunications. The institute, also known as Bei You, belongs to the group of the “you” schools, that is, posts and telecommunications colleges. While these schools were known for weak management departments, the academic standards of the engineering departments were higher—the result being that management graduates ordinarily landed staff jobs in post offices while some engineering graduates reached top administrative positions in the nation’s telecommunications industry. Zhou received a bachelor’s degree in wireline telecommunications engineering in 1968; however, on China Telecom’s Web site, he was listed as a professor-level senior engineer. Like most of the institute’s graduates, Zhou began his career working for the national telecommunications industry; he was the deputy chief engineer for the Beijing Long Distance Telephone Bureau. Later he moved to Anhui province and to a position at the Anhui Posts and Telecommunications Administration, where he served as deputy director general and later director general. While very little information is available on Zhou’s work in these institutions, the local and province posts led him toward an appointment in the top government sector of telecommunications regulators at the national level— namely, the Ministry of Posts and Telecommunications.

POSITIONS AT THE MINISTRIES Zhou worked at the Ministry of Posts and Telecommunications (MPT) until the administrative reshuffling that took place in 1998 in which the MPT, in charge of network standards and access, was merged with the Ministry of Electronics and Information, overseeing computers and software. The resulting division was the new Ministry of Information Industry (MII), a government agency in charge of telecommunications, broadcasting, multimedia, satellites, and the Internet but no longer responsible for postal administration and the telecom trunk line network. The postal services were thus separated from China Telecom (a giant, nongovernment-backed company) and taken in by the MII. The establishment of this agency coincided with the government ruling in March 1998 establishing a new telecommunications law that would change the regulation of the market and create competition and a custom-

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er-centered environment—both qualities needed for China’s entry into the World Trade Organization (WTO).

would be continued by the new agency, since the same people held key positions—Zhou included.

The new ministry was set up with the goal to ensure fair competition in the telecommunications and information services markets, promote quality service, and draft regulations for interconnection and the settlement of telecom networks nationwide. Zhou was appointed vice minister. At the MII, Zhou’s duties consisted of overseeing three key departments within the new ministry: the Telecommunications Administration Bureau, the Radio Regulatory Department, and the Department of Policies, Laws, and Regulations. As vice minister Zhou was a crucial figure in the developments of the Chinese telecommunications industry, specifically the restructuring of China Telecom in 1998 and its fragmentation and subsequent formation into separate companies in 1999 and early 2000. He was also in charge of the 1999 action to promote China’s mobile phone producers and take back a chunk of the market from foreign companies, with the goal of giving the domestic companies an increase in the market share from 5 to 50 percent.

The restructuring of China Telecom that took place in 1998 (with the newly formed MII agency taking up its charge of postal services) and the breakup in 1999 (with the separation and formation of four new state-owned companies out of the main provider) were steps taken to enhance market competitiveness; nevertheless, China Telecom remained a dominant presence in the industry. Critics of the country’s business development noted that China Telecom remained dominant in the industry despite the government regulations, which included reorganizing the company itself as well as giving regulatory advantages to its smaller counterparts. During his years at the MII, Zhou oversaw the ministry’s absorption of postal services from China Telecom in 1998 and the separation of four groups from its services to begin forming new companies. The same year, the ministry approved an advantage for China Telecom’s main competitor, China Unicom, by granting it an exclusive license as developer and carrier of Internet and Internet service provider services for the entire Chinese market. By early 2000 Zhou had overseen the establishment of China Mobile and China Satcom, two of the spin-off companies drawn out of China Telecom, as well as the establishment of the fixed-line market rival China Railways Communications (also known as Railcom). Competitors were allowed by the ministry to charge up to 50 percent less for their services than China Telecom in an effort to encourage the formation of a customer-oriented market. Still, despite the occasional low, China Telecom continued to dominate the nation’s industry.

At this time, the focus of the ministry’s work was to restructure the Chinese market to fit the requirements of the WTO and provide a competitive environment in the nation’s telecommunications industry. Zhou’s prior administrative experience with telecommunications networks at local and province levels, as well as his nationwide perspective from his years at the MPT, proved very useful in his new responsibilities at the MII in developing the country’s telecom industry to meet WTO standards. However, since the MPT had used its political power to ensure China Telecom’s dominance on the market in the past, the question was raised as to whether the members of the new ministry would continue with the same trend despite government regulations.

THE MII AND CHINA TELECOM Like the MPT before, the MII was also closely linked with China Telecom—the giant company monopolizing the country’s telecommunications industry and the world’s secondlargest telecommunications provider, with 100 million users in 1997 within a rapidly expanding market. China Telecom was established alongside China Unicom (a much weaker competitor on the market) in 1994, when Zhou was already active in the MPT; China Telecom was created in the wave of business modernization as an independent company that owned all public telecommunications and was thus heavily regulated by the ministry. In early 1998, after the Chinese Communist government passed a regulation promoting market competitiveness, the MPT stepped in to protect China Telecom’s monopoly over the market from its rival, China Unicom; later that year the ministry was reorganized into the MII, but the question remained as to whether the old policy

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Zhou’s position in the ministry gave him an insider’s view in the functioning of China Telecom and administrative power in decision making with the goal to create a balance between the giant and its considerably weaker competitors while apparently ensuring the company’s strength throughout transitions toward the modernization of the market. Zhou’s involvement with the company’s contacts and familiarity with the ministry regulations concerning the development of the telecommunications industry during this time period would eventually prove highly useful; in 2000 Zhou became the CEO of China Telecom.

LEADERSHIP OF CHINA TELECOM Zhou was appointed chairman of the board and CEO of China Telecom in May 2000. His move from the government to the independent sector may have been controversial, but it was not at all unusual in the Chinese business world: during the late 1990s various companies formerly associated with the relevant ministries branched off and became independent businesses, and the administrators followed the trend, as the nation’s industry prepared for the entry into the WTO. Still, Zhou’s appointment raised the issue of China Telecom’s con-


Zhou Deqiang

tinuing monopoly of the telecommunications market, unchanged despite the restructuring and fragmentation the company had undergone in the previous years. In the past, the ministries (MPT and later MII) had provided very favorable conditions for China Telecom’s rule of the market, from privileged policies to tax breaks; however, ministry officials maintained that they had done a good job regulating the entire national industry. While the skyrocketing developments in the market nationwide were indeed supportive of this evaluation, there were also stories of consumer displeasure with the conditions—such as the legal case brought by three students who sued China Telecom because their telephone cards could not be used outside the zone in which they were purchased. The country’s membership in the WTO, the international business regulations thereby applied, the influx of foreign capital into the country’s businesses, and the presence of an independent regulator (as opposed to the previous highly biased ministries) were all indications that the market would develop into a truly competitive environment. The new market conditions, along with state-imposed reductions in service fees that depleted the company’s financial resources, demanded a more aggressive policy for the future. China Telecom obtained some financing through the capital market in 1997, when it listed a part of its assets on the Hong Kong Stock Exchange. In 2002 Zhou began negotiations for Merrill Lynch and Morgan Stanley to bring China Telecom to the global stock market, selling 20 percent of the company’s shares; however, the U.S. estimates of the stock’s value in existing conditions and the falling value of telecommunications business in both Asia and the United States did not meet the projected figures, and the plan was postponed. In addition, China Telecom underwent yet another restructuring in 2002, being reorganized into two geographically determined groups: China Netcom Communications Group Corporation in the northern provinces and China Telecom Corporation in the southern provinces. The company CEO’s focus, though, remained on future development, such as acquiring a mobile license—mentioned in 2002 as a possible expansion on the market. Maintaining a positive political profile, Zhou also appeared and spoke at a gathering of the Chinese Communist Party in Beijing, described as a public justification for letting private business leaders into the party. While Zhou’s speech mostly served to entice investors’ interest in China Telecom’s public offering, he also


spoke about the “important thought of the Three Represents,” a reference to the Chinese Communist Party’s policy idea allowing an embrace of capitalism (Taipei Times, November 11, 2002). However, Zhou’s enthusiasm for China Telecom’s development sometimes demanded retractions from the more cautious public relations arm of the company: after the China Morning Post printed that Zhou had suggested China Telecom was looking into buying five provincial networks from its parent group in the months after the company’s stock exchange listing, the official press release denied any concrete plans to do so. In the long term, Zhou’s leadership of China Telecom included an internal restructuring of the company that consisted of several administrative projects: centralized financial management, internal control system, corporate governance, business process reengineering, and development of investor relations—for which China Telecom was recognized in June 2003 as the country’s most improved company in investor relations.

See also entry on China Telecom in International Directory of Company Histories.


“Business Heads Turn Cautious at Meet,” Taipei Times, November 11, 2002. Chan, Elaine, “Broadband Boost for China Telecom,” Standard, September 12, 2003, http:// www.thestandard.com.hk/ news_detail_frame.cfm?articleid=41762&intcatid=1. Kwok, Ben, “China Telecom Plays Down Talk of Network Buy-up from Parent,” Financial Times (from South China Morning Post), October 28, 2002. Kynge, James, “Cell Phone Groups Face Big Cut in China Sales: Quota Plan Designed to Give Local Manufacturers 50% of the Market,” Financial Times, November 1, 1999. “Team at the Top Brings in Wealth of Experience,” Financial Times (from South China Morning Post), November 15, 2002. —Jeremy W. Hubbell

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Aerin Lauder Zinterhofer 1970– Vice president of global advertising, Estee Lauder Companies Nationality: American. Born: April 23, 1970, in New York City, New York. Education: University of Pennsylvania, BA, 1991. Family: Daughter of Ronald S. Lauder (the chairman of Clinique Laboratories) and Jo-Carole Knopf; married Eric Zinterhofer (a broker with Morgan Stanley); children: two. Career: Estee Lauder Companies, 1992–1995, director of marketing for Prescriptives; 1995–1997, creative product-development director; 1997–2001, executive director of creative marketing; 2001–, vice president of global advertising. Address: Estee Lauder, 767 Fifth Avenue, New York, New York 10153; http://www.elcompanies.com.

■ Aerin Lauder Zinterhofer was the prominent public face of the large family business Estee Lauder, the $5 billion cosmetics empire comprising 19 brands, including Prescriptives, Clinique, Origins, Aveda, and MAC. Having carefully crafted an image and bearing a zealous drive to use that image effectively, Zinterhofer was the heiress to a fortune in stock worth at least $550 million in 2004. She was part of the third generation of her family to work at the firm that was founded by her grandmother, Estee Lauder, in the 1940s. Her first cousin, William, was Estee Lauder’s COO and was being groomed by her uncle Leonard Lauder to lead the company. Zinterhofer also staked out her own claim to the company’s future, with her glamorous image proving vital in reaching out to the company’s customer base. She often invoked and was deeply inspired by her entrepreneurial grandmother.

Aerin Lauder Zinterhofer. AP/Wide World Photos.

her vanity, studiously observing her techniques for applying eye shadow and lipstick. At an early age she wore opal lip gloss to school and mapped out her plans to work for either the family business or a fashion magazine.

A STUDENT OF BEAUTY

After graduating from the University of Pennsylvania with a communications degree, Zinterhofer joined Estee Lauder’s Prescriptives marketing team. She began working for the flagship Lauder brand in 1995 and was promoted to executive director of creative marketing in 1997. She created seasonal palettes for lipsticks and makeup and devised the concept of seasonal fragrances. She also conceived the notion of seasonal nail varnish bottled in vials small enough to last a season before new colors were launched.

Beauty and glamour were integral to Zinterhofer’s childhood. She recounted sitting with her grandmother in front of

One of her most successful projects was the ad campaign shot by the photographer Steven Meisel featuring the model

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Aerin Lauder Zinterhofer

Elizabeth Hurley. Lauder had researched ads from the 1970s featuring the model Karen Graham and became convinced that the key to a new campaign would be a sense of lifestyle. Elizabeth Hurley was featured running along a beach wearing full bridal attire, pursued by a number of young men presumed to be friends of the groom.

STYLE AND SUBSTANCE The year 2001 was pivotal for Estee Lauder. The company weathered tough times after the terrorist attacks of September 11 due to a weak economy, a drop in travel, less traffic in department stores, and fierce competition. Additionally, the flagship brand was losing ground as consumers’ top choice in cosmetics; the company’s core customers were aging and so was the company’s image. The firm needed an executive who could be trusted and who truly understood the customer base; Zinterhofer fit the bill. She had worked in different facets of the business, but perhaps more significantly she was a young, glamorous woman. When Zinterhofer acquired the role of vice president of global advertising in 2001, she was positioned at the helm of all advertising for Estee Lauder. Zinterhofer immediately pushed to reinvent the namesake brand, staying true to its trademark sophistication while introducing modern undertones that would appeal to a younger audience. She recruited the model Carolyn Murphy as a spokeswoman and signed the Ethiopian-born Liya Kebede to the company’s first major contract with a black model. She took the bold step of replacing the photographer with whom she had worked so closely, Steven Meisel, bringing on the more modern style of Mario Testino. Estee Lauder had a strong 2003, with 8 percent sales growth, a 20 percent increase in earnings, and $5 billion in sales for the first time.

IMAGE COUNTS From the silver bowls of candy that filled her Park Avenue apartment to the colors of the pillows in her ad campaigns, Zinterhofer devoted considerable attention to her image, which she believed was inextricably linked to the success of the family business. She maintained an active social schedule, spotting trends and showing off her designer outfits at charity galas, fashion shows, and other events that brought together the most influential people in fashion and beauty. What to some might have appeared to be a superficial lifestyle was all business and brand recognition for Zinterhofer. Said Wendy Nicholson, the financial analyst for Smith Barney, in Time magazine, “Aerin’s a terrific ambassador who focuses on brand image” (December 1, 2003).


A MODEL GRANDDAUGHTER Zinterhofer was born into a lifestyle of privilege and wealth that was made possible by her grandmother’s fierce battles to build a business, which she did literally from scratch. Estee Lauder, born Josephine Esther Mentzer, was the daughter of immigrants and lived above her father’s hardware store in Queens, New York. She began her career by selling skin creams concocted by her uncle, a chemist, in beauty shops, beach clubs, and resorts. She was said to have outworked everyone else in the cosmetics industry; by her own admission she stalked the bosses of New York City department stores until she was given counter space at Saks Fifth Avenue in 1948. Once in that space she utilized a personal selling approach that proved as potent as the promise of her skin regimens and perfumes. While she did not face the same pressing survival issues that her grandmother faced, Zinterhofer had her own series of pressures and responsibilities. She was keenly aware of her own image and the potential for her to be negatively portrayed as no more than an heiress; the degree of affluence into which she was born brought with it the highest scrutiny. Frequently photographed and often written about, privacy for her family was almost impossible. While she clearly enjoyed the role she played, it came with a price. As she described in the London Times, “It’s my name on those bottles. When people leave work at the end of the day, they close the office door and go home. When I go home, I look at a product or an advertisement, and I’m constantly reminded of the business. It’s a totally different kind of pressure than most people experience” (May 20, 2000). Though living in a world vastly different from the one her grandmother faced as a young woman, the two shared core values. Both embraced the notion that one can give one hundred percent at the office and still have energy left for family and home life. Zinterhofer drew attention to her boundless energy, pointing out that she found time to walk the dog and play with her baby after a long day of creating advertising campaigns and attending business functions. She aspired to live a life that would have made Estee Lauder proud, as she described in the Ottawa Citizen: “I think she’s had a great influence on me because she’s always worked hard at the same time as being very feminine. That’s a great combination: an attractive businesswoman who can do a lot of different things is very impressive. I never heard her take no for an answer. She always got her way and she really worked for it” (September 22, 2001).

See also entry on Estee Lauder Companies Inc. in International Directory of Company Histories.

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Aerin Lauder Zinterhofer SOURCES FOR FURTHER INFORMATION

Hodson, Heather, “The Aerin Effect: The Granddaughter of Estee Lauder Cuts an Elegant Swath through the Worlds of Fashion, Society, and Business,” Ottawa Citizen, September 22, 2001.

Preston, Morag, “American Beauty,” London Times, May 20, 2000. Tsiantar, Dody, “The Burden of Being the Heiress of Style,” Time, December 1, 2003, p. 68.

—Tim Halpern

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Edward J. Zore 1945– Chief executive officer and president, The Northwestern Mutual Life Insurance Company Nationality: American. Born: 1945, in Milwaukee, Wisconsin. Education: University of Wisconsin–Milwaukee, bachelor’s and master’s degrees. Family: Married Diane (maiden name unknown); children: two. Career: Northwestern Mutual, 1969–1990, various positions in the investment department; 1990–1998, chief investment officer; 1995–1998, CFO and executive vice president; The Northwestern Mutual Life Insurance Company, 1998–2000, executive vice president; 2000–2001, president; 2001–, CEO and president. Address: The Northwestern Mutual Life Insurance Company/Northwestern Mutual, 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797; http:// www.nmfn.com.

■ Edward Zore rose to become the CEO and president of The Northwestern Mutual Life Insurance Company, one of the largest providers of insurance as well as wealth management and business planning. Zore adhered to Northwestern Mutual’s core beliefs in growing organically through increasing product sales and in maintaining loyalty among employees and clients through top-notch benefits and follow-through. Considered by friends and coworkers to be funny and fair, Zore recognized the positive aspects of working for one the longest-standing and most successful insurance and financialservices providers in the United States.

GROCERY STORE CLERK TO CEO Zore grew up outside of Milwaukee in the working-class suburb of West Allis. While studying economics at the University of Wisconsin–Milwaukee, he worked at a grocery store to


support himself. He earned both a bachelor’s and a master’s degree in economics by 1970; the year before he had already begun working for Northwestern Mutual as a stock trader. Eager to assume new responsibilities, and with his long-term sights reportedly set on the top spot, Zore gradually rose through the ranks of the investment division. After more than 25 years there Zore transferred to the life and disability insurance division. In 2000 he became president; the following year he added the title of CEO. Zore was labeled brash and aggressive, which qualities he used to meet opportunities head on as they arose. With time and experience Zore realized that his success was also a result of his simply being with the right company. In a speech he gave on July 21, 2002, which was reproduced in Executive Speeches, Zore recalled how his boss John Konrad led him to this realization early in his career. Zore had just finished explaining his own perceived value and the good work that he was doing when Konrad replied, “Ed, you know what? You are pretty good. And you might be pretty good someplace else. But tell me this: Did you ever think that you might be successful because of who you’re with—Northwestern Mutual? You are where you are because of where you are” (December/ January 2002). In 2003 Northwestern Mutual announced a number of management changes. One of the company’s continuing goals, which Zore supported, was to provide its management with both wide and deep knowledge of the ways in which the company worked. The knowledge gained by executives through understanding the functions of a variety of divisions would allow the company to draw from within its ranks to fill highlevel positions. In adherence to that strategy the company moved 11 managers into different roles in different divisions.

LOYALTY IN ALL ENDEAVORS One of Northwestern’s points of pride was the fact that in the entirety of its operations, which spanned more than 140 years, the company never laid an employee off. In 2003 Northwestern Mutual employed more than four thousand people in Milwaukee in addition to 7,900 field agents. Zore worked vigorously to support the company’s goal of fostering loyalty among employees; by offering some of the best benefits in the industry as well as generous bonuses and pay, Northwestern

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Edward J. Zore

Mutual guaranteed such continued loyalty from its workers. The company bolstered rewards packages with constant and consistent training and support—especially for the large force of field agents stationed throughout the country. Zore believed that high employee loyalty would in turn inspire client loyalty, which would in turn save the company up to $400 million a year. Zore explained in an American Banker article, “In a business built on relationships, the combined effect of employee, sales-force, and customer loyalty can’t be overestimated” (September 19, 2003). In support of the human side of its business, Northwestern Mutual chose not to abandon its field sales force by offering products online, instead providing personal Web sites for individual agents via which clients could obtain information from the main company site. Through an online training program calling the Learning Network, Northwestern kept its agents up-to-date on industry knowledge, such that they could maintain their status as financial experts who could offer personal assistance and in-depth guidance to clients.

claims were settled within days of their being filed; and was thus assured of Northwestern’s financial security. In response employees and coworkers praised him for his personal touch. In 2003 Northwestern Mutual’s premium revenue rose to $10.3 billion, but dividend rates for policyholders dropped from 8.2 percent to 7.7 percent. In 2002 the company had experienced a number of losses due to a plunging stock market, leaving its net income at $158 million, but by 2003 net income had risen to $692 million. Zore believed that the slow and steady management of resources, which was a hallmark of Northwestern Mutual’s operations, not only allowed the company to weather the financial storms of the early 2000s but helped it to succeed and ensured its future growth.

See also entry on Northwestern Mutual Life Insurance Company in International Directory of Company Histories.


Zore believed in spurring organic growth at Northwestern Mutual, wherein every aspect of the organization was vital to the whole. That sense of the organic helped lead Zore to concentrate on the benefits of keeping employees loyal. Zore’s commitment to the company, its clients, and its employees was exemplified following the terrorist attacks of September 11, 2001. Within two days he had arrived in New York City to work with the agencies that had experienced the most client losses. Soon afterward he praised the work of the agents and employees who had lost clients—or who had almost lost their own lives—in the collapse of the World Trade Center. Zore praised the strength of Northwestern’s employees and agents; was proud of the quick and uncomplicated manner in which

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Gallagher, Kathleen, “CEO of Milwaukee-Based Insurance Firm Rides Risks to the Top,” Milwaukee Journal Sentinel, November 26, 2001. Reichheld, Frederick E., “Want to Know How to Keep Expenses Low? Think Loyalty,” American Banker, September 19, 2003, p. 6. Zore, Edward, “We Are Where We Are Because of Where We Are,” Executive Speeches, December/January 2002, pp. 16–21. —Eve M. B. Hermann


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Klaus Zumwinkel 1943– Chairman and chief executive officer, Deutsche Post Nationality: German. Born: December 15, 1943, in Germany. Education: University of Münster, business degree, 1969; Wharton School of Business of University of Pennsylvania, MBA, 1971; University of Münster, PhD, 1973. Family: Married Antje (maiden name unknown); children: two. Career: McKinsey and Company, 1974–1979, management consultant; 1979–1984, senior partner; Quelle, 1985–1989, CEO; Deutsche Post, 1990–, CEO. Awards: Industry Leadership Award, World Mail Awards, 2003; Manager of the Year, Business Manager, 2003. Address: Deutsche Post, Zentrale, Pressestelle, Hausaddresse, Charles-de-Gaulle-Str. 20, 53113 Bonn, Germany; http://www.deutschepost.de. Klaus Zumwinkel. AP/Wide World Photos.

■ Klaus Zumwinkel joined Deutsche Post in 1990 when the company was still completely state owned and operated. Under his direction Deutsche Post was privatized in 1995 and thence became one of the most profitable companies in the world. In transforming Deutsche Post from merely Europe’s largest postal service into a global mail and logistics juggernaut, Zumwinkel placed himself at the center of controversy for his use of aggressive tactics in acquiring other delivery companies around the world. Since 1997 Deutsche Post spent more than $5 billion in acquiring 30 firms, including Danzas, Air Express International, and DHL International.

EDUCATION AND EARLY CAREER After earning a business degree from the University of Münster in 1969, Klaus Zumwinkel attended the Wharton School of Business of the University of Pennsylvania, where


he attained an MBA in 1971. He returned to Münster and earned a doctorate in political science in 1973. Much of Zumwinkel’s education was paid for with funds acquired from the sale of the lucrative chain of retail stores that his father had established following World War II. Upon completing his education, Zumwinkel went to work for the financial-consulting firm McKinsey and Company, becoming a senior partner in 1979. Zumwinkel left McKinsey in 1984 to take over as CEO of Quelle, the largest mail-order house in Germany and one of McKinsey’s clients. In 1989 he resigned from Quelle and accepted an 80 percent pay cut to become the chief executive officer of Deutsche Post, the German state-owned post office.

401

Klaus Zumwinkel

REINVENTING DEUTSCHE POST

GOING GLOBAL

When Zumwinkel assumed control of Deutsche Post in 1990, many of the employees were civil servants, including former communist apparatchiks from East Germany, whose jobs were guaranteed by the state despite the chronic inefficiency of their performance. Even before reunification incorporated the bankrupt East German post office, the German postal system had been in a shambles. Local mail often took as long as four days to arrive, and the post office was losing nearly $400 million a year. In less than a decade Zumwinkel transformed Deutsche Post from a stodgy and inept bureaucracy into a sleek and profitable growth company. By 2000 he had positioned his company as the leading international competitor of United Parcel Service (UPS), which with its market capitalization of $67.4 billion was the largest and richest postal and package-delivery company in the world.

In 2002 Zumwinkel declined an opportunity to become the chairman of the board at Deutsche Telekom, the largest German telecommunications firm—and also a former state monopoly—in order to remain at Deutsche Post. Deutsche Post employees had expressed concerns about possible changes in management; Zumwinkel decided to remain with the company especially in order to oversee the merger of domestic and international operations of DHL in an effort to challenge the dominance of UPS and Federal Express, not only in Europe but also in Asia and the United States. Zumwinkel characterized the program to integrate the company’s various holdings and operations, which he hoped would increase profits by 40 percent to $3.06 billion by 2005, as the “logical conclusion” of the company’s multibillion-dollar strategy to create a global logistics, express, and delivery network (Journal of Commerce Online, October 31, 2002). Known as STAR, Zumwinkel’s plan cost approximately EUR 800 million ($990 million) to implement.

Zumwinkel began his tenure at Deutsche Post by closing more than one thousand postal depots and replacing them with 83 technologically sophisticated sorting centers. He also eliminated 16,000 of the 30,000 postal retail outlets and slashed 100,000 jobs. He next began to acquire delivery companies throughout Europe and Asia as well as in the United States. Deutsche Post gained control of 30 such companies around the world—including at least one in every major European country and Air Express International and Global Mail in the United States. In March 1998 Zumwinkel paid an estimated $700 million to gain control of 25 percent of DHL International, the air-freight company based in Bermuda; Deutsche Post subsequently acquired the rest of DHL. By 2002 Zumwinkel was exploring possibilities for expansion into India and China. Controversy surrounded Zumwinkel’s acquisitions strategy from the outset. Critics—such as spokesmen for UPS— asserted that Deutsche Post was illegitimately benefiting from its postal monopoly in Germany, using that income to finance overseas expansion. In the New York Times the UPS director of public affairs David Bolger stated, “We welcome the competition but it’s got to be competition that’s on a level playing field. They don’t exhibit that” (February 24, 2004). The European Union mounted an investigation into charges that Deutsche Post was receiving unfair state aid; in 2002 the company was ordered to repay the German government $1 billion in illegal subsidies. Deutsche Post appealed the ruling. Zumwinkel explained in Traffic World, “In the case against Deutsche Post our competitors are saying that we have used money from the reserved area so that we can have very low prices against our competitors. That is totally wrong. Until last year, Deutsche Post was losing market shares” (September 25, 2000). Such allegations notwithstanding Deutsche Post went forward with its initial public offering in November 2000, when the German government put 25 percent of the company up for sale.

402

CONQUERING AMERICA Under Zumwinkel’s direction Deutsche Post, though still primarily owned by the German government, became a formidable multinational corporation with annual sales in 2002 amounting to $49 billion. Yet despite the reorganization initiated by Zumwinkel, penetrating the U.S. market would not be easy. By the end of 2003 DSL controlled a miniscule 1 percent share of the American domestic parcel market and was losing an average of $200 million a year in the United States. By contrast FedEx controlled 44 percent of that market and UPS 34 percent. DSL however did command 18 percent of the parcel market between the United States and foreign destinations—a solid foundation upon which Zumwinkel hoped to build. FedEx and UPS were determined to resist what both companies regarded as the unfair incursions of DHL and its American subsidiary Airborne, which Zumwinkel acquired in March 2003 for $1.1 billion. The two American companies often charged DHL with regulatory violations. In 2003 lawyers for FedEx and UPS petitioned the Department of Transportation to ground DHL’s airline, Astar Air Cargo, alleging that it was truly owned by Deutsche Post; U.S. law prohibited a foreign company from owning more than 25 percent of an American airline. Zumwinkel admitted, “UPS considers us the evil enemy” (New York Times, February 24, 2004). In December 2003 Burton Kolko, the administrative law judge at the Department of Transportation, rejected UPS and Fedex’s petition, noting in a 39-page briefing that Deutsche Post had sold its interest in the airline to Astar’s chairman John Dasburg. The ruling cleared the way for Zumwinkel to begin fashioning his American distribution network. He noted, “We want to be


Klaus Zumwinkel

the number-one company in our field in the world. I think we can do it by 2005” (New York Times, February 24, 2004).

See also entry on Deutsche Post AG in International Directory of Company Histories.


Barnard, Bruce, and William Armbruster, “Deutsche Post Restructuring to Challenge UPS, FedEx,” Journal of Commerce Online, October 31, 2002. Davidson, Andrew, “Klaus Zumwinkel’s Deutsche Post Is Spreading Across the Globe,” Sunday Times (London), July 13, 2003. “Deutsche Post Defends Closure of Post Offices,” Die Welt, June 6, 2003.

Harnischfeger, Uta, “Zumwinkel Front-Runner for Deutsche Telekom,” Financial Times (London), October 7, 2002. “Klaus Zumwinkel Will Not Move to Deutsche Telekom,” Suddeutsche Zeitung, October 8, 2002. Krause, Kristin R., “What’s in a Name,” Traffic World, February 25, 2002, p. 27. Landler, Mark, “German’s Big Brown Delivery Van Contender,” New York Times, February 24, 2004. Parker, John, “We Are ‘No. 1 in Logistics,’” Traffic World, September 25, 2000, p. 13. “A Perspective from Europe,” Wharton Alumni Magazine, Spring 2004. “Pushing the Envelope at the Post Office,” BusinessWeek, September 11, 2000, p. 22.

“Deutsche Post Plans Asia Investment,” JoC Week, June 3, 2002.

“Q&A: Deutsche Post’s Zumwinkel; A Strategy of ‘High Quality and Low Cost,’” BusinessWeek Online, June 2, 1999, http://www.businessweek.com.

Echikson, William, Jack Ewing, and Inka Resch, “Who’ll Get Stomped in Europe’s Postal Wars,” BusinessWeek International, May 31, 1999.

Watts, Christopher, “The Yellow Machine,” Forbes, September 18, 2000, p. 192.

Ewing, Jack, “The World’s Postman,” BusinessWeek, September 29, 2003, p. 30.


—Meg Greene

403

Notes on Contributors ■■■

Notes on Contributors ■■■

ADDLESPERGER, Elisa. Business reference librarian and economics bibliographer, DePaul University. ALFONSO, Barry. Independent journalist and oral historian with the Heinz History Center, Pittsburgh, Pennsylvania. ALIC, Margaret. Ph.D. Independent scholar and scientific editor based in Eastsound, Washington. AMERMAN, Don. Independent writer and editor based in Freemansburg, Pennsylvania. Contributor to the St. James Encyclopedia of Labor History Worldwide and Scribner Encyclopedia of American Lives. ATKINS, William Arthur. Independent business and science writer and researcher. BEETZ, Kirk H. Emeritus. Author of over twenty books and over seven hundred articles. Interests include the global automobile industry, computer technology, Japanese corporate history, and business biographies. BEHNKE, Patricia C. Independent journalist, author, and editor based in High Springs, Florida. Publisher of a monthly newspaper and author of two novels. BEST, Mark. Professor of pathology, epidemiology, and biostatistics, St. Matthew’s University. Research interests include health care quality improvement, patient safety, organizational behavior, and transfusion medicine. BJERGA, Alan. Knight Ridder Newspapers correspondent based in Washington, D.C. Contributor to Scribner’s Encyclopedia of American Lives. BOGREN, Jeanette. Independent journalist based in Indianapolis, Indiana. BORJAS, Thomas. Research analyst, Mount Holyoke College, and independent writer. BRENNAN, Carol. Independent journalist based in Detroit, Michigan. CARDOSO, Jack J. Ph.D. Emeritus professor of history, State University of New York College at Buffalo; contributor to Encyclopedia of Korean War and History of the Civil War; reviews and articles in Civil War History, Journal of American History, Liberal Education, Journal of Canadian Studies, and Dictionary of American Biography.


CHIEN, C. A. Doctoral-level scholar and AACSB-qualified faculty, Chapel Hill, North Carolina. Research: effective postsecondary business education worldwide, including China. COLLINS, Peter. Independent journalist based in San Francisco, California. COLLINS, Stephen. Independent journalist and adjunct professor of journalism, Keene State College, Keene, New Hampshire. CORDON, Matthew. Associate professor of law and reference librarian, Baylor University Law School. DANIELS, Peggy. Independent writer and editor based in Detroit, Michigan. Contributor to the Biography Today series. DE LA GARZA, Amanda. Independent journalist, editor, and web designer based in central California. DINGER, Ed. Independent journalist and novelist based in New York City. DONALDSON, Catherine. Independent journalist and editor based in Dearborn, Michigan. Contributor to the New Perspectives series at Course Technology. FIKE, Jim. Assistant professor of photography, Ohio University. FINSTERWALD, Virginia. Assistant director, Graduate Programs and Executive Education, Ohio University, Athens, Ohio. FONTNO, Tiffeni. Business librarian and collection manager, Case Western Reserve University. FORD, Katrina. Independent journalist and historian. Specializes in research into the history of science and technology. FRANCE, Erik Donald. Ph.D. Librarian, college counselor, and economics instructor at University Liggett School and English instructor at Macomb College in metropolitan Detroit, Michigan. FRICK, Lisa. Independent journalist based in Columbia, Missouri. Regular cover-story contributor to the Columbia Daily Tribune’s “Saturday Business” magazine. GILLIO, Margaret E. Educational support specialist, Central Arizona College; writer based in Tucson, Arizona.

407

Notes on Contributors GILMAN, Larry. Independent scholar and editor based in Sharon, Vermont. Contributor to several encyclopedias, including the Gale Encyclopedia of Mathematics. GREENE, Meg. Writer and researcher based in Virginia. GREENLAND, Paul. Independent business journalist and editor based near Chicago, Illinois. Contributor to the Encyclopedia of American Industries, Encyclopedia of Emerging Industries, and Encyclopedia of Global Industries. GUNVALDSEN, Barbara. Principal, Ness Research Services (genealogical, prospect, and business research). HALPERN, Timothy L. Principal, Comprehensive Prospect Research, based in California and New York. Independent researcher and writer. HARDING, Lauri. Attorney-litigator, northern Kentucky area, of counsel Holbrook & Associates, Cincinnati, Ohio. Writercontributor to numerous legal, technical, and reference publications. HECKMAN, Lucy. Head of reference, St. John’s University, Jamaica, New York. Writer whose research interests include business and economics and sports history. HENDERSON, Ashyia N. Writer and editor based in Southfield, Michigan. HERMANN, Eve M. B. Independent journalist based in Bloomington, Indiana. Regular contributor to Contemporary Musicians and Newsmakers. HERRICK, John. Writer, biologist, and independent scholar in philosophy and history of science. Author of Our Bacterial Friends and Enemies (Les bactéries sont-elles nos ennemies?, published by Editions Pommier). Based in Paris, France. HUBBELL, Jeremy W. Adjunct instructor of writing and U.S. history. Contributor to Novels for Students. Research interests included corporate, urban, and environmental histories. JACOB LANEY, Dawn. Independent scholar, historian, and geneticist based at Emory University. JOHNSON, Michelle. Corporate patent counsel, ZymoGenetics, Inc. KIELING, Jean. C.P.A., business researcher based in Los Angeles, California. KOCH, Barbara. Business librarian and independent journalist, Farmington Hills, Michigan.

LARKIN, Sandra. Independent prospect research consultant based near Boston, Massachusetts. Former editor of NEDRA News, quarterly journal of the New England Development Research Association. LAUER, Josh. Doctoral candidate, Annenberg School for Communication, University of Pennsylvania. LESSER, Anne. Independent scholar and editor based in western Massachusetts. Manages writing projects for businesses. LEWIS, David. Instructor in history, Citrus College, Glendora, California. Coauthor of Birth of the Multinational and Foundations of Corporate Empire. Contributor to the Biographical Dictionary of Management. Research interests include history of business management and globalization. LONG, Jennifer. Independent journalist and editor based in Chicago, Illinois. LUCK, DeAnne. Electronic resources librarian, Austin Peay State University. LUDWIG, Susan. Author based in Iowa City, Iowa. Independent curriculum writer and editor. MARC, David. Writer, editor, and lecturer. Author of five books and more than 200 articles for magazines, quarterlies, encyclopedias, textbooks, and other venues. Research areas include mass media as technology, industry, and art; literature and the fine arts; and American history and culture. University appointments include Brown, Cal Tech, Syracuse, USC, and UCLA. MARTIN, William F. Associate professor, Department of Management, College of Commerce, DePaul University. Research interests are medical management, disruptive physician behavior, and socially responsible investing. MASER, Beth. Founder, Litigation Research Associates LLC. Research interests include historical and archival research for litigation. MAXFIELD, Doris Morris. Independent contractor providing editorial services to publishers and book packagers under the name Max’s Word Services. McCARTHY, Ann. Independent scholar. Research interests include the creative writing and colonial histories of the American West, New Zealand, and Australia. McKENNA, Patricia. Independent writer, editor, and multimedia producer based in Farmington Hills, Michigan. McQUEEN, Lee. Independent scholar.

KONDEK, Deborah. Teacher and independent journalist based in Farmington Hills, Michigan.

MEISTER, Jill. Independent journalist based in Providence, Rhode Island.

LAKE, Alison. Independent journalist and author based outside Washington, D.C.

MOUSSALLI, Carole Sayegh. Author, Vault’s Guide to Biotech Careers (Vault, Inc., 2004). President, CSM Consulting Asso-

408


Notes on Contributors ciates, Watertown, Massachusetts. Practice areas: instructional design and professional development for Fortune 1000 clients in pharmaceuticals, biotechnology, financial services, and high technology. NAGEL, Miriam C. Independent journalist and technical analyst based in Avon, Connecticut. Author of research reports on emerging high-technology and industrial markets for independent market consulting firm. NAGHDI, Catherine. Independent journalist based in Phoenix, Arizona. NEUMANN, Caryn E. Doctoral candidate in history, The Ohio State University. Contributor to The American Economy: A Historical Encyclopedia. OWEN, John M. Independent researcher. PECH, Carol. Independent scholar and editor. PETECHUK, David. Writer and editor. PETROU, Anastasis. Assistant professor of library and information science, Denver University. Research interests include emerging information technologies and virtual learning environments (VLEs).

SHEPHERD, Kenneth R. Doctoral candidate in history, Wayne State University, Detroit, Michigan. SHERK, Stephanie Dionne. Independent medical and business writer based in Ann Arbor, Michigan. SPATT, Hartley. Distinguished Teaching Professor, State University of New York Maritime College. STAMATEL, Janet P. Sociologist and independent scholar based in Michigan. SWANK, Kris. Librarian and adjunct instructor of international business, Pima Community College, Tucson, Arizona. Proprietor, Swank Research. THERIN, François. Associate professor, Grenoble Ecole de Management, France. THOMPSON, Marie L. Independent writer based in Rifle, Colorado. Contributor to The Scribner Encyclopedia of American Lives; copy editor for medical and human sciences journals. TRADII, Mary. Independent scholar. Contributor to the International Directory of Company Histories. TRUDELL, Scott. Independent scholar based in London, England.

PETRUSO, A. Independent author and editor based in Austin, Texas.

TULLOCH, David. Independent writer based in Wellington, New Zealand.

PRONO, Luca. Independent scholar based in Bologna, Italy. Research interests include literary theory, film studies, and Italian and American culture and politics.

VANDYKE, Michael. Assistant professor, Humanities Division, Cornerstone University, Grand Rapids, Michigan. Research interests include 20th-century American business and labor history.

RING, Trudy. Copy chief, LPI Media, Los Angeles, California. Contributor to Contemporary Authors, New Revision Series and International Directory of Company Histories. RHODES, Nelson. Independent editor and author based in the Chicago area. ROSS, Celia. Reference and instruction librarian and finance bibliographer, DePaul University. SANTORA, Joseph C. Independent scholar and managementleadership consultant based in Normandy Beach, New Jersey. Research interests: CEOs and leadership succession. SAVAGE, Lorraine. Magazine editor for Boston-area publishers. Specializes in high-tech, business, and health care. SCOTT, M. W. Professional writer and editor and president of Convergence Publishing Group, LLC, an editorial services firm that provides a full range of publishing services to the book and media industries. SECKMAN, Cathy. Independent journalist and indexer, Calcutta, Ohio. Contributor to the Gale Encyclopedia of Nursing and Allied Health.


VAN WIJK, Maike. Independent information professional, Content Solutions, LLC. Provides research and writing services for various multinational organizations. WATSON, Stephanie. Independent health and science writer based in Atlanta, Georgia. WEBSTER, Valerie. Independent writer and editor based in Detroit, Michigan. WEIGANT, S. E. Independent writer and researcher based in southeast Michigan. WITTMANN, Kelly. Independent journalist, author of Rediscovering America and Explorers of the American West. WOLFF, Lisa. Independent journalist and editor based in San Diego, California. WOWK, Timothy. Philanthropic researcher and independent journalist, Queen’s University. YOUNG, Ronald. Assistant professor of history, Georgia Southern University. Teaching and research interests focus on Latin America.

409

Notes on Contributors YOUNGERMAN, Barry. Independent writer and editor based in New York City. Generalist with a passion for science, history, and current affairs. ZULKOSKY, Candy. Independent scholar.

410


Nationality Index ■■■

American F. Duane Ackerman Shai Agassi Raul Alarcon Jr. William F. Aldinger III Herbert M. Allison Jr. John A. Allison IV Dan Amos Brad Anderson Richard H. Anderson G. Allen Andreas Jr. Micky Arison C. Michael Armstrong Gerard J. Arpey Ramani Ayer Steve Ballmer Jill Barad Don H. Barden Ned Barnholt Colleen Barrett Craig R. Barrett John M. Barth Glen A. Barton Richard Barton J. T. Battenberg III Robert H. Benmosche Betsy Bernard David W. Bernauer Gordon M. Bethune J. Robert Beyster Jeff Bezos Dave Bing Carole Black Cathleen Black Alan L. Boeckmann Jack O. Bovender Jr. Edward D. Breen Wayne Brunetti John E. Bryson Warren E. Buffett Steven A. Burd H. Peter Burg James Burke Ursula Burns Lewis B. Campbell

Michael R. Cannon Jim Cantalupo Thomas E. Capps Daniel A. Carp Peter Cartwright Steve Case Robert B. Catell William Cavanaugh III Charles M. Cawley Clarence P. Cazalot Jr. Nicholas D. Chabraja John T. Chambers J. Harold Chandler Morris Chang Kenneth I. Chenault Jim Clark Vance D. Coffman Douglas R. Conant Phil Condit John W. Conway Alston D. Correll David M. Cote Robert Crandall Mac Crawford Alexander M. Cutler David F. D’Alessandro Eric Daniels George David Richard K. Davidson Michael S. Dell Roger Deromedi William Dillard II Barry Diller John T. Dillon Jamie Dimon Peter R. Dolan Tim M. Donahue David W. Dorman E. Linn Draper Jr. John G. Drosdick Tony Earley Jr. Robert A. Eckert Michael Eisner John Elkann Larry Ellison


Thomas J. Engibous Gregg L. Engles Ted English Roger Enrico Charlie Ergen Michael L. Eskew Matthew J. Espe Robert A. Essner John H. Eyler Jr. Richard D. Fairbank Thomas J. Falk David N. Farr Jim Farrell E. James Ferland Trevor Fetter John Finnegan Carly Fiorina Paul Fireman Jay S. Fishman Dennis J. FitzSimons William P. Foley II Scott T. Ford William Clay Ford Jr. Gary D. Forsee Kent B. Foster Charlie Fote H. Allen Franklin Tom Freston Richard S. Fuld Jr. S. Marce Fuller Joseph Galli Jr. Christopher B. Galvin Bill Gates David Geffen Jay M. Gellert Louis V. Gerstner Jr. John E. Gherty Charles K. Gifford Raymond V. Gilmartin Larry C. Glasscock Robert D. Glynn Jr. David R. Goode Jim Goodnight Chip W. Goodyear William E. Greehey

413

Nationality Index Hank Greenberg Jeffrey W. Greenberg Robert Greenberg J. Barry Griswell Andy Grove Jerry A. Grundhofer Rajiv L. Gupta Carlos M. Gutierrez Robert Haas David D. Halbert John H. Hammergren H. Edward Hanway George J. Harad William B. Harrison Jr. William Haseltine Lewis Hay III William F. Hecht John B. Hess Laurence E. Hirsch Betsy Holden Chad Holliday Van B. Honeycutt Kazutomo Robert Hori Janice Bryant Howroyd Ancle Hsu L. Phillip Humann Robert Iger Jeffrey R. Immelt Ray R. Irani Michael J. Jackson Tony James Charles H. Jenkins Jr. David Ji Steve Jobs Jeffrey A. Joerres Abby Johnson John D. Johnson John H. Johnson Robert L. Johnson William R. Johnson Lawrence R. Johnston Jeff Jordan Michael H. Jordan Andrea Jung William G. Jurgensen Eugene S. Kahn Mel Karmazin Karen Katen Jeffrey Katzenberg Jim Kavanaugh Robert Keegan Herb Kelleher Edmund F. Kelly Kerry K. Killinger

414

James M. Kilts Eric Kim Lowry F. Kline Philip H. Knight Charles Koch Richard Jay Kogan Timothy Koogle Richard M. Kovacevich Dennis Kozlowski Sallie Krawcheck Ronald L. Kuehn Jr. Alan J. Lacy A. G. Lafley Robert W. Lane Sherry Lansing Kase L. Lawal Ken Lay Shelly Lazarus Lee Yong-kyung David J. Lesar R. Steve Letbetter Gerald Levin Arthur Levinson Kenneth D. Lewis Alfred C. Liggins III J. Bruce Lllewellyn Terry J. Lundgren John J. Mack Joseph Magliochetti Marjorie Magner Richard Mahoney Steven J. Malcolm Richard A. Manoogian Reuben Mark Michael E. Marks J. Willard Marriott Jr. R. Brad Martin David Maxwell L. Lowry Mays Michael B. McCallister W. Alan McCollough Mike McGavick Eugene R. McGrath Judy McGrath William W. McGuire Henry A. McKinnell Jr. C. Steven McMillan Scott G. McNealy W. James McNerney Jr. Dee Mellor Stuart A. Miller William E. Mitchell Larry Montgomery James P. Mooney

Ann Moore Patrick J. Moore Angelo R. Mozilo Anne M. Mulcahy Leo F. Mullin James J. Mulva James Murdoch Rupert Murdoch A. Maurice Myers Robert L. Nardelli M. Bruce Nelson Jeffrey Noddle Indra K. Nooyi Blake W. Nordstrom Richard C. Notebaert David C. Novak Erle Nye James J. O’Brien Jr. Mark J. O’Brien Robert J. O’Connell Steve Odland Adebayo Ogunlesi Thomas D. O’Malley E. Stanley O’Neal David J. O’Reilly Paul Otellini Samuel J. Palmisano Gregory J. Parseghian Richard D. Parsons Hank Paulson Roger S. Penske A. Jerrold Perenchio Peter J. Pestillo Donald K. Peterson Howard G. Phanstiel Joseph A. Pichler William F. Pickard Harvey R. Pierce Mark C. Pigott Fred Poses John E. Potter Myrtle Potter Paul S. Pressler Larry L. Prince Richard B. Priory Philip J. Purcell III Allen I. Questrom Franklin D. Raines Lee R. Raymond Steven A. Raymund Sumner M. Redstone Dennis H. Reilley Steven S. Reinemund Glenn M. Renwick


Nationality Index Linda Johnson Rice Stephen Riggio Jim Robbins Brian L. Roberts Steven R. Rogel James E. Rogers Bruce C. Rohde James E. Rohr Matthew K. Rose Bob Rossiter John W. Rowe Allen R. Rowland Patricia F. Russo Edward B. Rust Jr. Arthur F. Ryan Patrick G. Ryan Thomas M. Ryan Mary F. Sammons Steve Sanger Ron Sargent Arun Sarin George A. Schaefer Jr. Leonard D. Schaeffer James J. Schiro Richard J. Schnieders Howard Schultz H. Lee Scott Jr. Richard M. Scrushy Ivan G. Seidenberg Donald S. Shaffer Kevin W. Sharer William J. Shea Donald J. Shepard Thomas Siebel Henry R. Silverman Russell Simmons James D. Sinegal Bruce A. Smith Fred Smith O. Bruton Smith Stacey Snider Jure Sola George Soros William S. Stavropoulos Sy Sternberg David L. Steward Martha Stewart Patrick T. Stokes Harry C. Stonecipher Ronald D. Sugar William H. Swanson Sidney Taurel Ken Thompson Rex W. Tillerson

Robert L. Tillman Glenn Tilton James S. Tisch Barrett A. Toan Doreen Toben Don Tomnitz Donald Trump Joseph M. Tucci Ted Turner John H. Tyson Robert J. Ulrich Thomas J. Usher Roy A. Vallee Thomas H. Van Weelden Rick Wagoner Ted Waitt Robert Walter Sandy Weill Alberto Weisser Jack Welch William C. Weldon Norman H. Wesley Leslie H. Wexner Kenneth Whipple Edward E. Whitacre Jr. Miles D. White Meg Whitman David R. Whitwam Michael E. Wiley Bruce A. Williamson Chuck Williamson Peter S. Willmott Oprah Winfrey Patricia A. Woertz Dave Yost Larry D. Yost Edward Zander John D. Zeglis Aerin Lauder Zinterhofer Edward J. Zore

Argentinian Carlos Criado-Perez

Australian Charles Bell Roger Corbett John E. Fletcher James Murdoch Lachlan Murdoch Rupert Murdoch Jacques Nasser


Austrian Peter Brabeck-Letmathe Hebert Demel Franz B. Humer

Azerbaijani Vagit Y. Alekperov

Belgian Pierre-Olivier Beckers Ferdinand Verdonck

Brazilian Alain Belda Cassio Casseb Lima Márcio A. Cypriano José Dutra Carlos Ghosn Alberto Weisser

British Michael J. Bailey Jonathan Bloomer Richard Branson John Browne Terence Conran John R. Coomber James R. Crosby Adam Crozier Julian C. Day Roy A. Gardner Fred A. Goodwin Andrew Gould Stephen K. Green Richard Harvey Andy Haste Rob Lawes Terry Leahy Iain Lumsden Tom McKillop James Murdoch Lachlan Murdoch Lindsay Owen-Jones David J. Prosser Paul S. Walsh Philip B. Watts

Canadian Andrea Jung Henry A. McKinnell Gordon M. Nixon Gerald W. Schwartz

415

Nationality Index Belinda Stronach W. Galen Weston

Chinese Morris Chang Chen Tonghai David Ji Jiang Jianqing Victor Li Li Ka-shing Liu Chuanzhi Lu Weiding Ma Fucai Zhang Enzhao Zhang Ligui Zhou Deqiang

Croatian Jure Sola

Cuban Raul Alarcon Jr. Carlos M. Gutierrez

Philippe Citerne Henri de Castries Thierry Desmarest Guy Dollé Pierre Féraud Dominique Ferrero Jean-Martin Folz Jean-René Fourtou Louis Gallois Jean-Pierre Garnier Carlos Ghosn Igor Landau Jean Laurent Jean-Marie Messier Gérard Mestrallet Edouard Michelin Charles Milhaud Michel Pébereau Henri Proglio Pierre Richard Louis Schweitzer Serge Weinberg Antoine Zacharias

Hong Kongese Victor Li Li Ka-shing

Hungarian Andy Grove George Soros

Indian Ramani Ayer Rajiv L. Gupta Naina Lal Kidwai N. R. Murthy Indra K. Nooyi M. S. Ramachandran Arun Sarin Noel N. Tata

Irish Matthew William Barrett Niall FitzGerald Edmund F. Kelly David J. O’Reilly

German Dutch Antony Burgmans Rijkman W. J. Groenink Bert Heemskerk Ewald Kist Harry J. M. Roels Doreen Toben Anton van Rossum Ben Verwaayen Hans Wijers

Egyptian Louis C. Camilleri

Finnish Jorma Ollila

French Bernard Arnault Claude Bébéar Jean-Louis Beffa Daniel Bernard Pierre Bilger Daniel Bouton Martin Bouygues Thierry Breton Philippe Camus

416

Josef Ackermann Wulf H. Bernotat Ulrich Brixner John Browne Michael Diekmann Jürgen Dormann Rolf Eckrodt Franz Fehrenbach Oswald J. Grübel Jürgen Hambrecht Rainer Hertrich Günther Hülse Gerard J. Kleisterlee Hans-Joachim Körber Helmut Panke Bernd Pischetsrieder Dieter Rampl Kai-Uwe Ricke Hans-Jürgen Schinzler Werner Schmidt Jurgen E. Schrempp Ekkehard D. Schulz Gunter Thielen Heinrich von Pierer Jürgen Weber Werner Wenning Dieter Zetsche Klaus Zumwinkel

Israeli Shai Agassi Umberto Agnelli Sergio Balbinot Luciano Benetton Silvio Berlusconi Carla Cico Guerrino De Luca Vittorio Mincato Giuseppe Morchio Corrado Passera Alessandro Profumo Renzo Rosso Paolo Scaroni Marco Tronchetti Provera

Italian Umberto Agnelli Sergio Balbinot Luciano Benetton Silvio Berlusconi Carlo Cico Guerrino De Luca Vittorio Mincato Giuseppe Morchio Corrado Passera Alessandro Profumo Renzo Rosso


Nationality Index Paolo Scaroni Marco Tronchetti Provera

Japanese Naoyuki Akikusa Fujio Cho Takeo Fukui Masaaki Furukawa Hiroshi Hamada Toru Hambayashi Katsuhiko Honda Kazutomo Robert Hori Nobuyuki Idei Akinobu Kanasugi Isao Kaneko Ryotaro Kaneko Ken Kutaragi Terunobu Maeda Akio Mimura Fujio Mitarai Hayao Miyazaki Tomijiro Morita Kunio Nakamura Yoshifumi Nishikawa Hidetoshi Nishimura Uichiro Niwa Tamotsu Nomakuchi Minoru Ohnishi Motoyuki Oka Tadashi Okamura Mutsutake Otsuka Mikio Sasaki Yoichi Shimogaichi Etsuhiko Shoyama Osamu Suzuki Toshifumi Suzuki Keiji Tachikawa Shoichiro Toyoda Shiro Tsuda Kazuo Tsukuda Shoei Utsuda Akio Utsumi Norio Wada Shigeo Watanabe

Fumiaki Watari Shinichi Yokoyama

Lebanese Ray R. Irani Jacques Nasser

Malaysian Mohamed Hassan Marican

Mexican Raül Muñoz Leos Carlos Slim

Moroccan Alain Belda Sidney Taurel

New Zealander Glenn M. Renwick

Nigerian Kase L. Lawal Adebayo Ogunlesi

South Korean Ahn Cheol-soo Chung Ju-yung Eric Kim Kim Jung-tae John Koo Lee Yong-kyung Pae Chong-Yeul Yun Jong-yong

Spanish César Alierta Izuel Alfonso Cortina de Alcocer Francisco Gonzalez Rodriguez Rafael Miranda Robredo Amancio Ortega Alfredo Sáenz Hans-Jürgen Schinzler

Swedish Leif Johansson Anders C. Moberg Hans Stra˚berg Carl-Henric Svanberg

Swiss Norwegian Olav Fjell Eivind Reiten

Russian Vagit Y. Alekperov Mikhail Khodorkovsky Alexei Miller

Saudi Alwaleed Bin Talal Abdallah Jum’ah

South African Tony Trahar


Josef Ackermann Umberto Agnelli Peter Brabeck-Letmathe Louis C. Camilleri Franz B. Humer Marcel Ospel Louis Schweitzer Daniel Vasella

Taiwanese Morris Chang Ancle Hsu

Zimbabwean Strive Masiyiwa

417

Geographic Index ■■■

Australia Roger Corbett John E. Fletcher Fred A. Goodwin Chip W. Goodyear Lachlan Murdoch Rupert Murdoch Jacques Nasser

Azerbaijan Vagit Y. Alekperov

Belgium Pierre-Olivier Beckers Pierre Richard Anton van Rossum Ferdinand Verdonck

Brazil Cassio Casseb Lima Carla Cico Márcio A. Cypriano José Dutra

Canada Matthew William Barrett Gordon M. Nixon Gerald W. Schwartz Belinda Stronach W. Galen Weston

China Chen Tonghai Jiang Jianqing Victor Li Li Ka-shing Liu Chuanzhi Lu Weiding Ma Fucai Zhang Enzhao Zhang Ligui Zhou Deqiang

Finland Jorma Ollila

France Bernard Arnault Claude Bébéar Jean-Louis Beffa Daniel Bernard Pierre Bilger Daniel Bouton Martin Bouygues Thierry Breton Philippe Camus Philippe Citerne Henri de Castries Thierry Desmarest Barry Diller Guy Dollé Pierre Féraud Dominique Ferrero Jean-Martin Folz Jean-René Fourtou Louis Gallois Carlos Ghosn Andy Haste Rainer Hertrich Igor Landau Jean Laurent Jean-Marie Messier Gérard Mestrallet Edouard Michelin Charles Milhaud Lindsay Owen-Jones Michel Pébereau Henri Proglio Franklin D. Raines Pierre Richard Louis Schweitzer Serge Weinberg Antoine Zacharias

Germany Josef Ackermann Shai Agassi Alain Belda


Wulf H. Bernotat Ulrich Brixner Hebert Demel Michael Diekmann Jürgen Dormann Rolf Eckrodt Franz Fehrenbach Jürgen Hambrecht Rainer Hertrich Günther Hülse Hans-Joachim Korber Helmut Panke Bernd Pischetsrieder Dieter Rampl Kai-Uwe Ricke Harry J. M. Roels Hans-Jürgen Schinzler Werner Schmidt Jurgen E. Schrempp Ekkehard D. Schulz Gunter Thielen Heinrich von Pierer Jürgen Weber Alberto Weisser Werner Wenning Dieter Zetsche Klaus Zumwinkel

Hong Kong Victor Li Li Ka-shing

India Naina Lal Kidwai N. R. Murthy M. S. Ramachandran Noel N. Tata

Italy Umberto Agnelli Sergio Balbinot Luciano Benetton Silvio Berlusconi Carla Cico

421

Geographic Index Guerrino De Luca Hebert Demel John Elkann Vittorio Mincato Giuseppe Morchio Corrado Passera Alessandro Profumo Renzo Rosso Paolo Scaroni Marco Tronchetti Provera

Fumiaki Watari Shinichi Yokoyama

Alfonso Cortina de Alcocer Francisco Gonzalez Rodriguez Rafael Miranda Robredo Amancio Ortega Alfredo Sáenz

Luxembourg Guy Dollé

Sweden

Malaysia Mohamed Hassan Marican

Mexico Japan Naoyuki Akikusa Fujio Cho Rolf Eckrodt Takeo Fukui Masaaki Furukawa Carlos Ghosn Hiroshi Hamada Toru Hambayashi Katsuhiko Honda Kazutomo Robert Hori Nobuyuki Idei Akinobu Kanasugi Isao Kaneko Ryotaro Kaneko Ken Kutaragi Terunobu Maeda Akio Mimura Fujio Mitarai Hayao Miyazaki Tomijiro Morita Kunio Nakamura Yoshifumi Nishikawa Hidetoshi Nishimura Uichiro Niwa Tamotsu Nomakuchi Minoru Ohnishi Motoyuki Oka Tadashi Okamura Mutsutake Otsuka Mikio Sasaki Yoichi Shimogaichi Etsuhiko Shoyama Osamu Suzuki Toshifumi Suzuki Keiji Tachikawa Shoichiro Toyoda Shiro Tsuda Kazuo Tsukuda Shoei Utsuda Akio Utsumi Norio Wada Shigeo Watanabe

422

Raúl Muñoz Leos Carlos Slim

Leif Johansson Anders C. Moberg Hans Stra˚berg Carl-Henric Svanberg

Switzerland

Netherlands Antony Burgmans Niall FitzGerald Rijkman W. J. Groenink Bert Heemskerk Ewald Kist Gerard J. Kleisterlee Anders C. Moberg Donald J. Shepard Ben Verwaayen Hans Wijers

Josef Ackermann Peter Brabeck-Letmathe John R. Coomber Jürgen Dormann Oswald J. Grübel Franz B. Humer Tony James John J. Mack Marcel Ospel Dieter Rampl James J. Schiro Daniel Vasella

Taiwan

Norway

Morris Chang

Olav Fjell Eivind Reiten

United Kingdom Russia Vagit Y. Alekperov Mikhail Khodorkovsky Alexei Miller

Saudi Arabia Alwaleed Bin Talal Abdallah Jum’ah

South Korea Ahn Cheol-soo Chung Ju-yung Eric Kim Kim Jung-tae John Koo Lee Yong-kyung Pae Chong-Yeul Yun Jong-yong

Spain César Alierta Izuel

William F. Aldinger III Michael J. Bailey Matthew William Barrett Jonathan Bloomer Richard Branson John Browne Terence Conran Carlos Criado-Perez James R. Crosby Adam Crozier Eric Daniels Niall FitzGerald Roy A. Gardner Jean-Pierre Garnier Fred A. Goodwin Stephen K. Green Richard Harvey Andy Haste Naina Lal Kidwai Rob Lawes Terry Leahy Iain Lumsden Tom McKillop


Geographic Index James Murdoch Jorma Ollila David J. Prosser Harry J. M. Roels Arun Sarin Paolo Scaroni Tony Trahar Ben Verwaayen Paul S. Walsh Philip B. Watts

United States F. Duane Ackerman Shai Agassi Raul Alarcon Jr. William F. Aldinger III Herbert M. Allison Jr. John A. Allison IV Dan Amos Brad Anderson Richard H. Anderson G. Allen Andreas Micky Arison C. Michael Armstrong Bernard Arnault Gerard J. Arpey Ramani Ayer Steve Ballmer Jill Barad Don H. Barden Ned Barnholt Colleen Barrett Craig R. Barrett John M. Barth Glen A. Barton Richard Barton J. T. Battenberg III Alain Belda Charles Bell Robert H. Benmosche Betsy Bernard David W. Bernauer Gordon M. Bethune J. Robert Beyster Jeff Bezos Dave Bing Carole Black Cathleen Black Alan L. Boeckmann Jack O. Bovender Jr. Edward D. Breen John Browne Wayne Brunetti John E. Bryson

Warren E. Buffett Steven A. Burd H. Peter Burg James Burke Ursula Burns Louis C. Camilleri Lewis B. Campbell Michael R. Cannon Jim Cantalupo Thomas E. Capps Daniel A. Carp Peter Cartwright Steve Case Robert B. Catell William Cavanaugh III Charles M. Cawley Clarence P. Cazalot Jr. Nicholas D. Chabraja John T. Chambers J. Harold Chandler Morris Chang Kenneth I. Chenault Jim Clark Vance D. Coffman Douglas R. Conant Phil Condit John W. Conway Alston D. Correll David M. Cote Robert Crandall Mac Crawford Carlos Criado-Perez Alexander M. Cutler David F. D’Alessandro Eric Daniels George David Richard K. Davidson Julian C. Day Guerrino De Luca Michael S. Dell Roger Deromedi William Dillard II Barry Diller John T. Dillon Jamie Dimon Peter R. Dolan Tim M. Donahue David W. Dorman E. Linn Draper Jr. John G. Drosdick Tony Earley Jr. Robert A. Eckert Michael Eisner John Elkann


Larry Ellison Thomas J. Engibous Gregg L. Engles Ted English Roger Enrico Charlie Ergen Michael L. Eskew Matthew J. Espe Robert A. Essner John H. Eyler Jr. Richard D. Fairbank Thomas J. Falk David N. Farr Jim Farrell E. James Ferland Trevor Fetter John Finnegan Carly Fiorina Paul Fireman Jay S. Fishman Dennis J. FitzSimons William P. Foley II Scott T. Ford William Clay Ford Jr. Gary D. Forsee Kent B. Foster Charlie Fote H. Allen Franklin Tom Freston Richard S. Fuld Jr. S. Marce Fuller Joseph Galli Jr. Christopher B. Galvin Bill Gates David Geffen Jay M. Gellert Louis V. Gerstner Jr. John E. Gherty Charles K. Gifford Raymond V. Gilmartin Larry C. Glasscock Robert D. Glynn Jr. David R. Goode Jim Goodnight Chip W. Goodyear Andrew Gould William E. Greehey Hank Greenberg Jeffrey W. Greenberg Robert Greenberg J. Barry Griswell Andy Grove Jerry A. Grundhofer Rajiv L. Gupta

423

Geographic Index Carlos M. Gutierrez Robert Haas David D. Halbert John H. Hammergren H. Edward Hanway George J. Harad William B. Harrison Jr. William Haseltine Lewis Hay III William F. Hecht John B. Hess Laurence E. Hirsch Betsy Holden Chad Holliday Van B. Honeycutt Janice Bryant Howroyd Ancle Hsu L. Phillip Humann Robert Iger Jeffrey R. Immelt Ray R. Irani Michael J. Jackson Tony James Charles H. Jenkins Jr. David Ji Steve Jobs Jeffrey A. Joerres Abby Johnson John D. Johnson John H. Johnson Robert L. Johnson William R. Johnson Lawrence R. Johnston Jeff Jordan Michael H. Jordan Andrea Jung William G. Jurgensen Eugene S. Kahn Mel Karmazin Karen Katen Jeffrey Katzenberg Jim Kavanaugh Robert Keegan Herb Kelleher Edmund F. Kelly Kerry K. Killinger James M. Kilts Eric Kim Lowry F. Kline Philip H. Knight Charles Koch Richard Jay Kogan Timothy Koogle Richard M. Kovacevich

424

Dennis Kozlowski Sallie Krawcheck Ronald L. Kuehn Jr. Alan J. Lacy A. G. Lafley Robert W. Lane Sherry Lansing Kase L. Lawal Ken Lay Shelly Lazarus Lee Yong-kyung David J. Lesar R. Steve Letbetter Gerald Levin Arthur Levinson Kenneth D. Lewis Alfred C. Liggins III J. Bruce Lllewellyn Terry J. Lundgren John J. Mack Joseph Magliochetti Marjorie Magner Richard Mahoney Steven J. Malcolm Richard A. Manoogian Reuben Mark Michael E. Marks J. Willard Marriott Jr. R. Brad Martin David Maxwell L. Lowry Mays Michael B. McCallister W. Alan McCollough Mike McGavick Eugene R. McGrath Judy McGrath William W. McGuire Henry A. McKinnell Jr. C. Steven McMillan Scott G. McNealy W. James McNerney Jr. Dee Mellor Stuart A. Miller Fujio Mitarai William E. Mitchell Larry Montgomery James P. Mooney Ann Moore Patrick J. Moore Angelo R. Mozilo Anne M. Mulcahy Leo F. Mullin James J. Mulva James Murdoch

Lachlan Murdoch Rupert Murdoch A. Maurice Myers Robert L. Nardelli Jacques Nasser M. Bruce Nelson Jeffrey Noddle Indra K. Nooyi Blake W. Nordstrom Richard C. Notebaert David C. Novak Erle Nye James J. O’Brien Jr. Mark J. O’Brien Robert J. O’Connell Steve Odland Adebayo Ogunlesi Thomas D. O’Malley E. Stanley O’Neal David J. O’Reilly Marcel Ospel Paul Otellini Samuel J. Palmisano Helmut Panke Gregory J. Parseghian Richard D. Parsons Corrado Passera Hank Paulson Roger S. Penske A. Jerrold Perenchio Peter J. Pestillo Donald K. Peterson Howard G. Phanstiel Joseph A. Pichler William F. Pickard Harvey R. Pierce Mark C. Pigott Fred Poses John E. Potter Myrtle Potter Paul S. Pressler III Larry L. Prince Richard B. Priory Alessandro Profumo Philip J. Purcell Allen I. Questrom Franklin D. Raines Lee R. Raymond Steven A. Raymund Sumner M. Redstone Dennis H. Reilley Steven S. Reinemund Glenn M. Renwick Linda Johnson Rice


Geographic Index Stephen Riggio Jim Robbins Brian L. Roberts Steven R. Rogel James E. Rogers Bruce C. Rohde James E. Rohr Matthew K. Rose Bob Rossiter John W. Rowe Allen R. Rowland Patricia F. Russo Edward B. Rust Jr. Arthur F. Ryan Patrick G. Ryan Thomas M. Ryan Mary F. Sammons Steve Sanger Ron Sargent Arun Sarin George A. Schaefer Jr. Leonard D. Schaeffer James J. Schiro Richard J. Schnieders Howard Schultz H. Lee Scott Jr. Richard M. Scrushy Ivan G. Seidenberg Donald S. Shaffer Kevin W. Sharer William J. Shea Donald J. Shepard Thomas Siebel Henry R. Silverman

Russell Simmons James D. Sinegal Bruce A. Smith Fred Smith O. Bruton Smith Stacey Snider Jure Sola George Soros William S. Stavropoulos Sy Sternberg David L. Steward Martha Stewart Patrick T. Stokes Harry C. Stonecipher Ronald D. Sugar William H. Swanson Sidney Taurel Ken Thompson Rex W. Tillerson Robert L. Tillman Glenn Tilton James S. Tisch Barrett A. Toan Doreen Toben Don Tomnitz Donald Trump Joseph M. Tucci Ted Turner John H. Tyson Robert J. Ulrich Thomas J. Usher Roy A. Vallee Anton van Rossum Thomas H. Van Weelden


Rick Wagoner Ted Waitt Robert Walter Sandy Weill Alberto Weisser Jack Welch William C. Weldon Norman H. Wesley Leslie H. Wexner Kenneth Whipple Edward E. Whitacre Jr. Miles D. White Meg Whitman David R. Whitwam Hans Wijers Michael E. Wiley Bruce A. Williamson Chuck Williamson Peter S. Willmott Oprah Winfrey Patricia A. Woertz Dave Yost Larry D. Yost Edward Zander John D. Zeglis Dieter Zetsche Aerin Lauder Zinterhofer Edward J. Zore Klaus Zumwinkel

Zimbabwe Strive Masiyiwa

425

Company and Industry Index ■■■

Individual entrants are listed under company affiliation as well as under their principal industry. Industry terms appear in small caps. ABB Asea Brown Boveri Limited Jürgen Dormann Indra K. Nooyi Abbott Laboratories Miles D. White ABN Amro Rijkman W. J. Groenink Bert Heemskerk Accel-KKR Telecom Arun Sarin ACCO World Corporation Norman H. Wesley ACCOUNTING Jonathan Bloomer Jim Cantalupo David J. Lesar Mohamed Hassan Marican Leonard D. Schaeffer James J. Schiro William J. Shea Barrett A. Toan A-Check America Janice Bryant Howroyd Act*1 Personnel Services Janice Bryant Howroyd Adtranz-DaimlerChrysler Rail Systems Rolf Eckrodt AdvancePCS David D. Halbert ADVERTISING Terence Conran Adam Crozier Matthew J. Espe John E. Fletcher John H. Hammergren Van B. Honeycutt Kazutomo Robert Hori Janice Bryant Howroyd Jeffrey A. Joerres Shelly Lazarus L. Lowry Mays Mike McGavick

David C. Novak Pae Chong-Yeul Ted Turner Hans Wijers Peter S. Willmott AEGON NV Donald J. Shepard AEROSPACE Philippe Camus Michael R. Cannon Vance D. Coffman Phil Condit George David H. Allen Franklin Louis Gallois Roy A. Gardner Rainer Hertrich Bob Rossiter Harry C. Stonecipher Aérospatiale Louis Gallois Aetna Life and Casualty Company Edmund F. Kelly John W. Rowe AFLAC Inc. Dan Amos Agfa-Gevaert Ferdinand Verdonck Agilent Technologies Ned Barnholt AhnLab, Inc. Ahn Cheol-soo AIRLINES Richard H. Anderson Gerard J. Arpey Colleen Barrett Gordon M. Bethune Richard Branson Robert Crandall Isao Kaneko Herb Kelleher Leo F. Mullin


A. Maurice Myers Fred Smith Glenn Tilton Jürgen Weber AirTouch Communications Arun Sarin Akzo Nobel Hans Wijers Albertsons Inc. Lawrence R. Johnston Allen R. Rowland Alco Health Systems Corporation Dave Yost Alcoa Inc. Alain Belda Roger S. Penske Allianz AG Michael Diekmann Allied Waste Industries Thomas H. Van Weelden AlliedSignal Corporation Fred Poses Alltel Corporation Scott T. Ford Almanij Ferdinand Verdonck Aloha Airgroup A. Maurice Myers ALSTOM Pierre Bilger Altria Group Louis C. Camilleri Amazon.com Jeff Bezos Joseph Galli Jr. Amerada Hess John B. Hess America Online Steve Case American Broadcasting Company (ABC) Barry Diller Michael Eisner Robert Iger

429

Company and Industry Index American Electric Power Company E. Linn Draper Jr. American Express Company Kenneth I. Chenault Louis V. Gerstner Jr. American Family Insurance Group Harvey R. Pierce American International Group Inc. Hank Greenberg Jeffrey W. Greenberg Robert J. O’Connell American Standard Companies Henry A. McKinnell Jr. Fred Poses AmerisourceBergen Corporation Dave Yost Ameritech Corporation Richard C. Notebaert AmeriTrust Company Larry C. Glasscock Amgen Inc. Kevin W. Sharer AMR Corporation Gerard J. Arpey Robert Crandall Anderson-Clayton Foods William R. Johnson Anglo American PLC Tony Trahar Anheuser-Busch Companies Patrick T. Stokes Anthem Larry C. Glasscock Aon Corporation Patrick G. Ryan Apex Digital Ancle Hsu David Ji Apple Computer Inc. Guerrino De Luca Steve Jobs Arcelor Guy Dollé Archer Daniels Midland Company G. Allen Andreas ARCO Michael E. Wiley Argentaria Francisco Gonzalez Rodriguez ARI Network Services Jeffrey A. Joerres Ark Airlines Fred Smith Arnhold and S. Bleichroeder George Soros

430

Arrow Electronics William E. Mitchell Arthur Andersen Company Jonathan Bloomer David J. Lesar Leonard D. Schaeffer Arthur D. Little Inc. Steven A. Burd Arthur Young & Company Jim Cantalupo Mac Crawford ARV Assisted Living Howard G. Phanstiel Arvato Gunter Thielen ArvinMeritor Inc. Larry D. Yost Ashland Inc. James J. O’Brien Jr. Assa Abloy Group Carl-Henric Svanberg Assicurazioni Generali Sergio Balbinot Associated Newspapers of Zimbabwe Strive Masiyiwa AstraZeneca PLC Tom McKillop AT&T Bell Labs Lee Yong-kyung AT&T Corporation C. Michael Armstrong Betsy Bernard David W. Dorman Carly Fiorina Gary D. Forsee Patricia F. Russo Ivan G. Seidenberg Doreen Toben AT&T Wireless Services Tim M. Donahue John D. Zeglis Audi AG Hebert Demel AUTOMOTIVE Umberto Agnelli C. Michael Armstrong J. T. Battenberg III Lewis B. Campbell Fujio Cho Chung Ju-yung Hebert Demel Rolf Eckrodt John Elkann Franz Fehrenbach John Finnegan

Jean-Martin Folz William Clay Ford Jr. Takeo Fukui Carlos Ghosn Michael J. Jackson Leif Johansson Lu Weiding Joseph Magliochetti Giuseppe Morchio Jacques Nasser Steve Odland E. Stanley O’Neal Helmut Panke Roger S. Penske Peter J. Pestillo William F. Pickard Bernd Pischetsrieder Larry L. Prince Jurgen E. Schrempp Louis Schweitzer O. Bruton Smith Belinda Stronach Osamu Suzuki Shoichiro Toyoda Rick Wagoner Kenneth Whipple Larry D. Yost Dieter Zetsche AutoNation Inc. Michael J. Jackson AutoZone Inc. Steve Odland Avaya Inc. Donald K. Peterson Aventis Jean-René Fourtou Aviva Richard Harvey Avnet Inc. Roy A. Vallee Avon Products Inc. Andrea Jung AXA Group Claude Bébéar Henri de Castries Andy Haste Baker Hughes Michael E. Wiley Baker Investments Kase L. Lawal Banca Intesa Corrado Passera Banco Bilbao Vizcaya Alfonso Cortina de Alcocer Francisco Gonzalez Rodriguez


Company and Industry Index Alfredo Sáenz Banco Bradesco Márcio A. Cypriano Banco da Bahia Márcio A. Cypriano Banco do Brasil Cassio Casseb Lima Banco Español de Crédito (Banesto) Alfredo Sáenz Banco Francês & Brasileiro Cassio Casseb Lima Banco Lariano Alessandro Profumo Banco Urquijo César Alierta Izuel Bank of America Corporation Charles K. Gifford Kenneth D. Lewis Bank of Korea Pae Chong-Yeul Bank of Montreal Matthew William Barrett Bank One Corporation Jamie Dimon William G. Jurgensen Banque Pallas Serge Weinberg Barclays Bank Matthew William Barrett Barden Companies Inc. Don H. Barden Barnes & Noble Inc. Stephen Riggio BASF Alain Belda Jürgen Hambrecht Gunter Thielen Alberto Weisser Baxter Healthcare Corporation John H. Hammergren Bay Pacific Health Corporation Jay M. Gellert Bayer AG Werner Wenning Bayerische Hypo- und Vereinsbank (HVB Group) Dieter Rampl Hans-Jürgen Schinzler Bayerische Landesbank Girozentrale Werner Schmidt BB&T Corporation John A. Allison IV Bear Stearns & Company Gerald W. Schwartz

Becton, Dickinson and Company Raymond V. Gilmartin Bekaert Ferdinand Verdonck Bell Atlantic Corporation Ivan G. Seidenberg Doreen Toben BellSouth Corporation F. Duane Ackerman Gary D. Forsee Benetton Group Luciano Benetton Berkshire Hathaway Warren E. Buffett Bertelsmann AG Kai-Uwe Ricke Gunter Thielen Best Buy Company Inc. Brad Anderson BEVERAGES Bernard Arnault Roger Enrico Lowry F. Kline Patrick T. Stokes BHP Billiton Chip W. Goodyear Bing Group Dave Bing BIO-TECHNOLOGY William Haseltine Arthur Levinson Richard Mahoney Myrtle Potter Kevin W. Sharer Black & Decker Corporation Joseph Galli Jr. Black Entertainment Television Robert L. Johnson Blackstone Group Tony James Block’s Larry Montgomery BMW AG Helmut Panke Bernd Pischetsrieder BNP Paribas Michel Pébereau Boeing Company Gordon M. Bethune Michael R. Cannon Phil Condit Harry C. Stonecipher Boise Corporation George J. Harad M. Bruce Nelson


Booz Allen Hamilton Abby Johnson Bosch Group Franz Fehrenbach Boston Consulting Group Hans Wijers Bouygues SA Martin Bouygues BP PLC John Browne Brambles Industries John E. Fletcher Brasil Telecom Carla Cico Bridgestone Corporation Shigeo Watanabe Bristol-Myers Squibb Company Peter R. Dolan Myrtle Potter British Gas Roy A. Gardner British Sky Broadcasting James Murdoch Brooklyn Union Gas Robert B. Catell Brown and Root David J. Lesar BT Group Ben Verwaayen Bunge Alberto Weisser Burlington Northern Santa Fe Corporation Matthew K. Rose Caisse Nationale des Caisses d’Épargne Charles Milhaud Calpine Corporation Peter Cartwright CAMAC Holdings Kase L. Lawal Campbell Soup Company Douglas R. Conant Campofrio Rafael Miranda Robredo Canale 5 Silvio Berlusconi Canon Inc. Fujio Mitarai CanWest Capital Gerald W. Schwartz Capital One Financial Corporation Richard D. Fairbank Cardinal Foods Robert Walter

431

Company and Industry Index Cardinal Health Inc. Robert Walter Caremark International Inc. Mac Crawford Carlyle Group Louis V. Gerstner Jr. Carnival Corporation Micky Arison Carolina Power & Light Company William Cavanaugh III Carrefour SA Daniel Bernard Case Corporation Robert L. Nardelli Caterpillar Inc. Glen A. Barton CBS Corporation Michael H. Jordan Mel Karmazin Cendant Corporation Henry R. Silverman Centrica PLC Roy A. Gardner CGI Group Thierry Breton Charter Medical Corporation Mac Crawford Chase Manhattan Bank Robert H. Benmosche Charles K. Gifford Arthur F. Ryan Cheil Communications Pae Chong-Yeul Chemical Banking Corporation William B. Harrison Jr. Marjorie Magner CHEMICALS Alan L. Boeckmann Chen Tonghai Jürgen Dormann Jean-René Fourtou Rajiv L. Gupta Jürgen Hambrecht Chad Holliday Ray R. Irani Richard B. Priory William S. Stavropoulos Gunter Thielen Alberto Weisser Werner Wenning Cheung Kong Holdings Victor Li Li Ka-shing ChevronTexaco Corporation David J. O’Reilly

432

Patricia A. Woertz China Construction Bank Zhang Enzhao China Mobile Communications Corporation Zhang Ligui China National Petroleum Corporation Ma Fucai China Telecommunications Corporation Zhang Ligui Zhou Deqiang CHS John D. Johnson Chubb Corporation John Finnegan Ciba-Geigy Limited Richard Jay Kogan Cigna Corporation H. Edward Hanway CIN David J. Prosser Cinergy Corporation James E. Rogers Circuit City Stores Inc. W. Alan McCollough Cisco Systems Inc. John T. Chambers CitiBank Corporation William F. Aldinger III Cassio Casseb Lima Eric Daniels Jorma Ollila Cities Gas Company Steven J. Malcolm Citigroup Inc. Marjorie Magner Sandy Weill Clairol Shelly Lazarus Clear Channel Communications L. Lowry Mays CMS Energy Corporation Kenneth Whipple CNA Inc. Mike McGavick Coastal State Gas Corporation William E. Greehey Coca-Cola Enterprises Lowry F. Kline Coles Myer Limited John E. Fletcher Colgate-Palmolive Company Reuben Mark Columbia Pictures Sherry Lansing

Comcast Corporation Brian L. Roberts Commercial Credit Company Jay S. Fishman Compagnie de Suez Gérard Mestrallet Compagnie Générale d’Électricité Pierre Bilger Compagnie Générale des Eaux (CGE) Jean-Marie Messier Henri Proglio Antoine Zacharias Compass Group Michael J. Bailey Computer Sciences Corporation Van B. Honeycutt ConAgra Inc. John D. Johnson Bruce C. Rohde Concert Communications David W. Dorman CONGLOMERATES G. Allen Andreas Bernard Arnault Steve Ballmer Luciano Benetton Silvio Berlusconi Alwaleed Bin Talal Carole Black Peter Brabeck-Letmathe Richard Branson James Burke Louis C. Camilleri Lewis B. Campbell Philippe Camus Steve Case Chung Ju-yung David M. Cote Pierre Féraud Niall FitzGerald Rajiv L. Gupta Toru Hambayashi Günther Hülse Lawrence R. Johnston Dennis Kozlowski A. G. Lafley Victor Li Li Ka-shing Giuseppe Morchio Uichiro Niwa Motoyuki Oka Pae Chong-Yeul Mikio Sasaki Kevin W. Sharer Etsuhiko Shoyama


Company and Industry Index Henry R. Silverman Carlos Slim Noel N. Tata James S. Tisch Marco Tronchetti Provera Shoei Utsuda Ferdinand Verdonck Paul S. Walsh W. Galen Weston Hans Wijers Antoine Zacharias ConocoPhillips Inc. James J. Mulva Dennis H. Reilley Conran Holdings Limited Terence Conran Conseco Inc. William J. Shea Consolidated Edison Company of New York Eugene R. McGrath CONSTRUCTION Alan L. Boeckmann Martin Bouygues Chung Ju-yung Laurence E. Hirsch David J. Lesar Stuart A. Miller James J. O’Brien Jr. Mark J. O’Brien Don Tomnitz Antoine Zacharias Continental Airlines Inc. Richard H. Anderson Gordon M. Bethune Continental Bank Patrick J. Moore Continental Can International Corporation John W. Conway Continental Casualty Company Hank Greenberg Continental Group Ken Lay Continental Illinois National Bank and Trust Company of Chicago Bruce A. Smith Control Data Corporation David F. D’Alessandro Arthur F. Ryan Costco Wholesale Corporation James D. Sinegal Countrywide Financial Corporation Angelo R. Mozilo

Cox Communications Jim Robbins Cramer Roy A. Vallee Crédit Agricole Dominique Ferrero Jean Laurent Crédit commercial de France Michel Pébereau Crédit local de France Pierre Richard Crédit Lyonnais Dominique Ferrero Credit Suisse First Boston Josef Ackermann Oswald J. Grübel Tony James John J. Mack Adebayo Ogunlesi Gregory J. Parseghian Crow Development Company Don Tomnitz Crown Holdings Inc. John W. Conway Crown Zellerbach Corporation Norman H. Wesley CVS Corporation Thomas M. Ryan Cybird Company Kazutomo Robert Hori D.E. Shaw & Company Jeff Bezos D.R. Horton Inc. Don Tomnitz Dai-ichi Mutual Life Insurance Company Tomijiro Morita DaimlerChrysler Aerospace AG Rainer Hertrich DaimlerChrysler Corporation Rolf Eckrodt Jurgen E. Schrempp Dieter Zetsche Dana Corporation Joseph Magliochetti David Jones Roger Corbett Dayton Corporation Robert J. Ulrich Dean Foods Company Gregg L. Engles Deere & Company Robert W. Lane Def Jam Recordings Russell Simmons


Delhaize Group Pierre-Olivier Beckers Dell Inc. Michael S. Dell Delphi Corporation J. T. Battenberg III Delta Air Lines Inc. Leo F. Mullin Den norske Bank Olav Fjell Deutsche Bank Josef Ackermann Deutsche Lufthansa AG Jürgen Weber Deutsche Post Klaus Zumwinkel Deutsche Telekom Kai-Uwe Ricke Deutsche Zentral-Genossenschaftsbank Ulrich Brixner Dexia Group Pierre Richard Diageo Paul S. Walsh Diesel SpA Renzo Rosso Dillard’s Inc. William Dillard II Dillon Companies Joseph A. Pichler Dime Savings Bank Richard D. Parsons Dior and Boussac Saint-Frères Bernard Arnault Document Scanning Systems Janice Bryant Howroyd Dollar General Donald S. Shaffer Dominion Resources Inc. Thomas E. Capps Dominion Securities Gordon M. Nixon Donaldson, Lufkin & Jenrette Inc. Tony James Sallie Krawcheck Dongwon Securities Kim Jung-tae Dow Chemical Company William S. Stavropoulos Dreamworks SKG David Geffen Jeffrey Katzenberg DRUGS Peter R. Dolan Robert A. Essner

433

Company and Industry Index Jean-Pierre Garnier Raymond V. Gilmartin Franz B. Humer Karen Katen Richard Jay Kogan Igor Landau Richard Mahoney Tom McKillop Henry A. McKinnell Jr. Myrtle Potter Sidney Taurel Daniel Vasella Robert Walter Miles D. White Dave Yost DTE Energy Tony Earley Jr. Duke Energy Corporation Richard B. Priory Bruce A. Williamson DuPont Company Chad Holliday Raúl Muñoz Leos Dennis H. Reilley Dynegy Inc. Bruce A. Williamson E.ON Wulf H. Bernotat Eagle Materials Laurence E. Hirsch East Japan Railway Company Mutsutake Otsuka Eastman Kodak Company Daniel A. Carp Robert Crandall Raymond V. Gilmartin Robert Keegan Patricia F. Russo Eaton Corporation Alexander M. Cutler eBay Inc. Jeff Jordan Meg Whitman Echostar Communications Corporation Charlie Ergen Econet Wireless International Strive Masiyiwa Edison International John E. Bryson El Paso Corporation Ronald L. Kuehn Jr. ELECTRICAL AND ELECTRONICS Brad Anderson Edward D. Breen Thierry Breton

434

Michael R. Cannon Peter Cartwright John T. Chambers Morris Chang Jim Clark David M. Cote Jürgen Dormann John Elkann Thomas J. Engibous Matthew J. Espe S. Marce Fuller Nobuyuki Idei Jeffrey R. Immelt John D. Johnson Eric Kim John Koo Ken Kutaragi Dee Mellor William E. Mitchell Kunio Nakamura Robert L. Nardelli Tamotsu Nomakuchi Tadashi Okamura Peter J. Pestillo Jure Sola Roy A. Vallee Heinrich von Pierer Jack Welch Yun Jong-yong Electrolux AB Leif Johansson Hans Stra˚berg Electronic Data Systems Corporation Michael H. Jordan Eli Lilly and Company Sidney Taurel EMC Corporation Joseph M. Tucci Emerson David N. Farr Endesa Rafael Miranda Robredo Enel Paolo Scaroni ENGINEERING AND MANAGEMENT SERVICES J. Robert Beyster Steven A. Burd Peter Cartwright Julian C. Day Jürgen Dormann Stephen K. Green Jeffrey W. Greenberg J. Barry Griswell Robert Haas

Igor Landau David J. Lesar C. Steven McMillan W. James McNerney Jr. Leo F. Mullin Indra K. Nooyi Helmut Panke Corrado Passera Alessandro Profumo Philip J. Purcell Carl-Henric Svanberg Anton van Rossum Miles D. White Klaus Zumwinkel ENI Vittorio Mincato Enron Corporation Ken Lay Entergy Corporation William Cavanaugh III ENTERTAINMENT AND LEISURE Micky Arison Jill Barad Don H. Barden Richard Barton Jeff Bezos Carole Black Cathleen Black Richard Branson Steve Case Robert Crandall Barry Diller Michael Eisner Trevor Fetter Dennis J. FitzSimons Jean-René Fourtou Tom Freston Joseph Galli Jr. David Geffen Nobuyuki Idei Robert Iger Steve Jobs Robert L. Johnson Jeff Jordan Michael H. Jordan Mel Karmazin Jeffrey Katzenberg Ken Kutaragi Sherry Lansing Rob Lawes Gerald Levin Alfred C. Liggins III Judy McGrath Jean-Marie Messier


Company and Industry Index Hayao Miyazaki Ann Moore James Murdoch Lachlan Murdoch Rupert Murdoch Richard D. Parsons A. Jerrold Perenchio Paul S. Pressler Sumner M. Redstone Kai-Uwe Ricke Jim Robbins Brian L. Roberts Henry R. Silverman Russell Simmons O. Bruton Smith Stacey Snider Martha Stewart Gunter Thielen Ted Turner Serge Weinberg Oprah Winfrey Eridania Béghin-Say Jean-Martin Folz Estee Lauder Companies Aerin Lauder Zinterhofer European Aeronautic Defense and Space Company Philippe Camus Rainer Hertrich Expedia Richard Barton Express Scripts Inc. Barrett A. Toan Exxon Mobil Corporation John G. Drosdick Lee R. Raymond Rex W. Tillerson Chuck Williamson F. van Lanschot Bankiers Bert Heemskerk Fannie Mae David Maxwell Franklin D. Raines FAO Schwarz John H. Eyler Jr. Fedco Food Stores J. Bruce Lllewellyn Federated Department Stores John H. Eyler Jr. Terry J. Lundgren Allen I. Questrom FedEx Corporation Fred Smith David L. Steward Peter S. Willmott

Fed-Mart Corporation James D. Sinegal FG Inversiones Bursátiles Francisco Gonzalez Rodriguez Fiat SpA Umberto Agnelli Hebert Demel John Elkann Giuseppe Morchio Fidelity Investments Abby Johnson Fidelity National Financial William P. Foley II Fifth Third Bancorp George A. Schaefer Jr. FINANCIAL SERVICES: BANKS Josef Ackermann William F. Aldinger III César Alierta Izuel Herbert M. Allison Jr. John A. Allison IV Matthew William Barrett Robert H. Benmosche Daniel Bouton Ulrich Brixner Cassio Casseb Lima Charles M. Cawley J. Harold Chandler Philippe Citerne Alfonso Cortina de Alcocer James R. Crosby Márcio A. Cypriano Eric Daniels Jamie Dimon Richard D. Fairbank Dominique Ferrero Olav Fjell Charles K. Gifford Francisco Gonzalez Rodriguez Fred A. Goodwin Stephen K. Green Rijkman W. J. Groenink Oswald J. Grübel Jerry A. Grundhofer William B. Harrison Jr. Bert Heemskerk L. Phillip Humann Jiang Jianqing William G. Jurgensen Mikhail Khodorkovsky Kerry K. Killinger Kim Jung-tae Richard M. Kovacevich Robert W. Lane Jean Laurent


Kenneth D. Lewis Terunobu Maeda Marjorie Magner Charles Milhaud Patrick J. Moore Leo F. Mullin Yoshifumi Nishikawa Gordon M. Nixon Adebayo Ogunlesi Jorma Ollila Marcel Ospel Pae Chong-Yeul Richard D. Parsons Corrado Passera Michel Pébereau Alessandro Profumo Dieter Rampl Pierre Richard Arthur F. Ryan Alfredo Sáenz George A. Schaefer Jr. Hans-Jürgen Schinzler Werner Schmidt William J. Shea Bruce A. Smith Ken Thompson Don Tomnitz Akio Utsumi Serge Weinberg Zhang Enzhao FINANCIAL SERVICES: NON-BANKS William F. Aldinger III Ramani Ayer Robert H. Benmosche Jeff Bezos Warren E. Buffett Kenneth I. Chenault David F. D’Alessandro Eric Daniels Jamie Dimon Richard D. Fairbank Trevor Fetter John Finnegan Jay S. Fishman Olav Fjell Scott T. Ford Charlie Fote Richard S. Fuld Jr. Masaaki Furukawa Louis V. Gerstner Jr. Larry C. Glasscock Chip W. Goodyear Jeffrey W. Greenberg Oswald J. Grübel

435

Company and Industry Index H. Edward Hanway Tony James Abby Johnson William G. Jurgensen Naina Lal Kidwai Kerry K. Killinger Kim Jung-tae Ewald Kist Sallie Krawcheck Kase L. Lawal Gerald Levin John J. Mack Terunobu Maeda David Maxwell Jean-Marie Messier Angelo R. Mozilo Yoshifumi Nishikawa Hidetoshi Nishimura Gordon M. Nixon E. Stanley O’Neal Marcel Ospel Gregory J. Parseghian Hank Paulson Michel Pébereau David J. Prosser Philip J. Purcell III Franklin D. Raines Steven A. Raymund James E. Rohr Arthur F. Ryan James J. Schiro Gerald W. Schwartz Henry R. Silverman George Soros Martha Stewart Akio Utsumi Ferdinand Verdonck Sandy Weill Fininvest Silvio Berlusconi First Chicago NBD Corporation William G. Jurgensen Leo F. Mullin First Data Corporation Charlie Fote First National Bank of Chicago Robert W. Lane First Securities ASA Olav Fjell First Union Corporation Ken Thompson FirstEnergy Corporation H. Peter Burg FleetBoston Financial Corporation Charles K. Gifford

436

William J. Shea Fleming Companies Peter S. Willmott Flextronics International Michael E. Marks Florida Gas Company Ken Lay Florida Power & Light Company Wayne Brunetti Thomas E. Capps Lewis Hay III Florists’ Transworld Delivery (FTD) Meg Whitman Fluor Corporation Alan L. Boeckmann Foncière Euris Pierre Féraud FOOD PRODUCTS G. Allen Andreas Michael J. Bailey Peter Brabeck-Letmathe Antony Burgmans Louis C. Camilleri Douglas R. Conant Roger Deromedi Peter R. Dolan Robert A. Eckert Gregg L. Engles Roger Enrico Charlie Ergen Jean-Martin Folz John E. Gherty Carlos M. Gutierrez Betsy Holden John D. Johnson William R. Johnson Michael H. Jordan James M. Kilts Hans-Joachim Korber Richard M. Kovacevich Alan J. Lacy C. Steven McMillan Indra K. Nooyi Steve Odland Steven S. Reinemund Steve Sanger John H. Tyson Paul S. Walsh Alberto Weisser FOOD SERVICES AND RETAILERS Michael J. Bailey Pierre-Olivier Beckers Charles Bell Daniel Bernard Steven A. Burd

Jim Cantalupo Terence Conran Roger Corbett Lewis Hay III Charles H. Jenkins Jr. Terry Leahy J. Bruce Lllewellyn J. Willard Marriott Jr. Anders C. Moberg Jeffrey Noddle David C. Novak Joseph A. Pichler William F. Pickard Bruce C. Rohde Allen R. Rowland Ron Sargent Richard J. Schnieders Howard Schultz Robert Walter Ford Motor Company William Clay Ford Jr. A. Maurice Myers Jacques Nasser Peter J. Pestillo Kenneth Whipple Fortis Inc. Anton van Rossum Fortune Brands Norman H. Wesley FR3 Television Network Serge Weinberg France Télécom Thierry Breton Franz Haniel & Cie Günther Hülse Fred Meyer Mary F. Sammons Freddie Mac Gregory J. Parseghian Freeport-McMoRan Inc. Chip W. Goodyear Frito-Lay Company Roger Enrico Charlie Ergen William R. Johnson Fuji Bank Terunobu Maeda Fuji Iron & Steel Akio Mimura Fuji Photo Film Company Minoru Ohnishi Fujitsu Limited Naoyuki Akikusa Gain Technology Thomas Siebel


Company and Industry Index Gallatin Group Mike McGavick Gap Inc. Paul S. Pressler Gardner Merchant Limited Michael J. Bailey Gateway Corporation Ted Waitt Gazprom Alexei Miller GE Healthcare Dee Mellor GEC Marconi Roy A. Gardner Geffen Records David Geffen Genentech Inc. Arthur Levinson Myrtle Potter General Atomic Company J. Robert Beyster General Dynamics Nicholas D. Chabraja General Electric Company Peter Cartwright David M. Cote John Elkann Matthew J. Espe S. Marce Fuller Lawrence R. Johnston Jeffrey R. Immelt Dee Mellor Robert L. Nardelli Peter J. Pestillo Kevin W. Sharer Harry C. Stonecipher Jack Welch General Foods Corporation Peter R. Dolan Betsy Holden James M. Kilts General Instrument Corporation Edward D. Breen Morris Chang General Mills Inc. Douglas R. Conant Roger Enrico Richard M. Kovacevich Steve Sanger General Motors Acceptance Corporation John Finnegan General Motors Corporation C. Michael Armstrong J. T. Battenberg III Lewis B. Campbell

John Finnegan E. Stanley O’Neal Rick Wagoner Genius Group Renzo Rosso Genuine Parts Company Larry L. Prince George Weston Limited W. Galen Weston Georgia-Pacific Corporation Alston D. Correll Gillette Company James M. Kilts Glaxo Wellcome Franz B. Humer GlaxoSmithKline PLC Jean-Pierre Garnier Global Automotive Alliance L.L.C. William F. Pickard Goldman Sachs & Company Hank Paulson Goodyear Tire & Rubber Company Robert Keegan Grace Brothers Roger Corbett Grand Metropolitan Paul S. Walsh Groupe Michelin Edouard Michelin Gruber–Peters Entertainment Company Stacey Snider Grupo Carso Carlos Slim GTE Corporation Kent B. Foster Gulf Oil Corporation Patricia A. Woertz Gulf States Utilities E. Linn Draper Jr. H. J. Heinz Company William R. Johnson Halifax PLC James R. Crosby Halliburton Company David J. Lesar Hallmark Cards Inc. Robert Crandall Hammarplast Howard Schultz Harpo Inc. Oprah Winfrey Hartford Financial Services Group Ramani Ayer HBOS PLC James R. Crosby


HEALTH AND PERSONAL CARE PRODUCTS Antony Burgmans James Burke Thomas J. Falk Andrea Jung James M. Kilts Shelly Lazarus Reuben Mark W. James McNerney Jr. Lindsay Owen-Jones Steve Sanger William C. Weldon Aerin Lauder Zinterhofer HEALTH CARE SERVICES Jack O. Bovender Jr. Mac Crawford Trevor Fetter Jay M. Gellert John H. Hammergren Michael B. McCallister William W. McGuire Dee Mellor Howard G. Phanstiel Leonard D. Schaeffer Richard M. Scrushy Barrett A. Toan Health Net Jay M. Gellert HealthSouth Corporation Richard M. Scrushy Hearst Magazines Cathleen Black Heilig-Meyers Company Donald S. Shaffer Hewlett-Packard Company Ned Barnholt Carly Fiorina HIT Entertainment PLC Rob Lawes Hitachi Limited Etsuhiko Shoyama Hoechst AG Jürgen Dormann Home Depot Inc. Robert L. Nardelli Honda Motor Company Takeo Fukui Honeywell International David M. Cote Hopewell Holdings Victor Li Horringa and De Koning Hans Wijers Hospital Corporation of America Jack O. Bovender Jr.

437

Company and Industry Index Hot Shoppes, Inc. J. Willard Marriott Jr. HOTELS J. Willard Marriott Jr. Household International William F. Aldinger III Housing & Commercial Bank Kim Jung-tae Houston Industries R. Steve Letbetter Houston Light & Power R. Steve Letbetter Houston Natural Gas James E. Rogers HSBC Group Stephen K. Green Naina Lal Kidwai Human Genome Sciences William Haseltine Humana Inc. Michael B. McCallister Husky Energy Incorporated Victor Li Hutchinson Whampoa Li Ka-shing Hyperion Development Group Jim Clark Hyundai Group Chung Ju-yung I. Magnin Andrea Jung IAC/InteractiveCorp Richard Barton Barry Diller ICI Corporation Tom McKillop IKEA Group Anders C. Moberg IKON Office Solutions Matthew J. Espe Île de France Regional Bank Jean Laurent Illinois Tool Works Jim Farrell Indian Oil Corporation M. S. Ramachandran Industria de Diseño Textil Amancio Ortega Industrial and Commercial Bank of China Jiang Jianqing Infinity Broadcasting Corporation Mel Karmazin INFORMATION TECHNOLOGY Shai Agassi

438

Ahn Cheol-soo Naoyuki Akikusa C. Michael Armstrong Steve Ballmer Ned Barnholt Richard Barton J. Robert Beyster John T. Chambers Jim Clark Guerrino De Luca Michael S. Dell Barry Diller Larry Ellison Carly Fiorina Kent B. Foster Bill Gates Jim Goodnight Andy Grove John H. Hammergren Van B. Honeycutt Jeffrey A. Joerres Michael H. Jordan Timothy Koogle Scott G. McNealy N. R. Murthy Paul Otellini Corrado Passera Steven A. Raymund Patricia F. Russo Thomas Siebel David L. Steward Joseph M. Tucci Ben Verwaayen Meg Whitman Edward Zander Infosys Technologies N. R. Murthy ING Group Ewald Kist Ingram Micro Inc. Kent B. Foster INSURANCE Umberto Agnelli Herbert M. Allison Jr. Dan Amos Ramani Ayer Claude Bébéar Sergio Balbinot Robert H. Benmosche Jonathan Bloomer J. Harold Chandler John R. Coomber Henri de Castries Michael Diekmann

John Finnegan Jay S. Fishman William P. Foley II Larry C. Glasscock Hank Greenberg Jeffrey W. Greenberg J. Barry Griswell Oswald J. Grübel H. Edward Hanway Richard Harvey Andy Haste John H. Johnson William G. Jurgensen Ryotaro Kaneko Edmund F. Kelly Ewald Kist Iain Lumsden Mike McGavick Tomijiro Morita Robert J. O’Connell Harvey R. Pierce Glenn M. Renwick John W. Rowe Edward B. Rust Jr. Patrick G. Ryan William J. Shea Donald J. Shepard Sy Sternberg Anton van Rossum Shinichi Yokoyama Edward J. Zore Insurance Company of North America H. Edward Hanway Intel Corporation Craig R. Barrett Andy Grove Paul Otellini International Basic Economy Corporation Gerald Levin International Business Machines Corporation C. Michael Armstrong John T. Chambers Louis V. Gerstner Jr. Jeffrey A. Joerres Samuel J. Palmisano International Paper Company John T. Dillon Italtel Carla Cico Itochu Corporation Uichiro Niwa Ito-Yokado Group Toshifumi Suzuki


Company and Industry Index J.C. Penney and Company Allen I. Questrom J.P. Morgan Chase & Company Jamie Dimon William B. Harrison Jr. Japan Airlines International Company Isao Kaneko Japan Tobacco Katsuhiko Honda JFE Holdings Yoichi Shimogaichi John Hancock Financial Services David F. D’Alessandro Johnson & Johnson James Burke William C. Weldon Johnson Controls John M. Barth Johnson Publishing Company John H. Johnson Linda Johnson Rice Kauffman-Lattimer Company Dave Yost Kellogg Company Carlos M. Gutierrez Kendall Healthcare Products John H. Hammergren Kenner-Parker Toys Paul S. Pressler KeySpan Corporation Robert B. Catell Kidder, Peabody & Company Chip W. Goodyear Kimberly-Clark Corporation Thomas J. Falk King World Productions Oprah Winfrey Kingdom Holding Company Alwaleed Bin Talal Kmart Corporation Julian C. Day Koch Industries Inc. Charles Koch Kohlberg, Kravis, Roberts & Company Julian C. Day Kohl’s Corporation Larry Montgomery Koninklijke PTT Nederland Ben Verwaayen Kookmin Bank Kim Jung-tae Korea Telecom Lee Yong-kyung Kraft Foods International Louis C. Camilleri

Roger Deromedi Robert A. Eckert Betsy Holden Alan J. Lacy Kroger Company Joseph A. Pichler Ron Sargent KT Corporation Lee Yong-kyung L. A. Gear Inc. Robert Greenberg Lagardère Group Philippe Camus Land O’Lakes Inc. John E. Gherty Landesbank Baden-Württemberg Werner Schmidt Lazard Frères et Compagnie Jean-Marie Messier Franklin D. Raines Lear Corporation Bob Rossiter Legal and General Group David J. Prosser LEGAL SERVICES Richard D. Parsons Bruce C. Rohde John D. Zeglis Legend Group Holdings Company Liu Chuanzhi Lehman Brothers Holdings Richard S. Fuld Jr. Lennar Corporation Stuart A. Miller Lenovo Group Liu Chuanzhi Levi Strauss Company Robert Haas LG Electronics John Koo Liberty Mutual Insurance Group Edmund F. Kelly Life Investors Donald J. Shepard Lifemark Corporation Richard M. Scrushy Lifetime Entertainment Services Carole Black Lika Corporation Jure Sola Limited Brands Leslie H. Wexner Litton Industries Ronald D. Sugar


Lloyds TSB Group Eric Daniels Lockheed Martin Corporation Vance D. Coffman Loews Corporation James S. Tisch Logitech International Guerrino De Luca Loiret Regional Bank Jean Laurent Long Island Lighting Tony Earley Jr. L’Oréal Lindsay Owen-Jones Lotus Development Corporation Eric Kim LoVaca Gathering Company William E. Greehey Lowe’s Companies Robert L. Tillman Lucent Technologies Carly Fiorina Donald K. Peterson Patricia F. Russo Ben Verwaayen Lukoil Vagit Y. Alekperov LVMH-Moet Hennessy Louis Vuitton Bernard Arnault Macy’s Eugene S. Kahn Magna International Belinda Stronach Management Systems International Wayne Brunetti Manpower Inc. Jeffrey A. Joerres Manufacturers Hanover Corporation Steven A. Raymund MANUFACTURING Umberto Agnelli Naoyuki Akikusa Ned Barnholt Craig R. Barrett John M. Barth Glen A. Barton J. T. Battenberg III Jean-Louis Beffa Alain Belda Gordon M. Bethune Pierre Bilger Dave Bing Martin Bouygues Edward D. Breen Thierry Breton

439

Company and Industry Index Ursula Burns Michael R. Cannon Daniel A. Carp Nicholas D. Chabraja John T. Chambers Morris Chang John W. Conway Robert Crandall Alexander M. Cutler George David Thomas J. Falk David N. Farr Jim Farrell Franz Fehrenbach Joseph Galli Jr. Louis V. Gerstner Jr. Raymond V. Gilmartin Andy Grove Hiroshi Hamada Ancle Hsu David Ji Steve Jobs Jeffrey A. Joerres Leif Johansson Akinobu Kanasugi Robert Keegan Eric Kim Gerard J. Kleisterlee Dennis Kozlowski Robert W. Lane Victor Li Li Ka-shing Liu Chuanzhi Joseph Magliochetti Richard A. Manoogian Michael E. Marks Henry A. McKinnell Jr. W. James McNerney Jr. Rafael Miranda Robredo Fujio Mitarai Raúl Muñoz Leos Robert L. Nardelli Jacques Nasser Minoru Ohnishi Tadashi Okamura Samuel J. Palmisano Roger S. Penske Peter J. Pestillo William F. Pickard Mark C. Pigott Fred Poses Larry L. Prince Dennis H. Reilley Patricia F. Russo

440

Paolo Scaroni Howard Schultz Jure Sola Sy Sternberg Harry C. Stonecipher Hans Stra˚berg Belinda Stronach Ronald D. Sugar William H. Swanson Kazuo Tsukuda Ted Waitt Robert Walter Norman H. Wesley David R. Whitwam Larry D. Yost Edward Zander Manuli Group Giuseppe Morchio Manulife Financial Corporation David F. D’Alessandro Marathon Oil Corporation Clarence P. Cazalot Jr. Marriott International J. Willard Marriott Jr. Marsh & McLennan Companies Jeffrey W. Greenberg Martha Stewart Living Omnimedia Martha Stewart Masco Corporation Richard A. Manoogian Massachusetts Mutual Life Insurance Company Robert J. O’Connell Sy Sternberg MATERIALS Jean-Louis Beffa Alan L. Boeckmann Alfonso Cortina de Alcocer Carly Fiorina James J. O’Brien Matra Group Philippe Camus Matsushita Electric Industrial Company Kunio Nakamura Mattel Inc. Robert A. Eckert Jill Barad Maxtor Corporation Michael R. Cannon May Department Stores Company Eugene S. Kahn Mays–Company L. Lowry Mays MBNA Corporation Charles M. Cawley

McDonald’s Corporation Charles Bell Jim Cantalupo William F. Pickard McDonnell Douglas Corporation Harry C. Stonecipher McGrath, North, Mullin & Kratz Bruce C. Rohde MCI Communications Corporation Tim M. Donahue Kevin W. Sharer McKesson Corporation John H. Hammergren McKinsey and Company Stephen K. Green Robert Haas Igor Landau C. Steven McMillan W. James McNerney Jr. Leo F. Mullin Helmut Panke Corrado Passera Alessandro Profumo Philip J. Purcell III Anton van Rossum Miles D. White Klaus Zumwinkel Mead Corporation Alston D. Correll Meiji Life Insurance Company Ryotaro Kaneko Menetep Bank Mikhail Khodorkovsky Mercedes-Benz USA Inc. Michael J. Jackson Merck and Company Raymond V. Gilmartin Myrtle Potter Merrill Lynch and Company Herbert M. Allison Jr. E. Stanley O’Neal Merrill Lynch Capital Markets Trevor Fetter Marcel Ospel Messerschmitt-Bölkow-Blohm Rainer Hertrich MetLife Marketing Corporation J. Barry Griswell Metro AG Daniel Bernard Hans-Joachim Korber Metro-Goldwyn-Mayer/United Artists Trevor Fetter Sherry Lansing


Company and Industry Index Metropolitan Life Insurance Company Robert H. Benmosche Michelin Corporation Carlos Ghosn Microsoft Corporation Steve Ballmer Richard Barton Bill Gates Miller’s Supermarket Allen R. Rowland Milliken and Company W. Alan McCollough MINING AND METALS Vagit Y. Alekperov Alain Belda Dave Bing Guy Dollé Jean-Martin Folz Chip W. Goodyear Akio Mimura James P. Mooney Motoyuki Oka Roger S. Penske Ekkehard D. Schulz Yoichi Shimogaichi Tony Trahar Thomas J. Usher Minnesota Mining and Manufacturing Company (3M) W. James McNerney Jr. Mirant Corporation S. Marce Fuller Missouri Pacific Railroad Richard K. Davidson Mitsubishi Corporation Mikio Sasaki Mitsubishi Electric Corporation Tamotsu Nomakuchi Mitsubishi Heavy Industries Kazuo Tsukuda Mitsubishi Motors Corporation Rolf Eckrodt Mitsubishi Tokyo Financial Group Akio Utsumi Mitsubishi Trust and Banking Corporation Akio Utsumi Mitsui & Company Shoei Utsuda Mizuho Holdings Corporation Terunobu Maeda Moltex Renzo Rosso Mondi International Tony Trahar

Monness, Williams, and Sidel Martha Stewart Monsanto Company Ray R. Irani Richard Mahoney Mooney Chemicals James P. Mooney Morgan Stanley Inc. Naina Lal Kidwai John J. Mack Philip J. Purcell III Motorola Inc. Edward D. Breen Christopher B. Galvin Timothy Koogle Indra K. Nooyi Edward Zander MTV Networks Tom Freston Judy McGrath Münchener RückversicherungsGesellschaft Hans-Jürgen Schinzler Murphey Favre Kerry K. Killinger Music Corporation of America A. Jerrold Perenchio Mutuelles Unis Claude Bébéar Nabisco Food Company Douglas R. Conant James M. Kilts National Amusements Sumner M. Redstone National Australia Bank Fred A. Goodwin Nationale-Nederlanden Ewald Kist NationsBank Corporation J. Harold Chandler Kenneth D. Lewis Nationwide William G. Jurgensen NEC Corporation Akinobu Kanasugi Neiman Marcus Group Inc. Andrea Jung Allen I. Questrom Nestlé SA Peter Brabeck-Letmathe Netscape Communications Corporation Jim Clark New York Life Insurance Company Robert J. O’Connell Sy Sternberg


Newell Rubbermaid Inc. Joseph Galli Jr. News Corporation James Murdoch Lachlan Murdoch Rupert Murdoch Nextel Communications Inc. Tim M. Donahue Nike Inc. Philip H. Knight Nippon Oil Fumiaki Watari Nippon Steel Corporation Akio Mimura Nippon Telegraph and Telephone Corporation Norio Wada Nissho Iwai Corporation Toru Hambayashi Hidetoshi Nishimura Nisson Motor Company Carlos Ghosn NKK Corporation Yoichi Shimogaichi Nokia Corporation Jorma Ollila Nordstrom Inc. Blake W. Nordstrom Norfolk Southern Corporation David R. Goode Norsk Hydro ASA Eivind Reiten North Carolina National Bank Kenneth D. Lewis Northeast Theater Corporation Sumner M. Redstone Northern Telecom Limited Donald K. Peterson Northrop Grumman Corporation Ronald D. Sugar Northwest Airlines Inc. Richard H. Anderson Northwestern Mutual Life Insurance Company Edward J. Zore Norwest Richard M. Kovacevich Novartis AG Daniel Vasella NTT DoCoMo Keiji Tachikawa Shiro Tsuda Nutrition Management Food Services Company Michael J. Bailey

441

Company and Industry Index Occidental Petroleum Corporation Ray R. Irani Office Depot Inc. M. Bruce Nelson Ohio Edison H. Peter Burg Olgilvy & Mather Worldwide Shelly Lazarus Olivetti SpA Guerrino De Luca Corrado Passera OM Group James P. Mooney Onex Corporation Gerald W. Schwartz Oracle Corporation Larry Ellison Thomas Siebel Oscar Mayer Foods Corporation Robert A. Eckert Paccar Inc. Mark C. Pigott Pacific Bell Communications Betsy Bernard PacifiCare Health Systems Howard G. Phanstiel PaineWebber Inc. Robert H. Benmosche PAPER AND FORESTRY Alston D. Correll John T. Dillon Thomas J. Falk Rajiv L. Gupta George J. Harad Patrick J. Moore M. Bruce Nelson Steven R. Rogel Tony Trahar Paramount Pictures Corporation Michael Eisner Jeffrey Katzenberg Sherry Lansing Patni Computer Systems N. R. Murthy Patterson Belknap Webb & Tyler Richard D. Parsons Péchiney Jean-Martin Folz Pemex Raúl Muñoz Leos Penn Mutual Patrick G. Ryan Penske Corporation Roger S. Penske

442

People’s Bank of China Jiang Jianqing PepsiCo Inc. Roger Enrico Michael H. Jordan Indra K. Nooyi David C. Novak Steven S. Reinemund Perenchio Television A. Jerrold Perenchio Petrobras José Dutra PetroChina Ma Fucai PETROLEUM Wulf H. Bernotat John Browne Wayne Brunetti Clarence P. Cazalot Jr. Chen Tonghai Alfonso Cortina de Alcocer Thierry Desmarest John G. Drosdick José Dutra Olav Fjell Roy A. Gardner Chip W. Goodyear Andrew Gould William E. Greehey John B. Hess Ray R. Irani Abdallah Jum’ah Mikhail Khodorkovsky Charles Koch Ronald L. Kuehn Jr. Kase L. Lawal Ken Lay Ma Fucai Steven J. Malcolm Mohamed Hassan Marican Alexei Miller Vittorio Mincato James J. Mulva Raúl Muñoz Leos Thomas D. O’Malley David J. O’Reilly M. S. Ramachandran Lee R. Raymond Dennis H. Reilley Harry J. M. Roels James E. Rogers Bruce A. Smith Patrick T. Stokes Rex W. Tillerson

Glenn Tilton Fumiaki Watari Philip B. Watts Michael E. Wiley Bruce A. Williamson Chuck Williamson Patricia A. Woertz Petroliam Nasional Berhad (Petronas) Mohamed Hassan Marican Pfizer Inc. Karen Katen Henry A. McKinnell Jr. PG&E Corporation Robert D. Glynn Jr. Philadelphia Coca-Cola Bottling Company J. Bruce Lllewellyn Philip Morris Companies Louis C. Camilleri Alan J. Lacy Phillips Petroleum Thomas D. O’Malley Pilkington Paolo Scaroni Pinault-Printemps-Redoute Serge Weinberg Pirelli Group Giuseppe Morchio Marco Tronchetti Provera Pixar Animation Studios Steve Jobs PNC Financial Services Group James E. Rohr Polaroid Corporation Jacques Nasser Portland Valderrivas Alfonso Cortina de Alcocer PPL Corporation William F. Hecht Pratt & Whitney Aircraft H. Allen Franklin Praxair Inc. Dennis H. Reilley Premcor Inc. Thomas D. O’Malley Price Company James D. Sinegal Pricewaterhouse Coopers Naina Lal Kidwai James J. Schiro William J. Shea Barrett A. Toan Primerica Corporation Sandy Weill


Company and Industry Index Principal Financial Group J. Barry Griswell Proctor & Gamble Company James Burke Steve Ballmer Carole Black Steve Case A. G. Lafley W. James McNerney Jr. Steve Sanger Progress Energy Corporation William Cavanaugh III Progressive Casualty Insurance Company Glenn M. Renwick Prudential Financial Arthur F. Ryan Prudential Public Limited Company Jonathan Bloomer PSA Peugeot Citroën Jean-Martin Folz PSI Energy James E. Rogers Public Service Enterprise Group Inc. E. James Ferland PUBLISHING AND PRINTING Silvio Berlusconi Cathleen Black Dennis J. FitzSimons John H. Johnson Strive Masiyiwa Edouard Michelin Anne M. Mulcahy Linda Johnson Rice Martha Stewart Gunter Thielen Oprah Winfrey Publix Super Markets Inc. Charles H. Jenkins Jr. Pulte Homes Inc. Mark J. O’Brien Quaker Oatmeal Cereals Steve Odland Quelle Group Klaus Zumwinkel Qwest Communications Corporation Betsy Bernard Richard C. Notebaert R. A. Oetker Hans-Joachim Korber Rabobank Bert Heemskerk Radio One Inc. Alfred C. Liggins III Raychem Corporation William E. Mitchell

Raytheon Company Sy Sternberg William H. Swanson Edward Zander REAL ESTATE Jim Clark Donald Trump Reebok International Paul Fireman Reliance Capital Group Henry R. Silverman Reliant Resources R. Steve Letbetter Renault Corporation Carlos Ghosn Louis Schweitzer Repsol YPF Alfonso Cortina de Alcocer RepublicBank of Dallas Don Tomnitz RETAIL AND WHOLESALE Brad Anderson Jill Barad Daniel Bernard David W. Bernauer Jeff Bezos Roger Corbett Carlos Criado-Perez Julian C. Day William Dillard II Barry Diller Robert A. Eckert Ted English John H. Eyler Jr. Niall FitzGerald John E. Fletcher Kent B. Foster Joseph Galli Jr. Michael J. Jackson Lawrence R. Johnston Jeff Jordan Andrea Jung Eugene S. Kahn Jim Kavanaugh Alan J. Lacy Terry Leahy Terry J. Lundgren R. Brad Martin W. Alan McCollough Anders C. Moberg Larry Montgomery Robert L. Nardelli M. Bruce Nelson Steve Odland Paul S. Pressler


Allen I. Questrom Stephen Riggio Thomas M. Ryan Mary F. Sammons Ron Sargent H. Lee Scott Jr. Donald S. Shaffer James D. Sinegal Toshifumi Suzuki Noel N. Tata Robert L. Tillman Robert J. Ulrich Serge Weinberg Meg Whitman Peter S. Willmott Klaus Zumwinkel Rhône-Poulenc Group Jean-René Fourtou Igor Landau Ricoh Company Hiroshi Hamada Rite Aid Corporation Mary F. Sammons Roche Group Franz B. Humer Rockwell International Corporation Larry D. Yost Rohm & Haas Company Rajiv L. Gupta Royal Ahold Anders C. Moberg Royal and SunAlliance Andy Haste Royal Bank of Canada Gordon M. Nixon Royal Bank of Scotland Fred A. Goodwin Royal Dutch/Shell Group Harry J. M. Roels Philip B. Watts Bruce A. Williamson Royal Mail Group Adam Crozier Royal Philips Electronics Gerard J. Kleisterlee RUBBER AND TIRE Carlos Ghosn Robert Keegan Edouard Michelin Giuseppe Morchio Shigeo Watanabe Rush Communications of NYC Inc. Russell Simmons Russ & Company L. Lowry Mays

443

Company and Industry Index RWE Harry J. M. Roels Ryan Corporation Patrick G. Ryan Saatchi & Saatchi Adam Crozier Safeco Corporation Mike McGavick Safeway Inc. Steven A. Burd Carlos Criado-Perez SAI Umberto Agnelli Saint-Gobain Jean-Louis Beffa St. Paul Travelers Companies, Inc. Jay S. Fishman St. Regis Paper Company Steven R. Rogel Saks Inc. R. Brad Martin Salomon Brothers Inc. Gregory J. Parseghian Salomon Smith Barney Jamie Dimon Samsung Corporation Eric Kim Pae Chong-Yeul Yun Jong-yong Sandoz Pharmaceuticals Corporation Robert A. Essner Daniel Vasella Sanford C. Bernstein Sallie Krawcheck Sanmina-SCI Corporation Jure Sola Sanofi-Aventis Igor Landau Santander Central Hispano Group Alfredo Sáenz SAP AG Shai Agassi Sara Lee Corporation C. Steven McMillan Steve Odland SAS Institute Jim Goodnight Saudi Aramco Abdallah Jum’ah SBC Communications David W. Dorman Edward E. Whitacre Jr. Schering-Plough Corporation Jean-Pierre Garnier Franz B. Humer

444

Richard Jay Kogan Schlumberger Limited Andrew Gould Science Applications International Corporation J. Robert Beyster Scott Paper Company Rajiv L. Gupta Scottish Amicable James R. Crosby Sears Roebuck and Company Alan J. Lacy Donald S. Shaffer Julian C. Day Philip J. Purcell Securitas Group Carl-Henric Svanberg Shamrock Corporation Ray R. Irani Shanghai City Cooperative Bank Jiang Jianqing Shearson Lehman Brothers Holdings Jay S. Fishman Shell Oil Company Wulf H. Bernotat Kase L. Lawal Patrick T. Stokes Sidley and Austin John D. Zeglis Siebel Systems Thomas Siebel Siemens AG Heinrich von Pierer Signet Banking Corporation Richard D. Fairbank Silicon Graphics Inc. Jim Clark Simca Industries Umberto Agnelli Sinopec Corporation Chen Tonghai Skechers U.S.A. Inc. Robert Greenberg Smith Barney Inc. Sallie Krawcheck John J. Mack Smurfit-Stone Container Corporation Patrick J. Moore Sociétéde Banque Suisse Dieter Rampl SociétéGénérale Daniel Bouton Philippe Citerne

Société Nationale des Chemins de Fer Français Louis Gallois Söhnlein Rheingold Hans-Joachim Korber Sojitz Holdings Corporation Hidetoshi Nishimura Solectron Corporation Michael R. Cannon William E. Mitchell Sonat Inc. Ronald L. Kuehn Jr. Sonic Automotive O. Bruton Smith Sony Computer Entertainment Ken Kutaragi Sony Corporation Nobuyuki Idei Ken Kutaragi Soros Fund Management George Soros Southdown Inc. Laurence E. Hirsch Southern Company H. Allen Franklin S. Marce Fuller Southern Natural Resources Ronald L. Kuehn Jr. Southwest Airlines Company Colleen Barrett Herb Kelleher Spanish Broadcasting System, Inc. Raul Alarcon Jr. Speedway Motorsports O. Bruton Smith Spencer Trask Software Group Eric Kim Sprint Corporation Gary D. Forsee Standard Life Assurance Company Iain Lumsden Standard Oil John Browne Staples Inc. Ron Sargent Starbucks Corporation Howard Schultz State Farm Insurance Companies Edward B. Rust Jr. Statoil Olav Fjell Stephens Group Scott T. Ford Stet International Carla Cico


Company and Industry Index Stride Rite Company Meg Whitman Studio Ghibli Hiyao Miyazaki Südwestdeutsche Landesbank Werner Schmidt Suiza Foods Corporation Gregg L. Engles Sumitomo Corporation Motoyuki Oka Sumitomo Life Insurance Company Shinichi Yokoyama Sumitomo Mitsui Banking Corporation Yoshifumi Nishikawa Sumitomo Mitsui Financial Group Yoshifumi Nishikawa Sun Alliance Group PLC Richard Harvey Sun Microsystems Inc. Scott G. McNealy Edward Zander Sunoco Inc. John G. Drosdick SunTrust Banks L. Phillip Humann Supervalu Inc. Jeffrey Noddle Supreme Liberty Life Insurance Company John H. Johnson Suzuki Motor Corporation Osamu Suzuki Swiss Bank Corporation Marcel Ospel Swiss Re John R. Coomber SYSCO Corporation Richard J. Schnieders Tabacalera SA César Alierta Izuel Taiwan Semiconductor Manufacturing Company Morris Chang Talkline Kai-Uwe Ricke Target Corporation Robert J. Ulrich Tata Group Noel N. Tata Tech Data Corporation Steven A. Raymund Technit Paolo Scaroni Telecom Italia Marco Tronchetti Provera

TELECOMMUNICATIONS F. Duane Ackerman Raul Alarcon Jr. César Alierta Izuel C. Michael Armstrong Silvio Berlusconi Betsy Bernard Pierre Bilger Edward D. Breen Thierry Breton Carla Cico Tim M. Donahue David W. Dorman Charlie Ergen Carly Fiorina Scott T. Ford Gary D. Forsee Kent B. Foster Christopher B. Galvin David D. Halbert Timothy Koogle Lee Yong-kyung Strive Masiyiwa L. Lowry Mays Indra K. Nooyi Richard C. Notebaert Jorma Ollila Donald K. Peterson Kai-Uwe Ricke Patricia F. Russo Arun Sarin Ivan G. Seidenberg Kevin W. Sharer Carlos Slim Carl-Henric Svanberg Keiji Tachikawa Doreen Toben Marco Tronchetti Provera Shiro Tsuda Ben Verwaayen Norio Wada Edward E. Whitacre Jr. Edward Zander John D. Zeglis Zhang Ligui Zhou Deqiang Telefon LM Ericsson Carl-Henric Svanberg Telefónica César Alierta Izuel Telemilano Silvio Berlusconi Telemundo Group Henry R. Silverman


Tellabs Inc. Richard C. Notebaert Telmex Carlos Slim Tenet Healthcare Corporation Trevor Fetter Tesco PLC Terry Leahy Tesoro Petroleum Corporation Bruce A. Smith Texaco Inc. Clarence P. Cazalot Jr. Glenn Tilton Texas Instruments Inc. Morris Chang Thomas J. Engibous TEXTILES AND APPAREL Bernard Arnault Luciano Benetton Daniel Bernard Terence Conran William Dillard II Ted English Paul Fireman Robert Greenberg Robert Haas Eugene S. Kahn Philip H. Knight W. Alan McCollough Blake W. Nordstrom Amancio Ortega Paul S. Pressler Allen I. Questrom Renzo Rosso Leslie H. Wexner Textron Inc. Lewis B. Campbell Thomson Multimedia Thierry Breton Thyssen Krupp Ekkehard D. Schulz TIAA-CREF Herbert M. Allison Ticor Mortgage Insurance Company David Maxwell Time Warner Inc. Steve Case Gerald Levin Ann Moore Richard D. Parsons Ted Turner TJX Companies Ted English TOBACCO César Alierta Izuel

445

Company and Industry Index Louis C. Camilleri Katsuhiko Honda Alan J. Lacy Tokuma Hayao Miyazaki Tokyo Movie Shinsha Hayao Miyazaki TopTier Software Shai Agassi Tosco Corporation John G. Drosdick Thomas D. O’Malley Toshiba Corporation Tadashi Okamura Total SA Thierry Desmarest Touche Ross & Company Mohamed Hassan Marican Toyota Motor Corporation Fujio Cho Shoichiro Toyoda Toyota Tsusho Corporation Masaaki Furukawa Toys ‘R’ Us Inc. John H. Eyler Jr. Tracey-Locke BBDO David C. Novak TRANSPORT SERVICES Adam Crozier Richard K. Davidson Rolf Eckrodt Michael L. Eskew Louis Gallois David R. Goode James J. O’Brien Jr. Mutsutake Otsuka Mark C. Pigott John E. Potter Matthew K. Rose Fred Smith David L. Steward Peter S. Willmott Klaus Zumwinkel Transportation Business Specialists David L. Steward Travelers Group Sandy Weill Trent Limited Noel N. Tata Tribune Company Dennis J. FitzSimons TriStar Pictures Stacey Snider Trump Organization Donald Trump

446

TRW Inc. David M. Cote Ronald D. Sugar Tudor Rafael Miranda Robredo Turner Advertising Company Ted Turner Turner Broadcasting System Ted Turner TXU Corporation Erle Nye Tyco International Edward D. Breen Dennis Kozlowski Tyson Foods Inc. John H. Tyson U.S. Bancorp Jerry A. Grundhofer U.S. Foodservice Corporation Lewis Hay III U.S. Postal Service John E. Potter UAL Corporation Glenn Tilton UniCredito Italiano Alessandro Profumo Unilever PLC Antony Burgmans Niall FitzGerald Union Bank Jerry A. Grundhofer Union Carbide Corporation Richard B. Priory Union Pacific Corporation Richard K. Davidson Unisys Corporation Joseph M. Tucci United Bank of Switzerland Marcel Ospel United Mortgagee Servicing Corporation Angelo R. Mozilo United Parcel Service Michael L. Eskew United States Steel Corporation Thomas J. Usher United Technologies Corporation George David UnitedHealth Group William W. McGuire Universal Music Group Russell Simmons Universal Pictures Stacey Snider Univision Communications Inc. A. Jerrold Perenchio

Unocal Corporation Chuck Williamson UnumProvident Corporation J. Harold Chandler Usinor SA Guy Dollé UTILITIES Wulf H. Bernotat Wayne Brunetti John E. Bryson H. Peter Burg Thomas E. Capps Robert B. Catell William Cavanaugh III E. Linn Draper Jr. Tony Earley Jr. E. James Ferland H. Allen Franklin S. Marce Fuller Roy A. Gardner Robert D. Glynn Jr. Lewis Hay III William F. Hecht R. Steve Letbetter Eugene R. McGrath Jean-Marie Messier Gérard Mestrallet Rafael Miranda Robredo Erle Nye Richard B. Priory Henri Proglio Eivind Reiten Harry J. M. Roels James E. Rogers Paolo Scaroni Kenneth Whipple Bruce A. Williamson Antoine Zacharias Valero Energy Corporation William E. Greehey Bruce A. Smith Veolia Environnement Henri Proglio Verizon Corporation Ivan G. Seidenberg Doreen Toben Viacom International Dennis J. FitzSimons Mel Karmazin Sumner M. Redstone Jim Robbins Video Arts Television Rob Lawes Viking Office Products M. Bruce Nelson


Company and Industry Index VINCI SA Antoine Zacharias Virgin Group Richard Branson Visteon Corporation Peter J. Pestillo Vivendi Universal Barry Diller Jean-René Fourtou Jean-Marie Messier Henri Proglio Antoine Zacharias Vodafone Group Arun Sarin Volkswagen Hebert Demel Bernd Pischetsrieder Volvo AB Leif Johansson Wachovia Corporation Ken Thompson Walgreen Company David W. Bernauer Wal-Mart Stores Inc. Carlos Criado-Perez H. Lee Scott Jr. Walt Disney Company Carole Black Michael Eisner Robert Iger Jeff Jordan Jeffrey Katzenberg Paul S. Pressler Wang Global Joseph M. Tucci

Wang Laboratories John T. Chambers Wanxiang Group Corporation Lu Weiding Warner & Swasey Company Larry D. Yost Washington Mutual Bank Kerry K. Killinger Waste Management Inc. A. Maurice Myers WASTE SERVICES A. Maurice Myers Henri Proglio Thomas H. Van Weelden WellPoint Health Networks Howard G. Phanstiel Leonard D. Schaeffer Wells Fargo Bank William F. Aldinger III Jerry A. Grundhofer Richard M. Kovacevich Wertheim & Company George Soros Western Atlas Inc. Timothy Koogle Western Electric Company John D. Johnson Westinghouse Electric Corporation J. Robert Beyster Weyerhaeuser Company Alston D. Correll Steven R. Rogel Whirlpool Corporation David R. Whitwam


White Weld Securities Oswald J. Grübel Willamette Industries Steven R. Rogel William Morris Agency David Geffen Williams Companies Steven J. Malcolm Willmott Services Inc. Peter S. Willmott Winn-Dixie Stores Allen R. Rowland Woolworths Limited Roger Corbett World Wide Technology Holding Co. Inc. Jim Kavanaugh David L. Steward Wyeth Robert A. Essner Xcel Energy Wayne Brunetti Xerox Corporation Ursula Burns Anne M. Mulcahy Howard Schultz Yahoo! Inc. Timothy Koogle Yukos Oil Corporation Mikhail Khodorkovsky Yum! Brands David C. Novak Zeneca Group Tom McKillop Zurich Financial Services James J. Schiro

447

Name Index ■■■

Page references include both a volume number and a page number (for example 1:237-238 refers to pages 237-238 in Volume I). Boldface citations signify main articles. Italic page references indicate illustrations.

A Abdul, Paula, 2:178 Abdul-Jabbar, Kareem, 2:178 Abidin, Azizan, 3:25 Abri-Martorell, Fernando, 1:31 Ackerman, F. Duane, 1:1-4, 1, 403; 2:66-67 Ackermann, Josef, 1:5-8, 5 Adamik, Brian, 4:71 Adams, James R., 1:438 Adler, Joel, 1:14 Affentranger, Anton, 2:280 Agassi, Shai, 1:9-10 Agnelli, Giovanni, 1:11-12, 431-432; 3:135 Agnelli, Giovanni Alberto, 1:12 Agnelli, Umberto, 1:11-12, 11, 432; 3:135-136 Aguilera, Christina, 2:178 Ahn Cheol-soo, 1:13-15 Aikawa, Kentaro, 4:213 Akers, John F., 1:51; 3:272 Akikusa, Naoyuki, 1:16-18, 16 Alarcón, Raúl, Jr., 1:19-20 Alarcón, Raúl, Sr., 1:19 Alberto, Giovanni, 1:12 Alcocer, Alberto, 1:321 Aldinger, William F., III, 1:21-23, 21 Alekperov, Vagit Y., 1:24-28, 24 Alexander, Anthony J., 1:210 Alexander, James, 2:461 Alexander, Robert, 1:373 Alexander, Tom, 1:180 Alierta Izuel, César, 1:29-31, 29 Allen, Paul, 1:71, 244; 2:112-113 Allen, Robert E., 4:356, 384 Allen, Robert G., 1:52 Allende, Salvador, 1:174 Allert, Rick, 2:49-50 Allison, Herbert M., Jr., 1:32-34, 32 Allison, John A., IV, 1:35-37 Alm, John, 2:405

Alpert, Dan, 4:325 Alvarad, Carol, 2:456 Amelio, Gilbert F., 2:314 Amerman, John, 1:74 Ames, Roger, 3:286 Amiore, Ciro, 3:289 Amos, Bill, 1:38 Amos, Dan, 1:38-39 Amos, John, 1:38 Amos, Paul, 1:38-39 Amos, Paul, II, 1:38 Anan, Kofi, 3:68 Anders, Bill, 1:263-264 Anderson, Brad, 1:40-41, 40 Anderson, Bradbury H. See Anderson, Brad. Anderson, Paul, 2:157; 3:346-347 Anderson, Richard H., 1:42-44, 42 Anderson-Walters, Lorene, 1:265 Ando, Kunitake, 2:285, 434 Andreas, Dwayne, 1:45 Andreas, G. Allen, Jr., 1:45-46 Andreas, Michael, 1:45 Andreessen, Marc, 1:294, 296 Annan, Kofi, 2:280 Argus, Don R., 2:48, 157-158 Arison, Micky, 1:47-49, 47 Arledge, Roone, 2:287-288 Armstrong, C. Michael, 1:50-55, 50, 403; 4:384 Armstrong, Lance, 1:392 Arnault, Bernard, 1:56-58, 56 Arnold, Luqman, 3:259-260 Arnold, Tom, 2:31 Arpey, Gerard J., 1:59-61, 59 Ashley, Laura, 4:177 Asper, Izzy, 4:52-53 Auletta, Ken, 2:89 Auriana, Lawrence, 4:96 Auriemma, Michael, 1:258 Avery, Rick, 2:335 Ayer, Ramani, 1:62-64


Azcarraga, Emilio, 3:303 Azrak, Ruby, 4:101

B Bacanovic, Peter, 4:136 Bailey, Michael J., 1:65-67, 65 Bailey, Vicki, 3:421 Baird, Douglas, 4:182 Baird, Euan, 2:160 Baker, George, 3:155 Baker, Richard H., 3:368 Balbinot, Sergio, 1:68-69, 68 Baldwin, Jerry, 4:47 Ballen, John W., 4:97 Ballmer, Steve, 1:70-72, 70; 4:11 Baltimore, David, 2:234 Bammann, Linda, 1:389 Bancroft, Ron, 4:77 Barad, Jill, 1:73-75, 73, 420, 465 Barad, Thomas, 1:74 Barberye, René, 3:93 Barbossa, Almir, 1:414 Barden, Don H., 1:76-78 Barker, Robert, 1:122 Barnevikl, Percy, 1:405 Barnholt, Edward W. See Barnholt, Ned. Barnholt, Ned, 1:79-81 Baron, Philip, Jr., 2:61 Baronoff, Steven, 3:200 Barr, Anthony, 2:153 Barrett, Colleen, 1:82-84, 82 Barrett, Craig R., 1:85-89, 85; 2:191; 3:263 Barrett, Matthew William, 1:90-92, 90 Barshefsky, Charlene, 1:279 Bartelds, Hans, 4:243 Barth, John M., 1:93-94 Barton, Glen A., 1:95-97 Barton, Richard, 1:98-100 Bates, Ken, 1:337 Battenberg, J. T., III, 1:101-102, 101

451

Name Index Baxter, J. Clifford, 2:462 Bay, Willow, 2:288 Bean, Lloyd, 1:217 Bébéar, Claude, 1:103-105, 103, 359; 2:76-77 Bechtolsheim, Andy, 3:75 Beckers, Pierre-Olivier, 1:106-108, 106 Beder, Eric, 4:227 Beebe, Kate, 3:300 Beers, Charlotte, 2:465 Beffa, Jean-Louis, 1:109-111, 109 Beghini, Victor G., 4:345 Belda, Alain, 1:112-113 Belda, Ricardo, 1:112 Bell, Alexander Graham, 1:52 Bell, Charles, 1:114-116, 231 Bell, Scott, 2:502 Beneich, Denis, 1:186 Benetton, Giuliana, 1:117 Benetton, Luciano, 1:117-119, 117 Benito, Simon, 2:138 Benmosche, Robert H., 1:120-123 Bennack, Frank, Jr., 1:157 Bennett, Tim, 4:361 Beranek, George, 2:456 Berezovsky, Boris, 1:26 Berglund, Thomas, 4:156 Berlind, Roger, 4:293 Berlusconi, Silvio, 1:124-125 Bernabe, Franco, 3:103 Bernard, Betsy, 1:126-128, 126 Bernard, Daniel, 1:129-132, 129 Bernauer, David W., 1:133-135 Bernheim, Antoine, 1:57, 69 Bernotat, Wulf H., 1:136-137, 136 Bernstein, Sanford C., 2:428 Bernsten, Anna, 4:157 Berry, William, 1:234; 3:398 Berstrom, Alan, 3:363 Berube, Edward M., 4:80 Beshears, Gayle, 1:439 Besse, Georges, 4:56 Bethune, Gordon M., 1:138-139 Beyster, J. Robert, 1:140-143 Bezos, Jeff, 1:144-146, 144 Bezos, McKenzie, 1:145 Bhatia, Vic, 1:370 Bible, Geoffrey C., 1:219 Bibliowicz, Jessica, 1:388 Bierich, Marcus, 2:13 Bijur, Peter, 3:251-252 Bilger, Pierre, 1:147-150, 147 Bin Talal, Alwaleed, 1:151-152, 151 Binder, Gordon, 4:77

452

Bing, Dave, 1:153-154 Birmett, Tom, 2:58 Bishop, J. Michael, 2:482 Black, Carole, 1:155-156 Black, Cathleen, 1:157-158 Blackwell, David, 4:129 Blank, Arthur, 3:175, 177 Blayau, Pierre, 4:298 Bloomer, Jonathan, 1:159-161, 159 Bluhdorn, Charles G., 1:380, 427 Blum, George, 3:258 Bochco, Steven, 2:288 Bodenheimer, George, 1:429 Boeckmann, Alan L., 1:162-163 Boeken, Richard, 1:219 Boesky, Ivan, 3:384 Boisert, Andre, 2:154 Boisi, Geoffrey, 2:230 Bolger, David, 4:402 Bollenbach, Stephen, 1:429 Bolwell, Edwin, 3:162 Borel, Daniel, 1:366 Boren, David L., 1:60 Borget, Louis, 2:460 Bosack, Len, 1:266 Bosch, Carl, 2:214 Bosch, Robert, 2:12-13 Bossidy, Lawrence A., 1:324; 2:229; 3:331 Botin, Ana Patricia, 4:2 Boulay, Olivier, 1:424 Bouton, Daniel, 1:164-166, 164, 292 Bouygues, Francis, 1:167-168 Bouygues, Martin, 1:167-170, 167 Bouygues, Olivier, 1:167 Bove, Jose, 1:230 Bovender, Jack O., Jr., 1:171-172, 171 Bowen, W. J., 2:460 Bowerman, Bill, 2:406-407 Bowker, Gordon, 4:47 Bowles, Erskine, 2:229 Bowlin, Mike R., 1:193; 4:345 Boy George, 1:178 Boyer, Herbert W., 2:482 Boynton, Judy, 4:283, 286 Bozic, Michael, 4:73 Brabeck-Letmathe, Peter, 1:173-176, 173 Brace, Frederic, 4:180 Bradshaw, Neil, 4:23 Brady, Nicholas, 2:250 Branch, Alpheus, 1:35 Brandaõ, Lázaro, 1:342 Brando, Marlon, 1:22

Brandt, Peter, 2:369 Branson, Richard, 1:177-180, 177 Breen, Edward D., 1:181-183, 181 Brendsel, Leland, 3:283 Breton, Thierry, 1:184-187, 184 Breuer, Rolf, 1:6 Brewer, Richard B., 4:311 Brewster, Mike, 4:294 Briscoe, Dolph, 2:162 Britt, Wayne, 4:224 Brixner, Ulrich, 1:188-189 Broadhead, James, 2:238-239 Brodsky, Julian, 3:411 Bronfman, Edgar, Jr., 3:287 Brooks, Keith, 4:378 Brotman, Jeffrey, 4:104 Brown, Dick, 2:342 Brown, Heidi, 4:200 Brown, Jerry, 1:197 Brown, Kathi Ann, 3:35 Brown, Thomas K., 2:487 Browne, Edmund John Phillip. See Browne, John. Browne, Jackson, 2:118 Browne, John, 1:190-194, 190 Browne, Paula, 1:191 Broyles, Doug, 3:75 Bruckheimer, Jerry, 4:118 Brunetta, Renato, 1:125 Brunetti, Wayne, 1:195-196, 195 Bryson, John E., 1:197-199, 197 Buchanan, John, 2:159 Buchanan, Robert, 1:378 Budd, Edward, 4:294 Buenger, Clement L., 4:25 Buffett, Warren E., 1:172, 200-203, 200 Bunge, Johann Peter Gottlieb, 4:300 Burd, Steven A., 1:204-207 Burdick, Walter E., 2:124 Burg, H. Peter, 1:208-210 Burgmans, Antony, 1:211-213, 211; 2:38 Burke, James, 1:214-215, 214 Burke, Jon, 1:270 Burke, Michael D., 4:108 Burke, Steve, 1:429 Burnet, Steven, 2:325 Burnett, Tom, 2:381 Burnham, Duane, 4:333 Burns, Michael J., 3:14 Burns, Ursula, 1:216-217; 3:32 Bush, George H. W., 1:27; 2:459, 461; 4:124


Name Index Bush, George W., 1:3, 63, 204, 267, 355; 2:31, 206-207, 295; 3:68, 78, 207, 320, 422; 4:88 Bush, Jeb, 2:303; 3:68 Butcher, Willard C., 3:451 Buttenwieser, Lawrence B., 2:478

C Cabiallavetta, Mathis, 3:259 Cahen-Salvador, Gilles, 1:57 Caldwell, Chip, 1:172 Caldwell, Philip, 2:61 Calley, John, 2:284 Calloway, Wayne, 3:200 Calvet, Jacques, 2:55 Camilleri, Louis C., 1:218-220, 218 Campbell, Lewis B., 1:221-222 Camus, Philippe, 1:223-225, 223; 2:246-247 Canals, Jordi, 2:148 Cannon, Michael R., 1:226-227 Cantalupo, Jim, 1:114-116, 228-232, 228 Capellas, Michael, 2:125 Capps, Thomas E., 1:233-235 Cardoso, Fernando Henrique, 1:248 Carey, Albert V., 1:325 Carlisle, Belinda, 2:178 Carnegie, Andrew, 1:25 Carp, Daniel A., 1:236-239, 236; 3:444 Carroll, Diahann, 2:328 Carroll, Phillip J., Jr., 1:162 Carson, Johnny, 1:427 Carter, Andrew, 1:149 Carter, Arthur, 4:293 Carter, Jimmy, 2:499; 3:366, 385 Carter, Shawn “Jay-Z,” 4:100-101 Cartwright, Peter, 1:240-242 Carty, Donald J., 1:60-61 Case, Dan, 1:243, 246 Case, Steve, 1:243-247, 243; 2:479 Casseb Lima, Cássio, 1:248-249 Castellano, José María, 3:255 Castro, Fidel, 2:201 Catell, Robert B., 1:250-252 Cavanaugh, William, III, 1:253-255 Cawley, Charles M., 1:256-259 Cazalot, Clarence P., Jr., 1:260-262 Cecere, Andy, 2:197 Cesan, Raul E., 2:411 Cescau, Patrick, 2:40 Chabraja, Nicholas D., 1:263-264, 263 Chace, Kenneth, 1:201 Chait, Jon F., 2:316

Chalendon, Philippe, 1:168 Chambers, John T., 1:265-269, 265 Chandler, J. Harold, 1:270-271 Chang, Morris, 1:272-273, 272 Chase, Brad, 1:99 Cheen, Bishop, 1:20 Chen Tonghai, 1:274-275 Chenault, Kenneth I., 1:276-280, 276 Cheney, Richard B., 2:472-474 Cherry, Wayne K., 4:266 Cheung Tze-keung, 2:488 Chihaya, Akira, 3:101 Chirac, Jacques, 1:110, 167; 3:85 Cho Dong Sung, 2:396 Cho, Fujio, 1:281-285, 281; 4:196-197 Cho, Rujio, 4:197 Choi Hyung-woo, 3:269 Chrétien, Jean, 4:320 Christian, Jeffrey, 1:209 Chung Ju-yung, 1:286-289 Churchill, Winston, 3:18 Cianci, Jeffrey, 2:258 Cianpi, Carlo Azeglio, 3:289 Cico, Carla, 1:290-291, 290 Citerne, Philippe, 1:292-293 Claiburne, Harry E., 1:263 Clark, Jim, 1:294-297, 294 Clark, Tom C., 3:383 Clark, William, 4:129 Clarke, Richard, 1:197 Clarke, Vaughn, 3:281 Cleese, John, 2:457 Clement, Wolfgang, 4:290 Clendenin, John, 1:2-3 Clinton, Bill, 2:172, 499; 3:59, 366; 4:187, 201 Clinton, William Jefferson. See Clinton, Bill. Clough, Charles E., 3:113 Codd, Edgar H., 1:434 Coe, Charlie, 2:67 Coers, Joachim, 1:424 Coffin, Steve, 1:196 Coffman, Vance D., 1:298-300, 298 Cogan, Marshall S., 4:293 Cohen, Ethan, 1:251 Cohen, Julius, 1:120 Cohen, Lyor, 4:100-101 Cohen, Marshal, 4:227 Cole, Dave, 4:267 Cole, Elliot, 3:363 Collier, Norma, 4:135 Collins, Phil, 1:178 Comolli, Jean-Dominique, 1:30


Conant, Douglas R., 1:301-302 Condit, Phil, 1:303-307, 303; 4:141 Connolly, Brian C., 2:348 Conran, Terence, 1:308-309 Considine, William, 1:210 Conway, Andrew, 3:200 Conway, Charles, 1:357 Conway, John W., 1:310-311 Cook, Paul M., 3:112 Coomber, John R., 1:312-314, 312 Coombs, Sean “P-Diddy,” 4:100 Cooper, Arthur, 4:293 Corbett, Roger, 1:315-317, 315 Cornfield, Bernard, 4:52 Correll, Alston D., 1:318-320 Cortina, Alberto, 1:321 Cortina de Alcocer, Alfonso, 1:321-322 Cosby, Bill, 2:499 Cote, David M., 1:323-324 Cotros, Charles H., 4:39-40 Coulter, David, 2:230 Cowger, Gary, 4:266 Crandall, Robert, 1:59, 325-326, 325 Crawford, Edwin Mac. See Crawford, Mac. Crawford, Mac, 1:327-329 Creighton, Jack, 3:418; 4:180 Criado-Perez, Carlos, 1:330-333 Crombie, Sandy, 2:502 Crosby, James R., 1:334-335 Crozier, Adam, 1:336-338, 336 Crozier, William, 2:133 Crutchfield, Edward E. Jr., 4:173 Cuccia, Enrico, 1:12; 3:349 Culter, Harry T., 1:339 Curran, Raymond M., 3:132 Curvey, James C., 1:121; 2:322 Custer, George A., 4:78 Cutler, Alexander M., 1:339-341 Cypriano, Márcio A., 1:342-344

D Dahlberg, A. W. “Bill,” 2:80 Dais, Siegfried, 2:14 D’Alessandro, David F., 1:345-347 Daniell, Robert F., 1:350 Daniels, Eric, 1:348-349 Danielson, Arnold, 1:36 Darley, Andrew, 4:15, 255 Darrah, John, 1:60 Dasburg, John, 4:402 Dash, Damon, 4:101 da Silva, Luiz Inacio, 1:413-414 Dates, Jannette L., 2:329

453

Name Index David, George, 1:350-353 Davidson, Richard K., 1:354-355, 354 Davis, A. Dano, 3:440 Davis, Martin S., 1:380, 427 Davis, Marvin, 1:380 Dawson, Tim, 4:34 Day, Julian C., 1:356-358, 356 DeBenedetti, Carlo, 3:288 de Castries, Henri, 1:359-360, 359 DeFranco, Jim, 1:450 Dehecq, Jean-François, 2:444-445 Dell, Michael S., 1:361-364, 361; 4:295 DeLozier, Henry, 3:218 De Luca, Guerrino, 1:365-366, 365 DeMarrais, Kevin G., 2:20 Demel, Hebert, 1:367-368, 367; 3:136 de Metz, Robert, 2:77 Demming, W. Edwards, 4:56 Demos, Mark, 1:458 Deng, Wendi, 3:163 Deng Ziaoping, 2:496 Denney, Joel, 1:43 Deromedi, Roger, 1:369-371, 369 Derr, Kenneth, 3:251 Descarpentries, Jean-Marie, 1:110 DeSimone, Livio D., 3:79 Desmarest, Thierry, 1:372-373, 372 De Sole, Domenico, 4:297, 299 de Tocqueville, Alexis, 3:401 Devine, John, 4:266-267 de Weck, Pierre, 1:6 di Montezemolo, Luca Cordero, 3:136 Dias, Fiona, 3:50 Dibble, George, 1:196 DiCamillo, Gary, 2:98 DiCarlo, Lisa, 4:217 Dickson, John T., 3:359 Diekmann, Michael, 1:374-375, 374 Dienstbier, Dan, 4:347 Dillard, William, II, 1:376-378 Dillard, William T., 1:376 Diller, Barry, 1:99, 379-382, 379, 427, 429; 2:371, 479; 3:411 Diller, Michael, 1:379 Dillon, David, 3:318 Dillon, John T., 1:383-385 Dillon, Matt, 2:178 DiMaio, Debra, 4:360 Dimon, James. See Dimon, Jamie. Dimon, Jamie, 1:386-390, 386; 2:230 Dinallo, Eric, 3:360 Disney, Roy, 1:427, 429 Disney, Walt, 1:145, 427 Diwan, Roger, 3:154

454

Dixon, Theodore, 1:387 Dolan, Peter R., 1:391-394, 391 Dole, Elizabeth, 3:283 Dolgen, Jonathan, 2:449 Dollé, Guy, 1:395-397 Domit, Carlos Slim, 4:106 Donahue, Phil, 4:360 Donahue, Tim M., 1:398-401, 398 Donehey, Jim, 2:2 Donohue, Mark, 3:299 Donovan, Dennis M., 3:177 Dorman, David W., 1:127, 402-403, 402 Dormann, Jürgen, 1:404-407, 404; 2:76 Doyle, Carol, 4:79 Draper, E. Linn, Jr., 1:408-410 Draper, Simon, 1:178 Drosdick, John G., 1:411-412 Drummond, Jere, 2:67 Drury, David, 2:181 Drury, James, 1:356 Dukakis, Michael, 3:385 Duncan, Martin, 2:49 Duques, Henry C. “Ric,” 2:73-74 Dutra, José, 1:413-415 Dutta, Rono, 4:180 Dylan, Bob, 2:118

E Eaddy, W. Randy, 3:225 Earley, Anthony Francis, Jr. See Earley, Tony Jr. Earley, Tony, Jr., 1:416-418 Earnshaw, David, 2:108 Eastman, George, 1:237 Eaton, J. O., 1:339 Eaton, Robert, 4:43 Ebata, Makoto, 4:91 Ebersol, Dick, 1:347 Eckert, Robert A., 1:219, 419-420 Eckrodt, Rolf, 1:421-425, 421 Edelheit, Lonnie, 3:177 Edelman, Jeff, 3:362 Edison, Thomas, 1:145 Effron, Mark, 2:252 Eggers, Barry, 1:267 Eisen, Harvey P., 2:478 Eisner, Michael, 1:426-430, 426; 2:287, 372; 3:409, 413 Elizabeth II, Queen of England, 1:180; 2:125 Elkann, John, 1:431-432, 431 Ellison, Larry, 1:433-436, 433; 3:77; 4:93

Engelhorn, Friedrich, 2:214 Engibous, Thomas J., 1:437-438 Engles, Gregg L., 1:439-441 English, Edmond. See English, Ted. English, Ted, 1:442-444 Enrico, Roger, 1:445-448, 445; 3:200, 389, 391 Ergen, Cantey, 1:450 Ergen, Charlie, 1:449-451, 449 Erving, Julius, 2:499 Eskew, Michael L., 1:452-456, 452 Espe, Matthew J., 1:457-460 Esposito, Michael P., 2:174 Esrey, William T., 2:67-68 Esser, Klaus, 1:7 Essner, Robert A., 1:461-463, 461 Estenson, Noel, 2:325 Estrin, Claudia, 3:339 Evans, Jane, 1:219 Evans, Martin J., 4:313 Everett, Henry, 4:185 Eychmueller, Wolfgang, 2:14 Eyler, John H., Jr., 1:464-466, 464

F Fabius, Laurent, 1:110, 166; 4:56-57, 298 Facciola, Thomas P., 3:358 Fairbank, Richard D., 2:1-4 Falana, Lola, 2:328 Falk, Thomas J., 2:5-7 Fanjul, Oscar, 1:321 Farholz, Bernd, 1:375 Farr, David N., 2:8-9, 8 Farrell, David, 2:353 Farrell, Jim, 2:10-11 Farrell, W. James. See Farrell, Jim. Fastow, Andrew, 2:461-462; 3:247 Faure, Hubert, 1:350-351 Fauroux, Roger, 1:110 Fazio, Antonio, 1:68 Feczko, Joseph, 2:369 Fehrenbach, Franz, 2:12-16, 12 Feigen, Marc, 2:424 Feldmayer, Johannes, 4:257 Feldstein, Martin, 1:7 Felipe (Prince of Spain), 3:255 Féraud, Pierre, 2:17-18 Ferland, E. James, 2:19-21 Ferrero, Dominique, 2:22-23 Fetter, Trevor, 2:24-26 Fickling, William, 1:327 Fields, Jan, 1:231 Fields, John B., 2:259


Name Index Fields, Randolph, 1:178 Filo, David, 2:415-416 Finkelstein, Sydney, 1:75, 340 Finnegan, John, 2:27-28 Fiorina, Carleton S. See Fiorina, Carly. Fiorina, Carly, 2:29-32, 29; 3:444 Fireman, Paul, 2:33-34, 33 Firestone, Harvey, 4:277 Firestone, Martha Parke, 2:61 Fisher, Don, 3:341 Fisher, George, 1:237 Fisher, Richard B., 3:358 Fisher, Thomas, 4:38 Fishman, Charles, 4:77 Fishman, Jay S., 2:35-36 FitzGerald, Niall, 2:37-40, 37 FitzSimons, Dennis J., 2:41-43, 41 Fjell, Olav, 2:44-47, 44; 3:393 Flaherty, Kathleen, 4:326 Flannery, Simon, 4:71 Fleming, Dave, 2:232 Fletcher, John E., 2:48-50 Fliegelman, Arthur, 3:220 Flock, Kelly, 2:434 Flynn, Michael, 2:86 Foley, William P., II, 2:51-53 Folz, Jean-Martin, 2:54-56, 54 Forbes, Walter A., 4:97 Ford, Bill, Jr. See Ford, William Clay, Jr. Ford, Edsel, 2:61 Ford, Gerald R., 3:286 Ford, Henry, 2:60-62; 3:179, 329; 4:277 Ford, Henry II, 2:61, 63; 3:319 Ford, Joe T., 2:57 Ford, Scott T., 2:57-59 Ford, Tom, 4:297, 299 Ford, William Clay, Jr., 2:60-64, 60; 3:180, 300 Ford, William Clay, Sr., 2:61 Foreman, Ed F., 2:338 Forese, James J., 1:458 Forsee, Gary D., 2:65-69, 65 Fort, John F., III, 2:424 Foshee, Douglas, 2:432 Foss, Peter, 2:291 Foster, Kent B., 2:70-72 Fote, Charlie, 2:73-75 Fourtou, Jean-René, 2:76-78, 76, 444; 3:85, 352 Fox, Vicente, 3:153-154 France, Bill, Jr., 4:116 France, Brian, 4:114 Franklin, H. Allen, 2:79-81 Fransman, Martin, 2:356

Frantz, Blaine A., 2:91 Freston, Tom, 2:82-84, 82 Fridman, Mikhail, 1:193 Friedkin, William, 2:449 Friedman, Thomas, 1:229; 4:197 Friel, Bill, 3:452 Frist, Thomas, 1:171 Fromstein, Mitchell S., 2:316 Frost, David, 1:179 Fuchs, Anne Sutherland, 2:347 Fujita, Yuzuru, 4:364 Fukui, Takeo, 2:85-87, 85 Fuld, Richard S., Jr., 2:88-91, 88; 3:293 Fuller, H. Lairamce, 1:193 Fuller, S. Marce, 2:92-94 Funk, Joachim, 1:7 Furukawa, Masaaki, 2:95-96

G Gabriel, Peter, 2:34, 118 Gagliardi, Louis, 3:242 Galante, Edward G., 4:176 Gallagher, Thomas, 3:343 Galli, Joseph, Jr., 2:97-99 Galliano, John, 1:57 Gallo, Robert, 2:234 Gallois, Louis, 2:100-102, 100 Galvin, Christopher B., 2:103-105, 103 Gandhi, Firoz, 3:370 Gardner, Roy A., 2:106-107 Garnier, Jean-Pierre, 2:108-111 Gaswindt, Thomas, 4:257 Gates, Bill, 1:70-72, 98, 244-245, 296, 381; 2:112-116, 112, 206, 235, 311, 314; 3:76 Gates, Melinda, 2:116 Gates, Stephen F., 1:193 Gates, William Henry, III. See Gates, Bill. Gaziano, Joseph, 2:424 Geffen, David, 2:117-120, 117, 371-372 Gellert, Jay M., 2:121-122 Gent, Christopher, 4:15-16 George, Alan, 2:441 Gergorin, Jean-Louis, 1:224 Gerstner, Louis V., Jr., 1:51, 215; 2:123-126, 465; 3:272 Gessner, Jim, 1:355 Gherty, John E., 2:127-129 Ghosn, Carlos, 2:130-131, 130; 4:57-58 Gibson, Andrew, 2:232 Gibson, Mel, 1:116 Gibson, Thomas R., 1:458 Gifford, Chad. See Gifford, Charles K.


Gifford, Charles K., 2:132-134, 132; 4:80 Gifford, Clarence H., 2:132 Gifford, Kathie Lee, 4:61 Gilbert, Walter, 2:234 Gilbertson, Brain, 2:157 Gilmartin, Raymond V., 2:135-139, 135 Gilmour, Allan, 2:63 Ginn, Sam, 4:14 Giscard d’Estaing, Valéry, 2:76; 3:93, 296, 401 Giuliani, Rudolph, 1:152; 3:455; 4:106 Glass, David, 4:61 Glasscock, Larry C., 2:140-142, 140 Glenn, David, 3:281 Glynn, Robert D., Jr., 2:143-145 Goldberg, Leonard, 1:380 Golden, Jack E., 1:191 Goldenson, Leonard, 3:383 Goldstein, Michael, 1:465 Golub, Harvey, 1:278; 2:89 Gomez, Alain, 1:110 Gondossy, Robert, 2:252 González Rodríguez, Francisco, 2:146148, 146 Goode, David R., 2:149-151 Goodmanson, Richard R., 2:259 Goodnight, Jim, 2:152-154, 152 Goodwin, Fred A., 2:155-156, 155 Goodwin, James, 4:180 Goodyear, Charles Waterhouse. See Goodyear, Chip W. Goodyear, Chip W., 2:157-159 Gorbachev, Mikhail, 2:385 Gordon, Robert H., 2:487 Gorman, James, 3:246 Gorman, Joseph, 1:324 Gorton, Slade, 3:52 Gould, Andrew, 2:160-161 Gould, Michael, 3:363 Gowen, Andrew, 1:58 Graham, Benjamin, 1:202 Graham, Karen, 4:397 Graham, Stedman, Jr., 4:361 Granholm, Jennifer, 1:417 Graseck, Betty, 2:277 Grass, Martin L., 4:5 Grasso, Richard, 2:176; 3:290, 293 Grassol, Richard, 3:293 Graves, Michael, 4:229 Grayson, William P., 2:328 Grazer, Brian, 4:119 Greehey, William E., 2:162-164 Green, Stephen K., 2:165-168

455

Name Index Greenan, Mark, 1:226 Greenberg, Evan, 2:175 Greenberg, Hank, 2:169-173, 169, 174175 Greenberg, Jack, 1:230 Greenberg, Jeffrey W., 1:116; 2:174176, 174, 178 Greenberg, Maurice R. See Greenberg, Hank. Greenberg, Michael, 2:177-178 Greenberg, Robert, 2:177-179 Gregg, Walter, Jr., 3:427 Grier, Pam, 2:328 Griswell, J. Barry, 2:180-182, 180 Groenink, Rijkman W. J., 2:183-187 Gróf, András, 2:189 Grousbeck, H. I., 3:408 Grove, Andrew Steven. See Grove, Andy. Grove, Andy, 1:86, 190; 2:188-192, 188, 284, 322, 398; 3:263 Grübel, Oswald J., 2:193-194, 193 Gruber, Peter, 2:283; 4:118 Grundhofer, Jerry A., 2:195-198, 195 Grundhofer, John “Jack,” 2:195, 197 Grushow, Sandy, 3:159 Guiliani, Rudolph, 1:209 Gupta, Rajiv L., 2:199-200 Gusinsky, Vladimir, 2:386 Gutierrez, Carlos M., 2:201-203, 201 Gutierrez, Pedro, 2:201 Gutloff, Reuben, 4:304 Guyaux, Joseph, 3:427 Gyllenhammar, Pehr, 2:232

H Haas, Peter, Jr., 2:205 Haas, Peter, Sr., 2:205 Haas, Robert, 2:204-205, 204 Haas, Walter, Jr., 2:204 Hacker, Douglas, 4:180 Hackett, Jim, 4:349 Hadley, Thomas Jefferson, 1:35 Hagel, Chuck, 3:283 Hagstrom, Robert, 2:348 Hahn, Carl, 1:6 Halbert, David D., 2:206-207 Hall, Frank B., 3:455 Hall, John R., 3:214 Haltom, Hollis, 4:314 Hamada, Hiroshi, 2:208-209 Hambayashi, Toru, 2:210-212; 3:186 Hambrecht, Jürgen, 2:213-216, 213 Hamlin, George, 1:60 Hammer, Armand, 2:293-294, 296

456

Hammergren, John H., 2:217-220, 217 Hammond, Mike, 4:268 Hamnett, Katherine, 3:434 Hanawa, Yoshikazu, 4:58 Hanley, Jack, 3:17 Hansen, Mark, 4:355 Hanson, Allen D., 2:324 Hanson, Dale, 2:294 Hanway, H. Edward, 2:221-224 Harad, George J., 2:225-226 Hardyman, James, 1:221 Harrigan, Sean, 1:207 Harris, Bonita, 4:115 Harris, Steve, 4:267 Harrison, William B., Jr., 1:389; 2:227230, 227 Harvey, Richard, 2:231-233 Haseltine, William, 2:234-235 Hasler, William, 1:227 Hassenfeld, Alan G., 1:465 Haste, Andy, 2:236-237 Hata, Kazushige, 3:171 Hatchoji, Takashi, 4:91 Hatfield, Robert G., 4:80 Haunschild, Robert, 3:427 Hawes, Elizabeth, 4:135 Hawkins, David G., 3:421 Hawkins, Richard, 2:218 Hawthorne, Fran, 2:137-138 Hay, Lewis, III, 2:238-240 Hayes, Cassaundra, 1:216 Hays, Thomas C., 4:317 Hazen, Paul, 4:15 Hecht, William F., 2:241-243 Heckert, Dick, 2:260 Heemskerk, Bert, 2:244-245 Hefes, Sylvain, 1:360 Heimbold, Charles, 1:392 Heitmann, Alex Claud, 4:315 Hellman, Warren, 2:205 Helwig, Jane, 2:153 Henley, Don, 2:118 Henly, Jeffrey O., 1:435 Hertrich, Rainer, 1:223-224; 2:246-248, 246 Hervey, Jason, 4:66 Hess, John B., 2:249-250 Hess, Leon, 2:249-250 Hess, Mores, 2:249 Hewett, William, 1:79; 2:312 Hewitt, Clifford, 2:122 Hewlett, Walter, 2:30 Hicks, Tom, 3:45 Higgins, James F., 3:358

Higgins, James V., 4:326 Hilfiger, Tommy, 2:505 Hill, Emma, 3:28 Hill, J. Tomilson, 2:89 Hill, Robert M., 1:326 Hilter, Adolph, 4:49 Hiner, Glen, 3:13 Hirosaki, Botaro, 2:358 Hirsch, Laurence E., 2:251-253 Hodgson, Thomas, 4:333 Hoffa, James P., 1:454-455 Holden, Betsy, 1:370; 2:254-256, 254 Holland, Willard, 1:208 Holliday, Chad, 2:257-261 Holliday, Charles O., Jr. See Holliday, Chad. Holmquist, Tony, 4:363 Honda, Katsuhiko, 2:262-264, 262 Honda, Soichiro, 2:86 Honeycutt, Van B., 2:265-267 Hoover, William R., 2:265 Hori, Kazutomo Robert, 2:268-269 Horne, Lena, 2:328 Horton, Robert, 1:191 House, Larry, 4:65 House, Patricia, 4:93 Howald, Gordon, 1:251 Howard, John, 1:115 Howroyd, Bernard, 2:271 Howroyd, Brett, 2:271 Howroyd, Janice Bryant, 2:270-271 Howroyd, Katharyn, 2:271 Hsu, Ancle, 2:272-273, 306-307 Hughes, Catherine, 2:492-493 Hughes, Robert, 2:480 Huizenga, H. Wayne, 2:297 Huler, Scott, 1:138 Hülse, Günther, 2:274-275 Humann, L. Phillip, 2:276-278 Humer, Franz B., 2:279-281, 279, 483 Hunt, Bill, 4:371 Hurley, Elizabeth, 4:397 Hussein, Saddam, 1:373

I Iacocca, Lee, 2:61; 4:266 Ibuka, Masaru, 2:282 Icahn, Carl, 3:384 Idei, Nobuyuki, 2:282-286, 282, 433 Iger, Robert, 2:287-288, 287 Immelt, Andrea Allen, 2:290 Immelt, Jeffrey R., 1:458; 2:289-292, 289 Immelt, Joseph, 2:289


Name Index Imus, Don, 2:367 Inman, Bobby Ray, 1:363 Inouye, Wayne, 4:270 Irani, Ray R., 2:293-296 Ishida, Taizo, 4:195 Ishihara, Shintaro, 3:9 Ito, Masatoshi, 4:153-154 Iwakuni, Eiji, 1:424 Iwasaki, Yataro, 4:212

J Jackson, Ann W., 3:129 Jackson, Bo, 4:66 Jackson, Jesse, Sr., 2:21 Jackson, Michael, 2:178; 3:270 Jackson, Michael J., 2:297-300, 297 Jackson, Thomas, 1:377 Jackson, Thomas Penfield, 2:115 Jacobs, Irwin, 2:460 Jacobs, Jeff, 4:360-361 Jacobson, Matt, 3:157 Jaffe, Stanley R., 2:449 Jaffre, Philippe, 1:373 Jager, Durk, 2:439-442 Jagger, Mick, 1:177 Jain, Naveen, 4:15 Jalkut, Richard A., 1:458 James, Tony, 2:301-302 Jannott, Horst, 4:31 Janssen, Sven, 2:400 Jansson, Göran, 4:157 Javits, Jacob, 4:207 Jeffries, LeRoy, 2:328 Jenkins, Charles H., Jr., 2:303-305 Jenkins, Charles, Sr., 2:303 Jenkins, George, 2:303 Jenkins, Howard, 2:304 Jensen, Ronald, 4:84 Jermoluk, Tom, 1:297 Jessick, David, 4:5 Ji, David, 2:272, 306-307 Jiang Jianqing, 2:308-310 Jiang Zemin, 2:488 Jobs, Steve, 1:381; 2:311-315, 311, 496 Joerres, Jeffrey A., 2:316-318 Johansson, Leif, 2:319-321, 319 Johansson, Lennart “Erik,” 2:319 John, Sean, 4:100 Johnson, Abby, 2:322-323 Johnson, Bill “Tiger,” 2:334 Johnson, Christina, 3:37 Johnson, Edward C., II, 2:322 Johnson, Edward C., III, 2:322

Johnson, Eunice Walker, 2:328 Johnson, Gertrude, 2:327-328 Johnson, Jeff, 2:407 Johnson, John D., 2:324-326 Johnson, John H., 2:327-330, 327; 3:398 Johnson, John J., 3:399 Johnson, Lyndon B., 2:204, 328 Johnson, Robert L., 2:331-333, 331 Johnson, Robert Wood, 1:214 Johnson, William R., 2:334-336, 334 Johnston, James W., 2:124 Johnston, Lawrence R., 2:337-338 Jones, David A., 3:47 Jordan, Jeff, 2:339-340, 339 Jordan, Michael, 2:407 Jordan, Michael H., 2:341-342 Jorndt, L. Daniel, 1:133-134 Joss, Robert L., 3:69 Joy, Bill, 3:75 Julian, Alexander, 4:177 Jum’ah, Abdallah, 2:343-345 Jung, Andrea, 2:346-350, 346 Junkins, James R., 1:438 Juppé, Alain, 1:164 Jurgensen, William G., 2:351-352

K Kagle, Robert, 4:336 Kahn, Eugene S., 2:353-354 Kairamo, Kari, 3:238 Kaizaki, Yoichiro, 4:277-278 Kalbermatten, Thomas, 2:194 Kalinske, Tom, 1:74 Kaminski, Bob, 1:439 Kamman, Steve, 3:444 Kampf, Serge, 2:77 Kampouris, Emmanuel A., 3:331 Kamprad, Ingvar, 3:118-120 Kanasugi, Akinobu, 2:355-359, 355 Kane, Devin, 1:227 Kaneko, Isao, 2:360-362, 360 Kaneko, Ryotaro, 2:363-365, 363 Kaphan, Shel, 1:145 Karan, Donna, 2:347 Karmazin, Mel, 2:366-367, 366 Katen, Karen, 2:368-370, 368 Katzenberg, Jeffrey, 1:428-429; 2:117, 119, 371-372, 371 Kaufman, Will, 1:87 Kavanaugh, Jim, 2:373-374 Kawamoto, Nobuhiko, 2:86 Kawasoe, Katsuhiko, 4:44 Keane, Jack, 3:358


Kebede, Liya, 4:397 Keegan, Robert, 2:375-377, 375 Keigwin, Lloyd, 3:377 Keleghan, Kevin, 2:437 Kelleher, Herb, 1:440; 2:378-382, 378 Kellenberger, Mary-Beth, 2:86 Keller, Maryann, 4:197 Kellogg, William, 3:122 Kelly, Edmund F., 2:383-384 Kelly, James P., 1:454 Kelly, John, 2:357; 3:250 Kelly, Richard, 1:196 Kendall, Laura, 1:107 Kennard, William E., 4:69 Kennedy, Anthony, 1:439 Kennedy, Edward, 3:162 Kennedy, Jayne, 2:328 Kennedy, John F., 2:328 Kerkorian, Kirk, 4:44, 221 Kernkraut, Steven, 2:436 Ketner, Ralph, 1:107 Keyes, James, 1:93 Khodorkovsky, Mikhail, 2:385-386, 385; 3:2 Khosla, Vinod, 3:75 Kidwai, Naina Lal, 2:387-388 Kidwai, Rashid K., 2:387 Kielholz, Walter B., 1:313 Killinger, Kerry K., 2:389-390 Kilts, James M., 1:370; 2:391-393 Kim Dae-jung, 1:287 Kim, Eric, 2:394-395 Kim Jung-tae, 2:396-398 Kim Ssang-su, 2:413 Kimishima, Shigeharu, 4:278 King, Graham, 2:219 King, Larry, 1:426-427; 2:479 King, Martin Luther, Jr., 2:329 King, Mike, 4:360 King, Roger, 4:360 Kinney, Alva, 3:423 Kirkman, Peter, 3:236 Kist, Ewald, 2:399-401, 399 Kittleson, Terremce, 3:432 Klaskin, Stuart, 4:182 Klein, Calvin, 2:118 Kleinfeld, Klaus, 4:257 Kleisterlee, Gerard J., 2:402-403, 402 Kline, Lowry F., 2:404-405 Kloza, Tom, 3:242 Kluge, John, 1:56; 2:366 Knight, Charles F., 2:8-9 Knight, Philip H., 2:406-407, 406 Kobayashi, Koji, 2:356

457

Name Index Koch, Charles, 2:408-409 Koch, David, 2:409 Koch, Frederick, 2:408-409 Koch, Robert, 3:321 Koch, William, 2:409 Kogan, Richard Jay, 2:410-412 Kohlberg, Jerome, 4:53 Kohnstamm, Abby, 2:465 Kolko, Burton, 4:402 Komansky, David, 1:33; 3:246 Konolige, Kit, 1:241 Konrad, John, 4:399 Koo, John, 2:413-414 Koogle, Timothy, 2:415-417, 415 Körber, Hans-Joachim, 2:418-419 Kornbluth, Jesse, 1:446 Koss, Johann Olav, 4:147 Kovacevich, Richard M., 2:420-422, 420 Kozak, Jerome, 2:129 Kozlowski, Dennis, 2:423-427, 423 Kozlowski, Leo, 2:423 Kravis, Henry, 4:53 Krawcheck, Leonard, 2:428 Krawcheck, Sallie, 1:388; 2:428-430, 428 Krebs, Robert D., 3:429-430 Kreimeyer, Andreas, 2:215 Kresa, Kent, 4:149 Kresch, Sandra, 2:83 Krçzel, Arkadiusz, 2:211 Krol, John A., 2:258 Kron, Patrick, 1:148-149 Krupp, Afried, 4:49 Krupp, Alfred, 4:49 Krupp, Arndt, 4:49 Krupp, Bertha, 4:49 Krupp, Friedrich Alfred, 4:49 Krupp, Therese, 4:49 Krzyzewski, Mike, 3:6 Kudo, Tasashi, 3:9 Kuehn, Ronald L., Jr., 2:431-432 Kuhn, Bowie, 4:220 Kurata, Shisaburo, 4:195 Kurokawa, Hiroaki, 1:17 Kutaragi, Ken, 2:284, 286, 433-434, 433

L Labrecque, Thomas G., 3:451 Lachmann, Henri, 2:77 Lack, Andrew, 2:285 Lacy, Alan J., 2:435-438, 435 LaFleur, Robert, 1:99

458

Lafley, A. G., 2:6-7, 439-443, 439 Lafley, Alan G. See Lafley, A.G. Lagardère, Arnaud, 1:224-225 Lagardère, Jean-Luc, 1:224-225 Landau, Igor, 2:444-445 Landesman, Uri D., 3:159 Lane, Raymond J., 1:435 Lane, Robert W., 2:446-447 Langone, Kenneth, 3:293 Lansing, Sherry, 2:448-450, 448; 4:119 Lanyi, Janos, 2:189 LaRocco, Michael, 3:53 Larsen, Ralph, 4:310 Lathan, Simon, 4:100 Lathan, Stan, 4:101 Lauder, Aerin. See Zinterhofer, Aerin Lauder. Lauder, Estee, 4:396-397 Lauder, Leonard, 4:396 Lauder, William, 4:396 Laurent, Jean, 2:22, 451-454, 451 Lawal, Kase L., 2:455-456 Lawes, Rob, 2:457-458 Lawrence, Martin, 4:100 Lay, Ken, 2:459-463, 459 Lay, Linda, 2:462 Lay, Mark, 2:462 Laybourne, Geraldine, 1:429 Lazaran, Frank, 3:442 Lazarus, Charles, 1:465 Lazarus, George, 2:464 Lazarus, Shelly, 2:464-465 Lo⁄ ddso⁄ l, Leif Terje, 2:46 Leach, Bill, 1:45 Leach, Martin, 3:136 Leach, William, 2:336 Leahy, Terry, 2:466-468, 466 Leal, James, 2:166 Lebegue, Daniel, 3:94 Le Blanc, Robert E., 2:43 Lee, Charles R., 4:69 Lee, James, Jr., 1:447 Lee, Ken. See Lee Yong-kyung. Lee Kun-hee, 3:268-270 Lee Myung Bak, 3:87 Lee Sang-chul, 2:469-471 Lee Yong-kyung, 2:469-471, 469 Leigh, Phil, 1:245 Leighton, Allan, 1:337-338 Le Lay, Patrick, 1:168 LeMay, Ronald, 2:67-68 Lenehan, James T., 4:310 Lennon, John, 1:177 Leong, Kevin, 4:101

Lerner, Alfred, 1:258 Lerner, Sandy, 1:266 Lesar, David J., 2:472-474 Leschly, Jan, 2:109 Lescure, Pierre, 4:119 Letbetter, R. Steve, 2:475-476 LeVan, David, 2:150 Levein, Mike, 4:96 Lever, Hindustan, 4:165 Lever, William Hesketh, 2:37 Levin, Gerald, 2:477-481, 477; 3:286 Levinson, Arthur, 2:482-483 Levitt, Arthur, 4:34 Levitt, Arthur, Jr., 4:293 Levy, Raymond, 4:56 Levy, Steve, 3:445 Lew, Solomon, 2:49-50 Lewis, David, 1:271 Lewis, Ken, 2:133 Lewis, Kenneth D., 2:484-487, 484 Lewis, Michael A., 1:294-295; 2:175 Lewis, Salim, 4:294 Li, Richard, 2:491 Li, Victor, 2:488-489, 488, 491 Li Ka-shing, 2:488, 490-491 Lieberman, Lawrence, 2:323 Liggins, Alfred C., III, 2:492-494, 492 Light, Jay O., 1:387 Lilienthal, Stephen, 4:186 Lin, Walter, 2:186 Lincoln, Abraham, 1:127 Lincoln, Robert, 2:317 Lindahl, Goran, 1:405-406 Linder, Jack, 2:296 Lindsay, Evan, 2:36 Lindsay, John, 2:371 Lindstrand, Per, 1:178 Linhahl, Goran, 1:405 Link, Max, 4:249 Lion, Robert, 3:401 Lippens, Maurice, 4:243 Liu Chuanzhi, 2:495-497, 495 LL Cool J, 4:99 Llewellyn, J. Bruce, 2:498-499, 498 Loeb, David, 3:141 Loeb, Jerome, 2:354 Logan, Don, 3:130 Logue, Dennis E., 1:370 Looney, Wilton, 3:343 Louis XIV, 1:109 Lowe, Rob, 2:178 Lu Guanqiu, 2:500 Lu Weiding, 2:500-501 Lubin, Charles, 3:71


Name Index Lucas, Donald L., 1:435 Lucas, George, 1:447; 2:285, 313 Luce, Henry, 2:480 Luciano, Robert P., 2:410 Luckoski, Stan, 4:349 Ludes, John T., 4:317 Ludwig, Edward, 2:136 Lukens, Max L., 4:345 Lumsden, Iain, 2:502-503 Lundgren, Terry J., 2:504-505, 504 Lutz, Robert A., 3:179; 4:266 Lynch, Peter, 2:322; 4:276 Lytle, Gary R., 3:207 Lytle, L. Ben, 2:141

M Ma Fucai, 3:1-4, 1 Mac, Bernie, 4:100 Machiz, Leon, 4:240-241 Mack, John J., 2:194, 302; 3:5-7, 5, 226, 358-359 Macke, Kenneth, 4:228 MacLaurin, Ian, 4:15 Madonna, 3:341 Maeda, Terunobu, 3:8-11, 8 Magliochetti, Joseph, 3:12-14 Magner, Marjorie, 3:15-16 Magowan, Peter, 1:205 Maguire, Tom, 4:70 Mahoney, David, 2:218-219 Mahoney, Richard, 3:17-19, 17 Mair, George, 1:381 Malcolm, Steven J., 3:20-21 Mallett, Jeffrey, 2:416 Malone, John, 1:54, 450; 2:332; 4:98 Maltarp, Damen, 4:16 Mandela, Nelson, 4:42 Maneri, Robert R., 1:36 Manière, Philippe, 1:104 Manis, Stephanie B., 2:68 Mann, Bill, 3:282 Mann, Robert, 4:182 Manoogian, Alex, 3:22 Manoogian, Richard A., 3:22-23 Mao Zedong, 2:495 Mapplethorpe, Robert, 1:191 Maranghi, Vincenzo, 1:68 Marcus, Bernie, 3:175, 177 Marcus, Stanley, 2:505 Marican, Mohamed Hassan, 3:24-26, 24 Marinac, Christopher, 1:36 Mariucci, Anne, 3:218 Mark, Rebecca, 2:461

Mark, Reuben, 3:27-29 Markey, Ed, 1:209 Markkula, Mike, 2:312 Marks, Michael E., 3:30-32, 30 Marriott, Alice Sheets, 3:33-34 Marriott, David, 3:36 Marriott, J. Willard, Jr., 3:33-36, 33 Marriott, J. Willard, Sr., 3:33-35 Marriott, John Willard, Jr. See Marriott, J. Willard, Jr. Marriott, Steven, 3:36 Marsh, Lawrence, 4:275 Marshall, Ric, 3:28 Marshall, Thurgood, 3:225 Martin, Neil, 2:360 Martin, R. Brad, 3:37-38 Martin, Roy, 2:380 Martinez, Arthur, 2:436-437 Masiyiwa, Strive, 3:39-41, 39 Massey, William A., Jr., 4:66 Mastroeni, Thomas, 2:460 Mataushita, Masayuki, 3:171 Mathwich, Dale, 3:321-322 Maucher, Helmut, 1:174 Maughan, Deryck (Sir), 1:388 Maxwell, David, 3:42-43 Mayer, Sam, 1:61 Maynard, Micheline, 2:62 Mayrhuber, Wolfgang, 4:290 Mays, L. Lowry, 3:44-45 Mays, Mark, 3:45 Mays, Randall, 3:45 McAniff, Nora, 3:129-130 McCain, John, 1:33 McCall, Charlie, 2:218 McCallister, Michael B., 3:46-47 McCanless, Bill, 1:107 McCartney, Stella, 4:298 McColl, Hugh L., Jr., 2:485-487 McCollough, W. Alan, 3:48-51, 48 McCormick, Robert R., 2:43 McCormick, William T., Jr., 4:325-326 McCoy, Wesley, 2:107 McCoy, William, 1:2 McCracken, Ed, 1:296 McCune, Heather, 3:218 McCurry, Robert, 4:196 McDonald, Marshall, 1:233 McEnroe, John, 2:407 McGavick, Mike, 3:52-54 McGhee, Shawn, 3:182 McGinn, Richard, 3:444 McGrath, Eugene R., 3:55-57, 55 McGrath, Judy, 3:58-59, 58


McGuire, Nadine, 3:62 McGuire, William W., 3:60-62, 60 McGuirk, Terry, 3:411 McKay, Alick, 3:161 McKenna, Regis, 2:312 McKillop, Tom, 3:63-65, 63 McKillop, Thomas Fulton Wilson. See McKillop, Tom McKinnell, Henry A., Jr., 2:370; 3:6670 McKinney, Timothy E., 1:45 McKinnon, John, 2:238 McLane, Thomas L., 4:171 McManus, John, 1:227 McMillan, C. Steven, 3:71-73 McMillan, John M., 1:45 McMillin, John, 4:224 McNamara, Mike, 3:32 McNamara, Robert, 2:61, 63; 3:31 McNealy, Scott G., 3:74-77, 74; 4:381 McNerney, W. James, Jr., 3:78-80, 78 McQueen, Alexander, 4:298 Mebane, G. Allen, 2:259 Mecherle, George J., 3:447 Medica, John, 1:363 Mehta, Stephanie, 3:445 Meisel, Steven, 4:396-397 Meister, Edgar, 3:373 Mellor, Dee, 3:81-82 Mendelsohn, Robert, 2:236 Menezes, Victor, 1:388 Mer, Francis, 1:110; 2:453 Mercherle, Raymond, 3:447 Meredith, Thomas J., 1:363; 3:77 Merkle, Hans, 2:13 Messier, Jean-Marie, 1:111, 149; 2:77; 3:83-85, 83, 351-352 Mestrallet, Gérard, 3:86-88, 86 Meyer, Ron, 4:119 Michelin, Benôit, 3:89 Michelin, Bernadette, 3:89 Michelin, Damien, 3:89 Michelin, Edouard, 3:89-91, 89 Michelin, Etienne, 3:89 Michelin, François, 3:89-90 Michels, Larry, 2:114 Middlehoff, Thomas, 4:171 Miki, Shigemitsu, 4:238 Milburg, Joachim, 3:278 Milhaud, Charles, 3:92-94, 92 Milklich, Tom, 3:126 Miller, Alexei, 3:95-97, 95 Miller, Ken, 2:207 Miller, Leonard, 3:98

459

Name Index Miller, Robert, 3:317; 4:5-6 Miller, Stuart A., 3:98-100 Milunovich, Steven, 3:76; 4:217 Mimura, Akio, 3:101-102 Minamikawa, Akira, 3:236 Mincato, Vittorio, 3:103-105, 103 Miner, Robert N., 1:434 Mines, Herbert, 2:347 Miranda Robredo, Rafael, 3:106-108 Miscioscia, Louis, 3:31 Missy Elliott, 3:341 Mistry, Shapoor Pallonji, 4:166 Mitarai, Fujio, 3:109-111, 109 Mitarai, Takeshi, 3:109 Mitchell, George, 1:429 Mitchell, Joni, 2:118 Mitchell, Kevin, 1:60 Mitchell, William B., 1:438 Mitchell, William E., 3:112-114 Mitsui, Hachirobei, 4:234 Mitsui, Sokubei, 4:234 Mitterrand, François, 3:93 Miyahara, Kenji, 3:231 Miyazaki, Hayao, 3:115-117 Miyazaki, Katsuji, 3:115 Miyazu, Junichiro, 4:261 Miyoshi, Shunkichi, 4:87 Moberg, Anders C., 3:118-121, 118 Moche, Jules, 3:93 Moffett, David, 2:197 Mohamed, Mahathir, 3:25; 4:124 Montana, Joe, 2:178 Montgomery, Larry, 3:122-124 Montgomery, R. Lawrence. See Montgomery, Larry. Moody-Stuart, Mark, 4:283, 285 Mooney, Andy, 1:429 Mooney, James B., 3:125 Mooney, James P., 3:125-127 Moore, Ann, 3:128-130, 128 Moore, George, 1:86; 2:189, 191 Moore, Gordon, 1:87; 3:263 Moore, Kenny, 1:252 Moore, Patrick J., 3:131-132 Moore, Robert, 1:86 Moore, T. Justin, Jr., 1:233-234 Morchio, Giuseppe, 3:133-137, 133 Morgridge, John, 1:266-267 Morio, Minoru, 2:283 Morishita, Yoichi, 3:171 Morita, Akio, 2:283-284 Morita, Tomijiro, 3:138-140, 138 Moriyuki, Shinji, 4:211 Morris, Nigel, 2:1-3

460

Morrison, Robert, 1:420 Morrow, Daniel S., 2:217 Mortensen, Kent, 1:340 Morton, Rogers, 2:460 Moszkowski, Guy, 3:246, 292 Motola, Tommy, 2:285 Mottus, Allan G., 2:348 Moynihan, Daniel Patrick, 3:366 Mozilo, Angelo R., 3:141-142 Mueller, Glenn, 1:296, 295 Muhlemann, Lukas, 2:193-194; 3:260 Mulcahy, Anne M., 1:216-217; 3:143144, 143, 444 Muller, Jean-Louis, 2:109 Mullett, Michael A., 3:421 Mullin, Leo F., 2:291; 3:145-147, 145 Mulva, James J., 3:148-151, 148 Munger, Charles, 1:201 Munk, Nina, 2:478 Muñoz Leos, Raúl, 3:152-155 Murdoch, James, 3:156-157, 156, 159 Murdoch, Lachlan, 3:158-159 Murdoch, Rupert, 1:52, 116, 157, 380, 449-451; 2:284, 367; 3:156-159, 160164, 160 Murphy, Carolyn, 4:397 Murphy, Eddie, 4:100 Murphy, James, 4:80 Murthy, N. R., 3:165-167, 165 Murthy, Sudha, 3:166 Murtry, Larry M., 1:428 Muskie, Edmund, 3:385 Mussolini, Benito, 1:124 Mustier, Jean-Pierre, 1:292 Myers, A. Maurice, 3:168-169, 168 Myers, Maury. See Myers, A. Maurice. Myklebust, Egil, 3:393

N Nacchio, Joseph P., 3:206 Nader, Ralph, 2:61 Nagle, Terry, 2:128 Naimi, Ali al-, 2:344 Nair, Mira, 2:387 Naisbitt, John, 2:15 Nakamota, Michiyo, 4:163 Nakamura, Kunio, 3:170-173, 170 Nakamura, Masao, 4:211 Nakanishi, Hiroaki, 4:91 Nakasone, Robert, 1:465 Nanay, Julia, 1:27 Nanula, Richard, 1:429 Naouri, Jean-Charles, 2:17 Napier, John, 2:236

Napoleon II (emperor), 3:84 Nardelli, Robert J., 3:79 Nardelli, Robert L., 3:174-178, 174; 4:295 Narmon, Francois, 3:400 Nasser, Jacques, 2:60-62; 3:179-180 Neal, John, 3:210 Nelson, M. Bruce, 3:181-183, 181 Nestle, Marion, 3:391 Nettles, Patrick H., 3:134 Neuville, Colette, 1:149 Nichimuro, Taizo, 3:234 Nicholas, Albert, 3:322 Nicholas, Nicholas J., 2:478 Nicholson, Wendy, 4:397 Nicklaus, Jack, 3:218 Nicol, James, 4:147 Nictakis, Bill, 3:390 Nijalingappa, S., 3:370 Nilekani, Nandan, 3:166 Nishigaki, Koji, 2:356-357; 4:90 Nishikawa, Yoshifumi, 3:184-185, 184 Nishimura, Hidetoshi, 2:210-212; 3:186-188 Nishimura, Koichi, 1:227 Nishimura, Masao, 3:8 Nishimuro, Taizo, 3:234-235 Nishio, Shinichi, 3:139 Nishioka, Takashi, 4:213 Niwa, Uichiro, 3:189-191 Nixon, Gordon M., 3:192-193 Nixon, Richard, 2:204; 3:366 Nizer, Louis, 2:293 Noddle, Jeffrey, 3:194-195 Noir, Michael, 1:168 Nomakuchi, Tamotsu, 3:196-198 Nooyi, Indra K., 3:199-201, 199 Nordlinger, Jay, 1:318 Nordstrom, Blake W., 3:202-203 Nordstrom, John W., 3:202 Notebaert, Richard C., 3:204-208, 204 Novak, David C., 3:209-211, 209 Nowak, Eugene L., 2:250 Noyce, Robert, 2:189; 3:263 Nunn, Sam, 4:222 Nye, Erle, 3:212-213 Nye, John, 3:213

O Oates, Edward A., 1:434 O’Brien, James J., Jr., 3:214-216 O’Brien, Mark J., 3:217-218 O’Brien, Thomas H., 3:427 O’Connell, Brian, 3:250


Name Index O’Connell, Robert J., 3:219-221 Odama, Arthur, 2:253 Odland, Steve, 3:222-224 O’Donnel, Hugh, 3:105 Ogilvy, David, 2:464 Ogunlesi, Adebayo, 3:225-226 O’Hare, Dean, 2:27 Ohashi, Nobuo, 4:235 Ohga, Norio, 2:283-285 Ohnishi, Minoru, 3:227-229, 227 Ohno, Taiichi, 4:195 Oka, Motoyuki, 3:230-233 Okamura, Tadashi, 3:234-237, 234 Okuda, Hiroshi, 4:197 Oldfield, Mike, 1:178 O’Leary, Robert, 3:312 Olin, John, 2:296 Ollila, Jorma, 3:238-240 O’Malley, Shaun, 3:283 O’Malley, Thomas D., 3:241-243 Omidyar, Pierre, 4:336 O’Neal, E. Stanley, 3:244-248, 244 O’Neal, Shaquille, 2:360 O’Neill, Finbarr, 1:424 Onouviet, Richard, 1:275 O’Reilly, Anthony J. F., 2:335 O’Reilly, David J., 3:249-253, 249 O’Rourke, Terry, 4:371-372 Orr, James F., III, 1:271 Ortega, Amancio, 3:254-256, 254 Orton, Peter, 2:457 Ospel, Marcel, 3:257-261, 257 Otellini, Paul, 3:262-264, 262 Otsuka, Mutsutake, 3:265 Otsuka, Yasuo, 3:115 Ovitz, Michael, 1:428-429; 2:119 Owen-Jones, Lindsay, 3:266-267, 266 Owens, Michele, 1:346

P Pace, Harry H., 2:328 Pace, Wayne H., 3:286 Packard, Dave, 1:79 Pae Chong-yeul, 3:268-270 Palmisano, Samuel J., 3:271-275 Panke, Helmut, 3:276-280, 276 Panko, Ron, 4:130 Papanek, John, 3:129 Parcells, Bill, 3:242 Parker, Colleen, 2:381 Parker, James, 2:381 Parker, John, 2:379 Parker, Michael D., 4:127

Parker, Sarah Jessica, 3:341 Parseghian, Gregory J., 3:281-284, 281 Parsons, Richard D., 3:285-287, 285 Partners, Thomas H. Lee, 3:287 Passera, Corrado, 3:288-289 Patrick, Thomas H., 3:246-247 Patton, Chris, 3:163 Patton, George, 2:249 Paulson, Ed, 1:267 Paulson, Hank, 3:290-294, 290 Paulson, Henry M. See Paulson, Hank. Pearson, Andy, 3:210 Pébereau, Georges, 3:295 Pébereau, Michel, 3:295-297, 295 Pei, I. M., 1:109 Pelat, Claude, 3:93 Pelletier, Liane, 2:68 Penske, Roger S., 3:298-301, 298 Pepper, Claude, 2:332 Peralte, Paul C., 3:442 Perdue, David A., Jr., 4:75 Perenchio, A. Jerrold, 3:302-304, 302 Perissinotto, Giovanni, 1:68-69 Perot, H. Ross, 2:206, 313 Perrin, Charles R., 2:347 Pestillo, Peter J., 3:305-307, 305 Peters, Jon, 2:283 Peters, Tom, 2:52 Peterson, Bob, 4:225 Peterson, Donald K., 3:308-311, 308 Pettit, T. Christopher, 2:89 Peyrelevade, Jean, 2:22 Pfieffer, Peter, 4:387 Phanstiel, Howard G., 3:312-314 Picchi, Bernard, 2:250 Pichler, Joseph A., 3:315-318, 315 Pickard, William F., 3:319-320 Picker, David, 2:371 Piech, Ferdinand, 3:327-329 Pierallini, Fabrizio, 4:157 Pierce, Harvey R., 3:321-323 Pigott, Charles M., 3:325 Pigott, Mark C., 3:324-326 Pigott, Paul, 3:324-325 Pigott, William, Sr., 3:324 Pinault, Francois, 4:298 Pirelli, Leopoldo, 4:203 Pirko, Tom, 3:390 Pischetsrieder, Bernd, 3:277, 327-330, 327 Pittman, Robert, 1:245; 2:479; 3:286 Pivirotto, Richard R., 2:392 Pizzi, Charles, 2:110 Plath, D. Anthony, 1:36


Platt, Lewis E., 1:79, 306 Platt, Marc, 4:118 Polet, Robert, 4:297 Poling, Harold, 2:61 Pontal, Jean-François, 2:77 Popper, Karl, 4:123 Poses, Fred, 3:331-333 Post, Jeff, 1:375 Potoma, Peter, 4:293 Potter, John E., 3:334-337, 334 Potter, Myrtle, 3:338-339 Powell, Laurene, 2:313 Pozen, Robert, 2:322-323 Prescott, John, 2:157 Pressler, Paul S., 3:340-342, 340 Preston, James E., 2:347 Price, Frank, 4:100 Price, Hugh, 3:366 Price, Steve, 4:138 Prince, Chuck, 4:292 Prince, Larry L., 3:343-344 Priory, Richard B., 3:345-347, 345 Proctor, William, 2:440 Prodi, Romano, 3:289 Profumo, Alessandro, 3:348-350, 348 Proglio, Henri, 3:351-353, 351 Prosser, David J., 3:354-356, 354 Prot, Baudoin, 3:297 Pugh, Lawrence, 1:271 Pulido, Mark, 2:218 Purcell, Philip J., III, 3:357-360, 357 Putilov, N. I., 1:25 Putin, Vladimir, 1:26; 2:385-386; 3:95 Putnam, Howard, 1:326 Pzena, Richard, 4:186

Q Quall, Ward, 2:43 Quattrone, Frank, 3:6 Quément, Patrick, 4:56 Questrom, Allen I., 3:361-364, 361 Quinlan, Michael, 1:230 Quiroz, Lisa, 3:129

R Racamier, Henry, 1:57 Raduchel, Bill, 3:75 Rafsanjani, Mehdi Hashemi, 2:46 Raines, Franklin D., 1:278; 3:365-368, 365 Ramachandran, M. S., 3:369-371 Rampl, Dieter, 3:372-374, 372 Ramsey, Roger, 4:247

461

Name Index Rand, A. Barry, 1:278 Randall, Linda, 1:26 Randol, William, 3:376 Randolph, Jackson H., 3:421 Rankin, Gisele, 1:254 Ratigan, Dylan, 2:235 Raul, Lawrence, 3:376 Ray, Julie, 1:145 Raymond, Lee R., 2:229; 3:375-378; 4:176 Raymund, Edward C., 3:379 Raymund, Steven A., 3:379-381 Reagan, Ronald, 2:499 Redgrave, Vanessa, 1:177 Redstone, Sumner M., 2:367, 479; 3:382-385, 382 Reece, Franklin A., III, 4:80 Reed, Gavin, 3:192 Reed, John, 4:292, 295 Reed, William G., Jr., 3:53 Reich, Robert, 4:62 Reilley, Dennis H., 3:386-388 Reinemund, Steven S., 3:389-392, 389 Reischauer, Edwin, 3:383 Reiten, Eivind, 3:393-394 Reiter, Hal, 2:436 Reizle, Joachim, 3:278 Reizle, Wolfgang, 3:278 Rele, Parag, 1:62 Renk, Richard, 3:322 Renwick, Glenn M., 3:395-397 Reuter, Edzard, 1:422 Revell, Walter L., 2:239 Reynolds, Robert, 2:322 Rhodes, James T., 1:234 Rice, Linda Johnson, 2:329; 3:398-399 Richard, Oliver G., III, 1:234 Richard, Pierre, 3:400-402, 400 Ricke, Helmut, 3:403-404 Ricke, Kai-Uwe, 3:403-405, 403 Rickover, Hyman G., 4:76 Riede, Andreas, 1:406 Rifkin, Glen, 1:252 Riggio, Leonard, 3:406-407 Riggio, Stephen, 3:406-407 Ritchie, Peter, 1:114 Robbins, Jim, 3:408-409 Roberts, Brian L., 3:410-413, 410 Roberts, George, 4:53 Roberts, Morgan, 2:9 Roberts, Ralph, 3:411 Robertson, Sandy, 3:245 Robinson, James, III, 2:124; 4:294 Rock, Chris, 4:100

462

Rockefeller, John D., 3:159, 375 Rockefeller, Nelson, 3:285 Rodriguez, Ray, 3:303 Roels, Harry J. M., 3:414-416, 414 Rogel, Steven R., 3:417-419, 417 Rogers, James E., 3:420-422; 4:123 Rohde, Bruce C., 3:423-425, 423 Rohr, James E., 3:426-428 Rollins, Kevin, 1:363 Romiti, Cesare, 1:11 Romney, W. Mitt, 1:277 Ronstadt, Linda, 2:118 Roof, Becky, 4:356 Roosevelt, Eleanor, 2:328 Roosevelt, Franklin D., 3:365 Rose, Matthew K., 3:429-430 Rosenberg, Joseph, 4:185 Rosenman, Howard, 2:119 Rosenthal, Bennett, 3:245 Ross, Steve, 4:96 Rossiter, Bob, 3:431-433 Rosso, Renzo, 3:434-436, 434 Roth, Susan L., 1:258 Rouz, David J., 1:435 Rowe, John W., 3:437-439 Rowland, Allen R., 3:440-442 Rua, Fernando de la, 1:322 Rubin, Rick, 4:100 Rubin, Robert, 4:197 Ruettgers, Mike, 4:216 Ruggiero, Renato, 3:103 Rukeyeser, Louis, 2:42 Russo, Guy, 1:115 Russo, Patricia F., 1:238; 3:443-446, 443 Rust, Adlai H., 3:447 Rust, Edward B., Jr., 3:447-449 Rust, Edward Berry, Sr., 3:447-448 Ryan, Arthur F., 3:450-453, 450 Ryan, Barbara A., 1:393 Ryan, Patrick G., 3:454-455, 454 Ryan, Thomas M., 3:456-457 Ryder, Tom, 1:278

S Sáenz, Alfredo, 4:1-3, 1 Sagan, Carl, 2:482 Sahut d’Izarn, André, 1:103 Said al-Otaiba, Mana, 2:249 Saito, Hiroshi, 3:9 Sakurai, Takahide, 3:138-139 Sall, John, 2:153 Sammons, Mary F., 4:4-7, 4 Sammons, Nickolas F., 4:5

Sanders, Wayne R., 2:5-6 Sanger, Steve, 4:8-9 Sarbanes, Paul S. (senator), 3:368 Sargent, Ron, 4:10-12, 10 Sarin, Arun, 4:13-16, 13 Sarkozy, Nicholas, 2:445 Saro-Wiwa, Ken, 4:284 Sasaki, Mikio, 3:231; 4:17-21 Sauer, Hans Dietmar, 4:37-38 Scannell, Herb, 2:83 Scaroni, Paolo, 4:22-23, 22 Schörling, Melker, 4:156 Schacht, Henry, 3:444 Schaefer, George A., Jr., 4:24-27 Schaeffer, Leonard D., 4:28-29 Schinzler, Hans-Jürgen, 4:30-32, 30 Schiro, James J., 4:33-35, 33 Schlanger, Michael, 2:66, 68 Schlosstein, Ralph, 3:427 Schmidheiny, Stephan, 2:260 Schmidt, Albrecht, 3:373 Schmidt, Werner, 4:36-38, 36 Schneider, Manfred, 4:314 Schnieders, Richard J., 4:39-40 Scholl, Hermann, 2:14 Schonberger, Richard, 3:31 Schrempp, Jürgen E., 1:422, 424; 4:4145, 41 Schroeder, Gerhard, 3:373 Schroeder, Harold, 2:277 Schulhof, Mickey, 2:283-284 Schulte-Noelle, Henning, 1:375; 4:31 Schultz, Howard, 4:46-47, 46 Schulz, Ekkehard D., 4:48-51, 48 Schumpeter, Joseph, 2:408 Schwab, Charles, 4:93 Schwartz, Gerald W., 4:52-54, 52 Schwarzman, Stephen, 2:302 Schweitzer, Albert, 4:55 Schweitzer, Louis, 2:130; 4:55-59, 55 Scott, H. Lee, Jr., 4:60-63, 60 Scott, Judith, 2:316 Scott, Mike, 4:356 Scott, Richard, 1:171 Scrushy, Richard M., 4:64-67, 64 Sculley, John, 2:313-314 Sears, Michael M., 1:305 Seelenfreund, Alan, 2:218 Segnar, Samuel F., 2:460 Seidenberg, Ivan G., 4:68-72, 68 Sekimoto, Tadahiro, 2:356-357 Semel, Terry, 2:417 Sengupta, Prabir, 3:370 Senior, Antonia, 2:232


Name Index Shaffer, Donald S., 4:73-75 Shaffer, Oren G., 3:207 Shaheen, George T., 4:93 Shallenberger, Frank, 2:406 Shames, Michael, 1:198 Sharer, Kevin W., 4:76-78, 76 Sharp, Richard, 3:32, 48 Shaughness, John H., 2:294 Shaw, David, 1:145 Shaw, William J., 3:35 Shawcross, William, 3:162 Shea, William J., 4:79-82, 79 Sheehan, Brendan, 3:250 Shelby, Michael, 4:349 Shelby, Richard C., 3:368 Shepard, Donald J., 4:83-85, 83 Shewmaker, Jack, 1:316 Shields, David, 3:155 Shimizu, Shinjiro, 4:235 Shimogaichi, Yoichi, 4:86-88, 86 Shipley, Walter, 2:228 Shmuger, Marc, 4:119 Shoyama, Etsuhiko, 4:89-91, 89 Siebel, Thomas, 4:92-94, 92 Siegel, David, 4:182 Siegel, Jeremy J., 1:384 Sievert, Frederick J., 4:130 Silva, Luiz Inacio da, 1:248 Silverman, Henry R., 4:95-98, 95 Silverman, Ken, 2:332 Silverstein, Larry, 2:237 Simmons, Kimora, 4:100 Simmons, Russell, 4:99-102, 99 Simon, David, 1:192 Simpson, Don, 4:118 Sinegal, James D., 4:103-104, 103 Singleton, John, 4:100 Skilling, Jeffrey K., 2:461-462 Skinner, Stanley T., 3:421 Sleet, Moneta, 2:329 Slim, Carlos, 4:105-106, 105 Smale, John, 4:265 Smart, George M., 1:209 Smith, Bruce A., 4:107-109 Smith, Dean, 2:228 Smith, Fred, 4:110-113, 110 Smith, Frederick Wallace. See Smith, Fred. Smith, George Alfred, 4:107 Smith, Isabel (Andrews), 4:107 Smith, Jack, 4:265-266 Smith, O. Bruton, 4:114-117 Smith, Ray, 4:69 Smith, Roger, 2:196

Smith, Roy C., 2:89 Smith, Scott, 4:116 Smith, Will, 4:100 Smith, William H., Jr., 3:247 Smurfit, Michael W. J., 3:132 Snider, Stacey, 4:118-119, 118 Snow, John, 2:150 Snyder, Harley W., 3:142 Soderquist, Don, 4:61 Soga, Riemon, 3:230 Soifer, Raphael, 2:230 Sola, Jure, 4:120-121 Solh, Riad al-, 1:151 Solomon, Jennifer, 1:446 Sommer, Ron, 3:403-404 Sonnenfeld, Jeffrey A., 3:293 Sonobe, Takashi, 1:423-424 Soros, George, 4:122-125, 122 Sorrentino, Vince, 3:346 Souther, J. D., 2:118 Spare, Anthony E., 2:317 Sparks, Jack, 4:340 Spears, Britney, 2:178 Spelling, Aaron, 1:380 Spiegel, John W., 2:278 Spielberg, Steven, 1:380; 2:117, 119, 371-372 Spillane, Bryan, 3:391 Spindler, Michael, 2:314 Spitzer, Eliot, 3:293, 360 Spoerry, Vreni, 1:176 Squires, John, 3:130 Stafford, Jack, 1:462 Standley, John, 4:5 Starr, Adam L., 2:124 Stathakis, George, 1:242 Stavropoulos, William S., 4:126-127, 126 Stead, Jerre, 2:71 Stein, Jeffrey, 2:505 Stemberg, Thomas G., 4:10-11 Stempel, Robert, 4:265 Stephanian, Ira, 2:132-133 Stephens, Jack, 2:57 Stern, Howard, 2:367 Stern, Mitch, 3:159 Sternberg, Sy, 4:128-131 Stevenson, David A., 2:251 Steward, David L., 2:373-374; 4:132133 Stewart, Andrew, 4:135 Stewart, Martha, 4:67, 134-137, 134 Stokes, Patrick T., 4:138-139, 138 Stonecipher, Harry C., 1:305; 4:140142, 140


Storm, Kees J., 4:83-84 Stra˚berg, Hans, 4:143-145, 143 Strasser, Richard, 3:336 Strauss, Richard K., 3:359 Strauss-Kahn, Dominique, 4:197 Streiff, Christian, 1:109, 111 Strenger, Hermann Josef, 4:314 Stringer, Howard, 2:284 Stronach, Belinda, 4:146-147, 146 Stronach, Frank, 4:146-147 Studdert, Andy, 4:180 Sugar, Ronald D., 4:148-149, 148 Sugita, Katsuyuki, 3:8 Sumitomo, Masatomo, 3:230 Sununu, John, 3:283 Suquet, Léopold, 3:93 Surma, John P., 4:233 Suzuki, Osamu, 4:150-151, 150 Suzuki, Toshifumi, 4:152-154, 152 Svanberg, Carl-Henric, 4:155-158, 155 Swanson, Dennis, 4:360 Swanson, William H., 4:159-161 Swartz, Mark, 2:425-426 Swette, Brian, 4:337 Swindells, William, 3:417-418 Syron, Richard, 3:283

T Taborn, Tyrone, 4:160 Tachikawa, Keiji, 4:162-164, 162, 211 Takahata, Isao, 3:115 Takenaka, Heizo, 3:10 Taniguchi, Ichiro, 3:197 Tao, Wang, 3:2 Tata, Noel N., 4:165-166 Tata, Ratan, 4:166 Tata, Simone, 4:165 Taube, Henning O., 1:339 Taurel, Sidney, 4:167-169, 167 Tavoulareas, William P., 2:249 Taylor, James, 2:118 Taylor, William H., 2:222 Telling, Edward R., 3:358 Templeton, Richard K., 1:438 Terry, Franklin S., 1:339 Terzi, Vittorio, 3:350 Testino, Mario, 4:397 Thatcher, Margaret, 4:124 Thielen, Gunter, 4:170-171, 170 Thieme, Carl, 4:31 Thomas, DeRoy “Pete,” 1:62 Thomas, Jason, 3:282 Thomassen, Hans, 1:173

463

Name Index Thompson, G. Kennedy. See Thompson, Ken. Thompson, Ken, 4:172-174, 172 Thorbeck, John, 3:255 Thyssen, Amelia, 4:50 Thyssen, August, 4:49 Thyssen, Fritz, 4:49-50 Tichy, Noel, 3:339 Tillerson, Rex W., 4:175-176 Tillman, Robert L., 4:177-178 Tilson, Whitney, 1:231 Tilton, Glenn, 3:252; 4:179-183, 179 Timbers, Steve, 1:22 Tirpak, John A., 4:149 Tisch, Andrew, 4:185 Tisch, James S., 4:184-186, 184 Tisch, Jonathan, 4:185 Tisch, Laurence, 1:200; 4:184-185 Tisch, Preston, 4:184-185 Toan, Barrett A., 4:187-188 Toben, Doreen, 4:189-190 Toben, Edmund, 4:189 Todenhofer, Tilman, 2:14 Tokunaka, Terushisa, 2:285 Tolego, Pedro, 4:1 Tollett, Leland, 4:224 Tomnitz, Don, 4:191-193 Topfer, Morton L., 1:363 Torbensen, V. V., 1:339 Torv, Anna, 3:161 Toscani, Oliviero, 1:118 Toyoda, Akio, 4:197 Toyoda, Eijji, 4:194-195, 197 Toyoda, Sakichi, 4:194 Toyoda, Shoichiro, 4:194-198, 194 Toyoda, Tatsuro, 4:196-197 Trahar, Anthony John. See Trahar, Tony. Trahar, Tony, 4:199-202 Träm, Michael, 1:6 Treca, Laurent, 3:296 Trichet, Jean-Claude, 3:297 Tronchetti Provera, Marco, 4:203-205, 203 Trotman, Alex, 2:61 Trott, Donald, 3:177 Trump, Donald, 4:66, 206-209, 206 Trump, Frederick, 4:206 Tsuda, Shiro, 4:210-211 Tsukuda, Kazuo, 4:212-214 Tucci, Joseph M., 4:215-217, 215 Tung Chee Hwa, 3:87 Turner, Curtis, 4:115 Turner, Robert Edward, Jr., 4:219

464

Turner, Robert Edward, III. See Turner, Ted. Turner, Ted, 2:479; 4:218-222, 218 Tyson, Donald J., 2:329; 4:223-224 Tyson, John H., 4:223-226, 223 Tyson, John W., 4:224

U Ulrich, Robert J., 4:227-231 Upham, Scott, 3:14 Usher, Steve, 4:278 Usher, Thomas J., 4:232-233 Utendahl, John O., 1:278 Utsuda, Shoei, 4:234-236 Utsumi, Akio, 4:237-239

V Vagelos, P. Roy, 2:136 Valentine, Don, 1:266-267 Valeriani, Nick, 4:309 Vallance, Iain, 4:391 Vallee, Roy A., 4:240-242 Vallee, Rudy, 4:241 van de Vijver, Jeroen, 4:286 van de Vijver, Walter, 4:283, 286 van den Bergh, Maarten, 1:349 van der Hoeven, Cees, 3:120 van der Starr, Cornelius, 2:170 van der Veer, Jeroen, 4:286 van Lede, Cees J. A., 4:343 van Rossum, Anton, 4:243-245, 243 Van Weelden, Henry, 4:247 Van Weelden, Thomas H., 4:246-248 Varmus, Harold, 2:482 Vasella, Daniel, 4:249-251, 249 Velasquez, Gary, 2:121 Venter, J. Craig, 2:234-235 Verdonck, Ferdinand, 4:252-253 Verwaayen, Ben, 4:254-256, 254 Verwaayen, Bernardus. See Verwaayen, Ben. Villalonga, Juan, 1:30 Vincent, Fay, 2:479 Vogel, Harold, 2:479 Vogel, Julian, 3:255 Vogt, Brian, 2:74 von Bomhard, Nikolaus, 4:32 von Furstenberg, Diane, 1:381 von Hayek, Friedrich, 2:408 von Mises, Ludwig, 2:408 von Pierer, Heinrich, 4:257-260, 257 Vuorilehto, Simo, 3:239 Vyakhirev, Rem, 3:95-96

W Wada, Norio, 4:261-263, 261 Wade, William, 4:345 Wagoner, G. Richard. See Wagoner, Rick. Wagoner, Rick, 4:151, 264-267, 264 Waitt, Ted, 4:268-270, 268 Waitt, Theodore W. See Waitt, Ted. Waksal, Sam, 4:136 Wald, Tommy, 2:71 Walker, David, 3:359 Walker, Donald, 4:146-147 Walker, Joan H., 3:207 Walker, Lee, 1:363 Walker, Pinkney, 2:460 Walker, Ulrich, 1:424 Walsh, Mike, 1:355 Walsh, Paul S., 4:271-273 Walter, John R., 2:316 Walter, Robert, 4:274-276, 274 Walton, Sam, 1:316, 440; 2:329; 4:60-62 Wang, An, 1:266 Wang Xuebing, 4:388 Warburton, Matthew, 2:250 Ward, Charles, 2:302 Ward, John, 1:60 Warner, Jack, 2:118 Watanabe, Shigeo, 4:277-280, 277 Watari, Fumiaki, 4:281-282 Waters, John, 1:266-267 Watjen, Thomas R., 1:271 Watkins, Sherron, 2:462 Watson, David N., 4:69 Watson, James, 2:234 Watson, Thomas J., Sr., 2:124 Watts, Philip B., 4:283-287, 283 Way, Kenneth, 4:326 Weatherup, Craig E., 3:390 Weber, Jürgen, 4:288-291, 288 Weber, Jim, 4:252 Weber, William P., 1:438 Webster, David, 1:330-332 Webster, William H., 2:68 Weg, Kenneth, 1:392 Weill, Marc, 1:388 Weill, Max, 4:293 Weill, Sandy, 1:386-389; 2:36, 230, 428-429; 3:15; 4:292-296, 292 Weill, Sanford I. See Weill, Sandy. Weinberg, R. S., 4:139 Weinberg, Serge, 4:297-299, 297 Weinstock, Arnold, 2:106-107 Weinstock, Simon, 2:106 Weiss, William, 3:205


Name Index Weisser, Alberto, 4:300-302 Weitzen, Jeff, 4:269-270 Welch, Jack, 1:323, 352; 2:61, 229, 236, 289-291, 322, 337, 398; 3:27-28, 7879, 110, 175, 177; 4:77, 141, 303-307, 303 Weldon, William C., 4:308-312, 308 Wells, Frank, 1:427-428; 2:372 Wendt, Gary, 4:80-81 Wenning, Werner, 4:313-315, 313 Werner, Helmut, 4:43 Wesley, Norman H., 4:316-318 Weston, Garry, 4:320-321 Weston, George, 4:319 Weston, Hilary, 4:320-321 Weston, W. Galen, 4:319-321 Weston, W. Garfield, 4:319 Wexner, Bella, 4:322 Wexner, Harry, 4:322 Wexner, Leslie H., 4:322-324, 322 Weyerhaeuser, George, Sr., 3:418 Wheat, Allen, 2:302 Wheeler, H. A. “Humpy,” 4:115 Wheeler, Thomas, 4:129 Whipple, Kenneth, 4:325-327 Whitacre, Edward E., Jr., 4:328-331, 328 Whitacre, John, 3:202 Whitby, Tim, 1:61 White, Miles D., 4:332-334, 332 Whitman, Margaret. See Whitman, Meg. Whitman, Meg, 2:339-340; 4:335-339, 335 Whitwam, David R., 4:340-341 Wicklund, James K., 4:345 Wientzen, H. Robert, 3:335 Wijers, Hans, 4:342-343 Wilde, Mark, 3:132

Wiley, Michael E., 4:344-346 Willard, William T., Sr., 2:329 Willey, Frank P., 2:52 Williams, Clarke, 2:59 Williams, Doyle Z., 2:329 Williams, James B., 2:276-277 Williams, Madelina, 2:271 Williams, Mark S., 4:66 Williamson, Bruce A., 4:347-350, 347 Williamson, Charles R. See Williamson, Chuck. Williamson, Chuck, 4:351-354 Willmott, Peter S., 4:355-358 Willmott, Thomas, 4:357 Willumstad, Robert, 3:15 Wilson, J. Lawrence, 2:199 Wilson, J. Tylee, 1:255 Wilson, Robert N., 4:310 Winans, Chris, 2:175 Winebaum, Jake, 1:429 Winfrey, Oprah, 2:93; 4:359-361, 359 Wixted, Jack, 3:427 Woertz, Patricia A., 4:362-363 Wolf, Andrew, 2:304 Wollard, Edgar S., Jr., 2:258 Wood, Mark, 3:356 Woods, Tiger, 3:218 Worthington, Ken, 3:16 Wozniak, Stephen, 2:311-312 Wray, Christopher, 4:66 Wright, Jason, 2:124 Wright, Jim, 2:379 Wright, Mike, 3:194 Wright, Robert C., 2:123

Y Yadzi, Abbas, 2:46


Yamamoto, Yoshiro, 3:8 Yang, Jerry, 2:415-416 Yanigisawa, Hakuo, 3:9 Ybarra, Emilio, 4:2 Yeager, Bill, 1:266 Yeltsin, Boris, 1:26; 2:385 Yokich, Stephen P., 4:266 Yokoyama, Shinichi, 4:364-365 Yoon Jin Sik, 1:131 Yoshida, Koichi, 4:364 Yoshino, Hiroyuki, 2:86 Yost, Dave, 4:366-369, 366 Yost, Larry D., 4:370-372 Young, Jeffrey, 1:266 Yun Jong-yong, 4:373-376, 373

Z Zacharias, Antoine, 4:377-379, 377 Zachary, Norman, 4:129 Zakaria, Arshad R., 3:246-247 Zander, Edward, 4:380-382, 380 Zarolia, Dyasmin, 1:370 Zartner, Rolf, 1:7 Zeglis, John D., 4:383-385, 383 Zemin, Jiany, 3:385 Zetsche, Deiter, 4:386-387, 386 Zhang Enzhao, 4:388-390 Zhang Ligui, 4:391-392 Zhou Deqiang, 4:393-395 Zhu Rongii, 2:222 Zim, Lazarus, 4:200 Zimmerman, Joan, 3:291 Zingraff, René, 3:90 Zinterhofer, Aerin Lauder, 4:396-398, 396 Zore, Edward J., 4:399-400 Zumwinkel, Klaus, 4:401-403, 401

465

International Directory of Business Biographies

International Directory of Business Biographies

International Directory of Business Biographies