TOMORROW'S CHIEF EXECUTIVES Raised on radical change, a new group of leaders will soon take charge of corporate America. They're apt to be quite different from their own bosses.
(FORTUNE Magazine) – IF YOU WANT to analyze a corporation, read its financial statements. If you want to plumb its soul, talk to its chief executive. Despite the size and complexity of modern corporations, the person in charge still sets the tone, defines the style, becomes the company's public face. The very strongest executives, say, Alfred P. Sloan Jr. of General Motors or Walter Wriston of Citicorp, influence -- perhaps even haunt -- their organizations long after they are gone. Within the next five years or so, the chief executives of at least 25 of the ( largest U.S. companies are due to retire. Waiting to succeed them is a new group of corporate leaders, highly capable but largely unknown: ideal candidates for one of American Express's ''Do you know me?'' commercials. Because crown princes sometimes stumble on their way to the throne, most of these executives are reluctant to discuss their status. Some, like Charles Corry of USX, have been all but publicly anointed. Others, like Procter & Gamble's John Pepper, are considered shoo-ins, though no official announcement has been made. Still others are first among equals in competitions that are not yet over. All would be prime candidates to run other companies if they lost out at their own. Eight heirs presumptive who agreed to be interviewed by FORTUNE are profiled below; the other 17 appear in the table on page 43. If exceptional times produce exceptional men, this is a superior lot. They have thrived despite the sea changes of the past decade: hyperinflation and disinflation, oil surplus and oil shock, restructurings and mergers. They have learned to operate in a business world where yesterday's leader is today's laggard and tomorrow's takeover candidate. They are the most worldly U.S. executives ever, with extensive overseas experience. Chrysler's Gerald Greenwald speaks three foreign languages (Portuguese, French, and Spanish); Deere's Hans Becherer is fluent in two (German and French). In some ways tomorrow's chief executives closely resemble the men they will succeed. Nearly all are married with families, claim golf as their favorite sport, and say they love their jobs. All are male. Only three FORTUNE 500 companies -- Washington Post, Liz Claiborne, and Warnaco Group, where Linda Wachner recently became CEO -- have women at the top. There appear to be no ladies-in-waiting about to join them. In other ways the new corporate leaders are likely to be far different from their predecessors. Obviously they are younger: only 52 years old on average, vs. 61 for the incumbents. They have no memories of the Depression and few of World War II. They are part of the first television generation, and did not vote until the Kennedy-Nixon race of 1960. One of them, Jerry O. Williams, president of AM International, the old Addressograph-Multigraph, is poised to become the first black to head a FORTUNE 500 industrial company. Most have spent their entire careers at one corporation. Finance, manufacturing, and marketing provided the most reliable routes to the top, + followed by legal and sales. And it still doesn't hurt to marry the boss's daughter. Robert Hauptfuhrer, president of Sun Co., is married to the daughter of a former Sun CEO. For all the publicity given to chief executives who parachute in from outside the company, executive recruiter Gerard Roche of Heidrick & Struggles says outsiders fill CEO positions only 11% of the time. General Electric is by far the best source of free-agent management talent. One GE alumnus -- John S. Chamberlin -- is due to be head of Avon Products. Two others -- Walter Williams and Jerry Williams -- are in line to take over Rubbermaid and AM International. Are any of these emerging business leaders likely to become national figures? In the 1970s, CEOs such as Irving Shapiro of Du Pont and Reginald Jones of General Electric had a reputation for speaking out on corporate and economic issues. Few executives seem to be vying for that role now. ''The business statesman is an outmoded concept,'' says Hobson Brown Jr., president of the Russell Reynolds search firm. ''The issues are too complex.'' The true stature of the following men will not be known until they shed the anonymity of the understudy and perform in the limelight that illuminates the CEO.
CHRYSLER'S QUIET ONE What is it like being the heir presumptive to a business legend? Gerald Greenwald deflects the question. Though Lee Iacocca, 63, could retire as Chrysler's CEO in December 1990, when his contract expires, Greenwald, who is chairman of the auto operation, hopes that Iacocca will stay on. He adds, ''I don't think anyone is going to step into Lee's 21-inch shoes and walk the way he does.'' Greenwald has been Iacocca's second since 1981. The two men could hardly be more dissimilar. Iacocca is an Italian Catholic, Greenwald the son of Russian Jews. Iacocca is beefy, Greenwald slim. Iacocca is brash, impulsive, and profane; Greenwald is soft-spoken, thoughtful, and correct. Their professional backgrounds are just as different. Both started at Ford. But Iacocca, an engineer, worked in the heart of the business: sales, marketing, and product development. Greenwald moved up through finance. Iacocca made his career in Detroit. Greenwald held significant overseas jobs in Brazil, France, and Venezuela, learning to speak the language at each posting. It was in Venezuela, where Greenwald was running a Ford subsidiary in 1978, that Iacocca recruited him for Chrysler. Greenwald by then had become well known for his command of facts and for his ability to make quick, smart decisions. When he got a message at home saying that Iacocca had called, his wife, Glenda, pleaded, ''Don't call back.'' Greenwald did call back, and after four months of surreptitious conversations and meetings, decided to sign on -- ignoring his wife's fears about Chrysler's shaky finances. As controller, Greenwald imposed Ford-style financial discipline on Chrysler's unruly operations. He also played a crucial role in negotiations with bankers, union members, and federal officials over Chrysler's federally guaranteed loan in 1979. Since then, he has kept such tight control of costs that Chrysler can theoretically survive even the bumpiest markets. ''He's an excellent partner with Iacocca,'' says Chrysler vice chairman R. S. Miller. ''Lee does not have the patience for the details of the business that Jerry does.''
Greenwald was raised in University City, Missouri, a suburb of St. Louis, where his father was a wholesaler of eggs and chickens. Says Greenwald: ''I never thought I'd eat another chicken salad sandwich.'' He attended Princeton with the help of an Eagle Scout scholarship. Earlier this year he set up a foundation in his hometown to pay for the college education of 50 children now in the fifth grade. (Some are pictured with him on the preceding page.) His gesture will cost more than $775,000 if all the kids get undergraduate degrees. ''I got more than my share of breaks growing up,'' says Greenwald. ''This will be a serious experiment in what works in education and what doesn't.''
A BELL MAN AT AT&T Put them side by side, and AT&T's two top executives look like Mutt and Jeff. Chairman and Chief Executive James E. Olson, 62, is short, jowly, wears short-sleeved shirts, and has a raucous sense of humor. President and chief operating officer Robert E. Allen is tall, thin, favors tailored shirts and suspenders, and is noted for his quiet wit. Personalities aside, Olson and Allen are remarkably similar. Both are from the Midwest. Both started their careers in the old Bell System supervising switchboard operators, and both did time with Illinois Bell, the traditional training ground of AT&T chairmen. Allen is all but certain to succeed Olson by 1990. (In April the company announced that Olson was recovering from a cancer operation and had temporarily given over his chief executive's duties to Allen.) AT&T has stumbled a bit since the 1983 breakup, but it now feels it has a strategy in place. Allen will be charged with improving the company's U.S. operations, making it a leader in data communications, and expanding business overseas. After having spent his entire career in the U.S., Allen is now immersed in foreign affairs. He is trying to improve relationships with 250 telephone companies overseas with the aim of selling them more of AT&T's equipment and long-distance services. ''It is a forced bath,'' he admits. ''But the instability of the global marketplace has caused us to pay a lot more attention to our businesses there.'' It isn't Allen's first forced bath. In 1983 he was named AT&T's chief financial officer, despite his lack of formal training. Allen later told his bosses that a career finance man should hold the job in the future, though it was a traditional one for prospective CEOs. ''It was a good learning experience, but I didn't contribute a hell of a lot,'' he recalls. Allen is known for his analytical skills and his ability to encourage frankness from people under him. Both qualities speeded his ascent through the bureaucracy of the old Bell operating companies. Mild in demeanor, he knows when to get tough. One colleague remembers a tense meeting where Allen accused his subordinates of office politics and parochialism. He said angrily, ''The only turf I want to see you protecting from now on is the customer's turf.'' Allen lives in Short Hills, New Jersey, and he spends 11-hour days at AT&T's offices in nearby Basking Ridge (where he was photographed) or at headquarters in Manhattan. No exercise fanatic, he has still managed to take off 30 pounds from his 195-pound football-playing weight at Indiana's Wabash College. Allen is a certifiable golf nut who maintains an 11 handicap and belongs to seven country clubs in three states and the District of Columbia. In August he will get yet another lesson in foreign affairs. He plans to play eight historic golf courses in Scotland.
FINDING A HOME AT AM Jerry O. Williams grew up poor in Indianapolis. His father, who had only a fifth-grade education, drove a truck for a scrap iron company. But the family -- Williams has six sisters -- was close-knit and had lofty goals. Williams started delivering newspapers at age 8 and has worked hard ever since. President and chief operating officer of Chicago's AM International since 1985, he is set to become the first black chief executive of a FORTUNE 500 industrial company. ''Jerry is very focused and very tough-minded,'' says CEO ! Merle Banta, 55, a former McKinsey consultant who ran his own sporting and leisure goods business before becoming AM's chief in 1984. ''If I leave, he is my successor, and I've told the board that.'' The betting is that Banta will go before he is 60. For the deceptively easygoing Williams, the corporate ladder has closely resembled an obstacle course. He has changed jobs more often -- five times -- than any of FORTUNE's other prospective CEOs, and put in three separate tours at General Electric alone. ''I have a love-hate relationship with GE,'' he says. ''It is a great place to learn things, but I prefer a smaller environment.'' Williams's biggest break came in 1975, after he left GE a second time to become vice president of planning and development at Maremont, a $300-million- a-year Chicago auto supply firm. It was there that he hooked up with President Richard Black. After Maremont was bought by a Swiss company, Williams returned to GE for a third tour. That lasted only four months, until Black, who had moved to AM International as chief executive, lured Williams with his first big operating job: running the $115 million Bruning division, which makes graphics equipment for architects and engineers. ''One of the problems black executives have is that they rise up too high in staff jobs and they can't break out,'' says Black. ''Jerry has managed his career just like he manages a job -- very well.'' In answer to a question from FORTUNE, Williams says he thinks he would have risen faster if he had been white. ''There are a lot of people I know who have been held back because of the color of their skin,'' he says. ''But it is easy to be paranoid about it, and I try not to let it bother me.'' Black describes Williams as the point man in AM's recovery in 1984 from a bout with bankruptcy, and as a wizard at operations. ''We thought Bruning was running at peak efficiency,'' says Black, ''and he tripled earnings.'' Sales of graphics equipment are surging, thanks partly to a weak dollar that has hit AM's overseas competitors; indeed, business is so good that the company is struggling to meet delivery dates. Williams's tour has not been all triumphs. Two years after he campaigned for the purchase of a computer-aided design firm, he recommended that it be sold. He says now that he was overly optimistic about industry conditions. People who work for Williams describe him as a textbook manager. He negotiates strategic and financial objectives with division presidents and then tries to stay out of their way. Says Gerald McConnell, president of the Multigraphics division: ''He gives you the latitude you need, but he's not so far away that he can't challenge you when you need to be challenged.'' Even as a top manager, Williams has faced special obstacles because of his race. When Williams took over Bruning in 1982, Thomas Rooney, now its president, says, ''there was a lot of skepticism.'' The doubts multiplied when Williams started downsizing the operation, but after he tripled profits, Rooney says, ''his status went up quite a bit.''
Becoming a chief executive would fulfill ambitions that Williams's mother nurtured 40 years ago. ''She was a great inspiration for us,'' he recalls. ''The word 'can't' wasn't allowed in our house.'' She set up what the family called the ''Williams Scholarship Fund,'' a system in which the older children helped to pay for the education of the younger ones. Four of Williams's sisters graduated from college, and one is a doctor. Williams has undergraduate degrees in math and electrical engineering, and a master's of science and engineering. He is involved in a Chicago minority training program, but Williams does not see himself as a leader anywhere but on the job. ''I wouldn't be effective because I don't have the patience,'' he says. ''One thing about corporations is that you can make a decision quickly and get things done. I just want to be one of the top 500 CEOs in the country.''
A XEROX ORIGINAL In the 1970s, while he was an executive at Rank Xerox, the London-based overseas subsidiary of Xerox, Paul A. Allaire got a preview of the problems that would bedevil Xerox's U.S. business in the early 1980s. He saw that the Japanese were underpricing Xerox and leapfrogging it in copier technology. Allaire slimmed down Rank Xerox to make it more competitive, and cut $200 million in costs. When he returned to the U.S. in 1983 after a total of 11 years abroad, Allaire moved into Xerox's Stamford headquarters as head of staff operations. He became president in 1986, and he is expected to replace David Kearns two years from now when Kearns leaves as CEO at age 60, a company custom. Allaire has a reputation as a highly disciplined, though low-key, manager. ''Paul is less charismatic than David,'' says executive vice president Wayland Hicks, who worked for Allaire at Rank Xerox. ''David is clearly a driving force, and brought a lot of change to the company. Paul listens better, relies less on his instincts, and is more likely to think things through.'' The sandy-haired, boyish-looking Allaire regards himself as a global businessman. ''Even if you are not selling worldwide, you have to compete worldwide,'' he observes. ''I think I'm capable of operating anywhere in the world.'' That said, he wishes he had spent more time in sales, marketing, and product development and less time in staff jobs overseas. Gradually, Xerox is winning back some of its lost market share in office equipment; its 1987 profits were the highest in six years. Like Kearns, Allaire takes a broad view of corporate stewardship. ''At Xerox we don't worry just about the bottom line,'' he says. ''We are interested in social issues, and we can attract better people to the company because of that. We have been out front in the hiring of minorities. In sales, blacks and females are among our top performers.'' Allaire was raised on a 100-acre fruit and vegetable farm in western Massachusetts. After it was driven out of business by California farmers who could grow produce year-round, his father turned to selling the sand and gravel that he found on his property. Allaire scrimped for money to attend college at nearby Worcester Polytechnic Institute and chose engineering as a career because it paid well. An active athlete who took up fox hunting in England, Allaire brought his horse back to the U.S. and keeps it stabled near his home in New Canaan, Connecticut. (He was photographed at the stable.) Allaire also enjoys nights out in Manhattan. But he has yet to make the social A-list. When he tried to make a dinner reservation at fashionable Le Cirque to celebrate his 25th wedding anniversary, Allaire was told there was a seven- month wait. He took his wife, Kathleen, to the newly renovated Rainbow Room instead.
CHEVRON'S JOLLY GIANT After Chevron bought Gulf Oil for $13.3 billion in 1984 -- still the biggest corporate takeover -- Kenneth T. Derr, then president of Chevron's U.S. operations, was dispatched to blend the two companies. Derr mobilized 37 study groups to fit all the pieces together. ''It should go down as a textbook example of how two large organizations are melded,'' says Donald Bower, Chevron's retired vice chairman. By the time Derr finished in 1986, he had disposed of 10,300 gas stations, eliminated 17,000 jobs, and cut Chevron's long-term debt by $6 billion. Now the company's vice chairman, he is the clear favorite to succeed Chairman George M. Keller, 64. Around Chevron's San Francisco headquarters, the promotion of the genial, 6- foot 3-inch, 225-pound Derr would be popular. ''He likes to walk into your office and sit on a corner of your desk to chat,'' says a colleague. Derr delegates authority, though he never loses grasp of the details. Keller, who has a keen analytical mind, tends to make decisions on his own. Says another executive: ''A lot of us feel there will be a new emphasis on participative management when Derr takes over.'' Chevron's future seems brighter than its immediate past. Having acquired Gulf's petroleum reserves for $3 a barrel, Derr can look forward to selling the oil for considerably more. But as he concedes, predictions can go awry. ''The forecasts of the 1970s for the 1980s were dead wrong,'' says Derr. ''We didn't foresee the reduction in demand or surge in supply.'' After studying mechanical engineering and business administration at Cornell, Derr joined Chevron because he wanted to live in California. He got his first operating job at 31, when he was made assistant superintendent of Chevron's El Segundo refinery. From there he moved to the high-visibility post of assistant to Chevron's then-president H. J. Haynes before becoming, at 36, the youngest vice president in company history. Among his goals as CEO will be to improve Chevron's relations with environmentalists. ''We can't fight tooth and nail over every issue,'' he says. ''We have to develop a dialogue.'' Derr has already done his bit to beautify San Francisco. A sometime cable car rider himself (see photo), he ran a $10 million fund drive to overhaul the city's system. He got Chevron alone to contribute $1 million.
THE REGAL HEIR AT CHASE Thomas G. Labrecque, president of Chase Manhattan, has been heir apparent ever since he was named chief operating officer in 1980. Willard Butcher, Chase's current chief, intends to stay on until he is 65, so Labrecque will not ascend until late 1991. That's an understudy's role nearly as protracted as that of Prince Charles, whom Labrecque resembles in his regal demeanor and Old World grooming. Unlike the Prince of Wales, Labrecque has not lacked challenges. He decentralized Chase's technical operations in the late 1970s, a job, says Butcher, ''that required great skills for building teams of people.'' Adds Butcher: ''Tom does not have a tough-guy style, but he makes tough ( decisions.'' More recently Labrecque has been agitating for repeal of the Glass-Steagall Act -- which prevents commercial banks from underwriting securities -- so Chase can keep up with big foreign banks that are active in the U.S. ''It is appalling to lose business to Deutsche Bank because we can't do the same business they can in this country,'' says Labrecque. While Butcher followed the traditional career path in banking -- up through commercial lending -- Labrecque made his reputation on the ''money side'': foreign exchange, currency trading, and portfolio management. It turned out to be just the training needed for understanding today's global markets. Says Labrecque: ''My background seemed to be a diversion, but it has turned out to be very helpful. I would hate to be where I am now without it.'' Even in banking circles, Labrecque is known for consuming reams of data before making decisions. He is also something of a straight arrow who stays out of office politics. While the rumpled Butcher is aggressive and a table- pounder, the 6-foot 2-inch Labrecque is polished and almost uncannily controlled. He once told an interviewer: ''Before I speak, I ask myself, 'Who am I speaking to? What do I want them to take away?' '' Labrecque, who lives in Fair Haven, New Jersey, spends three nights a week in a Manhattan apartment so that he can more easily stretch his workday to 14 hours.
He knows that, inevitably, he will be compared with David Rockefeller, who ran Chase until 1980. Labrecque wonders whether the time of Rockefeller-size personalities has passed. ''Business leaders are more subject to scrutiny and criticism today,'' he notes. ''The number of people who criticized David Rockefeller in the 1950s was small; in the 1980s it would have been much larger.'' In the hurly-burly banking world of the 1990s, Labrecque will likely present an even bigger target.
BIG CHEESE AT KRAFT Lots of work and little play have brought Kraft President and chief operating officer Michael A. Miles close to the top of the food business. He arrives at his office by 6 A.M. for an 11-hour day and is never happier than when he is lugging home a load of paperwork and reading material for the weekend. Serving on the board of the Chicago Lyric Opera (he was photographed in the opera hall) is one of his few outside interests. ''I'd rather work than play tennis,'' Miles says, somewhat apologetically. ''If I want to work up a sweat, I'll get on an Exercycle.'' His hours of desk time have paid off. He has reinvigorated such stodgy products as Velveeta and Philadelphia Brand cream cheese by promoting new uses for them. For instance, he touted Cheez Whiz, which is usually spread on crackers, as a sauce that can be heated in a microwave. Now he is on track to follow John Richman, 60, as CEO of the U.S.'s largest independent food company. Miles retains the fresh-faced charm of the Phi Kappa Psi fraternity president he was. Unassuming and informal, he is known as Mike around Kraft's suburban Chicago headquarters. For a high-level executive, he practices a kind of old-fashioned courtesy: He does not keep visitors waiting, and he answers his own phone. He grew up in Washington, D.C., where his father worked at the old Bureau of the Budget. By age 11 he had decided that he wanted to be an advertising man; as he puts it, he proceeded ''directly from fireman and skipped railroad engineer and cowboy.'' He majored in journalism at Northwestern, an experience he describes as ''the best thing that ever happened to me, because I learned how to put all the news in the first paragraph.'' At Chicago's Leo Burnett agency, he was account executive for several Procter & Gamble brands. ''That let me learn P&G marketing without the regimentation that goes with having to work for the company,'' says Miles. His favorite assignment involved a product that never got out of test marketing: a disposable detergent-filled dishcloth called Fling. Another Leo Burnett client, Kentucky Fried Chicken, hired Miles away in 1971, and within six years he was running the franchise restaurant chain. Miles rejuvenated the sagging operation by luring back Colonel Harland Sanders as a pitchman and putting in place a program called QSCVOOFAMP, a jaw-breaking acronym for ''quality, service, cleanliness, value, other operating factors (recruitment, training, and operating standards), advertising, merchandising, and promotion.'' When R.J. Reynolds bought Kentucky Fried Chicken in 1982, Miles bolted for Kraft. He figured that if he had to start over with a new owner, he would rather move to a big food company. Miles thinks consumer tastes will move toward two extremes in the 1990s: lighter and more nutritious items, such as low-calorie, low-sodium cheese, and indulgent, fattening foods such as extra-rich ice cream and double-cheese pizza. Artificial sweeteners and fat substitutes will reduce the penalties for eating the heavy stuff. Miles's own tastes are definitely not self-indulgent.
DEERE'S COSMOPOLITE Hans Becherer exemplifies the ideal of a sophisticated executive. The son of German immigrants, he was raised in the upper-crust Detroit suburb of Grosse Pointe, holds a Harvard MBA, is married to a Frenchwoman, and maintains an apartment in Paris. The surprise is that Becherer, president and chief operating officer of Deere & Co., has spent his entire career at the farm equipment maker in Moline, Illinois. In two years he is expected to succeed Chairman and Chief Executive Robert Hanson, 63, a Moline native who was the first non-family member to run the 150-year-old company. Becherer would be the second. Highly competitive and full of ideas, Becherer strongly supported the strategy to expand Deere's insurance business beyond its farm customers to include general life and casualty coverage. But putting Deere right again will take all of his push and panache. Flattened by the farm belt slump, the company's sales have fallen to the levels of a decade ago, and its core manufacturing operations have lost money since 1984. Though Deere's stock has doubled since the October crash, it is still selling below its 1980 high. Becherer is looking to cut unprofitable components businesses, such as hydraulic pumps. ''We want a sustainable competitive advantage in every area,'' he says. ''If we can't compete, we'll get out of that business, whatever it is.'' Like Hanson, Becherer moved up through international sales and marketing. At his second overseas posting, he spent weeks finding a distributor in Norway. Norwegians wanted heavy-duty tractors and Deere sold only small utility models. But he persisted, and today in Norway Deere ranks second in tractor sales. Subsequently Becherer held a variety of international marketing jobs where he won respect, if not affection. As general manager of John Deere Export in Mannheim, West Germany, which became the company's leading foreign profit center, he fired nearly one-fifth of the key employees. ''We were going for excellence,'' he explains. An exuberant sportsman, Becherer plays tennis several times a week, rides horseback, and skis. He owns a high-powered 22-foot runabout that he uses for waterskiing and exploring the nearby Mississippi River. ''When you are on the river, it is like being in an African Queen environment,'' he says. He and his wife, Michele, visit Paris frequently, but Becherer makes no apologies for ! Moline. He points out that he can get from his desk to his boat, his horse, or the tennis court (or his backyard, where he was photographed trimming trees) in five minutes or so. Says Becherer: ''Living here, I have the luxury of extra time, which is really the only luxury there is.''
Clearly, there will be other chief executives who come (and perhaps go) during the next five years. They did not make FORTUNE's list because the timing of their ascension is unpredictable. Insiders at American Express, for instance, are convinced that, despite his denials, CEO James D. Robinson III, 52, would leave for a top job in a George Bush Administration. Robinson's most likely successor: President Louis V. Gerstner Jr., 46, head of Travel Related Services. As for the hazards of predicting, who could have guessed that two highly touted heirs, Samuel H. Armacost of BankAmerica and John M. Stafford of Pillsbury, would stumble so badly that they would be replaced by their predecessors (A. W. Clausen and William Spoor)? In times of stability, as Rosabeth Moss Kanter of Harvard business school points out, it almost doesn't matter who a company's CEO is, particularly if the division heads do their jobs well. On the other hand, when things go sour -- interest rates shoot up, sales collapse -- even the ablest CEO can't always win. Luck plays a factor in every career. Jerry Williams may have said it best. When asked to what he attributed his success, he replied, only half jokingly, ''Divine intervention.''
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