Europe's New Business Elite Wake up, America. Today's European CEO is a global animal who lives to do deals and make shareholders rich. One of them could be your next boss.
By Richard Tomlinson

(FORTUNE Magazine) – Goran Lindahl is absolutely neurotic about his company's stock. On a late January day, the chief executive of ABB, the Swiss-Swedish engineering group, is being interviewed by FORTUNE at the company's Zurich headquarters, and during our meeting he manages to hold his neurosis in check. But as Lindahl leaves the room, he can't help peering at the screen in the corridor that constantly monitors ABB's share price. Good news: ABB is up on the day. A relieved Lindahl throws a mock punch at this reporter before striding back to his office.

Gerard Mestrallet, the CEO of French utilities giant Suez Lyonnaise des Eaux, has caught the same disease. We're in mid-interview at Suez's Paris office when Mestrallet asks to be excused. He paces over to his computer, calls up the latest market price, and claps his hands with glee. A few hours earlier Mestrallet had announced that Suez would be bidding for a mobile-phone license in the next French government auction. Now the screen shows that Suez's shares have risen nearly 10% on the Paris Bourse. Mestrallet returns to our table and toasts his success with a glass of Belgian beer.

Superficially, there isn't much else to connect Lindahl with Mestrallet. Lindahl, 54, is a one-company Swedish engineer who rose through the ranks at ABB to succeed Percy Barnevik in 1997. Mestrallet, 51, had a dazzling career in the French civil service before joining the former Com-pagnie de Suez in 1984. But in the context of Europe's corporate revolution, their vastly different backgrounds hardly matter. What unites them and the rest of the new business elite featured on our list (see graphic) is something that may seem old-hat in America but is still radical in Europe: a management style that's committed to enriching shareholders.

The members of this new European elite are part of a growing network. You'll find some of these executives sitting on one another's boards; you'll run into them at power summits like the World Economic Forum in Davos; and you'll certainly see them doing deals with each other across national boundaries. "There is a new class of Euro-executives who know all the corporate leaders in different countries," says Angel Corcostegui, CEO of Spain's Banco Santander Central Hispano (BSCH) and himself one of the new elite. "I spend one day a week in London and one day a week in [Continental] Europe visiting other leaders to find out what they think."

To get a feel for what Corcostegui's talking about, consider this. The day after we met him in Madrid, Corcostegui was due to rendezvous with Chris Gent, CEO of Britain's Vodafone, to discuss the possible sale of BSCH's 30% stake in Airtel, Spain's second-largest mobile phone business. Gent is the man who recently hooked up with Jean-Marie Messier of Vivendi, the French telecom company, to develop a full-fledged Internet portal. And Messier is the man who spoiled the plans of Klaus Esser, the CEO of German cell-phone giant Mannesmann, who had hoped to use Vivendi as a white knight to repel Vodafone's hostile takeover bid.

Dizzy yet? Two other German corporate leaders had walk-on parts at this stage of the plot. One is Jurgen Schrempp, the co-chairman of DaimlerChrysler and a Mannesmann board member who helped persuade Esser to accept Gent's final $181 billion offer. (By coincidence, Vivendi's Messier sits on a subcommittee of the DaimlerChrysler board.) The other is Thomas Middelhoff, CEO of media giant Bertels-mann, which in partnership with AOL has an Internet service joint venture in France with Cegetel, Vivendi's telecom arm. (Middelhoff is a Vivendi board member.) And let's not leave Scandinavia out of it. Nordic telecom chiefs Kurt Hellstrom of Ericsson and Jorma Ollila of Nokia were interested spectators as the Mannesmann takeover battle reached its climax. Between them, Nokia and Ericsson count Vodafone, Mannesmann, and Vivendi among their big clients.

But it isn't just a passion for transnational dealmaking that connects Europe's new business elite. These new corporate stars are convinced that time is running out for the region's old economic order--that unholy trinity of meddling politicians, hidebound trade unions, and business dynasties for whom national interests always came first. At Suez, for example, Mestra-llet no longer sees his company as specifically French, pointing out that more than half its shares are held abroad. So would the French government object if this erstwhile national champion were eventually run by a foreigner? "The politicians don't have the power to change this decision," declares Mestrallet dismissively.

With a global outlook comes a healthy respect for American-style capitalism. It's striking, for example, that corporate heads like Sir John Browne of BP, Ollila of Nokia, and Lindahl of ABB sit on the boards of major U.S. companies (Intel, Ford, and Du Pont, respectively). Even more telling is the way Europe's business elite look to America for strategic inspiration. Take Juan Villalonga, the superaggressive CEO of Telefonica, Spain's leading telecom company. Villalonga made his name in the 1980s at McKinsey & Co., and since joining Telefonica in 1996 has raided this U.S. consulting firm for senior executives to shake up Telefonica's drowsy culture. At ABB, Lindahl admits that when he needs fresh ideas, "I'm not embarrassed that to some extent we have used GE in what we have done."

Indeed, Lindahl is proud to be counted as part of the Jack Welch fan club, which in his case has meant adopting a distinctly no-nonsense Welchian approach to hiring and firing. Three years ago ABB's chief executive ran into criticism from unions when he announced plans to cut the European work force and shift more of the group's production to Asia, where costs were drastically lower. The outcome: Lindahl ignored the protests and cut around 13,000 employees from ABB's work force of 200,000.

Even so, it's debatable that Europe's new elite have the same power to cut factory floor numbers as their U.S. counterparts, who generally negotiate with much weaker unions. Bernard Arnault, chairman of LVMH, the French luxury-goods conglomerate--not a company you'd immediately associate with blue-collar welfare issues--argues that "European companies are very careful about their social responsibilities because in many countries the state still has a strong presence."

Another idea the Europeans have borrowed from their American cousins: big CEO salaries. Until recently, the region's corporate chiefs lagged far behind their U.S. counterparts, but that's no longer universally true. At Vodafone, for instance, Gent commands a base salary of $1.4 million and has share options worth around $16.5 million. True, there are still social and political taboos about rewarding CEOs so lavishly, and on the Continent especially it is often difficult to obtain basic details about what board members actually earn. But that tradition is under increasing threat from newly inquisitive shareholders. One sign of the times: In January, France's two leading business lobby groups called for senior managers to disclose their full remuneration packages, including stock options.

Indeed, these days even second-tier executives at top European companies like BP and Vivendi can expect to receive handsome U.S.-style benefits in the form of stock options and performance bonuses. But in return these managers must perform. Heads of BP business groups had better be prepared for Browne's intense, 3 1/2-hour monthly review sessions, or face being shown the door. And at AXA, the French insurance giant, CEO Claude Bebear shoots down incompetent managers at the companies he acquires with the same relish he brings to killing the wild game that adorns his Paris office.

Indeed, life can be so demanding under Europe's new corporate leaders that excellence doesn't always guarantee an executive's survival. Consider the case of Juan Perea, who until recently was head of Tele-fonica's Internet businesses. When we met the 36-year-old Perea last August, he was preparing for the flotation of 30% of his unit--rebranded as Terra Networks--on the Madrid and New York stock exchanges. Since Terra's listing in November, the share price has risen almost eightfold, to give the group a market cap in late February of around $27 billion. Perea's reward? In February he abruptly resigned as Terra's CEO after a reported bust-up with Villalonga over the unit's future strategy. The word in Madrid is that beyond their strategic differences, Villalonga couldn't tolerate another star in the Telefonica boardroom.

Then there's the example of Thomas Stallkamp, the former Chrysler executive tipped to succeed Robert Eaton as Jurgen Schrempp's co-chairman in the merged DaimlerChrysler group. Unlike Perea's sudden departure, Stallkamp's ouster from the DaimlerChrysler board last September wasn't principally due to a clash of corporate egos. Instead, Schrempp reached the cold conclusion that Stallkamp--DaimlerChrysler's U.S. president--was surplus on a board that had been cut from 17 members to 13.

That decision illustrates a wider point: While Europe's new business elite respect corporate America, they certainly don't fear it. Take the BP-Amoco and Daimler-Chrysler mergers. Are they marriages of equal partners? Only if you believe that BP's Browne and Daimler's Schrempp have a consensual management style. Now look at just a few of the U.S. corporate trophies that Europe's new elite have seized since the start of last year:

--In January 1999, ABB's Lindahl forked over $2.1 billion to buy U.S. engineering firm Elsag Bailey.

--In March 1999, Vivendi Chairman Messier paid $6.2 billion for U.S. Filter, a water resources company.

--Not to be outdone, Mestrallet at Suez Lyonnaise des Eaux (Vivendi's archrival) bought two other U.S. water treatment firms, Calgon and Nalco, last June for around $4.5 billion.

--The same month, Vodafone's Gent scooped up California-based AirTouch in a whopping $62 billion all-share deal.

--And in November, Henning Schulte-Noelle, head of German insurance titan Allianz, spent $3.3 billion to buy a 70% controlling stake in PIMCO Advisors, the U.S. asset-management company.

Even when logic suggests that Europe's new chiefs ought to be scared of their U.S. competitors, they don't necessarily act that way. Daniel Bernard, chief executive of Carrefour, the French retailing multinational, is a prime example. Most European supermarket chains are quaking at the prospect of the Wal-Mart juggernaut arriving on their shores, but not Bernard. One reason: Carrefour--the world's second-largest retailer after Wal-Mart--is already giving the Arkansas giant a hard time in Latin America. There, Wal-Mart has been forced to learn from Carrefour's obsessive attention to local tastes, right down to how Argentine housewives like their meat cut. Ultimately, predicts Bernard, Carrefour will challenge Wal-Mart in its own American backyard.

In fact, business leaders like Browne, Schrempp, and Bernard are such masterly global operators that it's doubtful whether their corporate style is any longer distinctively European. True, where a typical U.S. chief executive might head for the golf course to relax, Gent of Vodafone prefers to watch cricket (an enthusiasm that explains his worst-ever business decision, sponsorship of England's hopeless national team). But when you look at his target market--the planet--it's hard to see what distinguishes his business persona from that of AT&T's Mike Armstrong or any other globally ambitious U.S. telecom chief. National or regional identity seems even less important when you bear in mind how much time Europe's business elite spend away from their nominal home base. Bertelsmann's Middelhoff, for instance, has his main office in Germany, but much of the time he's in New York, looking after the group's bulging portfolio of U.S. media businesses.

There is, however, one key difference that sets Europe's corporate elite apart from their American cousins: fame--or rather, the lack of it. In the U.S., top business leaders "are in the front of people's minds," according to John Viney, European chairman of executive search firm Heidrick & Struggles and author of a recent book on America and Europe's contrasting corporate cultures. But in Europe, says Viney, the heads of major corporations "have a very low profile, and what they do is slightly disdained by many European citizens. They're not applauded, and they're not praised."

It's unlikely that BP's Browne particularly minds that when he goes to the opera (his favorite pastime) he's more or less incognito. Yet the widespread indifference toward the region's business leaders points to an uncomfortable fact: The elite are more accurately described as a vanguard whose commitment to the global future isn't shared by many Europeans. It's dispiriting, for instance, that large swaths of the public still regard globalization as submission to the tyranny of Wall Street. This is true nowhere more than in France, home to such anti-U.S. idiocies as the periodic trashing of McDonald's restaurants by angry French farmers. "[Globalization] is not easy for the French to accept," laments Mestrallet. "From time to time there is a reaction by people who consider that the decisions of managers are imposed by the U.S. markets."

So what's the best evidence that Europe's new business elite really do represent the region's future? Surprisingly, it's Europe's traditional corporate dynasties, which increasingly are being forced to dance to the global market beat or risk seeing their companies flattened. Take the example of Fiat, Italy's most famous national champion, which shows two corporate faces to the world. Fiat's chairman, Paolo Fresco, spent most of his career at General Electric before returning to Italy in 1998 to inject some GE management sparkle into the ailing Turin-based company. In July 1999, Fresco even persuaded his mentor, Jack Welch, to join the Fiat management board. Fine--but the ultimate power at Fiat is still Giovanni Agnelli, the company's honorary chairman, whose grandfather founded the group at the end of the 19th century and whose family holds 30% of the stock. No one at Fiat doubts that Agnelli would like to retain his family's grip on the company.

Trouble is, Agnelli also knows that Fiat's car division is too small to compete with giants like Toyota in markets around the world and is on record as saying last July that the group was "destined" to find a foreign partner. Agnelli's prophecy came true this March, when Fiat and GM announced a cross-share alliance that seems bound to dilute the Agnelli family's influence.

Even more striking is how Europe's old business order is learning to get along with the new business elite. That's true of Fiat, of course, where Agnelli had a major say in bringing the GE-trained Fresco on board. But the outstanding example of this phenomenon in the past year has been BSCH, the Spanish bank currently on the phone with Vodafone. BSCH's chief executive, Angel Corcostegui, epitomizes the modern, international spirit of Iberian capitalism. He has a Ph.D. in finance from Wharton and was chief economist at Chase Manhattan before returning to Spain in 1987. Corcostegui, however, answers to BSCH's co-chairmen, Jose Maria Amusategui and Emilio Botin--both on the wrong side of 60 and with careers stretching deep into the murky Franco era.

So here's the surprise: Amusategui and Botin have built BSCH into one of Europe's most internationalized, fastest-moving banks. BSCH now boasts a series of cross-border alliances with other European banks, based on mutual shareholdings, including ties with Royal Bank of Scotland, France's Societe Generale, Germany's Commerzbank, and Italy's San Paolo-IMI.

That coup alone justifies bracketing Amusategui and Botin with our elite, even though you won't find them schmoozing at Davos. For what they've learned--and what the rest of Europe's corporate ancien regime is learning fast--is that there are only two options in the shareholder revolution now sweeping the region: adapt or die.