(FORTUNE Magazine) – YOU ALMOST have to feel sorry for James L. Dutt, the $1.2-million-a-year chairman and chief executive of Beatrice Cos. His efforts to transform the giant Chicago-based food processor and consumer-products company from a loose confederation of regional operations into what he calls ''the premier worldwide marketer'' have been greeted with derision by the financial community and his fellow industrialists. The most striking feature of Dutt's plan -- the $2.7-billion purchase last summer of Esmark, another Chicago food and consumer-products giant -- has been widely condemned as too costly. The deal made Beatrice about as large as Procter & Gamble, with revenues of $13.5 billion in the last four quarters. It also dumped a staggering load of debt onto the balance sheet, prompting Standard & Poor's to downgrade its rating of Beatrice securities from AA to A. The move caused some financial analysts who follow the company to remove Beatrice from their ''buy'' lists, and it helped drop Beatrice into last place among the ten food processors in this year's annual FORTUNE survey to determine the most admired U.S. corporations. Dutt is assailed not only for his corporate strategy and tactics, but for his management style as well. Once perceived as easygoing and amiable, he has become possessed by what he calls his ''vision'' of a new Beatrice and has developed into a fiery-tempered autocrat, according to more than a half dozen people who have observed him in action. His behavior these days suggests a monumental impatience bordering on desperation, and it sometimes seems that the border has been crossed. At management meetings he will deliver tirades that demoralize rather than inspire. Waving his arms and sweating, he reportedly harangues his followers relentlessly, insisting that they don't work hard enough and that only he can muster the drive, intelligence, and skill to bring the vision to reality. The outside world got an intriguing glimpse of this driven man last February, when he addressed a conference of food industry analysts in St. Petersburg, Florida. In response to a question about Beatrice's financial goals in the coming fiscal year, Dutt gestured toward three top executives seated behind him on the podium and declared that they would lose their jobs if the goals weren't met. Depending on who is speaking, Dutt is either the worst ogre and bungler to stalk the halls of corporate America or one of the great misunderstood business geniuses of modern times. In preparing this profile, FORTUNE spoke with a number of Dutt's former colleagues who had departed on bad terms. While willing enough to discuss their grievances, practically all refused to be quoted by name, some of them explaining that they feared that Dutt would find a way to ruin their careers. ''He's a very vindictive guy and I don't think I need that,'' one remarked. These people seem fairly vindictive themselves, and they obviously have axes to grind, but their portrayals of Dutt are remarkably consistent and much of what they say is affirmed by people who still work for the company -- again, of course, on the promise of anonymity. Dutt responded to FORTUNE's questions through a spokesman. One man who left Beatrice on his own initiative summarily declares: ''I've never heard anybody inside or outside the company say anything good about Jim Dutt.'' But FORTUNE interviewed many Beatrice executives who had good things to say about Dutt. The sentiments of Richard J. Pigott, executive vice president and chief administrative officer, are typical: ''I would evaluate his leadership as highly effective,'' Pigott says. ''I don't think he has any shortcomings worth mentioning. He is doing what he ought to be doing.'' Some company directors feel similarly. ''Impatience is a quality of leadership,'' cautions director Alexander Brody, president of DYR Worldwide -- a New York advertising agency that counts Beatrice as a client -- who has been on the board for a year. ''People who sit around and don't do anything are not leaders.'' Seven of the 11 other outside directors -- there are six insiders as well -- declined to talk about Dutt. He appointed 12 of the 18 board members, who include no business titans and seem mainly a compliant lot. But some were reportedly bothered by a recent editorial in Crain's Chicago Business entitled ''Jim Dutt's Sorry Record.'' The editorial charged that Dutt was taking too many risks with Beatrice and was inflicting ''needless personal traumas'' on its employees. It also reminded the directors that they could be held legally responsible if Dutt harmed the company. Many former subordinates contend that Dutt cannot tolerate dissent or debate and will fire -- or at best refuse to promote -- people who dare to disagree with him. ''There's nothing wrong with a brilliant dictator,'' observes one ousted executive, ''but when the dictator isn't brilliant, you've got a problem.'' Certainly executive turnover has been phenomenally high. Of Beatrice's 58 top corporate officers at the end of fiscal 1980 -- Dutt's first year as the top man -- 37 have left the company, many having quit in anger or been fired; among those forced out was President Donald P. Eckrich, who was never replaced. In the past three years Beatrice's La Choy Oriental-foods business has had three presidents, and in the past year the company's fruit juice unit, Tropicana Products, has also had three. The situation has lately degenerated, with dozens of firings and resignations among Esmark executives. The mass exodus has made a mockery of Dutt's promise that this would be ''the smoothest and most effective merger in recent history.'' The casualties included Esmark's two principal operating managers. Frederick B. Rentschler, the head of the Swift/Hunt-Wesson food business, which accounted for $1.6 billion of Esmark's $4 billion in revenues, was not only forced out but also publicly denounced by a Beatrice spokesman for not being a ''team player.'' Joel E. Smilow, who ran the International Playtex operation, with revenues of nearly $1 billion, stayed with the merged company for a few months in a more exalted position, as president of consumer products, then quit on two weeks' notice. Beatrice and Smilow said he left because he wanted to run a company of his own, but one of Smilow's former colleagues contends that there was a big dispute over ''two or three basic decisions Dutt decided to make without ever justifying them to Joel.'' To some observers the loss of Rentschler and Smilow greatly diminishes the value of ( Esmark. Without them, ''it's just a bunch of companies,'' remarks King D. Shwayder, a former Beatrice director, whose family sold the Samsonite luggage business to the company in 1973 for $75 million worth of stock. Dutt, for his part, says he doesn't understand the fuss over ''two guys who didn't want to stay.'' FOR ALL THE FEAR he inspires, Dutt is occasionally the butt of ridicule among his employees. A large photograph of Dutt hangs in the lobby of every major Beatrice facility throughout the world -- hundreds in all -- prompting company wags to make comparisons to Mao Tse-tung and to refer to the boss with mock reverence as ''Chairman Dutt.'' Women employees have been seen offering ironic curtsies to the chairman's visage. The company also is a-twitter with rumors about Dutt's personal life. The 60-year-old chairman is being sued for divorce by his wife of 42 years on grounds of mental cruelty. Critics contend that although Dutt owns just 18,000 of Beatrice's 91.7 million outstanding shares -- .02% of the total -- he is running the company as a private fiefdom and is abusing his power. Many of them point as an example to ''the Andretti promotion.'' In fact, Dutt's sponsorship of two auto-racing teams, one featuring Mario Andretti as its driver, is a near perfect example of Dutt's affinity for moves that can be interpreted by reasonable people as either idiotic or brilliant. A car collector and racing enthusiast, Dutt recently committed an estimated $30 million of company funds to sponsor the teams over the next two years. ''You have to question that kind of expense,'' says one former executive. ''The company sells only one or two products to men, and Dutt outbid August Busch, who sells Budweiser beer. There are more Budweiser drinkers watching racing than there are buyers of Halston fashions or Playtex bras'' -- both Beatrice products. The company did have a clear link with auto racing as the owner of STP Corp., a supplier of automotive products, which last year amassed revenues of $97 million -- less than 1% of Beatrice's total. But that link is to be severed; in April Beatrice agreed to sell STP to Union Carbide. The company insists there's another link: all the hot dogs sold at the Indianapolis 500 are made by Beatrice. The spokesman for Dutt says that the critics are misinterpreting the Andretti promotion. He explains that it is not aimed strictly at consumers, but at other Beatrice customers as well -- the thousands of retailers who market the company's products. Beatrice invited a large group of food retailers to the first Grand Prix racing event of the season last April, at Long Beach, California, and they got to hobnob with Andretti, actor Paul Newman, and others associated with the Beatrice-sponsored car. ''The key thing in the food business is shelf space,'' the spokesman remarks. He says that outings like the one at Long Beach make the retailers more willing to give space and prominence to Beatrice products. Some people who have worked with Dutt complain that he is either too much in the picture or impossible to reach. He is emphatically a hands-on manager when he is managing, especially when it comes to food products, which account for about 75% of Beatrice's revenues. Dutt made his way up on the food side of the business, and he still gets deeply involved in the nittiest and grittiest details, initiating management changes at practically every level and steeping himself in the minutiae of day-to-day operations. By contrast, he leaves the nonfood businesses pretty much alone. ONE INSIDER CONTENDS that there are long periods when the entire company is left to fend for itself. Dutt spends a great deal of time flying around in the company's Gulfstream III jet inspecting Beatrice's far-flung international operations, which account for only 22% of the company's volume. It is said that he sometimes retreats into a Howard Hughesian seclusion, letting scarcely anyone in the company know his whereabouts. If the boss is needed for consultation or for a crucial decision, the petitioner must submit a written request to Dutt's secretary, then wait and hope that Dutt will get the message and respond. Most of these requests have to be filtered through Dutt's assistant, Kathleen B. Kallman, 33, who was working as a legal secretary at Beatrice until five years ago, when Dutt discovered and promoted her. She is now a corporate officer with the rank of assistant vice president. People who have dealt with Mrs. Kallman complain that Dutt has unjustifiably granted her special privileges -- most annoyingly, the right to decide who will have access to the chairman. Dutt's spokesman denies that Mrs. Kallman has been given any power that wasn't exercised by her predecessors, all men, and dismisses the criticism as ''unfair and sexist.'' When Dutt ascended to the chairmanship six years ago, many people at Beatrice breathed a sigh of relief. He seemed a refreshing change from his burly, intimidating predecessor, Wallace N. Rasmussen, who had started at Beatrice hauling blocks of ice in a dairy and who demanded that his headquarters staff arise with the milkmen and get to work by 6:30 A.M. Dutt was an insatiable workaholic, but he apparently recognized that some subordinates might be blessed with less stamina. Like Rasmussen, Dutt had been a dairyman, joining the company in 1947 while still attending Washburn University in his native Topeka, Kansas. He started out as a part-time accountant at a local dairy plant, became manager of another plant, vice president of the dairy and soft-drink divisions, director of international dairy operations, and president of international food operations before rising to chief executive. Seemingly a devoted family man, he lived with his wife, Helen, in the well-to-do Chicago suburb of Arlington Heights until their recent breakup, when he moved to an apartment in downtown Chicago. The couple has a son and two daughters, all grown. On becoming chairman, Dutt seemed determined to make Beatrice more palatable to investors. Although the company could boast a strong balance sheet and an unbroken string of earnings gains stretching back 29 years, its return on shareholders' equity had been slipping and its stock was going nowhere. Dutt sifted through Beatrice's 430 profit centers and 9,000 products and sold off dozens of laggards, especially those in cyclical, capital-intensive businesses. He promised a leaner, more tightly controlled organization and vowed to push the company's return on equity substantially higher and to accelerate growth in earnings per share -- goals that he is still far from accomplishing. Beatrice's return on equity for fiscal 1985, excluding gains from the sale of assets, came to just 11% -- down from 14.5% in fiscal 1980. (With asset sales included, the 1985 figure was 20%.) During the same period, earnings per share -- again excluding special items -- dropped from $2.81 to $2.66. Because the great majority of its brands were regional, Beatrice had done scarcely any national advertising and marketing before Dutt took over. He vowed to consolidate the company's diffuse operations into a national marketing juggernaut and to give the company and its brands a national identity. Since 1980 he has boosted the company's annual advertising and marketing budget from $160 million to nearly $800 million, which places Beatrice in the rarefied company of such marketing colossi as Procter & Gamble and General Foods. ( A couple of years ago the name Beatrice drew a blank among 81% of people approached in a company survey, but Dutt figured he could give the name nationwide recognition by connecting it with the company's best-known products, such as Tropicana orange juice, Samsonite luggage, and La Choy Chinese foods. Then he could use the newly recognizable name of Beatrice to reflect some of the glory from the well-known products onto such lesser-known brands as Waterloo toolboxes, Mountain High yogurt, and Kneip corned beef. With an assist from the Havas Conseil Marsteller ad agency, Dutt made his most notable use of these tactics during the 1984 Olympics, when viewers of ABC's coverage got a full dose of the Beatrice name. The Olympics campaign cost about $30 million and raised Beatrice's name recognition to 68%. ''But so what?'' asks a recently departed manager. ''Where is this reflected in the stock market, or the movement of products? Studies have shown no boost from the name Beatrice. The Olympics advertising probably didn't sell one more item.'' Dutt and his colleagues stoutly deny that. They say that Beatrice's corporate advertising has made retailers more receptive to the company's products. ''We've made tremendous progress and will continue to make progress,'' insists Anthony Luiso, 41, president of Beatrice's U.S. food operations and one of the three high-ranking executives seated behind Dutt when he made his off-with-their-heads threat at the Florida security analysts' meeting. ''If I screw up, I should be gone,'' he remarks. He says that working with Dutt is ''great,'' and that he enjoys ''the challenges and the opportunities to share his ideas and to create something.'' For a while, investors seemed to accept Dutt's promise of a better tomorrow for Beatrice. The stock, after fluctuating between $16 and $25 a share during 1979, 1980, and 1981, finally took off in the bull market that began in the summer of 1982. From the end of July 1982 to the end of February 1984 the stock climbed from $20 a share to $33.75 -- a 69% gain that handily outpaced the S&P 500 index, which rose 46% in the same period. Since then, however, the market has bounded up another 20% or so, while Beatrice's stock has drifted down by a few percentage points. Over all of Dutt's tenure as chief executive, from July 1979 until mid-June of this year, the S&P 500 index rose 80%, while Beatrice stock was up 51%. EVEN BEFORE the Esmark acquisition, Wall Street had begun to doubt that Dutt could bring off his grand plan for Beatrice, and Esmark has made the future seem even murkier. When Dutt first made a move for Esmark a year ago, it came as a big surprise. He had previously insisted that he would stress internal growth while downplaying acquisitions, and he had stuck pretty much to that plan with one large exception -- paying $580 million in cash late in 1981 to buy the beverage business of Northwest Industries, which consisted primarily of the Coca-Cola Bottling Co. of Los Angeles. The Esmark offer was all the more surprising because that company had just accepted a takeover bid from a group led by Kohlberg Kravis Roberts & Co., a firm that specializes in management buyouts. The group, which included Esmark Chairman Donald P. Kelly, had offered Esmark's shareholders $2.4 billion in cash and notes, but Dutt sweetened the deal by offering $2.5 billion in cash, and he raised that to $2.7 billion after a little arm-twisting by Kelly. That figure amounted to a supremely generous 23 times Esmark's 1983 earnings. At the time, Dutt explained that Esmark was part of his plan to make Beatrice the ''premier worldwide marketer,'' and he asserted that the two companies combined would be ''stronger and more competitive'' than if they remained separate. Skeptics interpreted this to mean that Dutt's scheme for building the company through internal growth had flopped, that Beatrice's brands were faring poorly, and that the company needed a transfusion of vital new brands to restore its health. Esmark, which itself had purchased Norton Simon Inc. the previous year, brought to the merger a host of nationally recognized brand names, including the vast Hunt-Wesson food line, Max Factor cosmetics, Playtex underwear, Avis rental cars, and Swift meats. Dutt also hankered after Esmark's highly effective product-development organization and Hunt-Wesson's exceptionally strong in-house sales and distribution force, which deals directly with supermarket owners. Beatrice's own food sales and distribution were handled mainly by food brokers, who could give the company only limited attention since they also represented other food processors.

WHILE DUTT may have had good reasons for wanting Esmark, many analysts concluded that the deal would add complexity and risk without doing anything for Beatrice's bottom line. Virtually all the $2.7-billion purchase price was borrowed, at interest rates ranging from 12% to 14%, and the companies already owed $1.7 billion of long-term debt. By Beatrice's fiscal year-end last February, Dutt had lightened the debt load $1.4 billion by selling operations. But long-term debt was still 108% of equity -- vs. 38% before the merger -- and interest costs were running at $382 million a year, an enormous sum when compared with net earnings from continuing operations of $259 million. Even Dutt's sternest critics agree that Beatrice isn't likely to go down the drain. The company still has enough strong businesses, strong brands, and able people to keep it afloat no matter who is at the helm. Dutt has succeeded only in making Beatrice bigger, not more profitable. Unless that changes soon, the inescapable judgment will be that his tumultuous tenure was more bungling than brilliant. BOX: INVESTOR'S SNAPSHOT BEATRICE SALES (LATEST FOUR QUARTERS) $13.5 BILLION CHANGE FROM YEAR EARLIER UP 44% NET PROFIT $465.0 MILLION CHANGE UP 8% RETURN ON COMMON STOCKHOLDERS' EQUITY 20% FIVE-YEAR AVERAGE 14% RECENT SHARE PRICE $31 PRICE/EARNINGS MULTIPLE 6 TOTAL RETURN TO INVESTORS (12 MONTHS TO 6/21) 20% PRINCIPAL MARKET NYSE Explanatory notes: page 154