True Grit
September 27, 2002
By Patricia Sellers

Sallie Krawcheck bet her career on her scruples. Two years ago, she and her colleagues at Sanford C. Bernstein stubbornly insisted that running a pure research house--with no investment banking, no exotic trading--was the only upright, conflict-free way to give stock market advice to investors. "We were losing analysts to competitors," says Krawcheck, who headed a research department that faced off feebly against Wall Street's big, multi-service firms. "I'd ask clients, 'How are we doing?' and they'd say, 'Not well.' The word I heard most often was 'irrelevant.' "

She stood her ground. At worst, she told herself, she might be fired for sticking to her principles--"and once you make peace with that idea, you lose your fear." Krawcheck more than survived. Today, while those same Wall Street rivals reel over conflicts of interest and other scandals, Bernstein is held in highest regard. Though small, it is profitable and growing. Instead of being fired, Krawcheck became the firm's chairman and CEO. And this year she joins FORTUNE's list of the Most Powerful Women in Business, at No. 42.

At a time when temptation--to gun for growth, to push the limits, to behave recklessly--has led many once-powerful people to ruin, old-fashioned character distinguishes FORTUNE's 2002 lineup of Most Powerful Women. Who's missing? Martha Stewart, for one. Last year she was No. 13. No matter how the investigation into her alleged insider trading of ImClone stock turns out, her image has been badly damaged. And her sales are sagging right along with those of Kmart, with which she has had a lucrative relationship. The big discounter went Chapter 11 in January (see "Greed Mart").

Carly Fiorina, meanwhile, tops the FORTUNE 50 for the fifth straight year. Whether or not you endorse Hewlett-Packard's $18.7 billion acquisition of Compaq, you cannot deny that HP's chairman and chief executive showed her strength in overcoming dissident director Walter Hewlett. The vicious proxy battle, she says, "reaffirmed my fundamental belief that an internal compass is one of the most important things a leader must possess."

Kraft co-CEO Betsy Holden, who ranked No. 9 last year following the food giant's successful IPO, ascends to No. 2. She has emerged as her industry's most disciplined leader--though you won't hear that from her. "My philosophy is, It's not about me," says Holden, who oversees Kraft North America and the bulk of the corporation's $34 billion in annual revenues. eBay CEO Meg Whitman (No. 3) also exercises plenty of low-ego discipline in her Internet sector--one reason that eBay hits its targets quarter after quarter. PepsiCo president Indra Nooyi and Avon CEO Andrea Jung, Nos. 4 and 5 in our rankings, are bolder characters, but they're keen realists as well. Their rigorous approaches to their businesses fueled major corporate turnarounds.

More than fortitude, of course, is required of FORTUNE's Most Powerful. To assemble our list, we evaluated each candidate--in for-profit companies only--on four main measures: the revenues and profits she controls, the importance of her business in the global economy, the arc of her career (how quickly she's risen and where she's likely to go), and her impact on culture and society.

Power fluctuates, often for reasons beyond a woman's control. One of last year's stars, Mirant CEO Marce Fuller, tumbled from No. 5 to No. 37 due to the Enron effect: Mirant too is in energy trading. "Obviously, it's a business about risk-taking. Whatever you do, hold on to your values," says Fuller. She apparently did, but with her industry out of favor, she's cutting people and costs. Reported revenues ($31.5 billion in 2001) will take a dive too; new accounting rules will reduce them by more than 60%.

Another notable power shift: Oprah Winfrey went from No. 3 to No. 10. But her influence appears to be waning largely by choice. In January she told FORTUNE that Sept. 11 had hit her hard. "I've reevaluated everything, and I'm not going to do anything this year that I don't really want to do." Since then she has shut down Oprah's Book Club, decided to end her TV show in 2006, and severed her partnership with Jeff Jacobs, who had run Harpo, her company, since its start 18 years ago.

It's back to basics in these sober times, and the FORTUNE 50 reflects that. While the living brands are down (Oprah) and out (Martha), tried-and-true brands--and the women who nurture them--are gaining power. Ann Moore was named chairman and CEO of Time Inc., the world's largest magazine publisher (and FORTUNE's parent), in a reshuffling that favored profit-conscious, old-economy executives from the Time Warner side of AOL. Moore, who built People into a billion-dollar brand, ascends from No. 21 to No. 11.

There are other brand mavens among the FORTUNE 50's nine newcomers. Kathi Seifert, second in command at sturdy (but not sexy) Kimberly-Clark, is No. 38. At Procter & Gamble, Susan Arnold, the intense boss of global beauty care and feminine care, brings in more revenues (roughly $8 billion) and far more profits than Deb Henretta, who runs global baby care, but we place them nearly neck and neck on our list, at Nos. 32 and 34. Why? Pampers queen Henretta, a 41-year-old mother of three who looks as uncorporate as the moms she sells to, is one of the company's real up-and-comers. "Given her age, there's a chance Deb could become the first female CEO of P&G," says veteran Procter watcher Andrew Shore, who heads investment strategy for the global consumer sector at Deutsche Bank.

Hollywood isn't Cincinnati, but the discipline that drove P&G's turnaround appears to be spreading. Columbia Pictures chairman Amy Pascal (No. 26) has learned to manage with similar rigor. "We were making too many films," says Pascal of her past, when she turned out a bunch of money-losers and failed to make our list. Pascal has cut the number of movies Columbia makes in half, from 25 to 12. Proving that less is more, she produced hits such as Spider-Man and Men in Black II--megabrands with sequel power. Columbia's domestic box-office gross has already surpassed Hollywood's annual record; film profits are the best ever for parent Sony.

In finance, power players no longer boast about big deals. If they boast at all, it's about preserving the franchise. At Verizon, the most valuable company in the ravaged telecom sector, CFO Doreen Toben (No. 25) is busy reducing debt and increasing cash flow. "No deals!" she says proudly. Bank of America's Amy Brinkley rises to No. 17, from No. 31, because her new position, chief risk officer, is key to CEO Ken Lewis's mission to manage risk throughout the company. Insiders say that Brinkley, a meticulous manager who has worked all over BofA, has a decent shot at succeeding Lewis someday.

Meanwhile, at troubled Citigroup, Marge Magner is COO of the crown jewel, Citi's global consumer group, which generates $35 billion in annual revenues and $7 billion in net profits. "We don't get caught up in trends or flashy things," says Magner, a diligent manager who has had five promotions in five years. We're promoting her too--to No. 22 on the list, from No. 33 last year.

No. 50 is a Citi alum and FORTUNE 50 returnee. Heidi Miller was No. 2 on our list in 1999, when she was Citigroup's CFO. Convinced that a woman could not reach the top there, she quit, drifted awhile--to, then to Marsh & McLennan--and recently joined Bank One as CFO. As the influential right hand to Bank One CEO Jamie Dimon, another Citi alum, Miller's on the rebound.

It's a matter of debate whether power is harder to get or to keep. But for women on the FORTUNE 50, keeping power seems to be an especially daunting challenge. When we asked them to identify their greatest strength and weakness, virtually every woman said she felt pressed to soften the very thing that got her here: her powerful style. Verizon's Toben says that bosses (male ones) urged her to be less forthright--and she tries to be. BofA's Brinkley admits, "I had to learn not to be too tough." PepsiCo's passionate president Nooyi, a mother of two, says, "My biggest issue is that I view PepsiCo as an extension of my family. My husband says, 'You've got to make up your mind whether Pepsi is your spouse or I am.' " (She adds, "I assure him he's my first love and always will be.")

Even Carly Fiorina, whose ferocious self-determination has fueled her success, feels some responsibility to rein it in. "My strength is my strength," she says. "But it can also be a weakness." You probably wouldn't hear Bill Gates or Jeff Immelt say that. But even if these women don't wear their power quite as comfortably as men do, they've got every bit as much backbone.

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