The Fix-It Man

When Jean-Rene Fourtou took over as chief executive of Vivendi Universal on July 3, 2002, he says, he planned to carry out "a calm diagnosis" of the company's many problems. Instead, he was plunged into a maelstrom. Two days after his appointment, Moody's threatened to reduce Vivendi's credit rating to junk status and thus seriously imperil its finances. Fourtou's predecessor, the celebrity CEO Jean-Marie Messier, had leveraged Vivendi to the bursting point. His legacy included opaque accounts, a huge pile of debt--$34.5 billion, of which $5.5 billion had to be repaid within nine months and no cash.

Within a week, Fourtou secured a credit line of $994 million, enough to stave off default but not enough to keep the firm running smoothly for long. A few weeks later, he borrowed $1.96 billion more. Then Fourtou took out his scalpel and started to operate. "It was a matter of survival," he tells TIME. "I had to survive the first days, then the first weeks." Even though Moody's did downgrade Vivendi, Fourtou has pulled the company through.

Fourtou's experience may be extreme, but it's emblematic of the baptism by fire that new European CEOs often face these days. Fourtou is practically the anti-Messier. A sturdily built rugby fan from southwestern France, he is as low-key as Messier was flashy. Unlike Messier, whose acquisition spree was propelled by a subsequently discredited vision of the future, Fourtou has taken an approach to Vivendi that is basic. Rather than embracing a grandiose strategy, he started by selling what was easiest to sell while asking shareholders to be patient. After some strategic twisting and turning, he decided to spin off Universal to NBC, with Vivendi retaining a 20% stake in the venture. "He's not a screamer," says a company insider. "He's very pragmatic, although once he's decided on the path, he's very determined." Almost two years into his tenure, the firm is not yet profitable, but it is viable. Vivendi stock is about $26 after touching a low of around $9 in August 2002, and Merrill Lynch last month became the latest investment bank to upgrade the stock from neutral to buy. Thanks to Fourtou, says Merrill analyst Julien Roch, "Vivendi is now in the best shape it has been for a long time."

Fourtou, a connoisseur of Bordeaux wine, was in his early 60s and cruising comfortably toward retirement after 16 years as head of the pharmaceutical firm Rhone-Poulenc, now part of Aventis. But the Vivendi board was desperate to find a respected executive to calm the company. Fourtou, who is 64, initially resisted but has since performed brilliantly. He has sold off about $12 billion in assets not including Universal and reshaped Vivendi around its telecommunications, music and French TV businesses. Those pieces don't make a great strategic fit, his critics point out, but Vivendi is a far more manageable enterprise. Two-thirds of the debt is gone, and he plans to reduce it to just $5.99 billion by the end of the year. He has laid off about 3,000 employees and shrunk the company to 55,000 people, from more than 250,000 when he took over. Cash flow is positive again on $29.96 billion in revenues, operating profits are growing sharply, and the company promises shareholders it will resume paying a dividend in 2005.

The business world has changed dramatically since Fourtou got in the game 40 years ago. He says he has witnessed a massive increase in pressure from investors. "When I began my career, we didn't look at the stock price, or only from time to time. Today you can't help looking at it several times a day," he says. That current European chief executives have less job security than they used to "doesn't shock me to the contrary. We've also had a very big increase in salaries in the last few years," says Fourtou, whose annual salary is $1.2 million, plus a bonus of up to $1.5 million and stock options. He contends that the stable tenure of CEOs in the past "was probably excessive, but that shouldn't mean getting rid of management at the smallest market crisis." Still, the ones who have been fired probably deserved it. "To my knowledge, I haven't seen a CEO's exit that was scandalous or shocking," he says.