Quotes of the Day

When Jean-René 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 ratings agency announced that it was considering downgrading the conglomerate for the third time in three months, reducing its credit rating to junk status and thus seriously imperiling its finances. Fourtou's predecessor, the celebrity CEO Jean-Marie Messier, had overinflated Vivendi close to the bursting point; his legacy included opaque accounts, a huge pile of debt — €35 billion, of which €5.6 billion had to be repaid within nine months — and no cash.

Vivendi was in "an untenable situation, not far from insolvency," Fourtou recalls. So he plunged into tough negotiations with the company's banks. Within a week Fourtou secured a j1 billion credit line, enough to stave off a possible default but not enough to keep the firm operating smoothly for long. A few weeks later, he borrowed €2 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 now-discredited vision of the future, Fourtou's approach to Vivendi is not dogmatic: rather than embracing a grandiose strategy and overpromising results, he started by selling what was easiest to sell and asking shareholders to be patient. He has even changed his mind a few times. For example, he first put Vivendi's electronic-games division on the block before deciding to keep it, and initially planned to sell the firm's Hollywood operations, including the Universal movie studio, to entertainment mogul Barry Diller. Instead, he switched tack and is spinning Universal off to NBC, with Vivendi retaining a 20% stake in the venture. The zigzagging infuriated some bidders, but in the end Fourtou got what he thought was the best deal. "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 isn't yet profitable, but its life-threatening crisis is over. Vivendi stock is now at about €22 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 Fortou, says Merrill analyst Julien Roch, "Vivendi is now in the best shape it has been for a long time."

The secret of his success? Fourtou told TIME that he has been "incredibly lucky." Talk about self-effacing — but then, he didn't even want this job. A connoisseur of Bordeaux wine, Fourtou was in his early sixties and cruising comfortably toward retirement after 16 years as head of the pharmaceutical company Rhone-Poulenc, now part of Aventis. But the Vivendi board was desperate to find a respected executive to calm the company. Fourtou, now 64, initially resisted, but has since performed brilliantly. He has sold off about €10 billion in assets — not including Universal — and reshaped Vivendi around its telecommunications, music and French TV businesses. Two-thirds of the debt is gone, and he plans to reduce it to just €5 billion by the end of this year. He has laid off about 3,000 employees, but the group has shrunk far more dramatically as a result of the divestments. Vivendi currently numbers 55,000, down from more than 250,000 when Fourtou took over, and will shrink to about 40,000 once the Universal transaction closes. Cash flow is positive again on €25 billion in revenues, operating profits are growing sharply, and the company promises shareholders it will resume paying a dividend in 2005. True, its bottom line was hurt last year by write-downs for its music and electronic-games divisions. And some observers still question whether the company makes strategic sense. (What does a mobile- phone operator need a record company for?) "He hasn't saved the company, he doesn't have a strategy," says shareholder activist Frédérik Canoy, who argues that he has acted more like a bankruptcy trustee than a manager.

But skillful stewardship of a troubled company is the hallmark of today's CEO. The business world has changed dramatically since Fourtou got in the game 40 years ago. He says he has witnessed a massive increase in the pressure from investors on chief executives and boards. "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 today's 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 million, plus a bonus of up to €1.25 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.

Presumably that includes Messier, who continues to cast a shadow: last year the company paid $50 million to the U.S. Securities and Exchange Commission to settle charges of securities fraud against Messier and Vivendi, and Messier agreed to give up his €21 million claim for severance from Vivendi and paid a $1 million penalty. Neither he nor Vivendi admitted or denied charges that they violated securities laws. French prosecutors continue to probe alleged manipulation of Vivendi stock.

But the company has changed for good. One of Fourtou's biggest operations has been on the Vivendi board: 8 of the 10 directors are now independent, and 4 of them aren't French. The board recently began a process of evaluating its own performance — an idea still largely unknown on the Continent. Fourtou welcomes the growing attention being paid to the governance of companies, but frets that "today there's a tendency to drown directors with a flood of information. We've invested in procedure and not enough on the state of mind" of directors. Still, Vivendi's own state of mind is far calmer these days than it was 21 months ago. And that quiet, effective new tone is being set at the top.

• PETER GUMBEL | Paris
• How Jean-René Fourtou saved Vivendi