Heartland transformation: ADM CEO Allen Andreas has led the giant out of scandal and put it on a winning path

Chief Executive, The, March, 2004 by Dale Buss

But all the wheeling and dealing blew up in Dwayne Andreas's face in 1996 when the Justice Department nailed ADM for its role in a global conspiracy to fix the price of lysine, a widely used additive in animal feed. The company had to pay a $100-million fine, and Michael Andreas, then the vice chairman, and two other top ADM executives were jailed. (A civil suit still looms.). The scandal scorched ADM's reputation and stunted its growth for a while. The additional burden of the late-90s depression in crucial Asian markets held ADM's sales to $18.5 billion in 1999 compared with $19.8 billion in 1998, extending revenue stagnation that began in 1994.

Waiting in the wings was Allen Andreas. The son of an Iowa small-town banker, the 1969 Valparaiso Law School graduate joined Uncle Dwayne in 1973 after a stint with the U.S. Treasury Department. He did tours of duty throughout the company, finally becoming CFO in Europe, where he gained notice for building a critical mass for ADM by shrewdly acquiring assets amid the post-Cold War turmoil. After heading back to Decatur in 1994 as counsel to the board's executive committee--just as the company was dealing with the full press of the government's price-fixing allegations--Allen Andreas emerged as a strong voice for internal reform.

When his uncle and cousin were toppled. Allen Andreas became the heir apparent because he was the only candidate who had one foot planted in ADM's heritage and the other striding toward a different future. Sure. he was an Andreas, but the deliberate, mild-mannered Allen was not a simple extension of his uncle. He relied on integrity as well as intellect, on collaboration as well as his Rolodex. "He hadn't run a feed mill or a corn plant." says Glenn Webb, an ADM director and the retired chairman of Growmark Corp., a Bloomington. Ill.-based cooperative. "But his understanding of the financial picture and of global opportunities in our major businesses, such as joint ventures, were compelling arguments."

Allen Andreas quietly became president and CEO in 1997, and in 1999 he consolidated his power and became chairman. Yet the transition lasted longer than it should have and stymied the new chief. "You'd go to visit the company even a few years ago and Dwayne would still be hanging around," McMillin recalls. Dwayne, who now is 85 years old and owns about 4 percent of the company, finally left the board in the fall of 2001 and was replaced by his daughter Sandra Andreas McMurtrie. And when Michael Andreas emerged from a Minnesota prison in the spring of 2002, ADM didn't invite him back. "There's a pretty strong measure of steel in Allen." says Brian Mulroney, the former Canadian prime minister and an ADM board member. "He's not going to be pushed around by anybody."

Free to reshape ADM to his wishes, Andreas has been bold and deft. The collapse of the Asian economies had occurred just as ADM was opening several new grain-processing plants in North America to handle an expected flood of orders from Asia. At the same time, ADM's customers--all of the world's largest food-processing conglomerates including Unilever, Kraft, Nestle, Procter & Gamble and Coca-Cola--were concentrating their own buying strength through mergers and acquisitions. ADM's margins screamed for relief. So Andreas shut down the construction cranes in the United States and began to shift production and transportation to China and South America, where both markets and harvests were growing quickly.