Call me Crazy: These three bravehearts took top jobs nobody in their right minds would want. Here's why they did it and how they're doing - Careers - Chief Executive Officers Paul Norris/Deborah Cafaro/Jay Valentine - Statistical Data Included

Chief Executive, The, Feb, 2002 by Jeffrey Rothfeder

All CEOs face challenges. But some companies, especially those on bankruptcy's brink, offer more daunting hurdles than others.

Some executives tackle tough assignments because they cause they need the money. Others, like William Clay Ford Jr., are from families that own the companies; for Ford, taking the top slot at Ford Motor Co. after Jacques Nasser stumbled was as much obligation as choice. Harder to comprehend are the CEOs--Lucent's new chief Patricia Russo, for example-who move into precarious situations willingly. But they do, and in difficult economic times, there is certainly more demand for the services of execs willing to accept Mt. Everest-like challenges.

Here are snapshots of three who took on companies in trouble, faced angry creditors, got their egos bruised, but might do it all over again.

Falling from grace Paul Norris, W.R. Grace & Co.

In late 1998, when Paul Norris, then head of Allied Signal's specialty chemicals business, told CEO Lawrence Bossidy that he was leaving to run W.R. Grace & Co., Bossidy was dumbfounded. Citing Allied's steadily rising stock price, as well as the company's consistent track record as one of the better-performing manufacturers of aircraft equipment, auto parts and electronic materials, Bossidy reminded the then-52-year-old Norris of the career advancement his job would afford him and of the more than $1 million in stock options he'd be giving up if he left. Bossidy added that if Norris continued to build a management resume at Allied, he would have plenty of opportunities to land a CEO job -- much better than the offer from Grace.

"He said I was impatient, but I thought it was my time," Norris recalls. "I was well-positioned at Allied but I felt like I had learned enough during my nine years there to see if I was ready to be a chief executive. I preferred to run an independent company, even if it wasn't that big, rather than a small unit in a major company.

But Grace? The former high-flying conglomerate had spent most of the 1990s self-destructing. One CEO, J.P. Bolduc, who was accused by the company of sexually harassing employees, resigned after alleging financial improprieties by Peter Grace, his predecessor. Meanwhile, the Securities and Exchange Commission claimed the company had used improper accounting procedures to pad profits. Grace settled the dispute by setting aside $1 million to train staffers in financial disclosure rule To stave off a complete meltdown, Grace divested many of its larger businesses, including its health care and biotechnology units. Revenues fell from about $6 billion at the beginning of the 1990s to just over $1.5 billion when Norris took over in November 1998.

Still, Norris believed in Columbia, Md.-based Grace. Before taking the job, he analyzed its business lines, which were mostly specialty chemicals and which competed with many of the products he oversaw at Allied. His conclusion: Grace's portfolio was excellent as was its cash flow; the company simply wasn't reaching its potential.

"The fundamentals were strong and I was sure I could improve performance by changing processes in manufacturing, marketing, sales and even acquisitions -- all of which I knew something about," says Norris. "Sure there was a significant risk that I would fail very publicly and perhaps not get another CEO position. But I was confident that I could do transformational things to double the size of the business."

At first, it seemed like he had read the situation perfectly. Norris urged every business unit to rethink the way they operated, to look for savings, efficiencies, and to develop ideas for new product lines.

Initial results were heartening. In 1999, Norris' first full year as CEO, operating earnings were up 40 percent. More important, as a measure of improved productivity, operating margins topped 10 percent in both 1999 and 2000, up from about 8 percent when he started at the company.

But the smooth ride ended abruptly. In late 2000, potential liabilities from an unexpected 81-percent increase in asbestos-related litigation jeopardized Grace's ability to satisfy these claims from cash flow and reserves, as it had done in the past. When word got out, Grace's stock tumbled and lenders shut off new lines of credit and threatened to call in old debt. In April 2001, Grace filed for Chapter 11 bankruptcy protection. "I completely misevaluated the company's asbestos liability when I took the job," Norris says ruefully. "But at the time, there was a feeling that asbestos litigation was on the decline."

Now Norris is operating a far different company than he anticipated. Instead of doubling the size of the company, Norris spends his time in workouts with creditors, attorneys and suppliers while also making sure that core business lines don't degrade and employee morale remains high even after $75 million in 401(k) money was lost when Grace's stock became worthless. So far, through a new compensation plan to replace the lost equity, an effort to maintain critical research and development, and a stated goal to get out of Chapter 11 in three to five years, Norris has convinced most of his staffers and especially senior management that although the company's survival is in the balance, it's worth defending. The numbers back him up: During the first three quarters of 2001, when larger competitors in the chemical industry such as DuPont posted double-digit profit declines, Grace's operating income rose 10 percent.