FORTUNE 500 STORIES

EXXON MOBIL: THE DEFIANT ONE , by Geoff Colvin, page 86

Rex Tillerson is way out of line, and he knows it.  “They want us to join the parade,” he says, referring to assorted environmentalists, scientists, politicians, investors, and others who've been lambasting him and the company he heads, Exxon Mobil.  He knows what they're saying about him, and he repeats it: “Get in line.  You're outta line right now—get in line.”  Why Tillerson refuses to run Exxon the way other CEOs are running other giant oil companies is for many people the most baffling and even infuriating question about the world's most profitable corporation.

Quotes from Tillerson:

· On investing in ethanol, “I don't have a lot of technology to add to moonshine.”

· On Exxon's critics: “I'm not sure I know what we're ever going to do that's going to cause them to have a different opinion about us.  We may serve some other useful purpose.”

· On Exxon Mobil's reluctance to promote its environmental efforts, “Intellectually, it's just not us.  It's not just not me, it's not Exxon Mobil.  It's not the people of Exxon Mobil.  We just don't take a view that we should try to paint a picture of something other than what we are.”

GAP: DECLINE OF A DENIM DYNASTY , by Jennifer Reingold, page 96

Nearly four decades ago Don Fisher and his wife, Doris, opened their first Gap store, a San Francisco shop selling Levi's and records that grew into an iconic American brand.  From its high point, when Gap's classic style was so ubiquitous that it was worn to the 1998 Oscars and mocked on Saturday Night Live , the company has sunk into a slump that threatens to derail the Fishers' proud legacy.  For a long time now, though, the journalists penning the retailer's saga have spilled most of their ink on the messy departures of two high-profile CEOs: polar opposites Millard (Mickey) Drexler and Paul Pressler.  Yet the fact is that behind every major decision the company has made, the good ones and yes, the bad ones, is the famously private Don Fisher and his family, who hold 34% of Gap's stock (worth over $5 billion) and three of 12 board seats.  Says Drexler, who now runs J. Crew: “Don Fisher had two claims to fame: One was hiring me, and the other was firing me.  I find it quite ironic.”   Through interviews with more than four dozen people—including 19 former and current executives—FORTUNE was able to get a rare glimpse into the family's world.

KRAFT'S BID FOR A BIGGER SLICE , by Matthew Boyle, page 108

After years in the doldrums as part of a tobacco company, food giant Kraft is finally back out on its own.  New CEO Irene Rosenfeld, who spent 22 years at Kraft before leaving to run Frito-Lay in 2004, now has to unlock the potential of a $34 billion behemoth that used to be the envy of the food industry for its profitable stable of beloved brands—Oscar Mayer, Jell-O, Oreo—and had a management bench that headhunters drooled over.  Rosenfeld is confident her newly independent company—Altria spun off Kraft completely to its shareholders March 30—is poised to rebound.  (A standalone Kraft would have ranked No. 64 on the FORTUNE 500 this year, just behind rival PepsiCo.)  Her plan calls for repositioning familiar products like processed-cheese slices in larger, faster-growing markets, while unclogging Kraft's notoriously sclerotic decision-making.  The linchpin is fixing cheese, a crucial business for Kraft.

DELL IN REPAIR, by David Whitford, page 124

It's been a tough year in Round Rock, Texas .  Not for the first time in its rapid march from student startup to the upper reaches of the FORTUNE 500 (this year No. 34), Dell, the company, is in a funk.  Yes, yes, it's all relative.  This titan with $57 billion in revenues remains profitable; its cash flow from operations during the fourth quarter of 2006 alone was more than $1 billion.  After emerging from the tech bust into four straight years of double-digit expansion, Dell hit a wall in 2006.  Revenue growth stalled, profits fell by more than a quarter, and its operating margin, which had been hovering well above HP's, returned to earth.  What's worst, HP stock soared 45% last year, against a 16% decline for Dell, a trend that carried over into this year.  Consequently we have a little shakeup at Dell—new faces, new ideas, and a renewed commitment from the newly reinstated CEO.  Dell dearly wants his company to be the No. 1 PC manufacturer in the world again.  “Obviously I feel an enormous responsibility—to our people, our company, our shareholders,” Dell says, with appropriate swagger and resolve.  “And it's my name.  So we're going to make this work.  Period.  Full stop.”

WHAT WOULD LEE DO? , by Alex Taylor III, page 132

In an interview with Alex Taylor III, Lee Iaccoca talks about Kirk Kerkorian, the bidding for Chrysler and the future of Detroit .

Quotes from Iaccoca:

· On Kerkorian and Chrysler, “He's a gambler, and I don't know what his endgame would be.  He'll be 90 years old in June”

· On who will wind up with Chrysler, “If I had the money, I'd buy it.  I'd come out of retirement to buy it.”

· On the Daimler-Benz merger, “It was emotional when Chrysler sold out to the Germans.  It's extra-emotional now that the Germans are selling – they're throwing us to the curb, in effect.”

· On the problem with Detroit , “Let's start with health-care costs – the legacy costs.  There are lots of retirees out there.  They've earned what they're getting, but we can afford it anymore. The world has changed.”

US AIR'S MAVERICK CEO , by Barney Gimbel, page 136

Doug Parker, America 's most precocious and controversial airline executive, has shot to fame in the industry and on Wall Street for successfully combining his ailing America West and the twice-bankrupt US Airways, a merger that industry watchers had taken to calling Project Dumbbell for its leaden prospects. Parker has managed to prove them wrong. Says Gordon Bethune, the former Continental chief, “We've all known consolidation was the answer to a lot of the industry's problems.  It's just that Doug's the only one with the balls to go and do it.”   Yet Parker's progress has been marked by many harshly educational moments as an airline chief.  During his past year's adventures, FORTUNE was along for the ride, granted unusual access to explore what it's like in a job that has elements of glamour but also thankless challenges.

REFORMING UNITEDHEALTH , by Peter Elkind, page 150

For 15 years, UnitedHealth, now the nation's largest health insurer, was the domain of Dr. William Wayne McGuire. During his reign the company grew from a $600 million HMO operator to a $70 billion colossus, generating an eye-popping average annual return of nearly 30% for investors.  But now McGuire is gone, bounced by a board that made him a billionaire, after revelations that transformed the celebrated executive into the public face of the stock options scandal. McGuire has been replaced by his unassuming, handpicked deputy, Stephen Hemsley, who is busily trying to restore the company's battered image and set a new tone of corporate responsibility and frugality. Options are no longer the coin of the realm at UnitedHealth, where by the end of 2005, McGuire's total take for his career as CEO had a staggering paper value of $2 billion. Helmsley's new contract gives him zero options—and the board's grants, which made virtually every director millions, have been cut in half.  With criminal and SEC investigations, shareholder lawsuits, and the prospect of a nasty fight with the departed CEO over hundreds of millions the company may seek to recover, it won't be easy for Helmsley to purge UnitedHealth of McGuire's ghost.

CEO CONFIDENTIAL, by David Whitford, page 162

Ram Charan doesn't care what time it is. He doesn't care what day of the week it is.  And the last thing he cares about is where he is.  As long as Charan is with a client—or can get one on the phone—he's home.  Thirty years ago, Charan quit a tenured professorship at Boston University to devote himself full-time to consulting.  Today he's alone at the top of his profession—not as a consultant so much as a guru, a corporate sage, with unparalleled access to boardrooms across the globe and intimate, enduring relationships with an array of powerful CEOs.  Jack Welch, formerly of GE says, “He has this rare ability to distill meaningful from meaningless and transfer it to others in a quiet, effective way without destroying confidences.” In a typical month, Charan can easily travel to over ten cities worldwide and can pull in north of $20,000 a day.  Charan agreed—for the first time in his career—to let a journalist travel with him and watch him work.  FORTUNE's David Whitford, along for the ride, gives a unique glimpse into the life of this very frequent flier.

FORTUNE's TREASURE , page 142

FORTUNE invented magazine photojournalism—and we did it with the best, hiring luminaries like Ansel Adams and Walker Evans.  In 1930 we sent Margaret Bourke-White to the Soviet Union ; the result was the first photo essay.  This is a tradition we value.  So do others: Images taken for FORTUNE are in the collections of the Museum of Modern Art and the Metropolitan Museum in New York City .  In celebration of the photography that has graced the pages of FORTUNE, we present a gallery of great pictures from 77 years of excellence in photojournalism.

FIRST The Trouble with MBAs The attributes employers value most—interpersonal skills—are the ones recent B-school graduates lack.  Wal-Mart and the Love E-Mail Why the retail giant pinned a scarlet “W” on fired exec Julie Roehm.  Subprime Woes Lender ResCap could weigh down GMAC for the rest of the year.  COLUMNS Questions for… Best Buy CEO Brad Anderson answers your questions about the DVD wars, how the retail juggernaut plans to expand in China , and more.  Technology The wrath of Ballzilla: Microsoft CEO Steve Ballmer can't stop bashing Google.  Value Driven Why big companies are in the business of solving the world's woes.

 

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