It's good to be the boss
Female chief executives are taking charge at a slew of corporate giants. Call it the year of the Most Powerful Woman CEO.
By Patricia Sellers, Fortune editor-at-large

(Fortune Magazine) -- PepsiCo. Xerox. eBay (Charts). ADM. Kraft Foods. Sara Lee. Avon. The list of brand-name companies with women chief executives is longer and more impressive than ever, after a year of stunning breakthroughs in corner-office hiring. The first big surprise landed in the spring, when $37-billion-a-year Archer Daniels Midland (Charts) wooed former Chevron exec Pat Woertz to take over. In June came the next shocker: Kraft Foods (Charts), which three years ago had failed to offer enough growth opportunities to keep rising star Irene Rosenfeld from walking away, persuaded her to return as CEO after a dynamic run at Frito-Lay. But the biggest news hit in the heat of August when PepsiCo (Charts) unexpectedly announced that CEO Steve Reinemund would be stepping down. The front-runner to succeed him, most observers assumed, was an American man, Mike White, who had turned around Pepsi's international operations. Yet Pepsi's board defied the stereotypes, instead tapping Indian-born strategist Indra Nooyi. She had served as president and CFO since 2001 but had never run a line business at Pepsi - as naysayers had long pointed out. Still, by promoting herself as a visionary she won the board's support.

"It's a game-changing year," notes CEO recruiter Joie Gregor of Heidrick & Struggles. Indeed, it could be called the year of the Most Powerful Woman CEO. The top seven positions on Fortune's 2006 Most Powerful Women list are held by CEOs. Among the list's nine newcomers are Paula Rosput Reynolds (No. 40), who took charge at insurer Safeco last January, and Carol Meyrowitz (No. 26), who will take the helm at TJX, America's largest off-price retailer, next January. Then there are the CEOs in waiting. Susan Arnold (No. 10), whose health and beauty brands generate $29 billion of Procter & Gamble's $68 billion in revenues, is a top candidate to succeed chief A.G. Lafley. Ursula Burns (No. 27), who runs the vast majority of Xerox's operations, is in line to replace CEO Anne Mulcahy (No. 2) when she retires. Pat Russo now has the top spot on our international Most Powerful Women list, after merging her company, Lucent, with French telecom giant Alcatel and winnng the CEO job.

Of course, a few women tumbled off their pedestals. Karen Katen failed to win the top job at Pfizer and left the company. Anne Stevens, who headed Ford's Americas division, quit in September. And Pattie Dunn certainly had an ignoble fall from grace at Hewlett-Packard. Meanwhile, CEOs Brenda Barnes at Sara Lee (Charts) and Andrea Jung at Avon (Charts) (both of whom dropped in our ranking) are struggling to make big restructurings work. Still, by the key criteria Fortune uses in assembling the list - the size, importance, and health of each business in the global economy, and the momentum of each woman's career (along with her social and cultural influence) - there's no question that the power of women in the corporate sphere is rising.

Reinventing PepsiCo

Look no further than the new No. 1 on our list, Indra Nooyi at PepsiCo (eBay's Meg Whitman, who topped the rankings the past two years, slips to No. 3). The daughter of a banker and a housewife in southern India, Nooyi, 50, grew up in a middle-class environment where "if you didn't get a 100 on your test, you failed," she recalled in a speech a few years ago. She graduated from Madras Christian College at 18, earned her MBA at the Indian Institute of Management at 20 and three years later moved to the U.S. to attend Yale, where she picked up a master's in public and private management. Unable to afford a business suit, she wore a traditional Indian sari to an interview at Booz Allen Hamilton, which hired her as a summer intern. She moved on to strategy roles at Boston Consulting Group, Motorola, and Asea Brown Boveri.

Her first years at PepsiCo (as SVP of strategic planning) were grim. In 1996, Pepsi's international drinks business imploded because of overexpansion, and CEO Wayne Calloway died of cancer. But Nooyi hung in there - and exploited new opportunities. During the next five years she worked hand in hand with Calloway's successor, Roger Enrico, on $35 billion worth of deals, including spin-offs and divestitures. "I'd sit in meetings and try to be real macho and dehumanize these decisions," she said at Fortune's 2002 Most Powerful Women Summit. "Then I'd go into my office and close the door and shed a few tears, thinking, God, why can't I just be building? I struggled with this for many years. Then we bought Quaker Oats, and it was like giving birth, adding people."

Bold proof that powerful women need not tone down their style to get ahead, Nooyi has relished standing out from ordinary executives - especially the guys. "There is no question that women who reach the top have to perform at a higher level," she told Fortune a few years ago. (PepsiCo says it isn't making Nooyi available to any media until she has settled into her new job.) Once a member of a female rock band, she has been known to sing at company parties and plays electric guitar - though there's no time for that these days. The only thing that Nooyi, a mother of two daughters, does not pursue with gusto may be balance. "I work hard or work harder," she has said, classifying the concept of balance, at least as it applies to her, as "for the birds."

Her unbridled ambition and strident views put off some people. She has long dismissed the criticism about her lack of line experience. "The job I'm doing, to call it a non-operating job is crazy," she told Fortune in 2004, when as CFO and president she oversaw Pepsi-Co's IT systems and supply chain. "It's damn difficult," she added.

While White, vice chairman and head of Pepsi's international business, was the one-time favorite of then-CEO Reinemund, Nooyi convinced the directors that PepsiCo needed a transformational leader. "We have to keep reinventing ourselves," she likes to say. A lifelong vegetarian, she is sure to accelerate Pepsi's expansion in nutritional foods and beverages around the globe. "I grew up in an emerging market, and I cannot forget that," Nooyi said two years ago. "I have a basic belief that positive nutrition is important in developing markets."

A transformational leader at Kraft

At Kraft, the $34 billion marketer of Oreos and Maxwell House coffee, Irene Rosenfeld also aims to be a transformational leader. But she had to leave the company and prove herself elsewhere to earn the CEO title. Rosenfeld, 53, had a superb 22-year record at the world's second-largest food company, rising from associate market research manager to president of the North American business. "She's a no-nonsense problem-solver with an almost laser-like focus on improving a business," says Bob Eckert, a former Kraft chief who is now CEO of Mattel. In 2003, as Kraft's growth slowed and Rosenfeld disagreed with the direction of new top management, she decided to leave. Advisors scratched their heads. "Why get off the treadmill? You have all this talent," Heidrick's renowned recruiter, Gerry Roche, told her. But Rosenfeld knew what she was doing. She took a year off, turned down several CEO opportunities, and heeded the advice of her onetime boss, Jim Kilts, who ran Kraft before he headed Nabisco and Gillette: "I told Irene, 'Always go with a super company. Don't get caught up in the title.' " She ultimately joined PepsiCo to run Frito-Lay, its most profitable division.

Her successful stint at the $10 billion snack unit (Frito-Lay's profits rose solidly despite higher costs for potatoes, corn, and energy) convinced Kraft's board that she is the kind of CEO it needs. In July the board ousted Roger Deromedi, a stringent cost cutter and top-down decision-maker. Louis Camilleri, Kraft's chairman (and CEO of Altria, which owns 88% of Kraft), called Rosenfeld in. She claims she's a better leader today, having worked at Pepsi: "I learned the value of a relentless focus on growth," she says. Three months into her job as CEO, Rosenfeld is trying to view Kraft the way an outsider would. After visiting 22 Kraft plants and facilities around the world, she announced a sweeping reorganization to hand more power to the company's line operators.

An outsider reaches the top at ADM

Woertz, meanwhile, is viewing ADM as an outsider - because she is one. "I'm outside the company, outside the industry, outside the family, outside the gender expectations," notes the oil industry's former top female executive. (See "The Outsider") An accountant by training, Woertz, 53, had spent 29 years at Gulf Oil and its acquirer, Chevron, changing jobs every three years or so. Undaunted by male competition (a 15-handicap, she plays golf from the men's tees), she climbed to EVP at Chevron, in charge of refining, trading, and marketing - plus 20,000 employees in 180 countries.

Despite all that power, she had, in her view, reached a plateau. After four years in the position, she was looking at another four or so to get a shot at succeeding Chevron CEO David O'Reilly. "I didn't want to do the same job for that long," she says.

Leaving Chevron in February, "all I knew is, I didn't want to sit in a rocking chair," Woertz recalls. On a Sunday morning, she got a call from ace CEO recruiter Tom Neff of Spencer Stuart. "You should look at this," Neff said, explaining that ADM was searching for a new chief. John Strackhouse, a friend in the Philadelphia office of recruiter Heidrick & Struggles, gave her background on ADM's directors and sample interview questions - so she could screen the ADM folks as seriously as they were screening her. "John told me, 'Think of your first interview with the board as the beginning of a longterm relationship,'" Woertz says.

In April she beat four rival candidates, all men, for the CEO job at ADM. She hit the ground running - with a few bumps. Early in the morning on her first day at ADM headquarters in Decatur, Ill., Woertz got off the elevator and found herself trapped on a tiny landing with three locked doors and an elevator that wouldn't reopen. She rapped on the doors and called out until finally someone heard her. Which goes to show, the ride is never easy, even when you think you've reached the top.

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