Chiefs and the economy: what, us worry? (Economic Snapshot).

The recessions over, did you hear? GDP grew 5.8 percent in the first quarter. Alan Greenspan's over in a corner uncorking the champagne. So why do bosses remain so gloomy?

They say it's not pessimism keeping their purse strings tight; it's realism. "It's not getting worse, but it's also not getting better rapidly," says Bob Dutkowsky, chairman, president and CEO of the $874 million software maker J.D. Edwards & Co. in Denver. "CEOs now have their feet on the ground and are investing accordingly."

Most admit they dread another unexpected bolt: another terrorist attack, another market dive, another Enron. But "cautiously optimistic" is a phrase they use a lot, too.

Some go even further. "I'm a drunken optimist," laughs Maury Myers, chairman, president and CEO of $11.3 billion Waste Management in Houston, adding: "It's not that we re pessimistic about the economy; it's just that for right now, our earnings don't reflect Alan Greenspan's optimism. But I'm confident and looking forward to a pick-up in the latter part of the year."

In the meantime, Chief Executive asked half a dozen chiefs to put a name to their pain:

Worry: Global slump

"It's been a different kind of recession," acknowledges Chad Holliday, chairman and CEO of $25 billion chemical giant DuPont in Wilmington, Del. What bothers him is that it's global. "Asia's down, South America's in turmoil and Europe's down along with the U.S. --all at the same time," he observes. Usually, he notes, economic conditions in various regions offset one another. "I hope there's a new paradigm and everything's going to be wonderful," he says. "A lot of companies are seeing a short-term improvement in orders, and we're one of them. I just don't know how long that's going to last."

Worry: Investor skepticism

Robert Brady doesn't stand to gain much immediately from the war on terror, even though he's head of Moog Inc. in East Aurora, N.Y, a $704 million maker of control components that operate military and commercial aircraft, satellites and space vehicles. "A war that broke out next week would be fought out of the inventory that's already available," he says. But what really bothers Brady is investor skepticism caused by the dot-coin bust, Enron and the accounting scandals. "[These events] have invited politicians into the fray who seem determined to scare the hell out of the public and dissuade them from investing," Brady complains.

Worry: Shoppers cutting back

Consumers just have too much "stuff," contends Fred Langhammer, who runs $4.6 billion global beauty products company Estee Lauder Cos. in New York. "To some extent, whether we like it or not, there's a degree of saturation in the industrialized world," he notes, adding that September 11 caused many consumers to question their over-indulgence in material goods. "A lot of people sat back and said to themselves, 'Is my value system right? Is all this indulgence what I'm here for? Because it can be snuffed out just like this.' I think a lot of people have reassessed themselves to be a little more realistic in terms of exuberance."

Worry: Short-term mindsets

Donna Salvatore, CEO of media buyer MediaVest USA, a unit of the $18.6 billion Starcom MediaVest Group in New York, sees plenty of evidence that no one is preparing for the future: local politicians Lighting among themselves. Wall Street punishing companies for short earnings. CEOs curtailing investment to meet next-quarter expectations. None of it helps Salvatore's bottom line: She's expecting only low single-digit growth in ad spending through 2002 and 2003 -- or possibly less, if CEOs tap into their ad budgets to please Wall Street. "As a society, we've become so short-term focused that sometimes we allow longer-term objectives to be sacrificed," she complains.

Worry: Instability in Latin America

"We're watching Argentina and Venezuela very closely," says Joseph Carnes, president and CEO of BAX Global, a shipping and logistics company in Irvine, Calif. "We do a lot of business in those growth markets." He notes that Latin American demand for high technology and telecom equipment has been a bright spot for many American companies--and also for him, since BAX handles their cargo. "The U.S. economy is so dependent on the consumer demand of other countries," he observes.

Worry: Inflation and interest rates

"The automotive industry has been pretty resilient," says Autobytel's vice chairman, president and CEO, Jeffrey Schwartz, whose $71 million Irvine, Calif., enterprise operates a Web site that refers visitors to local auto dealers. Even so, Schwartz worries about the impact inflation or rising interest rates could have on sales. Concern about a jump in either has made him cautious about his company's spending, especially in areas like marketing and information technology. "I listen to every word Alan Greenspan says," he quips.

vested interests

A DECADE OF SHAREHOLDER ACTIVISM

An academic study of the topics most frequently mentioned in shareholder
resolutions between 1988 and 1998 shows how certain issues have
increased, or decreased, in popularity over the years.

  Proxy Topics       Total  '88  '89  '90  '91  '92  '93  '94  '95  '96

 1 South Africa       542    87  109  116   87   75   41   22    5    0
 2 Environment        483     6    3   46   78   63   60   54   28   30
 3 Human Rights       289    23   29   32   32   28   22   28   26   28
 4 Diversity          253    50   13   10   14   11   13   20   32   32
 5 Tobacco            209     2    2    6   16   14   17   23   36   41
 6 Labor              198     0    1    2   13   15   23   34   25   34
 7 Military           173    18   20   14   23   20   24   14    7   13
 8 Governance         101     0    0    0    0    0    2   15   21   32
 9 Political Action   101     1   11    5    2    3    2   12   12   21
10 Energy             100    13    7   14    8    7   12    4    8   10

   Total Proxies     2449   200  195  245  273  236  216  226  200  234

  Proxy Topics       '97  '98

 1 South Africa        0    0
 2 Environment        62   53
 3 Human Rights       18   23
 4 Diversity          42   23
 5 Tobacco            31   21
 6 Labor              24   27
 7 Military           11    9
 8 Governance         14   17
 9 Political Action   15   17
10 Energy              8    9

   Total Proxies     225  199

Source: From "Fad and Fashion in shareholder Activism: The Landscape of
Shareholder Resolution, 1988-1998," by Samuel Graves, Kathleen Rehbein
and Sandra Waddock and published in Business and Society Review, using
data from the investor Responsibility Research Center.

RELATED ARTICLE: in the public eye

CEO Reality Show

A POPULAR PRIMETIME BRITISH "business documentary" series that puts CEOs in their workers' shoes for a week will broadcast its fifth season in the United States this summer. "Back to the Floor" films bosses as they train for assistant manager-level positions within their own organizations. "It's not a stunt, it's not a presidential visit," says Joanna Ball, the series producer at [BBC.sub.2],s Business Unit. "They have to get their hands dirty and put their hours in." Afterward, CEOs are quizzed on what they learned to improve their organizations.

The award-winning show is popular in Britain, drawing viewers from both mainstream and business audiences. "Everybody likes to see their boss breaking a sweat," explains Ball. "Bosses can be very faceless. This humanizes them and makes them more likeable." This season will feature three British and three American CEOs.

The show airs on Fridays at 10 p.m. on PBS from June 14 to July 19.

--S.S.