So you thought dynasties were dead?

Primogeniture is no longer the corporate norm. But for some companies, bloodlines still factor into CEO succession, and some dynasties thought to be dead show signs of resurgence.

The movie script lay unread on a family coffee-table, so Edgar Bronfman Jr. picked it up. "Melody" was a tough, touching coming-of-age story about two adolescent boys. Bronfman convinced his father, Edgar Bronfman Sr., the no-nonsense head of the family-controlled Seagram Co., to ante up $450,000 to help produce it. At the time, Seagram had an interest in Metro-Goldwyn-Mayer. "Melody" was no great moment in film. But making it was seminal for 15-year-old Edgar Jr., who thrived on the independence and creativity he felt over the summer of 1971 in England working on the shoot.

In hindsight, the vignette reveals salient aspects about the father-son relationship that would transform Seagram: Edgar Sr. valued his son's opinions, and Edgar Jr. wanted a place in Hollywood. But it also foreshadows how the Bronfmans would confront the issue of corporate succession in their family business, a turbulent, divisive process that a host of large companies have grappled with in recent years, including Ford Motor, Motorola, Amerada Hess, Alberto-Culver, and Banc One.

In an age when independent, professional management dominates, primogeniture - handing reins to the firstborn son - is no longer the norm. "The day of descendancy is over," says Donald Frey, a top Ford executive in the 1960s and now a professor of industrial engineering at Northwestern University. "Unless you own 51 percent of the stock, it won't work." Nonetheless, more than a few public companies still straggle with the issue. In the private arena, the incidence is even higher.

The tactics have changed for executives who seek to keep their companies in the family. Stiffer selection criteria actually may make it harder for offspring to follow in their parents' footsteps. But some of the machinations remain the same in modern-day dynasties: Despotism, pageantry, power plays, and sibling rivalries all make a distinct impression on corporate culture and may even threaten a company. Ford and Motorola are two particularly interesting cases of corporate dynasties once thought to be dead but showing signs of possible resurgence.

PARENT POWER

Today, 24 years after "Melody" was filmed, Edgar Bronfman Jr. is in his second year as Seagram's chief executive - the third generation of Bronfmans to lead the vast Canadian liquor empire. And he's still making movies - only now the tab is not a quick half-million bucks but $5.7 billion for 80 percent of MCA, the lackluster entertainment giant that owns Universal Studios.

The Bronfmans are no strangers to Hollywood. Edgar Sr. paid $40 million in the late 1960s for 15 percent of MGM. Edgar Jr. keeps company with media moguls Michael Ovitz and Barry Diller. Still, his bold MCA bid would have needed family approval. The Bronfmans are reputed to be close-knit and careful scrutinizers of the bottom line. Edgar Sr., 65, shares the chairmanship of the board with his 63-year-old brother Charles, although conceivably Edgar Jr. will one day assume this role as well.

In the rarefied world of the family business, it's somewhat unusual for a powerful parent to step aside for a son or daughter in a timely and orderly fashion. If that time ever came to The Lillian Vernon Corp., it has passed now. The $157 million company, based in New Rochelle, NY, was put up for sale in March, seven months after the designated - and some say disaffected - heir, 43-year-old Fred Hochberg, resigned the presidency of his mother's company. Observers say the tough management style of founder Lillian Vernon, 68, led to his departure. Hochberg's younger brother David, 38, the company's vice president of public affairs, says only that Fred "got bitten by the political bug and is now a nonprofit fund-raiser" for the Democratic National Committee.

"When there is no more family in a family business, you sell the business," David says, professing a total lack of desire to run the company himself. Though both sons remained as directors while three potential buyers completed due diligence, Fred's last board meeting was in May when his term ended: "Mine, too," says David, whose term actually runs to 1997. "If the company is sold, the board is history." Mother Lillian may not be, however: All three suitors have asked that she stay on.

The Lillian Vernon story isn't unique. Four of every 10 family businesses don't make it to the second generation, says Leon Danco, who has run the Center for Family Business in Cleveland for more than three decades. Why not? "The first generation never plans to die," he says.

SIBLING RIVALRIES

It's not always the first-born who gets the prize. Perhaps the most striking aspect of the Seagram's case is the fact that Edgar running the show at all, since his brother, Samuel Bronfman II, is 19 months older. Sam sits on the company board and runs its wine division from Northern California. Supposedly he is very close to Edgar Jr. But nearly a decade ago, he could only watch as his younger brother was chosen heir apparent. The Bronfmans won't talk about it now, but by many accounts, the selection was difficult for Edgar Sr. When asked once about it, he is said to have replied matter-of-factly: "Sam was good; Edgar was better."

The choice of Edgar Jr. over Sam was in itself something of a revolution. At one time, primogeniture went unchallenged in family-dominated businesses, and younger sons could only view bloodlines as unfor-giving, ego-bruising accidents of birth. No longer, especially in publicly traded enterprises, where directors and institutions are often the kingmakers, and outside management is the norm. The Bronfmans, as holders of roughly one-third of Seagram's shares outstanding, were able to satisfy both sides and orchestrate their own succession.

Sometimes, keeping a company in the family goes beyond strict bloodlines. After graduating from Tulane University, Carol Bernick, 42, the only child of Alberto-Culver founder Leonard H. Lavin, says she interviewed for a job with the family company without her father's knowledge. She was hired. In 1977, Howard Bernick left First Boston to work in Alberto-Culver's corporate development area. Carol and Howard met on the job and eventually married.

Over the years, Carol has risen to head of the toiletry company's new-product division. Howard has moved up too, becoming the company's chief financial officer, then in 1988, president and chief operating officer of the $262 million company, based in Melrose Park, IL. And he's in line to succeed his father-in-law as CEO at some un-specified time in the future. "I don't think Carol wants the CEO job," says a company spokesman. "Her background is in product development. Howard's financial skills are better."

Still, sharing a gene pool with the company founder may have its advantages. If the best chief executive candidate is family, all the better. If not, directors look outside - if only until a scion can be groomed.

"Bloodlines can get you a job and can grease your path," observes a veteran institutional money manager, "but it's results that will get you to the top." This is particularly true at larger U.S. companies with strong family influence, such as Ford and Motorola.

Boris Yavitz, dean emeritus of the Columbia University Graduate School of Business, has been a director of many firms, including some family-controlled. "A good board will not permit the anointing of a CEO simply because of his last name," he maintains. "If the ability and competence isn't there, a good board won't go along with it."

There's a third factor, as well, says John B. McCoy, CEO of Banc One in Ohio: timing. Not only does he see it as pivotal in his own succession of his father, but he expects it to prevent him from handing the reins to the bank over to his own son, John T., now a teenager.

"I can't imagine that it could happen," says McCoy, 52. "If I stayed until I was 65, he'd be 30. I don't think a 30-year-old could run the bank." McCoy was 41 when he took over in 1984; his father, John G., was 46 when he took over from his father, John H. McCoy, the company's founder.

John H. got his start in banking when he quit eighth grade to go to work for Peoples Banking & Trust in Marietta, OH. He was 35 in 1922 when the founder died. McCoy became the president and divided his time between the bank and the company's oil interests in Oklahoma. John H. bad two sons, John G. and Charles. Both went to Stanford University, John to study banking, and Charles, the oil business.

Charles was drawn back into banking, however, in 1943, when his father had a heart attack. With John G. away in the navy, he returned to Ohio and worked every day in the bank, then reported to his father every night. It turned into a round-the-clock, in-depth education in banking. Years later, when John H. died of a fifth heart attack, Charles struck out on his own and eventually headed his own bank. John G. remained to oversee the family business.

When he took over, John G. insisted that the bank invest 3 percent of its profits in research and development, which eventually led to the bank's hugely successful base in technology. He also set a pattern of acquiring other banks in stock swaps and keeping their management teams in place. He went after market share with a strategy that resembled retailing more than banking. He once hired comedienne Phyllis Diller for Banc One's commercials and told the board it was a choice between dignity and dividends. By the time John B. took over, his father had created a bank based on technology, acquisitions, and marketing.

"My ambition was always to run whatever I was involved in," says John B., who came to work at the bank in 1969 at the age of 26. "But I didn't come to the bank thinking I would even be there in 20 years. My toughest days were in those first couple of years, because I was perceived as my father's son - I really had to prove I could do the job."

FORD'S FOUNDATIONS

"There are no crown princes," Henry Ford II once gruffly told an interviewer about his potential successors. And since this grandson of famed founder Henry retired from active management of Ford Motor in 1980, the operations of the nation's second-largest automaker have been run by strong professional executives who do not happen to be Fords.

When Henry Ford II turned the reins over to Philip Caldwell in 1980, the company entered the era of outside management, which continues today. Nonetheless, Benson Ford's attempt to secure a seat on the board caused then-CEO Don Petersen no end of aggravation.

There's little doubt that there are Fords who would like to be in the driver's seat, but all Ford Motor will admit to is the obvious. "There's a lot of interest in the family members and their roles in Ford Motor," says John Emmert, a spokesman. Even though the family itself declines to comment, William Clay Ford Jr. said in 1989 when Fortune asked if he'd like to be CEO: "Sure, I would." And as David Halberstam relates in "The Reckoning," his 1986 book criticizing the U.S. car industry, when a friend mentioned to Edsel Bryant Ford II how difficult it must have been for his father, who was not yet 30 when he took over the company, Edsel replied, "I would have loved to have done it."

The two - both fourth-generation scions - have enjoyed a rapid ascent through company ranks. Edsel II is Henry II's son, named after his grandfather. William Jr. is Henry II's nephew. And between them, it seems clear there will be a Ford in Ford's future - although that does not necessarily mean the final destination will be the CEO's chair. It's been less than a decade since the omnipotent Henry II passed away, and they have to earn every promotion. Apparently they want it that way. "They're not like the czars," says an executive who knows the family well. "They would prefer to be considered for their contribution to management rather than their family ties."

Edsel II, 46, is president of the Ford Motor Credit Co. unit and a company director. Cousin William Jr., 38, known as Billy, recently resigned from managerial duties to succeed his father as chairman of Ford's powerful finance committee, which reviews every crucial financial and strategic step. Two other cousins, 51-year-old Walter Buhl Ford III and Benson Ford Jr., 45, are at the company but not on its fast track. The Ford family effectively has voting control of the company, and a person familiar with them says there's a good chance that one of them, either Edsel II or Billy, will become chairman.

Signs indicate that Billy, a thoughtful, athletic type who enjoys fly-fishing and played rugby in college, currently may be the most-favored. And perhaps it's instructive that when he and Edsel posed together in a Ford convertible for the Fortune story, Billy was in the driver's seat. "William Clay," a family-watcher adds, "is being moved into serious positions more than Edsel." Indeed, before his father was chairman of the finance committee, the position was held by Henry II. Still, it could be a mistake to discount Edsel II. Some say he has a competitive streak: witness his penchant for powerboating, bird shooting, and collecting vintage Ferraris.

A Ford as chairman of the board is one thing; a Ford in the chief executive's seat is another matter. "Lesser odds," snaps the family-watcher. And more than a few company observers agree with the management expert who ventures, "If young Edsel takes over, I'd die of astonishment." Adds another, "There's a reasonable chance it would split between chairman of the board and a professional, non-family chief executive."

LEARNING THE RIGHT STUFF

As with the heirs of Henry Ford, the rite of passage for Motorola President and Chief Operating Officer Christopher Galvin has been hard-won. Though it's possible he may take over as chief executive, as with the Fords, there's no guarantee. Gary Tooker, 55, was named CEO in October 1993.

Paul Galvin, Chris' grandfather, founded the suburban Chicago-based company in 1928. His son Robert began as a stockboy and became chairman and chief executive in 1964, when Chris was 14. The Galvins, who were not available to be interviewed, have dedicated Motorola to the popular ideology of total quality management, which ties productivity to empowerment and innovation. That apparently goes for family as well. Chris has been training for the high-tech company's chief executive job his whole life. He began working part-time at the company in 1967 and full-time in 1973, rising through a variety of sales, marketing, and managerial positions. In 1988, he joined the board. He became president and COO in 1993; the same year Chairman and Chief Executive George Fisher left for Eastman Kodak.

"He's smart, he's driven," says a money manager who admires Galvin. But, he speculates, "he's being protected to a degree. He's not being exposed to conditions that could allow him to make a really dumb decision and blow his entire career." For Chris to reach the last rung, it seems he may have more convincing to do.

"Bob Galvin has a very strong sense of family tradition," says Yavitz, the former Columbia dean. However, he observes, "if Chris is going to get the top job, I'm sure he will get careful scrutiny from the board." Adds one skeptical observer, "There's no question the second generation was enormously successful. We don't know enough about Chris. It's unfinished business."

For some, "family business" becomes a frustrating oxymoron that provides neither the nurturing atmosphere of a family nor the school-of-hard-knocks lessons of the corporate world. If the clan's leader has planned well, giving his child positions of increasing responsibility, then succession can be reasonable. But many chiefs hang on. Often their message to younger family members is a damning, "You should take over, but you don't have what it takes."

Such a despotic situation hardly fosters competence, says Sarah Teslik, executive director of the Washington-based Council of Institutional Investors. And it may drive an heir to demand a job for which he or she is unsuited. In those instances, Teslik grumbles, "you have spoiled kids. You're not getting either the talent or the drive." But in the best, she adds, "you often have superior performance over time, because you have someone who cares."

GUIDING LIGHTS

In the best corporate dynasties, loyalty and destiny are common threads, ingrained among people who otherwise would not have to work for a living. "There's a linking of family fortune and company fortune," Yavitz explains. "Second- and third-generation members look to their father and the original founder, and often will be aware of some of the vision, some of the drive. They see that as kind of a compass, as a directional guide."

Sharing that kind of vision can create a palpable closeness between parent and child. Leon Hess' eyes moistened last month during the public announcement that he was stepping down, and his son John B. was taking over as chairman and CEO of Amerada Hess. Afterward, John kissed his father on the cheek and hugged him. The transition had been several years in the making, according to a company spokesman.

"Leon spent the last five to seven years getting ready for this moment," says Amerada Vice President Carl Tursi. "And now, the baton has been passed." Leon built the company up from a tiny heating-oil delivery business to a $6.7 billion integrated oil company after returning home to New Jersey from World War II.

In the past 18 months, the two worked together, Leon running daily operations, John leading expansion in production and exploration. With the installation of a $1 billion catalytic converter in the company's U.S. Virgin Islands plant, and several North Sea natural gas and oil projects brought on-line, Leon handed over the reins. He will continue as chairman of Amerada's executive committee. Between them, father and son own about 17 percent of the company.

Commitment to the future is common among executives in their families' businesses. "I feel like I'm not working for myself," William Ford Jr. told reporters after being appointed finance committee chairman. "I'm working for my children and my grandchildren." And in an interview for a Seagram newsletter, Edgar Bronfman Jr. worried about the adage that a first-generation founder builds an enterprise, which the second generation fumbles, and the third generation loses. "My grandfather used to say, 'Shirtsleeves to shirtsleeves in three generations, not in my family!'" recalled Edgar Jr. "I think of that golden rule and remember it, and hope I can live up to it."

But for some, corporate leadership turns into an exercise in on-the-job training. That appears to be what's in store for Marco de Benedetti, 33, son of Olivetti founder Carlo de Benedetti. The 60-year-old chairman and CEO recently called his son home to Italy to help rescue the beleaguered family firm. Marco is a Wharton MBA who got his sea legs at Procter & Gamble and Wall Street dealmaker Wasserstein Perella, where he worked on the Time Warner and RJR Nabisco mergers.

In Milan, he'll head Telemedia, the multimedia company Carlo created a year ago to offset Olivetti's declining fortunes in the computer field. It's a daunting assignment, according to some industry analysts, but if he succeeds, Marco could be the second generation of a new corporate dynasty.

FALL FROM GRACE

Unfortunately, saving the family business may not include learning how to groom the next generation. Half-a-century ago, J. Peter Grace Jr. was catapulted into such a situation at Grace & Co., the shipping and trading company that his grandfather William founded in 1854 in Peru. His father suffered a stroke, and it fell to Peter - who had started in the company mailroom nine years earlier - to take over as president and CEO. He was 32 years old.

The young executive steered W.R. Grace out of South America and created a domestic conglomerate with discordant holdings, from chemicals to Mexican fast-food restaurants. It was a successful strategy then, but eventually the business became spread too thinly. By the time Peter stepped down - reluctantly - from active management in 1992, after a 47-year reign, W.R. Grace had downsized and refocused on specialty chemicals and health care.

Peter Grace knew his business and rose to national prominence because of it. But like so many leaders, he didn't know when to quit. "He did great things for the company when he was young, but he stayed on until the emperor syndrome set in," says an expert on corporate governance. When Grace died in late April at 81, he left W.R. Grace in chaos and without a family member at the top for the first time in 140 years. None of his nine children is a significant player in the business. One son, Patrick, runs Grace Logistic Services in Greenville, SC, which handles several business lines, including trucking and warehouse distribution. Another son, J. Peter Grace III, who is in his early 50s, resigned from the company in November 1994 over his alleged unauthorized use of W.R. Grace funds to purchase a discontinued subsidiary.

"He was always reluctant to give away the reins," a former W.R. Grace executive says of J. Peter Grace Jr. Yet, continuing the family dynasty was evidently important to him. "He would have loved it if one of his kids was able to succeed him," the executive adds. "My theory is he was trying to get Patrick in there."

Turmoil and time have erased any chance of that. President and Chief Executive J.P. Bolduc, an architect of the company's restructuring, resigned under pressure in early March and was succeeded by Albert J. Costello. Meanwhile, legal documents disclosed that J. Peter Grace Jr. was using corporate funds for personal expenses, including nursing care. Angered institutional shareholders demanded changes from W.R. Grace's directors, a largely handpicked group of 21 friends and associates of Grace's that Chief Executive in April 1994 named as one of the country's five worst boards.

Two weeks before his death, and gravely ill, Grace made an emotional speech to his board. He implored it to resist shareholder demands, which included forcing out him and other directors.

He lost.

Jonathan Burton writes frequently on corporate issues. His articles have appeared in Forbes, Time, Worth, SmartMoney, and The New York Times.