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RICHARD A. CLARKEFree at last!” exclaimed Pacific Gas and Electric‘s CEO Richard A. Clarke last October. The nation’s biggest public …


Free at last!” exclaimed Pacific Gas and Electric‘s CEO Richard A. Clarke last October. The nation’s biggest public utility had negotiated a tentative settlement of the long controversy over the cost of its Diablo Canyon nuclear power plants. Clarke’s optimism was justified: In December the State of California formally approved the 28-year agreement. PG&E will absorb $2 billion of Diablo’s $5.5 billion cost and (this is what Clarke had wanted) Diablo’s rates are now tied to performance-the more kilowatt hours it produces, the more customers will pay.

A disappointed consumer group (TURN) immediately announced a court challenge, claiming that since Diablo is already producing well above the national average, PG&E’s customers will, in effect, end up paying much more than $3.5 billion for the plants. But for Dick Clarke, it was a stunning victory. “The settlement,” he says, “is a major step in the movement away from traditional utility regulation and toward a greater reliance on market incentives and pressure.”

After writing off its share of the Diablo costs, PG&E ended 1988 with no profit, but with a clean slate on which to write an aggressive future, one which Clarke has clearly envisioned. “My primary purpose,” he says, “is to pursue the transformation of PG&E from a regulated monopoly into an entrepreneurial business. I am obsessed with seeing that happen.”

The innovative Diablo agreement, which treats the nuclear facilities less like traditional power plants and more like manufacturing plants, is an important part of that transformation. With rates now based mainly on actual power production rather than on the usual ROI system, PG&E is closer to being the performance-based company that Clarke thinks it must be in this competitive, deregulated era.

“You have no idea,” emphasizes the 58year-old Clarke, “what it’s like to take the culture of a regulated monopoly utility and try to get it to hack competitive business.” But, he claims, PG&E is responding well to the challenges of cost, price consciousness and customer value. And, in a new partnership enterprise with the giant Bechtel Corporation, PG&E also intends to compete nationally as well as regionally.

When he can get away from all this, Clarke likes to play tennis, watch the Super Bowl-winning 49ers, or garden at his Mann County home where he grows tomatoes, zucchinis and strawberries: It’s hands-on management wherever Clarke chooses to work.

-Peter Lacey 


Since Ray J. Groves became chairman of Ernst & Whinney 11 years ago, the company’s international business has grown 300 percent. Today, the third-largest of the Big Eight financial services firms, it does about half of its work outside the U.S. and Groves, himself, spends three quarters of his time travelling. “My biggest challenge,” he says, “is to get 40,000 people in 85 countries working together as a team.”

Like most of the other Big Eight members, E&W is expanding its consulting services internationally as well as nationally. “Some of the European companies are more inclined to use consultants than U.S. companies because of 1992,” says Groves. And E&W, he claims, is now the leading financial services company working in Russia and Eastern Europe, where glasnost is putting capitalism in a cautious new light. The firm was also the first of the Big Eight to work in post-Mao China, and is an increasing presence in the booming Pacific-rim market.

E&W’s 1988 income was $2.2 billion, up almost 25 percent from 1987. The man directing and accelerating this expansion is a quiet 53-year-old accountant with a B.S. from Ohio State University. “I’m pretty impressed with what he’s done,” comments Bob Crane, Editor of Accounting Today. “He’s changed the firm an awful lot. It isn’t as stodgy as it was 10 years ago.”

Stodgy no, aggressive yes. “We tend to think in terms of leverage,” says Groves. “We’re looking for more things we can go worldwide with.” Leverage for E&W means, among other possibilities, developing consulting relationships with accounting clients. “We find,” says Groves, “that our financial auditing people really have a great depth of knowledge and we try to match them to our consulting services.”

Although Groves denies any competition with purely consulting companies like McKinsey, it’s clear that he is moving E&W firmly into the lucrative world of management consulting, actively seeking new markets for what it calls “services that go beyond accounting and auditing.”

In his rare moments at home in New York, where E&W is now headquartered, Ray Groves shares a deep interest in opera (Aida is his favorite) with his wife Anne; he is a managing director of The Metropolitan Opera Association. An enthusiastic sportsman, he also relishes a quail hunt whenever and wherever possible. Asked if he uses an expensive shotgun, Groves replied: “I can’t see using a $10,000 gun to shoot a $10 bird.” Even in recreation, Ray Groves keeps his financial priorities in mind.

-Peter Lacey


hank you can make money from buying an undermarketed brand and turning it around? Jim Pomroy thinks so. He’s been perfecting his formula for the last six years: Buy an ailing brand, reposition it in the marketplace, redesign its packaging, create new advertising campaigns and overhaul its sales force. Sounds as simple as Marketing 101, but is it?

Pomroy, CEO of Sundor Group, the $200 million privately-held Darien, Conn.-based specialty beverage company (a unit of Elders IXL of Australia), has been putting his turnaround formula to the test since 1983, when he purchased Sunny Delight citrus punch and made it the market leader. “One of the things that you have to try to do,” he says, “is to develop a product in a category without posing a threat to the king of that category.” Two ways to do this, he says, are “to stay small enough and unique enough,” so as not to put the king in a corner.

Formerly president of the Champale division of Iroquois Brands and senior V.P. of Kitchens of Sara Lee, Pomroy resigned from Champale and organized an LBO of Doric Foods in 1983, creating Sundor with a former Iroquois executive.

In ’85 he applied his technique to Rolling Rock beer; sales increased 10 percent the first year, bringing it to the attention of the Labatt Brewing Company who purchased the beer from Pomroy in an “offer he couldn’t refuse.” The following year he bought two of Lincoln Foods’ refrigerated fruit drinks and, in March of ’87, the Tex-sun line of pink grapefruit juice. Last year he made two acquisitions strengthening the company’s geographic presence in the Midwest and purchased two Canadian juice brands (through Sundor’s newly created Canadian subsidiary).

Pomroy’s most recent acquisition is in refrigerated foods. Sundor acquired the right to manufacture and market Touje (pronounced TOO-chee), a 100 percent natural refrigerated pudding snack.

Elders (which owns 72 percent of Sundor) has hired Morgan Stanley “to explore a sale or other alternative,” of the group. Your move, Jim. 


Catering to the likes of Prince Charles is no easy task for a hotelier. Even for Isadore (Issy) Sharp, founder, chairman and CEO of Canada’s largest hotel group-Four Seasons Hotels.

Sharp’s hotels are not grandiose. To the contrary, the average size is just 340 rooms. “We are not an organization of ‘big is better,’ ” says Sharp. “We are looking for name recognition.”

Says Sharp, “We are the only chain that’s gone after exclusiveness. We are able, because of our support systems, knowledge and experience to operate an individual, quality hotel, much better than any other operator.”

Dominating the top end of the market, Four Seasons currently owns and/or operates 21 hotels in Canada, the U.S. and England. Construction is underway on a beachfront resort on Maui and the Four Seasons Tokyo-scheduled to open in 1991-which Sharp says may end up being the most expensive hotel in the world. “We decided to do a joint venture with Fujita Group because in order to do business in Japan you really have to get into the inside circle,” says Sharp. “They approached us. They only run three-star hotels and they wanted to run five-star, and they wanted our name.”

According to Lodging Hospitality-which annually ranks the 100 top performers-The Four Seasons in Washington ranked number one last year in terms of per-room sales; two of Sharp’s hotels made the top ten. And Institutional Investor’s ’87 survey listed five Four Seasons Hotels among the 50 best in the world.

Sharp’s first hotel, The Four Seasons Motor Hotel, opened 25 years ago with $90,000 put up by two investors (who each still own an 8 percent stake in the firm), as a small motor hotel in a red-light district in Toronto. The company grew well, sharply enough for Issy to take it public in the late ’60s. He went private in 1977 when the stock market became volatile and then brought it back public again in 1986. Four Seasons net earnings skyrocketed from $3.4 million in ’85 to $49.5 million in ’86, but dropped to $11.3 million in ’87. (Figures for 1988 were not available.)

The group has had its share of problems. Going private in 1977 was a messy affair; there was also a devastating fire in 1981 at the Inn on the Park in Toronto which took the lives of six people. Some even thought management had taken its eye off the hospitality ball.

“For every hate letter, I can show you 20 others that talk about the complaint and the solution,” counters Issy.

When Issy isn’t helicopter skiing, whizzing down the slopes of the Bugaboos, he’s scouting for a new site for a Four Seasons Hotel. How about the peak of Mount Everest?



I was between jobs,” says Vernon Taylor, now chairman and CEO of Chemex Pharmaceuticals, “when I put together a group of investors and entered the biotech industry.”

A former mining engineer, as well as founder and CEO of his own mining company-Geodome Resources Ltd.-Taylor decided to break new ground with Chemex. Founded in 1974 as a single-drug company, the Denver-based firm has made great strides in broadening its R&D of various drugs for the treatment of skin diseases and disorders-and since then, has raised $25 million dollars towards its R&D efforts. One such drug-developed and tested by Chemex-is known as CHX2053 (or Actinex) and is effective in the treatment of skin cancer and a pre-malignant skin condition known as actinic or sun-induced keratosis. With Actinex, as well as other discoveries, Taylor hopes to override the steroid market-a market which he believes is a “shotgun approach” to attacking skin disease.

Taylor’s firm is close to FDA approval of Actinex. (In December of ’88, Chemex filed a New Drug Application (NDA) for Actinex with the FDA. If all goes well, the small pharmaceuticals firm will market its product to dermatologists, who, by the way, write an average of 2-3 prescriptions per visit.)

Chemex has now come to the attention of larger pharmaceutical firms, with Taylor close to securing a financial agreement that he sees as a make-or-break deal for the company. Revlon reportedly has been eyeing the company for some time.

Chemex continues to work at developing new drugs that will help provide safer and more effective ways of treating skin disease. ( A five-year agreement with Yale gives Chemex right of first refusal to develop and market the discoveries made by the Yale Department of Dermatology, and also allows the company to sign all or partial findings to a third party.)

Still at the R&D stage, the fledgling pharmaceuticals firm hopes to reach its goal of marketing and commercializing its products. “We are very focused,” expresses Taylor, pointing out that the skin is not simply “a bag of bones.”

-Lisa B. Aiello

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