The Cleanup Crew

Can these five executives bring their companies back from scandal?

After the dust settles on a big corporate scandal, someone has to clean up the mess. These five execs are trying to make the best of what their infamous predecessors left behind.

Perhaps it's fitting that Susan Lyne, the woman who championed Desperate Housewives on ABC (DIS ), should be charged with helping the queen of homemakers revive her company. Lyne, 54, was named chief executive of Martha Stewart Living Omnimedia in November. With her experience as president of ABC Entertainment, managing editor of New York's The Village Voice, and founder of Premiere magazine, Lyne has strong creative credentials. But she'll face a challenge building the company's merchandising business, an area she knows little about. And Lyne will have to forge a close partnership with Stewart while also trying to diversify the company. The domestic diva is serving a five-month jail sentence for lying to investigators about her trading of ImClone Systems Inc. (IMCL ) stock but has vowed to make a comeback.

At ImClone, meanwhile, CEO Daniel S. Lynch has been working hard to get his tarnished company back on track. Lynch, formerly the chief financial officer, took over in April, 2004, following the controversies that engulfed Stewart and now-jailed ImClone founder Sam Waksal. Erbitux, ImClone's delayed colon cancer drug, finally won Food & Drug Administration approval in February and has been selling briskly. The company plans to seek FDA approval in 2005 to market the drug for cancers of the head and neck. And ImClone will also move two other cancer drugs into clinical trials. The results will determine whether Lynch, 46, can keep ImClone on its recovery path.

The CEO-elect at software maker Computer Associates International Inc. (CA ), John Swainson, is facing a different challenge. A 26-year veteran of IBM, Swainson, 50, must rebuild CA's credibility, which waned after former CEO Sanjay Kumar was indicted in September on charges of securities fraud and obstruction of justice. He denies the charges. Swainson built IBM's WebSphere line of products -- which run large computing systems -- from revenues of zero in 1998 to $1 billion last year. When he takes over as CA's CEO early this year, he'll be under pressure to pull off a similar miracle.

HealthSouth Corp. (HLSH ) CEO Jay Grinney, 53, has enjoyed some good news of late. The rehabilitation hospital chain, burdened by a $2.7 billion accounting scandal and the looming trial of founder Richard M. Scrushy, will still generate $630 million in earnings in 2004 on sales of $4 billion. Grinney intends to boost profits even more this year by, among other things, updating the chain's inefficient computer systems. Admits Grinney: "Paying for the sins of the past is a process. We are six months into a three-to-four-year fix."

Whatever happened to Enron Corp.? Stephen F. Cooper, 58, who was brought in January, 2002, as interim CEO, has overseen the sale and restructuring of some $12.65 billion worth of the Houston energy giant's assets. Among his deals: the pending sale of Oregon utility Portland General Electric Co. for about $2.35 billion in cash and assumed debt. Once the sale closes and outstanding claims are resolved, Enron, which emerged from bankruptcy in November, will distribute some $12 billion to creditors -- far less than the $63 billion they claimed they were owed. Individual shareholders will get nothing. But Cooper and his turnaround company, Kroll Zolfo Cooper Inc., will have pocketed at least $63.4 million in fees. Cleanup: It's not always a thankless task.

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