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Ned Johnson's Point Man


Cover Story

NED JOHNSON'S POINT MAN

J. Gary Burkhead's hands are neatly folded on his desk in his corner office at Fidelity Investments. He's exquisitely dressed in a blue-striped shirt with white collar and French cuffs, gray pinstripes, and a cashmere cardigan. His office is perfect. Clean desk. Family photo. His words are carefully chosen--and always positive: "This is the greatest investment organization in the world."

Chairman Edward C. "Ned" Johnson III has absolute power in his family-held domain. But when it comes to Fidelity's worldwide investment-management operations, there's no second to Burkhead, 53, president and chief executive officer of FMR Co. since 1988. It's an unusual position for someone who never managed a mutual fund portfolio.

"He's a perfect complement to Ned," says Donald R. Kurtz, a former colleague of Burkhead at Equitable Life Assurance Society of the U.S. "Ned is a conceptualist, but doesn't like to administer."

"CROSS-FERTILIZATION." Burkhead thrives as an administrator. When Fidelity's bond funds faltered in 1994, he directed a radical overhaul of the department. He also masterminded the shakeup in March that changed 18 portfolio managers of 26 equity funds.

Still, Burkhead is not an autocrat, Fidelity sources say. "The decision-making process at Fidelity has always been one of cross-fertilization," says former Fidelity President John F. O'Brien Jr. Burkhead's main advisers are Vice-Chairman Peter S. Lynch, Chief Operating Officer William J. Hayes, and fund manager George Vanderheiden, but he receives a constant flow of ideas from dozens of company executives. Nonetheless, when Burkhead decides on a change, not even the firm's nine-man operating committee has veto power.

Burkhead's meticulous, almost imperious manner suggests the same privileged Brahmin upbringing that Johnson experienced. But his background could not be more different. He was born in Little Rock, the son of a steamfitter. In 1959, his senior year at Little Rock Central High School, the school was closed in the wake of desegregation. But Burkhead became one of only a few seniors to graduate on time when he completed his requirements through correspondence courses and classes at the University of Arkansas. He went on to Columbia University, Harvard business school, and a job at Smith Barney, Harris Upham & Co., where he followed health-care stocks, then became director of research. In 1978, he began a four-year stint as head of Equitable's pension operations before taking a similar job at Fidelity.

MYSTERY MAN. Of course, Burkhead has made his share of enemies. Some former employees have choice words to describe him--"control freak," for example. Burkhead is private and has few interests outside work. He runs three miles a day, reads mysteries, and serves on the board of the New York Stock Exchange. But mostly, his friends say, he's a workaholic.

The leading candidate to succeed Johnson when he retires is his daughter, Abigail. Even if she is the owner, Burkhead is a leading candidate to run the firm. He's a trustee of every Fidelity fund and is one of only two executives outside Johnson's family who own voting stock, with 3%. Asked if he wants to succeed Johnson, Burkhead is characteristically evasive: "I have one of the best jobs in the world," he says.By Geoffrey Smith in Boston


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