No guts, no glory.

• Author: Sales, A.R.
• Position: Interview with Hilton Hotels Pres. and CEO Stephen Bollenbach - Interview

Stephen Bollenbach, you've just arranged Walt Disney's $19 billion acquisition of Capital Cities/ABC. What are you going to do next?

Not what you'd expect. Bollenbach, 53, left his job as chief financial officer at The Walt Disney Co., a position he had held only since April 1995, to become president and chief executive officer of Hilton Hotels Corp., effective February 1996. The change was one of many in his high-profile career.

Bollenbach is well-known as something of a financial guru, working primarily in the hotel and real estate business, and leading daring deals that have consistently created shareholder value. He engineered the sale of a troubled gaming and hotel company to a British brewer, helped investor Donald Trump salvage his real estate empire, and, as CEO of Host Marriott, executed Marriott's controversial split into two companies. He became Disney's CFO in 1995 and was the financial mastermind behind the second-largest acquisition in U.S. history, when the company that Mickey built bought flourishing Capital Cities/ABC.

Financial executives' most important job is to create shareholder value, says Bollenbach. As companies enter worldwide, unregulated financial markets and barriers come down between traditionally separate industries, CFOs and treasurers have a greater opportunity than ever before to add value to their organizations through innovative financing.

The news of Bollenbach's decision to join Hilton as CEO came soon after he gave Financial Executive one of his last interviews while still at Disney. Several weeks later, we caught up with him - no easy task - at his new office in Beverly Hills, Calif. In this two-part interview, Bollenbach discusses the business philosophies that guide him with A.R. Sales, treasurer of Arvin Industries in Columbus, Ind.

SALES: In the last few years, there's been a lot of talk about how the role of the CFO has changed from managing the financial reporting processes to driving the strategic direction of the business. What does this shift represent for financial executives?

BOLLENBACH: I think you have to go back and look at why this shift occurred. The trend has its foundation back in the late '50s and early '60s, when the U.S. government deregulated the financial markets. Since the nation began, the markets had been regulated by the government. When I was very young, a bank paid 5-percent interest on savings accounts, and every other bank in the country also paid 5-percent interest. The rules were absolutely fixed. The markets were tightly regulated, both domestically and abroad. You couldn't transfer currencies to other countries. If you borrowed in other countries, there were special taxes on the money.

Because of the regulations, there was no real opportunity for financial people to create value for shareholders in the same way other departments could, such as marketing, engineering or manufacturing.

All of that changed in the '60s and on into the '70s. Today, we have unregulated financial markets virtually around the world. That gives financial people an opportunity to develop their skills, learn how the markets work and deal with them. Just as the marketing people can out-market their competitors or the manufacturing people can produce the same quality product less expensively than another company, the financial people can create value for the shareholders. That's what has changed.

It's unlikely that the markets will ever be re-regulated. From a financial person's perspective, the opportunity to be a major contributor at a company, in terms of creating value for the shareholders, is unlimited.

I see no limit on where the individual can go. There's no reason why a financial executive can't end up being chief executive. Financial executives are on an equal footing with any other discipline in the company.

Back in the days of regulated markets, that just wasn't true. The head accountant, who only knew the rules on reporting numbers, would be in an unlikely position to create value for the company. Therefore, that person didn't have the opportunity to learn enough to progress beyond his or her financial skills.

SALES: What's your opinion of treating finance and treasury as a profit center? How does that...