Vagit Alekperov
LUKOIL OIL CO.
Age: 55
Year named president: 1991
Company employees: 150,000
Stock performance (12 months ended 06/16/06): +98.3 percent
Controlling shareholder: None
One investor: “His authority inside the company is indisputable.”

Vagit Alekperov may not be the Russian oil industry’s version of John D. Rockefeller, but as a master of consolidation, integration and internationalization, and with a personal net worth of $11 billion, he comes close. Born in 1950 in Azerbaijan, Alekperov earned a degree at the Azerbaijan Institute of Oil and Chemistry, then went to work in the oil fields, first in the Caspian Sea area and later in western Siberia. In 1991, as first deputy minister of Fuel and Energy, he forged Lukoil from the then–Soviet Union’s three top oil producers — Langepas, Urai and Kogalym — and went on to lead the company when it was privatized two years later.

Today Lukoil is the biggest oil company in Russia and one of the largest in the world. Revenue at Lukoil last year was a record $55.8 billion, up 64.8 percent from 2004, and earnings rose 51.7 percent, to $6.4 billion. In addition, the company completed its biggest deal ever in the fall with its $2 billion purchase of Nelson Resources, a Canadian-owned oil company that had been operating in Kazakstan. The acquisition will allow Lukoil to increase oil production by 40 percent in Kazakstan over the next four years and will enable the company to begin shipping oil to China immediately.

“In less than 15 years, Alekperov has made Lukoil one of the three leading companies in the Russian oil sector and brought supplies to the international market, making its production competitive,” says one investor. “He is one of the most influential businessmen in Russia, and his company has a clear and wise strategy of development.”

Alekperov is so integral to the success of Lukoil — he owns 1.6 percent of the company — that many “make contracts with Lukoil only on condition that Alekperov remain as president,” says another investor. — Tom Johnson

Anatoly Chubais
Unified Energy System
Age: 51
Year named chairman: 1998
Company employees: 461,000
Stock performance (12 months ended 06/16/06): +118.9 percent
Controlling shareholder: Russian Federation (52.7 percent)
One investor: “Where he makes a difference is in his will to effect change.”

Like a character in a great Russian novel, Anatoly Chubais suffered great humiliation and towering success, all within a short time span. The lowest point for the Unified Energy System chairman came in May 2005, when large parts of Moscow went dark for several hours. The power failure earned UES management a public dressing-down from President Vladimir Putin and led to media speculation that the career of the St. Petersburg–raised economist and former government official, who oversaw mass privatization in the mid-1990s through a much-criticized voucher program, was over. Two months before the blackout, Chubais had been shot at while driving to work, escaping without injury in the latest of several assassination attempts.

But Chubais survived the attacks on his person and his reputation, redeeming himself early this year by providing Russians with a continuous supply of heat through the coldest winter in decades. That effort required coaxing innovation out of the world’s largest power grid, curtailing co-generated heat and electric output to industrial customers on the coldest days and burning aviation fuel to power backup plants in energy-hungry — and politically crucial — Moscow. Another form of redemption came this June, when the Russian cabinet approved Chubais’ grand reform plan, in which UES will spin off and privatize most of Russia’s generating and local-distribution capacity, thus becoming a long-distance transmission grid. Last year, Chubais cut UES’s workforce by 35,000. Despite lower employee costs, year-on-year pretax profits rose by just 3.9 percent, to 69.4 billion rubles ($2.4 billion).

Says Anatoly Poloun, a portfolio manager with Deutsche Bank in Moscow, “The results of Chubais’s work will become clear in two to five years.” — C.M.

Galina Ilyashenko
Seventh Continent
Age: 42
Year named general director: 2003
Company employees: 10,000
Stock performance (12 months ended 06/16/06): +60.8 percent
Controlling shareholders: Alexander Zanadvorov (43.5 percent), Vladimir Gruzdev (28.5 percent)
One investor: “She communicates the strategy concisely and sticks to it — and that works.”

Until 1994, when Seventh Continent opened its first stores in Moscow, Western-style grocery shopping in Russia was unknown. Today the retailer operates luxury and midrange supermarkets, hypermarkets and convenience stores — 119 in total — and has ambitious growth plans, all the vision of economist-accountant Galina Ilyashenko. The company director, who was honored by civic group Russian Academy of Business in 2003 for “successfully applying her efficient style of doing business,” launched a regional expansion effort last year by acquiring Altyn, a Kaliningrad-based retail chain. This year, Seventh Continent plans to open 25 high-end stores in various Russian cities, allowing it “to gain a strong foothold in promising markets,” says Finam Investment Co.’s Samarets Olga, a Moscow-based consumer analyst. Seventh Continent’s solid year-over-year revenue growth of 39.7 percent, to $712 million in 2005, was outpaced by its 72.2 percent increase in net profits, to $47.1 million. Margins remain strong thanks to the company’s focus on the premium end of the market and cost-containment efforts. Majority-owned by Alexander Zanadvorov, former head of Sobinbank, and State Duma deputy Vladimir Gruzdev, Seventh Continent conducted an $80 million domestic IPO, the first-ever offering in the Russian retail sector, in November 2004. A secondary offering, in April 2006, increased the free float to 25 percent. "Their financial releases are timely, follow a schedule and don't surprise on the downside", says Alexei Belkin a portfolio manager an Aton Capital Group in Moscow, which manages $300 millions in Russian institutional accounts, 2 to 3 percent which is invested in Seventh Continent shares.

—Pam Abramowitz

Valery khoroshKovsky
Evraz GROUP
Age: 37
Year named ceo: 2006
Company employees: 110,000
Stock performance (12 months ended 06/16/06): +48.8 percent
Controlling shareholder: Roman Abramovich (41 percent)
One investor: “He has delivered on all his promises.”

When he was appointed CEO of Evraz Group in January, Valery Khoroshkovsky became the first industry outsider to head a major Russian steel company. For years steel has been the domain of “red directors,” plant managers who wrested control of their government enterprises, then privatized and modernized them. A mold-breaker, Khoroshkovsky holds a Ph.D. in economic science from St. Petersburg’s State University of Economics and Finance and came to prominence as chairman of Ukrsotsbank, Ukraine’s third-largest bank. He arrived at Evraz early in 2004 as a vice president to head steelmaking, mining and trading after the political upheaval of the Orange Revolution ended his political career in Kiev.

Khoroshkovsky had a banner 2005. He guided Evraz through its $422 million initial public offering in London, saw the company post a 10 percent revenue increase and completed three European acquisitions, including that of V’tkovice Steel in the Czech Republic. Expansion costs plus a 30 percent drop in the world price of steel slabs cut profit by 23 percent from 2004, to $905 million. But investors are encouraged by the company’s potential in Russia’s sizzling construction industry. “Evraz has a quite clear strategy for expanding its steel business,” says Vladimir Potapov, a portfolio manager at Moscow’s Troika Dialog Asset Management, which has $2 billion in Russian assets under management.

Even as he deals with business challenges, Khoroshkovsky is also upgrading corporate governance at Evraz to meet international standards. “This is not such a simple matter for Russian companies,” he says, “but our major shareholders understand there is no other way.”

One such owner is Roman Abramovich, who sold oil-producer Sibneft to state-owned energy giant Gazprom last year for $13 billion and bought a 41 percent stake in Evraz for $3.1 billion in late June. Investors say they would like Khoroshkovsky to remain in charge. — C.M.

Mikhail Prokhorov
Norilsk Nickel
Age: 41
Year named general director: 2001
Company employees: 96,000
Stock performance (12 months ended 06/16/06): +71.3 percent
Controlling shareholder: Vladimir Potanin (12.8 percent)
One investor: “He has created huge value for all shareholders in Norilsk.”

A graduate of the Moscow State Financial Institute and a former banking executive, Mikhail Prokhorov assumed the helm of Norilsk Nickel in July 2001. The metallurgy and mining company is the crown jewel of Interros, the giant Russian private investment company controlled by multibillionaire Vladimir Potanin that has interests in agriculture, finance, media and mining. Interros also owns Rosbank, the bank Prokhorov headed before joining Norilsk. His accomplishments win investor praise.

“Norilsk Nickel has one of the most attractive asset bases in the world,” says an analyst at a U.S. hedge fund that owns the shares, “but beyond that Prokhorov has made smart decisions that have added value for shareholders.” The general director has upgraded production capacity at the Moscow-based company — which mines nickel, copper, palladium and platinum — and closed inefficient mines and plants. Revenues rose a modest 8.8 percent in 2005, to $7.17 billion, but tight cost controls resulted in operating profits that grew 23 percent year over year.

The company’s plan to invest as much as $1 billion in operations annually from 2007 to 2010 should increase output, reduce costs and help minimize the company’s environmental impact, says analyst Natalia Kocheshkova at Moscow’s Finam Investment Co. A joint venture with British-Australian miner Rio Tinto will augment Norilsk’s exploration efforts in Russia’s Far East.

Prokhorov is credited with acquiring Polyus Gold Mining Co. for $226 million in 2002, making other domestic and international gold-mining acquisitions, then spinning off Polyus Gold to shareholders this spring at an initial value of $12.9 billion. Investors also praise his willingness to bring in Western expertise and increase transparency about company mineral reserves.

“They’ve learned how to manage investor relations and the political landscape quite well,” says the hedge fund analyst. “At the end of the day, the credit has to go to Prokhorov.” — P.A.

Andrei Kazmin
SBERBANK
Age: 48
Year named ceo: 1996
Company employees: 230,000
Stock performance (12 months ended 06/16/06): +135.4 percent
Controlling shareholder: Central Bank of the Russian Federation
(60.6 percent)
One investor: “He has streamlined operations and made an outmoded institution a model of efficiency.”

In early June, Sberbank CEO Andrei Kazmin announced an accomplishment that few chief executives at large-cap companies can top: His bank’s market capitalization had doubled in a year, topping 821 billion rubles ($30.5 billion) in May, qualifying Sberbank for inclusion in the Financial Times Global 500 for the first time. The achievement is all the more impressive in that Sberbank is no high-growth start-up; it’s a 165-year-old, state-owned giant with more than 20,000 branches, nearly 250,000 employees, 62 percent of Russia’s deposits, 50 percent of its retail loans and 30 percent of its bank assets.

“Kazmin has brought Sberbank into the new millennium through geographic and demographic expansion, reaching out to those who may have felt banking and borrowing opportunities were unavailable to them,” says one money manager.

Although Sberbank has undoubtedly benefited from the soaring Russian economy and a housing boom, analysts say that Kazmin, a former deputy Finance minister and the holder of a Ph.D. from the Moscow Institute of Finance, deserves much of the credit for its success. He restructured its operations, making the bank more efficient and accessible to Russia’s growing middle class. Among his initiatives is a five-year business development program that would make loans, especially for home improvement, more easily available to ordinary citizens by extending terms to up to 20 years and speeding the application-approval process.

Even though 2005 was a record year for the company — net profits rose 262 percent, to R65.8 billion — Sberbank is on track for an even better 2006. For the year’s first five months, the bank posted a net profit of R37 billion. In addition, it is in final negotiations to acquire Bank NRB-Ukraine in a deal estimated at $100 million, and Kazakstan-based Teksakabank, in a deal valued at $50 million. — T.J.

Alexander Izosimov
VimpelCommunications
Age: 42
Year named ceo: 2003
Company employees: 10,900
Stock performance (12 months ended 06/16/06): +22.8 percent
Controlling shareholders: Altimo (32.9 percent), Telenor (26.6 percent)
One investor: “Izosimov is open and frank about company developments.”

In early June, CEO Alexander Izosimov surprised investors when he announced that he might leave VimpelCommunications, Russia’s second-largest mobile phone operator, when his contract expires in October. Izosimov’s possible departure underscores the ongoing conflict between Telenor, Norway’s biggest telecommunications company, which owns 26.6 percent of VimpelCom’s voting shares, and Altimo, the telecom investment arm of Russia’s Alfa Group Consortium, which owns 32.9 percent. The relationship between the two owners soured after VimpelCom’s November 2005 purchase of mobile operator Ukrainian RadioSystems for $231 million; Telenor tried to block the purchase, claiming the price was too high and Izosimov’s expansion plans too aggressive, while Altimo supported it.

Tensions have been running high ever since, even as the company reports continued growth and strong profits. In the first quarter of 2006, VimpelCom revenues topped $936 million, an increase of 46 percent over first-quarter 2005, and their net income totaled $150 million, a gain of 37 percent.

“VimpelCom has consistently delivered excellent financial performance over the past three years, with tight cost controls and an ability to defend its average revenue per user in a rather competitive market,” explains one investor. “VimpelCom’s management reshuffle, rebranding and changes in marketing approach — all of which Izosimov initiated — played out well.”

One day after Izosimov’s announcement, brokerage Troika Dialog issued a research note saying that the VimpelCom leader had assembled one of the strongest management teams among Russian telecoms and that “his departure may bode poorly for the stock price.”

In mid-June, just before VimpelCom’s corporate elections, Izosimov indicated that favorable changes to the board could affect his plans to leave. Indeed, four Alfa-proposed candidates were elected. — T.J.