When Anne Mulcahy took over as CEO of Xerox in August 2001, the outlook for the company to which she had devoted 25 years of her life could hardly have been bleaker. Xerox was over $17 billion in debt, bankruptcy appeared inevitable, and the US Securities and Exchange Commission was investigating alleged accounting irregularities.

During a visit here last week, Mulcahy spoke at length with Computerworld. In the process, she shed some light on how she engineered what Money magazine called "the great turnaround story of the postcrash era," and why she ranks No. 2 on Fortune's 2007 list of the 50 most powerful women in business. Excerpts from the interview follow:

Former Hewlett-Packard CEO Carly Fiorina is an adviser to the McCain campaign and has even been suggested as a running mate. Do you get involved in politics at all?

I do personally. I try not to get terribly active from a business perspective. I'm a Democrat, so I'm on the other side of the ledger.

Are you a Hillary Democrat?

Yes, and now I'm an Obama Democrat. I won't be writing in my vote. These days, we have enough significant issues that one of the good things about this particular campaign is that more people are involved than ever, which is a really good thing. But I certainly try to keep the business and personal sides somewhat separate.

The two presidential candidates have taken positions on the issue of CEO compensation. Sen. John McCain is calling for all aspects of a CEO's pay, including any severance arrangements, to be approved by shareholders. Sen. Barack Obama favors a requirement for companies to hold a nonbinding shareholders' vote on compensation packages. Where do you stand on that?

The principles of what this thing on pay are all about are things that I do think are important. I think transparency is important, and companies have to be into the role of clear and full disclosure as it relates to compensation. I think the principle of performance-based [compensation] is hugely important. Pay is not an entitlement -- it goes with performance. It should be taken away in light of nonperformance or issues companies have. So I definitely believe that we should have a set of principles that companies live by with regards to CEO pay.

I'm not necessarily sure than an advisory vote on pay is the most productive use of our shareholder voices. I do believe that is the job of a compensation committee, and that shareholders now have the ability, with majority voting, to say "yea" or "nay" to the people that they put on boards, and that that's appropriate. Executive pay is a complicated set of decisions and discussions, and suggesting we're going to solve it with advisory votes from shareholders -- I don't think that's the way it should be addressed.

You've noted that business and government need to work together to solve social problems, and that when the time comes for a change from what you're doing now, you'd like to be involved in that. In what way?

I do believe that the public/private partnership really is the model for solving big issues, and I think it's pretty well-developed today. Whether it's a world crisis or a business challenge -- and I would include education in that as well -- the need for collaboration to solve some big problems is a big deal.

There's just a ton of issues in this country today about job creation and the best source of innovation. The reality is the facts are pretty sobering, in terms of the lack of a pipeline for math and science graduates, the implications of restricted access for doctorates in skills that should be welcomed inside this country, what's happened to government funding of research over the last three decades as a percentage of GDP. There's just a whole laundry list of wake-up calls that need to be addressed here in this country if we're not going to lose our technological dominance.