Had she not been 29 and lovely-looking, she might still be vice-president for strategic planning at the Bendix Corporation. But Mary Elizabeth Cunningham was a dazzling blonde, and the rumors that she was romancing her way to the top began almost as soon as the ambitious Harvard Business School graduate was recruited in 1979 as Bendix chairman William Agee's executive assistant. Instead of ignoring the whispers, Agee, who is 42 and divorced, denied them at a meeting of Bendix employees in September. Because of the ensuing publicity, Cunningham resigned and dropped out of sight. Now she is planning her return to the corporate world. Recently she granted her first substantive interview since the controversy to PEOPLE correspondent Julie Greenwalt.

Let's clear the air. Were you having an affair with Bill Agee?

Of course not. It wasn't a romantic relationship. With the business pressures we were under, it would have been a disaster. We both steadfastly avoided allowing it to develop into anything more than good friends.

Had the two of you ever considered that possibility?

The first day I came into the company I think I shocked Bill by telling him that if my role as a professional woman was ever compromised, he'd have my resignation on his desk the next day. He made it clear to me that he couldn't agree more. Sometimes I almost wished we had [an affair]; we surely paid the price.

Now that you have left the company, is your relationship with Agee likely to become more than professional?

That is the ultimate question. It's not something you sit down and plan.

Did you hear from Agee after you left Bendix?

Oh, sure. We remained friends, but I must say it went through strains. Very significant strains. One person told me, "Mary, you can't blame Bill for not swimming well in a tidal wave." I received thousands of letters asking, "Did he sell you out or did he lose power? Why is Mary Cunningham the one who is out? She didn't make that speech at the employees' meeting."

Do you think what he said about you at that meeting was a mistake?

There is no question that it would have been wiser for him to not have made the statement.

What was your reaction at the time?

A shudder went through me. I thought, "My God, he didn't owe that to anybody." His intentions were the best, but it turned into a fiasco.

What did you say to him afterward?

I told him, "I'm concerned. I don't think this is going to end the way you think it's going to. I think the media are going to ride this story, and it could render me ineffective within the context of Bendix." So much of what we did in strategic planning was confidential. You couldn't have cameras following you around. Sure enough, five days later the board was scared and so was Bill Agee. They were all shocked at the degree to which this thing had caught on.

Did you resign voluntarily?

I resigned as freely as I could within a very strained situation.

What did Bill Agee say to you after your resignation?

His comments told me he had suffered as much as I did from this. Even more, perhaps, because he felt he caused it.

Would you work with him again?

Yes.

Anytime soon?

We talk about those possibilities.

Did you see him after you left Bendix?

Originally I felt, "I cannot see this person. If we got together it would just create another story." It took us six weeks to realize we were being controlled by public opinion and gossips.

Did you see each other then?

Yes. It felt very strange. Both of us had this kind of frightened feeling that maybe we couldn't even lunch together in a public place. We finally just looked at each other and said, "Do you realize how ridiculous this is? You know, there is no guilt here."

Where did you disappear to after your resignation?

I went to California with my younger brother, Frank. He has always been my friend, and he was the perfect person to be with then. The best thing I could do was go underground. Frank cut off all communication with the outside world.

What did you do?

I went to the La Costa health spa. People began to recognize me, so I put my hair in one of those French braids on top of my head. They asked if I was Mary Cunningham, and I'd say, "I sure must be a lookalike, a lot of people have been saying that." Places like La Costa have a sense of community, and I needed to be a part of something. I pampered myself because I needed a feeling of affection from people.

What were your feelings?

Sadness, depression and a sense of injustice and frustration. I had lost my job, which in a sense was my whole life. I had lost my privacy. And I had a sense of potential loss of my friendship with Bill Agee. It was like a nightmare.

How long did this go on?

A psychiatrist friend pointed out to me that many of the emotions I was experiencing were comparable to those involved in reacting to a death. First, denial, a disbelief that it was happening. Then anger. Then almost a quiet despair. Finally there was a sense of peace and a resolve not to allow what happened to be a destructive influence in my life.

Are you bitter?

I'm not vindictive, but I do have a much, much deeper insight into how people think and function under pressure. I also have greater insight into how afraid corporate America is of public opinion. Deeply afraid.

Is big business ready for women at the top?

The answer is yes, with reservations. What happened to me could mean that other women executives won't be allowed to proceed as fast and as far as they can because of the fear that this kind of thing could develop.

Did anyone suggest that you sue?

Yes. It had all the makings of a multimillion-dollar lawsuit. But I decided against it. It often takes more out of the person who sues than it does out of the entity she's suing. You may end up with a nice settlement, but you don't change society.

What about job offers?

I received more than 170 interview offers in writing and another 50 or 60 by phone. I found the interviewing process itself a tremendously reinforcing experience. Almost without exception, every company I talked to was very supportive.

Was there any unpleasantness?

Only once. It was someone whose real intention was to be able to tell the guys at the club that he had talked to Mary Cunningham today. I cut him off quickly. I'm getting really good at reading people.

Have you made a career decision yet?

I've narrowed it down to four alternatives. Two are vice-president for strategic planning with FORTUNE 500 companies. The third is president of a smaller company. And the fourth is the one that is capturing my imagination a great deal these days—the option to start my own company, which would blend consulting services and financial planning. It would be a wonderful opportunity to really start fresh. I will make a decision the first week in January.

Do you have any other plans?

I want to accept some lecture invitations and possibly even write a book. I want to turn what's happened into something constructive.

Have you fully recovered?

I lost almost 20 pounds. I lost my appetite entirely. But I've gained most of the weight back. Things will be back to normal when I can make a joke about the past—maybe choose to talk about it and maybe not, but treat it with a sense of perspective. I think I'm almost there.

What is the status of your marriage?

My husband, Howard Gray, and I have been separated for more than three years. I don't want to say anything more about that.

Will you ever consider marriage again? Could you ever put into a personal relationship the kind of energy you put into your work?

I hope so. I never have before, but I would very much like to someday. I suspect that much of the intensity that I put into my job could be misplaced. At times there are parts of me that experience such an intense loneliness that I block it out with lots of work and late hours. I would like to balance my life with that other dimension, and for me I think that would have to take place in the context of marriage.

Are you ready for such a relationship?

This experience has cleared away a lot of the confusion about what I want in a relationship. I was not ready for one before this and would not be ready for one until I was legally divorced from my husband. The relationship is certainly not happening now, but I think the potential for it to happen is there.