Performance Imperative.

All CEOs say they are creating shareholder value. A few can actually prove it.

Peter Drucker asks, "What are the assumptions that lead managers astray?" One of them, he observes, is the belief that management's job is "to run the business" rather than concentrate on what's happening outside the business. Managers need to be externally, not internally, focused. This is why CEOs often get themselves into trouble when considering performance.

According to the Vienna-born nonagenarian social theorist, management has to think through what performance really means. Most agree that it's more than the stock price. Managers need both long- and short-term measures, but, most important, they need a measurement system that integrates around the cost of capital. Most systems, argues the sage of Claremont College, focus too much attention on internal data, leading chiefs "to believe they have a pretty good idea of what's going on. But often they mislead themselves." It's not that the figures are false, but that the concepts they reflect are out of date. Business leaders, he argues need a measurement that rakes in the productivity of the entire chain.

This may explain the rise in popularity in various metrics such as the balanced scorecard, six sigma programs, return on committed capital, and CFROI among others. However, productivity in utilization or among workers is only partially adequate, argue some management theorists like Drucker. What's needed is information on total factor productivity, which is probably why economic value-added analysis (EVA) is gaining in popularity. EVA is based on something that people have known for a long time, namely, that which we call profit--the money left to repay equity--is often not profit at all. Unless a business earns a return greater than its cost of capital, it's not earning a true profit. The business that earns less than the resources devoted to it is being devoured. ft's not creating wealth but destroying it.

This is the predicament in which Briggs & Stratton, the world's largest producer of gasoline engines for outdoor power equipment, found itself earlier in the last decade. Its president, John Shiely, describes in the following roundtable how the company's success and a mentality that capital was free led the $1.5 billion Wisconsin firm to lose its position as a cost leader by pursuing out-of-core projects. After experimenting with other fixes, the company adopted EVA, which as Shiely indicates here, helped instill capital discipline. "EVA will not save a crew rowing in the wrong direction," adds Shiely, "but it does provide a road map for value creation." If the value discipline isn't tied to pay, he maintains, the effort will be wasted.

In the following roundtable, held in partnership with Stern Stewart & Co., CEOs examined how improved incentives such as EVA can be used to shape organizational behavior. Joel Stern, managing partner of Stern Stewart, emphasizes the importance of aligning the incentives. Recalling his early career at Chase Manhattan, he observes how "malicious compliance" to organizational norms can produce perverse incentives among loan officers to originate more loans irrespective of their profitability to the bank. Dugald Campbell, CEO of Tower Automotive discusses EVA and similar metrics as drivers for cultural change. Such measures, by themselves don't tell a CEO why a given product or service does not add value or what to do about it, but it does point out when remedial action is called for. Then it's up to leadership to figure out the next step.

J.P. Donlon

Identifying What's Wrong

Joel Stern (Stern Stewart): There are three significant problems with current incentive compensation models. The first is in the ratio between fixed remuneration and variable remuneration, where the variable is somehow tied to an economic measure of performance, and where the distribution between those two is favoring direct remuneration--not for the CEO, but for layers below. The CEOs in the U.S. generally have a fixed-to-variable remuneration of somewhere between 50/50 and 30/70 on average. Those below have a much larger fixed remuneration and a much smaller variable.

The second problem is that we don't hold enough of the variable pay, measured in a cash bonus, at risk in a deferred account. We have to have real money at risk that people can lose, where the declaration of the bonus under EVA is based on improvements of EVA. If you get X percent now, and one minus X goes into the deferred account, and is subject to loss--if you improve and then you deteriorate--I guarantee you, people will always study the consequences in future years of decisions they make now. It's a culture that is much friendlier toward shareholder interests.

The CEO of Coca-Cola was asked by his COO, what do we need this for? Look how well we're doing?" And in fact, they were earning almost 20 percent after tax on net assets at that time. The CEO said, "I'm not interested in how well we're doing, I'm interested in the potential." And if they were on the program about 8 years, their return on capital, or return on net assets after tax, would be 36 percent up from 19 percent. They reduced the number of plants from 51 down to 44 even as their sales increased by almost 2 times. And it's because there is this mentality of being sure that you're going to get the outcomes for remuneration and pension and so forth. The other side is having enough of an incentive to drive the variable pay side and having real money at risk that builds over time. The real goal to me is to have a continuum on remuneration. If your performance is only adequate, you get no bonus at all.

Arnie Pollard (CE): How do you handle the issue of people changing jobs? You're trying to incentivize people to act in the benefit of maximizing long term EVA, yet, at year three the likelihood is they're going to be at a different job, and the consequences of what they did in that role in year four is not going to be on their watch.

Stern: When you make the switch there will be a pro rata allocation so that part of what you have in that deferred account is going to be based on decisions you're made in the past; we do have to hold you accountable. We can't have people jumping ship and going off to do something else.

We have two families of programs. One says that in the current share price, there is an expectation of EVA improvement, and you have payouts equal to a target bonus, 100 percent, if you generate market expectations. If you go above that, you only get one-third of the overage, and two-thirds of the overage is put into this at-risk account. In my estimation, it rakes about 6 years to get full payout of that overage.

The second plan says, I want the fill declaration of the bonus to go into the bonus bank, which pays out gradually over time because I want more of the declaration at risk so that people will behave with less of a short-term focus.

Bob Fox (Foster Poultry Farms): Wouldn't the current management feel like you're taking money away from them?

Stern: They wind up getting more under my program than they do getting 100 percent of a much lower number today. The improvements are so dramatic.

Fox: So the key is that it's unlimited.

Stern: Correct, there are no caps, so people do nor defer. In fact, the rational outcome is to do the very best you can.

John Shiely (Briggs & Stratton): We're the world's largest producer of gasoline engines, an old line company; we've been listed on the NYSE since 1929. We actually made money in 1929, and every year since then--until 1989, when we experienced a $20 million dollar loss.

We analyzed the symptoms of our problem. The first was that our stock price languished throughout the '80s and was in the $12- to $ 15-dollar-a-share range. The second symptom was that we had real capital management issues. In 1980, the ratio of operating capital to profits was 3 to 1. By 1990, that ratio was 9 to 1. The third symptom was that we'd strategically over-extended ourselves. We were trying to be everything to everybody in the engine business.

Within four years of when we adopted EVA, our stock price had nearly tripled, and our after-tax cash earnings had exceeded $100 million dollars. One of the key success factors is the commitment and understanding of the CEO. It's one thing to commit to it, but, at some level, the CEO has to understand the concept of capital discipline. You also need a special kind of CFO, one who understands more about information than about data. You need systems to support EVA, you need to be able to measure as far down as you can, down to the plant level. You need what I call internal EVA consultants.

The final piece of the puzzle is an EVA incentive compensation plan. We have automatic targeting so there is no negotiation every year as to what our profit target's going to be. The automatic targeting feature is designed to force an upward bias in EVA growth. In other words, if you aren't growing, you're not going to get a bigger bonus than the year before. For our key executives, 50 percent of the bonus is based on divisional EVA and 50 percent is based on corporate EVA. So you have to be a good corporate player. And that also mollifies some of the impact of switching people among divisions. Because, at least at some level, it's a team effort. Target incentive for key executives range from 40 percent, for someone in a divisional management function, to 100 percent for our CEO Fred Stratton. And those are uncapped bonuses.

Harry Gould (Gould Paper): What's the highest performance factor you've ever had?

Shiely: We had a five or six in one of our divisions once, and those were some happy cowboys.

Bennett Stewart (Stern Stewart): If you have a down year and you have that negative bonus, that's too bad, but then the target for the next year automatically is set lower. And the credibility in the program grows as people see this is not a flavor of the month type of program. Most companies not only negotiate the budgetary targets each year but about every three years they whip up their bonus plan and start anew. How in heaven's name can you expect managers to think for the long term and make a commitment when they think its just a running negotiation in every way and shape?

Shiely: The final feature of our program is leveraged stock options. If you receive a $100,000 dollar bonus, you also receive $100,000 in 10 to 1 leveraged stock options of equivalent value to the bonus. Under our program you have to earn the long term by performing short term. There is a lot of criticism of options--they do reflect a lot of things that aren't levers that have been pulled by the management, interest rates, foreign currency, and things like that--but, we do believe in real ownership. And our options are not slam dunks. They're premium options, they must produce the cost of capital over the period of the options before they're even in the money.

Shiely: Culture. We had a very old-line rust belt culture. One of the things that made our implementation easy is we had no bonus program--when you're drowning you just want somebody to throw you something. You don't care whether its an anchor or a lifeboat; if there's rope coming on it, you're happy.

Pollard: What was the single biggest problem you encountered and had to overcome in making a successful implementation of this religion?

J.P. Donlon (CE): We're talking a lot about cultural change, and a lot of this is driven by U.S. markets. Given that you've got a very strong sort of managerial culture in one direction that may not line up to what we've been discussing, do you see this applicable to your situation?

Takafumi Asano (Pioneer Electronics): EVA may be more applicable to our parent company in Tokyo, because my responsibility in the U.S. relates to marketing of products largely made elsewhere. Depending upon the product line anywhere from 50 to 70 percent will come from China or elsewhere in Asia; maybe 20 percent will be made in the U.S. What really affects our operation is currency fluctuation and our limited pricing flexibility in a competitive market. I'm not sure how EVA specifically addresses our situation. Having said that, I believe Sony is among the few Japanese corporations doing this at the headquarters level, but at the moment, we are not.

A Private Affair

Colin Brown (JM Family Enterprises): We are a privately held company, ranked 18th in privately held companies in the U.S. We're in the car business. And we had silo organizations in a governance structure that allowed them to change the rules depending on the circumstances. So suddenly they were ROE or they flipped back to ROA, or it was incremental dollars from an operating profit standpoint, and everybody had their own rules of the game.

Right now, we're literally in transition with EVA. We are still working on the measurement process, driving the value chains through our individual companies. We have put through an extensive training program at the senior level that we started last year. It's making sense to people. The difficulty we're now facing is where the rubber meets the road--and that's putting it into pay plans.

The good news about incentives is that they work. The bad news about incentives is that they work. And as part of the wrenching cultural change, some of our people are beginning to realize that a lot of what they were doing and what they thought was the right thing to do, was wrong. It didn't make sense. I've got people in the organization who are saying, why are you doing this? We had a really good la-la life. We weren't getting the demands by the shareholder with respects to a different performance standard. And ultimately we say, we're doing it because we want to be here 10 years from now. We want to be here 20 years from now. And if we continue to destroy value in certain decisions we make, we as stewards of this organization aren't going to be around to be rewarded by it.

Stern: Privately held companies, family businesses, have less financing flexibility, so every dollar of improved performance inside a private company is worth a lot more to their ability to plan and do than it is in a publicly traded company. If a publicly traded company falls to deliver on expectations, they get clobbered out there, and you can lose outstanding people who have stock options.

Fox: I run a privately held company, $1 billion dollars, we have 8,500 employees and most of them are guys who couldn't even make it into college, let alone get through. And what's kind of interesting is the culture needs changing in most companies every five to 10 years, either because the company's in trouble, or because there's a new CEO, or there's a change in the family, which happened in our instance.

We've taken on the balanced scorecard measurement system. And it's nor perfect, and it's not a system that modifies, but it allows people to participate in understanding and setting strategy and then setting personal goals against that. I'm not sure it gets at the economic aspect quite as much as EVA does, but I think our problem was nor so much the economic performance as the cultural change to take these people who were under a family dominated system and get them to understand and participate.

Dug Campbell (Tower Automotive): Tower Automotive builds all the components and elements, assemblies, and modules that basically define the structure and the integrity, the ride characteristics of the vehicle. We started in 1993 and have grown through acquisition for the most part, which has been made possible through industry consolidation. We've really come off a pretty successful run of six years by a lot of measures. But it was important for us to implement something that was helpful as we continued to mature.

We're learning what it means to have a culture that moves beyond a more paternalistic system to one that's really characterized as true partners. We decided to create a values-based enterprise where everyone could lead.

A year ago we started to explore methodology by which we could better relate to the capital piece, the productivity of capital, how we continue to make people feel like owners. And so we began a series of explorations, met with Stern Stewart and last year went through the preparation.

This is a major shift in thinking. We've all been imprinted a certain way, and to suddenly rake not only a more simplistic approach, but a much more effective approach--and then you tie that to compensation techniques--it's no small task. Quite frankly, this year is one that terrifies me in many ways. Fundamentally and intuitively, it's the kind of thing that just makes all kinds of sense for a lot of reasons, other than just financial reasons. But how do you continue to build the knowledge, how do you transfer, how do you continue to top up as you're continuing to grow?

We have this deferred income program where the amount of incentive compensation payout can be applied to the purchase of Tower Automotive stock on a discounted basis. You buy three shares, you get a fourth one. So a little different, on a pre-tax basis, so it's a tremendous lever, as you put it earlier.

Mike Shaffer (Atlas World Group): We're a private company, closely held and I find EVA very interesting, especially the application to private firms.

Jim Davis (Quanex): We use some EVA methodologies in our incentive compensation, but we don't carry it through to the full EVA program that we've heard described here. Several of the things we're struggling with could be addressed by EVA. We have, for example, some plants or divisions that do very well and they get some very nice incentives paid out. We have other plants or divisions that aren't quite as fortunate; they work just as hard and maybe even do better in terms of the things they've been given, but the results aren't quite the same, so they aren't rewarded as handsomely. EVA might address one of those perceived or real inequities.

Gould: We're a $900 million private company. One of the problems in our business is out of 500 employees, 200 and change are salespeople. And historically, and at this point in time, they want the money now. Deferred income is something they're really not too interested in.

Stewart: What people want and what they should have are possibly two different things.

Campbell: But that is a big issue which I maybe glossed over, particularly as we have been acquiring companies and moving into this program. The traditional situation is high base and a fairly modest annual, very little at risk. And this is a complete reversal of that. The upside, the leverage, is so much greater. And getting people to make that mental shift to not paying me now, but pay me a lot more later is no small task.

Gould: But historically our business has been based on commission and the argument has always been about how high can you get the commission, not what kind of a bonus.

Coping With the Challenges

Bob Wolfe (GenCorp): We've been using an EVA system for about five years now and the most difficult part we're seeing is how to transition any compensation relative to all the employees, not just to the management level. We have a process where we have metrics that we measure everyone by, including the secretary or the hostess at the door. We haven't figured out a way yet to transition an EVA metric down to that lowest person. That's our biggest issue. The other problem I've got quite frankly is with the board and everyone else is primarily the shareholders. You put the process in place to measure against EVA, you'll ward against that in stock options, leveraged stock options, whatever. Your income continues to improve, you're doing better at the bottom line because of all the processes, yet your market value is going down. The shareholders are saying, I don't understand how you can continue to reward your managers based on a process that's nor giving us any return.

Shiely: Time heals all wounds.

Brian Devine (PETCO Animal Supplies): We're a billion dollar retailer, and currently we pay on income. So whatever we tell the street we're going to do, that's our 100 percent point. We have no cap on what we made, so last year we went 54 percent more than previous years, and we had a 180 percent bonus. We do also do some downside. If you have 75 percent of it, you get 25 percent of your bonus. For every one point you get 3 percent more of your bonus.

We've been trying to figure out a way to get values vs. pure economic measures involved. But currently we're keeping it the way we have it. Roger Polazzi (Harvard Industries): This is a good rime to hear about EVA. I took over to restructure Harvard about two years ago--it had been in bankruptcy two times--and we were doing about $2.2 billion dollars. Today we're only $600 million, but we have no debt, $100 million in cash and we're ready now to implement some kind of performance measurements.

Steve Abelman (Oxford Automotive): We're very similar to Tower. We've grown over the last three and a half years through acquisitions and organic growth. This year we're going to a system that defines objectives by your part of the organization. We're an entrepreneurial organization, and I think we sort of prided ourselves in allowing people to do those special things. What we're searching for is a system that will allow us to maintain that spirit while creating a pseudo corporate culture that doesn't stifle creativity.

Jerry Mahoney (Mail-Well): MailWell is one of the largest printers in the U.S., grown from a leverage buyout in 1994 when we had $250 million in sales to today. We just completed an acquisition two months ago, so we've grown very, very fast. I'm fascinated by EVA. I think there's a lot of value there. I believe it really does help. The question is in our case, do you do it now or a little later. We have so many thrusts going on and to throw one more at it right now, I'm a little afraid it's just going to cause problems.

Donlon: What's the current system that your top managers get incentivized on now?

Mahoney: Very, very simple. They're paid on growth. And the market wants growth, so we compensate them on that. There are special deals, but overall, you have to grow your profitability, which means you have to grow your earnings, and that's the way we pay our bonuses.

Joe Cannon (Geneva Steel): We're in Chapter 11, our revenues are actually $315 million. Normally they are $750 million, but we are a dog industry and we want to be a nice house in a dog industry. We're about to come our of Chapter 11 in a few months; it depends more on bureaucratic things than our earnings, but we're converting all of our debt to equity, we're choosing a new board of directors, and this is a really right time to be here. We're presently at a balanced scorecard type of approach, but we're really looking for an overarching theory to put in things like Six Sigma and things like customer satisfaction-- how do you do that. And to me, the really good thing about this is that it's a very integrated approach.

Stern: When we did work for a mining company in South Africa, and they wanted to drill this down into the organization, it was interesting that the miners said to us, safety is really important to us. We don't want this EVA thing going too far. We want the safety issue to be there, too. And I believe that there are some things like that. Even at Stern Stewart, we consider the extent to which you want to have exclamation points that go with your EVA program. I don't have a problem with it, as long as people cannot use that as an extenuating circumstance to say, I didn't deliver on value, and I'm not going to, but my customers love me. That's out.

Drucker on the Obvious and Unseen

With experience spanning seven decades and 31 books under his belt, Peter Drucker offers CEOs a rich and uniquely expansive, contextual lens through which to view modern business in the new millennium. In doing so, this Austrian born legend identifies challenges not so much hidden as they are unseen.

"I hope you don't mind my saying I that the computer has seamlessly degenerated the information that American business has, because you are all swamped now with insight and data that are totally unreliable. The computer does not give you anything that happens on the outside, so you're just becoming even more inward focused than you used to be. EVA is a good first step towards creating the information system we need.

Accept the fact that every institution, every business, every non-governmental institution has to be globally competitive and everyone has to learn to be a change leader. And these are trends to watch. Accept the fact that the talk you hear today about adapting to change is not only stupid, it's terribly dangerous. The only way you can manage change is to create it. By the time you catch up to change, the competition is already ahead of you.

Also accept the fact that the next 10 years are going to present extreme social turbulence in all developed countries for a very simple reason: We are facing totally unprecise demographics. And I am not talking about the aging population; that is nothing new. Population has been aging since 1700. What is new is our stupidity.

I came to this country in 1937 as an American editor for a group of British papers at the time when social security started. We set the age at 65; at that time, life expectancy in this country was essentially 59. I interviewed the first social security commissioner in Wisconsin and asked, "Isn't this a little tight, considering by the end of this century, average life expectancy in the U.S. between the 1900 census, and the 1950 census have gone up 11 years?" He said, "My boy, it's not only a little tight it's criminally tight."

It's still at 65 and our life expectancy is 78, and we are going to have a hard time paying the costs of that stupidity. We know by 2025, people may retire early, but they won't stop working because they won't be able to afford it. And it's already beginning. When I was born, people of 45 were broken people. But the kind of people I see around this room, including myself, our only occupational disease happens to be hemorrhoids. And those we know how to treat.

This country is the only one where the birth rate is still barely adequate for replacement. Is that news to you? All of the important things are news to people not because they're hidden, but because they are not looking out the window. You're looking backward. The replacement rate is 2.1 live births per woman of reproductive age. In this country it's about 1.9, but only because the recent immigrants still have large families. The official forecast for Italy is that by the end of this century there will be no Italians. Outside of the English-speaking world, the young population is already shrinking very fast.

That means that in all developed countries there's going to be tremendous immigration pressure and racial hatred--and extreme social pressure. On the one hand we will need immigrants to get the labor force we need. And on the other hand, only the English-speaking countries have a tradition of assimilating immigrants. We know it's painful, but also we know it works. No other country has the experience. They're all scared out of their wits. So don't believe the things you hear about the working political European Union. That's a pipe dream. Economically perhaps, politically no.

Another trend is the changing terms of trade from manufacturing. Beginning with World War I, the terms of trade for the products of the land--agricultural products, minerals, forest products--have been going down steadily at a rate of 1 percent a year. That's economy's language for saying the purchasing power of agricultural products, plant products, has been going down in relation to manufactured goods at a rate of 1 percent a year.

The real productivity increase of the last 40 years in the U.S. is not the manufacturing and, God help us, it's not in services. It's in agriculture. The products of the land related to manufactured goods is down to 40 percent of what it was in 1950. It's gone down by 50 percent in 50 years, which is a little more than 1 percent compound a year. That has begun in manufacturing. Manufacturing reached its peak when the productivity increased faster than employment, around 1960.

Since then, manufacturing output in this country has tripled. Manufacturing employment has gone down from 35 percent of the workforce to 15. Now actually, it means the same number of people but no new people. Manufacturing prices in relation to the prices of information and knowledge have been going down at a rate of 1 to 2 percent a year compound. How much longer that trend will continue, we don't know. We in this country have very largely made the transition. Our manufacturing employment is no longer the main employment. The share of manufacturing of the GNP is way down even though the production is triple what is was 40 years ago. We have made the transition without any great social upheaval. This is a miracle.

Outside this country in Japan, in Germany, more than one-third of the workforce are still manual blue collar workers in manufacturing. Japan is the worst case because they have no jobs for these people; there's no flexibility, no labor market. Once you're over 30 you cannot find another job. Germany's barely better.

Here is another story so you can assess how much credence to put on the things I'm telling you. In 1952, a very small group of us took the computer seriously. Everybody knew this was a wonderful machine to do scientific and military things, but a few of us said no, this is going to make a difference. IBM called me and a few other advisors in to write a report on the impact the computer. There were eight of us so we came up with something like 96 different opinions, but we all agreed on one point--which in itself should have told us that we were certainly wrong--that the computer would have a terrific impact on management decisions. Not one of us saw the real impact of the computer--which is on our operations. Not one of you makes management decisions based on the computer. But your operations have been totally changed.

Now it is going to hit decisions. The Internet abolishes distance. And that means that everybody has to be globally competitive. But we had thought that e-retail would take off and e-business would be very slow, but we were dead wrong. It's the other way around. It's gone so fast and so far that it has to perform unbelievably badly for it be reversed. And so if your business is to business, you will have to learn that you basically compete with everybody, and you have to know how your customer operates and how your suppliers operate. My guess is that you will have to make decisions on relationships and not on problems. And I don't know how to do that.

We will also have to realize that the idea of a manufacturer making their brand is probably dead--not dying. What you see in this country is that the Japanese are rapidly selling their plants to contract manufacturers who make the same electronic gimmick for all competitors. A few years ago you couldn't have conceived it. What you will see is that if Procter & Gamble can survive the e-commerce revolution, which is not guaranteed, they will have to use their strength to create a market for the competition. If you don't sell in the store, then that shelf becomes an expense rather than an asset.

And even if e-commerce only takes 20 percent of retail, it will have an impact because with e-business there there is no local. With any retail business, you have to deliver locally. That means it is conceivable that the large corporation of tomorrow will consist of a headquarters that designs product, makes strategic decisions and handles the e-mail based distribution, but outsources its manufacturing. The manufacturer will become a supplier. It is also conceivable that the manufacturer will have to be able to deliver the stuff all the world over.

For the first time in history, selling and delivery are separated. That's very easy if you sell books. But I don't think you can ship a tractor by parcel post. That you will have to deliver where it's being used.

J.P. Donlon (CE): What do you think about the so-called Internet stock bubble?

Look at the historical precedents: the printing boom that lasted from 1455 to 1520, when it collapsed, and the railroads that all went bankrupt after an enormous boom in the late 1800s. Going by that, maybe the technological revolution will last another five years. Or maybe this one will be different. I don't claim to be able to anticipate, to understand what these people are doing. I'm not technically good enough. But--and I sound like the old financial man I am--I don't yet see they are making any money at any time. I don't see what products they have. Do you?

But don't be too worried about it. There is a fairly small group that will be badly damaged by a stock market crash. But it may not be as disastrous as Mr. Greenspan thinks it will be.

A Who's Who Of Roundtable Participants

Steven M. Abelman is president and chief executive of Troy, MI-based Oxford Automotive, a $600 million dollar automotive supplier.

Takafumi Asano is president and chief executive of Long Beach, CA-based Pioneer Electronics (USA), a subsidiary of Pioneer Corp., a $4 billion maker of consumer and commercial electronics.

Colin W. Brown is chief operating officer of JM Family Enterprises, a $6.6 billion diversified automotive company, based in Deerfield Beach, FL.

Dugald Campbell is chairman and chief executive of Grand Rapids, MI-based Tower Automotive a $2 billion structural products manufacturer.

Joseph A. Cannon is chairman and chief executive of Vineyard, Utah-based Geneva Steel, a $314 million integrated steel mill.

James H. Davis is president and chief operating officer of Houston, TX-based Quanex Corp., an $810 million steel and aluminum specialty manufacturer.

Brian K. Devine is chairman, president and chief executive of San Diego, CA-based PETCO Animal Supplies, an $850 million specialty retailer of premium pet food and supplies.

Robert A. Fox is president and chief executive of Livingston, CA-based Foster Poultry Farms, a $1 billion integrated poultry company.

Harry E. Gould, Jr. is chairman, president and chief executive of New York-based Gould Paper, an $815 million printing and business papers distributor.

Gerald F. Mahoney is chairman and chief executive of Englewood, CO-based Mail-Well, a $1.5 billion printing consolidator.

Roger G. Pollazzi is chairman and chief executive of Lebanon, NJ-based Harvard Industries, a $495 million manufacturer of automotive components.

Michael L. Shaffer is chairman and chief Executive of Evansville, IN-based Atlas World Group, a $500 million trucking company.

John S. Shiely is president and chief operating officer of Milwaukee, WI-based Briggs & Stratton Corporation, a $1.5 billion producer of air-cooled gasoline engines for outdoor power equipment.

Joel Stern is managing partner of New York-based Stern Stewart, a consultancy firm that created EVA.

G. Bennett Stewart III is senior partner of New York-based Stern Stewart.

Robert A. Wolfe is chairman and chief executive of Sacramento, CA-based GenCorp, $1.7 billion manufacturing company.