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STUDY PREDICTS BIG CHANGES AHEAD FOR CORPORATE BOARDS

 SAN FRANCISCO, Dec. 22 /PRNewswire/ -- The corporate board of directors, long considered by some critics to be a chummy group of management "yes-men," is destined to assume far greater responsibility and accountability for the success or failure of corporations in the 90s, according to a just-released study of G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) conducted by British-based Oxford Analytica, a research consultancy.
 Though the changes will be most marked in the United States, where boards already have a higher degree of independence, "Board Directors and Corporate Governance," a study of trends in the G7 countries over the next ten years, predicted that corporations worldwide will see increased pressures to select directors who display greater professionalism, more familiarity with specific management functions, strict ethical standards and greater international market expertise.
 P. Anthony Price, managing director of the San Francisco office of Russell Reynolds Associates, one of the study sponsors, said, "Internal management will undoubtedly feel a greater degree of scrutiny from its outside board members than ever before. As shareholder lawsuits and other actions have made directors more aware of their responsibilities to all stackholders, they have begun to demand a greater role in the strategic guidance of the company. We're seeing this reflected in a tremendous demand for professional recruiting of outside directors."
 Price said Russell Reynolds Associates has been engaged to recruit more than a hundred board members for top U.S. and international corporations this year. "In the past, we did fewer corporate director searches. Now, the demand has shot through the roof," he said. "Companies are looking for board members who can contribute to their business direction, organizational reengineering, strategic alliances and their ability to compete in an increasingly global marketplace, among other things."
 Driving this trend, the study contends, is the intensifying international competition for capital, which will be relatively expensive in the 1990s. Companies everywhere will have to look to foreign sources for funding, and "the demands of international investors will undermine attempts by managers to defend themselves from undue exposure to both market forces and interference of other stakeholders," say the study's authors.
 Another change predicted is that corporate boards will represent a broader cross-section of stakeholder interests than in the past.
 "This doesn't necessarily mean that every interest group will have a seat on the board," Price said. "What it reflects is the increasing realization by corporate board members that they have a moral, legal and professional obligation to listen to more than just management's point of view."
 The study suggests that the rate of change in corporate governance practices will be slowest in Japan, where management is currently virtually free of oversight from boards, because the board is little more than an extension of senior executive management.
 "The strongest force for change will come from the multinationalization of their corporations," Price said. "But responding to the demand for more foreign board members will present a major challenge to the traditional patterns of long-term, close personal relationships and common company experiences which have made Japanese boards an extension of management."
 Other study conclusions:
 -- There will be greater pressures to respond to the interests of company employees, environmental groups and local communities.
 -- The rising tempo of international mergers and acquisitions will raise demand for multinational board members in every G7 country's corporations.
 -- Institutional shareholders will have increasing influence on boards, and bankers will have declining influence.
 -- Because of their greater liability and accountability, boards will become more reliant on independent external consulting and support services, such as independent management performance auditing; independent corporate performance assessment; independent analysis of international business conditions and international executive search services.
 Price pointed out that the study implies that not all the results of greater board involvement in company management will be positive.
 "Improved accountability may also create greater vulnerability of companies to short-term pressures. This is already a common complaint about the differences between U.S. corporations and their Japanese competitors," he said.
 In addition to Russell Reynolds Associates, a U.S. executive search firm with offices throughout the world, study sponsors included Price Waterhouse, Goldman Sachs International Ltd. and Gibson, Dunn & Crutcher.
 -0- 12/22/92
 /CONTACT: P. Anthony Price of Russell Reynolds Associates, 415-392-3130; or Hatti Hamlin of The Montgomery Group, 415-391-3040, for Russell Reynolds Associates/


CO: Russell Reynolds Associates ST: California IN: SU:

SM -- NYYFNS3 -- 9022 12/22/92 06:48 EST
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Date:Dec 22, 1992
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