THE 5 BEST AND 5 WORST BOARDS OF 1999.

TODAY, WITH GOOD GOVERNANCE PRACTICES CATCHING ON FAST AS THE LATEST CORPORATE FAD, NOT ONLY ARE THE BEST BOARDS GETTING BETTER, BUT THE BOARDS AT THE BOTTOM HAVE CLIMBED A NOTCH AS WELL. STILL, THERE REMAIN EGREGIOUS SINS WELL WORTH REPORTING, EVEN AS WE SEE EVER MORE EXEMPLARY BOARDS WITH CORPORATE GOVERNANCE PRACTICES THAT SHINE AS BRILLIANT EXAMPLES FOR THEIR PEERS.

This is the eighth time we have appraised the corporate governance posture of American corporations - and then had the temerity to choose the five best and five worst boards of directors for Chief Executive. In these years, we have peered into the proxy statements of more than 1,000 companies. We have read hundreds of articles and reports about board actions - and lack of action. We have listened to - and conducted - dozens of seminars and classes about what makes a good board and a bad board. And we have seen a lot of things change on the corporate governance scene.

Now, as we review and reappraise our good and bad candidates, we have a tendency to whisk through board composition and get quickly into board structure, policy, and procedures. We are interested in the board committees, who appoints them, how often they meet, and what they do. We pay lots of attention to the report of the compensation committee. We look for a nominating committee and a corporate governance committee or the equivalent. We want to know if there is a regular, formal performance review of the CEO and the board. We look for written statements of governance policy, and at the required performance graphs.

Overall, we believe that nearly all companies have it within their power to build a fine board of directors - even a great board. More and more companies are proving each year that it can be done without great expense and time.

We have often said the boardroom is one of the last great bastions of the free enterprise system. No one tells us who must be our directors, what or how they should be paid, what the board meeting agenda should be, or what can or cannot be discussed at our board meetings. But we must police ourselves to become good, responsible, responsive boards if we want to stay free and unhampered.

That is why we go through this effort every year to praise the companies that are doing it right and to decry the companies that don't try or don't care.

The Five Worst Boards

It is much more interesting to write about the five worst boards than the five best boards. There is often an air of arrogance or defiance present. Usually, however, it seems that most of our worst boards just don't get it. They choose insiders and sycophants and beholden suppliers to be their directors instead of strong, competent, experienced people. They don't have women or minority directors. They like to have their relatives on the board. They usually pay their executives and themselves unusually well, and sometimes outrageously so. They have lots of side deals with their executives and each other that are difficult to explain. They use their executive committees to run the company and the board plays second fiddle. Their proxy statements are hard to read and understand. The worst boards rarely, if ever, have corporate governance committees, formal performance reviews of the CEO and the board, written statements of board policy, and meetings without the CEO present.

Some of these boards are just old-fashioned and will get around to changing their ways when their CEOs and directors finally retire. But some just don't seem to care about representing the shareholders equitably and participating in the proper governance of the corporation.

The five worst we have chosen this year all have remediable boards, structures, and policies. It would not be hard nor would it take long to bring them into line with what are considered modern corporate governance principles. It does take an awareness of good corporate governance by CEOs, directors, stockholders, the financial community, and the press. We shall continue to point out the ways this can be done.

1 Rite Aid - "A weak board, tolerant of the conflicting interests of management."

Although they own only 2.6 percent of the outstanding stock of the Rite Aid Corp., Alex Grass, CEO, and his "retired" father ex-CEO Martin Grass, run the company like their own candy store. Rite Aid is a big company now - $12.6 billion in 1998 revenues - and it should behave itself better from a corporate governance standpoint. It takes nearly two pages of the proxy statement to list all of the recent real estate and related party transactions, most of which involved the Grass family and site locations of Rite Aid stores.

There is a board of directors, to be sure, but they don't seem to do much. Of the nine directors, four are insiders, one is a member of the company's law firm, and another is a 73-year-old holder of 2.87 million shares of stock. The board met only four times last year, the audit committee met twice, and the compensation and finance committees each met once. There is no sign of a nominating or corporate governance committee.

And in its only meeting, the compensation committee got around to giving CEO Martin Grass another million stock options, bringing him up to 3.1 million shares under option on top of the million shares that he owns.

On the positive side, the CEO, the president, the vice chairman, and the CFO were not paid a bonus in 1998 when their bonus performance plan target was not reached. Interestingly, the outside directors are not paid in cash at all, but receive a grant of 2,000 shares of restricted stock each year.

Rite Aid has a number of law suits and stockholder resolutions complaining about the side deals of the Grass family. A more independent and tougher board should have been able to contain and explain this situation better.

2 Carnival Corp. - "A family-dominated board with too little independent directors input."

If you like family-dominated corporate mazes, filled with partially owned subsidiary companies and lots of interwoven relationships, you will love reading about Carnival Corp.

The ruling family is that of Ted Arison, the founder and former CEO of Carnival cruises. His son Micky is now the CEO, his daughter is on the board, and it takes two pages of footnotes to list the various family trusts, B shares ownership, and option grants in the hands of Arison family members.

The board, as might be expected, is not very independent. There are 16 directors, and by our definition, 9 are family members, inside executives of the parent company or affiliates, or representatives of service suppliers to Carnival.

There is an executive committee of the board, chaired by Micky Arison, with the vice chairman and one other director as members. The executive committee met 12 times last year - the board met only 4 times - and has the "power to act in lieu of and with the powers and privileges granted to the board, other than the power to declare dividends or issue shares of capital stock." Guess who runs the company?

The compensation committee has an interesting twist: It is composed of the CEO and three "independent" directors who make compensation recommendations to the board. In addition, a separate plan administration committee, composed of the same three "independent" directors but not the CEO, recommends the amount of compensation payable to the CEO and other named officers. With this powerful positioning on the executive and the compensation committees, the CEO ends up with a nice pay structure. He has 1.6 million exercisable share of stock options and 520,000 more unexercisable shares with a value of $37.7 and $10.4 million respectively to go with his salary of $500,000 and bonus of $1.5 million.

There is an audit committee which met four times and a nominating committee which met once. There is no sign of a corporate governance committee or formal performance reviews of the CEO.

The company has done well over the past few years and it is no longer a struggling family enterprise. It should start cleaning up its act and instituting some effective corporate governance measures.

3 Conseco - "A board more concerned with executive compensation than with corporate governance."

The report of the Conseco compensation committee takes up two pages of the current proxy statement, and another six pages are devoted to a complicated explanation of the amazing stock option and change-of-control agreements of the company. Conseco apparently believes in making its CEO, Stephen C. Hilbert, one of the highest paid executives in the world. To figure it all out, the compensation committee met 12 times last year.

Mr. Hilbert, whom Business Week reported receiving $116 million in '97, kept on coming in '98. He got a $750,000 raise in salary, a bonus of $13.5 million, and three new option grants of nearly 2.5 million shares of stock. In addition, although the five-year performance graph for Conseco shows a nasty drop-off in '98, the board rewarded Mr. Hilbert's "extraordinary efforts" in acquiring Western National Life by granting him a $1.9 million interest-free loan in return for a non-compete agreement.

Most of the top executives, including the CEO, have a reload provision in their vested stock options and 1,645,000 shares of stock were received in reload programs last year. The three top executives have a most unusual change-of-control provision in their employment agreements - five times their annual salary and bonus plus a full price buyout of their outstanding options. The CEO, whose bonus is largely based on 3 percent of the company's pre-tax profits, would get a severance bonus of $70 million. For those interested in reading about exotic executive compensation plans, we recommend the 1998 Conseco proxy statement.

The composition of the Conseco board is a throwback to the old days and ways of linkage. Of nine directors, three are inside officers, one is a retired officer, one is the retired founder of a recent acquisition, one is a member of Conseco's law firm, one is a venture capitalist, and one is the retired CEO of the company's bank. That makes it hard to stag the audit and compensation committees with independent directors. There is no nominating committee and no corporate governance committee. There are no women or minority directors on the board.

The directors pay themselves well, which is not surprising under the circumstances. Each director receives a cash retainer of $50,000 plus an annual award of up to $30,000 in stock awards ($11,000 in 1998). In addition, each outside director receives 5,000 stock options each year. Not bad for a relatively small insurance company board.

4 North Face - "A board which has almost completely ignored modern corporate governance principles."

For a relatively small, and not-too-successful sporting apparel company, North Face has managed to get itself into the corporate governance spotlight. It is almost a classic illustration of how not to handle board affairs.

Last year, the company announced that it had overstated 1998 sales by $16 million, or 6 percent, and earnings by $6 million, or 42 percent, as well as a smaller write-down for 1997.

The matter was compounded when it was revealed that the former CEO and present vice chairman, William N. Simon, and the current chairman, Marsden Cason, had sold their stock before the announcement. Then, North Face appointed one of its directors and stockholders, James Fifield, as the new CEO, and, in May, announced the company had repriced its executive stock options, including those for Messrs. Simon, Cason, and Fifield from $21 down to $9. In another unpopular move, the new CEO moved the company headquarters from California to Colorado, near his Aspen home. Finally, the company announced that it was considering a plan to take the company private.

Where was the board while all this was going on? The board has only five directors, three of whom are the principal executives. The two "independent" directors are both consultants, one a former partner of the accounting firm used by the company, and the other a consultant who was paid a $100,000 fee in 1997.

As corporate governance critics, we believe in the free enterprise system and feel that the system must learn to police itself. But slipshod, self-serving boards like this one at North Face are intolerable and tend to provoke closer regulation.

5 Disney - "A board that continues to allow its highly paid CEO to wheel and deal as wishes."

When we picked Disney as one of our worst boards four years ago, we got a number of quizzical looks and questions. After all, it was the beloved owner of Mickey Mouse and Disneyland, the stock was a sensational gainer, and the CEO, Michael Eisner, had just become the highest paid executive in the world.

We looked at it differently. The board was largely composed of Disney executives and suppliers, plus a movie actor, a teacher, an architect, and a publisher - people who would not criticize or argue with the CEO. The company had lost a number of strong executives in a policy dispute. The president and COO had just been killed in an accident. The CEO had a major heart operation. We felt that this was an inadequate way to protect a large company and we blamed the board for being unable or unwilling to take corrective action.

Disney has been trying to do a few things in answer to the protests of its large shareholders. After buying Capital Cities, they put the ex-chairman of that company, Thomas Murphy, on the Disney board, and he has now become chairman of the compensation committee, which must be one of the most difficult board tasks around. But the compensation committee has tried to put a ceiling on Mr. Eisner's bonus amount. Four new directors were elected, three of whom are fully independent. They recruited the ill-fated Mr. Ovitz to be president. They went to court with the resigned executives. Unfortunately, Mr. Ovitz failed, at great expense. They lost the case with Mr. Katzenberg at great expense. Disney stock fell from its high level. And now Disney is back in about the same place it was when we chose them five years ago: no apparent management succession plan and insufficient backups to the CEO; continued high compensation for the CEO, out of line with current results; and a compliant, desultory board in an industry that is undergoing massive change.

Disney did not make enough of the strong corporate governance moves their institutional shareholders urged them to make. There is no corporate governance committee or its equivalent. Their ROI is slipping and so is their stock price. We were certainly right in picking them as one of our Worst boards once before. Unless more effective corporate governance changes are made, we suspect we might again.

Picking the Five Best Boards

As we search for the five best boards each year, we find clear evidence of the evolution of good governance thinking and practices in almost every sector of corporate America. More and more companies are adopting the basics of good governance. Whether this represents the acceptance of sound governance principles, or simple mechanical adherence to recommended practices - it's hard to tell. But the bottom line? Good boards are better still.

Because times have changed, we now look for features beyond simple composition mechanics. We look for innovative or unusual governance practices - those that go above and beyond that which we now assume. For example, board diversity, in terms of women and minority directors, is now almost taken for granted as a desirable feature. Thus, we do not even bother to cite their presence on our selected good boards, although we mention their absence on the bad ones.

This year, among other exciting changes, we found an illuminating compensation committee report, which showed sophisticated understanding of the variety of motivating factors in a multifaceted compensation package, a welcome change from the usual bureaucratic "boiler plate" recitations.

The last few years have seen more changes and diversity in the way directors are compensated than have emerged in several decades. Common stock, restricted stock, options, and stock equivalents provide the means for the creative designing of director compensation packages. It is encouraging to note that some original thinking is going into appropriate director compensation.

1 Cummins Engine Co. - "Model Compensation Report"

Here is a company with a long history and tradition of concern for corporate responsibility as well as for shareholder values, and the composition of its board certainly reflects that orientation. Of the 13 members, two are insiders, five are CEOs, both active and retired, while each of the six remaining members presents an interesting mix of academic, governmental, public service, or foundation backgrounds.

As for the nominating and organization committee, instead of the traditional three to six members, it has 11 members. Committee responsibilities include: designing the board, nominating candidates, and formally evaluating CEO performance.

Cummins treats its distinguished directors relatively generously. The annual retainer is $66,000, payable half in cash and half in stock, plus $1,000 for each special board meeting. Committee chairmen receive an additional $9,000, committee members an additional $6,000, plus $1,000 per special meeting. We note, however, our mild concern that Dr. Harold Brown receives special fees - a $50,000 annual consulting fee and an additional $17,000 retainer, plus $3,000 per meeting fee, for serving as chairman of the company's science and technology advisory board - and the implications of this arrangement for director independence.

The compensation committee report, clear and concise, is probably the best we have encountered in many years of proxy reading. CEO compensation in Cummins is designed so that base salary represents only one-third of the total package, with two-thirds in variable, incentive, and performance-based programs, when Cummins' performance is median in its peer group. As corporate performance goes above median, the variable portion of the CEO's compensation package increases. We were pleased to note that the compensation committee was prepared to "put its money where its mouth is." Cummins' performance in '98 was below '97, and the bonuses paid its executives reflected this lower performance. Even more impressively, Cummins incurred heavy special charges during the first and third quarters in '98; they were included in calculating CEO and executive bonuses.

Finally, Cummins has eliminated its directors' pension plan, replacing it with an increased number of restricted shares awarded as part of the annual retainer.

2 Warner Lambert - "Formalizing Good Governance"

Warner Lambert has recently formalized a number of sound corporate governance practices and procedures, which had been generally observed and followed for many years in this well-managed company. It has a board consisting of 10 members, which includes two insiders, three active and three retired CEOs, and three members with academic backgrounds.

Director compensation includes a $40,000 retainer plus $1,000 per meeting fee. Committee chairmen receive an additional $3,000. An extra one-half of the annual retainer is given each director in the form of stock equivalents, with the shares restricted until retirement. New directors receive 12,000 restricted shares upon joining.

Board committees include: audit, compensation, governance, retirement and savings plan, and corporate public policy. The governance committee develops policies on board size and composition, nominates directors, and nominates the company's chairman, CEO, president, and COO. A self-evaluation process consists of soliciting questionnaire responses from every director and having them collated by an outside firm. The report is sent to the governance committee chairman, who is responsible for providing feedback to the board and the CEO.

The board meets in private session annually (without the CEO present) to discuss any issue any director may wish to bring up. It is also company policy for the CEO to meet privately, one-on-one, with each of the directors, at least once every two years.

An interesting change to the compensation committee is the periodic review of the competitiveness of Warner Lambert's incentive programs as compared to its peer group, intended to peg the total compensation package above the median.

CEO compensation is based on several hard indicators of financial performance and some specific achievements such as growth rates and improvements made in eight specific product and process improvements. The five-year performance graph confirms an impressive record of outperforming Warner Lambert's peer group, (consisting of eight leading pharmaceutical companise), which in turn outperformed the S&P 500.

3 Chevron - "A CEO Takes Pride in his Board"

We were intrigued by an article written by a prominent CEO in praise of his board and his firm belief that good corporate governance makes a significant difference to corporate performance and shareholder value. The company is Chevron, and further evaluation on our part confirmed its CEO's opinion.

Of the board's 14 members, four are insiders, which we would normally consider excessive. Chevron's CEO argues that "several" insiders on the board can enrich the information provided a board. We disagree, as boards can and usually do get senior management's points of view from non-director executives who regularly attend board meetings. We believe three or more insiders are excessive. But this is not a crucial factor.

The balance of the board composition is sound, effective, and diverse. Six members are CEOs with solid corporate experience and four have government or academic backgrounds. The company has also recently implemented a formal orientation program for new directors - a move that is well regarded.

The board's audit committee is rightly perceived by the CEO as fulfilling a vital function in a complex, global business, but, he notes, "no one really likes serving" on it, which may mean Chevron's audit committee is viewing its functions a bit too narrowly.

Compensation committee philosophy has emphasized greater reliance on performance-based pay in the total compensation package. A nominating and governance committee is assigned the usual tasks, and is also involved in reviewing board processes, practices, and self-assessment. Individual directors are regularly canvassed for their opinion of board effectiveness, and any recommendations they may have for its improvement.

Finally, Chevron's CEO and board take a lively and continuing interest in management succession. An annual informal meeting reviews and discusses succession plans and candidates for future leadership positions.

4 AlliedSignal - "Impressive Executive Skills, Good Structure"

This is a board almost entirely staffed by senior, highly experienced executives. Of its 14 members, two are insiders, 10 are active or retired CEOs, one is a university chancellor with a background in engineering and aeronautics, and one is a consultant and former Air Force officer and astronaut. While each director's experience and background is impressive, we are a bit concerned when we see several of the same corporate names appear in the bios of at least five directors, which suggests the need for casting a wider net when searching for new directors.

Board structure includes a higher-than-usual number of standing committees, as well as some unusual clustering of activities. We were happy to see a corporate governance committee, which combines traditional nominating duties with corporate governance responsibilities, including: overview of board composition, compensation and structure, as well as committee memberships. A management development and compensation committee includes succession planning and career plotting.

AlliedSignal also utilizes less commonly used committees: A corporate social responsibility committee oversees compliance with legal and ethical standards; a technology committee monitors IT programs and budgets; a retirement plans committee appoints trustees and oversees the activities of the company's several retirement funds. It remains to be seen to what extent these practices survive as the merger with Honeywell proceeds.

Director compensation, after decades of "plain vanilla" cash payments of retainer and meeting fees, is undergoing a quiet evolution into more exotic and multi-faceted forms. AlliedSignal pays its directors an annual retainer of $50,000, of which $15,000 is credited into a deferred account in the form of restricted stock equivalents. An additional $5,400 is paid for each committee membership, $9,400 for chairing the audit or compensation committee, $7,400 for chairing any of the other committees, and $1,500 for board meeting attendance. A directors' plan includes a one-time grant of 3,000 shares to new directors, and an annual option to purchase 2,000 shares subject to restrictions.

In determining CEO compensation, the committee relied on several financial performance indicators (earnings per share, free cash flow, net income, and share price), plus more subjectively evaluated achievements. The company's performance graph shows a steadily rising trend for the past five years. In the current year, AlliedSignal maintains its rising trend, while the peer group drops off rather sharply.

5 International Paper Co. - "Old Company, New Governance"

This 100-year-old company has a thoroughly modern, diverse, and well-qualified board. Of its 15 members, nine are active or retired CEOs, two have academic and public backgrounds, and one is a consultant with extensive managerial experience.

The board's audit committee has a relatively standard charter, but with the interesting additional duty of reviewing its own performance. The same charge is assigned to the other standing committees, with the exception of the nominating committee. We are not sure how this is executed, but the basic idea parallels the notion of having boards assess their own performance. A relatively novel combination is the management development and compensation committee. It combines usual compensation duties with oversight of company policies and programs for the development of management. It also recommends changes in director compensation.

The nominating committee reviews the size and composition of the board, and recommends candidates. It also reviews and recommends committee assignments. This committee's charter covers almost the full gamut of a governance committee. It might prove useful to transfer to it the subject of director compensation and rename it the governance committee. An environment, health, and technology committee reviews compliance and quality of programs in relevant areas.

Total compensation is compared to a select group of peers. Each component of the total package is also compared to the median of the peer companies. In addition to objective financial factors (like return on investment versus budget), there are a series of predetermined qualitative targets such as quality, safety, environmental and people development. Both the management incentive plan and its long-term incentive plan contain some interesting provisions. The long-term incentive plan, in particular, features a five-year award, with half of the payouts in company stock being stretched out over a three-year period. There is also an executive continuity award, or "golden handcuffs," for a select group of executives.

Parameters of the Study

Our analysis was limited to public corporations of sufficient size to be listed on one or more of the major stock exchanges. Companies considered had a least $250 million in revenues.

* Criteria were established and board characteristics were assessed on the basis of published data, mainly annual reports, proxy statements, and a variety of directories.

* An important aspect of the time dimension needs to be emphasized. Today's boards are typically the end-products of a long history of director selection and structural evolution. Many of the characteristics viewed unfavorably today were perfectly acceptable a few years ago.

* We intentionally omitted any corporations with which we are personally connected as directors or governance consultants.

The Hallmarks of an Effective Board

* Board size: Keep it relatively small - more than a handful of members (four or five), but less than a crowd (15 or more).

* Outsider/insider ratio: Limit yourself to one or two inside directors. Former CEOs, service for a prescribed period, count as insiders.

* Potential conflicts of interest: Minimize the number of active investment bankers, legal counsel, commercial bankers, consultants, and interlocking directorships.

* Narrow special-interest groups: Minimize investors representing blocks of shares, relational investors, family members.

* Demographic balance: Maintain an appropriate mix of backgrounds, skills, and experience; recognition of capable women and minorities; relevant geographic dispersion.

* Stock ownership by directors: Encourage by means of fees or special stock grants.

* Committee structure: Establish a clear definition of responsibilities and functions of standing committees (Audit, Compensation, and Nominating).

* Form a "corporate governance" or "independent director" committee: Establish processes for CEO, board, and director performance evaluations.

The above characteristics applied in reverse typically represent needless "baggage" and curtail operating effectiveness. Cumulatively, such baggage can add up to a flawed or ineffective board.

RELATED ARTICLE: THE "WORST" BOARD DIRECTORS

Rite Aid - Alex Grass, 71, Honorary Chairman and Chairman of Executive Committee, retired CEO; Martin L. Grass, 45, CEO; Timothy J. Noonan, 57, President; Nancy A. Lieberman, 42, partner, Skadden, Arps law firm; Philip Neivert, 73, private investor; Gerald Tsai, Jr., 70, former CEO, Primamerica; William J. Bratton, 51, former Police Commissioner of New York City; Franklin C. Brown, 71, Vice Chairman; Preston Robert Tisch, 73, Co-Chairman, Loews Corporation; Leonard N. Stern, 61, Chairman, Hartz Group, Inc.

Carnival Corp. - Micky Arison, 49, CEO; Shari Arison, 41, daughter of Ted Arison, former CEO; Maks L. Birnbach, 78, Chairman of Fullcut Manufacturers; Atle Brynestad, 45, Chairman of Cunard, a subsidiary; Richard G. Capen, 64, former publisher of Miami Herald; David Crossland, 52, Chairman of Airtours, a travel group; Robert H. Dickinson, 56, President of Carnival Cruise Lines; James M. Dubin, 52, partner of Paul, Weiss law firm; Howard S. Frank, 57, Vice Chairman; A. Kirk Lanterman, 67, Chairman and CEO of Holland America Line; Modesto A. Maidique, 58, President of Florida International University; William S. Ruben, 71, President of William Ruben, a consulting firm; Stuart Subotnick, 57, Executive Vice President of Metromedia Company; Sherwood M. Weiser, 68, Chairman of Carnival Resorts and Casinos; Meshula, Zonis, 65, Senior Vice President; Uni Zucker, 63, Partner, Bear Stearns.

Conseco - Stephen C. Hilbert, 53, CEO; David R. Decatur, 60, President, Decatur Medical Center; Donald F. Gongaware, 63, Retired Executive Vice President; John M. Mutz, 63, President, PSI Energy; Robert S. Nickoloff, 70, ex Chairman, Medical Innovation Capital; Lawrence M. Coss, 60, Ex CEO, Green Tree Financial Corporation; Rollin M. Dick, 67, Executive Vice President; James D. Massey, 64, Retired CEO, Merchants National Bank; Dennis E. Murray, Sr., 59, partner of Murray & Murray law firm; Ngaire E. Cuneo, 48, Executive Vice President; M. Phil Hathaway, 69, Retired Treasurer, Cook Group.

North Face - James G. Fifield, 56, CEO; William N. Simon, Vice Chairman; Marsden S. Cason, 56, Chairman; Christopher F. Crawford, 41, General Manager of California Operations; Jeffrey C. Mack, 36, acting CFO; Karl Heinz Salzburger, 41, CEO of North Face (Europe) Inc; Robert P. Bunje, 54, President of Bunje Pacific Consulting; Michael Doyle, 56, President of Michael Doyle Associates; Michael J. Solomon, 60, President, Solomon Broadcasting, International.

The Walt Disney Co. - Michael D. Eisner, 56, CEO; Judith L. Estrin, 43, Senior Vice President of Cisco; Sanford M. Litvack, 62, Senior Executive Vice President; Sidney Poitier, 71, actor; Robert A.M. Stern, 59, architect; Andrea Van de Kamp, 55, Chairman of Sotheby's West Coast; Reveta Bowers, 50, Head of School for the Center for Early Education; Roy E. Disney, 68, Vice Chairman; Ignacio E. Lozano, Jr., 71, Publisher of La Opinioo; George J. Mitchell, 65, ex-U.S. Senator; Gary L. Wilson, 58, Chairman of Northwest Airlines; Stanley P. Gold, 56, president Shamrock Holdings; Thomas S. Murphy, 73, ex-CEO of Capital Cities/ABC; Fr. Leo J. O'Donovan, 64, President of Georgetown University; Irwin E. Russell, 72, attorney; Raymond L. Watson, 72, Chairman of the Executive Committee and ex-Chairman of the Board.

Source: Board member listings reflect most recent proxy statements.

RELATED ARTICLE: THE "BEST" BOARD DIRECTORS

Cummins Engine Co. - Harold Brown, 71, Counselor, Center for Strategic & International Studies, partner, Warburg, Pinous & Co.; Robert J. Darnall, 60, Pres & CEO, ISPAT North America; John M. Deutch, 60, Institute Professor, Massachusetts Institute of Technology; Walter Y. Elisha, 66, Retired Chairman & CEO, Springs Industries; Hanna H. Gray, 68, President Emeritus, University of Chicago; James A. Henderson, 64, Chairman & CEO, Cummins Engine; James A. Johnson, 55, Chairman, Executive Committee, Federal National Mortgage Association; William I. Miller, 42, Chairman, Irwin Financial Corporation; William D. Ruckelshaus, 66, Principal, Madrona Investment Group, LLC; Henry B. Schacht, Senior Adviser & former Chairman, Lucent Technologies; Theodore M. Solso, 51, President & COO, Cummins Engine; Franklin A. Thomas, 64, Consultant, TFF Study Group; J. Lawrence Wilson, 63, Chairman & CEO, Rohm & Haas Co.

Warner Lambert Co. - Robert N. Burt, 61, Chairman & CEO, FMC Corp.; Donald C. Clark, 67, Retired Chairman & CEO, Household International, Inc.; Lodewijk J. R. De Vink, 54, President & COO, Warner-Lambert; John A Georges, 68, Retired Chairman & CEO, International Paper William H. Gray III, 57, President & CEO, United Negro College Fund; William R. Howell, 63, Chairman & CEO Emeritus, J.C. Penney Company, Inc.; Lasalle D. LeFall, Jr., 68, Professor of Surgery, Howard University College of Medicine; George A. Lorch, 57, Chairman & CEO, Armstrong World Industries, Inc.; Alex J. Mandl, 55, Chairman & CEO, Teligent, Inc.; Michael I. Sovern, 67, President Emeritus, Columbia University.

AlliedSignal - Hans W. Becherer, 63, Chairman & CEO, Deere & Co.; Marshall N. Carter, 58, Chairman & CEO, State Street Corp.; Robert P. Luciano, 65, Retired Chairman & CEO, Schering-Plough Corp.; Robert B. Palmer, 58, Former Chairman & CEO, Digital Equipment Corp.; John R. Stafford, 61, Chairman & CEO, America Home Products Corp.; Lawrence A. Bossidy, 64, Chairman & CEO, AlliedSignal; Ann M. Fudge, 47, Executive Vice President, Kraft Foods; Frederic M. Poses, 56, President & COO, AlliedSignal; Robert C. Winters, 67, Chairman Emeritus, The Prudential Insurance Co.; Henry T. Yang, 58, Chancellor, University of California, Santa Barbara; Russell E. Palmer, 64, Chairman & CEO, The Palmer Group; Ivan G. Seidenberg, 52, Chairman & CEO, Bell Atlantic; Andrew C. Sigler, 67, Retired Chairman & CEO, Champion International; Thomas P. Stafford, 68, Consultant, General Technical Services.

Chevron Corp. - Samuel H. Armacost, 59, Chairman SRI International; Kenneth T. Derr, 62, Chairman & CEO, Chevron; Sam Ginn, 61, Chairman & CEO, AirTouch Communications; Carla Anderson Hills, 65, Chairman & CEO, Hills & Co. International Consultants; J. Bennett Johnston, 66, Former US Senator and CEO, Johnston & Associates; Richard H. Matzke, 62, Vice President, Chevron; David J. O'Reilly, 52, Vice Chairman of the Board, Chevron; Charles M. Pigott, 69, Chairman Emeritus, PACCAR Inx.; Condoleezza Rice, 44, Provost & Vice President, Stanford University; Frank A. Shrontz, 67, Former Chairman of the Board, The Boeing Co.; James N. Sullivan, 61, Vice Chairman of the Board, Chevron; Chang-Lin Tien, Distinguished Professor of Engineering, University of California, Berkeley; John A Young, 66, Vice Chairman, Novell.

International Paper Corporation - Samir G. Gibara, 59, Chairman CEO and President, The Goodyear Tire & Rubber Co.; James A. Henderson, 64, Chairman & CEO, Cummins Engine Co.; Jane C. Pfeiffer, 66 Management consultant; Jeremiah J. Sheehan, 60, Chairman & CEO, Reynolds Metals Co.; C. Wesley Smith, 59, Executive Vice President, International Paper; W. Craig McClelland, 64, Former Chairman & CEO, Union Camp Corp.; Robert D. Kennedy, 66, Former Chairman & CEO, Union Carbide Corp.; Peter I. Bijur, 56, Chairman & CEO, Texaco Inc.; John T. Dillon, 60, Chairman & CEO, International Paper; John R. Kennedy, 68, Retired Chairman & CEO, Federal Paper Board Co.; Robert J. Eaton, 59, Chairman of the board of management, Daimler-Chrysler AG; John A. Georges, 68, Retired Chairman & CEO, International Paper; Donald F. McHenry, 62, Distinguished Professor of Diplomacy, George-town University; Patrick F. Noonan, 56, Chairman, The Conservation Fund; Charles R. Shoemate, 59, Chairman, President & CEO, Bestfoods.

Source: Board member listings reflect most recent proxy statements.

Formerly the CEO of F.&M. Schaefer (1972-1977), Robert W. Lear is chairman of CE's advisory board. He taught at Columbia Business School, where he was executive-in-residence until June 1999. He has been a director of many companies and is on the advisory boards of five small firms. He is a partner of Lear, Yavitz & Associates, corporate governance consultants.

Boris Yavitz is dean emeritus of Columbia Business School. He works as a governance consultant and has served on the boards of the Federal Reserve Bank of New York, J.C. Penney Co., Sterling Drug, Barnes Group, Crane Co., St. Regis Corp., Medusa Corp., and Israel Discount Bank of New York. He was also chairman of NACD's 1994 Blue Ribbon Commission on Corporate Governance. He is a partner of Lear, Yavitz & Associates.