The best and worst boards of 1995: evaluating the boardroom.

THE TREND TOWARD INDEPENDENT, PARTICIPATIVE BOARDS CONTINUES TO EVOLVE AT MOST COMPANIES, BUT SOME STILL JUST DON'T GET THE MESSAGE: GOOD CORPORATE GOVERNANCE IS GOOD BUSINESS.

Some say the third time is the charm. We'd hoped that when we set out this year to evaluate the work of America's corporate boards, we'd find that the lessons of the past few years had been so well learned that there would be few, if any, candidates for the "worst board" title. Unfortunately, once again, we turned up numerous companies that are still clinging to the anachronisms of dependent directors, tyrannical managements, and fuzzy governance guidelines.

Granted, many more candidates this year qualified as strong boards, and many fewer as weak ones. Companies increasingly are rearranging their board structures and practices in line with more "enlightened" corporate-governance procedures, according to recent director surveys conducted by the National Association of Corporate Directors, The Conference Board, and Korn/Ferry International. This trend is gaining momentum as entrenched executives retire and new director voices are heard.

Nonetheless, we are not corporate-governance "Pollyannas." Far too many companies still only pay lip service to improving corporate governance. And far too few formally and thoroughly evaluate their CEOs, their boards, and their individual directors. While the picture is brighter and much progress is being made, corporate America still has a long way to go.

The first time we evaluated U.S. boards, using 1992 proxies, we concentrated largely on board composition. We hypothesized that unless a company started with the proper mix of board directors, it greatly reduced its chances of achieving good corporate governance. For example, we picked W.R. Grace as one of our worst boards, a choice born out by subsequent events, including the ouster of Chief Executive J.P. Bolduc in a firestorm of publicity.

The next time, using 1993 proxies, we focused on board organization. Good composition alone, we felt, was not enough; a logical committee structure and board procedures had to be in place. For example, although it had been vilified by corporate-governance critics in earlier years, General Motors appeared on our best board list because of the company's forthright efforts to improve board policies and practices.

Now, using 1994 proxies covering the 1993 calendar year, we have further refined our approach. Best boards must demonstrate some proactive evidence of positive corporate governance, while the worst ones must show a basic disregard for the structures and procedures currently advocated by most critics.

Our methods of selecting the best and worst boards are not scientific. We asked scores of corporate observers - Chief Executive readers and other CEOs, directors, academics, consultants, investors, shareholders, and writers - to give us their nominations for both good and bad performers. During the past year, we monitored news stories for other possible candidates. In all, we screened about 200 companies with more than $250 million in revenues and studied in depth the proxy statements of potential candidates before making our choices. In the process, we refined our criteria for determining what constitutes a good or bad board (see sidebar). As in our previous two analyses, we didn't rank these boards, because each is unique in composition, structure, and presentation.

The five companies we selected for their weak boards vary in size, product/service, and market. But they are remarkably similar in their coterie of insiders, their lack of board performance appraisal, and their dominant management. At least one had no CEO succession plan in place, while another turned a blind eye to its chief executive's abuse of power and perks. Directors of such companies should beware; they may be next in the hot seat.

THE WORST BOARDS

MORRISON KNUDSEN

Any roster of bad boards in the last year or so that did not include Boise, ID-based Morrison Knudsen would be incomplete.

The highly publicized mishaps of the Morrison Knudsen board and its CEO include a classic laundry list of corporate-governance sins:

* No outside directors who had ever run or managed an industrial business.

* Most directors either business affiliates or personal friends of CEO William Agee or his wife, Mary Cunningham Agee.

* No board meetings held at corporate headquarters for more than a year.

* Absentee residency of the CEO and purported over-use of the company plane.

* Excessive attention given to the CEO's compensation.

Regrettably, we did not review the 1993 Morrison Knudsen proxy when preparing this article last year. If we had, we would have selected this engineering, construction, mining, and rail concern as one of our worst boards well before the barrage of publicity. The 1993 proxy ran 43 pages, 38 of which concerned the compensation programs of CEO Agee and the top officers. It was no surprise that Peter Ueberroth, chairman of the Compensation Committee, resigned from the board last November.

It was not until two more directors were added in late 1994 and early 1995 that the board began to do anything about Agee's peccadilloes and the company's fast-fading performance. Even so, the board waited until this April to bring in R.S. Miller to save the company from bankruptcy.

ARCHER DANIELS MIDLAND 

We were prompted to examine ADM's board when allegations of price-fixing at the Decatur, IL-based agricultural company hit the press this summer. ADM and its chairman and CEO, Dwayne Andreas, have long been known for strong lobbying and giving large political gifts.

ADM's board is packed with the CEO's relatives, friends, and insiders. Of 17 directors, 10 are members of the founding families or are present/retired company executives. Five are high-profile friends of the CEO - Robert Strauss of Washington fame; Brian Mulroney, former prime minister of Canada; Mrs. Nelson Rockefeller; F. Ross Johnson, former CEO of RJR; and H.G. Buffett, son of Warren Buffett. J.K. Vanier is the brother-in-law of H.D. Hale, president of ADM Milling. Only Harvard Business School Professor R.A. Goldberg seems to be unrelated or unconnected.

Directors receive a $37,500 retainer fee, plus a $37,500 fee for serving as a committee member, with a maximum of $100,000. Apparently, Johnson and Vanier got the maximum.

The Salary and Stock Option Committee stated that the "company's compensation program is informal and rather simple." Perhaps that's why the CEO's salary is $2.97 million and not based on performance.

CROWN CORK & SEAL

Kicking and screaming, Philadelphia-based Crown Cork & Seal balks at entering the era of better corporate governance. For many years, this $4 billion packaging company was led by a dynamo of a CEO, John F. Connelley. Following Connelley's death in 1990, his successor, William J. Avery, has done little to change the firm's old-fashioned corporate-governance structure.

The board has 15 directors, eight of whom are present or former employees. Four of the other directors have affiliations: Josephine Connelley Mandeville, president and CEO of the Connelley Foundation and daughter of the former CEO; her husband, Owen Mandeville; the company's outside legal counsel; and a management consultant. Only two directors appear to be completely independent.

There is little or no evidence to show that the board evaluates the CEO, itself, or individual directors. The chairman of the Compensation Committee is Harold Sorgenti, the well-regarded former CEO of ARCO, but he is in the minority of so many beholden directors.

CBS 

At first glance, New York-based CBS' board looks good. It has 10 directors, with CEO Laurence Tisch and his brother, P.R. Tisch, as the only non-independents. Unfortunately, the eight others are not "boat rockers" who will give their 72-year-old, monarchical CEO any trouble.

The directors are all well-known: Henry Kissinger; Ellen Futter of the Natural History Museum; investment banker James Wolfensohn, now head of the World Bank; Harold Brown, former Secretary of Defense; Franklin Thomas of the Ford Foundation; and former CEOs Michel Bergerac of Revlon, Henry Schacht of Cummins Engine, and Edson Spencer of Honeywell.

Director compensation is about average for a company of CBS' size - $30,000 retainer, $3,000 or $1,250 for committee chairmen and $1,000 for each meeting attended. Five directors own fewer than 500 shares of stock. Interestingly, none of the directors has taken advantage of a deferred compensation plan that invests in the TV/radio network company's stock.

Despite falling to a distant third in prime-time programming ratings and selling off most of its non-broadcast properties while competitors were expanding, CBS gave its CEO a vote of confidence: The Compensation Committee proclaimed that Laurence Tisch's overall performance in 1994 was "excellent" and awarded him in October 1994 a 9.4 percent increase in salary, a $900,000 bonus, and a grant of 45,000 stock options.

While the sale of the company to Westinghouse Electric gives Tisch a huge capital gain, it adds little to CBS' position and contrasts sharply with the better deal Capital Cities/ABC struck with Disney.

WALT DISNEY 

We selected Disney as one of our worst boards several weeks before the announcements of the merger with Capital Cities/ABC and the appointment of Michael Ovitz as president. These were exciting moves, engineered by a brilliant executive, CEO Michael Eisner.

But nothing can change the fact that the Burbank, CA-based entertainment company has been in disarray. In the last two years, President Frank Wells died in a plane crash; several key executives resigned; and CEO Eisner underwent a bypass operation with no successor in place. All while the board seemingly sat idly by.

It was easy to see why this was so when we analyzed the board's composition. Six directors are present or past employees or do business with the company. There is also an actor, a school superintendent, a foreign-language newspaper publisher, a land developer, and two business executives - Gary Wilson, co-chairman of Northwest Airlines, and Stanley Gold, chairman of L.A. Gear.

Under such circumstances, it usually takes a coterie of strong, experienced, independent directors to stand up to a forceful chairman/CEO and demand that he create a succession plan.

While Disney seemed to be dragging its feet at first, the company has gone some way to rectify the situation. Through the Capital Cities/ABC deal, Disney acquired a strong director in Thomas Murphy, who coincidentally is chairman of the Committee of Nonmanagement Directors of Texaco, one of our best boards. In addition, it has access to some other excellent Capital Cities/ABC directors. And in hiring Michael Ovitz, Disney acquired a successful entertainment industry executive of sufficient caliber to succeed Eisner.

Will all this lead to better corporate governance at Disney? It is obviously a step in the right direction, but questions still remain. Will Eisner and Ovitz be able to work together constructively? Will Murphy be as strong and influential in board affairs as he has been at other companies? Will Eisner allow an independent board to have an equal or greater say in matters such as new director nominations, committee appointments, executive compensation, management succession, and CEO evaluation?

THE BEST BOARDS

Unlike our worst board selections, our best boards have entered corporate governance's Age of Enlightenment. They have written governance guidelines that include specifications for selecting new directors and criteria for board evaluations. With an average of 13 members, most have only one or two insiders - who don't serve on the audit, compensation, or nominating committees - and no personal friends of the CEO or other beholden directors.

All five companies are working to increase director share ownership and thus strengthen board involvement. Meanwhile, the compensation committees' reports in the proxy statements of the best boards are more detailed and explanatory than those in the worst. In general, they attempt to realistically link CEO pay with performance and underscore the creativity of individually tailored incentive programs.

We chose at least one of our best boards for its coolness under fire, anchored by a willingness to make difficult decisions, stand by management, and hang tough in a crisis. As many CEOs can attest, there's simply no substitute for having an independent, seasoned board in your corner - even in not-so-trying times.

TEXACO

At last, a company that firmly - and publicly - asserts that good governance is good business in that it creates long-term value for shareholders. In last year's roundup, we selected Texaco as one of the five best, based on the effective restructuring of its board and its accomplishments. This year, we re-elect the White Plains, NY-based oil and gas company for its focused, whole-hearted communication of its commitment to good governance and its continued willingness to lead the pack in this area.

Texaco's proxy opens with 21 pages on "Information Concerning the Board of Directors: Its Governance Procedures, Committees, and Compensation." The next major section, "Executive Compensation," fills the remaining 10 pages. Both sections provide clear, interesting, and often original insights into Texaco's governance processes and values. The tone and style are anything but legalistic boilerplate.

The company's Committee of Non-management Directors provides a forum in which only outside directors participate in certain decisions involving executive development, compensation, and succession. This committee also annually appraises CEO performance.

Texaco's Compensation Committee report clearly explains the three components of executive compensation: salary, bonus, and long-term incentives. Reliance on objective formulas and subjective judgments are noted. As executives rise in rank, a larger portion of their total compensation is put at risk by tying it to corporate performance.

Spearheading a charge toward written corporate-governance policies; Texaco spells out guidelines and specifications for selecting new directors and lists criteria for evaluating the performance of the board, its committee structure, and duties.

MCDONALD'S

Corporate-governance guidelines at Oak Brook, IL-based McDonald's provide food for thought. They include a rather original approach to the controversial issue of the non-executive chairman. Some people believe the chairman and CEO roles should be separate, while others argue for bestowing both titles on the company leader. McDonald's doesn't take a stance, but its guidelines declare that "the board retains the right to exercise its discretion in combining or separating the offices of chairman and chief executive officer."

The guidelines also call for two types of executive board sessions. One with the CEO is held at each board meeting. At one such meeting, directors evaluate the performance of senior management and talk about succession planning and executive development. This is an effective way of formalizing discussions of topics that all too often are ignored or swept under the rug. In addition, twice a year, outside directors have an opportunity to meet without management present.

Director responsibilities are summarized in five one-sentence bullets. The last one meets the latest board challenge: evaluating its own effectiveness, as well as selecting and recommending an appropriate slate for election. Nominating Committee duties include performance evaluations of individual directors and the entire board.

A recently adopted stock-option plan for outside directors offers a new twist. A grant of 1,000 options per year, vesting in three equal annual installments, is designed to align director and shareholder interests and increase director share ownership.

The composition of the fast-food company's board generally jibes with good governance criteria. The proxy cites the board's growing diversity, noting the presence of "one female and one minority male." Nevertheless, there is room for improvement, particularly by trimming the 17-member board and reducing the number of insiders from seven to two.

CATERPILLAR

Caterpillar's board looks good on paper. It is well-structured, organized, and staffed. Even more impressive, though, is the board's behavior during crisis.

A long, and sometimes violent, union strike put enormous pressure on Peoria, IL-based Caterpillar's management. The board assessed the situation, decided management's strategy was correct, and vigorously backed the CEO and his team. A tower of strength, the board never pressed management to take the path of least resistance by caving in to the union's demands.

Caterpillar's 12-member board includes two insiders (the chairman/CEO and vice chairman), as well as the retired chairman. It also boasts an experienced female director and a minority member, several CEOs, a former Secretary of Agriculture, an academic, and a banker.

The Audit and Compensation Committees consist solely of outsiders. The Nominating Committee, in addition to the traditional role of selecting new directors, is charged with identifying possible candidates for chairman, CEO, and other executive positions. This added duty may explain the inclusion of the current and former CEOs as members of the Nominating Committee. However, this can lead to bias or conflicts of interest.

Caterpillar's board also has a Public Policy Committee that monitors the earth-moving and heavy equipment manufacturer's worldwide code of conduct and compliance with regulations such as the Foreign Corrupt Practices Act and applicable disclosure laws.

Director compensation is relatively generous. It includes a pension plan and seeks to encourage director share ownership. The annual retainer is $30,000, plus a fee of $1,000 for each meeting attended. Committee chairmen receive an additional $5,000 retainer. In 1994, each director was granted stock options for 1,000 shares (since doubled by a 2-for-1 stock split). A pension plan for directors who reach the age of 70 and have served over five years provides for retirement income equal to the annual retainer at the time of their retirement. Directors may defer 50 percent or more of their annual compensation and can elect to have such deferrals kept in a share-equivalent account, which is credited with quarterly dividend accruals.

Compensation may be described as generous, but based on its performance in 1994, Caterpillar's board earned its keep.

AMERITECH

Telephone, power, and electric companies typically have large boards with as many as six insiders. The outsiders often consist of a mix of prominent regional citizens: executives, bankers, lawyers, as well as political, academic, or cultural leaders. Some Baby Bells still retain a certain "utility board" flavor. Not so Chicago-based Ameritech.

This telecommunications company has a strong and businesslike board. Of 13 members, only two - the chairman/CEO and vice chairman - are insiders. The remainder include eight active CEOs, an executive vice president of a major corporation, a former university president, and a former Secretary of Labor. Two are women, one a minority.

Directors represent the diverse industries Ameritech serves, including retailing, manufacturing, and pharmaceuticals. While we applaud the strong managerial representation, we recommend trading one CEO for a scientist or technical expert in communications or electronics.

Ameritech's Audit, Compensation, and Nominating committees are composed of all outsiders. Insiders serve only on the Executive and Finance committees.

Board compensation includes an interesting feature for increasing director share ownership. Relatively generous cash compensation comprises a $41,000 retainer, plus an additional $5,000 retainer for each committee served on ($6,000 for chairmen). Directors may defer all or part of their retainers, and can keep such deferments in common stock. As an incentive, dividend payments are credited to these accounts.

The company also encourages director stock ownership through its Stock Retirement Plan for Non-Employee Directors. Under this plan, directors annually receive 1,500 shares, for a maximum of six years. Each award is "grossed up" with additional cash to cover federal, state, and local taxes. Thus, each director who serves six or more years will own at least 9,000 shares at retirement.

Executive compensation comprising salary, short- and long-term incentives likewise is designed to encourage management stock ownership. An interesting provision in Ameritech's Management Committee Short-Term Incentive Plan: After specifying the financial criteria to be achieved each year, the Compensation Committee has the authority to reduce or eliminate - but not increase - any awards payable under the plan.

While Ameritech's strong board may not be the primary factor in its performance, the company's five-year returns graph shows it has consistently outperformed its peer group - the six other Baby Bells.

GENERAL RE

Philadelphia-based General Re's board and committee structure appear strong and well-suited to the property/casualty reinsurance industry and markets. The 12-member board includes two women and two insiders - the chairman and vice chairman. The outside directors represent an impressive mix of skills and backgrounds: professional managers (CEOs and retired senior executives of well-managed corporations), investment managers and advisers, federal government alumni, and noted academics in the fields of finance and accounting standards.

All standing committees, except the Executive and Finance committees, consist entirely of outsiders. The Committee on Directors deals with board compensation and committee structure, plus reviewing the performance of individual directors and carrying out the usual duties of a traditional Nominating Committee.

Director compensation includes an annual grant of non-qualified stock options, after an initial grant of 500 options, as proposed in the 1994 proxy. These options have a 10-year term and include a "reload" feature. Compensation deferral options also tend to encourage director stock ownership.

The executive compensation package consists of salary and short- and long-term incentives; a greater proportion of the total package is placed at risk as the executive rises in rank. Interestingly, the CEO's compensation package includes a grant of non-qualified stock options. Its magnitude depends on the number of basis points by which the company's total return outperforms the S&P 500 and the comparison group.

GET TO WORK

Our third analysis of America's corporate boards reveals that boards are slowly but surely becoming better organized, more diversified, and more independent. More and more companies are trying to refine committee structure and board procedures. And a conclusion reached in our previous two analyses still holds true: It's impressive what a strong board of experienced directors can achieve in a short time to improve corporate governance and to support a company and its CEO, especially in a crisis.

However, a board isn't truly effective until it moves to the next level: taking - and maintaining - a proactive approach to good corporate governance. This means directors must evaluate their individual performance and that of the board as a whole. It means companies must publicly communicate their commitment to good governance. It means boards must tackle controversial governance issues.

So what are you waiting for? It's time to go to work.

RELATED ARTICLE: PARAMETERS OF THE STUDY

Although our study does not purport to be definitive or scientific, in sifting through some 200 proxy statements, numerous directories, and accounts in the business press, and in conversations with many experienced directors and CEOs, we adhered to the following guidelines:

* No attempt was made to gain access to board meetings or to witness the dynamics of director interaction. We relied on relatively objective, publicly available information in evaluating the key aspects of board composition and structure.

* 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 at 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.

RELATED ARTICLE: MONITORING BOARD SELF-ASSESSMENT

Today's boards seem to have gotten the hang of handing out CEO report cards, but they appear a little reluctant to grade themselves. According to Korn/Ferry International's 22nd Annual Board of Directors Study (1995), 67 percent of mid-sized companies have a formal process for evaluating CEO performance (for companies over $5 billion, it's 78 percent). That's more than double the mere 26 percent of boards that appraise themselves on a regular basis.

Obviously, it's not exactly fun to stare at yourself in the mirror looking for flaws, but no one ever said a director's job is easy. Most people, corporate board members included, are predisposed to think they and their peers are performing well. It can be awkward, even embarrassing, for directors to speak frankly to colleagues about their performance expectations - both as individuals and as the board as a whole.

The answer lies in creating a procedure and criteria for candid, objective self-assessment. We suggest the full board first discuss possibilities and then call a meeting of outside directors in executive session to devise an optimal structure and agenda. One director or a small committee could be chosen to captain the process of scheduling meetings, preparing agendas, assigning tasks, and keeping track of recommendations. The chairman of the Organization or Governance Committee would be a logical person for this job.

The criteria the board measures itself against is partly company-specific, but there are some general responsibilities that apply to all boards. Texaco has done a particularly good job in setting out nine board benchmarks:

1. Review, approve, and monitor tactical plans.

2. Review strategic plans, long-range goals, and performance against tactical plans.

3. Oversee financial health.

4. Monitor activities that pose significant risk.

5. Review performance of CEO and senior officers.

6. Review adherence to corporate "Vision and Values," and responsibilities to stockholders, customers, and the company.

7. Review succession planning for the CEO and executive development.

8. Establish and maintain process for director selection and overall board quality.

9. Monitor the availability of information needed for effective performance by both management and the board.

This list of criteria conforms with both our own recommendations and those recently presented in a National Association of Corporate Directors Blue Ribbon Commission on Governance report.

General Motors' Committee on Director Affairs nominates new directors and annually assesses board performance based on criteria similar to Texaco's. At Unum Corp., a governance committee appraises the board each year and periodically evaluates individual directors on the following criteria: regularity of attendance at board and committee meetings; understanding of the business; soundness of business judgment; candor in personal communications; independence, logic, and objectivity of thinking; clarity of expression of ideas; amount and quality of participation at board meetings; and quality of overall contribution to board effectiveness.

In many cases, a two-step approach to board evaluation may facilitate implementation. Since boards appear more unwilling to assess individual director performance than that of the whole board, the better part of valor might be to establish the overall board appraisal first. Experience being the best teacher, this, we hope, will pave the way for individual director evaluations.

- Boris Yavitz and Robert Lear

RELATED ARTICLE: THE HALLMARKS OF AN EFFECTIVE BOARD

Since our previous two studies, based on the 1993 and 1994 proxy statements, there seems to be a growing consensus on the characteristics of an effective board. Several detailed reports have delved into the trends in corporate governance that are, or should be, taking place in American boardrooms - notably the National Association of Corporate Directors report on "Performance Evaluation of Chief Executives, Boards, and Directors"; the Korn/Ferry "Twenty-second Annual Board of Directors Study of 1995"; and the Louis Harris 1995 report on "Outside Directors and the Risks they Face."

The picture that emerges in these reports resembles the structural criteria we have used in our previous studies. In our selections this year, we attempted to evaluate board composition, structure, and procedures in the context of a company's management characteristics or strategic concerns. As such, boards could be compared based on how well they met these criteria.

The key aspects of effective board composition, structures, and procedures are as follows:

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, serving 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, inactive 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 (compensation, audit, and nominating).

Emerging indications of director independence: Name a non-executive chairman, where applicable. Recognize a "lead director" or equivalent. Form "board affairs" or "independent director" committee. Establish processes for CEO, board, and director performance evaluations.

Conversely, 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 BEST BOARDS

Ameritech: Hanna Holborn Gray, 64, president emeritus, University of Chicago; Arthur C. Martinez, 55, chairman and chief executive, Sears Merchandise Group of Sears, Roebuck & Co.; John D. Ong, 61, chairman and CEO, The BFGoodrich Co.; A. Barry Rand, 50, executive vice president, Operations, Xerox; James A. Unruh, 53, chairman and CEO, Unisys; Richard H. Brown, 47, vice chairman, Ameritech; Sheldon B. Lubar, 65, founder and chairman, Lubar & Co.; Lynn M. Martin, 55, chair, Council for the Advancement of Women, and adviser to Deloitte & Touche LLP; Richard C. Notebaert, 47, chairman, president, and CEO, Ameritech; Donald C. Clark, 63, chairman, Household International; Melvin R. Goodes, 59, chairman and CEO, Warner-Lambert; Richard M. Gillett, former chairman, Old Kent Financial; James A. Henderson, 60, chairman and CEO, Cummins Engine; John B. McCoy, 51, chairman and CEO, Banc One.

Caterpillar. Jerry R. Junkins, 57, chairman, president, and CEO, Texas Instruments; Gordon R. Parker, 59, retired chairman, Newmont Mining Corp. and Newmont Gold Co.; George A. Schaefer, 66, former chairman and CEO, Caterpillar; James P. Gorter, 65, chairman, Baker, Fentress & Co.; Peter A. Magowan, 52, chairman, Safeway, and president and managing general partner, San Francisco Giants; James W. Wogsland, 63, vice chairman, Caterpillar; Clayton K. Yeutter, 64, counsel to Hogan & Hartson; Lilyan H. Affinito, 63, retired vice chairman, Maxxam Group; Donald V. Fites, 61, chairman and CEO, Caterpillar; John W. Fondahl, 70, civil engineer, retired as Charles H. Leavell professor of Civil Engineering, Stanford University; David R. Goode, 54, chairman, president, and CEO, Norfolk Southern; Joshua I. Smith, 53, chairman and CEO, Maxima.

Texaco: John Brademas, 68, president emeritus, New York University; Alfred C. DeCrane Jr., 63, chairman and CEO, Texaco; Thomas S. Murphy, 69, chairman and CEO, Capital Cities/ABC; Charles H. Price II, 64, chairman, Mercantile Bank of Kansas City, and former U.S. Ambassador to the United Kingdom; Robert A. Beck, 69, chairman emeritus and former chairman and CEO, The Prudential Insurance Co. of America; Willard C. Butcher, 68, former chairman and CEO, Chase Manhattan Bank, N.A.; Edmund M. Carpenter, 53, chairman and CEO, General Signal; Franklyn G. Jenifer, 55, president, University of Texas at Dallas; Thomas A. Vanderslice, 63, chairman, president, and CEO, M/A-COM; Allen J. Krowe, 62, vice chairman, Texaco; Robin B. Smith, 55, president, Publishers Clearing House; William C. Steere Jr., 58, chairman and CEO, Pfizer; William Wrigley, 62, president and CEO, Wm. Wrigley Jr. Co.

General Re Corp.: Lucy Wilson Benson, 67, president, Benson and Associates, and former Undersecretary of State; John C. Etling, 59, vice chairman, General Re; William C. Ferguson, 64, chairman, Nynex; Kay Koplovitz, 49, founder, chairman, and CEO, USA Networks; Walter F. Williams, 66, retired chairman, president, and CEO, Bethlehem Steel; Walter M. Cabot, 62, senior adviser to and director, Standish, Ayer & Wood; Andrew W. Mathieson, 66, executive vice president, Richard K. Mellon and Sons; David E. McKinney, 60, self-employed and former senior vice president, IBM; Stephen A. Ross, 51, Sterling professor of Economics and Finance, Yale University; Ronald E. Ferguson, 53, chairman, president, and CEO, General Re; Donald J. Kirk, 62, executive-in-residence, Columbia University Graduate School of Business, and former chairman, Financial Accounting Standards Board; Edward H. Malone, 70, retired vice president, General Electric.

McDonald's: Hall Adams Jr., 61, business consultant, and former CEO, Leo Burnett Co.; Robert M. Beavers Jr., 51, senior vice president, McDonald's; James R. Cantalupo, 51, president and CEO-International, McDonald's; Gordon C. Gray, 67, chairman, Rio Algom Ltd.; Jack M. Greenberg, 52, vice chairman and CFO, McDonald's; Donald R. Keough, 68, chairman, Allen & Co.; Donald G. Lubin, 61, partner and chairman, Sonnenschein Nath & Rosenthal; Andrew J. McKenna, 65, chairman, president, and CEO, Schwarz Paper Co.; Michael R. Quinlan, 50, chairman and CEO, Dun & Bradstreet; Edward H. Rensi, 50, president and CEO-USA, McDonald's; Terry L Savage, 50, financial journalist, author, and president, Terry Savage Productions Ltd.; Paul D. Schrage, 60, senior executive vice president and chief marketing officer, McDonald's; Ballard F. Smith, 48, president and CEO, Sun Mountain Broadcasting; Roger W. Stone, 60, chairman, president, and CEO, Stone Container; Robert N. Thurston, 62, business consultant; Fred L. Turner, 62, senior chairman, and former chairman, McDonald's; B. Blair Vedder Jr., 70, business consultant.

RELATED ARTICLE: THE WORST BOARDS

Morrison Knudsen: Lindsay E. Fox, 58, chairman, Australian trucking company Linfox Group; Irene C. Peden, 69, former professor, electrical engineering, University of Washington; John W. Rogers Jr., 37, president, Ariel Capital Management; Peter S. Lynch, 51, former portfolio manager, Fidelity Magellan Fund; Gerard R. Roche, 63, chairman, executive recruiter Heidrick & Struggles; Robert A. Tinstman, 49, president and CEO, Morrison Knudsen; John Arrillaga, 58, partner, real-estate developer Peery-Arrillaga; Christopher B. Hemmeter, 55, partner and chairman, real-estate developer Hemmeter Enterprises; Robert A. McCabe, 61, president, Pilot Capital; Robert S. Miller Jr., 53, chairman, Morrison Knudsen.

Archer-Daniels-Midland: Dwayne O. Andreas, 76, chairman and CEO, ADM; Ralph Bruce, 77, retired executive vice president, ADM; J.H. Daniels, 72, retired chairman, ADM; H.G. Buffett, 39, vice president, ADM; L.W. Andreas, 72, retired president, ADM; S.M. Archer Jr., 71, private investor; R.A. Goldberg, 67, professor, Harvard Business School; J.K. Vanier, 66, president, Western Star Agricultural Resources; Martin L. Andreas, 55, senior vice president, ADM; Brian Mulroney, 55, former prime minister of Canada; Mrs. Nelson A. Rockefeller, 68, private investor; Michael D. Andreas, 45, vice chairman, ADM; H.D. Hale, 69, chairman and CEO, ADM Milling; O.G. Webb, 58, chairman and president, Growmark; J.R. Randall, 69, president, ADM; F. Ross Johnson, 62, former chairman and CEO, R JR Industries; Robert S. Strauss, 75, partner, Akin, Gump, Strauss, Hauer & Feld.

Crown Cork & Seal Co.: William J. Avery, 54, chairman and CEO, Crown; Henry E. Butwel, 66, retired executive vice president, Crown; Charles F. Casey, 68, former chairman and former CEO, Constar International; Francis X. Dalton, 71, retired treasurer, Crown; Francis J. Dunleavy, 80, former president and COO, ITT; Chester C. Hilinski, 77, counsel, Dechert Price and Rhoads; Richard L. Krzyzanowski, 62, executive vice president, Crown; Josephine Mandeville, 54, president and CEO, Connelley Foundation; Owen Mandeville Jr., 68, president, Mandeville Insurance Associates; Michael J. McKenna, 68, executive vice president, Crown; Alan W. Rutherford, 50, executive vice president and CFO, Crown; J. Douglas Scott, 74, chairman, C.C. and S. of Canada; Robert J. Siebert, 74, former president, CRC Chemicals; Harold A. Sorgenti, 68, former CEO, Arco; Edward P. Stuart, 81, management consultant.

CBS: Laurence A. Tisch, 72, chairman, president, and CEO, CBS; Michel C. Bergerac, 63, former chairman and CEO, Revlon; Harold Brown, 67, former Secretary of Defense; Ellen V. Futter, 45, president, Museum of Natural History; Henry A. Kissinger, 71, former Secretary of State; Henry B. Schacht, 60, former chairman, president, and CEO, Cummins Engine; Edson W. Spencer, 68, former chairman and CEO, Honeywell; Franklin A. Thomas, 60, president and CEO, Ford Foundation; Preston R. Tisch, 68, co-chairman and co-CEO, Loews; Daniel Yankelovich, 70, chairman, D.Y.G.

Walt Disney: Richard A. Nunis, 62, chairman, Walt Disney Attractions; Sidney Poitier, 67, actor; Robert A.M. Stern, 55, architect; E. Cardon Walker, 78, former chairman, president, and CEO, Disney; Reveta F. Bowers, 46, head of school, Center for Early Education; Roy E. Disney, 64, vice chairman, Disney; Ignacio E. Lozano Jr., 67, editor, La Opinion; Gary L. Wilson, 54, co-chair-man, Northwest Airlines; Michael D. Eisner, 52, chairman and CEO, Disney; Stanley P. Gold, 52, chairman, L.A. Gear; Irwin E. Russell, 68, attorney; Raymond L. Watson, 68, vice chairman, land developer Irvine Co.

Formerly the CEO of F.&M. Schaefer (1972-1977), Robert W. Lear is chairman of CE's Advisory Board. He also teaches at the Columbia Business School, where he is an executive-in-residence. With more than 150 years of composite board experience, he is an independent general partner of Equitable Capital Partners and holds directorships with Scudder Institutional Funds; Korea Fund; and Welsh, Carson, Anderson, Stowe Venture Capital Co.

Boris Yavitz is dean emeritus and chair professor emeritus of Public Policy and Business Strategy at the 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 also was chairman of a 1994 Blue Ribbon Commission on Corporate Governance appointed by the Washington-based National Association of Corporate Directors.