CONFERENCE BOARD REPORT ON BOARD GOVERNANCE

The enclosed report was authored by: John Snow (Secretary of the Treasury), Peter Peterson (Former Secretary of Commerce), Andy Grove (Chairman of the Board of Intel), John Boggle (Founder of Vanguard Investments), Ralph Larsen (Former CEO of Johnson & Johnson), and Paul Volker (former Chairman of the Federal Reserve System).

It deals with the dysfunction of having the Chairman of the Board and the Chief Executive Officer be the same individual, insuring that Board members focus on long term share holder value, and issues Nominating Committees should have in mind.

The recommendations of this Committee will circulate within the business community during 2003 and 2004.  Expect to see the SEC move in the direction of the Conference Board recommendations in 2004-2005 if not sooner.

As Board members, your choice is to wait until these recommendations are forced on your companies or take advantage of the Good Governance Premium by moving ahead of the pack.

By Good Governance Premium we mean a McKinsey & Company study which indicated that investors ranked good governance equal to financial performance. Investors are willing to pay a premium of up to 25% to invest in companies where investors believe proper checks & balances on management are in place.

If you have reactions/comments to this Report we will be delighted to post them.

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