Presented by: William B. Reeves, Atlanta

September, 2007

The Changing Profile of Directors and Trends in Corporate Governance

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Spencer Stuart’s Board Index 2006 - Highlights> Board Composition:

• Average board size stable at 10.7

• Demand for independent directors increased 17% since last year

• 31% of new directors had never before served on a public company

board

• Average age and retirement age are increasing

• Women account for 15% of directors, no change over previous year

• 96% of boards have a lead or presiding director in place (up from

36% in ’03)

• Minorities account for 14% of directors *

• Financial expertise in greatest demand, followed by CEOs ** * Analysis of top 200 S&P 500 companies. ** From supplemental survey, 145 respondents.

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> Compliance Requirements Met: Board independence is a reality

• 81% of directors are independent (only 2 insiders on average)

• On 39% of S&P 500 boards, CEO is only insider

• 33% of boards have separated the Chair and CEO roles, up from 26% in ’01; however, only 10% of chairs are independent

• Independence of key committees: audit, compensation and nominating committees comprise only independent directors

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> Profile of new S&P 500 directors has changed (391 selected in 2006 for S&P 500)• Fewer active CEOs – 29% in ‘06; down from 47% in ‘01• 31% are first-time public company directors –an impressive

group (e.g., $50B CFO, $20B head of mktg/strategy, $30B division president)

• More women – 23% in ’06 vs. 16% in ’01. (However, women make up only 15% of all directors, which reflects only a slight increase from 12% in ’01 and no change since ’05)

• Greater diversity of skills and experience• International experience and perspective are increasingly

important

> Mandatory retirement age and higher age limit more prevalent• More boards have mandatory retirement: 78% vs. 58% in ’01• But at older age: 62% at age 72+ vs. 34% in ’01

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> Audit Committees: More emphasis on true financial expertise• Boards with 11 or more audit committee meetings annually: 37% vs.

1% in ‘02• Fewer active CEOs serve as members: 23% vs. 30% in ‘01

• 54% of boards designate more than one financial expert; 20% designate all audit committee members as financial experts

> Audit chairs less likely to be CEOs• Fewer active CEOs: 19% vs. 27% in ‘01• More retired CEOs: 25% vs. 16% in ‘01• More active/retired CFOs: 10% vs. 2% in ‘01• More active/retired accountants: 9% vs. 2% in ‘01

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> Board compensation has increased • Average cash retainer today of $63,600, is 12% greater than last year

and 70% greater than it was in ‘01• Fewer boards paying meeting fees: 57% vs. 72% in ’01• But, meeting fees are higher: $1,955 vs. $1,535 in ‘01• More pay equity in addition to retainer: 64% vs. 42% in ‘01• Fewer pay with stock options: 51% vs. 72% in ’01

> Committee compensation has also increased• 70% increase in average committee chair retainer: $9,100 vs. $5,354 in

‘01• More companies pay committee chair retainers: 84% vs. 57% in ‘01• Although down from 2001, majority of boards still pay committee meeting

fees: 58% vs. 68%. And meeting fees are $1,500, up from $1,200• More companies have switched to paying committee member retainers:

29% vs. 13% in ‘01. Average retainers are $6,400, up from $5,600 in ‘01

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> Average total compensation (including committee fees) is $179,056 (per Supplemental Survey)

• On average, 62% of this is paid in equity

• Total compensation is up to $211,179 in 2007 survey (not yet released)

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Spencer Stuart’s Board Index 2006Supplemental Survey

> Boards seek new skills and more diversity (145 boards surveyed)• Financial expertise - 75%• Active CEO/COO – 71%• Retired CEO/COO – 35%• International expertise – 52%• Technology expertise – 40%• Marketing expertise – 27%• HR expertise – 5%• Minority – 62%• Women – 50%

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> CEO evaluation, succession, and compensation• Entire board increasingly responsible for CEO evaluation – 43%

up from 13% in ‘01

• 94% of boards discuss CEO succession at least once a year

• Responsibility for CEO succession lies with compensation (44%) or nominating committee (36%), although many boards now cite that multiple committees or the entire board are responsible

• 31% of boards surveyed still do not have an emergency succession plan

• CEO compensation includes restricted stock (79%) and options (81%); 74% of companies say at least a portion of equity awards is performance based

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> Shareholder engagement• 31% of boards have seen increase in shareholder efforts to

contact the board

• Majority voting and CEO compensation are the most frequently raised topics

• 22% report that individual directors had direct contact with shareholders, most often the lead director

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Preliminary Findings from the 2007 Survey *

> The profile of new S&P 500 directors continues to shift away from active CEOs and toward other corporate executives and first-time public company directors

> Fewer active CEOs – 33%; down from 41% in ’02 and 53% in ’00 > More active and retired senior corporate executives (e.g., division

managers and functional unit leaders) – 21% vs. 7% in ’02 > 33% are first-time public company directors > Mandatory retirement age more prevalent and older > 35% of boards have separated the CEO/chair roles, up from 32% in ’06

and 25% in ’02 > More boards shifting toward lead director designation; 40% designate

lead director, up from 28% in ‘04 > Total director compensation is now disclosed in proxies; all-inclusive

average total compensation is $211,179 > Committees meeting more; number of meetings for Big 3 committees all

up from last year * Not yet released

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Future Trends

> More first-time directors

> Greater need for director education

> More new directors are likely to be heir-apparent

executives versus active CEOs

> More diversity in the boardroom

> More strategic focus in board composition

> Board agenda: succession and strategy