National Association of Corporate Directors

1. National Association of Corporate Directors Mario O.Mariasch President and CEO NACD Silicon Valley Chapter Bogotá, Colombia – March 5, 2002 Board Professionalism, Board’s Role in Management and Leadership Development

2. Agenda • The National Association of Corporate Directors • Value of the Board • Value of Outside Directors • Personal Characteristics • Core Competencies • How Do Boards Add Value • Building Board Effectiveness • Board Leadership • Corporate Governance Association Source of data: NACD’s 1999/2000 Public Company Governance Survey

3. The National Association of Corporate Directors • Established in 1977, is the only organization focused exclusively on providing CEO’s, Directors and Boards with Research and Continuing Education. • NACD Enhances Directors Effectiveness • Promotes High Professional Standards • Creates forums for peer interaction • Conducts Research • Educates on Traditional and Cutting-Edge Issues • NACD Operates at National and Local Levels • 10,000 Members/Customers: CEOs, Directors, and Boards • Fortune 1000 and NASDAQ companies • Smaller OTC, venture funded and closely held firms

4. Value of the Board • Provides organization structure to insure, on behalf of the stockholders, that the organization fulfills its purpose and mission. • Determines how the powers which it delegates to executives shall be exercised • Advises the decision makers responsible for balancing the corporate benefits among the stakeholders and holds them accountable for their decisions • Safeguards the stability and continuity of the firm

5. Value of Outside Directors Personal Characteristics Expected to contribute broader perspectives • Integrity - High Ethical Standards • Accountability – Willingness to act on, and remain accountable for their board decisions • Informed Judgment - Ability to provide wise, thoughtful counsel • Credibility - Willingness to raise questions in a manner that encourages open discussion • Diversity - Specific skills, professional experience, gender, ethnic background, geographic origin • High Performance Standards - Directors with history of achievements • Commitment – Time and effort

6. Value of Outside Directors Core Competencies Domain Knowledge, Experience and Skills • Financial Literacy - Expertise in financial accounting and corporate finance • Proven Track Record - Understands/keeps up to date on management trends • Industry Knowledge - Relevant industry specific knowledge • Strategic Vision - To evaluate strategic decisions • Independence - Legal and practical perspectives e.g.director interlocks, consulting, employment

7. CEO’s Top Choices for Directors • Senior managers w/experience outside the company’s industry - 90% • Senior managers w/experience inside the industry - 70% • Professional service advisors - 50% • Technical experts - 45% Source: NACD’s 1999/2000 Public Company Governance Survey

8. CEO’s Ideal Director • Key qualities • Successful Track Record • Integrity and Intelligence • Visionary Strategic Thinker • Less important qualities • Industry Knowledge • Time and Commitment • Financial Background • Public Image and Government Contacts Source: NACD’s 1999/2000 Public Company Governance Survey

9. How Do Boards Add Value • Good governance can create a competitive advantage • Providing an outsideperspective on opportunities and risks that management may overlook • The board can support, counsel, and challenge the CEO and bring higher levels of performance to the enterprise • Maximizing the full potential of the Board and its members impacts total organizational value • Clarifying individual and collective roles and responsibilities of the Board enables greater accountability • Engaging the Board properly in fiduciary oversight, corporate strategy, and selection/succession

10. Building Board Effectiveness • Board Professionalism: Best Practices • Duty of Loyalty - Interest of corporation/stockholders ahead of personal • Duty of Care - Act with diligence/competence of a prudent person • Duty of Candor – Information complete w/o misstatements of facts • Board Structure:Size, Composition, Competencies, Compensation, Committees • Board Information:Agenda, Relevant Data, Education • Board Leadership:The unifying feature of effective boards • Board Evaluation: Process requirements for board and director assessment

11. Board Effectiveness CEOs consider their boards “Highly Effective” • CEO-Board Relations - 66% • Knowledge of Business - 54% • Corporate Governance - 52% • Change of Control - 51% • Regulatory Compliance - 50% Source: NACD’s 1999/2000 Public Company Governance Survey

12. Board EffectivenessTrouble Spots CEOs consider their boards “Below acceptable”: • CEO Succession - 16% • Strategic Planning - 15% • Nomination of Directors - 14% • Corporate Performance - 12% Source: NACD’s 1999/2000 Public Company Governance Survey

13. Board Leadership • Informal and formal leadership • The special responsibilities of the Chairman • The Chairman-CEO relationship • Board leadership transitions/succession • Committee and task force chairs • Effective leaders control the agenda

14. Corporate Governance Association • Mission: Improve corporate performance through better board practices • Strategy: • Affiliations/Alliances w/high profile, nationally recognized Companies, whose products meet corporate governance need. • Non Partisan, with no Legislative/Regulatory/Lobbying agenda • Structure: Nonprofit organization w/Board of Directors and Advisory Board • Management, and staff with experience in: • Corporate Governance Research and Education Programs • Meetings and Conferences • Customer Service/Database & Website Mgmt., Marketing Professionals • Services: • Director’s Monthly Magazine, Manuals, Guidelines, Information • Education – In-Boardroom Programs, Seminars, Annual Conferences • Director’s Registry • Funding: Membership Dues, Sponsorships, Publications, Education Programs

15. “Responsible board members are compelled to become students of governance quite as much as experts in their fields.” John Carver, On Board Leadership

16. Thank YouGraciasObrigado