2007 Spencer Stuart Board Index Findings Review of S&P 500 Proxies

1. 2007 Spencer Stuart Board Index FindingsReview of S&P 500 Proxies Spencer Stuart William B. Reeves Managing Director, Atlanta

2. Changing Director Profile • Board independence a reality and trend toward more independent board leadership • 81% of directors are independent • On 43% of boards, CEO is the only insider, up from 31% in 2002 • 35% of boards separate the Chair and CEO roles, up from 25% in ’02 • 13% of Chairs are truly independent, up from 10% last year • 94% of boards have lead/presiding director (up from 36% in ’03) • Profile of new directors continues to shift (329 in 2007) • Fewer active CEOs – 33%; down from 41% in ’02 and 53% in ’00 • More active and retired other corporate executives (e.g., division managers and functional unit leaders) – 21% vs. 7% in ’02 • 33% are first-time public company directors • Slight increase in women – 19% vs. 16% in ’02 • More bankers and investors -10% vs. 5% in ’02 • Fewer lawyers, consultants and accountants - 5% vs. 16% in ’02

3. Changing Director Profile, cont’d • CEO increasingly likely to be sole inside director and less likely to serve on any outside boards • CEO sole insider on 43% of boards, up from 31% in ’02 and 23% in ’98 • S&P 500 CEOs serve on 0.8 outside boards, down from 1.2 in ’02 and 2.0 in ’98 • Women directors and women CEOs at all-time high • 91% of boards have at least 1 woman director, up from 82% in ’02 • 55% of boards have 2 or more women directors and 15% have 3 or more women • 15 women serve as CEOs, up from 7 in ’02 • Minority representation not growing • For the largest 200 S&P 500 companies, minorities (including African-Americans, Hispanics and Asians) account for nearly 14% of directors, down slightly from ‘05 • 85% of these boards have at least one minority director • More companies appoint international directors • Half of the top 200 S&P 500 companies have at least one director from outside the U.S., up from 45% in ’05

4. Trends in Governance Practices • Board size and number of meetings relatively stable • 10.8 directors on average • 8.3 board meetings/year on average, up from 7.5 in ‘02 • Mandatory retirement age more prevalent and older • More boards have a retirement age: 79% vs. 55% in ’02 • But older: 67% have age 72+ vs. 35% in ’02 • One-year board terms becoming more common • 62% of boards now have a one-year term, compared to 40% in ’02

5. Trends in Governance Practices, cont’d • Greater disclosure of director recommendation sources • Information on sources of new director recommendations was disclosed for 57% of new appointees. • Director recommendations came from the following sources: • 61% from executive search firms • 19% from insiders (e.g., CEO, controlling shareholders) • 18% from non-management directors • More disclosure of limits on other corporate directorships • 55% of boards disclose limits on other corporate board service by their directors, up from 27% in ‘06 • 18% of boards limit other audit committee memberships for their own audit committee members, with the maximum typically set at 2 or 3. This is up from 5% in ’06

6. Committee Trends • Committees meeting more • Boards with 11+ audit cmte mtgs: 35% vs. 1% in ‘02 • Average number of audit committee meetings is 9.5 vs. 5.0 in ’02 • Compensation committees met on average 6 times, up from 5.8 in ’05 • Nominating committees met on average 5 times, up from 4.4 in ’05 • Audit chairs less likely to be CEOs/top executives • Fewer active CEOs: 18% vs. 27% in ‘02 • More retired CEOs: 24% vs. 18% • More active/retired CFOs: 13% vs. 3% • More active/retired accountants: 10% vs. 1% • Compensation and nominating committee chairs are most often retired CEOs/top executives • CompCo chairs: 38% retired CEOs; 23% active CEOs • NomCo chairs: 25% retired CEOs; 22% active CEOs

7. Non-Executive Chairs • 35% of boards have separated the CEO/chair roles, up from 32% in ’06 and 25% in ’02 • 13% of NECs are independent, up from 10% in ’06 • Independent NEC profile (n=60) • 73% are retired; 27% active executives • 50% are a former CEO of another company • 17% are other retired executives/CFO/COO • 10% are investors/involved in private equity • 87% were on the board before becoming the chair • Additional compensation is paid to 83% of independent NECs • Average additional compensation of $139,000

8. Lead and Presiding Directors • 94% of boards have a lead or presiding director • More boards shifting toward lead director designation • 40% designate lead director, up from 28% • 60% designate presiding director, down from 72% in ‘04 • Fewer boards rotating presiding directors • Of boards with a presiding director, 19% rotate the role, down from 27% in ’06 • And, for those that still rotate, trend is to rotate annually instead of at every board meeting • Role most often filled by retired or active CEOs/presidents/chairs • Additional compensation is paid to 32% of lead/presiding directors • Average additional compensation of $22,600

9. Director Compensation • New disclosure requirements bring transparency to director and top executives’ compensation • Board compensation reflects increased demands on directors • All-inclusive average total compensation is $211,000 • Stock awards - 41% • Options - 16% • Cash - 35% • Other – 8% (e.g., insurance premiums, charitable award programs) • Average cash retainer of $68,560 is up 8% from ’06 and 73% greater than $39,538 in ‘02 • Fewer boards paying meeting fees: 52% vs. 70% • But, meeting fees are higher: $2,027 vs. $1,596 • More pay equity in addition to retainer: 72% vs. 42% • Fewer pay with stock options: 42% vs. 77%

10. Committee Compensation • Committee compensation has increased for chairs and is shifting toward retainers for members • Retainers for committee chairs more prevalent and larger • More boards pay: 88% vs. 55% • Average retainer amount has increased 74% to $10,358 from $5,968 in ‘02 • Committee meeting fees less common • Fewer boards pay, although still a majority: 54% vs. 64% in ‘02 • Average fees have increased to $1,549 from $1,191 • Committee member retainers increasing in popularity • More boards pay: 31% vs. 13% • Average retainer amount has increased to $6,468 from $4,822

11. SSBI Supplemental Survey of Corporate Secretaries • Boards seek more women and minority directors • 73% of boards seek to bring on minorities • 70% seek to bring on women • Boards seek new skills • Financial expertise - 77% • Active CEO/COO – 68% • Retired CEO/COO – 49% • International expertise – 52% • Technology expertise – 36% • Marketing expertise – 35% • Legal expertise – 8% • HR expertise – 7% • Other (e.g., industry) – 22% • Source: 2007 Spencer Stuart Board Index Supplemental Survey. 119 corporate secretaries responding.

12. Supplemental Survey of Corporate Secretaries, cont’d • CEO succession approach varies • 25% of boards do not have an emergency succession plan • 62% of boards include CEO succession on the agenda annually; 34% more than once a year • Primary responsibility for succession planning split between nominating committee (41%) and compensation committee (40%), although many boards now cite that multiple committees or the entire board are responsible • 53% of boards use a formal review process to assess potential successors. Of these, 44% benchmark internal candidates against external ones • 23% of boards encourage top internal candidates to take on outside public board directorships • Shareholder engagement increasingly prevalent • 37% of boards, up from 22% in ’06, report that individual directors had direct contact with shareholders • Most frequently raised topics: CEO compensation (28%), majority voting (22%), and other concerns about board composition (17%) • Source: 2007 Spencer Stuart Board Index Supplemental Survey. 119 corporate secretaries responding.

13. Supplemental Survey of Corporate Secretaries, cont’d • Majority cite limits on outside board service • 58% of boards limit outside public board service for their CEOs. • 7% allow 0 outside boards • 34% allow 1-2 outside boards • 17% allow 3-4 outside boards • 32% of boards limit outside board service for other senior executives • 11% allow 0 outside boards • 19% allow 1-2 outside boards • 3% allow 3 outside boards • SEC disclosure requirements have impacted compensation committees • 82% of boards spent additional time discussing and reviewing executive compensation • 46% held more frequent meetings • 27% attribute compensation policy changes to the new rules • Source: 2007 Spencer Stuart Board Index Supplemental Survey. 119 corporate secretaries responding.