1. Challenges in Recruiting Independent Board Members Andrea Redmond Russell Reynolds Associates March 10, 2003 R USSELL R EYNOLDS A SSOCIATES

2. Regulatory changes Investor confidence in corporate governance is severely eroded and public disdain widespread Economic challenges General climate of uncertainty Current Situation

3. R USSELL R EYNOLDS A SSOCIATES Time commitment is significantly rising Complexity of the role is increasing Greater shift from approving strategic and operational development to contributing to it Director liability appears to be increasing Honor/appeal of being a director is decreasing Intolerance for inactive directors Greater public scrutiny The Changing Role of the Director

4. R USSELL R EYNOLDS A SSOCIATES The traditional CEO Financial experts Turn-around or crisis management experience International experience Strategy expertise Track record of operational excellence Women & Minorities OUT – professional directors, CMO, CTO, “new economy” CEO The New Board Candidate

5. R USSELL R EYNOLDS A SSOCIATES Analytical approach to director recruitment required Candidates must have impeccable ethics Candidates must have not only the time to for the directorship, but also a passion & enthusiasm for the role Client Concerns

6. R USSELL R EYNOLDS A SSOCIATES Time restrictions Limited CEO quality Operating performance issues Rising scrutiny of D&O insurance Hurdles to Recruitment

7. R USSELL R EYNOLDS A SSOCIATES Broaden the pool Target senior operating officers such as presidents of global business units Do not overlook the CEO of a smaller company  He/she could have come from a much larger business  He/she may have an impeccable track record  Be open to considering success wherever it is found Look at women and minorities  Do not chase the obvious candidates along with everyone else Recruiting Strategies

8. R USSELL R EYNOLDS A SSOCIATES Directors are recruited most successfully when both the CEO and the Nominating Committee commit focused and prioritized attention to the search Demonstrate the importance of the company’s governance to prospective directors through action Do not let the search languish between board meetings Recruiting Strategies

9. R USSELL R EYNOLDS A SSOCIATES Comments on Other Trends Director compensation Lead Directors Separate Chairman & CEO Director evaluation Audit Committee advisor CEO succession planning Executive compensation