Subject: [NEXTEL-1] Scandal Firms' Former Directors in Demand

From: [email-masked]
Date: Wed, 28 Jul 2004 00:24:29 -0400

Scandal Firms' Former Directors in Demand
July 25, 2004 6:18:00 PM ET

By Mark McSherry

NEW YORK (Reuters) - Former board members of scandal-hit companies such
as Enron and WorldCom once seem destined to become corporate pariahs,
viewed as inept or worse.
But for some, the reality has been quite different.

Rather than being shunned, some have retained board memberships at other
publicly traded companies and, in some cases, even added to them,
according to The Corporate Library, a corporate governance analysis
firm.

TCL tracked more than 20 individuals who were on the boards of Enron
Corp. , WorldCom Inc. , Adelphia Communications Corp. , and Global
Crossing Ltd (GLBCE) before the firms filed for bankruptcy protection,
and found they currently hold over 50 board seats of U.S. publicly
traded companies.

``Shareholders do seem to care and do recognize directors' reputations,
but the consequences of all this are rather mixed,'' wrote researchers
Jackie Cook and Randy Evans in a TCL report.

``Some directors with Enron or Global Crossing skeletons in their
closets are being squeezed off boards. But it must be difficult to judge
a new board nominee based on their resume alone.''

SCRUTINIZED

TCL said many of the board seats currently held by former directors of
Enron, Worldcom, Adelphia and Global Crossing are at smaller public
firms, where shareholder bodies may be less activist and practices
receive less scrutiny from media and governance ratings agencies.

But some sit on boards at major firms.

Former Enron director Frank Savage serves on the boards of defense
contractor Lockheed Martin Corp. (LMT) and money manager Alliance
Capital Management Holdings (AC).

Former Secretary of Defense William S. Cohen, who was a director of
Global Crossing before its bankruptcy, is on the boards of media
conglomerate Viacom Inc. (VIAb) and insurance giant American
International Group Inc. (AIG).
Ex-Enron director Herbert S. Winokur sits on the boards of Chicago-based
communications company CCC Information Services Group Inc. (CCCG) and
NATCO Group Inc. (NTG), an oil and gas services firm.

Former Global Crossing director William E. Conway is a director of both
Nextel Communications, Inc. (NXTL) and United Defense Industries Inc.
(UDI).

TCL said directors of companies that enter into bankruptcy proceedings
are required to disclose this fact to any new board they join for the
following five years.

In some cases, however, companies have stopped passing on this
information in proxy materials distributed to shareholders, TCL said.

UNCONCERNED

Why are some firms seemingly unconcerned about directors' past links
with problem companies?
``A more fundamental explanation is that corporate performance,
including failure, is difficult to distill to the level of individual
decisions,'' reported Cook and Evans.

Spokespeople for Lockheed Martin, Viacom, United Defense and CCC
Information all voiced support for their directors who once served of
boards of troubled companies.

Corporate governance expert Richard Steinberg, founder of Steinberg
Governance Advisors, Inc. of Westport, Connecticut, said ex-directors of
troubled firms need not be excluded from directorships at other firms.
``I believe it needs to be considered on a case by case basis,'' he
said.
© 2004 Reuters
http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20040725&ID=3918007

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