THE CONFERENCE BOARD

newsletter Winter 2003

The Conference Board Conference Board Forms Directors’ Blue-Ribbon Commission Institute The Conference Board has formed the Calls for Major Reforms Directors’ Institute to provide broad-based education for corporate directors. Endorsed by The Commission on Public Trust and Pri- vate Enterprise, the new Institute offers briefings on key governance issues and pro- vides high-level networking opportunities for directors of major companies. The comprehensive programs will include sessions on compliance, liability and ethics, as well as auditing and compensation issues. Most importantly, it will allow directors to share best practices with their peers. Further information: Diane Insolia, Global Research Center, 212 339 0392

Members of The Conference Board Commission on Public Trust and Private Enterprise at a press briefing in New York. A Call to Tighten Port Security The Conference Board blue-ribbon In a move to restore investor confidence More than 85 business and government lead- Commission on Public Trust and Private and improve corporate governance, the ers met in Washington D.C. to examine pos- Enterprise has called on companies to seri- Commission also recommended that audit- sible terrorist threats to America’s ports. ously consider separating the offices of ing firms confine their activities to auditing. Co-sponsored by The Conference Board chairman of the board and CEO. “The Commission recommends against pub- and Booz Allen Hamilton, the group learned “The roles of the chairman and CEO lic audit firms performing services that put that a “dirty bomb” attack through Amer- should be performed by two separate indi- them in an advocacy position, such as prof- ica’s port system could cost business more viduals,” concludes the Commission’s final fering novel and debatable tax strategies and than $58 billion and have a crippling impact report. “If the chairman is not ‘independ- products that involve income tax shelters on global trade. ent,’ according to strict stock exchange def- and extensive off-shore partnerships.” Security experts said that U.S. port security initions, a ‘lead independent director’ should The Commission was convened by The must be expanded and tightened to include be appointed. It is essential that non-CEO Conference Board in the wake of widespread America’s entire chain of delivery, from pro- chairmen not have any relationships with business scandals. Its first report focused on ducing goods to delivering them to market. the CEO or management that compromises compensation issues and called for the Participants included top executives from their ability to act independently.” expensing of stock options, among other rec- AIG, Chiquita, Maersk, Motorola, P&O Nedl- These were among a wide range of rec- ommendations. loyd and Sara Lee Branded Apparel. Gov- ommendations issued at a press conference The Conference Board’s Website includes ernment leaders attended from the in New York. More than 120 reporters and the full Commission report and other relevant Departments of Defense and Transportation, broadcasters representing worldwide media information: www.conference-board.org U.S. Customs Service, Office of Homeland covered the event. CONTINUED PAGE 2 Security and the Port Authorities of New York, New Jersey and Georgia. Further information: www.boozallen.com THE CONFERENCE BOARD

Shunning China Could Be Big Mistake While Japan is investing heavily in China, many U.S. and European firms are still staying away, concludes a Conference Board economic analysis. Japan is an exception, with 20 percent of its foreign direct investment now flowing into Asia, with China receiving about 25 percent. But declining shares of invest- ment are coming into China from Europe and the . Says Conference Board Chief Economist Gail Fosler: “Many U.S. and European companies have viewed emerg- Ralph Larsen, former Chairman and CEO of Johnson & Johnson, former Chairman of The Business Council, with Professor Lynn Sharp Paine, Harvard Business School. ing Asia as complementary but not essential. But the growing importance of the region suggests that this may CONTINUED FROM PAGE 1 be a mistake.” Members of The Conference Board Commission on Public Trust and Private Enterprise: Source: October 2002 StraightTalk, The Conference Board Co-Chairs Commissioners Peter G. Peterson Chairman of The Blackstone Group, former Secretary of Commerce and Chairman of the Sustainable Growth, Federal Reserve Bank of New York Anyone? John W. Snow Companies are continuing to reduce costs in virtually all Chairman and CEO, CSX Corporation parts of the world. But some firms are not focusing on and former Chairman, Business Roundtable cutbacks. They are emphasizing new growth strategies. A Conference Board Executive Action Report shows John H. Biggs Former Senator that while many companies claim to be innovative in get- former Chairman, President and CEO, Warren Rudman, ting new products to market, few actually are. But it TIAA-CREF Paul, Weiss, Rifkind, John C. Bogle Wharton & Garrison. cites DuPont and 3M among the firms who are using Founder and former Chairman, innovation to both reinvent themselves and grow. “There Vanguard Group, Inc. are two roads to profitability,” says the report. “One is Charles A. Bowsher a short-term fix—reducing operating costs. The other road, former Comptroller General the one less traveled, is a more sustainable option— Peter M. Gilbert creating profitable new business growth.” Chief Investment Officer, State Employees’ Retirement System, Commonwealth of Pennsylvania Further information: see the executive action series at www.conference-board.org Andrew S. Grove Chairman of Intel Corporation Ralph S. Larsen former Chairman and CEO of Johnson & Johnson, former Chairman of The Business Council Charles A. Bowsher, former Comptroller Arthur Levitt Jr. General. former SEC Chairman and former Chairman of the American Business Conference Professor Lynn Sharp Paine John G. McLean Professor of Business Administration, Harvard Business School Former Senator Warren B. Rudman Paul, Weiss, Rifkind, Wharton & Garrison Paul A. Volcker former Chairman of the Board of Governors, Federal Reserve System

John Bogle, Marcia Page, Vice President, Worldwide eMarketing, Founder and former Semiconductors, Texas Instruments Inc., with Tammy L. Richards, Chairman, Vanguard Customer Relationship Management, eMarketing, Semiconductors, Group, Inc. Texas Instruments Inc., at the Marketing Conference. THE CONFERENCE BOARD

U.S. Labor Officer Companies Trim Meets HR Chiefs Pay Increases U.S. Deputy Secretary of Labor, D. Cameron Findlay, met Companies are cutting previously planned pay increases with benefits and human resources corporate leaders at The for all levels of salaried employees. A Conference Board Conference Board to improve the flow of information survey shows that salary hikes this year will average 3.7 between the business community and the Department percent, down from the 4 percent figure previously planned. of Labor. Denise Benou Stires, Continued economic uncertainty, the threat of war, Executive Vice “The Department of Labor is actively working to bring President, Worldwide profit worries, and stock market volatility are cited our programs and policies in line with the realities of Marketing and as major reasons salary increases are being reduced. Firms the 21st Century workplace and economy,” Findlay said. Investor Services, also will be delaying merit increases and eliminating The Nasdaq Stock “My discussion with The Conference Board provided Market, Inc. vacation carryovers. valuable insights and ideas that will help make the Depart- Further information: Charles Peck, Principal Researcher and Program ment of Labor more responsive to the needs of the busi- Manager, Compensation 212 339-0404 ness community.” Deputy Secretary Findlay and the roundtable partici- pants discussed how labor and management can cooper- Why Older Workers ate in furthering workplace safety. He also recommended ways businesses can conform to government regulations. Keep Working Older workers, in large number, are remaining at work because they need the money and the benefits. The Honorable L. Paul Bremer, A Conference Board study of 1500 older workers (50 Keeping Customers Chairman and CEO, and above) shows that fewer than half plan to retire within Marsh Crisis the next five years. Contrary to popular opinion, most and Slashing Costs Consulting, and Customer retention and loyalty, cost reduction, and coun- Former U.S. older workers are not retiring to take care of other fam- Ambassador for tering widespread downward price pressures are the most ily members but are staying on the job to keep their Counter-Terrorism, benefits and remain active. critical management and marketplace issues facing CEOs. at the Corporate The Conference Board’s comprehensive survey of 700 Security and Crisis Most say they are getting little encouragement to keep Management working from their firms. They charge, in fact, that they global business leaders shows chief executives are also Conference. worried about changes in the level and type of competi- have been denied promotion opportunities and are not tion they’re facing and continued industry consolidation. respected. The study shows that many companies that have offered Source: The CEO Challenge: Top Marketplace and Management Issues 2002, Research Report #1322 older workers severance packages have later rehired them, often at higher salaries. Other older workers eligible for retirement are leaving their companies to join other South Pacific Firm organizations. Source: Voices of Experience: Mature Workers in the Future Wins Top Award Workforce, Research Report #1319 John Lefebvre, Turtle Island Resort in the South Pacific has received President, the latest “Best Practices” Award from The Conference Shareholder Board. The Board’s Business Enterprises for Sustainable Relations, at the Board’s Investor Travel (BEST) says the resort has successfully restored Relations meeting. the island to its original state after years of neglect. Turtle Island is effectively testing and measuring the impact of its operations on the local environment, nearby communities, marine resources and produces both envi- ronmental and cultural audits to make sure it is operat- ing in the public interest. BEST honors companies for effective sustainability programs. It is the premier source of knowledge about travel and tourism practices.

Further information: www.sustainabletravel.org Kenneth Lewis, Vice President, Marketing and Brand Development, The Stanley Works, with Maura C. Breen, Senior Vice President and Chief Marketing Officer, Retail Markets, Verizon Communications, at the Board’s Marketing Conference. THE CONFERENCE BOARD

Noted Business Leaders are Trustees of The Conference Board The Conference Board’s new leadership includes four prominent executives named to its Board of Trustees and the re-election of five other business leaders. In addition to Richard E. Cavanagh, President and CEO of The Conference Board, members include:

Elected to the Board of Trustees: Other Members of the Board of Alain J. P. Belda Trustees are: Chairman and Chief Executive Officer, Alcoa Inc. Josef Ackermann Samuel A. DiPiazza, Jr. Spokesman of the Board and Chairman The European Work-Life and Diversity Conference, Chief Executive Officer, of the Group Executive Committee, held in Amsterdam. PricewaterhouseCoopers LLP Deutsche Bank AG Nandan M. Nilekani Ignacio Aranguren Chief Executive Officer, President, President and CEO, and Managing Director Arancia Industrial S.A. de C.V. Infosys Technologies Ltd. The Lord Browne of Madingley, Hutham S. Olayan, Group Chief Executive, BP p.l.c. President, Olayan America Corporation Paul W. Chellgren Retired Chairman of the Board and CEO, Re-elected to the Board of Trustees: Ashland Inc. Niall W. A. FitzGerald, KBE Alan M. Dachs Chairman, President and CEO, Unilever (Vice Chairman) Fremont Group Harry M. J. Kraemer, Jr. S. Dhanabalan Chairman and CEO, Baxter International, Inc. Chairman, Temasek Holdings (Pte.) Ltd. (Vice Chairman) Anne Golden Sharon Patrick President and CEO, President and COO, The Conference Board of Canada Martha Stewart Living Omnimedia, Inc. Gayle Wiley, Diversity and Recruiting Executive, IBM Rijkman W. J. Groenink Eurocoordination, talking to Patrick McLaurin, Director of Robert C. Pozen Chairman of the Managing Board, Diversity and Multinational People Strategy, Booz Allen Secretary of Economic Affairs, ABN AMRO Bank nv Hamilton, at a Conference Board meeting in Amsterdam. The Commonwealth of Massachusetts John S. Hunkin Anne M. Tatlock Chairman and CEO, Chairman and Chief Executive Officer Canadian Imperial Bank of Commerce Fiduciary Trust Company International Ellen R. Marram The Lord Marshall of Knightsbridge, Managing Director, Chairman of British Airways Plc, North Castle Partners, L.L.C. is Chairman of the Board of Trustees. Linda Bardo Nicholls In addition to FitzGerald and Kraemer Chairman, Australia Post (listed above), other Vice Chairmen of Stephen G. Snyder the Board of Trustees are: President and CEO, Robert E. Denham TransAlta Corporation Partner, Munger, Sir Martin Sorrell Barry Macklin, Tolles & Olson LLP Group Chief Executive, Janice O’Neill, Vice President, Senior Vice Christina A. Gold WPP Group plc Corporate President, JPMorgan President, Western Union; C. J. A. van Lede Compliance, Chase, Treasury and Senior Executive Vice President, Chairman of the Board of Management, New York Stock Security Services, First Data Corporation Akzo Nobel nv Exchange, at a recent addressing a Washington SyCip Heinrich von Pierer Board meeting. Conference Board Founder, President and CEO, Siemens AG meeting. The SGV Group

The Conference Board newsletter is written and edited by Randall Poe, Carol Courter, and Sandra Lester. Based on an original design by Scott Adams. ©2003 by The Conference Board, Inc. All rights reserved. Printed in the U.S.A. The Conference Board and the torch logo are registered trademarks of The Conference Board, Inc. AGENDA 2003 THE CONFERENCE BOARD

U.S. Calendar Compensation Conference E-Learning Conference Understanding and Overcoming Pay Challenges Strategic Implementation Bottom Line Impact in the New Business Environment April 8-9, 2003 March 3-5, 2003 Marriott Financial Center, New York, NY Coronado Island Marriott Resort, San Diego, CA Succession Planning Seminar E-Learning Workshop April 10, 2003 E-Learning Strategy and Implementation Inter-Continental Chicago, Chicago, IL F. R. Erskine, March 6-7, 2003 Compensation Conference Project Manager, Ritz-Carlton Battery Park, New York, NY Understanding and Overcoming Pay Challenges Human Resources, Bechtel Group, Inc., Women’s Leadership Conference in the New Business Environment at the Shared Building Inclusion, Building Success April 14-16, 2003 Services Conference. March 11-12, 2003 The Waldorf=Astoria, New York, NY Marriott Financial Center, New York, NY Employee Benefits Conference Antitrust Conference Benefits for the Ages Antitrust Issues in Today’s Economy April 29-30, 2003 March 18-19, 2003 Marriott Financial Center, New York, NY The Waldorf=Astoria, New York, NY Crisis Communication and Management Seminar Annual Diversity Workshops April 30, 2003 Building Global Strategies and Effective Metrics The Waldorf=Astoria, New York, NY for Driving Change March 19-20, 2003 Marriott Financial Center, New York, NY Stephanie K. Conference on Business Innovation Bell-Rose, President, From Follower to Leader The Goldman Sachs March 19-21, 2003 Foundation, at the Business/Education The W Hotel, New York, NY Conference. Talent Management Strategies Conference Aligning Corporate and People Strategies to Create Value March 20-21, 2003 The Waldorf=Astoria, New York, NY Performance Measurement Conference The Implications for Business Execution and Strategy March 26-28, 2003 Loews Coronado Bay Resort, San Diego, CA The Gettysburg Leadership Experience Tim Furey, Chairman and CEO, April 2-4, 2003 Members of the Middle East Council meeting in Dubai. Marketbridge, Antrim 1844 Country Inn, Taneytown, Maryland addresses The Employee Benefits Conference European Calendar Conference Board’s Sales Conference. Benefits for the Ages Business Telematics Conference April 1-2, 2003 Driving Business Value from Coronado Island Marriott Resort, San Diego, CA Mobile Communications Electronic Procurement Conference March 26-27, 2003 Strategic E-Sourcing; Optimization; Marriott Hotel, Supplier Relationship Management and Citizenship, Governance and Risk Spend Management European Companies and Public Trust April 7-10, 2003 April 2-3, 2003 The Wyndham Hotel, Chicago, Illinois Hilton Hotel, Brussels

Paul Holmes, the Holmes Group, at the Enterprise Risk Management meeting. AGENDA 2003 THE CONFERENCE BOARD

New Associates A.T. Kearney (Europe) Fleishman-Hillard Olympus America Inc. Agencja Wlasnosci (Europe) Frederick W. Cook & Co. Pepperdine University Agilent Technologies Gap, Inc. Portal Software, Inc. Allied Domecq (Europe) Gas natural SDG (Europe) Proudfoot Consulting American Express International GlaxoSmithkline (Europe) Puratos Group (Europe) Amerigroup Corporation GlaxoSmithkline Consumer Health Purdue Pharma L.P. Avnet Inc. Global Apex QRS Corporation Robert L. Mallett, Benedictine Health System Great River Energy Railway Safety Senior Vice President, Corporate Careerbuilder.com LLP Guardsmark LLC Root Learning Inc. Affairs, Pfizer, at the Cendant Mobility H. Riesman Corporation Scientific Games Corporation Business/Education Conference. Cherokee Nation Holland & Davis LLC Segal Company Chico’s FAS, Inc. I2 Technologies Shell Oil Products East () CMI Management Services, Inc. ICI (Europe) Shipley Company LLC Colorado Housing and ICS Technology Co. Ltd. Siebel Systems, Inc. Finance Authority Intel Corporation (Europe) Sodexho Comar, Inc. J.P. Morgan (Europe) Stimpel-Wiebelhaus Associates Commerce One, Inc. Larsen Design Office, Inc. Symmetrics Marketing Corporation DSM Pharmaceuticals, Inc. Las Vegas Valley Water District SysTech Integrations Ducon Technolgies Inc. Lattimore Properties, Inc. The PMI Group, Inc. Ralph Rieves, Egon Zehnder International, Inc. Le Moyne College UBS Warburg (Japan) Limited Managing Director, Farragut, Jones & Energetyka Kaliska (Europe) Lominger Limited, Inc. United Utilities (Europe) Lawrence, at the Equity Office Properties London Business School (Europe) University of Houston–Downtown Board’s Investor Relations European Bank for Medstat Group Volkswagen AG (Europe) Conference. Reconstruction (Europe) Mm 02 Plc (Europe) Wipro Technologies Fireman’s Fund Insurance Monster.com YaYa Company Norfolk Southern Companies First Data Corporation Nsight Telservices

Jane Ann Westpheling, General Manager, Global Services Operations, Company, addresses the Shared Services Conference.

Ged Davis, Vice President, Global Business Environment, Royal Dutch Shell, addresses a Conference Board Sue Becht, Senior Vice President, Investor Relations, Duke Energy, at the Investor Relations Conference. audience.