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To: Amy J who wrote (167284)	7/2/2002 10:50:06 AM
From: BelowTheCrowd	Respond to of 186894

A couple of comments: it's generally assumed a CEO is in the pocket of the board that selects them That's only half of the picture. The other half of the picture is that over time the CEO tends to make whatever appointments to the board he or she wants, and those are almost never challenged. if boards of companies really wanted to make sure no corruption occurs, they would put an internal person on the board that's below the officer level. The job of the board is to manage management. Part of the reason Enron's board was so ineffective is that there were -- in truth -- no independent board members. Virtually all of them had some sort of tie to MANAGEMENT, and reasons for supporting management's desires for greater salaries, special benefits and loose accounting. Senator Phil Gramm's wife was on the audit committee despite the fact that she's not an accountant and her husband took huge campaign contributions from Enron. She was anything but an independent voice. Same pretty much true for every other board member. Hard to tell what happnened in your friend's situation, I would guess that many of those "outside" directors were anything but independent. More than likely they had ties to the CEO and benefitted from his activities. That wouldn't qualify them as "independent" under the proposed rules. (Keep in mind that if your friend was at a non-public startup, then none of these rules would apply anyway. Non-public companies operate under much less strict rules.) As I said, I think this proposal fails to address the key issue, which is that the major institutional shareholders take little interest in the management of the companies whose shares they own. mg