1. “The Board’s Role in Executive Compensation Strategy” Financial Executives International Robert F. Dow Arnall Golden Gregory LLP (404) 873-8706 Robert.Dow@AGG.com March 23,2004

2. New Source of Executive Compensation Guidance for Corporate Boards New listing standards NYSE/Nasdaq/Amex Conference Board Commission on Public Trust and Private Enterprise NACD Report Blue Ribbon Commission Delaware decisions in Disney, Pereira Breeden Report (MCI/Worldcom) New ISS guidelines Countless commentaries from law firms and consultants

3. Lessons from Disney Decision Boards no longer allowed to rubber stamp management proposals  Higher level of diligence required  Need to review terms of major executive contracts  Understand terms under various scenarios, e.g. severance, change-in-control, retirement  Adequate time and analysis of issues  Court is affected by Sarbanes-Oxley and related governance reforms.

4. Quotable Quotes “One of the great, as-yet-unsolved problems in the country today is executive compensation and how it is determined.” W. Donaldson, SEC Chairman, Speech to Nat’l Press Club, 8/1/03 “There is a belief - I suggest it is a myth - that there is no limit to what compensation committees may award CEOs and other managers … Judicial review of these kinds of director decisions is not about dollar amounts in isolation. It is all about process, and process is all about due care and good faith as well as loyalty.” E. N. Veasey, Chief Justice of Delaware, Speech to NACD, 10/21/03

5. Quotable Quotes (cont’d) “[The allegations] give rise to a question whether the defendant directors should be held personally liable to the corporation for a knowing or intentional lack of due care in the directors’ decision making process … [The] complaint suggests that the Disney directors failed to exercise any business judgment and failed to make any good faith attempt to fulfill their fiduciary duties to Disney and its stockholders.” In Re Walt Disney Co. Derivative Litigation, 825 A.2d 275 (Del. Ch. 2003) “The Compensation Committee should exercise independent judgment in determining the proper levels and types of executive compensation to be paid unconstrained by industry median compensation statistics or by the company’s own past compensation practices and levels.” The Conference Board Commission on Public Trust and Private Enterprise, 9/17/02

6. New NYSE Compensation Committee Rules All members must be independent Written charter:  Establishing goals/objective relevant to CEO compensation  Evaluating CEO performance and determining CEO compensation  Recommendation to Board re: non-CEO company, incentive plans and equity-based plans

7. Best Practices for Operation of Committee Frequency and duration of meetings Sufficient materials, sufficient time Calendar and agenda Periodic self evaluation Program to educate committee members

8. Compensation Consultants Selected by and accountable to the committee The reports go to the committee without preview or editing by management Readily available to committee for consultation Provide analysis of executive employment agreements and compensation programs

9. NACD Principles for Compensation 1. Philosophy – clearly articulated philosophy to guide decisions. 2. Independence capacity for objective judgment use independent consultants 3. Fairness Compensation perceived as fair internally and externally Compare to true peer companies

10. NACD Principles for Compensation (cont’d) 4. Long-term shareholder value encourage long-term commitment achieving key metrics over long period of time 5. Link to performance 6. Transparency – simplicity in design, full disclosure

11. Compensation Philosophy Identify strategic objectives of the company Identify key drivers of long-term value Consider both corporate performance and individual performance Link compensation to objectives and performance Benchmarking is an important data point, but not sole determinant Consider mix of compensation elements  Cash – Equity – Deferred – Other benefits

12. Excerpts from SYSCO Compensation Committee Report For executive officers, incentive bonuses earned in fiscal 2003 and paid in fiscal 2004 were calculated under the MIP in two parts. The first part was based on the overall performance of SYSCO and was based upon the interplay between the percentage increase in earnings per share and the return on shareholders' equity. The MIP utilized a matrix based on these two factors to determine award levels, resulting in an award of 161% of base salary to each executive officer participating in this portion of the MIP. The second portion of the fiscal 2003 incentive bonus under the MIP for executive officers was based upon the number of SYSCO operating companies that achieved a target return on capital. This portion of the incentive bonus is paid only when the operating companies achieving the goals, in the aggregate, represent at least 50% of the total capital of all of SYSCO's operating companies, which was the case during fiscal 2003, resulting in an award of 96% of base salary to each executive officer participating in this portion of the MIP.

13. Equity Compensation Analyze aggregate grant values and total shareholder dilution Consider appropriate allocation among executives and employees Consider in relation to total compensation mix Tie grants and vesting to corporate and individual performance Consider requiring executives to build and maintain equity ownership Analyze impact of expensing – are we getting the full benefit in relation to cost?