1. Covering Corporate Governance Laura Cohn Freelance Business Journalist laura.cohn@gmail.com GCGF - IFC PEP SE Media Workshop May 11, 2006

2. Key Questions to Investigate n What are the executives’ incentives? n Who’s watching the company from the inside? n Who’s watching the company from the outside?

3. Positive Incentives n Executive Pay n Salary vs. Options n Role in Enron n Exxon Controversy

4. Executive Pay n The average salary for CEOs at the top 350 U.S. companies rose 7.1% last year to $2.4 million, after jumping a record 14.5% to $2.5 million in 2004. n Including bonuses, stock options, and other incentives, total CEO pay increased 15.8% to $6.1 million last year. In 2004, the figure skyrocketed 40.9% to $5.9 million. Data: WSJ

5. Negative Incentives n Sarbanes/Oxley Requirements Add Red Tape

6. Who’s Watching from the Inside? n Accountants n Internal Controls n Chairman and CEO

7. Disney’s Predicament n Former Disney exec Michael Eisner held two titles--Chairman and CEO. n Eisner was forced by investors to give up his chairman title in 2004. Since then, he’s moved on.

8. Who’s Watching from the Outside? n Regulators n Shareholders

9. Verizon Under Fire n The board granted CEO Seidenberg a 50% jump in pay, to almost $27 million. n Then it reversed itself, fearing a shareholder revolt. Data: WSJ

10. Future Issues to Consider n More Disclosure Requirements for Executive Pay

11. Covering Corporate Governance Laura Cohn Freelance Business Journalist Washington, D.C. laura.cohn@gmail.com