The 'Board of the Year' governance standards.

• Position: Board of directors' award to Compaq Computer Corp.

In November 1997, the board of directors of Compaq Computer Corp. was named "Board of the Year" by the Wharton School of the University of Pennsylvania and Spencer Stuart, an international executive search firm. The award was presented in conjunction with the Wharton/Spencer Stuart Directors' Institute, an executive education program for board members. Compaq's approach to governance was cited as a model for board operations. Compaq publishes its governance standards in its proxy statement, and an excerpt of those standards from its 1997 proxy follow.

Compaq Computer Corporation continues to focus on the importance of corporate governance in achieving long-term shareholder value. From its beginning, the Board of Directors has consisted of independent outside directors except for the chief executive officer, who is also a member of the Board. All Board committees are composed exclusively of outside directors. The roles of Chairman and Chief Executive Officer have been and are separate. Directors have been compensated largely in equity to align their interests with those of Compaq's shareholders.

1. The Board of Directors shall be limited to ten or fewer members with the Chief Executive Officer as the only member who is an executive officer except in times of Chief Executive Officer transition. The Board will seek a balance between outside directors coming from business leadership positions and those who bring special expertise by favoring those who come from positions of leadership.

2. All Committee members will be outside directors.

3. Committee chairs will serve for two years and be rotated thereafter.

4. The Board will meet periodically in executive session without the Chief Executive Officer.

5. Board compensation will be paid in equity grants and an annual retainer. No meeting fees will be paid for regularly scheduled Board meetings. Retainers may alternatively be paid in stock options at the election of the individual director. Non-employee directors will maintain ownership of 2,000 shares of common stock within three years after first election to the Board.

6. Outside directors will not be paid for consulting nor will their firms be retained by Compaq for...