This appendix summarizes the corporate governance mandates and recommendations of large institutional investors and the organizations that advise these investors. The items, drawn from the organizations' Web sites, are restricted to issues pertaining to executive compensation.

CalPERS

The California Public Employees' Retirement System (CalPERS) manages pension and health benefits for more than 1.4 million California public employees, retirees, and their families. CalPERS has embarked on a sweeping executive compensation reform initiative, the principal elements of which include the following:

• Submitting to the SEC a comprehensive proposal for increased disclosure related to executive compensation in 2005;

• Advocating the enhancement of exchange listing standards that incorporate compensation philosophy and practice to better align boards and management of listed companies with shareowners;

• Engaging and communicating investors' compensation program preferences to the compensation consulting industry;

• Waging a visible shareowner campaign against the largest companies that refuse to implement CalPERS' executive compensation model, focusing on directors sitting on compensation committees that can be reasonably linked to approving poor executive compensation packages and policies.

CalPERS also evaluates these criteria:

• Compensation committee members who sit on multiple boards that exhibit a weak link between executive compensation and economic performance.

• Egregious use of severance packages related to mergers, acquisitions, and spin-offs, including the use of single-trigger accelerated equity vesting and the use of excise tax gross-ups.

• High percentages of negative votes for equity plan approval in recent years. Low levels of support may be an indication of investor concern over the compensation practices.

• Companies with the highest levels of total equity dilution and the highest run rates (equity granted per year divided by total shares outstanding).

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