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TORONTO, March 25, 2002 -- As the Enron meltdown continues to raise serious questions about that firm's corporate governance, a new survey reveals that the best Canadian boards are changing the way they work in response to the current turbulent and uncertain times. Successful boards are evolving from 'dumb monitors,' mainly content to review financial performance, to smart leadership partners who work with management teams in many areas of a firm's business, according to the 2001 Canadian Spencer Stuart Board Index.

Read the entire report online at www.rotman.utoronto.ca/ccbe, under 'News and Events'.

The publication is the sixth annual survey of board trends and practices of leading Canadian companies conducted by Spencer Stuart Canada. In 2001, Spencer Stuart partnered with the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto's Joseph L. Rotman School of Management to carry out the annual survey of Canadian board members.

"The major trend we observed this past year is that boards are becoming much more active as strategic partners to their CEOs and senior executives," says Prof. David R. Beatty, O.B.E., Director, Clarkson Centre for Business Ethics, and Board Effectiveness "Not surprisingly, this requires more time, more determination and more courage from all directors. But in the end, you have an involved board that can really assist top management to navigate turbulent waters successfully."

The Canadian boards that are leading the trend are zeroing in on strategy, building smart leadership teams and managing new frontiers such as social responsibility and ethics.

The survey reveals that boards are now routinely placing a higher priority on strategy by devoting more time and resources to it, promoting innovation, and in times of crisis, intensifying their activities to support their strategies.

"Leading boards are not only holding formal strategic planning sessions, they are also constantly on the search for original and workable ideas," says Andrew MacDougall, President, Spencer Stuart Canada.. "They are scanning the environment in a variety of ways and asking, 'What is different in the world? What might be different?"

Boards are also becoming more active in building smart leadership teams. They are not afraid to take action if they feel the performance of the company is slipping, and are becoming increasingly involved in executive team member recruitment. Downstream, more and more boards are spending time on developing and retaining top talent.

"Boards and stakeholders have become more demanding on the performance of both directors and executives. The average tenure of a CEO of an S& P 500 company in the United States has steadily declined over the last decade to just over six years," says MacDougall. "However, a Spencer Stuart study of 202 CEO transitions in major Canadian public companies from 1992 to 1997 found that, on average, Total Shareholder Returns were flat or declining over the two year period prior to a change in CEO. We concluded that boards should take responsibility for overseeing performance and succession planning much earlier than they have in the past."

The most dramatic changes revealed in the 2001 Canadian Board Index are the significant increases in board initiatives to ensure good corporate citizenship with regard to their communities and environment.

"Globalization has created many new opportunities and challenges for business. Pressures from global advocacy groups, consumers and other stakeholders require boards to look at their operations from a much more holistic viewpoint," says Beatty. "As a result, boards are paying more attention to issues and initiatives that ensure good corporate citizenship."

The 2001 Canadian Spencer Stuart Board Index analysis is conducted from three sources: proxy circulars, a detailed survey sent to CEOs and corporate secretaries of 250 companies across Canada, and a survey and interviews of board chairs.

Founded in 1956, Spencer Stuart is a leading management consulting firm specializing in senior-level executive search and board director appointments. With 52 offices in 24 countries around the world, Spencer Stuart has more than 290 consultants and is organized into industry practices that specialize in meeting client needs across a broad range of business sectors. For more than 20 years, the firm's Board Services practice has been a world leader in the recruitment of board directors for clients ranging from large multi-nationals to start-up firms newly entering the public market. The practice also provides comprehensive consulting services and intellectual capital on a wide range of boardroom objectives.

The Clarkson Centre for Business Ethics and Board Effectiveness is the center of research and corporate governance at the Joseph L. Rotman School of Management at the University of Toronto. Founded in 1988 by a pioneer in business ethics and stakeholder theory, the late Professor Emeritus Max Clarkson, the Centre grew from the belief that as the relationship between business and society increases in complexity, the need for organizations to manage social and ethical issues become critical. The Centre's research in corporate governance focuses on board demographics, social networks, and corporate performance.

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