Are there circumstances under which shareholders could consider supporting a retired CEO's election to the board? Despite the generalized statements above, shareholders have to recognize that every board and every CEO is different. It would not be appropriate to apply a blanket veto to every retired CEO up for election to the board. We therefore recommend that shareholders look carefully at a variety of factors that could justify supporting the election of a retired CEO:

- We would be more inclined to support a retired CEO's candidacy if we believed that the board had the power to prevent the problems described above. Boards comprised of a majority of independent directors is a good place to start, but even these boards may not be powerful enough, if the outside directors are beholden to the retired CEO. Another possible structural solution is to have an outside, independent chairman of the board. This may improve shareholders' ability to get the most out of its directors, the ex-CEO included.

- Given the potential for conflicts, we would recommend withholding votes for any retired CEOs who served on board audit, compensation, or nominating committees. We might start by notifying the board of our objection, and withholding votes if the retired CEO refused to step down from any of these committees.

- We also would be more inclined to support a retired CEO's election at a company where shareholder voting rights are free and unencumbered. Since the board itself may not provide the necessary checks and balances, it is imperative that institutional shareholders, who cannot rely on the "Wall Street Walk" as much as they used to, be able to implement change if and when it becomes necessary.

The specific safeguards to look for are corporations that: (1) allow cumulative voting, (2) do not have classified boards, (3) have confidential voting policies and third-party vote tabulators, (4) allow shareholder action by written consent and special meetings, (5) do not have dual-class voting plans and/or where management does not control a majority of the vote, and (6) allow shareholders to remove directors without cause. Each of these features would allow shareholders to remove from office any director if and when it becomes necessary. Without these safeguards, it is difficult to support any director candidate whose efficacy is already open to question.

- It would be shortsighted to argue against any director candidate who has served on the board of a corporation with a strong performance record. What is more problematic is the voting decision on director nominees of corporations with poor performance records. Shareholders have to examine whether performance has suffered because of mismanagement or because of market- or industry-wide conditions. In the latter case, we would look favorably at director nominees who approach their companies' problems aggressively. Implementation of a restructuring plan, the retention of an adviser to explore value-enhancing strategies, and/or a change in top management, for example, are signs that the board is doing everything it can under the circumstances. In those cases, shareholder support for all board candidates, the retired CEO included, can be justified.