2 . told little white lies in order to win shareholder approval for executive compensation plans that we thought were in the shareholders' best interests. Most of these were not serious and did no more lasting harm than repeating the tale about George Washington and the cherry tree or the stork bringing babies. First, we told everyone that executives would work harder and more effectively if they had an incentive plan. This is common gospel but it's as difficult to prove as the biblical version of God making the world in seven days. No one yet has been able to demonstrate corporate incentive plans have improved corporate performance. There is some correlation simply because the better performing companies are more apt to install incentive plans as a way of richly rewarding the superior performers. I contend that the best executives work as hard and as effectively as they know how because they are made that way. The promise of more money is way down the list of driving forces - far behind pride, conscientiousness, peer recognition, and others. Having done the job well they expect to be treated fairly but this is a matter of a deserved reward for a job well done, not a bribe to get the job done. Secondly, we have been very quiet about how executive compensation is really determined. We let stand unchallenged the concept that this is done scientifically and objectively because we used surveys, outside consultants, and executive compensation committees manned by only outside directors. Let's deal with each of these in order. The salary and bonus surveys are one of the best self-serving devices, for these need only be coupled with a company policy of paying at or above the market to produce an annual increase that