Facts and Figures on the Enron Collapse

Compensation of Directors

Exhibit 35a

Director Independence

Director independence has become an obvious demand of those looking to improve corporate governance. The 2002 corporate reforms, which can be found in the textbook, included requirements relating to director independence. In fact, until these legal requirements were passed, the definition of independence was not always clear.

What relationships with the corporation are appropriate?

In a recent working paper Gillan and Martin (2002) identify the Enron directors with clear indications of their possible conflicts. Table 3.2 provides that information.

Table 3.2 Outside Directors at Enron, 2001
(source: Gillan and Martin, from 2001 proxy statement of Enron Corporation)