88 Percent of New CEOs Rank Below Top Quartile
in Rittenhouse Rankings Candor Survey

NEW YORK, March 10, 2008 — A study by Rittenhouse Rankings Inc. (www.RittenhouseRankings.com) of CEO Candor in annual shareholder letters released in 2007, shows that 88 percent of newly-installed CEOs rank below the survey’s top CEO quartile in providing meaningful and straight-forward information. The benchmark study found that these executives, appointed between 2005 and 2006, posted lower scores in strategic content and accountability, and higher scores in confusing or misleading information.

New CEOs at Walt Disney, Hewlett-Packard, 3M, Franklin Resources, and Merck produced the greatest gains in content scores compared to the prior four-year average of their predecessors. The stock prices of this group increased an average of 28.4 percent in the year after the new executives were named. Conversely, the biggest declines in content scores compared to predecessors were posted by new CEOs at Estée Lauder, PepsiCo, ConAgra, Sara Lee and Home Depot. While PepsiCo’s stock increased 20 percent, the average stock price of this group declined 10.5 percent in the comparable period.

Rittenhouse Rankings President, L. J. Rittenhouse said, "Companies with CEOs ranked low in candor tend to articulate less coherent strategies and therefore, undermine execution in producing desired results. Given the value-building benefits of authentic and clear CEO communication, boards of directors have a duty to select new candidates that set an example for candor throughout the corporation."

Sixty percent of the new CEOs were promoted from the inside. These insiders were almost two times more likely to rank higher in candor in the survey while CEO outsiders were almost twice as likely to rank lower.

The Rittenhouse RankingsSM Survey, an annual benchmark of CEO candor in annual letters to shareholders, includes approximately 20 percent of Fortune 500 companies representing 12 industry groups. From 2002 to 2006, the average stock prices of 25 top-ranked companies in the Candor Survey have outperformed the 25 bottom-ranked companies. The survey is conducted by New York-based Rittenhouse Rankings Inc., a strategic and investor-relations company that advises large-cap and mid-size companies on building economic value through candid communications and actions based on capital stewardship. President L.J. Rittenhouse is the author of Do Business with People You Can Tru$t, a featured selection at the Berkshire Hathaway annual shareholder meeting.

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