A favorite among governance experts, the board includes three top shareholder activists and features a separate chairman and CEO, a rarity. It moved quickly to accept the resignation of a former CEO when directors discovered that his wife had been hired for a company job.

It's hard to fault this company on performance, but governance is another matter: Half of the 16 board members have ties to the company. Wal-Mart should sever its ties with two directors' families and decide whether it really needs all seven current or former Wal-Mart employees or family members who now sit on the board.

»One of the few boards that have a lead director. No insiders sit on the audit, compensation, or nominating committees. The board conducts an annual self-evaluation. Directors have big stakes in the company.

» This talent-packed board, with an unrivaled record of creating shareholder value, remains a favorite with governance experts, although there have been recent revelations of lavish retirement perks for former CEO Jack Welch. The company is improving board independence; it recently added Ralph Larsen, former CEO of Johnson & Johnson (JNJ) and a longtime champion of good governance. The board recently moved to expense options.

» With the departure of co-founder Bernard Marcus, the 12-member board now has only two insiders. Independent directors meet regularly without management. Directors are required to visit 20 stores a year.

» The board was second only to GE in overall approval by governance experts. Independent directors meet without the CEO. No Pfizer executives sit on the audit, nominating, or compensation committees. Stock transactions for directors and executives are posted on the company Web site.

» Directors are well-invested in the company and sit on few additional boards. The compensation committee has awarded premium-priced options to CEO Reuben Mark, which pay off only if stock appreciates by 10% to 70%. A new section on governance has been added to the latest proxy.

» Governance gurus applaud the board's practice of holding regular meetings without the CEO and its performance evaluations for directors. Members are graded on willingness to "hold management accountable" and "meaningful participation" at meetings.