PAGE   13                                                    
Texas Lawyer

                                  July 5, 1993

SECTION: Pg. 31

LENGTH: 1742 words

HEADLINE: Directors Paid Well, But Boards Eschew Lawyers

BYLINE: BY BRENDA SAPINO

 BODY:    Lawyers as directors may be going out of style.

   An executive recruiter in Houston and two executive compensation 
consultants in Dallas say corporations are more often tapping chief 
executive officers, chief financial officers, women and minorities as 
outside directors, and selecting lawyers less often.  The move away from 
lawyers, they say, is aimed at diversifying the boards and filling them 
with corporate executives with business experience.

   But despite that trend, 22 Texas lawyers serving as outside directors 
for the 48 public corporations based on the state that made the Forbes 
500 list, made anywhere from a few thousand dollars a year to more than $ 
125,000, including the estimated value of stock options, for that 
service.

   The most recent proxy statements of those 48 public companies -- some 
had fiscal years that did not end Dec. 31, 1992 -- showed some practicing 
or retired attorneys serve as outside directors, while some licensed 
attorneys on those boards make their living in other fields, particularly 
investments.  Others are retired corporate executives.

   The highest pay in this group of lawyer directors goes to Robert Ted 
Enloe III of Dallas, president and CEO of Liberte Investors, who earned 
an estimated $ 125,440, including an estimated $ 80,440 in stock options, 
from Houston's Compaq Computer Corp.

   Near the top of the list were E. H. Thornton Jr., a name partner in 
Thornton & Burnett of Houston, with estimated pay of $ 98,438, including 
an estimated $ 40,438 in options, from Service Corp. International of 
Houston, and Thomas W. Luce III, a name partner in Hughes & Luce of 
Dallas, who earned an estimated $ 88,025 from Austin's Dell Computer 
Corp., including an estimated $ 74,025 in options.

   Stock options are generally given with restrictions, including years 
of vesting, and they are generally in effect for 10 years from issuance.  
Any estimate of their value depends on the price of the corporation's 
stock in relation to the price of the option and other factors.  
Shrinking Demand

   Some of the 22 Texas lawyers who are members of these corporate boards 
have been outside directors for more than 30 years.  But David Morris, 
managing

                                                                       
PAGE   14                            Texas Lawyer, July 5, 1993                           


director in Houston for Russell Reynolds Associates, said he recruited 
about 60 outside directors for corporations in 1992 and none of the 
companies asked for lawyers.

   Morris said the move away from lawyers on boards started about five 
years ago as corporations tried to diversify their boards and seek the 
business expertise of executives from other corporations.  Additionally, 
lawyers are wary of liability and may be less likely to accept 
appointment as outside directors, he suggested.

   "They want people with practical experience in business, and not from 
a legal perspective.  Instead of attorneys, you are starting to see more 
investment bankers.  Many of these large investment companies, if they 
have a large stake, they want a director," said Robert Dill, an executive 
compensation consultant in Dallas for Towers Perrin.

   John McMillan, managing director in Houston for financial analysts 
William M. Mercer Inc., said lawyers who served as outside general 
counsel for firms traditionally served also as outside directors, but 
that trend is waning as companies try to avoid any hint of a conflict of 
interest.

   "What most boards are looking for is business experience and operating 
experience as opposed to legal expertise.  That would, of course, point 
in the direction of looking to other business executives and possibly 
even academia," McMillan said.

   Several of the lawyers serving as outside directors for the largest 
Texas companies said they are careful to avoid conflicts by making sure 
other lawyers at their firm do work for the corporate clients.

   Charles W. Hall, a senior partner in Houston's Fulbright & Jaworski, 
said he feels quite comfortable as a director of Maxus Energy Corp. of 
Dallas because Fulbright does not do much work for the company and Maxus 
is not one of his clients.  Fulbright was paid about $ 60,000 in legal 
fees in 1992, according to Maxus Energy's proxy statement, a tiny slice 
of Fulbright's $ 213.4 million in revenues last year.

   Bayard H. Friedman, a non-practicing lawyer who is an outside director 
of Texas Utilities Co. of Dallas, said he doesn't believe lawyers should 
serve on boards of companies for which their firms work.

   "You want your legal advice to come across untainted by any personal 
relationship," said Friedman, a retired banker working as an investment 
adviser in Fort Worth.

   Irwin Herz Jr., a name partner in Greer, Herz & Adams of Galveston, is 
on the board of American National Insurance Co. of Galveston.  Because 
his firm is general counsel for the insurance company -- not just an 
outside counsel -- one of his firm's partners sits in on board meetings 
in case a legal matter arises.

   "I want to think like a board member instead of a lawyer," Herz said.  
"There are times you have to divorce yourself of the role of the lawyer."


   Because of its relatively unusual relationship as general counsel, 
Greer, Herz has one of the most lucrative relationships spelled out in 
any of the 48

                                                                       
PAGE   15                            Texas Lawyer, July 5, 1993                           


companies' proxy statements.  Greer, Herz was paid $ 1.51 million for 
legal services for the year that ended Dec. 31, 1992, and also was 
provided with offices in the company's home office building and the use 
of certain office furniture, telephones and decorations, according to the 
proxy.

   Herz said the proximity of American national's headquarters makes it 
somewhat easier for him to do his job as a director, which is relatively 
involved because he is a member of the board's executive committee.  
Worth The Money

   Although nine of the corporations reported they paid legal fees to 
firms where a partner or shareholder serves as an outside director, only 
American National and Maxus Energy specified a dollar amount in their 
proxy statements.

   But all of the proxies by law included details of how much the outside 
directors are paid in retainer, per-meeting fees and other compensation.  
For instance, Fort Worth's AMR Inc., parent company of American Airlines, 
gave each outside director and his or her immediate family air 
transportation valued at an average of $ 37,250.

   Consultant McMillan said outside directors generally make in the range 
of $ 25,000 to $ 50,000 depending on the size of the company, although 
stock options are commonly being added as part of the yearly 
compensation.  Pay for the lawyer directors for these 48 Texas companies 
ranged from about $ 7,500 -- paid to A. Frank Smith Jr., a retired 
partner in Houston's Vinson & Elkins for service on the Cullen/Frost 
Bankers of San Antonio board -- to the estimated $ 125,440 paid by Compaq 
to Enloc.

   While the compensation may sound like a hefty amount of money for a 
few meetings a year, McMillan and Dill -- and several of the directors 
interviewed for this story -- said they earn their pay.

   "I feel they very definitely earn their keep, so to speak, and the 
pay, if anything, is quite a deal for the shareholders.  There is no 
question but what the director is needed as a source of second options 
and guidance and also as a check or a counterbalance to the CEO," 
McMillan said.  "Getting that kind of business judgment from another 
outsider is certainly worth the $ 25,000 or $ 50,000."

   He said directors tend to be paid a relatively small monetary 
compensation sweetened with some stock options, or a relatively higher 
retainer and pre-meeting fees for a higher total cash compensation.

   "For every hour I'm in [board] meetings, it probably takes four or 
five hours to review the papers," said Herz, the American National 
Insurance director.

   Joe H. foy, a retired Bracewell & Patterson partner who is an outside 
director on both Enron Corp.'s and Central & South West Corp's boards, 
said directors spend great amounts of time in meetings when a company is 
involved in a takeover or even a merger or acquisition.  He recalls 
spending about two weeks straight in meetings and depositions when 
Houston Natural Gas, a predecessor of Enron, was the target of an 
unsuccessful takeover attempt by Houston's Coastal Corp. in 1984.


                                                                       
PAGE   16                            Texas Lawyer, July 5, 1993                           


    Stanley Rosenberg,  a name partner in the newly formed Rosenberg, 
Tuggey & Agather of San Antonio, said he definitely earns his 
compensation for serving on the board of Houston's Maxxam Inc., citing 
the time he spends on board matters as well as the hassles of being named 
as a defendant in 10 or 15 suits against the company involving claims 
totaling "hundreds of millions" of dollars.

   Herz, who said he is not a bit concerned about liability because 
American National is such a strong insurance company, said lawyers are 
sometimes too worried about liability.

   "We [lawyers] are as a group probably the most negative-thinking group 
because we are so conservative.  If business leaders made decisions only 
based on lawyers, probably nothing would be accomplished in the U.S.," 
Herz said.

   Beyond the opportunity to earn some extra money and face challenges 
outside the regular practice of law, many of the directors said they like 
being involved in a different kind of business.  Luce, the Hughes & Luce 
name partner, said he has a great interest in the computer industry and 
enjoys serving as a director of dell Computer Corp.

   Others have family ties.  Vinson & Elkins partner J. Evans Attwell has 
been a director of Houston's American General Corp. for 30 years, where 
he is following in the footsteps of his grandfather, who was a close 
friend of a founder of the insurance company.

   While many lawyers may stay on boards as long as Attwell, Jack T. 
Trotter, a non-practicing attorney serving as a director of Houston 
Industries Inc. -- the parent company of Houston Lighting & Power Co. -- 
said he plans to resign soon from most of the half-dozen boards on which 
he currently serves, although he has not told the companies yet.  
Trotter, a private investor in Houston who likes to put deals together 
and handle restructurings, said he is looking for more challenge than 
some of the boards provide.

   Trotter said he would like to stay on the Houston Industries board 
because the corporation is diversifying and is likely to continue that 
trend, which Trotter finds interesting.  But Houston Industries directors 
also serve on the board of HL&P, and Trotter said that public utility is 
a "machine" that runs itself.

   "I can't do much with the light company," Trotter said.

GRAPHIC: Picture 1,  STANLEY ROSENBERG  of San Antonio says serving as a 
director of Maxxam Inc. has made him a named defendant in suits demanding 
"hundreds of millions" of dollars from the company; Picture 2, J. EVANS 
ATTWELL, former managing partner of Vinson & Elkins, has been a member of 
American General Corp.'s board for 30 years, continuing a relationship 
begun by his grandfather.  BARRY RUDICK

LANGUAGE: ENGLISH ---