As we have done in the past, CRO did a final review of companies mathematically qualified for 100 Best 2008 and took scandals into consideration. For the first time, this year we are disclosing the reasons behind our scandal analysis. As a result of our scandal review, we put the companies below in the Penalty Box. They were involved in a recent (during the past three years) major public scandal (involving a significant government- or regulator-imposed fine; major government-initiated lawsuit; admission of guilt or conviction; major corporate governance lapse; or other comparable infraction). They would again be eligible for 100 Best three years after the settlement, fine or culminating event.

• Bristol-Myers Squibb: A federal monitor called for the resignations in September 2006 of CEO Peter Dolan and General Counsel Richard Willard on corporate-governance grounds related to Plavix patent litigation. They indeed resigned. Also, the company agreed on Sept. 28, 2007, to pay some $516 million to settle state and federal claims of improper pricing, marketing and sales practices.
• Chevron: The company agreed Nov. 14, 2007, to pay federal authorities $30 million in connection with illegal surcharges that Chevron-contracted third parties paid to Iraq under the Oil for Food Program.
• Eli Lilly: The company in the second quarter of 2005, entered into $700 million agreement to settle product liability claims in the U.S. related to the antipsychotic drug Zyprexa. The suits alleged that Eli Lilly inadequately tested for and warned about the medication’s side effects, and improperly marketed Zyprexa.
• ExxonMobil: The state of New York filed suit against the company in July 2007, seeking to force ExxonMobil to clean up a 17 million gallon oil spill from its refinery and storage operations in Brooklyn, N.Y.
• Hewlett-Packard: Chairwoman Patricia Dunn resigned Sept. 22, 2006, at the request of the board following a scandal that involved an improper investigation of boardroom leaks.
• Mattel: Citing problems with subcontractors in China, Mattel in 2007 recalled millions of toys for impermissible levels of lead paint. In 2006 and 2007, the company also recalled millions of toys that could cause a choking hazard because of the potential release of small magnets.
• Merck: The company faces numerous lawsuits and reportedly a federal grand jury probe related to accusations that it concealed data about the health risks of its painkiller, Vioxx, and used improper marketing practices. In late 2007, the company entered into a pending $4.85 billion settlement with plaintiffs alleging injuries from the drug.
• Travelers Companies: The commercial insurer said in late 2007 that it settled a shareholder suit, alleging it paid contingent commissions to brokers and engaged in bid rigging, for an undisclosed sum. Separately, Travelers agreed to a $6 million settlement with several states alleging improper insurance placement and producer compensation practices.