The board of directors of Amgen Inc. will convene later this month in the long shadow of WorldCom Inc. as well as a half-dozen other once-admired companies, all of them now under investigation for alleged fraud.

By almost any measure, Amgen is a world apart from WorldCom. Its 13 directors are an accomplished group, including a retired Air Force secretary, a Nobel laureate and a former Hollywood studio chief. The company is a leader in biotechnology, not telecommunications. Its headquarters in Thousand Oaks is 1,800 miles from WorldCom's Mississippi offices. And most important, it hasn't been subject to a whisper of the sort of accounting scandal that is leading to WorldCom's meltdown.

Nevertheless, that $3.9-billion hole in WorldCom's books means this Amgen meeting won't be quite like any previous ones. Already the board is beginning to change the way it does business. "There will be differences in mood and differences in practice," said board member Donald Rice, a former Air Force secretary turned entrepreneur.

Another director, former McKinsey & Co. and Bechtel Group Inc. executive Frederick W. Gluck, said there would be a wholesale review to "make sure we don't have any situations that might lead to a problem. It's just prudent."

In an era when new corporate scandals surface every week, no board can be too careful. They're under scrutiny and frequently under attack. The stock exchanges are tightening board rules for their listed companies, trying to eliminate cronyism and dabblers. Congress is being swept by reform fever, while business critics see a once-in-a-lifetime chance at real change.

Meanwhile, boards are beset by increased liability worries. Traditionally, it has been very difficult to hold directors personally responsible for corporate meltdowns. Regardless of whether that's changing in reality, it's shifting in perception.

"Your home, your assets, your business reputation" are at risk, wrote Philip Crowley, assistant general counsel at Johnson & Johnson, in the National Assn. of Corporate Directors' monthly newsletter.

All this means it's getting harder to find new directors. Christian & Timbers, the global executive search firm, said that although turnover on boards has doubled, six out of 10 candidates are turning down seats. A year ago, seven out of 10 accepted them.

"A year ago, if you called someone up and asked him if he'd like to be on the board of Enron, he would say yes because it was a great company," said Christian & Timbers Chief Executive Jeffrey Christian. "There were many great companies then."

A Changing Role

As the ranks of those greats rapidly dwindle, the change is bringing up fundamental questions about the role of boards. State incorporation laws mandate their existence and oversight role but give directors wide latitude with regard to performance, composition and size.

The modern corporate board traces its origins to Renaissance England. The Virginia Co. of London and the Virginia Co. of Plymouth, which pioneered the European settlement of the Atlantic Coast, were run by outside councils responsible to the sovereign. Alexander Hamilton and Ben Franklin started companies that had oversight boards.

Originally, boards looked after the interests of the owners. With the rise of the professional manager and the modern corporation, boards began to be more aligned with the new owners: stockholders. But the distance between the directors and the stockholders, particularly in times of prosperity, is vast.

Until recently, many investors probably would have been hard-pressed to name the board members of their stock picks. The chief executive got all the attention. Who cares about oversight when everyone's making money?

Now that the market's falling, measures being discussed by reformers include making boards more independent by barring the typical practice of making a company's chief executive its board chairman as well; limiting the number of outside boards a chief executive can serve on; and issuing regular report cards on board members.

If grades were being issued today, many of them would be of the "failing" variety.

"Absolutely and deservedly, boards are getting a bad press," said Roger Raber, president of the National Assn. of Corporate Directors.

He breaks down public-company board members into three main types: the rubber stampers, who don't let anything delay getting to the golf course; the oversight board members, who make an effort to examine what is really going on but can still be bamboozled by crooked executives; and the activists, who do their job well but number no more than 10% of the total.

"The biggest obstacle to a good board is arrogance," Raber said. "With some directors, there's a sense of entitlement. 'I'm a former chief executive, I'm high profile, I'm here as long as I want to be.' "

Amgen's board is filled with high-profile names--in addition to Gluck and Rice, it includes Caltech President and Nobel laureate David Baltimore, former Universal Studios Chief Executive Frank Biondi, former Allstate Corp. Chairman Jerry Choate and venture capitalist Franklin Johnson Jr. But the company's chief executive, Kevin Sharer, said they're anything but aloof or disengaged.

In an e-mail to Amgen's 7,630 employees last winter, after the crash of Enron Corp. thrust the issue of corporate wrongdoing to the forefront, Sharer declared that the Amgen board members "pay attention, ask tough questions and get the full and accurate picture from management in a timely fashion. We have a more interactive, lively and engaged board than any I have seen."

Inability to Spot Fraud

But it's another matter whether such a board could prevent executives who were determined to use unsavory or illegal methods to enrich themselves. Christian & Timbers recently asked 225 executives at top corporations if they thought their boards could recognize "cooked" books. More than half said no.

The Enron board, after all, was saluted in 1999 as one of the nation's finest by Chief Executive magazine. Early this year, an investigation commissioned by the Enron board concluded that the directors should have demanded more information, probed more and understood matters better.

In essence, said New York investment banker and board watchdog Gary Lutin, boards have been "not just outgunned but outsmarted."

"Ten years ago, a clever executive could get away with stealing maybe $10 million," Lutin said. "But in the late '90s, it was as if we put a whole lot of money on the table and turned the lights out. If you think that's not going to attract thieves, you're crazy."

In practice, though, even the best boards have seen themselves less like police and more like professors--pushing the good and waving off the misguided ideas, counseling and encouraging, offering the benefits of their superior experience.

They also "make sure the management does its homework," Sharer said.

When a small acquisition was being discussed by the Amgen board a few years ago, Gluck thought the price was too high.

"Given what we've heard, this doesn't seem reasonable," he remembered telling the other directors. Eventually, an offer was made at a lower price.

Several directors pushed for Amgen to increase its in-house research and development and its access to outside innovation.

"We thought the pipeline wasn't as rich as it should be, and pushed for more licensing," said Gilbert Omenn, executive vice president for medical affairs at the University of Michigan and an Amgen director since 1987.

During Amgen's acquisition this year of Seattle-based Immunex Corp. in a $9.6-billion deal, the board encouraged Sharer to set up a stand-alone integration committee--something he hadn't been planning to do but realized would be useful.

All of this sounds, and indeed was, more incremental than earth-shaking.

"Sometimes the board agrees where management is headed and sometimes it doesn't, but you don't try to make a fight out of it," said Rice, who sits on five corporate boards and is chief executive of a small private biotech company.

A track record of disagreements, he noted, might serve as ammunition for suits by dissident shareholders.

But if too much of an adversarial position can be bad for a company in the short run, too little can be disastrous over the long term. The result is that boards are fumbling uncertainly toward a new role.

One thing the Amgen board is going to start doing immediately is detailing exactly what it does.

"The committee charters will get written with much more specificity," Rice said. "They're probably going to be published, so investors will know what kind of matters are under the purview of the board and its committees."

All this will take time, so he expects "more meetings and longer meetings." Amgen's board meets six times a year, for which the members are paid a $5,000 quarterly fee plus $1,250 for each board meeting, as well as fees for serving on committees. Board members also get an annual stock option grant of 16,000 shares. Since Amgen shares are near a three-year low, this hasn't been too much of a gift.

Amgen shares Friday rose $1.54 to $35.46 on Nasdaq.

With one crucial reform--the effort to make boards more independent--Amgen already is doing well.

A quarter of U.S. companies have boards that are not considered independent. Before WorldCom's debacle, for instance, more than half the directors were officers of the company or had some other direct connection. But at Amgen only its chairman, Sharer, and former Immunex Chief Executive Edward Fritzky have direct affiliations.

The board is taking a more cautious stance with other reform proposals, however. Take, for instance, splitting the roles of chairman and chief executive.

"If you were unhappy with the chief executive being chairman, you might wonder how good a chief executive he is," Omenn said. He pointed out that there are many companies where the roles were divided and the chairman and chief came into disastrous conflict.

Then there's expensing stock options as they are granted, which would have lowered Amgen's reported earnings by 17 cents a share last year but, advocates said, would have provided a truer picture of its financial health.

"I still haven't made up my mind," Gluck said. "Common sense says you have to be highly disciplined in the way you give away options. But they've clearly proven to be highly motivational."

And then there's officially restricting their own chief executive to one outside board, as recommended by the National Assn. of Corporate Directors. (Sharer now sits on two.)

"Up to at least a couple of boards, the benefits for the chief executive outweigh the losses," Rice said. "Yes, it takes some time away from his company, but he's going to be better in the 95% of the time he does spend there."

In other words, the Amgen board is in favor of reform, but only so much.

"The Enron and WorldCom debacles are being used as evidence that all kinds of points of view are more credible now than they were in the past," Sharer said. "We have to make sure we don't get swept away in the heat of the moment."