About 20 years ago, at one of her first board of directors meetings, Judy Runstad asked a simple question: "Were the company's salaries competitive with others?" That was not an appropriate question, another director cautioned her. She wasn't even on the compensation committee.

Runstad, a Seattle attorney, civic leader and now a veteran director who sits on several corporate boards, recalls that experience with amusement. Back then, she says, "boards were a little bit sleepy."

Not anymore. Corporate scandals, most notably the 2001 Enron debacle, have prompted new regulations and reporting requirements, many as part of the Sarbanes-Oxley Act of 2002, that demand the full attention of directors. And the new regulatory changes have created greater liability for directors for a company's problems.

Even so, more oversight by boards of directors has hardly eliminated problems. More than 200 companies have launched internal probes or are under federal investigation for discrepancies in their stock options grant practices. Meanwhile, large severance packages, like the $210 million bonanza received by former Home Depot CEO Bob Nardelli, grab headlines. And once again, lawmakers are considering new controls.

Although some would argue that Washington state's low-key business culture is less prone to such excess, some of the state's companies have also become the subject of investigations and public criticism.

A healthy debate is now under way over what companies should do to improve corporate culture and decision-making. Some call for new laws and even tighter oversight by directors. Others argue for more shareholder activism, including the right of shareholders to vote on compensation arrangements for top executives. Still others argue that new social norms - not laws -must drive business leaders to link profitability with care for employees, community and customers.

What is clear - and positive - is that all signs point to an "emerging corporate governance industry" focused on testing ideas and improving boardroom decisions, says Sean O'Connor, an associate professor at the University of Washington law school. For example, A Rockville, Md.-based Institutional Shareholder Services, which serves 1,700 clients worldwide, offers training to directors in the art of overseeing a company. "There may come a time when shareholders want ISS-certified directors," O'Connor says.

Directors have long been viewed as mere decoration, the "parsley" to the CEO's big fish, says Nell Minow of the Portland, Maine-based Corporate Library, a corporate-governance research group. Moreover, in the past, "proxy fights were rare . . . and corporate boards tended to be cozy with and dominated by management, making board oversight weak," according to a 2003 study from MIT and the University of Chicago.

Professional managers also grew in power as the complexity of running companies increased. The 1980s and '90s saw the rise of the "imperial CEO," O'Connor says, a phenomenon that peaked after 2000, as the excesses of Enron, WorldCom, Tyco and others unfolded in the media. The leaders of those companies "didn't selfregulate enough," O'Connor says, "so basically what you have is Congress saying corporate governance is fundamentally out of whack in the country."

New reporting and transparency requirements followed, including Sarbanes-Oxley, which instituted certification of financial reports by CEOs and CFOs, auditor independence and additional criminal and civil penalties for violations of securities law.

Besides adding important paperwork and penalties, Sarbanes- Oxley may help reduce the tension inherent in the dual role of a board as both monitor and adviser of management, according to the study by MIT and the University of Chicago. That's because, according to the study, the federal law provides "cover for a more independent and inquisitive board. Actions that in the past might have been construed as hostile will now be interpreted as following best practice."