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A lot of Scott McNealy's numbers have been going down recently. According to Business Week his compensation dropped by 91 percent last year, Forbes says his net worth fell by $1 billion, and at press time the stock of his empire, Sun Microsystems, stood at less than $5--a tiny fraction of what it was during those long-gone dot-com glory days. But on the bright side, McNealy has seen his USGA Handicap Index plummet, too, from 3.3 to 0.3 since our last biennial CEO ranking. ("I hate my handicap where it is right now," says McNealy. "I can't make any money.")

McNealy is our No. 1 CEO golfer for the third time running, having topped the list in 1998 with a 3.2 index (beating out the then CEO of General Electric, Jack Welch, by a whisker), and again in 2000. Thanks to McNealy's marked improvement, this time he leads comfortably over No. 2-ranked Curt Culver of MGIC Investment (2.9) and No. 3 William (Jerry) Jurgensen of Nationwide (3.8). The ranking (which appears on pages 177-178) comprises the top 200 CEO golfers in America who head either a Fortune 500 or Standard & Poor's 500 publicly traded company.

Fifty-four of the Golf Digest 200 have single-digit handicaps; to make the top 200 a CEO had to have an index of no higher than 18.3. The 70 CEO golfers who didn't make the cut include Norman H. Wesley of Fortune Brands, parent company of Titleist (18.6), master investor and Berkshire Hathaway CEO Warren Buffett (21.4), and J. Barry Griswell of Principal Financial, who just took up the game--"it looks a lot easier on television," he says--and who rounds out the complete list with a 35.1 index. (For the full ranking and alphabetical breakdowns by CEO or company name, visit www.golfdigest.com/CEO.)

Post Enron, the integrity of CEOs is being assaulted virtually everywhere (a recent Starwood Hotels survey concluded that 82 percent of America's business executives cheat at golf). But the CEOs on our list point to golf as a litmus test of honesty. "No mulligans--ever," says Steve Bennett of Intuit, ranked No. 4 with a 4.6 index. Ninth-ranked David Thomas of IMS Health, a 5.3, even questions putts being conceded. "If a putt is such a given, then make it," he says.

While many CEOs on our list say they have encountered artificially inflated handicaps--10-handicap Charles Fote of First Data concedes that golf and business have taught him that "not all people know how to count"--vanity handicaps that are too low are rare, they say.

For McNealy this is certainly true. His teacher, Jim Gerber, who is largely responsible for McNealy's improvement over the past two years, says the tech titan's handicap could be lower still if he had more time for golf--something not likely to happen for an executive widely viewed as the voice of Silicon Valley. Besides business demands there is McNealy's addiction to amateur hockey (he plays on five teams--at 9 or 10 p.m., he hastens to explain) and four young children, the oldest of whom, at age 6, is already shooting 150 for 18 holes.

McNealy achieved one goal when he finished as "Most Valuable Amateur" in the 2001 AT&T Pebble Beach Pro-Am (18 CEOs on our list played in it this year) by contributing 35 strokes to Jesper Parnevik's team score. McNealy jokingly laments not giving up his amateur status so he could claim the $8,000 prize for finishing fifth in the 2001 Sun Microsystems-sponsored John Elway CPT Classic in Colorado (this year he finished tied for 12th, passing up $3,400 and beating Elway by a shot). One goal remains: McNealy made it to the final in June, but he has yet to win the club championship at his home course, Sharon Heights in Menlo Park, Calif.

McNealy scoffs at those who criticize CEOs for playing--or playing too much. "There have to be better things to beat up on us for than golf," he says.

But the question remains: Should investors agitated by recent corporate disclosures be concerned if the CEO of a company whose stock they own appears high on our list?

"I make no apologies for being a CEO who loves golf," says 6-handicap and No. 13-ranked David Novak of Yum! Brands, parent company of the likes of Taco Bell and Kentucky Fried Chicken. "With the hours I put in, I don't think anyone should be worrying about my taking four hours to play."

While it may be capricious to try to correlate low CEO handicaps with good stock performances (as a story in The New York Times did following our inaugural rankings in 1998), it should be noted that all but tech stocks Sun and Intuit of the companies managed by our top-10 CEOs have made positive strides in the stock market since our last rankings, and Intuit is not only up in this tumultuous calendar year but also touted as a top stock by several analysts.

Mike McCallister, the CEO of Humana whose 4.8 index puts him fifth on the Golf Digest list, says: "I know I'll be getting e-mails from people who think my handicap is too low." But Humana returned 50 percent to investors in the first half of 2002. Cardinal Health CEO Bob Walter also sports a 4.8 handicap, and although the company's market performance has declined recently, Walter led the company to a 100 percent stock increase and a 3-for-2 split since he appeared at No. 2 in our 2000 rankings as a 3.6. Dillard's, headed by No. 12 Bill Dillard, another single-digit CEO, was the second-best performing stock in the S&P 500 as we went to press (behind Big Lots Inc., whose CEO Michael Potter debuts on our list at 11.0).

The CEO who has demonstrated the most improvement at golf since appearing on our list in 2000 with an 18-handicap is Dr. Vance Coffman of Lockheed Martin--not only has he managed to bring his index down to 11.7, but he also saw his company's stock quadruple since our last rankings (and it has gone up 47 percent this year).

Perhaps of comfort to those CEOs who play the game--and the investors who own their stock--there's this: Of the CEOs who have fallen hard in recent months, the disgraced were almost to a man nongolfers. Perhaps that was the problem.

Former Enron CEO Ken Lay has played in the past (his rounds with former presidents have been well publicized), but he failed to make our 2000 list because his 32.9 index at River Oaks Country Club in Houston had not been updated in years. Dennis Kozlowksi of Tyco? Bernie Ebbers of WorldCom? Gary Winnick of Global Crossing? John Rigas of Adelphia? Maybe some time spent on the course would have helped. We will grant that Charles Watson, the recently ousted CEO of Dynegy, would have reappeared on our list were he still in office: Just days before his departure, he confirmed his 10.4 index.

As much as the Golf Digest 200 play--and 32 percent of listed CEOs who responded to questions about their games play more than 40 rounds a year (a handful admitted to playing more than 100 rounds)--they don't mix work and play as much as might be expected. While many say they sometimes use the game as a business tool, to vet potential employees or business partners, our CEOs overwhelmingly play more social golf than business golf, typically a lot of it with their spouses. Says Nationwide's Jurgensen: "It's the No. 1 thing my wife and I enjoy doing together." His most memorable round, when he fired off nine birdies (and bogeyed the final two holes), came in a couples' guest-day event.

Even with their spouses, CEOs admit they usually have money riding on their games. "I play with people who make a lot more money than I do who go after $2 like you wouldn't believe," says Yum! Brands' Novak. Adds Phil Odeen of TRW: "I've observed that people who are very successful tend to be very, very competitive in sports. It's part of their nature, not just something evident in the boardroom."

Don't let the wagers get out of hand, warns Intuit's Bennett: "Playing for money is fun, but don't let money be the reason you're playing," he says. "I'd rather keep my friends."

Several CEO golfers have found that the game has brought other rewards, too, such as valuable life lessons. Curt Culver, the runner-up on our list who has amassed 20 club championships at eight different clubs, recounts his most memorable round ever, at the Wisconsin Junior Amateur during his senior year in high school. "I was playing the prior year's champion, had him 6 down with six to go and I lost the match. That was a great learning experience: Never count your chickens."

For most CEO golfers, the game also provides a much needed antidote to the stresses of corporate life. "Golf is an escape," says Fidelity Financial's Bill Foley, a 5.1.

Some parting advice from Humana's McCallister: "Don't get involved for business reasons. Play because you enjoy it."

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