Summoned by retired Bank of America Corp. Chairman Hugh McColl, about 120 executives spent the weekend brainstorming on how to restore public confidence in corporate America.
"It's the right topic at the right time and the right audience," said keynote speaker Warren Buffett at the Forum for Corporate Conscience. "This subject should be discussed by a group like this."
In a wide-ranging speech that lasted more than an hour, Buffett, one of the nation's richest men, said the need to restore corporate integrity was "vital to this country."
He cited a recent survey that said Americans trusted chief executive officers about as much as they did used-car salesmen.
"The damage has not been done by crooks," he said. "It's been done by good people."
He said the high pay chief executives are collecting -- regardless of company performance -- has helped to undermine corporate America's image.
"What really gets to the public is when CEOs get rich, really rich, and they get poorer," he said. "I think the acid test is going to be CEO compensation."
Buffett, 72, said that once a year he warns executives at his company, Omaha, Neb.-based Berkshire Hathaway, not to do anything they would not be proud to read about in their local newspaper.
"You can lose a reputation that took 37 years to build in 37 seconds," he said. "And it might take more than 37 years to build it back."
Buffett said company directors should exclude CEOs from discussions about compensation and performance and challenge strategic moves such as acquisitions. "It is tough to do that with the CEO himself present," he said.
A lesson from corporate scandals was that directors too often met in "a collegial atmosphere where the CEO did not welcome a challenge to an acquisition or a compensation plan," Buffett said. "It is incumbent for directors to take action."
Excluding CEOs from meetings "is the only way we are going to address two key questions a director has: Do we have the right CEO? Is he or she overreaching?" Buffett said. "The rest takes care of itself."
McColl persuaded not only Buffett to attend but also other prominent executives such as McColl's successor at Bank of America, Ken Lewis, and Ken Thompson, chairman and CEO of Charlotte's other banking giant, Wachovia Corp.
McColl, who retired in 2000, transformed North Carolina National Bank into one of America's largest consumer banks, with more than $600 billion in assets. He now runs several investment firms that focus on his specialty, mergers and acquisitions.
Also at the gathering were Richard B. Priory, Duke Energy Corp. chairman and CEO; Progress Energy Chairman William Cavanaugh; software magnate Jim Goodnight of SAS Institute; and Mark Moody-Stuart, former chairman of Royal Dutch/Shell Group.
The idea for the forum was planted two years ago, before the collapse of energy trader Enron Corp. and other corporate scandals set off a national debate about corporate values, ethics and priorities, McColl said.
McColl said the forum is even more relevant now. "A number of events have occurred that we never could have anticipated, including Sept. 11, war, WorldCom and the Enron bankruptcy," he said. "The issues haven't changed. Instead, they have intensified."
He said the goal of the conference was to look at "responsibilities companies and CEOs have toward the broad community they serve."
McColl said it would take time to see results. "Our credibility can't be won back with rhetoric," he said. "We need to do some things."