Executives look at ways to restore corporate integrity

Paul Nowell

Monday, March 17, 2003 | 9:38 a.m.

CHARLOTTE, N.C. -- 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.

The Forum for Corporate Conscience kicked off Friday with an opening address by billionaire Warren Buffett, one of the nation's richest men.

"It's the right topic at the right time and the right audience," Buffett said. "This subject should be discussed by a group like this."

In a wide-ranging speech that lasted more than an hour, Buffett said that 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 used car salesmen.

"The damage has not been done by crooks," he said. "It's been done by good people."

He said that the high pay chief executive officers 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 said that at his company, Berkshire Hathaway, he warns executives once a year 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."

The well-respected McColl not only convinced Buffett to attend but also other top CEOs such as McColl's successor at Bank of America, Ken Lewis, and Ken Thompson, chairman and chief executive at Charlotte's other banking giant, Wachovia Corp.

McColl, who retired in 2000, transformed the tiny 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 Duke Energy Corp. chairman and chief executive Rick Priory, Progress Energy chairman William Cavanaugh, software magnate Jim Goodnight of SAS Institute and Sir Mark Moody-Stuart, former chairman of Royal Dutch/Shell Group.

Other notables included author Tom Wolfe and Paul Hawken, founder of Smith & Hawken, the San Francisco-based gardening supply retailer and co-author of the book "Natural Capitalism."

"We're hoping for a lot of people with views that are sharply different from others," McColl said in an interview before the conference. "I'm looking forward to some very candid conversation."

He added: "With leadership comes the power of change and we have recruited the best of the best to engage CEOs in discussion and action. This is an opportunity for some of the most powerful individuals in the nation to create a new set of standards for corporate America."

The idea for the forum was planted two years ago, long 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 it's 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."

For example, he said, the possibility of war with Iraq will influence the world's oil supplies.

"I would anticipate there will be discussion of our overutilization of oil and gas and what are we as a country going to do about it," McColl said.

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."