NEW YORK — A blue-ribbon panel formed by the Conference Board to address the erosion of public trust in U.S. companies is urging business leaders to reform executive compensation practices as a first step in restoring trust.

In the first of three reports, the 12-member Commission on Public Trust and Private Enterprise is asking corporate boards to take a stronger role in monitoring compensation as well as force compensation committees to cut their ties to management. The commission said Tuesday that companies should uniformly expense stock options. The panel called for more transparency and "less footnotes" about options and pay, which tend to get buried in proxy statements.

"Our mantra is plain sight, plain English," said commission member Peter Peterson, chairman of The Blackstone Group and the Federal Reserve Bank of New York as well as former Secretary of Commerce.

The commission wants companies to revise compensation packages in a way that more closely aligns management’s performance with the interests of shareholders. They said executives should have long-term ownership of the companies they manage. Instead, the panel found that executives were awarded for the short term, and often with fixed-priced options, which infest compensation packages. These types of options, which the commission said should be restricted, are not expensed and are tax deductible.

Due to recent cases of fraud and misconduct at companies such as Enron and Global Crossing, the "foundation of corporate capitalism" has been "badly shaken" and is in need of major reforms, the commission said. The next two reports from the commission will tackle corporate governance in addition to issues relating to accounting and auditing.

The list of commission co-chairs reads like a who’s who of the business and finance community. In addition to Peterson, members include John Snow, chairman of CSX Corp.; John Biggs, chairman and president of TIAA-CREF; John Bogle, founder and former chairman of the Vanguard Group; Andrew Grove, chairman of Intel Corp.; Ralph Larsen, former chairman and chief executive officer of Johnson & Johnson and former chairman of the American Business Conference, and Arthur Levitt, former chairman of the Securities and Exchange Commission.

The panel of business heavyweights invited Warren Buffett, chairman and ceo of Berkshire Hathaway, to speak about the issue. Buffett, addressing the group through a broadcast link, said he agreed with the findings in the report, and added "compensation committees have to go back to square one."Buffett said compensation committees are too tight with management, which results in executive compensation packages that are at "obscene levels."

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