Bush to put CEOs on notice|
Executives could lose bonuses under 10-point plan to improve disclosure.
WASHINGTON (CNN) - President Bush is set to unveil a plan Thursday that would force chief executives to be more accountable for their company's performance and also step up pressure on accounting firms, CNN has learned.|
In another effort to distance his administration from the collapse of Enron, Bush will outline his plan during a morning event where he will also present awards for excellence in business, a senior administration official said.
Under the president's proposal, corporate chief executive officers or other top executives who are found to engage in "serious misconduct" would be barred from serving on the boards of any publicly held corporations, according to a fact sheet obtained by CNN. Such a move would require congressional legislation.
The president proposes that leaders lose any bonuses or other compensation based on incentives if they are found to be profiting from "erroneous financial statements," the White House fact sheet says.
Bush's plan also requires CEOs or other officers of a company to tell the public "promptly" when they buy or sell stock for personal gain. Currently, corporate leaders can wait as long as a year or more without revealing personal transactions within the company.
"The goal of these [proposals] is to increase corporate responsibility," an administration official said late Wednesday. The official said Bush has repeatedly talked about an "era of responsibility" and how that "extends to corporate leaders."
During his State of the Union address, Bush never mentioned Enron by name, but said, "Through stricter accounting standards and tougher disclosure requirements, corporate America must be made more accountable to employees and shareholders and held to the highest standards of conduct."
In other comments to reporters, the president has expressed his anger about the collapse of Enron, suggesting that investors were not given all the facts, and citing how his own mother-in-law lost about $8,000 in her Enron investment.
To help investors in the wake of the Enron debacle, the president wants corporations to provide quarterly information to shareholders about a firm's "financial performance, condition and risks."
And to prevent some of the accounting problems associated with Enron -- which have centered around Arthur Andersen and its auditing and consulting work for Enron -- the president calls for a "stronger, more independent audit system."
Bush's plan would require the Securities and Exchange Commission to establish guidelines for audit firms to prohibit an auditor from performing any other service, including consulting, to a client.
The president is also calling for the creation of an independent regulatory board, under the supervision of the SEC, to develop ethical standards for the accounting industry.
Bush's plan stems from recommendations from a working group, made up of Treasury, Commerce, SEC and other agency officials, formed after Enron became the biggest company to file for bankruptcy in U.S. history on Dec. 2.
The working group continues to meet to review other possible ways to promote more corporate responsibility and better disclosure requirements, an administration official told CNN.
Last month, in another move to prevent another Enron, Bush unveiled his proposals to help protect workers' retirement savings.
His pension reform proposals include allowing employees to diversify and invest in non-company stock after three years of investing in their company's 401(k). The president also calls for "pension parity," which aides describe as preventing corporate leaders from buying or selling company stock when employees and shareholders are barred from making investment changes in their retirement plans.
Enron and its executives were among the largest contributors to President Bush's political campaigns.
While Bush administration officials continue to say that Enron did not get any special treatment in exchange for those contributions, the president's advisers and Republicans are doing what they can to prevent the Enron debacle from affecting the GOP's performance in the November elections.
That is part of the reason the president will continue to tout his ideas for pension reform and his plan to promote corporate responsibility in the weeks ahead, his aides concede.