NEW YORK (CNN/Money) - A blue-ribbon panel of U.S. business leaders Tuesday proposed major reforms of executive compensation practices, including the expensing of stock options, to address abuses that have eroded investor trust.

The Conference Board, a private research firm, said its Blue-Ribbon Commission on Public Trust and Private Enterprise recommended a wide range of reforms, including listing stock options as expenses, advanced notice of executive stock sales, and shareholder approval of option repricing.

The 12-member panel includes former Federal Reserve Chairman Paul Volcker, Intel (INTC: Research, Estimates) Chairman Andrew Grove, and former Securities and Exchange Commission Chairman Arthur Levitt.

"This is the best hope that the investor community has today," Levitt told CNNfn. "This is the first time that a group made up of this type of individuals has come out for expensing stock options and curbs on the excessive compensation executives have been receiving."

The recommendations are not binding, but the group plans to launch a national effort to encourage companies to take corrective action to fix the problems without resorting to legislation.

Executive pay has been in the news all year, as investors and employees have learned that leaders of failing companies were given enormous amounts of stock, pay and benefits, even as other shareholders were left with little or nothing.

Recently, even Jack Welch, former CEO of General Electric (GE: Research, Estimates), has come under scrutiny after previously undisclosed details of his compensation package, like the use of a New York apartment, were revealed during his divorce.

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A key topic of controversy has been the granting of stock options, which give employees the right to purchase shares below the current market value. Proponents of the practice note that options align employee interests with those of other shareholders, but critics say stock options haven't prevented many executives from getting rich even as they put up lackluster job performance.

"Stock options have failed abjectly to do what they were ballyhooed to do," Vanguard Group founder and former John Bogle, another panel member, said at a press conference.

And companies have not been required to report these options as expenses when they file financial statements. Critics have said corporate earnings have been improperly inflated in this way and that the practice of only reporting the options in footnotes to financial statements helps hide the options from investors.

In response to rising criticism, several companies, including Ford (F: Research, Estimates), General Motors (GM: Research, Estimates), J.P. Morgan Chase (JPM: Research, Estimates), Coca-Cola (KO: Research, Estimates) and GE, have decided to list options as expenses. But most companies don't expense options and many tech companies say that expensing options is inappropriate.

Intel's Grove has been among the most vocal tech executives on the issue, and as a member of the panel he dissented on the opinion that stock options be reported as an expense.

"Stock options are a red herring," said Grove. "The issue is excessive compensation for executives in whatever currency is used -- stock, money, apartments and whatever else."

Former Fed Chairman Volcker also dissented on the opinion that stock options be expensed, but for a different reason than Grove altogether: He doesn't think that fixed-price stock options should be used as compensation at all, noting that the rewards that executives get through options have more to do with the ups and downs of the market than actual performance.

"It's like rewarding people by giving them tickets to the New Jersey lottery," he said.

Although not a member of the panel, Warren Buffett also participated in the press conference. A longtime proponent of expensing options, the Berkshire Hathaway chairman has been sparring with Intel's Grove all year on the subject.

The latest round came at the press conference, where Grove noted that Financial Accounting Standards Board, which sets U.S. accounting standards, had voted against requiring companies to expense options back in the early 1990s. But Buffett pointed out that happened only after U.S. companies lobbied heavily against the idea.

"FASB decided unanimously, seven-to-nothing, unequivocally, strongly worded... that stock options should be expensed," said Buffett. "And then they were muscled by Corporate America which descended on Washington in hordes."