CONCORD, N.H. -- Calling honesty and responsibility "the engine of economic growth," Democratic presidential hopeful John Edwards is unveiling plans to hold corporations accountable, including the requirement that companies count stock options as expenses against the bottom line.
The North Carolina senator, who planned to unveil several business-oriented proposals during a speech Monday afternoon, said executives no longer should be allowed to award themselves millions of shares, then manipulate their balance sheets to inflate stock prices and cash out when their companies falter.
"The abuse of stock options that are hidden from balance sheets have been central to the corporate scandals," Edwards said in prepared remarks provided to The Associated Press. "This is about honest accounting. It is a fundamental tenet of economic reform. If we're going to restore values to our economy, we need to do the right thing here."
The spectacle of Enron executives and others cashing out millions of dollars worth of stock before their companies collapsed has renewed the debate over counting stock options. A board that sets standards for corporate accounting favors reforms, but business interests, especially high-tech companies, have been vocal opponents.
Edwards said his proposal would help restore integrity to corporate America and boost the economy by reviving investor confidence.
"I don't believe our values are a luxury of economic growth. I believe they are the engine of economic growth," he said. "Books that are honest, executives who are responsible and employees who work hard for fair wages are essential to our economy."
Edwards also targeted boards of directors that are hand-picked by management and fail to represent their shareholders. He proposed allowing shareholders with substantial holdings the right to nominate board members without costly proxy fights.
"For some - not all, but some - corporate directorships have become perks to be hoarded and traded among a closed group: a nice way to pick up a few extra dollars and attend the occasional conference in the Caribbean," he said. "So it's no surprise that these cozy insiders were asleep at the switch during the largest corporate scandals in our history."
Edwards also would increase penalties for using illegal tax shelters and make it harder for companies to hide their money by requiring them to explain why profits they report to the IRS differ from the amount reported to shareholders.
Other proposals included requiring companies to fully disclose executive pay and perks and provide more accurate information about earnings of their company pension plans.