In the first post-Enron statement of its kind to come from a large Twin Cities business group, 38 local business leaders here have signed on to an evolving set of principles designed to help restore the public's confidence in the practices of American corporations.

The principles deal with four topics: executive compensation, balancing short-term gain with long-term value, corporate responsibility and corporate governance.

The statement grew out of concerns voiced last summer and fall by David Koch, retired chief executive officer of Golden Valley-based Graco Inc., and others about the need for corporate leaders to speak out on such issues.

Koch and three others — SurModics chairman Dale Olseth and retired chairmen Richard McFarland of RBC Dain Rauscher and Chuck Denny of ADC Telecommunications — organized the group. The Twin Cities-based Center for Ethical Business Cultures is serving as its administrative arm.

Some other business leaders here, notably retired Medtronic CEO William George, have expressed similar concerns as individuals.

George delivered a blistering critique of corporate leadership at a Westminster Town Forum meeting in Minneapolis two months ago. He charged that too many businesspeople have been "worshiping the wrong idols" and called for a new generation of leaders to speak out against CEO pay excesses and questionable corporate practices.

The group's statement was more cautious, but addressed many of the same concerns raised by George.

On executive pay, the group identified two themes — excessive compensation and pay for mediocre performance.

Executive pay "has grown significantly faster than compensation for the average worker, and some CEOs were compensated generously while their companies failed," the statement said. Stock options "are important,'' it added, but should be based on long-term company performance.

The rewards CEOs get should reflect the risks they take, the group added, but corporate directors should take the lead in adjusting pay levels to produce "a better distribution between the lowest-paid worker and the CEO."

The statement noted that the 1990s saw a "dramatic shift" to more stress on short-term gains in stock prices from long-term shareholder value. The group said directors should push a return to a more traditional emphasis on the longer perspective.

The statement also called on companies with a CEO who is also chairman to either split the jobs among two executives or go to a "lead director" structure. A few local companies with a combined CEO/chairman, notably Medtronic and Target, have adopted the lead director concept.

Ron James, president and CEO of the center, said that while there have been swift legislative and regulatory responses to corporate scandals, business leaders have been too silent.

Meanwhile, the public is expressing dissatisfaction in opinion polls and by pulling money out of the stock market. "In the absence of a business voice, the public paints all businesses with the same brush," James said.

He said the center, which is affiliated with the business schools at the University of Minnesota and the University of St. Thomas, will work with the group to further develop the principles.

Koch said he and the center were making headway in getting more corporate leaders involved, but that more of them should support the principles.

"It isn't that the CEOs need to satisfy just their boards or their shareholders,'' he said. "They also need to satisfy the public."

Ethical Principles Signers

Tony Andersen, Retired Chairman & CEO, H.B. Fuller

Larry Benveniste, Dean, University of Minnesota, Carlson School of Management

Carl Bergquist, Chairman, President & CEO, The Berquist Company

Norman Bowie, Andersen Chair in Corporate Responsibility, University of Minnesota, Carlson School of Managementl

Mary Brainerd, President and CEO, HealthPartners, Inc.

Robert H. Carlson, Co-CEO, Reell 

Thomas Colwell, CEO, Colwell Industries, Inc.

Judith Corson, Co-Founder and Former President, Custom Research

Gary Costley, President and CEO, International Multifoods

Jo Marie Dancik, Area Managing Partner, Ernst & Young LLP

Chuck Denny, Former Chairman & CEO,  Telecommunications

Jon Eisele, Managing Partner, DeLoittle & Touche

Sidney Emery Jr., Chairman and CEO, MTS Systems

Ken Goodpaster, Koch Endowed Chair in Business Ethics, University of St. Thomas

Tom Holloran, Professor Emeritus, University of St. Thomas

Russell Huffer, President, Chairman and CEO, Apogee Enterprises, Inc.

Ron James, President and CEO, Center for Ethical Business Cultures

S.A. Johnson, Chairman, Hidden Creek Industries

Jay Kiedrowski, Executive Vice President, Institutional Investments, Wells Fargo Bank

David Koch, Chairman Emeritus, Graco, Inc.

Richard McFarland, Retired Chairman, RBC Dain Rauscher, Inc.

Richard (Pinky) McNamara, Owner and President, Activar Inc.

Kendrick Melrose, Chairman and CEO, The Toro Company

William Monahan, Chairman and CEO, ImationCorp.

Timothy Morin, Former President and CEO, Wizmo, Inc.

Jeffrey Noddle, Chairman and CEO, SUPERVALU INC.

Dale Olseth, Chairman & CEO, SurModics, Inc.

Paul Pesek, Chairman, Locus Medical Technology

Peter Pierce, Chairman, Lyle Signs, Inc.

Christopher Puto, Dean, University of St. Thomas, College of Business

James Renier, Former Chairman and CEO, Honeywell

James Secord, Former President and CEO, Lakewood Publications

John Solberg, President and CEO, Opus Northwest, LLC

Gerald Stenson, Executive Vice President, Wells Fargo Bank, N. A.

William Sweasy, Chairman, Red Wing Shoe Company

Tom Triplett, Attorney and Counselor

Kathryn Tunheim, President and General Manager, GCI Tunheim

Win Wallin, Chairman Emeritus, Medtronic, Inc.