The picture on the front page of the New York Times in early May was memorable: five Enron directors with hands upraised, swearing to a Senate subcommittee they were not responsible for the company's collapse. Pathetic as they seemed, they were telling the truth. Corporate directors are not in any real sense 'directing' companies. And that's the problem.

In a telling moment before the subcommittee, the directors confessed they 'had no inkling that Enron was in troubled waters until mid-October 2001' right before the house of cards collapsed. This may seem unconscionable negligence, but it is more fundamentally a result of the design of corporate governance. Boards of directors don't govern because all essential governance happens before the board meets. State law mandates directors must act in the best interests of the corporation and its shareholders, which courts interpret to mean maximum share price. So as long as share price remains high, directors feel confident. Yet it was precisely the hyper-inflation of share price that destroyed Enron.

Post-Enron, it's clear that pursuit of profits must stay within ethical bounds, and that executives and shareholders may not enrich themselves by extorting the public or employees. Toothless codes of ethics like Enron's are no help. Ethical concerns must grow teeth which means biting into reform of corporate governance. While most proposals for reform today merely tinker at the margins, some get to the heart of the matter. Below are four of the best.

1. Ensure auditors really audit by making them fully independent. Instead of having companies be the 'bosses' of their own auditors selecting and paying the firms they want to work with a Corporate Accountability Commission could assign auditors and pay them from fees assessed on companies. That's the proposal of Ralph Estes, emeritus professor of accounting at American University, in his proposed Corporate Accountability Act (www.stakeholderalliance.org/CorpAccAct.html). The commission would be empowered to expand reporting requirements beyond stockholder needs to encompass data needed by other stakeholders such as pollution emissions, wages and benefits paid, and corporate welfare received.