Tuesday, February 22, 2005

Donaldson's Balancing Act

At the World Economic Forum in January in the Swiss resort of Davos, Securities & Exchange Commission Chairman William H. Donaldson took a break from hobnobbing to moderate a panel on leadership. He listened intently as New York Stock Exchange CEO John A. Thain, Citicorp (C ) CEO Charles Prince, and Home Depot Inc. (HD ) Chairman and CEO Robert L. Nardelli gave pointers. Then the SEC chief offered his own 10 principles of effective leadership. When he finished, Donaldson was startled to find corporate moguls crowding around, pestering him for copies and demanding to know when he would write a book based on his ideas.

Publishers, put those contracts away. Donaldson plans to keep practicing what he preaches at the SEC's Washington headquarters for at least another year. And the 73-year-old Wall Streeter is going to need all the leadership savvy he can muster. Already under heavy fire from Corporate America and some Republicans, Donaldson is walking a fine line. He isn't abandoning his activist agenda so much as balancing his pursuit of further governance and market reforms with some business-friendly flexibility and regulatory streamlining.

But Donaldson will get in Corporate America's face with a new push to make all forms of executive compensation more transparent, so shareholders can spot when pay outpaces performance. He remains a zealous enforcer. And he still wants to give shareholders more say in board elections. But on that and other issues, he's taking a softer approach that's less likely to rile the boardroom set. And his agenda for 2005 is heavy on items to modernize markets and make existing rules more efficient and effective -- a classic Republican deregulatory course that should curry favor with business.

Donaldson's Balancing Act

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