SEC Choice Praised for Modesty, Integrity

During a one-on-one lunch Monday at Manhattan’s University Club, Lincoln Center President Reynold Levy learned that one of his key trustees might have less time to devote to the performing arts center in the days ahead.

The trustee, William H. Donaldson, mentioned in passing that an upcoming project “might keep him a little busy for a while,” Levy said Tuesday, shortly after hearing that President Bush had nominated Donaldson to head the Securities and Exchange Commission.

It was typical of Donaldson both to be modest about the job he was taking on and to be more concerned about any ill effects on the home of the New York Philharmonic, the Metropolitan Opera and the New York City Ballet, Levy said.

For someone who made a fortune on Wall Street, headed the New York Stock Exchange, helped found the Yale School of Management, served as an undersecretary of State and commanded a Marine rifle platoon in the Korean War, Donaldson is down to earth and easily approachable, people who know him said Tuesday.

“He was Bill from Day 1, Bill to everyone -- faculty, students and staff -- and that set the tone,” said Arthur J. Swersey, who started as a professor at the Yale School of Management in the mid-1970s, when it opened with Donaldson as its founding dean.

The school was unusual in that it sought to prepare leaders for government and the nonprofit sector as well as for business and finance. In that respect, Donaldson may have been an obvious choice as dean, since his career already had taken him through all those worlds.

Though Donaldson had a whimsical side -- once demonstrating his yodeling technique at a Yale Christmas party -- Swersey said he also had the “inherent toughness” of someone who had founded and run a successful Wall Street investment firm, Donaldson, Lufkin & Jenrette.

Others described Donaldson, 71, as a good listener and an acute questioner, a manager who knows how to delegate and a man of high integrity.

“He’s not afraid of anybody,” said Steve Lebow, a Los Angeles venture capitalist who previously worked for DLJ and met Donaldson there.

Newport Beach lawyer Francis Quinlan, who serves with Donaldson on the board of trustees of the Marine Corps University Foundation, recalled a recent meeting at which the board debated whether to adopt a bylaw providing for fees to be paid in the event a trustee was asked to take on a time-consuming special project.

“Bill said, ‘Absolutely not. We all signed on to do this for nothing. It’s for the good of the Corps, and we shouldn’t take a penny,’ ” Quinlan recalled. That ended the debate, he said.

A Buffalo, N.Y., native and now a Manhattan resident, Donaldson attended Yale as an undergraduate and, like President Bush and his father, President George H.W. Bush, was a member of Yale’s Skull and Bones secret society.

Donaldson’s first job in the securities industry was in the firm of G.H. Walker & Co., a brokerage founded by the elder President Bush’s maternal uncle George Herbert Walker.

Donaldson attended Harvard Business School and, with classmates Dan Lufkin and Richard Jenrette, founded DLJ in 1959. It concentrated on research, grew quickly and in 1970 became the first New York Stock Exchange member firm allowed to sell shares to the public, enabling its founders to reap a fortune.

After stepping back from DLJ’s daily operations in 1973, Donaldson entered government service, then went on to help found the Yale management school. In the 1980s he headed his own investment company, Donaldson Enterprises.

In 1990 Donaldson was named chairman and chief executive of the NYSE, where he stayed for five years. But his tenure at the exchange got mixed reviews.

“He didn’t do anything I know about to prepare the NYSE for the future,” William Freund, the NYSE’s former chief economist, told Bloomberg News.

In the late 1990s Donaldson was a senior advisor to DLJ, before it was sold to Credit Suisse First Boston in 2000 for $13.4 billion.

Though Donaldson was lauded Tuesday by many observers, his recent corporate connections are certain to be scrutinized in advance of his Senate confirmation hearings.

Former federal judge William H. Webster’s ties to a small technology company that has been sued for alleged fraud sparked a firestorm that led to Webster’s resignation from the nation’s new accounting industry oversight board last month.

Donaldson was chairman of Aetna Inc. from May 2000 to April 2001, a period when the company was struggling to refocus itself as a health-care giant and was shedding its financial services business. Donaldson earned $7 million in salary and bonus for his service.

Aetna and Donaldson have been sued by some shareholders, who alleged that they misrepresented the company’s restructuring. Aetna said the suit has no merit, and the firm has filed a motion to dismiss it.

Donaldson also has served in recent years as a director of two small companies: EasyLink Services Corp. of Edison, N.J., and Bright Horizons Family Solutions Inc. of Watertown, Mass.

EasyLink, once known as Mail.com, is a money-losing provider of electronic mail and other services to businesses. Donaldson became a director in April 1998 and has served on the company’s compensation and audit committees at various times.

Outside directors such as Donaldson did not receive cash compensation at EasyLink, but were given stock options.

According to a recent company filing with the SEC, Donaldson resigned from EasyLink’s board Nov. 12, citing personal reasons.

The company, whose shares trade for about 77 cents, has told the SEC that its losses raise “considerable doubt about the company’s ability to continue as a going concern.”

In a statement Tuesday, EasyLink Chairman Gerald Gorman said Donaldson’s “extensive business experience helped us on many occasions.”

Bright Horizons is a profitable provider of employer-sponsored child-care and early education centers, operating 400 centers in the U.S., Europe, Canada and the Pacific Rim.

“We have long had enormous admiration for [Donaldson] and for his diversity of talents, which are unmatched,” said Linda Mason, Bright Horizons’ chairwoman.

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Times staff writer Debora Vrana contributed to this report.

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William H. Donaldson

Age: 71

Education: B.A., Yale University, 1953; M.B.A., Harvard University, 1958

Experience: Currently chairman of Donaldson Enterprises

Chairman of Aetna Inc., 2000-01; chairman and CEO, New York Stock Exchange, 1990-95; dean and professor, Yale School of Management, 1975-80; undersecretary of State, State Department, 1973-74; chairman and CEO, Donaldson, Lufkin & Jenrette Inc., 1959-73; U.S. Marine Corps, 1953-55.

Family: Wife, Jane, and children Adam, Kimberly and Matthew

Source: Associated Press