This week's presidential election heightens pressure on the Securities and Exchange Commission to move quickly on several key initiatives because the composition of the five-member commission may change next year, legal experts said.
The fate of one of the most controversial initiatives on the agency's agenda, a year-old proposal that would grant dissatisfied investors more power to nominate corporate board candidates under limited circumstances, remains unclear, according to SEC sources who spoke on condition of anonymity because of the sensitive nature of the issue.
The SEC has received thousands of letters in support of the proposal, which has been fiercely opposed by the U.S. Chamber of Commerce, the Business Roundtable and prominent members of the Bush administration. Corporate governance experts say it could be the most meaningful way to limit skyrocketing executive compensation and to make companies more accountable to shareholders.
SEC Chairman William H. Donaldson said last month that he still is trying to broker a workable compromise plan within the agency. But he also has said publicly that he will not cave in to pressure from interest groups that want him to proceed on an "artificial timetable."
Among the arguments for quick action is the makeup of the SEC itself. The term of Democrat Harvey J. Goldschmid, one of the strongest voices for shareholder reform at the SEC, expired months ago. Officials at Columbia University, where he has long taught, have said they expect him back in the classroom no later than August 2005.
Friends say it is unlikely that Goldschmid would agree to forfeit his tenured position at the law school to remain at the SEC past that date, unless he were to become the agency's chairman -- which is no longer an option with Sen. John F. Kerry's presidential election loss. Presidents traditionally appoint a chairman from their own party.
"It's absolutely critical for us to get it done before [Goldschmid] leaves, because he's been the voice of reason," said Patricia K. Macht, a spokeswoman for the California Public Employees' Retirement System, which supports the director-nomination proposal. "I couldn't think of any rational reason why this issue should be strung out for another 12 months, or even another nine months."
Some in the agency have said they think that 73-year-old Donaldson, who made millions as an investment banker and former chief of the New York Stock Exchange, may want to leave next year before his term expires in 2007. Donaldson, who parachuted in to help the agency recover from partisan gridlock in early 2003, has said he will remain on board so long as the president requires his service.
Democrat Roel C. Campos is scheduled to remain at the SEC at least through June, and the terms of Republican commissioners Cynthia A. Glassman and Paul S. Atkins are set to expire in 2006 and 2008, respectively.
"The next several months are likely to be a transition period," said Joel Seligman, dean of the Washington University law school and author of a history of the SEC. "You're finishing up the post-Enron, Sarbanes-Oxley phase in terms of reforms and initiatives, probably until the next scandals. You're likely to see a somewhat different direction in a second Bush term than you saw in the first."
At recent public meetings, Donaldson said he hopes the SEC will take action on several issues before the year ends, including changes to the way mutual fund shares are traded.