Charles Schwab to Relinquish Co-CEO Title
SAN FRANCISCO (AP) _ Discount stock brokerage pioneer Charles Schwab on Friday said he will relinquish the co-chief executive title at the company that bears his name and entrust the full responsibility to his long-time management partner, David Pottruck.
Schwab, 65, will remain chairman of the board at Charles Schwab Corp. and said he plans to continue to shape the strategic direction of the San Francisco-based brokerage he founded in 1971.
Wall Street’s emphasis on greater autonomy between corporate boards and management swayed Schwab’s decision to give up the chief executive role he has shared with Pottruck since 1998.
``It is important in today’s environment that the positions of CEO and chairman be distinct and that the chairman play a central role,″ Schwab said. ``I intend to embody that and be the model of an active chairman.″
The change will become effective at the company’s annual shareholders meeting in May. Pottruck will then become president and sole CEO.
Investors took Friday’s news in stride. Schwab’s shares rose 8 cents to close Friday at $9.22 on the New York Stock Exchange.
Although he isn’t as well known as Schwab, Pottruck, 54, has played a pivotal role in Schwab’s growth since he took control of the company’s brokerage subsidiary in 1992. Since then, Schwab customer assets have ballooned from $48 billion to $765 billion.
Pottruck plans to continue to work closely with Schwab.
``I know we can count on Chuck’s clarity of purpose and his vision as we move Schwab into its next era,″ Pottruck said.
By giving up the CEO mantle, Schwab appears to be rewarding Pottruck for his accomplishments while also trying to curry favor with investors who have been tough on his company’s stock, said veteran investment banker Scott Wendelin, who has worked with Schwab in the past.
``The gesture is very timely and it appears to be spoken from the heart, as well as the pocketbook. I wouldn’t rule out a very specific profit motive here,″ said Wendelin, now CEO of Prospect Financial Advisors.
The last few years of stock market turbulence have been particularly rough on Schwab and his company.
Schwab’s stock has fallen by 77 percent from its peak of $40.58, reached during 2000. Schwab owns about one-fifth of the company, saddling him with a paper loss of about $5 billion in less than three years.
With Schwab customers reluctant to buy stocks in the bear market of the past three years, the company has had to unravel an expansion launched during the heady days of the late 1990s. The dismantling has included nearly 10,000 layoffs over the past two years.
In a separate announcement Friday, Schwab said it has agreed to sell its British sterling pound brokerage business to Barclays PLC for an undisclosed amount. The deal, affecting 150,000 accounts with $3.6 billion in assets, is expected to be completed during the next six to nine months.
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