The Charles Schwab Corp said on Friday that its founder and chairman, Charles R. Schwab, would relinquish the title of co-chief executive in May, though Schwab intends to continue plotting the company's strategy.
David Pottruck, who has been managing the company's operations for five years, will become sole chief executive and president. The company said Schwab's move would bring the company in line with new standards of corporate governance, though almost no other big American financial company has split its chairman and chief executive roles lately.
One exception is the ETrade Group, one of Schwab's rivals in online trading. Last week, ETrade, which is based in Palo Alto, California, named an outside director to be its chairman after Christos M. Cotsakos resigned as chairman and chief executive.
Neither Schwab, who turned 65 in July, nor Pottruck, who 54, was available for comment on Friday, said Greg Gable, a spokesman at Schwab's headquarters in San Francisco.
In a prepared statement, Schwab said: "As many experts have suggested, from regulators to Congress to independent blue ribbon panels, it is important in today's environment that the positions of CEO and chairman be distinct and that the chairman play a central role. I intend to embody that and be the model of an active chairman."
Separately, Schwab announced an agreement to sell the bulk of its operations in Europe to Barclays PLC for an undisclosed sum. In selling its London-based brokerage firm, Schwab is largely pulling out of Europe after withdrawing from Japan, Australia and Canada.
Glen Mathison, another Schwab spokesman, said the sale fit the company's strategy of concentrating on brokerage business conducted in dollars, rather than local currencies. To compete with other brokerage firms based in Europe would have required a much bigger investment than Schwab was prepared to make. Schwab, which has been cutting costs and laying off thousands of employees for two years, still operates dollar-based brokerage operations in Europe, Hong Kong and Latin America, he said.
Barclays would decide how many of Schwab's 400 employees in London to keep, Mathison said. He said the sale would reduce Schwab's costs but the price would have little effect on Schwab's earnings.
Analysts said that the planned management change at Schwab should have little effect on the company's operations or prospects.
"Pottruck has been taking on more and more responsibilities for years," said Richard Strauss, an analyst at Goldman, Sachs. "He had a big role in growing the business and will have an even more challenging job now in reviving the company's fortunes."
Scott E. Wendelin, chief executive of Prospect Financial Advisors in Los Angeles, said he thought investors would applaud the move.
"I'm absolutely convinced that Charles Schwab thinks this is going to make the stock price go up," said Wendelin, a former investment banker.
"Most CEOs I've talked to don't believe that corporate governance sells. I think Charles Schwab does and he's got a huge stake in proving it."
Schwab, who founded the company in 1971, is its biggest stockholder with 244 million shares, worth about US$2.25 billion. He sold his discount brokerage firm to Bank of America in 1983, then led a buyout of it in 1987, and took it public.
In trading on the New York Stock Exchange, Schwab's shares rose US$0.08, to US$9.22.
None of the biggest firms on Wall Street have split their two top jobs permanently. At Merrill Lynch, David H. Komansky will remain chairman until April when he will yield that title to E. Stanley O'Neal, who succeeded Komansky as chief executive last year, a firm spokesman said.
At the Goldman Sachs Group, Henry M. Paulson Jr., who has criticized the governance of other companies, is chairman and chief executive. A Goldman spokesman said the firm had no plans to separate the jobs because it already had an independent board.
Citigroup, JP Morgan Chase, Morgan Stanley, Lehman Brothers Holdings and Bear Stearns each have one man serving as chairman and chief executive.
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