Charles Schwab steps down as CEO of his brokerage
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Charles R. Schwab grabbed back the helm of his foundering discount brokerage in 2004 and vowed to put the company back on course.
Now, Schwab must be feeling comfortable enough to try handing off control -- again: San Francisco-based Charles Schwab Corp. today said its board elected Walter W. Bettinger II as chief executive, succeeding the namesake.
Bettinger, 47, has been the heir apparent since he was named president and chief operating officer in February 2007. He will take over on Oct. 1.
Charles Schwab, 70, will remain executive chairman of the company and said in a statement that he would ‘continue to serve as a very active chairman.’
Bettinger is a 13-year veteran of Schwab and has held numerous executive posts along the way. He came to the company in 1995 when it acquired the retirement-plan services firm (Hampton Co.) he had founded at age 22.
Charles Schwab’s previous successor didn’t last long: David Pottruck, who had spent most of his 20 years at the brokerage as the founder’s right-hand man, was ousted as CEO in July 2004 after just 14 months in the job. He had shared the CEO title with Charles Schwab from 1998 to May 2003, when the founder gave Pottruck sole control of the top post.
But by the summer of 2004 the company faced heavy criticism that it had lost its connection to many of its core individual-investor customers. Rising fees were angering many Schwab clients and the company was struggling with a number of acquisitions that had taken it away from its central business.
Once back in control, Charles Schwab -- who later conceded the company had ‘lost touch with our heritage’ -- quickly refocused the business on providing financial advice to individual investors. He also rolled back Pottruck’s fee hikes.
As business rebounded, earnings began to turn around in 2005. So did the stock. The share price is up 151% since Pottruck’s ouster, 10 times the gain of the Standard & Poor’s 500 index in the period.
Last week the company reported a 22% jump in second-quarter operating earnings on a 9% rise in revenue. The company’s clients have $1.4 trillion in assets with the firm.
Today, the stock rose 99 cents, or 4.5%, to $22.85 before the succession announcement.
Bettinger, in the company’s statement, seemed to nod to the idea that some Schwab shareholders might worry about another succession going awry. ‘Chuck and I have worked closely together over the years preparing for this transition,’ he said, ‘and we will continue to work closely together in our respective roles as executive chairman and CEO.’