Woe to the chief executive who manages in the shadow of a legendary founder. That's a lesson David S. Pottruck could teach in his new part-time career as a business-school lecturer. On July 20 the board of Charles Schwab Corp. (SCH) showed Pottruck the door just 14 months after naming him CEO. Founder, Chairman, and former CEO Charles R. Schwab resumed the post.
During his tenure, Pottruck, 56, failed to reverse the disappointing revenue trends that began plaguing Schwab in 2000 while he and Chuck Schwab were co-CEOs. Also on Pottruck's watch, Schwab completed an ill-advised $289 million acquisition of Soundview Technology Group Inc. Pottruck accepted responsibility for the company's poor performance in a September, 2004, interview. But many believe Chuck Schwab is partly responsible. "There are things I wish I'd done," he said in October. Schwab said he tried to give Pottruck "license" as CEO. But as chairman during that period, Schwab weighed in on key decisions. Indeed, when he handed over the full CEO title to Pottruck in 2003, the board amended the company's bylaws to give the chairman an "active role" in setting strategy.
The possibility that Schwab might return to the CEO job hung over Pottruck while he was at the helm. "I never considered Chuck Schwab and myself to be equal," he said in September. The situation is typical of a company where a charismatic founder is still influential, says John Kador, author of Charles Schwab: How One Company Beat Wall Street and Reinvented the Brokerage Industry.
Pottruck's $10 million contract will keep him on Schwab's payroll through 2007. Meanwhile, he has started a private equity firm, Pottruck Group. The right buyout deal could put him back in the CEO role -- ideally at a company where the founder has long since retired.