Charles Schwab's decision to return to the discount brokerage giant that he founded and serve as the CEO of the firm once again has put the firm on stronger footing, according to MarketWatch.
The founder of the 35-year-old investment giant was happy to have retired back in May 2003. Who knew that a four hour meeting of company directors on July 18, 2004 would change all that?
The board told Schwab that the company was facing a "deepening disconnection" from customers, that its account fees had become too high and that some of its acquisitions into traditional Wall Street avenues were ill timed. It was after this meeting that Schwab decided to return and make some difficult decisions.
Since July 2004, Schwab has laid off 2,100 employees, cut back the branch network from 336 to 295 and reduced annual expenses by $300 million. As a result, the company has been able to cut trading and account fees eight times in the past sixteen months, which has helped the company regain market share and retain customers.
"He came back to protect his legacy, and in doing it he's really breathed new life into his company," said Don Putnam, founder of Grail Partners, a San Francisco investment banking firm, of Schwab. "He's promoted people who understand the theology of Schwab, which has to do with cost and fairness. He has rebuilt the brand and, I think, set the stage for this company to double in value over the next five years."
In just a little over a year, the firm has done a complete turnaround by fixing "frayed morale among employees and reignited the company's stock.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.