Schwab Agrees to Pay $6.2 Million to Ex-CEO

Charles Schwab Corp., the biggest discount broker, agreed to pay $6.2 million to former Chief Executive David Pottruck, who was ousted in July after he failed to stem a loss in market share to cheaper equity firms.

Pottruck, 56, was to receive the payment as a lump sum on Aug. 2, San Francisco-based Schwab said in a filing Monday with the Securities and Exchange Commission. The company replaced Pottruck with founder Charles Schwab.

The company also agreed to pay Pottruck a monthly salary of $83,333 in August and September. On Oct. 1, Schwab started paying him $135,714 a month. Pottruck will get the higher salary until either Jan. 31, 2007, or he gets another job.

Schwab, meanwhile, is among more than a dozen firms the SEC is probing for possibly failing to get clients the best prices for Nasdaq stocks, people familiar with the matter said.

The SEC investigation, first reported by the New York Times, is mainly focused on Nasdaq trading at the beginning of each session, when brokers race to fill client orders, the people said.

In addition to Schwab, other firms reported to be under scrutiny include Merrill Lynch, Morgan Stanley, Ameritrade Holding Corp. and E-Trade Group Inc.

SEC spokesman John Heine declined to comment, as did representatives of the brokerages.

“If the SEC deems that orders aren’t being executed at the best price, you could wind up with sizable fines, fees, new regulations and ways of doing business,� said Dick Bove, an analyst at Punk Ziegel & Co.