John C. Bogle, the man who founded Vanguard Group in 1975 and has remained its public face ever since, may be asked to step down from the fund manager's board this December.
It is the norm for Vanguard board members to retire in the year they reach the age of 70, which Bogle did in May.
It is not mandatory, however, and the board has the power to make exceptions.
But that power is unlikely to be exercised by the board in the case of Bogle. "We understand it is the board's intent to uphold the policy," said John Demming, communications manager at Vanguard.
Bogle was away on vacation and could not be reached for comment.
Company observers say the board's likely refusal to extend Bogle's term may be due to the differences between him and his protege-turned-successor, John Brennan.
"This allows Jack Brennan to build the board more to his liking," said Dan Wiener, editor of the Independent Adviser for Vanguard Investors, a Potomac-based newsletter that tracks Vanguard's funds.
Bogle's departure is not expected to materially affect Vanguard, which manages about $500 billion in assets, but public perception of the firm could be harmed, because Bogle has come to personify the company's low-cost, austere approach.
Although both Bogle and Brennan agree on Vanguard's basic philosophy of keeping costs low and emphasizing index mutual funds, observers said they have diametrically opposite views on discount securities brokerage.
People familiar with the matter said that while Brennan wants to use Internet technology to build a major online brokerage firm to compete with the likes of Charles Schwab Corp. and Fidelity Investments, Bogle is dead against it.
With Bogle off the board, Brennan will be free to push ahead with his plans.
The company spokesman, however, said brokerage services were not a primary focus for Vanguard, but rather an ancillary service it provided to its shareholders. Demming added that there were no differences of opinion between Brennan and Bogle.
Asked by the Wall Street Journal about his relationship with his successor, Bogle replied, "That's an essay question" and declined to comment further.
At the heart of Vanguard's success is Bogle's obsession with low-cost operations and focus on index-based funds. By using outside managers, Bogle drove down Vanguard's costs of operation and attracted a huge customer base.
Vanguard was one of the first fund firms to offer no-load funds, which eliminate sales charges.
Vanguard watchers say that although Brennan has been running the show for more than three years now, his future success will depend on his continuing to follow Bogle's credo of low-cost service.
"The proof will come out if Vanguard continues to negotiate very strict management contracts with outside managers," Wiener said.
CAPTION: John C. Bogle has come to personify Vanguard's austere approach.