Proxy Statement (Form DEF 14A)
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Preliminary Proxy Statement | |
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Confidential, for Use of the Commission Only (as permitted by Rule
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Definitive Proxy Statement | |
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Definitive Additional Materials | |
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Soliciting Material under
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No fee required
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Fee paid previously with preliminary materials
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
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Dear Fellow Stockholders,
We cordially invite you to attend our 2025 Annual Meeting of Stockholders to be held on
At the annual meeting, we will conduct the items of business outlined in this proxy statement. We also will report on our corporate performance in 2024 and answer questions.
Your vote is important. We encourage you to read this proxy statement carefully and to vote your shares as soon as possible, even if you plan to attend the meeting. Voting instructions are contained on the proxy card or voting instruction form that you received with this proxy statement.
We look forward to your participation.
Sincerely,
| CO-CHAIRMAN | CO-CHAIRMAN | |
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| NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS |
Notice of 2025 Annual Meeting of Stockholders
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Date |
Time |
Location |
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Agenda
| 1. Elect five directors for three-year terms; |
| 2. Vote to ratify the selection of independent auditors; |
| 3. Vote for the approval, on an advisory basis, of compensation of named executive officers; |
| 4. Vote on a stockholder proposal, if properly presented; and |
| 5. Consider any other business properly coming before the meeting. |
Stockholders who owned shares of our voting common stock at the close of business on
By Order of the Board of Directors,
Managing Director, General Counsel and Corporate Secretary
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IMPORTANT NOTICE Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on |
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Proxy Statement Summary
The Board of Directors (the board) of
This summary highlights information contained in the proxy statement. This summary does not contain all of the information that you should consider, and you should review all of the information contained in the proxy statement before voting.
Annual Meeting of Stockholders
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Date & Time |
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Record Date |
Location |
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VotingStockholders as of the record date are entitled to vote. Each share of voting common stock is entitled to one vote.(1) Attending the MeetingPlease follow the meeting attendance instructions contained in the proxy statement on page 82. |
(1) Unless otherwise specified, references to "common stock" in this proxy statement do not include non-votingcommon stock. |
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Voting Proposals
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Proposal |
Board Recommendation | Page | ||
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Election of Directors |
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FOR | 18 | ||
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FOR | 23 | ||
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FOR | 28 | ||
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FOR | 29 | ||
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FOR | 31 | ||
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Ratification of Independent Auditors |
FOR | 37 | ||
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Advisory Approval of Named Executive Officer (NEO) Compensation |
FOR | 40 | ||
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Stockholder Proposal Requesting Declassification of the Board of Directors |
AGAINST | 79 | ||
HOW TO VOTE
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Internet |
Telephone |
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During the Meeting |
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| Visit www.proxydocs.com/SCHWand follow the instructions on the website. |
Call (866) 485-0358and follow the instructions on your proxy card or your voting instruction form. | Sign, date and mail your proxy card or your voting instruction form. | While we encourage you to vote before the meeting, stockholders may vote online during the meeting by following the instructions on page 83. | |||
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PROXY STATEMENT SUMMARY
Director Nominees
We ask that you vote for the election of
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Age | Director Since | Occupation | Skills | Independent | Committees | ||||||
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69 | 2015 | Former Managing Director, |
Financial services expertise and investment banking experience | Audit | |||||||
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62 | 2012 | Managing Partner, |
Leadership skills and global management consulting experience | Audit,
Nominating |
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70 | 2009 | Former Chief Executive Officer, |
Public company knowledge and leadership experience | Nominating and Corporate Governance, Risk |
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87 | 1986 | Co-Chairman, |
Founder of |
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77 | 2002 | Chairman and Chief Executive Officer, |
Marketing skills and management and executive leadership experience | Compensation | |||||||
Independent Auditors
We ask that you ratify the appointment of
Fees for services provided by Deloitte and the member firms of
| 2024 | 2023 | |||
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Audit Fees |
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Audit-Related Fees |
2,422,900 | 4,342,211 | ||
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Tax Fees |
31,500 | 45,400 | ||
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All Other Fees |
4,600 | - | ||
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Total |
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PROXY STATEMENT SUMMARY
Recognition and Awards
We are honored to be the recipients of a number of awards and recognitions, including those listed below.
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StockBrokers.com recognized the company as Best Overall Broker for 2024 performance in its 2025 Annual Awards. |
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For the second year in a row, |
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For the 12th year in a row, |
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Newsweek recognized both |
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The company ranked #1 in the Trader App, Desktop Stock Trading Platform, |
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For the eighth year in a row, Points of Light, the world's largest organization dedicated to volunteer service, recognized the company as one of America's 50 most community-minded companies. |
Company Strategy
The company's strategy emphasizes placing clients' perspectives, needs, and desires at the forefront by seeing the business through clients' eyes. Because investing plays a fundamental role in building financial security, the company strives to deliver a better investing experience for its clients - individual investors and the people and institutions who serve them - by disrupting longstanding industry practices on their behalf and providing superior service. In pursuing this strategy, the company:
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offers a broad range of products and solutions to meet client needs with a focus on transparency, value, service, and trust; |
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combines its scale and resources with ongoing expense discipline to keep operating costs low and ensure that products and solutions are affordable as well as responsive to client needs; and |
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seeks to build stockholder value over time. |
The company's "Through Clients' Eyes" strategy is based on the principle that developing trusted relationships will translate into more assets from both new and existing clients, ultimately driving more revenue and, along with expense discipline and thoughtful capital management, will generate earnings growth and build long-term stockholder value.
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PROXY STATEMENT SUMMARY
2024 Company Performance Highlights
In pursuing the "Through Clients' Eyes" strategy, the company achieved the following performance results for 2024:
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Total Client Assets trillion 19% increase year-over-year |
Net Income billion |
Active Brokerage Accounts 36.5 million 5% increase year-over-year |
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Diluted EPS: Adjusted Diluted EPS(1): |
ROCE:15% ROTCE(1):35% |
Core Net New Assets billion 20% increase year-over-year |
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For reconciliation of our results as reported under |
Executive Compensation
We ask that you approve, on an advisory basis, the compensation of our NEOs. The NEOs are those executive officers listed in the 2024 Summary Compensation Table (the 2024 SCT). The advisory approval of NEO compensation is required by federal law, and while the vote is not binding, the Compensation Committee considers the vote as part of its evaluation of executive compensation programs.
The executive compensation program supports the company's strategic objectives through the following design principles:
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Pay for Performance |
Stockholder |
Risk Management |
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§ Link executives' pay with company financial and stock price performance. § Reward executives for individual performance. |
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§ Promote profitable growth that delivers on the annual and long-term operating plan. § Attract, retain, and reward talented executives. |
§ Create appropriate balance of risk and reward. § Ensure effective governance and risk management practices are in place. |
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The Compensation Committee is dedicated to delivering a robust and balanced executive compensation program, in support of a strong link between executive pay and the company's financial performance. The executive compensation program uses three compensation elements: base salary, annual cash incentives, and long-term equity-based incentives (LTIs).
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PROXY STATEMENT SUMMARY
Based on the company's financial performance in 2024, the Compensation Committee approved funding at 117.69% of the target award for the NEOs for annual cash incentives. The performance goal for performance-based restricted stock units (PBRSUs) granted in 2024 was set at ROTCE exceeding the Cost of Equity (COE); this aligns the executives' incentives with the long-term interests of stockholders. The PBRSUs have cliff-vesting based on a three-year performance period.
For more information on executive compensation, please see "Compensation Discussion and Analysis" beginning on page 40 and "Executive Compensation Tables" beginning on page 58.
Stockholder Proposals
There is one stockholder proposal to vote on that is described in the proxy statement.
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CORPORATE GOVERNANCE
Corporate Governance
Company Overview
The company was founded on the belief that all Americans deserve access to a better investing experience. Although much has changed in the intervening years, our purpose remains clear - to champion every client's goals with passion and integrity. Guided by this purpose and our vision of being the most trusted leader in investment services, management has adopted a strategy described as "Through Clients' Eyes."
The Board of Directors
The board is committed to the company's vision of being the most trusted leader in investment services and believes that good corporate governance and high ethical standards are duties that we owe to our investors, clients, and employees, and are key to our long-term success and the creation of long-term stockholder value. The board has the responsibility to hold management accountable for carrying out the company's daily operations consistent with its strategic vision while navigating changes in the financial services industry, effectively managing risks, and responding to competitive pressures, new technologies, and an evolving regulatory environment.
Our practices to maintain board effectiveness include the following:
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Leadership |
Independence |
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§ Our Co-Chairmen lead our board § Our NCG Chair leads independent directors |
§ 73% independent directors § Regular executive sessions of |
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Qualifications and Composition |
Structure and Committees |
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§ Annual review of skills and composition § Succession planning § Annual self-assessments |
§ Audit Committee § Risk Committee § Compensation Committee § Nominating and Corporate Governance Committee |
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Board Leadership
Our Corporate Governance Guidelines provide that the roles of Chairman or Co-Chairmanof the board and Chief Executive Officer (CEO) may be separated or combined, and our board exercises its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. The board made the determination to split the role of CEO and Co-Chairman,as
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CORPORATE GOVERNANCE
determined that leveraging our founder and former CEO, in the case of
As provided in our Corporate Governance Guidelines, non-managementdirectors meet regularly in executive session without management and independent directors meet at least annually in executive session with only independent directors. The Chair of the
The board has four standing committees (Audit, Compensation, Nominating and Corporate Governance, and Risk). Given the role and scope of authority of these committees, and that over 70% of the directors are independent, the board believes that its leadership structure, with the Co-Chairmenof the board leading board discussions, and the Chair of the
Director Independence
We have considered the independence of each director in accordance with
In determining independence, the board considers broadly all relevant facts and circumstances regarding a director's relationships with the company. All non-employeedirectors receive compensation from the company for their service as directors, as disclosed in the "Director Compensation" section of this proxy statement, and are entitled to receive reimbursement for their expenses in traveling to and participating in board and committee meetings. As disclosed in the "Transactions with Related Persons" section of this proxy statement, some directors and entities with which they are affiliated have credit transactions with the company's banking and brokerage subsidiaries, such as mortgage loans, revolving lines of credit, or other extensions of credit. These transactions with directors and their affiliates are made in the ordinary course of business and as permitted by the Sarbanes-Oxley Act of 2002. Such transactions are on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lender and do not involve more than the normal risk of collectability or present other unfavorable features.
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CORPORATE GOVERNANCE
In addition to the relationships outlined above and in "Transactions with Related Persons" the board considered the following as part of its determination of independence:
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Board Structure and Committees
The authorized number of directors is currently 15, and the company has 15 directors. There are five nominees for election this year and ten directors will continue to serve the terms described in their biographies.
Directors currently serve staggered terms. Each director who is elected at an annual meeting of stockholders serves a three-year term, and the directors are divided into three classes.
The board held eight meetings in 2024. Each director attended at least 75% of applicable board and committee meetings during 2024. As provided in our Corporate Governance Guidelines, we expect directors to attend the annual meeting of stockholders. In 2024, all of the then-serving directors attended the annual meeting, except
Risk Oversight
We believe a fundamental commitment to strong and effective risk management is integral to achieving the company's vision and executing on its strategy to be the most trusted leader in investment services. As part of its oversight functions, the board is responsible for oversight of risk management at the company and for holding senior management accountable for implementing the board's approved risk tolerance. The board exercises this oversight both directly and indirectly through its standing committees, each of which is delegated responsibility for specific risks and keeps the board informed of its oversight efforts through regular reports by each committee Chair.
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CORPORATE GOVERNANCE
The board's oversight responsibility is carried out through its standing committees, as follows:
Our corporate cybersecurity program is led by our Chief Information Security Officer (CISO), who has extensive experience assessing and managing cybersecurity risk and who reports to our Chief Information Officer (CIO). Our CISO and CIO attend meetings of and present to the Risk Committee on our prevention, detection, mitigation, and remediation efforts of our cybersecurity program. We also have an escalation process in place to inform senior management and the board of material cybersecurity incidents in a timely manner. For additional information, please see Part I, Item IC, "Cybersecurity" of the company's Annual Report on Form 10-K for the fiscal year ended
For further discussion of risk management at the company, please see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Management" of the company's Annual Report on Form 10-K for the fiscal year ended
Committees
Each of our four standing committees is chaired by an independent director. The Audit, Compensation, and Nominating and Corporate Governance Committees are composed entirely of independent directors as determined by the board in accordance with its independence guidelines and NYSE corporate governance standards, and the Risk Committee is chaired by an independent director. In addition to these standing committees, the board may from time to time establish ad hoccommittees to assist in various matters.
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CORPORATE GOVERNANCE
The board and its committees are currently composed of the following individuals:
| Committee Memberships | ||||||||||
| Name | Independent | Audit Committee |
Compensation Committee |
Nominating and Corporate Governance Committee |
Risk Committee |
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Charles |
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Walter W. Bettinger II |
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Richard A. Wurster |
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John |
Chair | |||||||||
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Marianne C. Brown |
Chair | |||||||||
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Joan T. Dea |
Member | Member | ||||||||
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Christopher |
Member | |||||||||
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Stephen A. Ellis |
Member | Member | ||||||||
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Frank |
Member | Chair | ||||||||
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Gerri K. Martin-Flickinger |
Member | |||||||||
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Todd |
Member | |||||||||
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Charles A. Ruffel |
Member | |||||||||
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Arun Sarin |
Member | Member | ||||||||
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Carolyn Schwab-Pomerantz |
Member | |||||||||
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Paula A. Sneed |
Chair | |||||||||
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CORPORATE GOVERNANCE
| Audit Committee | The Audit Committee held 12meetings in 2024 | |
| None of the directors on the Audit Committee is or, during the past three years, has been an employee of the company or any of its subsidiaries. None of the Audit Committee members simultaneously serves on the audit committees of more than three public companies, including ours. The board has determined that all the members of the Audit Committee are financially literate in accordance with NYSE listing standards, and |
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| Primary responsibilities: | ||
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§ reviews and discusses with management and the independent auditors the company's annual and quarterly financial statements and earnings releases and the integrity of the financial reporting process; § reviews the qualifications, independence, and performance of the independent auditors; |
§ reviews the activities and performance of the internal auditors; § reviews processes in place to assess and manage major risk exposures; and § reviews compliance with legal and regulatory requirements. |
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(Chair) |
Stephen A. Ellis |
Gerri K. Martin-Flickinger |
Todd M. Ricketts |
| Compensation Committee | The Compensation Committee held eight meetings in 2024 | |
| Primary responsibilities: | ||
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§ annually reviews and approves corporate goals and objectives relating to compensation of executive officers and other senior officers; § reviews and determines the compensation of executive officers and other senior officers based on the achievement of performance goals and objectives; § reviews and assesses the independence and work of any compensation consultant it retains; |
§ approves compensatory arrangements, including long-term awards, for executive officers and other senior officers; § reviews and approves or recommends incentive compensation plans for executive officers and all equity-based incentive compensation plans; and § oversees risk management of incentive compensation practices. |
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(Chair) |
Joan T. Dea |
Frank C. Herringer |
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CORPORATE GOVERNANCE
| Nominating and Corporate Governance Committee | The Nominating and Corporate Governance Committee held five meetings in 2024 |
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§ identifies and evaluates individuals qualified to serve on the board; § oversees environmental, social, and governance (ESG) policies, programs, and publications, and reviews reports from management on ESG activities; § recommends nominees to fill vacancies on the board and each standing committee and recommends a slate of nominees for election or re-electionas directors by the stockholders; |
§ makes recommendations regarding succession planning for the CEO and executive management; and § assesses the performance of the board and its committees and recommends corporate governance guidelines for adoption by the board. |
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(Chair) |
Stephen A. Ellis |
| Risk Committee | The Risk Committee held fivemeetings in 2024 | |
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§ reviews the company's overall risk governance and approves the enterprise-wide risk management framework to identify, measure, monitor, and control the major types of risk posed by the business of the company; § reviews the performance and activities of the company's independent risk management function; |
§ reviews capital and liquidity planning and the assessment of capital adequacy; and § reviews and approves key policies with respect to oversight of specific risks, including capital, compliance, credit, liquidity, market, model, third-party, interest rate, information security, technology, data, reputational, strategic, and operational risk. |
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(Chair) |
Christopher V. Dodds |
Charles A. Ruffel |
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CORPORATE GOVERNANCE
Each of our standing committees has a written charter. You may find a copy of these charters, as well as our Corporate Governance Guidelines and Code of Business Conduct and Ethics, on the company's website at www.aboutschwab.com/governance. You also may request and obtain a paper copy of these items, without charge, by contacting:
Attn:
Mail Stop: DFW-2,4-285
SchwabCorporateSecretary@Schwab.com
(817) 961-8984
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for the year ended
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ability to work together with other directors, with full and open discussion and debate, as an effective group;
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current knowledge of and experience in the
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ompany's business or operations, or contacts in the communities in which the company does business or the industries relevant to the company's business, or substantial business, financial, or industry-related experience commensurate with the business operations, complexity, asset size, and risk profile of the company; and |
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willingness and ability to devote adequate time to the company's business.
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relationships that may affect the independence of the director or conflicts of interest that may affect the director's ability to discharge the director's duties;
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diversity of experience, including the need for financial, business, academic, public sector, and other expertise on the board or board committees; and
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the fit of the individual's skills and experience with those of the other directors and potential directors in comparison to the needs of the company.
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2025 PROXY STATEMENT
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CORPORATE GOVERNANCE
When evaluating a candidate for nomination, the committee does not assign specific weight to any of these factors or believe that all of the criteria need apply to every candidate.
Skills and Competencies
Set forth below are some of the experience, skills, and competencies that the
For simplicity, each qualification is assigned to one category of oversight, even though some qualifications may pertain to multiple areas.
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Board Oversight of Management |
Related Qualifications and Experience |
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Carrying out the company's daily operations consistent with its strategic vision |
§ Financial Services § Banking § Asset Management § Brokerage/Investment Banking § Business Operations § ESG |
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Navigating changes in the financial services industry and responding to competitive pressures and new technologies |
§ Strategic Planning § Information Technology/Cybersecurity § Marketing § Academia |
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Overseeing the integrity of the company's financial statements and financial reporting process |
§ Finance § Accounting § Public Company Executive Experience § Public Company Board Experience |
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Ensuring compliance with legal and regulatory requirements |
§ Regulatory § Government Service § International Business |
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Implementing the board's approved risk tolerance, maintaining the company's risk management and control program, and operating the company's business in a safe and sound manner |
§ Risk Management |
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CORPORATE GOVERNANCE
The following matrix highlights the qualifications and experience represented by our director nominees and continuing directors:
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Qualifications and Experience |
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● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||
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Public Company Board Experience |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
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Financial Services |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||
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Banking |
● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
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Asset Management |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||
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Brokerage/Investment Banking |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||
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Strategic Planning |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||
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Finance |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||
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Business Operations |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
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Information Technology/Cybersecurity |
● | ● | ● | ● | ● | ● | ||||||||||||||||||||||||
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Marketing |
● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||
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Regulatory |
● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
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Accounting |
● | ● | ||||||||||||||||||||||||||||
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Risk Management |
● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||||||||||
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Government Service |
● | ● | ||||||||||||||||||||||||||||
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International Business |
● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||||
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Academia |
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Environmental, Social, and Governance |
● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
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Additional Qualifications and Information |
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Audit Committee Financial Expert |
● | ● | ||||||||||||||||||||||||||||
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Other Current Public Boards |
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Board Succession Planning
The board views the annual nomination process conducted by the
As part of board succession planning, the
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CORPORATE GOVERNANCE
Director Orientation and Continuing Education
Director education about the company, our strategy, industry, control framework, and regulatory environment begins when a director is elected to our board and continues throughout his or her tenure on the board. The company has an orientation program for new board members that includes written materials and meetings with executives in charge of key business and control functions. Depending on committee assignments, directors may receive further orientation and training with respect to committee functions. Continuing education address topics as deemed appropriate by the board and management and include such materials and presentations designed to assist the board and its committees with their oversight responsibilities of the company's business, strategy, and risk management.
Board and Committee Evaluations
Management Succession Planning and Transition
The board recognizes the importance of effective executive leadership to the company's success and reviews CEO and other executive succession planning at least annually. As part of this process, the board reviews and discusses the capabilities of our executive management, as well as succession planning and potential successors for the CEO and our other executive officers. The process includes consideration of organizational and operational needs, competitive challenges, leadership and management potential and development, and emergency situations.
The board has long prioritized CEO and senior leadership succession planning.
Following an intentional succession planning process that took place over multiple years, in
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| PROPOSAL ONE: ELECTION OF DIRECTORS |
Proposal One: Election of Directors
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Nominees for directors this year are: |
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Adams, Jr. |
Stephen A. Ellis |
Arun Sarin |
Charles R. Schwab |
Paula A. Sneed |
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Each nominee has consented to serve a three-year term and is presently a director of the company. Biographical information about each of the company's director nominees and continuing directors is contained in the following section.
| The board of directors recommends that you vote FORthe election of the director nominees. | ||
Director Nominees and Continuing Directors
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DIRECTOR SINCE 2015 CURRENT TERM EXPIRES 2025 AGE AT ANNUAL MEETING: 69 INDEPENDENT DIRECTOR COMMITTEES Audit |
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CAREER EXPERIENCE Managing Director (2002-2013) |
QUALIFICATIONS Public Company Board Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Regulatory Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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DIRECTOR SINCE 2008 CURRENT TERM EXPIRES 2027 AGE AT ANNUAL MEETING: 64 |
Walter W. Bettinger II | |||
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CAREER EXPERIENCE Co-Chairman(2022-present) Chief Executive Officer (2008-December 2024) President (2008-2021) Chief Operating Officer (2007-2008) Multiple Executive Vice President positions (2000-2007) |
QUALIFICATIONS Public Company Executive Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Business Operations Marketing Regulatory Accounting Risk Management International Business Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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DIRECTOR SINCE 2020 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING: 66 INDEPENDENT DIRECTOR COMMITTEES Risk OTHER |
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CAREER EXPERIENCE Co-ChiefOperating Officer (2018-2019) Chief Operating Officer (2015-2018) Chief Operating Officer (2014-2015) President and Chief Executive Officer (2006-2014) |
QUALIFICATIONS Public Company Executive Public Company Board Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Business Operations Information Technology/Cybersecurity Risk Management International Business |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2017 CURRENT TERM EXPIRES 2027 AGE AT ANNUAL MEETING 61 INDEPENDENT DIRECTOR COMMITTEES Compensation Nominating and Corporate Governance |
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|
|
||||
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CAREER EXPERIENCE Managing Director (2008-present) Executive Committee (2003-2008) Partner and Director (1994-2003) |
QUALIFICATIONS Public Company Executive Public Company Board Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Marketing International Business Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2014 CURRENT TERM EXPIRES 2027 AGE AT ANNUAL MEETING 65 INDEPENDENT DIRECTOR COMMITTEES Risk |
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|
|
||||
|
CAREER EXPERIENCE Managing Member (2020-present) Senior Advisor (2018-present) Senior Advisor (2008-2018) Chief Financial Officer (1999-2007) |
QUALIFICATIONS Public Company Executive Public Company Board Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Regulatory Accounting Risk Management |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2012 CURRENT TERM EXPIRES 2025 AGE AT ANNUAL MEETING 62 INDEPENDENT DIRECTOR COMMITTEES Audit Nominating and Corporate Governance |
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|
|
||||
|
CAREER EXPERIENCE Managing Partner (2015-present) Chief Executive Officer (2012-2015) Worldwide Managing Director (2005-2012) |
QUALIFICATIONS Public Company Board Financial Services Asset Management Strategic Planning Finance Business Operations International Business Academia Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 1996 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING 82 INDEPENDENT DIRECTOR COMMITTEES Compensation Nominating and Corporate Governance |
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|
||||
|
CAREER EXPERIENCE Chairman of the Board (1996-2015) Chief Executive Officer (1991-1999) |
QUALIFICATIONS Public Company Executive Public Company Board Financial Services Banking Asset Management Strategic Planning Business Operations Finance Regulatory Risk Management Government Service Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2020 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING 62 INDEPENDENT DIRECTOR COMMITTEES Audit |
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|
|
||||
|
CAREER EXPERIENCE Executive Vice President and Chief Technology Officer (2015-2021) Senior Vice President and Chief Information Officer (2006-2015) |
QUALIFICATIONS Public Company Executive Public Company Board Strategic Planning Finance Information Technology/Cybersecurity Marketing Risk Management International Business |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2020 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING 55 INDEPENDENT DIRECTOR COMMITTEES Audit |
||||
|
|
||||
|
CAREER EXPERIENCE Director (2009-present) Director (2011-2020) |
QUALIFICATIONS Public Company Board Financial Services Brokerage/Investment Banking Finance Business Operations Information Technology/Cybersecurity Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2018 CURRENT TERM EXPIRES 2027 AGE AT ANNUAL MEETING: 69 INDEPENDENT DIRECTOR COMMITTEES Risk |
||||
|
|
||||
|
CAREER EXPERIENCE Managing Partner (2015-present) Managing Partner (2009-2015) Chief Executive Officer (1998-2010) |
QUALIFICATIONS Financial Services Asset Management Brokerage/Investment Banking Strategic Planning Finance Business Operations Information Technology/Cybersecurity Marketing Regulatory Risk Management International Business Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2009 CURRENT TERM EXPIRES 2025 AGE AT ANNUAL MEETING 70 INDEPENDENT DIRECTOR COMMITTEES Nominating and Corporate Governance Risk OTHER |
||||
|
|
||||
|
CAREER EXPERIENCE Trepont Acquisition Corp I Chairman (2020-2022) Chief Executive Officer (2003-2008) Chief Executive Officer (2001-2003) Chief Executive Officer (2000-2001) |
QUALIFICATIONS Public Company Executive Public Company Board Strategic Planning Finance Business Operations Information Technology/Cybersecurity Marketing Regulatory Risk Management International Business Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 1986 CURRENT TERM EXPIRES 2025 AGE AT ANNUAL MEETING 87 |
||||
|
|
||||
|
CAREER EXPERIENCE Co-Chairman(2022-present) Chairman (1986-2022) Chief Executive Officer (1986-1997; 2004-2008) Co-ChiefExecutive Officer (1998-2003) Chief Executive Officer (2004-2008) |
QUALIFICATIONS Public Company Executive Public Company Board Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Business Operations Marketing Regulatory International Business Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2022 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING: 65 COMMITTEES Risk |
||||
|
|
||||
|
CAREER EXPERIENCE Chair (2004-2023) President (2002-2023) Managing Director - Consumer Education (2022-2023) Senior Vice President - Consumer Education (2005-2022) |
QUALIFICATIONS Financial Services Brokerage/Investment Banking Strategic Planning Finance Marketing Risk Management Government Service Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2002 CURRENT TERM EXPIRES 2025 AGE AT ANNUAL MEETING: 77 INDEPENDENT DIRECTOR COMMITTEES Compensation |
||||
|
|
||||
|
CAREER EXPERIENCE Chairman and Chief Executive Officer (2007-present) Executive Vice President (2005-2006) Senior Vice President (2004-2005) Executive Vice President (2000-2004) |
QUALIFICATIONS Public Company Executive Public Company Board Strategic Planning Business Operations Marketing Environmental, Social, and Governance |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
DIRECTOR SINCE 2025 CURRENT TERM EXPIRES 2026 AGE AT ANNUAL MEETING 52 |
||||
|
|
||||
|
CAREER EXPERIENCE Chief Executive Officer (2025-present) President (2021-present) Chief Executive Officer (2019-2021) Chief Executive Officer (2018-2021) Chief Executive Officer (2016-2018) Chief Executive Officer (2016-2018) |
QUALIFICATIONS Public Company Executive Financial Services Banking Asset Management Brokerage/Investment Banking Strategic Planning Finance Business Operations Information Technology/Cybersecurity Marketing Regulatory International Business |
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Table of Contents
PROPOSAL ONE: ELECTION OF DIRECTORS
Director Nominations
The committee has a policy to consider candidates recommended by stockholders. The policy requires written stockholder recommendations that include the following information: (i) the name, address, and contact information of the recommending stockholder; (ii) proof of the stockholder's share ownership; (iii) a resume or statement of the candidate's qualifications; and (iv) a statement of the stockholder's relationship with the proposed candidate or interest in the proposed candidacy. The written recommendation must be addressed to the
Identifying and Evaluating Candidates for Director
Communications With the Board of Directors
If you wish to communicate with the board, the Chair of the
Director Compensation
The Compensation Committee reviews, approves, and establishes director compensation, including compensation for service on board committees. In 2024, the Compensation Committee conducted a review of non-employeedirector compensation, including a comparison to the company's peer group, with input from its outside consultant,
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Table of Contents
director received an annual cash retainer in the amount of
director received an annual equity grant under the 2022 Stock Incentive Plan, with an aggregate value of
directors receive annual RSU and option grants on the second business day after the annual meeting of stockholders. We do not take material nonpublic information or the disclosure thereof into account when determining the timing and terms of option awards to our directors.
directors elected to the board during the year are granted pro rata amounts of their cash retainers and equity awards for their first calendar year in lieu of the full amounts. The annual equity grants vest over the three-year period following the grant date, with 25% vesting on each of the first and second anniversary of the grant date and the remaining 50% on the third anniversary. The awards become 100% vested in the event of the
director's death, disability, or retirement. Each stock option expires on the earliest of (i) ten years after the grant date, (ii) three months after termination of service for any reason other than death, disability, or retirement, or (iii) one year after termination of service because of death or disability.
directors and further align their long-term financial interests with those of stockholders. Under the guidelines, each
director is expected to maintain an investment position in the company's common stock with a fair market value equal to at least
directors also may participate in the Directors' Deferred Compensation Plan II (the DCP2). This plan allows them to defer receipt of all or a portion of their cash retainers and, at their election, to receive (i) immediately vested stock options with a fair value equal to the amounts deferred and an exercise price equal to the closing price of common stock on the date the deferred amount would have been paid or (ii) RSUs funded by an equivalent number of shares of common stock to be held in a "rabbi" trust and distributed to the director upon departure from the board.
incentive plans, defined benefit and actuarial pension plans, or other defined contribution retirement plans for
directors or (ii) offer above-market or preferential earnings under its nonqualified deferred compensation plans for directors. The following table shows compensation paid to each of our
directors during 2024.
|
34
|
2025 PROXY STATEMENT
|
Table of Contents
PROPOSAL ONE: ELECTION OF DIRECTORS
2024 Director Compensation Table
|
|
Fees Earned or Paid in Cash ($) | |||||||||
|
Cash1 ($) |
Deferred into Restricted Stock Units or Options2,5 ($) |
Stock Awards3,5 ($) |
Option Awards4,5 ($) |
Total ($) |
||||||
|
|
185,000 | - | 129,027 | 86,008 | 400,035 | |||||
|
|
35,000 | 150,000 | 129,027 | 86,008 | 400,035 | |||||
|
|
165,000 | - | 129,027 | 86,008 | 380,035 | |||||
|
|
155,000 | - | 129,027 | 86,008 | 370,035 | |||||
|
|
- | 135,000 | 129,027 | 86,008 | 350,035 | |||||
|
|
77,500 | - | - | - | 77,500 | |||||
|
|
- | 165,000 | 129,027 | 86,008 | 380,035 | |||||
|
|
115,000 | - | 129,027 | 86,008 | 330,035 | |||||
|
|
141,154 | - | 129,027 | 86,008 | 356,189 | |||||
|
|
- | 120,000 | 129,027 | 86,008 | 335,035 | |||||
|
|
155,000 | - | 129,027 | 86,008 | 370,035 | |||||
|
|
35,000 | 120,000 | 129,027 | 86,008 | 370,035 | |||||
|
|
135,000 | - | 129,027 | 86,008 | 350,035 | |||||
|
|
120,000 | - | 129,027 | 86,008 | 335,035 | |||||
|
|
150,000 | - | 129,027 | 86,008 | 365,035 | |||||
| (1) |
This column shows cash amounts earned for retainers. For |
| (2) |
This column shows the dollar amount of retainers deferred into RSUs or options under the DCP2. The corresponding RSUs or options were as follows: 2,160 RSUs for |
| (3) |
The amounts shown in this column represent the grant date fair value of the RSU award. In 2024, non-employeedirectors who served the full year received an automatic grant of RSUs with a grant date fair value of |
| (4) |
The amounts shown in this column represent the grant date fair value of the stock option award. In 2024, non-employeedirectors who served the full year received an automatic grant of stock options with a grant date fair value of |
| (5) |
The following table shows the aggregate number of outstanding stock option and RSU awards held by the non-employeedirectors as of |
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PROPOSAL ONE: ELECTION OF DIRECTORS
|
|
Stock Option Awards |
Restricted Stock Unit Awards |
||
|
|
46,596 | 4,708 | ||
|
|
22,159 | 9,792 | ||
|
|
40,371 | 4,708 | ||
|
|
19,053 | 4,708 | ||
|
|
112,013 | 14,999 | ||
|
|
71,980 | 152,233 | ||
|
|
20,296 | 4,708 | ||
|
|
22,159 | 4,708 | ||
|
|
20,296 | 12,025 | ||
|
|
20,296 | 4,708 | ||
|
|
69,580 | 4,708 | ||
|
|
63,010 | 4,708 | ||
|
|
34,442 | 1,809 | ||
|
|
25,708 | 55,857 | ||
| (6) |
|
| (7) |
|
| 36 |
Table of Contents
| PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS |
Proposal Two: Ratification of the Selection of Independent Auditors
The Audit Committee has the sole authority to appoint, retain, and terminate the independent auditors. The independent auditors report directly to the Audit Committee, and the Audit Committee is directly responsible for oversight of the work of the independent auditors. The Audit Committee oversees fees paid to the independent auditors and pre-approvesall audit, internal control-related, and permitted non-auditservices to be performed by the independent auditors. The Audit Committee conducts a comprehensive annual evaluation of the independent auditor's qualifications, performance, and independence (including assessing non-auditfees and services). The Audit Committee takes into account the insight provided to the Audit Committee and the quality of information provided on accounting issues, auditing issues, and regulatory developments. The Audit Committee also considers whether, in order to ensure continuing auditor independence, there should be periodic rotation and selection of the lead audit partner and rotation of the audit firm itself, taking into consideration the advisability and potential costs and impact of selecting a different firm.
The Audit Committee has selected Deloitte as the company's independent registered public accounting firm for the 2025 fiscal year. Deloitte has served in this capacity since the company's inception. The Audit Committee evaluated Deloitte's institutional knowledge and experience, quality of service, sufficiency of resources, and quality of the team's communications and interactions, as well as the team's objectivity and professionalism. As a result, the Audit Committee and the board believe that the retention of Deloitte for the 2025 fiscal year is in the best interests of the company and its stockholders. Although we are not required to submit the selection of the independent auditors to stockholders, we are asking for your ratification as part of the Audit Committee's evaluation process of the independent registered public accounting firm for the next fiscal year.
We expect representatives of Deloitte to attend the annual meeting, where they will respond to appropriate questions from stockholders and have the opportunity to make a statement.
Auditor Fees
Fees for services provided by Deloitte and the member firms of
| 2024 | 2023 | |||
|
Audit Fees1 |
||||
|
Audit-Related Fees2 |
2,422,900 | 4,342,211 | ||
|
Tax Fees3 |
31,500 | 45,400 | ||
|
All Other Fees4 |
4,600 | - | ||
|
Total |
||||
| (1) |
Audit fees are the aggregate fees for professional services billed in connection with audits of the consolidated annual financial statements and the effectiveness of internal control over financial reporting, and reviews of the consolidated financial statements included in quarterly reports on Form 10-Q. |
| (2) |
Audit-related fees include assurance and related services, service auditor reports over internal controls, review of |
| (3) |
Tax fees include permitted compliance and advisory services such as tax retureview, preparation and compliance, and advice on the application of rules or changes to tax laws. |
| (4) |
All other fees represent fees not included in "audit fees," "audit-related fees," and "tax fees," and in 2024 include charges for our license for the use of Deloitte's accounting research tool. |
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PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
In addition to the services listed above, Deloitte provides audit and tax retureview and preparation and compliance services to certain unconsolidated mutual funds, charitable trusts, and foundations. The fees for such services are included in the expenses of the mutual funds, charitable trusts, and foundations and borne by the stockholders of the funds and foundations. Amounts billed by Deloitte for these services were
Non-AuditServices Policies and Procedures
The Audit Committee has adopted a policy regarding non-auditservices performed by Deloitte. The Audit Committee's policy prohibits engaging Deloitte to perform the following services:
| § |
any contingent fee arrangement; |
| § |
bookkeeping or other services relating to accounting records or financial statements of the audit client; |
| § |
broker-dealer, investment advisor, or investment banking services; |
| § |
actuarial services; |
| § |
management and human resource functions (including executive search services); |
| § |
legal services or expert services unrelated to the audit; |
| § |
appraisal and valuation services, fairness opinions or contribution-in-kindreports; |
| § |
internal audit outsourcing; |
| § |
financial information systems design and implementation; |
| § |
tax consulting or advice or a tax opinion on an "aggressive" tax position or on a "listed transaction" or a "confidential transaction" as defined by |
| § |
tax services to employees who have a financial reporting oversight role. |
The Audit Committee may approve other non-auditservices in advance of their performance as part of its review and approval of Deloitte's audit service plan. In addition, the Audit Committee has pre-approvedthree separate categories of non-auditservices under the policy, subject to an annual aggregate dollar limit for each category. If the dollar limit in each of these three categories is reached, the Audit Committee will decide whether to establish an additional spending limit for the category or specifically pre-approveeach additional service in the category for the remainder of the year. The three categories are:
| § |
accounting theory consultation (includes services such as guidance on the application of GAAP to various transactions and guidance on the effects of new accounting pronouncements); |
| § |
assurance and due diligence (includes services such as certain service auditor reports over internal controls, review of |
| § |
tax related services (includes tax retureview, preparation and compliance, advice on the application of rules or changes to tax laws, and review of tax issues in connection with merger and acquisition activity). |
Services not subject to pre-approvallimits in one of the three categories above require specific pre-approvalfrom the Audit Committee. Fees related to services requiring specific pre-approvalare limited, on an annual basis, to 50% of the combination of audit fees, audit-related fees, and tax fees.
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PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The policy permits the Audit Committee to delegate pre-approvalauthority to one or more members of the Audit Committee, provided that the member or members report to the entire Audit Committee pre-approvalactions taken since the last Audit Committee meeting. The policy expressly prohibits delegation of pre-approvalauthority to management.
|
Audit Committee Report The Audit Committee has met and held discussions with management and the company's independent registered public accounting firm. As part of this process, the committee has: § reviewed and discussed the audited financial statements with management; § discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the § received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the company's Annual Report on Form 10-Kfor the fiscal year ended Audit Committee of the Board of Directors |
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Table of Contents
| PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION |
Proposal Three: Advisory Approval of Named Executive Officer Compensation
This proxy statement contains detailed information in the Compensation Discussion and Analysis and executive compensation tables regarding compensation of the NEOs. The NEOs are those executive officers who are listed in the 2024 SCT. We ask that you provide an advisory vote to approve the following, non-bindingresolution on NEO compensation:
|
RESOLVED, that the stockholders of |
The advisory approval of NEO compensation is required by federal law, and the company currently conducts annual advisory votes on that compensation. Although the vote is not binding on the board or the Compensation Committee, the Compensation Committee intends to consider the vote as part of its evaluation of executive compensation programs.
Compensation Discussion and Analysis
Executive Summary
This section describes the company's executive compensation program, policies, and practices, and how executive compensation is designed to support the company's strategic objectives. It also summarizes the compensation decisions made for the company's NEOs during 2024:
|
Named Executive Officer |
Title(1) | |
|
Walter W. Bettinger II |
Co-Chairmanof the Board and Chief Executive Officer | |
|
|
Managing Director and Chief Financial Officer | |
|
|
Former Managing Director and Chief Financial Officer | |
|
|
President | |
|
|
Co-Chairmanof the Board | |
|
|
Managing Director and Head of |
|
|
|
Chairman of the |
|
| (1) |
The title for each NEO is the title held on |
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
Executive Summary Table of Contents
| 45 | ||||
| 46 | ||||
| 49 | ||||
| 54 | ||||
| 56 | ||||
2024 Company Performance Highlights
In pursuing the "Through Clients' Eyes" strategy, the company achieved the following performance results for 2024:
|
Total Client Assets trillion 19% increase year-over-year |
Net Income billion |
Active Brokerage Accounts 36.5 million 5% increase year-over-year |
|
Diluted EPS: Adjusted Diluted EPS(1): |
ROCE:15% ROTCE(1):35% |
Core Net New Assets billion 20% increase year-over-year |
| (1) |
For reconciliation of our results as reported under GAAP to non-GAAPfinancial measures, including diluted EPS to adjusted diluted EPS and ROCE to ROTC, please see Appendix A beginning on page A-1. |
In addition, we are honored to be the recipient of a number of awards and recognitions, including those listed below.
| § |
StockBrokers.com recognized the company as Best Overall Broker for 2024 performance in its 2025 Annual Awards. |
| § |
For the second year in a row, |
| § |
|
| § |
For the 12th year in a row, |
| § |
Newsweek recognized both |
| § |
|
| § |
The company ranked #1 in the Trader App, Desktop Stock Trading Platform, |
| § |
For the eighth year in a row, Points of Light, the world's largest organization dedicated to volunteer service, recognized the company as one of America's 50 most community-minded companies. |
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
Our clear purpose and relentless focus on serving our clients drove the strong results we achieved in 2024. With the completion of the Ameritrade integration - one of the largest and most complex integrations in the history of the financial services industry - 2024 was about moving forward together as "One Schwab," dedicated to serving our clients exceptionally. The success of this collective dedication is demonstrated by the strong client engagement, increased margin utilization, encouraging client cash trends, and record net inflows into our Managed Investing Solutions experienced during 2024.
With a relentless focus on clients, we are continuing to innovate with solutions, capabilities, and experiences to meet investors' evolving needs. Strong competitive positioning, healthy business fundamentals, and a growing diverse client base puts the company in a position of strength. We remain confident that the combination of our "Through Clients' Eyes" strategy and managing "through the cycle" financial formula will continue to drive sustained long-term profitable growth for our clients and stockholders.
Chief Executive Officer Succession
Following an intentional succession planning process that took place over multiple years, in
Company Performance During
|
Stockholder Returns |
Business Results |
Growth |
||||||
|
§ Stock price grew from approximately § Quarterly dividend increased from |
|
§ Revenue grew from § Client assets increased from § Acquired and fully integrated Ameritrade clients and employees into the company. |
|
§ Brokerage accounts have increased from 7.4 million to 36.5 million. § Full-time equivalent employees grew from 13,400 to 32,100. § Market cap increased from approximately |
||||
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
Overview of the Executive Compensation Program
The executive compensation program supports the company's strategic objectives through the following design principles:
|
Pay for Performance |
Stockholder |
Risk Management |
||||||
|
§ Link executives' pay with company financial and stock price performance. § Reward executives for individual performance. |
|
§ Promote profitable growth that delivers on the annual and long-termoperating plan. § Attract, retain, and reward talented executives. |
|
§ Create appropriate balance of risk and reward. § Ensure effective governance and risk management practices are in place. |
||||
The Compensation Committee is dedicated to delivering a robust and balanced executive compensation program, in support of a strong link between executive pay and the company's financial performance. The executive compensation program uses three compensation elements: base salary, annual cash incentives, and LTIs. The chart below summarizes certain design aspects and governance practices included in the program:
|
§ Short- and Long-Term Incentives.Both short- and long-term incentive plans, designed to balance sound short-term decision-making with the creation of long-term stockholder value. § Equity Awards. A combination of stock options and PBRSUs align executives' interests with the creation of long-term stockholder value. § Multi-Year Vesting or Performance Periods.Stock options vest annually over a four-year period and PBRSUs vest on the third anniversary of grant based on achievement of multi-year financial goals. § Market-Based Analysis.Executive compensation and related practices are regularly evaluated against select peer companies and the broader market to maintain the competitiveness of the company's executive compensation program. § Risk Management. Annual review of incentive compensation practices and policies and their potential impact on employee risk-taking. § Limited Perquisites. Executives receive limited perquisites with no financial planning assistance, tax gross-ups,or special retirement and/or benefit plans. § Stock Ownership Guidelines.CEO and other executive officers are required to maintain minimum stock ownership levels (5x and 3x base salary, respectively) to reinforce the alignment of their interests with stockholder interests. § Recoupment Policy.Both a mandatory recoupment policy that aligns with NYSE requirements and a broader policy to ensure coverage of all executive incentive-based compensation. § Policy Against Hedging. Our Insider Trading Policy prohibits speculative trading in the company's stock or derivatives thereof, including certain hedging activities. |
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
In addition, most executive compensation is delivered through variable, performance-based incentives: 94% for the CEO and 89% on average for the other NEOs.
| 2024 CEO Pay Mix(1) |
2024 Average of Pay Mix of All Other Named Executive Officers(1) |
| (1) |
Pay mix is based on amounts in the 2024 SCT. The annual cash incentive is the amount reported for the Corporate Executive Bonus Plan (CEBP) under Non-EquityIncentive Plan Compensation in the 2024 SCT. Stock awards include the amounts reported in the 2024 SCT for PBRSUs. |
Key Executive Compensation Actions for 2024
The Compensation Committee regularly reviews and evaluates the company's executive compensation program and related policies and considers stockholder views regarding executive compensation. For 2024, the Compensation Committee:
|
§ assessed the competitiveness of executive compensation using peer group data, and based on such assessment, made no changes to executives' total direct compensation; § continued to select adjusted diluted EPS as the performance measure for the CEBP so that executives' short-term actions around operating performance and capital structure support long-term profitability: § set the target for adjusted diluted EPS in alignment with the company's board-approved 2024 financial plan; § approved annual cash incentive funding under the CEBP of 117.69% of the target set by the Compensation Committee, based on the company's financial performance; § continued to award a mix of LTI comprising 60% PBRSUs and 40% stock options: § continued to award PBRSUs with cliff vesting and a three-year performance period to ensure executive focus on long-term performance; § to align executive pay with the strength of the company, continued to measure performance in the PBRSU design based on the extent to which ROTCE exceeds COE, as this ratio reflects the creation of financial value for stockholders; § continued the use of a threshold level of performance in the PBRSU design that provides a payout of 50% of the target when a minimum level of performance is achieved in alignment with the competitive practice of providing a below target award opportunity in the event of positive performance that does not meet the target level; and § approved payout under the PBRSUs vesting based on the three-year performance period from |
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
Response to Advisory Vote on Say-on-Payand Stockholder Engagement
The Compensation Committee considers the result of the stockholders' advisory say-on-payvote when reviewing and evaluating the executive compensation program throughout the year. The Compensation Committee noted the strong overall support of the stockholders, who approved the company's advisory say-on-payproposal with approximately 91% of the vote at the company's 2024 annual meeting of stockholders, and believes this vote reflects broad support for the executive compensation program and policies.
|
The Compensation Committee continues to review and evaluate the company's executive compensation program and policies in the context of the company's business, regulatory requirements, and evolving best practices. As part of this process, members of investor relations, legal, and human resources meet with stockholders each year on a variety of topics, and the Compensation Committee takes into consideration stockholder views regarding executive compensation. Given the nature of the feedback received through stockholder engagement and the results of the company's 2024 say-on-payvote, the Compensation Committee determined that the executive compensation program should remain generally consistent with existing practice. |
Summary of the Executive Compensation Program
The Compensation Committee believes that incorporating three elements into the executive compensation program enables the recruitment and retention of talented executives and provides them incentive to act in the best interests of the company and its stockholders. The executive compensation program favors variable, performance-based opportunities as opposed to fixed base pay in alignment with a pay for performance philosophy. Both short-term incentive opportunities and long-term incentive opportunities are included in the program to ensure there is an appropriate balance of risk and reward. Further, the Compensation Committee chooses incentive plan measures for their ability to work together to drive executives' focus on short-term profitability that supports the creation of value over the long term. Incentive plan design, along with incentive plan goals aligned to the long-term financial plan, are reviewed, and approved annually by the Compensation Committee in its January meeting. Individual compensation targets for each NEO are also approved during this meeting.
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The table below provides additional detail about the objective of each compensation element and how each element supports the design principles of pay for performance, stockholder value creation, and risk management.
|
Element of Compensation |
||||||
|
Fixed |
Variable |
|||||
|
Base Salary |
Annual Cash |
Long-Term Incentives |
||||
|
Objective |
Provides a fixed level of compensation |
Aligns pay with both individual and company performance |
Aligns pay with long-term value creation |
|||
|
Design Principle |
||||||
|
Pay for Performance |
||||||
|
§ Reward NEOs for individual performance |
||||||
|
§ Link pay with company financial performance |
||||||
|
Stockholder |
||||||
|
§ Promote profitable growth that delivers on the annual and long-term operating plan |
||||||
|
§ Attract, retain, and reward talented executives |
||||||
|
Risk Management |
||||||
|
§ Create appropriate balance of risk and reward |
||||||
|
§ Ensure effective governance and risk management practices are in place |
||||||
Compensation Planning and the Decision-Making Process
The Compensation Committee receives input from several sources and references throughout the year that help inform its decision-making. Data and advice from its independent compensation consultant, Semler Brossy, feedback from stockholders, information from external market practice surveys, and individual performance and risk assessments are all considered by the Compensation Committee when determining plan design and making compensation decisions for the NEOs.
The Compensation Committee evaluates, together with the other independent directors, Semler Brossy, and
| § |
recommendations from |
| § |
recommendations from |
| § |
advice from the CFO regarding performance criteria and goals for annual and long-term incentives; |
| § |
advice from the Chief Risk Officer regarding the design and results of incentive compensation programs to ensure consistency with the company's financial plan, strategic objectives, and risk profile; |
| § |
the company's performance, how executives' roles and responsibilities continue to evolve in light of the company's recent acquisitions, the economic environment, and market trends; |
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
| § |
competitive pay analysis prepared by Semler Brossy and the company's |
| § |
each executive's experience, responsibilities, changes in job scope, individual performance, individual risk assessment, and pay relative to internal peers; and |
| § |
reports prepared by Semler Brossy and the company's |
| § |
actual total compensation from 2021 to 2023; |
| § |
proposed 2024 total compensation; |
| § |
option exercises, equity vesting amounts, dividend equivalents, 401(k) balances, deferred compensation balances, and other cash compensation (e.g., company match for the 401(k) plan); and |
| § |
the value and vesting schedule of outstanding long-term awards. |
The Compensation Committee also evaluates
While the Compensation Committee considers the information provided by management and Semler Brossy, it does not delegate authority to management for executive compensation decisions.
The Compensation Committee does not use a formula or assign a weighting to various factors considered in setting compensation and does not target a specific percentage mix between cash compensation and LTI or any specific percentage of total compensation for each compensation element. This approach aims to align short-term achievements with long-term value creation, and to support a strong link between executive pay and the company's financial performance.
The Compensation Committee uses a peer group as a market reference point for plan design, assessment of the competitiveness of the executive compensation program, and when making pay decisions for executives and non-employeedirectors. Potential peers are selected from a broad group of companies in select industries based on an evaluation of the following factors:
| § |
quantitative: revenue; market capitalization; and number of employees; and |
| § |
qualitative: business model; geographic coverage; and competition for customers and/or employees. |
There are a limited number of companies comparable to the company in terms of business model and geographical coverage. The goal is to create a balanced composition of brokerage firms, banking and asset management companies, and companies that provide custody services and process a significant daily volume of consumer financial transactions.
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The Compensation Committee reviews the peer group annually to ensure that it remains relevant as a market reference tool. Modifications are made as necessary to reflect changes within the company, among peers, or within the industry. For 2024, the Compensation Committee reviewed the peer group based on the factors noted above and did not make any changes. The peer group used for compensation analyses for 2024 was:
|
Asset Management |
||||
|
§ Ameriprise Financial § Blackrock § Franklin Resources |
§ Goldman Sachs § NortheTrust § T. |
|||
|
6 Peers |
||||
|
Brokerage |
||||
|
§ Fidelity Investments § LPL Financial Holdings |
§ Morgan Stanley § Raymond James |
|||
|
4 Peers |
||||
|
Banking |
||||
|
§ Fifth Third Bank § PNC Financial Group |
§ Truist § U.S. Bancorp |
|||
|
4 Peers |
||||
|
Custody and Processing |
||||
|
§ Bank of New York Mellon § Discover Financial Services § Mastercard |
§ PayPal § State Street § Visa |
|||
|
6 Peers |
||||
Compensation Consultant
Under its charter, the Compensation Committee is authorized to retain the services of an external compensation consultant to provide guidance and advice to the committee on all matters covered by its charter. Accordingly, the Compensation Committee has engaged Semler Brossy and approved all the terms of the engagement. In 2024, Semler Brossy performed the following key actions:
| § |
attended and participated in each Compensation Committee meeting held during 2024; |
| § |
advised on market trends, competitive practices, and the peer group composition; |
| § |
advised on compensation for the CEO, |
| § |
reviewed tally sheets, reflecting each executive officer's total compensation and compensation mix; |
| § |
provided an annual comparative review of the performance and executive pay levels for the company and its peer group; |
| § |
reviewed the company's annual cash incentive and LTI design against incentives used by peer group companies; and |
| § |
advised on new regulations impacting the executive compensation program. |
Semler Brossy was engaged by the Compensation Committee directly and does not provide other services to the company. To assess Semler Brossy's independence, the Compensation Committee reviews information regarding potential conflicts of interest, including any other services Semler Brossy provides to the company, fees received from the company as a percentage of Semler Brossy's total revenue, policies and procedures designed to prevent conflicts of interest, any business and/or personal relationships with members of the Compensation Committee, company stock owned, and any business and/or personal relationships between Semler Brossy consultants and any executive officer of the company. The annual independence assessment for 2024 did not identify any conflicts of interest or independence issues related to Semler Brossy's services.
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Plan Design and Compensation Decisions
The following describes each compensation element included in the executive compensation program, along with the compensation decisions made and any changes made for 2024.
Base Salary
Base salary is a fixed element of executive compensation. Base salaries are established at levels intended to attract, motivate, and retain talented executive officers. The Compensation Committee reviews base salary annually or at the time of promotion or hire, as applicable.
As illustrated by the pay mix charts above, NEOs receive a small percentage of their overall compensation in base salary. For 2024 the Compensation Committee determined that, based on company performance in 2023, no base salary adjustments would be made. The base salaries listed below were approved by the Compensation Committee in its
|
Executive |
2023 Base Salary Effective |
2024 Base Salary Effective |
Increase Amount ($) | Increase Amount (%) | ||||||||||||||||
|
Walter W. Bettinger II |
0% | |||||||||||||||||||
|
|
- | $ 900,000 | - | - | ||||||||||||||||
|
|
$ 725,000 | $ 725,000 | 0% | |||||||||||||||||
|
|
0% | |||||||||||||||||||
|
|
$ 900,000 | $ 900,000 | 0% | |||||||||||||||||
|
|
$ 775,000 | $ 775,000 | 0% | |||||||||||||||||
|
|
$ 925,000 | $ 925,000 | 0% | |||||||||||||||||
| (1) |
|
| (2) |
|
| (3) |
|
Annual Cash Incentive
Each NEO is eligible to eaan annual cash incentive pursuant to the CEBP, the intent of which is to reward executives for strong results during the performance year, in support of long-term value creation. In the first quarter of 2024, the Compensation Committee established the performance criterion for the CEBP, set performance goals, and approved a target bonus award, expressed as a percentage of base salary, for each NEO.
The Compensation Committee chose to use adjusted diluted EPS as the performance criterion for the CEBP because it believes the measure provides a comprehensive assessment of the company's profitability and focuses executives on operating performance and decisions around capital structure.
As part of the CEBP, adjusted diluted EPS goals and payouts were established with a matrix of threshold, target, and maximum performance goals with potential payouts ranging from 0% to 200% of a target award. Awards would be paid out at 100% of target if the target adjusted diluted EPS goal set by the Compensation Committee, in alignment with the company's 2024 financial plan approved by the board, was achieved. The matrix established both a threshold level of performance that was equal to 50% of the target adjusted diluted EPS goal and a maximum level of performance that was equal to 200% of the target adjusted diluted EPS goal. Payouts for adjusted diluted EPS results between threshold and target and between target and maximum levels would be interpolated. No payout would be made for performance below the threshold, and no additional payout would be made for performance above the maximum.
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When determining whether and the extent to which the performance goal has been achieved, the Compensation Committee reviews unusual gains and losses and whether results have been achieved in a manner consistent with the company's risk profile. Based on this review, the Compensation Committee may exercise discretion to reduce funding levels.
For 2024, the Compensation Committee approved the following threshold, target, and maximum performance goals for adjusted diluted EPS in line with the company's 2024 financial plan approved by the board, and the following result was achieved:
|
2024 Annual Cash Incentive Performance Criterion and Result (1) For purposes of the CEBP, adjusted diluted EPS is defined as the fully diluted EPS for net income available to common stockholders calculated in accordance with GAAP for the applicable performance period, adjusted to remove the after-taxfully diluted per share impact of (i) acquisition and integration-related costs, (ii) amortization of acquired intangible assets, and (iii) restructuring costs, as defined by the company's Use of Non-GAAPFinancial Measures Policy and supported by the company's policy guidance defining acquisition and integration-related and restructuring costs. Adjusted diluted EPS is subject to further categories of adjustments and exclusions for unusual items approved by the Compensation Committee at the time the performance criterion was established. For a reconciliation of GAAP diluted EPS to non-GAAPadjusted diluted EPS, please see Appendix A beginning on page A-1. |
When setting performance goals for incentive plans, the Compensation Committee uses the financial plan approved by the board in the first quarter of each year. The 2024 financial plan was set in consideration of many factors, including the headwinds on our business as interest rates begin to decline, the need to use higher-cost funding due to forecasted deposit levels, and trading revenue expectations.
In consideration of these factors, the Compensation Committee approved the target goal for adjusted diluted EPS achievement at
In
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PROPOSAL THREE: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION
The Compensation Committee approved the following annual cash incentives for 2024:
|
Executive |
2024 Earned Salary |
2024 Target Annual Cash Incentive (%) |
2024 Target Annual Cash Incentive ($)(1) |
2024 Actual Annual Cash Incentive ($)(2) |
||||
|
Walter W. Bettinger II |
375% | |||||||
|
|
$ 553,846 | 250% | ||||||
|
|
$ 725,000 | 200% | ||||||
|
|
300% | |||||||
|
|
$ 900,000 | 250% | ||||||
|
|
$ 775,000 | 200% | ||||||
|
|
$ 762,500 | 300% | ||||||
| (1) |
Target annual cash incentive equals base salary earned for 2024 multiplied by the target annual cash incentive percentage approved by the Compensation Committee for each NEO. |
| (2) |
Actual annual cash incentive equals target annual cash incentive for 2024 multiplied by the funding level of 117.69% for each NEO. |
| (3) |
|
Long-Term Incentives
The Compensation Committee believes that LTIs align executives' interests with the long-term interests of the company and its stockholders. For 2024, LTIs comprised 60% PBRSU grants and 40% stock option grants. In the first quarter of 2024, the Compensation Committee approved the following LTIs with a grant date of
|
Executive |
2024 PBRSUs ($) (60% of Award) |
2024 Stock Option ($) (40% of award) |
2024 Total LTI ($) |
|||
|
Walter W. Bettinger II |
||||||
|
|
$ 1,920,000 | $ 3,200,000 | ||||
|
|
$ 4,800,000 | $ 8,000,000 | ||||
|
|
$ 3,000,000 | $ 5,000,000 | ||||
|
|
$ 1,980,000 | $ 3,300,000 | ||||
|
|
$ 3,720,000 | $ 6,200,000 | ||||
Separate from the above, on
The Compensation Committee made no year-over-year increases in LTI award amounts for 2024.
Stock Options- The Compensation Committee included stock options in the equity mix to ensure that a portion of the LTI program is growth-oriented and aligns executives' incentives with the company's stockholders and stock price. Stock options granted to NEOs in 2024 will vest 25% annually over four years. Please see "Guidelines and Practices for Timing of Equity Awards" below for more information on our practices relating to the timing of option awards.
PBRSUs- The Compensation Committee includes PBRSUs in the equity mix to tie executives' incentive opportunities to the results achieved on multi-year financial performance goals. For the 2024 PBRSU awards, the Compensation Committee approved a target performance goal based on the extent to which ROTCE exceeds COE for the three-year performance period from
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financial value for stockholders in all phases of the business cycle and measures the earnings power of the company, while excluding the impact of certain unrealized gains or losses. For 2024, the Compensation Committee determined that the calculation of ROTCE would include Accumulated Other Comprehensive Income (AOCI) in anticipation of regulatory changes that require the inclusion of AOCI in the Company's capital requirements. Executives will be able to eabetween zero and 200% of the target award based on the company's performance. PBRSU awards granted in 2024 will be earned according to the following matrix:
|
PBRSU Performance Matrix |
||||||||||
|
ROTCE(1) Divided by COE(2) Result |
Payout % | |||||||||
| ≤ | 99.99% | 0% | ||||||||
|
100% |
to |
149.9% |
50%-100% based on linear interpolation between threshold and target |
|||||||
|
150% |
to | 470% | 100% | |||||||
|
>470% |
to |
669.99% |
100%-200% based on linear interpolation between target and maximum |
|||||||
|
≥670% |
> | 200% | ||||||||
|
|
||||||||||
| (1) |
For 2024, ROTCE is the simple average ROTCE determined separately for each calendar year in the three-year performance period. ROTCE was defined as adjusted net income available to common stockholders for the calendar year divided by average tangible common stockholders' equity (defined as the balance of tangible common stockholders' equity at the beginning of the calendar year plus the balance of tangible common stockholders' equity at the end of the calendar year divided by two). Adjusted net income available to common stockholders equals net income available to common stockholders calculated in accordance with GAAP for the applicable performance period, adjusted to remove the after-taximpact of (i) acquisition and integration-related costs, (ii) amortization of acquired intangible assets, and (iii) restructuring costs, as defined by the company's Use of Non-GAAPFinancial Measures Policy and supported by the company's policy guidance defining acquisition and integration-related and restructuring costs. Tangible common stockholders' equity equals total stockholders' equity calculated in accordance with GAAP, minus the sum of (i) preferred stock, (ii) goodwill, (iii) acquired intangible assets - net, and (iv) deferred tax liabilities related to goodwill and acquired intangible assets - net. |
| (2) |
COE is defined as the simple average COE based on the twelve quarters in the three-year performance period. COE is calculated using the Capital Asset Pricing Model, which is a commonly used financial metric that incorporates the risk-free interest rate (the company uses the six-monthaverage of the five-year |
In determining whether performance goals have been met, the Compensation Committee excludes any gains or losses for items that, collectively, exceed a specified threshold level, from any unusual or non-recurringitems, including those not already contemplated in the company's financial plan at the time of grant, including, but not limited to: (i) charges, costs, benefits, gains or income associated with reorganizations or restructurings of the company, mergers or acquisitions by the company, discontinued operations, goodwill, other intangible assets, long-lived assets (non-cash),real estate strategy (e.g., costs related to lease terminations or facility closure obligations), litigation or the resolution of litigation (e.g., attorney's fees, settlements or judgements), or currency or commodity fluctuations; and (ii) the effects of changes in applicable laws, regulations or accounting principles, and any other unusual or non-recurringgains or losses, provided that such items are not already taken into account in the normal calculation of performance.
The Compensation Committee also considers whether results have been achieved in a manner consistent with the company's risk profile. Based on this review, the Compensation Committee may exercise discretion to reduce payouts.
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Vesting of PBRSUs for the Performance Period Ended
In
|
PBRSU Performance Matrix |
||||||||||
|
ROTCE versus COE Result |
Payout % | |||||||||
| ≤ | 99.99% | 0% | ||||||||
| 100% | to | 324.99% | 100% | |||||||
| 325% | to | 524.99% | ((Actual performance - 325%) / 2) + 100% | |||||||
| ≥ | 525% | 200% | ||||||||
|
|
||||||||||
When determining whether performance goals for the 2022 PBRSU awards were met, the Compensation Committee reviewed final company results for the three-year performance period showing that ROTCE divided by COE was 478.69%, based on a three-year average ROTCE of 43.57% and a twelve-quarter average COE of 9.10%, as calculated under the terms of the 2022 PBRSU awards, which according to the PBRSU Performance Matrix, results in a 176.84% award payout. Based on the Compensation Committee's review as described, the Compensation Committee certified achievement of the performance goals for the 2022 PBRSU awards and approved a payout above target at 176.84% with no discretionary exceptions or adjustments.
The Compensation Committee determined the above results were appropriate given the progress made on long-term initiatives, including the completion of the Ameritrade integration, during the three-year performance period.
Other Compensation
Executive Benefits and Perquisites
The company provides limited executive perquisites. The Compensation Committee previously approved certain benefits, including a car service for commuting purposes for
For NEOs, the company:
| § |
does not provide special financial planning assistance; |
| § |
does not gross up payments to cover executives' personal tax liability; |
| § |
does not offer executive retirement or medical plans; and |
| § |
does not match contributions to the deferred compensation plan. |
Employee
The company does not offer (i) defined benefit and actuarial pension plans, special retirement plans, or other nonqualified excess plans for executives; or (ii) above-market or preferential earnings under nonqualified deferred compensation plans or defined contribution plans.
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Executive officers may participate in the company's 401(k) plan and Employee Stock Purchase Plan, and a deferred compensation plan available to officers and other key employees. The ESPP is available to all eligible employees subject to
Severance
All employees, including executive officers other than
Employment Agreement for
The company and
The amended employment agreement provides for an annual base salary, subject to annual review by the board, and provides that
The employment agreement prohibits
Compensation Policies
Stock Ownership Guidelines
The board has adopted and maintains stock ownership guidelines to promote significant equity ownership by executives and further align their long-term financial interests with those of other stockholders. Under the guidelines:
|
Chief Executive Officer |
All Other Executives |
|||
|
§ Expected to maintain an investment position in company stock equal to at least five times base salary. |
§ Expected to maintain an investment position in company stock equal to at least three times base salary. |
|||
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Shares owned directly, shares beneficially owned under company benefit plans, restricted stock, RSUs, and PBRSUs are included in determining ownership levels, but stock options are not. PBRSUs are included when computing ownership as they comprise sixty percent of an executive's equity mix and the company does not utilize RSUs in its equity mix for the NEOs. The Compensation Committee monitors compliance with the stock ownership guidelines and may take compensation related action if the target ownership levels are not met within five years after the executive officers assume their respective positions. As of
Guidelines and Practices for Timing of Equity Awards
Our Equity
During 2024, the company did not grant stock options to any of its NEOs in any period beginning four business days prior to and ending one business day after the filing of a periodic report on Form 10-Q,Form 10-Kor current report on Form 8-Kthat disclosed material nonpublic information.
Recoupment Policies
Pursuant to the
In addition, in
The Compensation Committee reserves the right under the Executive Council Incentive Compensation Recovery Policy to reduce or cancel equity awards or require executives to disgorge any profit realized from equity awards in the event of certain securities law violations. The company also reserves the right to cancel equity awards of employees who are terminated for cause.
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Risk Assessment
The Compensation Committee reviewed the annual report by the company's Human Resources and Corporate Risk Management Departments on incentive compensation practices and policies throughout the company and the potential impact on risk-taking by employees. The report reviewed payouts, risk ratings, and balancing methods for incentive compensation plans, changes to new or existing incentive compensation plans and programs made in 2024, bank product incentives, and enhancements to the incentive compensation risk management program.
The annual report identified the following risk-mitigating compensation practices currently in place:
| § |
a balanced mix of compensation components (i.e., base salary, annual cash incentives, and LTI); |
| § |
a balanced suite of performance metrics with a strong link to stockholder value; |
| § |
payments may be subject to adjustment based on risk management factors; |
| § |
performance goals based on financial plans approved by the board; |
| § |
caps on annual incentive opportunities and PBRSU payouts; |
| § |
a four-year vesting period for stock options and RSUs with limited opportunities for accelerated vesting; |
| § |
a three-year performance period and cliff-vesting for PBRSUs with limited opportunities for accelerated vesting; and |
| § |
meaningful executive stock ownership guidelines. |
The annual risk report also identified the following risk-mitigating oversight practices currently in place:
| § |
approval of executive compensation by an independent board committee with advice from an independent compensation consultant; |
| § |
review of plan design and performance results for all executive incentive plans by the corporate risk officer; |
| § |
annual review of incentive plan performance, along with centralized design and administration of all incentive plans; |
| § |
a committee of senior management overseeing the company's incentive compensation risk management program and reporting directly to the Compensation Committee; |
| § |
risk management performance assessments for covered employees as defined in the 2010 Guidance on Sound Incentive Compensation Policies; and |
| § |
monitoring of incentive compensation plan results to identify emerging risks and recommend modifications and balancers, as appropriate. |
In addition, when reviewing the design of and payments pursuant to executive incentive compensation programs, the Compensation Committee considers the review by the Managing Director and
Plan Design Decisions Made for 2025
The Compensation Committee reviews the executive compensation program annually to determine if changes should be made to the program for the upcoming year. During the review for the 2025 program, the Compensation Committee considered company performance in 2024, an analysis of market pay practices, and input from its compensation consultant, and determined that no changes will be made to the program.
2025 Annual Cash Incentives
In 2025, the Compensation Committee established a performance criterion matrix for 2025 annual cash incentive awards under the CEBP. The Compensation Committee again selected adjusted diluted EPS as the performance measure for purposes of these awards and set the target adjusted diluted EPS goal for 100% payout upon achieving the company's target adjusted diluted EPS in the 2025 financial plan approved by the board.
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2025 Long-Term Incentives
In 2025, the Compensation Committee approved long-term equity awards under the 2022 Stock Incentive Plan of 40% stock options and 60% PBRSUs based on the grant date fair values to align the long-term incentives of the executives with the long-term interests of the stockholders. These equity awards were granted on
|
Compensation Committee Report The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-Kwith management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the company's Annual Report on Form 10-Kfor the fiscal year ended Compensation Committee of the Board of Directors |
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EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
The following tables show compensation information for the NEOs: Walter W. Bettinger II, Co-Chairmanand former CEO;
2024 Summary Compensation Table
| Year | Salary ($) |
Bonus ($) |
Stock Awards2 ($) |
Option Awards3 ($) |
Non-equity Incentive Plan Compensation4 ($) |
All Other Compensation5 ($) |
Total ($) |
|||||||||
|
Walter W. Bettinger II6 Chief Executive Officer and Co-Chairman |
2024
2023 2022 |
1,500,000
1,500,000 1,484,615 |
-
- - |
10,950,021 10,950,019 10,200,043 |
7,300,016
7,300,015 6,800,011 |
6,620,062 4,104,000 5,885,200 |
18,460 17,710 16,460 |
26,388,559 23,871,744 24,386,329 |
||||||||
|
Managing Director and Chief Financial Officer |
2024 | 553,846 | - | 4,350,017 | - | 1,629,554 | 27,239 | 6,560,656 | ||||||||
|
Former Managing Director and Chief Financial Officer |
2024
2023 2022 |
725,000
721,154 688,462 |
-
- - |
1,920,066 1,920,002 1,800,045 |
1,280,004 1,280,010 1,200,016 |
1,706,505 1,052,308 1,455,545 |
18,022 17,465 16,133 |
5,649,597 4,990,939 5,160,201 |
||||||||
|
President |
2024
2023 2022 |
1,000,000
984,615 876,923 |
-
- - |
4,800,066 4,800,004 4,200,079 |
3,200,019
3,200,004 2,800,009 |
3,530,700 2,155,126 2,780,986 |
18,702 17,614 16,260 |
12,549,487 11,157,363 10,674,257 |
||||||||
|
Co-Chairman |
2024
2023 2022 |
900,000
884,616 792,308 |
-
- - |
3,000,017 3,000,041 3,000,022 |
2,000,002 2,000,016 2,000,013 |
2,648,025 1,613,539 2,093,871 |
18,364 17,518 16,220 |
8,566,408 7,515,730 7,902,434 |
||||||||
|
Managing Director and Head of |
2024 | 775,000 | - | 1,980,008 | 1,320,016 | 1,824,195 | 18,247 | 5,917,466 | ||||||||
|
Chairman of the |
2024
2023 2022 |
762,500
921,154 879,231 |
-
- - |
3,720,050 3,720,042 3,600,010 |
2,480,001
2,480,020 2,400,011 |
2,162,554 2,016,222 2,788,305 |
17,944 17,614 16,234 |
9,143,049 9,155,052 9,683,791 |
||||||||
| (1) |
The position for each NEO is the position the NEO held on |
| (2) |
The amounts shown in this column represent the aggregate grant date fair value of PBRSUs and RSUs and do not reflect the amounts ultimately realized by the NEO. The values shown are as of the grant date determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (Topic 718), which is the date on which all the significant terms, including any performance criteria, were established. The values represent the aggregate compensation cost expected at the grant date to be recognized over the service period and are not adjusted for the effect of any estimated forfeitures. The maximum value of the 2024 PBRSU awards on the grant date, assuming the performance conditions are met at 200% of the target award, would be: |
|
PBRSUs awarded in 2024, 2023, and 2022 vest only upon satisfaction of the performance conditions of those awards. For the 2024, 2023, and 2022 PBRSUs, the date the Compensation Committee granted the units and the date all significant terms of the award were finalized were the same. The values reflected in the table for the awards are the number of units granted multiplied by the average of the high and low market price of the company's common stock on the accounting grant date. |
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EXECUTIVE COMPENSATION TABLES
|
For further discussion of the company's accounting for its equity compensation plans, including key assumptions, see Part II, Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2. Summary of Significant Accounting Policies" and "Note 22. Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans" from the company's Annual Report on Form 10-Kfor the fiscal year ended |
| (3) |
The amounts shown in this column represent the aggregate grant date fair value of the stock option awards as determined in accordance with Topic 718, and not the amount ultimately realized by the NEO. For further discussion of the company's accounting for its equity compensation plans, including key assumptions, see Part II, Item 8, "Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 2. Summary of Significant Accounting Policies" and "Note 22. Employee Incentive, Retirement, Deferred Compensation, and Career Achievement Plans" from the company's Annual Report on Form 10-Kfor the fiscal year ended |
| (4) |
The amounts shown in this column represent amounts earned under the CEBP. |
| (5) |
The amounts shown in this column for 2024 include |
| (6) |
|
| (7) |
|
| (8) |
|
| (9) |
|
| (10) |
|
| 59 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
2024 Grants of Plan-Based Awards Table
| Grant Date |
Date of Action1 |
Estimated Possible Payouts Under Non-EquityIncentive Plan Awards2 |
Estimated Future Payouts Under Equity Incentive Plan Awards3 |
All Other (#) |
All Other (#) |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Equity Awards ($)5 |
|||||||||||||||||
|
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||
|
Walter W. Bettinger II |
-
|
2,812,500 - - |
5,625,000 - - |
11,250,000 - - |
-
- - |
-
165,140 |
-
330,280 |
-
- - |
-
- 382,400 |
-
- |
-
10,950,021 |
|||||||||||||
|
|
692,308
- |
1,384,616
- |
2,769,232
- |
-
- |
-
- |
-
- |
-
59,849 |
-
- |
-
- |
-
4,350,017 |
||||||||||||||
|
|
-
|
725,000
- - |
1,450,000 - - |
2,900,000 - - |
-
- - |
-
28,957 |
-
57,914 - |
-
- - |
-
- 67,051 |
-
- |
-
1,920,066 |
|||||||||||||
|
|
-
|
1,500,000 - - |
3,000,000 - - |
6,000,000 - - |
-
- - |
-
72,391 |
-
144,782 |
-
- - |
-
- 167,628 |
-
- |
-
4,800,066 |
|||||||||||||
|
|
-
|
1,125,000 - - |
2,250,000 - - |
4,500,000 - - |
-
- - |
-
45,244 |
-
90,488 - |
-
- - |
-
- 104,767 |
-
- |
-
3,000,017 2,000,002 |
|||||||||||||
|
|
-
|
775,000
- - |
1,550,000
- - |
3,100,000
- - |
-
- - |
-
29,861 - |
-
59,722 - |
-
- - |
-
- 69,147 |
-
- |
-
1,980,008 1,320,016 |
|||||||||||||
|
|
-
|
918,750
- - |
1,837,500 - - |
3,675,000 - - |
-
- - |
-
56,103 |
-
112,206 |
-
- - |
-
- 129,911 |
-
- |
-
3,720,050 |
|||||||||||||
| (1) |
This column shows the date that the Compensation Committee or the independent directors acted with respect to the award if that date is different than the grant date. If the grant date is not the meeting date, it is a fixed, future date specified at the time of the grant. |
| (2) |
These columns show the range of possible payouts for annual cash incentive awards granted in 2024 under the CEBP. The actual annual cash incentive awards paid for 2024 performance under this plan are shown in the "non-equityincentive plan compensation" column of the 2024 SCT. The "threshold" column shows the bonus payment for achieving 50% of the target EPS goal; achieving less than 50% of the target EPS goal would result in no bonus payment. |
| (3) |
These PBRSU awards were granted under the 2022 Stock Incentive Plan and vest on the third anniversary of the grant date, provided that a target performance goal based on ROTCE excluding AOCI divided by COE for the three-year performance period ending |
| (4) |
These stock option awards were granted under the 2022 Stock Incentive Plan, vest in four equal annual installments beginning on the first anniversary of the grant date and expire on the tenth anniversary of the grant date. |
| (5) |
Represents the grant date fair value of each equity award as determined in accordance with Topic 718. For the option awards, the grant date fair value was determined by multiplying the number of shares granted by the fair value of the option as determined by an options pricing model. The fair value of the option determined by the pricing model on |
| 60 |
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EXECUTIVE COMPENSATION TABLES
2024 Termination and Change in Control Benefits Table
| Event1 |
Salary Bonus ($) |
Early ($) |
Early or ($) |
Other ($) |
Total ($) |
|||||||
|
Walter W. Bettinger II |
Termination under Severance Plan |
1,773,0693 |
3,556,2354 |
39,387,5304 |
26,9395 |
44,743,772 |
||||||
|
Change in control |
- |
3,556,2356 |
39,387,5306 |
- |
42,943,764 |
|||||||
|
Death or disability |
- |
3,556,2356 |
39,387,5306 |
- |
42,943,764 |
|||||||
|
Retirement or voluntary resignation |
- |
3,556,2354 |
39,387,5304 |
- |
42,943,764 |
|||||||
|
|
Termination under Severance Plan Change in control Death or disability |
683,0743 - - |
- - - |
1,107,338 4,429,424 4,429,424 |
85 - - |
1,790,419 4,429,424 4,429,424 |
||||||
|
|
Termination under Severance Plan |
856,9923 |
719,7994 |
6,925,1904 |
27,2695 |
8,529,249 |
||||||
|
Change in control |
- |
719,7996 |
6,925,1906 |
- |
7,644,989 |
|||||||
|
Death or disability |
- |
719,7996 |
6,925,1906 |
- |
7,644,989 |
|||||||
|
Retirement or voluntary resignation |
- |
719,7994 |
6,925,1904 |
- |
7,644,989 |
|||||||
|
|
Termination under Severance Plan |
758,9753 |
472,2507 |
6,865,9087 |
15,9075 |
8,113,039 |
||||||
|
Change in control |
- |
1,420,1866 |
17,931,4396 |
- |
19,351,625 |
|||||||
|
Death or disability |
- |
1,420,1866 |
17,931,4396 |
- |
19,351,625 |
|||||||
|
|
Termination without cause |
10,644,0758 |
1,016,7839 |
11,127,0334 |
90,755,05110 |
113,542,942 |
||||||
|
Change in control |
- |
1,016,7836 |
11,127,0336 |
- |
12,143,817 |
|||||||
|
Death |
4,500,00011 |
1,016,7836 |
11,127,0336 |
89,276,83512 |
105,920,652 |
|||||||
|
Disability |
2,700,00013 |
1,016,7836 |
11,127,0336 |
89,343,62812 |
104,187,444 |
|||||||
|
Resignation following a change in control |
3,375,00014 |
1,016,7836 |
11,127,0336 |
89,276,83512 |
104,795,652 |
|||||||
|
Retirement or voluntary resignation |
3,375,00014 |
1,016,7834 |
11,127,0334 |
89,276,83512 |
104,795,652 |
|||||||
|
|
Termination under Severance Plan |
916,0983 |
507,6777 |
5,035,7887 |
2,801 |
6,462,365 |
||||||
|
Change in control |
- |
768,3656 |
7,245,8016 |
- |
8,014,166 |
|||||||
|
Death or disability |
- |
768,3656 |
7,245,8016 |
- |
8,014,166 |
|||||||
|
|
Termination under Severance Plan |
1,093,3943 |
1,395,3924 |
13,601,4104 |
27,2695 |
16,117,465 |
||||||
|
Change in control |
- |
1,395,3926 |
13,601,4106 |
- |
14,996,802 |
|||||||
|
Death or disability |
- |
1,395,3926 |
13,601,4106 |
- |
14,996,802 |
|||||||
|
Retirement or voluntary resignation |
- |
1,395,3924 |
13,601,4104 |
- |
14,996,802 |
|||||||
| 61 |
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EXECUTIVE COMPENSATION TABLES
| (1) |
This table shows the amount of benefits due to termination or change in control to be paid to the NEOs pursuant to existing agreements (assuming the event triggering the termination or change in control took place as of |
|
The benefits payable to |
|
Except for |
|
Stock option and RSU agreements contain provisions for accelerated vesting due to a change in control, death or disability, or retirement, and these accelerated amounts are included in amounts shown for "change in control," "death or disability," and "retirement or voluntary resignation." As of |
|
PBRSU award agreements contain provisions for accelerated vesting and payment of target awards due to a change in control, death, or disability. These accelerated amounts are included in the amounts shown for "change in control" or "death or disability." PBRSU award agreements contain provisions for continued vesting following either termination under the Severance Plan or retirement, subject to achievement of performance goals established at the time such awards were granted. The value of awards subject to these continued vesting and performance achievement provisions is included in amounts shown for "termination under Severance Plan" and "retirement or voluntary resignation" as applicable. |
|
"Retirement" means any termination of employment of an NEO for any reason other than death at any time after the NEO has attained (i) age 55, but only if, at the time of such termination, the NEO has been credited with at least ten years of service under the SchwabPlan Retirement Savings and Investment Plan (years of service), or (ii) age 65, but only if, at the time of such termination, the NEO has been credited with at least five years of service. |
| (2) |
For stock options, the amounts are based on the spread between the exercise price and the closing price of a share of company common stock on |
| (3) |
Includes a base salary payable under the Severance Plan for the severance period and a 60-daynotice period. Under the terms of the Severance Plan, an executive officer is eligible to receive a lump-sumseverance benefit equal to base salary (at the |
| (4) |
Under equity award agreements, if the employee meets the eligibility criteria for retirement at the time of termination, stock options awards will fully vest and become exercisable, RSUs will vest and become payable, and PBRSUs will continue to vest and may be earned based on the achievement of the related performance goals. |
| (5) |
Under the Severance Plan, amounts represent a lump-sumpayment to cover part of the cost of Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums based on group health plan COBRA rates for the severance period. |
| (6) |
Under equity award agreements, in the event of a change in control of the company, death, or disability, stock option awards will fully vest and become exercisable and RSUs and PBRSUs will vest and become payable as of the termination date; PBRSUs will be paid at target. |
| (7) |
Under the Severance Plan, the portion of stock option awards that would have vested during the severance period after termination will become vested and exercisable, the portion of RSUs that would have vested during the severance period after termination will vest and become payable as of the termination date, and PBRSUs that may vest during the severance period after termination will continue to vest and may be earned based on the achievement of related performance goals. |
| (8) |
Under |
| (9) |
Under |
| (10) |
Under |
| (11) |
Under |
| (12) |
Under |
| (13) |
Under |
| (14) |
Under |
| 62 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
Charles Schwab Severance Pay Plan
Employees other than
Under the Severance Plan, an executive officer is eligible to receive a lump-sumseverance pay benefit of base salary equal to 15 business days multiplied by the officer's full years of service, with a minimum of seven months and maximum of 12 months of the base salary that would have been payable to the executive officer. Prorated benefits will be provided for partial years of service. The lump-sumamount is in addition to base salary for the 60-daynotice period.
An executive officer who becomes eligible for severance benefits under the Severance Plan is also eligible to receive a lump-sumpayment to cover a portion of the cost of group health plan coverage. The amount of the payment is based upon the period of time for which he or she is eligible to receive severance pay and current COBRA rates for group health plan coverage. In addition, the portion of the executive officer's long-term awards, except PBRSUs or similar performance-based awards, which would have vested had the officer remained employed during the severance period, will vest following the officer's termination date. Executive officers are treated as employees during their severance period for purposes of determining their vesting in PBRSUs to the extent performance goals are met or exceeded for the period.
| 63 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
Mr. Schwab Termination and Change in Control Benefits
Under
If an involuntary termination is not due to death, disability, or cause:
| § |
|
| § |
all his outstanding unvested shares and options under stock incentive plans will vest fully on the termination date. |
If an involuntary termination is due to disability,
| § |
his base salary and benefits, less any payments under the long-term disability plan, for a period of 36 months from the termination date; and |
| § |
a prorated portion of any bonus or incentive payments for the year in which the disability occurs. |
If an involuntary termination is due to death, a lump-sumpayment will be made to
If
| 64 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards as of December 31, 2024
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
|
|
Number of Exercisable |
Number of Unexercisable |
Option ($) |
Option Expiration Date |
Number Shares (#) |
Market ($) |
Equity (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested1 ($) |
||||||||||||||||||||||||
|
Walter W. Bettinger II |
464,629 324,924 285,896 405,187 361,758 203,713 152,057 83,219 |
67,905
152,058 249,659 382,400 |
2
3 4 5 |
26.39 42.99 52.05 46.81 41.98 64.10 77.86 77.41 66.47 |
3/1/2026 3/1/2027 3/1/2028 3/1/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
225,296 | 6 | 9,428,948 | 306,897 | 7,8 | 22,713,447 | |||||||||||||||||||||
|
|
59,849 | 9 | 4,429,424 | |||||||||||||||||||||||||||||
|
|
1,276
29,977 28,670 11,191 31,767 50,649 51,680 64,852 26,834 14,592 |
21,618
26,834 43,776 67,051 |
2
3 4 5 |
34.70
26.39 42.99 39.70 52.05 46.81 41.98 64.10 77.86 77.41 66.47 |
8/3/2025
3/1/2026 3/1/2027 6/1/2027 3/1/2028 3/1/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
39,759 | 6 | 1,663,967 | 53,813 | 7,8 | 3,982,700 | |||||||||||||||||||||
|
|
4,956
26,069 37,899 47,304 62,612 36,479 |
15,769
62,612 109,440 167,628 |
2
3 4 5 |
46.39
41.63 41.98 64.10 77.86 77.41 66.47 |
11/1/2028
6/3/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
107,753 | 6,10 | 4,991,456 | 134,531 | 7,8 | 9,956,639 | |||||||||||||||||||||
|
|
180,506
179,857 126,147 109,594 149,919 134,367 68,667 44,723 22,800 |
22,890
44,723 68,400 104,767 |
2
3 4 5 |
30.17
26.39 42.99 52.05 46.81 41.98 64.10 77.86 77.41 66.47 |
3/2/2025
3/1/2026 3/1/2027 3/1/2028 3/1/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
66,264 | 6 | 2,773,229 | 84,082 | 7,8 | 6,222,909 | |||||||||||||||||||||
| 65 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
|
|
Number of Exercisable |
Number of Unexercisable |
Option ($) |
Option Expiration Date |
Number Shares (#) |
Market ($) |
Equity (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested1 ($) |
||||||||||||||||||||||||
|
|
38,227
39,708 13,124 87,116 82,688 74,771 28,623 15,048 |
24,924
28,623 45,144 69,147 |
2
3 4 5 |
42.99
52.05 50.41 46.81 41.98 64.10 77.86 77.41 66.47 |
3/1/2027
3/1/2028 4/2/2028 3/1/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
42,410 | 6 | 1,774,908 | 55,494 | 7,8 | 4,107,111 | |||||||||||||||||||||
|
|
71,474
24,607 131,686 111,973 125,890 53,667 28,272 |
41,964
53,668 84,816 129,911 |
2
3 4 5 |
52.05
50.41 46.81 41.98 64.10 77.86 77.41 66.47 |
3/1/2028
4/2/2028 3/1/2029 3/2/2030 3/1/2031 3/1/2032 3/1/2033 3/1/2034 |
79,516 | 6 | 3,327,860 | 104,262 | 7,8 | 7,716,431 | |||||||||||||||||||||
| (1) |
Represents the market value of unvested RSUs or PBRSUs held as of December 31, 2024 based on the closing price of a share of common stock of $74.01 on December 31, 2024. |
| (2) |
These non-qualifiedstock options under the 2013 Stock Incentive Plan have a grant date of March 1, 2021 and vest in four equal annual installments beginning on the first anniversary of the grant date. |
| (3) |
These non-qualifiedstock options under the 2013 Stock Incentive Plan have a grant date of March 1, 2022 and vest in four equal annual installments beginning on the first anniversary of the grant date. |
| (4) |
These non-qualifiedstock options under the 2022 Stock Incentive Plan have a grant date of March 1, 2023 and vest in four equal annual installments beginning on the first anniversary of the grant date. |
| (5) |
These non-qualifiedstock options under the 2022 Stock Incentive Plan have a grant date of March 1, 2024 and vest in four equal annual installments beginning on the first anniversary of the grant date. |
| (6) |
Includes PBRSU awards under the 2013 Stock Incentive Plan with a grant date of March 1, 2022 and vest 100% on the third anniversary of the grant date. The shares underlying the PBRSU awards granted on March 1, 2022 were paid based on an achievement of performance goals of 176.84% as follows: |
|
|
Vesting Date |
Number of Units |
||||||
|
Walter W. Bettinger II |
3/1/2025 | 225,296 | ||||||
|
|
3/1/2025 | 39,759 | ||||||
|
|
3/1/2025 | 92,770 | ||||||
|
|
3/1/2025 | 66,264 | ||||||
|
|
3/1/2025 | 42,410 | ||||||
|
|
3/1/2025 | 79,516 | ||||||
| 66 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
| (7) |
Includes PBRSU awards under the 2022 Stock Incentive Plan with a grant date of March 1, 2023 and vest 100% on the third anniversary of the grant date. Based on a target of 100%, future vesting for the PBRSUs is as follows: |
|
|
Vesting Date |
Number of Units |
||||||
|
Walter W. Bettinger II |
3/1/2026 | 141,757 | ||||||
|
|
3/1/2026 | 24,856 | ||||||
|
|
3/1/2026 | 62,140 | ||||||
|
|
3/1/2026 | 38,838 | ||||||
|
|
3/1/2026 | 25,633 | ||||||
|
|
3/1/2026 | 48,159 | ||||||
| (8) |
Includes PBRSU awards under the 2022 Stock Incentive Plan with a grant date of March 1, 2024 and vest 100% on the third anniversary of the grant date. Based on a target of 100%, future vesting for the PBRSUs is as follows: |
|
|
Vesting Date |
Number of Units |
||||||
|
Walter W. Bettinger II |
3/1/2027 | 165,140 | ||||||
|
|
3/1/2027 | 28,957 | ||||||
|
|
3/1/2027 | 72,391 | ||||||
|
|
3/1/2027 | 45,244 | ||||||
|
|
3/1/2027 | 29,861 | ||||||
|
|
3/1/2027 | 56,103 | ||||||
| (9) |
Includes time-based RSUs under the 2022 Stock Incentive Plan with a grant date of June 3, 2024 and vest in four equal annual installments beginning on the first anniversary of the grant date. Future vesting for these RSUs is as follows: |
|
|
Vesting Date |
Number of Units |
||||||
|
|
6/3/2025 | 14,962 | ||||||
| 6/3/2026 | 14,962 | |||||||
| 6/3/2027 | 14,962 | |||||||
| 6/3/2028 | 14,963 | |||||||
| (10) |
Includes time-based RSUs under the 2013 Stock Incentive Plan with a grant date of October 25, 2021 and vest in four equal annual installments beginning on the first anniversary of the grant date. Future vesting for these RSUs is as follows: |
|
|
Vesting Date |
Number of Units |
||||||
|
|
10/25/2025 | 14,983 | ||||||
| 67 |
Table of Contents
EXECUTIVE COMPENSATION TABLES
2024 Option Exercises and Stock Vested Table
| Option Awards | Stock Awards | |||||||
| Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)1 |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)2 |
||||
|
Walter W. Bettinger II |
- | - | 251,296 | 16,675,048 | ||||
|
|
- | - | - | - | ||||
|
|
32,597 | 1,523,080 | 80,000 | 5,308,496 | ||||
|
|
- | - | 73,337 | 4,950,701 | ||||
|
|
200,957 | 8,073,328 | 84,706 | 5,620,768 | ||||
|
|
4,977 | 217,086 | 92,236 | 6,120,430 | ||||
|
|
- | - | 155,296 | 10,304,852 | ||||
| (1) |
The value realized on exercise of stock options as shown in this chart was calculated as the difference between the market price of the underlying share at exercise and the exercise price of the options multiplied by the number of shares subject to the option exercised. The market price for each transaction was determined as follows: If upon exercising, the NEO sold the shares acquired, the market price was determined to be the sale price. If upon exercising, the NEO kept the shares acquired, then the market price was determined to be the average of the high and low market price of the company's common stock on the date of the exercise. |
| (2) |
Amounts in this column were calculated by multiplying the number of shares vesting by the average of the high and low market price of the company's common stock on the business day prior to the vesting date. |
2024 Nonqualified Deferred Compensation Table
| Name1 | Plan |
Executive Contributions In Last Fiscal Year2 ($) |
Aggregate Earnings in Last Fiscal Year3 ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last Fiscal |
|||||
|
Walter W. Bettinger II |
DCP2 | - | 4,089,890 | - | 28,010,5324 | |||||
|
|
DCP1 | - | 7,174,984 | - | 47,016,6985 | |||||
|
|
DCP2 | - | 293,853 | - | 2,013,134 | |||||
| (1) |
|
| (2) |
The company does not make contributions to the deferred compensation plans. |
| (3) |
The earnings reported in this column are not above-market or preferential and therefore are not reported in the 2024 SCT. |
| (4) |
For |
| (5) |
For |
The Charles Schwab Corporation Deferred Compensation Plans
In December 2004, the Compensation Committee adopted the DCP2. Deferrals for income earned prior to January 1, 2005 were made under the DCP1, and all deferrals for income earned after January 1, 2005 were made pursuant to the DCP2. Subject to the terms and conditions set forth in the plans, each eligible participant may elect to defer a portion of amounts earned under the company's non-equityincentive plans (and in some cases, participants can elect to defer a portion of their base salary). All of a participant's compensation deferrals are credited to a deferral
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2024 CEO Pay Ratio
account maintained for each participant. Amounts credited to deferral accounts are adjusted periodically to reflect earnings and losses (calculated based on the market retuof investment options selected by participants that the company makes available under the plans). Investment options available under the plans are listed mutual funds and the Schwab Managed Retirement Trust Funds. Participants may make investment changes at any time. With certain exceptions, deferral accounts are paid or commence payment upon a fixed payment date, as elected by the participant, or upon the participant's retirement. Participants generally may elect that payments be made in a single lump sum or in annual installments over a period of four, five, ten, or 15 years. However, payment will be made in a lump sum after a change in control of the company or upon a termination of a participant's employment for any reason other than retirement.
2024 CEO Pay Ratio
The following is a reasonable estimate, calculated in accordance with
| § |
the annual total compensation of the median employee, calculated in accordance with SCT rules, was $125,038; |
| § |
the annual total compensation of the CEO, as reported in the 2024 SCT, was $26,388,559; and |
| § |
the ratio of the annual total compensation of the CEO to the annual total compensation of the median employee was 211 to 1. |
For 2024, the company selected a new median employee because it had used the same median employee for the three prior years.
To identify the company's median employee in 2024, the company used internal records to determine the employee population as of December 31, 2024, which equaled 32,214 individuals, including full-time, part-time, temporary, and seasonal employees. Of the 32,214 individuals represented on our compensation and benefits platforms, 32,175 were employed in
The company used the taxable Medicare wages as reflected in the Company's payroll records as reported to the
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term that does not necessarily reflect the amounts realized by the NEOs or how the Compensation Committee evaluates the link between company performance and NEO compensation. In addition, a significant portion of CAP relates to changes in fair value of unvested awards over the course of each year. Unvested awards remain subject to vesting conditions and possible future declines in value based on changes in the price of our common stock. The ultimate value realized by our NEOs from unvested equity awards will not be determined until the awards vest. For further information regarding the executive compensation program, including how the Compensation Committee evaluates
please refer to the "Compensation Discussion and Analysis" section of this proxy statement.
|
Year
1
|
Summary
Compensation Table Total for CEO 2
|
Compensation
Actually Paid to CEO 3
|
Average Summary
Compensation Table Total for Other NEOs 2
|
Average
Compensation Actually Paid to Other NEOs 3
|
Value of Initial Fixed $100
Investment Based on: 4
|
Adjusted
Diluted Earnings Per Common
Share (EPS) 6
|
||||||||||||||||||||||||||||||||||
|
Total
Shareholder Return |
Total Shareholder Return |
Net Income
5
(000s) |
||||||||||||||||||||||||||||||||||||||
|
2024
|
$26,388,559
|
$29,406,845
|
$8,064,444
|
$ 8,950,965
|
$167
|
$217
|
$5,942
|
$3.25
|
||||||||||||||||||||||||||||||||
|
2023
|
$23,871,744
|
$ 4,173,708
|
$8,204,771
|
$ 1,878,242
|
$153
|
$169
|
$5,067
|
$3.13
|
||||||||||||||||||||||||||||||||
|
2022
|
$24,386,329
|
$57,877,151
|
$8,355,171
|
$18,470,980
|
$182
|
$149
|
$7,183
|
$3.90
|
||||||||||||||||||||||||||||||||
|
2021
|
$21,938,404
|
$41,631,785
|
$9,121,613
|
$14,041,967
|
$182
|
$166
|
$5,855
|
$3.25
|
||||||||||||||||||||||||||||||||
|
2020
|
$15,959,193
|
$20,212,071
|
$4,645,494
|
$ 5,780,703
|
$114
|
$118
|
$3,299
|
$2.45
|
||||||||||||||||||||||||||||||||
|
(1)
|
Walter W. Bettinger II was the CEO and
|
|
(2)
|
As reported in or, with respect to the non-CEO NEOs, the average of the amounts reported in, the "Total" column of the SCT (the SCT Total) for the applicable year. See the footnotes to the SCTs for further detail regarding the amounts in this column.
|
|
(3)
|
The SCT Total or, with respect to the non-CEO NEOs, the average of the SCT Totals reported for the applicable year, adjusted as follows in accordance with Item 402(v) of Regulation S-K:
|
|
Year
|
SCT Total
Compensation |
Minus
SCT Equity Awards Total i
|
Plus
Fair Value of Current Year Equity Awards at Year-End
ii
|
Plus
Change in Fair
Value of Unvested Prior Year Equity Awards ii, iii
|
Plus
Change in Fair
Value of Equity Awards Vested in Current Year ii,
iii
|
Plus
Dividends
Paid on Unvested RSUs |
Equals
Compensation
Actually Paid |
|||||||||||||||||||||||||||||||||
|
2024
|
CEO
|
$
|
26,388,559
|
$
|
18,250,037
|
$
|
19,425,742
|
$
|
2,794,556
|
($
|
951,975
|
)
|
-
|
$
|
29,406,845
|
|||||||||||||||||||||||||
|
Other
NEOs |
$
|
8,064,444
|
$
|
5,008,378
|
$
|
5,597,607
|
$
|
694,210
|
($
|
252,100)
|
$
|
155,182
|
$
|
8,950,965
|
||||||||||||||||||||||||||
|
(i)
|
Amounts in this column reflect the totals or, with respect to the
non-CEO
NEOs, the average of the totals under the Stock Awards and Option Awards columns in the 2024 SCT. See the footnotes to the 2024 SCT for further detail regarding the amounts in this column. |
|
(ii)
|
Fair value of equity awards is calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Fair value of PBRSUs with unsatisfied performance conditions as of the applicable measurement date also reflects the probable outcome of the applicable performance conditions as of that date. Fair value of unvested options is based on the fair value of the options as of the applicable measurement date as determined using an options pricing model. If a vesting event is on a weekend or holiday, the next preceding day's prices are used for valuation purposes. Dividend equivalents accumulating on unvested PBRSUs are included in the
year-end
fair value for the year in which the dividends are accrued. |
|
(iii)
|
Changes in fair value are measured by comparing fair value as of the end of the applicable year or at vesting, as applicable, to the fair value as of the end of the prior year.
|
|
(4)
|
Cumulative total shareholder retu(TSR) of the company and the Dow Jones
|
|
(5)
|
Net Income as reported in Part II, Item 8, "Financial Statements and Supplementary Data-Consolidated Statements of Income" of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
|
|
70
|
2025 PROXY STATEMENT
|
|
(6)
|
Adjusted Diluted EPS as reported on page 28 of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. For a reconciliation of diluted EPS in accordance with GAAP to the non-GAAP financial measure Adjusted Diluted EPS, please see Appendix A beginning on page A-1.
|
|
Measures Schwab Considers Important in Evaluating Executive
Pay for Performance |
|
Adjusted Diluted EPS
|
|
Retuon Tangible Common Equity (ROTCE) / Cost of Equity (COE)
|
|
Stock Price
|
|
2025 PROXY STATEMENT
|
71
|
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Securities Authorized for Issuance Under Equity Compensation Plans
The following table summarizes information as of December 31, 2024 with respect to equity compensation plans approved and not approved by stockholders:
Securities Authorized for Issuance As of December 31, 2024
| Plan Category |
Number of Securities Outstanding Options, Warrants, (#) |
Weighted-Average Exercise Price of ($) |
Number of Securities (#) |
|||
|
Equity compensation plans approved by stockholders |
26,745,3292 | $33.66 | 127,509,3943 | |||
|
Equity compensation plans not approved by stockholders |
- | - | - | |||
|
Total4 |
26,745,329 | $33.66 | 127,509,394 | |||
| (1) |
The weighted-average exercise price does not consider awards that have no exercise price, such as RSUs and PBRSUs. |
| (2) |
Consists of shares of common stock underlying: 16,134,776 stock options and 9,124,534 RSUs outstanding under the company's 2013 and 2022 Stock Incentive Plans and 1,486,019 unearned PBRSUs awarded under the 2013 and 2022 Stock Incentive Plans (assuming the achievement of target performance with respect to each applicable performance metric such that 100% of the target PBRSUs are earned). The number of shares to be issued pursuant to such PBRSUs, if any, will be determined following completion of the relevant performance period. |
| (3) |
Consists of 104,673,075 shares of common stock (including shares underlying stock options, stock appreciation rights, restricted stock, RSUs, performance stock, PBRSUs, performance units, and other stock awards) that may be awarded under the 2022 Stock Incentive Plan and 22,836,319 shares that may be purchased under the ESPP. An offering period under the ESPP had begun but was not completed as of December 31, 2024 (520,561 shares were subsequently purchased at the end of this offering period). |
| (4) |
In accordance with applicable |
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| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Security Ownership of Certain Beneficial Owners and Management
This table shows common stock that is beneficially owned by owners of 5% or more of the outstanding company common stock, the directors, the NEOs, and directors and executive officers as a group, as of the close of business on March 3, 2025 or as noted otherwise.
| Amount and Nature of Beneficial Ownership |
Percent of Shares |
|||||||||||||
|
|
Shares Owned1 |
Right to Acquire Within 60 Days2 |
Total Beneficial Ownership3 |
|||||||||||
|
The Vanguard Group |
119,918,442 | 4 | - | 119,918,442 | 6.6% | |||||||||
|
|
104,331,837 | 5 | 930,316 | 105,262,153 | 5.8% | |||||||||
|
|
96,697,577 | 6 | - | 96,697,577 | 5.3% | |||||||||
|
|
42,804 | 37,301 | 80,105 | * | ||||||||||
|
Walter W. Bettinger II |
969,351 | 7 | 2,139,508 | 3,108,859 | * | |||||||||
|
|
3,384 | 18,475 | 21,859 | * | ||||||||||
|
|
22,016 | 31,076 | 53,092 | * | ||||||||||
|
|
447,303 | 9,758 | 457,061 | * | ||||||||||
|
|
89,158 | 113,504 | 202,662 | * | ||||||||||
|
|
215,071 | 8 | 212,130 | 427,201 | * | |||||||||
|
|
8,052 | 12,864 | 20,916 | * | ||||||||||
|
|
533,411 | 9 | 11,001 | 544,412 | * | |||||||||
|
|
22,094 | 61,931 | 84,025 | * | ||||||||||
|
|
23,113 | 45,167 | 68,280 | * | ||||||||||
|
|
2,102,121 | 10 | 29,946 | 2,132,067 | * | |||||||||
|
|
114,301 | 67,738 | 182,039 | * | ||||||||||
|
|
178,816 | 385,729 | 564,545 | * | ||||||||||
|
|
57,615 | 335,433 | 393,048 | * | ||||||||||
|
|
- | - | - | * | ||||||||||
|
|
23,258 | 422,206 | 445,464 | * | ||||||||||
|
|
295,200 | 677,116 | 972,316 | * | ||||||||||
|
Directors and Executive Officers as a Group (21 Persons)11 |
109,352,805 | 5,085,677 | 114,438,482 | 6.3% | ||||||||||
| * |
Less than 1% |
| (1) |
This column includes outstanding shares for which the named person has sole or shared voting or investment power or holds in an account under The Charles Schwab Corporation Dividend Reinvestment Plan, ESPP and/or The SchwabPlan Retirement Savings and Investment Plan. This column excludes RSUs held by directors under the company's 2004 Stock Incentive Plan, the 2013 Stock Incentive Plan, the 2022 Stock |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
| Incentive Plan, and the DCP2, which do not have voting rights. Under the DCP2, the RSUs are converted into shares of common stock and paid in a lump sum by the end of February in the year following a director's termination of board service. As of March 3, 2025, there are no RSUs under the DCP2 that are convertible within 60 days. Information on these RSUs is contained in the "Director Compensation" section of this proxy statement. This column also excludes PBRSUs held by executive officers under the 2013 Stock Incentive Plan and the 2022 Stock Incentive Plan, which do not have voting rights. |
| (2) |
Shares that can be acquired through stock option exercises or through settlement of RSUs within 60 days of March 3, 2025. As of March 3, 2025, there are no RSUs held by directors and no PBRSUs held by executive officers that vest within 60 days. |
| (3) |
This column includes the total number of shares beneficially owned, including shares owned and the number of shares underlying stock options exercisable within 60 days of March 3, 2025. |
| (4) |
Includes shares held by The Vanguard Group (Vanguard) as reported on its Schedule 13G/A filed with the |
| (5) |
Includes 7,422,852 shares held by |
| (6) |
Includes shares held by |
| (7) |
Includes 2,541 shares held by |
| (8) |
Includes 50,625 shares held by |
| (9) |
Includes 7,867 shares held by |
| (10) |
Includes 524,929 shares held by |
| (11) |
In addition to the officers and directors named in this table, four other executive officers are members of this group. Excludes |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires the company's directors, executive officers, and beneficial owners of more than 10% of the company's common stock to file reports with the
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Table of Contents
| TRANSACTIONS WITH RELATED PERSONS |
Transactions With Related Persons
Ameritrade Transactions
On February 12, 2025,
In November 2019, in connection with the Ameritrade Acquisition, the company entered into a stockholder agreement with
Effective as of the closing of the Ameritrade Acquisition on October 6, 2020, the company entered into a registration rights agreement (the Registration Rights Agreement) with
Also in connection with the Ameritrade Acquisition, the company and subsidiaries of
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TRANSACTIONS WITH RELATED PERSONS
As a result of the Ameritrade Acquisition, the company assumed certain agreements existing between Ameritrade and
| § |
Trading Platform Hosting and Services Agreement. |
| § |
Cash Management Services Agreement.TD Bank |
| § |
Sublease Agreements.Ameritrade and |
| § |
Trademark License Agreement.Ameritrade and |
In addition, certain brokerage subsidiaries of the company have securities lending agreements with certain subsidiaries of
License Agreement with
The company and CS&Co are parties to an assignment and license agreement with
Beginning immediately after any termination of his employment,
No cash consideration is to be paid to
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Table of Contents
TRANSACTIONS WITH RELATED PERSONS
company. Beginning when all such compensation ceases, and continuing for a period of 15 years,
The license agreement permits the company to continue using
Other Transactions with Related Persons
BlackRock, Vanguard, and
Some directors, executive officers, and entities with which they are affiliated have credit transactions with the company's banking and brokerage subsidiaries, such as mortgage loans, revolving lines of credit, or other extensions of credit. These transactions with directors, executive officers, and their affiliates are made in the ordinary course of business and as permitted by the Sarbanes-Oxley Act of 2002. Such transactions are on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the lender and do not involve more than the normal risk of collectability or present other unfavorable features.
Policy Regarding Related Party Transactions
The company's written Policy Regarding Related Party Transactions, which has been approved by the Audit Committee, governs the review and approval of transactions with related persons. With certain limited exceptions, this policy generally requires Audit Committee review and approval of any financial transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness), or any series of similar transactions, arrangements, or relationships in which the company participates and the amount involved exceeds or is expected to exceed $120,000, and a director, nominee for director, or executive officer of the company, an immediate family member of any of the foregoing, or a stockholder owning in excess of 5% of a class of the company's voting securities has a direct or indirect material interest.
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TRANSACTIONS WITH RELATED PERSONS
The policy requires directors and executive officers to promptly notify the company's Office of Corporate Governance prior to the commencement of any such transaction in which the notifying person has or will have a material interest, and promptly after becoming aware of any other related person transaction or proposed related person transaction, and to provide a description of all material facts concerning such transaction and the related person's interest in such transaction. The Office of Corporate Governance conducts an initial review of any reported transaction and refers all transactions requiring review and approval to the Audit Committee. The Audit Committee must give reasonable prior review to any related person transaction brought to its attention and will generally consider any such transaction at its next meeting. However, if prior review is not reasonably possible or the Audit Committee otherwise becomes aware of a related person transaction after its commencement, the transaction will be considered at the next regularly scheduled Audit Committee meeting. In the event that it is infeasible or impractical to wait until the next regularly scheduled Audit Committee meeting or convene an Audit Committee meeting to evaluate a related person transaction, the Chair of the Audit Committee, or any two disinterested members of the Audit Committee if the Chair is an interested party, may review and approve the related person transaction, and any such approval will be reported to the Audit Committee as promptly as reasonably practicable. A transaction may be approved only if it is determined that the transaction is not inconsistent with the interests of the company as of the time of authorization or ratification.
Notice to and approval by the Audit Committee as described above is not required for certain transactions not required to be disclosed under Item 404 of Regulation S-K,charitable contributions to any tax-exemptorganization (other than family foundations created by a related person) that do not exceed the greater of $1 million or 2% of the charitable organization's revenues, and transactions involving financial services, other than loans and other extensions of credit, that are provided on substantially the same terms as those prevailing at the time for comparable services provided to non-affiliatesand that otherwise comply with applicable law.
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| PROPOSAL FOUR: STOCKHOLDER PROPOSAL |
Proposal Four: Stockholder Proposal
We have been notified that a stockholder proponent intends to present a proposal for consideration at the annual meeting. The stockholder proposal and supporting statement appear below, and we present the proposal as it was submitted to us. We recommend that you vote against the stockholder proposal. Our response is contained immediately after the proposal.
Stockholder Proposal
Elect Each Director Annually - Proposal 4
RESOLVED: Charles Schwab Inc. ("Company" or "Schwab") shareholders, including
Although our management can adopt this proposal topic in one year, and one-yearimplementation is a best practice, this proposal allows the option to be phased in.
Supporting Statement: Fully 90% of S&P 500 companies have declassified boards. Annual elections are widely viewed as a best practice. Annual election of each director makes directors more accountable, improving performance and increasing company value.
According to "What Matters in Corporate Governance" by
Diligent's Market Intelligence database includes the voting record of 24 shareholder resolutions to declassify boards during the period 2020 - 11/1/2024. They averaged 74% support. Only one proposal on this topic out of seven is reported to have received less than 50% of the vote in 2024.
BlackRock states, "Directors should be elected annually to discourage entrenchment and allow shareholders sufficient opportunity to exercise their oversight of the board." Vanguard generally votes for proposals to declassify an existing board and votes against management or shareholder proposals to create a classified board.
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PROPOSAL FOUR: STOCKHOLDER PROPOSAL
According to
A classified board creates conceamong shareholders because poorly performing directors may benefit from an electoral reprieve. Moreover, a fraternal atmosphere may form from a staggered board that favors the interests of management above those of shareholders. Since directors in a declassified board are elected and evaluated each year, declassification promotes responsiveness to shareholder demands and pressures directors to perform to retain their seat. Notably, proxy advisory firms ISS and Glass Lewis both support declassified structures.
The annual election of each director gives shareholders more leverage if management performs poorly. For instance, if management approves excessive or poorly incentivized executive pay, shareholders can soon vote against the Chair of the management pay committee instead of waiting for three years under the current setup.
Consider our Company's overall corporate governance:
According to Diligent's Market Intelligence, directors can only be removed for cause with an 80% vote, we cannot call special meetings, act by written consent, or nominate directors through proxy access. There is no requirement to have an independent Board Chair or even a Lead Director. Changing many bylaw provisions requires an 80% vote. Our directors have served an average of 11 years. Minorities constitute 17% of the Board, while women constitute 28%.
Freefloat Analytics estimates
Enhance Shareholder Value, Vote FOR
Elect Each Director Annually - Proposal 4
* * *
Board of Directors' Recommendation Against and Statement of Opposition to the Stockholder Proposal
While we recognize that there are differing perspectives on maintaining a classified board structure, the board believes that our company and our stockholders are best served by maintaining our current board structure because it supports our directors' focus on long-term growth and stockholder return, provides stability, protects institutional knowledge and promotes accountability. After careful consideration, our board unanimously recommends a vote AGAINST this proposal.
A Recent Company Proposal to Declassify the Board Failed to Receive Requisite Stockholder Support.
Our board and management team value the opinions and feedback of our stockholders. In light of stockholder approval of a nearly identical proposal submitted by the same proponent in 2021, at our 2022 annual meeting of stockholders, we sought approval of amendments to the Certificate of Incorporation to declassify the board and provide for annual election of all directors. The proposed amendments also sought to lower the requisite stockholder vote to approve future amendments to provisions in the Certificate of Incorporation that concethe elections of directors. However, the company's 2022 proposal did not receive sufficient support from stockholders to pass. As a result, the requisite vote to declassify the board remains at 80% of all outstanding shares of common stock. In light of this, the board believes that any certificate amendment to declassify the board is unlikely to receive the requisite stockholder support and, therefore, implementation of the proposal would waste company resources and divert management and board attention.
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PROPOSAL FOUR: STOCKHOLDER PROPOSAL
Our Board Believes That the Company and Our Stockholders are Best Served by Our Current Board Structure.
Our board understands that stockholders and other stakeholders have divergent views on a classified board structure and that there are advantages and disadvantages associated with maintaining that structure. For instance, our Board considered the perspective that annual elections of all directors may increase director accountability because the election of directors may be the primary means for stockholders to express their satisfaction or dissatisfaction with the actions of the board and to influence corporate governance policies of the company. However, after carefully considering the proposal and weighing both sides of the argument, our board continues to believe that its existing classified board structure is most appropriate for the company at this time for the following reasons:
| § |
Long-Term Focus:A classified board encourages directors to consider the long-term interests of the company and its stockholders, fosters long-term planning and strengthens the independence of non-employeedirectors from the often short-term focus of certain investors or special interest groups. The board also believes that the classified board structure assists in recruiting highly qualified directors willing to commit to the company and its strategic growth over the long term and develop a deep understanding of the company's business. In contrast, the annual election of all directors can, in some cases, lead to short-term focus or a concentration on only immediate results. |
| § |
Stability and Institutional Knowledge:The classified board structure is designed to provide stability and ensure that, at any given time, a majority of the directors serving on the board have substantial knowledge of the company, its business, its history, its culture, and its strategic goals. The board believes that a classified board is particularly beneficial for a financial institution, as it requires considerable time for directors to fully understand the company's operations and the application of various financial industry rules and regulations. Directors who understand the company are a valuable resource and well-positioned to make decisions in the best interests of the company and its stockholders. A declassified board could be replaced in a single year with directors unfamiliar with the company's business, culture and goals (for instance, in a hostile takeover), but a classified structure allows for orderly change alongside continuity as new directors with fresh perspectives interact and work with experienced directors with deep institutional knowledge. We believe that the stability of the classified board has particularly served the company well during periods of volatility and continues to do so. |
The classified board structure Is also designed to safeguard against hostile takeover efforts aiming to quickly take control of the company without paying fair value. A hostile bidder could replace a majority of the board at a single annual meeting with directors aligned with the bidder's own interests. The company's classified board allows the board the flexibility, the time and leverage it needs to evaluate the fairness of any takeover proposal at arm's length, negotiate on behalf of and for the benefit of all stockholders, and weigh alternatives in order to provide maximum value for stockholders.
| § |
Accountability:At each annual meeting, stockholders have the opportunity to evaluate and elect approximately one-thirdof the board, and the entire board is evaluated annually during its annual self-assessment. Further, regardless of term length, all directors must uphold their fiduciary duties to the company and its stockholders. The Nominating and Corporate Governance Committee also plays a significant role in ensuring director accountability by leading the board in its annual self-evaluation of the performance of the board and its committees to determine whether they are functioning effectively. In response to issues arising from such self-evaluations, the respective committee or the full board, as appropriate, will take necessary and advisable steps to address identified weaknesses or deficiencies. |
Summary
For these reasons, the board has determined, after careful consideration of the advantages and disadvantages of classified board structure, that maintaining its existing classified board structure is in the best interest of stockholders and the company at this time. Moreover, because a recent company proposal to approve amendments to our Certificate of Incorporation to declassify our board failed to receive the requisite support, the board believes that adoption of this proposal would waste company resources and divert management and board attention.
For these reasons, we recommend a vote against the stockholder proposal.
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| VOTING PROCEDURES AND OTHER INFORMATION |
Voting Procedures and Other Information
| Q |
How Can I Obtain Proxy Materials? |
|
|
A |
Pursuant to the "notice and access" rules adopted by the Internet distribution of proxy materials is designed to expedite receipt by stockholders and lower the cost of our annual meeting. However, if you received a Notice by mail and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting such materials contained on the Notice. If you have previously elected to receive our proxy materials electronically for all future meetings, you will continue to receive these materials via email unless you elect otherwise. |
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| Q |
How Can I Attend the Annual Meeting? |
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A |
Stockholders who owned the company's common stock at the close of business on March 24, 2025 may attend the annual meeting. There were 1,815,917,913 shares of common stock outstanding on March 24, 2025. This year's annual meeting will be a virtual event. You will not be able to attend the annual meeting physically in person. We believe that conducting the annual meeting as a virtual meeting will enable higher levels of stockholder attendance while also helping the company reduce its costs associated with the annual meeting. Stockholders attending the meeting will have the same rights as at an in-personmeeting, including the rights to vote and to ask questions through the virtual meeting platform. To attend the annual meeting, please go to: www.proxydocs.com/SCHW. As part of the attendance process, you must enter the control number contained in your Notice. Upon entry of your control number and other required information, you will receive further instructions via email that provides you access to the annual meeting and to vote and submit questions during the annual meeting. If your shares are held in "street name" (e.g., through a broker, bank, or other nominee) you may also need to provide the registered name on your account and the name of your broker, bank, or other nominee as part of the attendance process. On May 22, 2025, you will receive an email one hour prior to the start time of the annual meeting containing a unique URL, through which you will be able to log in to the virtual annual meeting. The annual meeting will begin promptly at 11:00 a.m. Central Time. You should ensure that you have a strong internet connection, and we recommend testing your system on the virtual meeting platform. |
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Should you encounter any difficulties accessing the virtual meeting platform, including any difficulties voting or submitting questions, we will have technicians ready to assist you. Please utilize the link on the meeting portal website at www.proxydocs.com/SCHW titled "Having trouble? Please view the Meeting Access FAQs Guide," which will have many FAQs as well as a technical support number that can be called before or during the meeting. Our virtual meeting platform will allow stockholders to submit questions before and during the annual meeting. Properly submitted questions may be addressed during the question and answer session of the annual meeting. Due to limited time at the annual meeting, we may aggregate questions by topic and may not be able to address all submitted questions. Our Investor Relations team may address submitted questions that are not able to be answered after the annual meeting. Consistent with the company's approach when the annual meetings were held in person, questions or comments that are not related to the proposals under discussion, are about personal concerns not shared by stockholders generally, or use blatantly offensive language may be ruled out of order. If you are not a stockholder or do not have a control number, you may still access the annual meeting as a guest, but you will not be able to vote or ask questions during the meeting. |
||
| Q |
What is a Quorum? |
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A |
A quorum is necessary to hold a valid annual meeting. The presence, in person or by proxy, of the holders of record of a majority in voting interest of the shares of stock of the company entitled to be voted at the annual meeting is necessary to constitute a quorum. Virtual attendance at the annual meeting constitutes presence in person for purpose of a quorum at the meeting. | |
| Q |
How Can I Vote? |
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A |
Stockholders who owned the company's voting common stock at the close of business on March 24, 2025 may vote in advance of or at the annual meeting. Each share of voting common stock is entitled to one vote. You may vote in advance of the meeting by internet, telephone, or mail. |
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Online |
Telephone |
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| You may vote by visiting www.proxydocs.com/SCHW and entering the unique control number found in your Notice. |
Call (866) 485-0358and follow the instructions on your proxy card or your voting instruction form. |
Sign, date and mail your proxy card or your voting instruction form. | ||
|
If you plan to attend and submit your vote at the virtual annual meeting (instead of voting in advance), you will need to provide the unique control number found in your Notice. If you hold your shares through a broker, bank, or other nominee (that is, in street name), you will receive instructions from your broker, bank or nominee that you must follow to submit your voting instructions and have your shares voted at the annual meeting. You may be instructed to obtain a legal proxy from your broker, bank, or other nominee and to submit a copy in advance of the meeting. Further instructions will be provided to you via email. |
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VOTING PROCEDURES AND OTHER INFORMATION
| Even if you plan to attend the annual meeting, we recommend that you submit your proxy or voting instructions in advance of the annual meeting as described above so that your vote will be counted even if you later decide not to attend the meeting. | ||
| Q |
How is My Vote Counted? |
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A |
You may vote either "for" or "against" or "abstain" from voting on each director nominee, the ratification of the selection of independent auditors, the advisory approval of NEO compensation, and the stockholder proposal. If you abstain from voting on any director nominee, the abstention will not count as a vote cast on the proposal to elect that director. If you abstain from voting on the ratification of the selection of independent auditors, the advisory approval of NEO compensation, or the stockholder proposal, it will have the same effect as a vote "against" that proposal. If you provide your voting instructions on your proxy, your shares will be voted as you instruct, and according to the best judgment of If you do not indicate a specific choice on the proxy you submit for one or more proposals, your shares will be voted (with respect to the proposal or proposals on which you do not vote): ∎ forthe named nominees for director; ∎ forthe ratification of the selection of independent auditors; ∎ for the advisory approval of NEO compensation; ∎ against the stockholder proposal requesting declassification of the board of directors; and ∎ according to the best judgment of |
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| Q |
How |
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A |
We know of no business other than the proposals contained in the proxy statement to be considered at the meeting. However, if other matters are properly presented at the meeting, or at any adjournment or postponement of the meeting, and you have properly submitted your proxy, then |
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| Q |
What If I Change My Mind After I Submit My Proxy? |
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A |
If you are a holder of record, you may revoke your proxy and change your vote by: ∎ signing a proxy card with a later date and returning it before the polls close at the meeting; ∎ voting by telephone or on the internet before 11:00 a.m. Central Time on May 22, 2025; or ∎ voting at the annual meeting (your attendance at the annual meeting without further action will not revoke an earlier submitted proxy). If you hold your shares in "street name," you must follow the instructions provided by your broker, bank, or nominee to revoke your voting instructions. |
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VOTING PROCEDURES AND OTHER INFORMATION
| Q |
How Many Votes Must the Director Nominees Receive to be Elected as Directors? |
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A |
A director must receive more "for" than "against" votes to be elected as a director. If a director does not receive more "for" than "against" votes, the director may be eligible under ∎ the reasons for the director's failure to receive an affirmative majority of votes; ∎ the director's qualifications and skills and contributions to the board and board committees; ∎ the effect on board composition without the director's continued service during the holdover term on the board or board committees; ∎ whether there are qualified candidates to fill a vacancy if the affected director immediately resigned from the board or board committees; and ∎ the guidelines for considering director candidates established by the Nominating and Corporate Governance Committee. In making its evaluation, the Nominating and Corporate Governance Committee may determine that: ∎ the director should continue to serve a holdover term on the board; ∎ the director should continue service on the board for a predetermined period (but less than a full holdover term); ∎ the director should continue service on the board for a holdover term or predetermined period but resign from one or more board committees; or ∎ the director should immediately resign from the board or one or more board committees. If the Nominating and Corporate Governance Committee determines that the affected director should resign from the board or one or more board committees, the director will be expected to submit a resignation immediately upon such determination. The Nominating and Corporate Governance Committee's determination, including the reasons for such determination, will be publicly disclosed on a Form 8-Kfiled with the |
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| Q |
What Happens If a Director Nominee is Unable to Stand for Election? |
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A |
The board may reduce the number of directors or select a substitute nominee. In the latter case, if you have submitted your proxy, |
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| Q |
How Many Votes are Needed for the Ratification of Independent Auditors and the Advisory Approval of NEO Compensation? |
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A |
The ratification of independent auditors and the advisory approval of NEO compensation will be approved if a majority of the shares present at the meeting in person or by proxy and entitled to vote on the proposal vote for approval. | |
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VOTING PROCEDURES AND OTHER INFORMATION
| Q |
How Many Votes are Needed for Approval of the Stockholder Proposal? |
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A |
The stockholder proposal will be approved if a majority of the shares present at the meeting in person or by proxy and entitled to vote on the proposal vote for approval. | |
| Q |
What is a "Broker Non-Vote"? |
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A |
A broker non-voteoccurs when a brokerage firm holding shares in "street name" for a beneficial owner does not vote on a proposal because the broker has not received instructions from the beneficial owner and does not have discretionary voting power with respect to the proposal. |
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| Q |
What is the Effect of Not Providing Voting Instructions If My Shares are Held in "Street Name"? |
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A |
Brokerage firms may have authority to vote clients' unvoted shares on some "routine" matters. When a brokerage firm votes its clients' unvoted shares on routine matters, these shares are counted to determine if a quorum exists to conduct business at the meeting. A brokerage firm cannot vote clients' unvoted shares on non-routinematters, which results in a broker non-vote.A broker non-votewill be treated as not being entitled to vote on the proposal and will not be counted for purposes of determining whether the proposal has been approved. The company's proposal to ratify the selection of independent auditors is considered a routine matter, but the election of directors, the advisory approval of NEO compensation, and the stockholder proposals are not. If you have a stockbroker or investment advisor, they may be able to vote your shares depending on the terms of the agreement you have with them. |
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| Q |
What is the Effect of Not Submitting My Proxy If My Shares are Held in a Retirement Plan? |
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A |
A trustee under a retirement plan may be able to vote a participant's unvoted shares. For example, if you are a participant in The SchwabPlan Retirement Savings and Investment Plan, the trustee, under certain circumstances, can vote your shares. Specifically, the trustee will vote shares you hold under the Employee Stock Ownership Plan (ESOP) component of The SchwabPlan Retirement Savings and Investment Plan if the trustee does not receive voting instructions from you. The trustee will vote your unvoted shares held under the ESOP component of the plan in the same proportion as all other plan participants vote their shares held under the ESOP component of the plan. | |
| Q |
What Does It Mean If I Receive More Than One Proxy Card? |
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A |
It means that you have multiple accounts at the transfer agent or with stockbrokers. Please complete and submit all proxies to ensure that all your shares are voted. Unless you need multiple accounts for specific purposes, it may be less confusing if you consolidate as many of your transfer agent or brokerage accounts as possible under the same name and address. |
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VOTING PROCEDURES AND OTHER INFORMATION
| Q |
Is My Vote Kept Confidential? |
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A |
Proxies, ballots, and voting tabulations identifying stockholders are kept confidential by our transfer agent and will not be disclosed except as may be necessary to meet legal requirements. | |
| Q |
Where Do I Find Voting Results of the Meeting? |
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A |
We will announce preliminary voting results at the annual meeting. We will announce the final results on a Form 8-Kfollowing the annual meeting. You may access a copy electronically on our website at www.aboutschwab.com/investor-relations by clicking on "Financial Reports & Presentations" or through the Voting results will be tabulated and certified by our inspector of elections. |
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| Q |
Who Pays the Cost for Proxy Solicitation? |
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A |
The company is paying for distributing and soliciting proxies. As a part of this process, the company reimburses brokers, nominees, fiduciaries, and other custodians for reasonable fees and expenses in forwarding proxy materials to stockholders. The company has retained |
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| Q |
What is "Householding"? |
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A |
"Householding" means that we may deliver a single Notice or, if applicable, set of proxy materials to households with multiple stockholders, provided such stockholders give their affirmative or implied consent and certain other conditions are met. Some households with multiple stockholders already may have provided the company with their affirmative consent or given a general consent to householding. We will provide only one Notice or, if applicable, set of proxy materials to each such household, unless we receive contrary instructions. If you are eligible for householding but received multiple Notices or, if applicable, sets of proxy materials and prefer to receive only a single Notice or set for your household, please send a request addressed to our transfer agent, |
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VOTING PROCEDURES AND OTHER INFORMATION
| Q |
How Do I Submit a Proposal or Nomination for the 2026 Annual Meeting? |
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A |
Pursuant to Rule 14a-8under the Exchange Act, some proposals by stockholders may be eligible for inclusion in our proxy statement for the 2026 annual meeting. If you want us to consider including such a proposal in our proxy statement next year, it must comply with |
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In addition, under our proxy access bylaw, if you are a stockholder or a group of up to 20 stockholders that has owned at least 3% of our outstanding common stock for at least three years, you may submit nominees up to the greater of two and 25% of the number of directors then in office for inclusion in our proxy statement for the 2026 annual meeting if the nominations are received by the Corporate Secretary via email or by mail no earlier than November 5, 2025 and no later than December 5, 2025. If you want to submit a proposal or nomination for action at next year's annual meeting that is not to be included in our proxy statement, pursuant to our bylaws, it must be received by the Corporate Secretary via email or by mail no earlier than February 21, 2026 and no later than March 23, 2026, and any such proposal must be, under the Delaware General Corporation Law, an appropriate subject for stockholder action. In addition to satisfying the foregoing requirements, stockholders who intend to solicit proxies in support of director nominees other than our nominees for next year's annual meeting pursuant to Rule 14a-19under the Exchange Act must provide the notice required by Rule 14a-19via email or by mail postmarked no later than March 23, 2026. The bylaws contain specific procedural requirements regarding a stockholder's ability to nominate a director or submit a proposal to be considered at a meeting of stockholders. The bylaws are available on our website at www.aboutschwab.com/governance. In addition, you may obtain a copy of our bylaws by contacting the Office of the Corporate Secretary at the address in the "Corporate Governance" section of this proxy statement. |
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| APPENDIX A: NON-GAAPFINANCIAL MEASURES |
Appendix A: Non-GAAPFinancial Measures
In addition to disclosing financial results in accordance with GAAP, this proxy statement contains references to the non-GAAPfinancial measures described below. We believe these non-GAAPfinancial measures provide useful supplemental information about the financial performance of the company, and facilitate meaningful comparison of the company's results in the current period to both historic and future results. These non-GAAPmeasures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may not be comparable to non-GAAPfinancial measures presented by other companies.
The company's use of non-GAAPmeasures is reflective of certain adjustments made to GAAP financial measures as shown below. These adjustments also include restructuring costs, which the company began incurring in connection with its previously announced plans to streamline its operations to prepare for post-integration of Ameritrade.
ROTCE represents annualized adjusted net income available to common stockholders as a percentage of average tangible common equity. Tangible common equity represents common equity less goodwill, acquired intangible assets - net, and related deferred tax liabilities. The company uses adjusted diluted EPS and ROTCE as components of performance criteria for employee bonus and certain executive management incentive compensation arrangements. The Compensation Committee maintains discretion in evaluating performance against these criteria.
The following tables present reconciliations of GAAP measures to non-GAAPmeasures for the 12 months ended December 31, 2024 (in millions, except ratios and per share amounts):
| 2024 Amount | 2024 Diluted EPS | |||
|
Net income available to common stockholders (GAAP), Diluted EPS (GAAP) |
$5,478 | $2.99 | ||
|
Acquisition and integration-related costs1 |
117 | 0.06 | ||
|
Amortization of acquired intangible assets |
519 | 0.28 | ||
|
Restructuring costs2 |
9 | - | ||
|
Income tax effects3 |
(154) | (0.08) | ||
|
Adjusted net income available to common stockholders (non-GAAP),Adjusted diluted EPS (non-GAAP) |
$5,969 | $3.25 | ||
| (1) |
Acquisition and integration-related costs for 2024 primarily consist of $54 million of compensation and benefits, $36 million of professional services, and $19 million of depreciation and amortization. |
| (2) |
Restructuring costs for 2024 primarily reflect a change in estimate of $34 million in compensation and benefits, offset by $5 million of occupancy and equipment and $37 million of other expense. |
| (3) |
The income tax effects of the non-GAAPadjustments are determined using an effective tax rate reflecting the exclusion of non-deductibleacquisition costs and are used to present the acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs on an after-taxbasis. |
| A-1 |
Table of Contents
APPENDIX A: NON-GAAPFINANCIAL MEASURES
| 2024 Amount | ||
|
Retuon average common stockholders' equity (GAAP) |
15% | |
|
Average common stockholders' equity |
$35,475 | |
|
Less: Average goodwill |
(11,951) | |
|
Less: Average acquired intangible assets - net |
(8,002) | |
|
Plus: Average deferred tax liabilities related to goodwill and acquired intangible assets - net |
1,741 | |
|
Average tangible common equity |
$17,263 | |
|
Adjusted net income available to common stockholders1 |
$5,969 | |
|
Retuon tangible common equity (non-GAAP) |
35% | |
| (1) |
See table above for the reconciliation of net income available to common stockholders to adjusted net income available to common stockholders (non-GAAP). |
| A-2 |
Table of Contents
"Always put
the client first."
| Chuck Schwab |
Since day one, we've set out to challenge the status quo, looking for ways to offer our clients more value and a better experience. We're confident our approach can help people take ownership of their financial futures. We believe in the power of investing, which helps tuearners into owners. Investing can be truly transformative when investors actively engage and when they work collaboratively with the right financial provider. We are champions of investors and those who serve them. We look at the world through our clients' eyes and keep that perspective at the heart of everything we do. |
We offer investors a contemporary, full-service approach to build and manage their wealth. We help investors either directly as Schwab clients or through one of the thousands of independent advisors and employers we serve. This is how we help investors, advisors, employers, and employees take ownership of their futures. |
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3000 (817) 859-5000 Schwab.com | AboutSchwab.com |
facebook.com/CharlesSchwab instagram.com/CharlesSchwab linkedin.com/company/ youtube.com/@CharlesSchwab |
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Printed on recycled paper. ©2025 The Charles Schwab Corporation. All rights reserved. LGL13902-26 (03/25) 00310366 |
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Table of Contents
Charles SCHWAB CORPORATION P.O. BOX 8016,
Table of Contents
Charles SCHWAB CORPORATION The Charles Schwab Corporation Annual Meeting of Stockholders Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 AGAINST ON PROPOSAL 4 PROPOSAL YOUR VOTE BOARD OF DIRECTORS RECOMMENDS 1. Election of directors for three-year terms: FOR AGAINST ABSTAIN 1.01
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Proxy Statement (Form DEF 14A)
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