8-KLeadership Changes

SCHWAB CHARLES CORP 8-K Report, Executive Changes (Sep 12, 2008)

Filed September 12, 2008For Securities:SCHWSCHW-PDSCHW-PJ

Summary

This 8-K filing from The Charles Schwab Corporation (SCHW) announces significant changes to executive compensation in anticipation of a leadership transition. Effective October 1, 2008, Walter W. Bettinger II will assume the role of President and Chief Executive Officer, and his compensation package has been detailed. This includes a substantial base salary, a significant annual cash incentive target, and a large equity award comprising stock options and restricted stock. Concurrently, Charles R. Schwab, who will continue as Chairman of the Board, will also have his compensation structure adjusted. His package includes a reduced base salary compared to his CEO role, a targeted cash incentive, and continued provision of certain perquisites such as a driver, vehicle, and security services. These changes are being reported as part of the normal course of business concerning executive appointments and compensation adjustments.

Key Highlights

  • 1Walter W. Bettinger II appointed President and CEO, effective October 1, 2008.
  • 2Bettinger's compensation package includes an annual base salary of $900,000.
  • 3Bettinger has a target annual cash incentive of 375% of his base salary.
  • 4Bettinger receives a $10 million equity award on October 1, 2008, split between $7 million in stock options and $3 million in restricted stock.
  • 5Charles R. Schwab transitions to Chairman of the Board, continuing in his role.
  • 6Schwab's compensation as Chairman includes a $500,000 base salary and a 250% target annual cash incentive.
  • 7Both executives will receive certain perquisites, including car services/drivers and continued corporate aircraft/security services.

Frequently Asked Questions

The main purpose of this 8-K filing is to report on the compensation arrangements for key executives, specifically Walter W. Bettinger II, upon his appointment as President and CEO, and Charles R. Schwab, as he transitions to Chairman of the Board.

Effective October 1, 2008, Mr. Bettinger's compensation includes an annual base salary of $900,000, a target annual cash incentive of 375% of his base salary (which would be $3,375,000), and a $10 million equity award comprised of stock options ($7 million) and restricted stock ($3 million). He will also receive a car service and continued use of corporate aircraft.

The stock options will vest over five years, with 15% vesting on each of the first four anniversaries of the grant date and the remaining 40% on the fifth anniversary. The restricted shares vest 25% on the third anniversary and 75% on the fourth anniversary of the grant date.

As Chairman of the Board, Mr. Schwab's annual base salary is set at $500,000, with a target annual cash incentive of 250% of his base salary. He will continue to receive a driver and vehicle costs, and security services.