8-KLeadership ChangesExhibits & Filings

SCHWAB CHARLES CORP 8-K Report, Executive Changes (Jan 30, 2013)

Filed January 30, 2013For Securities:SCHWSCHW-PDSCHW-PJ

Summary

This Form 8-K filing from The Charles Schwab Corporation (SCHW), dated January 30, 2013, details actions taken by its Compensation Committee on January 24, 2013, regarding executive and director compensation. The primary focus is the approval of performance-based long-term incentive awards for named executive officers and changes to retirement provisions for equity awards. Key among these are the grants of Cash LTIP, Restricted Stock Units (RSUs), and Nonqualified Stock Options (NSOs) to top executives, including the CEO, CFO, and head of Client Solutions. These awards are structured with specific performance metrics and vesting schedules, designed to align executive interests with company performance over the long term. Additionally, the filing outlines updated retirement provisions for equity awards, impacting vesting and post-termination exercise periods for both employees and non-employee directors.

Key Highlights

  • 1Approval of performance-based long-term incentive awards (Cash LTIP, RSUs, NSOs) for named executive officers, including CEO Walter Bettinger II, CFO Joseph Martinetto, and EVP James McCool.
  • 2CEO Walter Bettinger II received awards valued at $4 million in Cash LTIP, $3.25 million in Restricted Stock Units, and $3.25 million in Stock Options.
  • 3Awards are tied to performance targets such as cumulative earnings per share, return on common equity, and cost of equity capital.
  • 4Cash LTIP awards vest 100% on the fourth anniversary of the grant date, contingent on achieving cumulative EPS targets.
  • 5Restricted Stock Units have performance targets for each year and can vest up to 200% of the target amount.
  • 6Stock Options are granted in installments and vest over four years, with an exercise price set at the fair market value on the grant date.
  • 7Revised retirement provisions for equity awards, including accelerated vesting of stock options and RSUs upon retirement under specified conditions.

Frequently Asked Questions

The company awarded three types of performance-based long-term incentives: Cash LTIP (long-term incentive plan payable in cash), Restricted Stock Units (RSUs), and Nonqualified Stock Options (NSOs).

The awards are tied to specific performance metrics. Cash LTIP is based on cumulative earnings per common share over a four-year period. Restricted Stock Units are based on annual performance targets for return on common equity and cost of equity capital, with potential payouts up to 200% of the target. Stock options vest over four years, aligning with long-term company value.

The company updated retirement provisions to allow for accelerated vesting of stock options and restricted stock units upon retirement, based on age and service requirements. The post-termination exercise period for stock options was also adjusted based on years of service.

The awards have a grant date of March 1, 2013. The Cash LTIP vests 100% on the fourth anniversary of the grant date. Restricted Stock Units vest in installments over four years, based on annual performance. Stock Options are granted in three installments throughout 2013 and vest 25% on each of the first four anniversaries of their respective grant dates.