Charles R. Schwab
SCHWAB CHARLESAbout Charles R. Schwab
Charles R. Schwab is Co-Chairman and founder of The Charles Schwab Corporation, serving as a director since 1986; age 87 with current term expiring in 2025. He previously served as Chairman (1986–2022), CEO (1986–1997; 2004–2008), and Co-CEO (1998–2003), and is the father of director Carolyn Schwab-Pomerantz; the board classifies him as not independent under NYSE standards .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| The Charles Schwab Corporation | Co-Chairman | 2022–present | Board leadership; strategic oversight |
| The Charles Schwab Corporation | Chairman | 1986–2022 | Led board since inception |
| The Charles Schwab Corporation | Chief Executive Officer | 1986–1997; 2004–2008 | Founder-CEO, strategic growth phases |
| The Charles Schwab Corporation | Co-Chief Executive Officer | 1998–2003 | Executive leadership continuity |
| Charles Schwab & Co., Inc. | Chief Executive Officer | 2004–2008 | Led broker-dealer operations |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Charles Schwab Family of Funds; Schwab Investments; Schwab Capital Trust; Schwab Annuity Portfolios; Laudus Trust | Chairman and Trustee (registered investment companies) | Historical service (various years, including through 2015) | Governance of affiliated funds |
Board Governance
- Co-Chairmen leadership model: Mr. Schwab and Mr. Bettinger lead the board; CEO (Mr. Wurster) is separate; independent directors hold regular executive sessions led by the Nominating & Corporate Governance (NCG) Chair (Frank C. Herringer) .
- Independence: Mr. Schwab, Mr. Bettinger, Mr. Wurster, and Ms. Schwab-Pomerantz are not independent; all other directors are independent .
- Committee assignments: Schwab is not listed on Audit, Compensation, NCG, or Risk; all standing committees are chaired by independent directors .
- Attendance and engagement: Board held eight meetings in 2024; each director attended at least 75% of applicable board and committee meetings; all directors attended the annual meeting except Bharat Masrani .
- Board structure: classified/staggered three-year terms; five nominees up for election in 2025 .
Fixed Compensation
| Component | 2024 Value | Notes |
|---|---|---|
| Base Salary | $900,000 | No 2024 adjustment; reviewed annually |
| Director Retainer | $0 | As an employee, Schwab receives no additional director compensation |
| Other Cash/Benefits | Included in severance schedule (see Employment & Contracts) | Per employment agreement terms |
Performance Compensation
| Element | Design/Metric | 2024 Target | 2024 Result/Payout | Vesting/Terms |
|---|---|---|---|---|
| Annual Cash Incentive (CEBP) | Adjusted diluted EPS matrix (threshold 50% of target; cap 200%) | Target EPS $2.76; Schwab target % 250% of salary ($2,250,000) | Funding 117.69%; actual bonus $2,648,025 | Annual; committee may reduce for risk factors |
| PBRSUs (2024 grant) | ROTCE vs Cost of Equity (COE); payout 0–200% with thresholds and linear interpolation | Grant-date fair value $3,000,017; target units 45,244 | 3-year performance period (01/01/2024–12/31/2026) | Cliff vest on 3rd anniversary; includes AOCI in ROTCE |
| Stock Options (2024 grant) | Growth-aligned equity; 25% annual vest over 4 years | Grant-date fair value $2,000,002; 104,767 options at $66.47 strike | N/A (time-based) | 10-year term; vest annually 25% |
| PBRSUs (2022 cycle payout) | ROTCE/COE performance matrix (target/maximum per schedule) | N/A | Certified payout 176.84% based on 3-year average ROTCE 43.57% and COE 9.10% | Paid per certified performance |
Other Directorships & Interlocks
| Type | Detail |
|---|---|
| Family interlock | Father of director Carolyn Schwab-Pomerantz; both are not independent |
| Current external U.S. public boards | Not disclosed for Mr. Schwab in proxy biography |
| Governance environment | Stockholder proposal to declassify board; management recommends against; illustrates governance debate and investor scrutiny |
Expertise & Qualifications
- Founder-operator with deep financial services, banking, asset management, brokerage, strategic planning, finance, operations, marketing, regulatory, and international business qualifications .
Equity Ownership
| Holder/Category | Shares Owned | Rights to Acquire (≤60 days) | Total Beneficial Ownership | % Outstanding |
|---|---|---|---|---|
| Charles R. Schwab | 104,331,837 | 930,316 | 105,262,153 | 5.8% |
| Breakdown notes | Includes 7,422,852 held by spouse as trustee; 30,641,981 via family limited partnerships; 44,025 via 188 Corp; 6,214,541 held by nonprofit corporations (disclaimed) | — | — | — |
- Insider Trading Policy prohibits hedging, short sales, uncovered options, short-term trading, and pledging/margin loans of company securities—mitigating alignment risks (pledging prohibited) .
- Executive stock ownership guidelines: CEO 5x salary; other executives 3x; includes RSUs/PBRSUs; as of 12/31/2024, NEOs met or were within 5-year achievement window .
Employment & Contracts
- Employment agreement: auto-renews annually; non-compete for five years after voluntary resignation (except if resigned within 24 months of a change-in-control); eligible for base salary and bonus participation under CEBP .
- Severance (involuntary termination not due to cause): 36 months of salary and benefits, plus full vesting of unvested shares/options .
- Death/disability benefits: lump-sum death benefit equal to 5x salary; disability provides 36 months salary/benefits and prorated bonus .
- Consulting arrangement: optional five-year consulting post-resignation at $56,250 per month (60 installments) .
- License agreement (name/likeness): after employment compensation ceases, pays 0.3% of aggregate net revenues for 15 years, capped at CPI-adjusted $2.0 million per year (estimated annual installment $5,951,789); limits assignment without Mr. Schwab’s consent during his lifetime—potential transaction constraints .
Fixed Compensation (Director-specific)
- Non-employee director program (for reference): annual cash retainer $100,000; committee chair/member retainers; equity grants valued $215,000 (60% RSUs; 40% options; 3-year vest schedule), plus DCP2 deferrals . Mr. Schwab is an employee and does not receive director retainers or director equity grants .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approved with approximately 91% support, indicating broad investor acceptance of pay practices .
RED FLAGS and Risk Indicators
- Not independent; family relationship on the board (Carolyn Schwab-Pomerantz) may raise entrenchment/perception concerns despite independent committee leadership .
- License agreement creates a continuing related-party payment stream (up to 15 years) and consent rights that can constrain assignment of rights in certain transactions—heightened related-party exposure and potential deal friction .
- Section 16 compliance lapses: one late Form 4 and one late Form 5 reported for Mr. Schwab (minor but noteworthy) .
- Classified board structure persists; shareholder proposal seeks declassification—ongoing governance pressure .
Governance Assessment
- Board effectiveness: Separation of CEO and Co-Chairmen roles with independent committee chairs and executive sessions supports oversight, but founder-family presence and non-independence at the chair level introduce alignment scrutiny for some investors .
- Compensation alignment: Executive pay design is heavily performance-based, using adjusted EPS for annual cash and ROTCE/COE for PBRSUs; robust clawback policies, ownership guidelines, and anti-hedging/pledging policies strengthen alignment and risk management .
- Ownership: Significant beneficial stake (5.8%) aligns incentives with shareholders; ESPP exclusion due to >5% ownership noted .
- Related-party exposure: Name/likeness license payments and consent rights are the principal governance conflict to monitor, particularly in strategic transactions and leadership transitions .
Overall, Charles R. Schwab’s founder-led leadership and substantial ownership provide alignment, while non-independence and related-party licensing arrangements represent the key governance risks to evaluate alongside the classified board structure and family interlock .