{"id":38450,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/2004-stock-incentive-plan-schwab.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"2004-stock-incentive-plan-schwab","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/2004-stock-incentive-plan-schwab.html","title":{"rendered":"2004 Stock Incentive Plan – Schwab"},"content":{"rendered":"

THE CHARLES SCHWAB CORPORATION <\/strong><\/p>\n

2004 STOCK INCENTIVE PLAN <\/strong><\/p>\n

(Adopted by the Board on March 10, 2004) <\/strong>\n<\/p>\n

(Approved by Stockholders on May 17, 2004) <\/strong>\n<\/p>\n

(Amended by the Board on March 14, 2007) <\/strong>\n<\/p>\n

(Amendment Approved by Stockholders on May 17, 2007)
\n<\/strong><\/p>\n

(Amended and Restated December 12, 2007) <\/strong>\n<\/p>\n

(Amended and Restated December 10, 2009) <\/strong>\n<\/p>\n

(Amended and Restated January 27, 2011) <\/strong><\/p>\n

(Amended and Restated May 5, 2011) <\/strong><\/p>\n

(Approved by Stockholders on May 17, 2011) <\/strong>\n<\/p>\n<\/p>\n<\/p>\n

\n

TABLE OF CONTENTS <\/u><\/strong><\/p>\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n\n

Page<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 1. ESTABLISHMENT AND PURPOSE<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 2. ADMINISTRATION<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) Committee Composition<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Committee Administration<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 3. PARTICIPANTS<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) General Rule<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Non-Employee Directors<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 4. STOCK SUBJECT TO PLAN<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

3<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) Basic Limitation<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

3<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Share Usage<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

3<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(c) Participant Limits<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(d) Adjustments<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 5. AWARDS<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) General<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Stock Options<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

4<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(c) Stock Appreciation Rights<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(d) Restricted Stock and Restricted Stock Units<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(e) Performance Stock<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(f) Other Stock or Cash Awards<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(g) Performance Goals<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 6. ADJUSTMENT OF SHARES<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

7<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) Adjustments<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

7<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Corporate Transactions<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(c) Substitution and Assumption of Benefits<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(d) Reservation of Rights<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 7. TERMS OF AWARDS<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(a) Transferability<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(b) Change in Control<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

8<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(c) Taxes<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(d) Effective Date, Amendment and Termination<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(e) Fair Market Value<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(f) Dividend Equivalents<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(g) Other Provisions<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(h) Non-U.S. Employees<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(i) Governing Law<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

11<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
\n

(j) Section 409A<\/em><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

11<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 8. PAYMENT OF DIRECTORS153 FEES DEFERRALS IN
\nSECURITIES<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

11<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 9. DEFERRAL OF AWARDS<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

11<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

SECTION 10. DEFINED TERMS<\/strong><\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

12<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\n

THE CHARLES SCHWAB CORPORATION <\/strong><\/p>\n

2004 STOCK INCENTIVE PLAN <\/strong><\/p>\n

SECTION 1. ESTABLISHMENT AND PURPOSE. <\/strong><\/p>\n

The Plan was adopted by the Board of Directors on March 10,
\n2004, subject to stockholder approval, which was obtained on May 17, 2004 (the
\n“Effective Date<\/u>“).<\/em> The purposes of The Charles Schwab
\nCorporation 2004 Stock Incentive Plan (the “Plan<\/u>“) are to promote the
\nlong-term success of The Charles Schwab Corporation (“Schwab<\/u>” or the
\n“Company<\/u>“) and the creation of incremental stockholder value by
\n(i) encouraging non-employee directors, employees and consultants to focus on
\nlong-range objectives, (ii) encouraging the attraction and retention of
\nnon-employee directors, employees and consultants with exceptional
\nqualifications and (iii) linking non-employee directors, employees and
\nconsultants directly to stockholder interests by providing them stock options
\nand other stock and cash incentives.<\/p>\n

This Plan is a successor to The Charles Schwab Corporation
\n2001 Stock Incentive Plan, The Charles Schwab Corporation 1992 Stock Incentive
\nPlan and The Charles Schwab Corporation Employee Stock Incentive Plan (the
\n“Prior Plans<\/u>“). As of the Effective Date, no further awards shall be made
\nunder the Prior Plans. However, unless a contrary rule is stated, the provisions
\nof the Prior Plans shall continue to apply to awards granted to a participant
\nunder the Prior Plans prior to the Effective Date. In the event that this Plan
\nis not approved by stockholders, awards shall continue to be made under the
\nPrior Plans in accordance with their terms.<\/p>\n

SECTION 2. ADMINISTRATION. <\/strong><\/p>\n

(a) Committee Composition<\/em>. The Plan will be
\nadministered by a Committee (the “Committee<\/u>“) of the Schwab Board of
\nDirectors (the “Board<\/u>“) consisting of two or more directors as the Board
\nmay designate from time to time. The composition of the Committee shall satisfy
\nsuch requirements as:<\/p>\n

(i) the Securities and Exchange Commission may establish for
\nadministrators acting under plans intended to qualify for exemption under Rule
\n16b-3 or its successor under the Securities Exchange Act of 1934 (the
\n“Exchange Act<\/u>“);<\/p>\n

(ii) may be established by the stock exchange or stock market
\non which Schwab153s common stock may be listed pursuant to the rule-making
\nauthority of such stock exchange or stock market; and<\/p>\n

(iii) the Internal Revenue Service may establish for outside
\ndirectors acting under plans intended to qualify for exemption under section
\n162(m) of the Internal Revenue Code of 1986, as amended (the “Code<\/u>“).\n<\/p>\n

(b) Committee Administration.<\/em> The Committee shall
\nhave discretionary authority to construe and interpret the Plan and any benefits
\ngranted under the Plan, to establish, interpret and amend rules for Plan
\nadministration, to change the terms and conditions of options and other benefits
\nat or after grant, and to make all other determinations which it deems necessary
\nor advisable for the administration of the Plan. The determinations of the
\nCommittee shall be made in accordance with its judgment as to the best interests
\nof Schwab and its stockholders and in accordance with the purposes of the Plan,
\nand shall be final and conclusive on all persons. A majority of the members of
\nthe Committee shall constitute a quorum, and all determinations of the Committee
\nshall be made by a majority of its members in person or by telephone. Any
\ndetermination of the Committee under the Plan may be made without notice or
\nmeeting of the Committee, and shall be made in writing signed by all the
\nCommittee members. The Committee may authorize one or more officers of the
\nCompany to select employees to participate in the Plan and to determine the
\nnumber of option shares and other rights to be granted to such participants
\n(other than to the officer making such determination), except with respect to
\nawards to officers subject to section 16 of the Exchange Act or officers who are
\nor may become “covered employees” within the meaning of section 162(m) of the
\nCode (“Covered Employees<\/u>“) and any reference in the Plan to the Committee
\nshall include such officer or officers. Subject to the requirements of
\napplicable law, the Committee may also authorize one or more officers of the
\nCompany to administer claims under the Plan. No member of the Committee shall be
\nliable<\/p>\n<\/p>\n

1<\/p>\n<\/p>\n

\n

for any action that such member has taken or failed to take
\nin good faith with respect to the Plan or any award under the Plan.<\/p>\n

SECTION 3. PARTICIPANTS. <\/strong><\/p>\n

(a) General Rule<\/em>. Participants may consist of all
\nemployees and consultants of Schwab and its subsidiaries, non-employee directors
\nof the Board of Directors of Schwab (“Non-Employee Directors<\/u>“) and
\nnon-employee directors of any subsidiary as determined by the Committee. Any
\ncorporation or other entity in which a 50% or greater interest is at the time
\ndirectly or indirectly owned by Schwab shall be a subsidiary for purposes of the
\nPlan. Designation of a participant in any year shall not require the Committee
\nto designate that person to receive a benefit in any other year or to receive
\nthe same type or amount of benefit as granted to the participant in any other
\nyear or as granted to any other participant in any year. The Committee shall
\nconsider all factors that it deems relevant in selecting participants and in
\ndetermining the type and amount of their respective benefits.<\/p>\n

(b) Non-Employee Directors<\/em>. In addition to any
\nawards that may be granted to them under Section 3(a), each Non-Employee
\nDirector shall receive an automatic equity grant, subject to the terms of
\nsubparagraph (iv) below, as follows:<\/p>\n

(i) For each calendar year for which he or she serves as a
\nNon-Employee Director following the year in which the Non-Employee Director
\nbegins service, each Non-Employee Director shall receive an equity grant with an
\naggregate value equal to $125,000, consisting of 50 percent Stock Options and 50
\npercent Restricted Stock Units covering shares of Schwab common stock. The
\nnumber of Stock Options granted shall be determined by dividing $62,500 by the
\nbinomial value of a share of Schwab common stock on the date of grant and the
\nnumber of Restricted Stock Units shall be determined by dividing $62,500 by the
\nfair market value (defined as the average of the high and low price) of a share
\nof Schwab common stock on the date of grant.<\/p>\n

(ii) In the first calendar year upon joining the Board, each
\nNon-Employee Director shall receive an automatic equity grant calculated in the
\nmanner specified in Section 3(b)(i), except that the value of the grant shall be
\nequal to $125,000 multiplied by the number of months remaining in the calendar
\nyear during which the Non-Employee Director will first serve as a Non-Employee
\nDirector divided by twelve.<\/p>\n

(iii) The awards described in subparagraph (i) for a
\nparticular calendar year will be granted to each Non-Employee Director on the
\nsecond business day following each regular annual meeting of the Company153s
\nstockholders, provided that the Non-Employee Director continues to serve as a
\nNon-Employee Director through the date of such annual meeting. Otherwise, no
\naward shall be granted with respect to such calendar year. The awards described
\nin subparagraph (ii) for a particular calendar year will be granted to each
\nNon-Employee Director either (A) on the second business day following the
\nregular annual meeting of the Company153s stockholders for the calendar year in
\nwhich the Non-Employee Director is first appointed or elected to the Board, if
\nthe Non-Employee Director is elected or appointed to the Board on or before the
\ndate of such annual meeting or (B) on the date of the first meeting of the Board
\nfollowing the date the Non-Employee Director is first appointed or elected to
\nthe Board, if the Non-Employee Director is elected or appointed to the Board
\nafter the date of the regular annual meeting of the Company153s stockholders.<\/p>\n

(iv) Each stock option shall be subject to the following
\nterms and conditions:<\/p>\n

(A) Each stock option shall be designated as a non-qualified
\nstock option that is not intended to meet the specific requirements set forth in
\nsection 422 of the Code (“Nonqualified Stock Option<\/u>“);<\/p>\n

(B) The term of each Nonqualified Stock Option shall be 10
\nyears; provided, however, that any unexercised Nonqualified Stock Option shall
\nexpire on the earlier of (I) the date 10 years after the date of grant; or (II)
\nthree (3) months following the date that the participant ceases to be a
\nNon-Employee Director or an employee for any reason other than retirement (as
\ndefined in subparagraph (v) below), death or disability. If a participant ceases
\nto be a Non-Employee Director or employee on account of death or disability, any
\nunexercised<\/p>\n<\/p>\n

2<\/p>\n<\/p>\n

\n

Nonqualified Stock Option shall expire on the earlier of the
\ndate 10 years after the date of grant or one year after the date of death or
\ndisability of such director, and if a participant ceases to be a Non-Employee
\nDirector or employee on account of retirement, any unexercised Nonqualified
\nStock Option shall expire on the earlier of the date 10 years after the date of
\ngrant or two years after the date of retirement of such Non-Employee Director;
\nand<\/p>\n

(C) The exercise price under each Nonqualified Stock Option
\nshall be equal to the fair market value on the date of grant as determined by
\nthe Committee.<\/p>\n

(v) The awards described in subparagraphs (i) and (ii) shall
\nbecome vested and exercisable in accordance with the following schedule<\/p>\n<\/p>\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n\n

Cumulative Vesting Percentage of Award<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/tr>\n
\n

1st anniversary of grant date<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

25%<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/tr>\n
\n

2nd<\/sup> anniversary of grant date<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

50%<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/tr>\n
\n

3rd<\/sup> anniversary of grant date<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/td>\n\n

100%<\/p>\n<\/td>\n

<\/td>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Notwithstanding the foregoing, the awards described in
\nsubparagraphs (i) and (ii) shall be fully vested on the Non-Employee Director153s
\ndeath, disability (as such term is defined in the applicable award agreement) or
\nretirement from the Board. For purposes of this Section 3(b), “retirement” shall
\nmean a Non-Employee Director153s resignation or removal from the Board at any time
\nafter he or she has either attained age 70 or completed five years of service as
\na Non-Employee Director.<\/p>\n

(vi) Each Restricted Stock Unit represents the right to
\nreceive a share of Schwab common stock subject to the conditions set forth in
\nthe applicable award agreement. If Schwab pays cash dividends on shares of
\nSchwab common stock, each Restricted Stock Unit shall receive a dividend
\nequivalent payment equal to the dividend paid per share of Schwab common stock
\nmultiplied by the number of unvested Restricted Stock Units. Each such payment
\nshall be made as soon as practicable following the payment of the actual
\ndividend, but in no event beyond March 15th<\/sup> of the year following the
\nyear the actual dividend is paid.<\/p>\n

SECTION 4. STOCK SUBJECT TO PLAN. <\/strong><\/p>\n

(a) Basic Limitation<\/em>. There is hereby reserved for
\nissuance under the Plan an aggregate of:<\/p>\n

(i) 90 million shares of Schwab common stock; plus<\/p>\n

(ii) any shares of Schwab common stock subject to outstanding
\nawards under the Prior Plans as of the Effective Date that on or after the
\nEffective Date cease for any reason to be subject to such awards (other than by
\nreason of exercise or settlement of the awards to the extent they are exercised
\nfor or settled in shares); plus<\/p>\n

(iii) any shares of Schwab common stock that were issued
\nunder the Prior Plans and are reacquired by Schwab after the Effective Date.\n<\/p>\n

The aggregate maximum number of shares of Schwab common stock
\navailable under subparagraphs (ii) and (iii) is 150 million. To the extent an
\naward is paid in cash, it shall not reduce the limits of this Section 4(a).<\/p>\n

(b) Share Usage<\/em>. If there is a lapse, expiration,
\ntermination or cancellation of any stock option issued under the Plan prior to
\nthe issuance of shares under the Plan or if shares of common stock are issued
\nunder the Plan and thereafter are reacquired by Schwab, the shares subject to
\nthose options and the reacquired shares shall be added to the shares available
\nfor benefits under the Plan. Shares covered by a benefit granted<\/p>\n<\/p>\n

3<\/p>\n<\/p>\n

\n

under the Plan or a Prior Plan shall not be counted as issued
\nunless and until they are actually issued and delivered to a participant. Any
\nshares covered by a Stock Appreciation Right shall be counted as issued only to
\nthe extent shares are actually issued to the participant upon exercise of the
\nright. In addition, any shares of common stock exchanged by a participant as
\nfull or partial payment to Schwab of the exercise price under any Stock Option
\nexercised under the Plan or a Prior Plan, any shares retained by Schwab pursuant
\nto a participant153s tax withholding election, and any shares covered by a benefit
\nwhich is settled in cash shall be added to the shares available for benefits
\nunder the Plan. All shares issued under the Plan may be authorized and unissued
\nshares, issued shares reacquired by Schwab or other shares that are treasury
\nshares.<\/p>\n

(c) Participant Limits<\/em>. Under the Plan, no
\nparticipant may be granted in any fiscal year of the Company:<\/p>\n

(i) Stock Options or SARs relating to more than 5 million
\nshares of Schwab common stock in the aggregate, and<\/p>\n

(ii) Restricted Stock, Restricted Stock Units, Performance
\nStock, Performance Units denominated in shares of Schwab common stock, or Other
\nStock Awards that are subject to the attainment of Performance Criteria
\ndescribed in Section 5(g) relating to more than 1 million shares of Schwab
\ncommon stock in the aggregate, and<\/p>\n

(iii) Performance Units denominated in cash or Other Cash
\nAwards that are subject to the attainment of Performance Criteria described in
\nSection 5(g) that could entitle the participant to more than $10 million in the
\naggregate from that year153s awards (considering for this purpose the maximum that
\ncould be payable, including for above-target performance).<\/p>\n

With respect to any Stock Option or SAR granted to a
\nparticipant who is a Covered Employee that is canceled, the number of shares of
\nSchwab common stock originally subject to such Stock Option or SAR shall
\ncontinue to count against the limit specified in subparagraph (i) above in
\naccordance with Section 162(m) of the Code.<\/p>\n

(d) Adjustments<\/em>. The shares reserved for issuance
\nand the limitations set forth in this Section 4 shall be subject to adjustment
\nin accordance with Section 6.<\/p>\n

SECTION 5. AWARDS. <\/strong><\/p>\n

(a) General<\/em>. Benefits under the Plan shall consist
\nof Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
\nUnits, Performance Stock, Performance Units, and Other Stock or Cash Awards, all
\nas described below. Each award under the Plan shall be evidenced by a written
\naward agreement in paper or electronic form approved by the Committee. Such
\nagreement shall be subject to and incorporate the express terms and conditions,
\nif any, required under the Plan or as required by the Committee for the form of
\naward granted and such other terms and conditions as the Committee may specify.\n<\/p>\n

(b) Stock Options<\/em>. Stock Options may be granted to
\nparticipants at any time as determined by the Committee. The Committee shall
\ndetermine the number of shares subject to each option and whether the option is
\nan incentive stock option described in section 422(b) of the Code (an
\n“Incentive Stock Option<\/u>“); provided that only a common-law employee shall
\nbe eligible for the grant of an Incentive Stock Option. No participant may be
\ngranted Incentive Stock Options (under this Plan or any other Incentive Stock
\nOption plan of the Company and its affiliates) which are first exercisable in
\nany calendar year for shares of Schwab common stock having an aggregate fair
\nmarket value (determined as of the date an option is granted) that exceeds
\n$100,000; any Stock Option granted under the Plan that exceeds this limit shall
\nbe a Nonqualified Stock Option. The option price for each option shall be
\ndetermined by the Committee but shall not be less than 100% of the fair market
\nvalue of Schwab153s common stock on the date the option is granted (110% in the
\ncase of an Incentive Stock Option granted to an individual who, at the time of
\ngrant, owns stock possessing more than 10% of the total combined voting power of
\nall classes of stock of the Company (a “10% Stockholder<\/u>“). Each option
\nshall expire at such time as the Committee shall determine at the time of<\/p>\n<\/p>\n

4<\/p>\n<\/p>\n

\n

grant. Options shall be exercisable at such time and subject
\nto such terms and conditions as the Committee shall determine; provided,
\nhowever, that no option shall be exercisable later than the tenth anniversary of
\nits grant (five years in the case of an Incentive Stock Option granted to a 10%
\nStockholder). The option price, upon exercise of any option, shall be payable to
\nSchwab in full by:<\/p>\n

(i) cash payment or its equivalent;<\/p>\n

(ii) surrendering, or attesting to the ownership of, shares
\nof Schwab stock that are already owned by the participant;<\/p>\n

(iii) delivery of a properly executed exercise notice,
\ntogether with irrevocable instructions to a broker to promptly deliver to Schwab
\nthe amount of sale proceeds from the option shares or loan proceeds to pay the
\nexercise price and any withholding taxes due to Schwab; and<\/p>\n

(iv) such other methods of payment as the Committee, at its
\ndiscretion, deems appropriate; provided, however, that no method of payment will
\nbe permitted if it would result in a violation of applicable law, as determined
\nby the Committee in its sole discretion.<\/p>\n

In no event shall the Committee cancel any outstanding Stock
\nOption for the purpose of reissuing the option to the participant at a lower
\nexercise price or reduce the option price of an outstanding option.<\/p>\n

Notwithstanding anything in this Section 5(b) to the
\ncontrary, Stock Options may be granted only to individuals who provide direct
\nservices on the date of grant of the Stock Option to the Company or another
\nentity in a chain of entities in which the Company or another such entity has a
\ncontrolling interest within the meaning of Treasury Regulation section
\n1.409A-1(b)(iii)(E) in each entity in the chain.<\/p>\n

(c) Stock Appreciation Rights<\/em>. Stock Appreciation
\nRights (“SARs<\/u>“) may be granted to participants at any time as determined
\nby the Committee. An SAR may be granted in tandem with a Stock Option granted
\nunder this Plan or on a free-standing basis. The Committee also may, in its
\ndiscretion, substitute SARs for outstanding Stock Options. The grant price of a
\ntandem or substitute SAR shall be equal to the option price of the related
\noption. The grant price of a free-standing SAR shall be equal to the fair market
\nvalue of Schwab153s common stock on the date of its grant. An SAR may be exercised
\nupon such terms and conditions and for such term as the Committee in its sole
\ndiscretion determines; provided, however, that the term shall not exceed the
\noption term in the case of a tandem or substitute SAR or ten years in the case
\nof a free-standing SAR and the terms and conditions applicable to a substitute
\nSAR shall be substantially the same as those applicable to the Stock Option
\nwhich it replaces. Upon exercise of an SAR, the participant shall be entitled to
\nreceive payment from Schwab in an amount determined by multiplying the excess of
\nthe fair market value of a share of Schwab common stock on the date of exercise
\nover the grant price of the SAR by the number of shares with respect to which
\nthe SAR is exercised. The payment may be made in cash or stock, at the
\ndiscretion of the Committee. Notwithstanding anything in this Section 5(c) to
\nthe contrary, SARs may be granted only to individuals who provide direct
\nservices on the date of grant of the SAR to the Company or another entity in a
\nchain of entities in which the Company or another such entity has a controlling
\ninterest within the meaning of Treasury Regulation section 1.409A-1(b)(iii)(E)
\nin each entity in the chain.<\/p>\n

(d) Restricted Stock and Restricted Stock Units<\/em>.
\nRestricted Stock and Restricted Stock Units may be awarded or sold to
\nparticipants under such terms and conditions as shall be established by the
\nCommittee. Restricted Stock and Restricted Stock Units shall be subject to such
\nrestrictions as the Committee determines, including, without limitation, any of
\nthe following (i) a prohibition against sale, assignment, transfer, pledge,
\nhypothecation or other encumbrance for a specified period; or (ii) a requirement
\nthat the holder forfeit (or in the case of shares or units sold to the
\nparticipant resell to Schwab at cost) such shares or units in the event of
\ntermination of employment during the period of restriction. All restrictions
\nshall expire at such times as the Committee shall specify. Settlement of vested
\nRestricted Stock Units may be made in the form of (a) cash, (b) shares of Schwab
\ncommon stock or (c) any combination of both, as determined by the Committee.
\nRestricted Stock Units may be settled in a lump sum or in installments as
\nspecified in the applicable award agreement. The distribution may occur or
\ncommence when all vesting conditions<\/p>\n<\/p>\n

5<\/p>\n<\/p>\n

\n

applicable to the Restricted Stock Units have been satisfied
\nor have lapsed, or it may be deferred to any later date in accordance with
\nSection 9, as provided for in the applicable award agreement.<\/p>\n

(e) Performance Stock<\/em>. The Committee shall designate
\nthe participants to whom long-term performance stock (“Performance
\nStock<\/u>“) or long-term performance units (“Performance Units<\/u>“) are to
\nbe awarded and determine the number of shares or units, the length of the
\nperformance period and the other terms and conditions of each such award. Each
\naward of Performance Stock or Performance Units shall entitle the participant to
\na payment in the form of shares of common stock or cash (as provided in the
\naward agreement) upon the attainment of performance goals and other terms and
\nconditions specified by the Committee pursuant to Section 5(g) below. The
\nCommittee may, in its discretion, make a cash payment equal to the fair market
\nvalue of shares of common stock otherwise required to be issued to a participant
\npursuant to a Performance Stock award.<\/p>\n

(f) Other Stock or Cash Awards<\/em>. In addition to the
\nincentives described in paragraphs (b) through (e) of this Section 5, the
\nCommittee may grant other incentives payable in cash or in common stock under
\nthe Plan as it determines to be in the best interests of Schwab and subject to
\nsuch other terms and conditions as it deems appropriate.<\/p>\n

(g) Performance Goals<\/em>.<\/p>\n

(i) Awards of Restricted Stock, Restricted Stock Units,
\nPerformance Stock, Performance Units and Other Stock or Cash Awards under the
\nPlan may be made subject to the attainment of performance goals for a specified
\nperiod of time (a “Performance Period<\/u>“). In the case of an award that is
\nintended to satisfy the performance-based exception to the deductibility
\nlimitation of Section 162(m) of the Code (the “Performance-Based
\nException<\/u>“), the categories of permissible performance goals include:
\nincome; operating income; pre-tax income; after-tax income; profit; pre-tax
\noperating profits; pre-tax reported profits; pre-tax operating profit margin;
\npre-tax reported profit margin; after-tax operating profit margin; after-tax
\nreported profit margin; revenue; revenue growth; operating revenue growth; cash
\nflow; stockholder return; net income; client net new assets; levels of client
\nassets or sales (of products, offers or services); earnings per share; return on
\nstockholders153 equity; return on investment; earnings; earnings before interest
\nand taxes (EBIT); earnings before interest, taxes, depreciation and amortization
\n(EBITDA); consolidated pre-tax earnings; net earnings; operating cash flow; free
\ncash flow; free cash flow per share; cash flow return; economic value added;
\nmarket value added; total stockholder return; debt\/capital ratio; return on
\ntotal capital; market share of assets; return on assets; return on net assets;
\nreturn on capital employed; cost control; Schwab common stock price; capital
\nexpenditures; price\/earnings growth ratio; sales; sales volume; and book value
\nper share; cost of capital; cost of equity; and changes between years or periods
\nthat are determined with respect to any of the above-listed performance criteria
\n(“Performance Criteria<\/u>“). The Committee may establish other performance
\nmeasures for awards that are not intended to qualify under the Performance-Based
\nException. A performance goal may be measured relative to the performance of the
\nCompany as a whole or any business unit, department, division region or function
\nof the Company or any subsidiary in which the participant is employed and may be
\nmeasured relative to a peer group or index. If more than one performance goal is
\nspecified by the Committee for a Performance Period, the Committee shall also
\nspecify, in writing, whether one, all or some other number of such performance
\ngoals must be attained in order for the performance goals to be satisfied for
\nthe applicable award. Notwithstanding satisfaction of any performance goals, the
\nnumber of shares issued or amounts paid under awards may be adjusted by the
\nCommittee on the basis of such further consideration as the Committee in its
\nsole discretion shall determine, subject to the provisions of
\nSection 5(g)(ii)(B) below.<\/p>\n

(ii) For an award that is intended to qualify for the
\nPerformance-Based Exception:<\/p>\n

(A) Not later than the 90th day of the Performance Period
\n(or, in the event that a Performance Period is expected to be less than 12
\nmonths, not later than the date when 25% of the Performance Period has elapsed),
\nthe Committee shall select the participants for such period and establish in
\nwriting (I) the objective performance goals for each participant for that period\n<\/p>\n<\/p>\n

6<\/p>\n<\/p>\n

\n

based on one or more of the Performance Criteria, (II) the
\ndefinition of each applicable performance goal, (III) the maximum amount payable
\nunder the award for attainment of the performance goals and the threshold level
\nof attainment below which no amount will be paid under the award, in all cases
\nsubject to the per-participant limits described in Section 4, (IV) the method by
\nwhich such amounts will be calculated, and (V) how performance will be measured
\nagainst a goal to reflect the impact of extraordinary items and any other
\nunusual or non-recurring items as specified in Section 5(g)(iii) below.<\/p>\n

(B) The Committee may not in any event increase the amount of
\ncompensation payable to a Covered Employee upon the attainment of a performance
\ngoal. The Committee shall determine and certify in writing, for each
\nparticipant, the extent to which the performance goals have been met and the
\namount of the award, if any, to be made. The Committee has the absolute and
\nunrestricted discretion to reduce the amount of the award that otherwise would
\nbe payable in connection with the attainment of the performance goals applicable
\nto the award. It is expressly permissible to reduce the amount otherwise payable
\nto zero.<\/p>\n

(iii) In determining whether any performance goals have been
\nsatisfied, the Committee may exclude any or all extraordinary items (as
\ndetermined under U.S. generally accepted accounting principles), and any other
\nunusual or non-recurring items, including but not limited to, charges or costs
\nassociated with restructurings of the Company, discontinued operations and the
\ncumulative effects of accounting changes. In addition, the Committee may adjust
\nany performance goal for a year as it deems equitable to recognize unusual or
\nnon-recurring events affecting the Company, changes in tax laws or accounting
\nprocedures, mergers and acquisitions and any other factors as the Committee may
\ndetermine. In the case of an award that is intended to qualify for the
\nPerformance-Based Exception, such exclusions and adjustments may only apply to
\nthe extent the Committee specifies in writing (not later than the time the
\nperformance targets are required to be established) which exclusions and
\nadjustment the Committee will apply to determine whether a performance goal has
\nbeen satisfied, as well as an objective manner for applying them, or to the
\nextent that the Committee determined that they may apply without adversely
\naffecting the award153s qualification for the Performance-Based Exception. To the
\nextent that a performance goal is based on Schwab common stock, then in the
\nevent of any stock dividend, stock split, spin-off, split-off, spin-out,
\nrecapitalization or other change in the capital structure of the Company,
\nmerger, consolidation, reorganization, combination of shares, partial or
\ncomplete liquidation or other distribution of assets (other than a normal cash
\ndividend), issuance of rights or warrants to purchase securities or any other
\ncorporate transaction having an effect similar to any of the foregoing, the
\nCommittee shall make or provide for such adjustments in performance goals as the
\nCommittee in its sole discretion may in good faith determine to be equitably
\nrequired in order to prevent dilution or enlargement of the rights of
\nparticipants. In the case of an award intended to qualify for the
\nPerformance-Based Exception, this shall apply only to the extent the Committee
\ndetermined it will not adversely affect such qualification.<\/p>\n

SECTION 6. ADJUSTMENT OF SHARES. <\/strong><\/p>\n

(a) Adjustments<\/em>. If Schwab shall at any time change
\nthe number of issued shares of common stock by stock dividend, stock split,
\nspin-off, split-off, spin-out, recapitalization, or other change in the capital
\nstructure of the Company, merger, consolidation, reorganization, combination,
\nexchange of shares, partial or complete liquidation or other distribution of
\nassets (other than a normal cash dividend), issuance of rights or warrants to
\npurchase securities or any other corporate transaction having an effect similar
\nto any of the foregoing, then, in order to prevent unintended dilution or
\nenlargement of the benefits or potential benefits intended to be made available
\nunder the Plan, the Committee shall equitably adjust, as it determines to be
\nnecessary and appropriate, the total number of shares reserved for issuance
\nunder the Plan, the maximum number of shares that may be made subject to an
\naward in any fiscal year, and the number of shares covered by each outstanding
\naward and the price therefor, if any. Any such adjustment to an Incentive Stock
\nOption shall be made in a manner that permits the Incentive Stock Option to
\ncontinue to meet the requirements of Section 422 of the Code. The Committee
\nshall also adjust the terms and conditions of, and the criteria included in,
\nawards in recognition of unusual or nonrecurring events (including, without
\nlimitation, the<\/p>\n<\/p>\n

7<\/p>\n<\/p>\n

\n

events described in the first sentence of this Section 6(a))
\naffecting the Company or the financial statements of the Company or of changes
\nin applicable laws, regulations, or accounting principles, whenever the
\nCommittee determines that such adjustments are needed to prevent unintended
\ndilution or enlargement of the benefits or potential benefits intended to be
\nmade available under the Plan. The determination of the Committee as to the
\nforegoing adjustments, if any, shall be conclusive and binding on all
\nparticipants under the Plan.<\/p>\n

(b) Corporate Transactions<\/em>. In the event that the
\nSchwab is a party to a merger or other reorganization, outstanding awards shall
\nbe subject to the agreement of merger or reorganization. Such agreement shall
\nprovide for (i) the continuation of the outstanding awards by Schwab, if Schwab
\nis a surviving corporation, (ii) the assumption of the outstanding awards by the
\nsurviving corporation or its parent or subsidiary, (iii) the substitution by the
\nsurviving corporation or its parent or subsidiary of its own awards for the
\noutstanding awards under this Plan, (iv) full exercisability or vesting and
\naccelerated expiration of the outstanding awards or (v) settlement of the full
\nvalue of the outstanding awards in cash or cash equivalents followed by
\ncancellation of such awards.<\/p>\n

(c) Substitution and Assumption of Benefits<\/em>. Without
\naffecting the number of shares reserved or available hereunder, the Board or the
\nCommittee may authorize the issuance of benefits under this Plan in connection
\nwith the assumption of, or substitution for, outstanding benefits previously
\ngranted to individuals who become employees of Schwab or any subsidiary as a
\nresult of any merger, consolidation, acquisition of property or stock, or
\nreorganization, upon such terms and conditions as the Committee may deem
\nappropriate, including but not limited to a Stock Option exercise price or SAR
\ngrant price that is less than fair market value, so long as such exercise price
\nor grant price is determined in a manner that complies with the applicable
\nrequirements of Section 409A and Section 424 of the Code.<\/p>\n

(d) Reservation of Rights<\/em>. Except as provided in
\nthis Section 6, a participant shall have no rights by reason of any subdivision
\nor consolidation of shares of stock of any class, the payment of any dividend or
\nany other increase or decrease in the number of shares of stock of any class.
\nAny issue by Schwab of shares of stock of any class, or securities convertible
\ninto shares of stock of any class, shall not affect, and no adjustment by reason
\nthereof shall be made with respect to, the number, kind or exercise price of
\nshares subject to a Stock Option or other award. The grant of an award pursuant
\nto the Plan shall not affect in any way the right or power of the Company to
\nmake adjustments, reclassifications, reorganizations or changes of its capital
\nor business structure, to merge or consolidate or to dissolve, liquidate, sell
\nor transfer all or any part of its business or assets (or to undertake any other
\ncorporate action described in Section 6(a) above).<\/p>\n

SECTION 7. TERMS OF AWARDS. <\/strong><\/p>\n

(a) Transferability<\/em>. Except as otherwise determined
\nby the Committee in the case of benefits other than Incentive Stock Options or
\nSARs granted in tandem with Incentive Stock Options, each benefit granted under
\nthe Plan shall not be assigned, transferred, pledged or encumbered, either
\nvoluntarily or by operation of law, other than by will or the laws of descent
\nand distribution and each Stock Option and SAR shall be exercisable during the
\nparticipant153s lifetime only by the participant or, in the event of disability,
\nby the participant153s personal representative. In the event of the death of a
\nparticipant, the exercise of any benefit or payment with respect to any benefit
\nshall be made only by or to the executor or administrator of the estate of the
\ndeceased participant or the person or persons to whom the deceased participant153s
\nrights under the benefit shall pass by will or the laws of descent and
\ndistribution.<\/p>\n

(b) Change in Control<\/em>. The Committee (in its sole
\ndiscretion) may determine at the time of (or at any time after) the grant of an
\naward, that upon a Change in Control of Schwab, that any outstanding Stock
\nOption or SAR shall become vested and exercisable; all restrictions on any
\nRestricted Stock or Restricted Stock Unit shall lapse; all performance goals
\nshall be deemed achieved at target levels and all other terms and conditions
\nmet; Performance Stock shall be delivered; a Performance Unit and Restricted
\nStock Unit shall be paid out as promptly as practicable; and any Other Stock or
\nCash Award shall be delivered or paid; provided, however, that this Section 7(b)
\nshall not apply to awards pursuant to which a deferral election has been made in
\naccordance with Section 9. A “Change in Control<\/u>” shall mean the
\noccurrence of any of the following events:<\/p>\n<\/p>\n

8<\/p>\n<\/p>\n

\n

(i) Upon consummation of a reorganization, merger or
\nconsolidation (a “Business Combination<\/u>“), in each case, unless, following
\nsuch Business Combination:<\/p>\n

(A) the individuals and entities who were the beneficial
\nowners, respectively, of the then outstanding shares of Common Stock of the
\nCompany (the “Outstanding Common Stock<\/u>“) and the then outstanding voting
\nsecurities of the Company entitled to vote generally in the election of
\ndirectors (the “Outstanding Voting Securities<\/u>“) immediately prior to such
\nBusiness Combination beneficially own, directly or indirectly, more than 50% of,
\nrespectively, the then outstanding shares of common stock and the combined
\nvoting power of the then outstanding voting securities entitled to vote
\ngenerally in the election of directors, as the case may be, of the corporation
\nresulting from such Business Combination (including, without limitation, a
\ncorporation which as a result of such transaction owns the Company either
\ndirectly or through one or more subsidiaries) in substantially the same
\nproportions as their ownership, immediately prior to such Business Combination,
\nof the Outstanding Common Stock and Outstanding Voting Securities, as the case
\nmay be; and<\/p>\n

(B) no Person (as defined in subparagraph (iii) below)
\n(excluding any corporation resulting from such Business Combination or any
\nemployee benefit plan (or related trust) sponsored or maintained by the Company
\nor such other corporation resulting from such Business Combination) beneficially
\nowns, directly or indirectly, 20% or more of, respectively, the then outstanding
\nshares of common stock of the corporation resulting from such Business
\nCombination or the combined voting power of the then outstanding voting
\nsecurities of such corporation, except to the extent that such ownership of
\nOutstanding Common Stock or Outstanding Voting Securities existed prior to the
\nBusiness Combination; and<\/p>\n

(C) at least a majority of the members of the board of
\ndirectors of the corporation resulting from such Business Combination were
\nmembers of the Board at the time of the execution of the initial agreement, or
\nof the action of the Board, providing for such Business Combination; or<\/p>\n

(ii) If individuals who, as of the Effective Date, constitute
\nthe Board (the “Incumbent Board<\/u>“) cease for any reason to constitute at
\nleast a majority of the Board; provided, however, that any individual becoming a
\ndirector subsequent to the date hereof whose election, or nomination for
\nelection by the Company153s stockholders, was approved by a vote of at least a
\nmajority of the directors then comprising the Incumbent Board shall be
\nconsidered as though such individual were a member of the Incumbent Board, but
\nexcluding, for this purpose, any such individual whose initial assumption of
\noffice occurs as a result of (A) an actual or threatened election contest with
\nrespect to the election or removal of directors; (B) an actual or threatened
\nsolicitation of proxies or consents; or (C) any other actual or threatened
\naction by, or on behalf of, any Person other than the Board; or<\/p>\n

(iii) Upon the acquisition after the Effective Date by any
\nindividual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2)
\nof the Exchange Act (a “Person<\/u>“) of beneficial ownership (within the
\nmeaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
\neither (A) the then Outstanding Common Stock or (B) the combined voting power of
\nthe Outstanding Voting Securities; provided, however, that the following
\nacquisitions shall not be deemed to be covered by this subparagraph (iii):
\n(x) any acquisition of Outstanding Common Stock or Outstanding Voting Securities
\nby the Company, (y) any acquisition of Outstanding Common Stock or Outstanding
\nVoting Securities by any employee benefit plan (or related trust) sponsored or
\nmaintained by the Company or (z) any acquisition of Outstanding Common Stock or
\nOutstanding Voting Securities by any corporation pursuant to a transaction which
\ncomplies with clauses (A), (B) and (C) of subparagraph (i) above; or<\/p>\n

(iv) The consummation of the sale of all or substantially all
\nof the assets of the Company or approval by the stockholders of the Company of a
\ncomplete liquidation or dissolution of the Company.<\/p>\n

(c) Taxes<\/em>. Schwab shall be entitled to withhold the
\namount of any tax attributable to any amounts payable or shares deliverable
\nunder the Plan, after giving the person entitled to receive such payment or
\ndelivery notice and Schwab may defer making payment or delivery as to any award,
\nif any such tax is<\/p>\n<\/p>\n

9<\/p>\n<\/p>\n

\n

payable until indemnified to its satisfaction. A participant
\nmay pay all or a portion of Schwab153s minimum statutory withholding obligation
\narising in connection with the exercise of a Stock Option or SAR or the receipt
\nor vesting of shares hereunder by electing to have Schwab withhold shares of
\ncommon stock having a fair market value equal to such amount. The Committee may
\npermit a participant to pay the withholding obligation applicable to an award by
\ndelivery to the Company of shares of Schwab common stock owned by the
\nparticipant having a fair market value equal to the amount of such taxes or
\npermit cashless exercise.<\/p>\n

(d) Effective Date, Amendment and Termination<\/em>. The
\nPlan is effective on the Effective Date and shall automatically terminate one
\nday before the 10th anniversary of the date on which the Board adopted the Plan.
\nThe Board or the Committee may amend the Plan from time to time or terminate the
\nPlan at any time. However, no such action shall reduce the amount of any
\nexisting award or change the terms and conditions thereof without the
\nparticipant153s consent unless such action is necessary or desirable (i) for the
\ncontinued validity of the Plan or its compliance with Rule 16b-3 of the Exchange
\nAct or any other applicable law, rule or regulation or pronouncement, or (ii) to
\navoid any adverse consequences under Section 162(m) of the Code, Section 409A of
\nthe Code or any requirement of a securities exchange or association or
\nregulation or self-regulatory body. Stockholder approval shall be obtained for
\nany Plan amendment to the extent necessary or desirable to comply with
\napplicable laws, regulations or rules.<\/p>\n

(e) Fair Market Value<\/em>. The fair market value of a
\nshare of Schwab common stock on a given determination date shall equal:<\/p>\n

(i) The closing sales price of a share as reported on the New
\nYork Stock Exchange (NYSE) on the applicable determination date (except in the
\ncase of a share of Restricted Stock or a Restricted Stock Unit, which shall be
\nthe average of the high and low price of a share as reported on NYSE on the
\napplicable determination date), or<\/p>\n

(ii) If no sales of shares are reported for such date, the
\nmean between the bid and asked price of a share on NYSE at the close of the
\nmarket on such date, or<\/p>\n

(iii) In the event that the method for determining fair
\nmarket value described in clauses (i) and (ii) is not practicable, as determined
\nby the Committee in its discretion, the fair market value of a share determined
\nin accordance with any other reasonable method as the Committee, in its
\ndiscretion, may deem equitable, or as required by applicable law or regulation,
\nwhich method shall be one that is deemed to constitute fair market value for
\npurposes of Section 409A of the Code to the extent it is used with respect to a
\nStock Option or SAR.<\/p>\n

(f) Dividend Equivalents<\/em>. Any participant selected
\nby the Committee, in its sole discretion, may be granted dividend equivalents
\nbased on the dividends declared on shares that are subject to any award, to be
\ncredited as of dividend payment dates, during the period between the date the
\naward is granted and the date the award is exercised, vests or expires, as
\ndetermined by the Committee. Such dividend equivalents shall be converted to
\ncash or additional shares by such formula and at such time and subject to such
\nlimitations as may be determined by the Committee. Notwithstanding the
\nforegoing, no dividend equivalents will be paid contingent on the exercise of a
\nStock Option or SAR.<\/p>\n

(g) Other Provisions<\/em>. The award of any benefit under
\nthe Plan may also be subject to other provisions (whether or not applicable to
\nthe benefit awarded to any other participant) as the Committee determines
\nappropriate, including provisions intended to comply with applicable securities
\nlaws and stock exchange or stock market requirements, understandings or
\nconditions as to the participant153s employment, requirements or inducements for
\ncontinued ownership of common stock after exercise or vesting of benefits,
\nforfeiture of awards in the event of termination of employment shortly after
\nexercise or vesting, or breach of noncompetition or confidentiality agreements
\nfollowing termination of employment, or provisions permitting the deferral of
\nthe receipt of a benefit for such period and upon such terms as the Committee
\nshall determine.<\/p>\n

(h) Non-U.S. Employees<\/em>. In the event any benefit
\nunder this Plan is granted to an employee who is employed or providing services
\noutside the United States and who is not compensated from a payroll maintained
\nin the United States, the Committee may, in its sole discretion, modify the
\nprovisions of the Plan as they pertain to such individuals to comply with
\napplicable law, regulation or accounting rules.<\/p>\n<\/p>\n

10<\/p>\n<\/p>\n

\n

(i) Governing Law<\/em>. The Plan and any actions taken in
\nconnection herewith shall be governed by and construed in accordance with the
\nlaws of the state of Delaware (without regard to applicable Delaware principles
\nof conflict of laws).<\/p>\n

(j) Section 409A<\/em>. At all times, this Plan shall be
\ninterpreted and operated (i) with respect to awards subject to Section 409A of
\nthe Code (“Section 409A<\/u>“), in accordance with the requirements of
\nSection 409A and the regulatory guidance thereunder unless an exemption from
\nSection 409A is available and applicable, (ii) to maintain the exemptions from
\nSection 409A of Stock Options, SARs and Restricted Stock and any awards designed
\nto meet the short-deferral exception under Section 409A, and (iii) to preserve
\nthe status of deferrals of compensation that were earned and vested prior to
\nJanuary 1, 2005 as exempt from Section 409A, i.e.<\/em>, to preserve the
\ngrandfathered status of such deferrals. To the extent there is a conflict
\nbetween the provisions of the Plan relating to compliance with Section 409A and
\nthe provisions of any award agreement issued under the Plan, the provisions of
\nthe Plan control. Moreover, any discretionary authority that the Committee may
\nhave pursuant to the Plan shall not be applicable to an award that is subject to
\nSection 409A to the extent such discretionary authority would conflict with
\nSection 409A. In addition, to the extent required to avoid a violation of the
\napplicable rules under Section 409A by reason of Section 409A(a)(2)(B)(i), any
\npayment under an award shall be delayed until the earliest date of payment that
\nwill result in compliance with the rules of Section 409A(a)(2)(B)(i) (regarding
\nthe required six-month delay for distributions to specified employees that are
\nrelated to a separation from service). In the event that any award shall be
\ndeemed not to comply with Section 409A, then neither the Company, the Board, the
\nCommittee nor its or their designees or agents, nor any of their affiliates,
\nassigns or successors (each a “protected party”) shall be liable to any award
\nrecipient or other person for actions, inactions, decisions, indecisions or any
\nother role in relation to the Plan by a protected party if made or undertaken in
\ngood faith or in reliance on the advice of counsel (who may be counsel for the
\nCompany), or made or undertaken by someone other than a protected party.<\/p>\n

SECTION 8. PAYMENT OF DIRECTORS153 FEES DEFERRALS IN SECURITIES.
\n<\/strong><\/p>\n

In the event a Non-Employee Director elects pursuant to and
\nin accordance with the terms of Schwab153s Directors153 Deferred Compensation Plan
\nII (or any predecessor or successor to such plan) to defer receipt of the
\npayment of his or her annual cash retainer from Schwab in the form of Restricted
\nStock Units, Nonqualified Stock Options, Restricted Stock, Other Stock Awards or
\na combination thereof, such Nonqualified Stock Options, Restricted Stock Units,
\nRestricted Stock, and Other Stock Awards shall be issued under this Plan. For
\npurposes of this Section 8, the term “Non-Employee Director” shall also include
\na non-employee director of any Subsidiary, if the Committee has approved
\nparticipation by such non-employee director in Schwab153s deferred compensation
\nplan for directors. The number and form of each award to be granted to
\nNon-Employee Directors pursuant to this Section 8 in connection with a deferral
\nelection under the Directors153 Deferred Compensation Plan II (or any predecessor
\nor successor to such plan) shall be determined in accordance with the provisions
\nof that plan, but the terms of each such award shall be determined by the
\nCommittee or its delegate in accordance with the provisions of this Plan.<\/p>\n

SECTION 9. DEFERRAL OF AWARDS. <\/strong><\/p>\n

Subject to the requirements of Section 409A, the Committee
\n(in its sole discretion) may permit or require a participant to have cash or
\nshares that otherwise would be paid to such participant as a result of the
\nsettlement of a restricted stock unit or performance unit award credited to a
\ndeferred compensation account established for such participant by the Committee
\nas an entry on Schwab153s books. A deferred compensation account may be credited
\nwith interest or other forms of investment return, as determined by the
\nCommittee. A participant for whom such an account is established shall have no
\nrights other than those of a general creditor of Schwab. Such an account shall
\nrepresent an unfunded and unsecured obligation of Schwab and shall be subject to
\nthe terms and conditions of the applicable agreement between such participant
\nand Schwab. If the deferral or conversion of awards is permitted or required,
\nthe Committee (in its sole discretion) may, consistent with the requirements of
\nSection 409A, establish rules, procedures and forms pertaining to such awards,
\nincluding (without limitation) the settlement of deferred compensation accounts
\nestablished under this Section 9 and such rules and procedures shall be set
\nforth in detail in the applicable stock award agreement or other deferral
\nagreement.<\/p>\n<\/p>\n

11<\/p>\n<\/p>\n

\n

SECTION 10. DEFINED TERMS. <\/strong><\/p>\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“10% Stockholder<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Board<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Business Combination<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Change in Control<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Code<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Committee<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Company<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Covered Employees<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Effective Date<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Exchange Act<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Incentive Stock Option<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Incumbent Board<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Non-Employee Directors<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

2<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Nonqualified Stock Option<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

3<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Outstanding Common Stock<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Outstanding Voting Securities<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

9<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Performance Criteria<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

7<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Performance Period<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Performance Stock<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Performance Units<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Performance-Based Exception<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

6<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Person<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

10<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Plan<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Prior Plans<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“SARs<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

5<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Schwab<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

1<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
\n

“Section 409A<\/u>“<\/p>\n<\/td>\n

<\/td>\n<\/td>\n\n

11<\/p>\n<\/td>\n

<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

12<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8775],"corporate_contracts_industries":[9418],"corporate_contracts_types":[9539,9545],"class_list":["post-38450","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-schwab-charles-corp","corporate_contracts_industries-financial__securities","corporate_contracts_types-compensation","corporate_contracts_types-compensation__esp"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38450","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38450"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38450"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38450"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38450"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}