Exhibit 10.215
THE CHARLES SCHWAB CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
(as amended through December 13, 2000)
THE CHARLES SCHWAB CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Section Page
Article I. Purpose
1.1 Establishment of the Plan 2
1.2 Purpose of the Plan 2
Article II. Definitions
2.1 Definitions 3
2.2 Gender and Number 4
Article III. Administration
3.1 Committee and Administrator 5
Article IV. Participants
4.1 Participants 6
Article V. Deferrals
5.1 Deferrals 7
5.2 Deferral Procedures 7
5.3 Election of Time and Manner of Payment 7
5.4 Accounts and Earnings 8
5.5 Maintenance of Accounts 10
5.6 Change in Control 10
5.7 Payment of Deferred Amounts 14
5.8 Acceleration of Payment 14
Section
Page
Article VI. General Provisions
6.1 Unfunded Obligation 15
6.2 Informal Funding Vehicles 15
6.3 Beneficiary 16
6.4 Incapacity of Participant or Beneficiary 16
6.5 Nonassignment 17
6.6 No Right to Continued Employment 17
6.7 Tax Withholding 17
6.8 Claims Procedure and Arbitration 17
6.9 Termination and Amendment 19
6.10 Applicable Law 19
THE CHARLES SCHWAB CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
Article I. Purpose
1.1 Establishment of the Plan. Effective as of January 1, 1996, The
Charles Schwab Corporation (hereinafter, the "Company") hereby establishes The
Charles Schwab Corporation Directors' Deferred Compensation Plan (the "Plan"),
as set forth in this document.
1.2 Purpose of the Plan. The Plan permits Directors to defer the
payment of directors' fees that they may earn. The opportunity to elect such
deferrals is provided in order to help the Company attract and retain outside
directors. This Plan is unfunded and is maintained primarily for the purpose of
providing deferred compensation for its outside directors. It is intended to be
exempt from the participation, vesting, funding, and fiduciary requirements set
forth in Title I of the Employee Retirement Income Security Act of 1974, as
amended.
Article II. Definitions
2.1 Definitions. The following definitions are in addition to any
other definitions set forth elsewhere in the Plan. Whenever used in the Plan,
the capitalized terms in this section shall have the meanings set forth below
unless otherwise required by the context in which they are used:
(a) "Administrator" the administrator described in section 3.1 that is
selected by the Committee to assist in the administration of the Plan.
(b) "Beneficiary" means a person entitled to receive any benefit payments
that remain to be paid after a Participant's death, as determined
under section 6.3.
(c) "Board" means the Board of Directors of the Company.
(d) "Company" means The Charles Schwab Corporation, a Delaware
corporation.
(e) "Committee" means the Compensation Committee of the Board.
(f) "Deferral Account" means the account representing deferrals of cash
compensation, plus investment adjustments, as described in sections
5.4 and 5.5.
(g) "Director" means each member of the Board of the Directors who is not
an employee of the Company or any of its subsidiaries. The term
"Director" shall also include each member of the Board of Directors of
any subsidiary of the Company who is not an employee of the Company or
any of its subsidiaries, but only if the Committee has approved
participation in the Plan for such subsidiary's non-employee
directors.
(h) "Plan" means The Charles Schwab Corporation Directors' Deferred
Compensation Plan, as in effect from time to time.
(i) "Plan Year" means the calendar year.
(j) "Termination" means the date a Participant ceases to be a Director.
(k) "Valuation Date" means each December 31 and any other date designated
from time to time by the Committee for the purpose of determining the
value of a Participant's Deferral Account balance pursuant to section
5.4.
2.2 Gender and Number. Except when otherwise indicated by the
context, any masculine or feminine terminology shall also include the neuter and
other gender, and the use of any term in the singular or plural shall also
include the opposite number.
Article III. Administration
3.1 Committee and Administrator. The Committee shall administer the
Plan and may select one or more persons to serve as the Administrator. The
Administrator shall perform such administrative functions as the Committee may
delegate to it from time to time. Any person selected to serve as the
Administrator may, but need not, be a Committee member or an officer or employee
of the Company. However, if a person serving as Administrator or a member of the
Committee is a Participant, such person may not vote on a matter affecting his
interest as a Participant.
The Committee shall have discretionary authority to construe and
interpret the Plan provisions and resolve any ambiguities thereunder; to
prescribe, amend, and rescind administrative rules relating to the Plan; to
determine eligibility for benefits under the Plan; and to take all other actions
that are necessary or appropriate for the administration of the Plan. Such
interpretations, rules, and actions of the Committee shall be final and binding
upon all concerned and, in the event of judicial review, shall be entitled to
the maximum deference allowable by law. Where the Committee has delegated its
responsibility for matters of interpretation and Plan administration to the
Administrator, the actions of the Administrator shall constitute actions of the
Committee.
Article IV. Participants
4.1 Participants. Each Director shall be eligible to participate in
this Plan.
Article V. Deferrals
5.1 Deferrals. Each Director may elect to defer up to 100 percent of
the fees otherwise receivable from the Company for service as a Director. Any
such election must be made by entering a deferred compensation agreement with
the Company, as evidenced by a form approved by and filed with the Administrator
on or before the deadline specified by the Committee (which shall be no earlier
than one month prior to the beginning of the election period for which the
deferred fees are to be earned; provided that for the first year in which the
Plan is in effect, the deferral election shall be made within the first thirty
days of the election period). For this purpose, the election period shall be the
calendar year; provided, however, that during periods in which the Plan is not
in effect for a full calendar year or a Director is not a Participant for a full
calendar year, the election period shall be the portion of the calendar year
during which the Plan is in effect and the Director is an eligible Participant.
Deferrals that have been elected shall occur throughout the election period in
pro rata increments.
5.2 Deferral Procedures. Participants shall have an opportunity to
elect deferrals each year. Unless the Committee specifies other rules for the
deferrals that may be elected, deferrals may be made in increments of 10 percent
or in a fixed dollar amount. If a deferral is elected, the election shall be
irrevocable. Deferral elections shall be made on a form prescribed by the
Committee or the Administrator. As provided in section 6.7, any deferral is
subject to any applicable tax withholding measures and may be reduced to satisfy
any applicable tax withholding requirements.
5.3 Election of Time and Manner of Payment. At the time a Participant
makes a deferral election under section 5.1, the Participant shall also
designate the manner of payment and the date on which payments from his or her
Deferral Account shall begin, from among the following options:
(i) a lump sum payable by the end of February in the year immediately
following the Participant's Termination; or
(ii) a series of annual installments, commencing in the year following
the Participant's Termination and payable each year on or before the end of
February, over a period of five, ten, or fifteen years, as designated by the
Participant.
A Participant may modify an election of the time for payment
under circumstances determined by the Committee, provided that (i) a payment
election may not be modified in a manner that would cause payments to commence
earlier than the date payments would have commenced absent such modification,
and (ii) all payment elections shall become irrevocable one year prior to the
date on which payment will commence under the election. If payment is due in the
form of a lump sum, the payment shall equal the balance of the Deferral Account
being paid, determined as of the Valuation Date coincident with or immediately
preceding the payment date. If payment is due in the form of installments, the
amount of each installment payment shall be equal to the quotient determined by
dividing (A) the value of the portion of the Deferral Account to which the
installment payment election applies (determined as of the Valuation Date
coincident with or immediately preceding the date the payment is to be made), by
(B) the number of years over which the installment payments are to be made, less
the number of years in which prior payments attributable to such installment
payment election have been made.
Notwithstanding the foregoing, however, if earnings or any other amounts
credited to a Participant's Deferral Account do not otherwise meet any
applicable requirements of the Internal Revenue Code allowing the Company and
its Subsidiaries to receive a federal income tax deduction for such amounts upon
paying them at the time provided under the Participant's election, the payment
of such amounts, to the extent in excess of the amount that would be currently
tax deductible, shall automatically be deferred until the earliest year that the
payment can be deducted.
5.4 Accounts and Earnings. The Company shall establish a Deferral
Account for each Participant who has elected a deferral under section 5.1 above,
and its accounting records for the Plan with respect to each such Participant
shall include a separate Deferral Account or subaccount for each deferral
election of the Participant that could cause a payment made at a different time
or in a different form from other payments of deferrals elected by the same
Participant. Each Deferral Account balance shall reflect the Company's
obligation to pay a deferred amount to a Participant or Beneficiary as provided
in this Article V.
Under procedures approved by the Committee and communicated to
Participants, a Participant shall elect between the following two alternatives
with respect to the deferred amounts at the same time that the Participant
elects to defer the fees payable for a calendar year (provided that elections
made for the 1999 calendar year shall be made within 30 days of the date the
Participant receives notice of the election, or such shorter time as may be
specified by the Committee). Once made, a Participant's election for the method
of payment may not be changed; however, a Participant may make a different
election with respect to amounts that the Participant elects to defer in
subsequent periods.
(1) Payment in Shares. Under this alternative, a Participant shall be
credited with an award of Performance Shares pursuant to Section 4.7 of the 1992
Stock Incentive Plan, in a number of Performance Shares equal to (i) the amounts
deferred hereunder, divided by (ii) the closing price of the Common Stock of the
Company on the date the Deferral occurred. Performance Shares credited hereunder
shall be issued to one or more grantor trusts formed by the Company ("rabbi
trusts") pursuant to Section 6.2 hereof. Any dividends paid on shares of the
Common Stock of the Company issued to a rabbi trust shall be reinvested in
Common Stock of the Company, which shall be treated as having been issued to the
Participant as additional Performance Shares under the 1992 Stock Incentive
Plan. Notwithstanding the foregoing, the crediting of assumed earnings shall not
mean that any deferred compensation promise to a Participant is secured by
particular investment assets or that the Participant is actually earning any
form of investment income under the Plan.
(2) Issuance of Stock Options Under the 1992 Stock Incentive Plan.
Under this alternative, a Participant may elect, in lieu of receiving any
payments from the Plan, to be issued nonqualified stock options pursuant to
Section 4.6 of The Charles Schwab Corporation 1992 Stock Incentive Plan. A
Participant who elects this alternative shall, on the date the fees deferred
pursuant to Section 5.1 hereof would otherwise have been payable, be issued a
number of nonqualified stock options with a fair market value equal to the
amounts deferred, as determined under the valuation methods set forth in Exhibit
A hereto.
5.5 Maintenance of Accounts. The Accounts of each Participant shall
be entered on the books of the Company and shall represent a liability, payable
when due under this Plan, from the general assets of the Company. Prior to
benefits becoming due hereunder, the Company shall expense the liability for
such accounts in accordance with policies determined appropriate by the
Company's auditors. Except to the extent provided pursuant to the second
paragraph of this section 5.5, the Accounts created for a Participant by the
Company shall not be funded by a trust or an insurance contract; nor shall any
assets of the Company be segregated or identified to such account; nor shall any
property or assets of the Company be pledged, encumbered, or otherwise subjected
to a lien or security interest for payment of benefits hereunder.
5.6 Change in Control. In the event of a Change in Control (as
defined below), the following rules shall apply:
(a) All Participants shall continue to have a fully vested, nonforfeitable
interest in their Deferral Accounts.
(b) Deferrals of amounts for the year that includes the Change in Control
shall cease beginning with the first payment otherwise due that
follows the Change in Control.
(c) A special allocation of earnings on all Deferral Accounts shall be
made under section 5.4 as of the date of the Change in Control on a
basis no less favorable to Participants than the method being followed
prior to the Change in Control.
(d) All payments of deferred amounts following a Change in Control,
whether or not they have previously begun, shall be made in a lump sum
no later than 30 days following the Change in Control and, except as
provided in section 5.3 with respect to installment payments in
progress, shall be in an amount equal to the full Deferral Account
balance, as adjusted pursuant to paragraph (c) above, as of the date
of the Change in Control.
(e) Nothing in this Plan shall prevent a Participant from enforcing any
rules in a contract or another plan of the Company or any Subsidiary
concerning the method of determining the amount of fees or other form
of compensation to which a Participant may become entitled following a
change in control, or the time at which that compensation is to be
paid in the event of a change in control. For purposes of this Plan, a
"Change in Control" means any of the following:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Corporation (the "Outstanding Corporation Common Stock") or (ii)
the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the
election of directors (the "Outstanding Corporation Voting
Securities"); provided, however, that for purposes of this
paragraph (1), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of paragraph (3)
hereof; or
(2) Individuals who, as of January 1, 1996, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to January 1, 1996 whose election,
or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(3) Consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Corporation Common Stock and Outstanding Corporation
Voting Securities, as the case may be, (ii) no Person (excluding
any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for
such Business Combination; or
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company. A Change of Control
shall occur on the first day on which any of the preceding
conditions has been satisfied. However, notwithstanding the
foregoing, this section 5.6 shall not apply to any Participant
who alone or together with one or more other persons acting as a
partnership, limited partnership, syndicate, or other group for
the purpose of acquiring, holding or disposing of securities of
the Company, triggers a "Change in Control" within the meaning of
paragraphs (1) and (2) above. Moreover, no acquisition by (i)
Charles Schwab and/or his spouse or any of his lineal descendants
or (ii) any trust created by or for the benefit of Charles Schwab
and/or his spouse or any of his lineal descendants or (iii) the
Schwab Family Foundation shall constitute a Change of Control.
5.7 Payment of Deferred Amounts. A Participant shall have a fully
vested, nonforfeitable interest in his or her Deferral Account balance at all
times. However, vesting does not confer a right to payment other than in the
manner elected by the Participant pursuant to section 5.3 (subject to any
modification that may occur pursuant to section 5.4, 5.6 or 5.8). Upon the
expiration of a deferral period selected by the Participant in one or more
deferral elections, the Company shall pay to such Participant (or to the
Participant's Beneficiary, in the case of the Participant's death), an amount
equal to the balance of the Participant's Account attributable to such expiring
deferral elections, plus any assumed earnings (determined by the Company
pursuant to section 5.4) thereon.
5.8 Acceleration of Payment. The Committee, in its discretion, upon
receipt of a written request from a Participant, may accelerate the payment of
all or any portion of the unpaid balance of a Participant's Deferral Account in
the event of the Participant's death, permanent disability, or upon its
determination that the Participant (or his Beneficiary in the case of his death)
has incurred a severe, unforeseeable financial hardship creating an immediate
and heavy need for cash that cannot reasonably be satisfied from sources other
than an accelerated payment from this Plan. The Committee in making its
determination may consider such factors and require such information as it deems
appropriate.
Article VI. General Provisions
6.1 Unfunded Obligation. The deferred amounts to be paid to
Participants pursuant to this Plan constitute unfunded obligations of the
Company. Except to the extent specifically provided hereunder, the Company is
not required to segregate any monies from its general funds, to create any
trusts, or to make any special deposits with respect to this obligation. Title
to and beneficial ownership of any investments, including any grantor trust
investments which the Company has determined and directed the Administrator to
make to fulfill obligations under this Plan shall at all times remain in the
Company. Any investments and the creation or maintenance of any trust or
Accounts shall not create or constitute a trust or a fiduciary relationship
between the Administrator or the Company and a Participant, or otherwise create
any vested or beneficial interest in any Participant or his or her Beneficiary
or his or her creditors in any assets of the Company whatsoever. The
Participants shall have no claim for any changes in the value of any assets
which may be invested or reinvested by the Company in an effort to match its
liabilities under this Plan.
6.2 Informal Funding Vehicles. To the extent required pursuant to
Section 5.4(1), the Company shall arrange for the establishment and use of a
grantor trust or other informal funding vehicle to facilitate the payment of
benefits and to discharge the liability of the Company and participating
Affiliates under this Plan to the extent of payments actually made from such
trust or other informal funding vehicle. In addition, the Company may, but need
not, arrange for the establishment and use of such a grantor trust or other
informal funding vehicle to the extent otherwise permitted pursuant to the Plan.
Any investments and any creation or maintenance of memorandum accounts or a
trust or other informal funding vehicle shall not create or constitute a trust
or a fiduciary relationship between the Committee or the Company or an affiliate
and a Participant, or otherwise confer on any Participant or Beneficiary or his
or her creditors a vested or beneficial interest in any assets of the Company or
any Affiliate whatsoever. Participants and Beneficiaries shall have no claim
against the Company or any Affiliate for any changes in the value of any assets
which may be invested or reinvested by the Company or any Affiliate with respect
to this Plan.
6.3 Beneficiary. The term "Beneficiary" shall mean the person or
persons to whom payments are to be paid pursuant to the terms of the Plan in the
event of the Participant's death. A Participant may designate a Beneficiary on a
form provided by the Administrator, executed by the Participant, and delivered
to the Administrator. The Administrator may require the consent of the
Participant's spouse to a designation if the designation specifies a Beneficiary
other than the spouse. Subject to the foregoing, a Participant may change a
Beneficiary designation at any time. Subject to the property rights of any prior
spouse, if no Beneficiary is designated, if the designation is ineffective, or
if the Beneficiary dies before the balance of the Account is paid, the balance
shall be paid to the Participant's surviving spouse, or if there is no surviving
spouse, to the Participant's estate.
6.4 Incapacity of Participant or Beneficiary. Every person receiving
or claiming benefits under the Plan shall be conclusively presumed to be
mentally competent and of age until the date on which the Administrator receives
a written notice, in a form and manner acceptable to the Administrator, that
such person is incompetent or a minor, for whom a guardian or other person
legally vested with the care of his person or estate has been appointed;
provided, however, that if the Administrator finds that any person to whom a
benefit is payable under the Plan is unable to care for his or her affairs
because of incompetency, or because he or she is a minor, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a parent, a brother or
sister, or to any person or institution considered by the Administrator to have
incurred expense for such person otherwise entitled to payment. To the extent
permitted by law, any such payment so made shall be a complete discharge of
liability therefor under the Plan.
If a guardian of the estate of any person receiving or claiming benefits
under the Plan is appointed by a court of competent jurisdiction, benefit
payments may be made to such guardian provided that proper proof of appointment
and continuing qualification is furnished in a form and manner acceptable to the
Administrator. In the event a person claiming or receiving benefits under the
Plan is a minor, payment may be made to the custodian of an account for such
person under the Uniform Gifts to Minors Act. To the extent permitted by law,
any such payment so made shall be a complete discharge of any liability therefor
under the Plan.
6.5 Nonassignment. The right of a Participant or Beneficiary to the
payment of any amounts under the Plan may not be assigned, transferred, pledged
or encumbered nor shall such right or other interests be subject to attachment,
garnishment, execution, or other legal process.
6.6 No Right to Continued Service. Nothing in the Plan shall be
construed to confer upon any Participant any right to continue as a Director of
the Company.
6.7 Tax Withholding. Any appropriate taxes shall be withheld from
payments made to Participants pursuant to the Plan. To the extent tax
withholding is payable in connection with the Participant's deferral of income
rather than in connection with the payment of deferred amounts, such withholding
may be made from amounts currently payable to the Participant, or, as determined
by the Administrator, the amount of the deferral elected by the Participant may
be reduced in order to satisfy required tax withholding for any applicable
taxes.
6.8 Claims Procedure and Arbitration. The Company shall establish a
reasonable claims procedure consistent with the requirements of the Employee
Retirement Income Security Act of 1974, as amended. Following a Change in
Control of the Company (as determined under section 5.6) the claims procedure
shall include the following arbitration procedure.
Since time will be of the essence in determining whether any payments are
due to the Participant under this Plan following a Change in Control, a
Participant may submit any claim for payment to arbitration as follows: On or
after the second day following the Termination or other event triggering a right
to payment, the claim may be filed with an arbitrator of the Participant's
choice by submitting the claim in writing and providing a copy to the Company.
The arbitrator must be:
(a) a member of the National Academy of Arbitrators or one who currently
appears on arbitration panels issued by the Federal Mediation and
Conciliation Service or the American Arbitration Association; or
(b) a retired judge of the State in which the claimant is a resident who
served at the appellate level or higher. The arbitration hearing shall
be held within 72 hours (or as soon thereafter as possible) after
filing of the claim unless the Participant and the Company agree to a
later date. No continuance of said hearing shall be allowed without
the mutual consent of the Participant and the Company. Absence from or
nonparticipation at the hearing by either party shall not prevent the
issuance of an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion, and the
arbitrator may close the hearing in his or her sole discretion upon
deciding he or she has heard sufficient evidence to satisfy issuance
of an award. In reaching a decision, the arbitrator shall have no
authority to ignore, change, modify, add to or delete from any
provision of this Plan, but instead is limited to interpreting this
Plan. The arbitrator's award shall be rendered as expeditiously as
possible, and unless the arbitrator rules within seven days after the
close of the hearing, he will be deemed to have ruled in favor of the
Participant. If the arbitrator finds that any payment is due to the
Participant from the Company, the arbitrator shall order the Company
to pay that amount to the Participant within 48 hours after the
decision is rendered. The award of the arbitrator shall be final and
binding upon the Participant and the Company. Judgment upon the award
rendered by the arbitrator may be entered in any court in any State of
the United States. In the case of any arbitration regarding this
Agreement, the Participant shall be awarded the Participant's costs,
including attorney's fees. Such fee award may not be offset against
the deferred compensation due hereunder. The Company shall pay the
arbitrator's fee and all necessary expenses of the hearing, including
stenographic reporter if employed.
6.9 Termination and Amendment. The Committee may from time to time
amend, suspend or terminate the Plan, in whole or in part, and if the Plan is
suspended or terminated, the Committee may reinstate any or all of its
provisions. Except as otherwise required by law, the Committee may delegate to
the Administrator all or any of its foregoing powers to amend, suspend, or
terminate the Plan. Any such amendment, suspension, or termination may affect
future deferrals without the consent of any Participant or Beneficiary. However,
with respect to deferrals that have already occurred, no amendment, suspension
or termination may impair the right of a Participant or a designated Beneficiary
to receive payment of the related deferred compensation in accordance with the
terms of the Plan prior to the effective date of such amendment, suspension or
termination, unless the affected Participant or Beneficiary gives his express
written consent to the change.
6.10 Applicable Law. The Plan shall be construed and governed in
accordance with applicable federal law and, to the extent not preempted by such
federal law, the laws of the State of California.
Exhibit A
For purposes of determining the number of Options
to be granted Under the Stock Option
Investment Election, Options will be valued
under the Black-Scholes method, based on the
following assumptions:
o Assumed Option Term = 5 years
o Volatility = Actual volatility over the 3 year period immediately preceding
the grant
o Risk Free Interest Rate = 5 year Treasury Note Rate
o Dividend Yield = Current Annual Dividend Yield On Option Grant Date
(Quarterly Dividend x 4) / Market Price on Option Grant Date = Dividend Yield
Sample Calculation: ($.028 x 4)/ $55 = .2%
o Fair Market Value = Closing Price Of Schwab Common Stock on Date of Grant
(Same as Date of Retainer and Meeting Fee Payment)
o Exercise Price = Same as above
Sample Stock Option Calculation
o Fees Deferred / Black Scholes Valuation = Number of Stock Option grants
from Deferral Election
Sample Calculation: $14,250 / $23.82 = 598.2368 Stock Options, rounded up to
nearest full option, = grant of 599 Stock Options.