Exhibit 10.274
SUMMARY OF DIRECTOR COMPENSATION
The directors' current compensation was approved by the Board of Directors and
the equity portion of the compensation is subject to stockholder approval at the
2005 Annual Meeting of Stockholders. The following table sets forth rates of
cash compensation for non-employee directors beginning January 1, 2005:
Annual Retainer $ 50,000
Per Meeting Fees
Board Meeting $ 2,800
Audit Committee
Same Day as Board Meeting 1,000
Different Day as Board Meeting 2,500
Compensation Committee
Same Day as Board Meeting 1,000
Different Day as Board Meeting 2,500
Other Committee
Same Day as Board Meeting 500
Different Day as Board Meeting 2,000
Committee Chair Annual Retainer
Audit Committee $ 20,000
Compensation Committee 15,000
Nominating & Corporate Governance Committee 15,000
Non-employee directors may also participate in The Charles Schwab
Corporation Directors' Deferred Compensation Plan. This plan allows non-employee
directors to defer receipt of all or a portion of their retainers and fees and,
at their election, either to:
(1) receive stock options that (a) have a fair value equal to the amounts
deferred (as determined under the valuation method used by the company to value
stock options at the time of the deferral), (b) have an option exercise price
equal to the fair market value of common stock on the date the deferred amount
would have been paid, and (c) vest immediately upon grant and generally expire
ten years after the grant date, or
(2) invest the deferred amount in restricted stock units that are funded by
an equivalent number of shares of common stock to be held in a "rabbi" trust and
distributed to the director when he or she ceases to be a director.
In addition to cash compensation, non-employee directors also are entitled to
receive non-discretionary equity grants under the Company's 2004 Stock Incentive
Plan. In 2004, those grants were as follows:
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Non-Employee Director Equity Grants
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Annual grant of options 5,000 options
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Annual grant of restricted stock 5,242 shares
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Initial grant of options for new 5,000 options
directors
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Non-employee director equity grants are subject to the following terms and
conditions:
o Annual grants of options and restricted stock vest over the three-year
period following the date of grant and become 100% vested in the event of
the non-employee director's death, disability or retirement. Initial
grants of options (when a director joins the Board) are fully vested on
the date of the grant.
o The number of shares for the annual grant of restricted stock is
determined by dividing $50,000 by the average of the high and low market
prices of common stock on the grant date.
o Each stock option is designated as a non-qualified stock option and has
an exercise price equal to the fair market value of common stock on the
date of the grant.
o Each stock option expires on the earliest of (1) the date ten years after
the date of grant, (2) the date three months after termination of service
for any reason other than death, disability or retirement, (3) the date
one year after termination of service because of death or disability, or
(4) the date two years after termination of service because of
retirement.
If the amendment to the Company's 2004 Stock Incentive Plan is approved by the
stockholders at the Annual Meeting of Stockholders on May 19, 2005, non-employee
directors will receive an initial grant of options on 10,000 shares of common
stock. The annual, automatic grants to non-employee directors will consist of
(i) options on 5,000 shares of common stock and (ii) a number of restricted
shares of common stock determined by dividing $60,000 by the fair market value
of a share of common stock on the grant date.