Severance Plan

 

 

 

EX-10.314 2 dex10314.htm EMPLOYMENT AGREEMENT, BETWEEN THE REGISTRANT AND CHARLES R. SCHWAB

Exhibit 10.314

EMPLOYMENT AGREEMENT

This Agreement, as amended, is made and entered into effective as of March 13, 2008 by and between The Charles Schwab Corporation, a Delaware Corporation (hereinafter referred to as the “Company”), and Charles R. Schwab, an individual (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Company desires to reward the Executive for his continuing contribution to the Company and provide additional security for the Executive and to provide an inducement to the Executive to remain with the Company and not to engage in competition with it.

NOW THEREFORE, in consideration of the mutual obligations herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

 

1.

EMPLOYMENT

(a) The Company hereby employs the Executive to render services to the Company in the position of Chairman of the Board in the capacity defined in the Bylaws of the Company, as may be amended from time to time. The Executive shall perform such duties commensurate with his position and shall have authority and responsibility in working with the Chief Executive Officer, subject to the control of the Board of Directors, for the overall strategic direction and leadership of the Company.

(b) Throughout the term of this Agreement, the Executive shall devote his full business time and undivided attention to the business and affairs of the Company and its subsidiaries, except for reasonable vacations and except for illness or incapacity, but nothing in the Agreement shall preclude the Executive from devoting reasonable periods required for serving, as appropriate, on Boards of Directors of other companies, and from engaging in charitable and public service activities provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement.

 

2.

TERM

This Agreement shall commence on March 31, 2003, and shall continue through March 31, 2008, subject to the terms and conditions herein set forth. Beginning on March 31, 2004, and on each subsequent anniversary of this date, one year shall be added to the term of the Agreement, unless, prior to such anniversary, the Company or the Executive has notified the other party hereto that such extension will not become effective.

 

3.

COMPENSATION

For services rendered by the Executive during the term of this Agreement, and for his performance of all additional obligations of employment, the Company agrees to pay the Executive and the Executive


agrees to accept the following salary, other compensation, and benefits:

(a) Base Salary. During the term of this Agreement, the Company shall pay the Executive in periodic installments, a base salary at the annual rate of $900,000, such base salary to be reviewed on March 31, 2004, and on each subsequent anniversary the Board may adjust it up or down, taking into account, among other things, individual performance, competitive practice, and general business conditions.

(b) Annual Incentive. In addition to the base salary provided in Section 3(a) above, the Executive shall be eligible to receive an annual incentive award based upon the Company’s attainment of pre-established performance targets relative to specified performance standards. The performance standards upon which annual incentive payments will be earned shall be adopted at the beginning of each year by the Compensation Committee of the Board of Directors (the “Committee”), to be selected by the Committee from among the following: revenue growth, net revenue growth, operating revenue growth, consolidated pretax profit margin, consolidated pretax operating margin, consolidated after-tax profit margin, consolidated after-tax operating profit margin, customer net new asset growth, stockholder return, return on assets, earnings per share, return on equity, and return on investment.

For each fiscal year during the term of this Agreement, the Executive’s incentive opportunity shall be computed as the amount of total cash compensation earned pursuant to the formula-based matrix, which shall be adopted each year by the Compensation Committee of the Board of Directors of the Company, minus the Executive’s actual base salary paid during that year. For the 2003 fiscal year, the target total annual cash compensation amount (including base salary) is $5,400,000; therefore, the incentive target is $4,500,000 for achieving specified objectives (see above).

The formula-based matrix, as amended at the sole discretion of the Committee, shall be the sole basis for determining the Executive’s annual incentive award. The Committee shall annually review and approve the performance standards and targets with respect to the Executive’s incentive opportunity, which review and approval shall be completed no later than the 90th day of the Company’s fiscal year for which such incentive opportunity may be earned.

Notwithstanding anything to the contrary, the Executive’s maximum annual cash compensation (including base salary and annual incentive) may not exceed $8,000,000.

(c) Long-Term Incentive. The Executive will be considered for stock options in accordance with the Company’s 2001 Stock Incentive Plan, as amended, or any successor thereto (“Stock Option Program”) and any other long-term incentives offered to other executives of the Company from time to time during the term of this Agreement.

(d) Benefits. The Executive shall be entitled to participate, as long as he is an employee of the Company, in any and all of the Company’s present or future employee benefit plans, including without limitation pension plans, thrift and savings plans, insurance plans,

 

2


and other benefits that are generally applicable to the Company’s executives; provided, however, that the accrual and/or receipt by the Executive of benefits under and pursuant to any such present or future employee benefit plan shall be determined by the provisions of such plan.

(e) Perquisites. The Executive will be provided such additional perquisites as are customary for senior level executives of the Company provided that each perquisite is approved by the Board of Directors.

(f) Business Expenses. The Executive will be reimbursed for all reasonable expenses incurred in connection with the conduct of the Company’s business upon presentation of evidence of such expenditures, including but not limited to travel expenses incurred by the Executive in the performance of his duties, security for the Executive, his family, and principal residence, professional organization dues, and club initiation fees, dues and expenses.

(g) Any annual incentive award earned by Executive under this Section 3 shall be paid on or after January 1st and on or before March 15th of the calendar year immediately following the end of the fiscal year on which the award is based; provided, however, that if any such payment would be nondeductible to the Company under Section 162(m) of the Internal Revenue Code (the “Code”), then any nondeductible amounts shall be deferred from year to year until the payment of such amounts is deductible by the Company.

 

4.

TERMINATION OF EMPLOYMENT

(a) Resignation. Notwithstanding Section 2 hereof, this Agreement may be terminated by the Executive at any time upon six (6) months written notice of resignation by the Executive to the Company, and in such event any payments pursuant to Section 3 and 4 of this Agreement shall automatically terminate (except for the Company’s obligations relating to voluntary termination under its compensation and benefit plans, as specified in the various plan documents, and the Executive’s obligations set forth in Section 5). Subsequent payments may be made to the Executive as provided pursuant to Section 6 of this Agreement.

Termination under this Section 4(a) shall continue to be a “Voluntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(b) Separation from Service Other Than for Cause. An involuntary Separation from Service (as defined below) other than for Cause, as defined in Section 4(c) below, shall cause the Company to make payments to the Executive hereunder pursuant to the provisions of this Section 4(b). Such involuntary Separation from Service shall require at least sixty (60) business days’ prior notice and must be signed by at least three-fourths (3/4) of all the non-employee members of the Board of Directors.

Notwithstanding anything to the contrary contained in the Stock Option Program or any agreement or document related thereto, the Executive’s total outstanding and unvested shares and/or options under the Stock Option Program shall at the date of Separation from Service

 

3


under this Section 4(b) be 100% vested. No further grants of stock or options shall be made under the Stock Option Program after such termination.

With respect to base salary and annual incentive compensation, the Company’s obligation shall be to pay the Executive, according to the terms of this Agreement and for a period of thirty-six (36) months, an amount equal to the annual salary and incentive paid to the Executive at the bonus level for the year prior to which such Separation from Service occurs unless performance of the Company as defined in the matrix referenced in Section 3(b) is better in the year of Separation from Service, in which event such bonus shall be based on the matrix calculation as described in Section 3(b), such annual amounts to be paid in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee (as defined below), a lump sum representing six (6) of the monthly installment payments under this Section 4(b) shall be paid, and the remaining thirty (30) monthly installments payable under this Section 4(b) shall commence upon the first day of the seventh month following the Executive’s Separation from Service (or on the date of the Executive’s death, if earlier).

If the Board of Directors fails to reelect the Executive to a position comparable to that described in Section 1(a) of this Agreement or, without terminating the Executive’s employment, removes the Executive from his position for reasons other than Cause, substantively reduces the Executive’s duties and responsibilities, reduces his pay and/or benefits without the written consent of the Executive, forces relocation, or requires excessive travel, then the Executive may, by notice to the Company, Separate from Service and treat such Separation from Service as an involuntary Separation from Service pursuant to this Section 4(b).

In the event of the Executive’s death before the completion of the payments pursuant to this Section 4(b), the remaining payments hereunder shall be made to the beneficiary or beneficiaries designated by the Executive to the Company in writing or, absent such a designation, to his estate.

The term “Specified Employee” means an employee treated as a “specified employee” as defined under Code Section 409A as of the date of his Separation from Service. Generally, a specified employee is one of the top 50 most highly compensated officers.

The term “Separation from Service” or “Separate(s) from Service” shall mean a “separation from service” within the meaning of Code Section 409A. Generally, a separation from service occurs when an individual ceases to provide services for the Company and its affiliates.

Termination under this Section 4(b) shall continue to be an “Involuntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(i) Post-Employment Benefits. In the event the Executive’s employment terminates under Section 4(b), the Executive

 

4


shall be entitled to all benefits and perquisites as provided for in this Agreement, including office space and secretarial support, comparable to that provided to the Executive during his employment by the Company for a period of thirty-six (36) months following his Separation from Service. All benefits or perquisites that the Executive receives following his Separation from Service that are covered under Code Section 409A (“409A Benefits”) shall be administered consistent with the following requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (1) Executive’s eligibility for benefits in one year will not affect Executive’s eligibility for benefits in any other year; (2) any reimbursement of eligible expenses will be made on or before the last day of the year following the year in which the expense was incurred; and (3) Executive’s right to benefits is not subject to liquidation or exchange for another benefit.

If the Executive is a Specified Employee, then the Executive shall pay all applicable costs associated with the provision of 409A Benefits during the first six (6) months following the Executive’s Separation from Service. The Company shall reimburse the Executive for all expenses actually paid by the Executive under this Section 4(b) (i) upon the first day of the seventh month following the Executive’s Separation from Service.

(c) Termination by the Company for Cause. The Company may terminate the Executive’s employment for Cause if the Executive has committed a felonious act, or the Executive, in carrying out his duties hereunder has been willfully and grossly negligent or has committed willful and gross misconduct resulting, in either case, in material harm to the Company. An act or omission shall be deemed “willful” only if done, or omitted to be done, in bad faith and without reasonable belief that it was in the best interest of the Company. In the event of termination of the Executive by the Company for Cause, the Executive shall no longer be entitled to receive any payments or any other rights or benefits under this Agreement.

(d) Disability. In the event the Executive becomes Disabled (as defined below), he will continue to receive the same base salary and benefits which he was receiving prior to such disability for 36 months, offset by payments under the Company’s Long-Term Disability Plan. Such payments shall commence within 90 days of such disability. In addition, he shall receive a pro-rated annual incentive payment for the year in which his employment is terminated, based on the formula described in Section 3(b). Such payment shall be made as soon as practicable following the Executive becoming Disabled, but in no event later than 90 days following the Executive becoming Disabled. The term “Disabled” under this Section 4(d) means disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Executive is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

 

5


(e) Death. In the event of the death of the Executive during the term of this Agreement, the rights and benefits under employee benefit plans and programs of the Company, including life insurance, will be determined in accordance with the terms and conditions of such plans and programs as in effect on his date of death. In such event, the Company shall pay in a lump sum to the Executive’s estate an amount equal to five times the then current rate of the Executive’s base salary, and no further payments shall be required pursuant to this Agreement. The lump-sum described in this Section 4(e) shall be paid to the Executive’s estate as soon as practicable following the date of the Executive’s death, but in no event later than 90 days following the Executive’s death.

(f) Change in Control. In the event of a change in control of the Company, as set forth below, the Executive may at any time and in his complete discretion during a 24-month period following a change in control, elect to terminate his employment with the Company. For purposes of this Agreement, a “change in control” shall mean a change in ownership of the Company that would be required to be reported in response to Item 1(a) of a Current Report on Form 8-K pursuant to the Securities and Exchange Act of 1934 (“Exchange Act”), as in effect on the date hereof, except that any merger, consolidation or corporate reorganization in which the owners of the capital stock entitled to vote in the election of directors of the Employer or the Company (“Voting Stock”) prior to said combination, own 75% or more of the resulting entity’s Voting Stock shall not be considered a change in control for the purposes of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company is or becomes the beneficial owners (as that is used in Section 13(d) of the Exchange Act), directly or indirectly, of 30% or more of the Voting Stock of the Company or its successor; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (“Incumbent Board”) cease for any reason to constitute at least a majority thereof; provided, however, that any person becoming a director of the Company after the beginning of the period whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall, for the purposes hereof, be considered as though he were a member of the Incumbent Board; or (iii) there shall occur the sale of all or substantially all of the assets of the Company. Notwithstanding anything in the foregoing to the contrary, no change in control of the Company shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of persons which includes the Executive acquiring, directly or indirectly, more than 30 percent of the combined voting power of the Company’s outstanding securities. If any of the events constituting a change in control shall have occurred during the term hereof, the Executive shall be entitled to the privilege provided in subparagraph (f) herein to terminate his employment.

Any termination by the Executive pursuant to this Section shall be communicated by a written “Notice of Termination.”

 

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If, following a change in control, the Executive shall for any reason voluntarily terminate his employment during the 24-month period following a change in control, then the Company shall pay base salary up to the date of termination and a prorated annual incentive award based on the calculated bonus for the year in which termination occurred, as defined in Section 3(b), in a lump sum on the thirtieth (30th) day following the Date of Termination.

 

5.

COVENANT NOT TO COMPETE

(a) As a material inducement to the Company’s entering into this Agreement, the Executive agrees that during the term of this Agreement, he will not become associated with, render service to or engage in any other business competitive with any existing or contemplated business of the Company or its subsidiaries, except that the Executive may serve as a member of the board of directors of other companies or organizations, provided that he provides written notice to the Board of each significant activity, and that he will do nothing inconsistent with his duties and responsibilities to the Company.

(b) If the Executive voluntarily resigns from the employ of the Company prior to the expiration of the term of this Agreement, he specifically agrees that for a period of five (5) years commencing with the date of his voluntary resignation he will not engage in or perform any services either on a full-time or a part-time or on a consulting or advisory basis for any business organization that is in competition with the Company at the time such services are being performed by Executive, with the exception that this Section 5(b) shall not apply in the event the Executive resigns voluntarily following a change in control of the Company as defined in Section 4(f).

(c) The Executive will not at any time, whether while employed by the Company or after voluntary or involuntary termination or after retirement, reveal to any person, firm or entity any trade or business secrets or confidential, secret, or privileged information about the business of the Company or its subsidiaries or affiliates except as shall be required in the proper conduct of the Company’s business.

 

6.

CONSULTING ARRANGEMENT

Following the Executive’s Separation from Service pursuant to Section 4(a) or Separation from Service following a change in control under Section 4(f), or an involuntary Separation from Service subsequent to a change in control of the Company, for any reason but during a 24-month period following a change in control as defined in Section 4(f), after the Executive ceases to render services as the Chairman, he may in his sole discretion elect to act as a consultant to the Company for a period of five (5) years. During this period of consulting services, the Executive shall, at reasonable times and places, taking into account any other employment or activities he may then have, hold himself available to consult with and advise the officers, directors, and other representatives of the Company. As compensation therefore, the Executive shall be entitled to receive, and Company shall pay, an annual amount equal to seventy-five percent (75%) of his annual base salary rate in effect immediately prior to his Separation from Service, but in no event an annual amount to exceed

 

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$1,000,000, for each year of such period, payable in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee, a lump sum representing six (6) of the monthly installment payments under this Section 6 shall be paid, and the remaining monthly installments payable under this Section 6 shall commence upon the first day of the seventh month following the Executive’s Separation from Service.

 

7.

WITHHOLDING

All amounts payable hereunder which are or may become subject to withholding under pertinent provisions of law or regulation shall be reduced for applicable income and/or employment taxes required to be withheld.

 

8.

MISCELLANEOUS

(a) This Agreement supersedes any prior agreements or understandings, oral or written, with respect to employment of the Executive and constitutes the entire Agreement with respect thereto; provided, however, that nothing contained herein shall supersede that certain Assignment and License Agreement entered into as of March 31, 1987, as amended. This Agreement cannot be altered or terminated orally and may be amended only by a subsequent written agreement executed by both of the parties hereto or their legal representatives, and any material amendment must be approved by a majority of the voting shareholders of the Company.

(b) This Agreement shall be governed by and construed in accordance with the laws of the State of California.

(c) This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns. In that this constitutes a personal service agreement, it may not be assigned by the Executive and any attempted assignment by the Executive in violation of this covenant shall be null and void.

(d) For the purpose of this Agreement, the phrase “designated beneficiary or beneficiaries” shall include the estates of such beneficiaries in the event of their death before the receipt of all payments under this Agreement and shall also include any alternate or successor beneficiaries designated in writing to the Company by the Executive.

(e) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions, which shall remain in full force and effect.

(f) The Section and Paragraph headings contained herein are for reference purposes only and shall not in any way affect the meanings or interpretation of this Agreement.

(g) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be

 

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entered on the arbitrators’ award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company.

(h) Any notices, requests or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices.

 

9.

COMPLIANCE WITH CODE SECTION 409A

With respect to any compensation payable or benefits to be provided under this Agreement that are subject to Code Section 409A, this Agreement is intended to comply with the provisions of Code Section 409A. In furtherance of this intent, to the extent that any compensation payable or benefits to be provided under this Agreement are subject to Code Section 409A, this Agreement shall be interpreted, operated, and administered in a manner consistent with these intentions, and the parties agree to amend this Agreement further (if necessary) in order to avoid the adverse tax consequences of Code Section 409A.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

 

 

 

 

 

 

 

 

 

 

 

ATTEST

 

 

 

Company:

THE CHARLES SCHWAB CORPORATION

 

 

 

 

 

By:

 

/s/ Carrie Dwyer

 

 

 

By:

 

/s/ Jay Allen

 

 

Carrie Dwyer

Corporate Secretary

 

 

 

 

 

Jay Allen

Executive Vice President - Human Resources

 

 

 

 

 

 

 

Executive:

 

/s/ Charles R. Schwab

 

 

Charles R. Schwab

 

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EX-10.325 9 dex10325.htm THE CHARLES SCHWAB SEVERANCE PAY PLAN, AS AMENDED AND RESTATED.

Exhibit 10.325

 

 

 

THE CHARLES SCHWAB

SEVERANCE PAY PLAN

(As Amended and Restated Effective April 1, 2009)

 

 

 


TABLE OF CONTENTS

 

 

 

 

ARTICLE 1 - PURPOSE OF PLAN

  

1

 

 

ARTICLE 2 - DEFINITIONS

  

1

 

 

ARTICLE 3 - PARTICIPATION

  

7

 

 

3.1        Commencement of Participation

  

7

 

 

3.2        Termination of Participation

  

7

 

 

ARTICLE 4 - EFFECT ON OTHER BENEFITS

  

7

 

 

4.1        Eligibility for Benefits

  

8

 

 

4.2        Paid Time Off Benefits

  

8

 

 

ARTICLE 5 - NOTICE PERIOD

  

8

 

 

5.1        Notice Period.

  

8

 

 

5.2        Participants Requested to Work During Notice Period.

  

8

 

 

5.3        Acceleration of Termination Date.

  

8

 

 

ARTICLE 6 - BENEFITS

  

9

 

 

6.1        Non-Officers Severance Pay.

  

9

 

 

6.2        Officer Severance Pay

  

10

 

 

6.3        Group Health Plan Coverage Payment and Long-Term Awards

  

11

 

 

6.4        Additional Provisions Related to Severance Benefits.

  

12

 

 

ARTICLE 7 - FUNDING

  

13

 

 

ARTICLE 8 - ADMINISTRATION

  

14

 

 

8.1        Administrator’s Authority.

  

14

 

 

8.2        Claims for Benefits

  

15

 

 

8.3        Indemnification

  

15

 

 

ARTICLE 9 - AMENDMENT AND TERMINATION

  

15

 

 

ARTICLE 10 - MISCELLANEOUS

  

15

 

 

ARTICLE 11 - EXECUTION

  

16

 

 

APPENDIX A

  

A

 

i.


ARTICLE 1 - PURPOSE OF PLAN

The purpose of this Plan is to set forth the terms and conditions under which severance pay and other severance benefits will be provided to employees of the Company. This Plan is intended to constitute an employee welfare benefit plan within the meaning of section 3(1) of ERISA, and is intended to memorialize the provisions of the Company’s severance pay program.

The effective date of this restatement is April 1, 2009. The rights of any person whose Notice Period Start Date is prior to the Restated Effective Date shall be determined solely under the terms of the Plan provisions as in effect on such date, unless such person is thereafter reemployed and again becomes a Participant. The rights of any other person shall be determined solely under the terms of this restated Plan, except as may be otherwise required by law.

This Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). In the event that that any benefit hereunder is deemed by the Administrator to be subject to section 409A of the Code, the Administrator may modify such benefit as it deems necessary to comply with, or to qualify for an exemption from, Code section 409A.

ARTICLE 2 - DEFINITIONS

 

 

A.

“Administrator” means Schwab or such person or committee as may be appointed from time to time by Schwab to supervise the administration of the Plan.

 

 

B.

“Affiliate” means any company which is a member of a controlled group of corporations (within the meaning of section 414(b) of the Code) or a group of trades or businesses under common control (within the meaning of section 414(c) of the Code) that includes the Company.

 

 

C.

“Base Salary” means the Participant’s annual “pay rate” maintained under the authoritative system of record used to produce the Participant’s regular semi-monthly pay. Base Salary shall be determined as of the Participant’s Notice Period Start Date. Unless included by the Company in a Participant’s “pay rate,” Base Salary shall exclude all other earnings or paid amounts such as bonuses, overtime, commissions, all differentials, variable pay, incentive pay, the value of employee benefits and any other amounts that are treated as “other earnings” under the Company’s payroll system. In the case of an Eligible Employee who is classified by the Administrator as a branch manager or a financial consultant of a retail, branch extension, national or satellite branch, the Administrator may determine, in its sole discretion, that such individual’s Base Salary, for purposes of calculating Severance Benefits, shall be supplemented with

 

1.


 

the amount that the Administrator determines, in its sole discretion, to be the Participant’s “practice service” payment in effect as of the Participant’s Notice Period Start Date and as annualized by the Plan Administrator. The Administrator shall have sole discretionary authority to determine a Participant’s Base Salary for all purposes, and the Administrator’s discretionary determinations shall be conclusive and binding on all persons.

 

 

D.

“Code” means the Internal Revenue Code of 1986, as amended.

 

 

E.

“Company” means The Charles Schwab Corporation, a Delaware corporation, and (unless the context requires otherwise) any Participating Company.

 

 

F.

“Comparable Position” means a position that is comparable, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation the similarity of duties and salary and any increase in the commuting distance to the individual’s principal place of employment, provided that a position will not fail to be a “Comparable Position” unless it would result in a material negative change within the meaning of Treas. Reg. section 1.409A-1(n)(2)(i) or any successor thereto.

 

 

G.

“Corporate Transaction” means a merger, acquisition, spin-off, stock sale, sale of assets or portions of a business, outsourcing of all or any portion of a business or any other similar corporate transaction.

 

 

H.

“Eligible Employee” means an individual classified by the Administrator as a Regular Employee who has incurred a Job Elimination. The term “Eligible Employee” shall not include (i) individuals employed pursuant to the terms of a collective bargaining agreement between the Company or an Affiliate and a bargaining unit representing such individuals; (ii) an employee who is on an unpaid leave of absence and has no right to reinstatement under applicable law upon completion of the leave; and (iii) any individual who the Administrator, in its sole discretion, determines to be covered by a Guaranteed Payments Arrangement or any arrangement that, by its terms, makes the individual ineligible for Plan benefits. Notwithstanding the foregoing, the Administrator may, in its sole discretion, determine that an individual who is a party to a Guaranteed Payments Arrangement is an Eligible Employee eligible to receive benefits under Section 6.4(g).

 

 

I.

“Guaranteed Payments Arrangement” is any guarantee or agreement, offer letter, policy, arrangement or plan (regardless of whether it is written or oral) that provides for guaranteed payments of any nature, severance

 

2.


 

benefits of any kind, cash payments representing the value of stock options or restricted stock, and/or similar amounts.

 

 

J.

“Job Elimination” means involuntary termination of employment solely on account of changes in the Company’s operations or organization that result in the elimination of the employee’s job, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation (i) a relocation or dissolution of a portion of the business of the Company; (ii) a withdrawal by the Company from a segment of a market served by the Company; (iii) the elimination of one or more Company product lines; (iv) an elimination, reduction, or change in the Company’s need for one or more specialized skills provided by the employee; (v) an organizational change in the Company, including without limitation a business redesign, reorganization or consolidation; (vi) a significant change in the Company’s systems or technology; and (vii) a reduction in the Company’s staffing levels. Notwithstanding anything to the contrary contained herein, a Job Elimination shall not result (A) from retirement, death or voluntary resignation (whether or not in response to changes in the Company’s operations or organization or in an individual’s title, duties, responsibilities, compensation or benefits) prior to Notice of Eligibility; (B) if the Company or any successor employer or successor organization offers the employee a Comparable Position; (C) from termination prior to or after Notice of Eligibility on account of unsatisfactory performance, failure of a condition of employment, breach of any agreement to which the employee and the Company are parties, or violation of any law, regulation, or Company policy (including but not limited to the Code of Business Conduct and Ethics, Compliance Manual, and HR Policies); (D) where, in connection with a Corporate Transaction, an employee is employed in the same or a substantially similar position at the closing of the Corporate Transaction or the employee is offered a Comparable Position; (E) from the employee’s failure to return to work within the time required following an approved leave of absence; (F) from a change in employment that results from a natural disaster, unforeseeable governmental action, act of war, or other similar unanticipated business disaster; (G) from a transfer of employment among the Company and any of its Affiliates; (H) where, in connection with the outsourcing of all or any a portion of a business, the employee is offered a Comparable Position; and (I) from the Company’s modification or termination of any telecommuting arrangement.

 

 

K.

“Long-Term Award” means a long-term award outstanding as of the Participant’s Termination Date and granted under the plan of a Participating Company that provides for long-term or stock-based awards.

 

 

L.

“Non-Officer” means an Eligible Employee who is not an Officer.

 

3.


 

M.

“Notice of Eligibility” means a written or electronic notice, in a form approved by the Administrator, provided to an Eligible Employee that there will be a Job Elimination and that he or she is eligible for Severance Benefits under the Plan.

 

 

N.

“Notice Period” means a sixty (60) calendar day period commencing on the date specified in the Notice of Eligibility. Except as provided in Section 5.2, Participants are relieved from job responsibilities during the Notice Period and generally are not required to report to work. Also during the Notice Period, all Compliance, Human Resources and Information Security policies and procedures that applied to Participants before receiving Notice of Eligibility continue in full force and effect and Participants remain subject to those policies and procedures. Participants will continue to receive Base Salary and to participate in certain employee benefits. Except as otherwise provided under the applicable bonus or incentive plan, Participants shall not be eligible for bonuses and other incentive pay during the Notice Period. In all cases, non-production-based bonuses will be pro-rated to reflect the Participant’s service prior to the Notice Period Start Date and will be subject to discretionary adjustments by the Company in its sole and absolute discretion.

 

 

O.

“Notice Period Start Date” means the first day of the Notice Period.

 

 

P.

“Officer” means an Eligible Employee who is classified by the Company as an “officer” based on job grade, designation and such other factors the Company deems relevant.

 

 

Q.

“Participant” means any person who is participating in the Plan as provided in Article 3.

 

 

R.

“Participating Company” means the Company and any Affiliate that participates in the Plan (as determined by the Company or Schwab in its sole discretion). A current list of Participating Companies is set forth in Appendix A. Notwithstanding the foregoing, if a Participating Company ceases to be an Affiliate by reason of a Corporate Transaction, then such entity shall cease to be a Participating Company upon the closing of such Corporate Transaction. Notwithstanding anything to the contrary in this Plan, no benefits shall be payable under the Plan on account of any employment termination (actual or constructive) that occurs on or after the closing of such Corporate Transaction in which such entity ceases to be a Participating Company.

 

 

S.

“Plan” means The Charles Schwab Severance Pay Plan.

 

4.


 

T.

“Regular Employee” means an individual who (i) is directly employed and paid by the Company and on whose behalf the Company withholds income tax from his or her compensation; (ii) has regular full-time or part-time employment with the Company; and (iii) is considered and classified by the Company as a “regular employee.” Notwithstanding the foregoing, a “Regular Employee” shall not include any of the following:

(A) a temporary or seasonal employee, intern, co-op or floater;

(B) an agency temporary or leased employee;

(C) an employee on an unpaid leave of absence who does not have a job guarantee upon completion of the leave;

(D) an individual who is not directly paid by the Company through its payroll system (without regard to his or her common law employment status);

(E) consultants, contingent workers, independent contractors, persons who have signed independent contractor, consultant or vendor agreement(s) or provide services to the Company pursuant to an independent contractor, consultant or vendor agreement, or pursuant to an agreement with any third party, irrespective of whether any such individuals are determined by any third party (including without limitation any court, arbitrator or governmental or regulatory agency) to constitute an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee); and

(F) persons (including but not limited to those identified in subparagraphs (A) through (E)) not otherwise considered by the Company to be a Regular Employee, irrespective of whether any such individuals are deemed by a court, arbitrator or government agency or other third party to be an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee).

If, during any period, the Company has not treated an individual as a common law employee and, for that reason, has not withheld income and employment taxes with respect to that individual, then that individual shall not be a Regular Employee for that period, even if the individual is determined, retroactively, to have been a common law employee during all or any portion of that period by the Internal Revenue Service or other third party or pursuant to a court decree, judgment or settlement in a judicial proceeding or otherwise.

 

 

U.

“Restated Effective Date” means April 1, 2009.

 

5.


 

V.

“Return Date” means the date specified in the Participant’s Notice of Eligibility by which the Participant must sign and return a Severance Agreement.

 

 

W.

“Revocation Period” means the seven calendar day (or other longer legally required calendar day) period immediately following the date the Participant signs the Severance Agreement during which a Participant who is either: (i) at least forty (40) years old; or (ii) is under forty (40) years old and is employed in a state that requires a specific Revocation Period, may revoke his or her signed Severance Agreement. To be effective, a written request to revoke must be received by the Administrator (as defined by applicable law) no later than 5:00 p.m. PST on the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement or, if mailed, be postmarked no later than the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement.

 

 

X.

“Schwab” means Charles Schwab & Co., Inc., a California corporation.

 

 

Y.

“Severance Agreement” means a written agreement in a form satisfactory to the Administrator in exchange for payment of Severance Benefits as provided in Article 6. In the sole discretion of the Administrator, such agreement may include without limitation, but is not limited to, provisions relating to (i) non-disparagement and non-disclosure; (ii) non-solicitation of customers, clients and employees; (iii) use of confidential and proprietary information; (iv) return of company property; (v) cooperation with investigations, arbitrations, and litigation; (vi) release and waiver of all legal claims; and (vii) authorized deductions (if any). To be effective, a Severance Agreement must be signed and returned by the Return Date (and not revoked during any applicable Revocation Period). Severance Agreements are not required to be identical among Participants.

 

 

Z.

“Severance Benefits” means all payments and benefits provided for in this Plan, including but not limited to all salary and benefits for periods during which a Participant remains an employee after being provided a Notice of Eligibility (such as the Notice Period), all forms of compensation and/or benefits of any kind for or in connection with such periods, and all other amounts paid or payable to Participants in accordance with the Plan. The Severance Benefits a Participant may be eligible for are gross amounts from which applicable taxes, withholding and appropriate deductions will be taken, including but not limited to, deduction of any outstanding amount owed to the Company by the Participant regardless of the reason for or source of the amount due. In order to receive Severance Benefits under Article 6, a Participant must timely sign and return (and not revoke, where a Revocation Period applies) a Severance Agreement. All Severance Benefits shall be applied toward satisfaction of the Company’s

 

6.


 

WARN obligations, if any, and shall constitute WARN notice and/or WARN benefits where WARN applies.

 

 

AA.

“Severance Period” means the period of time determined by adding, to the Participant’s Termination Date, the number of days or months for which the Participant is eligible to receive severance pay under Section 6.1 or 6.2.

 

 

BB.

“Termination Date” means the earlier of (i) last day that the Participant is employed by the Company; or (ii) day that the Participant’s Notice Period ends (as it may be accelerated under Article 5).

 

 

CC.

“WARN” means the Federal Worker Adjustment Retraining and Notification Act, as amended, and any applicable state plant or facility closing or mass layoff law. In the event WARN applies to a Participant, any Notice Period and/or Severance Period, and all compensation and all benefits of any kind due or paid with respect to either are also deemed to constitute WARN notice and/or WARN benefits, and will be applied toward satisfying the Company’s obligations under WARN.

 

 

DD.

“Year of Service” means each 12-month period of service completed by a Participant while a Regular Employee including any service commencing on the Participant’s date of hire and ending on the Participant’s Notice Period Start Date and any service prior to a break in service for any reason other than Job Elimination. A Participant will receive credit for service with a predecessor employer that was acquired by the Company or an Affiliate if such service must be credited for purposes of an “employee benefit plan” within the meaning of ERISA under the applicable purchase agreement. Except as provided in Section 6.4(a), a Participant’s Years of Service shall exclude service previously used to determine a Participant’s severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement.

ARTICLE 3 - PARTICIPATION

3.1 Commencement of Participation. An Eligible Employee will become a Participant as of the date he or she is issued a Notice of Eligibility.

3.2 Termination of Participation. A Participant’s participation in the Plan shall terminate on the earlier of (i) the date when his or her entire Plan benefit has been paid; or (ii) the date that his or her participation ends under Section 5.3(b) or 6.4(b).

ARTICLE 4 - EFFECT ON OTHER BENEFITS

 

7.


4.1 Eligibility for Benefits. A Participant’s eligibility for all employee benefits (including without limitation medical, dental and vision insurance) will cease in accordance with the terms of each respective plan no later than the last day of the month that includes the Termination Date except as may be otherwise required by applicable law.

4.2 Paid Time Off Benefits. A Participant will continue accruing paid time off benefits until the Termination Date. The rate of accrual during the Notice Period will be the same as the rate of accrual prior to the Participant’s Notice of Eligibility.

ARTICLE 5 - NOTICE PERIOD

5.1 Notice Period. Following an Eligible Employee’s Notice of Eligibility, the Participant will enter a Notice Period for a period of sixty (60) calendar days. Except as provided in Section 5.2, during the Notice Period Participants shall not be required to report to work but shall remain subject to the Company’s policies and procedures. If WARN is applicable to a Participant, the Notice Period and all compensation (including but not limited to salary/wages, benefits and benefit plan participation) attributable to the Notice Period shall constitute WARN notice and the payment of WARN benefits, respectively, and will be applied against any notice period or other payments that would otherwise be due to satisfy the Company’s obligations under WARN.

5.2 Participants Requested to Work During Notice Period. If a Participant is requested to work during the Notice Period, then the Participant will be entitled to Severance Benefits only if the Participant continues to perform his or her assigned duties and responsibilities to the satisfaction of the Company through the date established by the Company in its discretion.

5.3 Acceleration of Termination Date. The Termination Date, which is originally established as the end of the 60 day Notice Period, will be accelerated or otherwise changed if any of the following events occur:

(a) If, prior to the end of the Notice Period, a Participant resigns or otherwise obtains an external position or acts as an employee, consultant or independent contractor or as a sole proprietor of a business or acts as an officer, director, or partner in another public or privately held company. In that case, the Participant is required to notify the Administrator immediately, the end of the Notice Period and the Termination Date will be accelerated to coincide with the next day after the Participant resigned or otherwise obtained that position. The Participant will receive a payment reflecting the balance of the Base Salary attributable to the unused portion of the original Notice Period; however, no payment will be made for the value of bonuses, or other incentive compensation or the value of other employee benefits that might otherwise have been received if the Termination Date had not been accelerated. The Participant remains eligible to sign and return the applicable Severance Agreement by the Return Date in order to obtain additional Severance Benefits under Article 6.

 

8.


(b) Except as provided in Section 5.2 as determined by the Administrator, if a Participant provides substantial services to the Company or any Affiliate as an employee (full-time, part-time or seasonal), consultant or independent contractor of the Company or any Affiliate within the Notice Period (without regard to whether the end of the Notice Period has been accelerated pursuant to Section 5.3(a)), his or her Termination Date under the Plan will be cancelled or accelerated (as appropriate), his or her participation will end, and the Participant will no longer be eligible to receive any Severance Benefits or any payment of any kind for compensation (including benefits) otherwise attributable to the unused portion of the Notice Period. If a Participant already received payment of lump sum severance pay under Section 6.1, 6.2 and/or 6.3 (as applicable), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, to repay the lump sum severance pay, including the COBRA payment, in full, as a condition of employment or providing services. In addition, if a Participant already received a lump sum payment for the unused portion of the Notice Period under Section 5.3(a), the Participant is required, except as the Administrator otherwise determines in its sole discretion, to repay the amount by which this lump sum payment exceeds the amount the Participant would have received if the payment had been calculated based on the number of business days that actually elapsed between the beginning of the Notice Period and the date of his or her commencement of service, as a condition of employment or providing services.

ARTICLE 6 - BENEFITS

Upon being provided with a Notice of Eligibility, a Participant becomes eligible to receive the Severance Benefits described in Sections 6.1, 6.2, and 6.3 (as applicable) only if the Participant returns to the Administrator a signed Severance Agreement no later than the Return Date. If a Revocation Period applies, a Participant’s eligibility to receive these Severance Benefits also is conditioned upon the Participant not revoking (or attempting to revoke) the Severance Agreement during the Revocation Period. Subject to those conditions and such other conditions set forth in this Plan, the Participant will be entitled to receive the benefits set forth in Sections 6.1 and 6.2, or 6.3 (as applicable).

6.1 Non-Officers Severance Pay.

A Non-Officer Participant employed by a Participating Company as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit equal to the greater of the amount determined under (i) or (ii) below:

(i) The amount of the Participant’s Base Salary that would have been payable for one-half month of active employment (i.e., 11 business days) multiplied by the Participant’s full Years of Service (but in no event to exceed the maximum amount equivalent to 220 business days of Base Salary). The Participant also will receive credit for a partial Year of Service (after aggregation of partial years), based on the following table:

 

9.


 

 

 

Length of Partial Year

  

Number of Business Days

Less than 3 months

  

3 days

At least 3 months but less than 6 months

  

6 days

At least 6 months but less than 9 months

  

9 days

At least 9 months but less than 12 months

  

11 days

Or

(ii) The amount of the Participant’s Base Salary that would have been payable for the number of business days determined under the following table:

 

 

 

 

Base Salary

  

Number of Business Days

$29,999 or less

  

22 days

$30,000 to $39,999

  

44 days

$40,000 to $54,999

  

66 days

$55,000 to $74,999

  

88 days

$75,000 and over

  

110 days

The length of service formula under Section 6.1(i) will be used in the event application of Section 6.1(i) and 6.1(ii) results in the same amount. Notwithstanding the foregoing, the Severance Benefit that a Participant shall be eligible to receive under this Section 6.1 shall be no less than the amount of Base Salary that would have been payable to the Participant for 22 business days.

6.2 Officer Severance Pay.

An Officer Participant employed by a Participating Company as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit in the following amounts. For Vice Presidents, the amount of the Participant’s Base Salary that would have been payable for ten business days multiplied by the Participant’s full Years of Service, but in no event less than the amount of Base Salary that would have been payable to the Participant for five months and no more than the amount of Base Salary that would have been payable to the Participant for 10 months. For Senior Vice Presidents or Executive Vice Presidents, the amount of the Participant’s Base Salary that would have been payable for 15 business days multiplied by the Participant’s full Years of Service, but in no event less than the amount of Base Salary that would have been payable to the Participant for seven months and no more than the amount of Base Salary that would have been payable to the Participant for 12 months.

The Participant who is a Vice President also will receive credit for a partial Year of Service (after aggregation of partial years), based on the following table:

 

10.


 

 

 

Length of Partial Year

  

Number of Business Days

Less than 3 months

  

3 days

At least 3 months but less than 6 months

  

5 days

At least 6 months but less than 9 months

  

7 days

At least 9 months but less than 12 months

  

10 days

The Participant who is a Senior Vice President or Executive Vice President also will receive credit for a partial Year of Service (after aggregation of partial years), based on the following table:

 

 

 

 

Length of Partial Year

  

Number of Business Days

Less than 3 months

  

3 days

At least 3 months but less than 6 months

  

7 days

At least 6 months but less than 9 months

  

11 days

At least 9 months but less than 12 months

  

15 days

6.3 Group Health Plan Coverage Payment and Long-Term Awards.

(a) A Participant who becomes entitled to receive Severance Benefits will be eligible to receive a single lump sum payment to cover a portion of the cost of group health plan coverage for the Participant and his or her enrolled spouse, domestic partner and dependents (“Dependents”). The amount of such payment shall be based on the period of time for which the Participant is eligible to receive severance pay and COBRA rates for group health plan coverage in effect for the Participant and his or her Dependents as of the Participant’s Notice of Eligibility, without regard to changes in COBRA rates or coverage after Notice of Eligibility.

(b) If an Officer Participant becomes entitled to Severance Benefits, then:

(i) The portion of each of the Participant’s Long-Term Awards, except performance-based restricted stock or similar awards designed to meet the requirements for performance-based compensation under Section 162(m) of the Code, that would have vested if the Participant had remained employed during the Severance Period shall be vested as soon as administratively practicable after the Participant’s Termination Date and the Participant shall be treated as if he continued in employment during the Severance Period for purposes of determining whether the Participant vests in any performance-based restricted stock or similar award, subject to subparagraph (iii) below; and

(ii) The determination of whether the Participant has satisfied the conditions of “retirement” under each Long-Term Award agreement (to the extent applicable) shall be made as of his or her Termination Date, without regard to the Participant’s Severance Period.

 

11.


(iii) The Severance Period shall not modify or extend the exercise period of any Long-Term Award, and, except as set forth in Section 6.3(b)(i), the Plan shall not provide any benefit with respect to any Long-Term Award.

6.4 Additional Provisions Related to Severance Benefits.

(a) If a Participant receives severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement and if the Participant subsequently provides services to the Company or an Affiliate, then any Severance Benefits that may become payable to the Participant under this Plan following the date of recommencement of service shall be based solely on the Participant’s Years of Service following the date of such recommencement and, in the case of a Non-Officer Participant, shall be calculated without regard to Section 6.1 (ii); provided, however, the Administrator shall have the discretionary authority to suspend the application of this provision to a Participant who repaid more than 80% of his or her Severance Benefits pursuant to Section 5.3(b) or 6.4(d).

(b) Notwithstanding anything to the contrary contained herein, (i) an employee or Participant whose employment with the Company (or an Affiliate) is terminated before or after receipt of Notice of Eligibility for any reason other than Job Elimination shall not be entitled to receive any Severance Benefits hereunder, (ii) a Participant shall lose eligibility to receive Severance Benefits if (A) after receipt of Notice of Eligibility, the employee fails to work satisfactorily at the request of the Company through the date it specifies; or (B) the Company becomes aware of circumstances which could or would have caused a Participant’s termination from employment including but not limited to misconduct or any violation of law, regulation or Company policy, and (iii) in the case of an Regular Employee who the Administrator determines, in its sole discretion, is covered by a Guaranteed Payments Arrangement, except as provided in Section 6.4(g), the calculation of any payment to such Regular Employee upon such termination or resignation shall be governed by the terms of such arrangement, and not by this Article 6.

(c) Lump sum benefits payable pursuant to Section 6.1, 6.2 or 6.3(a) shall be paid during the next payroll processing cycle that follows the later of (i) the date the Severance Agreement is received, assuming it is signed and returned to the Administrator in the required time and is not revoked in accordance with any applicable Revocation Period; or (ii) the Termination Date, as it may be accelerated under Article 5 or 6. All payments made pursuant to this Plan shall be paid no later than March 15th of the calendar year immediately following the year the Termination Date occurs.

(d) If a Participant receives payment of any or all of his or her Severance Benefit under Section 6.1, 6.2 and/or 6.3 and after his Termination Date subsequently provides substantial services to the Company or any Affiliate as an employee, consultant or independent contractor (other than pursuant to a Corporate Transaction), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, as a condition of reemployment or otherwise providing services, to repay the amount (if any) by which the lump sum payment (including COBRA payments) exceeds

 

12.


the amount the Participant would have received if such payment had been calculated based on the number of business days that have actually elapsed between the Termination Date and the date that the Participant started to provide such services. The repayment obligation is applicable regardless of whether the Participant’s severance pay was paid under Section 6.1, 6.2 and/or 6.3(a); provided, however, the repayment obligation shall not apply to benefits provided under Section 6.3(b). Repayment of a pro rata share of severance benefits does not affect the validity of the Severance Agreement.

(e) Notwithstanding anything to the contrary contained in this Plan, in the event WARN is applicable to a Participant: (i) any Notice Period and/or Severance Benefits paid or payable to the Participant will be deemed to constitute and shall be attributed to WARN notice and/or WARN benefits; (ii) all Severance Benefits under this Plan will be reduced and/or offset by any notice, payments or benefits to which the Participant may be entitled under WARN; and (iii) all Severance Benefits under this Plan will be reduced and/or offset by any amount of paid days and/or paid benefits in lieu of notice the Participant is given or is required to be given by the Company to satisfy its obligations under WARN. A Severance Agreement is not required for receipt of WARN benefits.

(f) Notwithstanding anything to the contrary contained herein, the Company may revoke a Participant’s Severance Agreement during any applicable Revocation Period.

(g) Notwithstanding anything to the contrary contained herein, in the event that the Administrator determines, in its sole discretion, that an individual is a party to a Guaranteed Payments Arrangement and that such individual would otherwise be entitled to a benefit under Section 6.1 or 6.2 and/or 6.3, then the Administrator may determine, in its sole discretion, that such individual shall be eligible to receive a cash severance benefit (instead, and in lieu, of any and all payments under such Guaranteed Payments Arrangement) equal to the greater of either (i) the amount that the Administrator determines, in its sole discretion, to be the amount of the Participant’s payments under the Guaranteed Payments Arrangement; or (ii) the total amount of the cash severance payments to which the Administrator determines, in its sole discretion, the Participant otherwise would have been entitled under Section 6.1, 6.2 and/or 6.3. Payment of such cash severance benefit shall be paid at the time and in the form provided for under the Guaranteed Payment Arrangement.

(h) Notwithstanding anything to the contrary contained herein, a Participant shall be deemed to be employed by a Participating Company for purposes of benefits under Article 6 in the event that such Participant, as of his or her Notice of Eligibility, is designated by the Company, in its sole and absolute discretion, as a dual employee providing fund administration services to the Excelsior Funds.

ARTICLE 7 - FUNDING

 

13.


The amount required to be paid as Severance Benefit under this Plan shall be paid from the general assets of the Company at the time such Severance Benefits are to be paid.

ARTICLE 8 - ADMINISTRATION

8.1 Administrator’s Authority. The administration of the Plan shall be under the supervision of the Administrator. It shall be the responsibility of the Administrator to assure that the Plan is carried out in accordance with its terms. The Administrator shall have full power and sole discretionary authority to administer, interpret and construe the Plan, and to determine all claims for benefits, subject to the requirements of ERISA. The Administrator’s actions, interpretations and determinations shall be final and binding on all concerned and, in the event of judicial review, shall be entitled to the maximum deference allowed by law. The Administrator shall have discretionary authority:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret and construe the plan, its interpretation and construction thereof to be final and conclusive on all persons claiming benefits under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To compute the amount of benefits which will be payable to any Participant in accordance with the provisions of the Plan, and to determine the person or persons to whom such benefits will be paid;

(e) To authorize the payment of benefits;

(f) To appoint such agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan; and

(g) To allocate and delegate its responsibilities under the Plan and to designate other persons to carry out any of its responsibilities under the Plan, and such allocation, delegation or designation to be by written instrument and in accordance with Section 405 of ERISA.

The interpretations and determinations of the Administrator shall be final and binding and are not required to be uniform among similarly situated individuals. The Administrator also reserves the right to provide additional benefits, in the Administrator’s sole discretion. Determinations to be made in the discretion of the Company are made by the Company in its non-fiduciary capacity, with regard to the best interests of the Company, and are not required to be uniform among similarly situated individuals. In administering the Plan, the Administrator shall be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are

 

14.


furnished by any accountant, counsel or other expert who is employed or engaged by the Administrator. Schwab shall be the “named fiduciary” for purposes of section 402(a)(1) of ERISA with authority to control and manage the operation and administration of the Plan, and shall be responsible for complying with all of the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA.

8.2 Claims for Benefits. No person shall be entitled to benefits under this Plan unless the Administrator has determined that he or she is entitled to them. All applications for benefits, and all inquiries concerning the Plan or present or future rights to benefits under the Plan, must be submitted to the Administrator in accordance with the established claims procedure set forth in the summary plan description. Notwithstanding anything to the contrary in this Plan, no person shall have a colorable claim for vested or unvested benefits under this Plan unless the Administrator (i) has determined that the person has incurred a Job Elimination; and (ii) has issued to the person a Notice of Eligibility.

8.3 Indemnification. The Company agrees to indemnify, defend and hold harmless to the fullest extent permitted by law any employee serving as or on behalf of the Administrator or as a member of a committee designated as Administrator (including any employee or former employee who formerly served as Administrator or as a member of such committee) against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

ARTICLE 9 - AMENDMENT AND TERMINATION

The Plan and/or any of its terms may be amended, suspended or terminated at any time with or without prior notice by action of the Board of Directors of Schwab or the Company or their respective delegates. Schwab’s Executive Vice President – Human Resources shall have the authority to adopt amendments that do not materially increase the cost of the Plan.

ARTICLE 10 - MISCELLANEOUS

Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

This Plan shall not be deemed to constitute a contract between the Company and any Eligible Employee or to be a consideration or an inducement for the employment of any Eligible Employee. Nothing contained in this Plan shall be deemed to give any Eligible Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Eligible Employee at any time, irrespective of the effect which such discharge shall have upon such individual as an Eligible Employee of this Plan.

 

15.


This Plan shall be construed and enforced according to federal law, except where not preempted, by the laws of the State of California other than its laws respecting choice of law.

ARTICLE 11 - EXECUTION

To record the amendment and restatement of the Plan to read as set forth herein effective as of April 1, 2009, Charles Schwab & Co., Inc. has caused its authorized officer to execute the same this 16th day of December 2008.

 

 

CHARLES SCHWAB & CO., INC.

 

/s/    Charles R. Schwab

Charles R. Schwab

 

16.


APPENDIX A

(As of January 1, 2009)

Charles Schwab & Co., Inc.

Charles Schwab Bank

Charles Schwab Global Holdings, Inc.

Charles Schwab Global Services Corporation

Charles Schwab Investment Management, Inc.

Performance Technologies, Inc.

Schwab (SIS) Holdings, Inc. I

Schwab Holdings, Inc.

Schwab International Holdings, Inc.

Schwab Retirement Plan Services, Inc.

Schwab Retirement Technologies, Inc.

The 401(k) Companies, Inc.

The 401(k) Company

401(k) Investment Services, Inc.

410(k) Investment Advisors, Inc.

 

A.