The Charles Schwab Corporation
                            Long Term Incentive Plan
 
 
Section 1. PURPOSE
 
The Charles Schwab Corporation Long Term Incentive Plan (the "Plan") is intended
to provide financial  incentives to selected management  employees to contribute
to the long-term  success of The Charles Schwab  Corporation  and its affiliated
companies (collectively the "Company").
 
Section 2. DEFINITIONS
 
As used in this Plan,  the following  capitalized  terms shall have the meanings
set forth below:
 
a)   "Administrative  Committee"  means the  committee of the Plan,  which shall
     consist of the  individuals  occupying the  following  three offices of the
     Corporation:
 
     Chief Executive Officer or President and Co- Chief Executive Officer
     Chief Financial Officer
     Chief Administrative Officer
 
b)   "Award"  means the cash  amount  payable to a  Participant  pursuant to the
     provisions of this Plan.
 
c)   "Board" means the Board of Directors of The Charles Schwab Corporation.
 
d)   "Change in Control"  means the  occurrence of any of the  following  events
     after the effective date of the Plan:
 
          (1) A change in control required to be reported  pursuant to Item 6(e)
          of Schedule 14A of Regulation 14A under the Exchange Act;
 
          (2) A change in the  composition  of the  Board,  as a result of which
          fewer than  two-thirds  of the  incumbent  directors are directors who
          either (i) had been  directors  of the Company 24 months prior to such
          change or (ii) were elected,  or nominated for election,  to the Board
          with the affirmative votes of at least a majority of the directors who
          had been  directors  of the Company 24 months prior to such change and
          who were still in office at the time of the election or nomination;
 
          (3) Any "person" (as such term is used in sections  13(d) and 14(d) of
          the  Exchange  Act)  becomes  the   beneficial   owner,   directly  or
          indirectly,  of securities of the Company  representing  20 percent or
          more of the combined  voting power of the Company's  then  outstanding
          securities  ordinarily  (and apart from rights  accruing under special
          circumstances) having the right to vote at elections of directors (the
          "Base  Capital  Stock");  provided,  however,  that any  change in the
          relative  beneficial  ownership of securities of any person  resulting
          solely from a reduction in the aggregate number of outstanding  shares
          of Base Capital  Stock,  and any decrease  thereafter in such person's
          ownership  of  securities,  shall be  disregarded  until  such  person
          increases  in  any  manner,  directly  or  indirectly,  such  person's
          beneficial ownership of any securities of the Company.
 
e)   "Committee"  means the Compensation  Committee of the Board of Directors of
     The Charles Schwab Corporation.
 
f)   "Determination Date" means the date on which the Participants,  Performance
     Goals and Target Awards are determined for any Performance Period.
 
g)   "Disability"  means the  inability  to engage  in any  substantial  gainful
     activity  considering the Participant's  age, education and work experience
     by reason of any medically  determined  physical or mental  impairment that
     has continued without  interruption for a period of at least six months and
     that can be expected to be of long, continued and indefinite duration.  All
     determinations  as to whether a Participant has incurred a Disability shall
     be made by the Employee Benefits  Administration  Committee of the Company,
     the findings of which shall be final, binding and conclusive.
 
h)   "Named  Executive  Officer"  means a  Participant  who,  as of the  date of
     payment of an Award is one of a group of "covered employees," as defined in
     the Regulations  promulgated  under Section 162(m) of the Internal  Revenue
     Code of 1986, or any successor statute.
 
i)   "Participant"  means  an  eligible  employee  of the  Company  who has been
     designated as a Participant in accordance with section 3 hereof.
 
j)   "Performance  Goal" shall mean a measure of corporate  performance (such as
     cumulative  earnings per share), that shall be selected by the Committee to
     be used as the basis for determining  the amounts  payable  pursuant to the
     Plan for a  Performance  Period.  Performance  goals shall be selected 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.
 
k)   "Performance Period" means a period of four fiscal years of the Company, or
     such other  period as may be  specified  by the  Committee,  which has been
     designated  by the  Committee  as a period  for  which  Awards  may be paid
     pursuant to the Plan. The Committee may authorize more than one Performance
     Period to be in effect at any one time.
 
l)   "Retirement"  shall mean any termination of employment of a Participant for
     any reason other than death at any time after the  Participant has attained
     Retirement Age. For this purpose, Retirement Age shall mean age fifty (50),
     but only if,  at the time of such  termination,  the  Participant  has been
     credited  with at least  seven (7) Years of  Service  under the  SchwabPlan
     Retirement Savings and Investment Plan.
 
m)   "Target Award" has the meaning assigned thereto in Section 5 (a) hereof.
 
Section 3. ELIGIBILITY
 
a)   Participation in the Plan is limited to officers (and officer  equivalents)
     of the  Company,  as may be selected for  participation  in the Plan by the
     Committee as of each Determination Date.
 
b)   Participants   generally   shall  be  selected  at  the  beginning  of  the
     Performance  Period.  After  the  Performance  Period  has  commenced,  the
     Committee  shall  have  the  authority  to  designate  additional  Eligible
     Participants  under this Plan,  and the amount of the Award payable to such
     individuals who become  Participants  after the Determination Date for that
     Performance  Period  shall be  pro-rated  to  reflect  the  portion  of the
     Performance Period during which such Eligible Participant was a Participant
     in the Plan.
 
 
Section 4. PLAN TERM
 
The Plan shall  become  effective as of January 1, 2003,  and shall  continue in
effect until terminated by the Committee.
 
 
Section 5. PERFORMANCE CRITERIA AND TARGET AWARDS
 
a)   Performance Period and Target Awards. The length of each Performance Period
     shall be the four year period commencing as of any  Determination  Date, or
     such  other  period  as  may  be  specified  by  the   Committee.   On  the
     Determination Date for a Performance  Period, the Committee shall determine
     for each Participant an amount,  which may be expressed in Plan Units, that
     shall be payable to the Participant as an Award for that Performance Period
     if the  Performance  Goal for that  Performance  Period  is  achieved  (the
     "Target Award").  The Committee shall have the authority to delegate to the
     Company's  executive  management  the  authority to issue Target  Awards to
     Participants, other than executive officers.
 
b)   Performance Goals. As of the Determination  Date for a Performance  Period,
     the  Committee  shall  establish  a  Performance  Goal for the  Performance
     Period.  The Committee may specify that the Performance  Goal may include a
     threshold  level of  performance  below  which no Award  shall be  payable,
     levels of  performance at which  specified  percentages or multiples of the
     Target Award shall be payable,  and a maximum  level of  performance  above
     which no additional  Award shall be paid;  provided that in calculating the
     value of an Award, the maximum multiple shall be 400% of the Target Award.
 
c)   Equitable  Adjustment.  The  Committee  shall have the  discretion  to make
     equitable  adjustments  to  Performance  Goals in recognition of unusual or
     non-recurring events affecting the Company, its financial statements or its
     shares,  in response to changes in applicable  laws or  regulations,  or to
     account for items of gain, loss or expense  determined to be  extraordinary
     or  unusual  in  nature or  infrequent  in  occurrence  or  related  to the
     acquisition,  disposition or discontinuance of a business or a segment of a
     business,  or related to a change in accounting  principles,  or to reflect
     capital changes.
 
d)   Certification  and  Restrictions on Amount of Awards.  Following the end of
     each Performance Period, the Committee shall be required to certify whether
     and the extent to which the Performance Goal for the Performance Period was
     satisfied before any Award is paid to any Participant.
 
     With  respect to any  Performance  Period,  at any time before an Award for
     such  Performance  Period is paid, the Committee may establish a ceiling on
     the aggregate  amount which may be paid out in Awards for such  Performance
     Period.  In the event that such a limit is established  for any Performance
     Period,   the  Awards  otherwise  payable  to  all  Participants  for  such
     Performance Period shall be reduced pro-rata.
 
     The  amount of any Award may be  pro-rated  for any  period of time  during
     which the  Participant  was not an active employee of the Company or any of
     its  Subsidiaries,  including leaves of absence and other periods as may be
     determined by the Company in its discretion.
 
e)   Maximum  Target Award.  In no event shall the total amount of Target Awards
     granted to any Participant pursuant to the Plan in any calendar year exceed
     $3,000,000.
 
f)   Delegation  to  Management.  The  Committee  shall  have the  authority  to
     delegate to the  executive  officers of the Company the  authority to issue
     Target Awards to Participants, other than executive officers.
 
Section 6. CALCULATION OF AMOUNT OF AWARDS
 
The amount of Awards payable for a Performance Period will be calculated as soon
as practicable  following the close of each  Performance  Period,  in accordance
with the provisions of Section 8 of this plan.
 
Section 7. VESTING
 
Subject to the remaining provisions of the Plan, and subject to the authority of
the  Committee  to  authorize  a  different  vesting  schedule  at the  time  it
authorizes  the granting of a Target  Award,  Awards shall become vested only if
the Participant remains continuously employed with the Company from the date the
Participant  receives  a  Target  Award,  in  accordance  with on the  following
schedule:
 
                                                Vested Percentage % of
                  Vesting Date                    Award (Cumulative)
             ----------------------------------------------------------
             1st Anniversary of Target Award              0%
             2nd Anniversary of Target Award             25%
             3rd Anniversary of Target Award             50%
             4th Anniversary of Target Award            100%
 
 
Section 8. PAYMENT OF AWARDS
 
Awards  will  be  paid  in  cash  as  soon  as  practicable  after  the end of a
Performance  Period,  but not prior to certification of the Company's results by
its independent auditors for all years of the Performance Period. Subject to the
provisions of Section 9, a  Participant  will be entitled to payment of an Award
only if the Participant has been continuously employed by the Company throughout
the  Performance  Period  and is still in the  employ of (and has not  delivered
notice of resignation to) the Company on the date of payment of the Award).  The
Company will withhold from payments all  applicable  taxes as may be required by
applicable law.
 
Section 9. TERMINATION OF EMPLOYMENT DURING A PERFORMANCE PERIOD
 
(a)  Death or  Disability.  If a  Participant's  employment  is  terminated as a
     result of death or  disability  at any time  after the first two years of a
     Performance Period (and before completion of the Performance Period),  such
     Participant or Participant's  estate shall be entitled to receive the Award
     such Participant would have been entitled to receive,  pro-rated to reflect
     the actual  amount of time that such person was a  Participant  in the Plan
     for such  Performance  Period,  valued  and  payable as  determined  by the
     Administrative  Committee as soon as  practicable  following the end of the
     calendar quarter that includes the date of the Participant's date of death.
 
(b)  Retirement   after  first  two  years  of  a  Performance   Period.   If  a
     Participant's employment is terminated on account of Retirement at any time
     after the first two years of a Performance Period (and before completion of
     the Performance Period),  such Participant shall be entitled to receive the
     entire Award such Participant would have been entitled to, based on Company
     performance  and  payable  at  the  time  Awards  are  paid  to  all  other
     Participants for such Performance Period.
 
(c)  Other  Termination  of  Employment.   If  a  Participant's   employment  is
     terminated for any reason other than death, disability or Retirement at any
     time  after  the  first  two  years of a  Performance  Period  (and  before
     completion of the Performance  Period),  such Participant shall be entitled
     to  receive  the  Award  such  Participant  would  have been  entitled  to,
     multiplied  by  the   Participant's   vested  percentage  at  the  time  of
     termination,  based on Company  performance  and payable at the time Awards
     are paid to all other Participants for such Performance Period.
 
(d)  Termination of Employment  After the End of a Performance  Period but Prior
     to payment. If, after the completion of a Performance Period and before the
     payment of an Award, a  Participant's  termination  terminates by reason of
     the Participant's death, Disability or Retirement, the Participant shall be
     entitled to the payment of any Award for such Performance Period. Any Award
     payable  to a  deceased  Participant  shall  be paid  to the  Participant's
     estate.
 
Section 10. AMENDMENTS, MODIFICATIONS, AND TERMINATION OF THE PLAN
 
The Committee may terminate, modify or amend the Plan at any time, provided that
such action shall not affect the rights of the Plan  Participants to awards that
were granted prior to the date of such termination, modification or amendment.
 
Section 11. NO RIGHT TO CONTINUED EMPLOYMENT
 
The designation of an employee as a Participant  for any  Performance  Period or
the  receipt of an award by a  Participant  shall not give the  Participant  any
right to  continued  employment  by the Company for any period of time,  and the
right to dismiss any employee is specifically reserved by the Company.
 
Section 12. CHANGE IN CONTROL
 
In the event of a Change in Control,  all Awards shall  become fully  payable as
soon as  practicable  following  such  Change in  Control,  and the value of all
Awards shall be determined by the Committee as soon as practicable following the
end of the calendar quarter immediately preceding the Change in Control.
 
Section 13. GOVERNING LAW
 
The Plan shall be construed  and its  provisions  enforced and  administered  in
accordance with the laws of the State of California.