Sample Business Contracts

Employment Agreement - Charles Schwab Corp. and Charles R. Schwab

Employment Forms

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  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                              EMPLOYMENT AGREEMENT

     This Agreement,  as amended, is made and entered into effective as of March
31, 2003 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").


     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


          (a) The Company hereby employs the Executive to render services to the
          Company in the  positions  of  Chairman  of the Board in the  capacity
          defined in the By-laws 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

          (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

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.


     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, 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

          (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 as soon as reasonably  practical  after the end of the
          Company's fiscal year end; provided, however, that if any such payment
          would be  nondeductible  to the Company  under  Internal  Revenue Code
          Section 162(m), then any nondeductible  amounts shall be deferred from
          year to year until the payment of such  amounts is  deductible  by the


          (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.

          (b)  Termination  by the Company Other Than for Cause.  Termination of
          the  Executive  by the  Company  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 a termination  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  Plan  shall at the date of  termination  be  deemed to be 100%
          vested.  No further grants of stock or options shall be made under the
          Plan 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 termination occurs
          unless  performance of the Company as defined in the matrix referenced
          in Section 3(b) is better in the year of  termination,  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

          During the 36-month  severance payment period,  the Executive shall be
          entitled to all payments,  benefits and perquisites as provided for in
          this Agreement, and office space and secretarial support comparable to
          that provided to the Executive  during his  employment by the Company.
          The  Executive  shall be  entitled  to all  payments  and  benefits as
          provided for in this Section for a period of thirty-six (36) months.

          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,  treat such action or removal as a  termination
          of the Executive by the Company 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.

          (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's employment terminates due
          to total and permanent  disability (for the purposes of this Agreement
          "disability"  shall  have  the  same  meaning  as  applies  under  the
          Company's Long-Term  Disability Plan), 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. In addition,  he shall receive a pro-rated
          annual  incentive  payment  for the  year in which  is  employment  is
          terminated, based on the formula described in Section 3(b).

          (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

          (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

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

          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.


          (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

          (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.


     Following a voluntary  termination  of employment  pursuant to Section 4(a)
     and 4(f), or an involuntary  termination  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  termination  of
     employment, but in no event an annual amount to exceed $1,000,000, for each
     year of such period, payable in equal monthly installments.


     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


          (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 supercede 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

          (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.  Judgement  may be
          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.

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


By:  Carrie Dwyer             By: Mary McLeod
     ------------                 -----------
Corporate Secretary           Title:  Executive Vice President - Human Resources

                              Executive:  /s/  Charles R. Schwab
                                               Charles R. Schwab