Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures: The management of the Company, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2022. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2022.
Changes in internal control over financial reporting : No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) was identified during the quarter ended December 31, 2022, that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm are included in Item 8.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
The information relating to directors of CSC required to be furnished pursuant to this item is incorporated by reference from portions of the Company’s definitive proxy statement for its annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A by April 30, 2023 (the Proxy Statement). The Company’s Code of Conduct and Business Ethics, applicable to directors and all employees, including senior financial officers, is available on the Company’s website at https://www.aboutschwab.com/governance . If the Company makes any amendments to or grants any waivers from its Code of Conduct and Business Ethics, which are required to be disclosed pursuant to the Securities Exchange Act of 1934, the Company will make such disclosures on this website.
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THE CHARLES SCHWAB CORPORATION
Schwab Executive Officers of the Registrant
The following table provides certain information about each of the Company’s executive officers as of December 31, 2022.
Executive Officers of the Registrant
Name Age Title
Charles R. Schwab 85 Co-Chairman of the Board
Walter W. Bettinger II 62 Co-Chairman of the Board and Chief Executive Officer
Richard A. Wurster 49 President
Bernard J. Clark 64 Managing Director, Head of Advisor Services
Jonathan M. Craig 51 Managing Director, Head of Investor Services & Marketing
Peter B. Crawford 54 Managing Director, Chief Financial Officer
Joseph R. Martinetto 60 Managing Director, Chief Operating Officer
Peter J. Morgan III 58 Managing Director, General Counsel
Nigel J. Murtagh 59 Managing Director, Chief Risk Officer
Mr. Schwab has been a director of CSC since its incorporation in 1986. He served as Chairman of the Board from 1986 to 2022 and has served as Co-Chairman of the Board since 2022. He also served as Chief Executive Officer of CSC from 1986 to 1997 and as Co-Chief Executive Officer from 1998 until 2003. He was re-appointed Chief Executive Officer in 2004 and served in that role until 2008. He served as Chairman of the Board and a director of CS&Co until 2018.
Mr. Bettinger has been Chief Executive Officer and a director of CSC since 2008 and has been Co-Chairman of the Board since 2022. He serves as Co-Chairman of the Board of CSB, and is a director of TD Ameritrade Holding Corporation. He also serves as Chairman and trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust, all registered investment companies and affiliates of CSC. Mr. Bettinger served as Director, President and Chief Executive Officer of CS&Co from 2008 until 2021. Mr. Bettinger served as President of CSC from 2007 to 2021, CSC Chief Operating Officer from 2007 until 2008, and as Executive Vice President and President – Schwab Investor Services of CSC and CS&Co from 2005 to 2007. Mr. Bettinger joined Schwab in 1995.
Mr. Wurster has been President of CSC since 2021 and has served as President and director of CS&Co since 2021. He served as CEO of Charles Schwab Investment Management, Inc. from 2019 to 2021 and has been a director since 2021. He was CEO of Charles Schwab Investment Advisory, Inc. from 2018 to 2021. Mr. Wurster was CEO of ThomasPartners, Inc. and Windhaven Investment Management, Inc., subsidiaries of CSC, from 2016 to 2018. Mr. Wurster joined Schwab in 2016.
Mr. Clark has been Managing Director, Head of Advisor Services since 2022 and was Executive Vice President – Advisor Services of CSC from 2012 to 2022. Mr. Clark has served as Managing Director, Head of Advisor Services of CS&Co since 2022 and was Executive Vice President – Advisor Services of CS&Co from 2010 to 2022. From 2006 until 2010, Mr. Clark served as Senior Vice President – Schwab Institutional Sales of CS&Co. Mr. Clark joined Schwab in 1998.
Mr. Craig has been Managing Director, Head of Investor Services and Marketing of CSC and CS&Co since 2022. Prior to that he served as Senior Executive Vice President of CSC and CS&Co from 2018 to 2021, Executive Vice President – Client and Marketing Solutions of CSC and CS&Co from 2017 until 2018 and Executive Vice President and Chief Marketing Officer of CSC and CS&Co from 2012 until 2018. Mr. Craig joined Schwab in 2000.
Mr. Crawford has been Managing Director of CSC and CS&Co since 2022, Executive Vice President from 2017 to 2022 of CSC and CS&Co and Chief Financial Officer of CSC and CS&Co since 2017. Prior to his appointment as Chief Financial Officer, Mr. Crawford was Executive Vice President of Finance of CS&Co from 2015 to 2017. He served as Senior Vice President of Schwab’s asset management and client solutions organization from 2008 to 2015. He joined the Board of Directors of TD Ameritrade Holding Corporation in 2020, and has served on the Board of Directors of CS&Co since 2018. Mr. Crawford joined Schwab in 2001.
Mr. Martinetto has been Managing Director since 2022 of CSC and CS&Co, Senior Executive Vice President of CSC and CS&Co from 2015 to 2022, and Chief Operating Officer of CSC and CS&Co since 2018. He served as Chief Financial Officer of CSC and CS&Co from 2007 until 2017, and Executive Vice President of CSC and CS&Co from 2007 until 2015. He also serves on the Board of Directors of CS&Co and TD Ameritrade Holding Corporation and serves as Co-Chairman of CSB. From 2016 to 2022 Mr. Martinetto was a trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust, and Schwab Strategic Trust. Mr. Martinetto joined Schwab in 1997.
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THE CHARLES SCHWAB CORPORATION
Mr. Morgan has been Managing Director of CSC and CS&Co since 2022, Executive Vice President of CSC from 2019 to 2022, General Counsel and Corporate Secretary of CSC since 2019, and Executive Vice President and Corporate Secretary of CS&Co from 2020 to 2022. He was Senior Vice President and Deputy General Counsel of CS&Co from 2009 to 2020. He has served as General Counsel of CSB since 2009, including as Executive Vice President and General Counsel of CSB since 2019, and as Senior Vice President and General Counsel from 2015 to 2019. Mr. Morgan joined Schwab in 1999.
Mr. Murtagh has been Managing Director and Chief Risk Officer of CSC and CS&Co since 2022, and was Executive Vice President and Chief Risk Officer of CSC and CS&Co from 2012 to 2022. He served as Senior Vice President and Chief Credit Officer of CS&Co from 2002 until 2012 and of CSC from 2008 until 2012 when he was also Head of Fixed Income Research for Charles Schwab Investment Management. Mr. Murtagh also serves as Managing Director and Chief Risk Officer of CSB. Mr. Murtagh joined Schwab in 2000.
Item 11. Executive Compensation
The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement. In addition, the information from a portion of the Proxy Statement under “Compensation Committee Report,” is incorporated by reference from the Proxy Statement and furnished on this Form 10-K, and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required to be furnished pursuant to this item is incorporated by reference from portions of the Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required to be furnished pursuant to this item is incorporated by reference from a portion of the Proxy Statement.
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THE CHARLES SCHWAB CORPORATION
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as part of this Report
1. Financial Statements
The financial statements and independent auditors’ report are included in Item 8 and are listed below:
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
2. Financial Statement Schedules
Other financial statement schedules required pursuant to this Item are omitted because of the absence of conditions under which they are required or because the information is included in the Company’s consolidated financial statements and notes in Item 8.
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THE CHARLES SCHWAB CORPORATION
(b) Exhibits
The exhibits listed below are filed as part of this annual report on Form 10-K.
Exhibit
Number Exhibit
2.1 Agreement and Plan of Merger, dated as of November 24, 2019, by and among the Registrant, Americano Acquisition Corp., and TD Ameritrade Holding Corporation, filed as Exhibit 2.1 to the Registrant’s Form 8-K dated November 24, 2019, and incorporated herein by reference.*
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of May 14, 2020, by and among the Registrant, Americano Acquisition Corp., and TD Ameritrade Holding Corporation, filed as Exhibit 2.2 to the Registrant's Form 8-K dated May 14, 2020, and incorporated herein by reference.
3.11 Fifth Restated Certificate of Incorporation, effective May 7, 2001, of the Registrant, filed as Exhibit 3.11 to the Registrant’s Form 10-K for the year ended December 31, 2016, and incorporated herein by reference.
3.11(i) Amendment to Fifth Restated Certificate of Incorporation of the Registrant, effective October 6, 2020, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated October 2, 2020, and incorporated herein by reference.
3.18 Certificate of Designations of 5.95% Non-Cumulative Perpetual Preferred Stock, Series D, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated March 7, 2016, and incorporated herein by reference.
3.20 Certificate of Designations of 5.00% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated October 31, 2017, and incorporated herein by reference.
3.21 Certificate of Designations of 5.375% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated April 30, 2020, and incorporated herein by reference.
3.22 Certificate of Designations of 4.000% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series H, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated December 8, 2020, and incorporated herein by reference.
3.23 Certificate of Designations of 4.000% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series I, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated March 15, 2021, and incorporated herein by reference.
3.24 Certificate of Designations of 4.450% Non-Cumulative Perpetual Preferred Stock, Series J, of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated March 29, 2021, and incorporated herein by reference.
3.26 Certificate of Designations of 5.000% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series K , of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated March 3, 2022, and incorporated herein by reference.
3.28 Certificate of Elimination of the Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated November 1, 2022, and incorporated herein by reference.
3.29 Certificate of Elimination of the 4.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E of The Charles Schwab Corporation, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated December 1, 2022, and incorporated herein by reference.
3.30 Amended and Restated Bylaws of The Charles Schwab Corporation, effective January 26, 2023, filed as Exhibit 3.1 to the Registrant’s Form 8-K dated January 26, 2023, and incorporated herein by reference.
4.3 Deposit Agreement, dated March 7, 2016, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated March 7, 2016, and incorporated herein by reference.
4.5 Deposit Agreement, dated October 31, 2017, between the Company and Wells Fargo Bank, N.A., as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated October 31, 2017, and incorporated herein by reference.
4.6 Deposit Agreement, dated April 30, 2020, between the Company and Equiniti Trust Company, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated April 30, 2020, and incorporated herein by reference.
4.7 Deposit Agreement, dated December 11, 2020, between the Company and Equiniti Trust Company, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated December 8, 2020, and incorporated herein by reference.
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THE CHARLES SCHWAB CORPORATION
Exhibit
Number Exhibit
4.8 Deposit Agreement, dated March 18, 2021, between the Company and Equiniti Trust Company, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated March 15, 2021, and incorporated herein by reference.
4.9 Deposit Agreement, dated March 30, 2021, between the Company and Equiniti Trust Company, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated March 29, 2021, and incorporated herein by reference.
4.10 Deposit Agreement, dated March 4, 2022, between the Company and Equiniti Trust Company, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto), filed as Exhibit 4.1 to the Registrant’s Form 8-K dated March 3, 2022, and incorporated herein by reference.
4.11 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.12 Neither the Registrant nor its subsidiaries are parties to any instrument with respect to long-term debt for which securities authorized thereunder exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. Copies of instruments with respect to long-term debt of lesser amounts will be provided to the SEC upon request.
10.4 Form of Release Agreement dated as of March 31, 1987 among BAC, Registrant, Schwab Holdings, Inc., Charles Schwab & Co., Inc., and former shareholders of Schwab Holdings, Inc., filed as the identically-numbered exhibit to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
10.57 Registration Rights and Stock Restriction Agreement, dated as of March 31, 1987, between the Registrant and the holders of the Common Stock, filed as Exhibit 4.23 to Registrant’s Registration Statement No. 33-16192 on Form S-1 and incorporated herein by reference.
10.72 Restatement of Assignment and License, as amended January 25, 1988, among Charles Schwab & Co., Inc., Charles R. Schwab and the Registrant, filed as Exhibit 10.72 to the Registrant’s Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.
10.267 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.267 to the Registrant’s Form 10-K for the year ended December 31, 200 4, and incorporated herein by reference.
(2)
10.271 The Charles Schwab Corporation Directors’ Deferred Compensation Plan, as amended through December 8, 2004, filed as Exhibit 10.271 to the Registrant’s Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.
(2)
10.272 The Charles Schwab Corporation Deferred Compensation Plan, as amended through December 8, 2004, filed as Exhibit 10.272 to the Registrant’s Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.
(2)
10.314 Employment Agreement dated as of March 13, 2008, between the Registrant and Charles R. Schwab, filed as Exhibit 10.314 to the Registrant's Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
(2)
10.319 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.319 to the Registrant’s Form 10-K for the year ended December 31, 2008, and incorporated herein by reference .
(2)
10.338 The Charles Schwab Corporation 2004 Stock Incentive Plan, as approved at the Annual Meeting of Stockholders on May 17, 2011, filed as Exhibit 10.338 to the Registrant’s Form 10-Q for the quarter ended June 30, 2016, and incorporated herein by reference.
(2)
10.341 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.341 to the Registrant’s Form 10-K for the year ended December 31, 2011, and incorporated herein by reference.
(2)
10.354 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2004 Stock Incentive Plan and successor plans, filed as Exhibit 10.354 to the Registrant’s Form 8-K dated January 24, 2013, and incorporated herein by reference.
(2)
10.356 Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2004 Stock Incentive Plan and successor plans, filed as Exhibit 10.356 to the Registrant’s Form 8-K dated January 24, 2013, and incorporated herein by reference.
(2)
10.358 Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.373 to the Registrant’s Form 8-K dated January 24, 2013, and incorporated herein by reference.
(2)
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Exhibit
Number Exhibit
10.359 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.359 to the Registrant’s Form 8-K dated January 24, 2013, and incorporated herein by reference.
(2)
10.370 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.370 to the Registrant’s Form 10-Q for the quarter ended September 30, 2016, and incorporated herein by reference.
(2)
10.372 Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.372 to the Registrant’s Form 10-Q for the quarter ended September 30, 2016, and incorporated herein by reference.
(2)
10.374 Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.373 to the Registrant’s Form 10-Q for the quarter ended September 30, 2016, incorporated herein by reference .
(2)
10.375 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.375 to the Registrant’s Form 10-Q for the quarter ended September 30, 2016, incorporated herein by reference.
(2)
10.379 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans , filed as Exhibit 10.379 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.
(2)
10.381 Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.381 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.
(2)
10.383 Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.383 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference .
(2)
10.384 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.384 to the Registrant’s Form 10-Q for the quarter ended September 30, 2017, and incorporated herein by reference.
(2)
10.387 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.387 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.
(2)
10.389 The Charles Schwab Corporation Corporate Executive Bonus Plan, restated to include amendments approved at the Annual Meeting of Stockholders on May 13, 2015, as amended and restated as of December 13, 2017, filed as Exhibit 10.389 to the Registrant’s Form 10-K for the year ended December 31, 2017, and incorporated herein by reference.
(2)
10.393 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.393 to the Registrant’s Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
(2)
10.394 Form of Notice and Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.394 to the Registrant’s Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
(2)
10.396 Form of Notice and Restricted Stock Unit Agreement (no accelerating vesting for retirement) under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.396 to the Registrants’ Form 10-Q for the quarter ended June 30, 2019, and incorporated herein by reference.
(2)
10.397 Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.397 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.398 Form of Notice and Retainer Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.398 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference .
(2)
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Exhibit
Number Exhibit
10.399 Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.399 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.401 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.401 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.402 Form of Notice and Nonqualified Stock Option Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.402 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.403 Form of Notice and Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.403 to the Registrant’s Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.404 Form of Notice and Restricted Stock Unit Agreement (no accelerating vesting for retirement) under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.404 to the Registrants’ Form 10-Q for the quarter ended September 30, 2019, and incorporated herein by reference.
(2)
10.405 Stockholder Agreement, dated as of November 24, 2019, by and between the Registrant and the Toronto-Dominion Bank, filed as Exhibit 10.1 to the Registrant’s Form 8-K dated November 24, 2019, and incorporated herein by reference.
10.406 Registration Rights Agreement by and among the Registrant, Charles R. Schwab, The Toronto-Dominion Bank, and certain other stockholders, filed as Exhibit 10.5 to the Registrant's Form 8-K dated November 24, 2019, and incorporated herein by reference.
10.407 Amended and Restated Insured Deposit Account Agreement by and among TD Bank USA, National Association, TD Bank, National Association, and the Registrant, filed as Exhibit 10.6 to the Registrant’s Form 8-K dated November 24, 2019, and incorporated herein by reference. **
10.407(i) Consent, Agreement and Joinder to the Amended and Restated IDA Agreement, dated as of October 6, 2020, by and among Charles Schwab & Co., Inc., TD Ameritrade, Inc., TD Ameritrade Clearing, Inc. and TD Ameritrade Trust Company, filed as Exhibit 10.1 to TD Ameritrade Holding Corporation’s Form 8-K dated October 6, 2020, and incorporated herein by reference.
10.407(ii) Amendment to Amended and Restated Insured Deposit Agreement, dated as of November 24, 2021, by and among TD Bank USA, National Association, TD Bank, National Association, and The Charles Schwab Corporation, TD Ameritrade, Inc., TD Ameritrade Clearing, Inc., TD Ameritrade Trust Company, and Charles Schwab & Co., Inc. , filed as Ex hibi t 10.407(ii) to the Registrant ’ s Form 10-K for the year ended December 31, 2021, and incorporated her e in by reference. **
10.407(iii) Second Amendment to Amended and Restated Insured Deposit Agreement, dated February 14, 2023, by and among TD Bank USA, National Association, TD Bank, National Association, and The Charles Schwab Corporation, TD Ameritrade, Inc., TD Ameritrade Clearing, Inc., Charles Schwab Trust Bank, as suc cessor to TD Ameritrade Trust Company, and Charles Schwab & Co., Inc.
10.408 Form of Notice and Performance-Based Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans, filed as Exhibit 10.408 to the Registrant's Form 10-K for the year ended December 31, 2019, and incorporated herein by reference.
(2)
10.410 2013 Stock Incentive Plan, as amended and restated, filed as Exhibit 10.410 to the Registrant’s Form 8-K dated May 12, 2020, and incorporated herein by reference.
(2)
10.412 Form of Notice and Retainer Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans , filed as Exhibit 10.412 to the Registrant’s Form 10-Q for the quarter ended September, 30, 2020, and incorporated herein by reference.
(2)
10.413 Form of Notice and Retainer Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans , filed as Exhibit 10.413 to the Registrant’s Form 10-Q for the quarter ended September, 30, 2020, and incorporated herein by reference.
(2)
10.414 Form of Notice and Stock Option Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans , filed as Exhibit 10.414 to the Registrant’s Form 10-Q for the quarter ended September, 30, 2020, and incorporated herein by reference.
(2)
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Exhibit
Number Exhibit
10.415 Form of Notice and Restricted Stock Unit Agreement for Non-Employee Directors under The Charles Schwab Corporation Directors’ Deferred Compensation Plan II and successor plans, filed as Exhibit 10.415 to the Registrant’s Form 10-Q for the quarter ended September, 30, 2020, and incorporated herein by reference.
(2)
10.423 The Charles Schwab Corporation Deferred Compensation Plan II, as amended and restated as of December 8, 2020, filed as Exhibit 10.423 to the Registrant’s Form 10-K for the year ended December 31, 2020, and incorporated herein by reference.
(2)
10.424 The Charles Schwab Severance Pay Plan, as Amended and Restated Effective June 21, 2021 , filed as Exhibit 10.424 to the Registrant’s Form 10-Q for the quarter ended June 30, 2021, and incorporated herein by reference.
(2)
10.426 Form of Notice and Restricted Stock Unit Agreement under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans , filed as Exhibit 10.426 to the Registrant ’ s Form 10-K for the year ended December 31, 2021, and incorporated by reference .
(2)
10.427 Form of Notice and Restricted Stock Unit Agreement (no accelerating vesting for retirement) under The Charles Schwab Corporation 2013 Stock Incentive Plan and successor plans , filed as Exhibit 10.427 to the Registrant ’ s Form 10-K for the year ended December 31, 2021, and incorporated by reference .
(2)
10.428 Summary of Non-Employee Director Compensation, filed as Exhibit 10.428 to the Registrant’s Form 10-K for the year ended December 31, 2021, and incorporated herein by reference.
(2)
10.429 The Charles Schwab Corporation 2022 Stock Incentive Plan, filed as Exhibit 10.1 to the Registrant’s Form 8-K, dated May 17, 2022, and incorporated herein by reference.
(2)
10.430 Repurchase Agreement between The Charles Schwab Corporation and TD Luxembourg International Holdings SARL, filed as Exhibit 10.1 to the Registrant’s 8-K, dated July 31, 2022, and incorporated herein by reference.
21.1 Subsidiaries of the Registrant.
23.1 Independent Registered Public Accounting Firm’s Consent.
31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
31.2 Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
(1)
32.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
(1)
101.INS Inline XBRL Instance Document (3)
101.SCH Inline XBRL Taxonomy Extension Schema (3)
101.CAL Inline XBRL Taxonomy Extension Calculation (3)
101.DEF Inline XBRL Extension Definition (3)
101.LAB Inline XBRL Taxonomy Extension Label (3)
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(1) Furnished as an exhibit to this annual report on Form 10-K.
(2) Management contract or compensatory plan.
(3) Attached as Exhibit 101 to this Annual Report on Form 10-K for the annual period ended December 31, 2022, are the following materials formatted in XBRL (Extensible Business Reporting Language) (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Consolidated Financial Statements.
* The schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Schwab agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request.
** Certain confidential information contained in this agreement has been omitted because it is not material and would be competitively harmful if publicly disclosed.
Item 16. Form 10-K Summary
None.
-135-
THE CHARLES SCHWAB CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 24, 2023.
THE CHARLES SCHWAB CORPORATION
(Registrant)
BY: /s/ Walter W. Bettinger II
Walter W. Bettinger II
Co-Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on February 24, 2023.
Signature / Title Signature / Title
/s/ Walter W. Bettinger II /s/ Peter Crawford
Walter W. Bettinger II, Peter Crawford,
Co-Chairman of the Board and Chief Executive Officer
(principal executive officer) Managing Director and Chief Financial Officer
(principal financial and accounting officer)
/s/ Charles R. Schwab /s/ John K. Adams, Jr.
Charles R. Schwab, Co-Chairman of the Board John K. Adams, Jr., Director
/s/ Marianne C. Brown /s/ Joan T. Dea
Marianne C. Brown, Director Joan T. Dea, Director
/s/ Christopher V. Dodds /s/ Stephen A. Ellis
Christopher V. Dodds, Director Stephen A. Ellis, Director
/s/ Mark A. Goldfarb /s/ William S. Haraf
Mark A. Goldfarb, Director William S. Haraf, Director
/s/ Frank C. Herringer /s/ Brian M. Levitt
Frank C. Herringer, Director Brian M. Levitt, Director
/s/ Gerri K. Martin-Flickinger /s/ Bharat B. Masrani
Gerri K. Martin-Flickinger, Director Bharat B. Masrani, Director
/s/ Todd M. Ricketts /s/ Charles A. Ruffel
Todd M. Ricketts, Director Charles A. Ruffel, Director
/s/ Arun Sarin /s/ Carrie Schwab-Pomerantz
Arun Sarin, Director Carrie Schwab-Pomerantz, Director
/s/ Paula A. Sneed
Paula A. Sneed, Director
- 136 -
THE CHARLES SCHWAB CORPORATION
SUPPLEMENTAL INFORMATION
Disclosure Page
Average Balance Sheets and Net Interest Revenue F-2
Analysis of Changes in Net Interest Revenue F-3
Bank Loan Portfolio F-4
Allowance for Credit Losses on Bank Loans F-5
Bank Deposits F-6
F-1
THE CHARLES SCHWAB CORPORATION
Supplemental Financial Data (Unaudited)
(Dollars in Millions)
As a savings and loan holding company, the Company provides the following supplemental information pursuant to Subpart 1400 of Regulation S-K. Other information required by Subpart 1400 of Regulation S-K is presented throughout this Annual Report on Form 10-K.
1. Average Balance Sheets and Net Interest Revenue
For the Year Ended December 31, 2022 2021 2020
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
Assets:
Cash and cash equivalents $ 57,163 $ 812 1.40 % $ 40,325 $ 40 0.10 % $ 39,052 $ 120 0.30 %
Cash and investments segregated 49,430 691 1.38 % 43,942 24 0.05 % 34,100 141 0.41 %
Receivables from brokerage clients 75,614 3,321 4.33 % 77,768 2,455 3.11 % 28,058 848 2.97 %
Available for sale securities (1,2)
260,392 4,139 1.58 % 357,122 4,641 1.30 % 253,555 4,537 1.78 %
Held to maturity securities (1,2)
112,357 1,688 1.50 % — — — — — —
Bank loans (3)
38,816 1,083 2.79 % 28,789 620 2.15 % 20,932 545 2.60 %
Total interest-earning assets 593,772 11,734 1.96 % 547,946 7,780 1.41 % 375,697 6,191 1.64 %
Securities lending revenue 471 720 334
Other interest revenue 22 6 6
Total interest-earning assets 593,772 12,227 2.04 % 547,946 8,506 1.54 % 375,697 6,531 1.73 %
Non-interest-earning assets (4,5)
24,962 41,930 38,608
Total assets $ 618,734 $ 589,876 $ 414,305
Liabilities and Stockholders’ Equity:
Bank deposits $ 424,168 $ 723 0.17 % $ 381,549 $ 54 0.01 % $ 291,206 $ 93 0.03 %
Payables to brokerage clients 97,825 123 0.13 % 91,667 9 0.01 % 46,347 12 0.02 %
Short-term borrowings (6)
4,993 154 3.07 % 3,040 9 0.30 % 89 — 0.20 %
Long-term debt 20,714 498 2.40 % 17,704 384 2.17 % 8,992 289 3.22 %
Total interest-bearing liabilities 547,700 1,498 0.27 % 493,960 456 0.09 % 346,634 394 0.11 %
Securities lending expense 48 24 33
Other interest expense (1) (4) (9)
Non-interest-bearing liabilities (4,7)
27,596 39,182 32,486
Total liabilities (8)
575,296 1,545 0.26 % 533,142 476 0.09 % 379,120 418 0.11 %
Stockholders’ equity (4)
43,438 56,734 35,185
Total liabilities and stockholders’ equity $ 618,734 $ 589,876 $ 414,305
Net interest revenue $ 10,682 $ 8,030 $ 6,113
Net yield on interest-earning assets 1.78 % 1.45 % 1.62 %
(1) Amounts calculated based on amortized cost.
(2) In January 2022 and November 2022, the Company transferred a portion of its investment securities designated as AFS to the HTM category, as described in Item 8 – Note 6.
(3) Includes average principal balances of nonaccrual loans.
(4) Average balance calculation based on month end balances.
(5) Non-interest-earning assets include equipment, office facilities, and property – net, goodwill, acquired intangible assets – net, and other assets that do not generate interest income.
(6) Interest revenue or expense was less than $500 thousand in the period or periods presented.
(7) Non-interest-bearing liabilities consist of other liabilities that do not generate interest expense.
(8) Average rate calculation based on total funding sources.
F-2
THE CHARLES SCHWAB CORPORATION
Supplemental Financial Data (Unaudited)
(Dollars in Millions)
2. Analysis of Changes in Net Interest Revenue
An analysis of the year-to-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:
2022 Compared to 2021
Increase (Decrease) Due to
Change in: 2021 Compared to 2020
Increase (Decrease) Due to
Change in:
Average
Volume Average
Rate Total Average
Volume Average
Rate Total
Interest-earning assets:
Cash and cash equivalents (1)
$ 17 $ 755 $ 772 $ 4 $ (84) $ (80)
Cash and investments segregated 3 664 667 40 (157) (117)
Receivables from brokerage clients (67) 933 866 1,476 131 1,607
Available for sale securities (2,3)
(2,945) 2,443 (502) 1,843 (1,739) 104
Held to maturity securities (2,3)
1,688 — 1,688 — — —
Bank loans (4)
216 247 463 204 (129) 75
Securities lending revenue — (249) (249) — 386 386
Other interest revenue — 16 16 — — —
Total interest-earning assets $ (1,088) $ 4,809 $ 3,721 $ 3,567 $ (1,592) $ 1,975
Interest-bearing sources of funds:
Bank deposits $ 4 $ 665 $ 669 $ 27 $ (66) $ (39)
Payables to brokerage clients 1 113 114 9 (12) (3)
Short-term borrowings 6 139 145 6 3 9
Long-term debt 65 49 114 281 (186) 95
Securities lending expense — 24 24 — (9) (9)
Other interest expense — 3 3 — 5 5
Total sources on which interest is paid 76 993 1,069 323 (265) 58
Change in net interest revenue $ (1,164) $ 3,816 $ 2,652 $ 3,244 $ (1,327) $ 1,917
Note: Changes that are not due solely to volume or rate have been allocated to rate.
(1) Includes deposits with banks and short-term investments.
(2) Amounts have been calculated based on amortized cost.
(3) In January 2022 and November 2022, the Company transferred a portion of its investment securities designated as AFS to the HTM category, as described in Item 8 - Note 6.
(4) Includes average principal balances of nonaccrual loans.
F-3
THE CHARLES SCHWAB CORPORATION
Supplemental Financial Data (Unaudited)
(Dollars in Millions)
3. Bank Loan Portfolio
The maturities of the bank loan portfolio are described below:
December 31, 2022 Within
1 year After 1 year
through
5 years After
5 years through 15 years After 15 years Total
Residential real estate:
First Mortgages $ — $ 15 $ 1,500 $ 23,683 $ 25,198
HELOCs — — 82 515 597
Total residential real estate — 15 1,582 24,198 25,795
Pledged asset lines 13,934 658 — — 14,592
Other 6 183 2 — 191
Total $ 13,940 $ 856 $ 1,584 $ 24,198 $ 40,578
Note: Maturities in the above table are based upon the contractual terms of the loans. The maturities for HELOCs are based on 30-year loan terms, with an initial draw period of ten years, followed by a 20-year amortizing period.
The interest sensitivity of loans with contractual maturities in excess of one year is as follows:
December 31, 2022 After 1 year
through
5 years After
5 years through 15 years After 15 years
Loans with floating or adjustable interest rates
Residential real estate:
First Mortgages $ — $ 36 $ 20,425
HELOCs — 82 515
Total residential real estate — 118 20,940
Pledged asset lines 658 — —
Other 1 — —
Total loans with floating or adjustable interest rates 659 118 20,940
Loans with predetermined interest rates
Residential real estate:
First Mortgages $ 15 $ 1,464 $ 3,258
HELOCs — — —
Total residential real estate 15 1,464 3,258
Pledged asset lines — — —
Other 182 2 —
Total loans with predetermined interest rates 197 1,466 3,258
Total $ 856 $ 1,584 $ 24,198
Note: Maturities in the above table are based upon the contractual terms of the loans. The maturities for HELOCs are based on 30-year loan terms, with an initial draw period of ten years, followed by a 20-year amortizing period.
F-4
THE CHARLES SCHWAB CORPORATION
Supplemental Financial Data (Unaudited)
(Dollars in Millions)
4. Allowance for Credit Losses on Bank Loans
The following table presents several credit ratios related to the Company’s bank loans portfolio. See Item 8 – Note 7 for the values underlying these ratios:
December 31, 2022 2021
Allowance for credit losses to total year-end loans 0.18 % 0.05 %
Nonaccrual loans to total year-end loans 0.06 % 0.10 %
Allowance for credit losses to total nonaccrual year-end loans 317 % 51 %
The following table presents information regarding average loans outstanding during the period and the ratio of net charge-offs (recoveries) during the period to average loans outstanding:
Year Ended December 31, 2022 2021 2020
Average loans Net charge-offs (recoveries) to average loans Average loans Net charge-offs (recoveries) to average loans Average loans Net charge-offs (recoveries) to average loans
Residential real estate:
First Mortgages $ 23,639 — $ 17,673 — $ 13,635 (.01) %
HELOCs 617 (.16) % 731 (.14) % 981 —
Total residential real estate 24,256 — 18,404 (.01) % 14,616 (.01) %
Pledged asset lines 14,360 .03 % 10,201 — 6,125 —
Other 200 — 184 .54 % 191 —
Total $ 38,816 .01 % $ 28,789 — $ 20,932 —
The increase in the Company’s average loan portfolio in the periods presented has been driven by growth in First Mortgages and PALs. Growth in these loan types is due in large part to overall growth in Schwab’s client base and net new client assets during the periods presented, as well as the low interest rate environment observed from 2020 through early 2022. The increase in the ratios of the allowance for credit losses to year-end loans and nonaccrual loans is primarily due to an increase in the allowance for credit losses due to higher modeled projections of loss rates as a result of macroeconomic factors as discussed in Item 8 – Note 7 and lower nonaccrual First Mortgages outstanding.
The following table presents the allocation of the allowance for credit losses for bank loans and loans by category as a percentage of total bank loans:
December 31, 2022 2021
Allowance for Credit Losses Percent of loans to total loans Allowance for Credit Losses Percent of loans to total loans
Residential real estate:
First Mortgages $ 66 63 % $ 13 60 %
HELOCs 4 1 % 2 2 %
Total residential real estate 70 64 % 15 62 %
Pledged asset lines — 36 % — 37 %
Other 3 — 3 1 %
Total $ 73 100 % $ 18 100 %
F-5
THE CHARLES SCHWAB CORPORATION
Supplemental Financial Data (Unaudited)
(Dollars in Millions)
5. Bank Deposits
The following table presents the average amount of and the average rate paid on deposit categories that are in excess of ten percent of average total bank deposits:
Year Ended December 31, 2022 2021
Amount Rate Amount Rate
Analysis of average daily deposits:
Money market and other savings deposits $ 367,426 0.17 % $ 349,665 0.01 %
Interest-bearing demand deposits (1)
56,306 0.15 %
Total $ 423,732 $ 349,665
(1) Interest-bearing demand deposits did not exceed ten percent of average total bank deposits for the year ended December 31, 2021.
As of December 31, 2022 and 2021, uninsured bank deposits totaled approximately $68.9 billion and $134.8 billion, respectively. As of December 31, 2022, the Company’s bank deposits did not include any time deposits that were in excess of FDIC insurance limits or were otherwise uninsured.
F-6