Schwab Co-CEOs' Bonuses Axed, Pay Slashed
April 8, 2002
Charles Schwab co-CEOs Charles Schwab and David Pottruck in 2001 earned a mere fraction of the $8.8 million they have earned over the previous two years. Not only didn't either exec get any bonus last year - a cool $8 million apiece in both 2000 and 1999 - but their base salaries were cut back 19% in 2001, down from $800,004 to $650,003, according to proxy statements. At that rate, the executives earned less than Executive Vice President H. Marshall Schwarz.
Schwab has gone through several rounds of layoffs over the past year, and the company's founder has appeared visibly humbled when speaking of the layoffs at industry meetings. But the drop in Schwab's compensation package is not directly related to job cuts; based on last year's pre-tax profit margin of 15% and decline in net revenue of 25%, the company issued no bonuses, according to the proxy.
"We're pretty clear about the fact that executive compensation is closely tied to company performance and we've said that year after year," confirmed Schwab spokesman Glen Mathison.
Nonetheless, the company is still seeking to make changes to its executive compensation policy, with the exception of Schwab himself, whose compensation is covered under his employment agreement.
Currently, compensation is tied to specific annual revenue growth and profitability measures. Shareholders will vote on allowing the compensation committee to change the criteria, to other measures, such as operating revenue growth or stockholder return.