Charles Schwab Corp. Paid CEO $15.6 Million in 2018 Comp
Charles Schwab Corp. awarded its chief executive, Walt Bettinger, an 8.9% compensation hike in 2018 to $15.6 million, about 150 times the firm’s median employee pay of $104,281, the company said in a proxy statement filed on Friday.
The San Francisco-based discount brokerage pioneer also gave Charles R. Schwab, its 81-year-old namesake founder and chairman, a 2018 pay package of $6.05 million, up 9.6% from 2017.
The executives’ total compensation includes salary, cash-denominated performance bonuses and long-term stock and option awards that may not reflect the ultimate value they will have when the shares vest and when the options are exercised.
The pay hikes reflect a strong year in which Schwab collected record core net new assets of $227.8 billion, produced a record pretax profit margin of 45%, generated earnings per share 52% higher than in the previous year and boasted its highest return on common equity (19%) since 2008, Schwab’s compensation committee wrote in justifying its comp decisions.
Bettinger, 58, has been president and CEO of Schwab since 2008, but his total 2018 compensation trailed the $19.54 million bonanza he was awarded in 2016.
Almost one-third of Bettinger’s compensation, or $5.34 million, was a cash incentive bonus based on the earnings per share metric, according to the report. The strong stock performance resulted in cash bonuses for him, Schwab and three other executives named in the proxy that were 111.6% of the bonus targets the board had set for them.
Retail brokerage (investor services division) head Terri Kallsen earned $3.28 million, Chief Operating Officer Joe Martinetto was awarded $5.3 million and Chief Financial Officer Peter Crawford was awarded $2.28 million.
Schwab’s compensation committee also increased Bettinger’s annual long-term incentive awards of stock and options in 2018 by $500,000.
Charles Schwab’s daughter, Carrie Schwab-Pomerantz, earned about $815,000 in salary, bonus and benefits during 2018 in her role as president of the Charles Schwab Foundation, according to the proxy. She has worked at the company for 36 years.
As required by law, Schwab is submitting its executive officer compensation to its shareholders for a non-binding vote of approval that will be tabulated at its annual meeting in San Francisco on May 15.
Such votes are typically cast overwhelmingly in favor of compensation committee decisions, although Ameriprise Financial cut CEO James Cracchiolo’s 2018 pay by 23% from the previous year (to $22.3 million) in response to approximately 75% of its shareholders disapproving his earlier year’s compensation.
Schwab stockholders are voting this proxy season on a single shareholder proposal. New York City Comptroller Scott M. Stringer, on behalf of municipal employee pension plans, wants Schwab to annually disclose its Equal Employment Opportunity Commission breakdown of its workforce by race and gender.
“The financial services industry, of which the company is a part, is characterized by persistent and pervasive underrepresentation of minorities and women, particularly in senior positions,” the proposal says.
Over two-thirds of S&P 100 companies disclose their EEOC data, including Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley, according to Stringer’s proposal.
Schwab is committed to diversity but the “EEO-1” data Stringer seeks “neither informs nor accurately measures that commitment,” Schwab wrote in the proxy, recommending a vote against the proposal.
Stringer noted that his proposal received 35.8% support at Schwab last year, while the company noted that stockholders defeated the proposal in each of the last five years.