Schwab’s Two CEOs Earned $8.9 Million Each Last Year

Charles Schwab Corp., the biggest U.S. discount brokerage, paid each of its co-chief executives $8.9 million in salary and bonuses last year. The company cut the pay of its co-CEOs and other top executives earlier this year to help offset a decline in trading volume.

Charles Schwab, the firm’s founder and chairman, and David Pottruck, president and co-chief executive, each earned $800,004 in salary and got $8.1-million bonuses. The co-CEOs also got options to buy 300,000 shares. The company valued the option grant at about $12.1 million, assuming that company shares rise 10% a year for the next 10 years.

In 1999, Schwab and Pottruck earned the same salary and $100,000 bonuses. They didn’t receive any new option grants that year. Schwab shares rose 11% in 2000, compared with their 26% rise in 1999 and 101% rally in 1998.

Schwab realized $19 million in gains by exercising previously granted options, while Pottruck gained $63 million, according to the company’s filing with the Securities and Exchange Commission. Schwab has about $118 million in unexercised options, while Pottruck has $240 million in unexercised options, according to the company’s calculations in the proxy statement.

The company’s operating profit rose 27% in 2000.

In December, the company said it would halve the salaries of Schwab and Pottruck, and cut other executives’ pay. Schwab and Pottruck’s salaries will be reset to their normal level at the end of March, while other executives returned to normal pay at the end of February.

The U.S. stock market’s plunge in the past year has led to a drought in individual investors’ appetite for stock trading. Schwab’s fourth-quarter profit fell 15% because of the slowdown.

Shares of Schwab fell 11 cents to $19.89, down 30% this year, and off 38% in the past 12 months.