Schwab CEO’s Pay Triples in 2003
Charles Schwab Corp. Chief Executive David Pottruck’s compensation more than tripled last year to $3.6 million, even as the company said in a filing Monday that he and Chairman Charles Schwab waived bonuses for a second straight year to build employee morale.
Pottruck, 55, was paid $2.5 million in restricted stock and $1.1 million in salary and perquisites, up from $1.04 million in 2002 -- a year in which he didn’t get restricted stock, the company said in a proxy filing with the Securities and Exchange Commission.
CEO pay at U.S. brokerage firms soared in 2003 as rising stock markets helped boost earnings. Schwab, the biggest discount broker by client assets, said net income rose 33% last year to $472 million, reversing two years of declines.
Charles Schwab, who founded his San Francisco-based firm in 1971, resigned as co-CEO in May, leaving Pottruck alone in the post.
Pottruck’s raise, which included an 11% salary increase to $983,333, reflects his additional responsibility and pay packages at rivals, the company said in its filing. He also got options to buy 1.4 million shares, the only senior executive to get an options grant in 2003.
Schwab, 66, who like Pottruck last year gave up some previously awarded options, got a 1.9% salary raise to $900,000 in 2003. He didn’t receive restricted stock or options in 2003.
Between the two men, the waived bonuses for 2003 total about $8 million.
Pottruck’s new options would be worth $7.9 million on their 2013 expiration date if the company’s stock appreciates 5% and $20 million if it rises 10%, the proxy said. He could exercise some options within five years if the firm meets certain goals but can’t cash underlying shares until he retires.
The options are exercisable at $8.88 a share. Schwab shares rose 30 cents Monday to $11.56 on the New York Stock Exchange.
Pottruck in January got options for an additional 425,000 shares exercisable in three years at $13.76, a Schwab spokesman said. The filing said they were a “special grant” for Pottruck’s “performance” in 2003.
As they did last year, Pottruck and Schwab rejected “a recommended bonus for 2003 so that the amount declined would be available for bonuses for other employees,” the proxy said.
Pottruck waived a $4.8-million bonus; Schwab’s would have been $3.3 million. Bonuses to employees rose “about 50% higher than 2002’s minimal level,” Schwab said in its annual report, which also was released Monday.
Pottruck and Schwab each gave up 2.6 million stock options in 2002 that were valued at the time at as much as $55.6 million, and canceled other options from 2000 and 2001. They said they relinquished the payments to motivate employees and retain staff after the firm’s earnings fell 45% in 2002.
Schwab is the biggest investor in the company, which has 7.5 million customers and holds more than $1 trillion of their assets. Schwab owns 253.6 million shares, or 19% of the shares outstanding, compared with 8.5% held by Fidelity Investments, the second-largest shareholder, the filing said.