Exhibit 10.323
THE CHARLES SCHWAB
CORPORATION
DIRECTORS’ DEFERRED
COMPENSATION PLAN II
(Effective December 9,
2004)
(Amended and Restated December 12,
2007)
(Amended and Restated October 23,
2008)
TABLE OF CONTENTS
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Page
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Article I.
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Purpose
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1
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1.1
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Establishment
of the Plan
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1
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1.2
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Purpose of the
Plan
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1
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Article II.
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Definitions
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1
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2.1
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Definitions
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1
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2.2
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Gender and
Number
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2
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Article III.
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Administration
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3
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3.1
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Committee and
Administrator
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3
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Article IV.
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Participants
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3
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4.1
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Participants
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3
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Article V.
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Deferrals
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3
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5.1
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Deferrals
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3
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5.2
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Timing of
Elections
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3
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5.3
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Deferral
Procedures
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3
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5.4
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Election of
Time and Manner of Payment
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4
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5.5
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Accounts and
Earnings
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5
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5.6
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Maintenance of
Accounts
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5
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5.7
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Change in
Control
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5
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5.8
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Payment of
Deferred Amounts
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7
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5.9
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Payment on
Certain Events
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7
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Article VI.
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General Provisions
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7
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6.1
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Unfunded
Obligation
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7
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6.2
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Informal
Funding Vehicles
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8
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6.3
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Beneficiary
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8
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6.4
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Incapacity of
Participant or Beneficiary
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8
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6.5
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Nonassignment
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9
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6.6
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No Right to
Continued Service
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9
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6.7
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Tax
Withholding
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9
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6.8
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Claims
Procedure and Arbitration
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9
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6.9
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Termination and
Amendment
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10
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6.10
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Applicable
Law
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10
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i
THE CHARLES SCHWAB CORPORATION
DIRECTORS’ DEFERRED COMPENSATION PLAN
II
Article I. Purpose
1.1 Establishment of the Plan.
Effective as of December 9, 2004, The Charles Schwab
Corporation (hereinafter, the “Company”) established
The Charles Schwab Corporation Directors’ Deferred
Compensation Plan II (the “Plan”), as set forth in this
document. This Plan shall apply to cash compensation that is
earned, deferred and accrued by eligible Participants after
December 31, 2004. This Plan is adopted by the Committee
pursuant to its authority under the Company’s 2004 Stock
Incentive Plan to prescribe procedures for Directors to elect to
receive annual retainer payments and/or meeting fees from the
Company in the form of Nonqualified Stock Options and Restricted
Stock Units, among other awards, to be issued under the 2004 Stock
Incentive Plan.
1.2 Purpose of the Plan. The Plan
permits Directors to defer the payment of directors’ fees
that they may earn. The opportunity to elect such deferrals is
provided in order to help the Company attract and retain outside
directors. This Plan is unfunded and is maintained primarily for
the purpose of providing deferred compensation for its outside
directors. It is intended to be exempt from the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The
Plan also is intended to meet the requirements of section 409A of
the Internal Revenue Code of 1986 and is to be construed in
accordance with that section and any regulatory guidance issued
thereunder.
Article II. Definitions
2.1 Definitions. The following
definitions are in addition to any other definitions set forth
elsewhere in the Plan. Whenever used in the Plan, the capitalized
terms in this Section shall have the meanings set forth below
unless otherwise required by the context in which they are
used:
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(a)
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“Administrator” the administrator
described in Section 3.1 that is selected by the Committee to
assist in the administration of the Plan.
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(b)
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“Beneficiary” means a person
entitled to receive any benefit payments that remain to be paid
after a Participant’s death, as determined under
Section 6.3.
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(c)
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“Board” means the Board of Directors
of the Company.
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(d)
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“Code” means the Internal Revenue
Code of 1986, as amended.
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(e)
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“Company” means The Charles Schwab
Corporation, a Delaware corporation.
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(f)
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“Committee” means the Compensation
Committee of the Board.
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(g)
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“Deferral
Account” means the account representing deferrals of cash
compensation, plus investment adjustments, as described in Sections
5.5 and 5.6.
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(h)
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“Director” means each member of the
Board who is not an employee of the Company or any of its
subsidiaries. The term “Director” shall also include
each member of the board of directors of any subsidiary of the
Company who is not an employee of the Company or any of its
subsidiaries, but only if the Committee has approved participation
in the Plan for such subsidiary’s non-employee
directors.
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(i)
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“Disability” means a condition such
that an individual is “disabled” within the meaning of
section 409A of the Code and any regulatory guidance promulgated
thereunder. Generally, an individual who is disabled (a) is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months; or (b) is, by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than 3 months
under an accident and health plan covering employees of the Company
or its subsidiaries.
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(j)
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“Nonqualified Stock Options” means
nonqualified stock options as defined in and issued under the
Company’s 2004 Stock Incentive Plan.
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(k)
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“Plan” means The Charles Schwab
Corporation Directors’ Deferred Compensation Plan II, as in
effect from time to time.
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(l)
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“Plan
Year” means the calendar year.
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(m)
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“Restricted Stock Units” means
restricted stock units as defined in and issued under the
Company’s 2004 Stock Incentive Plan.
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(n)
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“Separation from Service” or
“Separate(s) from Service” means “Separation from
Service” within the meaning of section 409A of the Code and
any regulatory guidance promulgated thereunder. Generally, a
separation from service occurs when an individual ceases to provide
services for the Company and its affiliates.
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(o)
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“Specified Employee” means a
“specified employee” within the meaning of section 409A
of the Code and any regulatory guidance promulgated thereunder,
provided that in determining the compensation of individuals for
this purpose, the definition of compensation in Treas. Reg.
§ 1.415(c)-2(d)(2) shall be used.
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(p)
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“Termination” means the date a
Participant ceases to be a Director and otherwise incurs a
“Separation from Service”.
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(q)
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“Unforeseeable Emergency” means a
severe financial hardship to the Participant resulting from
(i) an illness or accident of the Participant, the
Participant’s spouse, or the Participant’s dependent
(as defined in section 152(a) of the Code); (ii) loss of the
Participant’s property due to casualty; or (iii) other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, as
determined in the sole discretion of the Administrator in
accordance with section 409A of the Code.
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(r)
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“Valuation Date” means each
December 31 and any other date designated from time to time by
the Committee for the purpose of determining the value of a
Participant’s Deferral Account balance pursuant to
Section 5.5.
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2.2 Gender and Number. Except when
otherwise indicated by the context, any masculine or feminine
terminology shall also include the neuter and other gender, and the
use of any term in the singular or plural shall also include the
opposite number.
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Article III. Administration
3.1 Committee and Administrator. The
Committee shall administer the Plan and may select one or more
persons to serve as the Administrator. The Administrator shall
perform such administrative functions as the Committee may delegate
to it from time to time. Any person selected to serve as the
Administrator may, but need not, be a Committee member or an
officer or employee of the Company. However, if a person serving as
Administrator or a member of the Committee is a Participant, such
person may not vote on a matter affecting his or her interest as a
Participant.
The Committee shall have
discretionary authority to construe and interpret the Plan
provisions and resolve any ambiguities thereunder; to prescribe,
amend, and rescind administrative rules relating to the Plan; to
determine eligibility for benefits under the Plan; and to take all
other actions that are necessary or appropriate for the
administration of the Plan. Such interpretations, rules, and
actions of the Committee shall be final and binding upon all
concerned and, in the event of judicial review, shall be entitled
to the maximum deference allowable by law. Where the Committee has
delegated its responsibility for matters of interpretation and Plan
administration to the Administrator, the actions of the
Administrator shall constitute actions of the Committee.
Article IV. Participants
4.1 Participants. Each Director
shall be eligible to participate in this Plan.
Article V. Deferrals
5.1 Deferrals. Each Director may
elect to defer up to 100 percent of the fees otherwise receivable
from the Company for service as a Director. Any such election must
be made by entering a deferred compensation agreement with the
Company in accordance with the procedures established by the
Administrator on or before the applicable deadline under
Section 5.2. Deferral elections shall apply only to a single
Plan Year and new deferral elections must be made with respect to
each Plan Year.
5.2 Timing of Elections.
(a) Except as otherwise provided
under subparagraph (b) below, compensation for services
performed during a Plan Year may be deferred at the
Participant’s election only if the election to defer such
compensation is made not later than the close of the preceding Plan
Year or, if permitted by the Administrator in its sole discretion,
at such other time permitted under the Code.
(b) To the extent permitted under
section 409A of the Code and any regulatory guidance promulgated
thereunder, in the case of the first Plan Year in which a
Participant becomes eligible to participate in the Plan, the
Administrator may, in its sole discretion, provide that the
Participant may make an election to defer compensation for services
to be performed subsequent to the election provided that such
election is made not later than 30 days after the date the
Participant becomes eligible to participate in the Plan. The
election shall only apply to compensation earned after the
effective date of the election.
5.3 Deferral Procedures. Subject to
Section 5.2, Participants shall have an opportunity to elect
deferrals with respect to each Plan Year. Unless the Committee
specifies other rules for the deferrals that may be elected,
deferrals may be made in increments of 10 percent or in a fixed
dollar amount.
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If a deferral is elected, the election shall be
irrevocable with respect to the applicable Plan Year. Deferral
elections shall be made by following the procedures adopted by the
Committee or the Administrator. As provided in Section 6.7,
any deferral is subject to any applicable tax withholding measures
and may be reduced to satisfy any applicable tax withholding
requirements.
5.4 Election of Time and Manner of
Payment.
(a) When a Participant incurs a
Separation from Service, the payment of the Participant’s
entire Deferral Account of Restricted Stock Units, shall be made in
the year following the Participant’s Separation from Service
in February. Notwithstanding anything in the Plan to the contrary,
if (i) the Participant is a Specified Employee at the time of
the Separation from Service, and (ii) the Separation from
Service occurs after July, such payment shall be made in the year
following the Participant’s Separation from Service in
July.
(b) Notwithstanding anything to the
contrary in this Plan, except as otherwise permitted under section
409A of the Code, a Participant’s Deferral Account shall not
be distributed earlier than (i) Separation from Service or, in
the case of a Specified Employee, the date that is at least six
(6) months after Separation from Service;
(ii) Disability; (iii) death; (iv) a specified time
or schedule; (v) to the extent permitted under section 409A of
the Code and any regulatory guidance promulgated thereunder, a
change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the assets of the
Company; or (vi) the occurrence of an Unforeseeable
Emergency.
(c) The acceleration of the time or
schedule of any payment under the Plan shall not be permitted
unless permitted by the Administrator in accordance with the
requirements of section 409A of the Code and any regulatory
guidance promulgated thereunder.
(d) Under procedures approved by the
Committee and communicated to Participants, a Participant shall
elect between the following two alternatives with respect to the
deferred amounts at the same time that the Participant elects to
defer the fees payable for a Plan Year. Once made, a
Participant’s election for the method of payment may not be
changed; however, a Participant may make a different election with
respect to amounts that the Participant elects to defer in
subsequent Plan Years.
(1) Payment in Shares. Under this
alternative, a Participant automatically shall be granted fully
vested Restricted Stock Units pursuant to section 8 of the
Company’s 2004 Stock Incentive Plan in a number equal to
(i) the amounts deferred hereunder, divided by (ii) the
closing price of the Common Stock of the Company on the date the
fees deferred pursuant to Section 5.1 hereof would otherwise
have been payable. The Company shall issue a number of shares of
Common Stock equal to the number of such Restricted Stock Units to
one or more grantor trusts formed by the Company (“rabbi
trusts”) pursuant to Section 6.2 hereof. Any dividends
paid on shares of the Common Stock of the Company issued to a rabbi
trust shall be reinvested in Common Stock of the Company, which
shall be credited to the Participant as additional Restricted Stock
Units pursuant to sections 7(f) and 8 of the Company’s 2004
Stock Incentive Plan. Notwithstanding the foregoing, the issuance
of shares of Common Stock to a rabbi trust and the crediting of
assumed earnings shall not mean that any deferred compensation
promised to a Participant is secured by particular investment
assets or that the Participant is actually earning any form of
investment income under the Plan.
(2) Issuance of Stock Options Under
Company’s Stock Incentive Plan. Under this alternative, a
Participant automatically shall be granted fully vested
Nonqualified Stock Options pursuant to section 8 of the
Company’s 2004 Stock
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Incentive Plan. A Participant who elects this
alternative shall, on the date the fees deferred pursuant to
Section 5.1 hereof w
