UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x☒                             Filed by a Party other than the Registrant  ¨☐

Check the appropriate box:

E*TRADE Financial Corporation

(Name of registrantRegistrant as specified in its charter)Specified In Its Charter)

(Name of person(s) filing proxy statement,Person(s) Filing Proxy Statement, if other than the registrant)Registrant)

Payment of Filing Fee (Check the appropriate box):

previously paid:

party:

Notice of Annual Meeting of Stockholders

To Be Held May 7, 201511, 2017

TO OUR STOCKHOLDERS:

You are cordially invited to attend the Annual Meeting of Stockholders of E*TRADE Financial Corporation (“E*TRADE,” the “Company,” “us” or “we”), which will be held in the Roman Room at the Time Life Conference Center, 1271 Avenue of the Americas, Room #1 (2The Michelangelo Hotel, 152 West 51^ndst Floor),Street, New York, NY 10020,New York 10019, on May 7, 201511, 2017 at 8:30 a.m. EDT, for the following purposes:

The Board has fixed the close of business on March 9, 201513, 2017 as the record date for determining those stockholders entitled to receive notice of, to attend and to vote at the Annual Meeting.Meeting of Stockholders.

The Company is pleased to continue to furnish its proxy materials to its stockholders via the Internet. We believe that this process allows us to provide our stockholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability.

It is important that your shares be represented at the Annual Meeting.Meeting of Stockholders. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS, PLEASE SUBMIT YOUR PROXY BY INTERNET, PHONE OR MAIL AS SOON AS POSSIBLE. If you later choose to revoke your proxy or change your vote, you may do so by following the procedures described in the attached proxy statement. Unless you have previously requested printed materials or you request a paper copy of our proxy materials in the manner specified in the Notice of Internet Availability, you will not receive a paper proxy card.

Please read the proxy materials carefully. Your vote is important and the Company appreciates your cooperation in considering and acting on the matters presented.

Very truly yours,

Rodger A. Lawson

Executive Chairman of the Board

March 25, 201529, 2017

New York, New York

TABLE OF CONTENTS

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PROXY SUMMARY

Below are highlights of the information that you will find in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement and our Annual Report for the year endingended December 31, 20142016 before voting.

Your Vote is Important

Please cast your vote, even if you plan to attend the Annual Meeting of Stockholders in person.Stockholders of Record, who hold shares registered in their names, may vote:

The deadline for voting online or by telephone is 11:59 p.m. EDT on May 6, 2015.10, 2017. If you vote by mail, your proxy card must be received no later than the day before the annual meeting.Annual Meeting of Stockholders.

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Street Name Holders, who own shares through a bank or brokerage firm, may vote by returning the voting instruction form, or by following the instructions for voting via telephone or the Internet, provided by their bank or broker.

If you own shares in different accounts or in more than one name you may receive different voting instructions for each type of ownership. Please vote all your shares. If you are a Stockholder of Record or a Street Name Holder who has a legal proxy to vote the shares, you may choose to vote in person at the Annual Meeting.Meeting of Stockholders.

Even if you plan to attend the Annual Meeting of Stockholders in person,

please cast your vote as soon as possiblepossible..

The following table provides summary information about each director nominee standing for election to the Board for a one-year term that will expire at the 2016Company’s 2018 Annual Meeting.Meeting of Stockholders.

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The Company is committed to good corporate governance, which we believe is important to the success of our business and in advancing stockholder interests. Highlights include:

The Company’s executive compensation program is overseen by the Compensation Committee of the Board of Directors. A summary of the Compensation Committee’s philosophy on compensation and a detailed description of the Company’s executive compensation program beginbegins on page 3226 of this Proxy Statement.

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Stockholders Should Read the Entire Proxy Statement Carefully

Prior to Returning Their Proxy Cards

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS OF E*TRADE FINANCIAL CORPORATION

To Be Held May 7, 201511, 2017

This Proxy Statement is furnished in connection with the solicitation by the Company’s Board of Directors (the “Board”) of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”), which will be held in the Roman Room at the Time Life Conference Center, 1271 Avenue of the Americas, Room #1 (2The Michelangelo Hotel, 152 West 51^ndst Floor),Street, New York, NY 10020,New York 10019, on May 7, 201511, 2017 at 8:30 a.m. EDT, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. These materials were first sent or made available to stockholders on or about March 25, 2015.29, 2017.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

Why am I receiving these materials?

We have made these materials available to you on the Internet or, upon your request, have delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at the Annual Meeting to be held on Thursday, May 7, 2015,11, 2017, at 8:30 a.m. EDT, and at any postponements or adjournments thereof. You are invited to attend the Annual Meeting and are requested to vote on the proposals described in this proxy statement (the “Proxy Statement”).

What is the purpose of the Annual Meeting?

At the Annual Meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting of Stockholders. These include the election of directors, approval of the E*TRADE Financial Corporation 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), an advisory non-binding vote to approve compensation paid to our Named Executive Officers (“NEOs”), and ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm. include:

Once the business of the Annual Meeting is concluded, representatives from the Company and Deloitte & Touche LLP will be available to respond to questions from stockholders.

What is a proxy and how does it work?

The Board is asking for your proxy. A “proxy” is your legal designation of another person to vote the stock you own in the manner you direct. If you designate someone as your proxy in a written document, that document is also is called a proxy or proxy card. By giving your proxy to the persons named as proxy holders in the proxy card accompanying this Proxy Statement, you authorize them to vote your shares of our common stock, $0.01 par value per share (the “Common Stock”), at the Annual Meeting in the manner you direct. You may vote your shares for, against or abstain for all, some or none of the director nominees and you may choose to vote your shares for, against or abstain with respect to the other matters we are submitting to a vote of our stockholders at the Annual Meeting.

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If you complete and submit your proxy in one of the manners described below, but do not specify how to vote, the proxy holders will vote your shares FOR the election of directors as described in “Proposal 1—Election of Directors”; FOR the approval of the 2015 Omnibus Incentive Plancompensation of the Company’s Named Executive Officers (“NEOs”) as described in “Proposal 2—ApprovalNon-Binding Advisory Vote to Approve the Compensation of the Adoption of the 2015 Omnibus Incentive Plan”; FOR approval of the compensation paid to theCompany’s Named Executive Officers (the “Say-on-Pay Vote”)”; for the selection of ONE YEAR as the frequency of the CompanySay-on-Pay Vote as described in “Proposal 3—Non-Binding Advisory Vote to Approve Executive Compensation”Select the Frequency of the Say-on-Pay Vote”; and FOR the ratification of the selectionappointment of accountants as described in “Proposal 4—Ratification of SelectionAppointment of Independent Registered Public Accounting Firm.”

How can I receive a paper or electronic copy of this Proxy Statement?

We mailed the Notice of Internet Availability to our stockholders, except those who had previously requested paper materials. The Notice of Internet Availability contains instructions on how to access and review the proxy materials and our Annual Report for the year ended December 31, 20142016 (the “2014“2016 Annual Report”) over the Internet. If you received a Notice of Internet Availability by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability.

Who may vote and how many votes do I have?

Only common stockholders of record at the close of business on March 9, 201513, 2017 (the “Record Date”) may vote at the Annual Meeting. On that date, there were 289,851,469274,700,705 outstanding shares of our Common Stock.

All of the outstanding shares of Common Stock are entitled to vote at the Annual Meeting. Stockholders of record on the Record Date will have one vote for each share of Common Stock they hold.

What is the difference between a stockholder of record and a beneficial owner of stock held in street name?

Stockholders of Record. If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are a stockholder“stockholder of recordrecord” with respect to those shares and the Notice of Internet Availability or the proxy materials were sent directly to you by Broadridge Financial Solutions, Inc.

Street Name Holders. If you hold your shares in an account at a bank or broker, you are the beneficial owner of shares held in “street name.” The Notice of Internet Availability or proxy materials were forwarded to you by your bank or broker, who is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your bank or broker on how to vote the shares held in your account. See the voting instruction form provided by your bank or broker for instructions.

How can I vote my shares?

By Written Proxy. All stockholders of record who received a Notice of Internet Availability or the proxy materials electronically may request a proxy card at any time by following the instructions on the Notice of Internet Availability or on the voting website (www.proxyvote.com). If you are a street name holder, you will receive instructions on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.

By Telephone or Internet. All stockholders of record may vote by telephone using the toll-free telephone number on the proxy card, or through the Internet by visitingwww.proxyvote.com before 11:59 p.m. EDT on May 6, 2015.10, 2017. The Internet and telephone voting procedures are designed to authenticate stockholders’ identities, allow stockholders to vote their shares and to confirm that their instructions have been properly recorded. If you would like to receive future stockholder materials electronically, please enroll after you complete your voting process onwww.proxyvote.com. Street name holders may vote by Internet or telephone if their bank or broker makes those methods available, in which case the bank or broker will encloseprovide instructions with the proxy materials.

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In Person. All stockholders of record may vote in person at the Annual Meeting. Street name holders may vote in person at the Annual Meeting if they have a legal proxy, as described below.

Whether you plan to attend the Annual Meeting or not, we encourage you to vote by proxy as soon as possible.Please note that the Notice of Internet Availability is not a proxy card and it cannot be used to vote your shares.

What does it mean if I receive more than one Notice of Internet Availability or Voting Instruction Form?

You may receive more than one Notice of Internet Availability or voting instruction form depending on how you hold your shares. You will receive a Notice of Internet Availability for shares registered in your name. If you are the beneficial owner of shares held in street name, you may also receive a voting instruction form from your bank or broker asking how you want to vote. If your shares are registered differently and are in more than one account, you will receive more than one Notice of Internet Availability or voting instruction form and may have to cast multiple votes. We encourage you to vote all of your shares and to have all accounts registered in the same name and address whenever possible.

Can I change my vote?

Stockholders of record may revoke a proxy and/or change their vote before the time of voting at the Annual Meeting by:

To be counted, revocations submitted in a manner provided for above must be received the day before the Annual Meeting. You may also revoke your proxy by voting in person at the Annual Meeting.

Street name holders may revoke a proxy and/or change their vote before the time of voting at the Annual Meeting by:

Who can attend the Annual Meeting?

Only stockholders of record and street name holders as of the Record Date, or their duly appointed proxies, and guests of the Company may attend the Annual Meeting.

Stockholders of Record. Please bring photo identification and proof of share ownership with you to the Annual Meeting. For example, the Notice of Internet Availability received in connection with this meeting oris acceptable proof of share ownership.

Street Name Holders. Please bring photo identification and proof of share ownership with you to enter the Annual Meeting. For example, a bank or brokerage account statement showing that you owned Common Stock in the Company on the Record Date is acceptable as proof of share ownership if you are a record holder.

Street Name Holders. If you are a street name holder, youownership. You may not, however, vote your shares at the Annual Meeting unless you obtain a legal proxy from your bank or broker. A legal proxy is a bank’s or broker’s authorization for you to vote the shares it holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further information. Please bring photo identification and a legal proxy with you to the Annual Meeting.

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What constitutes a quorum for the Annual Meeting?

A quorum is necessary to conduct business at the Annual Meeting. A quorum requires the presence of a majority of the outstanding shares of Common Stock entitled to vote, in person or represented by proxy. Your shares will be counted toward the quorum requirement if you have voted by proxy.

Abstentions and broker non-votes count as “shares present” at the meeting for purposes of determining a quorum. A broker non-vote occurs when a bank, broker or other nominee who holds shares for a beneficial owner does not vote on a particular item because the nominee does not have discretionary voting authority to vote on that item and has not received instructions from the beneficial owner of the shares.

If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.

How many votes are needed to approve each of the proposals?proposals and what are the effects of such votes?

For “Proposal 1—Election of Directors,” directors will be elected by a majority of the votes cast. “Votes cast” excludes both abstentions and “broker non-votes” (described above). In an uncontested election, such as this year’s election, any director nominee who receives an equal or greater number of votes “against” as compared to votes “for” must tender his or her resignation to the Governance Committee of the Board. The Governance Committee is required to make recommendations to the Board with respect to any such tendered resignation. The Board will act on the tendered resignation within 90 days from the certification of the stockholder vote and will publicly disclose its decision, including its rationale. Please see “Board Meetings and Committees—Majority“Majority Voting Standard and Director Resignation Policy” belowon page 15 for further details.

For “Proposal 2—Approval of the Adoption of the 2015 Omnibus Incentive Plan,” an affirmative vote of a majority of the votes cast will be considered approval of the 2015 Omnibus Incentive Plan. Abstentions and broker non-votes will have no impact as they are not counted as votes on Proposal 2.

For “Proposal 3—Non-Binding Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers (the “Say-on-Pay Vote”),” the outcome of the vote will not be binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee, in the exercise of their fiduciary duties, expect towill consider the outcome of the advisory vote in determining future compensation decisions. An affirmative vote of a majority of the votes cast will be considered approval by anour stockholders of the compensation of our NEOs. Abstentions and broker non-votes will have no impact, as they are not counted as votes cast, on Proposal 2.

For “Proposal 3—Non-Binding Advisory Vote to Select the Frequency of the Say-on-Pay Vote,” the outcome of the vote will not be binding on the Board. However, the Board, in the exercise of its fiduciary duties, will consider the outcome of the advisory vote in determining how frequently we will seek stockholder advisory votes on the compensation of our NEOs. The option that receives the Company’s compensation paid togreatest number of votes—every one, two or three years—will be considered the frequency approved by our Named Executive Officers.stockholders. Abstentions and broker non-votes will have no impact, as they are not counted as votes cast, on Proposal 3.

For “Proposal 4—Ratification of SelectionAppointment of Independent Registered Public Accounting Firm,” an affirmative vote of the majority of the shares of Common Stock present in person or represented by proxy and entitled to vote on the item will be considered ratification of the selectionappointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm. Abstentions will have the same effect as a vote against Proposal 4.

If you are a street name holder and you do not instruct the bank or broker on how to vote your shares, your bank or broker may exercise its discretionary authority to vote your shares with regard to Proposal 4, but cannot exercise its discretionary authority to vote your shares regarding Proposals 1, 2 and 3, thus resulting in “broker non-votes.”

Who pays for the solicitation of proxies?

The Company pays the cost of soliciting proxies. We retained Innisfree M&A Incorporated to advise the Company and assist with our solicitation of proxies for an estimated fee of $17,500 plus reasonable out-of-pocket expenses. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for their

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reasonable out-of-pocket expenses for sending soliciting materials to beneficial owners and obtaining their votes.

In addition to solicitation by mail, proxies may be solicited personally, by telephone or electronic media by our employees.

What if only one copy of the Notice of Internet Availability or proxy materials was delivered to multiple stockholders who share a single address?

AUnder Securities and Exchange Commission (“SEC”) rules, a single Notice of Internet Availability (or one copy of this Proxy Statement and the accompanying 20142016 Annual Report, for those stockholders who previously requested paper copies) will be delivered in one envelope to multiple stockholders having the same last name and address and to individuals with more than one account registered at American Stock Transfer & Trust Company, LLC with the same address unless contrary instructions have been received from an affected stockholder. This procedure, referred to as “householding,” reduces the volume of duplicate materials that stockholders receive and reduces mailing expenses.

If you would likeYou may revoke your consent to future householding mailings or enroll in this service or receive individual copies of all documents, now or in the future, you may submithouseholding by submitting a written request to our Corporate Secretary, at the Company’s principal offices located at 1271 Avenue of the Americas, 14thBallston Tower, 671 North Glebe Road, 12^th Floor, New York, New York 10020-1302.Arlington, VA 22203-2120. You may also send an email to ir@etrade.com or call us at (646) 521-4340. We will deliver a separate copy of all documents to an individual stockholder who shares an address with another stockholder upon request to the address, email or telephone number provided above even if a single copy of the documents was originally delivered.

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PROPOSAL 1

ELECTION OF DIRECTORS

Listed below are the Company’s eleventwelve directors, each of which havewhom has been nominated by the Board for election by the stockholders at the Annual Meeting and havehas agreed to be named in this Proxy Statement and to serve if elected. Under the Company’s Amended and Restated Certificate of Incorporation, each of the eleventwelve nominees standing for election at this Annual Meeting would, if elected, serve for a term beginning on the date of election and ending at the 2016Company’s 2018 Annual Meeting of Stockholders or until his or her earlier resignation or removal. Christopher Flink, one of our current directors, is not standing for re-election at the Annual Meeting.

In the absence of contrary instructions, the proxy holders intend to vote all proxies received by them FOR the nominees for director listed below. Although we know of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your Common Stock for any substitute nominee proposed by the Board.

Qualifications of Directors

The Board, acting through its Governance Committee, is responsible for recommending to the stockholders a group of nominees that, taken together, have a significant breadth and diversity of relevant experience, professional expertise, knowledge and abilities to carry out the Board’s responsibilities. Our Governance Committee Charter requires the Governance Committee to periodically review the composition of the Board and its committees in light of the risks, current challenges and needs of the Company and determine whether to add or remove individuals after considering issues of knowledge, expertise, judgment, term of service, age, skills, diversity of background and experience and relationsrelationships with various constituencies.

In presenting this year’s nominees, the Governance Committee considered, among other things, the experience the nominees gained in enhancing their oversight over management in light of the heightened standards from the Company’s and its subsidiaries’ regulators, their ability to work as a collegial group during a period of transition and their willingness to spend the time necessary to perform their roleduties despite other professional commitments.

In addition to the characteristics common to all of our directors, which include expertise within the financial services industry, integrity, a strong professional reputation and a record of achievement in senior executive capacities, the Governance Committee has included on the Board persons with diverse backgrounds and skills reflecting the needs of the Company.

In evaluating each nominee for service on the Board, the Governance Committee considered the following specific experience and skills of the current Board:

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Nominees to the Board of Directors:

Richard J. Carbonehas been a director of the Company since August 2013. Mr. Carbone was formerly Chief Financial Officer of Prudential Financial, Inc. from 1997 through 2013, and served as Executive Vice President until retiring from that position in February 2014. Mr. Carbone brings nearly four decades of experience in financial services, having held senior finance office positions in both the banking and securities industries, including Managing Director and Controller of Salomon Brothers and Senior Vice President and Controller of Bankers Trust Company. He began his career at Price Waterhouse & Co. Mr. Carbone received an M.B.A. from St. John’s University and is a Certified Public Accountant. He was an officer in the United States Marine Corps from 1969 to 1972. Mr. Carbone is a member of the board of directors for Resolution Life Holdings and its indirect subsidiary, Lincoln BeneficialBenefit Life. He is also a director on the board of a non-profit organization focused on helping disabled adults and indigent children. Mr. Carbone is a member of the E*TRADE Bank board and a member of the Audit Committee, where he is designated an audit committee financial expert, and the Compensation Committee.

James P. Healyhas been a director of the Company since January 2015. He had a 25-year career in the Investment Banking arm of the Credit Suisse Group, where he served as Global Head of the Fixed Income Division from 2003 to 2007. Other leadership positions while at Credit Suisse included Global Head of Emerging Markets Group, and the Global Co-Head of Credit Suisse Financial Products, which housed the firm’s derivative businesses. Prior to joining Credit Suisse, Mr. Healy was as an economist at the International Monetary Fund, served as a consultant to the Organization for Economic Cooperation and Development, and as a visiting scholar at the Board of Governors of the Federal Reserve. He is currently the CEO of Capra Ibex Advisors, a registered Investment Advisorinvestment advisor he founded in 2010 to provide investment and risk management advice to select financial institutions, including First Republic Bank and JPMorgan Chase.Chase & Co. Mr. Healy is a member of the Boardboard of Directorsdirectors of Student Sponsor Partners, a New York City philanthropy serving 1,400 disadvantaged high school students, and served as its Board Chair from 2010 to 2014. He holds a B.A. in Economics from Stanford University, a M.Sc. in Economics from the London School of Economics, and a Ph.D. in Economics from Princeton University. Mr. Healy is a member of the E*TRADE Bank board, the Risk Oversight Committee and the Compensation Committee.

Kevin T. Kabathas been Lead Independent Director of the Company since September 2016 and a director since June 2016. He served as Chief Executive Officer of Fifth Third Bancorp from 2007 to 2015, where he was responsible for overseeing the strategic direction of the company. Mr. Kabat also served as President of Fifth Third Bancorp from 2006 to 2012, Chairman from 2008 to 2010, and Vice Chairman from 2012 to 2016. Prior to these roles, Mr. Kabat served as Executive Vice President where he led both retail and affiliate banking. Prior to joining Fifth Third Bancorp, Mr. Kabat spent 20 years at Old Kent Bank (acquired by Fifth Third Bancorp in 2001), where he served as Vice Chairman and President. Mr. Kabat is Lead Director and Chairman elect of Unum Group and a member of the board of directors of NiSource Inc. Mr. Kabat also serves on the Cincinnati Business Committee and the Executive Committee of the ArtsWave Board of Trustees. He also served as co-chairman of Cincinnati Children’s Hospital Medical Center’s “Change the Outcome” campaign and was chair of the United Way of Greater Cincinnati’s 100th anniversary campaign. He holds a B.A. in Behavioral Science from Johns Hopkins University and an M.S. in Industrial/Organizational Psychology from Purdue University. Mr. Kabat is a member of the E*TRADE Bank board, the Compensation Committee, the Governance Committee and is an ex officio member of the Audit Committee and the Risk Oversight Committee.

Paul T. IdzikFrederick has been a director of the Company and Chief Executive Officer since January 2013. Prior to joining the Company, Mr. Idzik was Group Chief Executive of DTZ Holdings plc in London from November 2008 to August 2011. He also spent 10 years at Barclays PLC, first as Chief Administration Officer, then Chief Operating Officer at Barclays Capital Group and then as Group Chief Operating Officer of Barclays PLC. Mr. Idzik began his career as a consultant and spent over a decade with Booz Allen Hamilton, Inc. Mr. Idzik has a B.A. in Economics and a B.A. in Computer Applications from the University of Notre Dame and an M.B.A. in Finance and Accounting from the University of Chicago. He is President of E*TRADE Bank and a member of the E*TRADE Bank board.

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Frederick W.Kannerhas been a director of the Company since April 2008. Mr. Kanner is Seniora retired corporate lawyer who advised corporations, boards of directors, and financial advisors in connection with merger and acquisition transactions, financings, and securities law issues, as well as matters of fiduciary duty and corporate governance. During his over 40-year legal career, he served as a partner and Of Counsel at the law firm of Covington & Burling LLP in New York City since May 2012. He was a partner in the law firm of Dewey Ballantine LLP and subsequently(subsequently, Dewey & LeBoeuf LLP from 1976 untilLLP) where he retired from the full-time practice of law at the end of 2009 and was Of Counsel until 2012. He served as Chairman of Dewey’s Corporate Finance practice for more than 15 years and as a member of its Management Committee for 20 years. HeThereafter, Mr. Kanner served as Senior Of Counsel at Covington & Burling LLP. Mr. Kanner is a member of the board of directors of Financial Guaranty Insurance Company (where he serves as Chairman of the Compensation Committee), National Benefit Life Insurance Company (where he serves as Chairman and is a member of the Audit Committee) and theboard of trustees of The Lawyers’ Committee for Civil Rights Under Law. Mr. KannerHe received a B.A. in Economics from the University of Virginia and a J.D. from the Georgetown University Law Center. Mr. Kanner is a member of the E*TRADE Bank board and a member of the Audit Committee, the Compensation Committee and the Governance Committee.

James Lamhas been a director of the Company since November 2012. Mr. Lam is currentlyhas been President of James Lam & Associates, a firm focused on corporate governance and risk management, since January 2002. He previously served as Founder and President of ERisk, Chief Risk Officer of Fidelity Investments and Chief Risk Officer of GE Capital Markets Services, Inc. He is the author of the best-selling book,Enterprise Risk Management (Wiley, 2003)(Wiley, 2nd Edition, 2014). Mr. Lam graduatedsumma cum laude with a B.B.A. from Baruch College in 1983 and received an M.B.A. with honors from UCLA in 1989. In 2004, he was appointed Senior Research Fellow at Peking University. Mr. Lam has taught M.B.A. classes at Babson College and the Hult International Business School. He has also guest lectured at Harvard Business School. Previously, Mr. Lam served as Vice Chairman on the board of directors of ERisk and as an independent director of Covarity. Mr. Lam is a member of the E*TRADE Bank board, a member and Chair of the Risk Oversight Committee and a member of the Audit Committee.

Rodger A. Lawsonhas been Executive Chairman of the Company since September 2016 and has served as a director of the Company since February 2012 and Chairman of the Board since May 2013.2012. Mr. Lawson also served as the Company’s non-executive Chairman from May 2013 to September 2016 and Lead Independent Director from August 2012 to January 2013. Mr. Lawson is a retiredan experienced financial services executive who most recently served as President and Chief Executive Officer of Fidelity Investments – Investments—Financial Services from 2007 through 2010. Prior to joining Fidelity, Mr. Lawson served in several senior executive roles with Prudential Financial including Vice Chairman of Prudential Financial.Chairman. He has held numerous other executive positions in financial services, including President and Chief Executive Officer of Van Eck Global, and Chief Executive Officer and Partner of Global Private Banking at Bankers Trust Company. Previously, Mr. Lawson was President and Chief Executive Officer of Fidelity Investments Retail Group and Chief Executive Officer of the Dreyfus Service Corporation. Mr. Lawson earned a B.A. from London University and a M.Sc. from Bradford University. He is currently on the board of directors of UnitedHealth Group, Inc. Mr. Lawson is a member of the E*TRADE Bank board, the Governance Committee and anex officio member of the Audit, Compensation and Risk Oversight Committees.board.

Shelley B. Leibowitzhas been a director of the Company since December 2014. Ms. Leibowitz is President of SL Advisory, a firm she founded in 2016 that focuses on technology strategy, IT portfolio and risk management, and cybersecurity governance. From 2009 through 2012, Ms. Leibowitz served as Group Chief Information Officer for the World Bank Group, where she was responsible for the technology services and capabilities that underlie the work of delivering quality knowledge and financing products to the Bank Group’s clients across the globe. Ms. Leibowitz managed the Bank Group’s cybersecurity program and served as a member of the Bank’sBank Group’s Pension Investment Committee. Previously, Ms. Leibowitz held Chief Information Officer positions at Morgan Stanley, Greenwich Capital Markets and Barclays Capital. Ms. Leibowitz alsoCapital, and served as Boarda board member and technology advisor for GAIN Capital, now listed on the NYSE. In 2002,Capital. Ms. Leibowitz receivedis an advisor to security intelligence firm Endgame and a Merit Award frommember of the Women’s Bond Club of New York for career achievement and leadership in the financial industry.Council on Foreign Relations. She graduated Phi Beta Kappa from Williams College with a B.A. in Mathematics. Ms. Leibowitz is currently an Advisor to security intelligence firm Endgame. Ms. Leibowitz is a member of the E*TRADE Bank board and a member of the Risk Oversight Committee.

Karl A. Roessneris Chief Executive Officer of the Company and has served as a director since September 2016. Prior to his appointment as Chief Executive Officer, Mr. Roessner served as the Company’s General Counsel for more than seven years, overseeing all compliance and regulatory functions for the Company and its bank and brokerage subsidiaries. During that time, he also served as the Corporate Secretary to the Company’s Board of Directors. Prior to joining the Company, he was a partner in the Corporate Practice group of Clifford Chance US LLP. There, he advised clients on negotiated public and private transactions, management and leveraged buyouts, capital raising activities, and corporate governance matters. Mr. Roessner earned his B.A. cum laude from Siena College and his J.D. cum laude from St. Johns University School of Law, where he was a member of the St. John’s University Law Review. Mr. Roessner is President and a member of the E*TRADE Bank board.

RebeccaSaegerhas been a director of the Company since February 2012. Ms. Saeger served as Executive Vice President at Charles Schwab from 2004 through 2010, most recently as Chief Marketing Officer. Prior to joining Charles Schwab, she was Executive Vice President, Marketing at Visa U.S.A. Previously, Ms. Saeger was Senior Vice President and head of Account Management at Foote, Cone & Belding and Senior Vice President at Ogilvy & Mather. She has served on the board of directors as Chair of the Association of National

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Advertisers (ANA). She received a B.A. from Muhlenberg College and an M.B.A. from the Wharton School at the University of Pennsylvania. Ms. Saeger is a member of the E*TRADE Bank board, a member and Chair of the Compensation Committee and a member of the Governance Committee.

Joseph L. Sclafanihas been a director of the Company since June 2008. Mr. Sclafani was formerly Executive Vice President and Controller of JPMorgan Chase & Co., responsible for corporate financial operations, regulatory reporting, financial accounting and reporting and accounting policies until December 2006. His 38 years of experience include 27 years at JPMorgan Chase & Co. and its predecessors. Mr. Sclafani also spent 11 years at KPMG as a certified public accountant. He earned a B.A. from St. Francis College in Brooklyn and completed post-graduate studies in finance at Bernard M. Baruch College. Mr. Sclafani is a member of the E*TRADE Bank board, a member and the Chair of the Audit Committee, where he is designated an audit committee financial expert, and a member of the Risk Oversight Committee.

Gary H. Stern was appointedhas been a director of the Company insince June 2014. Mr. Stern was President and Chief Executive Officer of the Federal Reserve Bank of Minneapolis from 1985 through 2009, the longest-serving president in the Bank’s history. He joined the Federal Reserve Bank of Minneapolis in 1982 as senior vice president and director of research. His prior experience included seven years at the Federal Reserve Bank of New York. Mr. Stern co-authoredToo Big to Fail: The Hazards of Bank Bailouts, published by The Brookings Institution (2004). He holds an A.B. in Economics from Washington University in St. Louis, and an M.A. and Ph.D. in Economics from Rice University. He served on the Boardboard of Directorsdirectors of The Dolan Company from 2010 to 2014. He also currently serves on the Boardboard of Directorsdirectors of Standard and Poor’s Ratings, the FDIC Systemic Resolution Advisory Committee, the Ambac Assurance Corporation, The Depository Trust & Clearing Corporation, and the National Council on Economic Education.Education, and Hamline University. Mr. Stern is a member of the E*TRADE Bank board and a member of the Risk Oversight Committee.

Donna L. Weaverhas been a director of the Company since April 2003. Ms. Weaver is a retired corporate financial executive and business owner. A Certified Management Accountant, Ms. Weaver received a B.S. in Economics and Finance from the University of Arizona and an M.S. in Management from the Stanford Graduate School of Business. Since 1986, Ms. Weaver has served on the boards of several public and private companies. Ms. Weaver is a member of the E*TRADE Bank board, a member and Chair of the Governance Committee and a member of the Audit Committee.

The Board of Directors recommends that stockholders vote FOR the election of each of the nominees as directors listed above.

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BOARD MEETINGS AND COMMITTEESCORPORATE GOVERNANCE OVERVIEW

The Board held a total of 1319 meetings during 2014.2016. Each current director attended at least 75% of the aggregatetotal number of the meetings of the Board and the committees of the Board, held during his or her tenure, of which he or she was a member and was eligible to attend.member. Our non-management directors met in executive session without management at least quarterly. The Chairman of the Board led these executive sessions during 2014.2016 until he was appointed as the Executive Chairman, effective September 12, 2016. Thereafter, the executive sessions have been led by the Lead Independent Director.

To conduct its business, the Board maintains four standing committees: Audit, Compensation, Governance and Risk Oversight. The primary responsibilities of each committee are set forth below:

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Each of these committees is composed entirely of directors that meet the applicable independence requirements of the NASDAQNasdaq Global Select Market (“NASDAQ”Nasdaq”). The charters of each of these committees are available on our website atabout.etrade.com in the “Corporate Governance” section. You may also request a copy of each of these documents free of charge by writing to E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14thBallston Tower, 671 North Glebe Road, 12^th Floor, New York, New York 10020-1302,Arlington, VA 22203-2120, Attention: Corporate Secretary.

The following table presents, as of March 25, 2015,29, 2017, the members of each committee of the Board and the number of times each committee met during 2014:2016:

Communications to the Board, the Executive Chairman of the Board, the non-management directors or any other director may be sent to: E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14th Ballston Tower, 671 North Glebe Road, 12^thFloor, New York, New York 10020-1302,Arlington, VA 22203-2120, Attention: Corporate Secretary. The Company does not have a formal policy regarding director attendance at our annual stockholder meetings; however, all of the then-current directors attended the 20142016 Annual Meeting of Stockholders.

The Company’s Code of Professional Conduct, Corporate Governance Guidelines and Related Party Transactions Policy are available on our website atabout.etrade.com in the “Corporate Governance” section. You may also request a copy of each of these documents free of charge by writing to E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14thBallston Tower, 671 North Glebe Road, 12^th Floor, New York, New York 10020-1302,Arlington, VA 22203-2120, Attention: Corporate Secretary. We intend to post on our corporate website any amendments to, or waivers from, our Code of Professional Conduct or Related Party Transactions Policy that applyapplies to our executive officers including our principal executive officer, principal financial officer and principal accounting officer.directors. The information on our website is not a part of this Proxy Statement.

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Risk Management

The Board plays an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks. The Board regularly reviews reports from members of senior management and committees on areas of material risk to the Company, including credit, interest rate, liquidity, market, operational, strategic, reputational, information technology, information security and cyber security, legal, regulatory, and compliance risks. In particular, the Risk Oversight Committee assists the Board and senior management, including the

Company’s Chief Risk Officer, the Company’s General Counsel and the Company’s Chief Compliance Officer, in the effective identification, assessment and management of the Company’s risk profilerisks and in working to improvemanage and monitor the financial risk and return of the Company. The Risk Oversight Committee reviewsoversees the capital planning processes, the Company’s capital position and capital adequacy, and structure, consolidated capital reporting, significant capital expenditures, capital structure, and financing requirements.reporting. The Risk Oversight Committee also oversees, reviews and challenges senior management and recommends to the Board for its approval policies related to the financial and risk management of the Company and its subsidiaries and oversees the Company’s implementation of such policies, includingpolicies. These include policies relating to capital, funding, liquidity and funds transfer risk, asset and liability management and cash management, and policies for assessing and managing exposure of the Company’s operational risk, credit risk, market risk, interest rate risk, investment risk, liquidity risk, reputational risk, information technology, information security and cyber security risk, strategic risk, and legal, regulatory &and compliance risk, includingrisk. Additionally, the framework for counterparty credit risk management and trading limits, andRisk Oversight Committee reviews the Company’s business continuity plan, strategic plan, strategic transactions, and proposed investments.investments, and assists in defining the Company’s Enterprise Risk Appetite Statement. The Risk Oversight Committee makes recommendations regarding the Company’s Enterprise Risk Appetite Statement to the Board for its approval considering with senior management the Company’s risk capacity, risk appetite, global risk limits, current risk profile, remediation protocols and risk exceptions.

The Compensation Committee assists the Board in evaluating risks arising from Company executive and non-executive compensation programs as well as succession planning for our executive officers.programs. The Governance Committee assists the Board in overseeing risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance. The Audit Committee assists the Board in overseeing risks associated with financial reporting and internal controls.

Director Independence

The Board has adopted categorical standards to assist in its evaluation of the independence of directors. The categoricalThese standards describe various types of relationships that could exist between a Board member and the Company and set thresholds at which such relationships would be deemed to be material in the determination of a director’s independence. Although any director who meets the independence criteria of NASDAQNasdaq and the Board’s own categorical standards (as well as Rule 10A-3(b) under the Securities Exchange Act Rule 10A-3(b)of 1934, as amended (the “Exchange Act”), in the case of Audit Committee members, and NASDAQNasdaq Rule 5605(d)(2), in the case of Compensation Committee members) will be presumed to be independent, the Board may make a decision to the contrary based on its review of any other relevant factors. The Board’s categorical standards are as follows:

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After a review of all relevant factors and applying these categorical standards and the independence criteria of NASDAQ,Nasdaq, the Board has determined that during 2014:

The Board has also determined that each member of the Company’s Audit Committee, Compensation Committee, Governance Committee and Risk Oversight Committee is independent.independent under the applicable standards and that Messrs. Carbone and Sclafani are each an “audit committee financial expert” as defined under SEC rules.

Identifying and Evaluating Director Nominees

The Governance Committee uses various methods to identify director nominees. The Governance Committee regularly assesses the appropriate size and composition of the Board and the particular needs of the Board, considering skill sets required and whether any vacancies are expected due to retirement or otherwise. Candidates may come to the attention of the Governance Committee through current Board members, professional search firms, stockholders or other parties. While there is no diversity policy or fixed set of qualifications that must be satisfied before a candidate will be considered, we seek nominees with a broad diversity of skills, experience, expertise, professions, skills, geographic representation and backgrounds. All candidates are then evaluated based on a review of the individual’s qualifications, skills, independence, experience, expertise and expertise,business acumen, including the criteria included in our Corporate Governance Guidelines and the Board’s desire to draw on diverse perspectives and expertise in conducting its work.

Under our Bylaws, there shall be no fewer than six and no more than twelve directors concurrently serving on the Board. The Board will reduce its size to eleven directors upon the election of directors at the Annual Meeting.

Our Bylaws permit the Board to increase or decrease its size within the authorized range and to add new directors between stockholder meetings. Any director appointed by the Board in accordance with the preceding sentence shall hold office for a term expiring at the next Annual Meeting.annual meeting of stockholders.

Submission of Director Nominees to the Governance Committee by Stockholders

The Governance Committee will consider director candidates submitted by any stockholder who has continuously held at least 5% of our voting securities (either directly or as part of a group) for at least one year and is not a competitor of the Company. Such recommendations must be mailed to E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14th Floor, New York, New York 10020-1302, Attention: Corporate Secretary. Such recommendationssubmissions should (i) be accompanied by (i) evidence of the stockholder’s stock ownership overduring the previous twelvepreceding 12 months; (ii) include a statement that the stockholder is not a competitor of the Company; and (iii) a resume and contact information forcomply with the director candidate, as well as a descriptionnotice requirements set forth in Section 1.08 of the candidate’s qualifications; and (iv) a statement whether the candidate has expressed interest in serving as a director.Company’s Bylaws. The Governance Committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders as it does for candidates proposed by other parties. The Governance Committee will consider such candidacy and will advise the recommending stockholder of its final decision. Any nominee for the Board, at the request of the Board, must submit a statement that, if elected, the nominee intends to comply with the Company’s majority voting policy, described below.

Submissions of director candidates by stockholders should be mailed to E*TRADE Financial Corporation, Ballston Tower, 671 North Glebe Road, 12^th Floor, Arlington, VA 22203-2120, Attention: Corporate Secretary.

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Board Leadership

The Board believes that separating the functions of Lead Independent Director from the Executive Chairman and Chief Executive Officer (“CEO”) generally strengthens the Board’s independence from management. During 2014,From January 1, 2016 until September 12, 2016, Mr. Lawson served as the Company’s Non-Executive Chairman of the Board. In September 2016, the Board considered and ultimately determined to reconfigure the leadership of the Company to better focus on accelerating the growth of our core brokerage business while continuing to deliver long-term value for our stockholders. Effective September 12, 2016, Mr. Lawson was appointed Executive Chairman, Mr. Roessner was appointed CEO and director, and Mr. Kabat was appointed Lead Independent Director. We believe this structure is appropriate for the Company because it strengthensreinforces the strength of the Board’s independence from management.management while positioning the Company to execute on its commitment to stockholders to grow our core business.

There are no arrangements or understandings between Messrs. Lawson, Roessner or Kabat and any other persons pursuant to which he was elected to such positions. There are also no family relationships between any of the foregoing directors and any director or executive officer of the Company. As indicated under “Transactions with Related Persons” below, none of the foregoing directors have a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Majority Voting Standard and Director Resignation Policy

Our Bylaws and Corporate Governance Guidelines provide that the voting standard for the election of directors in uncontested elections is a majority voting standard. Under our majority voting standard, in an uncontested election, each nominee shall be elected to the Board by the majority of the votes cast with respect to the director’s election (that is, the number of votes “for” a director’s election must exceed 50% of the votes cast with respect to that director’s election). Directors will be elected by plurality vote in contested elections (that is, when the number of nominees for election exceeds the number of directors to be elected). Whether an election is contested or not is determined on the last day by which stockholders may submit notice to nominate a person for election as a director pursuant to the Company’s Amended and Restated Certificate of Incorporation.Bylaws.

If a nominee who is serving as a director is not elected by a majority of the votes cast at the Annual Meeting, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” However, under our Bylaws and Corporate Governance Guidelines, each director must submit in advance an irrevocable, contingent resignation to the Chair of the Governance Committee that the Board may accept if the director fails to be elected by the majority of the votes cast with respect to the director’s election. In that situation, the Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation, and submit its recommendation to the Board. The Board will act on the Governance Committee’s recommendation and publicly disclose its decision and the rationale behind its decision within 90 days following certification of the stockholder vote. The Governance Committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that it considers appropriate and relevant.

The Board expects that any director whose resignation becomes effective pursuant to this policy will excuse himself or herself from participating in the consideration of his or her resignation by either the Governance Committee or the Board. If an incumbent director’s resignation is not accepted, he or she will continue to serve until the next Annual Meetingannual meeting of stockholders and until his or her successor is duly elected, or until his or her earlier removal. All nominees currently serve on the Board.

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DIRECTOR COMPENSATION

Introduction

Our Director Compensation program reflects our desire to attract, retain and motivate highly qualified individuals who have the skills, experience, expertise and expertisebackground necessary to serve on the board of directors of a company of our size and regulatory complexity and who can continue to guide the Company to provide long-term value to its stockholders. Accordingly, our Director Compensation program is designed to provide our non-employee directors with a mix of cash and long-term equity compensation that both fairly compensates them for the services they provide to us as non-employee directors and aligns their interests with the long-term interests of our stockholders.

2016 Annual Review of Director Compensation Program in 2014

The Governance Committee reviews the structure and philosophy of our Director Compensation program on an annual basis. In the second quarter of 2014,2016, the Governance Committee, with the advice of its independent compensation consultant, analyzed the overall level and mix of compensation delivered by our Director Compensation program as compared to the Company’s peer group. The Governance Committee determined during its 2016 annual review that the existing Director Compensation levels remained appropriate.

As a result of this review,In 2016, the Board formed two additional advisory working groups, the Growth Initiative Working Group and the Integration Working Group, to provide advice and counsel to management on the respective topics. The Governance Committee approved increases effectivean annual retainer for each advisory working group chair of $15,000, payable to all working group chairs. Mr. Healy and Mses. Saeger (Chair) and Weaver are members of the Growth Initiative Working Group and Messrs. Kabat (Chair) and Lam and Ms. Leibowitz are members of the Integration Working Group.

2016 Director Compensation

Cash Compensation.The Director Compensation policy for cash fees for non-employee directors in 2016 was as follows:

EquityCompensation.The Director Compensation policy for equity compensation for non-employee directors in 2016 was as follows:

In addition, the Governance Committee, asAs a part of its 2014 annual review of the Company’sour overall Director Compensation program, approved the implementation of a Director Compensation Deferral Program (the “Deferral Program”). Under the terms of the Deferral Program, non-employee directors may elect, on an annual basis, to defer all or a portion of their cash and equity compensation for service on the Board and/or its committees into deferred restricted stock units (“DSUs”) issued under the Company’s 2005 Equity2015 Omnibus Incentive Plan.Plan pursuant to the terms of our Director Compensation Deferral Program (the “Deferral Program”). Grants of DSUs are issued atbased on the fair market value of our Common Stock on the grant date (measured as the average of the high and low of the price of theour Common Stock on the grant date) and fully vest one year following the grant. At the time of deferral, non-employee directors must elect settlement of the DSUs into shares of our Common Stock in either (i) one lump payout on the first anniversary of the date on which Board service is completed or (ii) five (5) equal annual installments beginning on the first anniversary of the date on which Board service is completed.

2014 Director Compensation

Cash Compensation. The Director Compensation policy for cash fees for non-employee directors in 2014 was as follows:

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Equity Compensation. The Director Compensation policy for equity compensation for non-employee directors in 2014, which takes into account the increases described above, was as follows:

Each restricted stock or DSU award, as applicable, granted to a non-employee director in 2016 vests one year from the date of issuance, subject to immediate vesting upon (i) certain changes in the ownership or control of the Company or (ii) the death or disability of the director while serving as a Board member.

Expense Reimbursement and Perquisites

All non-employee directors receive reimbursement for reasonable out-of-pocket expenses incurred in connection with meetings of the Board and its committees.committees and for attending up to three director education programs. Non-employee directors do not receive perquisites, but are eligible to participate in the Deferral Program.

20142016 Director Compensation Table

The table below does not include Mr. Idzik,Roessner, who did not receive separate compensation for his service on the Board. The table below also does not include Mr. Lawson. While Mr. Lawson did receive compensation for his services as our Non-Executive Chairman prior to his appointment as our Executive Chairman on September 12, 2016, that compensation is included in the “2016 Summary Compensation Table” set forth on page 39 of the Proxy Statement.

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Policy of Equity Ownership for Board of Directors

The Board believes that directors should hold meaningful equity ownership positions in the Company to help align the interests of directors with those of stockholders. Under our policy regarding equity ownership for directors, non-employee directors are expected to be beneficial owners of shares of Common Stock with a market value equivalent to at least two years’ annual retainer fees due(currently equal to $100,000) payable to non-employee directors (not including any additional retainer for service as a Committee Chair, or Non-Executive Chairman, Lead Independent Director or on an advisory working group and as adjusted from time to time) within two years of joining the Board. Until a non-employee director has met this equity ownership guideline, he or she is expected to hold any stock acquired through exercise of a stock option or vesting of restricted stock, net of shares sold to cover the cost of acquisition and any tax obligation. During 2014,2016, each of the Company’s non-employee directors was in compliance with this policy. The Company does not permit directors to pledge or engage in hedging transactions involving Company stock.

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PROPOSAL 2

APPROVAL OF THE ADOPTION OF THE

E*TRADE FINANCIAL CORPORATION 2015 OMNIBUS INCENTIVE PLAN

At the Annual Meeting, stockholders will be asked to approve the E*TRADE Financial Corporation 2015 Omnibus Incentive Plan (the “2015 Plan”). The Compensation Committee approved the 2015 Plan on January 26, 2015, subject to its approval by stockholders. The 2015 Plan is intended to replace our 2005 Equity Incentive Plan, which is scheduled to expire on May 26, 2015 (the “Prior Plan”). If the stockholders approve the 2015 Plan, it will become effective on the day of the 2015 Annual Meeting (the “Effective Date”), and no further awards will thereafter be granted under the Prior Plan.

Introduction

We operate in a challenging marketplace in which our success depends to a great extent on our ability to attract and retain executives, employees and non-employee directors with the skills and experience necessary to operate our business in an efficient and effective manner. We strongly believe that a competitive compensation package which includes equity and equity-based awards is a critical component in attracting and retaining these individuals, and will also provide them with a long-term incentive to maximize value for our stockholders and contribute to our ongoing growth. The approval of the 2015 Plan by our stockholders will provide us with a vehicle by which we can make a wide variety of equity and equity-based awards, along with cash incentives, and will therefore help to ensure our ongoing ability to attract and retain key talent.

If our stockholders approve the 2015 Plan, approximately 12,295,917 common shares, which includes the 6,295,917 common shares that remain available for issuance under the Prior Plan and are not subject to outstanding awards as of the Record Date, will be available for grants of equity and equity-based awards under the 2015 Plan. In addition, any shares in respect of awards granted under the Prior Plan that are terminated or cancelled without being exercised or settled or that are acquired as a result of forfeiture or repurchase after the Effective Date will be available for issuance under the 2015 Plan.

In determining the number of shares of Common Stock to be reserved for issuance under the 2015 Plan, our management and the Compensation Committee, in consultation with Pay Governance LLC (the Compensation Committee’s independent compensation consultant) evaluated, among other things, the historic share usage and burn rate under the Prior Plan, the overhang under the Prior Plan and the existing terms of outstanding awards under the Prior Plan. For additional information on our annual share usage and burn rate, see the subsection entitled “Historical Annual Share Usage” below. We currently anticipate that the shares of Common Stock to be reserved for issuance under the 2015 Plan will allow us to continue making equity grants for four to six years.

Reasons for Adoption of the 2015 Plan

The Prior Plan, which is the only plan pursuant to which we make equity and equity-based awards to our executives, employees and non-employee directors, will expire by its terms on May 26, 2015, and we may not make any more grants under the Prior Plan after that date. We do not intend to grant any further awards under the Prior Plan after the Effective Date. Accordingly, we have adopted and are seeking stockholder approval of the 2015 Plan to provide a vehicle by which we can use equity and equity-based awards to continue to attract, retain, motivate and appropriately incentivize key talent who can effectively manage our business and provide long-term value to our stockholders.

If the 2015 Plan is not approved by our stockholders, we will no longer have a stockholder-approved plan by which we can make grants of equity and equity-based awards as of May 26, 2015. Accordingly, the failure to attain stockholder approval of the 2015 Plan will put us at a significant disadvantage relative to the companies with which we compete for key talent and could ultimately result in our failure to attract and retain high caliber talent who can achieve our business objectives.

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In addition, we are seeking approval of the 2015 Plan in order to, among other things: (1) comply with NASDAQ rules requiring stockholder approval of equity compensation plans; (2) allow the grant of incentive stock options (ISOs) to our employees; and (3) provide the Compensation Committee with the ability to grant both stock awards and cash bonuses that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

Historical Annual Share Usage

While the use of equity is an important part of our compensation program, we are particularly mindful of our responsibility to our stockholders to exercise judgment in the granting of equity and equity-based awards. As a result, we evaluated both our “overhang percentage” and annual share usage, or “burn rate,” in considering the advisability of the 2015 Plan and its potential impact on our stockholders.

Although our future annual share usage will depend upon and be influenced by a number of factors, such as the number of plan participants, the price per share of our Common Stock and the methodology used to establish the equity award mix, the shares of Common Stock reserved for issuance under the 2015 Plan will enable us to continue to utilize equity awards as an important component of our compensation program and help meet our objectives to attract, retain, motivate and appropriately incentivize executives, employees and non-employee directors with the skills and experience necessary to operate our business effectively. The calculation of the share reserve took into account, among other things, our stock price and volatility, our share burn rate and overhang and the existing terms of our outstanding awards.

Highlights of the 2015 Plan

On March 12, 2015, the Board, upon the recommendation of the Compensation Committee, unanimously approved the 2015 Plan, subject to stockholder approval.

The 2015 Plan is intended to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and its affiliates and by motivating those persons to contribute to the growth and profitability of the Company and its affiliates.

The 2015 Plan is intended to permit the grant of performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, which generally limits the annual deduction that we may take for compensation of our covered officers, which consist of our CEO and three other most highly compensated executive officers (other than our CFO) who are serving as such at the end of the year. Under Section 162(m), certain compensation, including compensation based on the attainment of performance goals, will not be subject to this limitation if certain requirements are met. Among these requirements is a requirement that the material

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terms pursuant to which the performance-based compensation is to be paid be disclosed to and approved by our stockholders. Accordingly, if the 2015 Plan is approved by stockholders and the other conditions of Section 162(m) relating to performance-based compensation are satisfied, qualified performance-based compensation paid to covered officers pursuant to the 2015 Plan will not fail to be deductible due to the operation of Section 162(m).

Additional considerations which demonstrate our commitment to governance best practices and which are relevant to the adoption of the 2015 Plan are highlighted below:

The 2015 Plan is attached as Appendix A to this proxy statement and the following description of the material terms of the 2015 Plan is qualified in its entirety by the complete text of the plan.

Description of the 2015 Plan

Types of Awards. The following types of awards may be granted under the 2015 Plan: stock options (including both incentive stock options (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code and nonqualified options (“NQSOs”), which are options that do not qualify as ISOs), stock appreciation rights, restricted stock, restricted stock units (including performance units), cash awards, and other stock-based awards that are denominated in or otherwise relate to our Common Stock.

Shares Available. The number of shares of Common Stock reserved for issuance under the 2015 Plan will be equal to the sum of (1) 6,000,000 common shares, (2) the number of common shares remaining available for issuance under the Prior Plan that are not subject to outstanding awards as of the Effective Date and (3) any shares underlying awards granted under the Prior Plan that are terminated or cancelled without being exercised or settled or that are acquired as a result of forfeiture or repurchase after the Effective Date.

Shares of Common Stock subject to an award under the 2015 Plan that either remain unissued upon the expiration, termination or cancellation of the award, or that are forfeited or repurchased by the Company for an amount not greater than the purchase price paid by the recipient, will again become available for award under the 2015 Plan. However, shares of Common Stock that are withheld or reacquired by the Company in satisfaction of tax withholding obligations will not again be available for issuance under the 2015 Plan, and upon the payment in shares of Common Stock pursuant to the exercise of an option or stock appreciation right, the number of shares of Common Stock available for issuance under the 2015 Plan will be reduced by the gross number of shares for which the option or stock appreciation right was exercised. Shares of Common Stock will not be deemed to have been issued under the 2015 Plan with respect to the portion of any award that is settled in cash.

Certain Limitations. Under the 2015 Plan, in any fiscal year, no employee may be granted (1) options or freestanding stock appreciation rights for more than 1,000,000 shares of Common Stock in the aggregate, (2) restricted stock awards or restricted stock units, the grant or vesting of which is subject to the achievement of

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performance goals, for more than 500,000 shares of Common Stock in the aggregate, (3) other stock-based awards, the grant or vesting of which is subject to the achievement of performance goals, that could result in the employee receiving more than 500,000 shares or (4) cash-based awards, the grant or vesting of which is subject to the achievement of performance goals, which could result in the employee receiving more than $8,000,000.

In addition, the 2015 Plan provides that the fair market value of the shares of Common Stock subject to full value awards issued to a non-employee director in any fiscal year, together with the value of any other awards granted to the non-employee director under the 2015 Plan in that fiscal year, shall not exceed $500,000.

Administration. It is expected that the 2015 Plan will be administered by the Compensation Committee, although the Board may in its discretion instead appoint the Governance Committee or another committee of directors to administer the 2015 Plan or may determine to administer the 2015 Plan itself (the Board or committee referred to above being sometimes referred to as the “plan administrator”). Each member of the Compensation Committee is a “non-employee director” (within the meaning of Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934), an “outside director” (within the meaning of Section 162(m) of the Internal Revenue Code) and an “independent director” (within the meaning of the NASDAQ listed company manual).

All questions of interpretation of the 2015 Plan or any award granted under the 2015 Plan will be determined by the plan administrator and those determinations will be final and binding on all persons having an interest in the 2015 Plan or in any such award. The plan administrator will have full and final discretionary power and authority to, among other things, (1) determine the persons who will receive awards and the terms and conditions of those awards, (2) correct any defect, supply any omission or reconcile any inconsistency in the 2015 Plan or any award agreement and (3) make all other determinations and take all other actions with respect to the 2015 Plan or any award granted thereunder as it may deem advisable to the extent not inconsistent with the provisions of the 2015 Plan or any award granted thereunder. However, the plan administrator will not have the right to reprice or cancel and regrant any award at a lower exercise price or cancel any award with an exercise price in exchange for cash, property or other awards without first obtaining the approval of our stockholders.

Eligibility. Awards under the 2015 Plan will be granted at the sole discretion of the plan administrator, and may be granted to (1) employees of the Company or its parents, subsidiaries and affiliates, (2) individuals who are engaged to provide consulting or advisory services to the Company or its parents, subsidiaries and affiliates and (3) non-employee members of the Board.

Vesting and Exercisability. Awards will become exercisable or otherwise vest at the times and upon the conditions that the plan administrator may determine. In general, any award granted under the 2015 Plan will be subject to a vesting period or performance period, as applicable, of at least one year following the date of grant, although awards representing a maximum of five percent of the shares of Common Stock initially reserved for issuance under the 2015 Plan may be granted without regard to that one year period.

Performance Goals.The vesting, settlement or exercise of any award granted under the 2015 Plan may be subject to the achievement of performance criteria determined by the plan administrator. The performance criteria for any awards that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code will be based upon one or more of the following performance measures: (1) revenue; (2) sales; (3) expenses; (4) operating income; (5) gross margin; (6) operating margin; (7) earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization; (8) pre-tax profit; (9) net operating income; (10) net income; (11) economic value added; (12) free cash flow; (13) operating cash flow; (14) stock price; (15) earnings per share; (16) return on stockholder equity; (17) return on capital; (18) return on assets; (19) return on investment; (20) employee satisfaction; (21) employee retention; (22) balance of cash, cash equivalents and marketable securities; (23) market share; (24) daily average revenue trades; (25) asset gathering metrics; (26) number of customers; (27) customer satisfaction; (28) product development; (29) completion of a joint venture or other corporate transaction; (30) completion of identified

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special project(s); (31) overall effectiveness of management; or (32) any combination of the foregoing. In addition, to the extent permitted under Section 162(m) of the Internal Revenue Code, the plan administrator may provide that one or more objectively determinable adjustments shall be made to the performance measures, which may include adjustments that would cause the measures to be considered “non-GAAP financial measures” under rules promulgated by the Securities and Exchange Commission.

The performance targets that are set by the plan administrator may be expressed in terms of attaining a specified level of the performance measure or the attainment of a percentage increase or decrease in the particular performance measure, and may be applied to one or more of the Company, a subsidiary, or a division or strategic business unit of the Company or a subsidiary, or may be applied to the performance of the Company or a subsidiary relative to a market index, a group of other companies or a combination thereof, all as determined by the plan administrator. The performance targets may be subject to a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).

Stock Options. A stock option entitles the recipient to purchase shares of Common Stock during a specified period after expiration of a stated vesting period at a purchase price specified by the plan administrator (at a price not less than 100% of the fair market value of the Common Stock on the date of grant). The maximum term of all options granted under the 2015 Plan will be determined by the plan administrator, but may not exceed ten years. The recipient of an option may pay the option exercise price either (1) in cash or by check or cash equivalent, (2) by tender of shares of Common Stock already owned by the recipient, (3) through a broker-assisted cashless exercise or net settlement procedure, (4) by such other method approved by the plan administrator from time to time (other than by means of a promissory note) or (5) by any combination of these methods.

Stock Appreciation Rights. A stock appreciation right may be granted in connection with an option, or may be granted independently of an option. Stock appreciation rights generally permit the participant to receive cash or shares of Common Stock after expiration of a stated vesting period equal to the difference between the exercise price of the stock appreciation right (which may not be less than 100% of the fair market value of the Common Stock on the date of grant) and the fair market value of the Common Stock on the date of exercise. The maximum term of all stock appreciation rights granted under the 2015 Plan will be determined by the plan administrator, but may not exceed ten years.

Restricted Stock.A restricted share of Common Stock is an issued and outstanding share of Common Stock that is subject to vesting conditions and such other terms and conditions as the plan administrator may determine in its discretion. Except for restrictions on transfer and such other restrictions as the plan administrator may impose, recipients of restricted shares will generally have the rights of a stockholder with respect to the restricted stock.

Restricted Stock Units. A restricted stock unit award represents the right of the recipient to receive a specified number of shares of Common Stock at a future date, subject to vesting conditions and such other terms and conditions as the plan administrator may determine in its discretion. Recipients of restricted stock units will generally not have the rights of a stockholder with respect to the shares of Common Stock underlying the restricted stock units, but the plan administrator may provide a recipient with dividend equivalent payments with respect to cash dividends declared while the award is outstanding.

Cash-Based Awards and Other Stock-Based Awards. The plan administrator may grant cash-based awards or other stock-based awards in such amounts and subject to vesting conditions and such other terms and conditions as the plan administrator may determine in its discretion. Cash-based awards will specify a monetary payment or range of payments, while other stock-based awards will specify a number of shares or units based on shares or other equity-related awards. Recipients of other stock-based awards will generally not have the rights of a stockholder with respect to the shares of Common Stock underlying the award, but the plan administrator may provide the recipient with dividend equivalent payments with respect to cash dividends declared while the award is outstanding.

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Change in Control. In the event of a change in control of the Company, the plan administrator may, in its sole discretion and without the consent of any participant, take such actions as it deems appropriate with respect to outstanding awards to provide for (1) the acceleration of vesting, exercisability or settlement effective as of the change in control or upon such conditions, including termination of the recipient’s service following the change in control, as may be determined by the plan administrator, (2) the assumption or continuation of outstanding awards by the acquiring entity, (3) the substitution of outstanding awards by the acquiring entity of substantially equivalent rights relating to the acquiring entity’s stock, (4) the cancellation of awards in exchange for payment in cash, shares or other property or (5) any other treatment as may be determined by the plan administrator prior to the consummation of the change in control. Notwithstanding the general treatment set forth in the prior sentence, all awards granted to the Company’s non-employee directors will become vested and exercisable as of the change in control of the Company.

For purposes of the 2015 Plan, a “change in control” means, in general: (1) a person or entity acquires securities of the Company representing 50% or more of its combined voting power; (2) a change in the majority membership of the Board that is not approved by Board; (3) consummation of a merger or consolidation of the Company or any subsidiary, other than a merger or consolidation that results in both the Company’s voting securities continuing to represent at least 50% of the combined voting power of the surviving entity or its parent and the individuals who comprise the Board immediately prior to the merger or consolidation continuing to constitute a majority of the Board after the transaction, or the consummation of a merger or consolidation effected to implement a recapitalization or similar transaction involving the Company in which no person or entity acquires at least 50% of the combined voting power of the Company; (4) stockholder approval of a plan of complete liquidation or dissolution of the Company; or (5) the consummation of an agreement for the sale or disposition of all or substantially all of the Company’s assets, other than a sale or disposition to an entity, at least 50% of the combined voting power of which is owned by the Company’s stockholders in substantially the same proportions as their ownership of the Company immediately prior to such sale and the majority of whose board of directors immediately following the sale or disposition consists of individuals who comprise the Board immediately prior to the sale or disposition.

Equitable Adjustment. In the event of the occurrence of any change in the Common Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Common Stock (excepting normal cash dividends) that has a material effect on the fair market value of the Common Stock, appropriate adjustments intended to prevent dilution or enlargement of participants’ rights under the 2015 Plan shall be made in (1) the number and kind of shares or other property subject to the 2015 Plan and to any outstanding awards, (2) the maximum adjustment for unissued or forfeited shares under the Prior Plan, (3) the award limits set forth in the 2015 Plan and (4) the exercise or purchase price per share under any outstanding award.

Amendment and Termination of the Plan. The plan administrator may amend, suspend or terminate the 2015 Plan at any time, but stockholder approval will be necessary where required by applicable law or regulation. Except as expressly provided in the 2015 Plan, no amendment, suspension or termination of the 2015 Plan may adversely affect any then-outstanding award without the participant’s consent.

The 2015 Plan will terminate not later than the tenth anniversary of its effective date. However, awards granted before the termination of the 2015 Plan may extend beyond that date in accordance with their terms.

Governing Law. Except to the extent governed by federal law, the 2015 Plan is governed by the laws of the State of New York.

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Certain Federal Income Tax Consequences

Set forth below is a discussion of certain United States federal income tax consequences with respect to certain awards that may be granted pursuant to the 2015 Plan. The following discussion is intended only as a general guide, and reference is made to the Internal Revenue Code and the regulations and interpretations issued (the “Code”) thereunder for a complete statement of all relevant federal tax consequences.

Incentive Stock Options.A participant generally recognizes no taxable income as a result of the grant or exercise of an incentive stock option (although the individual may be subject to alternative minimum tax as a result of the exercise of the option). Participants who dispose of their shares more than two years following the date the option was granted and more than one year following the exercise of the option will, upon such disposition of the shares, normally recognize capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. In such event, we will not be entitled to any corresponding deduction for federal income tax purposes. If the participant disposes of the shares before both of these holding periods have been satisfied (a “disqualifying disposition”), the participant will recognize ordinary income equal to the spread between the option exercise price and the fair market value of the shares on the date of exercise, but in most cases not to exceed the gain realized on the sale, if lower. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. The Company will generally be entitled to a deduction for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code, in an amount equal to any ordinary income recognized by the participant upon the disqualifying disposition of the shares.

Nonqualified Stock Options. A participant generally recognizes no taxable income upon receipt of a nonstatutory stock option with an exercise price equal to or greater than the fair market value of the stock as of the grant date. Upon exercising a nonstatutory stock option, the participant normally recognizes ordinary income equal to the difference between the exercise price paid and the fair market value of the shares on the date the option is exercised. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company will generally be entitled to a tax deduction equal to the amount of ordinary income recognized by the participant as a result of the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable provisions of the Code. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the exercise date, will be taxed as capital gain or loss.

Stock Appreciation Rights. A Participant generally recognizes no taxable income upon the receipt of a stock appreciation right with a base price equal to or greater than the fair market value of the stock as of the grant date. Upon the exercise of a stock appreciation right, the participant generally will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of Common Stock on the exercise date over the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company will generally be entitled to a tax deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Code.

Restricted Stock Awards and Restricted Stock Units. A Participant generally recognizes no taxable income upon the grant of a restricted stock award and upon the grant or vesting of a restricted stock unit. When a restricted stock award ceases to be subject to a substantial risk of forfeiture, and when cash or shares are delivered to a participant in settlement of a restricted stock unit, the participant normally will recognize ordinary income in an amount equal to the fair market value of the shares on such date and the amount of cash so paid. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company will generally be entitled to a tax deduction equal to the amount of ordinary income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code.

Other Awards. In general, a participant will recognize ordinary taxable income upon the receipt of cash and the lapsing of a substantial risk of forfeiture with respect to shares delivered with respect to other awards granted

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under the 2015 Plan and the Company will generally become entitled to a deduction at such time equal to the amount of income recognized by the participant, except to the extent such deduction is limited by applicable provisions of the Code.

New Plan Benefits

The 2015 Plan was designed by the Compensation Committee, with the assistance of Pay Governance LLC (the Compensation Committee’s independent compensation consultant), as part of a comprehensive compensation strategy to provide a long-term, broad based incentive for executives, employees and non-employee directors to contribute to our growth and achieve our key business objectives.

If approved by the stockholders, participants in the 2015 Plan will be eligible for equity and equity-based awards, which may include restricted stock, restricted stock units and stock options (and other awards permitted under the 2015 Plan). The amount and types of awards will be determined by the Compensation Committee in light of the participants’ targeted long-term incentive level and such other factors as it deems appropriate. The Compensation Committee may impose such conditions or restrictions on the vesting of awards as it deems appropriate, including, but not limited to, the achievement of performance goals based on one or more business criteria.

Awards under the 2015 Plan are made in the discretion of the plan administrator and therefore are not determinable at this time. Moreover, the ultimate value of any grants that are made will depend on the value of the underlying shares of Common Stock at the time of settlement, which likewise is not determinable at this time. Please refer to the “Grants of Plan-Based Awards Table for 2014” on page 47 for information with respect to equity and equity-based awards made to our named executive officers in 2014.

The Board of Directors recommends that stockholders vote FOR the proposal to approve the E*TRADE Financial Corporation 2015 Omnibus Incentive Plan.

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PROPOSAL 3

NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS (THE “SAY-ON-PAY VOTE”)

WeIn accordance with Section 14A of the Exchange Act, which Congress adopted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are asking that you indicate your support, in a nonbindingnon-binding advisory vote, for the compensation policies and practices relating to our Named Executive OfficersNEOs as described in “Compensation Discussion and Analysis,” the accompanying compensation tables and the related narrative appearing on pages 3226 to 5145 of this Proxy Statement.

As described in detail in “Compensation Discussion and Analysis,” we strive to provide a majority of compensation for our Named Executive OfficersNEOs in the form of cash and equity incentives that encourage and reward strong long-term performance and align the financial interests of our Named Executive OfficersNEOs with the interests of our stockholders. Although, as an advisory vote, this proposal is not binding on the Board or the Compensation Committee, the Board and the Compensation Committee, expect to carefullyin exercise of their fiduciary duties, will consider the stockholderoutcome of the advisory vote on this matter in makingdetermining future compensation decisions. The next non-binding advisory vote to approve Named Executive Officer compensation will occur at our 2016 Annual Meeting.

Stockholders are being asked to vote on the following resolution:

RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 20152017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC (Item 402 of Regulation S-K), including the “Compensation Discussion and Analysis,” the compensation tables and the related narrative disclosures.

The Board of Directors recommends that stockholders vote FOR the proposal to approve the

compensation of the Company’s Named Executive Officers as described in this Proxy Statement.

PROPOSAL 3

26NON-BINDING ADVISORY VOTE TO SELECT THE FREQUENCY OF THE SAY-ON-PAY VOTE

Our stockholders voted on a similar proposal in 2011 with the majority voting to hold the Say-on-Pay vote every year. Our Board of Directors believes that an advisory vote on executive compensation that occurs once every year is the most appropriate alternative for the Company at this time. Although, as an advisory vote, this proposal is not binding on the Board, the Board, in the exercise of its fiduciary duties, will consider the outcome of the advisory vote in determining how frequently we will seek stockholder advisory votes on the compensation of our NEOs.

The proxy card provides stockholders with the opportunity to choose among four options (holding the vote every one, two or three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the recommendation of the Board of Directors.

The Board of Directors recommends that stockholders vote for the selection of ONE YEAR as the

frequency of the Say-on-Pay Vote

PROPOSAL 4

RATIFICATION OF SELECTIONAPPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We are askingThe Audit Committee of the stockholders to ratifyBoard is responsible for the selectionappointment, compensation, retention and oversight of the independent registered public accounting firm responsible for auditing the Company’s consolidated financial statements. The Audit Committee has appointed Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for 2015. 2017, and we are asking the stockholders to ratify its appointment of Deloitte. Deloitte has been retained as the Company’s independent registered public accounting firm since 1995. The Audit Committee and the Board believe that the continued retention of Deloitte to serve as our independent registered public accounting firm is in the best interests of the Company and its stockholders.

If the stockholders fail to ratify the appointment, the Audit Committee of the Board will reconsider the appointment but is not obligated to appoint another independent registered public accounting firm. Even if the selectionappointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent auditor at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.

A representative of Deloitte & Touche LLP is expected to attend the Annual Meeting, will be given an opportunity to make a statement and will be available to respond to appropriate questions from stockholders.

Audit Fees Paid to Deloitte & Touche LLP

The aggregate fees billed by Deloitte & Touche LLP and their respective affiliates for professional services rendered in 20142016 and 20132015 are as follows:

AllThe Audit Committee is responsible for the audit fee negotiations associated with the Company’s retention of Deloitte and all audit and non-audit services and fees were pre-approved by the Audit Committee either individually or by category. The Audit Committee has reviewed the nature of all non-audit services provided by Deloitte & Touche LLP and concluded that the provision of such services are compatible with maintaining the firm’s ability to serve as our independent registered public accounting firm.

Audit Committee Pre-Approval Policies and Procedures

Pursuant to its charter, the Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. The Audit Committee charter allows the Committee to delegate its authority to pre-approve services to one or more Committee members, provided that the designees present the pre-approvals to the full Audit Committee at its next meeting.

The Board of Directors recommends that stockholders vote FOR the proposal to ratify the selectionappointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2015.2017.

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EXECUTIVE OFFICERS OF THE COMPANY

In addition to Paul T. Idzik, the CEO,Rodger A. Lawson, Executive Chairman, and Karl A. Roessner, Chief Executive Officer, the following are our executive officers as of March 25, 2015:29, 2017:

Matthew J. AudetteMichael A. Pizziis Executive Vice President and Chief Financial Officer of the Company, a position heresponsible for all finance and accounting functions for E*TRADE Financial, including financial reporting, planning, tax, treasury, as well as the Company’s investor relations, corporate communications, facilities and procurement functions. Mr. Pizzi has held since January 2011. Mr. Audette joined E*TRADE in 2000, whenbeen with the Company acquired Telebank, wheresince 2003 and most recently served as the Company’s Chief Risk Officer. Prior to that he served as Controllerthe Corporate and bank Treasurer, during which time he was responsible for all portfolio, capital and liquidity management. He also previously held various positions in the Capital Markets department.Company’s portfolio management and derivatives functions. Before joining the Company, Mr. Audette served from 2005 through 2010Pizzi worked in asset/liability management at both Lehman Brothers and First Maryland Bank, as Senior Vice President, Corporate Controllerwell as in capital markets research for the Company.Federal Reserve Board. Mr. Pizzi earned a BA in Economics from Ursinus College, is a CFA charterholder, and holds the Financial Risk Manager (FRM) designation.

Michael J. Curciois Chief Brokerage Officer of the Company, responsible for leading the retail brokerage business, including all Product, Digital Channels, all Marketing, and the Company’s Corporate Services channel. Previously, Mr. Curcio was the CEO of Aperture Group, LLC, the parent company of OptionsHouse. Before joining Aperture Group and OptionsHouse, Mr. Curcio spent 11 years at E*TRADE, last serving as the head of the Company’s brokerage business, in addition to the corporate services and market making channels. Prior to 2005, he servedE*TRADE, Mr. Curcio spent 15 years at TD Waterhouse, last serving as ControllerEVP of E*TRADE Bank and Chief Financial OfficerCustomer Relationship Management. Mr. Curcio received a BS in Business from the State University of E*TRADE Bank, a position he continues to hold.New York, at Plattsburgh. He was also interim Chief Financial Officer in 2008. Since October 2011, he haspreviously served on the Board of DirectorsGovernors of Network for Teaching Entrepreneurship. Mr. Audette began his career in public accounting at KPMG and holds a B.S. in Accounting from Virginia Tech.the Philadelphia Stock Exchange (PHLX), now NASDAQ OMX PHLX.

Michael E. Foleyis Executive Vice PresidentChief Technology and Chief AdministrativeOperations Officer of the Company, a position he has held since June 2013, having joined the Company in February 2013.which oversees all of E*TRADE’s Technology Infrastructure, Technology Development, and Operations. Mr. Foley oversees the Company’s technology infrastructure, operations, human resources, facilities management and procurement functions. Mr. Foley has anFoley’s extensive background in project management makingmakes him well-suited to oversee a wide range of programs critical to the successful execution of the Company’s strategic imperatives. Prior to joining the Company,E*TRADE, Mr. Foley worked as a consultant at Foley & Cunningham from April 2009 to February 2013. Mr. Foley also held several roles at Barclays Bank PLCPlc from January 2005 to April 2009, including Interim Chief Information Officer and Chief Administrative Officer, where he was responsible for several global functions supporting 170,000 employees across 60 countries. Mr. Foley began his career at Booz & Company, where he helped clients develop strategies and plans to address technology and operational issues over his 16 year career. Mr. Foley is a member of the Board of Directors of UMUC Ventures, a non-profit company. Mr. Foley studied at Hatfield Polytechnic in Hertfordshire, England.

Navtej S. Nandra is President of the Company, a position he has held since May 2013. Mr. Nandra is responsible for overseeing management of the Company’s core businesses. Mr. Nandra joined the Company from Morgan Stanley where he was Head of International for Morgan Stanley Investment Management and Chief Strategy Officer for Real Estate Investing and Merchant Banking from June 2010 to April 2013. In addition, he served on the Boards of Directors of Morgan Stanley Huaxin Fund Management Company, Morgan Stanley International Ltd. and Morgan Stanley & Co. International plc. Prior to Morgan Stanley, Mr. Nandra served on the Boards of Directors of Edelweiss Financial Services Ltd. and Edelweiss Tokio Life Insurance Co. Ltd., and as Senior Advisor to DTZ Holdings plc. Before that he held various positions at Merrill Lynch, including Head of Diversified Financial Services from 2008 through 2009, Chief Operating Officer of Global Wealth Management from 2007 through 2009, and Chief Operating Officer of Global Investment Banking and Head of Strategy for Global Markets and Investment Banking from 2004 through 2007. Mr. Nandra serves on the boards of directors of Edelweiss Financial Services, Ltd. and the Center of Governance, Institutions and Organizations, at the Business School of the National University of Singapore. He has also been a guest speaker at Columbia, Vanderbilt and Yale Universities and led the groundbreaking study with the Bank Administration Institute titled “Demand Strategy: Recapturing Share in Consumer Financial Services.” Mr. Nandra holds a P.G.D.M. (M.B.A.) from the Indian Institute of Management, Ahmedabad, and a Bachelor’s degree in Commerce (honors) from the University of Delhi.

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Karl A. Roessner is Executive Vice President and General Counsel of the Company, a position he has held since May 2009. Mr. Roessner manages the legal, compliance and regulatory functions for the Company and its bank and brokerage subsidiaries. He also acts as Corporate Secretary to the Company’s and E*TRADE Bank’s Boards of Directors. Leveraging a depth of experience in legal matters related to highly regulated public companies, including board advisory, corporate governance, mergers & acquisitions and capital raising, Mr. Roessner is responsible for the oversight, guidance and direction of all legal, compliance and regulatory matters. Mr. Roessner has more than 20 years of experience practicing law. Prior to joining the Company in May 2009, Mr. Roessner was a partner in the Corporate Practice group of Clifford Chance US LLP, one of the world’s leading law firms. There, he advised clients on negotiated public and private transactions, management and leveraged buyouts, capital raising activities and corporate governance matters. Mr. Roessner earned a B.S. in Business Administrationcum laude from Siena College and his J.D.cum laude from St. John’s University School of Law where he was a member of the St. John’s University Law Review.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of the Common Stock as of March 13, 2015,2017, by (i) each director; (ii) each NEO; (iii) all current directors and executive officers as a group; and (iv) each person who is known to the Company to beneficially own more than 5% of the outstanding shares of the Common Stock of the Company. Unless otherwise indicated, all persons named as beneficial owners of the Common Stock have sole voting power and sole investment power with respect to the shares indicated as owned. In addition, unless otherwise indicated, the address for each person named below is c/o E*TRADE Financial Corporation, 1271 Avenue of the Americas, 14th14^th Floor, New York, New York 10020-1302.

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

We reconfigured our leadership in September 2016 to better focus on accelerating the growth of our core brokerage business while continuing to deliver long-term value for our stockholders. As part of this reconfiguration, we appointed Rodger A. Lawson as our Executive Chairman and Karl A. Roessner as our Chief Executive Officer. In addition, in connection with our acquisition of Aperture New Holdings, Inc., the ultimate parent company of OptionsHouse (“OptionsHouse”), we appointed Michael J. Curcio, an industry and Company veteran, as our Chief Brokerage Officer. We believe that these individuals, together with the rest of our management team, are strongly positioned to reenergize our brokerage business by focusing on enhancing the overall customer experience, capitalizing on the value of our corporate services channel and strategically utilizing our balance sheet to enhance returns and putting capital to work, while ultimately creating sustainable, long-term value for our stockholders.

The following Compensation Discussion and Analysis that follows provides a description of our compensation program for our Executive Chairman, our Chief Executive Officer, our Chief Financial Officer, and our threetwo other most highly compensated executive officers who were serving as of December 31, 2014.2016, and our former Chief Executive Officer. We refer to these individuals throughout the Compensation Discussion and Analysis and the tables and narratives that follow as our named executive officers, or NEOs. For 2014,2016, our named executive officers were as follows:

Executive Compensation Highlights

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Our Executive Compensation Philosophy

Our compensation program for our NEOs is designed to attract, motivate and retain highly qualified individuals and establish a strong link between their pay and the achievement of our business goals. We seek to accomplish these objectives by maintaining a pay for performance program heavily weighted toward incentives for sustainable long-term performance that allocates a significant percentage of annual compensation opportunities for our NEOs toward:

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Key Compensation Practices and Governance

Our 20142016 compensation program for our NEOs contains the following notable good corporate governance features:

Compensation Considerations for 20142016

2016 Say-on-Pay Vote. At our 20142016 Annual Meeting of Stockholders, stockholders supported our “say-on-pay vote,” with 95%more than 96% of the votes cast (excluding abstentions and broker non-votes) in favor of our compensation program for our NEOs. Although this was only an advisory vote, theThe Compensation Committee believes this overwhelming approval by our stockholders shows strong support for our compensation philosophy of placing significant weight on incentive pay. For thispay and other reasons described below (includingcontinues to use that philosophy as the basis for our business achievements for the year), the Compensation Committee retained its general approach to determining the compensation of our NEOs in 2014, as described in this “Compensation Discussion and Analysis.”program.

Fiscal 20142016 Business Highlights. Our business strategy is centered on two corekey objectives: accelerating the growth of our core brokerage business to improve our market share, and strengtheninggenerating robust earnings growth and healthy returns on capital to deliver long-term value for our overall financial and franchise position.stockholders. Accelerating the growth of our core brokerage business focuses on capitalizing on secular growth within the direct brokerage industry, enhancing the digital and offlineoverall customer experience and capitalizing on the value of our corporate services business,channel. Generating robust earnings growth and maximizing the value of deposits through E*TRADE Bank. Strengthening our overall financial and franchise positionhealthy returns on capital focuses on managing downutilizing our legacy risks (including credit losses)balance sheet to enhance returns and continuingputting capital to execute onwork for the benefit of our capital plan.stockholders. Our executive compensation program has been designed to recognize and support these efforts.

In determining the appropriate compensation for our NEOs in 2014,2016, the Board and the Compensation Committee recognized our business achievements and challenges.financial performance. In addition to improving our metrics and financial results during 2014, which were our strongest in eight years2016, they considered the Company’s strategic positioning, the Company’s accomplishment of various operational and included setting multiple brokeragestrategic goals, the regulatory environment and enhanced regulatory expectations and management’s performance records in assetagainst such expectations, market developments and account growth, we took steps to position ourselves for growththe macro-economic environment as well as compensation of each of the NEO’s internal and benefitted from an organization more focused on the core of our Company – the customer; made meaningful headway toward rationalizing our capital structure; eliminated asymmetric risk through the sales of a none-core business unit and legacy assets; and delivered on several critical capital plan initiatives, culminating in the pay down of a portion of our corporate debt with cash and key regulatory approvals. external peers’ compensation.

Mr. IdzikRoessner and his team of experienced executives have refocused our business, and the Board and the Compensation Committee recognized the following achievements in particular:

Due to the OptionsHouse acquisition, we did not repurchase shares under the program in the second half of 2016. We completedwill continue to assess the salebest use of corporate cash and anticipate resuming share repurchases in the market making business, G1 Execution Services, LLC, to an affiliatesecond half of Susquehanna International Group, LLP.2017; and

Process for Determining Executive Compensation

Compensation Committee.As previously described, all members of the Compensation Committee were independent in 2014.2016. The Compensation Committee is responsible for establishing and administering compensation programs for our senior executives, including programs for the NEOs. The Compensation Committee reviews and approves NEO compensation or, with respect to the CEO’s compensation of the Executive Chairman and CEO, recommends histheir compensation to the independent members of the full Board for approval or ratification.approval.

Compensation Consultants.The Compensation Committee has full authority to retain any consultants it deems appropriate. In 2014,2016, the Compensation Committee again retained Johnson Associates and Pay Governance LLC as its outside compensation consultantsconsultant to advise the Compensation Committee on matters including

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executive compensation practices and market compensation levels. Representatives from Johnson Associates and Pay Governance LLC attended meetings of the Compensation Committee. No services were provided by Johnson Associates or Pay Governance LLC to the Company outside of its engagement with the Compensation Committee.Committee and the Governance Committee as described above. The Compensation Committee considered all relevant factors in determining the independence of each of Johnson Associates and Pay Governance LLC, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, and determined no conflicts of interest existed with respect to eitherthe Committee’s compensation consultant.

Role of Management.The Compensation Committee works with management, led by the CEO, in an effort to ensure that our NEO compensation programs effectively meet the Compensation Committee’s objectives of retaining and motivating highly qualified individuals with the skills and experience necessary to achieve our key business objectives and rewarding desired performance and achievement of goals. In particular, the Compensation Committee considers the CEO’s review of the performance of other executive officers, given his daily experience with them and his particular knowledge of their roles. However, the Compensation Committee ultimately makes its own determinations regarding the form and amount of each NEOsNEO’s compensation and may accept or reject any recommendation from its consultants and management. In addition, the Executive Chairman and CEO isare not present when the Compensation Committee or independent members of the full Board determine the CEO’stheir respective compensation.

Comparative Data.Data. To determine whether our compensation programs are competitive, the Compensation Committee considered publicly available data provided by Pay Governance LLC concerning programs and compensation levels offered by other companies as well as third party survey information in relevant markets.markets and our industry. In particular, the Compensation Committee reviewed compensation data for the companies listed below, although it did not target a specific percentile for comparing compensation.compensation or place specific weights on the sources of pay information. Instead, it used this information as a reference point when considering whether compensation was appropriate and competitive.

The Compensation Committee conducts a thorough review of the peer comparator group each year to ensure the size, scope, performance and business focus of the peer comparator companies reflect the Company’s competitive environment. In 2016, the Compensation Committee, with assistance from Pay Governance LLC, determined that the peer comparator group set in 2015 continued to reflect the competitive environment with respect to attracting customers and talent and therefore did not make any changes. The peer comparator group companies are as follows:

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Overview of 20142016 Named Executive Officer Compensation

The following chart provides a brief overview of the elements and objectives of our compensation program for our NEOs:

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The total target compensation for 2014,2016, including each element of compensation, and individual changes in particular elements from 2013,2016, are described below.

At least once a year, the Compensation Committee reviews “tally sheets” for each of the NEOs. These tally sheets are prepared by Pay Governance LLC, the Compensation Committee’s independent compensation consultant and quantify the elements of each NEO’s total compensation, including potential total annual compensation at different performance levels and the value of outstanding equity awards. The Compensation Committee did not recommend specific changes for NEOs’ fiscal 20142016 compensation in response to this particular review, although it uses the tally sheet information as one data point when considering executive compensation matters.

The differences in pay among NEOs is a result of the Compensation Committee’s review of each NEO’s position and level of authority within the Company, experience, unique skill sets, significant achievements, competitive level of total compensation as compared with internal and external peers and/or individual negotiations in connection with accepting employment with the Company. For example, our CEO’s and our President’s total compensation were each significantly higher than those of our other executive officers because the CEO and the President oversee all of our business units and functions as well as the implementation of our overall business strategy. The Compensation Committee also considers compensation of our NEOs in light of changes in roles and responsibilities. The Compensation Committee does not place a specific weight or emphasis on any of these factors.

20142016 Performance Metrics.Our strategy for 20142016 was to maintaincontinue to improve the strengthoperating performance of our operatingthe business while managing risks, particularly those arising from the balance sheet management segment.risks. Accordingly, our incentive compensation program focused on these areas, but included a significant element associated with strategic and qualitative performance.

The determination of ourcash bonuses awarded to NEOs for 2014 was2016 were based 80% on the following criteria:

(i)Operating Performance (65%). The budgetCompany’s pre-tax income for each 2014 financial performance metric excludes the impactyear and 20% on the achievement of plan payments, the impairment of goodwill in connection with our decision to exit our market making business, restructuring costs and certain other one-time expenses, including severance payments and executive search fees.

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(ii)Execution of Key Initiatives (35%).

managed product. In addition, the Compensation Committee had discretion to adjust the overall cash bonus amounts upward or downward by 25%10%. For purposes of the annual cash incentive plan, operatingpre-tax income is before bonus accrualexcludes all revenue and excludesexpense related to the OptionsHouse acquisition as well as other items, including, restructuring and transaction costs, the provision/benefit for loan losses, and executive severance.

The PSUs granted to NEOs, other than Mr. Lawson, for 2016 performance were based 50% on consolidated earnings per share targets relating to 2016 and 50% on the achievement of certain one-time itemskey business initiatives during 2016. Mr. Lawson received a grant of PSUs in September 2016 upon his appointment as discussed further below.Executive Chairman that was based solely on the achievement of consolidated earnings per share targets relating to 2016 due to the timing of the grant.

For additional information regarding the annual cash bonuses paid to the NEOs in early 2017 for 2016 performance and the vesting and settlement of the PSUs that were granted with respect to 2016 performance, please see pages 34 through 35.

Determination of 2014 Compensation Levels for our NEOs

Compensation of Our CEOExecutive Chairman.

Mr. IdzikLawson was hiredappointed as our CEO in January 2013 during an important transition period for our Company. Mr. Idzik receives compensation under the terms of his employment agreement, which was approved by the Compensation Committee and independent members of the Board inExecutive Chairman on September 12, 2016. In connection with his hiring and provides for compensation at a level viewedappointment as reflective of his strategic importance to the Company’s leadership.

Pursuant to hisour Executive Chairman, Mr. Lawson entered into an employment agreement with us (the “Lawson Agreement”), which is scheduled to remain in 2014effect until December 31, 2018.

The Lawson Agreement provides that Mr. IdzikLawson will receive an annual base salary of $850,000. The Lawson Agreement further provides that Mr. Lawson was eligible to receive an annual cash performance bonus for 2016 with a target of $500,000 and is eligible to receive an annual cash performance bonus for each of 2017 and 2018 with a target of $1,650,000 and an annual equity performance bonus for each of 2017 and 2018 with a target of $1,500,000 in the form of PSUs and $1,000,000 in the form of RSUs. Mr. Lawson also received a one-time equity award grant upon his appointment as Executive Chairman, consisting of PSUs with a grant date value of $455,000 that vested based on the achievement of consolidated earnings per share targets for 2016 and RSUs with a grant date value of $300,000 that vest ratably on each of the first three anniversaries of the grant date.

Compensation of Our CEO.Mr. Roessner was appointed as our Chief Executive Officer on September 12, 2016. In connection with his appointment as our Chief Executive Officer, Mr. Roessner entered into a new employment agreement with us (the “Roessner Agreement”), which is scheduled to remain in effect until December 31, 2019.

The Roessner Agreement provides that Mr. Roessner will receive an annual base salary of $850,000, which represented an increase of $50,000 over his pre-appointment salary. The Roessner Agreement further provides that Mr. Roessner was eligible to receive an annual cash performance bonus for 2016 with a target of $950,000, which represents an increase of $400,000 over his 2015 target amount, and is eligible to receive an annual cash performance bonus for 2017 with a target of $1,500,000 and an annual equity performance bonus for 2017 with a target of $1,200,000 in the form of PSUs and $1,200,000 in the form of RSUs. Mr. Roessner also received a one-time grant of RSUs upon his appointment as Chief Executive Officer with a grant date value of $1,000,000 that vests ratably on each of the first three anniversaries of the grant date.

CompensationofOurChiefFinancial Officer.Mr. Pizzi received an annual base salary of $1,000,000 and was eligible for$600,000, an annual cash performance bonus (at target)target of $3,000,000.$900,000 and an annual long-term equity award target of $1,400,000. Mr. Idzik did not receivePizzi’s 2016 base salary represented an equity grant in Februaryincrease of $100,000 over his 2015 base salary and his 2016 annual cash performance target represented an increase of $50,000 over his 2015 target amount. Each of these increases for 2014 performance. AtMr. Pizzi was made to reflect the timeincreasing complexity of the Companyfinancial regulatory environment and the resulting increased expectation as well as to better align his base salary with his internal and external peer group.

Compensation of Our Chief Brokerage Officer.Mr. Curcio was appointed as our Chief Brokerage Officer on September 12, 2016. In connection with his appointment as our Chief Brokerage Officer, Mr. Curcio entered into thean employment agreement with Mr. Idzik in 2013, it did not intend to grant new equity awards to Mr. Idzik during theus (the “Curcio Agreement”), which has an initial term that expires on December 31, 2017.

The Curcio Agreement provides that Mr. Curcio will receive an annual base salary of his employment. At$600,000. The Curcio Agreement further provides that time,Mr. Curcio is eligible to receive an annual cash performance bonus with a target of $1,200,000 (pro-rated to $357,500 for 2016) and, commencing in 2017, an annual equity performance bonus with a target of $600,000 in the Compensation Committee determined that his new hireform of PSUs and $600,000 in the form of RSUs. In connection with our acquisition of OptionsHouse, Mr. Curcio received a one-time equity award grant in 2013, which hadconsisting of RSUs with a grant date value of $9,000,000, would provide sufficient$7,676,361, which approximated the unvested portion of a profit sharing plan award from his prior employer. The award will vest ratably on each of the first three anniversaries of the grant date.

Compensation of Our Chief Technology and Operations Officer. Mr. Foley received an annual base salary of $600,000, an annual cash performance bonus target of $600,000 and an annual long-term incentive toequity award target of $800,000.

Compensation of Our Former CEO. We paid Mr. Idzik during the initial term ofseverance in accordance with his employment agreement. Please see the “2016 Summary Compensation Table” set forth on page 39.

Base Salary

The Compensation Committee believes that the CEO’s compensation should be heavily weighted toward incentive compensation, in the form of both annual cash bonuses based on performance and long-term equity awards, which ties his interestsbase salary payable to thoseeach of our stockholders. In determining the amounts of the CEO’s compensation, the Compensation Committee considered a variety of factors, including data from the companies listed above (but did not target a specific level within the market data), and discussions with its compensation consultants as to market practices, but does not apply any specific weightings to the factors.

Compensation of Our Other NEOs

For our other NEOs, 2014 total compensation approved by the Compensation Committee, after consultation with our CEO, was as follows:

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Base Salary

For 2014, the Compensation Committee made no significant changes to base salary for our NEOs, other than Mr. Foley, because the Compensation Committee determined that their base salaries were competitive and preferred to focus on performance-based cash compensation and long-term equity compensation when making adjustments to total compensation. The Compensation Committee increased Mr. Foley’s base salary by 22% for 2014 in recognition of his leadership of the Company’s technology infrastructure and operations functions.peer companies.

Annual Cash Incentive Program

Annual Cash Incentive Awards. This cash-based element of compensation provides NEOs with an incentive and a reward for achieving meaningful near-term performance objectives that the Compensation Committee believes will lead to sustainable long-term performance. The Compensation Committee believes that it is important to rigorously assess achievement of our performance goals in determining whether and how much to pay in cash bonuses, but that it is also important to retain a degree of flexibility given the nature of our business. In 2014, the Compensation Committee made no significant changes to theThe target cash bonus amountsamount for each of our NEOs other than Mr. Roessner, becausewas set at a level that is reflective of each individual’s position within the Compensation Committee determined that these targets were competitive and in line with market compensation levels. In light of the fact that Mr. Roessner’s target cash bonus amount had remained unchanged over the last two years, the Compensation Committee increased Mr. Roessner’s target cash bonus amount by 25% for 2014 in recognition ofCompany, the importance of the Legal and Compliance function in enhancing regulatory relationships and building outvarious business areas or functions overseen to the Company’s Enterprise Risk Management Programstrategy and to better align Mr. Roessner’s target amount with his internal peersuccess and external peer group.each individual’s overall compensation.

Cash Awards for 20142016 Performance. In early 2014,2016, the Compensation Committee established target cash bonus awards for each of our NEOs, in the amounts set forth in the “Grants of Plan-Based Awards” table, for which the actual payout amounts would depend on the Compensation Committee’s review of our 20142016 performance against the pre-established performance criteria described below. In early 2015,2017, after reviewing both our financial and strategic performance, the Compensation Committee first approved a total bonus pool based on the factors described below and then determined appropriate individual payments. In determining that the total bonus pool for 2014 should be 120%2016, the Compensation Committee first determined that (i) the pre-tax income of the Company, which generally accounts for 80% of the bonus, was above budget; and (ii) the Company’s key brokerage metrics, which generally account for 20% of the bonus, and include net new brokerage accounts, net new brokerage assets, margin contribution, daily average revenue trades and managed product, were slightly below budget. The achievement of these pre-established performance criteria resulted in a bonus pool that was equal to 101% of the accrued target budget, thebudget. The Compensation Committee then considered the following factors: (i) the pro forma operating income of the Company was 34% above budget; (ii) an emphasis on exceeding goals and not merely meeting them at the executive level; and (iii) the Company’s execution of key initiatives and accomplishment of various operational and strategic goals, when combined with special considerations, the regulatory environment and enhanced regulatory expectations, market developments and the macro-economic environment.

(i)Operating Performance (65%). Results for each of the pre-established financial performance metrics for 2014, excluding the impact of plan payments, the impairment of goodwill in connection with our decisionenvironment and determined to exit our market making business, restructuring costs and other certain one-time expenses, including severance payments and executive search fees, were as follows:

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(ii)Execution of Key Initiatives (35%). In assessing our level of achievement of this metric, the Compensation Committee reviewed accomplishments in the key areas described above as well as execution of the initiatives described under “Compensation Considerations for 2014.” In determining that our collective strategic and qualitative performance exceeded the target performance level, the Compensation Committee particularly focused on the Company’s strategy, which includes the following:

As part of this assessment of the qualitative component ofexercise its pre-existing discretion to increase the bonus pool to a total of 111% of the Compensation Committee also considered factors that may have reduced our performance results including additional costs incurred as a result of enhanced expectations from our regulators with respect to compliance with laws and regulations, including our controls and business processes and changes in the macro-economic environment, and other indicators of our overall business performance, including the quality of our performance and our relative position to our peers (considering both financial and non-financial metrics).accrued target budget.

Individual Cash Bonus Payouts.Payouts Based on the above factors, the Compensation Committee established the overall bonus pool at 120% of target.. In determining the individual NEO payments from this bonus pool, the Board (with respect to the Executive Chairman and CEO) and the Compensation Committee primarily considered which business segmentsareas were most successful and their importance to our strategy and successes, together with its view of leadership and effort by each individual officer and each individual’s overall compensation. As further described below, this resulted in the payments of $4,250,000, $850,000, $600,000, $1,850,000 and $750,000 for each of Messrs. Idzik, Audette,Lawson, Roessner, Pizzi, Curcio and Foley Nandrareceiving payments of $500,000, $1,100,000, $1,000,000, $500,000 and Roessner,$600,000, respectively. As a result, bonus payments ranged from approximately 100% to 150% of the individual’s target. In paying cash bonuses at or above target, the Board (with respect to the Executive Chairman and CEO) and the Compensation Committee reiterated itstheir desire to emphasize exceeding, not just meeting, goals for the year, to encourage focus on the improving brokerage businessfinancial performance of the Company while enhancing regulatory relations and to make “target” bonuses difficult to achieve at the executive level.

Given our strong businessfinancial and operational results in 2014,2016, all bonus payouts to NEOs were at or above target. However, the Board (with respect to the Executive Chairman and CEO) and the Compensation Committee approved slightly different allocations (as a percentage of targets) due to the particular responsibilities and roles of each individual NEO. Mr. IdzikLawson received 142%100% of target in recognition of his substantial efforts in guiding

our successful management transition. Mr. Roessner received 116% of target in recognition of his significant leadership efforts both before and after his appointment as our Chief Executive Officer, including reinvigorating the management team in line with the Company’s strong financial results, his responsibility for all of the Company’s business units and functions and his leadership in the execution of key initiatives, including continuing the build-out of the Company’s Enterprise Risk Management function,strategic goals, as well as enhancing the Company’s and E*TRADE Bank’s regulatory relationships.guiding our acquisition of OptionsHouse. Mr. AudettePizzi received 100%111% of target based onin recognition of his leadership in significant efforts that have contributed to the Company’s financial results, and that will enableincluding the Company to achieve its strategic and business goals, such as deleveraging the Company’s balance sheet and paying down a substantial portionOptionsHouse acquisition, his continued strong leadership in light of the Company’s corporate debt.management transition and his execution against our ambitious capital plan. Mr. NandraCurcio received 106%140% of target because he was directly or indirectly(a $150,000 increase) in chargerecognition of his ability in a significant portionshort period of time since his appointment as Chief Brokerage Officer to successfully align the Company’s business unitsbrokerage organization and functions as well asfocus the implementation of the Company’s business strategy.brokerage team on achieving growth goals. Mr. Foley received 100% of target in recognition of his leadership of the Company’s technology development and infrastructure and operations functions. Mr. Roessner received 150% of target because of the importance of the Legal and Compliance function infunctions during a period intime at which the Company has been significantly enhancing regulatory relationships and building outintegration of OptionsHouse is critical to the Company’s Enterprise Risk Management Program.

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Equity Compensation

Annual Long-Term Incentive Compensation Paid in 2014. In early 2014, the Compensation Committee approved equity grants for our NEOs based on 2013 performance, as described in detail under “Compensation Discussion and Analysis” in our 2013 Proxy Statement. These equity grants vest annually over three years following the date of grant. These award amounts are set forth in the “Grants of Plan-Based Awards” table below because they were granted in 2014; however, they were earned as part of 2013 compensation because they related to 2013 performance.

Annual Long-Term Incentive Compensation Practices for 2014.2016The Compensation Committee determined that equity-based compensation for our NEOs with respect to 2014 should consist of RSUs granted in early 2015 that are subject to achievement of performance targets set in early 2014, and which vest over an extended period of time following the. We generally grant date subject to the recipient’s continued employment with us. The Compensation Committee determined that these RSU grants provided the optimum form of equity compensation for our NEOs because (i) they are granted based on the Compensation Committee’s review of our 2014 performance, including the meaningful near-term performance objectives that the Compensation Committee considers in respect of annual cash bonuses for NEOs, (ii) they align the interests of our NEOs and our stockholders because their value is directly tied to the value of our Common Stock and (iii) they provide a meaningful retention incentive because they are subject to vesting over an extended period of time subject to the NEO’s continued employment with us.

The Compensation Committee increased 2014 equity bonus targets for each of our NEOs other than our CEO, to better align this element of compensation with each executive’s external peer group in order to ensure that we continue to provide our NEOs with a level of compensation that is consistent with that provided by the companies with which we compete for talent. The Compensation Committee increased bonus equity targets within a range from approximately 12% to 56% over the prior year’s target in recognition of the Company’s strong financial results in 2013. However, the Compensation Committee approved different increases due to the particular responsibilities and roles of each individual NEO.

In February 2015, the Compensation Committee determined long-term equity target awards for each NEO based on the Compensation Committee’s review of 2014 performance. As described above, Mr. Idzik did not receive an equity grant in February 2015. Based on the Company’s financial results and the Company’s performance under the performance criteria, the Compensation Committee approved awards of RSUs to our NEOs with grant date values ranging from 100% to 133% of the individual’s target. The reasons for the differences among our other NEOs were substantially similar to the reasons for the cash bonus payment differences, as described above.

Because these awards were made in 2015, SEC disclosure rules require that they not be reflected in the “Summary Compensation Table” or “Grants of Plan-Based Awards” table below. However, we are describing them in this “Compensation Discussion and Analysis” because we consider them part of our 2014 compensation.

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We granted the following RSU awards to our NEOs on February 6, 2015. These RSUs vest in equal installments on each of the first three anniversaries of the grant date, generally subject to the NEO’s continued employment with us.

Equity Award Practices for 2015. After undertaking an extensive review of evolving compensation practices with Pay Governance LLC, its independent compensation consultant, the Compensation Committee determined that equity-based compensation for 2015 should consistmix of both performance-vesting PSUs and time-vesting RSUs (70% of target equity value) and new PSUs (30% of target equity value) that vest based on the achievement of key business objectives determined by the Compensation Committee.RSUs. The Compensation Committee believes that awarding a mix of time-vesting and performance-vesting equity awards will achievebased on pre-established goals achieves a greater balance in our equity-based compensation program and will serveserves to further align the interests of our NEOs and our stockholders because the time-vesting RSU grants will continue to provide retention value, while the PSU grants will help to further ensure a strong pay-for-performance alignment of our compensation program with stockholder interests.interests and will further motivate our NEOs to strive to achieve our key business objectives. The Compensation Committee’s decision to grant PSUs was informed, in part, by evolving best practices and discussions with certaintarget amount for each of our stockholders regardingNEOs was set at a level that is reflective of each individual’s position within the meritsCompany, the importance of grantingthe various business areas or functions overseen to the Company’s strategy and success and each individual’s overall compensation.

PSU Grants Relating to 2016 Performance.The PSUs that were granted to our NEOs in 2016 are generally subject to vesting over three successive one-year performance periods, with one-third of the PSUs relating to performance goals with respect to each of 2016, 2017 and 2018. In addition, Messrs. Roessner, Pizzi and Foley were each granted PSUs in 2015, a pay-for-performance executive compensation program. Astotal of 50% of which were subject to vesting over a resultone-year performance period relating to 2016 performance goals. Accordingly, for Messrs. Roessner, Pizzi and Foley, a total of one-half of the introductionPSUs granted in 2015 and a total of one-third of the PSUs granted in 2016 were subject to vesting based on performance goals relating to 2016. Mr. Lawson received a one-time grant of PSUs upon his appointment as Executive Chairman in September 2016 that relates solely to the 2016 performance period. Mr. Curcio did not receive a componentgrant of PSUs in 2016.