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 Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Notice of Annual Meeting of Stockholders

To Be Held May 12, 201611, 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 Michelangelo Hotel, 152 West 51^st Street, New York, NYNew York 10019, on May 12, 201611, 2017 at 8:30 a.m. EDT, for the following purposes:

The Board has fixed the close of business on March 14, 201613, 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 30, 201629, 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 ended December 31, 20152016 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 11, 2016.10, 2017. If you vote by mail, your proxy card must be received no later than the day before the Annual Meeting.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.

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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 possible.

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 2017Company’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 begins on page 2426 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 12, 201611, 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 Michelangelo Hotel, 152 West 51^st Street, New York, NYNew York 10019, on May 12, 201611, 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 30, 2016.29, 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 12, 2016,11, 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, a non-binding advisory 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.

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 compensation paid toof the Company’s Named Executive Officers of the Company(“NEOs”) as

described in “Proposal 2—Non-Binding Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers”Officers (the “Say-on-Pay Vote”)”; for the selection of ONE YEAR as the frequency of the Say-on-Pay Vote as described in “Proposal 3—Non-Binding Advisory Vote to Select the Frequency of the Say-on-Pay Vote”; and FOR the ratification of the selectionappointment of accountants as described in “Proposal 3—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, 20152016 (the “2015“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 14, 201613, 2017 (the “Record Date”) may vote at the Annual Meeting. On that date, there were 279,522,800274,700,705 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 of record” 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 11, 2016.10, 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 provide instructions with the proxy materials.

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 sharesshares..

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 is 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. 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.

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—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, will 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 an advisory vote,our stockholders of the Company’s compensation paid toof our Named Executive Officers.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 greatest number of votes—every one, two or three years—will be considered the frequency approved by our 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 3.4.

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 3,4, but cannot exercise its discretionary authority to vote your shares regarding Proposals 1, 2 and 2,3, 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 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?

Under Securities and Exchange Commission (“SEC”) rules, a single Notice of Internet Availability (or one copy of this Proxy Statement and the accompanying 20152016 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.

You may revoke your consent to future householding mailings or enroll in householding by submitting a written request to our Corporate Secretary, at the Company’s principal offices located at 1271 Avenue of the Americas, 14Ballston 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.

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 2017Company’s 2018 Annual Meeting of Stockholders or until his or her earlier resignation or removal.

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 relationships 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 challenging market conditionstransition 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:

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 Benefit 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.

PaulKevin T. IdzikKabathas been a directorLead Independent Director of the Company since September 2016 and a director since June 2016. He served as Chief Executive Officer since January 2013.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 Company,board of directors of NiSource Inc. Mr. Idzik was Group ChiefKabat also serves on the Cincinnati Business Committee and the Executive Committee of DTZ Holdings plc in London from November 2008 to August 2011.the ArtsWave Board of Trustees. He also spent 10 years at Barclays PLC, firstserved as Chief Administration Officer, then Chief Operating Officer at Barclays Capital Groupco-chairman of Cincinnati Children’s Hospital Medical Center’s “Change the Outcome” campaign and then as Group Chief Operating Officerwas chair of Barclays PLC. Mr. Idzik began his career as a consultant and spent over a decade with Booz Allen Hamilton, Inc. Mr. Idzik hasthe United Way of Greater Cincinnati’s 100th anniversary campaign. He holds a B.A. in Economics and a B.A. in Computer ApplicationsBehavioral Science from theJohns Hopkins University of Notre Dame and an M.B.A.M.S. in Finance and AccountingIndustrial/Organizational Psychology from the University of Chicago. HePurdue University. Mr. Kabat is President of E*TRADE Bank and a member of the E*TRADE Bank board.board, the Compensation Committee, the Governance Committee and is an ex officio member of the Audit Committee and the Risk Oversight Committee.

FrederickW.Kannerhas been a director of the Company since April 2008. Mr. Kanner is a 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 Dewey Ballantine LLP (subsequently, Dewey & LeBoeuf LLP) where he was Chairman of Dewey’s Corporate Finance practice for more than 15 years and a member of its Management Committee for 20 years. Thereafter, 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) and National Benefit Life Insurance Company (where he serves as Chairman of the Audit Committee) and is a member of the board of trustees of The Lawyers’ Committee for Civil Rights Under Law. He 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,(Wiley, 2nd Edition, 2014). Mr. Lam graduated 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 aB.A.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 currentlyPresident of SL Advisory, a Technology Advisor.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 tojoiningto 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 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, the National Council on Economic 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.

CORPORATE GOVERNANCE OVERVIEW

The Board held a total of 1319 meetings during 2015.2016. Each current director attended at least 75% of the total 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. Our non-management directors met in executive session without management at least quarterly. The Chairman of the Board led these executive sessions during 2015.2016 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:

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, 14Ballston 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 30, 2016,29, 2017, the members of each committee of the Board and the number of times each committee met during 2015:2016:

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, 14Ballston 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 20152016 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, 14Ballston 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 that applies to our executive officers and directors. The information on our website is not a part of this Proxy Statement.

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, IT/cybersecurity,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 risks and in working to manage and monitor the financial risk and return of the Company. The Risk Oversight Committee oversees the capital planning processes, the Company’s capital position and capital adequacy, and consolidated capital 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, liquidity risk, reputational risk, IT/cybersecurityinformation technology, information security and cyber security risk, strategic risk, and legal, regulatory and compliance risk. Additionally, the Risk Oversight Committee reviews the Company’s business continuity plan, strategic plan, strategic transactions, and proposed 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 and recommends it 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. 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. These 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:

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 2015, all directors, except for Mr. Idzik,Messrs. Lawson and Roessner, were independent.independent during 2016.

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, geographic representation and backgrounds. All candidates are then evaluated based on a review of the individual’s qualifications, skills, independence, experience, expertise and 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.

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 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 submissions should (i) be accompanied by (i) evidence of the stockholder’s stock ownership during the preceding 12 months; (ii) include a statement that the stockholder is not a competitor of the Company; and (iii) comply with the notice requirements set forth in Section 1.08 of the Company’s bylaws.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, 1271 Avenue of the Americas, 14Ballston Tower, 671 North Glebe Road, 12^th Floor, New York, New York 10020-1302,Arlington, VA 22203-2120, Attention: Corporate Secretary.

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 2015,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.

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 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.

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 background 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.

20152016 Annual Review of Director Compensation Program

The Governance Committee reviews the structure and philosophy of our Director Compensation program on an annual basis. In the second quarter of 2015,2016, 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. In November 2015, theThe Governance Committee approved an increase todetermined during its 2016 annual review that the additional annual retainer for Committee Chairs to $25,000, effective May 12, 2016.existing Director Compensation levels remained appropriate.

TheIn 2016, the Board also formed two additional advisory working groups, in the second quarter of 2015, the Cybersecurity AdvisoryGrowth Initiative Working Group and the Strategic AdvisoryIntegration Working Group, to provide advice and counsel to management on the respective topics. At that time, theThe Governance Committee approved an annual retainers to be paid toretainer for each non-employee director who serves on an advisory working group. Messrs.group chair of $15,000, payable to all working group chairs. Mr. Healy and SternMses. 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 Cybersecurity Advisory Working Group and Messrs. Healy and Stern and Mses. Saeger and Weaver are members of the Strategic AdvisoryIntegration Working Group.

Other than approving an additional annual retainer for all advisory working group members, the Governance Committee determined during its 2015 annual review that the existing Director Compensation levels remained appropriate.

20152016 Director Compensation

Cash Compensation.The Director Compensation policy for cash fees for non-employee directors in 20152016 was as follows:

EquityCompensation.The Director Compensation policy for equity compensation for non-employee directors in 20152016 was as follows:

As a part of our overall Director Compensation 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 2015 Omnibus Incentive Plan pursuant to the terms of our Director Compensation Deferral Program (the “Deferral Program”). Grants of DSUs are issued based 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.

Each restricted stock or DSU award, as applicable, granted to a non-employee director in 20152016 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.

20152016 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.

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 (currently equal to $100,000) duepayable to non-employee directors (not including any additional retainer for service as a Committee Chair, 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 2015,2016, 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.

PROPOSAL 2

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 non-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 2426 to 4445 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, in 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 the compensation of the Named Executive Officers will occur at our 2017 Annual Meeting of Stockholders.

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 20162017 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

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

As described in Proposal 2 above, our stockholders have the opportunity to cast an advisory vote to approve the compensation of our NEOs as disclosed in accordance with the compensation disclosure rules of the SEC. This Proposal 3 affords stockholders the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently we should seek stockholder advisory votes on executive compensation. By voting with respect to this proposal, stockholders may indicate whether they would prefer that we conduct future advisory votes on executive compensation once every one, two, or three years. Stockholders also may, if they wish, abstain from casting a vote on this proposal.

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

The Audit Committee of the Board is responsible for the appointment, 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 20162017, and we are asking the stockholders to ratify its selectionappointment 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 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 and their respective affiliates for professional services rendered in 20152016 and 20142015 are as follows:

The 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 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 2016.2017.

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 30, 2016:29, 2017:

Michael A. Pizziis Chief Financial Officer of the Company, responsible 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 been with the Company since 2003 and most recently served as the Company’s Chief Risk Officer. Prior to that he served as the 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 Company’s portfolio management and derivatives functions. Before joining the Company, Mr. Pizzi worked in asset/liability management at both Lehman Brothers and First Maryland Bank, as well as in capital markets research for the 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 E*TRADE, Mr. Curcio spent 15 years at TD Waterhouse, last serving as EVP of Customer Relationship Management. Mr. Curcio received a BS in Business from the State University of New York, at Plattsburgh. He previously served on the Board of Governors of 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 development and 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.

David Herbert is Senior Vice President of Retail Services and was appointed as the President of E*TRADE Securities LLC in August 2015. As head of retail brokerage services, Mr. Herbert oversees the brokerage business across all of the Company’s products and channels. Prior to joining the Company in 2013, Mr. Herbert worked at Charles Schwab as Regional Branch Executive of Investor Services, setting strategic retail direction, as well as driving the implementation of a new client relationship model, and he held a number of senior positions with Fidelity Investments, including managing investor centers and overseeing branch and premium distribution channels. Additionally, he has held various positions at Merrill Lynch, Racal-Redac Inc., and Reynolds and Reynolds Company. He has a B.S. in Business Administration from Wittenberg University.

Michael A. Pizzi is Executive Vice President and Chief Financial Officer of the Company, a position he has held since June 2015. Mr. Pizzi is responsible for all finance and accounting functions for the Company, including financial reporting, planning, tax, treasury, investor relations, and corporate communications. Mr. Pizzi has been with the Company since 2003 and served as the Chief Risk Officer, and the Corporate and Bank Treasurer where he was responsible for all portfolio, capital and liquidity management. He also previously held various positions in the Company’s portfolio management and derivatives functions. Prior to joining the Company, Mr. Pizzi worked in asset/liability management at both Lehman Brothers and First Maryland Bank, as well as in capital markets research for the Federal Reserve Board. Mr. Pizzi earned a B.A. in Economics from Ursinus College, and holds Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM) designations.

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

May2009, 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.

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 14, 2016,13, 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, 14^th Floor, New York, New York 10020-1302.

Name and Address of Beneficial Owner		Number of Shares of Common Stock Beneficially Owned (1)				Number of Shares of Common Stock Beneficially Owned Plus Certain Outstanding Equity Awards(2)				Percentage of Common Stock   Beneficially Owned (3)
DIRECTORSAND NAMED EXECUTIVE OFFICERS:
Carbone, Richard J.			2,470				14,673			*
Curcio, Michael J.			—				—			*
Foley, Michael E.			48,700				48,700			*
Healy, James P.			10,000				20,974			*
Idzik, Paul T. (4)			449,903				449,903			*
Kabat, Kevin T.			4,904				4,904			*
Kanner, Frederick W.(5)			44,315				44,315			*
Lam, James			19,848				19,848			*
Lawson, Rodger A.			40,003				52,206			*
Leibowitz, Shelley B.			3,954				9,099			*
Pizzi, Michael A.(6)			60,625				60,625			*
Roessner, Karl A.(7)			124,341				124,341			*
Saeger, Rebecca			23,184				23,184			*
Sclafani, Joseph L.(8)			34,527				34,527			*
Stern, Gary H.			11,723				11,723			*
Weaver, Donna L.(9)			51,911				58,528			*
All current directors and executive officers as a group (15 persons)			480,505				527,647			*
STOCKHOLDERS OWNING MORETHAN 5%:
The Vanguard Group, Inc.(10) 100 Vanguard Blvd. Malvern, PA 19355			27,991,222				27,991,222			10.19%
BlackRock, Inc.(11) 55 East 52nd Street New York, NY 10055			21,689,370				21,689,370			7.90%
T. Rowe Price Associates, Inc.(12) 100 E. Pratt Street Baltimore, MD 21202			13,887,061				13,887,061			5.06%

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, our threetwo other most highly compensated executive officers who were serving as of December 31, 20152016, and our former Chief FinancialExecutive 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 2015,2016, our named executive officers were as follows:

Mr. Nandra’s employment with the Company terminated as of December 31, 2015 and Mr. Audette’s employment with the Company terminated as of July 31, 2015.

Executive Compensation Highlights

COMPENSATION HIGHLIGHTS

•      Annual Cash Bonus awards to NEOs relating to 2016, which were funded based upon Companypre-tax income goals, specified key brokerage metrics and individual performance, in 2015, ranged from 100% to 150%140% of target awards which equated to $0 to $150,000 over target   •      Our CEO did not receive an equity award for 2015 performance, consistent with the terms of his 2013 employment agreement and new hire equity award granted in 2013 •      For our other NEOs, Equity Compensation ranged from 100% to 135% of target awards associated with 2015 performance, andfor NEOs in 2016 generally consisted of a mix of performance share units (“PSUs”) that vest based upon achievement of earnings per share targets and key business initiatives and time-based restricted stock units that vest over three years of continued employment (“RSUs”), with PSUs relating to 2016 performance vesting at approximately 120% of target awards

COMPENSATION DESIGN

Philosophy and Peers		•       We assess our compensation levels in comparison to a peer group of comparable companies and place a heavy emphasis on performance-based pay through Annual Cash Bonuses and Equity Compensation
“Say on Pay”		•       Our stockholders supported our compensation program with greater than a 96% approval level at our 20152016 Annual Meeting of Stockholders
Program Design Changes		•      Our implementation of PSU grants in lieu of a portion of time-based RSU grants consistent with the Compensation Committee’s “pay for performance” philosophy and further aligning the interests of our NEOs with those of our stockholders
Annual Cash Bonuses		•       Annual Cash Bonuses are funded based upon pre-tax operating income performance as described below;and the achievement of specified key brokerage metrics; individual cash bonus amounts are also based, in part, on the individual performance of each NEO
Equity Compensation		•       PSUs vest and settle based upon the achievement of earnings per share targets and key business initiatives
		•       RSUs vest over three years of continued employment

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:

Key Compensation Practices and Governance

Our 20152016 compensation program for our NEOs contains the following notable good corporate governance features:

Compensation Considerations for 20152016

20152016 Say-on-Pay Vote. At our 20152016 Annual Meeting of Stockholders, stockholders supported our “say-on-pay vote,” with more than 96% of the votes cast (excluding abstentions and broker non-votes) in favor of our compensation program for our NEOs. The Compensation Committee believes this overwhelming approval by our stockholders shows strong support for our compensation philosophy of placing significant weight on incentive pay and continues to use that philosophy as the basis for our compensation program.

Fiscal 20152016 Business Highlights. Our business strategy is centered on two corekey objectives: accelerating the growth of our core brokerage business to drive organic growth and improve our market share, and generating robust earnings growth and healthy returns on capital to deliver long-term value for our stockholders. Accelerating the growth of our core brokerage business focuses on enhancing the digital and offlineoverall customer experience and capitalizing on the value of our corporate services business.channel. Generating robust earnings growth and healthy returns on capital focuses on maximizing the value of deposits while improvingutilizing our balance sheet efficiencyto enhance returns and creatingputting capital efficiency.to work for the benefit of our stockholders. Our executive compensation program has been designed to recognize and support these efforts.

In determining the appropriate compensation for our NEOs in 2015,2016, the Board and the Compensation Committee recognized our business achievements and challenges.financial performance. In addition to our metrics and financial results during 2015, we took steps to position ourselves for growth2016, they considered the Company’s strategic positioning, the Company’s accomplishment of various operational and benefitted from an organization more focused onstrategic goals, the core of our Company – the customer;regulatory environment and we achieved increased capital flexibility at both E*TRADE Bankenhanced regulatory expectations and management’s performance against such expectations, market developments and the Company.macro-economic environment as well as compensation of each of the NEO’s internal and 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:

—

Began the process of growing our balance sheet to our target size of $49.5 billion; and

Due to the Company.OptionsHouse acquisition, we did not repurchase shares under the program in the second half of 2016. We will continue to assess the best use of corporate cash and anticipate resuming share repurchases in the second half of 2017; and

Process for Determining Executive Compensation

Compensation CommitteeCommittee..As previously described, all members of the Compensation Committee were independent in 2015.2016. 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.

Compensation ConsultantsConsultants..The Compensation Committee has full authority to retain any consultants it deems appropriate. In 2015,2016, the Compensation Committee again retained Pay Governance LLC as its outside compensation consultant to advise the Compensation Committee on matters including executive compensation practices and market compensation levels. Representatives from Pay Governance LLC attended meetings of the Compensation Committee. No services were provided by Pay Governance LLC to the Company outside of its engagement with the Compensation Committee and the Governance Committee as described above. The Compensation Committee considered all relevant factors in determining the independence of 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 the Committee’s compensation consultant.

Role of ManagementManagement..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 NEO’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. 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 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 2015,2016, the Compensation Committee, with assistance from Pay Governance LLC, determined to adjust and enlargethat the peer comparator group. The Compensation Committee believes that the revised peer comparator group better reflectsset in 2015 continued to reflect the competitive environment with respect to attracting customers and talent.talent and therefore did not make any changes. The peer comparator group companies are as follows:

Overview of 20152016 Named Executive Officer Compensation

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

The total target compensation for 2015,2016, including each element of compensation, and individual changes in particular elements from 2014,2016, 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 20152016 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. 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.

20152016 Performance MetricsMetrics..Our strategy for 20152016 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 our NEOs’ cash bonuses awarded to NEOs for 2015 was2016 were based 80% on the Company’s pre-tax operating income for the year.year and 20% on the achievement of specified key brokerage metrics, including net new brokerage accounts, net new brokerage assets, margin contribution, daily average revenue trades and managed product. In addition, the Compensation Committee had discretion to adjust the overall cash bonus amounts upward or downward by 10%. For purposes of the annual cash incentive plan, pre-tax operating income is before bonus accrualexcludes all revenue and excludes certain one-time items.expense 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, in February 2015other than Mr. Lawson, for 2016 performance were subject to vesting and settlement based upon50% on consolidated earnings per share targets relating to 2016 and 50% on the achievement of certain key business initiatives during 2016. Mr. Lawson received a grant of PSUs in September 2016 upon his appointment as Executive Chairman that each relatedwas based solely on the achievement of consolidated earnings per share targets relating to 2016 due to the Company’s performance during 2015.timing of the grant.

For additional information regarding the annual cash bonuses paid to the NEOs in early 2017 for 2016 in respect of 2015 performance and the vesting and settlement of the PSUs that were granted in 2015 with respect to 20152016 performance, please see pages 32 and 33.34 through 35.

Determination of 2015 Compensation Levels for our NEOs

Compensation of Our CEOExecutive Chairman.

Mr. IdzikLawson was hiredappointed as our CEO in January 2013 duringExecutive Chairman on September 12, 2016. In connection with his appointment as our Executive Chairman, Mr. Lawson entered into an important transition period for our Company. In 2015, Mr. Idzik received compensation under the terms of a three-year employment agreement entered into in January 2013with us (the “2013“Lawson Agreement”), which is scheduled to remain in effect until December 31, 2018.

The Lawson Agreement provides that Mr. Lawson will receive an annual base salary of $850,000. The Lawson Agreement further provides that Mr. Lawson was approved byeligible 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 Compensation Committeeform of PSUs and independent members$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 Board infirst 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 hiringappointment 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 providedis eligible to receive an annual cash performance bonus for compensation at2017 with a level viewedtarget 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 reflectiveChief Executive Officer with a grant date value of his strategic importance to$1,000,000 that vests ratably on each of the Company’s leadership.first three anniversaries of the grant date.

Pursuant to the 2013 Agreement, in 2015 CompensationofOurChiefFinancial Officer.Mr. IdzikPizzi 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 2015 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 the 2013 Agreement with Mr. Idzik, the Compensation Committee determined that his new hire grant in 2013, which had a grant date value of $9,000,000, would provide sufficient long-term incentive to Mr. Idzik during the initial three-year term of his 2013 Agreement. The Board and 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 interests to those of our stockholders. In determining the amounts of

the CEO’s compensation, the Board and 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.

In October 2015, the Company and Mr. Idzik entered into a newan employment agreement effective January 1, 2016with us (the “2016“Curcio Agreement”), to replace the 2013 Agreement. Pursuant to the 2016which has an initial term that expires on December 31, 2017.

The Curcio Agreement provides that Mr. IdzikCurcio will continue to receive an annual base salary of $1,000,000 and will continue to be$600,000. The Curcio Agreement further provides that Mr. Curcio is eligible to receive an annual cash performance bonus with a target of $3,000,000. In addition, Mr. Idzik will be eligible$1,200,000 (pro-rated to receive$357,500 for 2016) and, commencing in 2017, an annual equity compensationperformance bonus with a target of $600,000 in the form 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 consisting of RSUs with a grant date value of $4,000,000 for 2016 (50% in RSUs and 50% in PSUs).$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 Other NEOsChief 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 equity award target of $800,000.

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

ForBase Salary

The annual base salary payable to each of our other NEOs 2015 total compensation approved by the Compensation Committee, after consultation with our CEO, was as follows:

Base Salary

For 2015, the Compensation Committee made no significant changes to base salary for our NEOs 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.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 2015, the Compensation Committee made no significant changes to theThe target cash bonus amountsamount for each of our NEOs other than Mr. Roessner and Mr. Pizzi, 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. The Compensation Committee increased Mr. Roessner’s target cash bonus amount by 10% for 2015 in recognition of his leadership and role in light ofCompany, the importance of the Legalvarious business areas or functions overseen to the Company’s strategy and Compliance function in a period where the Company has been enhancing regulatory

relationships as evidenced by the regulatory approval for the capital deployment actions described abovesuccess and to better align Mr. Roessner’s target amount with his internal peer and external peer group. The Compensation Committee increased Mr. Pizzi’s target cash bonus by 31% in 2015 in recognition of his appointment as Chief Financial Officer.each individual’s overall compensation.

Cash Awards for 20152016 Performance. In early 2015,2016, 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 20152016 performance against the pre-established performance criteria described below. In early 2016,2017, 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 2015 should be 133%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 pre-tax net income of the Company was above budget; (ii) an emphasis on exceeding goals and not merely meeting them at the executive level; and (iii) the Company’s 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.environment and determined to exercise its pre-existing discretion to increase the bonus pool to a total of 111% of the accrued target budget.

Individual Cash Bonus Payouts. 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 each of Messrs. Idzik,Lawson, Roessner, Pizzi, Curcio and Foley Pizzi and Roessner receiving payments of $4,500,000, $700,000, $850,000,$500,000, $1,100,000, $1,000,000, $500,000 and $800,000,$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 their desire to emphasize exceeding, not just meeting, goals for the year, to encourage focus on the improving financial performance of the Company while enhancing regulatory relations and to make “target” bonuses difficult to achieve at the executive level. Messrs. Nandra and Audette were not eligible for cash bonus payments in early 2016 as they were no longer employed by the Company.

Given our strong financial and operational results in 2015,2016, 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. The Board approved Mr. Idzik receiving 150% of target in recognition of 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, as well as enhancing the Company’s and E*TRADE Bank’s regulatory relationships. Mr. FoleyLawson received 117%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 ofefforts both before and after his appointment as our Chief Executive Officer, including reinvigorating the management team in line with the Company’s technology development & infrastructure and operations functions.strategic goals, as well as guiding our acquisition of OptionsHouse. Mr. Pizzi who became Chief Financial Officer in June 2015, received 100%111% of target in recognition of his leadership in significant efforts that have contributed to the Company’s financial results, and executionincluding the OptionsHouse acquisition, his continued strong leadership in light of its capital plan ahead of schedule. Mr. Roessner received 145% of target because of his enhanced leadership role through a period ofthe management transition and his execution against our ambitious capital plan. Mr. Curcio received 140% of target (a $150,000 increase) in recognition of his ability in a short period of time since his appointment as Chief Brokerage Officer to successfully align the overall rolebrokerage organization and focus the brokerage team on achieving growth goals. Mr. Foley received 100% of target in recognition of his leadership of the LegalCompany’s technology development and Compliance function ininfrastructure and operations functions during a period intime at which the Company has been significantly enhancing regulatory relationships and executing on its capital plan.

Equity Compensation

Long-Term Incentive Compensation Paid in 2015 with Respect to 2014 Performance. In early 2015, the Compensation Committee approved RSUs for our NEOs other than Mr. Idzik based on 2014 performance, as described in detail under “Compensation Discussion and Analysis” in our 2014 Proxy Statement. These equity grants vest annually over three years following the dateintegration of grant, generally subjectOptionsHouse is critical to the NEO’s continued employment.success of our business strategy.

Equity Compensation

Long-Term Incentive Compensation Practices for 20152016. After undertaking an extensive reviewWe generally grant each of evolving compensation practices with Pay Governance LLC, the Compensation Committee determined that equity-based compensation for our NEOs with respect to 2015 should consista mix of both performance-vesting PSUs and time-vesting RSUs. A total of 50% of the PSUs are subject to vesting and settlement over a one-year performance period relating to 2015 performance goals (“2015 PSUs”), and a total of 50% of the PSUs are subject to vesting and settlement over a one-year performance period relating to 2016 performance goals (“2016 PSUs”). The RSUs vest annually over three years, generally subject to the NEO’s continued employment.

The Compensation Committee believes that awarding a mix of time-vesting and performance-vesting equity awards based on pre-established goals achieves a balance in our equity-based compensation program and serves 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 help to further ensure a strong pay-for-performance alignment of our compensation program with stockholder interests and will further motivate our NEOs to strive to achieve our key business objectives. RSUsThe target amount for each of our NEOs was set at a level that vest over time will continue to provide retention value. The Compensation Committee’s decision to grant PSUs was informed, in part, by evolving best practices andis reflective of each individual’s position within the prevalence of linking equity awards to pre-established performance goals.

As a resultCompany, the importance of the introduction of the PSUs as a component of performance compensation and as a wayvarious business areas or functions overseen to prospectively incentivize NEOs, contingent on the Company’s performancestrategy and continued employment, the Compensation Committee granted these PSUs and RSUs at the beginning of the 2015 performance period, rather than early in the year following the end of the performance period as had been our practice in prior years. Accordingly, in February 2015, the Compensation Committee determined long-term equity target awards for each NEO other than Mr. Idzik based on the Compensation Committee’s review of the Company’s financial performance for 2014, their particular roles and responsibilities and the Committee’s expectationssuccess and each NEO’s goals for 2015 along with input and guidance from the CEO and the Compensation Committee’s independent compensation consultant. Based on such criteria, the Compensation Committee approved awards of RSUsindividual’s overall compensation.

PSU Grants Relating to 2016 Performance.The PSUs that were granted to our NEOs in February 2015 with grant date values ranging from (i) $700,0002016 are generally subject to $2,350,000 with respect to 2014 performance, and (ii) $490,000 to $1,575,000 with respect to 2015 compensation, and awards of PSUs to our NEOs in February 2015 with grant date values ranging from $210,000 to $675,000.

In February 2016, the Compensation Committee granted PSUs and RSUs to each NEO in connection with 2016 compensation. The Compensation Committee determined to increase the percentage of PSUs granted to NEOs in relation to RSUs and the PSUs granted to NEOs will vest and settlevesting over three successive one-year performance periods.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 recognition2015, a total of 50% of which were subject to vesting over a one-year performance period relating to 2016 performance goals. Accordingly, for Messrs. Roessner, Pizzi and Foley, a total of one-half of the significant contributions made by Messrs. Pizzi and Roessner to the Company’s performancePSUs granted in 2015 Messrs. Pizzi’s and Roessner’sa total of one-third of the PSUs granted in 2016 RSU grants reflected an increased value of $300,000 and $150,000, respectively.

Performance Goals Relatingwere subject to 2015 PSUs. Thevesting 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 20152016 performance period. Mr. Curcio did not receive a grant of PSUs in 2016.

The performance goals that apply to the PSUs that were subject to vesting based on 2016 performance (the “2016 PSUs”) were established at the beginning of 2015. One-half2016. For all NEOs who received 2016 PSUs other than Mr. Lawson, one-half of the 20152016 PSUs were subject to the Company’s achievement in 20152016 of pro-forma earnings per share targets. Thetargets, and the other halfone-half of the 20152016 PSUs were subject to the Company’s achievement of certain key business initiatives that the Compensation Committee determined to have the highest strategic importance for the long-term performance of the Company and reinforce the Company’s critical priorities such as improving customer/colleague experience. For Mr. Lawson, 100% of the 2016 PSUs were subject to the Company’s achievement in 2016 of earnings per share targets. In February 2016,2017, the Compensation Committee reviewed 20152016 performance relative to the pre-established goals and, based on that performance, confirmed that the Company had achieved 130%approximately 120% of overall target performance.performance with respect to the 2016 PSUs.

RSU Grants Made in 2016.

Reporting of 2015 Equity AwardsThe RSUs granted to our NEOs in 2015 Summary Compensation Table.SEC disclosure rules require2016 vest annually over three years, subject to the NEO’s continued employment. In addition to RSU grants that all equity grantswere made to the NEOsMessrs. Roessner, Pizzi and Foley in 2015 be included as 2015 compensation in the “2015 Summary Compensation Table,” which is set forth below. As a result, the values in the “Stock Awards” column of the “2015 Summary Compensation Table” for 2015 includeearly 2016, we also made additional one-time grants in respect of both the 2014 and 2015 performance years, encompassing both (i) the RSUs granted in 2015 in respect of 2014 performance in accordance with the prior equity grant practice for NEOs, as described above in “Long-Term Incentive Compensation Paid in 2015

with Respect to 2014 Performance,” and (ii) the mix of RSUs to each of Messrs. Lawson, Roessner and PSUs that were grantedCurcio in 2015September 2016, which are described in accordance with the new equity grant practice approved by the Compensation Committee in 2015, as describedmore detail above in “Long-Term Incentive Compensation Practices for 2015.” on page 33.

Equity Ownership Guidelines

The Compensation Committee believes that requiring significant stock ownership by our NEOs further aligns their interests with those of our stockholders. Under our stock ownership guidelines:

The Compensation Committee periodically reviews compliance with these ownership guidelines. As of December 31, 2015,2016, all of our NEOs were in compliance with the ownership requirements.

Recoupment Policy

Our recoupment policy is applicable to all NEOs and certain other employees. If the Compensation Committee determines that incentive compensation was overpaid as a result of a restatement of our reported financial results or any inaccurate data used to calculate such compensation, the Compensation Committee will review the cash bonus and long-term incentive plan awards granted, vested or accrued and determine the amount and kind of the overpayment. To the extent practicable, in the best interests of stockholders, and as permitted by applicable law, the Compensation Committee will seek to recover or cancel any such overpayments. The Compensation Committee may make determinations of overpayment at any time through the date the Company files its audited consolidated financial statements for the fiscal year that follows the year for which the inaccurate performance criteria were measured. However, if the Compensation Committee determines that any person purposefully provided inaccurate information or otherwise was culpable in the inaccuracy of the performance metrics, the Compensation Committee is entitled to determine that the overpayment with respect to such person is the entire amount of the bonus or other incentive payment or equity awarded for the applicable year, and without regard to when the event occurred.

Benefits in Connection with Termination of Employment Relating to Change in Control

As described in detail (including a quantification of potential benefits) under “Potential Payments on Termination or Change in Control” below, we have entered into employment agreements with each of our NEOs providing for severance benefits, including enhanced severance benefits in connection with certain qualifying terminations of employment in connection with a change in control, as well as certain other benefits outside of a change in control. The Compensation Committee periodically reviews these arrangements and considers the costs and benefits, but believes thesethey are appropriate to help alleviate any uncertainty and concern our NEOs may have over being terminated and therefore help to ensure that theyour NEOs remain focused solely on their duties. The Compensation Committee balances the potential costs of these agreements against the need to retain our NEOs in a market for top executive candidates that has become increasingly competitive. Our employment agreements with our NEOs do not provide for tax gross-ups, including with respect to any excise taxes resulting from Section 280G of the Internal Revenue Code.

Other Benefit Plans and Perquisites

We do not offer a defined benefit pension plan or “SERP” for our executives and only provide matching contributions to our 401(k) plan, which are made for NEOs in the same manner as for our other employees.

We offer a non-qualified deferred compensation plan for our NEOs, but the amounts in a participating executive’s plan account consist solely of the deferred compensation portion of his or her salary or cash incentive payments (as elected by the executive) and the market return on the deferred amounts, and we do not provide matching contributions or guaranteed returns. We have retained life insurance policies to support the payment of obligations under this plan.

Our philosophy is to provide minimal perquisites. We only provide NEOs with an “umbrella” liability insurance policy, providing for insurance coverage for the executive beyond what the executive has retained on his or her own behalf, with a cost per individual of less than $5,000 per year. Beyond this, there are no perquisites offered to our NEOs with anything other than ade minimisvalue except, as reported in the 2015“2016 Summary Compensation Table,Table”, for payments to Mr. IdzikLawson in satisfaction of our agreement to pay for certain taxinitial commuting and relocation services pursuant toupon his 2013 Agreementappointment as Executive Chairman and limited spousal travel.travel for Mr. Idzik.

Tax Considerations

The tax deductibility of compensation is one factor considered by the Compensation Committee in determining executive compensation. Although some of our incentive plans are structured so that certain types of awards will qualify as deductible, the Compensation Committee retains the flexibility to instead focus on the other considerations described in this “Compensation Discussion and Analysis.”

Compensation Committee Report

The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

The Compensation Committee reviewed and discussed this “Compensation Discussion and Analysis” set forth in this Proxy Statement with management. Based on the above-mentioned review and discussions with management, the Compensation Committee recommended to the Board that the “Compensation Discussion and Analysis” be included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors:

Rebecca Saeger, Chair

Richard J. Carbone Member

James P. Healy Member

Kevin T. Kabat

Frederick W. Kanner Member

Compensation Committee Interlocks and Insider Participation

As discussed above, at various times during 2015,2016, Ms. Saeger and Messrs. Carbone, Flink, Healy, Kabat and Kanner served on the Compensation Committee. Mr. Flink served on the Compensation Committee until his term expired at the 2015 Annual Meeting of Stockholders. None of these individuals was at any time during 2015,2016, or at any other time, an officer or employee of the Company. No executive officer of the Company serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of the Company’s Board or Compensation Committee.

Compensation Risk Assessment

During 2015,2016, the Compensation Committee considered the risk profile of our compensation programs, including a review of both executive and non-executive compensation in a series of meetings with Pay Governance LLC, its independent compensation consultant, and members of our Legal, and Human Resources and Risk teams. In particular, the Compensation Committee requested that Pay Governance LLC review all of our incentive plans. We may periodically adjust individual plans in response to this review to ensure that the plans do not pose a material risk to the Company. We believe the compensation program for our NEOs supports long-term growth and does not encourage excessive risk-taking because of the following features, as further described in this “Compensation Discussion and Analysis:”Analysis”:

EXECUTIVE COMPENSATION

2015 Summary Compensation Table2016 SUMMARY COMPENSATION TABLE

The following table shows the annual and long-term compensation paid or accrued by the Company to its named executive officers, which consist of its Executive Chairman, Chief Executive Officer, Chief Financial Officer, former Chief Financial Officer and threethe two other most highly compensated executive officers who were serving as of December 31, 2015.2016, and its former Chief Executive Officer.