SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

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The Charles Schwab Corporation
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2002 PROXY STATEMENT
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THE CHARLES SCHWAB CORPORATION

LETTER TO STOCKHOLDERS

APRIL 1, 2002
DEAR FELLOW STOCKHOLDERS:

We cordially invite you to attend our 2002 annual meeting of stockholders. The
meeting will be held on Monday, May 13, 2002, at 2:00 p.m., Pacific time, at The
Argent Hotel, 50 Third Street, San Francisco, California.

At the meeting we will:

o elect four directors for three-year terms,

o vote on a proposal to approve an amendment to the Corporate Executive
Bonus Plan,

o vote on a proposal to approve an amendment to the Annual Executive
Individual Performance Plan, and

o conduct any other business properly coming before the meeting.

We also will report on our corporate performance in 2001 and answer your
questions.

We are continuing to make our proxy statement and annual report available over
the Internet and to make it possible for all stockholders to vote on the
Internet. WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET VOTING. IT IS A SIMPLE
PROCESS AND THE LEAST EXPENSIVE WAY FOR US TO PROCESS YOUR VOTE. When you vote
on the Internet, you will have the option to enroll in Internet delivery. WE
ENCOURAGE STOCKHOLDERS WHO HAVE NOT YET DONE SO TO ENROLL IN INTERNET DELIVERY.
IT IS THE LEAST EXPENSIVE AND QUICKEST WAY FOR US TO SEND PROXY MATERIALS TO
YOU.

This year, you will find a form in the proxy materials which will enable us, as
the SEC now permits, to deliver to households with multiple stockholders just
one set of proxy materials. If you live in such a household (and choose not to
enroll in Internet delivery), we encourage you to allow us to send your
household a single set of proxy materials to help us reduce future proxy
printing and distribution costs.

We want to express our appreciation to H. Marshall Schwarz, who retired this
past February from his executive officer position with the Company, as well as
from the chairmanship of U.S. Trust Corporation (which became a subsidiary of
the Company through a merger in May 2000). Because of Mr. Schwarz's retirement,
he is not seeking election to a new term on our Board of Directors and his
service on our Board will end at the time of our annual meeting. In addition to
Mr. Schwarz's valued contributions to the Company as an officer and a director
since the merger, he provided 35 years of distinguished service to U. S. Trust.
That service included his leadership as U.S. Trust's chairman and chief
executive officer throughout the 1990s when U.S. Trust grew into a truly
national wealth management firm.

We look forward to seeing you at our annual meeting. If you cannot attend the
meeting in person, we hope you will join us via our Webcast.

Sincerely,

CHARLES R. SCHWAB DAVID S. POTTRUCK
CHAIRMAN OF THE BOARD AND PRESIDENT AND
CO-CHIEF EXECUTIVE OFFICER CO-CHIEF EXECUTIVE OFFICER

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[PHOTO OF CHARLES R. SCHWAB AND DAVID S. POTTRUCK]

TABLE OF CONTENTS

NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS.............................. 3

PROXY STATEMENT............................................................ 4

QUESTIONS AND ANSWERS............................................... 5

PROPOSALS TO BE VOTED ON............................................ 9

THE BOARD OF DIRECTORS.............................................. 12

BOARD AND COMMITTEE MEETINGS........................................ 17

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION............................................. 18

DIRECTOR COMPENSATION............................................... 19

PRINCIPAL STOCKHOLDERS.............................................. 20

PERFORMANCE GRAPH................................................... 22

SUMMARY COMPENSATION TABLE.......................................... 23

OPTION GRANTS....................................................... 26

OPTIONS EXERCISED................................................... 28

PENSION PLAN TABLE.................................................. 29

COMPENSATION COMMITTEE REPORT....................................... 30

AUDIT COMMITTEE REPORT.............................................. 37

AUDITOR INDEPENDENCE................................................ 38

OTHER INFORMATION................................................... 40

CERTAIN TRANSACTIONS.............................................. 40

SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE........................................... 41

STOCKHOLDER PROPOSALS............................................. 41

EFFECT OF NOT RETURNING PROXY..................................... 41

COSTS OF PROXY SOLICITATION....................................... 42

INCORPORATION BY REFERENCE........................................ 42

HOUSEHOLDING...................................................... 43

TICKETS AND INTERNET ACCESS TO THE ANNUAL MEETING.......................... 44

APPENDIX A

DESCRIPTION OF CHARLES R. SCHWAB'S EMPLOYMENT AND
LICENSE AGREEMENTS................................................ 45

APPENDIX B

DESCRIPTION OF H. MARSHALL SCHWARZ'S SEPARATION AND
EMPLOYMENT AGREEMENTS............................................. 48

APPENDIX C

DESCRIPTION OF JEFFREY S. MAURER'S EMPLOYMENT
AGREEMENT......................................................... 50

APPENDIX D

DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN................... 52

APPENDIX E

DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL
PERFORMANCE PLAN.................................................. 54

APPENDIX F

NEW PLAN BENEFITS TABLE............................................. 56

NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS

The 2002 annual meeting of stockholders of The Charles Schwab Corporation will
be held on Monday, May 13, 2002, at 2:00 p.m., Pacific time, at The Argent
Hotel, 50 Third Street, San Francisco, California, to conduct the following
items of business:

o elect four directors for three-year terms,

o vote on a proposal to approve an amendment to the Corporate Executive
Bonus Plan,

o vote on a proposal to approve an amendment to the Annual Executive
Individual Performance Plan, and

o conduct any other business properly coming before the meeting.

Stockholders who owned shares of our common stock at the close of business on
March 14, 2002 are entitled to attend and vote at the meeting and any
adjournment or postponement of the meeting. A complete list of registered
stockholders will be available prior to the meeting at our principal executive
offices at 120 Kearny Street, San Francisco, California 94108.

By Order of the Board of Directors,

/s/CARRIE E. DWYER

CARRIE E. DWYER
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND
CORPORATE SECRETARY

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THE 2002 ANNUAL MEETING OF STOCKHOLDERS WILL BE HELD ON MONDAY, MAY 13, 2002, AT
2:00 P.M., AT THE ARGENT HOTEL IN SAN FRANCISCO, CALIFORNIA.

PROXY STATEMENT

As a stockholder of The Charles Schwab Corporation, you have a right to vote on
certain matters affecting the Company. This proxy statement discusses the
proposals you are voting on this year. Please read this proxy statement
carefully because it contains important information for you to consider when
deciding how to vote. YOUR VOTE IS IMPORTANT.

In this proxy statement, we refer to The Charles Schwab Corporation as the
"Company." We also refer to this proxy statement, the proxy card and our 2001
annual report as the "proxy materials."

The Board of Directors is sending proxy materials to you and all other
stockholders on or about April 1, 2002. The Board is asking you to vote your
shares by completing and returning the proxy card or otherwise submitting your
vote in a manner described on pages 5 and 6 of this proxy statement under
"Questions and Answers--How Do I Vote?"

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STOCKHOLDERS OWNING COMPANY SHARES AT THE CLOSE OF BUSINESS ON MARCH 14, 2002
ARE ENTITLED TO ATTEND AND VOTE AT THE MEETING.

QUESTIONS AND ANSWERS

Q: WHO CAN VOTE AT THE ANNUAL MEETING?

A: Stockholders who owned Company common stock on March 14, 2002 may attend and
vote at the annual meeting. Each share is entitled to one vote. There were
1,370,705,388 shares of Company common stock outstanding on March 14, 2002.

Q: WHAT IS IN THIS PROXY STATEMENT?

A: This proxy statement describes the proposals on which we would like you, as a
stockholder, to vote. It also gives you information on the proposals, as well as
other information, so that you can make an informed decision.

Q: WHAT IS THE PROXY CARD?

A: The proxy card enables you to appoint Charles R. Schwab and David S. Pottruck
as your representatives at the annual meeting. By completing and returning the
proxy card, you are authorizing Mr. Schwab and Mr. Pottruck to vote your shares
at the meeting as you have instructed them on the proxy card. This way, your
shares will be voted whether or not you attend the meeting. Even if you plan to
attend the meeting, it is a good idea to complete and return your proxy card
before the meeting date just in case your plans change.

Q: WHAT AM I VOTING ON?

A: We are asking you to vote on:

o the election of four directors for terms of three years,

o a proposal to approve an amendment to the Corporate Executive Bonus
Plan, and

o a proposal to approve an amendment to the Annual Executive Individual
Performance Plan.

The section entitled "Proposals To Be Voted On," beginning on page 9, gives you
more information on these matters.

Q: HOW DO I VOTE?

A: YOU MAY VOTE BY MAIL.

You do this by completing and signing your proxy card and mailing it in the
enclosed prepaid and addressed envelope. If you mark your voting instructions on
the proxy card, your shares will be voted:

o as you instruct, and

o according to the best judgment of Mr. Schwab and Mr. Pottruck if a
proposal comes up for a vote at the meeting that is not on the proxy
card.

If you do not mark your voting instructions on the proxy card, your shares will
be voted:

o FOR the four named nominees for directors,

o FOR approval of an amendment to the Corporate Executive Bonus Plan,

o FOR approval of an amendment to the Annual Executive Individual
Performance Plan, and

o according to the best judgment of Mr. Schwab and Mr. Pottruck if a
proposal comes up for a vote at the meeting that is not on the proxy
card.

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WHO CAN VOTE AT THE ANNUAL MEETING?

WHAT IS IN THIS PROXY STATEMENT?

WHAT IS THE PROXY CARD?

WHAT AM I VOTING ON?

HOW DO I VOTE?

QUESTIONS AND ANSWERS

YOU MAY VOTE BY TELEPHONE.

You do this by following the "Vote by Telephone" instructions that came with
your proxy statement. If you vote by telephone, you do not have to mail in your
proxy card.

YOU MAY VOTE ON THE INTERNET.

You do this by following the "Vote by Internet" instructions that came with your
proxy statement. If you vote on the Internet, you do not have to mail in your
proxy card.

YOU MAY VOTE IN PERSON AT THE MEETING.

We will pass out written ballots to anyone who wants to vote in person at the
meeting. However, if you hold your shares in street name, you must request a
proxy from your stockbroker in order to vote at the meeting. Holding shares in
"street name" means you hold them through a brokerage firm, bank or other
nominee, and therefore the shares are not held in your individual name.

Q: HOW DO I VOTE MY DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES?

A: If you participate in the Dividend Reinvestment and Stock Purchase Plan
managed by our transfer agent, Wells Fargo Bank Minnesota, N.A., the proxy card
you receive from Wells Fargo will include your Company shares held under that
plan.

If you participate in our Dividend Reinvestment and Stock Purchase Plan through
the Company's principal brokerage subsidiary, Charles Schwab & Co., Inc., the
proxy card you receive from that firm will include Company shares held in your
brokerage account under that plan.

WE ENCOURAGE YOU TO EXAMINE YOUR PROXY CARD AND VOTING INSTRUCTIONS CLOSELY TO
MAKE SURE YOU ARE VOTING ALL OF YOUR COMPANY SHARES.

Q: HOW DO I VOTE MY RETIREMENT PLAN SHARES?

A: The proxy card you receive from our transfer agent will include your Company
shares, if any, held under The SchwabPlan Retirement Savings and Investment Plan
and under the U.S. Trust Corporation 401(k) Plan. By completing and returning
your proxy card, you provide voting instructions:

o to the transfer agent for shares you hold in your individual name at
Wells Fargo Bank Minnesota, N.A., and

o to these plans' purchasing agents for shares you hold through these
plans.

Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?

A: It means that you have multiple accounts at the transfer agent or with
stockbrokers. Please complete and return all proxy cards to ensure that all your
shares are voted.

Unless you need multiple accounts for specific purposes, it may be less
confusing if you consolidate as many of your transfer agent or brokerage
accounts as possible under the same name and address.

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HOW DO I VOTE MY DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN SHARES?

HOW DO I VOTE MY RETIREMENT PLAN SHARES?

WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?

QUESTIONS AND ANSWERS

Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?

A: You may revoke your proxy and change your vote by:

o signing another proxy card with a later date and returning it before
the polls close at the meeting,

o voting by telephone or on the Internet before 12:00 p.m., Central time,
on May 10, 2002 (your LATEST telephone or Internet vote is counted), or

o voting at the meeting.

Q: HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?

A: To hold the meeting and conduct business, a majority of the Company's
outstanding shares as of March 14, 2002 must be present at the meeting. This is
called a quorum.

Shares are counted as present at the meeting if the stockholder either:

o is present and votes in person at the meeting, or

o has properly submitted a proxy (including voting by telephone or over
the Internet).

Q: HOW MANY VOTES MUST THE NOMINEES RECEIVE TO BE ELECTED AS DIRECTORS?

A: Because four directors are to be elected at the annual meeting, the four
individuals receiving the highest number of votes FOR election will be elected.

Q: HOW MANY VOTES MUST THE AMENDMENT TO THE CORPORATE EXECUTIVE BONUS PLAN
RECEIVE TO BE APPROVED?

A: The amendment to the Corporate Executive Bonus Plan will be approved if a
majority of the shares present at the meeting in person or by proxy vote FOR
approval.

Q: HOW MANY VOTES MUST THE AMENDMENT TO THE ANNUAL EXECUTIVE INDIVIDUAL
PERFORMANCE PLAN RECEIVE TO BE APPROVED?

A: The amendment to the Annual Executive Individual Performance Plan will be
approved if a majority of the shares present at the meeting in person or by
proxy vote FOR approval.

Q: WHAT HAPPENS IF A DIRECTOR NOMINEE IS UNABLE TO STAND FOR ELECTION?

A: The Board may reduce the number of directors or select a substitute nominee.
In the latter case, if you have completed and returned your proxy card, Charles
R. Schwab and David S. Pottruck can vote your shares for a substitute nominee.
They cannot vote for more than four nominees.

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WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?

HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?

HOW MANY VOTES MUST THE NOMINEES RECEIVE TO BE ELECTED AS DIRECTORS?

HOW MANY VOTES MUST THE AMENDMENT TO THE CORPORATE EXECUTIVE BONUS PLAN RECEIVE
TO BE APPROVED?

HOW MANY VOTES MUST THE AMENDMENT TO THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE
PLAN RECEIVE TO BE APPROVED?

WHAT HAPPENS IF A DIRECTOR NOMINEE IS UNABLE TO STAND FOR ELECTION?

QUESTIONS AND ANSWERS

Q: HOW ARE VOTES COUNTED?

A: You may vote either "for" each director nominee or withhold your vote from
any one or more of the nominees.

You may vote "for" or "against" or "abstain" from voting on each of the
proposals to approve an amendment to the Corporate Executive Bonus Plan and an
amendment to the Annual Executive Individual Performance Plan. If you abstain
from voting on either proposal, it will have the same effect as a vote "against"
the proposal.

If you give your proxy without voting instructions, your shares will be counted
as a vote FOR each director nominee and FOR the proposals to approve the
amendments to the Corporate Executive Bonus Plan and the Annual Executive
Individual Performance Plan.

Voting results are tabulated and certified by our transfer agent, Wells Fargo
Bank Minnesota, N.A.

Q: IS MY VOTE KEPT CONFIDENTIAL?

A: Proxies, ballots and voting tabulations identifying stockholders are kept
confidential by the Company's transfer agent and will not be disclosed except as
may be necessary to meet legal requirements.

Q: HOW DO I ACCESS THE ANNUAL MEETING ON THE INTERNET?

A: For information on how to receive the real-time broadcast of the annual
meeting over the Internet, go to WWW.SCHWABEVENTS.COM.

Q: WHERE DO I FIND THE VOTING RESULTS OF THE MEETING?

A: We will announce preliminary voting results at the annual meeting. We will
publish the final results in our quarterly report on Form 10-Q for the second
quarter of 2002. We will file that report with the Securities and Exchange
Commission in mid-August, and you can get a copy by contacting our Investor
Relations Hotline at (415) 636-2787 or the SEC at (800) SEC-0330 for the
location of its nearest public reference room. You can also get a copy on the
Internet at WWW.SCHWAB.COM by clicking on "About Schwab--Investor
Relations--Financials" or through the SEC's electronic data system called EDGAR
at WWW.SEC.GOV.

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HOW ARE VOTES COUNTED?

IS MY VOTE KEPT CONFIDENTIAL?

HOW DO I ACCESS THE ANNUAL MEETING ON THE INTERNET?

WHERE DO I FIND THE VOTING RESULTS OF THE MEETING?

PROPOSALS TO BE VOTED ON

1. ELECTION OF DIRECTORS

Nominees for directors this year are Frank C. Herringer, Stephen T. McLin,
Charles R. Schwab, and Roger O. Walther.

Each nominee is presently a director of the Company and has consented to serve a
new three-year term.

THE BOARD RECOMMENDS A VOTE FOR THESE NOMINEES.

2. APPROVAL OF AMENDMENT TO CORPORATE EXECUTIVE BONUS PLAN

We are asking stockholders to approve an amendment to the Corporate Executive
Bonus Plan. This bonus plan covers certain executive officer participants
selected by the Board Compensation Committee, but Chairman and Co-Chief
Executive Officer Charles R. Schwab is not eligible to participate in the Plan.
(His incentive compensation is covered by his employment agreement.)
Stockholders last approved the plan in 2000. In February 2002, the Board
Compensation Committee approved the amendment to the plan, as described below,
and the Board approved the Compensation Committee's recommendation to submit the
amendment to the stockholders for approval. We will be able to achieve the
desired flexibility in setting performance goals and criteria and the desired
tax results for certain bonus payments under the plan only if stockholders
approve the amendment.

The plan provides for the payment of bonuses to the Company's executive
officers, based on the Company's attainment of corporate performance objectives.
The amendment to the plan would allow the Compensation Committee to select the
appropriate performance measures to be used in determining the amount available
for the payment of bonuses under the plan. The Compensation Committee would be
able to select from among the following performance measures at the beginning of
each year after a review of corporate goals and objectives: revenue growth,
operating revenue growth, consolidated pre-tax profit margin, consolidated
pre-tax operating profit margin, client net new assets growth, stockholder
return, return on net assets, earnings per share, return on equity, and return
on investment. (Operating revenue growth excludes non-operating revenue, which
in 2001 primarily consisted of a gain on the sale of an investment. Pre-tax
operating profit represents an adjusted operating income measure, which in 2001
excluded an extraordinary gain, non-operating revenue, restructuring and other
charges, and merger- and acquisition-related costs.) The plan currently limits
the performance measures to specific annual revenue growth and profitability
objectives. For more information about the plan, see the description of its
terms in Appendix D of this proxy statement.

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ELECTION OF DIRECTORS

o FRANK C. HERRINGER

o STEPHEN T. MCLIN

o CHARLES R. SCHWAB

o ROGER O. WALTHER

APPROVAL OF AMENDMENT TO CORPORATE EXECUTIVE BONUS PLAN

PROPOSALS TO BE VOTED ON

officers under the plan will qualify for deduction under Section 162(m). If
stockholders do not approve the amendment to the plan, bonus payments to certain
executive officers, or portions of such bonus payments, which are determined on
the basis of any of the proposed new performance measures, may not qualify for
deduction under Section 162(m), to the extent that certain compensation paid to
any such executive officer in any calendar year exceeds $1 million. In that
case, the Company may not be able to deduct for tax purposes all compensation
paid to the affected executive officers.

The Company believes that the plan changes will allow the Compensation Committee
to focus on annually selecting the appropriate financial performance measures to
motivate the participants to achieve the business plan for that year. The
Company also believes that the changes are consistent with the Company's
compensation philosophy of emphasizing variable compensation based on the
Company's financial performance.

Currently, the Compensation Committee has the authority to amend the plan
without stockholders' approval in ways that could increase the cost of the plan
or change the allocation of benefits among the participants.

See the table in Appendix F for the amounts that, would have been payable for
2000 and 2001 under the Corporate Executive Bonus Plan, based on certain
assumptions, if the proposed amendment to the plan had been in effect for those
years.

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE CORPORATE
EXECUTIVE BONUS PLAN.

3. APPROVAL OF AMENDMENT TO ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

We are asking stockholders to approve an amendment to the Annual Executive
Individual Performance Plan. This bonus plan covers certain executive officer
participants selected by the Board Compensation Committee, but Co-Chief
Executive Officers Charles R. Schwab and David S. Pottruck are not eligible to
participate in the plan. (Mr. Schwab's incentive compensation is covered by his
employment agreement, and all of Mr. Pottruck's bonus compensation is payable
under the Corporate Executive Bonus Plan.) Stockholders last approved the plan
in 2001. In February 2002, the Board Compensation Committee approved the
amendment to the plan, as described below, and the Board approved the
Compensation Committee's recommendation to submit the amendment to the
stockholders for approval. We will be able to achieve the desired flexibility in
setting performance goals and criteria and the desired tax results for certain
bonus payments under the plan only if stockholders approve the amendment.

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APPROVAL OF AMENDMENT TO ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

PROPOSALS TO BE VOTED ON

to select from among the following performance measures at the beginning of each
year after a review of corporate goals and objectives: revenue growth, operating
revenue growth, consolidated pre-tax profit margin, consolidated pre-tax
operating profit margin, client net new assets growth, stockholder return,
return on net assets, earnings per share, return on equity, and return on
investment. The plan currently limits the performance measures to specific
annual revenue growth and profitability objectives. For more information about
the plan, see the description of its terms in Appendix E of this proxy
statement.

Section 162(m) of the Internal Revenue Code authorizes tax deductions for
certain executive compensation in excess of $1 million only if such compensation
is based on performance and the plan under which it is paid is approved by
stockholders. If stockholders approve the amendment to the Annual Executive
Individual Performance Plan, and the Company complies with certain other
requirements set forth in Section 162(m), payments to executive officers under
the plan will qualify for deduction under Section 162(m). If stockholders do not
approve the amendment to the plan, bonus payments to certain executive officers,
or portions of such bonus payments, which are determined on the basis of any of
the proposed new performance measures, may not qualify for deduction under
Section 162(m), to the extent that certain compensation paid to any such
executive officer in any calendar year exceeds $1 million. In that case, the
Company may not be able to deduct for tax purposes all compensation paid to the
affected executive officers.

See the table in Appendix F for the amounts that, would have been payable for
2000 and 2001 under the Annual Executive Individual Performance Plan, based on
certain assumptions, if the proposed amendment to the plan had been in effect
for those years.

THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE ANNUAL
EXECUTIVE INDIVIDUAL PERFORMANCE PLAN.

OTHER BUSINESS

The Board knows of no other business to be considered at the meeting. However,
if:
o other matters are properly presented at the meeting, or at any
adjournment or postponement of the meeting, and

o you have properly submitted your proxy,

then Charles R. Schwab and David S. Pottruck will vote your shares on those
matters according to their best judgment.

[side bar]

OTHER BUSINESS

THE BOARD OF DIRECTORS

NANCY H. BECHTLE
DIRECTOR SINCE 1992

Ms. Bechtle, age 64, served as President and Chief Executive Officer of the San
Francisco Symphony from 1987 until December 2001, and has served as a member of
the San Francisco Symphony Board of Governors since 1984. She was a director and
Chief Financial Officer of J.R. Bechtle & Co., an international consulting firm,
from 1979 to 1998. Ms. Bechtle also has served as Chairman and Chief Executive
Officer of Sugar Bowl Ski Resort, and as a director of Sugar Bowl Corporation,
since 1998. Ms. Bechtle's term expires in 2003.

C. PRESTON BUTCHER
DIRECTOR SINCE 1988

Mr. Butcher, age 63, has been Chairman and Chief Executive Officer of Legacy
Partners (formerly Lincoln Property Company N.C., Inc.), a real estate
development and management firm, since 1998. Mr. Butcher served as President,
Chief Executive Officer and Regional Partner of Lincoln Property Company N.C.,
Inc. from 1967 until 1998. Mr. Butcher's term expires in 2003.

DONALD G. FISHER
DIRECTOR SINCE 1988

Mr. Fisher, age 73, is Chairman of the Board of Gap, Inc., a nationwide
specialty retail clothing chain. He was also Chief Executive Officer of Gap,
Inc. from 1969 to November 1995. Mr. Fisher has been a trustee of the Presidio
Trust by appointment of former President Clinton since 1997. He is a member of
the California State Board of Education and served on the Advisory Council for
the Office of the U.S. Trade Representative from 1987 until 1998. Mr. Fisher's
term expires in 2004.

ANTHONY M. FRANK
DIRECTOR SINCE 1993

Mr. Frank, age 70, has been Founding Chairman of Belvedere Capital Partners, a
general partner of an investment fund specializing in financial institutions,
since 1993. From 1988 until 1992, Mr. Frank served as Postmaster General of the
United States. Mr. Frank is a director of Temple-Inland, Inc., a maker of
containers, cardboard products and building products and a provider of financial
services; Cotelligent, Inc., an information technology services company; and
Bedford Properties Investors and Crescent Real Estate Equities, both real estate
investment trusts. Mr. Frank previously served as a director of the Company from
April 1987 until February 1988 and from March 1992 until April 1993. He rejoined
the Board in December 1993. Mr. Frank's term expires in 2004.

[side bar]

BIOGRAPHIES

o NANCY H. BECHTLE

o C. PRESTON BUTCHER

o DONALD G. FISHER

o ANTHONY M. FRANK

THE BOARD OF DIRECTORS

FRANK C. HERRINGER
DIRECTOR SINCE 1996

Mr. Herringer, age 59, has been Chairman of the Board of Transamerica
Corporation, a financial services company, since 1996. He served as Chief
Executive Officer of Transamerica from 1991 to 1999 and President from 1986 to
1999, when Transamerica was acquired by Aegon N.V. From the date of the
acquisition until May 2000, Mr. Herringer served on the Executive Board of Aegon
N.V. and as Chairman of the Board of Aegon U.S.A. Mr. Herringer is also a
director of Unocal Corporation, an oil company; and Mirapoint, Inc., an Internet
message infrastructure equipment developer. Mr. Herringer is a nominee for
election this year.

JEFFREY S. MAURER
DIRECTOR SINCE 2000

Mr. Maurer, age 54, has been an Executive Vice President of the Company since
May 2000. He has been Chairman and Chief Executive Officer of U.S. Trust
Corporation and United States Trust Company of New York (each of which is a
subsidiary of the Company) since February 2002 and is a director of both
companies. Mr. Maurer joined United States Trust Company in 1970 and became
Senior Vice President in November 1980, Executive Vice President in May 1986,
and manager of the Asset Management and Private Banking Group in 1988. Mr.
Maurer was named President in February 1990, Chief Operating Officer in December
1994, Chief Executive Officer in January 2001 and Chairman and Chief Executive
Officer in February 2002. Mr. Maurer is also a director of forbes.com, an
Internet media company; and the Greater New York Mutual Insurance Companies, a
property and casualty insurance company. Mr. Maurer's term expires in 2004.

STEPHEN T. MCLIN
DIRECTOR SINCE 1988

Mr. McLin, age 55, has been Chairman and Chief Executive Officer of STM Holdings
LLC, which offers merger and acquisition advice for technology companies, since
1998. From 1987 until 1998, he was President and Chief Executive Officer of
America First Financial Corporation, a finance and investment banking firm. Mr.
McLin is a director of BCG ValueScience, Inc., a joint venture of the Boston
Consulting Group and ValueScience, Inc.; and Your:)Bank.com, a wholly-owned
subsidiary of Gateway, Inc., a computer company. Mr. McLin is a nominee for
election this year.

DAVID S. POTTRUCK
DIRECTOR SINCE 1994

Mr. Pottruck, age 53, is President and Co-Chief Executive Officer of the
Company. He became President in 1992, and Co-Chief Executive Officer in January
1998. He was also the Company's Chief Operating Officer from 1994 until
September 1998. He became

[side bar]

BIOGRAPHIES

o FRANK C. HERRINGER

o JEFFREY S. MAURER

o STEPHEN T. MCLIN

o DAVID S. POTTRUCK

THE BOARD OF DIRECTORS

Chief Executive Officer of Charles Schwab & Co., Inc., the Company's principal
brokerage subsidiary, in 1992. Mr. Pottruck is currently a director of U.S.
Trust Corporation and United States Trust Company of New York (each of which is
a subsidiary of the Company); the Nasdaq Stock Market; Intel Corporation, a
maker of microcomputer components and related products; and DoveBid, Inc., a
provider of online business-to-business capital asset auctions and valuation
services. Mr. Pottruck's term expires in 2003.

ARUN SARIN
DIRECTOR SINCE 1998

Mr. Sarin, age 47, is Chief Executive Officer of Accel-KKR Telecom, a venture
focused on telecommunications industry investments. He served as Chief Executive
Officer of Infospace, Inc., a provider of Internet infrastructure services,
between April 2000 and January 2001. From July 1999 until April 2000, he was
Chief Executive Officer of USA/Asia Pacific Region of Vodafone Group Plc, a
wireless telecommunications services company. He served as President and Chief
Operating Officer of AirTouch Communications, Inc. from 1997 until July 1999,
and prior to his appointment to these positions in 1997, Mr. Sarin was President
and Chief Executive Officer of AirTouch International. Mr. Sarin joined AirTouch
(formerly Pacific Telesis Group) in 1984 and held a variety of positions,
including Vice President and General Manager, Vice President--Chief Financial
Officer and Controller, and Vice President of Corporate Strategy. Mr. Sarin is a
director of Vodafone Group Plc; Cisco Systems, Inc., a computer networking
company; and Gap, Inc. Mr. Sarin's term expires in 2004.

CHARLES R. SCHWAB
DIRECTOR SINCE 1986

Mr. Schwab, age 64, was a founder of Charles Schwab & Co., Inc. in 1971, and has
been its Chairman since 1978. He has been Chairman and a director of the Company
since its incorporation in 1986. He also served as Chief Executive Officer from
1986 until January 1998, when he and David S. Pottruck became Co-Chief Executive
Officers. Mr. Schwab is a director of U.S. Trust Corporation and United States
Trust Company of New York (each of which is a subsidiary of the Company); Gap,
Inc.; Siebel Systems, Inc., a company that provides support for software
systems; and Xign, Inc., a developer of electronic payment systems using
digitally signed electronic check technology. He is also a trustee of The
Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and
Schwab Annuity Portfolios, all registered investment companies. Mr. Schwab is a
nominee for election this year.

GEORGE P. SHULTZ
DIRECTOR SINCE 1997

Dr. Shultz, age 81, is Professor Emeritus of International Economics at the
Graduate School of Business at Stanford University, and a Distinguished Fellow
at the Hoover Institution. He has held United States government positions as
Secretary of Labor (1969-

[side bar]

BIOGRAPHIES

o ARUN SARIN

o CHARLES R. SCHWAB

o GEORGE P. SHULTZ

THE BOARD OF DIRECTORS

1970), Director of the Office of Management and Budget (1970-1972), Secretary of
the Treasury (1972-1974) and Secretary of State (1982-1989). In 1989, he was
awarded the Medal of Freedom, the nation's highest civilian honor. Dr. Shultz is
a director of Bechtel Group, Inc., a provider of engineering, construction and
related management services; Fremont Group, Inc., an investment company; Gilead
Sciences, Inc., a biotechnology company; and UNext, a provider of business
education and training over the Internet. He is also Chairman of J.P. Morgan
Chase's International Advisory Council and Chairman of the Advisory Board of
Infrastructure World, an Internet-based intermediary in infrastructure projects.
He was President of Bechtel Group, Inc. from 1974 to 1982. Dr. Shultz's term
expires in 2003.

ROGER O. WALTHER
DIRECTOR SINCE 1989

Mr. Walther, age 66, has served as Chairman and Chief Executive Officer of
Tusker Corporation, a real estate and business management company, since August
1997. He served as Chairman and Chief Executive Officer of ELS Educational
Services, Inc., a provider in the United States of courses in English as a
second language between 1992 and 1997. Mr. Walther was President, Chief
Executive Officer and a director of AIFS, Inc., which designs and markets
educational and cultural programs internationally, from 1964 to February 1993.
Since 1985, Mr. Walther has served as Chairman and has been a director of First
Republic Bank. Mr. Walther is a nominee for election this year.

NUMBER OF DIRECTORS AND TERMS

The authorized number of directors is fourteen. The Company currently has
thirteen directors, which leaves one vacant seat on the Board. Board members
have had discussions with Paula A. Sneed, whose biographical information appears
below, about her joining the Board in April 2002 and filling that existing
vacant seat.

Four of the current thirteen directors are nominees for election this year.
Eight of the current directors will continue to serve the terms described in
their biographies. The term of the remaining director, H. Marshall Schwarz, will
end at the time of our annual meeting. Because of Mr. Schwarz's retirement from
his executive officer position with the Company and from the chairmanship of
U.S. Trust Corporation, a subsidiary of the Company, he is not seeking election
to a new term on the Company's Board. Consequently, after the annual meeting
there will be one new vacant seat on the Board.

Our directors serve staggered terms. This is accomplished as follows:

o each director who is elected at an annual meeting of stockholders
serves a three-year term,

o the directors are divided into three classes,

o the classes are as nearly equal in number as possible, and

o the term of each class begins on a staggered schedule.

[side bar]

BIOGRAPHIES

o ROGER O. WALTHER

NUMBER OF DIRECTORS AND TERMS

THE BOARD OF DIRECTORS

PAULA A. SNEED

Based upon discussions between Board members and Paula A. Sneed, the Board
expects to vote on her nomination for election as a director in April 2002 to
fill the existing vacant seat on the Board. Biographical information on Ms.
Sneed appears below:

Ms. Sneed, age 54, has been Group Vice President and President of E-Commerce and
Marketing Services of Kraft Foods, Inc., the largest branded food and beverage
company headquartered in the United States, since September 2000. She joined
General Foods Corporation (which later merged with Kraft Foods) in 1977 and has
held a variety of management positions, including Vice President, Consumer
Affairs; Vice President and President, Foodservice Division; Executive Vice
President and General Manager, Desserts Division; Executive Vice President and
General Manager, Dinners and Enhancers Division; Senior Vice President,
Marketing Service, and Chief Marketing Officer. Ms. Sneed is a member of the
board of directors of Airgas, Inc., a national distributor of industrial,
medical and specialty gases and related equipment; and Hercules, Inc., a leading
manufacturer and marketer of specialty chemicals and related services for a
broad range of business, consumer and industrial applications.

[side bar]

BIOGRAPHY

o PAULA A. SNEED

BOARD AND COMMITTEE MEETINGS

The Board held eight regular meetings and two special meetings in 2001. Each
director attended at least 75% of all Board and applicable committee meetings
during 2001. This table describes the Board's committees. The Board does not
have a nominating committee or a committee serving a similar function.

NAME OF COMMITTEE FUNCTIONS NUMBER OF
AND MEMBERS OF THE COMMITTEE MEETINGS IN 2001
- ------------------------------- ----------------------------------------------------------- -----------------

AUDIT o reviews the integrity of the financial reporting process 4
o reviews the adequacy of internal controls
Nancy H. Bechtle o reviews the audit process, including the performance of
C. Preston Butcher internal and external auditors and independence of
Donald G. Fisher external auditors
Anthony M. Frank o recommends to the Board the selection of independent
Frank C. Herringer auditors
Stephen T. McLin *
Arun Sarin

- ------------------------------- ----------------------------------------------------------- -----------------
COMPENSATION o determines the compensation of the Co-Chief Executive 8
Officers and other executive officers
Nancy H. Bechtle o reviews and approves:
C. Preston Butcher o executive compensation philosophy
Stephen T. McLin o programs for annual and long-term executive
George P. Shultz compensation
Roger O. Walther * o other executive programs
o has authority to grant options and other equity awards
under stock incentive plans and bonus awards under
executive incentive plans

- ------------------------------- ----------------------------------------------------------- -----------------
CUSTOMER QUALITY ASSURANCE o assesses service quality 2
o reviews results of client satisfaction surverys
Nancy H. Bechtle o proposes initiatives to research service quality
Donald G. Fisher
Anthony M. Frank*
Frank C. Herringer
Jeffrey S. Maurer
Arun Sarin
Charles R. Schwab
H. Marshall Schwarz
George P. Shultz
Roger O. Walther

*Chairperson

[side bar]

THIS TABLE DESCRIBES THE BOARD COMMITTEES.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2001:

o none of the members of the Board Compensation Committee was an officer
(or former officer) or employee of the Company or any of its
subsidiaries;

o none of the members of the Board Compensation Committee entered into
(or agreed to enter into) any transaction or series of transactions
with the Company or any of its subsidiaries in which the amount
involved exceeds $60,000;

o none of the Company's executive officers served on the compensation
committee (or another board committee with similar functions or, if
there was no such committee, the entire board of directors) of another
entity where one of that entity's executive officers served on the
Company's Board Compensation Committee or otherwise served on the
Company's Board; and

o none of the Company's executive officers was a director of another
entity where one of that entity's executive officers served on the
Company's Board Compensation Committee.

[side bar]

DURING 2001, OUR BOARD COMPENSATION COMMITTEE CONSISTED OF ALL NON-EMPLOYEE
DIRECTORS, AND WE DID NOT HAVE ANY COMPENSATION COMMITTEE INTERLOCKS.

DIRECTOR COMPENSATION

We do not pay directors who are also officers of the Company additional
compensation for their service as directors.

In 2001, compensation for non-employee directors included the following:

o an annual retainer of $35,000,

o $2,000 for each Board meeting attended,

o $500 for each Board committee meeting attended on the same day as a
Board meeting, and $1,000 for each other Board committee meeting
attended, and

o an annual retainer of $3,000 to committee chairpersons.

Directors also are reimbursed for expenses of attending Board and committee
meetings.

On September 24, 2001, non-employee directors also received a special Board
recognition grant of options on 12,500 shares of Company common stock, with a
per share exercise price of $10.20, the closing price of Company common stock on
the grant date. The options vested immediately and expire ten years after the
grant date.

Non-employee directors may participate in the Directors' Deferred Compensation
Plan. Since January 2000, this plan has allowed non-employee directors to defer
receipt of all or a portion of their directors' fees and, at their election, to
either:

o receive a grant of stock options which:

o have a fair value on the grant date equal to the amount of the
deferred fees (as determined under an appropriate options valuation
method),

o have an option exercise price equal to the fair market value of
Company common stock on the date the deferred fee amount would have
been paid, and

o vest immediately upon grant and generally expire ten years after the
grant date,
- or -

o invest the amount of the deferred fees in shares of Company common
stock to be held in a trust and distributed to the director (in shares)
when the director leaves the Board.

At the annual meeting on May 7, 2001, stockholders approved the 2001 Stock
Incentive Plan. That plan provides for annual, automatic option grants to
non-employee directors. The number of shares underlying each option grant to
each non-employee director is determined by dividing $150,000 by the closing
price of Company common stock on the grant date. Each such grant for 2001, which
was made on May 15, 2001, consisted of options on 7,654 shares of Company common
stock, with a per share exercise price of $19.60.

Before the approval of the 2001 Stock Incentive Plan, the annual, automatic
option grant to each non-employee director under the 1992 Stock Incentive Plan
consisted of either:

o options on 2,500 shares of Company common stock if the closing price of
the stock on the grant date was $35 or more, or

o options on 3,500 shares of Company common stock if the closing price of
the stock on the grant date was less than $35.

[side bar]

THE COMPANY PAYS ITS DIRECTORS WITH CASH AND EQUITY-BASED COMPENSATION.

PRINCIPAL STOCKHOLDERS

This table shows how much Company common stock is beneficially owned by the
directors, certain executive officers and owners of 5% or more of the
outstanding shares of Company common stock, as of March 14, 2002.

AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED

NUMBER OF RIGHT TO RESTRICTED PERCENT OF
SHARES OWNED ACQUIRE STOCK OUTSTANDING
NAME (#) (1) (#) (2) (#) (3) SHARES
- ---------------------------------------------------------------------------------------------------------------------

CHARLES R. SCHWAB (4) 261,620,674 5,355,000 0 19.4%

FMR CORP. (5) 107,117,636 0 0 7.8%

DAVID S. POTTRUCK (6) 6,248,641 10,178,481 0 1.2%

NANCY H. BECHTLE 238,474 115,185 0 *

C. PRESTON BUTCHER (7) 1,026,799 198,440 0 *

DONALD G. FISHER (8) 4,560,561 27,654 0 *

ANTHONY M. FRANK 547,500 122,888 0 *

FRANK C. HERRINGER (9) 95,386 144,009 0 *

JEFFREY S. MAURER 559,415 46,875 15,000 *

STEPHEN T. MCLIN (10) 152,726 120,385 0 *

ARUN SARIN 3,000 73,531 0 *

H. MARSHALL SCHWARZ (11) 554,707 9,375 0 *

GEORGE P. SHULTZ 67,500 124,694 0 *

ROGER O. WALTHER (12) 155,784 123,960 0 *

DAWN GOULD LEPORE (13) 597,899 823,655 0 *

JOHN PHILIP COGHLAN 1,028,337 1,172,174 78,750 *

LON GORMAN 149,465 528,569 0 *

DIRECTORS AND CURRENT EXECUTIVE OFFICERS
AS A GROUP (18 PERSONS) (14) 278,155,658 20,198,762 127,500 21.5%
* Less than 1%

(1) Includes shares for which the named person:

o has sole voting and investment power,

o has shared voting and investment power with his or her spouse, or

o holds in an account under The SchwabPlan Retirement Savings and
Investment Plan or the U.S. Trust Corporation 401(k) Plan, unless
otherwise indicated in the footnotes.

Excludes shares
that:

o may be acquired through stock option exercises, or

o are restricted stock holdings.

(2) Shares that can be acquired through stock option exercises through May 13,
2002.

(3) Shares subject to a vesting schedule, forfeiture risk and other
restrictions.

[side bar]

A FUNDAMENTAL TENET OF THE COMPANY'S COMPENSATION POLICY IS THAT SIGNIFICANT
EQUITY PARTICIPATION CREATES A VITAL LONG-TERM PARTNERSHIP BETWEEN MANAGEMENT
AND OTHER STOCKHOLDERS.

PRINCIPAL STOCKHOLDERS

(4) Includes 7,977,765 shares held by Mr. Schwab's spouse.

Includes 45,203,958 shares held by a limited liability company.

Includes the following shares for which Mr. Schwab disclaims beneficial
ownership:

o 15,511,185 shares held by a non-profit public benefit corporation.

o 6,000 shares held in a trust for which Mr. Schwab acts as trustee.

Includes the following shares for which Mr. Schwab may be deemed to have
shared voting and investment power, but disclaims beneficial ownership:

o 1,905,622 shares held by investment companies and managed by a
wholly-owned subsidiary of the Company.

Mr. Schwab's address is c/o The Charles Schwab Corporation, 120 Kearny
Street, San Francisco, California 94108.

(5) Includes shares held by Fidelity Management & Research Company and other
subsidiaries of FMR Corp. The address of FMR Corp. is 82 Devonshire Street,
Boston, Massachusetts 02109.

(6) Includes 75,893 shares held by Mr. Pottruck's spouse and children.

Includes 478,064 shares held in trusts for which Mr. Pottruck acts as
trustee.

Includes 260,936 shares held by a non-profit public benefit corporation.

(7) Includes 274,363 shares held by Mr. Butcher's spouse.

(8) Includes the following shares for which Mr. Fisher has shared voting and
investment power, but disclaims beneficial ownership:

o 390,000 shares held by a non-profit public benefit corporation.

(9) Includes 50,625 shares held by Mr. Herringer's spouse.

(10) Includes 13,781 shares held by a non-profit public benefit corporation
established by Mr. Mclin.

(11) Includes 56,385 shares held by a non-profit public benefit corporation
established by Mr. Schwarz.

(12) Includes 26,766 shares held by Mr. Walther's spouse.

(13) Includes 21,057 shares held by Ms. Lepore's spouse.

(14) In addition to the officers and directors named in this table, two other
executive officers are members of the group. The group does not include
persons who were not executive officers as of March 14, 2002, although
they were executive officers prior to that date in 2002 and/or 2001.

PERFORMANCE GRAPH

The following graph shows a five-year comparison of cumulative total returns for
Company common stock, the Dow Jones Securities Brokerage Group Index and the
Standard & Poor's 500 Index, each of which assumes an initial investment of $100
and reinvestment of dividends.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

[GRAPH GOES HERE]

12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------------------------------------------------------------------------------------------------

THE CHARLES SCHWAB CORPORATION $100 $198 $399 $544 $606 $331

DOW JONES SECURITIES BROKERAGE
GROUP INDEX $100 $183 $213 $332 $413 $315

STANDARD & POOR'S
500 INDEX $100 $133 $171 $208 $189 $166

[side bar]

THIS GRAPH COMPARES FIVE-YEAR CUMULATIVE TOTAL RETURNS FOR COMPANY COMMON STOCK,
THE DOW JONES SECURITIES BROKERAGE GROUP INDEX AND THE STANDARD AND POOR'S 500
INDEX.

SUMMARY COMPENSATION TABLE

This table shows, for the last three years, compensation information for the
Company's Co-Chief Executive Officers and the next five most highly compensated
executive officers. We refer to each of these officers as a "named executive
officer."(1)

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
- -------------------------------------------------------------------------------------------------------------------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND SALARY COMPENSATION STOCK AWARDS UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) (2) BONUS ($) ($) (3) ($) (4) OPTIONS (#) ($) (5)
- -------------------------------------------------------------------------------------------------------------------------

CHARLES R. SCHWAB 2001 $650,003 0 -- 0 1,116,000 $8,750
CHAIRMAN AND 2000 $800,004 $8,101,000 -- 0 300,000 $9,894
CO-CHIEF EXECUTIVE OFFICER 1999 $800,004 $8,200,225 -- 0 0 $14,759

DAVID S. POTTRUCK 2001 $650,003 0 -- 0 1,116,000 $8,750
PRESIDENT AND 2000 $800,004 $8,101,000 -- 0 300,000 $9,894
CO-CHIEF EXECUTIVE OFFICER 1999 $800,004 $8,200,225 -- 0 0 $14,759

H. MARSHALL SCHWARZ (6) 2001 $673,442 0(7) -- 0 0 $59,000
EXECUTIVE VICE PRESIDENT 2000 $405,385 $848,000(5) -- 0 88,723 $1,039,300

JEFFREY S. MAURER (6) 2001 $526,330 --(5) -- 0 300,000 $162,500
EXECUTIVE VICE PRESIDENT 2000 $326,154 $885,000(5) -- $886,250 88,723 $750,800

DAWN GOULD LEPORE 2001 $526,388 0 -- 0 340,000 $8,750
VICE CHAIRMAN--TECHNOLOGY 2000 $521,667 $1,620,408 -- 0 220,001 $9,894
AND ADMINISTRATION 1999 $475,000 $1,830,537 $1,433,320 0 90,000 $14,759

JOHN PHILIP COGHLAN 2001 $499,125 0 -- 0 340,000 $8,750
VICE CHAIRMAN AND 2000 $481,666 $1,678,464 -- 0 220,001 $9,894
EXECUTIVE VICE PRESIDENT 1999 $439,167 $1,786,777 $1,433,320 0 90,000 $14,759

LON GORMAN 2001 $499,125 0 -- 0 340,000 $8,750
VICE CHAIRMAN AND 2000 $474,782 $1,659,189 -- 0 220,001 $9,894
EXECUTIVE VICE PRESIDENT 1999 $399,933 $1,763,537 -- 0 90,000 $14,759

(1) Steven L. Scheid and Linnet F. Deily were named executive officers in our
2001 proxy statement. They are no longer with the Company.

(2) This column reflects a reduction in the salary originally established for
2001 for each named executive officer. The reduction was part of the
Company's cost containment measures during 2001.

SUMMARY COMPENSATION TABLE

(3) "Other Annual Compensation" includes payments that are not properly
categorized as salary or bonus. For 1999, Ms. Lepore and Mr. Coghlan each
received a cash payment arising out of certain restricted stock grants.
These payments were based on Company common stock (including price
appreciation and dividend reinvestment) outperforming, by a specified
margin, the return on the Standard & Poor's 500 Index. These payments were
intended to encourage the executives to continue holding Company common
stock after vesting by helping them satisfy the income tax liability
resulting from the vesting of the shares.

(4) RESTRICTED STOCK--DATE OF GRANT VALUE. For Mr. Maurer, the amount shown in
this column represents the market value on the date of grant (July 12,
2000) of a restricted stock award, based on the closing price of Company
common stock on that date ($28.875).

RESTRICTED STOCK--YEAR-END VALUE. The following chart shows the number and
year-end value of all shares of unvested restricted stock held on December
31, 2001 by the named executive officers (except for Mr. Schwab, Mr.
Pottruck and Mr. Schwarz, who held none). The year-end value is based on
the closing price of Company common stock on that date ($15.47).

NAME NUMBER OF SHARES YEAR-END VALUE
-------------------------------------------------------
MR. MAURER 15,000 $232,050
MS. LEPORE 90,000 $1,392,300
MR. COGHLAN 78,750 $1,218,263
MR. GORMAN 90,000 $1,392,300

RESTRICTED STOCK--RIGHTS. Restricted stockholders have voting and dividend
rights.

RESTRICTED STOCK--VESTING SCHEDULE. Mr. Maurer's shares vest in 25%
increments on each December 31 of 2000 through 2003. For each other named
executive officer listed in the above chart:

o 50% of the shares vest three years after the grant date, and

o the remaining 50% of the shares vest four years after the grant date.

(5) 401(K) PLAN CONTRIBUTIONS. The sums of $8,750, $9,894 and $14,759 represent
contributions for 2001, 2000 and 1999, respectively, under The SchwabPlan
Retirement Savings and Investment Plan to each named executive officer,
except for Mr. Schwarz and Mr. Maurer.

The sums of $8,500 and $6,800 represent contributions for 2001 and 2000,
respectively, under the U.S. Trust Corporation 401(k) Plan to each of Mr.
Schwarz and Mr. Maurer.

BENEFIT EQUALIZATION PLAN AMOUNTS. Under U.S. Trust Corporation's Benefit
Equalization Plan, the sum of $50,500 was credited to Mr. Schwarz's
retirement plan account, and the sum of $54,000 was credited to Mr.
Maurer's retirement plan account, for each of 2001 and 2000, to provide
benefit amounts in excess of the Internal Revenue Code Compensation
limitation. (See "Pension Plan Table" on page 29.)

SUMMARY COMPENSATION TABLE

DEFERRED COMPENSATION PLAN AMOUNTS. For Mr. Schwarz, the sum of $732,000,
and for Mr. Maurer, the sum of $590,000, which otherwise would have been
payable as bonus for 2000, was subject to mandatory deferral into the U.S.
Trust Corporation Executive Deferred Compensation Plan with certain vesting
conditions. These amounts are reflected in the "All Other Compensation"
column rather than the "Bonus" column.

LIFE INSURANCE PAYMENTS. For Mr. Schwarz, the sum of $250,000 for 2000
represents a payment for insurance on his life, which was made in
connection with his voluntary waiver of bonus for 2000. For Mr. Maurer, the
sum of $100,000 for each of 2001 and 2000 represents a payment for
insurance on his life, which was made in connection with his voluntary
waiver of bonus for 2001 and 2000. These amounts are reflected in the "All
Other Compensation" column rather than the "Bonus" column. U.S. Trust
Corporation, a subsidiary of the Company, is the owner of each policy. Each
of these named executive officers has irrevocably assigned his interest in
the policy on his life to a trust established for the benefit of his heirs,
and the trust is the beneficiary under the policy.

(6) Mr. Schwarz and Mr. Maurer joined the Company in May 2000, at the time of
the merger involving the Company and U.S. Trust Corporation. Based on SEC
requirements, we have not provided information on compensation paid to Mr.
Schwarz and Mr. Maurer for periods prior to the merger.

(7) Mr. Schwarz voluntarily waived the receipt of any bonus for 2001.

OPTION GRANTS

This table shows stock option grants to the named executive officers during the
last fiscal year.

OPTIONS GRANTED IN 2001

INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
TERM (2)

NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#) (1) YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------------------------------

CHARLES R. SCHWAB 186,000 0.27% $10.20 9/24/2011 $1,167,386 $2,982,641

930,000 1.37% $20.90 2/28/2011 $11,852,681 $30,386,588

DAVID S. POTTRUCK 186,000 0.27% $10.20 9/24/2011 $1,167,386 $2,982,641

930,000 1.37% $20.90 2/28/2011 $11,852,681 $30,386,588

H. MARSHALL SCHWARZ 0(3) 0.00% -- -- 0 0

JEFFREY S. MAURER 150,000 0.22% $10.20 9/24/2011 $941,440 $2,405,356

150,000 0.22% $19.38 4/26/2011 $1,900,275 $4,747,782

DAWN GOULD LEPORE 30,000 0.04% $10.20 9/24/2011 $188,288 $481,071

150,000 0.22% $15.02 7/18/2011 $1,407,126 $3,575,139

10,000 0.01% $20.68 5/4/2011 $120,771 $314,802

150,000 0.22% $20.90 2/28/2011 $1,911,723 $4,901,063

JOHN PHILIP COGHLAN 30,000 0.04% $10.20 9/24/2011 $188,288 $481,071

150,000 0.22% $15.02 7/18/2011 $1,407,126 $3,575,139

10,000 0.01% $20.68 5/4/2011 $120,771 $314,802

150,000 0.22% $20.90 2/28/2011 $1,911,723 $4,901,063

LON GORMAN 30,000 0.04% $10.20 9/24/2011 $188,288 $481,071

150,000 0.22% $15.02 7/18/2011 $1,407,126 $3,575,139

10,000 0.01% $20.68 5/4/2011 $120,771 $314,802

150,000 0.22% $20.90 2/28/2011 $1,911,723 $4,901,063
<FN>
(1) These options were granted in February, April, May, July and September
2001 under the 1992 Stock Incentive Plan and/or the 2001 Stock Incentive
Plan. These options:

o were granted at an exercise price equal to 100% of the fair market
value of the common stock on the grant date, and

o expire ten years from the grant date, unless otherwise earlier
terminated because of certain events related to termination of
employment.
</FN>

OPTION GRANTS

The options granted in February and April vest in four equal annual
installments beginning on the first anniversary of the grant date.

The options granted in May vested immediately on the grant date.

The options granted in July and September vest according to the following
schedule: 35% on the first anniversary of the grant date; 25% on the second
anniversary of the grant date; and 20% on each of the third and fourth
anniversary of the grant date.

(2) Based on SEC's rules, we use a 5% and 10% assumed rate of appreciation
over the ten-year option term. This does not represent the Company's
estimate or projection of the future common stock price. If Company common
stock does not appreciate above the exercise price, the named executive
officers will receive no benefit from the options.

(3) Mr. Schwarz voluntarily waived the receipt of any options in 2001.

OPTIONS EXERCISED

This table shows stock option exercises and the value of unexercised stock
options held by the named executive officers during the last fiscal year.

AGGREGATED OPTION EXERCISES IN 2001
AND FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED
ACQUIRED VALUE AT IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED FISCAL YEAR-END (#) AT FISCAL YEAR-END ($) (2)
NAME (#) ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------

CHARLES R. SCHWAB 337,500 $3,160,250 4,305,000 1,948,500 $38,340,064 $7,165,545
DAVID S. POTTRUCK 300,000 $4,185,369 8,228,481 5,548,500 $72,510,163 $7,165,545
H. MARSHALL SCHWARZ 0 0 9,375 79,348 0 0
JEFFREY S. MAURER 0 0 9,375 379,348 0 $801,750
DAWN GOULD LEPORE 275,000 $3,190,919 638,027 671,879 $4,420,148 $814,792
JOHN PHILIP COGHLAN 0 0 1,070,924 660,626 $10,904,418 $722,781
LON GORMAN 53,750 $562,493 342,941 671,879 $1,866,685 $814,792

<FN>
(1) The amounts in this column are calculated as
follows:

o if upon exercising the stock options, the named executive officer kept
the shares he or she acquired, then by averaging the high and low
market prices of Company common stock on the date of exercise to get
the "market price," or

o if upon exercising the stock options, the named executive officer sold
the shares he or she acquired, then by using the sale price as the
"market price,"

o then subtracting the option exercise price from the market price to get
the "value realized per share," and

o then multiplying the value realized per share by the number of shares
acquired upon exercise.

The amounts in this column may not represent amounts actually realized by
the named executive officers.

(2) The amounts in this column are calculated by:

o subtracting the option exercise price from the Company's December 31,
2001 average market price ($15.545) per share (as reported in the New
York Stock Exchange Composite Transactions Index) to get the "average
value per option," and

o then multiplying the average value per option by the number of
exercisable or unexercisable options, as applicable.

The amounts in this column may not represent amounts that will actually be
realized by the named executive officers.

</FN>

PENSION PLAN TABLE

H. Marshall Schwarz and Jeffrey S. Maurer participate in the Employees'
Retirement Plan of United States Trust Company of New York and Affiliated
Companies, a tax qualified noncontributory defined benefit pension plan. An
annual pension benefit equal to a percentage (based on credited years of service
up to a maximum of 35 years) of average base salary (based on a participant's
highest five consecutive years of base salary during the last ten plan years of
employment), reduced by a portion of the participant's annual Social Security
covered compensation, is payable after retirement in the form of an annuity.

The amount of benefits payable from the Retirement Plan trust is limited by the
restrictions applicable to qualified plans under the Internal Revenue Code. The
table below shows the annual pension benefit payable upon retirement at normal
retirement age (65) as a single life annuity under the Retirement Plan to Mr.
Schwarz and Mr. Maurer.

PENSION PLAN TABLE

ANNUAL RETIREMENT ESTIMATED ANNUAL
BENEFIT ACCRUED AS OF RETIREMENT BENEFIT
NAME 12/31/01 AT AGE 65
- --------------------------------------------------------------------------------
H. MARSHALL SCHWARZ $122,300 $122,300

JEFFREY S. MAURER $105,300 $109,600

Benefits under the Retirement Plan vested after five years of service.

In addition, under U.S. Trust Corporation's Benefit Equalization Plan, an amount
is credited each year to the account of a Retirement Plan participant equal to a
specific percentage (based on the participant's age at December 31 of such year)
of the participant's base salary in excess of the Internal Revenue Code
compensation limitation. Such amounts credited to Mr. Schwarz and Maurer are
included under the caption "All Other Compensation" in the Summary Compensation
Table. At retirement, a participant is paid, in addition to his or her benefit
under the Retirement Plan, the value of his or her individual Benefit
Equalization Plan account in either a lump sum or installments. Mr. Schwarz
retired on February 28, 2002. (See Appendix B.)

[side bar]

PENSION PLAN TABLE

COMPENSATION COMMITTEE REPORT

In this section, we describe our executive compensation policies and practices,
including the compensation we pay our Co-Chief Executive Officers and the next
five most highly compensated executive officers.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

During 2001, the Compensation Committee of the Company's Board of Directors
consisted of Roger O. Walther, Nancy H. Bechtle, C. Preston Butcher, Stephen T.
McLin and George P. Shultz. No member of our committee during 2001 was an
employee of the Company or any of its subsidiaries. Each member qualifies as a
"non-employee director" under Rule 16b-3 of the Securities Exchange Act of 1934
and as an "outside director" under Section 162(m) of the Internal Revenue Code.

Our committee has overall responsibility for the Company's executive
compensation policies and practices. Our committee's functions include:

o determining the compensation of the Co-Chief Executive Officers,
Charles R. Schwab and David S. Pottruck,

o on recommendation of the Co-Chief Executive Officers, reviewing and
approving the other executive officers' compensation, including salary
and payments under the annual executive bonus plans, and

o granting awards under the Company's stock incentive plans.

Our committee is providing the following report on the Company's executive
compensation policies, the relationship of the Company's performance to
executive compensation, and the Co-Chief Executive Officers' compensation.

COMPENSATION POLICIES

The Company's executive compensation policies are designed to address a number
of objectives, including rewarding financial performance and motivating
executive officers to achieve significant returns for stockholders. The
Company's policies rely on two principles:

o first, a significant portion of executive officers' total compensation
should be in the form of stock and stock-based incentives, and

o second, a large portion of their cash compensation should be at risk
and vary, depending on meeting stated financial objectives.

When establishing salaries, bonus levels and stock-based awards for executive
officers, our committee considers the individual's role, responsibilities and
performance during the past year, and the amount of compensation paid to
executive officers in similar positions of comparable companies, based on
periodic reviews of competitive data obtained from independent consultants. Our
committee reviews companies whose size, rates of growth and financial returns
are similar to the Company's, including some of the companies in the Dow Jones
Securities Brokerage Group Index.

Our committee selects companies outside the financial services industry for
inclusion in the review based on the extent to which

[side bar]

IN THIS SECTION, WE DESCRIBE THE COMPENSATION WE PAY OUR CO-CHIEF EXECUTIVE
OFFICERS AND THE NEXT FIVE MOST HIGHLY COMPENSATED EXECUTIVE OFFICERS.

COMPENSATION POLICIES

COMPENSATION COMMITTEE REPORT

they satisfy a list of selection criteria, including size, growth rates, similar
financial performance, leadership status in their industry, reputation for
innovation, and the extent to which they compete with the Company for
executives. Not all of these criteria will necessarily be satisfied in any
particular case. Our committee includes in its review companies other than those
included in the Dow Jones Securities Brokerage Group Index because the Company
frequently recruits executives from outside the financial services industry,
depending on the specific skills required for the position.

Our committee uses comparative data to set compensation targets that will
provide executive officers with total compensation that:

o exceeds the average amounts paid to similar executives of comparable
companies in years in which the Company achieves superior performance,
and

o falls below the average amounts paid to similar executives of
comparable companies in years in which the Company fails to achieve
superior performance.

However, our committee also makes discretionary and subjective determinations of
appropriate compensation amounts to reflect, for example, the Company's
philosophy of compensating executives for the success they achieve in managing
specific enterprises.

In Mr. Pottruck's case, our committee places considerable weight on the
recommendations of Mr. Schwab, and in the case of executive officers other than
Mr. Schwab and Mr. Pottruck, our committee places considerable weight on the
recommendations of Mr. Schwab and Mr. Pottruck.

THE IMPORTANCE OF OWNERSHIP

A fundamental tenet of the Company's compensation policy is that significant
equity participation creates a vital long-term partnership between management
and other stockholders. Through various stock incentive plans, The SchwabPlan
Retirement Savings and Investment Plan, and the U.S. Trust Corporation 401(k)
Plan, the benefits of equity ownership are extended to non-employee directors,
executive officers and employees of the Company and its subsidiaries.

As of March 14, 2002, the directors and executive officers of the Company owned
an aggregate of 278,283,158 shares (including restricted shares) and had the
right to acquire an additional 20,198,762 shares upon the exercise (on or before
May 13, 2002) of stock options. As of March 14, 2002, The SchwabPlan Retirement
Savings and Investment Plan and the U.S. Trust Corporation 401(k) Plan held an
aggregate of 77,997,571 shares that had been allocated to participants'
accounts. The Company intends to continue its strategy of encouraging its
employees to become stockholders.

The performance graph on page 22 of this proxy statement compares changes in the

[side bar]

THE IMPORTANCE OF OWNERSHIP

COMPENSATION COMMITTEE REPORT

Company's cumulative total returns with those of the Dow Jones Securities
Brokerage Group Index and the Standard & Poor's 500 Index. From December 31,
1996 through December 31, 2001, the cumulative total return for Company stock
was 231%. By comparison, in the same period the Dow Jones Securities Brokerage
Group Index grew 215% and the Standard & Poor's 500 Index grew 66%. Our
committee believes employees' equity participation in the Company is a
meaningful factor contributing to the Company's success.

ANNUAL BASE SALARY

The Company believes that base salary is frequently a significant factor in
attracting, motivating and retaining skilled executive officers. Accordingly,
our committee reviews base salaries of executive officers annually and generally
sets the base salary of executive officers at or near the average of the levels
paid by the other companies it reviews. (See "Compensation Policies" earlier in
this report.)

VARIABLE COMPENSATION

CORPORATE EXECUTIVE BONUS PLAN

The Corporate Executive Bonus Plan covers certain executive officer participants
selected by our committee, but Mr. Schwab is not eligible to participate. (Mr.
Schwab is covered under an employment agreement with the Company. See "Co-Chief
Executive Officers' Compensation" later in this report.) This bonus plan pays
bonuses each year based on corporate performance. Currently, bonus amounts under
this bonus plan are paid out at a percentage of each participant's bonus target,
depending on the Company's pre-tax operating profit margin and net revenue
growth. Targets are expressed as a percentage of base salary, which our
committee determines based on the factors discussed earlier in this report. (See
"Compensation Policies" earlier in this report.)

Our committee sets target bonuses in the first quarter of each year based on the
recommendations of Mr. Schwab and Mr. Pottruck (except that Mr. Pottruck's
target bonus is based on the recommendation of Mr. Schwab only). In the case of
Mr. Pottruck, who receives all of his annual incentive compensation under this
bonus plan, our committee determined that it would be appropriate to set a
target bonus for 2001 that would result in an annual bonus payment to Mr.
Pottruck equal to the annual bonus payable to Mr. Schwab under his employment
agreement, depending on the Company's corporate performance. (See "Co-Chief
Executive Officers' Compensation" later in this report.) In the case of the
remaining executive officers who participate in this bonus plan, the target
bonuses for 2001 under this bonus plan could be up to 100% of base salary. These
remaining executive officers also participate in the Annual Executive Individual
Performance Plan (discussed later in this report).

The target bonus is adjusted upward or downward, according to a payout matrix
our committee adopted when we set the target bonus. This results in a payout of
a multiple (or fraction) of the target bonus depending on the Company's
corporate

[side bar]

ANNUAL BASE SALARY

VARIABLE COMPENSATION

COMPENSATION COMMITTEE REPORT

performance. The factors currently used to determine bonuses in the matrix are
pre-tax operating profit margin and net revenue growth. In general, a given
percentage change in pre-tax operating profit margin will have a greater impact
on the determination of bonus payments than the same percentage change in the
net revenue growth rate. In 2001, the Company attained a pre-tax operating
profit margin of 15% and net revenue declined 25%. Based on this performance,
executive officers who participate in this bonus plan received no bonuses in
2001.

ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

The Annual Executive Individual Performance Plan covers certain executive
officer participants selected by the Board Compensation Committee, but Mr.
Schwab and Mr. Pottruck are not eligible to participate. The Individual
Performance Plan presently pays bonuses based on a subjective determination of
each officer's individual contribution to the attainment of corporate
performance objectives. Our committee makes this determination based on the
recommendations of Mr. Schwab and Mr. Pottruck. In general, their
recommendations are based in significant part on the officer's success in
achieving specific goals identified in the officer's business plan.

The amount available for payments under the Individual Performance Plan is
generally calculated by multiplying the amounts payable to the participants
under the Corporate Executive Bonus Plan by a fixed amount. Individual bonuses
under the Individual Performance Plan may vary, depending on individual
achievements. However, the aggregate amount of bonuses payable to executive
officers, as a group, under the Individual Performance Plan is based strictly on
our corporate performance. Based on this performance, executive officers who
participate in this bonus plan received no bonuses in 2001.

1992 AND 2001 STOCK INCENTIVE PLANS

In 1992, the Board approved the 1992 Stock Incentive Plan, which was approved by
the Company's stockholders at the 1992 annual meeting and became effective on
May 8, 1992. In 2001, the Board approved the 2001 Stock Incentive Plan, which
was approved by the Company's stockholders at the 2001 annual meeting and became
effective on May 7, 2001. Under each plan, our committee grants stock options
and restricted stock to executive officers, based on the factors discussed
earlier in this report. (See "Compensation Policies" earlier in this report.)
Our committee has a policy of granting annual stock options to executive
officers, because of our belief that an emphasis on annual awards provides a
powerful incentive to executive officers to obtain superior performance results.
Our committee intends that stock-based incentives will be the sole long-term
incentives payable to executive officers.

During 2001, our committee granted stock options to each of the Company's
executive officers except Mr. Schwarz, who voluntarily waived the receipt of any
options in 2001. To determine the size of the grants, our committee reviewed
data

[side bar]

VARIABLE COMPENSATION

COMPENSATION COMMITTEE REPORT

obtained from an independent consultant concerning levels of long-term
compensation for executive officers of selected financial services companies and
companies of comparable size, rates of growth, and/or financial returns.

CO-CHIEF EXECUTIVE OFFICERS' COMPENSATION

CHARLES R. SCHWAB

Mr. Schwab, Chairman and Co-Chief Executive Officer, is compensated based on an
employment agreement that was entered into between the Company and Mr. Schwab
and approved by the stockholders, effective March 31, 1995. (See Appendix A.)
Mr. Schwab's employment agreement specifies an annual base salary of $800,004,
subject to annual review by our committee. Mr. Schwab's annual bonus, if any, is
a multiple of his base salary. The multiple is based on the Company's pre-tax
operating profit margin and net revenue growth for the year, and is determined
under a matrix adopted by our committee. Our committee has the authority to
adjust the matrix from time to time (provided that for any year we may not
change the matrix more than 90 days after the beginning of the year). No annual
bonus was paid to Mr. Schwab under his employment agreement for 2001.

In 2001, our committee approved stock option grants to Mr. Schwab. Our
committee's approval of these grants followed a review of compensation practices
of certain comparable companies, performed by an independent consultant, and was
intended to ensure that Mr. Schwab's long-term incentive remains consistent with
the compensation practices of companies whose size, rates of growth and
financial returns are similar to the Company's.

Our committee believes that Mr. Schwab's leadership is a vital factor in the
Company's success. Specifically, our committee believes that:

o MR. SCHWAB PROVIDES THE LEADERSHIP, VISION AND INSPIRATION FOR
INNOVATION THAT HAS GENERATED CORPORATE GROWTH AND SUPERIOR
PERFORMANCE,

o THE OVERALL STRATEGIC DIRECTION DEVELOPED BY MR. SCHWAB IS CRITICAL TO
ENHANCING THE FUTURE LONG-TERM VALUE OF THE COMPANY FOR ITS
STOCKHOLDERS, AND

o MR. SCHWAB'S LEADERSHIP HAS ENABLED THE COMPANY, ON THE WHOLE, TO
OUTPERFORM BOTH THE DOW JONES SECURITIES BROKERAGE GROUP INDEX AND THE
STANDARD & POOR'S 500 INDEX OVER THE PAST FIVE YEARS.

In 2001, the Company attained a pre-tax operating profit margin of 15% and net
revenue declined 25%, which resulted in pre-tax operating profit of $647
million.

DAVID S. POTTRUCK

Mr. Pottruck, President and Co-Chief Executive Officer, is compensated in the
form of a base salary and an annual bonus payable under the Corporate Executive
Bonus Plan that is dependent on the Company's pre-tax operating profit margin
and net revenue growth. (See "Corporate Executive Bonus Plan" earlier in this
report.) For 2001, our committee determined that, based on the relative
responsibilities of Mr. Schwab and

[side bar]

CO-CHIEF EXECUTIVE

OFFICERS' COMPENSATION

COMPENSATION COMMITTEE REPORT

Mr. Pottruck, it was appropriate for Mr. Pottruck to receive a base salary equal
to the base salary payable to Mr. Schwab under his employment agreement. For the
same reason, we determined it to be appropriate to set a target bonus for Mr.
Pottruck under the Corporate Executive Bonus Plan that would cause Mr. Pottruck
to receive an annual bonus equal to the annual bonus payable to Mr. Schwab under
his employment agreement, depending on the Company's corporate performance. No
annual bonus was paid to Mr. Pottruck under the Corporate Executive Bonus Plan
for 2001.

Our committee also approved stock option grants to Mr. Pottruck in 2001. Our
committee's approval of these grants followed a review of compensation practices
of certain comparable companies, performed by an independent consultant, and was
intended to ensure that Mr. Pottruck's long-term incentive remains consistent
with the compensation practices of companies whose size, rates of growth and
financial returns are similar to the Company's.

Specifically, our committee believes that:

o MR. POTTRUCK PROVIDES STRATEGIC AND DAY-TO-DAY LEADERSHIP THAT HAS
CONTRIBUTED AND CONTINUES TO CONTRIBUTE SIGNIFICANTLY TO THE COMPANY'S
GROWTH AND SUPERIOR PERFORMANCE,

o MR. POTTRUCK GUIDES THE COMPANY IN THE DELIVERY OF HIGHLY COMPETITIVE
PRODUCTS AND SERVICES TO ITS CLIENTS, AND THIS ABILITY TO COMPETE IS
IMPERATIVE TO BUILDING FUTURE LONG-TERM VALUE FOR STOCKHOLDERS, AND

o OVER THE PAST FIVE YEARS, THE COMBINATION OF MR. POTTRUCK'S AND MR.
SCHWAB'S LEADERSHIP HAS ENABLED THE COMPANY, ON THE WHOLE, TO
OUTPERFORM BOTH THE DOW JONES SECURITIES BROKERAGE GROUP INDEX AND THE
STANDARD & POOR'S 500 INDEX.

TAX LAW LIMITS ON EXECUTIVE COMPENSATION

Section 162(m) of the Internal Revenue Code limits tax deductions for certain
executive compensation over $1 million. Certain types of compensation are
deductible only if performance criteria are specified in detail, and
stockholders have approved the compensation arrangements. The Company believes
that it is generally in the best interests of its stockholders to structure
compensation plans so that compensation is deductible under Section 162(m).
Accordingly, the Company's Corporate Executive Bonus Plan, 1992 Stock Incentive
Plan, 2001 Stock Incentive Plan, Annual Executive Individual Performance Plan
and Mr. Schwab's employment agreement have been approved by stockholders. In
addition, stockholders are being asked to approve amendments to the Corporate
Executive Bonus Plan and the Annual Executive Individual Performance Plan at
this year's annual meeting of stockholders to preserve the desired tax results.
(See "Proposals To Be Voted On," beginning on page 9, and Appendices D and E.)
However, the Company believes that there may be times when the benefit of the
deduction would be outweighed by other corporate objectives, such as the need
for flexibility.

[side bar]

TAX LAW LIMITS ON EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

Our committee will continue to monitor issues concerning the tax deductibility
of executive compensation and will take appropriate action if we believe it is
warranted. Since corporate objectives may not always be consistent with the
requirements for full deductibility, our committee is prepared, if we believe it
is appropriate, to enter into compensation arrangements or provide compensation
under which payments may not be deductible under Section 162(m). Tax
deductibility will not be the sole factor we consider in determining appropriate
levels or types of compensation.

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Roger O. Walther, Chairman

Nancy H. Bechtle

C. Preston Butcher

Stephen T. McLin

George P. Shultz

[side bar]

TAX LAW LIMITS ON EXECUTIVE COMPENSATION

AUDIT COMMITTEE REPORT

The Audit Committee of the Company's Board of Directors consists of seven
directors who are not employees of the Company or any of its subsidiaries. The
Board believes that all of the members of our committee are "independent
directors" as defined under applicable stock exchange listing standards.
Furthermore, all of the members of our committee are financially literate and a
majority of the members have accounting or related financial management
expertise.

The Board of Directors has adopted a written Audit Committee Charter. Because we
attached a copy of the Charter to last year's proxy statement, under SEC rules
we have not attached a copy to this proxy statement. If you would like a copy of
the Charter, please contact the Assistant Corporate Secretary at the address or
telephone number indicated on page 44.

Our committee has met and held discussions with management and the Company's
independent auditors. As part of this process, we have:

o reviewed and discussed the audited financial statements with
management,

o discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees), and

o received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and discussed with
the auditors their independence.

Based on the review and discussions referred to above, our committee recommended
to the Board of Directors that the audited financial statements be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, for filing with the SEC.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

Stephen T. McLin, Chairman

Nancy H. Bechtle

C. Preston Butcher

Donald G. Fisher

Anthony M. Frank

Frank C. Herringer

Arun Sarin

[side bar]

BOARD AUDIT COMMITTEE REPORT

AUDITOR INDEPENDENCE

SELECTION

Our Board has selected Deloitte & Touche LLP and the member firms of Deloitte
Touche Tohmatsu (collectively referred to as "Deloitte & Touche") as the
Company's independent auditors for the current fiscal year. Deloitte & Touche
has served as auditors for Charles Schwab & Co., Inc. or the Company since 1976.
We expect representatives of Deloitte & Touche to attend the meeting in order to
respond to questions from stockholders, and they will have the opportunity to
make a statement.

AUDIT FEES

The aggregate fees for professional services rendered by Deloitte & Touche in
connection with their audit of our consolidated financial statements and reviews
of the consolidated financial statements included in our quarterly reports on
Form 10-Q for the fiscal year ended December 31, 2001 were approximately $4.8
million.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

Deloitte & Touche did not perform on behalf of the Company, and therefore did
not bill the Company for, any financial information and systems design and
implementation services for the fiscal year ended December 31, 2001.

ALL OTHER FEES

The aggregate fees for all other services rendered by Deloitte & Touche for the
fiscal year ended December 31, 2001 were approximately $2.6 million and can be
sub-categorized as follows:

AUDIT-RELATED FEES

The aggregate fees for audit-related services for matters such as SEC
registration statements, comfort letters, Statement on Auditing Standards No. 70
reports, employee benefit plan audits, internal audit assistance, due diligence
related to acquisitions, and agreed-upon procedures were approximately $1.3
million.

OTHER FEES

The aggregate fees for all other services, including tax consulting and
compliance, business and operational process improvement, and regulatory
matters, were approximately $1.3 million.

The "Audit-Related Fees" are for services generally required to be performed by
Deloitte & Touche because they follow upon and are linked to Deloitte & Touche's
audit of the Company's consolidated financial statements. With respect to the
audit-related services consisting of due diligence for acquisitions, the Company
believes that it is efficient to engage Deloitte & Touche for those services
because their audit will have to cover any acquisition after its completion.

Approximately 81% of the $1.3 million in "Other Fees" relate to tax consulting
and compliance services provided by Deloitte & Touche, while the other 19%
relate to all other services listed under "Other Fees."

Deloitte & Touche recently announced their intent to separate Deloitte
Consulting

[side bar]

SELECTION

AUDIT FEES

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

ALL OTHER FEES

AUDITOR INDEPENDENCE

from the firm. None of the fees paid by the Company to Deloitte & Touche for
2001 resulted from services provided by Deloitte Consulting.

REVIEW OF AUDITOR INDEPENDENCE

The Board Audit Committee has considered whether the provision of non-audit
services by Deloitte & Touche, as described above in "All Other Fees," is
compatible with maintaining Deloitte & Touche's independence as the Company's
principal auditor.

[side bar]

REVIEW OF AUDITOR INDEPENDENCE

OTHER INFORMATION

CERTAIN TRANSACTIONS

Directors and executive officers may maintain margin trading accounts with
Charles Schwab & Co., Inc. and asset management and private banking accounts
with subsidiary banks of U.S. Trust Corporation. Extensions of credit in such
accounts:

o are made in the ordinary course of business,

o are made on the same or substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons, and

o do not involve more than the normal risk of collectibility or present
other unfavorable features.

Employees and directors of the Company who engage in brokerage transactions at
Charles Schwab & Co., Inc. receive a 20% discount from its standard commission
rates for brokerage transactions.

In addition, the tables below show loans made by the Company to executive
officers since the beginning of 2001 under two loan programs established by the
Board of Directors.

The Company made loans in 2001 under an executive loan program to encourage
executive officers to continue holding shares of Company restricted stock after
vesting by providing funds to satisfy the income tax liability resulting from
the vesting of the shares. These loans do not bear interest. However, under
Internal Revenue Code regulations, the executives are taxed on imputed income in
amounts based on required IRS interest rates.

EXECUTIVE LOAN PROGRAM

LARGEST AMOUNT AMOUNT
OUTSTANDING OUTSTANDING
NAME AND TITLE SINCE 1/1/01 AS OF 3/14/02
- -------------------------------------------------------------------------------------------

LON GORMAN $813,564 0
VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT

DAWN GOULD LEPORE
VICE CHAIRMAN--TECHNOLOGY AND ADMINISTRATION $647,672 0

STEVEN L. SCHEID*
FORMER VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT $647,672 0

LINNET F. DEILY*
FORMER VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT $638,499 0

DANIEL O. LEEMON
VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT $566,713 0

* Mr. Scheid and Ms. Deily are no longer with the Company.

[side bar]

CERTAIN TRANSACTIONS

EXECUTIVE LOAN PROGRAM

OTHER INFORMATION

The Company made loans in 2001 under a senior management loan program to assist
senior management officers in special circumstances. These loans bear interest
at a market rate determined to be appropriate based on program requirements. The
only such loan made to an executive officer of the Company is shown below.

SENIOR MANAGEMENT LOAN PROGRAM

LARGEST
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
OUTSTANDING OUTSTANDING INTEREST
NAME AND TITLE SINCE 1/1/01 AS OF 3/14/02 RATE
- --------------------------------------------------------------------------------

JOHN PHILIP COGHLAN
VICE CHAIRMAN AND EXECUTIVE
VICE PRESIDENT $250,000 $250,000 5.43%

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company believes that during 2001 all filings with the SEC by its officers,
directors and 10% stockholders complied with requirements for reporting
ownership and changes in ownership of Company common stock under Section 16(a)
of the Securities Exchange Act of 1934, except for an inadvertent late report of
an exempt transfer of shares in December 2000 by John Philip Coghlan, Vice
Chairman and Executive Vice President, which should have been reported in an
annual statement on Form 5 in February 2001.

STOCKHOLDER PROPOSALS

If you want us to consider including a proposal in our proxy statement next
year, you must deliver it to the Company's Corporate Secretary at our principal
executive office no later than December 2, 2002. The Company's bylaws contain
specific procedural requirements regarding a stockholder's ability to nominate a
director or submit a proposal to be considered at a meeting of stockholders. If
you would like a copy of the procedures contained in our bylaws, please contact:

Assistant Corporate Secretary
The Charles Schwab Corporation
101 Montgomery Street (120/4)
San Francisco, California 94104
(415) 636-3087

For next year's annual meeting of stockholders, the persons appointed by proxy
to vote stockholders' shares will vote those shares according to their best
judgment on any stockholder proposal the Company receives after March 14, 2003.

EFFECT OF NOT RETURNING PROXY

IF YOU DO NOT RETURN YOUR PROXY AND YOUR SHARES ARE HELD IN STREET NAME, YOUR
BROKERAGE FIRM, UNDER CERTAIN CIRCUMSTANCES AS DESCRIBED BELOW, MAY VOTE YOUR
SHARES.

Brokerage firms have authority under New York Stock Exchange rules to vote
customers' unvoted shares on some "routine" matters. The New York Stock Exchange
has determined that all three of the proposals described under "Proposals

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SENIOR MANAGEMENT LOAN PROGRAM

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

STOCKHOLDER PROPOSALS

EFFECT OF NOT RETURNING PROXY

OTHER INFORMATION

To Be Voted On," beginning on page 9, are considered routine matters.

If you do not give a proxy to vote your shares, your brokerage firm may either:

o vote your shares on routine matters, or

o leave your shares unvoted.

As a brokerage firm, Charles Schwab & Co., Inc. may vote its customers' unvoted
shares on routine matters. However, as the Company's subsidiary, when it is
voting on Company proposals, it must follow a stricter set of New York Stock
Exchange rules. Specifically, our brokerage subsidiary can vote unvoted Company
shares held in brokerage accounts only in the same proportion as all other
stockholders vote.

When a brokerage firm votes its customers' unvoted shares on routine matters,
these shares are counted to determine if a quorum exists to conduct business at
the meeting. A brokerage firm cannot vote customers' unvoted shares on
non-routine matters. These shares are considered not entitled to vote on
non-routine matters, rather than having the effect of a vote against the
matters.

We encourage you to provide instructions to your brokerage firm by giving your
proxy. This ensures your shares will be voted at the meeting.

YOU MAY HAVE GRANTED TO YOUR STOCKBROKER DISCRETIONARY VOTING AUTHORITY OVER
YOUR ACCOUNT.

Your stockbroker may be able to vote your shares depending on the terms of the
agreement you have with your stockbroker.

A PURCHASING AGENT UNDER A RETIREMENT PLAN MAY BE ABLE TO VOTE A PARTICIPANT'S
UNVOTED SHARES. FOR EXAMPLE, IF YOU ARE A PARTICIPANT IN THE SCHWABPLAN
RETIREMENT SAVINGS AND INVESTMENT PLAN, THE PLAN'S PURCHASING AGENT, UNDER
CERTAIN CIRCUMSTANCES, CAN VOTE YOUR SHARES.

Specifically, the purchasing agent will vote shares you hold under the Employee
Stock Ownership Plan ("ESOP") component of The SchwabPlan Retirement Savings and
Investment Plan if the purchasing agent does not receive voting instructions
from you. The purchasing agent will vote your unvoted shares held under the ESOP
component of the overall plan in the same proportion as all other plan
participants vote their shares held under the ESOP component of the overall
plan.

COSTS OF PROXY SOLICITATION

The Company is paying for distributing and soliciting proxies. As a part of this
process, the Company reimburses brokers, nominees, fiduciaries and other
custodians for reasonable fees and expenses in forwarding proxy materials to
stockholders. The Company is not using an outside proxy solicitation firm this
year, but employees of the Company or its subsidiaries may solicit proxies
through mail, telephone, the Internet or other means. Employees do not receive
additional compensation for soliciting proxies.

INCORPORATION BY REFERENCE

The Company's filings with the SEC sometimes "incorporate information by

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COSTS OF PROXY SOLICITATION

INCORPORATION BY REFERENCE

OTHER INFORMATION

reference." This means that the Company is referring you to information that has
previously been filed with the SEC, so the information should be considered as
part of the filing you are reading. Based on SEC rules, the performance graph on
page 22 of this proxy statement, the "Compensation Committee Report" on pages 30
through 36, and the "Audit Committee Report" on page 37 specifically are not
incorporated by reference into any other filings with the SEC.

You are receiving this proxy statement as part of the proxy materials for the
annual meeting of stockholders. You may not consider this proxy statement as
material for soliciting the purchase or sale of Company stock.

HOUSEHOLDING

The SEC now permits companies to deliver a single set of proxy materials to
households with multiple stockholders, provided such stockholders give their
affirmative or implied consent and certain other conditions are met. This is
called householding. This year, the Company's proxy materials contain a form
that will enable the householding of the Company's proxy materials. Householding
may help reduce the Company's future proxy printing and distribution costs.

Some households with multiple stockholders may, through a general consent
relating to securities they hold, already have available to them the
householding of the Company's proxy materials.

We will promptly deliver separate copies of our proxy statement and annual
report at the request of any stockholder who is in a household that participates
in the householding of the Company's proxy materials. The request may be made by
calling the toll-free telephone number included in the householding notice that
accompanies the proxy materials.

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HOUSEHOLDING

TICKETS AND INTERNET ACCESS TO THE ANNUAL MEETING

Seating is limited and, therefore, admission to the annual meeting is by ticket
only on a first-come, first-served basis. To request a ticket, you may either:

o go to WWW.SCHWABEVENTS.COM,

o write the Assistant Corporate Secretary at this address:

Assistant Corporate Secretary
The Charles Schwab Corporation
101 Montgomery Street (120/4)
San Francisco, CA 94104

- or -

o call the Assistant Corporate Secretary at (415) 636-3087

We also will broadcast the annual meeting over the Internet. For information on
how to receive the real-time Webcast, go to WWW.SCHWABEVENTS.COM.

By Order of the Board of Directors,

CARRIE E. DWYER
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND
CORPORATE SECRETARY

APRIL 1, 2002
SAN FRANCISCO, CALIFORNIA

APPENDIX A DESCRIPTION OF CHARLES R. SCHWAB'S EMPLOYMENT AND LICENSE AGREEMENTS

This Appendix A describes agreements between the Company and Charles R. Schwab
relating to his employment and the use of the name "Schwab" by the Company.

EMPLOYMENT AGREEMENT

The Company and Mr. Schwab entered into an employment agreement effective March
31, 1995. Stockholders approved the employment agreement. It has an initial term
of five years, and provides that as of each March 31, the term of the employment
agreement is automatically extended by an additional year, under the same terms
and conditions, unless beforehand either party provides notice to the other of
an intention not to extend it.

The employment agreement provides for an annual base salary of $800,004, subject
to annual review by the Compensation Committee, and provides that Mr. Schwab
will participate in all compensation and fringe benefit programs made available
to other executive officers, including the stock incentive plans. Instead of
participating in the executive bonus plans, Mr. Schwab's annual bonus, if any,
is a multiple of his base salary. This multiple is based on our corporate
pre-tax operating profit margin and net revenue growth for the year, and is
determined under a matrix adopted by the Board Compensation Committee. The
committee has the authority to adjust the matrix periodically (except the
committee may not change the matrix more than 90 days after the beginning of any
year). The matrix is also adjusted automatically each year, based on increases
in the Consumer Price Index.

The employment agreement also provides that certain compensation and benefits
will be paid or provided to Mr. Schwab (or his immediate family or estate) if
his employment is terminated involuntarily, except for cause, before the
expiration of the employment agreement. "Cause" is defined as the commission of
a felony, or willful and gross negligence, or misconduct that results in
material harm to the Company.

"Involuntary termination" includes Mr. Schwab's resignation following a material
change in his capacities or duties at the Company or Charles Schwab & Co., Inc.
If an involuntary termination is not due to death, disability or "cause":

o Mr. Schwab will be entitled to receive for a period of 36 months all
compensation to which he would have been entitled had he not been
terminated, including his base salary and participation in all bonus,
incentive and other compensation and benefit plans for which he was or
would have been eligible (but excluding additional grants under stock
incentive plans), and

o all his outstanding, unvested awards under stock incentive plans will
vest fully on the termination date.

If an involuntary termination is due to disability, Mr. Schwab will be entitled
to receive:

o his base salary, less any payments under the corporate long-term
disability plan, and benefits (but not bonuses or other incentive
compensation) for a period of 36 months from the termination date, and

o a prorated portion of any bonus or incentive payments for the year in
which the disability occurs.

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EMPLOYMENT AGREEMENT

APPENDIX A DESCRIPTION OF CHARLES R. SCHWAB'S EMPLOYMENT AND LICENSE AGREEMENTS

If an involuntary termination is due to death, a lump sum payment will be made
to Mr. Schwab's estate equal to five times his then base salary.

If Mr. Schwab voluntarily resigns his employment within 24 months of a change in
control of the Company, he will be entitled to receive a prorated portion of any
bonus or incentive payments payable for the year in which the resignation
occurs. In addition, if Mr. Schwab voluntarily resigns his employment, or his
employment is involuntarily terminated, within 24 months of a change in control
of the Company, he will have the right (but not the obligation) to enter into a
consulting arrangement with the Company. Under that arrangement, Mr. Schwab
would provide certain consulting services to the Company for a period of five
years for an annual payment equal to $1 million or 75% of his then base salary,
whichever is less.

The employment agreement prohibits Mr. Schwab from becoming associated with any
business competing with the Company for a period of five years following a
voluntary resignation of employment. (However, that restriction does not apply
if Mr. Schwab resigns his employment within 24 months of a change in control of
the Company.)

LICENSE AGREEMENT

The Company and Charles Schwab & Co., Inc. also are parties to an assignment and
license agreement with Mr. Schwab that was approved in July 1987 by the
Company's non-employee directors. Under the agreement, Mr. Schwab has assigned
to the Company all service mark, trademark, and trade name rights to Mr.
Schwab's name (and variations on the name) and likeness. However, Mr. Schwab has
retained the perpetual, exclusive, irrevocable right to use his name and
likeness for any activity other than the financial services business.

Beginning immediately after any termination of his employment, Mr. Schwab will
be entitled to use his likeness in the financial services business for some
purposes (specifically, the sale, distribution, broadcast and promotion of
books, videotapes, lectures, radio and television programs, and also any
financial planning services that do not directly compete with any business in
which the Company or its subsidiaries are then engaged or plan to enter within
three months). Beginning two years after any termination of his employment, Mr.
Schwab may use his likeness for all other purposes, as long as that use does not
cause confusion about whether the Company is involved with goods or services
actually marketed by Mr. Schwab or by third parties unrelated to the Company.

So long as Mr. Schwab does not cause actual confusion among clients, he will at
all times be able to use his own name to identify himself, but not as a service
mark, trademark or trade name in the financial services business. The assignment
and license agreement defines the "financial services business" as the business
in which Charles Schwab & Co., Inc. is currently engaged and any additional and
related businesses in which that firm or the

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LICENSE AGREEMENT

APPENDIX A DESCRIPTION OF CHARLES R. SCHWAB'S EMPLOYMENT AND LICENSE AGREEMENTS

Company is permitted to engage under rules and regulations of applicable
regulatory agencies. The Company's ability to assign or license the right to use
Mr. Schwab's name and likeness is severely limited during Mr. Schwab's lifetime.

No cash consideration is to be paid to Mr. Schwab for the name assignment while
he is employed by the Company or, after that employment terminates, while he is
receiving compensation under an employment agreement with the Company. Beginning
when all such compensation ceases, and continuing for a period of 15 years, Mr.
Schwab or his estate will receive three-tenths of one percent (0.3%) of the
aggregate net revenues of the Company (on a consolidated basis) and those of its
unconsolidated assignees and licensees that use the name or likeness. These
payments may not, however, exceed $2 million per year, adjusted up or down to
reflect changes from the cost of living prevailing in the San Francisco Bay Area
during specified months in 1987, and they will terminate if the Company and its
subsidiaries cease using the name and likeness.

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LICENSE AGREEMENT

APPENDIX B DESCRIPTION OF H. MARSHALL SCHWARZ'S SEPARATION AND EMPLOYMENT
AGREEMENTS

This Appendix B describes H. Marshall Schwarz's separation agreement and certain
terms of his employment agreement, which has been superseded for the most part
by the separation agreement.

SEPARATION AGREEMENT

Although Mr. Schwarz had planned to retire in November 2001, he delayed his
retirement at the Company's request so that U.S. Trust Corporation and its
subsidiaries would be able to continue to benefit from his experience, expertise
and guidance at a critical juncture in U.S. Trust's history. Having successfully
completed that additional service, on February 28, 2002, Mr. Schwarz retired
from his position as Chairman of U.S. Trust and Executive Vice President of the
Company.

Under the terms of a separation agreement with the Company and U.S. Trust, Mr.
Schwarz will receive a one-time lump-sum payment in the amount of $2,333,333 on
or before June 30, 2002, as well as options to purchase 51,233 shares of Company
common stock. This payment and option grant are in place of any compensation
that otherwise might have been payable under the Company's or U.S. Trust's
compensation plans and programs and under Mr. Schwarz's employment agreement
with the Company and U.S. Trust (certain terms of which are described below).

In addition, Mr. Schwarz will receive any benefits which had accrued and vested
as of his retirement date.

Under the terms of the separation agreement, Mr. Schwarz has agreed to continue
to serve as a U.S. Trust board member until the earlier of his (i) resignation
from the board; (ii) 72nd birthday; or (iii) death, incapacity or other
inability to perform his duties as a board member.

Although the separation agreement supersedes the terms of his employment
agreement for the most part, Mr. Schwarz remains subject to certain provisions
of his employment agreement. They include provisions prohibiting him from
becoming associated with any business competing with the Company or U.S. Trust,
or any of the Company's other subsidiaries or affiliates, in certain specified
geographical areas for two years following the date of his retirement.

Certain other provisions of Mr. Schwarz's employment agreement are described
below because of their relevance to information concerning Mr. Schwarz contained
elsewhere in this proxy statement.

EMPLOYMENT AGREEMENT

The Company, U.S. Trust and H. Marshall Schwarz entered into an employment
agreement as of January 12, 2000. His employment term began on May 31, 2000 (the
effective date of the merger involving the Company and U.S. Trust). His
employment term would have terminated on the third anniversary of the merger if
Mr. Schwarz had not retired (and his employment term had not been otherwise
terminated earlier under the terms of the employment agreement).

The employment agreement provided for an annual base salary equal to the base

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SEPARATION AGREEMENT

EMPLOYMENT AGREEMENT

APPENDIX B DESCRIPTION OF H. MARSHALL SCHWARZ'S SEPARATION AND EMPLOYMENT
AGREEMENTS

salary paid by U.S. Trust to Mr. Schwarz before the merger and an annual bonus
with a target of 165% of his base salary. It further provided that, for 2000,
Mr. Schwarz's bonus would not be less than the bonus he received for 1999, and
for 2001, it would not be less than 80% of the bonus he received for 1999. (Mr.
Schwarz voluntarily waived the receipt of any bonus for 2001.)

The employment agreement also provided for grants of options on Company common
stock, subject to the approval of the Board Compensation Committee. (Mr. Schwarz
voluntarily waived the receipt of any options in 2001). The employment agreement
also provided for other executive benefits, including participation in employee
benefits and executive compensation plans and programs made available to other
executive officers (except for plans that provide for severance pay or
benefits).

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EMPLOYMENT AGREEMENT

APPENDIX C DESCRIPTION OF JEFFREY S. MAURER'S EMPLOYMENT AGREEMENT

This Appendix C describes Jeffrey S. Maurer's employment agreement.

EMPLOYMENT AGREEMENT

The Company, U.S. Trust Corporation and Jeffrey S. Maurer entered into an
employment agreement as of January 12, 2000. His employment term began on May
31, 2000 (the effective date of the merger involving the Company and U.S.
Trust). His employment term terminates automatically on the third anniversary of
the merger, unless earlier terminated under the terms of the agreement.

The employment agreement provides for an annual base salary equal to the base
salary paid by U.S. Trust to Mr. Maurer before the merger and an annual bonus
with a target of 150% of his base salary. It further provides that, for 2000,
Mr. Maurer's bonus would not be less than the bonus he received for 1999, and
for 2001, it would not be less than 60% of the bonus he received for 1999. The
employment agreement permits the Company, after December 31, 2001, to modify, in
its sole discretion, the specific terms of Mr. Maurer's bonus arrangement.
Effective January 1, 2002, the Company elected to make Mr. Maurer eligible to
participate in the Company's Corporate Executive Bonus Plan and Annual Executive
Individual Performance Plan. (For a description of these plans, see "Variable
Compensation" under the "Compensation Committee Report" beginning on page 30.)

The employment agreement also provides for grants of options on Company common
stock, subject to the approval of the Board Compensation Committee. The
employment agreement also provides other executive benefits, including
participation in employee benefits and executive compensation plans and programs
made available to other executive officers (except for plans that provide for
severance pay or benefits).

In connection with the merger involving the Company and U.S. Trust, a key
employee retention program was established. Under the terms of the retention
program, if Mr. Maurer is an employee of the Company or one of its subsidiaries
on May 31, 2002, he will receive a payment equal to $2.8 million of which
$2,333,333 will be in cash. The remainder consists of stock options (based on a
valuation formula).

The employment agreement provides that certain compensation and benefits will be
paid or provided to Mr. Maurer if his employment is terminated without cause or
he terminates his employment for good reason, as discussed below. "Cause" is
defined as failure or refusal to perform duties (for reasons other than death or
physical or mental incapacity), willful and gross negligence, the commission of
a felony, violation of laws and regulations that are seriously detrimental to
U.S. Trust and its business, or a material breach of the employment agreement by
Mr. Maurer.

"Good reason" is defined as a material breach by the Company of the employment
agreement, a substantial reduction in Mr. Maurer's responsibilities, Mr.
Maurer's required relocation to a place

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EMPLOYMENT AGREEMENT

APPENDIX C DESCRIPTION OF JEFFREY S. MAURER'S EMPLOYMENT AGREEMENT

of employment outside New York City, a reduction in annual base salary or
targeted total compensation, or the failure to obtain the written assumption of
the employment agreement by a successor to the Company or U.S. Trust.

If Mr. Maurer's employment is terminated without cause, or if he terminates his
employment for good reason, he will be entitled to receive, among other things:

o his base salary, bonus and benefits for each year remaining in his
employment term (but not less than three times his base salary and
targeted bonus if he is terminated before or on May 31, 2002, or not
less than two times his base salary and targeted bonus if he is
terminated after May 31, 2002), and

o full and immediate vesting of all then outstanding stock options and
other equity-based awards.

If termination of his employment is due to disability, Mr. Maurer will be
entitled to receive, among other things:

o his base salary through the termination date, any bonus due for the
fiscal year ended prior to the termination, and any prorated portion of
any bonus for the year in which the disability occurs, and

o full and immediate vesting of all then outstanding stock options and
other equity-based awards, with stock options remaining exercisable for
one year after the termination (but not beyond their original term).

If termination of employment is due to death, Mr. Maurer's estate will be
entitled to receive, among other things:

o his base salary through the last day of the month in which his death
occurs, any bonus due for the fiscal year ended prior to his death, and
any prorated portion of any bonus for the year in which his death
occurs, and

o full and immediate vesting of all then outstanding stock options and
other equity-based awards, with stock options remaining exercisable by
his estate for one year after his death (but not beyond their original
term).

The employment agreement prohibits Mr. Maurer from becoming associated with any
business competing with the Company or U.S. Trust, or any of the Company's other
subsidiaries or affiliates, in certain specified geographical areas for a period
of:

o two years following a termination of employment that occurs before or
on May 31, 2002, or

o one year following a termination that occurs after May 31, 2002.

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EMPLOYMENT AGREEMENT

APPENDIX D DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN

GENERAL DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN

PLAN PARTICIPANTS

The participants in the Corporate Executive Bonus Plan include the President and
Co-Chief Executive Officer, Vice Chairmen, Executive Vice Presidents and, from
time to time, certain other officers having comparable positions, in each case
as selected for participation by the Board Compensation Committee. Currently,
seven executive officers are among this group of participants.

DETERMINATION OF BONUS AMOUNTS

The Corporate Executive Bonus Plan specifies a target bonus for each executive
officer, which is expressed as a percentage of that executive's annual base
salary, and which depends upon an assessment of that executive's roles and
responsibilities. The Compensation Committee sets target bonuses in the first
quarter of each year, based upon the recommendations of the Chairman and
Co-Chief Executive Officer and, where appropriate, the President and Co-Chief
Executive Officer. The President and Co-Chief Executive Officer receives all of
his annual incentive compensation under the plan. The other six executive
officers also participate in the Company's Annual Executive Individual
Performance Plan, which pays additional annual bonuses based on the achievement
of individual performance goals. The target bonus percentages under the
Corporate Executive Bonus Plan are:

o up to 500% of the President and Co-Chief Executive Officer's annual
base salary, and

o up to 100% of the annual base salaries of the other six executive
officers.

The amount of the target bonus is then multiplied by a payout percentage, which
is derived from a matrix fixed by the Compensation Committee in advance, and
which can range from:

o 0% to 500% for the President and Co-Chief Executive Officer and

o 0% to 400% for the other six executive officers.

The matrix establishes the relationship between the payout percentage and the
Company's performance for the year relative to its targets, which are currently
based on the Company's pre-tax operating profit margin and net revenue growth.
If stockholders approve the proposed amendment to the Corporate Executive Bonus
Plan, the Compensation Committee will be able to select from among the following
performance measures in establishing such targets at the beginning of each year
after a review of corporate goals and objectives: revenue growth, operating
revenue growth, consolidated pre-tax profit margin, consolidated pre-tax
operating profit margin, client net new assets growth, stockholder return,
return on net assets, earnings per share, return on equity, and return on
investment.

In the case of the President and Co-Chief Executive Officer, the Compensation
Committee has discretion, subject to the percentage limits mentioned above, to
reduce the amount of any payment otherwise required under the plan. In any
event, the amount of base salary included in the computation of the target bonus

[side bar]

GENERAL DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN

APPENDIX D DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN

amount for each participant in any year may not exceed 250% of the base salary,
determined as of March 31, 2000, payable to the participant holding the same or
substantially similar position on March 31, 2000.

BONUS PAYMENTS

Payments under the plan for any year are made quarterly based on the Company's
year-to-date performance for that year, except that payments to the President
and Co-Chief Executive Officer are made annually within a reasonable time after
the end of that year. Payments are generally made in cash, except that the
Compensation Committee may decide to make all or a portion of the payments in
Company stock or other equity-based awards (including stock options or
restricted stock) with equivalent value. However, not more than 0.5% of the
Company's outstanding shares may be issued in any year under the plan (combined
with any such shares issued under the Annual Executive Individual Performance
Plan).

Amounts payable under the Corporate Executive Bonus Plan are generally paid in
the year in which they are earned or during the following year. However, a
recipient may elect to defer receipt of all or any portion of the amounts
payable under the plan until a specified date, or until termination of
employment, but deferrals will be paid immediately upon a change of control.
Deferrals may be credited with growth rates, determined by the total return that
would result from investments in certain registered investment companies
selected from time to time by the Company, the allocation among which is
determined by the participant.

PLAN ADMINISTRATION

The Compensation Committee administers the plan and makes all decisions
regarding the operation of the plan and payments under it. The Compensation
Committee may amend or terminate the plan at any time and for any reason.

PLAN BENEFITS TABLE

The table in Appendix F identifies the amounts that would have been payable for
2000 and 2001 under the Corporate Executive Bonus Plan, based on the assumptions
stated in the table, if the proposed amendment to the plan had been in effect
for those years. The fundamental design of the plan has not changed. The purpose
of the amendment is to provide the Compensation Committee more flexibility in
annually selecting performance goals and criteria in order to provide
appropriate incentive to participants to achieve the business plan each year, as
well as to ensure the desired tax treatment of bonus payments.

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GENERAL DESCRIPTION OF THE CORPORATE EXECUTIVE BONUS PLAN

APPENDIX E DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

GENERAL DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

PLAN PARTICIPANTS

The participants in the Annual Executive Individual Performance Plan include the
Vice Chairmen, Executive Vice Presidents and, from time to time, certain other
officers having comparable positions, in each case as selected for participation
by the Board Compensation Committee. Currently, six executive officers are among
this group of participants.

DETERMINATION OF BONUS AMOUNTS

The Individual Performance Plan specifies a maximum bonus for each participant,
which is 160% of the amount of the executive's bonus computed under the
Corporate Executive Bonus Plan. Participants in the Individual Performance Plan
may receive some, all, or none of their maximum bonus under the plan, depending
upon an assessment of their achievement of individual performance goals, which
is made by the Compensation Committee. The following paragraph describes how an
executive's bonus is computed under the Corporate Executive Bonus Plan.

To determine the bonus payable to an executive officer under the Corporate
Executive Bonus Plan, the Compensation Committee first determines a target bonus
for each executive, which is expressed as a percentage of the executive's annual
base salary, and depends upon an assessment of the executive's roles and
responsibilities. The Compensation Committee sets target bonuses in the first
quarter of each year, based upon the recommendations of the Chairman and
Co-Chief Executive Officer and, where appropriate, the President and Co-Chief
Executive Officer. For the executives who participate in the Individual
Performance Plan, the target bonus percentages under the Corporate Executive
Bonus Plan can be up to 100% of the executive's annual base salary. The amount
of the target bonus is then multiplied by a payout percentage, which is derived
from a matrix fixed by the Compensation Committee in advance, and which can
range from 0% to 400% for the executives who participate in the Individual
Performance Plan.

The matrix establishes the relationship between the payout percentage and the
Company's performance for the year relative to its targets, which are currently
based on the Company's pre-tax operating profit margin and net revenue growth.
If stockholders approve the proposed amendment to the Individual Performance
Plan, the Compensation Committee will be able to select from among the following
performance measures in establishing such targets at the beginning of each year
after a review of corporate goals and objectives: revenue growth, operating
revenue growth, consolidated pre-tax profit margin, consolidated pre-tax
operating profit margin, client net new assets growth, stockholder return,
return on net assets, earnings per share, return on equity, and return on
investment.

In any event, the amount of base salary included in the computation of the
target bonus amount for each participant in any

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GENERAL DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

APPENDIX E DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

year may not exceed 250% of the base salary, determined as of March 31, 2000,
payable to the participant holding the same or substantially similar position on
March 31, 2000.

The amount so derived from multiplying the executive's target bonus by the
payout percentage determined pursuant to the matrix is the amount of the bonus
payable under the Corporate Executive Bonus Plan. This latter amount is then
multiplied by 160% to determine the maximum bonus payable to the executive under
the Individual Performance Plan.

BONUS PAYMENTS

Payments are generally made in cash, except that the Compensation Committee may
decide to make all or a portion of the payments in Company stock or other
equity-based awards (including stock options or restricted stock) with
equivalent value. However, not more than 0.5% of the Company's outstanding
shares may be issued in any year under the Individual Performance Plan (combined
with any such shares issued under the Corporate Executive Bonus Plan).

Amounts payable under the Individual Performance Plan are generally paid within
a reasonable time after the end of the year in which they are earned. However, a
recipient may elect to defer receipt of all or any portion of the amounts
payable under the plan until a specified date, or until termination of
employment, but deferrals will be paid immediately if the Company undergoes a
change in control. Deferrals may be credited with growth rates, determined by
the total return that would result from investments in certain registered
investment companies selected from time to time by the Company, the allocation
among which is determined by the participant.

PLAN ADMINISTRATION

The Compensation Committee administers the Individual Performance Plan and makes
all decisions regarding the operation of the plan and payments under it. The
Compensation Committee may amend or terminate the plan at any time and for any
reason.

PLAN BENEFITS TABLE

The table in Appendix F identifies the amounts that would have been payable for
2000 and 2001 under the Annual Executive Individual Performance Plan, based on
the assumptions stated in the table, if the proposed amendment to the plan had
been in effect for those years. The fundamental design of the plan has not
changed. The purpose of the amendment is to provide the Compensation Committee
more flexibility in annually selecting performance goals and criteria in order
to provide appropriate incentive to participants to achieve the business plan
each year, as well as to ensure the desired tax treatment of bonus payments.

[side bar]

GENERAL DESCRIPTION OF THE ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

APPENDIX F NEW PLAN BENEFITS TABLE

NEW PLAN BENEFITS

ANNUAL EXECUTIVE
CORPORATE EXECUTIVE INDIVIDUAL
BONUS PLAN (1) PERFORMANCE PLAN (1)
DOLLAR VALUE ($) DOLLAR VALUE ($)

BASED ON BASED BASED ON BASED
2000 ON 2001 2000 ON 2001
NAME RESULTS RESULTS RESULTS RESULTS
- ---------------------------------------------------------------------------------------------------------------

CHARLES R. SCHWAB (2) N/A N/A N/A N/A
CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER

DAVID S. POTTRUCK (2) $11,200,000 0 N/A N/A
PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER

H. MARSHALL SCHWARZ (2) N/A N/A N/A N/A
EXECUTIVE VICE PRESIDENT

JEFFREY S. MAURER $1,593,312 0 $955,987 0
EXECUTIVE VICE PRESIDENT

DAWN GOULD LEPORE $1,608,344 0 $965,006 0
VICE CHAIRMAN-TECHNOLOGY AND ADMINISTRATION

JOHN PHILIP COGHLAN $1,499,368 0 $899,621 0
VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT

LON GORMAN $1,499,368 0 $899,621 0
VICE CHAIRMAN AND EXECUTIVE VICE PRESIDENT

ALL CURRENT EXECUTIVE OFFICERS, AS A GROUP
(7 PERSONS--2001 CORPORATE EXECUTIVE BONUS
PLAN; 6 PERSONS--ANNUAL EXECUTIVE INDIVIDUAL
PERFORMANCE PLAN) $19,396,542 0 $4,917,925 0

ALL CURRENT DIRECTORS WHO ARE NOT EXECUTIVE N/A N/A N/A N/A
OFFICERS, AS A GROUP (9 PERSONS) (3)

ALL CURRENT EMPLOYEES, OTHER THAN EXECUTIVE N/A N/A N/A N/A
OFFICERS, AS A GROUP (3)

(1) The left side of each column identifies the amounts that would be payable
under the Corporate Executive Bonus Plan and the Annual Executive
Individual Performance Plan, as amended, for 2000, had the proposed
amendments to the plans then been in effect, based on the Company's 2000
pre-tax operating profit margin of 24% and net revenue growth of 29%. The
right side of each column identifies the amounts that would be payable
under these plans for 2001, had the proposed amendments to the plans then
been in effect, based on the Company's 2001 pre-tax operating profit margin
of 15% and net revenue decline of 25%. Further, in each case, the amount
shown is based on:

o the base salaries originally established for 2001 ( rather than the
reduced salaries for 2001 shown in the "Summary Compensation Table" on
page 23) and 2001 target bonuses,

o an assumption that the Board Compensation Committee decides to use
pre-tax operating profit margin and net revenue growth as the sole
performance measures in determining the amounts available for payment
of bonuses under each plan, and

[side bar]

NEW PLAN BENEFITS TABLE

APPENDIX F NEW PLAN BENEFITS TABLE

o an assumption that each executive officer receives his or her full
target bonus under each plan.

(2) Mr. Schwab does not participate in the Corporate Executive Bonus Plan, and
he and Mr. Pottruck do not participate in the Annual Executive Individual
Performance Plan. Mr. Schwarz did not participate in either plan before his
retirement in February 2002, and he will not participate in them under the
terms of his separation agreement described in Appendix B.

(3) Only executive officers are eligible to participate in the Corporate
Executive Bonus Plan and the Annual Executive Individual Performance Plan.

[side bar]

NEW PLAN BENEFITS TABLE

[This Page Intentionally Left Blank]

THE CHARLES SCHWAB CORPORATION

101 Montgomery Street
San Francisco, California 94104
(415) 627-7000
WWW.SCHWAB.COM

THE CHARLES SCHWAB CORPORATION

CORPORATE EXECUTIVE BONUS PLAN

(AS AMENDED FEBRUARY 27, 2002)

I. PURPOSES

The purposes of this Corporate Executive Bonus Plan (the "Plan") are:
(a) to provide greater incentive for key executives continually to
exert their best efforts on behalf of The Charles Schwab Corporation
(the "Company") by rewarding them for services rendered with
compensation that is in addition to their regular salaries; (b) to
attract and to retain in the employ of the Company persons of
outstanding competence; and (c) to further the identity of interests of
such employees with those of the Company's stockholders through a
strong performance-based reward system.

II. FORM OF AWARDS

1. Incentive compensation awards under this Plan shall be generally
granted in cash, less any applicable withholding taxes; provided
that the Committee may determine, from time to time, that all or
a portion of any award may be paid in the form of an equity based
incentive, including without limitation stock options, restricted
shares, or outright grants of Company stock. The number of shares
and stock options granted in any year, when added to the number
of shares and stock options granted for such year pursuant to the
Company's Annual Executive Individual Performance Plan, shall in
no event exceed .5% of the outstanding shares of the Company.

III. DETERMINATION OF AWARDS

1. Incentive awards for participants other than the
President/Co-Chief Executive Officer shall be determined
quarterly according to a Corporate Performance Payout Matrix that
shall be adopted at the beginning of each year by the
Compensation Committee of the Board of Directors (the
"Committee"). The Executive Committee Corporate Performance
Payout Matrix shall be based on corporate performance criteria to
be selected by the Committee from among the following: revenue
growth, operating revenue growth, consolidated pretax profit
margin, consolidated pretax operating margin, customer net new
asset growth, stockholder return, return on net assets, earnings
per share, return on equity, and return on investment. Awards
shall be defined by reference to a target percentage of base
salary determined, from time to time, by the Committee. Payouts
described in this subsection shall be calculated and paid on a
quarterly basis, based on year-to-date performance compared with
the comparable period in the preceding year.

2. With respect to payments made pursuant to Section III.1, the
amount of base salary included in the computation of incentive
awards shall not exceed 250% of the base salary in effect for the
officer holding the same or substantially similar position on
March 31, 2000. In addition, for all participants other than the
President/Co-Chief Executive Officer, (i) the maximum target
incentive percentage shall be 100% of base salary

and (ii) the maximum award shall be 400% of the participant's
target award.

3. Incentive awards for the President/Co-Chief Executive Officer
shall be determined in accordance with a Corporate Performance
Payout Matrix that shall be adopted at the beginning of each year
by the Committee. The Committee shall determine the
President/Co-Chief Executive Officer's award each year, up to the
maximum amount defined by the matrix for a given level of
performance. This matrix may, if the Committee deems appropriate,
differ from that described in Subsection III.1. However, the
performance criteria shall be the same as referred to above.
Payouts for the President/Co-Chief Executive Officer shall be
made on an annual basis, based on the Company's results for the
full year.

4. The maximum award payable for the President/Co-Chief Executive
Officer under this plan shall be no more than 500% of his target
incentive award. The target incentive amount shall be determined
each year by the Committee, but may not exceed 500% of base
salary. The amount of base salary taken into account for purposes
of computing the target incentive award may not exceed 250% of
the President/Co-Chief Executive Officer's base salary as of
March 31, 2000.

5. Notwithstanding anything to the contrary contained in this Plan,
the Committee shall have the power, in its sole discretion, to
reduce the amount payable to any Participant (or to determine
that no amount shall be payable to such Participant) with respect
to any award prior to the time the amount otherwise would have
become payable hereunder. In the event of such a reduction, the
amount of such reduction shall not increase the amounts payable
to other participants under the Plan.

IV. ADMINISTRATION

1. Except as otherwise specifically provided, the Plan shall be
administered by the Committee. The Committee members shall be
appointed pursuant to the Bylaws of the Company, and the members
thereof shall be ineligible for awards under this Plan for
services performed while serving on said Committee.

2. The decision of the Committee with respect to any questions
arising as to interpretation of the Plan, including the
severability of any and all of the provisions thereof, shall be,
in its sole and absolute discretion, final, conclusive and
binding.

V. ELIGIBILITY FOR AWARDS

1. Awards under the Plan may be granted by the Committee to those
employees who have contributed the most in a general way to the
Company's success by their ability, efficiency, and loyalty,
consideration being given to ability to succeed in more important
managerial responsibility in the Company. This is intended to
include the President/Co-Chief Executive Officer, Vice Chairmen,
Executive Vice Presidents, and from time to time, certain other
officers having comparable positions. No award may be granted to
a member of the Company's Board of Directors except for services
performed as an employee of the Company.

2. Except in the event of retirement, death, or disability, to be
eligible for an award an employee shall be employed by the
Company as of the date awards are calculated and approved by the
Committee under this Plan.

3. For purposes of this Plan, the term "employee" shall include an
employee of a corporation or other business entity in which this
Company shall directly or indirectly own 50% or more of the
outstanding voting stock or other ownership interest.

VI. AWARDS

1. The Committee shall determine each year the payments, if any, to
be made under the Plan. Awards for any calendar year shall be
granted not later than the end of the first

quarter of the calendar year, and payments pursuant to the Plan
shall be made as soon as practicable after the close of each
calendar quarter (or, in the case of the President/Co-Chief
Executive Officer, as soon as practicable after the close of each
calendar year).

2. Upon the granting of awards under this Plan, each participant
shall be informed of his or her award by his or her direct
manager and that such award is subject to the applicable
provisions of this Plan.

VII. DEFERRAL OF AWARDS

1. A participant in this Plan who is also eligible to participate in
The Charles Schwab Corporation Deferred Compensation Plan may
elect to defer payments pursuant to the terms of that plan.

VIII. RECOMMENDATIONS AND GRANTING OF AWARDS

1. Recommendations for awards shall be made to the Committee by the
Co-Chief Executive Officers, except that, with respect to the
President/Co-Chief Executive Officer, recommendations for awards
shall be made solely by the Chairman/Co-Chief Executive Officer.

2. Any award shall be made in the sole discretion of the Committee,
which shall take final action on any such award. No person shall
have a right to an award under this Plan until final action has
been taken granting such award.

IX. AMENDMENTS AND EXPIRATION DATE

While it is the present intention of the Company to grant awards
annually, the Committee reserves the right to modify this Plan from
time to time or to repeal the Plan entirely, or to direct the
discontinuance of granting awards either temporarily or permanently;
provided, however, that no modification of this plan shall operate to
annul, without the consent of the beneficiary, an award already granted
hereunder; provided, also, that no modification without approval of the
stockholders shall increase the maximum amount which may be awarded as
hereinabove provided.

X. MISCELLANEOUS

All expenses and costs in connection with the operation of this Plan
shall be borne by the Company and no part thereof shall be charged
against the awards anticipated by the Plan. Nothing contained herein
shall be construed as a guarantee of continued employment of any
participant hereunder. This Plan shall be construed and governed in
accordance with the laws of the State of California.

THE CHARLES SCHWAB CORPORATION

ANNUAL EXECUTIVE INDIVIDUAL PERFORMANCE PLAN

(AS AMENDED FEBRUARY 27, 2002)

I. PURPOSES

The purposes of this Annual Executive Individual Performance Plan (the
"Plan") are: (a) to provide greater incentive for key executives to
continually exert their best efforts on behalf of The Charles Schwab
Corporation (the "Company") by rewarding them for services rendered
with incentive compensation that is in addition to their regular
salaries; (b) to attract and to retain in the employ of the Company
persons of outstanding competence; and (c) to further align the
interests of such employees with those of the Company's stockholders
through a strong performance-based reward system.

II. FORM OF AWARDS

Incentive compensation awards under this Plan shall be generally
granted in cash, less any applicable withholding taxes; provided that
the Committee may determine, from time to time, that all or a portion
of any award may be paid in the form of an equity based incentive,
including without limitation stock options, restricted shares, or
outright grants of Company stock. The number of shares and stock
options granted in any year, when added to the number of shares and
stock options granted for such year pursuant to the Company's Corporate
Executive Bonus Plan, shall in no event exceed .5% of the outstanding
shares of the Company.

III. DETERMINATION OF AWARDS

1. Incentive awards for participants shall be determined annually.
The participants in the Plan shall be the executive officers who
are selected by the Compensation Committee of the Board of
Directors (the "Committee") to participate in the Charles Schwab
Corporate Executive Bonus Plan (the "CEB Plan"), except that the
President and Co-Chief Executive Officer shall not be eligible to
participate in the Plan. Payouts under the CEB Plan are defined
by reference to a target percentage of base salary determined,
from time to time, by the Committee and pursuant to a payout
matrix, adopted from time to time by the Committee, that uses
corporate performance criteria, to be selected by the Committee
from among the following: revenue growth, operating revenue
growth, consolidated pretax profit margin, consolidated pretax
operating margin, customer net new asset growth, stockholder
return, return on net assets, earnings per share, return on
equity, and return on investment. Each participant shall have a
bonus target under the Plan equal to such Participant's bonus
target under the CEB Plan, multiplied by 160%. Payouts described
in this subsection shall be calculated and paid on an annual
basis.

2. With respect to payments made pursuant to Section III.1, the
amount of base salary included in the computation of incentive
awards pursuant to the CEB Plan shall not exceed 250% of the base
salary in effect for the officer holding the same or
substantially similar position on March 31, 2000. In addition,
(i) the maximum target incentive percentage pursuant to the CEB
Plan shall be 100% of base salary and (ii) the maximum award

pursuant to the CEB Plan shall be 400% of the participant's
target award.

3. Notwithstanding anything to the contrary contained in this Plan,
the Committee shall have the power, in its sole discretion, to
reduce the amount payable to any Participant (or to determine
that no amount shall be payable to such Participant) with respect
to any award prior to the time the amount otherwise would have
become payable hereunder. In the event of such a reduction, the
amount of such reduction shall not increase the amounts payable
to other participants under the Plan.

IV. ADMINISTRATION

V. ELIGIBILITY FOR AWARDS

1. Awards under the Plan shall be granted by the Committee to those
employees who are eligible to participate in the CEB Plan. This
is intended to include the Vice Chairmen, Executive Vice
Presidents, and other officers having comparable positions.

No award may be granted to a member of the Company's Board of
Directors except for services performed as an employee of the
Company.

2. Except in the event of retirement, death, or disability, to be
eligible for an award an employee must be employed by the Company
as of the date awards are calculated and approved by the
Committee under this Plan.

VI. AWARDS

1. The Committee shall determine each year the payments, if any, to
be made under the Plan. Awards for any calendar year shall be
granted not later than the end of the first quarter of the

calendar year, and payments pursuant to the Plan shall be made as
soon as practicable after the close of the calendar year.

VII. DEFERRAL OF AWARDS

1. A participant in this Plan who is also eligible to participate in
The Charles Schwab Corporation Deferred Compensation Plan may
elect to defer payments pursuant to the terms of that plan.

VIII. RECOMMENDATIONS AND GRANTING OF AWARDS

1. Recommendations for awards shall be made to the Committee by the
Co-Chief Executive Officers.

IX. AMENDMENTS AND EXPIRATION DATE

X. MISCELLANEOUS

THE CHARLES SCHWAB CORPORATION

ANNUAL MEETING OF STOCKHOLDERS

MONDAY, MAY 13, 2002
2:00 P.M. (PST)

THE ARGENT HOTEL
50 THIRD STREET
SAN FRANCISCO, CALIFORNIA

THE ANNUAL MEETING OF STOCKHOLDERS WILL BE BROADCAST OVER THE INTERNET. FOR
INFORMATION ABOUT THE REAL-TIME WEBCAST, VISIT WWW.SCHWABEVENTS.COM.

================================================================================

THE CHARLES SCHWAB CORPORATION
101 MONTGOMERY STREET
SAN FRANCISCO, CA 94104 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 13, 2002.

The shares of stock you hold in your account, as well as any shares you hold
under The Charles Schwab Corporation Dividend Reinvestment and Stock Purchase
Plan, The SchwabPlan Retirement Savings and Investment Plan and/or the U.S.
Trust Corporation 401(k) Plan will be voted as you specify on the reverse side.

IF YOU SIGN AND RETURN YOUR PROXY CARD AND NO CHOICE IS SPECIFIED, YOUR SHARES
WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.

By signing the proxy, you revoke all prior proxies and appoint Charles R.
Schwab and David S. Pottruck, and each of them, with full power of
substitution, to vote your shares on the matters shown on the reverse side and
any other matters which may come before the Annual Meeting and all
adjournments.

SEE REVERSE FOR VOTING INSTRUCTIONS.

COMPANY #

CONTROL #

THERE ARE THREE WAYS TO VOTE YOUR SHARES

YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.

VOTE BY TELEPHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY ***
IMMEDIATE

o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m., Central time, on May 10, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions the voice provides you.

VOTE BY INTERNET -- HTTP://WWW.EPROXY.COM/SCH/ -- QUICK *** EASY *** IMMEDIATE

o Use the Internet to vote your shares 24 hours a day, 7 days a week, until
12:00 p.m., Central time, on May 10, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic proxy.
o You will have the option to receive all future materials via the Internet.

VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to The Charles Schwab Corporation, c/o Shareowner
Services(SM), P.O. Box 64873, St. Paul, MN 55164-0873.

Account Number
--------------------------

IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
PLEASE DETACH HERE

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.

1. Election of directors:

01 Frank C. Herringer 02 Stephen T. McLin
03 Charles R. Schwab 04 Roger O. Walther

[ ] Vote FOR all nominees [ ] Vote WITHHELD
(except as marked) from all nominees

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
-----------------------------

2. Approval of Amendment to the Corporate
Executive Bonus Plan. [ ] For [ ] Against [ ] Abstain

3. Approval of Amendment to the Annual
Executive Individual Performance Plan. [ ] For [ ] Against [ ] Abstain

WHEN THIS PROXY IS PROPERLY EXECUTED YOUR SHARES WILL BE VOTED: (1) AS
DIRECTED; (2) FOR EACH PROPOSAL IF NO DIRECTION IS GIVEN; AND (3) ACCORDING TO
THE BEST JUDGMENT OF CHARLES R. SCHWAB AND DAVID S. POTTRUCK IF ANY OTHER
MATTER COMES BEFORE THE ANNUAL MEETING FOR A VOTE.

Address Change? Mark Box [ ] Indicate changes below:

Date -------------------------------------------------------

- ------------------------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear on the proxy card. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the proxy.