Exit and Other Related Liabilities

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

The integration of TD Ameritrade’s operations is expected to occur over 18 to 36 months from the October 6, 2020 acquisition date. To achieve our integration objectives, the Company expects to recognize significant additional acquisition and integration-related costs and capital expenditures throughout the integration process. Such acquisition and integration-related costs have included and are expected to continue to include professional fees, such as legal, advisory, and accounting fees, costs for technology enhancements, and compensation and benefits expenses for employees and contractors involved in the integration work.

The Company’s acquisition and integration-related spending also includes exit and other related costs, such as severance and other employee termination benefits, retention costs, as well as costs related to facility closures, including accelerated depreciation or impairments of assets in those locations. Exit and other related costs are a component of the Company’s overall acquisition and integration-related spending, and support the Company’s ability to achieve integration objectives including expected synergies.

The Company is in the early stages of integration, and our estimates of the nature, amounts, and timing of recognition of acquisition and integration-related costs are subject to change based on a number of factors, including the expected duration and complexity of the integration process and the heightened uncertainty of the current economic environment. More specifically, factors that could cause variability in our expected acquisition and integration-related costs include the level of employee attrition, workforce redeployment from eliminated positions into open roles, changes in the levels of client activity, and increased real estate-related exit cost variability due to the effects of the COVID-19 pandemic.

Inclusive of costs recognized in 2020, Schwab currently expects to incur total exit and other related costs for the integration of TD Ameritrade ranging from $650 million to $1 billion, consisting of employee compensation and benefits, facility exit costs, and certain other costs. During 2020, the Company incurred pre-tax charges of $186 million for acquisition-related exit costs. The Company expects the remaining exit and other related costs be incurred and charged to expense over the next 15 to 33 months. In addition to ASC 420 Exit or Disposal Cost Obligations, certain of the costs associated with these activities are accounted for in accordance with ASC 360 Property, Plant and Equipment, ASC 712 Compensation – Nonretirement Post Employment Benefits, ASC 718 Compensation – Stock Compensation, and ASC 842 Leases.

The following is a summary of the activity in the Company’s exit and other related liabilities for the year ended December 31, 2020:



	Investor Services Employee Compensation and Benefits		Advisor Services Employee Compensation and Benefits		Total
Balance at December 31, 2019	$	—	$	—	$	—
Exit and other related liabilities assumed in business acquisition	18		5		23
Costs incurred and charged to expense (1)	138		38		176
Costs paid or otherwise settled	(70)		(19)		(89)

Balance at December 31, 2020 (2)	$	86	$	24	$	110

(1) Costs incurred for severance pay and other termination benefits, as well as retention costs, are included in employee compensation and benefits on the consolidated statements of income.

(2) Included in accrued and expenses and other liabilities on the consolidated balance sheets.

The following table summarizes the exit and other related costs incurred by the Company for the year ended December 31, 2020, which represents cumulative costs incurred to date:


	Investor Services				Advisor Services
	Employee Compensation and Benefits		Facility Exit Costs (1)		Investor Services Total		Employee Compensation and Benefits		Facility Exit Costs (1)		Advisor Services Total		Total

Compensation and benefits	$	138	$	—	$	138	$	38	$	—	$	38	$	176

Occupancy and equipment	—		6		6		—		1		1		7

Depreciation and amortization	—		2		2		—		1		1		3

Total	$	138	$	8	$	146	$	38	$	2	$	40	$	186

(1) Costs related to facility closures. These costs, which are comprised of accelerated amortization of ROU assets and accelerated depreciation of fixed assets, relate to the impact of abandoning leased and other properties.