S-8

As filed with the Securities and Exchange Commission on February 3, 2006

File No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

THE CHARLES SCHWAB CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware	94-3025021
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

120 Kearny Street

San Francisco, California 94108

(Address of Principal Executive Offices)

The Charles Schwab Corporation Deferred Compensation Plan II

(Full Title of the Plan)

Christopher V. Dodds

Executive Vice President and Chief Financial Officer

The Charles Schwab Corporation

120 Kearny Street

San Francisco, California 94108

Telephone: 415/627-7000

(Name, Address and Telephone Number, Including Area Code, of Agent for Service)

CALCULATION OF REGISTRATION FEE

Title of Securities To be Registered	Amount to be Registered		Proposed Maximum Offering Price Per Share		Proposed Maxi-mum Aggregate Offering Price (2)		Amount of Registration Fee
Deferred Compensation Obligations (1)	$	200,000,000	100	%	$	200,000,000	$	21,400

(1) The Deferred Compensation Obligations being registered are general unsecured obligations of The Charles Schwab Corporation (the “Registrant”) to pay deferred compensation in the future to participating members of a select group of management or highly compensated employees in accordance with the terms of The Charles Schwab Corporation Deferred Compensation Plan II (the “Plan”).

(2) Estimated pursuant to Rule 457(h) solely for the purpose of calculating the registration fee.

This Registration Statement shall become effective upon filing in accordance with Rule 462 under the Securities Act of 1933.

PART I

INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

Item 1. Plan Information*

Item 2. Registrant Information and Employee Plan Annual Information*

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Certain Documents by Reference.

The following documents filed by the Registrant with the Securities and Exchange Commission (the “Commission”) are incorporated by reference into this Registration Statement on Form S-8 (the “Registration Statement”):

(a) The Registrant’s Annual Report on Form 10-K for the year ended December 31, 2004;

(b) The Registrant’s Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2005; and

(c) The Registrant’s Current Reports on Form 8-K filed on January 18, March 1, April 15, May 4, May 25, July 18, August 2, September 9, October 17, November 28, and December 15, 2005 and on January 18 and January 31, 2006 (excluding any portions thereof which are deemed “furnished” rather than filed with the Commission).

All reports or other documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), prior to the filing of a post-effective amendment to this Registration Statement which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold hereunder, shall be deemed to be incorporated by reference herein and to be a part of this Registration Statement from the date of filing such reports and documents.

Any statement contained in a document incorporated by reference into this Registration Statement shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein (or in any other subsequently filed document which also is or is deemed incorporated herein) modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part hereof, except as so modified or superseded.

* Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933 and the Note to Part I of Form S-8.

Item 4. Description of Securities.

The Plan provides a select group of management or highly compensated employees of the Registrant with the opportunity to defer the receipt of certain cash compensation. The Plan applies to cash compensation that is earned and deferred by participating eligible employees (“Participants”) after December 31, 2004.

The obligations of the Registrant under the Plan (the “Deferred Compensation Obligations”) will be general unsecured obligations of the Registrant to pay deferred compensation in the future to Participants in accordance with the terms of the Plan from the general assets of the Registrant, and will rank pari passu with other unsecured and unsubordinated indebtedness of the Registrant from time to time outstanding. The Deferred Compensation Obligations include compensation deferred by Participants, as adjusted to reflect assumed earnings and losses thereon. Such obligations will be denominated and payable in United States dollars.

Subject to the term and conditions set forth in the Plan, each eligible Participant may elect to defer base salary, bonuses and other forms of incentive pay that may otherwise be payable in a calendar year. The Registrant will maintain a deferral account (the “Deferral Account”) for each Participant. All of a Participant’s compensation deferrals will be credited to this Deferral Account. Amounts credited to Participants’ Deferral Accounts will be adjusted periodically (not less frequently than annually) to reflect assumed earnings and losses, based on investment options made available to Participants by the Registrant under the Plan. Investment options available under the Plan generally mirror the investment options available under the SchwabPlan Retirement Savings and Investment Plan, which is the Registrant’s defined contribution plan for employees generally. Each choice offers its own risks and potential returns. No representation is made regarding the future performance of such investment options, and none of the investment options is insured by the government or any other entity. The Deferral Accounts are bookkeeping entries only; no assets of the Registrant have been set aside to fund the Registrant’s obligations under the Plan and the Registrant is not obligated to actually invest any deferred amounts in those investment options. The Deferral Accounts do not give a participant any interest in or claim to any specific asset of the Registrant, nor shall they be deemed to create a trust for the benefit of the Participant.

With certain exceptions, Deferred Compensation Obligations will be paid or commence to be paid upon a fixed payment date, as elected by the Participant, or the Participant’s retirement. Participants may generally elect that payments be made in a single lump sum or in annual installments over a period of four, five, ten or fifteen years. However, upon a termination of Participant’s employment for any reason other than retirement, or upon a change in control of the Registrant, payment will be made in a lump sum. Amounts payable to certain specified employees upon termination of employment will be deferred for at least six months to the extent required under Section 409A of the Internal Revenue Code.

No amount payable under the Plan will be subject to anticipation, assignment, transfer, sale, mortgage, pledge or hypothecation. The plan administrator will not recognize any attempt by a third party to attach, garnish or levy upon any benefit under the Plan except as may be required by law.

The Deferred Compensation Obligations are not subject to redemption, in whole or in part, prior to the individual payment dates selected by the Participant, except that Participants may withdraw all or a portion of the value of the Plan accounts under certain circumstances as specified in the Plan and certain mandatory single sum distributions may be made. The Registrant reserves the right to amend or terminate the Plan at any time.

The total amount of Deferred Compensation Obligations is not determinable because the amount will vary depending upon the level of participation by eligible employees, the amounts of their compensation

that they elect to defer under the Plan, and assumed earnings and losses on deferred amounts. The duration of the Plan is indefinite (subject to the Registrant’s ability to terminate the Plan).

The Deferred Compensation Obligations are not convertible into another security of the Registrant. The Deferred Compensation Obligations will not have the benefit of a negative pledge or any other affirmative or negative covenant on the part of the Registrant. Each Participant will be responsible for acting independently with respect to, among other things, the giving of notices, responding to any requests for consents, waivers or amendments pertaining to the Deferred Compensation Obligations, enforcing covenants and taking action upon a default by the Registrant.

Item 5. Interests of Named Experts and Counsel.

Counsel who provided the opinion set forth in Exhibit 5 is employed by, and is Vice President, Associate General Counsel and Assistant Corporate Secretary of, the Registrant.

Item 6. Indemnification of Directors and Officers.

The Registrant’s Fifth Restated Certificate of Incorporation provides that, pursuant to Delaware law, no director of the Registrant shall be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, with specific exceptions. The exceptions relate to (i) any breach of a director’s duty of loyalty to the Registrant or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) approval by a director of certain unlawful dividend payments, distributions or stock redemptions or repurchases, or (iv) engaging in a transaction from which a director derives an improper personal benefit. Among the types of breaches for which directors will not be liable are those resulting from negligent or grossly negligent behavior.

The Registrant’s Third Restated Bylaws also provide for the indemnification of both the Registrant’s directors and officers within the limitations permitted by Delaware law. Section 145 of the Delaware General Corporation Law authorizes indemnification of directors and officers for actions taken in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation. This provision is sufficiently broad to permit indemnification under certain circumstances for liabilities (and for reimbursement of expenses incurred) arising under the Securities Act of 1933, as amended (the “Act”). The Registrant has entered into indemnity agreements with its directors that contain provisions that are in some respects broader than the specified indemnification provisions contained in Delaware law.

The Registrant has obtained directors’ and officers’ liability and corporate reimbursement insurance covering all officers and directors of the Registrant and its subsidiaries and providing for the reimbursement of amounts paid by the Registrant or its subsidiaries to directors and officers pursuant to indemnification arrangements, subject to certain deductibles and coinsurance provisions.

Item 7. Exemption from Registration Claimed.

Not applicable.

Item 8. Exhibits.

Exhibit Number	Exhibit Description
5	Opinion of Counsel
23.1	Independent Auditors’ Consent
23.2	Consent of Counsel (included in Exhibit 5)
24	Powers of Attorney (included as part of the signature page to this Registration Statement)
99.1	The Charles Schwab Corporation Deferred Compensation Plan II

Item 9. Undertakings.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a) (3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions in the documents and agreements described in Item 6 above, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and County of San Francisco, and the State of California, on this 3rd day of February, 2006.

THE CHARLES SCHWAB CORPORATION (Registrant)
By:	/s/ Charles R. Schwab
	Charles R. Schwab
	Chairman and Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Charles R. Schwab and Christopher V. Dodds, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign and execute on behalf of the undersigned any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection with any such amendments, as fully to all intents and purposes as he might or could do in person, and does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below on this 3rd day of February, 2006 by the following persons in the capacities indicated.

Signature	Title
/s/ Charles R. Schwab	Chairman, Chief Executive Officer and Director (principal executive officer)
Charles R. Schwab
/s/ Christopher V. Dodds	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)
Christopher V. Dodds
/s/ William F. Aldinger	Director
William F. Aldinger
/s/ Nancy H. Bechtle	Director
Nancy H. Bechtle
/s/ C. Preston Butcher	Director
C. Preston Butcher
/s/ Donald G. Fisher	Director
Donald G. Fisher
/s/ Frank C. Herringer	Director
Frank C. Herringer
/s/ Stephen T. McLin	Director
Stephen T. McLin
/s/ Paula A. Sneed	Director
Paula A. Sneed
/s/ Roger O. Walther	Director
Roger O. Walther
/s/ Robert N. Wilson	Director
Robert N. Wilson
/s/ David B. Yoffie	Director
David B. Yoffie

/s/ Marjorie Magner	Director
Marjorie Magner

INDEX TO EXHIBITS

Exhibit Number	Exhibit Description
5	Opinion of Counsel
23.1	Independent Auditors’ Consent
23.2	Consent of Counsel (included in Exhibit 5)
24	Powers of Attorney (included as part of the signature page to this Registration Statement)
99.1	The Charles Schwab Corporation Deferred Compensation Plan II

EX-5

Exhibit 5

February 3, 2006

Members of the Board of Directors

The Charles Schwab Corporation

120 Kearny Street

San Francisco, CA 94108

Dear Board Members:

I am Vice President, Associate General Counsel and Assistant Corporate Secretary of The Charles Schwab Corporation (the “Registrant”). I am rendering this opinion in my capacity as counsel to the Registrant in connection with the registration under the Securities Act of 1933, as amended, of deferred compensation obligations (the “Obligations”) of the Registrant, to be offered and sold under The Charles Schwab Corporation Deferred Compensation Plan II (the “Plan”), pursuant to a Registration Statement on Form S-8 (the “Registration Statement”). The Registration Statement is to be filed by the Registrant with the Commission on or about February 3, 2006.

I have examined or caused to be examined such corporate records, certificates and other documents and such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. On the basis of such examination, it is my opinion that the Obligations when established in accordance with the Plan and applicable resolutions of the Board of Directors, will be valid and binding obligations of the Registrant, enforceable against the Registrant in accordance with their terms and the terms of the Plan, except as enforceability (i) may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting creditor’s rights generally, and (ii) is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

The foregoing opinion is limited to the federal laws of the United States, the laws of the State of California, and the General Corporation Law of the State of Delaware, and I am expressing no opinion as to the effect of the laws of any other jurisdiction.

I hereby consent to the inclusion of this opinion as an exhibit to the Registration Statement.

Sincerely,

/s/ R. Scott McMillen

R. Scott McMillen

Vice President and Associate General Counsel

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement on Form S-8 of our report relating to the consolidated financial statements and financial statement schedule of The Charles Schwab Corporation and management’s report on the effectiveness of internal control over financial reporting dated February 28, 2005, appearing in The Charles Schwab Corporation’s Annual Report on Form 10-K for the year ended December 31, 2004.

DELOITTE & TOUCHE LLP

/s/ Deloitte & Touche LLP

San Francisco, California

February 3, 2006

EX-99.1

Exhibit 99.1

THE CHARLES SCHWAB CORPORATION

DEFERRED COMPENSATION PLAN II

(Effective December 9, 2004)

Table of Contents

ARTICLE 1:        PURPOSE		1
1.1	Establishment of the Plan.	1
1.2	Purpose of the Plan.	1
ARTICLE 2:        DEFINITIONS		1
2.1	Definitions.	1
2.2	Gender and Number.	3
ARTICLE 3:        ADMINISTRATION		3
3.1	Committee and Administrator.	3
ARTICLE 4:        PARTICIPANTS		3
4.1	Participants.	3
ARTICLE 5:        DEFERRALS		4
5.1	Salary Deferrals.	4
5.2	Deferrals of Bonuses, Commissions and Other Cash Incentive Compensation.	4
5.3	Timing of Elections.	4
5.4	Deferral Procedures.	5
5.5	Election of Time and Manner of Payment.	5
5.6	Accounts and Earnings.	7
5.7	Maintenance of Accounts.	7
5.8	Change in Control.	8
5.9	Payment of Deferred Amounts.	9
5.10	Payment on Certain Events.	10
ARTICLE 6:        GENERAL PROVISIONS		10
6.1	Unfunded Obligation.	10
6.2	Informal Funding Vehicles.	10
6.3	Beneficiary.	11
6.4	Incapacity of Participant or Beneficiary.	11
6.5	Nonassignment.	11
6.6	No Right to Continued Employment.	12
6.7	Tax Withholding.	12
6.8	Claims Procedure and Arbitration.	12
6.9	Termination and Amendment.	13
6.10	Applicable Law.	13
ARTICLE 7:        EXECUTION		13

THE CHARLES SCHWAB CORPORATION

DEFERRED COMPENSATION PLAN II

ARTICLE 1: PURPOSE

1.1 Establishment of the Plan.

Effective as of December 9, 2004, The Charles Schwab Corporation (hereinafter, the “Company”) hereby establishes The Charles Schwab Corporation Deferred Compensation Plan II (the “Plan”), as set forth in this document. This Plan shall apply to cash compensation that is earned and deferred by eligible Participants after December 31, 2004.

1.2 Purpose of the Plan.

The Plan permits participating employees to defer the payment of certain cash compensation that they may earn. The opportunity to elect such deferrals is provided in order to help the Company attract and retain key employees. This Plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. It is accordingly intended to be exempt from the participation, vesting, funding, and fiduciary requirements set forth in Title I of the Employee Retirement Income Security Act of 1974. The Plan also is intended to meet the requirements of section 409A of the Internal Revenue Code of 1986 and is to be construed in accordance with that section and any regulatory guidance issued thereunder.

ARTICLE 2: DEFINITIONS

2.1 Definitions.

The following definitions are in addition to any other definitions set forth elsewhere in the Plan. Whenever used in the Plan, the capitalized terms in this Section 2.1 shall have the meanings set forth below unless otherwise required by the context in which they are used:

(a) “Administrator” the administrator described in Section 3.1 that is selected by the Committee to assist in the administration of the Plan.

(b) “Beneficiary” means a person entitled to receive any payments that remain to be paid after a Participant’s death, as determined under Section 6.3.

(c) “Board” means the Board of Directors of the Company.

(d) “Company” means The Charles Schwab Corporation, a Delaware corporation.

(e) “Category 1 Participant” and “Category 2 Participant” each refer to a specific Participant group and have the meaning set forth in Section 4.1.

(f) “Committee” means the Compensation Committee of the Board.

1.

(g) “Deferral Account” means the account representing deferrals of cash compensation, plus investment adjustments, as described in Sections 5.6 and 5.7.

(h) “Disability” means a condition such that an individual (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company or its Subsidiaries.

(i) “Participant” means any employee who meets the eligibility requirements of the Plan, as set forth in Article 4, and includes, where appropriate to the context, any former employee who is entitled to payments under this Plan.

(j) “Plan” means The Charles Schwab Corporation Deferred Compensation Plan II, as in effect from time to time.

(k) “Plan Year” means the calendar year.

(l) “Retirement” shall mean:

(i) separation from service with respect to the Company and its Subsidiaries with the exception of U.S. Trust Corporation for any reason other than death at any time after the Participant has attained age fifty (50), but only if, at the time of such termination, the Participant has been credited with at least seven (7) Years of Service; and

(ii) separation from service with respect to U.S. Trust Corporation for any reason other than death at any time after (A) the Participant has attained age sixty-five (65); (B) the sum of the Participant’s age and credited Years of Service, at the time of such separation, is equal to or greater than eighty (80); or (C) the Participant has attained age sixty (60), but only if, at the time of such termination, the Participant has been credited with at least ten (10) Years of Service.

For purpose of this subparagraph (l), the term “Years of Service” shall have the same meaning given to it under the SchwabPlan Retirement Savings and Investment Plan (or any successor plan).

(m) “Specified Employee” means a “specified employee” within the meaning of section 409A of the Code.

(n) “Subsidiary” means a corporation or other business entity in which the Company owns, directly or indirectly, securities with more than 80 percent of the total voting power.

2.

(o) “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in section 152(a) of the Code); (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined in the sole discretion of the Administrator in accordance with section 409A of the Code.

(p) “Valuation Date” means each December 31 and any other date designated from time to time by the Committee for the purpose of determining the value of a Participant’s Deferral Account balance pursuant to Section 5.6.

2.2 Gender and Number.

Except when otherwise indicated by the context, any masculine or feminine terminology shall also include the neuter and other gender, and the use of any term in the singular or plural shall also include the opposite number.

ARTICLE 3: ADMINISTRATION

3.1 Committee and Administrator.

The Committee shall administer the Plan and may select one or more persons to serve as the Administrator. The Administrator shall perform such administrative functions as the Committee may delegate to it from time to time. Any person selected to serve as the Administrator may, but need not, be a Committee member or an officer or employee of the Company. However, if a person serving as Administrator or a member of the Committee is a Participant, such person may not vote on a matter affecting his or her interest as a Participant. The Committee shall have discretionary authority to construe and interpret the Plan provisions and resolve any ambiguities thereunder; to prescribe, amend, and rescind administrative rules relating to the Plan; to select the employees who may participate and to terminate the future participation of any such employees; to determine eligibility for benefits under the Plan; and to take all other actions that are necessary or appropriate for the administration of the Plan. Such interpretations, rules, and actions of the Committee shall be final and binding upon all concerned and, in the event of judicial review, shall be entitled to the maximum deference allowable by law. Where the Committee has delegated its responsibility for matters of interpretation and Plan administration to the Administrator, the actions of the Administrator shall constitute actions of the Committee.

ARTICLE 4: PARTICIPANTS

4.1 Participants.

Officers and other key employees of the Company and each of its Subsidiaries shall be eligible to participate in this Plan upon selection by the Administrator. To be nominated for participation, an employee must be a member of a select group of management or highly compensated employees. Directors of the Company who are full-time employees of the

3.

Company shall be eligible to participate in the Plan. Participating employees of the Company in the position of Executive Vice President or above shall be “Category 1 Participants.” All other participating employees shall be “Category 2 Participants.”

ARTICLE 5: DEFERRALS

5.1 Salary Deferrals.

Each Category 2 Participant selected under Section 4.1 may elect to defer up to 50 percent of his or her regular base salary (subject to the provisions of this Article V). Any such election must be made by entering into a deferred compensation agreement with the employer in accordance with procedures established by the Administrator on or before the applicable deadline under Section 5.3 for the election period during which the services for which the deferred salary is to be earned are performed. For this purpose, the election period shall be the Plan Year; provided, however, that during periods in which the Plan is not in effect for a full Plan Year or an employee is not a Participant for a full Plan Year, the election period shall be the portion of the Plan Year during which the Plan is in effect and the employee is an eligible Participant. Notwithstanding the foregoing, a person who is not a Participant at the beginning of a Plan Year shall not be allowed to elect a deferral of compensation that takes effect during that year unless the requirements under Section 5.3(b) are met. Salary deferrals that have been elected shall occur throughout the election period in equal increments for each payroll period.

5.2 Deferrals of Bonuses, Commissions and Other Cash Incentive Compensation.

Each Category 1 Participant and each Category 2 Participant may elect to defer all or any portion (subject to the provisions of this Article 5) of (a) his or her commissions; and (b) any amount that he or she subsequently earns under an annual cash bonus program and/or a long-term cash incentive compensation program of the Company or a participating Subsidiary. Any such election must be made by entering into a deferred compensation agreement with the employer in accordance with procedures established by the Administrator on or before the applicable deadline under Section 5.3. Rules similar to those in Section 5.1 shall apply in cases where the Plan is not in existence or an employee is not a Participant for the full period in which an annual cash bonus, commission or long-term incentive compensation award is earned.

5.3 Timing of Elections.

(a) Except as otherwise provided under subparagraph (b) or (c) below, compensation for services performed during a Plan Year may be deferred at the Participant’s election only if the election to defer such compensation is made not later than the close of the preceding Plan Year or, if permitted by the Administrator in its sole discretion, at such other time permitted under the Code.

(b) In the case of the first Plan Year in which a Participant becomes eligible to participate in the Plan, the Administrator may, in its sole discretion, provide that the Participant may make an election to defer compensation for services to be performed subsequent to the

4.

election provided that such election is made not later than 30 days after the date the Participant becomes eligible to participate in the Plan.

(c) In the case of “performance-based compensation” within the meaning section 409A of the Code that is based on services performed over a period of at least 12 months, the Administrator may, in its sole discretion, provide that the Participant may make an election to defer such performance-based compensation provided that such election is made not later than 6 months before the end of such period.

5.4 Deferral Procedures.

Subject to Section 5.3, Participants eligible to elect salary deferrals under Section 5.1 shall have an opportunity to do so each year. Participants eligible to elect deferrals under Section 5.2 shall have a separate opportunity to do so for each (a) cash bonus under an annual bonus program; (b) cash bonus or incentive payment under a long-term incentive plan; and (c) commission that they may earn. The Administrator shall specify the rules for the deferrals that may be elected. If a deferral is elected, the election shall be irrevocable with respect to the particular compensation that is subject to the election. Deferral elections shall be made on a form prescribed by the Committee or the Administrator. As provided in Section 6.7, any deferral is subject to appropriate tax withholding measures and may be reduced to satisfy tax withholding requirements.

5.5 Election of Time and Manner of Payment.

(a) At the time a Participant makes a deferral election under Section 5.1 or 5.2, the Participant shall also designate the manner of payment and the date on which payments from his or her Deferral Account shall begin. Subject to Section 5.5(b), a Participant may elect from among the following options:

(i) a lump sum payable by the end of the month of February of any year that the Participant specifies;

(ii) a lump sum payable by the end of the month of February in the year immediately following the Participant’s Retirement;

(iii) a series of annual installments, commencing in any year selected by the Participant and payable each year on or before the end of February, over a period of four years; or

(iv) a series of annual installments, commencing in the year following the Participant’s Retirement and payable each year on or before the end of February, over a period of five, ten, or fifteen years, as designated by the Participant.

Notwithstanding the terms of a Participant’s election, if a Participant incurs a separation from service for any reason other than Retirement, the payment of the Participant’s entire Deferral Account, including any unpaid installments pursuant to subparagraph (iii) above, shall

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be made in a single lump sum by the end of February next following the year of the Participant’s separation from service; provided, however, in the case of a Specified Employee who incurs a separation from service on or after August 1 of a Plan Year, such payment shall be made no earlier than the end of the month of August next following such Plan Year.

Any election of a specified payment date pursuant to subparagraphs (i) or (ii), above, shall be subject to any restrictions that the Committee may, in its sole discretion, choose to establish in order to limit the number of different payment dates that a Participant may have in effect at one time.

(b) Notwithstanding anything to the contrary in this Plan, except as otherwise permitted under section 409A of the Code, a Participant’s Deferral Account shall not be distributed earlier than (i) separation from service or, in the case of a Specified Employee, the date that is six (6) months after separation from service; (ii) Disability; (iii) death; (iv) the specified time or schedule under Section 5.5(a); (v) to the extent permitted under section 409A of the Code and any regulatory guidance promulgated thereunder, a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company; or (vi) the occurrence of an Unforeseeable Emergency.

(c) The acceleration of the time or schedule of any payment under the Plan shall not be permitted unless permitted by the Administrator in accordance with the requirements of section 409A of the Code and any regulatory guidance promulgated thereunder. In accordance with the procedures established by the Administrator, a Participant may elect to delay the timing or change the form of payment provided that (i) the election shall not take effect until at least 12 months after the date on which the election is made; (ii) the first payment with respect to which such election is made is deferred for a period of not less than five years from the date such payment would otherwise have been made, except in the case of elections relating to distributions on death, Disability, or Unforeseeable Emergency; and (iii) if related to a payment at a specified time or pursuant to a fixed schedule under Section 5.5(a), the election shall be made at least 12 months prior to the date of the first scheduled payment.

(d) If payment is due in the form of a lump sum, the payment shall equal the balance of the Deferral Account being paid, determined as of the Valuation Date coincident with or immediately preceding the payment date. If payment is due in the form of installments, the amount of each installment payment shall be equal to the quotient determined by dividing (i) the value of the portion of the Deferral Account to which the installment payment election applies (determined as of the Valuation Date coincident with or immediately preceding the date the payment is to be made), by (ii) the number of years over which the installment payments are to be made, less the number of years in which prior payments attributable to such installment payment election have been made.

(e) Notwithstanding the foregoing, however, if earnings or any other amounts credited to a Participant’s Deferral Account are not considered performance-based compensation, within the meaning of section 162(m) of the Code, and do not otherwise meet the conditions under the Code allowing the Company and its Subsidiaries to receive a federal income tax deduction for such amounts upon paying them at the time provided under the Participant’s

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election, the payment of such amounts, to the extent in excess of the amount that would be currently tax deductible, shall automatically be deferred until the earliest year that the payment can be deducted, to the extent such deferral is permitted under section 409A of the Code.

5.6 Accounts and Earnings.

The Company shall establish a Deferral Account for each Participant who has elected a deferral under Section 5.1 or 5.2 above, and its accounting records for the Plan with respect to each such Participant shall include a separate Deferral Account or subaccount for each deferral election of the Participant that could cause a payment made at a different time or in a different form from other payments of deferrals elected by the same Participant. Each Deferral Account balance shall reflect the Company’s obligation to pay a deferred amount to a Participant or Beneficiary as provided in this Article 5. Under procedures approved by the Committee and communicated to Participants, a Participant’s Deferral Account balance shall be increased periodically (not less frequently than annually) to reflect an assumed earnings increment, based on an interest rate or other benchmark selected by the Committee and in effect at the time. Until the time for determining the amount to be paid to the Participant or Beneficiary, such assumed earnings shall accrue from each Valuation Date on the Deferral Account balance as of that date and shall be credited to the account as of the next Valuation Date. The rate of earnings may, but need not, be determined with reference to the actual rate of earnings on assets held under any existing grantor trust or other informal funding vehicle that is in effect pursuant to Section 6.2. Any method of crediting earnings that is followed from time to time may, with reasonable advance notice to affected Participants, be revoked or revised prospectively as of the beginning of any new Plan Year. Earnings that have been credited for any Plan Year, like deferred amounts that have been previously credited to a Participant, shall not be reduced or eliminated retroactively unless they were credited in error. The crediting of assumed earnings shall not mean that any deferred compensation promise to a Participant is secured by particular investment assets or that the Participant is actually earning interest or any other form of investment income under the Plan. Consistent with the foregoing authority to exercise flexibility in establishing a method for crediting assumed earnings on account balances, the Committee may, but need not, consult with Participants about their investment preferences and may, but need not, institute a program of assumed earnings that tracks the investment performance in a Participant’s qualified defined contribution plan account or in an assumed participant-directed investment arrangement.

5.7 Maintenance of Accounts.

The Accounts of each Participant shall be entered on the books of the Company and shall represent a liability, payable when due under this Plan, out of the general assets of the Company. Prior to benefits becoming due hereunder, the Company shall expense the liability for such accounts in accordance with policies determined appropriate by the Company’s auditors. Except to the extent provided pursuant to the second paragraph of this Section 5.7, the Accounts created for a Participant by the Company shall not be funded by a trust or an insurance contract; nor shall any assets of the Company be segregated or identified to such account; nor shall any property or assets of the Company be pledged, encumbered, or otherwise subjected to a lien or security interest for payment of benefits hereunder.

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Notwithstanding that the amounts to be paid hereunder to Participants constitute an unfunded obligation of the Company, the Company may direct that an amount equal to any portion of the Accounts shall be invested by the Company as the Company, in its sole discretion, shall determine. The Committee may in its sole discretion determine that all or any portion of an amount equal to the Accounts shall be paid into one or more grantor trusts that may be established by the Company for the purpose of providing a potential source of funds to pay Plan benefits. The Company may designate an investment advisor to direct the investment of funds that may be used to pay benefits, including the investment of the assets of any grantor trusts hereunder.

5.8 Change in Control.

In the event of a Change in Control (as defined below), the following rules shall apply:

(a) All Participants shall continue to have a fully vested, non-forfeitable interest in their Deferral Accounts.

(b) To the extent permitted under section 409A of the Code and any regulatory guidance issued thereunder, deferrals of amounts for the year that includes the Change in Control shall cease beginning with the first payroll period that follows the Change in Control.

(c) A special allocation of earnings on all Deferral Accounts shall be made under Section 5.6 as of the date of the Change in Control on a basis no less favorable to Participants than the method being followed prior to the Change in Control.

(d) To the extent permitted under section 409A of the Code and any regulatory guidance issued thereunder, all payments of deferred amounts following a Change in Control, whether or not they have previously begun, shall be made in a cash lump sum no later than 30 days following the Change in Control and, except as provided in Section 5.5 with respect to installment payments in progress, shall be in an amount equal to the full Deferral Account balance, as adjusted pursuant to paragraph (c) above, as of the date of the Change in Control.

(e) Subject to section 409A and any regulatory guidance promulgated thereunder, nothing in this Plan shall prevent a Participant from enforcing any rules in a contract or another plan of the Company or any Subsidiary concerning the method of determining the amount of a bonus, incentive compensation, or other form of compensation to which a Participant may become entitled following a change in control, or the time at which that compensation is to be paid in the event of a change in control.

For purposes of this Plan, a “Change in Control” means any of the following:

(1) Any “person” who, alone or together with all “affiliates” and “associates” of such person, is or becomes (A) an “acquiring person” or (B) the “beneficial owner” of 35% of the outstanding voting securities of the Company (the terms “person”, “affiliates”, “associates” and “beneficial owner” are used as such terms are used in the Securities Exchange Act of 1934 and the General Rules and Regulations thereunder); provided, however, that a “Change in

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Control” shall not be deemed to have occurred if such “person” is Charles R. Schwab, the Company, any subsidiary or any employee benefit plan or employee stock plan of the Company or of any Subsidiary, or any trust or other entity organized, established or holding shares of such voting securities by, for or pursuant to, the terms of any such plan; or

(2) Individuals who at the beginning of any period of two consecutive calendar years constitute the Board cease for any reason, during such period, to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s Shareholders, of each new Board Member was approved by a vote of at least three-quarters (3/4) of the Board members then still in office who were Board members at the beginning of such period; or

(3) Approval by the shareholders of the Company of:

(A) the dissolution or liquidation of the Company;

(B) the sale or transfer of substantially all of the Company’s business and/or assets to a person or entity which is not a “subsidiary” (any corporation or other entity a majority or more of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company); or

(C) an agreement to merge or consolidate, or otherwise reorganize, with one or more entities which are not subsidiaries (as defined in (B) above), as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity are, or are to be, owned by former shareholders of the Company; or

(4) The Board agrees by a majority vote that an event has or is about to occur that, in fairness to the Participants, is tantamount to a Change in Control.

A Change of Control shall occur on the first day on which any of the preceding conditions has been satisfied. However, notwithstanding the foregoing, this Section 5.8 shall not apply to any Participant who alone or together with one or more other persons acting as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding or disposing of securities of the Company, triggers a “Change in Control” within the meaning of paragraphs (1) and (2) above.

5.9 Payment of Deferred Amounts.

A Participant shall have a fully vested, non-forfeitable interest in his or her Deferral Account balance at all times. However, vesting does not confer a right to payment other than in the manner elected by the Participant pursuant to Section 5.5 (subject to any modification that may occur pursuant to Section 5.6 or 5.8). Upon the expiration of a deferral period selected by the Participant in one or more deferral elections, the Company shall pay to such Participant (or to the Participant’s Beneficiary, in the case of the Participant’s death) an amount equal to the balance of the Participant’s Account attributable to such expiring deferral elections, plus assumed earnings (determined by the Company pursuant to Section 5.6) thereon.

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5.10 Payment on Certain Events.

Notwithstanding any elections that have been made under Section 5.5, the unpaid balance of a Participant’s Deferral Account, including any unpaid installments, shall be paid in a lump sum in the event of the Participant’s death, Disability, or upon receipt of a written request from a Participant and the Administrator’s determination that the Participant (or his or her Beneficiary in the case of the Participant’s death) has incurred an Unforeseeable Emergency; provided, that the amounts distributed because of an Unforeseeable Emergency shall not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the individual’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship).

ARTICLE 6: GENERAL PROVISIONS

6.1 Unfunded Obligation.

The deferred amounts to be paid to Participants pursuant to this Plan constitute unfunded obligations of the Company. Except to the extent specifically provided hereunder, the Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments, including any grantor trust investments which the Company has determined and directed the Administrator to make to fulfill obligations under this Plan shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or Accounts shall not create or constitute a trust or a fiduciary relationship between the Administrator or the Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or his or her Beneficiary or his or her creditors in any assets of the Company whatsoever. The Participants shall have no claim for any changes in the value of any assets which may be invested or reinvested by the Company in an effort to match its liabilities under this Plan.

6.2 Informal Funding Vehicles.

Notwithstanding Section 6.1, the Company may, but need not, arrange for the establishment and use of a grantor trust or other informal funding vehicle to facilitate the payment of benefits and to discharge the liability of the Company and participating Affiliates under this Plan to the extent of payments actually made from such trust or other informal funding vehicle. Any investments and any creation or maintenance of memorandum accounts or a trust or other informal funding vehicle shall not create or constitute a trust or a fiduciary relationship between the Committee or the Company or an affiliate and a Participant, or otherwise confer on any Participant or Beneficiary or his or her creditors a vested or beneficial interest in any assets of the Company or any Affiliate whatsoever. Participants and Beneficiaries shall have no claim against the Company or any Affiliate for any changes in the value of any assets which may be invested or reinvested by the Company or any Affiliate with respect to this Plan.

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6.3 Beneficiary.

The term “Beneficiary” shall mean the person or persons to whom payments are to be paid pursuant to the terms of the Plan in the event of the Participant’s death. A Participant may designate a Beneficiary on a form provided by the Administrator, executed by the Participant, and delivered to the Administrator. The Administrator may require the consent of the Participant’s spouse to a designation if the designation specifies a Beneficiary other than the spouse. Subject to the foregoing, a Participant may change a Beneficiary designation at any time. Subject to the property rights of any prior spouse, if no Beneficiary is designated, if the designation is ineffective, or if the Beneficiary dies before the balance of the Account is paid, the balance shall be paid to the Participant’s surviving spouse, or if there is no surviving spouse, to the Participant’s estate.

6.4 Incapacity of Participant or Beneficiary.

Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the date on which the Administrator receives a written notice, in a form and manner acceptable to the Administrator, that such person is incompetent or a minor, for whom a guardian or other person legally vested with the care of his or her person or estate has been appointed; provided, however, that if the Administrator finds that any person to whom a benefit is payable under the Plan is unable to care for his or her affairs because of incompetency, or because he or she is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent, a brother or sister, or to any person or institution considered by the Administrator to have incurred expense for such person otherwise entitled to payment. To the extent permitted by law, any such payment so made shall be a complete discharge of liability therefor under the Plan.

If a guardian of the estate of any person receiving or claiming benefits under the Plan is appointed by a court of competent jurisdiction, benefit payments may be made to such guardian provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Administrator. In the event a person claiming or receiving benefits under the Plan is a minor, payment may be made to the custodian of an account for such person under the Uniform Gifts to Minors Act. To the extent permitted by law, any such payment so made shall be a complete discharge of any liability therefor under the Plan.

6.5 Nonassignment.

The right of a Participant or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered nor shall such right or other interests be subject to attachment, garnishment, execution, or other legal process.

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6.6 No Right to Continued Employment.

Nothing in the Plan shall be construed to confer upon any Participant any right to continued employment with the Company, nor shall the Plan interfere in any way with the right of the Company to terminate the employment of such Participant at any time without assigning any reason therefor.

6.7 Tax Withholding.

Appropriate taxes shall be withheld from cash payments made to Participants pursuant to the Plan. To the extent tax withholding is payable in connection with the Participant’s deferral of income rather than in connection with the payment of deferred amounts, such withholding may be made from other wages and salary currently payable to the Participant, or, as determined by the Administrator, the amount of the deferral elected by the Participant may be reduced in order to satisfy required tax withholding for employment taxes and any other taxes.

6.8 Claims Procedure and Arbitration.

The Administrator shall establish a reasonable claims procedure consistent with the requirements of the Employee Retirement Income Security Act of 1974, as amended. Following a Change in Control of the Company (as determined under Section 5.8) the claims procedure shall include the following arbitration procedure. Following a Change in Control of the Company (as determined under Section 5.8) the claims procedure shall include the following arbitration procedure. Since time will be of the essence in determining whether any payments are due to the Participant under this Plan following a Change in Control, a Participant may submit any claim for payment to arbitration as follows: On or after the second day following the termination of the Participant’s employment or other event triggering a right to payment, the claim may be filed with an arbitrator of the Participant’s choice by submitting the claim in writing and providing a copy to the Company. The arbitrator must be (a) a member of the National Academy of Arbitrators or one who currently appears on arbitration panels issued by the Federal Mediation and Conciliation Service or the American Arbitration Association; or (b) a retired judge of the State in which the claimant is a resident who served at the appellate level or higher. The arbitration hearing shall be held within 72 hours (or as soon thereafter as possible) after filing of the claim unless the Participant and the Company agree to a later date. No continuance of said hearing shall be allowed without the mutual consent of the Participant and the Company. Absence from or nonparticipation at the hearing by either party shall not prevent the issuance of an award. Hearing procedures which will expedite the hearing may be ordered at the arbitrator’s discretion, and the arbitrator may close the hearing in his or her sole discretion upon deciding he or she has heard sufficient evidence to satisfy issuance of an award. In reaching a decision, the arbitrator shall have no authority to ignore, change, modify, add to or delete from any provision of this Plan, but instead is limited to interpreting this Plan. The arbitrator’s award shall be rendered as expeditiously as possible, and unless the arbitrator rules within seven days after the close of the hearing, he will be deemed to have ruled in favor of the Participant. If the arbitrator finds that any payment is due to the Participant from the Company, the arbitrator shall order the Company to pay that amount to the Participant within 48 hours after the decision is rendered. The award of the arbitrator shall be final and binding upon the Participant and the Company.

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Judgment upon the award rendered by the arbitrator may be entered in any court in any State of the United States. In the case of any arbitration regarding this Agreement, the Participant shall be awarded the Participant’s costs, including attorney’s fees. Such fee award may not be offset against the deferred compensation due hereunder. The Company shall pay the arbitrator’s fee and all necessary expenses of the hearing, including stenographic reporter if employed.

6.9 Termination and Amendment.

The Committee may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Committee may reinstate any or all of its provisions. The Executive Vice President – Human Resources has the authority to amend the Plan to comply with the requirements of the Code, to avoid a plan failure under section 409A of the Code and to facilitate administration of the Plan to the extent that any such amendments will not materially increase the cost of the Plan. Except as otherwise required by law, the Committee may delegate to the Administrator all or any of its foregoing powers to amend, suspend, or terminate the Plan. Any such amendment, suspension, or termination may affect future deferrals without the consent of any Participant or Beneficiary. However, with respect to deferrals that have already occurred, no amendment, suspension or termination may impair the right of a Participant or a designated Beneficiary to receive payment of the related deferred compensation in accordance with the terms of the Plan prior to the effective date of such amendment, suspension or termination, unless the affected Participant or Beneficiary gives his or her express written consent to the change; provided that such consent shall not be required if an amendment is required to avoid a plan failure under section 409A of the Code.

6.10 Applicable Law.

The Plan shall be construed and governed in accordance with applicable federal law and, to the extent not preempted by such federal law, the laws of the State of California to the extent the application of such state laws would not result in the taxation of amounts deferred under the Plan until such amounts are distributed to participants under the Plan.

ARTICLE 7: EXECUTION

To record the adoption of the Plan to read as set forth herein effective as of December 9, 2004, The Charles Schwab Corporation has caused its authorized officer to execute the same this 21st day of December, 2004.

THE CHARLES SCHWAB CORPORATION
By:	/s/ Christopher v. Dodds
Its:	Chief Financial Officer

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