SCHWAB CHARLES CORP

16. Exit and Other Related Liabilities

Integration of Ameritrade

The Company completed its acquisition of Ameritrade effective October 6, 2020 and integration work concluded during 2024, including completion of the final client transition group from the Ameritrade broker-dealers to CS&Co in May and, thereafter, completion of overall integration work including decommissioning of duplicative platforms. The Company incurred acquisition and integration-related costs including professional fees, compensation and benefits expenses for employees and contractors involved in the integration work, and costs for technology enhancements. The Company also incurred exit and other related costs to attain anticipated synergies, which are primarily comprised of employee compensation and benefits such as severance pay, other termination benefits, and retention costs, as well as costs related to facility closures, such as accelerated amortization and 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.

Inclusive of costs recognized through December 31, 2024, Schwab incurred total exit and other related costs for the integration of Ameritrade of $430 million, consisting of employee compensation and benefits, facility exit costs, and certain other costs. During each of the years ended December 31, 2024, 2023, and 2022, the Company recognized $42 million, $60 million, and $34 million of acquisition-related exit costs, respectively. In addition to ASC 420 Exit or Disposal Cost Obligations (ASC 420), certain of the costs associated with these activities were accounted for in accordance with ASC 360 Property, Plant and Equipment (ASC 360), ASC 712 Compensation–Nonretirement Post Employment Benefits (ASC 712), ASC 718 Compensation– Stock Compensation (ASC 718), and ASC 842 Leases (ASC 842). The integration of Ameritrade is complete and the exit and other related liabilities as of December 31, 2024 are anticipated to be paid in early 2025.

The following table is a summary of the Ameritrade integration activity in the Company’s exit and other related liabilities as of December 31, 2024 and 2023 and activity for the years then ended:

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

(2) Amounts recognized in expense for severance pay and other termination benefits, as well as retention costs, are primarily included incompensation and benefits on the consolidated statements of income.

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The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2024:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and accelerated depreciation of fixed assets, relate to the impact of abandoning leased and other properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets and accelerated depreciation of fixed assets are included in occupancy and equipment and depreciation expense, respectively, on the consolidated statements of income.

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2023:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets, relate to the impact of abandoning leased properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the consolidated statements of income.

The following table summarizes the Ameritrade integration exit and other related costs recognized in expense for the year ended December 31, 2022:

(1)Costs related to facility closures. These costs, which are primarily comprised of accelerated amortization of ROU assets, relate to the impact of abandoning leased and other properties. Accelerated amortization of ROU assets are included in occupancy and equipment on the consolidated statements of income.

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The following table summarizes the Ameritrade integration exit and other related costs incurred from the acquisition closing date through December 31, 2024:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and accelerated depreciation of fixed assets, relate to the impact of abandoning leased and other properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets and accelerated depreciation of fixed assets are included in occupancy and equipment and depreciation expense, respectively, on the consolidated statements of income.

Other

When significant progress had been made in the integration of Ameritrade, the Company undertook incremental actions beginning in 2023 to streamline its operations to prepare for post-integration, including through position eliminations and decreasing its real estate footprint. In order to achieve anticipated cost savings through these actions, the Company incurred total exit and related costs, primarily related to employee compensation and benefits and facility exit costs, of $504 million inclusive of costs recognized through December 31, 2024. During each of the years ended December 31, 2024 and 2023, the Company recognized $9 million and $495 million of restructuring-related exit costs, respectively. In addition to ASC 420, certain of the costs associated with these activities were accounted for in accordance with ASC 360, ASC 712, ASC 718, and ASC 842. Actions under the plan have been completed and there are no remaining exit and other related liabilities as of December 31, 2024.

The following table is a summary of the restructuring activity in the Company’s exit and other related liabilities as of December 31, 2024 and 2023 and activity for the years then ended:

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

(2)Amounts recognized in expense for severance pay and other termination benefits are included incompensation and benefits on the consolidated statements of income. The year ended December 31, 2024 includes a reduction of the liability resulting from changes in estimates of $27 million and $9 million in Investor Services and Advisor Services, respectively.

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The following table summarizes the restructuring exit and other related costs recognized in expense for the year ended December 31, 2024:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and impairment of fixed assets, relate to the impact of abandoning leased and other properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the consolidated statements of income.

The following table summarizes the restructuring exit and other related costs recognized in expense for the year ended December 31, 2023:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and impairment of fixed assets, relate to the impact of abandoning leased and other properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the consolidated statements of income.

The following table summarizes the restructuring exit and other related costs recognized in expense from initiation of the plan through December 31, 2024:

(1)Costs related to facility closures. These costs, which are primarily comprised of impairment and accelerated amortization of ROU assets and impairment of fixed assets, relate to the impact of abandoning leased and other properties. Impairment charges are included in other expense, while accelerated amortization of ROU assets are included in occupancy and equipment on the consolidated statements of income.

In the fourth quarter of 2024, the Retirement Business Services business unit was transferred from the Advisor Services segment to the Investor Services segment. See Note 25 for more information. The impact of the transfer on integration-related and restructuring-related exit costs was not material and prior-year amounts in the relevant tables above have not been recast.