News breaks as US consumer banking chief anounces departure to competitor
Toronto-Dominion Bank (TD) has significantly reduced the compensation of its top U.S. executives as the fallout from its money-laundering scandal continues to reshape the bank’s leadership and financial strategy. The move is part of a broader effort to signal accountability and refocus on regulatory compliance and financial recovery.
TD’s U.S. chief executive, Leo Salom, saw his variable pay cut by 35% for 2024, reducing his total compensation to US$3.5 million from US$4.6 million the previous year. However, the bank has earmarked a potential US$2 million in share-based compensation for him in 2025, contingent on meeting specific anti-money laundering (AML) remediation milestones. The bank’s board emphasized Salom’s crucial role in leading TD’s compliance overhaul, stating that he is expected to be at the forefront of strengthening regulatory adherence in the U.S. market.
The reductions in executive pay extend beyond Salom. In January, TD disclosed that it had slashed variable compensation for 41 executives by a total of C$30 million. Former CEO Bharat Masrani saw an even steeper cut, receiving no bonus at all in 2024. His total pay plunged to C$1.61 million, down from C$13.34 million the previous year. Masrani, who stepped down amid mounting scrutiny, will remain in an advisory role until July, earning a C$500,000 monthly fee.
The AML scandal, which erupted last year, led to TD pleading guilty to compliance failures that allowed illicit funds tied to drug cartels to flow through its U.S. operations. The bank agreed to pay a historic US$3.1 billion fine in October, in addition to other financial penalties and restrictions that have hampered its U.S. growth plans. The settlement with U.S. authorities resulted in an asset cap on TD’s retail banking operations, further stalling its expansion efforts.
In the wake of the scandal, a wave of executive departures has reshaped the bank’s leadership. Twenty-two individuals have exited the company following internal accountability reviews.
And amid all the changes, Matt Boss, TD’s U.S. consumer banking chief has just announced his departure to join Citizens Bank as head of consumer banking in May. His departure follows those of other key executives, including the bank’s chief global AML officer, Herb Mazariegos, and chief compliance officer, Monica Kowal.
The financial and reputational damage from the AML scandal has been severe for TD. In addition to regulatory fines, the bank suffered its first quarterly loss in over two decades and saw its planned acquisition of First Horizon Bank collapse. The scandal has also drawn comparisons to past banking crises, with TD now operating under stringent regulatory oversight similar to Wells Fargo’s post-2018 restrictions.
As TD works to rebuild its credibility, its leadership is under pressure to implement robust compliance measures while managing the financial fallout. The cutbacks in executive pay signal an effort to align compensation with performance and regulatory expectations, but whether these measures will be enough to restore investor confidence remains to be seen.
