Aborting the First Horizon takeover and regulatory issues tainted 2023
There were some challenging times for TD Bank Group in 2023, and this has been reflected in a pay cut for its chief executive.
The Canadian big six bank reported its full-year and fourth quarter results in November 2023 revealing a decline in earnings of $5.60 per share compared to $9.47 in the previous year. There has been some improvement in the most recent quarterly results.
But it was the failed acquisition of U.S. bank First Horizon and regulatory concerns around its anti-money-laundering controls south of the border that added to the issues faced by the bank in the past year. Cancelling the First Horizon deal cost TD more than $200 million while some analysts think a negative outcome for the AML probe could mean a fine of up to US$1 billion.
In light of the tough year, CEO Bharat Masrani’s direct compensation of $13,271,000 was more than $1.7 million below his target of $15 million and 11.2% below what he received in 2022. This was calculated using a Business Performance Factor of 96.4% which reduced his incentive compensation, and a $1 million discretionary adjustment which was recommended by Masrani specifically due to the termination of the First Horizon transaction and U.S. regulatory issues.
However, in TD’s annual proxy circular sent to shareholders, it states that “the board believes that the CEO demonstrated excellent personal leadership and performance through a challenging year.”
Alan MacGibbon, TD's Board Chair, said that the bank delivered for its stakeholders in 2023.
“We invested in new capabilities to strengthen the Bank and enhance the customer experience, acquired and integrated TD Cowen, and built strong foundations for future growth. The Bank's performance and capital position enabled it to pay higher dividends, initiate share repurchases under a normal course issuer bid, and return value directly to shareholders," he said. "We continued to help advance a more sustainable and inclusive future and set a new $500 billion Sustainable and Decarbonization Finance Target, while directly contributing $157 million through the TD Ready Commitment in the communities in which we operate. I would like to thank our colleagues for their tremendous efforts, our customers for their trust, and our shareholders for their ongoing support."
