TD banks signage in Ottawa.Sean Kilpatrick/The Canadian Press
Toronto-Dominion Bank TD-T will award its head of U.S. retail banking Leo Salom a US$2-million retention bonus in recognition of his role overseeing the efforts to fix the lender’s anti-money-laundering failings.
In October, TD became the first bank in the U.S. to plead guilty to conspiracy to commit money laundering, and regulators and the Department of Justice levied severe penalties and requirements to remediate its compliance and risk-control gaps.
In the fallout, TD swept clean its board of directors and slashed its executive compensation to address investor concerns over accountability for the failings that weighed on the bank’s stock.
Excluding the US$2-million bonus, Mr. Salom’s total 2024 compensation of US$5.09-million was nearly 21 per cent below his 2023 pay.
Despite the pay cut, TD also gave the U.S. retail head – who was considered a contender for the chief executive officer position before Raymond Chun was tapped – the one-time bonus in recognition of “the critical role that Mr. Salom will continue to play in the remediation of the bank’s U.S. AML program,” the bank says in its proxy circular to shareholders, in which it discloses compensation.
Mr. Salom will receive the award in 2025. The shares will vest, or become sellable by Mr. Salom, if the company meets anti-money-laundering remediation conditions and milestones.
In his previous role, Mr. Salom was TD’s head of wealth management and insurance, based in Toronto. He became the head of the U.S. division in January, 2022, near the end of the period probed by U.S. regulators. The investigation unveiled gaps in TD’s anti-money-laundering program between January, 2014, and October, 2023.
U.S. authorities required TD to pay a US$3-billion penalty. The bank also faces an asset cap, which restricts its ability to expand in its largest growth market.
The extensive remediation requirements will weigh heavily on the bank’s expenses in the year ahead.
“There is no doubt that 2024 was a challenging year for TD,” board chair Alan MacGibbon said in the filing. “The gravity of TD’s U.S. anti-money laundering failures, the associated costs and the limitations imposed on the U.S. retail business had and will continue to have a significant impact on the bank.”
In January, amid mounting investor pressure for executives to be held accountable for failures in the U.S., TD announced that then-CEO Bharat Masrani would step down more than two months ahead of schedule. It also said that Mr. MacGibbon, who joined TD’s board in 2014 and became the chair less than a year ago, will step down later this year after the bank conducts a search for his successor.
TD also said in its circular that it adjusted executive compensation “to reflect the seriousness of the U.S. AML failures, the associated costs to the bank and the limitations imposed on the U.S. retail business.”
The pay cuts were extensive. At the time, TD said 41 executives, including former staff, received reductions to their variable compensation, totalling $30-million, including those who oversaw front-line operations, control functions and internal audit. Variable compensation for TD’s most senior executives was reduced by at least 25 per cent from the target amount.
Mr. Masrani’s pay was slashed in 2024. He received no cash incentive award or equity compensation for 2024, the bank said in January.
According to the filings Tuesday, Mr. Masrani was paid a total of $1.61-million – 88 per cent below 2023. That year, he took a $1-million cut to his bonus pay in response to the terminated takeover deal of U.S.-based First Horizon Corp. and the bank’s continuing troubles with U.S. regulators and law enforcement.
Chief financial officer Kelvin Tran’s total compensation of $3.07-million was 29 per cent below 2023’s pay. TD Securities head Riaz Ahmed – who retired at the end of January – had his compensation lowered by 18 per cent to $6.68-million from the prior year.
Mr. Tran’s bonus of $773,500 fell 24 per cent from the prior year. Mr. Ahmed received a $1.97-million bonus, down 21 per cent from the prior year. Tim Wiggan, in his first year as president and CEO of TD Securities, received a $1.18-million bonus.
TD said were it not for the 25-per-cent reduction in the bonus pool, it would have paid incentive awards at close to their targets. The bank missed its net income goal, but surpassed its targets for return on capital and a customer-experience metric.
TD plans to hold its annual shareholder meeting on April 10, which provides investors with an opportunity to vote on compensation and other proposals.
In January, TD announced four new members are joining the board.
On Tuesday, the bank said it is adding another director to its roster. Ana Arsov, the former global co-head of financial institutions and global head of private credit at ratings agency Moody’s, will also stand for election at the meeting.