February 25, 2010 / 8:50 PM / 8 years ago

TD Bank says CEO Clark took 5.5 pct pay cut

* CEO’s compensation falls to C$10.4 million

* RBC boosts its CEO’s pay 19 pct to C$10.4 million

TORONTO, Feb 25 (Reuters) - Toronto-Dominion Bank (TD.TO) paid Chief Executive Ed Clark C$10.4 million ($9.8 million) in 2009, down 5.5 percent from 2008 in response to industry trends and the financial crisis.

Clark was paid a salary of C$1.5 million as well as C$8.9 million in share-based, option-based, and non-equity incentive awards, according to the bank’s 2009 proxy circular, filed on Thursday.

Canada’s second-largest bank said Clark’s compensation target was cut by 20 percent in May 2009 in the wake of the financial crisis, which forced Canadian banks, including TD, to issue shares to shore up their capital as market losses and loan losses hit.

While TD’s chief domestic rival, Royal Bank of Canada (RY.TO), boosted the pay of Chief Executive Gord Nixon 19 percent to C$10.4 million last year, TD said it decided to cut its compensation level in anticipation that bank chiefs globally would be taking a pay cut in the wake of the financial sector meltdown.

“This reduction reflected a view that market competitive target compensation levels for CEOs at large financial institutions would likely decrease in the short to medium term in response to the recent turmoil in the financial markets,” the bank said in its proxy statement.

The pay structure was also changed so that 100 percent of stock options granted to top executives vest after four years, rather than vesting 25 percent a year. The move reinforces the incentive for long-term performance.

Clark’s term as CEO, originally set to expire in October 2010, was extended in February 2009 to run at least until TD’s annual meeting in 2013.

TD had record net income of C$4.7 billion and adjusted earnings per share grew 10 percent in 2009.

All of the big Canadian banks struggled with rising loan losses in 2009 and profitability was down from levels seen before the financial crisis, but the sector has generally outperformed global rivals.

No Canadian bank accepted government bailout money, and focus on executive compensation has generally been less intense than criticism of bankers’ pay in the United States or Britain.

Shareholders of Canadian Imperial Bank of Commerce (CM.TO) voted in favor of executive pay at that bank on Thursday in the first “say on pay” vote in the financial sector.

TD will also give its investors a nonbinding “advisory” vote on compensation at the bank’s annual meeting in March.

$1=$1.06 Canadian Reporting by Andrea Hopkins; editing by Rob Wilson

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