TORONTO — TD Bank Group is speeding up its plan to install its new chief executive and overhauling its board as it continues to deal with the fallout of its anti-money laundering failures in the United States.
The bank, which also announced it was slashing executive bonuses, said Friday that Raymond Chun would take over the CEO role from Bharat Masrani on Feb. 1 rather than April 10 as previously announced.
It said five board members appointed before 2020 will be leaving the bank as it announced four new board nominations. Alan MacGibbon, who was appointed board chair less than a year ago but served as a director since 2014, will step down from both positions at the end of the year.
MacGibbon signalled the bank was looking to put the past behind it as he welcomed the accelerated path to Chun taking over.
"Ray has moved quickly and decisively to launch a review of our strategy, operations, and investments ... we are excited to have Ray take the helm and lead TD into the future."
TD said Masrani will remain available in an advisory capacity until the end of July, while MacGibbon thanked him for his almost four decades of service to the bank.
Along with new board members, TD said it was appointing new chairs to four of its five committees.
The bank has also cut bonuses for 41 executives, including many who are no longer with the bank, to reflect the seriousness of the failures, the associated costs to the bank and the limitations imposed on the U.S. retail business.
The bank says Masrani's total direct compensation for 2024 has been slashed to $1.5 million, down 89 per cent compared with his 2023 pay of $13.3 million, which itself was cut by $1 million.
Variable compensation was cut by at least 25 per cent from their target for all other members of the senior executive team, it said.
The changes come after TD agreed in October to pay fines totalling more than $4.23 billion after pleading guilty to multiple charges in the U.S. related to its anti-money laundering failings over the past decade. Regulators also imposed an asset growth cap on its U.S. retail banking operations.
As part of the settlement, TD was also required to undertake a review of its board of directors and management to ensure adequate oversight of its U.S. operations.
The new director nominations include Frank Pearn, who oversaw compliance and operational risk at JP Morgan Chase and Co., and Paul Wirth, who served as global controller for Morgan Stanley.
The scale of the board changes is highly unusual, said Richard Leblanc, governance professor at York University.
"In 30 years in the field, I've not seen wholesale change like this, particularly chairs of committees," he said.
"It's rather unprecedented."
He said regulatory pressure could well have led to the scale of changes at the top.
"I would not at all be surprised if one of the regulators wanted renewed board and committee leadership, but not to include past directors, to include a fresh set of eyes as committee and board chairs."
The bank has also reduced the term lengths for board members, instituting a two-year extension after the first decade, down from a five-year extension.
The change is a good idea and puts the bank more in line with international standards, said Leblanc.
"You get regular renewal of these individuals," he said. "I think other banks will be looking at the governance reforms that TD has implemented."
Jefferies analyst John Aiken welcomed the accelerated leadership changes and noted other banks may also move to change their board composition to create more focus on risk management and compliance.
"We view these announcements positively as it infers that TD's remediation path will remain a big push and could spell some relief for investors," he said in a note.
TD's share price was up almost five per cent in mid-afternoon trading Friday on the Toronto Stock Exchange.
This report by The Canadian Press was first published Jan. 17, 2025.
Companies in this story: (TSX:TD)
Ian Bickis, The Canadian Press
