DEF 14A 1 d646586ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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TD Ameritrade Holding Corporation

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LOGO


Table of Contents

 

LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2019 Annual Meeting of Stockholders of TD Ameritrade Holding Corporation (the “Company”) will be located at the Company’s corporate headquarters, 200 South 108th Avenue, in Omaha, Nebraska, on Wednesday, February 13, 2019, at 9:00 a.m., Central Standard Time. You may also attend the meeting virtually via the Internet at amtd.onlineshareholdermeeting.com, where you will be able to vote electronically and submit questions during the meeting.

At the 2019 Annual Meeting the following items of business will be considered:

 

  1)

The election of four nominees recommended by the board of directors to the board of directors;

 

  2)

Advisory vote to approve executive compensation; and

 

  3)

Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019.

Only stockholders of record at the close of business on December 17, 2018 will be entitled to notice of and to vote at the meeting.

We have adopted the U.S. Securities and Exchange Commission rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing a Notice of Internet Availability of Proxy Materials (the “Internet Availability Notice”) to most of our stockholders instead of a paper copy of this Proxy Statement and our 2018 Annual Report. The Internet Availability Notice contains instructions on how to access and review those documents over the Internet. We believe that this process allows us to provide our stockholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received an Internet Availability Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Internet Availability Notice.

Your vote is very important. Whether or not you plan to attend the Annual Meeting (in person or virtually via the Internet), please complete and return your proxy card or vote by telephone or via the Internet by following the instructions on your Internet Availability Notice. Returning a proxy card or otherwise submitting your proxy does not deprive you of your right to attend the Annual Meeting and vote in person or virtually via the Internet. Proxies are being solicited on behalf of the board of directors.

By Order of the Board of Directors

 

 

LOGO

Ellen L.S. Koplow,

Secretary

Omaha, Nebraska

December 31, 2018


Table of Contents

Table of Contents

 

General Information About the Meeting     1  
Quorum and Voting Requirements     1  
Voting Electronically     1  
Proposal No. 1 — Election of Directors Recommended by the Board of Directors     2  
Board of Directors     2  
Nominees to Board of Directors     3  
Directors Not Standing For Election     6  
Board Qualifications, Skills and Background     11  
Board Meetings and Committees     12  
Code of Ethics     14  
Stockholder Communications Policy     14  
Director Compensation     15  
Director Compensation Table for Fiscal Year 2018     16  
Non-employee Director Stock Ownership Guidelines     17  
Executive Compensation and Related Information     18  
Executive Officers     18  
Compensation Discussion and Analysis     20  

Executive Summary

    20  

1.     Role of the Compensation Committee and Board

    22  

2.     Role of Compensation Consultants and Management

    22  

3.     Guiding Principles

    23  

4.     Peer Group

    23  

5.     Elements of Compensation

    24  

6.     Clawback Policy

    28  

7.     Risk Assessment

    29  

8.      Stock Ownership Guidelines and Anti-Hedging and Anti-Pledging Policy

    29  

9.     Change in Control and Severance Provisions

    29  

10.     Tax Treatment

    29  

11.     Actions Since End of Fiscal Year 2018

    30  
Compensation Committee Report     32  
Compensation Committee Interlocks and Insider Participation     32  
Summary Compensation Table for Fiscal Years 2018, 2017 and 2016     33  
Grants of Plan-based Awards During Fiscal Year 2018     36  
Outstanding Equity Awards at Fiscal Year-end September 30, 2018     37  
Option Exercises and Stock Vested During Fiscal Year 2018     38  
Nonqualified Deferred Compensation for Fiscal Year 2018     38  
Potential Payments Upon Termination or Change in Control     39  

Management Incentive Plan and Long-Term Incentive Plan

    39  

Company Severance Practices

    41  

President and CEO – Tim Hockey

    41  

Executive Vice President, Chief Financial Officer – Stephen J. Boyle

    43  

President, Retail Distribution – Peter J. deSilva

    45  
Summary Table – Potential Payments Upon Termination or Change in Control     46  
CEO Pay Ratio     48  
Stock Ownership and Related Information     49  
Stock Ownership of Certain Beneficial Owners and Management     49  
Stockholders Agreement     51  
Section 16(a) Beneficial Ownership Reporting Compliance     52  
Certain Relationships and Related Party Transactions     53  
Proposal No. 2 — Advisory Vote to Approve Executive Compensation     58  
Proposal No. 3 — Ratification of Appointment of Independent Registered Public Accounting Firm     59  
Fees Paid to Independent Auditor     59  
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm     59  
Report of the Audit Committee     60  
Submission of Stockholder Proposals     61  
Householding Proxy Materials     62  
Annual Report     63  
Other Matters     64  
Appendix A: Non-GAAP Financial Measures     A-1  
 

 

LOGO


Table of Contents

 

   General Information About the Meeting

 

This Proxy Statement is furnished in connection with the solicitation of proxies to be voted at the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of TD Ameritrade Holding Corporation (the “Company”). The Annual Meeting will be held on Wednesday, February 13, 2019 at 9:00 a.m., Central Standard Time, at the Company’s corporate headquarters, 200 South 108th Avenue, Omaha, Nebraska and via the Internet at amtd.onlineshareholdermeeting.com, where you will be able to vote electronically and submit questions during the meeting. This Proxy Statement and the accompanying proxy card are first being sent to stockholders on or about December 31, 2018.

Quorum and Voting Requirements

The Company has one class of common stock. Each share of common stock is entitled to one vote upon each matter to be voted on at the Annual Meeting. Stockholders do not have the right to cumulate votes in the election of directors. Only stockholders of record at the close of business on December 17, 2018 (the “Record Date”) will be entitled to vote at the Annual Meeting. As of the Record Date, there were 561,142,554 shares of common stock issued and outstanding.

This Proxy Statement relates only to the solicitation of proxies from the stockholders with respect to the election of four Class II directors recommended by the board of directors, an advisory vote to approve executive compensation and ratification of the appointment of the Company’s independent registered public accounting firm. All shares of the Company’s common stock represented by properly executed and unrevoked proxies will be voted by the persons named as proxies in accordance with the directions given. Where no instructions are indicated on any such proxy, properly executed proxies will be voted “FOR” the proposals set forth in this Proxy Statement for consideration at the Annual Meeting. At this time, we are unaware of any matters, other than those described above in the Notice of Annual Meeting of Stockholders, that may properly come before the Annual Meeting. If any other matters come before the Annual Meeting, the proxies in the enclosed form will confer discretionary authority on the persons named as proxies to vote in their discretion with respect to such matters.

The accompanying proxy is solicited from the holders of the Company’s common stock on behalf of the board of directors of the Company. A proxy is revocable at any time by giving written notice of revocation to the secretary of the Company prior to the Annual Meeting or by executing and delivering a later-dated proxy

via the Internet, telephone or mail prior to the Annual Meeting. Furthermore, the stockholders who are present at the Annual Meeting (in person or via the Internet) may revoke their proxies and vote in person. Stockholders attending the Annual Meeting via the Internet should follow the instructions at amtd.onlineshareholdermeeting.com in order to vote at the meeting.

A quorum consisting of at least a majority of shares of common stock issued and outstanding must be present at the meeting for any business to be conducted. Shares of common stock entitled to vote and represented by properly executed, returned and unrevoked proxies, including shares with respect to which votes are withheld or abstentions are cast or shares that are “broker non-votes,” will be considered present at the Annual Meeting for purposes of determining a quorum. Broker non-votes are shares held by brokers or nominees for which voting instructions have not been received from the beneficial owners or the persons entitled to vote those shares and for which the broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. If your broker holds your shares in its name and you do not instruct your broker how to vote, your broker will nevertheless have discretion to vote your shares on our sole “routine” matter – the ratification of the appointment of the Company’s independent registered public accounting firm. Your broker will not have discretion to vote on the following “non-routine” matters absent direction from you: the election of directors recommended by the board of directors and the advisory vote to approve executive compensation.

Voting Electronically

In order to vote online or via telephone before the Annual Meeting, go to the www.proxyvote.com website or call the toll-free number on the proxy card or Notice of Internet Availability of Proxy Materials (the “Internet Availability Notice”) and follow the instructions. If you choose not to vote by telephone or electronically, please complete and return the proxy card in the pre-addressed, postage-paid envelope provided. You may also vote while attending the meeting on the Internet. If you received an Internet Availability Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Internet Availability Notice. If you would like to receive future stockholder materials electronically, please enroll at http://enroll.icsdelivery.com/AMTD. Please have the proxy card you received available when accessing the site.

 

 

  TD Ameritrade 2019 Proxy Statement   1


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   Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

Board of Directors

 

The Company’s certificate of incorporation divides the Company’s board of directors into three classes. Each class shall consist, as nearly as possible, of one-third of the total number of directors with each class being elected to a staggered three-year term. The Toronto-Dominion Bank, a Canadian chartered bank, owned approximately 42% of our common stock as of the Record Date. References to “TD” or “TD Bank Group” in this Proxy Statement refer to The Toronto-Dominion Bank and its subsidiaries. In connection with the Company’s January 24, 2006 acquisition of TD Waterhouse Group, Inc. (“TD Waterhouse”), the Company entered into a stockholders agreement, as amended (the “Stockholders Agreement”).

Under the Stockholders Agreement, the Company’s board of directors consists of twelve members, up to five of whom may be designated by TD, one of whom is the Company’s chief executive officer (“CEO”), and the remainder of whom are outside independent directors who are nominated by the Outside Independent Directors Committee (“OID Committee”) and subject to consent by TD not to be unreasonably withheld. The right of TD to designate directors is subject to its maintaining specified

ownership thresholds of Company common stock, as set forth in the Stockholders Agreement. As of the Record Date, based on its ownership position in the Company, TD has the right to designate five members of the board of directors. See discussion under “Stock Ownership and Related Information – Stockholders Agreement” for additional information regarding the terms of the Stockholders Agreement. The board of directors has nominated the following persons as directors to be voted upon at the Annual Meeting: Bharat B. Masrani, Irene R. Miller, Todd M. Ricketts and Allan R. Tessler, as Class II directors to serve terms ending at the 2022 annual meeting of stockholders. Mr. Masrani and Ms. Miller are designees of TD. Messrs. Ricketts and Tessler are outside independent directors. Lorenzo A. Bettino, V. Ann Hailey, Joseph H. Moglia and Wilbur J. Prezzano are Class III directors serving terms ending at the 2020 annual meeting of stockholders. Tim Hockey, Brian M. Levitt, Karen E. Maidment and Mark L. Mitchell are Class I directors serving terms ending at the 2021 annual meeting of stockholders. The board of directors has determined that Mses. Hailey, Maidment and Miller and Messrs. Bettino, Levitt, Mitchell, Moglia, Prezzano, Ricketts and Tessler are independent as defined in Nasdaq Rule 5605.

 

 

The board of directors knows of no reason why any of Messrs. Masrani, Ricketts and Tessler and Ms. Miller might be unavailable to serve as directors, and each has expressed an intention to serve if elected. If any of Messrs. Masrani, Ricketts and Tessler and Ms. Miller is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute nominee as the board of directors may recommend. With the exception of the Stockholders Agreement, there are no arrangements or understandings between any of the persons nominated to be a Class II director and any other person pursuant to which any of such nominees was selected. The election of a director requires the affirmative vote of a plurality of the shares of common stock present in person or represented by proxy at the meeting and voting, provided a quorum of at least a majority of the outstanding shares of common stock is represented at the meeting. If you abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker how to vote on this “non-routine” proposal, your broker does not have authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any other effect on the outcome of the election of directors. Where no instructions are indicated, properly executed and unrevoked proxies will be voted “FOR” the election of each of Messrs. Masrani, Ricketts and Tessler and Ms. Miller as Class II directors.

 

LOGO    THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF BHARAT B. MASRANI, IRENE R. MILLER, TODD M. RICKETTS AND ALLAN R. TESSLER AS CLASS II DIRECTORS.

 

2   TD Ameritrade 2019 Proxy Statement  


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

The tables below set forth certain information regarding the directors of the Company.

Nominees to Board of Directors

 

Name       Age        Principal Occupation  

      Director      

Since

 

Class and
Year in Which

Term Expires

       

Bharat B. Masrani

 

 

62

 

  

Group President and Chief Executive Officer, TD Bank Group

 

 

 2013 

 

 

Class II

2022

 

       

Irene R. Miller

 

 

66

 

  

Chief Executive Officer, Akim, Inc.

 

 

 2015 

 

 

Class II

2022

 

       

Todd M. Ricketts

 

 

49

 

  

Director, Chicago Baseball Holdings, LLC

 

 

 2011(1)

 

 

Class II

2022

 

       

Allan R. Tessler

 

 

82

 

  

Chairman and Chief Executive Officer, International Financial Group, Inc.

 

 

 2006 

 

 

Class II

2022

 

 

(1)

Mr. Todd M. Ricketts previously served on the Company’s board of directors from October 2011 to February 2014 and was reelected effective January 2015.

 

  TD Ameritrade 2019 Proxy Statement   3


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

 

 

 

 

 

 

LOGO

 

Bharat B. Masrani

 

Age: 62

 

Director Since: 2013

 

 

 

 

 

 

 

 

    

Experience

Mr. Masrani is group president and chief executive officer of TD Bank Group. Mr. Masrani has served in this position since November 2014. From July 2013 until his current appointment, Mr. Masrani served as chief operating officer of TD Bank Group. Mr. Masrani served as group head, U.S. personal and commercial banking of TD Bank Group and president and chief executive officer of TD Bank US Holding Company and TD Bank, N.A. (a wholly-owned subsidiary of TD) from 2008 until 2013. From 2003 to 2008, he served as vice chairman and chief risk officer of TD Bank Group. Mr. Masrani joined TD Bank Group in 1987 as a commercial lending trainee and during his tenure with TD Bank Group he has served in various leadership positions, including senior vice president and chief executive officer of TD Waterhouse Investor Services in Europe, senior vice president of corporate finance and co-head in Europe, vice president and country head for India and vice president and head of corporate banking for Canada. Mr. Masrani is a director of TD and certain subsidiaries of TD, including TD Bank, N.A. and TD Bank USA, N.A. Mr. Masrani holds a Bachelor of Administrative Studies degree from York University and an M.B.A. from the Schulich School of Business, York University.

 

Qualifications

Mr. Masrani is one of the five directors currently designated by TD. He brings significant leadership skills and operational and financial services experience to the board of directors, having served in several leadership positions with TD Bank Group.

 

 

 

 

LOGO

 

Irene R. Miller

 

Age: 66

 

Director Since: 2015

    

Experience

Ms. Miller has served as the chief executive officer of Akim, Inc., an investment management and consulting firm, since 1997. Prior to joining Akim, Inc., Ms. Miller served as the vice chairman and chief financial officer of Barnes & Noble, Inc. She has also held senior investment banking and corporate finance positions with Morgan Stanley & Co. and Rothschild, Inc., respectively. Ms. Miller currently serves as a director of TD. She was formerly a director of Coach, Inc. from 2001 to 2014, Barnes & Noble, Inc. from 1995 to 2012, and Inditex, S.A. from 2001 to 2016, where she was chair of the audit and control committee. Ms. Miller received an M.S. in chemistry and chemical engineering from Cornell University and a B.S. from the University of Toronto.

 

Qualifications

Ms. Miller is one of the five directors currently designated by TD. She brings leadership skills and financial experience to the board of directors based on her experience as chief executive officer of Akim, Inc. and chief financial officer of Barnes & Noble, Inc. She brings insights to our board of directors through her service on other public company boards, having served as audit committee chair of five prior boards and as lead director of Coach, Inc. for ten years.

 

4   TD Ameritrade 2019 Proxy Statement  


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

 

 

 

 

LOGO

 

Todd M. Ricketts

 

Age: 49

 

Director Since: 2011

 

 

 

 

 

 

 

    

Experience

Mr. Ricketts has served as a director of Chicago Baseball Holdings, LLC since October 2009. Mr. Ricketts has managed his personal investment portfolio since 2001 and has been a managing co-owner of JBE Riding Group LLC, a bicycle retailer and service provider, since 2009. Previously, Mr. Ricketts served as corporate secretary and director of business development for the Company. He also served as the special assistant to the president for Knight Capital Group, Inc. and assisted with its initial public offering. Mr. Ricketts received a B.A. in economics from Loyola University Chicago. Todd M. Ricketts is the son of J. Joe Ricketts, founder of the Company.

 

Qualifications

Mr. Ricketts is one of the six outside independent directors. He brings business management and financial experience to the board of directors through his entrepreneurial and financial services industry experience.

 

 

 

 

 

 

 

LOGO

 

Allan R. Tessler

 

Age: 82

 

Director Since: 2006

 

 

 

 

 

 

 

    

Experience

Mr. Tessler has been chairman of the board and chief executive officer of International Financial Group, Inc., an international merchant banking firm, since 1987. He previously served as a director of Steel Partners Holdings L.P., chairman of the board of Epoch Holding Corporation (formerly J Net Enterprises), chief executive officer of J Net Enterprises, co-chairman and co-chief executive officer of Data Broadcasting Corporation (now known as Interactive Data Corporation), chairman of Enhance Financial Services Group, Inc. and chairman and principal stockholder of Great Dane Holdings. Mr. Tessler is the lead independent director and chair of both the finance and the nominating and governance committees of L Brands, Inc. Mr. Tessler also serves as chairman of Imperva, Inc. He is a governor emeritus of the Boys & Girls Clubs of America. Mr. Tessler holds a B.A. from Cornell University and an L.L.B. from Cornell University Law School.

 

Qualifications

Mr. Tessler is one of the six outside independent directors. He brings leadership skills and operational and financial services experience to the board of directors, having served as chief executive officer of J Net Enterprises and co-chief executive officer of Data Broadcasting Corporation. He brings insights to our board of directors through his service on other public company boards.

 

  TD Ameritrade 2019 Proxy Statement   5


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Directors Not Standing For Election

 

Name       Age       Principal Occupation         Director      
     Since    
 

Class and

Year in Which

Term Expires

       

Lorenzo A. Bettino

 

 

58

 

 

Private Investor

 

 

 2014 

 

 

Class III
2020

 

       

V. Ann Hailey

 

 

67

 

 

Former Executive Vice President and Chief Financial Officer, L Brands, Inc.

 

 

 2016 

 

 

Class III
2020

 

       

Joseph H. Moglia

 

 

69

 

 

Head Football Coach, Coastal Carolina University;
Chairman of the Company

 

 

 2006 

 

 

Class III
2020

 

       

Wilbur J. Prezzano

 

 

78

 

 

Retired Vice Chairman, Eastman Kodak Company

 

 

 2006 

 

 

Class III
2020

 

       

Tim Hockey

 

 

55

 

 

President and CEO of the Company

 

 

 2016 

 

 

Class I
2021

 

       

Brian M. Levitt

 

 

71

 

 

Chairman of the Board, TD Bank Group

 

 

 2016 

 

 

Class I
2021

 

       

Karen E. Maidment

 

 

60

 

 

Director, The Toronto-Dominion Bank

 

 

 2010 

 

 

Class I
2021

 

       

Mark L. Mitchell

 

 

58

 

 

Principal, CNH Partners, LLC

 

 

 1996(1)

 

 

Class I
2021

 

 

(1)

Mr. Mitchell previously served on the Company’s board of directors from December 1996 to January 2006 and was reelected in November 2006.

 

6   TD Ameritrade 2019 Proxy Statement  


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

 

 

 

 

LOGO

 

Lorenzo A. Bettino

 

Age: 58

 

Director Since: 2014

 

 

 

 

 

 

 

    

Experience

Mr. Bettino has managed his personal investment portfolio since December 2014. Previously, Mr. Bettino served as a special advisor to StarVest Partners, L.P., a New York-based venture capital firm focused on technology-enabled business services in the U.S., from 2006 to 2014. From 2001 to 2006, he served as a partner and managing director of Warburg Pincus LLC, where he was responsible for leading the firm’s investment activities in telecommunications and information technology. Mr. Bettino was a founding partner at Baker Capital from 1996 to 2001, a partner with Dillon Read Venture Capital from 1989 to 1996, and he held various management and technical positions with IBM from 1982 to 1989. Mr. Bettino has served on several private equity and venture capital backed corporate boards. Mr. Bettino holds a B.S. degree in electrical engineering from Rensselaer Polytechnic Institute and an M.B.A. from Harvard Business School.

 

Qualifications

Mr. Bettino is one of the six outside independent directors. Mr. Bettino brings significant technological and financial expertise to the board of directors, having more than 25 years of technology-focused, venture capital and private equity investing experience.

 

 

 

LOGO

 

V. Ann Hailey

 

Age: 67

 

Director Since: 2016

    

Experience

Ms. Hailey spent ten years with L Brands, Inc. (formerly Limited Brands, Inc.), where she served as executive vice president and chief financial officer from 1997 to 2006, as executive vice president of corporate development from 2006 to 2007 and as a board member from 2001 to 2006. Previously, Ms. Hailey spent 13 years at PepsiCo, Inc. in various leadership positions, including vice president, headquarters finance, Pepsi-Cola Company and vice president, finance and chief financial officer of the Pepsi-Cola Fountain Beverage and USA Divisions, as well as holding positions in the marketing and human resources functions. In addition, Ms. Hailey held leadership roles at Pillsbury Company and RJR Nabisco Foods, Inc. and she gained experience in on-line businesses as the president, chief executive officer and chief financial officer of Famous Yard Sale, Inc., an online marketplace, from July 2012 to March 2014 and as chief financial officer of Gilt Groupe, Inc. from 2009 to 2010. Ms. Hailey serves as a director of Realogy Holdings Corp., where she is chair of the audit committee and a member of the nominating and corporate governance committee. She also serves as a director of W.W. Grainger, Inc., where she is chair of the audit committee and member of the board affairs and nominating committee. She was formerly a director of Avon Products, Inc. and the Federal Reserve Bank of Cleveland where she served as the chair of its audit committee. Ms. Hailey received an M.B.A. from Harvard Business School and a B.B.A. (summa cum laude) from the University of Georgia.

 

Qualifications

Ms. Hailey is one of the six outside independent directors. Ms. Hailey brings financial and operations experience to the board of directors, having worked in the consumer products industry in senior roles for more than 30 years. Ms. Hailey’s positions as chief financial officer, her current and prior service on the audit committees of other companies and as the audit chair of the Cleveland Federal Reserve Bank and her accounting and financial knowledge, also impart significant expertise to the board.

 

  TD Ameritrade 2019 Proxy Statement   7


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

LOGO

 

Joseph H. Moglia

 

Age: 69

 

Director Since: 2006

    

Experience

Mr. Moglia was elected chairman of the Company’s board of directors effective October 1, 2008. Mr. Moglia has been head football coach of Coastal Carolina University since December 2011, and in March 2014 he was named chair of the athletics division, providing strategic oversight for the university’s athletic program. He served as president and head coach of the Omaha Nighthawks of the United Football League during 2011. From March 2001 through September 2008 he served as the Company’s chief executive officer. Mr. Moglia joined the Company from Merrill Lynch, where he served as senior vice president and head of the investment performance and product group for Merrill’s private client division. He oversaw all investment products, as well as the firm’s insurance and 401(k) businesses. Mr. Moglia joined Merrill Lynch in 1984 and, by 1988, was the company’s top institutional sales person. In 1992 he became head of global fixed income institutional sales and in 1995 he ran the firm’s municipal division before moving to its private client division in 1997. Prior to entering the financial services industry, Mr. Moglia was the defensive coordinator for Dartmouth College’s football team. He coached various teams for 16 years, authored a book on football and wrote 11 articles that were published in national coaching journals. Mr. Moglia serves on the STRATCOM Consultation Committee and is a director for the National Italian American Foundation. Mr. Moglia received an M.S. in Economics from the University of Delaware and a B.A. in Economics from Fordham University.

 

Qualifications

Mr. Moglia is one of the six outside independent directors. Mr. Moglia has significant financial services and leadership experience, having served as the Company’s chief executive officer from March 2001 through September 2008 and as head of the investment performance and product group for Merrill Lynch’s private client division. His experience as our former chief executive officer provides him with insights that are useful in his current role as chairman of the board.

 

 

 

LOGO

 

Wilbur J. Prezzano

 

Age: 78

 

Director Since: 2006

    

Experience

Mr. Prezzano was employed with Eastman Kodak Company for over 30 years and served in various general management positions during that time, including as vice chairman of Eastman Kodak Company and chairman and president of Kodak’s greater China region, the positions that he held at the time of his retirement in 1996. Mr. Prezzano serves as a director of TD Bank, N.A. (wholly-owned subsidiary of TD) and Roper Industries, Inc. He was formerly a director of EnPro Industries, Inc., The Toronto-Dominion Bank and Snyder’s-Lance, Inc. Mr. Prezzano received a Bachelor’s degree and an M.B.A. from The Wharton School at the University of Pennsylvania.

 

Qualifications

Mr. Prezzano is one of the five directors currently designated by TD. He brings leadership skills and financial experience to the board of directors, having served as the vice chairman of Eastman Kodak Company. He brings insights to our board of directors through his service on other public company boards.

 

8   TD Ameritrade 2019 Proxy Statement  


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

 

 

 

 

 

 

LOGO

 

Tim Hockey

 

Age: 55

 

Director Since: 2016

 

 

 

 

 

 

 

 

    

 

Experience

Mr. Hockey joined the Company as president and was elected to the Company’s board of directors in January 2016. He became CEO of the Company on October 1, 2016. Prior to joining the Company, Mr. Hockey served as group head, Canadian Banking and Wealth Management, TD Bank Group since July 2013 and president and chief executive officer of TD Canada Trust since June 2008 and was primarily responsible for the leadership of Canadian banking, which included Canadian personal banking, business banking, auto finance, global direct investing, advisory and Canadian asset management businesses. In over 30 years with TD, Mr. Hockey held senior positions in a variety of areas including mutual funds, retail distribution, information technology, core and small business, credit cards and personal lending. Mr. Hockey serves on the advisory board of the Richard Ivey School of Business and as chairman of the CivicAction Leadership Foundation. He served as chairman of the Canadian Bankers Association’s Executive Council and as a director of the SickKids Foundation. Mr. Hockey was previously named one of Canada’s “Top 40 Under 40,” a program that celebrates Canadians who have reached significant success before the age of 40 in the private, public and not-for-profit sectors. Mr. Hockey received an M.B.A. from the University of Western Ontario.

 

Qualifications

Mr. Hockey is the CEO of the Company. He has significant financial services and management experience, having worked in the financial services industry for over 35 years.

 

 

 

 

LOGO

 

Brian M. Levitt

 

Age: 71

 

Director Since: 2016

    

 

Experience

Mr. Levitt was elected as a director of the Company on October 1, 2016. Mr. Levitt currently serves as chairman of the board for TD, a position he has held since 2011. Until 2015, Mr. Levitt served as vice-chair of Osler, Hoskin & Harcourt LLP, a law firm that he first joined in 1976 and became a partner of in 1979. In 1991, Mr. Levitt left Osler, Hoskin & Harcourt LLP to become president and subsequently chief executive officer of Imasco Limited, a Canadian consumer products and services company. Imasco was sold in 2000, and Mr. Levitt returned to Osler, Hoskin & Harcourt LLP in 2001. Mr. Levitt also serves as a director of Domtar Corporation, where he is the chair of the finance committee and a member of the human resources committee, and as a director of Stelco Holdings Inc., where he is the lead independent director and chair of the nominating, compensation and governance committee. He was formerly a director of Tailsman Energy Inc. In 2014, Mr. Levitt was named as a recipient of the Institute of Corporate Directors Fellowship Awards, which annually recognizes individuals who have made outstanding contributions to corporate, not-for-profit and Crown corporation boards across Canada. He was appointed to the Order of Canada in 2015 for his work and support for the arts. Mr. Levitt holds a law degree from the University of Toronto, where he also completed his bachelor of applied science degree in civil engineering.

 

Qualifications

Mr. Levitt is one of five directors currently designated by TD. He brings leadership skills and financial and operational experience to the board of directors, having served as the president and chief executive officer of Imasco Limited and vice-chair of Osler, Hoskin & Harcourt LLP. He brings insights to our board of directors through his service on other public company boards.

 

  TD Ameritrade 2019 Proxy Statement   9


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

 

 

 

 

 

 

LOGO

 

Karen E. Maidment

 

Age: 60

 

Director Since: 2010

 

 

 

 

 

 

 

 

    

 

Experience

Ms. Maidment has served as a director of the Company since August 2010. Ms. Maidment was chief financial and administrative officer of Bank of Montreal (“BMO”) Financial Group, a financial services organization, from 2007 to 2009, and was responsible for all global finance operations, risk management, legal and compliance, tax, communications and mergers and acquisitions. From 2000 to 2007 she served as the chief financial officer of BMO Financial Group. Ms. Maidment held several executive positions with Clarica Life Insurance Company from 1988 to 2000, including chief financial officer. Ms. Maidment currently serves on the board of directors of TD. She was formerly a director of TransAlta Corporation. Ms. Maidment holds a Bachelor of Commerce degree from McMaster University and is a chartered professional accountant and a chartered accountant. In 2000, she was named a Fellow of the Institute of Chartered Professional Accountants of Ontario.

 

Qualifications

Ms. Maidment is one of the five directors currently designated by TD. She brings leadership skills and significant financial services experience to the board of directors, having most recently served as chief financial and administrative officer of BMO Financial Group. Her financial expertise and experience in risk management and compliance are important for her role as a member of the Audit Committee and Risk Committee.

 

 

 

 

 

 

 

 

 

LOGO

 

Mark L. Mitchell

 

Age: 58

 

Director Since: 1996

 

 

 

 

 

 

 

 

    

 

Experience

Mr. Mitchell is a principal at CNH Partners, LLC, an investment management firm, which he co-founded in 2001. Mr. Mitchell served as a director of the Company from December 1996 until January 2006 and served as a member of the Company’s board of advisors in 1993. He was reelected as a director in November 2006. Mr. Mitchell has served as Adjunct Professor of Finance at Booth Business School, University of Chicago since 2017. Previously, he was a finance professor at Harvard Business School from 1999 to 2003 and was a finance professor at the Graduate School of Business, University of Chicago from 1990 to 1999. Mr. Mitchell was a senior financial economist for the Securities and Exchange Commission from 1987 to 1990. He was a member of the Nasdaq quality of markets committee from 2003 to 2005. He was a member of the economic advisory board of NASD from 1995 to 1998. Mr. Mitchell received a Ph.D. in Applied Economics and an M.A. in Economics from Clemson University and received a B.B.A. (summa cum laude) in Economics from the University of Louisiana at Monroe.

 

Qualifications

Mr. Mitchell is one of the six outside independent directors. He brings significant financial experience and extensive knowledge of the Company and the brokerage industry, serving as a principal and co-founder of an investment management firm and as a director of the Company since 1996.

 

10   TD Ameritrade 2019 Proxy Statement  


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Board Qualifications, Skills and Background

The charts below summarize the primary qualifications, skills and background that each director brings to their service on the board and highlights the balanced mix of skills, qualifications and experience of the board as a whole. This summary is not intended to be an exhaustive list of each director’s skills or contributions to the board. Additional information on the business experience and other skills and qualifications of each of our directors is included above.

 

     Lorenzo A.
Bettino
  V. Ann
Hailey
  Tim
Hockey
  Brian M.
Levitt
  Karen E.
Maidment
  Bharat B.
Masrani
  Irene R.
Miller
  Mark L.
Mitchell
  Joseph H.
Moglia
  Wilbur J.
Prezzano
  Todd M.
Ricketts
  Allan R.
Tessler
                     

Knowledge, Skills and Experience

                                           
                       

Audit/Accounting

  ü   ü           ü       ü                    
                       

Capital Markets/Treasury

  ü   ü       ü   ü       ü   ü   ü            

Governance/Corporate Responsibility

 

              ü

 

  ü

 

              ü

 

  ü

 

      ü

 

                       

Financial Services

  ü   ü   ü   ü   ü   ü   ü   ü   ü   ü   ü   ü
                       

Government/Public Affairs

              ü       ü                   ü    
                       

Executive Leadership

          ü   ü   ü   ü           ü   ü   ü   ü
                       

Legal/Regulatory

              ü                               ü
                       

Marketing/Brand Awareness

  ü   ü                   ü           ü        
                       

Operations

      ü   ü           ü       ü           ü   ü
                       

Risk Management

  ü   ü           ü   ü   ü   ü                
                       

Strategic Planning

  ü   ü   ü   ü   ü   ü   ü   ü   ü   ü       ü

Talent Management & Executive Compensation

 

  ü

 

      ü

 

  ü

 

  ü

 

  ü

 

          ü

 

  ü

 

       
                       

Technology Management

  ü   ü   ü                  
                       

Board Tenure

                       
                       

Years

  5   3   3   3   9   6   4   22   13   13   7   13

 

Under Age 60

 

LOGO

 

Women and Ethnically Diverse

 

LOGO

 

Tenure

 

LOGO

 

  TD Ameritrade 2019 Proxy Statement   11


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Board Meetings and Committees

The board of directors conducts its business through meetings of the board, actions taken by written consent in lieu of meetings and by the actions of its committees. The non-employee members and the independent members of our board of directors regularly meet in executive session without management present. These directors select a presiding director at these meetings on an ad-hoc basis. The board of directors has a policy requiring the separation of the roles of CEO and chairman of the board because the board of directors believes it improves the ability of the board to exercise its oversight role. Mr. Hockey serves as the CEO, with primary responsibility for operational leadership and strategic direction of the Company. Mr. Moglia serves as chairman of the board, facilitating the board’s oversight of management, promoting communication between management and the board and engaging with shareholders. Key responsibilities of the chairman include: setting the agenda for board meetings in consultation with other directors, the CEO, and the corporate secretary, facilitating the annual CEO performance evaluation, serving as a liaison between the board and senior management, conducting annual board interviews as part of the annual board evaluation process and setting and maintaining board culture. The separation of the roles of CEO and chairman of the board does not affect risk oversight, which is the responsibility of the board of directors, primarily overseen by the Risk Committee.

During the fiscal year ended September 30, 2018, the board of directors held fourteen meetings. During fiscal year 2018, each incumbent director attended at least 75% of the aggregate number of meetings of the board of directors and meetings of the committees of the board of directors on which he or she served during the period in which he or she served, if any. Although the Company does not have a formal policy regarding director attendance at our annual meeting of stockholders, directors are encouraged to attend. All directors of the Company at the time of the 2018 annual meeting of stockholders attended the 2018 annual meeting of stockholders.

The board of directors has established six standing committees: Audit, H.R. and Compensation, Corporate Governance, Outside Independent Directors, Non-TD Directors and Risk. The committee members are identified in the following table:

 

Director   Audit  

H. R. and

Compensation

 

Corporate

Governance

 

Outside

Independent

Directors

 

Non-TD

Directors

  Risk
           

Lorenzo A. Bettino

 

 

LOGO

 

         

Chair

 

 

LOGO

 

 

LOGO

 

           

V. Ann Hailey

 

 

LOGO

 

         

LOGO

 

 

LOGO

 

 

LOGO

 

           

Tim Hockey

 

                 

LOGO

 

   
           

Brian M. Levitt

 

     

LOGO

 

               
           

Karen E. Maidment

 

 

Chair

 

                 

LOGO

 

           

Bharat B. Masrani

 

         

LOGO

 

           
           

Irene R. Miller

 

 

LOGO

 

                 

LOGO

 

           

Mark L. Mitchell

 

 

LOGO

 

 

LOGO

 

     

LOGO

 

 

LOGO

 

 

Chair

 

           

Joseph H. Moglia

 

                 

LOGO

 

   
           

Wilbur J. Prezzano

 

     

Chair

 

 

LOGO

 

           
           

Todd M. Ricketts

 

 

LOGO

 

     

LOGO

 

 

LOGO

 

 

LOGO

 

 

LOGO

 

           

Allan R. Tessler

 

     

LOGO

 

 

Chair

 

 

LOGO

 

  LOGO    

 

12   TD Ameritrade 2019 Proxy Statement  


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Audit Committee. The functions performed by the Audit Committee are described in the Audit Committee charter and include: (1) overseeing the Company’s internal accounting controls and controls over financial reporting, including assessment of legal and compliance matters, (2) appointment of the Company’s independent registered public accounting firm, reviewing the appointment of the Managing Director, General Auditor and assessing their performance on an ongoing basis, (3) reviewing the Company’s financial statements and audit issues and overseeing the financial and regulatory reporting processes and related risks, (4) performing other oversight functions as requested by the board of directors and (5) reporting its activities to the board of directors. The Audit Committee charter is available on the Company’s website at www.amtd.com under the governance section. All current Audit Committee members are independent as defined in the applicable listing standards of The Nasdaq Stock Market. The board of directors has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the committee and has designated Mses. Maidment, Hailey, and Miller, and Mr. Bettino as audit committee financial experts as defined by the Securities and Exchange Commission (“SEC”). The Company’s Audit Committee met 10 times during fiscal year 2018. The Report of the Audit Committee for the fiscal year ended September 30, 2018 appears under Proposal No. 3 – “Ratification of Appointment of Independent Registered Public Accounting Firm.”

H.R. and Compensation Committee. The H.R. and Compensation Committee (the “Compensation Committee”) reviews and approves broad compensation philosophy and policy and executive salary levels, bonus payments and equity awards pursuant to the Company’s management incentive plans and, in consultation with the Risk Committee, reviews compensation-related risks. The Compensation Committee also reviews the Compensation Discussion and Analysis, discusses it with management and makes a recommendation as to whether it should be included in each proxy statement. The Compensation Committee charter is available on the Company’s website at www.amtd.com under the governance section. All current Compensation Committee members are independent as defined in the applicable listing standards of The Nasdaq Stock Market. The Compensation Committee met five times during fiscal year 2018. The Compensation Committee Report appears under “Executive Compensation and Related Information.”

Corporate Governance Committee. The primary purpose of the Corporate Governance Committee is to ensure that the Company has and follows appropriate governance standards. To carry out this purpose, the committee develops and recommends to the board of directors corporate governance principles and leads and oversees the annual self-evaluation of the board of directors and its committees. The Corporate Governance Committee also makes recommendations to the board of directors regarding

compensation for non-employee directors by annually reviewing

the market practice for non-employee director compensation for companies in its peer group, which this year was accomplished in consultation with Semler Brossy Consulting Group, LLC (“Semler Brossy”), the independent compensation consultant retained by the Compensation Committee, who assessed whether the Company’s non-employee director compensation program continues to be competitive with the market for qualified directors, incorporates best practices and aligns the interests of our non-employee directors with the long-term interests of our shareholders. The Company’s Corporate Governance Committee met four times during fiscal year 2018. The Corporate Governance Committee charter and the Corporate Governance Guidelines are available on the Company’s website at www.amtd.com under the governance section.

Outside Independent Directors Committee. The OID Committee’s purpose is to assist the board of directors in fulfilling the board’s oversight responsibilities by: (1) identifying individuals qualified to serve on the board of directors, (2) reviewing the qualifications of the members of the board and recommending nominees to fill board of director vacancies and (3) recommending a slate of nominees for election or reelection as directors by the Company’s stockholders at our annual meeting of stockholders to fill the seats of directors whose terms are expiring. The OID Committee reviews and approves (or ratifies) any related person transaction that is required to be disclosed by the Company. The OID Committee is also responsible for approving transfers of voting securities by TD that are not otherwise permitted by the Stockholders Agreement, approving qualifying transactions (as defined in the Stockholders Agreement) and determining the fair market value (or selecting an independent investment banking firm to determine the fair market value) of certain property in connection with the stock purchase and transfer rights of TD set forth in the Stockholders Agreement. All current OID Committee members are independent as defined in the applicable listing standards of The Nasdaq Stock Market. The Company’s OID Committee met seven times during fiscal year 2018.

Written communications submitted by stockholders pursuant to the Company’s Stockholder Communications Policy recommending the nomination of a person to be a member of the Company’s board of directors will be forwarded to the chair of the OID Committee for consideration. The OID Committee will consider director candidates who have been identified by other directors or the Company’s stockholders, but it has no obligation to recommend such candidates for nomination, except as may be required by contractual obligation of the Company. Stockholders who submit director recommendations must include the following: (1) a detailed resume outlining the candidate’s knowledge, skills and experience, (2) a one-page summary of the candidate’s attributes, including a statement as to why the candidate is an excellent choice for the board of directors, (3) a detailed resume of the stockholder submitting the director recommendation and (4) the number of shares held by the stockholder, including the dates such shares were acquired.

 

 

  TD Ameritrade 2019 Proxy Statement   13


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

The OID Committee charter establishes the following guidelines for identifying and evaluating candidates for selection to the board of directors:

 

1.

Decisions for recommending candidates for nomination are based on merit, qualifications, performance, character and integrity and the Company’s business needs and will comply with the Company’s anti-discrimination policies and federal, state and local laws.

 

2.

The composition of the entire board of directors will be taken into account when evaluating individual directors, including: the diversity, depth and breadth of knowledge, skills, experience and background represented on the board of directors; the need for financial, business, financial industry, public company and other experience and expertise on the board of directors and its committees; and the need to have directors work cooperatively to further the interests of the Company and its stockholders.

 

3.

Candidates will be free of conflicts of interest that would interfere with their ability to discharge their duties as a director.

 

4.

Candidates will be willing and able to devote the time necessary to discharge their duties as a director and shall have the desire and purpose to represent and advance the interests of the Company and stockholders as a whole.

 

5.

Any other criteria as the OID Committee may determine.

Notwithstanding any provision to the contrary in the OID Committee charter, when the Company is legally required by contractual obligation to provide third parties with the ability to nominate directors (including pursuant to the Stockholders Agreement, discussed under “Stock Ownership and Related Information – Stockholders Agreement”), the selection and nomination of such directors is not subject to the committee’s review and recommendation process. The OID Committee charter is available on the Company’s website at www.amtd.com under the governance section.

Non-TD Directors Committee. The Non-TD Directors Committee is composed of all of the directors not designated by TD. The purpose of this committee is to make determinations relating to any acquisition by the Company of a competing business (as defined in the Stockholders Agreement) held by TD. The Non-TD Directors Committee did not meet during fiscal year 2018.

Risk Committee. The Risk Committee was formed for the purpose of assisting the board of directors in its oversight responsibilities relating to the identification, monitoring and assessment of the key risks of the Company, including the significant policies, procedures and practices employed in risk management. The Risk Committee met seven times during fiscal year 2018. The Risk Committee charter is available on the

Company’s website at www.amtd.com under the governance section.

Code of Ethics

The Company has a code of business conduct and ethics that applies to all employees and the board of directors. A copy of this code is publicly available on the Company’s website at www.amtd.com under the governance section and as Exhibit 14 of the Company’s quarterly report on Form 10-Q filed with the SEC on February 4, 2011.

Stockholder Communications Policy

Stockholders and interested parties may communicate with any member of the board of directors, including the chair of any committee, an entire committee or the independent directors or all directors as a group, by sending written communications to:

Corporate Secretary

TD Ameritrade Holding Corporation

6940 Columbia Gateway Drive

Columbia, Maryland 21046

A stockholder must include his, her or its name and address in any such written communication and indicate whether he, she or it is a Company stockholder.

The corporate secretary will compile all communications, summarize lengthy, repetitive or duplicative communications and forward them to the appropriate director or directors. Complaints regarding accounting, internal controls or auditing will be forwarded to the chair of the Audit Committee. The corporate secretary will not forward to directors non-substantive communications or communications that appear to pertain to personal grievances, but will instead forward them to the appropriate department within the Company for resolution. The corporate secretary will retain a copy of such communications for review by any director upon his or her request.

Communications from a Company employee or agent will be considered stockholder communications under this policy if made solely in his or her capacity as a stockholder. No communications from a Company director or officer will be considered stockholder communications under this policy. In addition, proposals submitted by stockholders for inclusion in the Company’s annual proxy statement, and proposals submitted by stockholders for presentation at the Company’s annual meeting of stockholders, will not be considered stockholder communications under this policy. Written communications submitted by stockholders recommending the nomination of a person to be a member of the Company’s board of directors will be forwarded to the chair of the OID Committee.

 

 

14   TD Ameritrade 2019 Proxy Statement  


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Director Compensation

The following table summarizes non-employee director compensation for calendar year 2018 under the terms of the TD Ameritrade Holding Corporation 2006 Directors Incentive Plan:

 

Non-employee

Director Compensation

   Amount(1)        
 

Chairman of the Board Annual Retainer

 

  

$400,000 in cash or a

combination of cash and equity(2)

 

 

Annual Cash Retainer

(excluding Chairman)

 

  

$80,000

 

 

 

Annual Equity Retainer

(excluding Chairman)

 

  

$130,000 in Restricted Stock Units(2)

 

 

 

Annual Committee

Chair Fee

(excluding Chairman)

 

  

$25,000 for chairs of Audit and Risk Committees

$15,000 for chairs of Governance, Compensation, and OID Committees

 

 

Annual Committee Member Fee

(excluding Chair and Chairman)

 

  

$10,000 for Audit and Risk Committees

$5,000 for Governance, Compensation, and OID Committees

 

 

 

(1)

All of the amounts shown were unchanged from the non-employee director compensation program for calendar year 2017.

 

(2)

Please see “Changes for Calendar Year 2019” below for a description of compensation changes for calendar year 2019.

Non-employee directors may also receive, at the discretion of the Corporate Governance Committee and approved by the board of directors, payment of additional non-employee director compensation when special circumstances warrant. No additional non-employee director compensation was paid in calendar year 2018.

2006 Directors Incentive Plan

The 2006 Directors Incentive Plan is designed to:

 

    fairly compensate non-employee directors for work required of a company the size and complexity of TD Ameritrade and

 

    align directors’ interests with the long-term interests of stockholders.

The annual cash retainer, the committee chair and membership fees are paid in advance at the beginning of each calendar year.

Under the 2006 Directors Incentive Plan, any non-employee director is permitted to defer any or all of the cash or equity award. Investment earnings on amounts deferred in the form of stock units are based on the fluctuations in the underlying common stock of the Company. Deferred cash awards earn interest at the prime rate as reported by The Wall Street Journal.

The number of restricted stock units (“RSUs”) under the annual equity grant is calculated by using the average of the high and low price of the Company’s common stock for the 20 trading days prior to the grant date. RSU awards vest completely on the first anniversary of the grant date and are settled by issuing one share of Company common stock for each RSU granted. RSUs do not have any voting rights. RSUs receive the benefit of any dividends on common stock of the Company in the form of additional dividend equivalent units (“DEUs”) that are subject to the same vesting schedule as the original RSUs on which the dividends are paid. In the event of the death or disability of a non-employee director or a change in control of the Company, the RSUs will vest and be settled in common stock of the Company.

Non-employee directors are reimbursed for reasonable expenses incurred in connection with attending meetings of the board of directors. The Company also indemnifies and provides liability insurance for its directors and officers.

Chairman Compensation

For calendar year 2018, Mr. Moglia was compensated pursuant to a non-employee chairman term sheet. Under the term sheet, Mr. Moglia earns an annual retainer of $400,000, which is paid in either cash or a combination of cash and equity as agreed upon between Mr. Moglia and the board of directors. The term sheet also provides for administrative support equivalent to that provided to a senior executive including secretarial assistance, office, and certain other equipment. Mr. Moglia’s 2018 annual retainer was paid in cash. For the provisions of the non-employee chairman term sheet, see Exhibit 10.2 of the Company’s Annual Report on Form 10-K filed with the SEC on November 18, 2011.

As part of the annual review of director compensation, the Corporate Governance Committee asked Semler Brossy, the Compensation Committee’s independent compensation consultant, to review Mr. Moglia’s compensation in his role as chairman. Semler Brossy’s review found that Mr. Moglia’s compensation was consistent generally with the median compensation for non-executive chairman within our fiscal year 2018 peer group. (For more information on our peer group, refer to p. 23.) The Corporate Governance Committee considered the data provided by Semler Brossy, as well as Mr. Moglia’s responsibilities as chairman of the board of directors (including serving as a liaison between the board and senior management and conducting annual board interviews as part of the annual board evaluation process) and his unique insight and experience as our former chief executive officer. In light of this review, the Corporate Governance Committee continues to believe that the annual retainer amount is appropriate and made no changes to the calendar year 2019 retainer amount. For a description of changes to the form of payment of Mr. Moglia’s retainer for calendar year 2019, please see “Changes for Calendar Year 2019” below.

 

 

  TD Ameritrade 2019 Proxy Statement   15


Table of Contents

Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

Changes for Calendar Year 2019

As part of its annual review of director compensation, the Corporate Governance Committee requested that Semler Brossy conduct an independent review of the Company’s non-employee director compensation program. Semler Brossy conducted an in-depth assessment of each element of compensation and of the compensation program structure in comparison to the companies in the fiscal year 2018 peer group used for executive compensation purposes. Semler Brossy’s review found that the cash compensation paid to our non-employee directors was consistent generally with the median paid in our peer group, but the amount of our equity retainer was below the fiscal year 2018 peer group median. The amount of equity retainer had not been increased since 2010. Following the recommendation of the Corporate Governance Committee, on November 16, 2018, the board of directors approved a $15,000 increase in the annual equity retainer for our non-employee directors (other than the

chairman), from $130,000 to $145,000. This increase resulted in bringing the annual equity retainer to approximately the peer group median. There were no other changes to the terms of the compensation for non-employee directors, including no changes to vesting, proration and deferral.

As noted above, Mr. Moglia is compensated pursuant to a non-employee chairman term sheet that provides for payment of his annual retainer in either cash or a combination of cash and equity as agreed upon between Mr. Moglia and the board of directors. For calendar year 2019, Mr. Moglia will receive 50% of his annual retainer in cash and 50% in the form of RSUs. The total amount of the annual retainer was not changed. Consistent with the RSUs granted to other non-employee directors, Mr. Moglia’s RSUs will be scheduled to vest on the first anniversary of the grant date, subject to his continued service as a director through the vesting date.

 

 

Director Compensation Table for Fiscal Year 2018

The table below provides information on compensation for non-employee directors who served during fiscal year 2018. Compensation information for Mr. Hockey, who is a named executive officer and served as an employee director of the Company during fiscal year 2018, is disclosed in the Summary Compensation Table under “Executive Compensation and Related Information.”

 

      

Fees Earned or Paid in Cash

 

                             

Name

 

    

Paid in

Cash(2)

($)

 

    

Deferred

in Form

of Stock

Units(3),(4)

($)

 

    

Stock

Awards(4),(5)

($)

 

   

Nonqualified

Deferred

Compensation

Earnings(6)

($)

 

   

All Other

Compensation(7)

($)

 

      

Total

($)

 

 
           

Lorenzo A. Bettino

 

      

 

28,750

 

 

 

    

 

86,250

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

245,384

 

 

 

           

V. Ann Hailey

 

      

 

105,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

235,384

 

 

 

           

Brian M. Levitt

 

      

 

63,750

 

 

 

    

 

21,250

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

215,384

 

 

 

           

Karen E. Maidment

 

      

 

115,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

1,526

 

 

 

   

 

 

 

 

      

 

246,910

 

 

 

           

Bharat B. Masrani(1)

 

      

 

 

 

 

    

 

 

 

 

    

 

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

 

 

 

           

Irene R. Miller

 

      

 

100,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

230,384

 

 

 

           

Mark L. Mitchell

 

      

 

125,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

10,917

 

 

 

   

 

 

 

 

      

 

266,301

 

 

 

           

Joseph H. Moglia

 

      

 

400,000

 

 

 

    

 

 

 

 

    

 

 

 

 

   

 

 

 

 

   

 

14,685

 

 

 

      

 

414,685

 

 

 

           

Wilbur J. Prezzano

 

      

 

100,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

230,384

 

 

 

           

Todd M. Ricketts

 

      

 

110,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

240,384

 

 

 

           

Allan R. Tessler

 

      

 

105,000

 

 

 

    

 

 

 

 

    

 

130,384

 

 

 

   

 

 

 

 

   

 

 

 

 

      

 

235,384

 

 

 

 

(1)

Mr. Masrani, an employee of TD, elected during fiscal year 2018 not to receive compensation for services provided as a non-employee director both in fiscal year 2018, and generally on an ongoing basis.

 

(2)

The amounts in this column represent amounts paid in cash for retainers and fees for services provided by our non-employee directors during fiscal year 2018.

 

(3)

The amount in this column represents the dollar amount of retainers and fees earned for services provided in fiscal year 2018 that were deferred in the form of 1,558 Company stock units for Mr. Bettino and 489 Company stock units for Mr. Levitt.

 

16   TD Ameritrade 2019 Proxy Statement  


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Proposal No. 1 – Election of Directors Recommended by the Board of Directors

 

 

(4)

The following table summarizes, as of September 30, 2018, the aggregate number of outstanding deferred stock units and RSUs, including DEUs associated with the outstanding deferred stock units and RSU awards, held by the individuals who served as our non-employee directors during fiscal year 2018. Outstanding stock-based awards for Mr. Hockey, who is a named executive officer and served as an employee director of the Company during fiscal 2018, are summarized in the Outstanding Equity Awards at September 30, 2018 table under “Executive Compensation and Related Information.”

 

Name

 

 

Deferred Stock

        Unit Awards        

(#)

 

 

Restricted Stock

        Unit Awards        

(#)

 

   

Lorenzo A. Bettino

 

    2,092

 

  2,347

 

   

V. Ann Hailey

 

    7,283

 

  2,347

 

   

Brian M. Levitt

 

    6,595

 

  2,347

 

   

Karen E. Maidment

 

  61,510

 

  2,347

 

   

Bharat B. Masrani

 

        —

 

        —

 

   

Irene R. Miller

 

        —

 

  2,347

 

   

Mark L. Mitchell

 

  28,133

 

  2,347

 

   

Joseph H. Moglia

 

        —

 

        —

 

   

Wilbur J. Prezzano

 

  48,835

 

  2,347

 

   

Todd M. Ricketts

 

        —

 

  2,347

 

   

Allan R. Tessler

 

        —

 

  2,347

 

 

(5)

The amounts in this column represent the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation, for RSUs granted to the non-employee directors during fiscal year 2018. In fiscal year 2018, the RSUs granted as 2018 annual equity grants on February 21, 2018, as noted in the main table above, had a grant date fair value of $130,384.

 

(6)

The amounts in this column represent above market interest calculated under SEC rules as the interest credited under the plan to the director minus the interest that would have been credited using 120% of the long-term, quarterly applicable federal rate as prescribed under Section 1274(d) of the Code for the month in which the applicable interest under the plan was determined.

 

(7)

The amount in this column represents reimbursement for post-retirement medical coverage. In connection with Mr. Moglia’s transition to chairman of our board of directors from CEO in 2008, Mr. Moglia became eligible, pursuant his employment agreement then in effect, to receive post-retirement medical coverage for him, his spouse and any eligible dependents for his life (and his spouse’s life if she survives him), with the coverage secondary to his Medicare benefits. To receive this benefit, Mr. Moglia was required to agree to a release of claims in favor of the Company and non-competition, non-solicitation and nondisparagement obligations for a specified period (which has been satisfied) following employment termination.

Non-employee Director Stock Ownership Guidelines

Under the Company’s non-employee director stock ownership guidelines, non-employee directors receiving compensation are required to own shares of the Company’s common stock with the value described below, no later than the five-year anniversary of becoming a director of the Company. Shares counted toward this calculation include common stock beneficially owned by the director and vested and unvested RSUs. As of September 30, 2018, the last day of our fiscal year 2018, all non-employee directors with more than five years of service with the Company who are receiving compensation for their services as a director have met this guideline.

 

   Non-Employee Director

 

  

Stock
Ownership
Value

($)

 

    

Multiple of 2019
Cash Retainer

 

    

Multiple of 2019
Total Retainer

 

 
     

Chairman

 

   $

 

800,000

 

 

 

    

 

4.0x

 

 

 

    

 

2.0x

 

 

 

     

Directors

 

   $

 

450,000

 

 

 

    

 

5.6x

 

 

 

    

 

2.0x

 

 

 

 

  TD Ameritrade 2019 Proxy Statement   17


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   Executive Compensation and Related Information

 

Executive Officers

 

The Company’s current executive officers are as follows:

 

Name

    Age     Position
   

Tim Hockey

 

 

55

 

 

President and CEO

 

   

Stephen J. Boyle

 

 

57

 

 

Executive Vice President, Chief Financial Officer

 

   

Peter J. deSilva

 

 

57

 

 

Executive Vice President, Retail Distribution

 

   

Ellen L.S. Koplow

 

 

59

 

 

Executive Vice President, General Counsel and Secretary

 

   

Thomas A. Nally

 

 

47

 

 

Executive Vice President, Institutional Services

 

   

Steven M. Quirk

 

 

54

 

 

Executive Vice President, Trading and Education

 

Under the Bylaws of the Company, the Company’s executive officers are elected annually by the Board of Directors and hold office until their successors are elected and qualified or until their earlier death, termination, resignation, or removal from office.

For information regarding the business experience of Tim Hockey, see Proposal No. 1 – “Election of Directors Recommended by the Board of Directors – Nominees to the Board of Directors.”

Stephen J. Boyle joined the Company in July 2015 as executive vice president of finance and became chief financial officer in October 2015. In his role as chief financial officer, he is responsible for the Company’s investor relations and finance operations functions, including accounting, business planning and forecasting, external and internal reporting, procurement, tax, treasury and asset/liability management. Mr. Boyle has nearly 30 years of experience in the financial services industry. Mr. Boyle joined Banknorth Group, Inc. as controller in 1997 and was named executive vice president and chief financial officer in 2004, where he was responsible for finance, accounting, treasury and tax functions. He remained in this role after Banknorth was acquired by TD Bank Group in 2007, until joining the Company in 2015. Prior to joining Banknorth, Mr. Boyle served as director of financial reporting for Barnett Banks, Inc. from 1994 to 1997 and as manager of corporate accounting for Fleet Financial Group, Inc. from 1991 to 1994. Prior to joining Fleet Financial Group, Inc., Mr. Boyle spent eight years with Arthur Andersen LLP, serving as a senior audit manager primarily focusing on financial services clients. Mr. Boyle holds an M.S. in Accounting from the New York University Stern School of Business and a B.A. in Economics (cum laude) from Wake Forest University.

Peter J. deSilva joined the Company in September 2017 following the closing of the acquisition of Scottrade Financial Services, Inc. (“Scottrade”) and was appointed executive vice president of retail distribution in the same month. In this role, he is responsible for the Company’s branch network, investor service and sales call centers, guidance solutions and investment products. Prior to joining the Company, Mr. deSilva was president at Scottrade from 2016 to 2017 where he led the retail and institutional divisions. Prior to joining Scottrade in 2016, he was the president and chief operating officer of UMB Financial Corp., a financial services company, a position he held from 2004 to 2015. Before that, from 1987 to 2004, Mr. deSilva worked with Fidelity Investments, where he served in several leadership positions including senior vice president/general manager of Fidelity Retail and senior vice president of Fidelity Brokerage Company. Mr. deSilva holds a B.A. in Management from the University of Massachusetts Dartmouth.

Ellen L.S. Koplow has served as general counsel since June 2001 and was named secretary in November 2005. She manages the Company’s legal and government relations departments. Ms. Koplow previously oversaw the Company’s compliance and internal audit functions. She joined the Company in May 1999 as deputy general counsel and was named acting general counsel in November 2000. Prior to joining the Company, Ms. Koplow was managing principal of the Columbia, Maryland office of Miles & Stockbridge P.C. She served as a member of the New York Stock Exchange Commission on Corporate Governance, and she completed the Rock Center for Corporate Governance Directors College series held at Stanford Law School. Ms. Koplow graduated cum laude from the University of Baltimore Law School in 1983, where she was a member of the Heuisler Honor Society, a Scribes Award winner and a Comments Editor for the Law Review. Ms. Koplow also holds a B.A. in Government and Politics from the University of Maryland, from which she received the College of Behavioral and Social Sciences Distinguished Alumni Award in 2011.

Thomas A. Nally was appointed president of Institutional Services and named executive vice president of the Company in February 2012. In his role as president of Institutional Services, he oversees all institutional business functions, including the Company’s independent investment advisor services, self-directed 401(k) and retirement trust businesses. Mr. Nally also oversees the Company’s brokerage and clearing operations. Mr. Nally joined the Company upon its acquisition of TD Waterhouse in January 2006. From January 2006 until his current appointment, he was responsible for TD Ameritrade Institutional Sales, where he led his team to develop new advisor relationships and deliver a value added practice management solution to assist registered investment advisors in achieving their strategic business objectives. Prior to January 2006, Mr. Nally spent 12 years at TD Waterhouse

 

 

18   TD Ameritrade 2019 Proxy Statement  


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Executive Compensation and Related Information

 

 

in various leadership positions, including as senior vice president of TD Waterhouse Institutional, Brokerage Services. Over his tenure, he has held multiple management positions in various key areas of the business, including responsibility for trading, fixed income, advisor relations, client service, advisor technology, account services and operations for approximately 6,000 independent registered investment advisors who custody assets with TD Ameritrade Institutional. Mr. Nally graduated from Rider University with a degree in Finance, he completed the Securities Industry Institute program, sponsored by SIFMA, at the Wharton School, and he completed executive education coursework at the Stanford Graduate School of Business. He was recognized as one of Investment Advisor Magazine’s top 25 most influential people (2012 and 2014) and Investment News’ 2013 Power 20 list of financial industry leaders. He also holds several financial services industry securities licenses.

Steven M. Quirk joined the Company upon its acquisition of thinkorswim in July 2009 and was appointed senior vice president of the Trader Group in July 2010. In November 2015, he was named executive vice president of the Company. In this role,

Mr. Quirk leads development of strategies, products and the trading applications for retail traders and investors at TD Ameritrade. He is also responsible for the Company’s investor education businesses. Prior to his current role, he was responsible for the development of new trading tools and technology enhancements for the Company’s trading platform. Mr. Quirk played a major role in the successful acquisition and integration of thinkorswim by TD Ameritrade. Mr. Quirk joined thinkorswim in July 2007, where he served in various leadership positions. In prior leadership roles, Mr. Quirk led the Chicago division of Van der Moolen USA and was a partner at SCMS LLC for several years. Mr. Quirk began his trading career at the Chicago Mercantile Exchange and Chicago Board Options Exchange (CBOE) in 1987. While at the CBOE, Mr. Quirk served on the CBOE Index Market Performance Committee and the Arbitration Committee. Mr. Quirk is a recognized industry expert on trading technology and retail trading behavior and is a regular contributor to various media outlets including Barron’s, CNBC, Fox Business, the Wall Street Journal and CNBC Asia. Mr. Quirk holds a Bachelor’s Degree in Risk, Insurance and Marketing from the University of Wisconsin. He also holds several industry licenses.

 

 

  TD Ameritrade 2019 Proxy Statement   19


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Executive Compensation and Related Information

 

 

Compensation Discussion and Analysis

Executive Summary

Named Executive Officers

 

This section is an executive summary of fiscal year 2018 compensation for our CEO, our chief financial officer (“CFO”) and each of our other three most highly compensated executive officers employed at the end of fiscal year 2018. We refer to these individuals as our named executive officers. Our named executive officers for fiscal year 2018 were:

 

    Tim Hockey, President and CEO

 

    Stephen J. Boyle, Executive Vice President, CFO

 

    Peter J. deSilva, Executive Vice President, Retail Distribution

 

    Thomas A. Nally, Executive Vice President, Institutional Services

 

    Steven M. Quirk, Executive Vice President, Trading and Education

Executive Compensation Program Highlights for Fiscal Year 2018

Consistent with the Company’s executive compensation principles and strong commitment to pay for performance, the majority of our named executive officers’ fiscal year 2018 total compensation package required achievement of performance objectives set by the Compensation Committee before the compensation could be

earned and paid. Further, any equity awards that were granted upon meeting these performance objectives are subject to multi-year, service-based vesting, with additional performance objectives related to the Company’s three-year total shareholder return (“TSR”) as compared to the components of the New York Stock Exchange Archipelago (“NYSE Arca”) Securities Broker/Dealer Index that can result in adjustments to the awards up or down 20% depending on performance achievement.

At the Company’s 2018 annual meeting of stockholders, the compensation of the fiscal year 2017 named executive officers was approved on a non-binding advisory basis with more than 99% of the total votes cast voting in favor of the say-on-pay proposal. The previous year’s stockholder advisory vote yielded more than 98% of total votes cast voting in favor of the say-on-pay proposal. In overseeing our executive compensation program, the Compensation Committee also takes into account the views of stockholders as expressed directly to the Company. Our investor relations department engages directly with institutional stockholders to understand their priorities and concerns. After considering the results of the stockholder advisory votes, the Compensation Committee decided to maintain the same general approach with respect to the Company’s executive compensation program for fiscal year 2018.

 

 

Our CEO’s and other named executive executives’ targeted total annual compensation (i.e., base salary, target cash incentive and target equity incentive) for fiscal year 2018 was heavily weighted toward elements that were subject to performance objectives:

Fiscal Year 2018 Named Executive Officer

Target Total Annual Compensation(1)

 

                                                         Chief Executive Officer    NEO Average (Excluding CEO) (2)

 

LOGO

 

Base salaryTarget cash incentiveTarget equity incentive

(1)

Target cash incentive and target equity incentive are amounts as established by the Compensation Committee based on performance under the Management Incentive Plan (“MIP”) during fiscal year 2018. Any equity awards under the fiscal year 2018 MIP were granted following the completion of the fiscal year 2018 performance period, in early fiscal year 2019. These elements required achievement of performance goals before they could be paid or granted.

 

(2)

Each element of compensation comprising the target total annual compensation for the named executive officers, other than the CEO, is based on the average among the named executive officers (other than Mr. Hockey).

 

20   TD Ameritrade 2019 Proxy Statement  


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Key Performance Highlights and Pay for Performance Results for Fiscal Year 2018

In fiscal year 2018, the Company demonstrated strong performance in its businesses, with core operating metrics at record levels, driven by strong organic growth and the successful integration of Scottrade.

Results for the fiscal year ended September 30, 2018, included the following:

 

 

Net new client assets of approximately $92 billion, a growth rate of 8 percent

 

 

Record average client trades per day of approximately 811,000, up 59 percent year over year

 

 

$2.59 in GAAP earnings per diluted share, up 58 percent year over year, on net income of $1.47 billion

 

 

$3.34 in Non-GAAP earnings per diluted share, up 82 percent year over year. For a discussion of this measure and a reconciliation to the related GAAP measure, refer to Appendix A

 

 

The successful integration of Scottrade

The Company’s non-GAAP diluted earnings per share (“EPS”), an important measure of our financial performance, weighted at 60% of the corporate performance metrics under the MIP, was adjusted downward by the Compensation Committee to $2.63 (from $3.34) to account for changes to tax laws and unplanned increases in interest rates. The Compensation Committee determined that these items were outside the control of the Company and therefore it was appropriate to make the downward adjustment to better reflect the results delivered to stockholders and preserve the intent of the pre-established performance goals, which were set before the occurrence of these unplanned events. The adjusted non-GAAP EPS performance of $2.63 exceeded the pre-established target of $2.24. The Company also overachieved on market share of client revenue trades and net new client assets, which when combined with the firm’s qualitative strategic goals, comprise the other 40% of the corporate performance metrics under the MIP. Based on these results and consistent with our executive compensation program’s pay-for-performance philosophy, the Compensation Committee approved annual incentive awards under the MIP of between 135.9% and 140.9% of the target incentive opportunity for our named executive officers, after adjustments were made to reflect individual performance.

Executive Compensation Governance Highlights

Consistent with our guiding principles underlying our executive compensation program, we observe the following practices:

 

 
  

Review executive compensation in comparison to peer group

 

         

Permit use of negative discretion to decrease (but not increase) incentive compensation

 

 
  

Measure, manage and reward based on performance goals that drive our short- and long-term business strategy

 

          Employ double-trigger change-in-control provisions
 
  

Maintain a pay mix that is heavily performance-based

 

         

Prohibit repricing stock options without stockholder approval

 

 
  

Use PRSUs (as defined below) linked to relative three-year total shareholder return

 

          Prohibit hedging of stock
 
  

Maintain stock ownership guidelines for executives

 

         

Prohibit pledging of stock

 

 
  

Maintain a clawback policy

 

         

No golden parachute excise tax gross-ups to executives

 

 
  

Conduct annual risk assessments of our executive compensation policies and practices

 

         

No single trigger severance or bonus payments in the event of a change in control

 

 
  

Hold an annual shareholder say-on-pay advisory vote

 

         

No material perquisites

 

 
  

Engage an independent compensation consultant that reports directly to our Compensation Committee

 

         

No supplemental executive retirement plans (SERPs)

 

 

  TD Ameritrade 2019 Proxy Statement   21


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Executive Compensation and Related Information

 

 

Compensation-related Agreements and Plans

The Compensation Discussion and Analysis and the executive compensation tables below are based in part on the Company’s agreements with Messrs. Hockey, Boyle, and deSilva, and the terms of our MIP and Long-Term Incentive Plan (the “LTIP”). Please refer to the following agreements and plan documents for the complete terms.

Where you can find more information

 

Name   Description   SEC Filing
   

Tim Hockey

 

 

Employment Agreement

 

 

Quarterly Report on Form 10-Q filed on February 4, 2016, Exhibit 10.1

 

   

Stephen J. Boyle

 

 

Term Sheet

 

 

Quarterly Report on Form 10-Q filed on May 7, 2015, Exhibit 10.1

 

   

Peter J. deSilva

 

 

Term Sheet

 

 

Annual Report on Form 10-K filed on November 17, 2017, Exhibit 10.12

 

   

All Executive Officers

 

LTIP

 

  Form 8-K filed on February 24, 2016, Exhibit 10.1

   
   

MIP

 

 

  Form 8-K filed on February 24, 2016, Exhibit 10.2

 

 

We have organized the remainder of this report as follows:

 

1.

First, we provide information regarding our Compensation Committee and its and the Board’s role in setting executive compensation.

 

2.

Next, we discuss the roles of our compensation consultant and management in our process.

 

3.

We discuss the guiding principles underlying our senior executive compensation policies and decisions.

 

4.

We discuss the peer group of companies that we use to help inform our compensation decisions.

 

5.

We discuss the elements of compensation, how we determined the amount of each element and how each element fits into the Company’s compensation objectives.

 

6.

We describe our clawback policy.

 

7.

We describe the risk assessment of our compensation programs.

 

8.

We describe our stock ownership guidelines.

 

9.

We discuss severance and change in control provisions.

 

10.

We discuss certain tax treatment of senior executive compensation

 

11.

We conclude by describing certain compensation-related actions taken since the end of fiscal year 2018.

1.    Role of the Compensation Committee and Board

The Compensation Committee is composed of non-employee directors of the board. No member of the Compensation Committee during fiscal year 2018 was an employee of the Company or any of its subsidiaries at the time of his service on the Compensation Committee. Each member of the Compensation

Committee during fiscal year 2018 was intended to qualify as a “non-employee director” under rule 16b-3 under the Securities Exchange Act of 1934 (the “1934 Act”) and as an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended (“the Code”).

The Compensation Committee reviews, assesses and approves all compensation and benefits for executive officers and, in consultation with the Risk Committee, reviews compensation-related risks. The board of directors evaluates the performance of the CEO and reviews and provides input on the Compensation Committee’s compensation recommendation. The Compensation Committee then approves the CEO’s compensation. The CEO and the Compensation Committee together assess the performance of each of the other named executive officers and then the Compensation Committee approves final recommendations from the CEO.

2.    Role of Compensation Consultants and Management

Beginning in May 2018, the Compensation Committee retained Semler Brossy as its independent compensation consultant to assist the Compensation Committee in its oversight of the design and operation of the Company’s executive compensation programs. Semler Brossy advised the Compensation Committee on best practices for executive compensation and governance, among other activities. Semler Brossy works directly with the Compensation Committee (and not on behalf of management) to assist the Compensation Committee in satisfying its responsibilities. Semler Brossy performs no other consulting or other services for the Company.

The Compensation Committee also requests the attendance at its meetings of any members of management that it deems appropriate or advisable. Typically, and for fiscal year 2018, the Compensation Committee received input from the CEO to assess

 

 

22   TD Ameritrade 2019 Proxy Statement  


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the individual performance of the named executive officers other than the CEO and regarding plan design and goals and objectives.

The Compensation Committee has delegated to our CEO the authority to increase the compensation of, and grant equity awards to, any employee participating in the MIP, except for executive officers and any other employees whose total target compensation equals or exceeds $1 million per year, subject in each case to any increase or grant being (1) within the budget previously approved by the Compensation Committee, and (2) in accordance with the terms of the applicable compensation plan.

3.    Guiding Principles

The objective of the executive compensation plans is to attract, retain and motivate high-performing executives to create sustainable long-term value for stockholders. To achieve this objective, the Company and the Compensation Committee use the following guiding principles when evaluating executive compensation policies and decisions:

Alignment with the Company’s Business Strategy

 

    Executive compensation is linked to the achievement of specific short- and long-term strategic business objectives and the Company’s overall performance.

 

    Compensation plans are linked to key business drivers that support long-term stockholder value creation.

Alignment with Stockholders’ Interests

 

    The interests of executives are appropriately aligned with those of stockholders over the long-term through policy and plan design.

 

    Stock ownership guidelines are used to more closely align the interests of executives with those of stockholders over the long term.

 

    As an executive increases in seniority, an increasing percentage of total compensation consists of equity-based awards to more closely align the interests of the executive with those of our stockholders, to aid in retention and to focus executives on sustainable long-term performance.

Risk Management

 

    Compensation plan design should not create an incentive for excessive risk-taking and each plan is reviewed on at least an annual basis to determine that it is operating as intended.

 

    Incentive compensation is subject to risk of forfeiture in accordance with the clawback policy.

Pay for Performance

 

    Clear relationships should exist between executive compensation and performance. Compensation should reward both corporate and individual performance.

 

    Total compensation includes a meaningful variable component that is linked to key business objectives and the Company’s overall performance.

 

    A substantial portion of variable compensation is awarded in the form of equity-based awards.

 

    Equity awards are generally granted based on the achievement of annual performance goals and are subject to time-based and/or performance vesting.

 

    The Compensation Committee has the ability to exercise negative discretion to reduce incentive compensation.

Pay Competitively

 

    Competitive data on market median compensation, adjusted to reflect scope of responsibility or other factors specific to the executive, is considered when establishing compensation targets.

4.    Peer Group

The Company operates in the highly competitive financial services sector, with a leadership position in retail securities brokerage services. The overall compensation program is designed to closely align the interests of executives with those of our stockholders and be competitive with the compensation practices of financial services companies with characteristics similar to the Company.

 

 

  TD Ameritrade 2019 Proxy Statement   23


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Executive Compensation and Related Information

 

 

The peer group for fiscal year 2018 consisted of the following:

Fiscal Year 2018 Peer Group

 

     

Ameriprise Financial, Inc.

 

 

Fifth Third Bancorp

 

 

NASDAQ, Inc.

 

 

Broadridge Financial Solutions, Inc.

 

 

Franklin Resources, Inc.

 

 

Northern Trust Corporation

 

 

Charles Schwab Corporation

 

 

Intercontinental Exchange, Inc.

 

 

Raymond James Financial, Inc.

 

 

CME Group Inc.

 

 

Invesco, Ltd.

 

 

T. Rowe Price Group, Inc.

 

 

Comerica Incorporated

 

 

Legg Mason, Inc.

 

 
 

E*TRADE Financial Corporation

 

 

LPL Financial Holdings Inc.

 

 

For fiscal year 2018, the Compensation Committee was guided by the data collected on the above peer group in establishing the base salaries and target annual incentive amounts for our named executive officers. No changes to the companies comprising the peer group were made for fiscal year 2018 as compared to those for fiscal year 2017.

For fiscal year 2019, the Committee requested that Semler Brossy conduct an independent review of the peer group. The criteria for reviewing and determining the companies comprising the peer group for fiscal year 2019 were industry, market capitalization, revenue, geography, organizational complexity and competition for talent. Based on this review, SEI Investments and Stifel Financial Corporation were added to the peer group and Comerica Incorporated and Fifth Third Bancorp were removed, effective November 2018. The Compensation Committee agreed with Semler Brossy’s assessment that the two companies that were removed, as regional banks, were not as well-aligned with the Company’s businesses; the two additions were chosen for having relatively stronger business alignment with the Company. As part its review, Semler Brossy also presented to the Compensation Committee the lists of companies comprising peer groups identified by proxy advisors with respect to the Company and public companies that include the Company in their peer groups. The peer group was updated as part of the process for considering the fiscal year 2019 executive compensation program.

The peer group for fiscal year 2019 consists of the following:

Fiscal Year 2019 Peer Group

 

     

Ameriprise Financial, Inc.

 

 

Intercontinental Exchange, Inc.

 

 

Raymond James Financial, Inc.

 

 

Broadridge Financial Solutions, Inc.

 

 

Invesco, Ltd.

 

 

SEI Investments Company

 

 

Charles Schwab Corporation

 

 

Legg Mason, Inc.

 

 

Stifel Financial Corporation

 

 

CME Group Inc.

 

 

LPL Financial Holdings Inc.

 

 

T. Rowe Price Group, Inc.

 

 

E*TRADE Financial Corporation

 

 

NASDAQ, Inc.

 

 
 

Franklin Resources, Inc.

 

 

Northern Trust Corporation

 

 

 

5.    Elements of Compensation

Target Total Compensation

Target total annual compensation consists of: (1) base salary and (2) incentive compensation, which is comprised of cash and equity. Each of these elements of compensation, as well as the compensation package as a whole, is intended to enable the Company to remain competitive in attracting and retaining talented individuals. While base salaries are provided to reward executives on a day-to-day basis for their time and services, the incentive

compensation links the executives’ compensation to the achievement of the Company’s business strategy and stockholders’ interests. For fiscal year 2018 compensation, these target total compensation levels were developed using market data from our peer group and other financial services compensation data obtained from human resources consulting firms, such as McLagan, Mercer and Willis Towers Watson. The market data considered as part of the competitive review reflect executive responsibilities that were similar to the responsibilities of our executive officers, where available. While the Compensation

 

 

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Committee did not target a specific percentile or otherwise benchmark any key elements of the named executive officers’ compensation to the market data, it did review a range of market data and generally compared compensation to the market median. During fiscal year 2018, Semler Brossy reviewed the market compensation information prepared by management and confirmed the market data as an appropriate point of reference in setting target total compensation for fiscal year 2019.

A significant portion of each executive’s target total compensation is performance-based or “at risk.” The “at risk” portion includes the annual cash incentive and the annual equity incentive, which are both linked to performance during the year. If the Company’s or individual’s performance is below target, “at risk” compensation may decrease. Conversely, if the Company’s or individual’s performance is above target, “at risk” compensation may increase.

 

The equity incentive compensation target is established so that a meaningful portion of total compensation is awarded as equity that vests in full on the third anniversary of the grant date, subject to continued service with us and depending in part on achievement of additional performance objectives based on relative TSR. The target mix between cash and equity is based on target total compensation level, with the portion that is awarded as equity generally increasing as target total compensation increases. This practice, combined with stock ownership guidelines, promotes retention and focuses executives on executing business strategies, sustaining performance and growing value for stockholders over the long term.

 

 

Each named executive officer had target total annual compensation for fiscal year 2018 as follows:

Fiscal Year 2018 Target Total Annual Compensation

 

Name

 

Base

         Salary         

($)

 

     Target Cash     

Incentive

($)

 

     Target Equity     

Incentive

($)

 

     Target Total     

Incentive

($)

 

Target Total Annual

     Compensation     

($)

 

Performance-

based Portion of
Target Annual
     Compensation    

           

Tim Hockey(1)

 

     

 

1,000,000

 

 

     

 

1,950,000

 

 

     

 

4,550,000

 

 

     

 

6,500,000

 

 

  7,500,000

 

  87%

 

           

Stephen J. Boyle(2)

 

     

 

  450,000

 

 

     

 

  875,000

 

 

     

 

  875,000

 

 

     

 

1,750,000

 

 

  2,200,000

 

  80%

 

           

Peter J. deSilva

 

     

 

  650,000

 

 

     

 

1,000,000

 

 

     

 

1,000,000

 

 

     

 

2,000,000

 

 

  2,650,000

 

  75%

 

           

Thomas A. Nally(3)

 

     

 

  500,000

 

 

     

 

1,075,000

 

 

     

 

1,075,000

 

 

     

 

2,150,000

 

 

  2,650,000

 

  81%

 

     

Steven M. Quirk

 

     

 

  450,000

 

 

     

 

  775,000

 

 

     

 

  775,000

 

 

     

 

1,550,000

 

 

  2,000,000

 

  78%

 

 

(1)

Mr. Hockey’s target total incentive compensation for fiscal year 2018 was increased from $5.75 million to $6.5 million, which continued to consist of 30% cash and 70% equity.

 

(2)

Mr. Boyle’s target total incentive compensation was increased from $1.55 million to $1.75 million, which continued to consist of 50% cash and 50% equity.

 

(3)

Mr. Nally’s target total incentive compensation was increased from $2 million to $2.15 million, which continued to consist of 50% cash and 50% equity.

 

The increases in target compensation for fiscal year 2018 were determined by the Compensation Committee after considering each of these named executive officers’ individual performance during the prior fiscal year, tenure, scope of responsibility, and market data for comparable roles.

Consistent with the Company’s overall compensation principles, a large percentage of the total compensation package is paid only after performance objectives set by the Compensation Committee have been met. Further, any equity awards that are granted upon meeting these performance objectives are subject to multi-year,

service-based vesting and in part on additional performance objectives based on relative TSR that can result in positive or negative adjustments to any otherwise earned awards by up to 20% depending on performance achievement (as described further below).

In addition, the performance-based portion of target total annual compensation is divided between the cash incentive and the equity incentive. A greater proportion of the incentive is delivered in equity for more senior executives. For our CEO, 30% of his total incentive is paid in cash and 70% is paid in equity. For our other named

 

 

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executive officers, 50% of their incentive is paid in cash and 50% is paid in equity.

Annual Incentive Award under the MIP

Our annual incentive plan, reviewed and approved by the Compensation Committee, supports our pay-for-performance philosophy, with the objective of driving the business strategy for which each executive is most responsible and which is critical for sustaining the long-term growth of the Company. Through the equity component of the plan, we promote closer alignment of each executive’s interests to the long-term growth of the Company. Based on pre-established targets for non-GAAP EPS and quantitative and qualitative strategic goals, the Compensation Committee believes that the design provides for a balanced assessment of short- and long-term performance.

In fiscal year 2018, the first step for calculating awards under the annual incentive plan for executive officers was based on the achievement of goals for the following key metrics: (1) non-GAAP EPS, (2) market share of client revenue trades among the Company’s primary publicly-traded competitors and (3) net new client assets. These goals were initially recommended by the CEO and established and approved by the Compensation Committee, as the Compensation Committee determined that these goals are important metrics for assessing the Company’s business success and would help to align the interests of executives more closely with those of our stockholders. We refer to market share of client revenue trades and net new client assets as the quantitative strategic goals. In addition, the following factors were considered in determining the annual incentive awards of our executive officers:

 

    Attainment of pre-established qualitative goals that consisted of short-term objectives and progress with respect to long-term objectives, recommended by the CEO and approved by the Compensation Committee, which we refer to as the qualitative strategic goals, and
    Attainment of pre-established individual quantitative and qualitative performance goals.

The Compensation Committee reserves the right to reduce the payouts initially determined by the achievement of non-GAAP EPS and quantitative strategic goals. In addition, the Compensation Committee retains the ability to exercise further negative discretion to reduce or eliminate incentive payments to executives.

A portion of the annual incentive award is granted in equity under the LTIP. Equity awards are used to motivate, reward and retain key executives and to align their interests more closely to those of stockholders. Equity awards are granted under the annual incentive plan only if the pre-established performance measures under the annual incentive plan have been achieved. For fiscal year 2018, equity incentives were granted solely in the form of performance-based restricted stock units (“PRSUs”). As described below under “Fiscal Year 2018 MIP Incentive Funding Formula,” equity incentives may be funded between 0% and 200% of target. After the equity incentive has been granted, the PRSUs are then subject to a three-year cliff vesting period and may be further adjusted up or down 20% based on the Company’s cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant. This equity incentive design further aligns the long-term interests of executives with those of our stockholders. PRSU awards are automatically increased by the number of units equivalent to the value of any cash dividends paid while the awards are outstanding (based on the target amount of the award). DEUs are subject to the same vesting schedule as the underlying award. The vesting of PRSU awards may accelerate upon certain events, as described under “Potential Payments Upon Termination or Change in Control” later in this section.

The Compensation Committee believes that the clear performance measures and specific targets used by the Company ensure a strong, team-oriented, pay-for-performance philosophy.

 

 

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Fiscal Year 2018 MIP Incentive Funding Formula

For fiscal year 2018, 60% of the initial measurement of results under the annual incentive plan was based on non-GAAP EPS, a key measure of the Company’s short-term financial performance. The remaining 40% was based on the two quantitative strategic goals of market share of client revenue trades among the Company’s primary publicly traded competitors (16%) and net new client assets (24%). The quantitative strategic goals result was then adjusted downward to additionally reflect the attainment of the qualitative strategic goals, which include successfully integrating Scottrade, improving the client experience, accelerating and diversifying revenue growth, increasing organizational agility and efficiency, associate development, and increased competitiveness through innovation. Both the quantitative and qualitative strategic goals impact the Company’s long-term financial performance and support its long-term strategy. These metrics are all intended to incentivize management to drive Company performance in alignment with long-term stockholder interests. The quantitative performance goals and corresponding funding percentages for each of these measures are summarized below:

Fiscal Year 2018 Management Incentive Plan Quantitative Performance Goals

 

Performance Goals    Target      Weight      Funding
     

Non-GAAP EPS

 

    

 

$2.24

 

 

 

    

 

60%

 

 

 

  

0% funding at $1.31 to 240% funding at $2.91

 

     

Quantitative Strategic Goals:

 

Market share – client revenue trades

 

Net new client assets (dollars in billions)

 

    

 

 

54.0%

 

$67.6

 

 

 

 

 

    

 

 

16%

 

24%

 

 

 

 

 

  

0% funding at 47% to 240% funding at 59%

 

0% funding at $4.6 to 240% at $112.6

 

     

Total Weighting

 

             

 

100%

 

 

 

    

After the quantitative performance goals are measured, the Compensation Committee uses its negative discretion to reduce the payout based on qualitative considerations as well as an assessment of each named executive officer’s individual performance for the fiscal year as shown below.

The final payout percentage is capped at 200% of the named executive officer’s target annual incentive opportunity. Following the completion of fiscal year 2018, the Compensation Committee determined the payout of annual incentive compensation as follows:

Fiscal Year 2018 Management Incentive Plan Performance and Results

 

Goals

Target

Actual

Results

Unweighted
Payout
Percentage
Weight

Weighted

Payout

Percentage

Negative
Discretion

Adjusted

Payout

Percentage

             
   Non-GAAP EPS(1)   $2.24   $2.63 (2)    198.5%     60%     119.1%  
    
             

   Market share – client revenue trades

 

 

 

54.0%

 

 

 

 

 

55.2%

 

 

 

 

 

164.0%

 

 

 

 

 

16%

 

 

 

 

 

26.2%

 

 

 

             

   Net new client assets (dollars in billions)

 

 

 

$67.6

 

 

 

 

$92.3

 

 

 

 

 

193.5%

 

 

 

 

 

24%

 

 

 

 

 

46.4%

 

 

 

             
   Qualitative strategic goals   -15.9% (3)  
    
             

   Strategic goals

 

 

 

40%

 

 

 

 

 

56.8%

 

 

 

             

Total

 

 

 

100%

 

 

 

 

 

175.9%

 

 

 

             

Committee discretion (0% to -40%)

 

 

 

-20%

 

 

 

             

Maximum Individual Payout Percentage

 

 

 

155.9%

 

 

 

             

Individual performance (0% to -40%)

 

 

 

-15% to -20%

 

 

 

             

Actual Individual Payout Percentage

 

 

 

135.9% - 140.9%

 

 

 

 

(1)

Non-GAAP EPS is a non-GAAP metric and non-GAAP financial measure as defined by SEC Regulation G. Non-GAAP EPS excludes the after-tax effect of amortization of acquired intangible assets, because management does not believe it is indicative of our underlying business performance, and acquisition-related expenses, because management believes these costs are not representative of the costs of running the Company’s on-going business. For a discussion of this measure and a reconciliation to the related GAAP measure, refer to Appendix A.

 

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(2)

Actual results for non-GAAP EPS were adjusted downward by the Compensation Committee from $3.34 to $2.63 to account for changes to tax laws and unplanned changes to interest rates, which the Compensation Committee determined were outside the control of the Company and appropriate to reflect the results delivered to stockholders and preserve the intent of the pre-established performance goals (which were set before the occurrence of the unplanned changes).

 

(3)

The Compensation Committee applied 15.9% negative discretion to reduce the funding otherwise achieved by the quantitative strategic goals to reflect the performance assessment of the strategic goals overall.

 

In determining the negative discretion to be applied, the Compensation Committee noted the record performance on the quantitative goals, weighed them against qualitative performance goals, and established a maximum individual payout percentage of 155.9% for each of the named executive officers. The Compensation Committee then used its judgment to measure the individual performance of each of the named executive officers in order to determine the amount of any additional negative discretion to apply. For fiscal year 2018, the Compensation Committee varied the negative discretion applied for individual performance in order to recognize significant contributions during fiscal year 2018 and emphasize individual responsibilities and roles. The additional negative discretion ranged from 15.0% to 20.0% based on the Compensation Committee’s assessment, and the CEO’s review

and recommendation with respect to the named executive officers other than himself. Consistent with the Company’s pay for performance philosophy, this result reflects a very strong year which included the successful integration of Scottrade and record core operating metrics.

The equity component of the fiscal year 2018 annual incentive awards for the named executive officers was granted solely in the form of PRSUs. As described above, the equity incentive awards are subject to a three-year cliff vesting period and may be further adjusted up or down 20% based on the Company’s cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant.

 

 

The following table sets forth total cash and equity compensation earned by our named executive officers for fiscal year 2018 performance.

 

    Name         Annual Incentive Under the MIP    

Total Annual

Compensation

($)

 
 

Base

Salary

($)

   

Cash

Incentive

($)

   

Equity

Incentive(1)

($)

   

 

Total Incentive

 
  ($)    

% of

Target

 
             

Tim Hockey

 

   

 

1,000,000     

 

 

 

   

 

2,650,050     

 

 

 

   

 

6,183,450     

 

 

 

   

 

8,833,500     

 

 

 

   

 

135.9

 

%      

 

   

 

9,833,500     

 

 

 

           

Stephen J. Boyle

 

   

 

450,000     

 

 

 

   

 

1,189,125     

 

 

 

   

 

1,189,125     

 

 

 

   

 

2,378,250     

 

 

 

   

 

135.9

 

%      

 

   

 

2,828,250     

 

 

 

           

Peter J. deSilva(2)

 

   

 

650,000     

 

 

 

   

 

1,359,000     

 

 

 

   

 

1,459,000     

 

 

 

   

 

2,818,000     

 

 

 

   

 

140.9

 

%      

 

   

 

3,468,000     

 

 

 

           

Thomas A. Nally(2)

 

   

 

500,000     

 

 

 

   

 

1,460,925     

 

 

 

   

 

1,568,425     

 

 

 

   

 

3,029,350     

 

 

 

   

 

140.9

 

%      

 

   

 

3,529,350     

 

 

 

           

Steven M. Quirk

 

   

 

450,000     

 

 

 

   

 

1,053,225     

 

 

 

   

 

1,053,225     

 

 

 

   

 

2,106,450     

 

 

 

   

 

135.9

 

%      

 

   

 

2,556,450     

 

 

 

 

(1)

These equity incentive awards were granted in fiscal year 2019. As a result, they are not included in the Summary Compensation Table or the Grants of Plan-based Awards and Outstanding Equity Awards at Fiscal Year-End tables later in this section.

 

(2)

For Messrs. deSilva and Nally, incentive funding in excess of 135.9% was delivered in equity.

 

Scottrade Appreciation Right Award

Prior to our acquisition of Scottrade, Mr. deSilva received from Scottrade a Scottrade Appreciation Right Award (“SAR award”), that provided for the potential to earn certain cash bonuses. During fiscal year 2018, Mr. deSilva’s SAR award paid out a total of $4,812,361, which consisted of a change-in-control payment in the amount of $4,087,423, as well as amounts that became payable based on certain performance results in 2016 and 2017 and that vested in fiscal year 2018 based on continued employment in the aggregate amount of $724,938. As of September 30, 2018, the remaining unvested amounts under Mr. deSilva’s SAR award totaled $1,148,485. The unvested amounts are scheduled to vest on December 31, 2018 (as to

$724,938), and December 31, 2019 (as to $423,548), subject to Mr. deSilva’s continued employment with the Company through the vesting date or upon the occurrence of certain qualifying terminations of employment as described in further detail below under “Potential Payments Upon Termination or Change in Control.” Upon joining TD Ameritrade, Mr. deSilva no longer accrues future payments under his SAR award.

6.    Clawback Policy

We maintain a clawback policy that applies to certain incentive compensation provided to our named executive officers, including compensation under the MIP and LTIP. The MIP permits the “clawback” of any cash incentive awards, and the Company’s

 

 

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equity agreements permit the clawback of awards granted pursuant to the MIP and LTIP if the Compensation Committee determines, within three years of the grant date of the award, that certain conduct has occurred. Generally, under the terms of the clawback policy, an executive who is involved in fraud or willful misconduct that results in a restatement of the Company’s financial statements or who commits an act of fraud, negligence or breach of fiduciary duty resulting in material loss, damage or injury to the Company can be required to: (1) forfeit and transfer to the Company, at no cost to the Company, any unvested equity awards and any shares of common stock issued in connection with vested equity awards and (2) repay to the Company any cash incentive awarded under the MIP or any gain realized from the disposition of any such shares of common stock awarded under the LTIP.

7.    Risk Assessment

The Compensation Committee, together with the Risk Committee, assessed the Company’s incentive compensation plans and concluded that our compensation plans and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Management assessed all of the Company’s executive, sales and broad-based compensation plans to determine if any provisions or practices create undesired or unintentional risk of a material nature. This risk assessment process included a review of plan design, including business drivers and performance measures. Incentive compensation plan design varies across business units based on differing goals established for business units. Incentive compensation targets are reviewed annually and adjusted as necessary to align with quantitative and qualitative strategic goals (discussed above).

8.    Stock Ownership Guidelines and Anti-Hedging and Anti-Pledging Policy

The Compensation Committee and the board of directors strongly believe that senior executives should own a significant amount of Company common stock. This provides a direct and continuing alignment of financial interests between executives and stockholders.

The stock ownership guidelines for the named executive officers are as follows:

 

    ten times base salary for Mr. Hockey, and

 

    five times base salary for Messrs. Boyle, deSilva, Nally, and Quirk.

None of these executive officers are permitted to sell any equity interest in the Company until they meet their respective stock ownership guidelines, after which the CEO must obtain prior approval from the Compensation Committee and all other senior executives must obtain prior approval from the CEO. The Company considers any stock held without restrictions, unvested

RSUs and PRSUs, vested but unexercised in-the-money stock options, deferred compensation that will settle in common stock and common stock held under the Company’s 401(k) plan in determining whether the stock ownership guidelines have been met. All current named executive officers, with the exception of Mr. deSilva, who joined the company in September 2017, have met the stock ownership guidelines as of the end of fiscal year 2018.

The Company prohibits any of its employees from entering into hedging or pledging transactions involving its common stock.

9.    Change in Control and Severance Provisions

Our senior executive team has been instrumental to the success of the Company, and we believe it is important to provide certain benefits to them in the event of a change in control. We believe that the interests of our stockholders are best served if the interests of senior management are closely aligned with them, and providing change in control benefits should minimize any reluctance of senior management to pursue change in control transactions that may be in the best interest of our stockholders. Equity awards under the MIP generally will vest upon certain qualifying terminations of employment by the Company within a specified period after a change in control. Our executive officers are not automatically entitled to any single-trigger bonuses, vesting acceleration, or other payouts upon a change in control. Rather, our employment arrangement with Mr. Hockey and our executive compensation practices (described later in this section under “Potential Payments Upon Termination or Change in Control”) require a termination of employment under specified circumstances in connection with or following a change in control for any benefits to apply. We utilize this dual-trigger change in control provision because we believe that triggering severance or bonus payments simply because a change in control has occurred is not in the Company’s or stockholders’ best interests.

10.    Tax Treatment

In determining executive compensation, the Compensation Committee considers the possible tax consequences to the Company and to its executives. To maintain maximum flexibility in designing compensation programs, the Compensation Committee, while considering tax deductibility as one of its factors in determining compensation, will not limit compensation to those levels or types of compensation that are intended to be deductible.

Certain compensation previously paid to executive officers under the MIP, and certain equity awards that previously vested, were and are intended to be fully deductible under the “performance-based” compensation exception (discussed below) previously provided by Section 162(m) of the Code. As a result of the Tax Cuts and Jobs Act of 2017 (the “Act”), for tax years beginning after December 31, 2017, Section 162(m) of the Code limits to

 

 

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$1 million the federal income tax deduction we can receive for annual individual compensation paid to certain current and former executive officers, subject to a transition rule for written binding contracts in effect on November 2, 2017, and not materially modified after that date. Prior to the Act, Section 162(m)’s deduction limit included an exception for “performance-based” compensation that permitted qualifying compensation to be deductible even if it exceeded the $1 million limit. Significant aspects of the Company’s compensation programs were designed to permit (but not require) compensation to qualify for this performance-based exception. To accomplish this, the Company previously asked shareholders to approve equity and incentive compensation plans that included limitations and provisions required to be included under Section 162(m). Now that the performance-based compensation exception is no longer available, the Company will no longer include specific Section 162(m)-related limitations or provisions or request shareholder approval for this purpose, and generally will not attempt to meet the requirements previously included in our plans related to the now eliminated performance-based exception as there is no tax benefit from doing so. The Company will continue to seek shareholder approval of certain compensation plans as may be required by applicable law or regulation.

11.    Actions Since End of Fiscal Year 2018

Fiscal Year 2018 PRSUs Granted in Fiscal Year 2019

The table below summarizes the PRSUs granted to our named executive officers since the end of fiscal year 2018, which represent the portion of the annual incentive award earned under the MIP for fiscal year 2018 and then granted in the form of PRSUs. These grants were made in fiscal year 2019 and therefore are not included in the Summary Compensation Table or the Grants of Plan-based Awards and Outstanding Equity Awards at Fiscal Year-End tables set forth below.

Fiscal Year 2019 PRSUs Granted for Fiscal Year 2018 MIP Performance

 

     Fiscal 2018 Equity Incentive  

Name

  

Amount

Earned

($)

    

Number of

Units

(#)

    

Grant Date

Fair Value

($)

 
     

Tim Hockey

 

    

 

6,183,450

 

 

 

    

 

117,445

 

 

 

    

 

6,344,379

 

 

 

     

Stephen J. Boyle

 

    

 

1,189,125

 

 

 

    

 

22,586

 

 

 

    

 

1,220,096

 

 

 

     

Peter J. deSilva

 

    

 

1,459,000

 

 

 

    

 

27,712

 

 

 

    

 

1,497,002

 

 

 

     

Thomas A. Nally

 

    

 

1,568,425

 

 

 

    

 

29,790

 

 

 

    

 

1,609,256

 

 

 

     

Steven M. Quirk

 

    

 

1,053,225

 

 

 

    

 

20,005

 

 

 

    

 

1,080,670

 

 

 

The number of PRSUs granted was determined by dividing the dollar amount earned by $52.65, the average of the high and low price of the Company’s common stock for the 20 trading days ended December 5, 2018. These awards are subject to a three-year cliff vesting period and may be further adjusted up or down by up to 20% of the target number of shares, based on the Company’s cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant (subject to adjustment for DEUs). The grant date fair value for accounting purposes was determined based upon a Monte Carlo analysis whereby the stock prices of the Company and the selected peer group companies were simulated using correlated Geometric Brownian motion paths in order to estimate the Company’s total expected shareholder return rank within the peer group index and the corresponding percent of PRSUs that are estimated to be earned per the PRSU agreement. The per share grant date fair value on December 5, 2018, was $54.02.

 

 

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Executive Compensation and Related Information

 

 

Fiscal Year 2019 Target Total Annual Compensation Adjustments

The Compensation Committee discussed with our CEO the target total annual compensation for fiscal year 2019 of our named executive officers (other than the CEO), and reviewed the peer group data and its assessment of performance for each named executive officer including the CEO. After considering prior performance and market data, including the competitiveness of our named executive officers’ compensation compared to the market data, the Compensation Committee approved the fiscal year 2019 target total annual compensation for each named executive officer as follows:

Fiscal Year 2019 Target Total Annual Compensation

 

Name     

Base

Salary

($)

    

Target Cash

Incentive

($)

    

Target Equity

Incentive

($)

    

Total Target

Incentive

($)

    

Target Total
Annual

Compensation

($)

 
         

Tim Hockey(1)

 

      

 

1,000,000

 

 

 

    

 

2,250,000

 

 

 

    

 

5,250,000

 

 

 

    

 

7,500,000

 

 

 

    

 

8,500,000

 

 

 

         

Stephen J. Boyle(2)

 

      

 

500,000

 

 

 

    

 

1,000,000

 

 

 

    

 

1,000,000

 

 

 

    

 

2,000,000

 

 

 

    

 

2,500,000

 

 

 

         

Peter J. deSilva(3)

 

      

 

650,000

 

 

 

    

 

1,075,000

 

 

 

    

 

1,075,000

 

 

 

    

 

2,150,000

 

 

 

    

 

2,800,000

 

 

 

         

Thomas A. Nally(4)

 

      

 

650,000

 

 

 

    

 

1,075,000

 

 

 

    

 

1,075,000

 

 

 

    

 

2,150,000

 

 

 

    

 

2,800,000

 

 

 

         

Steven M. Quirk(5)

 

      

 

500,000

 

 

 

    

 

1,050,000

 

 

 

    

 

1,050,000

 

 

 

    

 

2,100,000

 

 

 

    

 

2,600,000

 

 

 

 

(1)

Mr. Hockey’s annual target incentive compensation was increased from $6.5 million for fiscal year 2018 to $7.5 million for fiscal year 2019, which continues to consist of 30% cash and 70% equity.

 

(2)

Mr. Boyle’s base compensation was increased by $50,000, and his annual target incentive compensation was increased from $1.75 million for fiscal year 2018 to $2 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity.

 

(3)

Mr. deSilva’s annual target incentive compensation was increased from $2.0 million for fiscal year 2018 to $2.15 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity.

 

(4)

Mr. Nally’s base compensation was increased by $150,000.

 

(5)

Mr. Quirk’s base compensation was increased by $50,000, and his annual target compensation was increased from $1.55 million for fiscal year 2018 to $2.1 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity.

 

  TD Ameritrade 2019 Proxy Statement   31


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Executive Compensation and Related Information

 

 

Fiscal Year 2019 MIP Incentive Funding Formula

In light of the recent changes to Section 162(m) of the Code, and in consultation with Semler Brossy following review of the Company’s executive compensation programs, effective for fiscal year 2019, the incentive funding formula under the MIP for fiscal year 2018 will be replaced with the design illustrated below.

 

 

LOGO

FY 2019 Incentive Funding Design Incentive Funding Components Component Weightings CEO NEO Potential Funding Range Corporate Performance 80% 70%0%, 50% - 150% Individual Performance20%30%0%, 50% - 150% Total Individual Incentive Funding Percentage:0% - 150%
Corporate Performance Formula Metric Weighting Potential Funding Range Earnings Per Share 40% 0%, 50% - 150% Client Experience 25% 0%, 50% - 150% Revenue & Market Share 20% 0%, 50% - 150% Other Strategic Themes 15% 0%, 50% - 150% Corporate Performance Total 100% 0% - 150%

The fiscal year 2019 incentive funding formula emphasizes key, short-term, quantitative results and further supports the delivery of a superior client experience. The new design is intended to emphasize areas that the Compensation Committee believes are critical drivers of the Company’s strategic and financial success over the longer-term (client experience and key strategic themes) and measures of the Company’s short-term operational success (non-GAAP EPS, revenue and market share). Equity incentives will continue to be delivered 100% in the form of PRSUs, which may be adjusted up or down by up to 20% based on the Company’s cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant and which also are subject to three-year cliff vesting based on continued service with us.

 

 

Compensation Committee Report

 

This report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or to the liabilities of Section 18 of the 1934 Act and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933 or the 1934 Act.

 

The H.R. and Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” of this Proxy Statement with TD Ameritrade’s management. Based on that review and those discussions, the H.R. and Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis section be included in this Proxy Statement and incorporated by reference into TD Ameritrade’s Annual Report on Form 10-K for its 2018 fiscal year.

 

Wilbur J. Prezzano, Chairman

Brian M. Levitt

Mark L. Mitchell

Allan R. Tessler

 

 

Compensation Committee Interlocks and Insider Participation

Messrs. Prezzano, Levitt, Mitchell and Tessler served as members of the Compensation Committee during fiscal 2018. During fiscal 2018, there were no Compensation Committee interlocks and no insider participation in Compensation Committee decisions that were required to be reported under the rules and regulations of the 1934 Act.

 

32   TD Ameritrade 2019 Proxy Statement  


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Executive Compensation and Related Information

 

 

Summary Compensation Table for Fiscal Years 2018, 2017 and 2016

The following table provides compensation information during fiscal years 2018, 2017 and 2016 for Mr. Hockey, our CEO, Mr. Boyle, our CFO, and our other three most highly compensated executive officers who were serving as executive officers as of September 30, 2018. We refer to these individuals as our named executive officers. Mr. Quirk became a named executive officer beginning in fiscal year 2017, and Mr. deSilva became a named executive officer beginning in fiscal year 2018. In accordance with SEC rules, the compensation described in this table does not include medical or group life insurance received by the named executive officers that is available generally to all salaried employees of the Company and certain perquisites and other personal benefits received by the named executive officers that in the aggregate do not exceed $10,000.

 

Name and

Principal Position

Year Salary
($)

Stock

Awards(1)

($)

Option

Awards(1)

($)

Non-Equity

Incentive Plan

Compensation(3)

($)

All Other

Compensation(6)

($)

Total

($)

 

Tim Hockey

    President and CEO

 

 

 

2018

 

  1,000,000   4,911,253     2,650,050      16,206      8,577,509

 

 

 

 

2017

 

 

 

 

 

 

 

995,192

 

 

 

 

 

 

 

4,373,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,976,850   

 

 

 

 

 

 

 

2,002   

 

 

 

 

 

 

 

7,347,990

 

 

 

 

 

2016

 

 

 

 

562,500

 

 

 

 

4,435,944

 

 

 

 

3,100,002

 

 

 

 

1,466,850   

 

 

 

 

130,596(7)

 

 

 

 

 

9,695,892

 

 

 

Stephen J. Boyle

    Executive Vice President,

    CFO

 

 

 

2018

 

  450,433   945,644     1,189,125(4)     145,462      2,730,664

 

 

 

 

2017

 

 

 

 

 

 

 

449,038

 

 

 

 

 

 

 

803,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

888,150   

 

 

 

 

 

 

 

150,781   

 

 

 

 

 

 

 

2,291,350

 

 

 

 

 

2016

 

 

 

 

400,000

 

 

 

 

684,779

 

 

 

 

 

 

 

 

685,800   

 

 

 

 

124,923   

 

 

 

 

1,895,502

 

 

 

Peter J. deSilva

 

 

 

2018

 

  650,000   40,919 (2)      6,171,361(5)     30,842      6,893,121

    Executive Vice President,

    Retail Distribution

             

 

Thomas A. Nally

    Executive Vice President,

    Institutional Services

 

 

 

2018

 

 

 

 

500,000

 

  1,539,596     1,460,925      20,784      3,521,305

 

 

 

 

2017

 

 

 

 

 

 

 

500,000

 

 

 

 

 

 

 

1,011,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,146,000   

 

 

 

 

 

 

 

21,248   

 

 

 

 

 

 

 

2,678,880

 

 

 

 

 

2016

 

 

 

 

500,000

 

 

 

 

1,037,877

 

 

 

 

 

 

 

 

863,600   

 

 

 

 

21,224   

 

 

 

 

2,422,701

 

 

 

Steven M. Quirk

    Executive Vice President,

    Trader and Education

 

 

 

 

2018

 

 

 

 

 

 

 

450,000

 

 

 

 

 

 

 

945,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,053,225   

 

 

 

 

 

 

 

20,755   

 

 

 

 

 

 

 

2,469,624

 

 

 

  2017   450,000   922,381     888,150      20,295      2,280,826

 

(1)

The amounts in these columns represent the aggregate grant date fair value calculated in accordance with ASC Topic 718 for equity awards granted during the fiscal year. These amounts do not necessarily correspond to the actual value recognized by our NEOs. For a discussion of the underlying assumptions used and for further discussion of the Company’s accounting for its equity compensation plans, see the following sections of the Company’s Form 10-K for the fiscal year ended September 30, 2018:

* Part II – Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements

 

 

Note 1. Nature of Operations and Summary of Significant Accounting Policies – Stock-based Compensation

 

 

Note 13. Stock-based Compensation

 

  TD Ameritrade 2019 Proxy Statement   33


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Executive Compensation and Related Information

 

 

The amounts in the Stock Awards column for fiscal year 2018 represent the grant date fair value of PRSUs based on the probable outcome of the performance conditions to which the PRSUs are subject. The following table shows the value of the PRSUs at the grant date assuming that the highest level of performance conditions will be achieved (equivalent to 120% of the award), subject to adjustment with respect to any related DEUs:

 

   Name

 

Grant Date

 

Value of PRSUs at
Grant Date Assuming
Highest Level of
Performance

($)

 

 

Tim Hockey

 

 

 

 

 

11/29/2017

 

 

 

 

 

 

 

5,893,461

 

 

 

 

Stephen J. Boyle

 

 

 

 

 

11/29/2017

 

 

 

 

 

 

 

1,134,762

 

 

 

 

Peter J. deSilva

 

 

 

 

 

11/29/2017

 

 

 

 

 

 

 

49,103

 

 

 

 

Thomas A. Nally

 

 

 

 

 

11/29/2017

 

 

 

 

 

 

 

1,847,484

 

 

 

 

Steven M. Quirk

 

 

 

 

 

11/29/2017

 

 

 

 

 

 

 

1,134,762

 

 

 

 

(2)

The amount reflects Mr. deSilva’s PRSU award as prorated to reflect that he was employed with the Company, following the closing of Scottrade’s acquisition by the Company, during fiscal year 2018 from September 18, 2017, through September 30, 2017, as set forth in Mr. deSilva’s term sheet as negotiated and entered into between Mr. deSilva and the Company in connection with the closing of the Scottrade acquisition.

 

(3)

The amounts in this column include the cash component of the annual incentive awards earned under the MIP.

 

(4)

The cash component of the annual incentive award earned by Mr. Boyle under the MIP was deferred by him and will be paid in the form of Company common stock upon the termination of Mr. Boyle’s employment with the Company, in equal, annual installments over a period of ten years (or in the event of his earlier death or disability that occurs during employment, in a lump sum shortly following such event).

 

(5)

The amount includes (a) the cash component of the annual incentive award earned under the MIP of $1,359,000, and (b) cash bonus payments that were paid under Mr. deSilva’s SAR award pursuant to the terms of the Scottrade Appreciation Right Award dated January 1, 2016, consisting of (i) $301,390 that was paid during fiscal year 2018, representing one-third of the amount that Mr. deSilva became eligible to receive based on performance achieved for Scottrade’s fiscal year 2016 and prior to the closing of the Company’s acquisition of Scottrade that occurred in the Company’s fiscal year 2017, (ii) $423,548 that was paid during fiscal year 2018, representing one-third of the amount that Mr. deSilva became eligible to receive based on performance achieved with respect to Scottrade’s fiscal year 2017 and prior to the closing of the Company’s acquisition of Scottrade, and (iii) $4,087,423 of which was paid during fiscal year 2018 under the SAR award granted by Scottrade, representing the entire amount that Mr. deSilva became eligible to receive in connection with the Company’s acquisition of Scottrade in fiscal year 2017, in each case of (i) through (iii), subject to Mr. deSilva’s continued employment with the Company (as the successor to Scottrade) through the applicable vesting dates in fiscal year 2018.

 

34   TD Ameritrade 2019 Proxy Statement  


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Executive Compensation and Related Information

 

 

(6)

The amounts in this column are summarized in the following table:

 

   Name

 

Year

 

Income and
Employment

Taxes

Reimbursed(a)

($)

 

Employer Cash

Contributions

to Company’s

Qualified

401(k) Profit

Sharing Plan

($)

 

Other(c)

($)

 

Total

($)

 

         

Tim Hockey

  2018   9,092   —      7,114   16,206
         
  2017   813   —      1,189   2,002
         
 

 

2016

 

 

 

 

73,223

 

 

 

 

4,759(b)

 

 

 

 

 

52,614

 

 

 

 

130,596

 

 

         

Stephen J. Boyle

  2018   64,412   20,490      60,560   145,462
         
  2017   66,919   25,228      58,635   150,781
         
 

 

2016

 

 

 

 

60,221

 

 

 

 

11,422   

 

 

 

 

53,280

 

 

 

 

124,923

 

 

         

Peter J. deSilva

 

 

2018

 

 

 

 

 

 

 

 

30,842   

 

 

 

 

 

 

 

 

30,842

 

 

         

Thomas A. Nally

  2018     20,784        20,784
         
  2017   261   20,295      693   21,248
         
 

 

2016

 

 

 

 

629

 

 

 

 

20,595   

 

 

 

 

 

 

 

 

21,224

 

 

         

Steven M. Quirk

  2018     20,755        20,755
         
 

 

2017

 

 

 

 

 

 

 

 

20,295   

 

 

 

 

 

 

 

 

20,295

 

 

 

  (a)

The amount of taxes reimbursed by the Company for fiscal year 2018 relate to Company-paid tax preparation services for Mr. Hockey and housing reimbursement for Mr. Boyle.

 

  (b)

During fiscal year 2017, this amount subsequently was adjusted to reflect that Mr. Hockey would not receive any fiscal year 2016 matching contribution and accordingly, the payment was reversed.

 

  (c)

The fiscal year 2018 amounts consisted of tax preparation services for Mr. Hockey and housing reimbursement for Mr. Boyle.

 

(7)

This amount includes employer cash contributions to the Company’s qualified 401(k) profit sharing plan for Mr. Hockey for fiscal year 2016 in the amount of $4,759, as previously disclosed in the Company’s proxy statement filed with the SEC on January 4, 2017. Pursuant to his employment agreement, Mr. Hockey is not eligible for matching and profit sharing contributions under the Company’s 401(k) plan while he continues to accrue benefits under the TD Bank Group non-qualified pension plan through June 30, 2018. An adjustment was made during fiscal year 2017 to reflect that Mr. Hockey would not receive such fiscal year 2016 matching contribution and accordingly, the payment of $4,759 was reversed.

 

  TD Ameritrade 2019 Proxy Statement   35


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Executive Compensation and Related Information

 

 

Grants of Plan-based Awards During Fiscal Year 2018

The following table summarizes equity awards granted to our named executive officers in fiscal year 2018 under our LTIP and non-equity incentive plan awards granted to our named executive officers in fiscal year 2018 under our MIP. Equity awards granted in fiscal year 2019 for services rendered in fiscal year 2018 are summarized in the Compensation Discussion and Analysis under the heading “Actions Since End of Fiscal Year 2018.”

 

      Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards
Estimated Future Payouts Under
Equity Incentive Plan Awards

Grant Date
Fair Value of
Stock Awards

($)

 

   Name

 

Grant

Date

 

Approval
Date of
Stock
Awards

 

Threshold

($)

 

Target

($)

 

Maximum

($)

 

Threshold

(#)

 

Target

(#)

 

Maximum

(#)

 

                 

Tim Hockey

  —         1,950,000(2)     3,900,000
                 
 

 

11/29/2017(1)

 

 

 

 

 

11/17/2017

 

 

 

 

74,895

 

 

 

 

93,619

 

 

 

 

112,342

 

 

 

 

4,911,253

 

 

                 

Stephen J. Boyle

  —         875,000     1,750,000
                 
 

 

11/29/2017(1)

 

 

 

 

 

11/16/2017

 

 

 

 

14,420

 

 

 

 

18,026

 

 

 

 

21,631

 

 

 

 

945,644

 

 

                 

Peter J. deSilva

  —         1,000,000(2)     2,000,000
                 
 

 

11/29/2017(1)

 

 

 

 

 

11/16/2017

 

 

 

 

624

 

 

 

 

780

 

 

 

 

936

 

 

 

 

40,919

 

 

                 

Thomas A. Nally

  —         1,075,000(2)     2,150,000
                 
 

 

11/29/2017(1)

 

 

 

 

 

11/16/2017

 

 

 

 

23,478

 

 

 

 

29,348

 

 

 

 

35,217

 

 

 

 

1,539,596

 

 

                 

Steven M. Quirk

  —         775,000(2)     1,550,000
                 
 

 

11/29/2017(1)

 

 

 

 

 

11/16/2017

 

 

 

 

14,420

 

 

 

 

18,026

 

 

 

 

21,631

 

 

 

 

945,644

 

 

 

(1)

Represents the equity component of the fiscal year 2017 annual incentives payable pursuant to the MIP in the form of PRSUs. PRSUs (including any related DEUs), which were granted under the LTIP, are scheduled to vest in full on the three-year anniversary of the grant date based upon achievement of specified performance criteria, subject to the named executive officer’s service with the Company through such date. The performance criteria relate to the Company’s cumulative three-year TSR relative to certain components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant. The actual number of PRSUs that may become eligible to vest as a result of performance will range from a minimum of 80% to a maximum of 120% of the PRSUs (including any related DEUs).

 

(2)

Represents the cash incentive component of the fiscal year 2018 annual incentives payable to the named executive officer pursuant to the MIP.

 

36   TD Ameritrade 2019 Proxy Statement  


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Executive Compensation and Related Information

 

 

Outstanding Equity Awards at Fiscal Year-end September 30, 2018

The following table provides information on the holdings of stock option and stock awards by our named executive officers as of September 30, 2018, the last day of fiscal year 2018. This table includes unexercised and unvested option awards, unvested RSUs and unvested DEUs associated with the outstanding RSU awards. The vesting schedule is shown for each grant in the footnotes to the table. The market value of the stock awards is based on $52.83, the closing market price of the Company’s common stock on September 28, 2018 (the last business day of fiscal year 2018).

 

  Option Awards Stock Awards
   Name

Number of

Securities

Underlying

Unexercised

Options

(#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options

(#)

Unexercisable

Option

Exercise

Price

($)

Option

Expiration

Date

Number of

Shares or

Units of Stock

That Have

Not Vested

(#)(2)

Market Value

of Shares or

Units of Stock

That Have

Not Vested

($)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other

Rights That
Have Not
Vested

(#)(2)

Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other

Rights That
Have Not
Vested

($)

Vesting

Date(2)

                 

Tim Hockey

  251,623   251,624 (1)(2)    27.97   1/21/2026
                 
  166,647   8,803,961   1/21/2021(3)  
                 
  94,644   5,000,043   11/29/2020(4)  
                 
 

 

107,052

 

 

 

 

5,655,557

 

 

 

 

11/22/2019(4)

 

 

 

                 

Stephen J. Boyle

  18,222   962,668   11/29/2020(4)  
                 
  19,659   1,038,585   11/22/2019(4)  
                 
 

 

19,724

 

 

 

 

1,042,019

 

 

 

 

11/25/2018(5)

 

 

 

                 

Peter J. deSilva

  786   41,524   11/29/2020(4)  
                 
  11,607   613,198   9/20/2020(5)  
                 
 

 

11,607

 

 

 

 

613,198

 

 

 

 

9/20/2022(6)

 

 

 

                 

Thomas A. Nally

  29,668   1,567,360   11/29/2020(4)  
                 
  24,757   1,307,912   11/22/2019(4)  
                 
 

 

29,893

 

 

 

 

1,579,247

 

 

 

 

11/25/2018(5)

 

 

 

                 

Steven M. Quirk

  18,222   962,668   11/29/2020(4)  
                 
  22,571   1,192,426   11/22/2019(4)  
                 
 

 

 

26,970

 

 

 

 

 

 

1,424,825

 

 

 

 

 

11/25/2018(5)

 

 

 

 

 

 

(1)

These nonqualified stock options are scheduled to vest in four, equal installments on January 21, 2017, 2018, 2019 and 2020, subject to Mr. Hockey’s continued employment with the Company or service as a member of the board of directors through such dates.

 

(2)

In certain circumstances, the awards are eligible for continued vesting or vesting acceleration as described further below in the section titled “Potential Payments Upon Termination or Change in Control.”

 

(3)

These RSUs are scheduled to vest in full on the five-year anniversary of the grant date, subject to Mr. Hockey’s continued employment or other service with the Company through such date.

 

(4)

These PRSUs are shown based on target number of shares subject to the PRSUs (including any DEUs based on such target number). PRSUs are scheduled to vest in full on the three-year anniversary of the grant date based upon achievement of specified performance criteria, subject to the named executive officer’s employment or other service with the Company through such date. The performance criteria relate to the Company’s cumulative TSR, relative to the cumulative TSR of each of the component companies of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant, measured over a period of three years beginning on the first day of fiscal year 2017 with respect to PRSUs with a vesting date of November 22, 2019, or fiscal year 2018 with respect to PRSUs with a vesting date of November 29, 2020). The actual number of PRSUs (including any related DEUs) that may become eligible to vest as a result of performance will range from a minimum of 80% to a maximum of 120% of the PRSUs.

 

(5)

These RSUs are scheduled to vest in full on the three-year anniversary of the grant date, subject to the named executive officer’s continued employment with the Company through such date.

 

(6)

These RSUs are scheduled to vest in full on the five-year anniversary of the grant date, subject to the named executive officer’s continued employment with the Company through such date.

 

  TD Ameritrade 2019 Proxy Statement   37


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Executive Compensation and Related Information

 

 

Option Exercises and Stock Vested During Fiscal Year 2018

The following table summarizes stock awards that vested for our named executive officers during fiscal year 2018.

 

    

Stock Awards

 

 

Name

 

  

Number of Shares

Acquired on Vesting

(#)

 

      

Value Realized

on Vesting

($)

 

 

 

Tim Hockey

 

  

 

 

 

 

—            

 

 

 

 

    

 

 

 

 

—            

 

 

 

 

 

Stephen J. Boyle(1)

 

  

 

 

 

 

84,275            

 

 

 

 

    

 

 

 

 

4,619,113            

 

 

 

 

 

Peter J. deSilva

 

  

 

 

 

 

—            

 

 

 

 

    

 

 

 

 

—            

 

 

 

 

 

Thomas A. Nally

 

  

 

 

 

 

26,789            

 

 

 

 

    

 

 

 

 

1,315,876            

 

 

 

 

 

Steven M. Quirk

 

  

 

 

 

 

19,876            

 

 

 

 

    

 

 

 

 

976,309            

 

 

 

 

 

(1)

The settlement of Mr. Boyle’s RSU award covering 79,767 shares granted on July 8, 2015, was deferred pursuant to the terms of the RSU award agreement. 100% of the award vested on July 8, 2018, including 4,508 DEUs earned for a total of 84,275 shares. The deferred stock units are scheduled to be paid to Mr. Boyle in ten, equal, annual installments upon the termination of his employment other than due to his death or disability, with the first installment paid shortly after the termination of his employment and remaining installments paid on each of the next nine anniversaries of the termination. In the event that Mr. Boyle dies or becomes disabled during his employment, the deferred stock units instead will be issued in lump sum shortly following the date of the death or disability.

Nonqualified Deferred Compensation for Fiscal Year 2018

The following table summarizes deferred compensation for our named executive officers during fiscal year 2018 that is not tax-qualified.

 

Name

 

Executive
Contributions in
Fiscal Year 2018

($)

 

Company
Contributions in
Fiscal Year 2018

($)

 

Aggregate
Earnings in
Fiscal Year 2018

($)

 

Aggregate
Withdrawals/
Distributions

($)

 

Aggregate
Balance at Fiscal
Year End 2018

($)

 

         

Tim Hockey

 

 

 

—   

 

 

 

 

          —          

 

 

 

 

—       

 

 

 

 

—  

 

 

 

 

—    

 

 

         

Stephen J. Boyle

  888,150(1)     —             128,147(3)(4)     —     1,529,429(6)  
         
 

 

4,510,534(2)

 

 

 

 

 

-157,133(4)(5)

 

 

 

 

 

4,353,916(7)

 

 

 

         

Peter J. deSilva

 

 

 

—   

 

 

 

 

—          

 

 

 

 

—       

 

 

 

 

—  

 

 

 

 

—    

 

 

         

Thomas A. Nally

 

 

 

—   

 

 

 

 

—          

 

 

 

 

—       

 

 

 

 

—  

 

 

 

 

—    

 

 

         

Steven M. Quirk

 

 

 

—   

 

 

 

 

—          

 

 

 

 

—       

 

 

 

 

—  

 

 

 

 

—    

 

 

 

(1)

Mr. Boyle deferred all of the cash component of his annual incentive award payable to him under the MIP for fiscal year 2017, which was converted into 18,076 deferred stock units during fiscal year 2018, and will be payable to him in shares of Company common stock. Upon the termination of his employment with the Company or his retirement, his deferred stock units will be paid in ten, annual installments following termination (with the first payment occurring on the one-year anniversary of termination and each installment comprising a number of shares of Company common stock equal to the total number of deferred stock units outstanding (including DEUs), divided by the number of remaining installments to be paid). The full amount of the cash component of the annual incentive award payable to Mr. Boyle under the MIP for fiscal year 2017 in the amount of $888,150 was included in the Summary Compensation Table for Mr. Boyle for fiscal year 2017 under the column titled Non-Equity Incentive Plan Compensation.

 

(2)

Mr. Boyle was granted RSUs covering 79,767 shares on July 8, 2015, which vested in full on July 8, 2018. A total of 82,294 vested shares (which include DEUs but are net of shares used to satisfy any applicable tax withholdings at vesting) otherwise issuable under the RSUs have been deferred until the earliest of the termination of Mr. Boyle’s employment, his death, or his disability. The deferred stock units are scheduled to be paid to Mr. Boyle in ten, annual installments upon the termination of his employment other than due to his death or disability, with the first installment paid shortly after the termination of his employment and remaining installments paid on each of the next nine anniversaries of the termination. The number of shares of Company common stock to be paid in each installment is equal to the total number of deferred stock units (including DEUs), divided by the number of remaining installments to be paid. In the event that Mr. Boyle dies or becomes disabled during his employment, the deferred stock units instead will be issued in lump sum shortly following the date of the death or disability. The grant date fair value of this RSU award was included in the Summary Compensation Table for fiscal year 2015 in the amount of $2,881,535, under the column titled Stock Awards.

 

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Executive Compensation and Related Information

 

 

(3)

The amount of aggregate earnings in fiscal year 2018 represents $18,107 in dividends earned during fiscal year 2018 on the deferred stock units, which dividends will be payable in shares, and the value of any increase or decrease in the stock price of the shares.

 

(4)

The amounts earned for Mr. Boyle’s deferred stock units were not subject to any above-market or preferential earnings during fiscal year 2018 or any prior year reported in the Summary Compensation Table.

 

(5)

The amount of aggregate earnings in fiscal year 2018 represents $17,282 in dividends earned during fiscal year 2018 on the deferred stock units, which dividends will be payable in shares, and the value of any increase or decrease in the stock price of the shares.

 

(6)

The aggregate balance at fiscal year end 2018 represents the value of 28,950 deferred stock units of Company common stock based on $52.83 per share, the closing market price of the Company’s common stock on September 28, 2018 (the last business day of fiscal year 2018). Mr. Boyle previously deferred 50% of the cash component of his annual incentive award payable to him under the MIP for fiscal year 2016, which was converted into 10,334 deferred stock units. An amount of $342,900, representing the deferred portion of the annual incentive award payable in cash to Mr. Boyle under the MIP for fiscal year 2016 was included in the Summary Compensation Table for fiscal year 2016 under the column titled Non-Equity Incentive Plan Compensation. These deferred stock units are subject to the Company’s Executive Deferred Compensation Program. Under this program, participants may elect to defer up to 100% of their annual incentive earned under the MIP or such other compensation that the program administrator may permit. The program also permits discretionary contributions by the Company, although no Company contributions were made in fiscal year 2018. Deferred stock units under the program are eligible for DEUs, which generally are calculated by multiplying the dividend amount per share by the number of deferred stock units of the participant, divided by the closing price of the Company’s common stock on the dividend payment date. The program will provide for earlier, lump sum distribution in the event that Mr. Boyle becomes disabled while employed with the Company, and also permits distributions in connection with an unforeseeable emergency.

 

(7)

The aggregate balance at fiscal year end 2018 represents the value of 82,603 shares of Company common stock deferred under the RSU described in footnote (2) above (including DEUs earned on the deferred stock units, which also remain deferred), based on $52.83 per share, the closing market price of the Company’s common stock on September 28, 2018 (the last business day of fiscal year 2018).

Potential Payments Upon Termination or Change in Control

Introduction and Overview

The Company has entered into employment agreements with Messrs. Hockey, Boyle and deSilva. Messrs. Nally and Quirk do not have employment agreements. The employment agreements and certain compensation plans and award agreements require the Company to provide compensation and benefits to the executives in the event of certain qualifying terminations of employment, including in connection with a change in control of the Company. Payments are not triggered automatically upon the occurrence of a change in control. Rather, our executives will receive change in control benefits only if their employment is terminated in certain instances following a change in control.

Compensation Plans and Award Agreements

Management Incentive Plan and Long-Term Incentive Plan

Under the MIP, in the event of death or disability prior to the payment of a scheduled award, compensation will be paid to the executive’s estate or other authorized person. The LTIP provides that in the event of a change in control, unless determined otherwise by the administrator of the LTIP, in the event a successor to the Company does not assume or substitute or replace outstanding awards of options, RSUs and PRSUs, those awards will vest in full. The RSU and PRSU award agreements generally provide for settlement as soon as practicable upon the vesting of the award, except in limited circumstances for purposes of complying with any applicable laws (such as requirements relating to deferred compensation). The option, RSU and PRSU award agreements provide for the following treatment of named executive officers’ awards upon death, disability, retirement, termination without cause, resignation for good reason, and change in control:

 

   Triggering Event

 

  

Treatment of Award

 

 

Death or disability

  

RSU award vests in full

 

PRSU award vests based on target performance

 

 

Retirement

  

RSU award vests in full (other than with respect to Mr. Hockey’s RSUs granted January 1, 2016)

 

PRSU award remains outstanding and eligible to vest based on actual performance

 

 

Termination by the Company without cause

  

Mr. Hockey’s RSU award granted January 1, 2016, vests in full, and other RSUs held by a named executive officer vest as to a prorated portion based on the number of full, 12-month periods of service completed during the vesting period

 

PRSUs for which performance already has been met will vest in full. For PRSUs for which performance has not yet been measured, those PRSUs will remain outstanding and eligible to vest based on actual performance as to 100% with respect to Mr. Hockey, or 33% (if termination occurs at least one year after grant), 67% (if termination occurs at least two years after grant), or 100% (if termination occurs at least three years after grant), with respect to other named executive officers

 

Mr. Hockey’s option award will continue to vest in accordance with its vesting schedule without regard to any continued employment or director service requirement

 

 

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Executive Compensation and Related Information

 

 

   Triggering Event

 

  

Treatment of Award

 

 

Resignation by the executive for good reason

  

Mr. Hockey’s RSUs granted January 1, 2016, vests in full. Mr. deSilva’s RSUs will vest as to a prorated portion based on the number of full, 12-month periods of service completed during the vesting period

 

Mr. deSilva’s PRSUs for which performance already has been met will vest as to a prorated portion based on the number of full, 12-month periods of service completed during the vesting period. His PRSUs for which performance has not yet been measured will remain outstanding and eligible to vest based on actual performance as to 33% (if termination occurs at least one year after grant), 67% (if termination occurs at least two years after grant), or 100% (if termination occurs at least three years after grant)

 

Mr. Hockey’s options will continue to vest in accordance with their vesting schedule without regard to any continued employment or director service requirement

 

 

Change in control

  

RSU award vests in full following termination by the Company without cause that occurs within 24 months after a change in control

 

For PRSU awards, the performance period will end upon the change in control and actual performance will be measured at that time. PRSUs for which performance is deemed met will be scheduled to vest, after the change in control, on the three-year anniversary of the grant date subject to continued service. Upon termination of service due to death, disability or retirement, such PRSUs will accelerate vesting in full. With respect to Mr. Hockey, upon resignation for good reason, or termination of employment by the Company other than for cause, such PRSUs will accelerate vesting in full. With respect to Mr. deSilva, upon resignation for good reason or termination of employment by the Company other than for cause in each case within 12 months after the change in control, such PRSUs will continue to vest in accordance with its vesting schedule. With respect to other named executive officers, upon termination of employment by the Company other than for cause, 33% (if termination occurs at least one year after grant), 67% (if termination occurs at least two years after grant), or 100% (if termination occurs at least three years after grant) of such PRSUs will accelerate vesting

 

 

Conditions to Receipt of Accelerated Vesting Benefit

  

Under the RSU and PRSU award agreements, non-solicitation and non-competition covenants for a period of 12 months (or 24 months, in the case of Mr. Hockey and Mr. Boyle), following termination of employment with the Company, and with respect to Mr. Hockey’s PRSU award agreement, a release of claims in favor of the Company pursuant to his employment agreement. Upon termination other than due to death or disability, the portion of Mr. Boyle’s RSU award granted July 8, 2015, that accelerates vesting will be paid out in annual installments over a 9-year period following termination

 

Certain Definitions Under RSU, PRSU and Option Award Agreements and LTIP

Under the LTIP, “change in control” generally means the occurrence of any of the following:

 

 

The date any person (or more than one person acting as a group) acquires ownership of Company common stock that, together with common stock held by such person (or group), constitutes more than 50% of the total fair market value or voting power of Company common stock, but other than circumstances in which: additional common stock is acquired by any one person (or more than one person acting as a group) considered to own more than 50% of the total fair market value or voting power of Company common stock, or Company stockholders continue to retain substantially the same proportions of their ownership of the total fair market value or voting power of Company common stock of fifty percent (50%) or more of the total fair market value or voting power of common stock of the Company or of the ultimate parent entity of the Company, such event will not be considered a change in control; or

 

 

The date that the board of directors determines that any person (or more than one person acting as a group, but other than any person or group considered to effectively control the Company) acquires or has acquired during a 12-month period at least 50% of the total voting power of Company common stock, or a majority of members of the board of directors is replaced over a 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors before the appointment or election; or

 

 

The date that any person (or more than one person acting as a group) acquires or has acquired during a 12-month period assets from the Company that have a total gross fair market value of at least 50% of the total fair market value of all Company assets, but other than a transfer: (i) to an entity controlled by the Company’s stockholders immediately after the transfer; or (ii) of assets to a Company stockholder in exchange for or with respect to Company common stock, or to an entity, at least 50% of the total value or voting power of which is owned by the Company or to a person (or more than one person acting as a group) that owns at least 50% of the total value or voting power of all outstanding Company common stock, or to an entity owned by such person (referenced in the immediately preceding clause) as to at least 50% of its total value or voting power.

Transactions also are required to qualify as a change in control within the meaning of Code section 409A in order to constitute a change in control under the LTIP.

 

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Executive Compensation and Related Information

 

 

Under the RSU and PRSU award agreements, a change in control will not be deemed to occur, for purposes of the treatment described in the award agreement in connection with a change in control, if TD Bank Financial Group acquires the Company’s outstanding shares of common stock or substantially all of the Company’s assets.

Under the PRSU award agreements, “retirement” generally means a termination by the Company of the executive’s employment with the Company other than for cause, death or disability after the executive has attained at least age 55 and at least ten years of continuous service with the Company. With respect to Mr. Hockey, if Mr. Hockey has served as CEO for at least five years, then the term “Retirement” under his PRSUs will have the same meaning as under his employment agreement.

Under the RSU award agreements (other than for Mr. Hockey), “retirement” generally means a termination by the Company of the executive’s employment with the Company other than for cause after the executive has attained age 55 and at least ten years of continuous service with the Company.

Under the RSU and PRSU award agreements (other than with respect to Mr. Hockey’s awards), “cause” generally means:

 

 

failure to substantially perform the executive’s duties as an employee, other than due to illness, injury or disability;

 

 

willfully engaging in conduct which is materially injurious to the Company;

 

 

misconduct involving serious moral turpitude, or any conviction of, or plea of no contest to, a criminal offense arising out of a breach of trust, embezzlement or fraud committed against the Company by the executive in the course of his employment with the Company;

 

 

any violation of the non-solicitation or non-competition covenants under the award agreement; or

 

 

any other action that might be considered gross misconduct under the Company’s applicable associate handbook.

Under Mr. Hockey’s RSU, PRSU and option award agreements, “cause” and “good reason” generally have the same meaning as provided in Mr. Hockey’s employment agreement.

Company Severance Practices

In addition, in accordance with the Company’s executive compensation practices, unless otherwise specified in an employment agreement, named executive officers will generally receive the following severance benefits upon any termination by the Company without cause including following a change in control: (a) four weeks of base salary for each completed year of service (or minimum of 12 weeks), up to a maximum of 104 weeks, (b) four weeks of annual cash incentive for each completed year of service, up to a maximum of 104 weeks, calculated based on target performance, (c) continued Company-paid employer portion of premium costs for medical and dental coverage for a period equal to one month for each completed year of service (or minimum of six months), up to a maximum of 18 months, and (d) eligibility to receive the cash portion of annual incentive, based on actual performance and prorated for the period of the fiscal year that the named executive officer remained employed. These severance benefits are subject to a release of claims in favor of the Company, and non-competition and non-solicitation obligations for a period of 12 months following termination of employment.

Employment Agreements of Named Executive Officers

President and CEO – Tim Hockey

On November 9, 2015, Mr. Hockey entered into an employment agreement under which he became the Company’s president effective January 2, 2016, and CEO effective October 1, 2016. Below is a brief summary of certain terms of his employment agreement.

Severance benefits under his employment agreement are summarized further below under the section titled “Summary Table – Potential Payments Upon Termination or Change in Control.”

 

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Executive Compensation and Related Information

 

 

Employment Agreement

 

Provision

 

 

Summary

 

 

Position

 

President, effective January 2, 2016

 

CEO, effective October 1, 2016

 

 

Term

 

Initial term of five years commencing January 2, 2016

 

  Annual re-appointment as CEO by the approval of at least two-thirds of the board of directors during the initial term or renewal thereof

 

  Automatic renewal for additional terms of one-year each after the initial term

 

  Written notice of non-renewal may be provided by the Company or Mr. Hockey at least six months before expiration

 

  Written notice of voluntary retirement by Mr. Hockey at least six months before his resignation

 

 

Base Salary

 

$750,000 per year, and increased by the Compensation Committee to $1,000,000 beginning with fiscal year 2017

 

 

Annual Cash Incentive

 

Participation in MIP with annual cash incentive target of $1,575,000 for fiscal year 2016, and increased by the Compensation Committee to $1,725,000 beginning with fiscal year 2017

 

 

Equity Compensation

 

Participation in LTIP

 

  Equity component of annual incentive award under the MIP with a target of $3,675,000 for fiscal year 2016, and increased by the Compensation Committee to $4,025,000 beginning with fiscal year 2017

 

  RSU award covering 158,533 shares granted on January 21, 2016, and scheduled to vest in full on January 21, 2021, subject to continued service with the Company through such date

 

  Stock option award covering 503,247 shares granted on January 21, 2016, and scheduled to vest in four equal installments on January 21, 2017, 2018, 2019 and 2020, subject to continued employment with the Company or service as a member of the board of directors through the applicable dates

 

 

Air Travel

 

Mr. Hockey is entitled to fly on private aircraft when traveling on Company-related business at the expense of the Company

 

 

Car Service

 

Mr. Hockey is entitled to Company-paid car service transportation to and from work, and when traveling by ground transportation on Company-related business to the extent important for security purposes

 

 

Taxes

 

Tax preparation services paid by the Company in years where Mr. Hockey’s employment income is recognized in both Canada and the United States.

 

If benefits provided to Mr. Hockey constitute “parachute payments” within the meaning of Section 280G of the Code and are subject to the excise tax imposed by Section 4999 of the Code, then severance benefits may be paid in a lesser amount that would result in no portion being subject to the excise tax, if such reduction would result in the receipt, on an after-tax basis, of a greater amount of severance benefits.

 

 

Conditions to Receipt of Termination

Payments and Benefits

 

As a condition to Mr. Hockey receiving severance payments, he is required to enter into a release of claims and is required to abide by non-competition, non-solicitation and (except in the case of voluntary retirement after five years of becoming the Company’s CEO) mutual non-disparagement covenants and share ownership requirements. The non-competition, non-solicitation and non-disparagement covenants and the share ownership requirements cover a period of two years from the date of termination.

 

 

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Executive Compensation and Related Information

 

 

Certain Definitions Under Mr. Hockey’s Employment Agreement

“Good reason” generally means Mr. Hockey’s resignation within 30 days following the expiration of any Company cure period following the occurrence of one or more of the following, without Mr. Hockey’s written consent:

 

 

a significant reduction of Mr. Hockey’s duties, position, or responsibilities, relative to his duties, position, or responsibilities in effect immediately prior to such reduction;

 

 

a material reduction in the kind or level of employee benefits to which Mr. Hockey is entitled immediately prior to such reduction with the result that his overall benefits package is significantly reduced, other than a one-time reduction that also is applied to substantially all other executive officers of the Company and that reduces the level of employee benefits by a percentage reduction of 10% or less;

 

 

a reduction in Mr. Hockey’s base salary or annual MIP incentive award as in effect immediately prior to such reduction, other than a one-time reduction that also is applied to substantially all other executive officers of the Company and which one-time reduction reduces any of the base salary, target annual incentive, or annual award by a percentage reduction of 10% or less in the aggregate;