Share-Based Compensation

12 Months Ended

Oct. 31, 2025

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 21: SHARE-BASED COMPENSATION

STOCK OPTION PLAN

The Bank maintains a stock option program for certain key employees. Options on common shares are granted to eligible employees of the Bank under the plan

for terms of

ten years

 and vest over a

four-year

 period. These options provide holders with the right to purchase common shares of the Bank at a fixed price equal

to the closing market price of the shares on the TSX on the day prior to the date the options were issued. The outstanding options expire on various dates to

December 12, 2034.

The following table summarizes the Bank’s stock option activity and related information, adjusted to reflect the impact of the 2014 stock

dividend on a retrospective basis, for the years ended October 31, 2025 and October 31, 2024.

Stock Option Activity

(millions of shares and Canadian dollars)

2025

2024

Weighted-

Weighted-

Number

average

Number

average

of shares

exercise price

of shares

exercise price

Number outstanding, beginning of year

14.7

$

79.17

14.1

$

76.58

Granted

2.0

75.76

2.6

81.78

Exercised

(2.3)

65.99

(1.7)

60.07

Forfeited/expired

(0.2)

85.29

(0.3)

85.36

Number outstanding, end of year

14.2

$

80.65

14.7

$

79.17

Exercisable, end of year

5.2

$

70.94

5.4

$

68.51

Available for grant

3.4

5.1

The weighted-average share price for the options exercised in 2025 was $

93.40

 (2024 – $

80.57

).

The following table summarizes information relating to stock options outstanding and exercisable as at October 31, 2025.

Range of Exercise Prices

(millions of shares and Canadian dollars)

 Options outstanding

 Options exercisable

Weighted-

average

Weighted-

Weighted-

Number

remaining

average

Number

average

of shares

contractual

exercise

of shares

exercise

outstanding

life (years)

price

exercisable

price

$

53.15

-$

69.39

1.7

2.3

68.07

1.7

68.07

$

71.88

-$

72.64

2.2

4.0

72.13

2.2

72.13

$

72.84

-$

81.78

5.6

7.5

77.67

1.3

72.84

$

90.55

2.4

7.0

90.55

–

–

$

95.33

2.3

6.0

95.33

–

–

For the year ended October 31, 2025, the Bank recognized compensation expense for stock option awards of $

22.9

 million (October 31, 2024 – $

34.2

 million). For

the year ended October 31, 2025,

2.0

 million (October 31, 2024 –

2.6

 million) options were granted by the Bank at a weighted-average fair value of $

12.80

 per

option (2024 – $

14.36

 per option) estimated using a binomial tree-based valuation option pricing model.

The following table summarizes the assumptions used for estimating the fair value of options for the years ended October 31, 2025 and October 31, 2024.

Assumptions Used for Estimating the Fair Value of Options

(in Canadian dollars, except as noted)

2025

2024

Risk-free interest rate

3.08

%

3.41

%

Option contractual life

10

 years

10

 years

Expected volatility

19.47

%

18.92

%

Expected dividend yield

3.94

%

3.78

%

Exercise price/share price

$

75.76

$

81.78

The risk-free interest rate is based on Government of Canada benchmark bond yields as at the grant date. Expected volatility is calculated based on the historical

average daily volatility and expected dividend yield is based on dividend payouts in the last fiscal year. These assumptions are measured over a period

corresponding to the option contractual life.

OTHER SHARE-BASED COMPENSATION PLANS

The Bank operates restricted share unit and performance share unit plans which are offered to certain employees of the Bank. Under these plans, participants are

awarded share units equivalent to the Bank’s common shares that generally vest over

three years

. During the vesting period, dividend equivalents accrue to the

participants in the form of additional share units. At the maturity date, the participant receives cash representing the value of the share units. The final number of

performance share units will typically vary from

80

% to

120

% of the number of units outstanding at maturity (consisting of initial units awarded plus additional units

in lieu of dividends) based on the Bank’s total shareholder return relative to the average of a peer group of large Canadian financial institutions. For the year ended

October 31, 2025, the Bank awarded

12.9

 million of such share units at a weighted-average price of $

76.19

 (2024 –

9.9

 million units at a weighted-average price of

$

81.54

). The number of such share units outstanding under these plans as at October 31, 2025 was

32.2

 million (October 31, 2024 –

27.9

 million).

The Bank also offers deferred share unit plans to eligible employees and non-employee directors. Under these plans, a portion of the participant’s annual

incentive award may be deferred, or in the case of non-employee directors, a portion of their annual compensation may be delivered as share units equivalent to

the Bank’s common shares. The deferred share units are not redeemable by the participant until termination of employment or directorship. Once these conditions

are met, the deferred share units must be redeemed for cash no later than the end of the next calendar year. Dividend equivalents accrue to the participants in the

form of additional units. For the year ended October 31, 2025, the Bank awarded

0.2

 million deferred share units at a weighted-average price of $

79.30

 (2024 –

0.2

 million units at a weighted-average price of $

81.57

). As at October 31, 2025,

5.9

 million deferred share units were outstanding (October 31, 2024 –

6.6

 million).

Compensation expense for these plans is recorded in the year the incentive award is earned by the plan participant. Changes in the value of these plans are

recorded, net of the effects of related hedges, on the Consolidated Statement of Income. For the year ended October 31, 2025, the Bank recognized

compensation expense, net of the effects of hedges, for these plans of $

1,043

 million (2024 – $

970

 million). The compensation expense recognized before the

effects of hedges was $

2,390

 million (2024 – $

903

 million). The carrying amount of the liability relating to these plans, based on the closing share price, was

$

4.4

 billion at October 31, 2025 (October 31, 2024 – $

2.7

 billion), and is reported in Other liabilities on the Consolidated Balance Sheet.

EMPLOYEE OWNERSHIP PLAN

The Bank also operates a share purchase plan available to Canadian employees. Employees can contribute up to

10

% of their annual eligible earnings (net of

source deductions) to the Employee Ownership Plan. For participating employees below the level of Vice President, the Bank matches

100

% of the first $

250

 of

employee contributions each year and the remainder of employee contributions at

50

% to an overall maximum of

3.5

% of the employee’s eligible earnings or

$

2,250

, whichever comes first. The Bank’s contributions vest once an employee has completed two years of continuous service with the Bank. For the year ended

October 31, 2025, the Bank’s contributions totalled $

93

 million (2024 – $

91

 million) and were expensed as salaries and employee benefits. As at

October 31, 2025, an aggregate of

23

 million (October 31, 2024 –

24

 million) common shares were held under the Employee Ownership Plan. The shares in the

Employee Ownership Plan are purchased in the open market and are considered outstanding for computing the Bank’s basic and diluted earnings per share.

Dividends earned on the Bank’s common shares held by the Employee Ownership Plan are used to purchase additional common shares for the Employee

Ownership Plan in the open market.