TD investors meet at AGM overshadowed by probe, worry over CEO succession

financialpost.com:

Toronto-Dominion Bank is confronting shareholders at a moment when investors and executives alike are clamouring for clarity on potential penalties in a U.S. probe and the future of the firm’s leadership.

The bank’s annual shareholders meeting on Thursday comes as the firm contends with an investigation into its anti-money-laundering controls that has derailed the lender’s growth strategy, hurt its stock and hastened questions about who might eventually rise to succeed chief executive Bharat Masrani, 67, once he ultimately retires.

Senior executives have grown unhappy with the lack of an heir apparent, according to people with knowledge of the situation. The uncertainty has exacerbated managers’ frustrations over the business setbacks and their ability to plot their futures, the people said, asking not to be named discussing private conversations.

Much of the tension stems from the bank’s attempt to buy Memphis-based First Horizon Corp., which was called off almost a year ago amid a U.S. regulatory probe into how the Toronto-based lender handled suspicious customer transactions. The move left Toronto-Dominion with ample capital to deploy and limited options, with its U.S. growth strategy in limbo. The stock has tumbled in recent months, falling almost nine per cent this year, compared with a 2.5 per cent decline for the S&P/TSX Commercial Banks Index.

Masrani, who’s been chief executive for almost a decade, voluntarily took a $1 million pay cut for the last fiscal year over the scuttled acquisition of First Horizon and regulatory probe. Now, with no clear successor lined up, a new board chair is under pressure to come up with a way forward to satisfy investors and employees.

“The uncertainty is the biggest source of