TD reduces pay for top executives amidst anti-money laundering failure

Toronto Dominion Bank reduced its top executives’ pay last year, but also approved a conditional award of US$2 million to its U.S. banking head as the lender looks to fix its anti-money laundering (AML) program after being sanctioned last year.

“Executive compensation was adjusted to reflect the seriousness of the AML failures, the associated costs to the bank and the limitations imposed on the U.S. retail business,” the bank said.

But Leo Salom, TD Bank Group head of U.S. retail, will receive a one-time restricted share unit award in 2025 because of the “critical role” he will “continue to play in the remediation” of the bank’s AML program, TD said in a proxy statement on Tuesday.

The award is still “subject to meeting AML remediation conditions and milestones,” the bank said.

In January, TD said the variable compensation of 41 of its former and current executives in 2023 and 2024 was reduced by $30 million as the bank failed to prevent money laundering at its U.S. branches. The lender was sanctioned by authorities in the U.S. last year.

The bank’s former chief executive, Bharat Masrani, didn’t receive a cash or equity incentive for fiscal 2024, which reduced his total compensation by 89 per cent from 2023. For the remaining members of its senior executive team, TD reduced their variable compensation by at least 25 per cent in 2024.

Aside from the US$2-million bonus, Salom’s total compensation in 2024 was about $5.1 million, which was lower than the $6.4 million he received in 2023.

Similarly, chief financial officer Kelvin Tran’s total compensation was reduced to about $3.1 million in 2024 from US$4.3 million in 2023.

After two successive misses, TD met analysts’ first-quarter expectations last week as it reported