TD Speed’s CEO Handoff, Cuts Pay for More Than 40 Executives

(Bloomberg) — Toronto-Dominion Bank moved up the start date of its new chief executive, Raymond Chun, by two months and slashed executive pay in the wake of its historic and costly money-laundering scandal.

The bank is also overhauling its board, which has faced criticism for its oversight of the lender’s U.S. compliance program after it failed to stop drug cartels and other criminals from laundering hundreds of millions of dollars through several of the Toronto-Dominions US branches for years.

Five longtime directors will leave the board and the chairman, Alan MacGibbon, will step down and retire as a director at the end of the year, Toronto-Dominion said in a statement Friday. The lender said 41 executives, including many who have already left the bank, saw their bonus pay cut last year, resulting in total reductions of C$30 million ($21 million) in anti-money laundering.

“TD has adjusted executive compensation to reflect the seriousness of the US AML failures, the associated costs to the bank and the constraints imposed on the US retail business,” according to the statement.

Longtime CEO Chun, who has run TD’s Canadian retail banking arm, its wealth management and insurance unit and its online brokerage business, will now take over from Bharat Masrani on February 1st instead of April 10th.

“Ray has moved quickly and decisively to launch a review of our strategy, operations and investments and has engaged with customers, clients and colleagues across the bank,” MacGibbon said in the statement. “We are delighted to have Ray take the helm.”

Toronto-Dominion shares rose 2.9% to C$81.94 at 11:36 in Toronto.

The news is “probably one of the first tangible steps in a long road toward a turnaround,” John Aiken, director of Canadian research at Jefferies Financial Group Inc., said in an interview. It’s an attempt to “turn the page” for the bank, he said, leaving Masrani and the money laundering mess in the background. “This allows Ray to step forward, front and center, and make this his bank.”

The investment community is hoping for an update on Toronto-Dominion’s strategy as soon as possible and ideally earlier than the investor day scheduled for the second half of the year, Aiken said.

Chun, who has been CEO since September, was in control during Toronto-Dominion’s most recent analyst call in December and also spoke at the Royal Bank of Canada’s annual bank executive conference earlier this month. In retrospect, Aiken said, this signaled that a change in the succession timeline was likely.

“He won some very strong points in terms of his messaging, his presentation,” Aiken said.

Masrani’s salary

Masrani, who has been CEO of TD since 2014, received no variable compensation beyond his base salary last year, reducing his total pay to C$1.5 million, down from C$13.3 million a year earlier, according to the statement. The cuts in Masrani’s pay account for more than a third of the total reductions in executive compensation.

That’s a striking difference from what Toronto-Dominion’s board said in last year’s annual proxy circular published in March, when the bank announced that Masrani himself volunteered to take a C$1 million pay cut in recognition of the U.S. regulatory problems.

At the time, the board said Masrani had “demonstrated outstanding personal leadership and performance throughout a challenging year.” Investors were already raising questions about whether the board would replace Masrani, but it would be several months before his successor was named.

Chun has led a review of strategy at the company, which suspended its medium-term financial targets in December. Just two months earlier, Canada’s no. 2 pleads guilty to a series of charges brought by US authorities for their failed money laundering.

Expensive probes

The bank agreed to pay nearly $3.1 billion in fines as part of the settlement with law enforcement and regulators, but the scandal has cost TD far more than that.

It paid a $200 million breakup fee in 2023 when it was forced to cancel its $13.4 billion purchase of Memphis, Tenn.-based First Horizon Corp. after it became clear that regulators would not approve the transaction mid in the investigations of money laundering.

Toronto-Dominion also spent $350 million on improving its compliance programs last year and said it expects to spend another $500 million on those efforts this year.

And the lender, which launched an ambitious expansion in the US about 20 years ago and became one of the 10 largest banks in the country, is now barred from expanding its US retail business beyond its current size.

To stay below the regulatory limit on its assets, Toronto-Dominion is exiting some U.S. lending businesses and repositioning that division’s securities portfolio, changes the bank has said will reduce its earnings and lead to one-time costs of as much as $1.5 billion after taxes.

Board changes

Amy Brinkley, Colleen Goggins, Karen Maidment, Claude Mongeau and Brian Ferguson will leave the board after the 2025 annual general meeting scheduled for April 10.

Four new directors – two Canadians and two Americans, most with strong backgrounds in compliance and risk – will stand for election at the meeting: Elio Luongo, former managing director of KPMG Canada; Nathalie Palladitcheff, former managing director of Ivanhoé Cambridge, CDPQ’s real estate portfolio; Frank Pearn, former global chief compliance officer at JPMorgan Chase & Co.; and Paul Wirth, former deputy chief financial officer for Morgan Stanley.

Toronto-Dominion will also change the leadership of four board committees and has set new limits on director term extensions, cutting them to two years from five after an initial 10-year term.

MacGibbon, who has been a director for more than a decade, took over as chairman just last year, succeeding Brian Levitt, who had been a board member since 2008.

TD was required to conduct a review of its corporate-governance program under its money-laundering settlement with the Federal Reserve.

“It wasn’t just the management that had to change,” Aiken said, “it was the top of the house as well.”

(Updates with stock price, analyst commentary and additional details beginning in the second section.)

©2025 Bloomberg LP