ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Nasdaq Global Select Market |
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging growth company |
Page No. |
||||||
Item 10. |
4 |
|||||
Item 11. |
16 |
|||||
Item 12. |
53 |
|||||
Item 13. |
58 |
|||||
Item 14. |
64 |
|||||
Item 15. |
66 |
|||||
66 |
||||||
72 |
Item 10. |
Directors, Executive Officers and Corporate Governance |
Name |
Age |
Position |
Director Since |
Class and Year In Which Term Expires |
||||||||||||
Stephen J. Boyle |
58 |
Interim President and Chief Executive Officer, and Director |
2019 |
Class I 2021 |
||||||||||||
Jon C. Peterson |
46 |
Interim Chief Financial Officer |
||||||||||||||
Peter J. deSilva |
58 |
Executive Vice President, Retail Distribution |
||||||||||||||
Thomas A. Nally |
48 |
Executive Vice President, Institutional Services |
||||||||||||||
Steven M. Quirk |
55 |
Executive Vice President, Trading and Education |
||||||||||||||
Lorenzo A. Bettino |
59 |
Director |
2014 |
Class III 2020 |
||||||||||||
V. Ann Hailey |
68 |
Director |
2016 |
Class III 2020 |
||||||||||||
Joseph H. Moglia |
70 |
Director |
2006 |
Class III 2020 |
||||||||||||
Wilbur J. Prezzano |
79 |
Director |
2006 |
Class III 2020 |
||||||||||||
Brian M. Levitt |
72 |
Director |
2016 |
Class I 2021 |
||||||||||||
Karen E. Maidment |
61 |
Director |
2010 |
Class I 2021 |
||||||||||||
Mark L. Mitchell |
59 |
Director |
1996 (1) |
Class I 2021 |
||||||||||||
Bharat B. Masrani |
63 |
Director |
2013 |
Class II 2022 |
||||||||||||
Irene R. Miller |
67 |
Director |
2015 |
Class II 2022 |
||||||||||||
Todd M. Ricketts |
50 |
Director |
2011 (2) |
Class II 2022 |
||||||||||||
Allan R. Tessler |
83 |
Director |
2006 |
Class II 2022 |
(1) |
Mr. Mitchell previously served on the Company’s board of directors from December 1996 to January 2006 and was reelected in November 2006. |
(2) |
Mr. Ricketts previously served on the Company’s board of directors from October 2011 to February 2014 and was reelected effective January 2015. |
Lorenzo A Bettino Age: 59 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. | ||
V. Ann Hailey Age: 68 Director Since: 2016 |
Experience Ms. Hailey 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 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. 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. |
Joseph H. Moglia Age: 70 Director Since: 2006 |
Experience Mr. Moglia was elected chairman of the Company’s board of directors effective October 1, 2008. Mr. Moglia served as head football coach of Coastal Carolina University from December 2011 to January 2019, and from March 2014 to January 2019 he was chair of the athletics division, providing strategic oversight for the university’s athletic program. Since January 2019, he has served as chair of athletics and executive advisor to the president at Coastal Carolina University. 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. | |
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. | ||
Wilbur J. Prezzano Age: 79 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 a chairman of Roper Technologies, 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. |
Stephen J. Boyle Age: 58 Director Since: 2019 |
Experience In connection with the Company’s entry into the merger agreement with the Charles Schwab Corporation (“Schwab”), Mr. Boyle became interim president and chief executive officer (“CEO”) of the Company. He joined the Company in July 2015 as executive vice president of finance and became chief financial officer in October 2015. Prior to joining the Company, Mr. Boyle served as controller of Banknorth Group, Inc. starting 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. and served in a variety of accounting roles for Fleet Financial Group, Inc. and Arthur Anderson LLP. 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. | |
Qualifications Mr. Boyle is the CEO of the Company. He has significant financial services and management experience, having worked in the financial services industry for over 30 years. | ||
Brian M. Levitt Age: 72 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 Talisman 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. |
Karen E. Maidment Age: 61 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. | ||
Bharat B. Masrani Age: 63 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. |
Irene R. Miller Age: 67 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. | ||
Mark L. Mitchell Age: 59 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 during 2017-2019. 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. |
Todd M. Ricketts Age: 50 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. | |
Allan R. Tessler Age: 83 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. and previously served as a director of BioCardia, 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. |
Director |
Audit |
H.R and Compensation |
Corporate Governance |
Outside Independent Directors |
Non-TD Directors |
Risk |
||||||||||||||||||
Lorenzo A. Bettino |
✓ |
✓ |
Chair |
✓ |
✓ |
|||||||||||||||||||
Stephen J. Boyle |
✓ |
|||||||||||||||||||||||
V. Ann Hailey |
✓ |
✓ |
✓ |
✓ |
||||||||||||||||||||
Brian M. Levitt |
✓ |
|||||||||||||||||||||||
Karen E. Maidment |
Chair |
✓ |
||||||||||||||||||||||
Bharat B. Masrani |
✓ |
|||||||||||||||||||||||
Irene R. Miller |
✓ |
✓ |
||||||||||||||||||||||
Mark L. Mitchell |
✓ |
✓ |
✓ |
✓ |
Chair |
|||||||||||||||||||
Joseph H. Moglia |
✓ |
|||||||||||||||||||||||
Wilbur J. Prezzano |
Chair |
✓ |
||||||||||||||||||||||
Todd M. Ricketts |
✓ |
✓ |
✓ |
✓ |
✓ |
|||||||||||||||||||
Allan R. Tessler |
✓ |
Chair |
✓ |
✓ |
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 antidiscrimination 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. |
Item 11. |
Executive Compensation |
• | 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 |
Chief Executive Officer |
NEO Average (Excluding CEO) (2) | |
|
|
(1) | Target cash incentive and target equity incentive are amounts established by the Compensation Committee based on performance under the Management Incentive Plan (“MIP”) during fiscal year 2019. Any equity awards under the fiscal year 2019 MIP were granted following the completion of the fiscal year 2019 performance period, in early fiscal year 2020. 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 NEOs, other than the CEO, is based on the average among the NEOs (other than Mr. Hockey). |
• | Record net new client assets of approximately $93 billion, a year-over-year growth rate of 7 percent |
• | Record average client trades per day of approximately 862,000, up 6 percent year over year |
• | Record net revenues of $6 billion, up 10 percent year over year |
• | Ending client assets of approximately $1.3 trillion, up 2 percent year over year |
• | $3.96 in GAAP earnings per diluted share, up 53 percent year over year, on net income of $2.21 billion |
• | $4.13 in non-GAAP earnings per diluted share, up 24 percent year over year. For a discussion of this measure and a reconciliation to the related GAAP measure, refer to Appendix A |
☑ Review executive compensation in comparison to peer group |
☑ Employ double-trigger vesting acceleration change-in-control provisions | |
☑ Measure, manage and reward based on performance goals that drive our short- and long-term business strategy |
☑ Prohibit repricing stock options without stockholder approval | |
☑ Maintain a pay mix that is heavily performance-based |
☑ 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 material perquisites | |
☑ Hold an annual shareholder say-on-pay advisory vote |
☑ No supplemental executive retirement plans (SERPs) | |
☑ Engage an independent compensation consultant that reports directly to our Compensation Committee |
| |
☑ Permit use of negative discretion to decrease incentive compensation |
Name |
Description |
SEC Filing | ||
Tim Hockey |
Employment Agreement Transition Agreement |
Quarterly Report on Form 10-Q filed on February 4, 2018, Exhibit 10.1Annual Report on Form 10-K filed on November 15, 2019, Exhibit 10.4 | ||
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 MIP |
Form 8-K filed on February 24, 2016, Exhibit 10.1Form 8-K filed on May 20, 2019, Exhibit 10.2 |
Ameriprise Financial, Inc. |
Fifth Third Bancorp |
NASDAQ, Inc. | ||
Broadridge Financial Solutions, Inc. |
Franklin Resources, Inc. |
Northern Trust Company | ||
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. |
|
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 Company |
|
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 |
2,250,000 |
5,250,000 |
7,500,000 |
8,500,000 |
88 |
% | |||||||||||||||||
Stephen J. Boyle (2) |
500,000 |
1,000,000 |
1,000,000 |
2,000,000 |
2,500,000 |
80 |
% | |||||||||||||||||
Peter J. deSilva (3) |
650,000 |
1,075,000 |
1,075,000 |
2,150,000 |
2,800,000 |
77 |
% | |||||||||||||||||
Thomas A. Nally (4) |
650,000 |
1,075,000 |
1,075,000 |
2,150,000 |
2,800,000 |
77 |
% | |||||||||||||||||
Steven M. Quirk (5) |
500,000 |
1,050,000 |
1,050,000 |
2,100,000 |
2,600,000 |
81 |
% |
(1) | Mr. Hockey’s target total incentive compensation for fiscal year 2019 was increased from $6.5 million to $7.5 million, which continued to consist of 30% cash and 70% equity. |
(2) | Mr. Boyle’s base salary was increased from $450,000 to $500,000, and his target total incentive compensation was increased from $1.75 million to $2 million, which continued to consist of 50% cash and 50% equity. |
(3) | Mr. deSilva’s target total incentive compensation was increased from $2 million to $2.15 million, which continued to consist of 50% cash and 50% equity. |
(4) | Mr. Nally’s base salary was increased from $500,000 to $650,000. |
(5) | Mr. Quirk’s base salary was increased from $450,000 to $500,000, and his target total incentive compensation was increased from $1.55 million to $2.1 million, which continued to consist of 50% cash and 50% equity. |
• | The individual performance component was shifted from a modifier to a discrete metric, weighted 20% for the CEO and 30% for all other NEOs; the remaining portion of the MIP is based on achievement of corporate metrics and objectives, which was based 40% on non-GAAP EPS, 25% on client experience, 20% on revenue and market share metrics, and 15% on other strategic themes. |
• | The weighting of non-GAAP EPS as a key metric of short-term earning was reduced overall, though it remains the largest component of corporate objectives. |
• | Client experience and absolute revenue were added to the corporate objectives as discrete metrics. |
• | Net new assets (or NNA), which is included as a metric under revenue and market share, is now measured on the basis of market share, rather than on absolute results, as had been the case in prior years. |
• | Qualitative strategic themes were also shifted from a modifier to a discrete metric to reinforce the importance of strategic themes to long-term strategy. Strategic themes for fiscal year 2019 include goals around organizational agility and efficiency, associate experience, and increased competitiveness through innovation. |
Fiscal Year 2019 Management Incentive Plan; Corporate Performance Percentage |
Performance Goals |
Weighting |
Threshold Performance 50% (3) |
Target Performance 100% |
Maximum Performance 150% |
Actual Result |
Performance |
Funding |
|||||||||||||||
Non-GAAP EPS(1) |
40.0 |
% | $3.44 |
$3.94 |
$4.44 |
$ | 4.08 |
114.0 |
% | 45.6 |
% | |||||||||||
Revenue and Market Share |
20.0 |
% | — |
— |
— |
— |
106.8 |
% | 21.4 |
% | ||||||||||||
• Absolute Revenue ($b) (1) |
10.0 |
% | $5.507 |
$5.879 |
$6.251 |
$ | 5.928 |
106.0 |
% | 10.6 |
% | |||||||||||
• DART Share |
5.0 |
% | 53.51% - 53.75% |
54.76% - 55.00% |
56.01% - 56.25% |
54.99 |
% | 100.0 |
% | 5.0 |
% | |||||||||||
• NNA Share - Retail |
2.5 |
% | 9.0% - 10.0% |
14.0% - 15.0% |
19.0% - 20.0% |
14.48 |
% | 100.0 |
% | 2.5 |
% | |||||||||||
• NNA Share - Institutional |
2.5 |
% | 33.5% - 34.5% |
38.5% - 39.5% |
43.5% - 44.5% |
42.48 |
% | 130.0 |
% | 3.3 |
% | |||||||||||
Client Experience |
25.0 |
% | — |
— |
— |
— |
99.6 |
% | 24.9 |
% | ||||||||||||
• Net Advocate Score |
12.5 |
% | 42.6% |
55.1% |
67.6% |
54.9 |
% | 99.2 |
% | 12.4 |
% | |||||||||||
• Qualitative Assessment |
12.5 |
% | — |
— |
— |
— |
100.0 |
% | 12.5 |
% | ||||||||||||
Other Strategic Themes |
15.0 |
% | — |
— |
— |
— |
101.7 |
% | 15.3 |
% | ||||||||||||
• Efficiency |
5.0 |
% | — |
— |
— |
— |
105.0 |
% | 5.3 |
% | ||||||||||||
• Associate Experience |
5.0 |
% | — |
— |
— |
— |
100.0 |
% | 5.0 |
% | ||||||||||||
• Innovation |
5.0 |
% | — |
— |
— |
— |
100.0 |
% | 5.0 |
% | ||||||||||||
Subtotal |
100.0 |
% |
— |
— |
— |
— |
107.1 |
% | ||||||||||||||
+/- 20% Committee Discretion |
0.0 |
% | ||||||||||||||||||||
Total (2) |
107.1 |
% | ||||||||||||||||||||
(1) | The Company’s non-GAAP diluted EPS, an important measure of our financial performance, weighted at 40% of the corporate performance metrics under the MIP, was adjusted downward by the Compensation Committee to $4.08 (from $4.13) to account for items that were not reflective of operational performance such as unplanned accounting policy adjustments and interest rates changes. Similarly, revenue was adjusted from $6.016b to $5.928b. The Compensation Committee determined it was appropriate to make a downward adjustment to better reflect the results delivered to stockholders and preserve the intent of the pre-established performance goals, which were set before the occurrence of these unplanned events. |
(2) | Total funding capped at 150%. In addition, the Compensation Committee reserves the right to reduce total to 0%. |
(3) | Below threshold performance results in 0% payout. |
Corporate Performance Weighting (A) |
Corporate Achievement as a Percent of Target (B) |
Individual Component Weighting (C) |
Individual Achievement as a Percent of Target (D) |
Total Payout as a Percent of Target (A x B) + (C x D) |
||||||||||||||||
Tim Hockey |
80 |
% | 107.1 |
% | 20 |
% | 100.0 |
% | 105.7 |
% | ||||||||||
Stephen J. Boyle |
70 |
% | 107.1 |
% | 30 |
% | 120.0 |
% | 111.0 |
% | ||||||||||
Peter J. deSilva |
70 |
% | 107.1 |
% | 30 |
% | 120.0 |
% | 111.0 |
% | ||||||||||
Thomas A. Nally |
70 |
% | 107.1 |
% | 30 |
% | 120.0 |
% | 111.0 |
% | ||||||||||
Steven M. Quirk |
70 |
% | 107.1 |
% | 30 |
% | 120.0 |
% | 111.0 |
% |
Base Salary ($) |
Cash Incentive ($) |
Equity Incentive (2) ($) |
Total Incentive |
Total Annual Compensation ($) |
Special Stock Awards (2) ($) |
|||||||||||||||||||||||
Name |
($) |
% of Target |
||||||||||||||||||||||||||
Tim Hockey |
1,000,000 |
2,377,800 |
5,548,200 |
7,926,000 |
105.7 |
% | 8,926,000 |
— |
||||||||||||||||||||
Stephen J. Boyle |
500,000 |
1,109,700 |
(1) |
1,109,700 |
2,219,400 |
111.0 |
% | 2,719,400 |
— |
|||||||||||||||||||
Peter J. deSilva |
650,000 |
1,192,928 |
1,192,928 |
2,385,855 |
111.0 |
% | 3,035,855 |
— |
||||||||||||||||||||
Thomas A. Nally |
650,000 |
1,192,928 |
1,192,928 |
2,385,855 |
111.0 |
% | 3,035,855 |
$ | 250,000 |
|||||||||||||||||||
Steven M. Quirk |
500,000 |
1,165,185 |
1,165,185 |
2,330,370 |
111.0 |
% | 2,830,370 |
$ | 250,000 |
(1) | Mr. Boyle deferred 100% of this amount pursuant to the Company’s Executive Deferred Compensation Program. |
(2) | These equity incentive awards were granted in fiscal year 2020. 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. |
Name |
Base Salary ($) |
Target Cash Incentive ($) |
Target Equity Incentive ($) |
Total Target Incentive $ |
Target Total Annual Compensation ($) |
|||||||||||||||
Stephen J. Boyle (1) |
550,000 |
1,075,000 |
1,075,000 |
2,150,000 |
2,700,000 |
|||||||||||||||
Peter J. deSilva (2) |
650,000 |
1,175,000 |
1,175,000 |
2,350,000 |
3,000,000 |
|||||||||||||||
Thomas A. Nally (3) |
650,000 |
1,175,000 |
1,175,000 |
2,350,000 |
3,000,000 |
|||||||||||||||
Steven M. Quirk (4) |
550,000 |
1,125,000 |
1,125,000 |
2,250,000 |
2,800,000 |
(1) | Mr. Boyle’s base salary was increased by $50,000, and his annual target incentive compensation was increased from $2 million for fiscal year 2019 to $2.15 million for fiscal year 2020, which continues to consist of 50% cash and 50% equity. |
(2) | Mr. deSilva’s annual target incentive compensation was increased from $2.15 million for fiscal year 2019 to $2.35 million for fiscal year 2020, which continues to consist of 50% cash and 50% equity. |
(3) | Mr. Nally’s annual target incentive compensation was increased from $2.15 million for fiscal year 2019 to $2.35 million for fiscal year 2020, which continues to consist of 50% cash and 50% equity. |
(4) | Mr. Quirk’s base salary was increased by $50,000, and his annual target compensation was increased from $2.1 million for fiscal year 2019 to $2.25 million for fiscal year 2020, which continues to consist of 50% cash and 50% equity. |
Compensation Committee Report This report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the liabilities of Section 18 of the 1934 Act and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company under the Securities Act of 1933 or the 1934 Act. The H.R. and Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” with TD Ameritrade’s management. Based on that review and those discussions, the H.R. and Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis section be included in TD Ameritrade’s Annual Report on Form 10-K for its 2019 fiscal year.Wilbur J. Prezzano, Chairman Lorenzo A. Bettino Brian M. Levitt Mark L. Mitchell Allan R. Tessler |
Name and Principal Position |
Year |
Salary ($) |
Stock Awards (2) ($) |
Non-Equity Incentive Plan Compensation (3) ($) |
All Other Compensation (5) ($) |
Total ($) |
||||||||||||||||||
Tim Hockey |
2019 |
1,000,000 |
6,344,379 |
2,377,800 |
50,551 |
9,772,730 |
||||||||||||||||||
Senior Advisor (formerly President and CEO) |
2018 2017 |
1,000,000 995,192 |
4,911,253 4,373,946 |
2,650,050 1,976,850 |
16,206 2,002 |
8,577,509 7,347,990 |
||||||||||||||||||
Stephen J. Boyle |
2019 |
499,519 |
1,220,096 |
1,109,700 |
151,090 |
2,980,405 |
||||||||||||||||||
Interim President and CEO (formerly Executive Vice President, CFO) |
2018 2017 |
450,433 449,038 |
945,644 803,380 |
1,189,125 888,150 |
145,462 150,781 |
2,730,664 2,291,350 |
||||||||||||||||||
Peter J. deSilva |
2019 |
650,000 |
1,497,002 |
1,917,865 |
(4) |
21,063 |
4,085,930 |
|||||||||||||||||
Executive Vice President, Retail Distribution |
2018 |
650,000 |
40,912 |
6,171,361 |
30,842 |
6,893,121 |
||||||||||||||||||
Thomas A. Nally |
2019 |
647,115 |
1,609,256 |
1,192,928 |
21,173 |
3,470,471 |
||||||||||||||||||
Executive Vice President, Institutional Services |
2018 2017 |
500,000 500,000 |
1,539,596 1,011,632 |
1,460,925 1,146,000 |
20,784 21,248 |
3,521,305 2,678,880 |
||||||||||||||||||
Steven M. Quirk |
2019 |
518,269 |
(1) |
1,080,670 |
1,165,185 |
21,091 |
2,785,215 |
|||||||||||||||||
Executive Vice President, Trading and Education |
2018 2017 |
450,000 450,000 |
945,644 922,381 |
1,053,225 888,150 |
20,755 20,295 |
2,469,624 2,280,826 |
(1) | The amount includes an additional payout of accrued paid time off of $19,231. |
(2) | The amounts in the column represent the aggregate grant date fair value calculated in accordance with ASC Topic 718 for equity awards granted during the fiscal year. These amounts do not necessarily correspond to the actual value recognized by our NEOs. For a discussion of the underlying assumptions used and for further discussion of the Company’s accounting for its equity compensation plans, see the following sections of the Company’s Form 10-K for the fiscal year ended September 30, 2019: |
* | Part II - Item 8 - Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements |
- | Note 1. Nature of Operations and Summary of Significant Accounting Policies—Stock-based Compensation |
- | Note 14. Stock-based Compensation |
Name |
Grant Date |
Value of PRSUs at Grant Date Assuming Highest Level of Performance ($) |
||||||
Tim Hockey |
12/5/2018 |
7,613,255 |
||||||
Stephen J. Boyle |
12/5/2018 |
1,464,104 |
||||||
Peter J. deSilva |
12/5/2018 |
1,796,381 |
||||||
Thomas A. Nally |
12/5/2018 |
1,931,107 |
||||||
Steven M. Quirk |
12/5/2018 |
1,296,804 |
(3) | The amounts in the Non-Equity Incentive Plan Compensation column for fiscal year 2019 include the cash component of the annual incentive awards earned under the MIP. |
(4) | The amount includes (a) the cash component of the annual incentive award earned under the MIP of $1,192,928, 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 2019, 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, and (ii) $423,548 that was paid during fiscal year 2019, representing one-third of the amount that Mr. deSilva became eligible to receive based on performance achieved with respect to Scottrade’s fiscal year 2017 and prior to the closing of the Company’s acquisition of Scottrade, in each case of both (i) and (ii), subject to Mr. deSilva’s continued employment with the Company (as the successor to Scottrade) through the applicable vesting dates in fiscal year 2019. |
(5) | The amounts in this column are summarized in the following table: |
Name |
Year |
Income and Employment Taxes Reimbursed (a) ($) |
Employer Cash Contributions to Company’s Qualified 401(k) Profit Sharing Plan ($) |
Other (b) ($) |
Total ($) |
|||||||||||||||
Tim Hockey |
2019 |
10,512 |
29,298 |
10,741 |
50,551 |
|||||||||||||||
2018 |
9,092 |
— |
7,114 |
16,206 |
||||||||||||||||
2017 |
813 |
— |
1,189 |
2,002 |
||||||||||||||||
Stephen J. Boyle |
2019 |
65,653 |
21,447 |
63,990 |
151,090 |
|||||||||||||||
2018 |
64,412 |
20,490 |
60,560 |
145,462 |
||||||||||||||||
2017 |
66,919 |
25,228 |
58,635 |
150,781 |
||||||||||||||||
Peter J. deSilva |
2019 |
5 |
21,048 |
10 |
21,063 |
|||||||||||||||
2018 |
— |
30,842 |
— |
30,842 |
||||||||||||||||
Thomas A. Nally |
2019 |
36 |
21,048 |
89 |
21,173 |
|||||||||||||||
2018 |
— |
20,784 |
— |
20,784 |
||||||||||||||||
2017 |
261 |
20,295 |
693 |
21,248 |
||||||||||||||||
Steven M. Quirk |
2019 |
4 |
21,077 |
10 |
21,091 |
|||||||||||||||
2018 |
— |
20,755 |
— |
20,755 |
||||||||||||||||
2017 |
— |
20,295 |
— |
20,295 |
(a) | The amount of taxes reimbursed by the Company for fiscal year 2019 relate to: Company-paid tax preparation services ($9,900), home security ($601) and an award in the form of points redeemable for a non-cash consumer good (a “non-cash award”) ($11) for Mr. Hockey; housing reimbursement ($65,650) and a non-cash award ($3) for Mr. Boyle; a non-cash award ($5) for Mr. deSilva; home security ($31) and a non-cash award ($5) for Mr. Nally; and a non-cash award ($4) for Mr. Quirk. |
(b) | The fiscal year 2019 amounts consisted of a non-cash award for each NEO, as well as tax preparation services and home security for Mr. Hockey, housing reimbursement ($63,980) for Mr. Boyle, and home security for Mr. Nally. |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
|||||||||||||||||||||||||||||||||||
Name |
Grant Date |
Approval Date of Stock Awards |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
Grant Date Fair Value of Stock Awards ($) |
|||||||||||||||||||||||||||
Tim Hockey |
12/5/2018 |
11/16/2018 |
— |
2,250,000 |
4,500,000 |
93,956 |
117,445 |
140,934 |
6,344,379 |
|||||||||||||||||||||||||||
Stephen J. Boyle |
12/5/2018 |
11/15/2018 |
— |
1,000,000 |
2,000,000 |
18,068 |
22,586 |
27,103 |
1,220,096 |
|||||||||||||||||||||||||||
Peter J. deSilva |
12/5/2018 |
11/15/2018 |
— |
1,075,000 |
2,150,000 |
22,169 |
27,712 |
33,254 |
1,497,002 |
|||||||||||||||||||||||||||
Thomas A. Nally |
12/5/2018 |
11/15/2018 |
— |
1,075,000 |
2,150,000 |
23,832 |
29,790 |
35,748 |
1,609,256 |
|||||||||||||||||||||||||||
Steven M. Quirk |
12/5/2018 |
11/15/2018 |
— |
1,050,000 |
2,100,000 |
16,004 |
20,005 |
24,006 |
1,080,670 |
(1) | Represents the cash incentive component of the fiscal year 2019 annual incentives payable to the NEO pursuant to the MIP. |
(2) | Represents the equity component of the fiscal year 2018 annual incentives payable pursuant to the MIP in the form of PRSUs. PRSUs (including any related DEUs), which were granted under the LTIP, are scheduled to vest in full on the three-year anniversary of the grant date based upon achievement of specified performance criteria, subject to the NEO’s service with the Company through such date. The performance criteria relate to the Company’s cumulative three-year TSR relative to certain components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant. The actual number of PRSUs that may become eligible to vest as a result of performance will range from a minimum of 80% to a maximum of 120% of the PRSUs (including any related DEUs). |
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||||||||||
Name |
Number of Shares Underlying Unexercised Options Exercisable (#) |
Number of Shares Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
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 ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (2) |
Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested Units of Stock ($) |
Vesting Date (2) |
|||||||||||||||||||||||||||
Tim Hockey |
377,435 |
(1) |
125,812 |
(1)(2) |
27.97 |
1/21/2026 |
||||||||||||||||||||||||||||||
170,639 |
7,968,841 |
1/21/2021 |
(3) | |||||||||||||||||||||||||||||||||
119,560 |
5,583,452 |
12/5/2021 |
(4) | |||||||||||||||||||||||||||||||||
96,911 |
4,525,744 |
11/29/2020 |
(4) | |||||||||||||||||||||||||||||||||
109,617 |
5,119,114 |
11/22/2019 |
(4) | |||||||||||||||||||||||||||||||||
Stephen J. Boyle |
22,991 |
1,073,680 |
12/05/2021 |
(4) | ||||||||||||||||||||||||||||||||
18,657 |
871,282 |
11/29/2020 |
(4) | |||||||||||||||||||||||||||||||||
20,128 |
939,978 |
11/22/2019 |
(4) | |||||||||||||||||||||||||||||||||
Peter J. deSilva |
28,210 |
1,317,407 |
12/05/2021 |
(4) | ||||||||||||||||||||||||||||||||
803 |
37,500 |
11/29/2020 |
(4) | |||||||||||||||||||||||||||||||||
11,883 |
554,936 |
9/20/2020 |
(5) | |||||||||||||||||||||||||||||||||
11,883 |
554,936 |
9/20/2022 |
(6) | |||||||||||||||||||||||||||||||||
Thomas A. Nally |
30,325 |
1,416,178 |
12/5/2021 |
(4) | ||||||||||||||||||||||||||||||||
30,378 |
1,418,653 |
11/29/2020 |
(4) | |||||||||||||||||||||||||||||||||
25,348 |
1,183,752 |
11/22/2019 |
(4) | |||||||||||||||||||||||||||||||||
Steven M. Quirk |
20,364 |
950,999 |
12/5/2021 |
(4) | ||||||||||||||||||||||||||||||||
18,657 |
871,282 |
11/29/2020 |
(4) | |||||||||||||||||||||||||||||||||
23,110 |
1,079,237 |
11/22/2019 |
(4) |
(1) | These nonqualified stock options vested 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 were 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, but will accelerate vesting in full upon his separation following completion of his transition services per the terms of his transition agreement. |
(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 (or vested, as applicable) in full on the three-year anniversary of the grant date based upon achievement of specified performance criteria (over a three fiscal year performance period), subject to the NEO’s employment or other service with the Company through such vesting 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. 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 NEO’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 NEO’s continued employment with the Company through such date. |
Stock Awards |
||||||||
Name |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||
Tim Hockey |
— |
— |
||||||
Stephen J. Boyle |
19,839 |
1,025,875 |
||||||
Peter J. deSilva |
— |
— |
||||||
Thomas A. Nally |
30,067 |
1,554,765 |
||||||
Steven M. Quirk |
27,127 |
1,402,737 |
Name |
Executive Contributions in Fiscal Year 2019 ($) |
Company Contributions in Fiscal Year 2019 ($) |
Aggregate Earnings in Fiscal Year 2019 ($) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Fiscal Year End 2019 ($) |
|||||||||||||||
Tim Hockey |
— |
— |
— |
— |
— |
|||||||||||||||
Stephen J. Boyle |
— |
— |
-145,148 |
(1)(2) |
— |
1,384,281 |
(4) | |||||||||||||
-404,357 |
(2)(3) |
3,949,559 |
(5) | |||||||||||||||||
Peter J. deSilva |
— |
— |
— |
— |
— |
|||||||||||||||
Thomas A. Nally |
— |
— |
— |
— |
— |
|||||||||||||||
Steven M. Quirk |
— |
— |
— |
— |
— |
(1) | Represents $32,334 in dividends earned during fiscal year 2019 on the deferred stock units and the value of any increase or decrease in the stock price of the shares. Mr. Boyle previously deferred certain portions of the cash component of his annual incentive award payable to him under the MIP for fiscal years 2017 and 2016, which were converted into 18,076 deferred stock units and 10,334 deferred stock units, respectively, during fiscal years 2018 and 2017, respectively. The deferred stock units are scheduled to be paid to Mr. Boyle in ten annual installments upon the termination of his employment but would be distributed in full within thirty days of a change in control event as per the terms of the Executive Deferred Compensation Program. |
(2) | The amounts earned for Mr. Boyle’s deferred stock units were not subject to any above-market or preferential earnings during fiscal year 2019 or any prior year reported in the Summary Compensation Table. |
(3) | Represents $92,014 in dividends earned during fiscal year 2019 on the deferred stock units and the value of any increase or decrease in the stock price of the shares. 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. |
(4) | The aggregate balance at fiscal year end 2019 represents the value of 29,642 deferred stock units of Company common stock based on $46.70 per share, the closing market price of the Company’s common stock on September 30, 2019 (the last business day of fiscal year 2019). 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 2019. 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 of change in control or should Mr. Boyle become disabled while employed with the Company, and also permits distributions in connection with an unforeseeable emergency. |
(5) | The aggregate balance at fiscal year end 2019 represents the value of 84,573 shares of Company common stock deferred under the RSU described in footnote (3) above (including DEUs earned on the deferred stock units, which also remain deferred), based on $46.70 per share, the closing market price of the Company’s common stock on September 30, 2019 (the last business day of fiscal year 2019). 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. |
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 21, 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 21, 2016, vests in full, and other RSUs held by an NEO 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 measured and 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 NEOs. 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. | |
Resignation by the executive for good reason |
Mr. Hockey’s RSUs granted January 21, 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. Hockey’s PRSUs will remain outstanding and eligible to vest based on actual performance. Mr. deSilva’s PRSUs for which performance already has been measured and 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 NEOs, 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. In connection with the pending acquisition by Schwab, the Company amended the terms of the PRSU agreements to provide for full acceleration of vesting in the event of a termination without cause following a change in control. | |
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. |
• | 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. |
• | 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. |
Provision |
Summary of Mr. Hockey’s Employment Agreement Terms |
Summary of Modifications to Mr. Hockey’s Employment Terms Pursuant to his Transition Agreement | ||
Position |
President, effective January 2, 2016 CEO, effective October 1, 2016 |
If Mr. Hockey’s successor commences employment as President and CEO before February 29, 2020 (referred to as the transition date), Mr. Hockey will transition to the role of senior advisor to the Company On November 25, 2019, the Company announced Mr. Boyle’s appointment as the interim President and CEO and Mr. Hockey’s transition to his role as senior advisor | ||
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 |
Effective as of July 22, 2019, Mr. Hockey’s transition agreement provides that his employment would end no later than the transition date With the appointment of Mr. Boyle as interim president and CEO, Mr. Hockey stepped down from his role as president and CEO, and transitioned to a senior advisor role as described above |
Provision |
Summary of Mr. Hockey’s Employment Agreement Terms |
Summary of Modifications to Mr. Hockey’s Employment Terms Pursuant to his Transition Agreement | ||
• 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 |
$1,000,000 per year during his employment through the transition date | ||
Annual Cash Incentive |
Participation in MIP with initial annual cash incentive target of $1,575,000 for fiscal year 2016. Annual cash incentive target of $2,250,000 for fiscal year 2019 |
Annual cash incentive for fiscal year 2019 payable in the normal course in November 2019, with the amounts determined based on actual performance against the pre-established goals (with the individual component of the goals deemed achieved at 100% of target levels) | ||
Additional Payments |
A lump sum transition payment of $3,540,000 as compensation for fiscal year 2020 | |||
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 |
Mr. Hockey would be entitled to receive a PRSU award with the target number of shares of Company common stock subject to the award determined based on actual performance of the applicable goals under the fiscal year 2019 MIP, but with the individual component of the goals deemed achieved at 100% of target levels On December 5, 2019, Mr. Hockey was granted an RSU award covering 121,512 shares in lieu of the PRSU award | ||
Air Travel |
Mr. Hockey is entitled to fly on private aircraft when traveling on Company-related business at the expense of the Company |
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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 or 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 |
The Company will reimburse Mr. Hockey for tax preparation services for his 2019 and 2020 tax years |
Provision |
Summary of Mr. Hockey’s Employment Agreement Terms |
Summary of Modifications to Mr. Hockey’s Employment Terms Pursuant to his Transition Agreement | ||
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 |
||||
Legal Fees |
The Company will reimburse Mr. Hockey for legal fees incurred by him relating to his separation and transition matters, up to a maximum of $75,000 | |||
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 |
In connection with a termination of his employment due to the transition, the release of claims that Mr. Hockey would be required to enter into as a condition of receiving severance payments will be a mutual release of claims with the Company, his non-solicitation obligations with respect to Company employees and customers will extend through July 22, 2021 (rather than for a period of two years from the date of termination), and the non-disparagement obligations will be mutual and will apply for an indefinite period |
• | 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; |
• | a material change in the geographic location of Mr. Hockey’s primary office location, other than to a facility or location less than 25 miles from his primary office location; |
• | the failure of the Company to obtain the assumption of his employment agreement by a successor; and |
• | absent cause, the board of directors’ failure to re-appoint Mr. Hockey as CEO on an annual basis. |
• | conviction of, or plea of nolo contendere to, a felony that the board of directors reasonably believes has had or will have a material detrimental effect to the Company’s reputation or business; |
• | any act of personal dishonesty by Mr. Hockey in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in his substantial personal enrichment; |
• | a breach of any fiduciary duty owed to the Company that has a material detrimental effect on the Company’s reputation or business; |
• | willful, substantial and continuing failure to perform the reasonable duties of Mr. Hockey’s position for a period of at least 30 days following written notice from the board of directors which describes the basis for the board of directors’ belief that he has not substantially performed his reasonable duties for reasons other than illness or incapacity; |
• | being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not he admits or denies liability); willful misconduct, gross negligence, fraud or embezzlement, in each case that results in substantial, material harm to the Company; |
• | (1) obstructing or impeding, (2) endeavoring to influence, obstruct or impede, or (3) failing to materially cooperate with, any investigation authorized by the board of directors or any governmental or self-regulatory entity; however, failure to waive attorney-client privilege relating to communications with Mr. Hockey’s own attorney in connection with any such investigation will not constitute cause; and |
• | disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by his employment agreement or his loss of any governmental or self-regulatory license that is reasonably necessary for him to perform his responsibilities to the Company if (1) the disqualification, bar or loss continues for more than 30 days and (2) during that period the Company uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. |
Provision |
Summary | |
Position |
Executive Vice President, Finance, effective July 1, 2015 Executive Vice President, CFO, effective October 1, 2015 Interim President and CEO, effective November 20, 2019 | |
Base Salary |
Initially $400,000 per year; fiscal year 2019 salary of $500,000 per year | |
Annual Cash Incentive |
Participation in MIP with annual cash incentive target of $675,000 initially; fiscal year 2019 annual cash incentive target of $1,000,000 | |
Equity Compensation |
Participation in LTIP • RSU award covering 79,767 shares granted July 8, 2015, and scheduled to vest in full on July 8, 2018, subject to continued employment with the Company through such date• Equity component of annual incentive award under the MIP with a target of $675,000 initially; fiscal year 2019 equity component of annual incentive award under the MIP with a target of $1,000,000 | |
Housing Allowance |
Company-paid monthly housing allowance for one-bedroom work apartment and reimbursement for related taxes for the benefit | |
Conditions to Receipt of Termination Payments and Benefits |
As a condition to Mr. Boyle receiving severance payments, he is required to enter into a release of claims and is required to abide by non-competition and non-solicitation covenants for a period of two years from the date of termination |
• | the failure by Mr. Boyle to substantially perform his duties, other than due to illness, injury or disability, which failure continues for ten days following receipt of notice from the Company specifying such failure; |
• | the willful engaging by Mr. Boyle in conduct which is materially injurious to the Company, monetarily or otherwise; |
• | misconduct involving serious moral turpitude to the extent that in the reasonable judgment of the Company, Mr. Boyle’s credibility or reputation no longer conforms to the standard of the Company’s executives; or |
• | Mr. Boyle’s breach of any restrictive covenants to which he is subject. |
• | 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 |
• | 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 50% or more 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. |
Provision |
Summary | |
Position |
President, Retail Distribution | |
Base Salary |
$650,000 | |
Annual Cash Incentive |
Participation in MIP with annual cash incentive target of $1,000,000 initially; fiscal year 2019 annual cash incentive target of $1,075,000 | |
Equity Compensation |
Participation in LTIP • RSU award covering 11,434 shares granted September 20, 2017, scheduled to vest on September 20, 2020, and RSU award covering 11,434 shares granted September 20, 2017, scheduled to vest on September 20, 2022, in each case subject to continued employment with the Company through such date• Equity component of annual incentive award under the MIP with a target of $1,000,000 initially; fiscal year 2019 equity component of annual incentive award under the MIP with a target of $1,075,000 | |
Conditions to Receipt of Termination Payments and Benefits |
As a condition to Mr. deSilva receiving severance payments, he is required to enter into a separation and release of claims agreement and is required to abide by non-competition and non-solicitation covenants for a period of two years from the date of termination |
• | the failure by Mr. deSilva to substantially perform his duties, other than due to illness, injury or disability, which failure continues for ten days following receipt of notice from the Company specifying such failure; |
• | the willful engaging by Mr. deSilva in conduct which is materially injurious to the Company, monetarily or otherwise; |
• | misconduct to the extent that in the reasonable judgment of the Company, Mr. deSilva’s credibility or reputation no longer conforms to the standard appropriate for the Company’s executives; or |
• | Mr. deSilva’s breach of any restrictive covenants to which he is subject. |
• | As required by SEC rules, we assume the triggering event causing the payment occurred on September 30, 2019, the last business day of our last completed fiscal year, and the price per share of the common stock of the Company was $46.70, the closing market price on that date. |
• | We treat all amounts of base salary and annual cash incentive that were earned and accrued, including unused vacation, as of the date of the triggering event as paid immediately prior to the triggering event. |
Name |
Event of Termination |
Salary, Bonus and Cash Severance (6) ($) |
Option Awards ($) |
RSU Awards (7) ($) |
PRSU Awards (9) ($) |
Other Benefits and Perquisites ($) |
Total ($) |
|||||||||||||||||||
Tim Hockey (1) (2) |
Termination without cause or resignation for good reason (including following a change in control), or continued employment through February 29, 2020 (4) |
10,567,850 |
2,346,459 |
13,643,452 |
15,228,310 |
24,997 |
41,821,067 |
|||||||||||||||||||
Death or disability (5) |
7,027,850 |
2,346,459 |
13,643,452 |
15,228,310 |
24,997 |
38,281,067 |
||||||||||||||||||||
Stephen J. Boyle (2) |
Termination without cause (including following a change in control), retirement |
2,538,462 |
— |
1,134,997 |
2,884,939 |
12,996 |
(10) |
6,571,394 |
||||||||||||||||||
Death or disability |
— |
— |
1,134,997 |
2,884,939 |
— |
4,019,936 |
||||||||||||||||||||
Peter J. deSilva (3) |
Termination without cause within 24 months after a change in control |
2,148,548 |
— |
2,330,003 |
1,354,907 |
8,703 |
5,842,161 |
|||||||||||||||||||
Termination without cause |
2,148,548 |
— |
592,016 |
(8) |
12,469 |
(8) |
8,703 |
2,761,736 |
||||||||||||||||||
Resignation for good reason within 12 month after a change in control |
1,725,000 |
— |
2,330,003 |
1,354,907 |
8,703 |
5,418,614 |
||||||||||||||||||||
Resignation for good reason |
1,725,000 |
— |
592,016 |
(8) |
12,469 |
(8) |
8,703 |
2,338,188 |
||||||||||||||||||
Death or disability |
423,548 |
— |
2,330,003 |
1,354,907 |
— |
4,108,458 |
||||||||||||||||||||
Thomas A. Nally |
Termination without cause within 24 months after a change in control |
3,317,308 |
— |
1,220,131 |
4,018,582 |
13,411 |
(11) |
8,569,432 |
||||||||||||||||||
Termination without cause |
3,317,308 |
— |
— |
1,261,974 |
(8) |
13,411 |
(11) |
4,592,693 |
||||||||||||||||||
Death or disability |
— |
— |
1,220,131 |
4,018,582 |
— |
5,238,713 |
||||||||||||||||||||
Steven M. Quirk (2) |
Termination without cause, retirement |
1,430,769 |
— |
1,191,737 |
2,901,518 |
18,336 |
(11) |
5,542,360 |
||||||||||||||||||
Death or disability |
— |
— |
1,191,737 |
2,901,518 |
— |
4,093,255 |
(1) | Under Mr. Hockey’s employment agreement, Mr. Hockey will receive a lump sum cash payment equal to (a) 24 months of his base salary and (b) 24 months of his average annual cash incentive payments for the prior two years, vesting acceleration with respect to all time-based RSUs, and continue vesting in any options, PRSUs (based on actual performance), and other RSUs without regard to continued service requirements. Further, his options will remain outstanding for the remainder of its term. The amount under Other Benefits and Perquisites for Mr. Hockey includes the estimated employer portion of premium costs for the continuation of medical and dental coverage under COBRA for a period of two years after the termination date that he would receive under his employment agreement, the estimated amount of reimbursements for tax preparation services for his tax years 2019 and 2020, and reimbursement for legal fees incurred by Mr. Hockey relating to his separation and transition matters, up to a maximum of $75,000. |
(2) | As of September 30, 2019, of the NEOs, only Messrs. Boyle and Quirk were eligible for retirement with respect to the retirement-related vesting benefits under the RSU and PRSU award agreements. Under Mr. Hockey’s employment agreement, if Mr. Hockey had resigned due to his voluntary retirement after the five-year anniversary of his becoming the Company’s CEO, then he would have received continued vesting of his options and PRSUs without regard to any continued service requirement, and his options would have remained exercisable for the remaining portion of its original term. Mr. Hockey had not yet met the requirements for having remained the Company’s CEO for such period during fiscal year 2019. |
(3) | Under Mr. deSilva’s term sheet, Mr. deSilva will receive continued payments of base salary for 12 months and a lump sum cash bonus payment of $1,075,000 (which is the cash portion of his annual incentive at target). Mr. deSilva’s SAR award agreement provides that in the event of Mr. deSilva’s death or disability, or a termination of his employment without cause, any cash bonus amount that has accrued under the SAR award (but for which the continued employment requirement has not yet been satisfied) will become payable to him in full. |
(4) | Under Mr. Hockey’s transition agreement, Mr. Hockey would receive a cash payment of $3,540,000, payable in 2020, and a PRSU award with the target number of shares of Company common stock subject to the award determined based on actual performance of the applicable goals under the fiscal year 2019 MIP but with the individual component of the goals deemed achieved at 100% of target levels. Mr. Hockey’s actual award granted on December 5, 2019, was granted in the form of RSUs and covers 121,512 shares of Company common stock. |
(5) | During the period of his transition services under his transition agreement and so long as his employment does not terminate for cause or due to his death or disability, and he did not resign without good reason, Mr. Hockey would receive his annual cash incentive for fiscal year 2019, payable in the normal course based on actual performance under the fiscal year 2019 MIP but with the individual component of the goals deemed achieved at 100% of target levels. Pursuant to Mr. Hockey’s employment agreement, had his employment terminated due to death or disability, Mr. Hockey would have received a prorated portion (if any) of his cash incentive based on actual performance, for the year of termination of employment. Mr. Hockey’s actual cash incentive earned for the full fiscal year 2019 was $2,377,800. |
(6) | Other than with respect to Messrs. Hockey and deSilva, the amounts represent the cash severance payments under Messrs. Boyle’s term sheet agreement or minimum cash severance payments with respect to the other NEOs under the Company’s executive compensation practices, in each case consisting of (a) four weeks of base salary for each completed year of service up to a maximum of 104 weeks and (b) four weeks of annual cash incentive for each completed year of service calculated based on target performance up to a maximum of 104 weeks. The Company’s executive compensation practices also provide for prorated payment of the cash portion of the NEO’s annual incentive based on actual performance. The actual cash incentive earned for the full fiscal year 2019 by each of Messrs. Nally and Quirk was $1,192,928 and $1,165,185, respectively. |
(7) | RSU awards accelerate vesting as described further above except, with respect to Mr. Hockey, as specified in his employment agreement (as described in the footnote above), or with respect to Mr. Boyle, as specified in his term sheet agreement. Mr. Boyle’s term sheet agreement contemplates that RSU awards will vest: (i) upon a termination by the Company without cause, as to a prorated portion based on the number of full, 12-month periods of service completed during the vesting period, or (ii) upon a termination within 12 months after a change in control, in full. However, Mr. Boyle is eligible for retirement under the applicable RSU award agreements. Accordingly, upon any termination by the Company without cause, his RSU awards will vest in full. Mr. Quirk also is eligible for retirement under the applicable RSU award agreements. Accordingly, upon any termination by the Company without cause, his RSU awards will vest in full. |
(8) | Vesting occurs on a prorated basis, as described further above. |
(9) | Amounts represent PRSU awards at target levels. Amounts include the PRSU awards granted to NEOs on November 22, 2016, November 29, 2017, and December 5, 2018. Under the terms and conditions of the applicable PRSU award agreements, PRSU awards are treated as described further above. To the extent PRSUs remain outstanding and eligible to vest based on actual performance after the termination of the NEO’s employment, the amounts shown assume actual performance satisfies the applicable performance criteria at target. However, any vesting based on actual performance may range from 80% to 120% of target, depending on the extent of achievement of the applicable performance criteria. |
(10) | Under Mr. Boyle’s term sheet agreement, this represents the estimated employer portion of premium costs for the continuation of medical, vision and dental coverage under COBRA for a period of 12 months after employment termination. |
(11) | The amounts represent the estimated employer portion of premium costs for the continuation of medical, vision and dental coverage under COBRA for each of Messrs. Nally and Quirk, based on the Company’s executive compensation practices providing for this benefit over a period equal to one month for each completed year of service, with a minimum of 6 months and a maximum of 18 months. As of September 30, 2019, Messrs. Nally and Quirk had completed 25 and 12 years of service, respectively. |
The annual total compensation of our median employee, excluding our CEO, for our fiscal year 2019 was $83,718. |
The annual total compensation of our CEO for our fiscal year 2019 was $9,772,730. |
The ratio of the annual total compensation of our CEO to that of our median employee for our fiscal year 2019 was estimated to be 116.7 to 1. |
Non-employee Director Compensation |
Amount (1) | |
Chairman of the Board Annual Retainer |
||
• Cash Retainer |
$200,000 | |
• Equity Retainer |
$200,000 in RSUs | |
Annual Retainers (1) |
||
• Cash Retainer |
$80,000 | |
• Equity Retainer(2) |
$145,000 in RSUs | |
Annual Committee Chair Fees (1) |
$25,000 for chairs of Audit and Risk Committees $15,000 for chairs of Governance, Compensation, and OID Committees | |
Annual Committee Member Fees (1)(3) |
$10,000 for Audit and Risk Committees $5,000 for Governance, Compensation, and OID Committees |
(1) | Excludes Chairman of the Board. |
(2) | Increased from $130,000 for calendar year 2018 to $145,000 for calendar year 2019. |
(3) | Excludes Committee Chairs. |
• | fairly compensate non-employee directors for work required of a company the size and complexity of TD Ameritrade and |
• | align directors’ interests with the long-term interests of stockholders. |
Name |
Fees Earned or Paid in Cash (1) ($) |
Stock Awards (3)(4) ($) |
Nonqualified Deferred Compensation Earnings (5) ($) |
All Other Compensation (6) ($) |
Total ($) |
|||||||||||||||
Lorenzo A. Bettino |
115,000 |
146,375 |
— |
— |
261,735 |
|||||||||||||||
V. Ann Hailey |
180,000 |
146,735 |
— |
— |
326,735 |
|||||||||||||||
Brian M. Levitt |
85,000 |
146,735 |
— |
— |
231,735 |
|||||||||||||||
Karen E. Maidment |
115,000 |
146,735 |
2,456 |
— |
264,192 |
|||||||||||||||
Bharat B. Masrani |
— |
— |
— |
— |
||||||||||||||||
Irene R. Miller |
100,000 |
146,735 |
— |
— |
246,735 |
|||||||||||||||
Mark L. Mitchell |
200,000 |
146,735 |
17,569 |
— |
364,304 |
|||||||||||||||
Joseph H. Moglia |
250,000 |
(2) |
202,396 |
— |
16,058 |
468,454 |
(2) | |||||||||||||
Wilbur J. Prezzano |
100,000 |
146,735 |
— |
— |
246,735 |
|||||||||||||||
Todd M. Ricketts |
110,000 |
146,735 |
— |
— |
256,735 |
|||||||||||||||
Allan R. Tessler |
205,000 |
146,735 |
— |
— |
351,735 |
(1) | The amounts in this column represent, other than with respect to Messrs. Bettino and Ricketts, amounts paid in cash for retainers and fees for services provided by our non-employee directors for fiscal year 2019 (consisting of the amount of the retainers and fees corresponding to the applicable portions of calendar years 2018 and 2019 that comprised fiscal year 2019). For Mr. Bettino, the amount in this column represents the dollar amount of retainers and fees earned for services provided in fiscal year 2019 that were deferred in the form of 2,042 deferred stock units. For Mr. Ricketts, the amount in this column represents the dollar amount of retainers and fees earned for services provided in fiscal year 2019 that Mr. Ricketts elected to receive in the form of cash and 1,457 shares of Company common stock. For each of Ms. Hailey, Mr. Mitchell and Mr. Tessler, the amounts in this column include fees paid during fiscal 2019 in the amount of $60,000, $60,000, and $80,000, respectively, and one quarter of the fees paid in December 2019 in the amount of $15,000, $15,000 and $20,000, respectively, in consideration for his or her work during fiscal 2019 in connection with the pending acquisition by Schwab. Mr. Masrani, an employee of TD, elected during fiscal year 2019 not to receive compensation for services provided as a non-employee director both in fiscal year 2019, and generally on an ongoing basis. |
(2) | The combined value of Mr. Moglia’s cash and equity compensation remained unchanged from calendar year 2018 to calendar year 2019. His annual cash compensation for fiscal year 2019 reflects the applicable portions of Mr. Moglia’s calendar years 2018 and 2019 annual cash retainers allocated to services he provided as a director during fiscal year 2019. For calendar year 2019, Mr. Moglia was paid such compensation 50% as an annual cash retainer of $200,000 and 50% as an equity award. For calendar year 2018, Mr. Moglia did not receive any equity awards for his services. Instead, the value of any equity awards he otherwise would have received for such calendar year 2018 services were paid entirely in cash. As a result, his annual cash retainer for calendar year 2018 was $400,000 and his equity compensation was $0. The amount shown in the table above being greater than $200,000 is attributable to the additional amount that he received for calendar year 2018 as cash compensation for the forgone equity compensation. |
(3) | The following table summarizes, as of September 30, 2019, 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 2019. Outstanding stock-based awards for Mr. Hockey, who is a NEO and served as an employee director of the Company during fiscal 2019, are summarized in the Outstanding Equity Awards at September 30, 2019, table under “Executive Compensation and Related Information.” |
Name |
Deferred Stock Unit Awards (#) |
Restricted Stock Unit Awards (#) |
||||||
Lorenzo A. Bettino |
6,599 |
2,634 |
||||||
V. Ann Hailey |
8,302 |
2,634 |
||||||
Brian M. Levitt |
9,153 |
2,634 |
||||||
Karen E. Maidment |
65,384 |
2,634 |
||||||
Bharat B. Masrani |
— |
— |
||||||
Irene R. Miller |
— |
2,634 |
||||||
Mark L. Mitchell |
28,806 |
2,634 |
||||||
Joseph H. Moglia |
— |
3,634 |
||||||
Wilbur J. Prezzano |
50,004 |
2,634 |
||||||
Todd M. Ricketts |
— |
2,634 |
||||||
Allan R. Tessler |
— |
2,634 |
(4) | 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 non-employee directors during fiscal year 2019. In fiscal year 2019, the RSUs granted as 2019 annual equity grants on February 20, 2019, as noted in the main table above, had a grant date fair value of $146,735. |
(5) | The amounts in this column represent above market interest calculated under SEC rules as the interest credited under the plan to the director minus the interest that would have been credited using 120% of the long-term, quarterly applicable federal rate as prescribed under Internal Revenue Code Section 1274(d) for the month in which the applicable interest under the plan was determined. |
(6) | The amount in this column represents reimbursement for post-retirement medical coverage. In connection with Mr. Moglia’s transition to chairman of our board of directors from CEO in 2008, Mr. Moglia became eligible, pursuant to his employment agreement then in effect, to receive post-retirement medical coverage for him, his spouse and any eligible dependents for his life (and his spouse’s life if she survives him), with the coverage secondary to his Medicare benefits. To receive this benefit, Mr. Moglia agreed to a release of claims in favor of the Company and non-competition, non-solicitation and non-disparagement obligations for a specified period (which has been satisfied) following employment termination. |
Non-Employee Director |
Stock Ownership Value ($) |
Multiple of 2019 Cash Retainer |
Multiple of 2019 Total Retainer |
|||||||||
Chairman |
$ | 800,000 |
4.0x |
2.0x |
||||||||
Directors |
$ | 450,000 |
5.6x |
2.0x |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Name |
Number of Shares of Common Stock |
Percent of Shares of Common Stock |
||||||
Directors and Executive Officers |
||||||||
Joseph H. Moglia, (1) Chairman |
113,661 |
* |
||||||
Tim Hockey, (2) Senior Advisor (formerly President and CEO) |
511,573 |
* |
||||||
Stephen J. Boyle, (3) Interim President and CEO, Director (formerly Executive Vice President, CFO) |
174,176 |
* |
||||||
Peter J. deSilva, (4) Executive Vice President, Retail Distribution |
84,307 |
* |
||||||
Thomas A. Nally, (5) Executive Vice President, Institutional Services |
185,818 |
* |
||||||
Steven M. Quirk, (6) Executive Vice President, Trading and Education |
101,120 |
* |
||||||
Lorenzo A. Bettino, (7) Director |
20,575 |
* |
||||||
V. Ann Hailey, (8) Director |
12,547 |
* |
||||||
Brian M. Levitt, (9) Director |
16,876 |
* |
||||||
Karen E. Maidment, (10) Director |
72,118 |
* |
||||||
Bharat B. Masrani, Director |
— |
* |
||||||
Irene R. Miller, (11) Director |
12,173 |
* |
||||||
Mark L. Mitchell, (12) Director |
59,136 |
* |
||||||
Wilbur J. Prezzano, (13) Director |
118,852 |
* |
||||||
Todd M. Ricketts, (14) Director |
462,412 |
* |
||||||
Allan R. Tessler, (15) Director |
77,664 |
* |
||||||
All current Directors and Executive Officers as a group (16) (16 persons) |
1,530,213 |
* |
||||||
5% Stockholders |
||||||||
The Toronto-Dominion Bank (17) Toronto-Dominion Centre P.O. Box 1 Toronto, Ontario, Canada M5K IA2 |
234,513,815 |
43.4 |
% | |||||
T. Rowe Price Associates, Inc. (18) P.O. Box 89000 Baltimore, MD 21289 |
42,819,149 |
7.9 |
% | |||||
J. Joe Ricketts, (19) Founder C/O Hugo Enterprises LLC 1395 S. Platte River Drive Denver, CO 80223 |
32,686,808 |
6 |
% |
* | Less than 1% of the issued and outstanding shares. |
(1) | Consists of 110,000 shares held by Mr. Moglia directly and 3,661 RSUs. |
(2) | Consists of 503,247 shares issuable upon the exercise of options exercisable within 60 days of January 15, 2020, 293,452 RSUs and 218,121 PRSUs. |
(3) | Consists of 17,127 shares held by Mr. Boyle directly, 115,084 shares held for the benefit of Mr. Boyle in a deferred compensation account under the Company’s Executive Deferred Compensation Program and 41,965 PRSUs. |
(4) | Consists of 28,946 shares held by Mr. deSilva directly, 29,234 RSUs and 26,127 PRSUs. |
(5) | Consists of 93,050 shares held by Mr. Nally directly, 31,603 RSUs and 61,165 PRSUs. |
(6) | Consist of 30,807 shares held by Mr. Quirk directly, 30,995 RSUs and 39,318 PRSUs. |
(7) | Consists of 11,272 shares held by Mr. Bettino directly, 2,654 RSUs and 6,649 stock units held in a deferred compensation account for Mr. Bettino. |
(8) | Consists of 1,528 shares held by Ms. Hailey directly, 2,654 RSUs and 8,365 stock units held in a deferred compensation account for Ms. Hailey. |
(9) | Consists of 5,000 shares held by Mr. Levitt directly, 2,654 RSUs and 9,222 stock units held in a deferred compensation account for Mr. Levitt. |
(10) | Consists of 3,582 shares held by Ms. Maidment directly, 2,654 RSUs and 65,882 stock units held in a deferred compensation account for Ms. Maidment. |
(11) | Consists of 9,519 shares held by Ms. Miller directly and 2, 654 RSUs. |
(12) | Consists of 27,457 shares held by Mr. Mitchell directly, 2,654 RSUs and 29,025 stock units held in a deferred compensation account for Mr. Mitchell. |
(13) | Consists of 65,813 shares held by Mr. Prezzano directly, 2,654 RSUs and 50,385 stock units held in a deferred compensation account for Mr. Prezzano. |
(14) | Consists of 179,985 shares held by Mr. Todd M. Ricketts directly, 2,654 RSUs, 8,059 shares held by Mr. Ricketts’ spouse and 271,714 shares held in trusts for the benefit of Mr. Ricketts’ spouse and children. |
(15) | Consists of 65,010 shares held by Mr. Tessler directly, 2,654 RSUs and 10,000 shares held by International Financial Group, Inc. Mr. Tessler is chairman, chief executive officer and sole stockholder of International Financial Group, Inc. |
(16) | Includes 944,588 shares of common stock, 301,013 RSUs and PRSUs and 284,612 stock units held in deferred compensation accounts. |
(17) | Based on Schedule 13D/A filed on November 27, 2019 by The Toronto-Dominion Bank, TD Group US Holdings LLC, a wholly-owned subsidiary of The Toronto-Dominion Bank, and TD Luxembourg International Holdings S.à.r.l., a wholly-owned subsidiary of TD Group US Holdings LLC. |
(18) | Based on a Form 13G/A filed on January 10, 2020 by T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. claimed sole voting authority with respect to 16,125,891 shares and no voting authority with respect to 42,819,149 shares. These securities are owned by various individual and institutional investors, for which T. Rowe Price Associates, Inc. serves as investment advisor with power to direct investments and/or sole voting power to vote the securities. For purposes of the 1934 Act, T. Rowe Price Associates, Inc. is deemed to be a beneficial owner of such securities; however, T. Rowe Price Associates, Inc. expressly disclaims that it is, in fact, the beneficial owner of such securities. |
(19) | Based on Schedule 13G filed on February 14, 2019 by Mr. J. Joe Ricketts. Does not include 13,873,725 shares held by Mr. Ricketts’ spouse, Marlene M. Ricketts, of which Mr. Ricketts disclaims beneficial ownership. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
• | whether the terms of the related party transaction are fair to the Company and are no less favorable than terms that would apply if the transaction did not involve a related party; |
• | whether there are business reasons for the Company to enter into the related party transaction; |
• | whether the related party transaction would impair the independence of an outside director; and |
• | whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company, taking into account the size of the transaction, the overall financial position of the director, executive officer or related party, the direct or indirect nature of the director’s, executive officer’s or related party’s interest in the transaction and the ongoing nature of any proposed relationship. |
Transaction |
Names & Interests of Related Persons |
Revenues from and Expenses to Related Parties for Fiscal Year 2019 |
Other Information | |||
Insured Deposit Account Agreement |
U.S. bank subsidiaries of TD make available to clients of the Company FDIC-insured money market deposit accounts as either designated sweep vehicles or as non-sweep deposit accounts, and the Company provides marketing, recordkeeping and support services with respect to the money market deposit accounts. In exchange for providing |
$1,602 |
(1) |
these services, the Company is paid an aggregate marketing fee based on the weighted average yield earned on the client IDA assets, less the actual interest paid to clients, a servicing fee and the cost of FDIC insurance premiums. The Company and TD entered into Amendment No. 1 to the Insured Deposit Account Agreement to address the treatment of Scottrade brokerage accounts following the closing of the Agreement and Plan of Merger (the “Scottrade merger agreement”), dated as of October 24, 2016, by and among Scottrade, Rodger O. Riney, as Voting Trustee of the Rodger O. Riney Family Voting Trust U/A/D 12/31/2012, created under the Voting Trust Agreement dated December 31, 2012, as amended on January 21, 2016 and the Company. |
||||||
Legal Settlement |
On April 6, 2017, a stockholder of the Company filed a stockholder derivative complaint regarding the acquisition of Scottrade by the Company and the acquisition of Scottrade Bank by TD. The suit named as defendants TD and the members of the Company’s board of directors. It also named the Company as a nominal defendant. The suit filed in the Delaware Chancery Court is captioned Vero Beach Police Officers’ Retirement Fund derivatively on behalf of nominal defendant TD Ameritrade Holding Corp. v. Larry Bettino et al. |
$11.2 non-operating revenue |
(2) | |||
Mutual Fund Agreements |
Certain mutual funds of a TD affiliate received distribution and marketing support from the Company. |
$2 |
(3) | |||
Referral and Strategic Alliance Agreement |
A wholly-owned subsidiary of TD promotes the brokerage services of TD Ameritrade, Inc., and another TD wholly-owned subsidiary referred existing brokerage clients to TD Ameritrade, Inc. |
$5.5 |
(4) | |||
Trading Platform Hosting and Services Agreement |
TD Waterhouse Canada Inc. (“TDW Canada”), a wholly owned subsidiary of TD, uses the thinkorswim trading platform, and TD Ameritrade, Inc. provides the services to support the platform. |
$3.4 |
(5) | |||
TD Waterhouse Canada Order Routing Agreement |
TD Ameritrade Clearing, Inc. (“TDAC”), a wholly-owned subsidiary of the Company, provides certain order routing services to TDW Canada. |
$23.2 |
(6) | |||
Cash Management Services Agreement |
TD Bank USA, N.A. (“TD Bank USA”), a wholly-owned subsidiary of TD, provides cash management services to clients of TD Ameritrade, Inc. |
$1.6 |
(7) | |||
Securities Borrowing and Lending |
TD Securities, Inc., an affiliate of TD, and the Company engage in securities borrowing and lending in connection with the Company’s brokerage business. |
$1.4 |
(8) | |||
Master Selected Dealers Agreement |
TD Securities (USA) LLC (“TDS”), a wholly-owned subsidiary of TD, and TD Ameritrade, Inc., are party to a master selected dealer agreement to facilitate the distribution of initial public offering SEC registered securities to TD Ameritrade, Inc.’s clients. |
$1 |
(9) | |||
Transition Services Agreement |
In connection with the closing of the Scottrade merger agreement on September 18, 2017, TD and the Company each provided the other with transition services. In addition, the Company agreed to reimburse TD for employment costs for up to 18 months for employees of Scottrade who perform transition services. |
$.35 |
(10) |
Revolving Credit Facilities and Notes Offerings |
The Company entered into revolving credit agreements, consisting of senior unsecured revolving credit facilities in the aggregate principal amount of $1.75 billion, and an affiliate of TD participates as a lender on terms no more favorable than the terms of the other lenders participating in the credit agreements, including receiving an upfront fee percentage the same as those payable to the other lenders participating in the credit agreements, as well as certain customary expense reimbursement. The Company entered into underwriting agreements with respect to the offering and sale by the Company of $1.5 billion aggregate principal amount of the Company’s senior notes, and TDS participated in the offerings as a passive book runner on terms no more favorable than the terms of the other underwriters participating in the offering, including underwriting commissions the same as those payable to the other underwriters participating in the offerings. |
$0.26 $1.2 |
(11) | |||
Securities-Based Lending |
Securities-based lending is an offering for the Company’s institutional and retail clients, that allows them to open a line of credit against their securities portfolio. An arrangement is in place for institutional clients for TD Bank, N.A. to lend against brokerage assets. |
$0.21 |
(12) | |||
Sublease Agreements |
The Company and TD are parties to sublease agreements where the Company and TD sublease building space to each other for administrative and operational purposes. |
(13) |
(13) | |||
Margin Accounts |
Certain directors and executive officers, and members of their immediate families, maintain margin trading accounts with the Company, as permitted by applicable law. |
(14) |
(14) | |||
Trademark License Agreement |
The Company and TD are a party to a trademark license agreement that requires the Company to use the TD trademark and logo as part of the Company’s corporate identity. |
(15) |
(15) | |||
Registration Rights Agreement |
In connection with the closing of Scottrade merger agreement on September 18, 2017, TD, and certain Ricketts stockholders entered into a registration rights agreement with certain customary registration rights with respect to their respective shares of Company common stock. |
(16) |
(16) |
(1) | The Company is party to an insured deposit account (“IDA”) agreement, under which TD Bank USA and TD Bank, NA. (together, the “TD Depository Institutions”) make available to clients of the Company FDIC-insured (up to specified limits) money market deposit accounts as either designated sweep vehicles or as non-sweep deposit accounts. The Company provides marketing, recordkeeping and support services for the TD Depository Institutions with respect to the money market deposit accounts. In exchange for providing these services, the TD Depository Institutions pay the Company an aggregate marketing fee based on the weighted average yield earned on the client IDA assets, less the actual interest paid to clients, a servicing fee to the TD Depository Institutions and the cost of FDIC insurance premiums. |
(2) | For additional information about the settlement, see Note 8 — Commitments and Contingencies, Legal and Regulatory Matters under Item 1, Financial Statements — Notes to Condensed Consolidated Financial Statements to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 31, 2019. |
(3) | The Company and an affiliate of TD were parties to a transfer agency agreement and a shareholder services agreement pursuant to which certain mutual funds were made available as money market sweep or direct purchase options to Company clients. The Company performed certain distribution and marketing support services and acted as a transfer agent with respect to those funds. In consideration for offering the funds, performing the distribution and marketing support services and acting as a transfer agent, an affiliate of TD compensated the Company in accordance with the provisions of the agreements. The transfer agency agreement and the shareholder services agreement were terminated in fiscal 2019. |
(4) | TD Ameritrade, Inc. is a party to a referral and strategic alliance agreement with TD Bank, N.A. and TD Wealth Management Services, Inc. (“TDWMS”), a wholly-owned subsidiary of TD. The strategic alliance agreement had an initial term of five years beginning February 1, 2010 and is automatically renewable for successive three-year terms, provided that it may be terminated by any party upon 180 days’ prior written notice. Under the agreement, TD Bank, N.A. promotes TD Ameritrade, Inc.’s brokerage services to its clients using a variety of marketing and referral programs and TDWMS referred its existing brokerage account clients to TD Ameritrade, Inc. while TDWMS discontinued its brokerage operations. TD Bank, N.A. clients that open brokerage accounts at TD Ameritrade, Inc. and TDWMS clients that elected to transfer their accounts to TD Ameritrade, Inc. are considered program clients. TD Ameritrade, Inc. retains a fee for providing brokerage services to the program clients, and the program’s net margin is shared equally between TD Ameritrade, Inc. and TD Bank, N.A. |
(5) | On June 11, 2009, immediately following the closing of the Company’s acquisition of thinkorswim Group Inc. (“thinkorswim”), the Company completed the sale of thinkorswim Canada, Inc. (“thinkorswim Canada”) to TDW Canada. In connection with the sale of thinkorswim Canada, the Company and TDW Canada entered into a trading platform hosting and services agreement. The agreement had an initial term of five years beginning June 11, 2009 and automatically renews for additional periods of two years, unless either party provides notice of non-renewal to the other party at least 90 days prior to the end of the then-current term. Under the agreement, TDW Canada uses the thinkorswim trading platform and TD Ameritrade, Inc. provides the services to support the platform. In consideration for the performance by TD Ameritrade, Inc. of all its obligations under this agreement, TDW Canada pays TD Ameritrade, Inc., on a monthly basis, a fee based on average client trades per day and transactional revenues. |
(6) | The order routing agreement automatically renews for successive one-year terms on October 31 of each year, provided that it may be terminated by either party upon 90 days’ prior written notice. Under the agreement, TDAC provides TDW Canada order routing services for U.S. equity and option orders to U.S. brokers and market centers with which TDW Canada has order execution arrangements. TDAC retains a percentage of the net order routing revenue it receives on TDW Canada trades and remits the remainder to TDW Canada. |
(7) | In exchange for cash management services provided by TD Bank USA to clients of TD Ameritrade, Inc., the Company pays service-based fees agreed upon by the parties. This agreement will continue in effect as long as the IDA agreement remains in effect, provided that it may be terminated by TD Ameritrade, Inc. without cause upon 60 days’ prior written notice to TD Bank USA. |
(8) | In connection with its brokerage business, the Company engages in securities borrowing and lending with TD Securities, Inc. (“TDSI”). The transactions with TDSI are subject to the same collateral requirements as transactions with other counterparties. |
(9) | TD Ameritrade, Inc. and TDS entered into a master selected dealers agreement to facilitate the distribution of initial public offering SEC registered securities, including debt securities, warrants or other securities with payment of principal and interest, which may include securities issued by TD, to TD Ameritrade, Inc.’s clients. The Agreement provides for TDS, as lead agent or as lead or co-manager of an underwriting syndicate, to invite TD Ameritrade, Inc. to act as one of several selected dealers in a public offering. When invited to participate in an offering, TD Ameritrade, Inc. commits to purchase from TDS, an allocated amount of the new issue securities. The Agreement may be terminated by either party for any reason upon five business day’s written notice to the other party. As a selected dealer, TD Ameritrade, Inc. receives a selling concession on the securities it sells to its clients. The lead agent or lead or co-manager of the underwriting syndicate sets the selling concession for the offering. The pricing of the offering, including the selling concession, is based on the nature of the issuer, the features of the new issue offered, and market conditions. |
(10) | The amount paid by each party is based on a cost-plus methodology for transition services provided. The agreement provides for customary termination rights, including for breach or if legally required. |
(11) | For additional information about the revolving credit facilities, see Note 11 — Long-term Debt and Other Borrowings under Item 8, Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements to the Company’s Annual Report on Form 10-K filed with the SEC on November 15, 2019. As of September 30, 2019, the total lending commitment received from TD under these credit facilities was $221 million. During the fiscal year ended September 30, 2019, the Company paid approximately $1 million of debt issuance costs to an affiliate of TD in connection with the issuance of the 2021 Notes, 2024 Notes and 2029 Notes, which is being amortized into interest expense over the terms of the respective notes. |
(12) | This agreement establishes revenue sharing terms. While the Company will remain the custodian of pledged client securities, TD Bank maintains a senior security interest in the pledged securities and will underwrite the loans and provide the line of credit to clients. |
(13) | Under these sublease agreements, the Company incurred $0.3 million of sub-lease rental income and recognized $0.3 million of occupancy and equipment costs during fiscal 2019. |
(14) | Certain directors and executive officers, and members of their immediate families, maintain margin trading accounts with the Company as permitted by applicable law. Margin loans to these individuals were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features. |
(15) | The Company and TD are a party to a trademark license agreement that requires the Company to use the TD trademark and logo as part of the Company’s corporate identity. The following is a summary of selected provisions of the trademark license agreement. |
(16) | Under the Registration Rights Agreement, each of TD and the Ricketts stockholders are entitled to certain customary demand registration, shelf takedown and piggyback registration rights with respect to their respective shares of Company common stock, subject to certain customary limitations (including minimum offering size and maximum number of demands and underwritten shelf takedowns within certain periods). |
Item 14. |
Principal Accounting Fees and Services |
2019 |
2018 |
|||||||
Audit Fees |
$ | 5,445,726 |
$ | 5,457,812 |
||||
Audit-Related Fees |
$ | 1,200,945 |
$ | 1,065,735 |
||||
Tax Fees |
— |
$ | 105,000 |
|||||
All Other Fees |
— |
$ | 206,000 |
|||||
Total |
$ | 6,646,671 |
$ | 6,834,547 |
||||
Item 15. |
Exhibits, Financial Statement Schedules |
(a) | Documents filed as part of this Report |
1. | Financial Statements |
2. | Financial Statement Schedules |
3. | Exhibits |
(b) | Exhibits |
Exhibit No. |
Description | |||
2.1^ |
||||
3.1 |
||||
3.2 |
||||
4.1 |
||||
4.2 |
||||
4.3 |
||||
4.4 |
||||
4.5 |
||||
4.6 |
4.7 |
||||
4.8 |
||||
4.9 |
||||
4.10 |
||||
4.11 |
||||
4.12 |
||||
4.13 |
||||
4.14 |
||||
4.15 |
||||
4.16 # |
||||
10.1* |
Exhibit No. |
Description | |||
10.2* |
||||
10.3* |
||||
10.4* # |
||||
10.5* |
||||
10.6* |
||||
10.7* |
||||
10.8* |
||||
10.9* |
||||
10.10* |
||||
10.11* |
||||
10.12* |
||||
10.13* |
||||
10.14* |
||||
10.15* |
||||
10.16* |
||||
10.17* |
Exhibit No. |
Description | |||
10.18* |
||||
10.19* |
||||
10.20* |
||||
10.21* |
||||
10.22* |
||||
10.23* |
||||
10.24* |
||||
10.25 |
||||
10.26 |
||||
10.27 |
||||
10.28 |
||||
10.29 |
||||
10.30 |
||||
10.31† |
Exhibit No. |
Description | |||
10.32 |
||||
10.33 |
||||
10.34 |
||||
10.35 |
||||
10.36 |
||||
10.37 |
||||
10.38 |
||||
10.39 |
||||
14 |
||||
21.1 # |
||||
23.1 # |
||||
31.1 |
||||
31.2 |
Exhibit No. |
Description | |||
32.1 ## |
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101.INS # |
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document | |||
101.SCH # |
Inline XBRL Taxonomy Extension Schema | |||
101.CAL # |
Inline XBRL Taxonomy Extension Calculation | |||
101.LAB # |
Inline XBRL Taxonomy Extension Label | |||
101.PRE # |
Inline XBRL Taxonomy Extension Presentation | |||
101.DEF # |
Inline XBRL Taxonomy Extension Definition | |||
104 |
Cover page formatted as Inline XBRL and contained in Exhibit 101 |
^ | Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request. |
* | Management contracts and compensatory plans and arrangements required to be filed as exhibits under Item 15(b) of this report. |
† | Confidential treatment has been granted with respect to the omitted portions of this Exhibit, which portions have been filed separately with the Securities and Exchange Commission. |
# |
Previously filed with our Annual Report on Form 10-K filed with the SEC on November 15, 2019. |
## |
Previously furnished with our Annual Report on Form 10-K filed with the SEC on November 15, 2019. |
TD AMERITRADE HOLDING CORPORATION | ||
By: |
/s/ Stephen J. Boyle | |
Stephen J. Boyle | ||
Interim President and Chief Executive Officer, and Director (Principal Executive Officer) | ||
By: |
/s/ Jon C. Peterson | |
Jon C. Peterson | ||
Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
Non-GAAP Diluted EPS (1) |
Fiscal Year Ended Sept. 30, 2019 Diluted EPS |
Fiscal Year Ended Sept. 30, 2018 Diluted EPS |
Fiscal Year Ended Sept. 30, 2017 Diluted EPS |
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Diluted EPS – GAAP |
$ | 3.96 |
$ | 2.59 |
$ | 1.64 |
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Non-GAAP adjustments:Amortization of acquired intangible assets |
0.22 |
0.25 |
0.15 |
|||||||||
Acquisition-related expenses |
— |
0.78 |
0.17 |
|||||||||
Income tax effect of above adjustments |
(0.05 |
) | (0.28 |
) | (0.12 |
) | ||||||
Non-GAAP diluted EPS |
$ | 4.13 |
$ | 3.34 |
$ | 1.84 |
(1) | Non-GAAP diluted earnings per share (EPS) is a non-GAAP financial measure as defined by SEC Regulation G. Non-GAAP EPS is adjusted to remove the after-tax effect of: (1) amortization of acquired intangible assets and (2) acquisition-related expenses associated with the Company’s business acquisitions. We consider non-GAAP diluted EPS as an important measure of our financial performance because it excludes certain items that may not be indicative of our core operating results and business outlook and may be useful in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of our underlying business performance. Acquisition-related expenses are excluded as these costs are not representative of the costs of running the Company’s on-going business. Non-GAAP diluted EPS should be considered in addition to, rather than as a substitute for, GAAP diluted EPS. |