UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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TD Ameritrade Holding Corporation
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2019 Annual Meeting of Stockholders of TD Ameritrade Holding Corporation (the Company) will be located at the Companys corporate headquarters, 200 South 108th Avenue, in Omaha, Nebraska, on Wednesday, February 13, 2019, at 9:00 a.m., Central Standard Time. You may also attend the meeting virtually via the Internet at amtd.onlineshareholdermeeting.com, where you will be able to vote electronically and submit questions during the meeting.
At the 2019 Annual Meeting the following items of business will be considered:
1) | The election of four nominees recommended by the board of directors to the board of directors; |
2) | Advisory vote to approve executive compensation; and |
3) | Ratification of the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2019. |
Only stockholders of record at the close of business on December 17, 2018 will be entitled to notice of and to vote at the meeting.
We have adopted the U.S. Securities and Exchange Commission rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing a Notice of Internet Availability of Proxy Materials (the Internet Availability Notice) to most of our stockholders instead of a paper copy of this Proxy Statement and our 2018 Annual Report. The Internet Availability Notice contains instructions on how to access and review those documents over the Internet. We believe that this process allows us to provide our stockholders with the information they need in a more timely manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. If you received an Internet Availability Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Internet Availability Notice.
Your vote is very important. Whether or not you plan to attend the Annual Meeting (in person or virtually via the Internet), please complete and return your proxy card or vote by telephone or via the Internet by following the instructions on your Internet Availability Notice. Returning a proxy card or otherwise submitting your proxy does not deprive you of your right to attend the Annual Meeting and vote in person or virtually via the Internet. Proxies are being solicited on behalf of the board of directors.
By Order of the Board of Directors
Ellen L.S. Koplow,
Secretary
Omaha, Nebraska
December 31, 2018
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Proposal No. 1 Election of Directors Recommended by the Board of Directors |
The board of directors knows of no reason why any of Messrs. Masrani, Ricketts and Tessler and Ms. Miller might be unavailable to serve as directors, and each has expressed an intention to serve if elected. If any of Messrs. Masrani, Ricketts and Tessler and Ms. Miller is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute nominee as the board of directors may recommend. With the exception of the Stockholders Agreement, there are no arrangements or understandings between any of the persons nominated to be a Class II director and any other person pursuant to which any of such nominees was selected. The election of a director requires the affirmative vote of a plurality of the shares of common stock present in person or represented by proxy at the meeting and voting, provided a quorum of at least a majority of the outstanding shares of common stock is represented at the meeting. If you abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker how to vote on this non-routine proposal, your broker does not have authority to vote your shares. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any other effect on the outcome of the election of directors. Where no instructions are indicated, properly executed and unrevoked proxies will be voted FOR the election of each of Messrs. Masrani, Ricketts and Tessler and Ms. Miller as Class II directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF BHARAT B. MASRANI, IRENE R. MILLER, TODD M. RICKETTS AND ALLAN R. TESSLER AS CLASS II DIRECTORS. |
2 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
The tables below set forth certain information regarding the directors of the Company.
Nominees to Board of Directors
Name | Age | Principal Occupation |
Director Since |
Class and Term Expires | ||||
Bharat B. Masrani
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62
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Group President and Chief Executive Officer, TD Bank Group
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2013
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Class II 2022
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Irene R. Miller
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66
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Chief Executive Officer, Akim, Inc.
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2015
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Class II 2022
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Todd M. Ricketts
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49
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Director, Chicago Baseball Holdings, LLC
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2011(1)
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Class II 2022
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Allan R. Tessler
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82
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Chairman and Chief Executive Officer, International Financial Group, Inc.
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2006
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Class II 2022
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(1) | Mr. Todd M. Ricketts previously served on the Companys board of directors from October 2011 to February 2014 and was reelected effective January 2015. |
TD Ameritrade 2019 Proxy Statement | 3 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
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Bharat B. Masrani
Age: 62
Director Since: 2013 |
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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: 66
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. |
4 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
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Todd M. Ricketts
Age: 49
Director Since: 2011 |
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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. |
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Allan R. Tessler
Age: 82
Director Since: 2006 |
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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. 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. |
TD Ameritrade 2019 Proxy Statement | 5 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
Directors Not Standing For Election
Name | Age | Principal Occupation | Director Since |
Class and Year in Which Term Expires | ||||
Lorenzo A. Bettino
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58
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Private Investor
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2014
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Class III
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V. Ann Hailey
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67
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Former Executive Vice President and Chief Financial Officer, L Brands, Inc.
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2016
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Class III
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Joseph H. Moglia
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69
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Head Football Coach, Coastal Carolina University;
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2006
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Class III
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Wilbur J. Prezzano
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78
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Retired Vice Chairman, Eastman Kodak Company
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2006
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Class III
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Tim Hockey
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55
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President and CEO of the Company
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2016
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Class I
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Brian M. Levitt
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71
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Chairman of the Board, TD Bank Group
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2016
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Class I
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Karen E. Maidment
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60
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Director, The Toronto-Dominion Bank
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2010
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Class I
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Mark L. Mitchell
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58
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Principal, CNH Partners, LLC
|
1996(1)
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Class I
|
(1) | Mr. Mitchell previously served on the Companys board of directors from December 1996 to January 2006 and was reelected in November 2006. |
6 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
|
Lorenzo A. Bettino
Age: 58
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 firms 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: 67
Director Since: 2016 |
Experience 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. and she 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 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. Haileys 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. |
TD Ameritrade 2019 Proxy Statement | 7 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
Joseph H. Moglia
Age: 69
Director Since: 2006 |
Experience Mr. Moglia was elected chairman of the Companys board of directors effective October 1, 2008. Mr. Moglia has been head football coach of Coastal Carolina University since December 2011, and in March 2014 he was named chair of the athletics division, providing strategic oversight for the universitys athletic program. 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 Companys 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 Merrills private client division. He oversaw all investment products, as well as the firms insurance and 401(k) businesses. Mr. Moglia joined Merrill Lynch in 1984 and, by 1988, was the companys top institutional sales person. In 1992 he became head of global fixed income institutional sales and in 1995 he ran the firms 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 Colleges 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. Moglia serves on the STRATCOM Consultation Committee and is a director for the National Italian American Foundation. Mr. Moglia received an M.S. in Economics from the University of Delaware and a B.A. in Economics from Fordham University.
Qualifications Mr. Moglia is one of the six outside independent directors. Mr. Moglia has significant financial services and leadership experience, having served as the Companys chief executive officer from March 2001 through September 2008 and as head of the investment performance and product group for Merrill Lynchs 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: 78
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 Kodaks 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 Roper Industries, Inc. He was formerly a director of EnPro Industries, Inc., The Toronto-Dominion Bank and Snyders-Lance, Inc. Mr. Prezzano received a Bachelors 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. |
8 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
|
Tim Hockey
Age: 55
Director Since: 2016 |
|
Experience Mr. Hockey joined the Company as president and was elected to the Companys board of directors in January 2016. He became CEO of the Company on October 1, 2016. Prior to joining the Company, Mr. Hockey served as group head, Canadian Banking and Wealth Management, TD Bank Group since July 2013 and president and chief executive officer of TD Canada Trust since June 2008 and was primarily responsible for the leadership of Canadian banking, which included Canadian personal banking, business banking, auto finance, global direct investing, advisory and Canadian asset management businesses. In over 30 years with TD, Mr. Hockey held senior positions in a variety of areas including mutual funds, retail distribution, information technology, core and small business, credit cards and personal lending. Mr. Hockey serves on the advisory board of the Richard Ivey School of Business and as chairman of the CivicAction Leadership Foundation. He served as chairman of the Canadian Bankers Associations Executive Council and as a director of the SickKids Foundation. Mr. Hockey was previously named one of Canadas Top 40 Under 40, a program that celebrates Canadians who have reached significant success before the age of 40 in the private, public and not-for-profit sectors. Mr. Hockey received an M.B.A. from the University of Western Ontario.
Qualifications Mr. Hockey is the CEO of the Company. He has significant financial services and management experience, having worked in the financial services industry for over 35 years. |
Brian M. Levitt
Age: 71
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 Tailsman 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. |
TD Ameritrade 2019 Proxy Statement | 9 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
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Karen E. Maidment
Age: 60
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. |
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Mark L. Mitchell
Age: 58
Director Since: 1996 |
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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 Companys 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 since 2017. 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. |
10 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
Board Qualifications, Skills and Background
The charts below summarize the primary qualifications, skills and background that each director brings to their service on the board and highlights the balanced mix of skills, qualifications and experience of the board as a whole. This summary is not intended to be an exhaustive list of each directors skills or contributions to the board. Additional information on the business experience and other skills and qualifications of each of our directors is included above.
Lorenzo A. Bettino |
V. Ann Hailey |
Tim Hockey |
Brian M. Levitt |
Karen E. Maidment |
Bharat B. Masrani |
Irene R. Miller |
Mark L. Mitchell |
Joseph H. Moglia |
Wilbur J. Prezzano |
Todd M. Ricketts |
Allan R. Tessler | |||||||||||||
Knowledge, Skills and Experience |
||||||||||||||||||||||||
Audit/Accounting |
ü | ü | ü | ü | ||||||||||||||||||||
Capital Markets/Treasury |
ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||
Governance/Corporate Responsibility
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ü
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ü
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ü
|
ü
|
ü
| |||||||||||||||||||
Financial Services |
ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||
Government/Public Affairs |
ü | ü | ü | |||||||||||||||||||||
Executive Leadership |
ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||||||
Legal/Regulatory |
ü | ü | ||||||||||||||||||||||
Marketing/Brand Awareness |
ü | ü | ü | ü | ||||||||||||||||||||
Operations |
ü | ü | ü | ü | ü | ü | ||||||||||||||||||
Risk Management |
ü | ü | ü | ü | ü | ü | ||||||||||||||||||
Strategic Planning |
ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||||||||||||
Talent Management & Executive Compensation
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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|||||||||||||||||
Technology Management |
ü | ü | ü | |||||||||||||||||||||
Board Tenure |
||||||||||||||||||||||||
Years |
5 | 3 | 3 | 3 | 9 | 6 | 4 | 22 | 13 | 13 | 7 | 13 |
Under Age 60
|
Women and Ethnically Diverse
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Tenure
|
TD Ameritrade 2019 Proxy Statement | 11 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
The board of directors conducts its business through meetings of the board, actions taken by written consent in lieu of meetings and by the actions of its committees. The non-employee members and the independent members of our board of directors regularly meet in executive session without management present. These directors select a presiding director at these meetings on an ad-hoc basis. The board of directors has a policy requiring the separation of the roles of CEO and chairman of the board because the board of directors believes it improves the ability of the board to exercise its oversight role. Mr. Hockey serves as the CEO, with primary responsibility for operational leadership and strategic direction of the Company. Mr. Moglia serves as chairman of the board, facilitating the boards oversight of management, promoting communication between management and the board and engaging with shareholders. Key responsibilities of the chairman include: setting the agenda for board meetings in consultation with other directors, the CEO, and the corporate secretary, facilitating the annual CEO performance evaluation, serving as a liaison between the board and senior management, conducting annual board interviews as part of the annual board evaluation process and setting and maintaining board culture. The separation of the roles of CEO and chairman of the board does not affect risk oversight, which is the responsibility of the board of directors, primarily overseen by the Risk Committee.
During the fiscal year ended September 30, 2018, the board of directors held fourteen meetings. During fiscal year 2018, each incumbent director attended at least 75% of the aggregate number of meetings of the board of directors and meetings of the committees of the board of directors on which he or she served during the period in which he or she served, if any. Although the Company does not have a formal policy regarding director attendance at our annual meeting of stockholders, directors are encouraged to attend. All directors of the Company at the time of the 2018 annual meeting of stockholders attended the 2018 annual meeting of stockholders.
The board of directors has established six standing committees: Audit, H.R. and Compensation, Corporate Governance, Outside Independent Directors, Non-TD Directors and Risk. The committee members are identified in the following table:
Director | Audit | H. R. and Compensation |
Corporate Governance |
Outside Independent Directors |
Non-TD Directors |
Risk | ||||||
Lorenzo A. Bettino
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Chair
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V. Ann Hailey
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Tim Hockey
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Brian M. Levitt
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Karen E. Maidment
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Chair
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Bharat B. Masrani
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Irene R. Miller
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Mark L. Mitchell
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Chair
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Joseph H. Moglia
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Wilbur J. Prezzano
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Chair
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Todd M. Ricketts
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|
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Allan R. Tessler
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Chair
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12 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
TD Ameritrade 2019 Proxy Statement | 13 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
14 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
TD Ameritrade 2019 Proxy Statement | 15 |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
Director Compensation Table for Fiscal Year 2018
The table below provides information on compensation for non-employee directors who served during fiscal year 2018. Compensation information for Mr. Hockey, who is a named executive officer and served as an employee director of the Company during fiscal year 2018, is disclosed in the Summary Compensation Table under Executive Compensation and Related Information.
Fees Earned or Paid in Cash
|
||||||||||||||||||||||||
Name
|
Paid in Cash(2) ($)
|
Deferred in Form of Stock Units(3),(4) ($)
|
Stock Awards(4),(5) ($)
|
Nonqualified Deferred Compensation Earnings(6) ($)
|
All Other Compensation(7) ($)
|
Total ($)
|
||||||||||||||||||
Lorenzo A. Bettino
|
|
28,750
|
|
|
86,250
|
|
|
130,384
|
|
|
|
|
|
|
|
|
245,384
|
| ||||||
V. Ann Hailey
|
|
105,000
|
|
|
|
|
|
130,384
|
|
|
|
|
|
|
|
|
235,384
|
| ||||||
Brian M. Levitt
|
|
63,750
|
|
|
21,250
|
|
|
130,384
|
|
|
|
|
|
|
|
|
215,384
|
| ||||||
Karen E. Maidment
|
|
115,000
|
|
|
|
|
|
130,384
|
|
|
1,526
|
|
|
|
|
|
246,910
|
| ||||||
Bharat B. Masrani(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Irene R. Miller
|
|
100,000
|
|
|
|
|
|
130,384
|
|
|
|
|
|
|
|
|
230,384
|
| ||||||
Mark L. Mitchell
|
|
125,000
|
|
|
|
|
|
130,384
|
|
|
10,917
|
|
|
|
|
|
266,301
|
| ||||||
Joseph H. Moglia
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
14,685
|
|
|
414,685
|
| ||||||
Wilbur J. Prezzano
|
|
100,000
|
|
|
|
|
|
130,384
|
|
|
|
|
|
|
|
|
230,384
|
| ||||||
Todd M. Ricketts
|
|
110,000
|
|
|
|
|
|
130,384
|
|
|
|
|
|
|
|
|
240,384
|
| ||||||
Allan R. Tessler
|
|
105,000
|
|
|
|
|
|
130,384
|
|
|
|
|
|
|
|
|
235,384
|
|
(1) | Mr. Masrani, an employee of TD, elected during fiscal year 2018 not to receive compensation for services provided as a non-employee director both in fiscal year 2018, and generally on an ongoing basis. |
(2) | The amounts in this column represent amounts paid in cash for retainers and fees for services provided by our non-employee directors during fiscal year 2018. |
(3) | The amount in this column represents the dollar amount of retainers and fees earned for services provided in fiscal year 2018 that were deferred in the form of 1,558 Company stock units for Mr. Bettino and 489 Company stock units for Mr. Levitt. |
16 | TD Ameritrade 2019 Proxy Statement |
Proposal No. 1 Election of Directors Recommended by the Board of Directors
(4) | The following table summarizes, as of September 30, 2018, 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 2018. Outstanding stock-based awards for Mr. Hockey, who is a named executive officer and served as an employee director of the Company during fiscal 2018, are summarized in the Outstanding Equity Awards at September 30, 2018 table under Executive Compensation and Related Information. |
Name
|
Deferred Stock Unit Awards (#)
|
Restricted Stock Unit Awards (#)
| ||
Lorenzo A. Bettino
|
2,092
|
2,347
| ||
V. Ann Hailey
|
7,283
|
2,347
| ||
Brian M. Levitt
|
6,595
|
2,347
| ||
Karen E. Maidment
|
61,510
|
2,347
| ||
Bharat B. Masrani
|
|
| ||
Irene R. Miller
|
|
2,347
| ||
Mark L. Mitchell
|
28,133
|
2,347
| ||
Joseph H. Moglia
|
|
| ||
Wilbur J. Prezzano
|
48,835
|
2,347
| ||
Todd M. Ricketts
|
|
2,347
| ||
Allan R. Tessler
|
|
2,347
|
(5) | 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, for RSUs granted to the non-employee directors during fiscal year 2018. In fiscal year 2018, the RSUs granted as 2018 annual equity grants on February 21, 2018, as noted in the main table above, had a grant date fair value of $130,384. |
(6) | The amounts in this column represent above market interest calculated under SEC rules as the interest credited under the plan to the director minus the interest that would have been credited using 120% of the long-term, quarterly applicable federal rate as prescribed under Section 1274(d) of the Code for the month in which the applicable interest under the plan was determined. |
(7) | The amount in this column represents reimbursement for post-retirement medical coverage. In connection with Mr. Moglias transition to chairman of our board of directors from CEO in 2008, Mr. Moglia became eligible, pursuant his employment agreement then in effect, to receive post-retirement medical coverage for him, his spouse and any eligible dependents for his life (and his spouses life if she survives him), with the coverage secondary to his Medicare benefits. To receive this benefit, Mr. Moglia was required to agree to a release of claims in favor of the Company and non-competition, non-solicitation and nondisparagement obligations for a specified period (which has been satisfied) following employment termination. |
Non-employee Director Stock Ownership Guidelines
Under the Companys non-employee director stock ownership guidelines, non-employee directors receiving compensation are required to own shares of the Companys common stock with the value described below, no later than the five-year anniversary of becoming a director of the Company. Shares counted toward this calculation include common stock beneficially owned by the director and vested and unvested RSUs. As of September 30, 2018, the last day of our fiscal year 2018, all non-employee directors with more than five years of service with the Company who are receiving compensation for their services as a director have met this guideline.
Non-Employee Director
|
Stock ($)
|
Multiple of 2019
|
Multiple of 2019
|
|||||||||
Chairman
|
$
|
800,000
|
|
|
4.0x
|
|
|
2.0x
|
| |||
Directors
|
$
|
450,000
|
|
|
5.6x
|
|
|
2.0x
|
|
TD Ameritrade 2019 Proxy Statement | 17 |
Executive Compensation and Related Information
TD Ameritrade 2019 Proxy Statement | 19 |
Executive Compensation and Related Information
Compensation Discussion and Analysis
Named Executive Officers
Our CEOs and other named executive executives targeted total annual compensation (i.e., base salary, target cash incentive and target equity incentive) for fiscal year 2018 was heavily weighted toward elements that were subject to performance objectives:
Fiscal Year 2018 Named Executive Officer
Target Total Annual Compensation(1)
Chief Executive Officer | NEO Average (Excluding CEO) (2) |
Base salaryTarget cash incentiveTarget equity incentive
(1) | Target cash incentive and target equity incentive are amounts as established by the Compensation Committee based on performance under the Management Incentive Plan (MIP) during fiscal year 2018. Any equity awards under the fiscal year 2018 MIP were granted following the completion of the fiscal year 2018 performance period, in early fiscal year 2019. 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 named executive officers, other than the CEO, is based on the average among the named executive officers (other than Mr. Hockey). |
20 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Key Performance Highlights and Pay for Performance Results for Fiscal Year 2018
In fiscal year 2018, the Company demonstrated strong performance in its businesses, with core operating metrics at record levels, driven by strong organic growth and the successful integration of Scottrade.
Results for the fiscal year ended September 30, 2018, included the following:
| Net new client assets of approximately $92 billion, a growth rate of 8 percent |
| Record average client trades per day of approximately 811,000, up 59 percent year over year |
| $2.59 in GAAP earnings per diluted share, up 58 percent year over year, on net income of $1.47 billion |
| $3.34 in Non-GAAP earnings per diluted share, up 82 percent year over year. For a discussion of this measure and a reconciliation to the related GAAP measure, refer to Appendix A |
| The successful integration of Scottrade |
The Companys non-GAAP diluted earnings per share (EPS), an important measure of our financial performance, weighted at 60% of the corporate performance metrics under the MIP, was adjusted downward by the Compensation Committee to $2.63 (from $3.34) to account for changes to tax laws and unplanned increases in interest rates. The Compensation Committee determined that these items were outside the control of the Company and therefore it was appropriate to make the 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. The adjusted non-GAAP EPS performance of $2.63 exceeded the pre-established target of $2.24. The Company also overachieved on market share of client revenue trades and net new client assets, which when combined with the firms qualitative strategic goals, comprise the other 40% of the corporate performance metrics under the MIP. Based on these results and consistent with our executive compensation programs pay-for-performance philosophy, the Compensation Committee approved annual incentive awards under the MIP of between 135.9% and 140.9% of the target incentive opportunity for our named executive officers, after adjustments were made to reflect individual performance.
Executive Compensation Governance Highlights
Consistent with our guiding principles underlying our executive compensation program, we observe the following practices:
☑ | Review executive compensation in comparison to peer group
|
☑ | Permit use of negative discretion to decrease (but not increase) incentive compensation
| |||
☑ | Measure, manage and reward based on performance goals that drive our short- and long-term business strategy
|
☑ | Employ double-trigger change-in-control provisions | |||
☑ | Maintain a pay mix that is heavily performance-based
|
☑ | Prohibit repricing stock options without stockholder approval
| |||
☑ | Use PRSUs (as defined below) linked to relative three-year total shareholder return
|
☑ | 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 single trigger severance or bonus payments in the event of a change in control
| |||
☑ | Hold an annual shareholder say-on-pay advisory vote
|
☑ | No material perquisites
| |||
☑ | Engage an independent compensation consultant that reports directly to our Compensation Committee
|
☑ | No supplemental executive retirement plans (SERPs)
|
TD Ameritrade 2019 Proxy Statement | 21 |
Executive Compensation and Related Information
Compensation-related Agreements and Plans
The Compensation Discussion and Analysis and the executive compensation tables below are based in part on the Companys agreements with Messrs. Hockey, Boyle, and deSilva, and the terms of our MIP and Long-Term Incentive Plan (the LTIP). Please refer to the following agreements and plan documents for the complete terms.
Where you can find more information
Name | Description | SEC Filing | ||
Tim Hockey
|
Employment Agreement
|
Quarterly Report on Form 10-Q filed on February 4, 2016, Exhibit 10.1
| ||
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 |
Form 8-K filed on February 24, 2016, Exhibit 10.1 | ||
MIP
|
Form 8-K filed on February 24, 2016, Exhibit 10.2
|
22 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
TD Ameritrade 2019 Proxy Statement | 23 |
Executive Compensation and Related Information
The peer group for fiscal year 2018 consisted of the following:
Fiscal Year 2018 Peer Group
Ameriprise Financial, Inc.
|
Fifth Third Bancorp
|
NASDAQ, Inc.
| ||
Broadridge Financial Solutions, Inc.
|
Franklin Resources, Inc.
|
Northern Trust Corporation
| ||
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.
|
For fiscal year 2018, the Compensation Committee was guided by the data collected on the above peer group in establishing the base salaries and target annual incentive amounts for our named executive officers. No changes to the companies comprising the peer group were made for fiscal year 2018 as compared to those for fiscal year 2017.
For fiscal year 2019, the Committee requested that Semler Brossy conduct an independent review of the peer group. The criteria for reviewing and determining the companies comprising the peer group for fiscal year 2019 were industry, market capitalization, revenue, geography, organizational complexity and competition for talent. Based on this review, SEI Investments and Stifel Financial Corporation were added to the peer group and Comerica Incorporated and Fifth Third Bancorp were removed, effective November 2018. The Compensation Committee agreed with Semler Brossys assessment that the two companies that were removed, as regional banks, were not as well-aligned with the Companys businesses; the two additions were chosen for having relatively stronger business alignment with the Company. As part its review, Semler Brossy also presented to the Compensation Committee the lists of companies comprising peer groups identified by proxy advisors with respect to the Company and public companies that include the Company in their peer groups. The peer group was updated as part of the process for considering the fiscal year 2019 executive compensation program.
The peer group for fiscal year 2019 consists of the following:
Fiscal Year 2019 Peer Group
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 Corporation
|
24 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Each named executive officer had target total annual compensation for fiscal year 2018 as follows:
Fiscal Year 2018 Target Total Annual Compensation
Name |
Base Salary ($) |
Target Cash Incentive ($) |
Target Equity Incentive ($) |
Target Total Incentive ($) |
Target Total Annual Compensation ($) |
Performance- based Portion of | ||||||||||||||||||||||||
Tim Hockey(1)
|
|
1,000,000
|
|
|
1,950,000
|
|
|
4,550,000
|
|
|
6,500,000
|
|
7,500,000
|
87%
| ||||||||||||||||
Stephen J. Boyle(2)
|
|
450,000
|
|
|
875,000
|
|
|
875,000
|
|
|
1,750,000
|
|
2,200,000
|
80%
| ||||||||||||||||
Peter J. deSilva
|
|
650,000
|
|
|
1,000,000
|
|
|
1,000,000
|
|
|
2,000,000
|
|
2,650,000
|
75%
| ||||||||||||||||
Thomas A. Nally(3)
|
|
500,000
|
|
|
1,075,000
|
|
|
1,075,000
|
|
|
2,150,000
|
|
2,650,000
|
81%
| ||||||||||||||||
Steven M. Quirk
|
|
450,000
|
|
|
775,000
|
|
|
775,000
|
|
|
1,550,000
|
|
2,000,000
|
78%
|
(1) | Mr. Hockeys target total incentive compensation for fiscal year 2018 was increased from $5.75 million to $6.5 million, which continued to consist of 30% cash and 70% equity. |
(2) | Mr. Boyles target total incentive compensation was increased from $1.55 million to $1.75 million, which continued to consist of 50% cash and 50% equity. |
(3) | Mr. Nallys target total incentive compensation was increased from $2 million to $2.15 million, which continued to consist of 50% cash and 50% equity. |
TD Ameritrade 2019 Proxy Statement | 25 |
Executive Compensation and Related Information
26 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Fiscal Year 2018 MIP Incentive Funding Formula
For fiscal year 2018, 60% of the initial measurement of results under the annual incentive plan was based on non-GAAP EPS, a key measure of the Companys short-term financial performance. The remaining 40% was based on the two quantitative strategic goals of market share of client revenue trades among the Companys primary publicly traded competitors (16%) and net new client assets (24%). The quantitative strategic goals result was then adjusted downward to additionally reflect the attainment of the qualitative strategic goals, which include successfully integrating Scottrade, improving the client experience, accelerating and diversifying revenue growth, increasing organizational agility and efficiency, associate development, and increased competitiveness through innovation. Both the quantitative and qualitative strategic goals impact the Companys long-term financial performance and support its long-term strategy. These metrics are all intended to incentivize management to drive Company performance in alignment with long-term stockholder interests. The quantitative performance goals and corresponding funding percentages for each of these measures are summarized below:
Fiscal Year 2018 Management Incentive Plan Quantitative Performance Goals
Performance Goals | Target | Weight | Funding | |||||||
Non-GAAP EPS
|
|
$2.24
|
|
|
60%
|
|
0% funding at $1.31 to 240% funding at $2.91
| |||
Quantitative Strategic Goals:
Market share client revenue trades
Net new client assets (dollars in billions)
|
|
54.0%
$67.6
|
|
|
16%
24%
|
|
0% funding at 47% to 240% funding at 59%
0% funding at $4.6 to 240% at $112.6
| |||
Total Weighting
|
|
100%
|
|
After the quantitative performance goals are measured, the Compensation Committee uses its negative discretion to reduce the payout based on qualitative considerations as well as an assessment of each named executive officers individual performance for the fiscal year as shown below.
The final payout percentage is capped at 200% of the named executive officers target annual incentive opportunity. Following the completion of fiscal year 2018, the Compensation Committee determined the payout of annual incentive compensation as follows:
Fiscal Year 2018 Management Incentive Plan Performance and Results
Goals |
Target | Actual Results |
Unweighted Payout Percentage |
Weight | Weighted Payout Percentage |
Negative Discretion |
Adjusted Payout Percentage | ||||||||||||||||||||||||||||
Non-GAAP EPS(1) | $2.24 | $2.63 | (2) | 198.5% | 60% | 119.1% | |||||||||||||||||||||||||||||
Market share client revenue trades
|
|
54.0%
|
|
|
55.2%
|
|
|
164.0%
|
|
|
16%
|
|
|
26.2%
|
|
||||||||||||||||||||
Net new client assets (dollars in billions)
|
|
$67.6
|
|
|
$92.3
|
|
|
193.5%
|
|
|
24%
|
|
|
46.4%
|
|
||||||||||||||||||||
Qualitative strategic goals | -15.9% | (3) | |||||||||||||||||||||||||||||||||
Strategic goals
|
|
40%
|
|
|
56.8%
|
|
|||||||||||||||||||||||||||||
Total
|
|
100%
|
|
|
175.9%
|
|
|||||||||||||||||||||||||||||
Committee discretion (0% to -40%)
|
|
-20%
|
|
||||||||||||||||||||||||||||||||
Maximum Individual Payout Percentage
|
|
155.9%
|
| ||||||||||||||||||||||||||||||||
Individual performance (0% to -40%)
|
|
-15% to -20%
|
|
||||||||||||||||||||||||||||||||
Actual Individual Payout Percentage
|
|
135.9% - 140.9%
|
|
(1) | Non-GAAP EPS is a non-GAAP metric and non-GAAP financial measure as defined by SEC Regulation G. Non-GAAP EPS excludes the after-tax effect of amortization of acquired intangible assets, because management does not believe it is indicative of our underlying business performance, and acquisition-related expenses, because management believes these costs are not representative of the costs of running the Companys on-going business. For a discussion of this measure and a reconciliation to the related GAAP measure, refer to Appendix A. |
TD Ameritrade 2019 Proxy Statement | 27 |
Executive Compensation and Related Information
(2) | Actual results for non-GAAP EPS were adjusted downward by the Compensation Committee from $3.34 to $2.63 to account for changes to tax laws and unplanned changes to interest rates, which the Compensation Committee determined were outside the control of the Company and appropriate to reflect the results delivered to stockholders and preserve the intent of the pre-established performance goals (which were set before the occurrence of the unplanned changes). |
(3) | The Compensation Committee applied 15.9% negative discretion to reduce the funding otherwise achieved by the quantitative strategic goals to reflect the performance assessment of the strategic goals overall. |
The following table sets forth total cash and equity compensation earned by our named executive officers for fiscal year 2018 performance.
Name | Annual Incentive Under the MIP | Total Annual Compensation ($) |
||||||||||||||||||||||
Base Salary ($) |
Cash Incentive ($) |
Equity Incentive(1) ($) |
Total Incentive |
|||||||||||||||||||||
($) | % of Target |
|||||||||||||||||||||||
Tim Hockey
|
|
1,000,000
|
|
|
2,650,050
|
|
|
6,183,450
|
|
|
8,833,500
|
|
|
135.9
|
%
|
|
9,833,500
|
| ||||||
Stephen J. Boyle
|
|
450,000
|
|
|
1,189,125
|
|
|
1,189,125
|
|
|
2,378,250
|
|
|
135.9
|
%
|
|
2,828,250
|
| ||||||
Peter J. deSilva(2)
|
|
650,000
|
|
|
1,359,000
|
|
|
1,459,000
|
|
|
2,818,000
|
|
|
140.9
|
%
|
|
3,468,000
|
| ||||||
Thomas A. Nally(2)
|
|
500,000
|
|
|
1,460,925
|
|
|
1,568,425
|
|
|
3,029,350
|
|
|
140.9
|
%
|
|
3,529,350
|
| ||||||
Steven M. Quirk
|
|
450,000
|
|
|
1,053,225
|
|
|
1,053,225
|
|
|
2,106,450
|
|
|
135.9
|
%
|
|
2,556,450
|
|
(1) | These equity incentive awards were granted in fiscal year 2019. 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. |
(2) | For Messrs. deSilva and Nally, incentive funding in excess of 135.9% was delivered in equity. |
28 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
TD Ameritrade 2019 Proxy Statement | 29 |
Executive Compensation and Related Information
30 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Fiscal Year 2019 Target Total Annual Compensation Adjustments
The Compensation Committee discussed with our CEO the target total annual compensation for fiscal year 2019 of our named executive officers (other than the CEO), and reviewed the peer group data and its assessment of performance for each named executive officer including the CEO. After considering prior performance and market data, including the competitiveness of our named executive officers compensation compared to the market data, the Compensation Committee approved the fiscal year 2019 target total annual compensation for each named executive officer as follows:
Fiscal Year 2019 Target Total Annual Compensation
Name | Base Salary ($) |
Target Cash Incentive ($) |
Target Equity Incentive ($) |
Total Target Incentive ($) |
Target Total Compensation ($) |
|||||||||||||||
Tim Hockey(1)
|
|
1,000,000
|
|
|
2,250,000
|
|
|
5,250,000
|
|
|
7,500,000
|
|
|
8,500,000
|
| |||||
Stephen J. Boyle(2)
|
|
500,000
|
|
|
1,000,000
|
|
|
1,000,000
|
|
|
2,000,000
|
|
|
2,500,000
|
| |||||
Peter J. deSilva(3)
|
|
650,000
|
|
|
1,075,000
|
|
|
1,075,000
|
|
|
2,150,000
|
|
|
2,800,000
|
| |||||
Thomas A. Nally(4)
|
|
650,000
|
|
|
1,075,000
|
|
|
1,075,000
|
|
|
2,150,000
|
|
|
2,800,000
|
| |||||
Steven M. Quirk(5)
|
|
500,000
|
|
|
1,050,000
|
|
|
1,050,000
|
|
|
2,100,000
|
|
|
2,600,000
|
|
(1) | Mr. Hockeys annual target incentive compensation was increased from $6.5 million for fiscal year 2018 to $7.5 million for fiscal year 2019, which continues to consist of 30% cash and 70% equity. |
(2) | Mr. Boyles base compensation was increased by $50,000, and his annual target incentive compensation was increased from $1.75 million for fiscal year 2018 to $2 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity. |
(3) | Mr. deSilvas annual target incentive compensation was increased from $2.0 million for fiscal year 2018 to $2.15 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity. |
(4) | Mr. Nallys base compensation was increased by $150,000. |
(5) | Mr. Quirks base compensation was increased by $50,000, and his annual target compensation was increased from $1.55 million for fiscal year 2018 to $2.1 million for fiscal year 2019, which continues to consist of 50% cash and 50% equity. |
TD Ameritrade 2019 Proxy Statement | 31 |
Executive Compensation and Related Information
Fiscal Year 2019 MIP Incentive Funding Formula
In light of the recent changes to Section 162(m) of the Code, and in consultation with Semler Brossy following review of the Companys executive compensation programs, effective for fiscal year 2019, the incentive funding formula under the MIP for fiscal year 2018 will be replaced with the design illustrated below.
FY 2019 Incentive Funding Design Incentive Funding Components Component Weightings CEO NEO Potential Funding Range Corporate
Performance 80% 70%0%, 50% - 150% Individual Performance20%30%0%, 50% - 150% Total Individual Incentive Funding Percentage:0% - 150%
Corporate Performance Formula Metric
Weighting Potential Funding Range Earnings Per Share 40% 0%, 50% - 150% Client Experience 25% 0%, 50% - 150% Revenue & Market Share 20% 0%, 50% - 150% Other Strategic Themes 15% 0%, 50% - 150% Corporate Performance Total 100% 0% - 150%
The fiscal year 2019 incentive funding formula emphasizes key, short-term, quantitative results and further supports the delivery of a superior client experience. The new design is intended to emphasize areas that the Compensation Committee believes are critical drivers of the Companys strategic and financial success over the longer-term (client experience and key strategic themes) and measures of the Companys short-term operational success (non-GAAP EPS, revenue and market share). Equity incentives will continue to be delivered 100% in the form of PRSUs, which may be adjusted up or down by up to 20% based on the Companys cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant and which also are subject to three-year cliff vesting based on continued service with us.
This report is not deemed to be soliciting material or to be filed with the SEC or subject to the SECs proxy rules or 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 of this Proxy Statement with TD Ameritrades 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 this Proxy Statement and incorporated by reference into TD Ameritrades Annual Report on Form 10-K for its 2018 fiscal year.
Wilbur J. Prezzano, Chairman Brian M. Levitt Mark L. Mitchell Allan R. Tessler
|
Compensation Committee Interlocks and Insider Participation
Messrs. Prezzano, Levitt, Mitchell and Tessler served as members of the Compensation Committee during fiscal 2018. During fiscal 2018, there were no Compensation Committee interlocks and no insider participation in Compensation Committee decisions that were required to be reported under the rules and regulations of the 1934 Act.
32 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Summary Compensation Table for Fiscal Years 2018, 2017 and 2016
The following table provides compensation information during fiscal years 2018, 2017 and 2016 for Mr. Hockey, our CEO, Mr. Boyle, our CFO, and our other three most highly compensated executive officers who were serving as executive officers as of September 30, 2018. We refer to these individuals as our named executive officers. Mr. Quirk became a named executive officer beginning in fiscal year 2017, and Mr. deSilva became a named executive officer beginning in fiscal year 2018. In accordance with SEC rules, the compensation described in this table does not include medical or group life insurance received by the named executive officers that is available generally to all salaried employees of the Company and certain perquisites and other personal benefits received by the named executive officers that in the aggregate do not exceed $10,000.
Name and Principal Position |
Year | Salary ($) |
Stock Awards(1) ($) |
Option Awards(1) ($) |
Non-Equity Incentive Plan Compensation(3) ($) |
All Other Compensation(6) ($) |
Total ($) | ||||||||||||||||||||||||||||
Tim Hockey President and CEO |
|
2018 |
|
1,000,000 | 4,911,253 | | 2,650,050 | 16,206 | 8,577,509 | ||||||||||||||||||||||||||
|
2017
|
|
|
995,192
|
|
|
4,373,946
|
|
|
|
|
|
1,976,850
|
|
|
2,002
|
|
|
7,347,990
|
| |||||||||||||||
|
2016
|
|
|
562,500
|
|
|
4,435,944
|
|
|
3,100,002
|
|
|
1,466,850
|
|
|
130,596(7)
|
|
|
9,695,892
|
| |||||||||||||||
Stephen J. Boyle Executive Vice President, CFO |
|
2018 |
|
450,433 | 945,644 | | 1,189,125(4) | 145,462 | 2,730,664 | ||||||||||||||||||||||||||
|
2017
|
|
|
449,038
|
|
|
803,380
|
|
|
|
|
|
888,150
|
|
|
150,781
|
|
|
2,291,350
|
| |||||||||||||||
|
2016
|
|
|
400,000
|
|
|
684,779
|
|
|
|
|
|
685,800
|
|
|
124,923
|
|
|
1,895,502
|
| |||||||||||||||
Peter J. deSilva |
|
2018 |
|
650,000 | 40,919 | (2) | | 6,171,361(5) | 30,842 | 6,893,121 | |||||||||||||||||||||||||
Executive Vice President, Retail Distribution |
|||||||||||||||||||||||||||||||||||
Thomas A. Nally Executive Vice President, Institutional Services |
|
2018 |
|
|
500,000 |
|
1,539,596 | | 1,460,925 | 20,784 | 3,521,305 | ||||||||||||||||||||||||
|
2017
|
|
|
500,000
|
|
|
1,011,632
|
|
|
|
|
|
1,146,000
|
|
|
21,248
|
|
|
2,678,880
|
| |||||||||||||||
|
2016
|
|
|
500,000
|
|
|
1,037,877
|
|
|
|
|
|
863,600
|
|
|
21,224
|
|
|
2,422,701
|
| |||||||||||||||
Steven M. Quirk Executive Vice President, Trader and Education |
|
2018
|
|
|
450,000
|
|
|
945,644
|
|
|
|
|
|
1,053,225
|
|
|
20,755
|
|
|
2,469,624
|
| ||||||||||||||
2017 | 450,000 | 922,381 | | 888,150 | 20,295 | 2,280,826 | |||||||||||||||||||||||||||||
(1) | The amounts in these columns 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 Companys accounting for its equity compensation plans, see the following sections of the Companys Form 10-K for the fiscal year ended September 30, 2018: |
* 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 13. Stock-based Compensation |
TD Ameritrade 2019 Proxy Statement | 33 |
Executive Compensation and Related Information
The amounts in the Stock Awards column for fiscal year 2018 represent the grant date fair value of PRSUs based on the probable outcome of the performance conditions to which the PRSUs are subject. The following table shows the value of the PRSUs at the grant date assuming that the highest level of performance conditions will be achieved (equivalent to 120% of the award), subject to adjustment with respect to any related DEUs:
Name
|
Grant Date
|
Value of PRSUs at ($)
| ||||||||
Tim Hockey
|
|
11/29/2017
|
|
|
5,893,461
|
| ||||
Stephen J. Boyle
|
|
11/29/2017
|
|
|
1,134,762
|
| ||||
Peter J. deSilva
|
|
11/29/2017
|
|
|
49,103
|
| ||||
Thomas A. Nally
|
|
11/29/2017
|
|
|
1,847,484
|
| ||||
Steven M. Quirk
|
|
11/29/2017
|
|
|
1,134,762
|
|
(2) | The amount reflects Mr. deSilvas PRSU award as prorated to reflect that he was employed with the Company, following the closing of Scottrades acquisition by the Company, during fiscal year 2018 from September 18, 2017, through September 30, 2017, as set forth in Mr. deSilvas term sheet as negotiated and entered into between Mr. deSilva and the Company in connection with the closing of the Scottrade acquisition. |
(3) | The amounts in this column include the cash component of the annual incentive awards earned under the MIP. |
(4) | The cash component of the annual incentive award earned by Mr. Boyle under the MIP was deferred by him and will be paid in the form of Company common stock upon the termination of Mr. Boyles employment with the Company, in equal, annual installments over a period of ten years (or in the event of his earlier death or disability that occurs during employment, in a lump sum shortly following such event). |
(5) | The amount includes (a) the cash component of the annual incentive award earned under the MIP of $1,359,000, and (b) cash bonus payments that were paid under Mr. deSilvas 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 2018, representing one-third of the amount that Mr. deSilva became eligible to receive based on performance achieved for Scottrades fiscal year 2016 and prior to the closing of the Companys acquisition of Scottrade that occurred in the Companys fiscal year 2017, (ii) $423,548 that was paid during fiscal year 2018, representing one-third of the amount that Mr. deSilva became eligible to receive based on performance achieved with respect to Scottrades fiscal year 2017 and prior to the closing of the Companys acquisition of Scottrade, and (iii) $4,087,423 of which was paid during fiscal year 2018 under the SAR award granted by Scottrade, representing the entire amount that Mr. deSilva became eligible to receive in connection with the Companys acquisition of Scottrade in fiscal year 2017, in each case of (i) through (iii), subject to Mr. deSilvas continued employment with the Company (as the successor to Scottrade) through the applicable vesting dates in fiscal year 2018. |
34 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
(6) | The amounts in this column are summarized in the following table: |
Name
|
Year
|
Income and Taxes Reimbursed(a) ($)
|
Employer Cash Contributions to Companys Qualified 401(k) Profit Sharing Plan ($)
|
Other(c) ($)
|
Total ($)
| ||||||||||||||||||||
Tim Hockey |
2018 | 9,092 | | 7,114 | 16,206 | ||||||||||||||||||||
2017 | 813 | | 1,189 | 2,002 | |||||||||||||||||||||
|
2016
|
|
|
73,223
|
|
|
4,759(b)
|
|
|
52,614
|
|
|
130,596
|
| |||||||||||
Stephen J. Boyle |
2018 | 64,412 | 20,490 | 60,560 | 145,462 | ||||||||||||||||||||
2017 | 66,919 | 25,228 | 58,635 | 150,781 | |||||||||||||||||||||
|
2016
|
|
|
60,221
|
|
|
11,422
|
|
|
53,280
|
|
|
124,923
|
| |||||||||||
Peter J. deSilva |
|
2018
|
|
|
|
|
|
30,842
|
|
|
|
|
|
30,842
|
| ||||||||||
Thomas A. Nally |
2018 | | 20,784 | | 20,784 | ||||||||||||||||||||
2017 | 261 | 20,295 | 693 | 21,248 | |||||||||||||||||||||
|
2016
|
|
|
629
|
|
|
20,595
|
|
|
|
|
|
21,224
|
| |||||||||||
Steven M. Quirk |
2018 | | 20,755 | | 20,755 | ||||||||||||||||||||
|
2017
|
|
|
|
|
|
20,295
|
|
|
|
|
|
20,295
|
|
(a) | The amount of taxes reimbursed by the Company for fiscal year 2018 relate to Company-paid tax preparation services for Mr. Hockey and housing reimbursement for Mr. Boyle. |
(b) | During fiscal year 2017, this amount subsequently was adjusted to reflect that Mr. Hockey would not receive any fiscal year 2016 matching contribution and accordingly, the payment was reversed. |
(c) | The fiscal year 2018 amounts consisted of tax preparation services for Mr. Hockey and housing reimbursement for Mr. Boyle. |
(7) | This amount includes employer cash contributions to the Companys qualified 401(k) profit sharing plan for Mr. Hockey for fiscal year 2016 in the amount of $4,759, as previously disclosed in the Companys proxy statement filed with the SEC on January 4, 2017. Pursuant to his employment agreement, Mr. Hockey is not eligible for matching and profit sharing contributions under the Companys 401(k) plan while he continues to accrue benefits under the TD Bank Group non-qualified pension plan through June 30, 2018. An adjustment was made during fiscal year 2017 to reflect that Mr. Hockey would not receive such fiscal year 2016 matching contribution and accordingly, the payment of $4,759 was reversed. |
TD Ameritrade 2019 Proxy Statement | 35 |
Executive Compensation and Related Information
Grants of Plan-based Awards During Fiscal Year 2018
The following table summarizes equity awards granted to our named executive officers in fiscal year 2018 under our LTIP and non-equity incentive plan awards granted to our named executive officers in fiscal year 2018 under our MIP. Equity awards granted in fiscal year 2019 for services rendered in fiscal year 2018 are summarized in the Compensation Discussion and Analysis under the heading Actions Since End of Fiscal Year 2018.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
Grant Date ($)
| |||||||||||||||||||||||||||||||||||||||||||
Name
|
Grant Date
|
Approval
|
Threshold ($)
|
Target ($)
|
Maximum ($)
|
Threshold (#)
|
Target (#)
|
Maximum (#)
| |||||||||||||||||||||||||||||||||||||
Tim Hockey |
| | 1,950,000(2) | 3,900,000 | |||||||||||||||||||||||||||||||||||||||||
|
11/29/2017(1)
|
|
|
11/17/2017
|
|
|
74,895
|
|
|
93,619
|
|
|
112,342
|
|
|
4,911,253
|
| ||||||||||||||||||||||||||||
Stephen J. Boyle |
| | 875,000 | 1,750,000 | |||||||||||||||||||||||||||||||||||||||||
|
11/29/2017(1)
|
|
|
11/16/2017
|
|
|
14,420
|
|
|
18,026
|
|
|
21,631
|
|
|
945,644
|
| ||||||||||||||||||||||||||||
Peter J. deSilva |
| | 1,000,000(2) | 2,000,000 | |||||||||||||||||||||||||||||||||||||||||
|
11/29/2017(1)
|
|
|
11/16/2017
|
|
|
624
|
|
|
780
|
|
|
936
|
|
|
40,919
|
| ||||||||||||||||||||||||||||
Thomas A. Nally |
| | 1,075,000(2) | 2,150,000 | |||||||||||||||||||||||||||||||||||||||||
|
11/29/2017(1)
|
|
|
11/16/2017
|
|
|
23,478
|
|
|
29,348
|
|
|
35,217
|
|
|
1,539,596
|
| ||||||||||||||||||||||||||||
Steven M. Quirk |
| | 775,000(2) | 1,550,000 | |||||||||||||||||||||||||||||||||||||||||
|
11/29/2017(1)
|
|
|
11/16/2017
|
|
|
14,420
|
|
|
18,026
|
|
|
21,631
|
|
|
945,644
|
|
(1) | Represents the equity component of the fiscal year 2017 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 named executive officers service with the Company through such date. The performance criteria relate to the Companys 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). |
(2) | Represents the cash incentive component of the fiscal year 2018 annual incentives payable to the named executive officer pursuant to the MIP. |
36 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Outstanding Equity Awards at Fiscal Year-end September 30, 2018
The following table provides information on the holdings of stock option and stock awards by our named executive officers as of September 30, 2018, the last day of fiscal year 2018. This table includes unexercised and unvested option awards, unvested RSUs and unvested DEUs associated with the outstanding RSU awards. The vesting schedule is shown for each grant in the footnotes to the table. The market value of the stock awards is based on $52.83, the closing market price of the Companys common stock on September 28, 2018 (the last business day of fiscal year 2018).
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
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 ($) |
Equity Rights That (#)(2) |
Equity Rights That ($) |
Vesting Date(2) | ||||||||||||||||||||||||||||||||||||
Tim Hockey |
251,623 | 251,624 | (1)(2) | 27.97 | 1/21/2026 | ||||||||||||||||||||||||||||||||||||||||
166,647 | 8,803,961 | 1/21/2021(3) | |||||||||||||||||||||||||||||||||||||||||||
94,644 | 5,000,043 | 11/29/2020(4) | |||||||||||||||||||||||||||||||||||||||||||
|
107,052
|
|
|
5,655,557
|
|
|
11/22/2019(4)
|
| |||||||||||||||||||||||||||||||||||||
Stephen J. Boyle |
18,222 | 962,668 | 11/29/2020(4) | ||||||||||||||||||||||||||||||||||||||||||
19,659 | 1,038,585 | 11/22/2019(4) | |||||||||||||||||||||||||||||||||||||||||||
|
19,724
|
|
|
1,042,019
|
|
|
11/25/2018(5)
|
| |||||||||||||||||||||||||||||||||||||
Peter J. deSilva |
786 | 41,524 | 11/29/2020(4) | ||||||||||||||||||||||||||||||||||||||||||
11,607 | 613,198 | 9/20/2020(5) | |||||||||||||||||||||||||||||||||||||||||||
|
11,607
|
|
|
613,198
|
|
|
9/20/2022(6)
|
| |||||||||||||||||||||||||||||||||||||
Thomas A. Nally |
29,668 | 1,567,360 | 11/29/2020(4) | ||||||||||||||||||||||||||||||||||||||||||
24,757 | 1,307,912 | 11/22/2019(4) | |||||||||||||||||||||||||||||||||||||||||||
|
29,893
|
|
|
1,579,247
|
|
|
11/25/2018(5)
|
| |||||||||||||||||||||||||||||||||||||
Steven M. Quirk |
18,222 | 962,668 | 11/29/2020(4) | ||||||||||||||||||||||||||||||||||||||||||
22,571 | 1,192,426 | 11/22/2019(4) | |||||||||||||||||||||||||||||||||||||||||||
|
26,970
|
|
|
1,424,825
|
|
|
11/25/2018(5)
|
|
(1) | These nonqualified stock options are scheduled to vest in four, equal installments on January 21, 2017, 2018, 2019 and 2020, subject to Mr. Hockeys 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 are scheduled to vest in full on the five-year anniversary of the grant date, subject to Mr. Hockeys continued employment or other service with the Company through such date. |
(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 in full on the three-year anniversary of the grant date based upon achievement of specified performance criteria, subject to the named executive officers employment or other service with the Company through such date. The performance criteria relate to the Companys 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, measured over a period of three years beginning on the first day of fiscal year 2017 with respect to PRSUs with a vesting date of November 22, 2019, or fiscal year 2018 with respect to PRSUs with a vesting date of November 29, 2020). 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 named executive officers 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 named executive officers continued employment with the Company through such date. |
TD Ameritrade 2019 Proxy Statement | 37 |
Executive Compensation and Related Information
Option Exercises and Stock Vested During Fiscal Year 2018
The following table summarizes stock awards that vested for our named executive officers during fiscal year 2018.
Stock Awards
|
||||||||
Name
|
Number of Shares Acquired on Vesting (#)
|
Value Realized on Vesting ($)
|
||||||
Tim Hockey
|
|
|
|
|
|
| ||
Stephen J. Boyle(1)
|
|
84,275
|
|
|
4,619,113
|
| ||
Peter J. deSilva
|
|
|
|
|
|
| ||
Thomas A. Nally
|
|
26,789
|
|
|
1,315,876
|
| ||
Steven M. Quirk
|
|
19,876
|
|
|
976,309
|
|
(1) | The settlement of Mr. Boyles RSU award covering 79,767 shares granted on July 8, 2015, was deferred pursuant to the terms of the RSU award agreement. 100% of the award vested on July 8, 2018, including 4,508 DEUs earned for a total of 84,275 shares. The deferred stock units are scheduled to be paid to Mr. Boyle in ten, equal, annual installments upon the termination of his employment other than due to his death or disability, with the first installment paid shortly after the termination of his employment and remaining installments paid on each of the next nine anniversaries of the termination. In the event that Mr. Boyle dies or becomes disabled during his employment, the deferred stock units instead will be issued in lump sum shortly following the date of the death or disability. |
Nonqualified Deferred Compensation for Fiscal Year 2018
The following table summarizes deferred compensation for our named executive officers during fiscal year 2018 that is not tax-qualified.
Name
|
Executive ($)
|
Company ($)
|
Aggregate ($)
|
Aggregate ($)
|
Aggregate ($)
| ||||||||||||||||||||
Tim Hockey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Stephen J. Boyle |
888,150(1) | | 128,147(3)(4) | | 1,529,429(6) | ||||||||||||||||||||
|
4,510,534(2)
|
|
|
-157,133(4)(5)
|
|
|
4,353,916(7)
|
| |||||||||||||||||
Peter J. deSilva
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Thomas A. Nally
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Steven M. Quirk
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Mr. Boyle deferred all of the cash component of his annual incentive award payable to him under the MIP for fiscal year 2017, which was converted into 18,076 deferred stock units during fiscal year 2018, and will be payable to him in shares of Company common stock. Upon the termination of his employment with the Company or his retirement, his deferred stock units will be paid in ten, annual installments following termination (with the first payment occurring on the one-year anniversary of termination and each installment comprising a number of shares of Company common stock equal to the total number of deferred stock units outstanding (including DEUs), divided by the number of remaining installments to be paid). The full amount of the cash component of the annual incentive award payable to Mr. Boyle under the MIP for fiscal year 2017 in the amount of $888,150 was included in the Summary Compensation Table for Mr. Boyle for fiscal year 2017 under the column titled Non-Equity Incentive Plan Compensation. |
(2) | 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. Boyles 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. 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. |
38 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
(3) | The amount of aggregate earnings in fiscal year 2018 represents $18,107 in dividends earned during fiscal year 2018 on the deferred stock units, which dividends will be payable in shares, and the value of any increase or decrease in the stock price of the shares. |
(4) | The amounts earned for Mr. Boyles deferred stock units were not subject to any above-market or preferential earnings during fiscal year 2018 or any prior year reported in the Summary Compensation Table. |
(5) | The amount of aggregate earnings in fiscal year 2018 represents $17,282 in dividends earned during fiscal year 2018 on the deferred stock units, which dividends will be payable in shares, and the value of any increase or decrease in the stock price of the shares. |
(6) | The aggregate balance at fiscal year end 2018 represents the value of 28,950 deferred stock units of Company common stock based on $52.83 per share, the closing market price of the Companys common stock on September 28, 2018 (the last business day of fiscal year 2018). 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 Companys 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 2018. 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 Companys common stock on the dividend payment date. The program will provide for earlier, lump sum distribution in the event that Mr. Boyle becomes disabled while employed with the Company, and also permits distributions in connection with an unforeseeable emergency. |
(7) | The aggregate balance at fiscal year end 2018 represents the value of 82,603 shares of Company common stock deferred under the RSU described in footnote (2) above (including DEUs earned on the deferred stock units, which also remain deferred), based on $52.83 per share, the closing market price of the Companys common stock on September 28, 2018 (the last business day of fiscal year 2018). |
Potential Payments Upon Termination or Change in Control
Introduction and Overview
The Company has entered into employment agreements with Messrs. Hockey, Boyle and deSilva. Messrs. Nally and Quirk do not have employment agreements. The employment agreements and certain compensation plans and award agreements require the Company to provide compensation and benefits to the executives in the event of certain qualifying terminations of employment, including in connection with a change in control of the Company. Payments are not triggered automatically upon the occurrence of a change in control. Rather, our executives will receive change in control benefits only if their employment is terminated in certain instances following a change in control.
Compensation Plans and Award Agreements
Management Incentive Plan and Long-Term Incentive Plan
Under the MIP, in the event of death or disability prior to the payment of a scheduled award, compensation will be paid to the executives estate or other authorized person. The LTIP provides that in the event of a change in control, unless determined otherwise by the administrator of the LTIP, in the event a successor to the Company does not assume or substitute or replace outstanding awards of options, RSUs and PRSUs, those awards will vest in full. The RSU and PRSU award agreements generally provide for settlement as soon as practicable upon the vesting of the award, except in limited circumstances for purposes of complying with any applicable laws (such as requirements relating to deferred compensation). The option, RSU and PRSU award agreements provide for the following treatment of named executive officers awards upon death, disability, retirement, termination without cause, resignation for good reason, and change in control:
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. Hockeys RSUs granted January 1, 2016)
PRSU award remains outstanding and eligible to vest based on actual performance
| |
Termination by the Company without cause |
Mr. Hockeys RSU award granted January 1, 2016, vests in full, and other RSUs held by a named executive officer 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 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 named executive officers
Mr. Hockeys option award will continue to vest in accordance with its vesting schedule without regard to any continued employment or director service requirement
|
TD Ameritrade 2019 Proxy Statement | 39 |
Executive Compensation and Related Information
Triggering Event
|
Treatment of Award
| |
Resignation by the executive for good reason |
Mr. Hockeys RSUs granted January 1, 2016, vests in full. Mr. deSilvas 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. deSilvas PRSUs for which performance already has been 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. Hockeys 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 named executive officers, 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
| |
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. Hockeys 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. Boyles RSU award granted July 8, 2015, that accelerates vesting will be paid out in annual installments over a 9-year period following termination
|
Certain Definitions Under RSU, PRSU and Option Award Agreements and LTIP
Under the LTIP, change in control generally means the occurrence of any of the following:
| 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 Companys 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. |
Transactions also are required to qualify as a change in control within the meaning of Code section 409A in order to constitute a change in control under the LTIP.
40 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Under the RSU and PRSU award agreements, a change in control will not be deemed to occur, for purposes of the treatment described in the award agreement in connection with a change in control, if TD Bank Financial Group acquires the Companys outstanding shares of common stock or substantially all of the Companys assets.
Under the PRSU award agreements, retirement generally means a termination by the Company of the executives employment with the Company other than for cause, death or disability after the executive has attained at least age 55 and at least ten years of continuous service with the Company. With respect to Mr. Hockey, if Mr. Hockey has served as CEO for at least five years, then the term Retirement under his PRSUs will have the same meaning as under his employment agreement.
Under the RSU award agreements (other than for Mr. Hockey), retirement generally means a termination by the Company of the executives employment with the Company other than for cause after the executive has attained age 55 and at least ten years of continuous service with the Company.
Under the RSU and PRSU award agreements (other than with respect to Mr. Hockeys awards), cause generally means:
| failure to substantially perform the executives 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 Companys applicable associate handbook. |
Under Mr. Hockeys RSU, PRSU and option award agreements, cause and good reason generally have the same meaning as provided in Mr. Hockeys employment agreement.
In addition, in accordance with the Companys executive compensation practices, unless otherwise specified in an employment agreement, named executive officers will generally receive the following severance benefits upon any termination by the Company without cause including following a change in control: (a) four weeks of base salary for each completed year of service (or minimum of 12 weeks), up to a maximum of 104 weeks, (b) four weeks of annual cash incentive for each completed year of service, up to a maximum of 104 weeks, calculated based on target performance, (c) continued Company-paid employer portion of premium costs for medical and dental coverage for a period equal to one month for each completed year of service (or minimum of six months), up to a maximum of 18 months, and (d) eligibility to receive the cash portion of annual incentive, based on actual performance and prorated for the period of the fiscal year that the named executive officer remained employed. These severance benefits are subject to a release of claims in favor of the Company, and non-competition and non-solicitation obligations for a period of 12 months following termination of employment.
Employment Agreements of Named Executive Officers
President and CEO Tim Hockey
On November 9, 2015, Mr. Hockey entered into an employment agreement under which he became the Companys president effective January 2, 2016, and CEO effective October 1, 2016. Below is a brief summary of certain terms of his employment agreement.
Severance benefits under his employment agreement are summarized further below under the section titled Summary Table Potential Payments Upon Termination or Change in Control.
TD Ameritrade 2019 Proxy Statement | 41 |
Executive Compensation and Related Information
Provision
|
Summary
| |
Position |
President, effective January 2, 2016
CEO, effective October 1, 2016
| |
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
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
| |
Annual Cash Incentive |
Participation in MIP with annual cash incentive target of $1,575,000 for fiscal year 2016, and increased by the Compensation Committee to $1,725,000 beginning with fiscal year 2017
| |
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
| |
Air Travel |
Mr. Hockey is entitled to fly on private aircraft when traveling on Company-related business at the expense of the Company
| |
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 to the extent important for security purposes
| |
Taxes |
Tax preparation services paid by the Company in years where Mr. Hockeys employment income is recognized in both Canada and the United States.
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.
| |
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 Companys 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.
|
42 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
Certain Definitions Under Mr. Hockeys Employment Agreement
Good reason generally means Mr. Hockeys resignation within 30 days following the expiration of any Company cure period following the occurrence of one or more of the following, without Mr. Hockeys written consent:
| a significant reduction of Mr. Hockeys 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. Hockeys 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. Hockeys 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. |
In order to resign for good reason, Mr. Hockey is required to deliver written notice to the Company within 90 days of the event constituting good reason and provide the Company with a reasonable cure period of at least 30 days and not more than 90 days following the date of written notice.
Cause generally means the occurrence of any of the following:
| 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 Companys 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 Companys reputation or business; |
| willful, substantial and continuing failure to perform the reasonable duties of Mr. Hockeys 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. Hockeys 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. |
Change in control generally has the same meaning as provided under the LTIP.
Executive Vice President, Chief Financial Officer Stephen J. Boyle
On March 25, 2015, Mr. Boyle entered into a term sheet agreement to become the Companys executive vice president, finance effective July 1, 2015, and CFO effective October 1, 2015. Below is a brief summary of certain terms of his agreement. Severance benefits under his term sheet agreement are summarized further below under the section titled Summary Table Potential Payments Upon Termination or Change in Control.
TD Ameritrade 2019 Proxy Statement | 43 |
Executive Compensation and Related Information
Provision | Summary | |
Position |
Executive Vice President, Finance, effective July 1, 2015
Executive Vice President, CFO, effective October 1, 2015
| |
Base Salary |
$400,000 per year, and increased by the Compensation Committee to $450,000 beginning with fiscal year 2017
| |
Annual Cash Incentive |
Participation in MIP with annual cash incentive target of $675,000, and increased by the Compensation Committee to $775,000 beginning with fiscal year 2017
| |
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, and increased by the Compensation Committee to $775,000 beginning with fiscal year 2017
| |
Housing Allowance |
Company-paid monthly housing allowance for one bedroom work apartment and reimbursement for related taxes for the benefit
| |
Conditions to Receipt
|
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
|
Certain Definitions Under Mr. Boyles Term Sheet
Cause generally means the occurrence of any of the following:
| 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. Boyles credibility or reputation no longer conforms to the standard of the Companys executives; or |
| Mr. Boyles breach of any restrictive covenants to which he is subject. |
Change in control generally means the occurrence of any of the following:
| 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 Companys 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. |
44 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
However, the acquisition by TD Bank Group of Company common stock or substantially all of the Companys assets will not be considered a change in control.
President, Retail Distribution Peter J. deSilva
Mr. deSilva entered into a term sheet, effective September 18, 2017, to become the Companys President, Retail Distribution. Below is a brief summary of certain terms of his agreement. Severance benefits under his term sheet are summarized further below under the section titled Summary Table Potential Payments Upon Termination or Change in Control.
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
| |
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
| |
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
|
Certain Definitions Under Mr. deSilvas Term Sheet
Cause generally means the occurrence of any of the following:
| 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. deSilvas credibility or reputation no longer conforms to the standard appropriate for the Companys executives; or |
| Mr. deSilvas breach of any restrictive covenants to which he is subject. |
Change in control generally has the same meaning as provided under the LTIP.
Mr. deSilva entered into a SAR award agreement dated January 1, 2016 with Scottrade (before our acquisition of Scottrade). The SAR award agreement provided that, for each of calendar years 2016 and 2017, Mr. deSilva would become eligible to receive a cash bonus determined based on Scottrades consolidated pre-tax earnings. Cash bonus amounts are paid in three, equal, annual installments, with the first installment paid on the last day of the applicable year of performance, in each case subject to Mr. deSilvas continued employment through the end of the applicable year. In the event of a termination of Mr. deSilvas employment as a result of his death or disability, or termination by Scottrade or any of its affiliates (including the Company) without cause, any cash bonuses that have not yet vested under the SAR award based on Mr. deSilvas continued employment, will accelerate vesting in full and become payable to him. In connection with the Companys acquisition of Scottrade, Mr. deSilva became eligible to receive, and was paid, an amount equal to $4,087,423. Other than these cash bonuses, following the closing of the Companys acquisition of Scottrade, no new amounts of cash bonuses will become eligible to be earned or paid under Mr. deSilvas SAR award.
TD Ameritrade 2019 Proxy Statement | 45 |
Executive Compensation and Related Information
Summary Table Potential Payments Upon Termination or Change in Control
The following table summarizes potential payments upon termination or change in control for the named executive officers who were still serving as executive officers as of September 30, 2018. Each of the named executive officers will be entitled to receive change in control benefits only if his employment is terminated in connection with or following a change in control. Cause and good reason, where applicable, are defined above in the summary of employment agreements for Messrs. Hockey, Boyle and deSilva and any applicable award agreements. Except as specifically indicated in the footnotes to the table below, we used the following assumptions in calculating the amounts included the table and discussion below:
| As required by SEC rules, we assume the triggering event causing the payment occurred on September 28, 2018, the last business day of our last completed fiscal year, and the price per share of the common stock of the Company was $52.83, the closing market price on that date. |
| We treat all amounts of base salary and annual cash incentive that were earned and accrued, including unused vacation, as of the date of the triggering event as paid immediately prior to the triggering event. |
These payments and benefits are payable by the Company (or its successor as applicable, in the case of any payments and benefits occurring after a change in control).
Name
|
Event of Termination
|
Salary, Bonus and Cash ($)
|
Option Awards ($)
|
RSU ($)
|
PRSU ($)
|
Other Benefits and Perquisites ($)
|
Total ($)
|
|||||||||||||||||||
Tim Hockey(1)(2) |
Termination without cause or resignation for good reason (including following a change in control), death or disability
|
|
5,443,700
|
|
|
6,255,373
|
|
|
8,803,961
|
|
|
16,860,219
|
|
|
23,536
|
|
|
37,386,789
|
| |||||||
Stephen J. Boyle(2) |
Termination without cause (including following a change in control), retirement | 2,140,385 | | 1,042,019 | 3,194,472 | 11,636 | (8) | 6,388,512 | ||||||||||||||||||
Death or disability
|
|
|
|
|
|
|
|
1,042,019
|
|
|
3,194,472
|
|
|
|
|
|
4,236,491
|
| ||||||||
Peter J. deSilva(3) |
Termination without cause within 24 months after a change in control | 2,798,485 | | 1,226,396 | 1,505,549 | 7,944 | 5,538,374 | |||||||||||||||||||
Termination without cause | 2,798,485 | | 327,123 | (6) | | (6) | 7,944 | 3,133,552 | ||||||||||||||||||
Resignation for good reason within 12 months following a change in control | 1,650,000 | | 1,226,396 | 1,505,549 | 7,944 | 4,389,889 | ||||||||||||||||||||
Resignation for good reason | 1,650,000 | | 327,123 | (6) | | (6) | 7,944 | 1,985,067 | ||||||||||||||||||
Death or disability
|
|
|
|
|
|
|
|
1,226,396
|
|
|
1,505,549
|
|
|
|
|
|
2,731,945
|
| ||||||||
Thomas A. Nally |
Termination without cause within 24 months after a change in control | 2,907,692 | | 1,579,247 | 4,449,078 | 11,971 | (9) | 8,947,988 | ||||||||||||||||||
Termination without cause | 2,907,692 | | 1,052,796 | (6) | 435,953 | (6) | 11,971 | (9) | 4,408,412 | |||||||||||||||||
Death or disability
|
|
|
|
|
|
|
|
1,579,247
|
|
|
4,449,078
|
|
|
|
|
|
6,028,326
|
| ||||||||
Steven M. Quirk |
Termination without cause within 24 months after a change in control | 1,036,538 | | 1,424,825 | 3,211,958 | 15,894 | (9) | 5,689,215 | ||||||||||||||||||
Termination without cause | 1,036,538 | | 949,831 | (6) | 397,440 | (6) | 15,894 | (9) | 2,399,703 | |||||||||||||||||
Death or disability
|
|
|
|
|
|
|
|
1,424,825
|
|
|
3,211,958
|
|
|
|
|
|
4,636,783
|
|
46 | TD Ameritrade 2019 Proxy Statement |
Executive Compensation and Related Information
(1) | Under Mr. Hockeys 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. Mr. Hockeys employment agreement also provides for payout, if any, based on actual performance, of a prorated portion of his cash incentive for the year of termination of employment. Mr. Hockeys actual cash incentive earned for the full fiscal year 2018 was $2,650,050. In addition, under his employment agreement, Mr. Hockey will accelerate vesting with respect to all time-based RSUs, and will 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 is 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. |
(2) | As of September 28, 2018, of the named executive officers, only Mr. Boyle was eligible for retirement with respect to the retirement-related vesting benefits under the RSU and PRSU award agreements. Under Mr. Hockeys employment agreement, if Mr. Hockey resigns due to his voluntary retirement after the five-year anniversary of his becoming the Companys CEO, then he will receive continued vesting of his options and PRSUs without regard to any continued service requirement, and his options will remain exercisable for the remaining portion of its original term. Mr. Hockey was not eligible to receive these vesting benefits had he voluntarily resigned on September 28, 2018. |
(3) | Under Mr. deSilvas term sheet, Mr. deSilva will receive continued payments of base salary for 12 months and a lump sum cash bonus payment of $1,000,000 (which is the cash portion of his annual incentive at target). Mr. deSilvas SAR award agreement provides that in the event of Mr. deSilvas 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) | Other than with respect to Messrs. Hockey and deSilva, the amounts represent the cash severance payments under Messrs. Boyles term sheet agreement or minimum cash severance payments with respect to the other named executive officers under the Companys 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 Companys executive compensation practices also provide for prorated payment of the cash portion of the named executive officers annual incentive based on actual performance. The actual cash incentive earned for the full fiscal year 2018 by each of Messrs. Nally and Quirk was $1,460,925 and $1,053,225, respectively. |
(5) | 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. Boyles 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. |
(6) | Vesting occurs on a prorated basis, as described further above. |
(7) | Amounts represent PRSU awards at target levels. Amounts include the PRSU awards granted to named executive officers 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 named executive officers 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. |
(8) | Under Mr. Boyles 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. |
(9) | 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 Companys 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 28, 2018, Messrs. Nally and Quirk had completed 24 and 11 years of service, respectively. |
TD Ameritrade 2019 Proxy Statement | 47 |
Executive Compensation and Related Information
In accordance with Item 402(u) of Regulation S-K under the Securities Act of 1933, as amended, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee.
The annual total compensation of our median employee, excluding our CEO, for our fiscal year 2018 was $87,721.
|
The annual total compensation of our CEO for our fiscal year 2018 was $8,577,509.
|
The ratio of the annual total compensation of our CEO to that of our median employee for our fiscal year 2018 was estimated to be 98 to 1.
|
The median employee generally is the employee whose annual total compensation is at the midpoint of our employees, ranked in order of their compensation amounts. We used W-2 compensation as the compensation measure for determining our median employee, as permitted by the SEC rules. We reviewed the W-2 compensation information for the approximately 9,291 individuals who, for purposes of this disclosure, as of September 30, 2018, the last day of our fiscal year 2018, were employed by us and were located in the U.S., excluding our CEO.
We excluded all of our approximately 17 employees who are located outside of the U.S., including approximately six employees in Hong Kong and 11 employees in Singapore. Our non-U.S. employees constituted less than 5% of our estimated total of 9,308 employees as of September 30, 2018.
Based on W-2 compensation information, we identified a small subset of employees whose compensation was closest to or constituted the median W-2 compensation amount. We then calculated the fiscal year 2018 annual total compensation of each employee in the subset in a manner consistent with the SEC rules for determining the compensation of our named executive officers disclosed in the Summary Compensation Table. The employee whose annual total compensation was at the median of the subset was selected as the median employee whose annual total compensation was compared to the annual total compensation of our CEO for purposes of the ratio set forth above. We did not make any cost of living adjustments.
48 | TD Ameritrade 2019 Proxy Statement |
Stock Ownership and Related Information |
Stock Ownership of Certain Beneficial Owners and Management
As of the Record Date, there were 561,142,554 shares of common stock issued and outstanding. The following table sets forth, as of the Record Date, the beneficial ownership of the Companys common stock by each of the named executive officers, by current directors and nominees, by each person believed by the Company to beneficially own more than 5% of the Companys common stock and by all current executive officers and directors of the Company as a group. Shares of common stock subject to options that are exercisable within 60 days of the Record Date are deemed beneficially owned by the person holding such options and are treated as outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. RSUs held by our directors and officers and PRSUs held by our officers are included below, but do not have voting rights until the units vest and the underlying shares are distributed. Deferred stock units held by our directors and officers are included below, but do not have voting rights until the underlying shares are distributed to the holder pursuant to his or her deferral election. The business address of each of the Companys directors and executive officers is: TD Ameritrade Holding Corporation, 200 South 108th Avenue, Omaha, Nebraska 68154.
Name |
Number of Shares of Common Stock |
Percent of Shares of Common Stock | ||||
Directors and Executive Officers
|
||||||
Joseph H. Moglia, Chairman
|
|
125,000
|
|
*
| ||
Tim Hockey,(1) President, CEO, Director
|
|
865,377
|
|
*
| ||
Stephen J. Boyle,(2) Executive Vice President, CFO
|
|
182,450
|
|
*
| ||
Peter J. DeSilva,(3) Executive Vice President, Retail Distribution
|
|
56,850
|
|
*
| ||
Thomas A. Nally,(4) Executive Vice President, Institutional Services
|
|
182,336
|
|
*
| ||
Steven M. Quirk,(5) Executive Vice President, Trading and Education
|
|
98,623
|
|
*
| ||
Lorenzo A. Bettino,(6) Director
|
|
15,736
|
|
*
| ||
V. Ann Hailey,(7) Director
|
|
9,685
|
|
*
| ||
Brian M. Levitt,(8) Director
|
|
13,993
|
|
*
| ||
Karen E. Maidment,(9) Director
|
|
67,811
|
|
*
| ||
Bharat B. Masrani, Director
|
|
|
|
*
| ||
Irene R. Miller,(10) Director
|
|
9,507
|
|
*
| ||
Mark L. Mitchell,(11) Director
|
|
57,242
|
|
*
| ||
Wilbur J. Prezzano,(12) Director
|
|
114,921
|
|
*
| ||
Todd M. Ricketts,(13) Director
|
|
457,804
|
|
*
| ||
Allan R. Tessler,(14) Director
|
|
74,998
|
|
*
| ||
All Directors and Executive Officers as a group(15) (17 persons)
|
|
2,463,381
|
|
*
|
TD Ameritrade 2019 Proxy Statement | 49 |
Stock Ownership and Related Information
Name |
Number of Shares of Common Stock |
Percent of Shares of Common Stock | ||||
5% Stockholders
|
||||||
The Toronto-Dominion Bank(16) Toronto-Dominion Centre P.O. Box 1 Toronto, Ontario, Canada M5K IA2
|
|
233,993,484 |
|
41.7% | ||
T. Rowe Price Associates, Inc.(17) P.O. Box 89000 Baltimore, MD 21289
|
|
74,489,572 |
|
13.3% | ||
J. Joe Ricketts,(18) Founder C/O Hugo Enterprises LLC 1395 S. Platte River Drive Denver, CO 80223
|
|
36,174,906 |
|
6.4% |
* | Less than 1% of the issued and outstanding shares. |
(1) | Consists of 377,436 shares issuable upon the exercise of options exercisable within 60 days of the Record Date, 167,621 RSUs and 320,320 PRSUs. |
(2) | Consists of 9,558 shares held by Mr. Boyle directly, 112,205 shares held for the benefit of Mr. Boyle in a deferred compensation account under the Companys Executive Deferred Compensation Program and 60,687 PRSUs. |
(3) | Consists of 5,000 shares held by Mr. deSilva directly, 23,348 RSUs and 28,502 PRSUs. |
(4) | Consists of 97,804 shares held by Mr. Nally directly and 84,532 PRSUs. |
(5) | Consist of 37,588 shares held by Mr. Quirk directly, and 61,035 PRSUs. |
(6) | Consists of 11,272 shares held by Mr. Bettino directly, 2,360 RSUs, and 2,104 stock units held in a deferred compensation account for Mr. Bettino. |
(7) | Consists of 2,360 RSUs and 7,325 stock units held in a deferred compensation account for Ms. Hailey. |
(8) | Consists of 5,000 shares held by Mr. Levitt directly, 2,360 RSUs and 6,633 stock units held in a deferred compensation account for Mr. Levitt. |
(9) | Consists of 3,582 shares held by Ms. Maidment directly, 2,360 RSUs and 61,869 stock units held in a deferred compensation account for Ms. Maidment. |
(10) | Consists of 7,147 shares held by Ms. Miller directly and 2,360 RSUs. |
(11) | Consists of 26,585 shares held by Mr. Mitchell directly, 2,360 RSUs and 28,297 stock units held in a deferred compensation account for Mr. Mitchell. |
(12) | Consists of 63,441 shares held by Mr. Prezzano directly, 2,360 RSUs and 49,120 stock units held in a deferred compensation account for Mr. Prezzano. |
(13) | Consists of 175,671 shares held by Mr. Todd M. Ricketts directly, 2,360 RSUs, 7,769 shares held by Mr. Ricketts spouse and 272,004 shares held in trusts for the benefit of Mr. Ricketts spouse and children. |
(14) | Consists of 62,638 shares held by Mr. Tessler directly, 2,360 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. |
(15) | Includes 1,028,382 shares of common stock, 377,436 shares issuable upon the exercise of options exercisable within 60 days of the Record Date, 790,010 RSUs and PRSUs and 267,553 stock units held in deferred compensation accounts. |
(16) | Based on Schedule 13D/A filed on September 20, 2017 by TD, TD Group US Holdings LLC, a wholly-owned subsidiary of TD, and TD Luxembourg International Holdings S.a.r.l., a wholly-owned subsidiary of TD Group US Holdings LLC. |
(17) | Based on a Form 13F filed on November 14, 2018 by T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. claimed sole voting authority with respect to 25,987,803 shares and no voting authority with respect to 48,501,769 shares. These securities are owned by various individual and institutional investors, 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. |
(18) | Based on Schedule 13G filed on February 3, 2016 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. |
50 | TD Ameritrade 2019 Proxy Statement |
Stock Ownership and Related Information
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon the Companys review of forms filed by directors, officers and certain beneficial owners of the Companys common stock (the Section 16(a) Reporting Persons) pursuant to the 1934 Act, the Company has not identified any late filings by a Section 16(a) Reporting Person.
52 | TD Ameritrade 2019 Proxy Statement |
Stock Ownership and Related Information
Certain Relationships and Related Party Transactions
Review and Approval of Related Party Transactions. The board of directors has adopted a written Related Party Transactions Policy covering the review and approval or ratification of any transaction, arrangement or relationship involving the Company or any of its subsidiaries, with a value of $120,000 or more per fiscal year, and in which any related party had, has or will have a direct or indirect material interest required to be disclosed under applicable SEC rules. Related parties are our directors, executive officers and any stockholder beneficially owning more than 5% of our common stock or any of their immediate family members. Under the policy, the OID Committee reviews related party transactions and may approve or ratify them only if it is determined that they are in, or not inconsistent with, the best interests of the Company and its stockholders. When reviewing a related party transaction, the OID Committee will consider, among other factors determined to be appropriate, the following factors (to the extent relevant to the related party transaction):
| 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 directors, executive officers or related partys interest in the transaction and the ongoing nature of any proposed relationship. |
Nothing in the policy supersedes or modifies any contractual rights or obligations provided in the Stockholders Agreement.
Transactions with Related Parties
The Company transacts business and has extensive relationships with TD and certain of its affiliates. The following table describes transactions between the Company and related persons, including TD and its affiliates, for fiscal year 2018, or any currently proposed transaction in which the Company was or is to be a participant, in which the amount involved exceeds or could reasonably be expected to exceed $120,000 and in which any related person had or will have a direct or indirect material interest.
Transaction | Names & Interests of Related Persons | Revenues from and Expenses to Related Parties for Fiscal Year 2018 |
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 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 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. | $1,426 million of bank deposit account fee revenue | (1 | ) | ||||
Mutual Fund Agreements |
Certain mutual funds of a TD affiliate receive distribution and marketing support from the Company. | $17 million of investment product fee revenue | (2 | ) |
TD Ameritrade 2019 Proxy Statement | 53 |
Stock Ownership and Related Information
Transaction | Names & Interests of Related Persons | Revenues from and Expenses to Related Parties for Fiscal Year 2018 |
Other Information |
|||||
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. | $4.8 million of other expense | (3 | ) | ||||
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. | $4.5 million of other revenue | (4 | ) | ||||
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. | $4.2 million of other revenue | (5 | ) | ||||
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. | $2.3 million of clearing and execution costs | (6 | ) | ||||
Transition Services Agreement |
In connection with the closing of the Merger Agreement on September 18, 2017, TD and the Company each provide the other with transition services to substantially the same level in all material respects as provided by Scottrade or Scottrade Bank prior to the closing. In addition, the Company will be reimbursing TD for employment costs for up to 18 months for employees of Scottrade who perform transition services. | $2.2 million of revenue | (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 Companys brokerage business. | $1.7 million of net interest revenue | (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. | $0.6 million in commissions and transaction fee revenue | (9 | ) | ||||
Revolving Credit Facility |
TDAC entered into a revolving credit agreement in the aggregate principal amount of $600 million, and an affiliate of TD participates as a lender on terms no more favorable than the terms of the other lenders participating in each of the revolving credit agreements, including receiving an upfront fee percentage the same as those payable to the other lenders participating in the revolving credit agreement and a customary commitment fee, as well as customary expense reimbursement. | $0.2 million of interest expense | (10 | ) | ||||
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. | (11) | (11 | ) | ||||
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. | (12) | (12 | ) | ||||
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 Companys corporate identity. | (13) | (13 | ) | ||||
URL License Agreement |
TD owns Internet domain names licensed to the Company. | (14) | (14 | ) | ||||
Registration Rights Agreement |
In connection with the closing of 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. | (15) | (15 | ) |
54 | TD Ameritrade 2019 Proxy Statement |
Stock Ownership and Related Information
(1) | The Company is party to an insured deposit account (IDA) agreement, under which TD Bank USA and TD Bank, N.A. (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. |
The current IDA agreement became effective as of January 1, 2013 and had an initial term expiring July 1, 2018. It is automatically renewable for successive five-year terms, provided that it may be terminated by either the Company or the TD Depository Institutions by providing written notice of non-renewal at least two years prior to the initial expiration date or the expiration date of any subsequent renewal period. Notice of non-renewal was not provided by either party, therefore the IDA agreement automatically renewed for an additional five- year term on July 1, 2018. |
The fee earned on the IDA agreement is calculated based on two primary components: (a) the yield on fixed-rate notional investments, based on prevailing fixed rates for identical balances and maturities in the interest rate swap market (generally LIBOR-based) at the time such investments were added to the IDA portfolio (including any adjustments required to adjust the variable rate leg of such swaps to a one-month reset frequency and the overall swap payment frequency to monthly) and (b) the yield on floating-rate investments. As of September 30, 2018, the IDA portfolio was comprised of approximately 78% fixed-rate notional investments and 22% floating rate investments. |
The IDA agreement provides that the Company may designate amounts and maturity dates for the fixed-rate notional investments in the IDA portfolio, subject to certain limitations. For example, if the Company designates that $100 million of deposits be invested in 5-year fixed-rate investments, and on the day such investment is confirmed by the TD Depository Institutions the prevailing fixed yield for the applicable 5-year U.S. dollar LIBOR-based swaps is 1.45%, then the Company will earn a gross fixed yield of 1.45% on that portion of the portfolio (before any deductions for interest paid to clients, the servicing fee to the TD Depository Institutions and the cost of FDIC insurance premiums). In the event that (1) the federal funds effective rate is established at 0.75% or greater and (2) the rate on 5-year U.S. dollar interest rate swaps is equal to or greater than 1.50% for 20 consecutive business days, then the rate earned by the Company on new fixed-rate notional investments will be reduced by 20% of the excess of the 5-year U.S. dollar swap rate over 1.50%, up to a maximum of 0.10%. |
The yield on floating-rate investments is calculated daily based on the greater of the following rates published by the Federal Reserve: (1) the interest rate paid by Federal Reserve Banks on balances held in excess of required reserve balances and contractual clearing balances under Regulation D and (2) the daily effective federal funds rate. |
The interest rates paid to clients are set by the TD Depository Institutions and are not linked to any index. The servicing fee to the TD Depository Institutions under the IDA agreement is equal to 25 basis points on the aggregate average daily balance in the IDA accounts, subject to adjustment as it relates to deposits of less than or equal to $20 billion kept in floating-rate investments or in fixed-rate notional investments with a maturity of up to 24 months (short-term fixed-rate investments). For such floating-rate and short-term fixed-rate investments, the servicing fee is equal to the difference of the interest rate earned on the investments less the FDIC premiums paid (in basis points), divided by two. The servicing fee has a floor of 3 basis points (subject to adjustment from time to time to reflect material changes to the TD Depository Institutions leverage costs) and a maximum of 25 basis points. |
In the event the marketing fee computation results in a negative amount, the Company must pay the TD Depository Institutions the negative amount. This effectively results in the Company guaranteeing the TD Depository Institutions revenue equal to the servicing fee on the IDA agreement, plus the reimbursement of FDIC insurance premiums. The marketing fee computation under the IDA agreement is affected by many variables, including the type, duration, principal balance and yield of the fixed-rate and floating-rate investments, the prevailing interest rate environment, the amount of client deposits and the yield paid on client deposits. Because a negative marketing fee computation would arise only if there were extraordinary movements in many of these variables, the maximum potential amount of future payments the Company could be required to make under this arrangement cannot be reasonably estimated. Management believes the potential for the marketing fee calculation to result in a negative amount is remote. In the event the Company withdraws a notional investment prior to its maturity, the Company is required to reimburse the TD Depository Institutions an amount equal to the economic replacement value of the investment, as defined in the IDA agreement. |
Under Amendment No. 1 to the IDA agreement (IDA Amendment), which became effective on the closing of the Merger Agreement on September 18, 2017 with respect to Scottrade brokerage accounts, the parties will cause: (1) the funds of Scottrade clients held in other money market sweep accounts prior to closing to be withdrawn and deposited with TDs money market deposit accounts within a specified number of days following closing or following the maturity date of the deposits (depending on the type of deposit), (2) new funds deposited by Scottrade clients after closing to be deposited with TDs money market deposit accounts, (3) the existing funds of Scottrade clients in excess of the FDIC deposit insurance limits to be deposited into master accounts with TD, and (4) if the Company elects to sweep any uninsured deposits to a bank other than TD, the Company will sweep a certain amount of uninsured deposit accounts from its other client accounts to TD for a period of time that term funds remain at Scottrades program banks. For the complete IDA Amendment agreement, see Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed with the SEC on August 7, 2018. |
(2) | The Company and an affiliate of TD are parties to a transfer agency agreement and a shareholder services agreement pursuant to which certain mutual funds are made available as money market sweep or direct purchase options to Company clients. The Company performs certain distribution and marketing support services and acts 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 compensates the Company in accordance with the provisions of the agreements. The transfer agency agreement may be terminated by an affiliate of TD upon 60 days prior written notice and by the Company upon one years prior written notice. The shareholder services agreement may be terminated by either party upon 15 days notice. |
(3) | 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 |
TD Ameritrade 2019 Proxy Statement | 55 |
Stock Ownership and Related Information
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 programs net margin is shared equally between TD Ameritrade, Inc. and TD Bank, N.A. |
(4) | On June 11, 2009, immediately following the closing of the Companys 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. |
(5) | 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. |
(6) | 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. |
(7) | The amount paid by each party is based on a cost-plus methodology. The agreement provides for customary termination rights, including for breach or if legally required. In no event will either party be liable to the other for indemnification or otherwise under the agreement for any amount in excess of (1) $15 million in the aggregate, for indemnification claims in respect of damages paid to third parties or (2) aggregate fees actually received under the agreement for all other claims. |
(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 days 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) | For additional information about the revolving credit facilities, see Note 10 Long-term Debt and Other Borrowings under Item 8, Financial Statements and Supplementary Information Notes to Consolidated Financial Statements to the Companys Annual Report on Form 10-K filed with the SEC on November 16, 2018. |
(11) | Under these sublease agreements, the Company incurred $0.3 million of sub-lease rental income and recognized $0.5 million of occupancy and equipment costs during fiscal 2018. |
(12) | 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. |
(13) | 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 Companys corporate identity. The following is a summary of selected provisions of the trademark license agreement. |
The Company is required to use the TD Ameritrade name in the U.S. as its exclusive corporate entity name and to use the TD logo in connection with the TD Ameritrade name in the U.S. in corporate identity and marketing materials. |
The Company has a worldwide (except in Canada) license to use the name and trademark TD as part of the trademark, service mark, trade name, corporate name or domain name TD Ameritrade in connection with the Companys business of providing securities brokerage services to retail traders, individual investors and registered investment advisors. TD has agreed not to use the TD mark or any trademarks, service marks, trade names, corporate names and domain names incorporating the TD mark in connection with any business or activity providing securities brokerage services to retail traders, individual investors and registered investment advisors in the U.S., as so restricted by the Stockholders Agreement. |
TD and the Company jointly own the TD Ameritrade name. The Company has agreed to be responsible for the registration, maintenance and prosecution of any trademark applications and registrations for the TD Ameritrade name. The Company and TD have each agreed to be responsible for 50% of the costs and expenses associated with the registration, maintenance and prosecution of the TD Ameritrade trademark. |
The Company has agreed to indemnify TD for liability incurred by TD as a result of the Companys (and any of its sublicensees) breach of its obligations under the trademark license agreement. TD has agreed to indemnify the Company for liability incurred by the Company so long as the Companys actions are in accordance with the terms of the trademark license agreement and the Companys use of the TD Ameritrade name or the TD logo is in a jurisdiction where TD has trademark applications or registrations or is using or has used the TD trademark or logo. |
The trademark license agreement had an initial term of 10 years beginning June 22, 2005 and is automatically renewable for additional periods of 10 years, unless earlier terminated pursuant to the terms of the agreement. |
56 | TD Ameritrade 2019 Proxy Statement |
Stock Ownership and Related Information
(14) | TD and the Company are party to a license agreement pursuant to which TD granted the Company an exclusive license to use the TDWaterhouse.com Internet domain name for redirection to the Companys home page as well as the rights to include links to international TD Waterhouse Internet domain names. In exchange for those rights, the Company agreed to not transfer the rights to the domain names and to use commercially reasonable efforts to include a link on the homepage of the Company to the international TD Waterhouse websites. The original term of the URL license agreement went until January 24, 2016 and has been mutually extended. Either party may terminate the agreement if the trademark license is terminated or the other party materially breaches the agreement. The Company has the right to terminate the agreement for any reason upon 30 days prior written notice. |
(15) | 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). |
TD Ameritrade 2019 Proxy Statement | 57 |
Proposal No. 3 Ratification of Appointment of Independent Registered Public Accounting Firm |
Ernst & Young LLP (EY) has been appointed by the Audit Committee as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ending September 30, 2019. This appointment is being presented to the stockholders for ratification. The ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of the holders of a majority of the total shares of common stock present in person or represented by proxy and voting on the matter, provided that a quorum of at least a majority of the outstanding shares are represented at the meeting. If you abstain from voting on this matter, your abstention will have no effect on the vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this routine proposal, your broker will nevertheless have authority to vote your shares on this routine proposal in your brokers discretion. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any other effect on the outcome of the proposal. Where no instructions are indicated, properly executed and unrevoked proxies will be voted FOR the ratification of EY as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2019.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2019. |
Representatives of EY are expected to be present at the Annual Meeting and will be provided an opportunity to make a statement and to respond to appropriate inquiries from stockholders.
Fees Paid to Independent Auditor
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm.
On an ongoing basis, management communicates specific projects and categories of service for which the advance approval of the Audit Committee is requested.
The Audit Committee reviews these requests and advises management if the committee approves the engagement of the independent registered public accounting firm. No services are undertaken which are not pre-approved. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services compared to the approved amounts. All of the services provided by our independent auditor in 2018 and 2017, including services related to audit, audit-related fees, tax fees and all other fees described above, were approved by the Audit Committee under its pre-approval policies.
TD Ameritrade 2019 Proxy Statement | 59 |
Proposal No. 3 Ratification of Appointment of Independent Registered Public Accounting Firm
The following report is not deemed to be soliciting material or to be filed with the SEC or subject to the SECs proxy rules or 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 Audit Committee evidenced its completion of and compliance with the duties and responsibilities set forth in the Audit Committee charter through a formal written report dated and executed as of November 15, 2018. A copy of that report is set forth below.
November 15, 2018
The Board of Directors
TD Ameritrade Holding Corporation
Fellow Directors:
The primary purpose of the Audit Committee is to assist the Board of Directors in its general oversight of the Companys financial reporting process. The Audit Committee conducted its oversight activities for TD Ameritrade Holding Corporation and subsidiaries (TD Ameritrade) in accordance with the duties and responsibilities outlined in the audit committee charter. The Audit Committee annually reviews the NASDAQ standard of independence for audit committees and its most recent review determined that the committee meets that standard.
TD Ameritrade management is responsible for the preparation, consistency, integrity and fair presentation of the financial statements, accounting and financial reporting principles, systems of internal control, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. The Companys independent Registered Public Accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of the financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America.
The Audit Committee, with the assistance and support of the Corporate Audit Department and management of TD Ameritrade Holding Corporation, has fulfilled its objectives, duties and responsibilities as stipulated in the Audit Committee charter and has provided adequate and appropriate independent oversight and monitoring of TD Ameritrades systems of internal control for the fiscal year ended September 30, 2018.
These activities included, but were not limited to, the following significant accomplishments during the fiscal year ended September 30, 2018:
| Reviewed and discussed the audited financial statements with management and the external auditors. |
| Discussed with the external auditors the matters requiring discussion under Public Company Accounting Oversight Auditing Standard No. 1301, Communications with Audit Committees (AS1301), and Rule 2.07 of Regulation S-X, including matters related to the conduct of the audit of the financial statements. |
| Received written disclosures and letter from the external auditors required by applicable requirements of the Public Company Accounting Oversight Board, and discussed with the auditors their independence. |
In reliance on the Committees review and discussions of the matters referred to above, the Audit Committee recommends the audited financial statements be included in TD Ameritrades Annual Report on Form 10-K for the fiscal year ended September 30, 2018, for filing with the Securities and Exchange Commission.
Respectfully submitted,
TD Ameritrade Holding Corporation Audit Committee
Karen Maidment, Chair
Larry Bettino
Ann Hailey
Irene Miller
Mark Mitchell
Todd Ricketts
60 | TD Ameritrade 2019 Proxy Statement |
Appendix A |
TD AMERITRADE HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Non-GAAP Diluted EPS(1) | Fiscal Year Sept. 30, 2018 Diluted EPS |
Fiscal Year Sept. 30, 2017 Diluted EPS |
||||||
Diluted EPS - GAAP
|
$
|
2.59
|
|
$
|
1.64
|
| ||
Non-GAAP adjustments: |
||||||||
Amortization of acquired intangible assets
|
|
0.25
|
|
|
0.15
|
| ||
Acquisition-related expenses
|
|
0.78
|
|
|
0.17
|
| ||
Income tax effect of above adjustments
|
|
(0.28
|
)
|
|
(0.12
|
)
| ||
Non-GAAP diluted EPS
|
$
|
3.34
|
|
$
|
1.84
|
|
The term GAAP refers to generally accepted accounting principles in the United States.
(1) | Non-GAAP diluted earnings per share (EPS) is a non-GAAP financial measure as defined by SEC Regulation G. Non-GAAP EPS excludes the after-tax effect of amortization of acquired intangible assets, because management does not believe it is indicative of our underlying business performance, and acquisition-related expenses, because management believes these costs are not representative of the costs of running the Companys on-going business. Non-GAAP diluted EPS should be considered in addition to, rather than as a substitute for diluted EPS. |
A-1 | TD Ameritrade 2019 Proxy Statement |
|
200 South 108th Avenue Omaha, NE 68154 800.669.3900
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E53695-P15849 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TD AMERITRADE HOLDING CORPORATION |
For All |
Withhold All |
For All Except |
To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. |
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The Board of Directors recommends that you vote |
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FOR ALL on the following proposal: | ||||||||||||||||||
1. |
ELECTION OF CLASS II DIRECTORS |
☐ | ☐ | ☐ |
|
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Nominees: |
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01) Bharat B. Masrani | ||||||||||||||||||
02) Irene R. Miller | ||||||||||||||||||
03) Todd M. Ricketts | ||||||||||||||||||
04) Allan R. Tessler |
The Board of Directors recommends that you vote FOR the following proposal: | For | Against | Abstain | |||||||||
2. | ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION. | ☐ | ☐ | ☐ | ||||||||
The Board of Directors recommends that you vote FOR the following proposal: | For | Against | Abstain | |||||||||
3. | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. Ratification of the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2019. | ☐ | ☐ | ☐ |
Yes | No | |||||||
Please indicate if you plan to attend this meeting. | ☐ | ☐ |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation, partnership or LLC, please sign in full corporate, partnership or LLC name by authorized person.
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
E53696-P15849
REVOCABLE PROXY OF HOLDERS
OF COMMON STOCK
TD AMERITRADE HOLDING CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF TD AMERITRADE HOLDING CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 13, 2019 AND AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
The undersigned hereby appoints each of Ellen L.S. Koplow, Stephen J. Boyle and Tim Hockey, with full power of substitution, as proxies to represent and to vote as designated on the reverse of this card all of the shares of common stock of TD Ameritrade Holding Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held at the Companys corporate headquarters, 200 South 108th Avenue, Omaha, Nebraska, on Wednesday, February 13, 2019, at 9:00 a.m., Central Standard Time, and at any postponement or adjournment of said meeting and thereat to act with respect to all votes that the undersigned would be entitled to cast, if then personally present, in accordance with the instructions below and on the reverse hereof, and to vote in his or her discretion on any other matters that may come before the meeting or any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE HEREIN, THIS PROXY WILL BE VOTED FOR ALL THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
This proxy is revocable and the undersigned may revoke it at any time prior to the Annual Meeting by giving written notice of such revocation to the Secretary of the Company or by filing with the Secretary of the Company a later-dated proxy. Should the undersigned be present and want to vote in person at the Annual Meeting, or at any postponement or adjournment thereof, the undersigned may revoke this proxy by giving written notice of such revocation to the Secretary of the Company on a form provided at the meeting. The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of Stockholders of the Company called for February 13, 2019 and the Proxy Statement for the Annual Meeting prior to the signing of this proxy.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Continued and to be signed on reverse side