TDs performance reflected the factors controllable by the top management

Despite facing some uncontrollable challenges, which impacted some areas of the
business, CEO Edmund Clark managed to deliver positive results. The main force behind
this outcome is strong results from North American retail banking that includes both
personal and commercial banking and consists 91% of the banks adjusted earnings.
During the year, under his leadership, bank provided shareholders with a total return of
22% including two dividend increases. Bank also maintains its position as a leader in
customer satisfaction for the eighth consecutive year. Mr. Clark also played a key role in
the ongoing succession planning process overseen by the board. Despite all these
achievements he failed to outperform peers in a manner consistent with prior years. As a
result board award him 97% of final total compensation.
Identify at least one factor non controllable by the firms top managers and that in
turn have a significant impact on the companys performance. The CEO
compensation was affected by that non-controllable factor? Explain.
There is no single non-controllable factor that in turn has a significant impact on banks
overall performance. However, there are at least two non-controllable factors that affect
some areas of the business. These two non-controllable factors are:
Force majeure: the property and casualty insurance results were impacted by
severe winter conditions in North America
Economic and competitive factor: the sustained low interest rate, regulatory
and legislative changes had an impact on the operating environment, product
offerings, and earnings.
In your opinion, did the compensation plan of the executive induce him/her to take
actions that were detrimental to the company? Explain or provide one example.
TD has a robust corporate governance structure in place. Human Resource Committee
(HRC) of the board oversees executive compensation. The objective of the executive
compensation strategy is to attract, retain and motivate top management to create longterm sustainable value for its shareholders. If top management failed to achieve their
target defined in their performance contract. There are clauses in the contract, which
allow board to deduct, stop or hold their compensation. One of the examples is 3%
deduction of CEO Clarks compensation in 2014. Clark failed to outperform banks
performance against its peers.