TD Bank accelerates CEO transition following regulatory fallout
Toronto-Dominion Bank (TD) has expedited the appointment of Raymond Chun as its next chief executive officer and reduced pay for dozens of executives after facing substantial penalties and restrictions tied to anti-money-laundering (AML) issues in the US.
Chun, previously scheduled to step into the role on April 10, will now take over as CEO on Feb. 1, 2025. He succeeds Bharat Masrani, who has led the bank since 2014.
Toronto-Dominion Bank leadership changes
In its announcement, TD confirmed that 41 executives, including some who have left the organization, had their bonus payments reduced last year. These adjustments, totalling US$30 million, were implemented in response to the bank’s regulatory challenges and associated costs.
“TD has adjusted executive compensation to reflect the seriousness of the US AML failures, the associated costs to the bank, and the limitations imposed on the US retail business,” the bank said, as reported by Bloomberg.
Masrani received no performance-based compensation for the year, leaving him with a total pay of US$1.5 million, down significantly from US$13.3 million in the prior year. His pay cut accounted for more than one-third of the overall executive compensation reductions.
Financial and regulatory impact
Beyond the settlement, TD cancelled its proposed US$13.4 billion acquisition of First Horizon Corp, citing regulatory concerns tied to its compliance challenges. The termination of the deal incurred a US$200 million breakup fee.
The bank also disclosed that it spent US$350 million on compliance enhancements last year and expects to spend an additional US$500 million in 2025 to strengthen its AML controls. These investments, combined with other regulatory constraints, have prompted TD to scale back its US lending operations and reposition its securities portfolio. The adjustments are expected to reduce earnings and result in one-time costs of up to US$1.5 billion after taxes.
Board changes and governance updates
Five long-serving members – Amy Brinkley, Colleen Goggins, Karen Maidment, Claude Mongeau, and Brian Ferguson – will step down following the bank’s annual shareholders’ meeting in April 2025.
To fill these vacancies, TD has nominated four new directors:
The bank also announced new term limits for directors, reducing the maximum allowable extension from five years to two after an initial 10-year term. Leadership roles across four board committees will also change as part of the governance overhaul.
Strategic reassessment
Amid these changes, Chun is conducting a broader review of TD’s strategy and operational priorities. The bank has temporarily suspended its medium-term financial targets while addressing its compliance and regulatory obligations.
TD’s efforts to expand in the US, which began two decades ago and established the bank as one of the 10 largest in the country, have faced significant setbacks. The compliance failures have limited the bank’s ability to grow its US retail banking operations beyond their current size.
