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This Is Why The Toronto-Dominion Bank's (TSE:TD) CEO Compensation Looks Appropriate

Key Insights

The share price of The Toronto-Dominion Bank (TSE:TD) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 18th of April. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Toronto-Dominion Bank

How Does Total Compensation For Bharat Masrani Compare With Other Companies In The Industry?

According to our data, The Toronto-Dominion Bank has a market capitalization of CA$139b, and paid its CEO total annual compensation worth CA$13m over the year to October 2023. Notably, that's a decrease of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$1.5m.

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In comparison with other companies in the Canadian Banks industry with market capitalizations over CA$11b, the reported median total CEO compensation was CA$12m. This suggests that Toronto-Dominion Bank remunerates its CEO largely in line with the industry average. Furthermore, Bharat Masrani directly owns CA$90m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2023

2022

Proportion (2023)

Salary

CA$1.5m

CA$1.5m

11%

Other

CA$12m

CA$14m

89%

Total Compensation

CA$13m

CA$15m

100%

On an industry level, roughly 11% of total compensation represents salary and 89% is other remuneration. Our data reveals that Toronto-Dominion Bank allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

The Toronto-Dominion Bank's Growth

Earnings per share at The Toronto-Dominion Bank are much the same as they were three years ago, albeit slightly lower. In the last year, its revenue is up 4.9%.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has The Toronto-Dominion Bank Been A Good Investment?

The Toronto-Dominion Bank has not done too badly by shareholders, with a total return of 8.8%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Toronto-Dominion Bank that investors should look into moving forward.

Switching gears from Toronto-Dominion Bank, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.