TDS EXECUTIVE COMPENSATION PLAN

OBJECTIVES
TDs executive compensation strategy is aimed to achieve four primary objectives:
(1) Create sustainable value for shareholders over long-term; (2) Manage risks both in the
aggregate and on an individual basis; (3) Implement evolving regulatory requirements and
industry best practices; (4) Attract, retain and motivate high performing executives
Compensation for Executives is based on following principles:
Align with the bank's business and talent
strategy

Effective risk management

Align to shareholder's
interests

Pay for
performance

Pay competitively

DRIVERS FOR DETERMINING EXECUTIVE COMPENSATION 2010-2013

A key success of compensation system is that TD relies on judgment.
TD does not believe that there is a perfect formula for achieving the
Performance
Evaluation

Benchmarki
ng

right outcome and allow the use of discretion to account for risk
related issues, and unexpected or unanticipated internal or external
developments.

Accordingly,

each

named

executives

compensation is determined using a balanced scorecard approach that considered, in the

context of a competitive marketplace, factors contributing to the financial and nonperformance of TD and the executives individual leadership.
TDs Approach/Drivers to Compensation Overview

Use Benchmarking of peer groups to

reflect1:
theBenchmarking
median of the competitive
STEP
to Establish
market,
on Direct
average.
Targets for an for
Target
Total
Compnesation
individual
may be
eachexecutive
executives
positioned above or below the
median to reflect the experience,
potential, perforamnce, or other
factors specific to the excetutive or
role.

Business performance factor = 100% + Internal

Meaures+ Other Discretionary Factors;
STEP2:Evaluating
Busineese
Performance
Internal Measures: TD
Net Income
After Tax to
,
Determine
Actual variable
compensation
pool
Business segment
NIAT, constomer
experience
Other Discretionary Factors: Risk adjustment,
Enterprise relative performance, discretion
Actual variable compensation= Variable
compensation target * Business perforamnce factor

STEP
3: Evaluating
Personal
Allocate
Actual variable
Performacne
Determine
compensation to
pool
based on
Individual
Awards
individual
performance,
leadership, potential, calibration
to peers and governance, control,
and risk management.

Benchmarking to Determine Target Total Compensation 2010-2013

(Base salary + cash incentive target + equity compensation target):
Executives Target compensation Benchmarked with peer groups
Year
Ed Clark (CEO), Colleen Johnston (CFO)
2013
2012
2011

2010

North America financial institutions of a

similar size and scope of operations as the
bank. Includes: Royal bank of Canada,
Canadian Imperial Bank of Commerce,
Bank of Montreal, Scotiabank, Manulife
Financial, Sun Life Financial, PNC
Financial and US Bancorp

Internal Measures
TD Net Income
Customer
Year
Business
After Tax
experience
segment
(80%
(20%
NIAT
Weighting)
Weighting)

2013

2012

2011

2010

i. Target: $7,177
ii. Missed
Target; Impact
on factor: -0.2%

i. Target: $5,322
ii. Beat Target;
Impact on
factor: 8.2%

i. Target: $6,415
ii. Beat Target;
Impact on
factor: 7.8%

i. Target: $4,388
ii. Beat Target;
Impact on
factor: 15.4%

Not
applicabl
e

Not
applicabl
e

Not
applicabl
e

Not
applicabl
e

i. Target:
32.6%
ii. Missed
target; Impact
on factor:
-0.6%

Bob Dorrance (segment CEO), Tim

Bharat Masrani (COO)
Hockey (segment CEO)
Large Canadian financial institutions.
U.S financial institution of a similar size to T
Includes: Royal Bank of Canada,
Americas Most Convenient Bank. Includes: S
Canadian Imperial Bank of Commerce,
Banks, BB&T Corp, Regions Financial Corp
Bank of Montreal, Scotiabank
Third Bancorp, KeyCorp,
Large Canadian financial institutions.
U.S financial institution of a similar size to T
Includes: Royal Bank of Canada,
Americas Most Convenient Bank. Includes: S
Canadian Imperial Bank of Commerce,
Banks, BB&T Corp, Regions Financial Corp
Bank of Montreal, Scotiabank, National
Third Bancorp, KeyCorp, Comerica Inc, M&
Bank of Canada, Manulife Financial
Corp, Marshall& llsley Corp, Zions Bancorp
and Sun Life Financial
and Huntington Bancshares Inc.
Drivers used to evaluate TD and individual performance
Other Discretionary factors
Risk Adjustment

Enterprise relative performance

i. Chief risk
officer presented
an enterprise risk
scorecard;
ii. no risk
adjustment
approved to the
executive
compensation
plan for 2013

Benchmarked with peer group consisted

of Bank of Montreal, Canadian Imperial
Bank of Commerce, PNC Financial,
Royal Bank of Canada, Scotiabank and
US. Bancorp. Based on Adjusted Cash
return on Risk weighted assets (above
median), 1-year TSR (median), and
Adjusted EPS growth (below median)

i. Target:
29.8%
ii. Beat target;
Impact on
factor: 2.2%

No risk
adjustment
approved to the
executive
compensation
plan for 2012

i. Target:
26.7%
ii. Beat target;
Impact on
factor: 3.7%

No risk
adjustment
approved to the
executive
compensation
plan for 2011

Peer group and base financial measures

same as 2013;
Cash return on risk weighted assets (rank
1st), 1-year TSR (rank 2nd), EPS growth
(rank 2nd )

i. Target:
25.5%
ii. Beat target;
Impact on

No risk
adjustment
approved to the
executive

Peer group and base financial measures

same as 2013;
Cash return on risk weighted assets (rank
1st), 1-year TSR (rank 4th), EPS growth

Peer group and base financial measures

same as 2013;
Cash return on risk weighted assets (rank
2nd), 1-year TSR (rank 3rd), EPS growth
(rank 5th)

Discretion

Applied negative disc

Bank benefitted
unanticipated improv
credit losses

After considering
difference betw
assumptions and a
experience, the impa
litigation reserves,
results under the pla
executives, the com
applied negative disc
8.4% to achieve a
business performanc
of 102.0% which it
was appropriate g
performance during

The committee ap
negative discretion o
achieve a final bu
performance factor o
which it thought
appropriate giv
performance during

Negative discretion
was applied to the b
performance factor
CEO and his direct

compensation
plan for 2010

factor: 3.1%

(rank 5th)

Drivers of Pay For Performance to Determine Actual Variable Compensation 2010-2013:

TD Net Income After Tax

($ in Millions)
Actu al Pe rform an ce

Targe t Pe rformance
$7,075

$6,415

$5,842
$5,228

$7,177
$7,158

$5,322

$4,388

2010.0

2011.0

2012.0

2013.0

TD Adjusted Cash Return on Risk Weighted Assets; 1-Year TSR; EPS Growth;
(in % )
25.00%
Adjuste d C ash Re turn on Risk W eighte d Asse ts
20.00%

1-ye ar TSR

15.00%
10.00%
EPS growth
5.00%
0.00%
2010.0

2011.0

2012.0

PERFORMANCE 2010-2013

2013.0

TDs FINANCIAL

reflecting a conser
approach to compe