John Thompson's Remarks
TD Bank Annual General Meeting
March 25, 2004
Check against delivery
Ladies and gentlemen, fellow shareholders, it’s great to be in Edmonton – you are a lively and
vibrant community where we have so many employees, customers, business partners, and
shareholders and we congratulate you on celebrating your centennial anniversary.
I too am celebrating an anniversary today, although a much smaller one. It’s been one year
since I was officially elected to the role of Chairman of the Board of TD Bank. 2003 has been a
year of change and recovery and growth for the bank. And it’s been a year of innovation and
hard work for your board, as we continue to strive to represent your best interests and to be a
leader in corporate governance.
I want to start off by saying that it is a real pleasure working with Ed Clark and his leadership
team on your behalf. As a leader, Ed is as good as they come – he’s a straight talker and a
great communicator with a strong vision for this bank. In the relatively short time he and his
team have been in charge, they’ve successfully repositioned the bank after a difficult 2002 and
set it on the right course for the future. I feel very confident about this management team, and
you should too.
Having said that, as a shareholder, I’m sure there have been times when you’ve wondered what
it would be like to be up there on the top floor where the action is. From time to time you’ve
probably had questions for Ed and the senior managers that you’d like answered.
So I want to start off by telling you that you are up there on the top floor. You’re in my office,
just down the hall from Ed and his leadership team. And I, along with the rest of the board, am
asking those questions on your behalf. Think of me as your representative on the executive
floor.
About eighteen months ago it was obvious that some tough questions had to be answered and
a number of changes had to be made. There was going to have to be some restructuring and
reorganizing at the bank to get us back on track, and we were going to have to make some
changes to the way the board does things, as well.
Last year at this time TD stated its mandate:
- To be the best run bank in Canada and one of the best globally
- To be known and recognized for being a leader in corporate governance
- To stand out for delivering customer and employee satisfaction
- To deliver consistent value for our shareholders.
Standing here today, I’m happy to say we have made great strides toward fulfilling that
mandate.
- TDBFG is performing very well. Ed and his team will update you on the steps they’ve
taken to ensure TD is one of the best run banks anywhere.
- A number of corporate governance enhancements over the past year have affirmed our
position as a leader in corporate governance.
- As Ed will explain later, TD’s employee and customer satisfaction indicators point to
major improvements over the past year.
- And TD has certainly been delivering value for shareholders as evidenced by our rising
share price and the increases in our dividend.
The board has been busy. Let me fill you in on what we’ve been doing.
As I mentioned, our main objectives are:
- To represent your long-term best interests and
- To be a leader in corporate governance.
I believe these two objectives are closely aligned. So how do we achieve them?
- First, by ensuring that TD has top quality, highly-informed, experienced directors with
integrity who are willing to invest their time, energy, reputations, and even their money in
TD – for you.
- Director recruitment is done by the board not management;
- The Board has very high standards – members must have been successful in
their field, have outstanding business experience, demonstrate strong ethics and,
over time, acquire and hold a significant number of shares.
- New Directors receive extensive orientation to familiarize them with the bank;
- Directors receive on-going education including access to business leaders,
reports and timely high-quality materials; and
- And we have the ability to hire independent consultants/experts to provide
informed, objective perspectives on a wide range of matters.
- Second, we achieve them by working closely with, but independent of, management.
- The board sets the agenda at all meetings, deciding what will be discussed and
what needs to be reviewed.
- We oversee management’s performance.
- The board makes sure management stays on strategy.
- We oversee management resources planning, including succession.
- We meet regularly and often without management present to encourage the most
candid discussions.
- And we act as a vital sounding board for Ed and other members of the senior
team on a variety of matters.
- And third, we achieve them by continually examining and assessing the way we do
things and the way management does things.
- Many of you here today are employees of TD Bank or other companies and you
get an annual performance review. Well so does Ed. Ed gets a formal review by
the board every year. And the board? There are strict assessment procedures in
place to keep us on track as well.
To further our objectives we have grappled with a number of issues over the past year or so.
In some areas we’ve been ahead of the game.
- Recent corporate governance initiatives have emphasized the importance of a majority
of independent board members. We’ve had that in place for many years.
- Governance initiatives have also noted the importance of having key committees made
up of directors who are independent – also something we’ve had in place for many
years.
- No one from management sits on our committees. And our independent committees provide a forum and a focus for the open discussion of important issues like succession, compensation, financial performance and corporate
governance without members of management present.
- To do its job, each Board committee meets independently, uses the services of outside consultants and has total access to management as required.
- On the issue of compensation, which is always a challenging one, I think we’ve led the way in creating programs that better align executives with shareholders.
- We have shifted away from short term cash incentives to a mix that emphasizes longer-term equity.
- The very top executives, including Ed and his senior team, are now required to hold even more of the bank’s shares, and soon all executives will be required to hold a greater number of shares, reflective of their position at the bank.
- This means that managers’ interests are in line with your interests. If you win, they win.
- Starting in 2003, TD was one of the first banks to separate the roles of CEO and Chairman.
- This separation allows me to focus on governance matters and the board, and lets Ed concentrate on running the business.
- Having said that, many on the board, including myself, have decades of experience running successful companies. Others teach at top business schools. And still others have had long and distinguished professional careers.
- Ongoing director education at the bank keeps us on top of the issues, and, if we don’t know something we know exactly where to go for the answer.
For the past year we have been dealing with these and other initiatives, like strengthening TD’s
code of conduct, creating a new Risk Committee, and improving director education and we look
forward to continuing to make new improvements. All in order to strengthen your bank.
In closing, I would just like to say a few more words about TD’s leadership. I speak for the
entire board when I say that Ed and his team have been consistently open and candid with us.
Members of the team, from Finance to Risk, Legal or any of the divisions, are always available
to provide information, to shed light on an issue, or to answer a question. I mentioned earlier
that I can wander down to Ed’s office with a question. Well, I, or any other member of the board
can also drop in on any of the other business leaders at any time. This kind of access makes
our jobs easier. Management at TD appreciates the importance of what we do and they’ve
been supportive even when we’ve had to ask the difficult questions.
So, thanks to Ed and his team. And thanks to you, the shareholders, for your faith in and
support of the bank. I look forward to continuing to work hard as your representative on the “top
floor”.
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