The chief executive of discount brokerage firm TD Ameritrade Holding Corp has signed a four-year employment agreement guaranteeing an annual base salary of $900,000 and target annual cash and stock incentives of $5.6 million through October 1, 2017.
The new contract for Fredric Tomczyk, effective at the start of the company's fiscal year in October, replaces a five-year agreement signed when he became CEO in 2008, the Omaha, Nebraska-based firm said in a regulatory filing on Thursday. Terms of the new contract are largely unchanged.
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Tomczyk, 58, was a retail banking and wealth management executive at Toronto-Dominion Bank before joining TD Ameritrade as chief operating officer in 2007. The Canadian bank owns about 42 percent of TD Ameritrade, the world's largest discount broker as measured by clients' daily trades.
Tomczyk, who played varsity ice hockey at Cornell University will be reimbursed for moving expenses related to his relocation to Canada when his employment ends with the company, according to the new contract. He currently lives in New York City and works from TD Ameritrade offices in New Jersey.
The new employment contract covers car service transportation to and from work as well as the private plane business travel coverage that was in his previous contract.
Tomczyk's 2012 pay package totaled $6.5 million, including base salary of $700,000, and stock and incentive awards of $5.8 million. He was also granted $4.8 million worth of restricted future stock for his fiscal 2012 performance.
He and the firm's four other top executives achieved 96.8 percent of bonus targets set by the board last year. They were tied primarily to achieving goals for earnings per share, market share and net new client assets.
Although TD Ameritrade beat the targeted goals in fiscal 2012, its compensation committee said in an earlier filing with the U.S. Securities and Exchange Commission that it tweaked lower the executive awards for "qualitative" considerations that could include progress on strategic initiatives, client experience and stockholder returns.
The firm's 2012 profit was $1.06 a share, 28 percent above target, its trading market share against competitors was 45.7 percent, more than 240 percent of the target, and net new client assets were $40.8 billion, 170 percent of target.
The filing did not spell out specific qualitative factors affecting the targets.
In March Tomczyk sold about 2.5 million shares of TD Ameritrade, or about 8 percent of his holdings, largely to buy a vacation home in Florida. Under his current and new employment agreement, he is required to own common stock worth ten times his base salary, or $9 million, until two years after the agreement ends.
In an interview last month, Tomczyk suggested that TD Ameritrade is more likely to use some of its excess cash for raising dividends than for share buybacks, though a final decision will be made by the board.
The firm currently pays an annual dividend of 27 cents a share, and last December paid out a special dividend of 50 cents a share to reward shareholders ahead of higher dividend taxes in 2013.
Shares of TD Ameritrade, up 63.7 percent since the beginning of the year, were down 0.5 percent to $27.55 on Friday.
(Editing by Jeffrey Benkoe)