TD Bank 2010 Annual Report Download - page 8

6TD BANK GROUP ANNUAL REPORT 2010 CHAIRMAN OF THE BOARD’S MESSAGE
Chairman of the Board’s Message
When I wrote to you a year ago, the global economy was still struggling
through the recession. Many companies and entire industries were
simply trying to ride out the storm. And while economic conditions
didn’t get worse in 2010, they also didn’t get much better. However,
we felt confident that our strategy of producing long-term profitable
growth by building great franchises and delivering value to our
customers, shareholders and communities would enable us to grow
in 2010. And it did.
Our focus on lower-risk retail banking allowed us not only to
weather the global economic storm, but to grow through it and
emerge with momentum. Ours is a strategy we believe in and one
that clearly works.
GROWING IN AN UNCERTAIN ECONOMY
As you know, our adjusted earnings crossed the $5 billion mark for
the first time this past year. Our retail operations had record adjusted
earnings of $4.8 billion. Our adjusted earnings per share rose
eight per cent and are back to the record levels we saw in 2007. We
also had one of the highest levels of return on risk-weighted assets
among our peers. Our U.S. franchise continued to grow both organi-
cally and through acquisitions, and we were once again recognized as
a leader in customer service.
DELIVERING FOR OUR SHAREHOLDERS
TD has a long history of maintaining its dividend, and despite
significant economic headwinds, this year was no different – a clear
indication of our confidence that TD will continue to grow earnings
over time. Total shareholder return was 23 per cent for the year and
remained above the Canadian and U.S. bank peer averages on a
compounded basis.
Our policy is to manage dividends based on the board’s outlook
on long-term sustainable earnings. With that in mind, we hope to
be in a better position to give you more clarity on our expectations
for dividends in 2011 with the release of our Q1 earnings.
The strength of our franchise and the resilience of our business
model never cease to amaze me. While the economic recovery remains
sluggish, particularly in the U.S., your board is confident that share-
holders will continue to benefit from TD’s strategy.
A CORPORATE GOVERNANCE LEADER
Your board is committed to representing the best interests of
shareholders through a strong focus on good corporate governance.
As a leader in this area, we are committed to continuing to enhance
our already robust governance foundation.
One of the simple but very valuable things we’ve done is reorganize
the board meeting to ensure quality time is devoted to strategy and
executive leadership. The first two hours of our meetings are reserved
for the CEO and directors to have free-flowing dialogue on strategic
issues that impact the long-term value of the corporation. These are
issues of critical importance to shareholders and include our growth in
the U.S. and our strategy for building TD’s future leadership.
We were pleased that for the fourth year in a row, our corporate
governance standards were ranked by GovernanceMetrics International
as being in the top one per cent of companies it ranks worldwide.
FORMALIZING OUR RISK APPETITE
TD’s risk culture today is truly defined by the business decisions made
and strategic actions taken up to and during the economic crisis –
we clearly made the right decisions. This year, we achieved another
significant milestone by putting what made us successful into simple
words, creating our risk appetite statement. The statement is the basic
yardstick against which we measure how much risk we are willing to
take in order to generate value for our shareholders.
We believe every employee in this organization is essentially a risk
manager. We want all employees to be knowledgeable about the risks
they take in their day-to-day activities. Why is this important? Adhering
to the bank’s strategy and risk appetite – something we’ve always
done – allows us to grow profitability without going out the risk curve.
FOCUS ON PEOPLE AND TALENT
TD has an enormous focus on developing talent to ensure we have
the best possible team today and tomorrow. The strength of our
employment brand has enabled us to attract and retain the very best
employees. Employees at TD know that their success is based on their
skills, their personal performance, their potential and the company’s
achievements. That’s why your board is focused on helping TD continue
to raise the bar when it comes to its unique and inclusive employee
culture and ensuring an ongoing focus on building talent for the future.
We’re delighted to have once again won a number of best employer
awards, including the Hewitt Associates 50 Best Employers in Canada.
TD was also named the best at developing the next generation of
leaders in a survey conducted by Canadian Business magazine and
Knightsbridge Human Capital Solutions.
COMPENSATION
Last year, we completed a comprehensive review of executive compen-
sation programs and fine-tuned our compensation practices in order to
appropriately align them with the risk appetite of the bank. I’m happy
to report that we’ve made tremendous progress on this front and that
the bank continues to evolve its approach to compensation. We’re taking
a balanced approach that is intended to attract, retain and reward talent
in alignment with the creation of long-term, profitable growth.
CHANGES TO THE BOARD
Managing talent is done at all levels, which is why we’re always looking
for individuals with new and diverse experience and knowledge.
That’s why I’m delighted to welcome Amy Brinkley to the board.
Amy, formerly a global risk executive at Bank of America, currently
serves on the board of Carter’s, Inc. Her rich banking background,
coupled with her extensive risk management experience, makes her a
valuable addition to the board.
As was announced on September 28, 2010, I will be retiring as
chairman of the board at the end of this year. I’d like to congratulate
Brian Levitt, who will become your new board chairman on January 1,
2011. I’m delighted that Brian will be taking over the reins. He is a
terrific director and knows the banking industry extremely well. Brian
has a very strong relationship with all of the board directors, as well as
with senior management. I think he’s a terrific choice, and I’m
delighted that I’ll be staying on the board.
I’d also like to thank Roger Phillips, Bill Ryan and Donna Hayes, who
stepped down from the board earlier this year. Their contributions
have been invaluable.
IN CLOSING
As I look back on my time as chairman, one of my proudest moments
was in 2002, when I first led the board in the appointment of Ed Clark.
Ed has done an outstanding job over the last eight years in leading
his management team to build The Better Bank. Back in 2002, our
market capitalization was about $19 billion. Today it stands at over
$64 billion, more than a three-fold increase.
The last few years have been incredibly challenging, but against a
backdrop of economic turmoil, TD has proudly stood out as a success
story. The fact that TD delivered record adjusted earnings in 2010
speaks to the enormous talent, drive and commitment of Ed, his leader-
ship team and TD’s more than 81,000 dedicated employees. On behalf
of the board, I would like to thank them all for their extraordinary
efforts in the past year.
Your board remains committed to working in the best interests
of shareholders. We look forward to serving you throughout 2011
and beyond.
John M. Thompson
Chairman of the Board of Directors