TD Bank 2001 Annual Report Download - page 58

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FINANCIAL RESULTS
Stock dividend
On July 31, 1999, the Bank paid a stock dividend of one
common share on each of its issued and outstanding common
shares. The effect of this one-for-one stock dividend is the
same as a two-for-one split of the common shares. All common
share numbers have been restated to reflect the stock dividend.
Employee savings plan
Under the Bank’s Employee Savings Plan (ESP), employees
may contribute up to 5% of their annual base earnings to a maxi-
mum of $2,200 per calendar year toward the purchase of Bank
common shares. The Bank matches 50% of the employee contri-
bution amount. The Bank’s contributions vest over a two-year
period beginning on the first day of the following calendar year.
For the year ended October 31, 2001, the Bank’s contributions
totalled $13.4 million (2000 – $12.7 million; 1999 – $13.2
million). As at October 31, 2001, an aggregate of 5,001,746
common shares were held under the ESP (2000 – 5,408,543).
Options outstanding Options exercisable
Weighted average Weighted Weighted
remaining average average
Number contractualexercise Number exercise
Range of exercise prices outstanding life (years) price exercisable price
$8.19 – $11.81 4,377,223 4.3 $10.99 4,377,223 $10.99
$17.45 – $25.43 7,098,024 7.1 $21.83 5,152,787 $20.46
$30.60 – $41.70 10,743,540 8.7 $36.22 3,551,250 $32.23
Weighted Weighted Weighted
average average average
exercise exercise exercise
2001 price 2000 price 1999 price
Number outstanding, beginning of year 23,403,443 $ 22.54 23,336,948 $ 18.39 21,867,140 $ 15.80
Granted 3,639,640 41.66 4,527,000 36.20 4,916,400 25.43
Exercised – cash (2,593,303) 15.30 (2,840,740) 13.65 (2,770,072) 10.76
– shares (1,303,943) 13.38 (1,160,665) 11.52 (405,520) 12.57
Forfeited (927,050) 32.27 (459,100) 29.29 (271,000) 23.46
Number outstanding, end of year 22,218,787 $ 26.65 23,403,443 $ 22.54 23,336,948 $ 18.39
Exercisable, end of year 13,081,260 $ 20.49 12,910,639 $ 16.41 12,337,346 $ 13.40
Dividend restrictions
The Bank is prohibited by the Bank Act from declaring any divi-
dends on its preferred or common shares if there are reasonable
grounds for believing that the Bank is, or the payment would
cause the Bank to be, in contravention of the capital adequacy
and liquidity regulations
of the Bank Act or directions of the
Superintendent of Financial Institutions Canada. The Bank’s
ability to pay dividends on its preferred or common shares is
also restricted in the event that TD Capital Trust fails to pay
semi-annual distributions in full to holders of TD Capital Trust
Securities. In addition, the ability to pay common share dividends
is restricted by the terms of the outstanding preferred shares
whereby the Bank may not pay dividends on its common shares
without the approval of the holders of the outstanding preferred
shares unless all dividends on the preferred shares have been
declared and paid or set apart for payment. Cur rently these
limitations do not restrict the payment of dividends on preferred
or common shares.
The following table summarizes information relating to stock options
outstanding and exercisable at October 31, 2001.
Stock options
Under the Bank’s 2000 stock option plan, options on common
shares are periodically granted to certain employees for terms of
10 years, vesting over a four-year period. These options provide
employees with the right to purchase common shares of the Bank
at a fixed price equal to the closing market price of the shares on
the date prior to the date the options were issued. Under this
plan, 26,521,860 common shares have been reserved for future
issuance (2000 – 30,000,000). The outstanding options expire
on various dates to September 2011.
The Bank’s predecessor plan, the 1993 stock option plan,
expired in 2000 and there will be no further issuance of stock
options from this plan. The outstanding options under the 1993
stock option plan expire on various dates to July 2010.
A summary of the Bank’s stock option activity and related
information for the years ended October 31 is as follows:
Common shares
2001 2000
Number outstanding at beginning of year 622,615,868 620,343,168
Issued on acquisition of subsidiaries 4,531,348 1,112,035
Issued on exercise of options 1,303,943 1,160,665
Number outstanding at end of year 628,451,159 622,615,868