Former TD Ameritrade CEO Tim Hockey stands to collect somewhere in the neighborhood of $40 million once he wraps up his stint as a special advisor for the firm at the end of this month. But that payout could take a hit because of the stock’s valuation.
Hockey is among the top executives expected to receive severance in connection with TD Ameritrade’s planned $26 billion acquisition by Charles Schwab.
Hockey, who stepped down as CEO last July, confirmed to FA-IQ last week via a LinkedIn message that he will continue in the advisory role through February 29. He says his contract will pay out “as stipulated in the 10-K” SEC filing on January 27.
That amended annual report indicates Hockey could receive a potential payout of about $41.8 million, though nearly three-quarters of that haul comes in the form of TD Ameritrade equity granted to him over time since taking the helm in October 2016.
The transition agreement provides for severance in the event of a termination or resignation without cause, regardless of a sale or other change in control.
Scroll down for the change-of-control severance amounts for TD Ameritrade's named executives.
But the figures cited in filings are based on 2019 prices, which topped $50 per share. Since then, the stock price has slid, and based on TD Ameritrade’s February 4 closing price of $49.05 per share, comp consultancy Equilar places Hockey’s compensation closer to $35.5 million.
Hockey’s compensation package will include a $1 million salary, plus a lump sum “transition payment” of about $3.5 million, a bonus of $6.7 million and accelerated vesting on his equity, as was disclosed in his transition agreement. Hockey also holds an additional $10.6 million in vested options that he must exercise by 2026, according to Equilar data.
In his three-year tenure as CEO, Hockey realized nearly $12.2 million in total compensation from TD Ameritrade, according to data provided by Equilar.
Hockey’s pay could change if there are any tweaks to what his actual bonus payout was for the prior year, says Arnaldo Ulaj, principal at ClearBridge Compensation Group.
Hockey, whose LinkedIn profile describes him as an “aspiring leader and world traveler,” declined to comment further on details of his departure or payout.
It wasn’t Hockey’s choice to leave
In October, Hockey spoke to graduates of Western University in Ontario in a speech he titled, “Words of Advice, From a Guy Fired Twice.” In it, he spoke of a janitorial job where he was let go when he was 16 and then of his recent departure from TD Ameritrade.
“These days, companies have gotten really good at sugar-coating CEO departures. Familiar lines like, ‘They’re leaving for personal reasons,’” he said, as he made an air quote gesture. “I wasn’t interested in any of that.”
In fact, after the July 22 announcement, Hockey was blunt in a call with analysts. “I am not leaving for another job or to spend more time with my family or because of my health or because I’ve done something contrary to our core values,” he said.
“I came to the decision that it’s time for a new CEO to lead our next chapter.”
In his October speech, Hockey said: “[It] might have looked like it was my choice, but it wasn’t.”
He recalled facing employees in an all-hands meeting: “I told them, ‘I don’t care that the whole world knows that I was fired, as long as you know that I didn’t quit on you.’”
At the time the Schwab deal was announced, TD Ameritrade named long-time Chief Financial Officer Steve Boyle as its interim president and CEO.
Both TD Ameritrade and Schwab have said they intend for the deal to close during the second half of 2020.
The two custodial giants face pressure for the transaction to close before year-end, says CFRA equity research analyst Pauline Bell. But a potential change in administration after the November elections could quash the acquisition, which is subject to an anti-trust review by federal authorities, she notes.
Other named officers at TD
So far, TD Ameritrade’s other named executive officers remain employed, so change-of-control provisions in their contracts have not been triggered.
A spokeswoman for TD Ameritrade tells FA-IQ decisions about which executives could move forward with the combined company “will be made as part of the integration planning process, which is just now getting underway.”
A Schwab spokesman declined to comment “on any personnel decisions related to the proposed acquisition.”
Boyle, the interim CEO, stands to make nearly $6.6 million if he is terminated as part of the merger, according to the company’s annual report.
Retail brokerage chief Peter deSilva would receive as much as $5.8 million, while Thomas Nally, who leads the RIA custody unit, would get up to $8.6 million. Steven Quirk — who leads trading at the firm and is credited with helping to develop its thinkorswim platform — could walk away with roughly $5.5 million in the event he is terminated without cause.
Semler Brossy, which represents TD Ameritrade as its compensation consultant, declined to comment for this article.
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