So we already know that Toronto-Dominion Bank (TSE:TD) has been working to replace its CEO, and finally landed a pick in Raymond Chun. But TD Bank wants Chun in place a lot faster than expected, and is stepping up its timetable accordingly. That and other changes combined to send shares surging nearly 4% in Friday morning’s trading.
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Originally, Raymond Chun was set to step in in the springtime, somewhere around April 10. But TD Bank stepped up that timetable significantly and now plans to bring him in February 1, over two months ahead of the original plan. Apparently, this is partially Chun’s own doing; a Reuters report noted that he “…moved quickly and decisively to launch a review of our strategy, operations and investments.”
But Chun’s accelerated onboarding was not the only change at TD; it also went through salaries like a pillow through a wood chipper. Former CEO Bharat Masrani—who took full responsibility for the issues that saw TD Bank hit by anti-money laundering regulation issues—got his pay cut from C$13.3 million to just C$1.5 million. Another 40 senior executives took cuts totaling C$30 million, with the rest of the executive team taking a 25% cut.
Sell Off Schwab
Meanwhile, word from the Globe & Mail suggests a plan for Chun when he walks in: sell off Schwab. Specifically, the bank currently owns around 10% of Charles Schwab (SCHW), worth around $13 billion at last report. That $13 billion—which works out to around C$18.75 billion Canadian as of this writing—would buy back a lot of TD Bank shares.
And such a decisive move that directly benefits shareholders would give Chun no end of political capital to do, well, whatever it is he means to do, right off the bat. And with TD already selling off some of its Schwab holdings earlier, the move to simply cut the project loose represents a move that could be big for TD.
Is TD a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TD stock based on four Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 8.53% rally in its share price over the past year, the average TD price target of C$83.96 per share implies 1.19% upside potential.
