2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 256 Executive Compensation and Related Information We have organized this report as follows: 1. First, we provide information regarding our Compensation Committee and its role in setting executive compensation. 2. Next, we discuss the guiding principles underlying senior executive compensation policies and decisions. 3. We describe the risk assessment of our compensation programs. 4. We discuss the elements of compensation, how we determined the amount of each element and how each element fits into the Company’s compensation objectives. 5. We describe stock ownership guidelines. 6. We discuss severance and change in control provisions. 7. We discuss certain tax treatment of senior executive compensation. 8. We conclude by describing certain compensation-related actions taken since the end of fiscal year 2017. 1. The H.R. and Compensation Committee The Compensation Committee is composed of non-employee directors of the board. No member of the Compensation Committee during fiscal year 2017 was an employee of the Company or any of its subsidiaries at the time of his service on the Compensation Committee. Each member of the Compensation Committee during fiscal year 2017 was intended to qualify as a “non-employee director” under rule 16b-3 under the Securities Exchange Act of 1934 (the “1934 Act”) and as an “outside director” under section 162(m) of the Internal Revenue Code of 1986, as amended (“the Code”). Mr. Masrani, group president and chief executive officer of The Toronto-Dominion Bank (“TD”), served on the Compensation Committee until November 18, 2016. Given that TD is the Company’s largest stockholder, we believe Mr. Masrani’s views are properly aligned with stockholder interests. The Compensation Committee establishes and administers the Company’s executive compensation programs and, in consultation with the Risk Committee, reviews compensation-related risks. The board of directors evaluates the performance of the CEO and reviews and provides input on the Compensation Committee’s compensation recommendation. The Compensation Committee then formally approves the CEO’s compensation. The CEO and the Compensation Committee together assess the performance of each of the other named executive officers and then the Compensation Committee determines their compensation based on initial recommendations from the CEO. Beginning in October 2005, the Company retained Mercer Human Resources Consulting (“Mercer”) to advise on executive compensation practices and market compensation levels. Annually, Mercer provides independent validation of the market data to management. In addition, Mercer provides management with guidance on industry trends and best practices. Management also engages Mercer to provide consulting services to the Company on its health and welfare plans. In fiscal year 2017, Mercer earned $29,189 in fees for executive compensation market analysis and $398,392 in fees for other services, including consulting services on the Company’s benefit plans, compensation market surveys and compensation market survey software. In addition, the Company paid an affiliate of Mercer $549,369, which was primarily for premiums on certain insurance coverages during fiscal year 2017. The Compensation Committee has delegated to our CEO the authority to increase the compensation of, and grant equity awards to, any employee participating in the Management Incentive Plan (the “MIP”), except for executive officers and any other employees whose total target compensation equals or exceeds $1 million per year, subject in each case to any increase or grant being (1) within the budget previously approved by the Compensation Committee and (2) in accordance with the terms of the applicable compensation plan. 2. Guiding Principles The objective of the executive compensation plans is to attract, retain and motivate high-performing executives to create sustainable long-term value for stockholders. To achieve this objective, the Company and the Compensation Committee use the following guiding principles when evaluating executive compensation policies and decisions: Alignment with the Company’s Business Strategy – Executive compensation is linked with the achievement of specific short- and long-term strategic business objectives and the Company’s overall performance. – Compensation plans are linked to key business drivers that support long-term stockholder value creation. Alignment to Stockholders’ Interests – The interests of executives are aligned with those of long- term stockholders through policy and plan design. – Stock ownership guidelines are used to align the interests of executives with those of stockholders over the long term. – As an executive increases in seniority, an increasing percentage of total compensation consists of equity-based awards to help align executives with stockholders, aid in retention and to focus executives on sustainable long-term performance. Risk Management – Compensation plan design should not create an incentive for excessive risk-taking and each plan is reviewed on at least an annual basis to determine that it is operating as intended. 20 TD Ameritrade 2018 Proxy Statement TD AMERITRADE