TD Ameritrade 2019 Proxy and Annual Meeting of Stockholders

Executive Compensation and Related Information executive officers, 50% of their incentive is paid in cash and 50% is paid in equity. Annual Incentive Award under the MIP Our annual incentive plan, reviewed and approved by the Compensation Committee, supports our pay-for-performance philosophy, with the objective of driving the business strategy for which each executive is most responsible and which is critical for sustaining the long-term growth of the Company. Through the equity component of the plan, we promote closer alignment of each executive’s interests to the long-term growth of the Company. Based on pre-established targets for non-GAAP EPS and quantitative and qualitative strategic goals, the Compensation Committee believes that the design provides for a balanced assessment of short- and long-term performance. In fiscal year 2018, the first step for calculating awards under the annual incentive plan for executive officers was based on the achievement of goals for the following key metrics: (1) non-GAAP EPS, (2) market share of client revenue trades among the Company’s primary publicly-traded competitors and (3) net new client assets. These goals were initially recommended by the CEO and established and approved by the Compensation Committee, as the Compensation Committee determined that these goals are important metrics for assessing the Company’s business success and would help to align the interests of executives more closely with those of our stockholders. We refer to market share of client revenue trades and net new client assets as the quantitative strategic goals. In addition, the following factors were considered in determining the annual incentive awards of our executive officers: • Attainment of pre-established qualitative goals that consisted of short-term objectives and progress with respect to long-term objectives, recommended by the CEO and approved by the Compensation Committee, which we refer to as the qualitative strategic goals, and • Attainment of pre-established individual quantitative and qualitative performance goals. The Compensation Committee reserves the right to reduce the payouts initially determined by the achievement of non-GAAP EPS and quantitative strategic goals. In addition, the Compensation Committee retains the ability to exercise further negative discretion to reduce or eliminate incentive payments to executives. A portion of the annual incentive award is granted in equity under the LTIP. Equity awards are used to motivate, reward and retain key executives and to align their interests more closely to those of stockholders. Equity awards are granted under the annual incentive plan only if the pre-established performance measures under the annual incentive plan have been achieved. For fiscal year 2018, equity incentives were granted solely in the form of performance-based restricted stock units (“PRSUs”). As described below under “Fiscal Year 2018 MIP Incentive Funding Formula,” equity incentives may be funded between 0% and 200% of target. After the equity incentive has been granted, the PRSUs are then subject to a three-year cliff vesting period and may be further adjusted up or down 20% based on the Company’s cumulative three-year TSR relative to the components of the NYSE Arca Securities Broker/Dealer Index determined at the time of grant. This equity incentive design further aligns the long-term interests of executives with those of our stockholders. PRSU awards are automatically increased by the number of units equivalent to the value of any cash dividends paid while the awards are outstanding (based on the target amount of the award). DEUs are subject to the same vesting schedule as the underlying award. The vesting of PRSU awards may accelerate upon certain events, as described under “Potential Payments Upon Termination or Change in Control” later in this section. The Compensation Committee believes that the clear performance measures and specific targets used by the Company ensure a strong, team-oriented, pay-for-performance philosophy. 26 TD Ameritrade 2019 Proxy Statement