“Fred’s familiarity with Cboe’s business, combined with his multi-decade experience in the financial services industry, will provide stability and reinforce the company’s commitment to growth.”
In 2008 Fredric Tomczyk took over as president and chief executive of discount brokerage TD Ameritrade in the midst of the great financial crisis and he believes that no time tests a leader’s limits more than a crisis.
In a LinkedIn post in 2013 Tomczyk described his first earnings day as TD Ameritrade CEO on 23 October 2008 when he had been in his position for just 23 days. In a TV interview he was asked what it was like to take over as CEO of a financial services company during the biggest financial crisis since the Great Depression as Lehman Brothers had collapsed, Merrill Lynch had been sold to Bank of America and the first money market mutual fund “broke the buck” in 20 years.
He wrote that during crises people go into survival mode and their instinct is to cut expenses to preserve the bottom line.
“That’s where many of us were in 2008, and while it may work for a time, it’s not a long-term strategy, nor is it taking advantage of the crisis to build long-term value,” Tomczyk wrote. “I believed, and still do, that out of misery comes opportunity – to learn, to grow and to change – and you need to seize your moments to do those things if you ever want to heal the damage done and move forward toward something better.”
Tomczyk can seize another opportunity as Cboe Global Markets said in a statement on September 19 that he was replacing Edward Tilly as chief executive.
Tilly, the former chief executive and chairman, resigned after an investigation found that he did not disclose personal relationships with colleagues, which violated Cboe’s policies and stands in stark contrast to the company’s values. The statement said the conduct was not related to and does not impact the company’s strategy, financial performance, technology and market operations, reporting, or internal controls.
A filing with the US Securities and Exchange Commission said Tilly had resigned and voluntarily terminated his employment with the company without good reason effective as of 18 September 2023.
Tomczyk said in a statement: “Cboe’s business is stronger than ever, and I look forward to working alongside our global president, Dave Howson, and the entire management team to continue to execute on our global strategy of building on our position as the world’s leading securities and derivatives network.”
Tomczyk was already a director on the Cboe board. As a result of his new role Tomczyk has agreed to step down from the board’s compensation committee and the finance and strategy committee.
William Farrow, III, currently lead director, was named non-executive chairman.
Farrow said in a statement: “Fred’s familiarity with Cboe’s business, combined with his multi-decade experience in the financial services industry, will provide stability and reinforce the company’s commitment to growth for Cboe, its associates, customers, index partners, and investors during this period of transition.”
Tomczyk is 68 years old and has served on the Cboe board since July 2019. His previous role as the president and chief executive of TD Ameritrade ended in October 2016.
Moving from an acquisition-based growth strategy
He also wrote in his LinkedIn post that when he took over at TD Ameritrade the firm had an acquisition-based growth strategy which had worked for many years, but needed to shift focus to organic growth. Cboe has also used a string of acquisitions to expand geographically, such as into Canada, Australia and Japan, and into new asset classes such as digital assets.
“In a crisis, and when you’re embarking on change, you need to win people over,” Tomczyk added. “It takes words, actions and early wins to prove your strategy is working.”
In 2008 TD Ameritrade had a strong balance sheet with no troubled assets, so the firm took a contrarian view by deciding to gain market share by increasing marketing spend, adding hundreds of sales people and investing millions in technology. Five years later Tomczyk wrote that TD Ameritrade had an even stronger balance sheet, had experienced five years of double-digit organic net new client asset growth and shareholders were well rewarded relative to the market and industry peers.
His experience at TD Ameritrade will also prove useful in his new role at Cboe as there is an increased proportion of retail trading in the options market. In another LinkedIn post Tomczyk highlighted “Mayday”, when the SEC allowed brokerage firms to set their own commission prices for buying and selling stock for the first time on 1 May 1975.
“Prior to Mayday, Wall Street was the domain of the privileged. It was confusing and cost-prohibitive for the average American,” he said. “Mayday allowed new participants, “discounters,” to create a new industry positioned to democratize investing.”
In another LinkedIn post Tomczyk described the lessons the learnt from his first job. Underneath his post was a comment from Barb Rabicki who said: “I remember well Fred’s extraordinary work ethic, and positive, engaging attitude during his first job at the Bank of Montreal, Brantford. Fred’s passion for excellence and genuine respect for people was outstanding then as now; he stood out for working hard; asking the right questions; listening; and doing the right thing. And as it turns out, he seems to have made a pretty good living doing just that, after all.”
Cboe’s SEC filing said Tomczyk will be entitled to an annual base salary of $1m and his target bonus opportunity will be 165% of his base salary, each of which will be prorated for 2023 based on the number of days worked. Tomczyk will also receive an equity incentive award in the form of time-based restricted stock units with a grant date value of $7.15m.
