Good morning, fellow shareholders, and welcome to the 2024 Annual Meeting of Shareholders of the Bank of Montreal. I also want to do a special call-out to any BMO retirees who are joining us today at the annual meeting. My name is George Cope. I have the honor of serving as your Chair of the Board of Directors, and I call this meeting to order. We would like to begin today's meeting with a land acknowledgment by Nadir André.
Kweh. Bonjour. Moi, c'est. My name is Nadir André. I'm a member of the Indigenous Advisory Council at the Bank of Montreal, and today I will give the land acknowledgment for your gathering. First, I would like to say a few words concerning the origins of land acknowledgment. Indigenous peoples have occupied the great Turtle Island that we call America for time immemorial. Each were given a land to live on and to take care of. When they visited each other, it was custom that they recognize on whose land they were, and they would do so orally and publicly. It was a way to recognize that the land belonged to another neighboring nation. Today, the Bank of Montreal is gathering in Toronto. We are in the historical and traditional territories of many nations, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, the Haudenosaunee, the Wendat.
This territory is also the home of many First Nations, Métis, and Inuit people. Finally, we acknowledge that Toronto is covered by Treaty Number 13 with the Mississaugas of the Credit . Miigwech, and enjoy your gathering.
Thank you. Thank you to our shareholders for joining us this morning. We appreciate everyone's interest and your participation. I'm joined today on stage by Darryl White, our Chief Executive Officer; Tayfun Tuzun, our Chief Financial Officer; Sharon Haward- Laird, our General Counsel; and Paul Noble, our Corporate Secretary. Members of the bank's board of directors and the bank's senior management team are joining us as well today. Members of the board will be introduced when it is time for their election as directors. The Secretary has confirmed that notice of this meeting was duly given in accordance with the Bank Act, and that a quorum of shareholders, as prescribed by the laws of the bank, is present in person or represented by proxy. I therefore declare this meeting to be properly constituted for the transaction of business.
I appoint Arlene Rennalls and Melody Tong, representatives of Computershare Trust Company of Canada , who are joining us today to act as scrutineers for the meeting, and Paul Noble, our Corporate Secretary, to act as secretary. The shareholders' auditors for Fiscal 2023, KPMG LLP, are also joining us today, and we thank them for their service. I will turn it over to our Corporate Secretary, Paul Noble, for some meeting procedures.
Thank you, Chair. Closed captioning is being provided over the webcast, and the meeting is being broadcast in both official languages. Most of our shareholders submit their proxy or voting instructions in advance of the meeting, with only a small number choosing to vote their shares at the meeting. I will first describe how voting will occur, and second, how shareholders can ask questions. When you registered for the meeting, you should have received a paper ballot. The ballot covers the items described in the management proxy circular being voted on today. Alternatively, if you registered in advance with Computershare, you may log into the online platform and vote from your mobile device while in the meeting. If you vote online today and also complete a paper ballot, the paper ballot will be given priority.
If you want to vote in person this morning by ballot and did not receive a paper ballot at registration, please raise your hand, and a representative from Computershare will give you one now. Those of you participating in the meeting online can vote using the online voting platform. Only registered shareholders and proxy holders who registered in advance with Computershare are eligible to vote during the meeting. If you voted in advance of the meeting, your voting instructions have been recorded, and you do not need to do anything further. Detailed instructions on how to log into the meeting as either a registered shareholder or a proxy holder can be found on our investor relations website, the URL of which is now on the screen.
For those who have entered the registered shareholder and proxy holder section of the voting platform, when you choose the voting icon, the meeting resolutions will be displayed. To vote, choose one of the voting options. Voting will remain open during the formal meeting portion of the meeting. You may vote on any or all agenda items and change your vote at any time during the period. If you have logged on as a guest, you will not be able to vote at the meeting unless you log back in using your 15-digit control number or your four-digit alpha number as applicable. Registered shareholders and proxy holders participating by webcast may ask their questions in writing or verbally by clicking on the messaging tab at the top of the webcast page. Insert your question into the messaging box, and we will read aloud your name and your question.
If you wish to address the meeting verbally, insert into the messaging box your phone number and question topic and your preferred language. The webcast operator will call you at the number you provided, and you will hear an automated message with instructions on joining the queue. Please mute the sound on your computer. When you're invited to ask your question, you will hear a beep, and your phone will be unmuted. To avoid feedback, please do not use a speakerphone and use a handset or a headset. Shareholders attending the meeting in person who want to ask a question regarding an item of business that is before the meeting should line up behind one of the microphones in the meeting hall at the appropriate time. You may ask your question once the chair invites you to do so.
Questions of a more general nature and not related to the formal business of the meeting will be addressed during the question and answer session following the formal business of the meeting. We will do our best to respond to all your questions during the meeting. Any questions not answered will be answered following the meeting. You can also join our meeting this morning in listen-only mode by calling into our English or French language phone lines. The numbers are on your screen now and are also on our website. You cannot vote or ask questions over the phone lines. On behalf of those speaking today, I note that their comments may include forward-looking statements which involve assumptions that have inherent risks and uncertainties. Actual results may differ materially from forecast projections or conclusions in the forward-looking statements.
I would remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and an adjusted basis and considers both to be useful in assessing underlying business performance. Unless otherwise noted, speakers will be referring to adjusted results in their remarks. Details regarding forward-looking statements and non-GAAP financial measures are on screen and can also be found in the bank's 2023 annual report as updated in our first quarter 2024 report to shareholders.
Thank you, Paul. We would like to thank the many registered and beneficial shareholders who took the time to vote by proxy prior to this meeting. Just one side note, I do miss those machines where we used to be able to click on the screen only because then we could decide tonight, is it tonight or is it Thursday that Auston gets goal number 70? That would have been 100% certain, that's for sure. Anyway, the agenda today will consist of an address by the Bank CEO, Darryl White, followed by submission of the bank's 2023 annual financial statements. Then there will be three resolutions proposed by management: first, to elect the Board of Directors for next year; second, to appoint the shareholder auditor for Fiscal 2024; and third, to consider an advisory resolution on the bank's approach to executive compensation.
We will then consider the shareholder proposals. There were 12 shareholders' proposals submitted this year. Five proposals were submitted for a vote, and seven were withdrawn. Three of the proposals going to a vote are from MÉDAC. One is from InvestNow on behalf of Gina Pappano, and the third is from Vanc ity Investment Management. The shareholder proposals will be addressed following the votes on the three resolutions proposed by management. Following that, we will have time for question and answer session. Without further ado, why don't we go to the first item on the agenda and turn it over to our CEO, Darryl White? Thank you.
Thank you, Chairman. Bonjour à tous.
Good morning, everyone.
To address each of you, our valued shareholders, and update you on our progress in 2023, our 206th year of operation. Last year, we made significant progress on our strategic priorities to continue to grow and strengthen our bank and enhance customer experience and invest in our communities. The performance of our bank enables the progress we make for a thriving economy, a sustainable future, and an inclusive society, all in support of our purpose to boldly grow the good in business and life.
The team I'm proud to lead is focused each day on building a digitally enabled, future-ready bank with leading efficiency, profitability, and loyalty for our clients, our colleagues, and the communities we serve.
Over the past year, the number of clients that we serve and communities that we serve grew substantially with the successful completion of three acquisitions, the most notable being our acquisition of California-based Bank of the West. More on that later. Last year, we reinforced and expanded the bank's foundation to future-proof against several macroeconomic trends transforming economies around the globe. The clean energy transition, the accelerated at-scale availability of advanced generative AI technologies, and rapidly reorganizing geopolitical relationships each present risks and opportunities for our clients and for BMO.
In 2023, the global economy was significantly impacted by rising interest rates, weaker financial conditions, and escalating geopolitical crises.
While inflation fell from four-decades high across North America, it does remain sticky, keeping borrowing costs high and global demand low, risking a higher-for-longer rate environment. Even when rates do start to ease, and they should in time, we will find ourselves in a new normal, an environment with fundamentally different characteristics than that of the past two decades.
While these factors challenged near-term growth opportunities for North American banks, they reinforced BMO's fundamental strength and diversified portfolio of businesses.
BMO is a powerful platform for growth and resilience in a challenging economic environment. This year-in-review today reflects the continued investment we are making in the fundamental strength that sets BMO apart from the vast majority of North American banks. In 2023, we delivered good performance. On an adjusted basis, BMO delivered record revenue of over $31 billion and pre-provisioned pre-tax earnings of $12.7 billion, which grew year-over-year. This growth was led by the continued strength of our Canadian personal and commercial banking business and the successful integration of acquisitions. Now, proudly serving 13 million clients, at the core of our balance sheet is $650 billion of customer deposits and $1.3 trillion in assets. We strengthened our capital position with a CET1 ratio of 12.5% at year-end. Consistent, all-weather performance through economic cycles is paramount to BMO's success.
With a 195-year dividend record, we have the longest-running dividend payout record of any bank or any company in Canada. And you can see that we consistently deliver top-tier returns to our shareholders. This unprecedented record is underpinned by our disciplined approach to risk management and our ethical culture. I'm proud to share today that for the seventh straight year, BMO was recognized as one of the world's most ethical companies by Ethisphere.
This recognition of our balance of ethical high performance is a reflection of our team's commitment to helping our customers make real financial progress and our strong client service culture.
In 2023, BMO was ranked for the first time as number one in personal banking customer satisfaction among Canada's Big Five banks in the J.D. Power 2023 Canada Retail Banking Satisfaction Study. This team was also recognized by J.D. Power as the number one in customer satisfaction with online banking. The intersection of people, technology, and progress are at the core of these two achievements, and this is where the magic happens. Great customer service meets great digital experience. Unlocking the power of our people to deliver this award-winning service wouldn't be possible without the significant emphasis that we have put on our digital-first agenda, empowering our teams to develop and deploy digital solutions that free up capacity for our teams to work with our clients to deliver expert advice.
We're very clear when we're speaking with our team about the importance of being a future-ready and digital-first bank. It means designing leading solutions for our customers and our employees, using agile practices to accelerate time-to-market, deploying increasingly sophisticated data and analytics, including AI, and leveraging cloud engineering to drive modernization.
We can then deliver more, faster, and with greater quality and security. We do value external validation when we receive it, when Fast Company names us as one of the world's most innovative companies, when we receive a Model Bank Award for integration excellence, when we're recognized for the globally significant value of our intellectual property and patents. But my team hears me say all the time that the best award, the best award, is the recognition from our customers. Our technology foundation is built on strong partnerships, particularly with the world's largest cloud providers. That gives us access to enormous raw computing power, speed, and the ability to scale. These partnerships bring with them access to cloud-native architecture and access to leading AI capabilities.
Our competitive advantage comes from the creativity and the vision to drive the highest-impact use cases with a relentless focus on what can help our customers make progress. This obsession with progress for our customers is, in fact, the connection between last year's groundbreaking J.D. Power recognition and the complex and highly successful integration of the Bank of the West when we welcomed nearly 2 million customers and thousands of employees in the largest acquisition in Canadian banking history. Through the Labor Day weekend of 2023, nearly 2 million customers were onboarded, over 300 systems were converted, and more than 500 branches rebranded to help us go to market as BMO from San Diego to St. John's. We began laying the groundwork for this successful integration over many years, having made significant advancements and investments in our U.S. franchise.
Although we've operated in the U.S. since 1818, our acquisition of the Harris Bank in 1984 established the meaningful presence in the U.S. Midwest that was then advanced again with our 2011 acquisition of M&I. In 2023, we closed and converted the natural next step in our North American growth strategy with our expansion to the West Coast with California-headquartered Bank of the West. Representing one of the largest economies in the world, nearly twice the size of Canada, California is now strategically important as a market for BMO. With our newest colleagues and customers on board, we're now competitively positioned as a top 10 U.S. bank by assets and a top 4 commercial lender in North America.
The significance of our U.S. operations has enabled us to meaningfully expand our market access to high-growth regions. It's doubled our U.S. footprint, and it solidifies BMO's position as a leading North American bank.
With a physical presence in 32 U.S. states, a unified brand, differentiated retail offering, a premium commercial bank, and a leading investment bank, we are set up to win in our newest markets. We are the most integrated cross-border bank in North America, with all four operating groups powered by robust continental leadership and organizational infrastructure.
This is a story of diversification and balance. Our revenue and earnings are balanced between the United States and Canada, and our customer segments are evenly split between business and consumer. Our personal banking business is growing strongly, with peer-leading revenue growth in Canada as we gain market share through differentiated client service and a foundation of helping our customers make real financial progress. Our retail franchise is now twice as large in the US as it was before. Our commercial and capital markets businesses support our clients with differentiated cross-border expertise. BMO Wealth Management is primed for acceleration with continued net new asset growth reflecting the trusted relationships that we've built with our clients.
It's worth noting that since our closing of the Bank of the West acquisition, during and throughout a period of heightened uncertainty in the US banking market, our US segment has consistently delivered quarterly pre-provision pre-tax earnings above $1 billion US. We've maintained this performance through intense deposit competition and decreased loan demand while overachieving our cost-saving targets. Throughout the instability of the spring of 2023, we were proud, and our team was honored to serve as an important port in a storm, a role our clients have and can continue to count on us for. BMO is now well-established to serve more clients between the Canadian and US economies and to realize the full potential of the North American region in a shifting global landscape.
The US economy is showing signs of stronger-than-expected growth this year, with real GDP forecasted to be at least 2%, which should exceed Canada's rate of growth. With one of the largest bilateral trade relationships in the world, trade and investment between Canada and the US is fundamental to our two countries' economic competitiveness and prosperity. The relationship is significant. Put into context, just counting the Great Lakes region made up of eight states and two provinces, eight states and two provinces would be the world's third-largest economy, nearly equal to that of Japan and Germany combined. That region employs a third of the US-Canadian combined workforce. Then add in California, an economy almost twice the size of Canada's, and you can see the global impact this north-south partnership really has.
The countless points of connectivity between our two countries are an important reminder. With trade and investment flows supporting millions of jobs and global macroeconomic trends like the clean energy transition reshaping the flow of investment, this vital partnership cannot be taken for granted, nor can it be more appreciated for the strategic security and economic opportunity of the North American region.
The shift in the production and consumption of energy will benefit both Canada and the US as the world continues to turn to reliable and trusted suppliers of sought-after resources, technology, and all forms of energy. As demand for lower carbon and more ethically sourced energy increases, both Canada and the US are well-positioned to help reduce global reliance on less sustainable and more geopolitically unstable countries. Responding to this demand for cleaner, more secure sources of energy and the technologies that will enable a lower carbon future, BMO set out in our client ambition to be our client's lead partner in the transition to a net-zero world. Whether it's working with clients on the leading edge of green technologies, clients developing the next generation of agriculture practices, retrofitting real estate, or supporting our energy clients working through their emissions profiles, we're proud to be financing the transition.
Last year, we exceeded our pledge to mobilize $300 billion in capital to our clients' sustainable outcomes by 2025. These outcomes include climate-related as well as social sustainability outcomes like support for women-owned business, indigenous banking, and the advancement of our Empower programs.
At BMO, the strength of our performance fuels the ability to put our purpose into action and to boldly grow the good for a thriving economy, a sustainable future, and an inclusive society. When our clients achieve their goals, we achieve ours. That's why we work so hard to support the communities we serve, including in our newest markets. At BMO, we recognize that when you empower people to achieve their potential, they exceed your expectations. Empowering our clients to make real financial progress, empowering our employees to work together to meet more of our clients' needs, it's a connected relationship that drives results, results that consistently show up in our winning culture scores. In just a few short years, Team BMO has made substantial progress in employee engagement, and our scores are leading to a workplace culture being ranked among the world's strongest.
Your team is a winning team, a team committed to building world-class loyalty and to deepening client relationships by bringing the whole of the bank to serve our clients.
We're hard at work continuously optimizing our businesses and balance sheet, controlling our costs, and deepening customer relationships, all in the pursuit of sustainable long-term growth. While we've crossed the starting line on our US West Coast expansion, across all of our businesses and throughout our footprint, we are gaining momentum as we execute against our clear and well-defined plan to win. Thank you for your support and your confidence in our bank's future. Merci beaucoup.
Wow. Every time Darryl takes us for a review of the achievements of the bank, you just can't help as a shareholder to get more excited about the future. So thank you. Tremendous presentation. We'll now turn to some additional procedural matters. I have been informed by our transfer agent that over 365 million votes have been cast or received by proxy from both registered and beneficial shareholders in respect of the matters of business before this meeting, representing approximately 50.4% of the total outstanding shares eligible to be voted. We will conduct all the votes in sequence, and later when the votes are tallied, the scrutineers will report the outcome of each vote to the meeting. For shareholders and proxy holders who are using our online voting platforms, the polls are now open for voting and will close after our presentation of the items of business.
If you have already voted or sent in a proxy, there is no need for you to do anything unless you would like to change your vote. When the proxies are submitted to our registrar and transfer agent, they are counted and tabulated by their officers. Scrutineers of the meeting will then verify and report on the results. If you are online and want to ask a question, you can now type your question or your phone number, the subject matter of your question, and your preferred language into the messaging box. Now, to our first item of business, the submission of the financial statements. In March 2024, copies of our annual report for 2023 were either mailed to shareholders or made available online.
The consolidated financial statements and notes for the October 31st, 2023 year-end were included on pages 145 to 214 of the annual report, and the audit report therein can be found on page 139. It will be taken as read. Are there any questions in the room related to the 2023 financial statements? Okay. Thank you. Paul, have we received any questions on the 2023 financial statements in advance of the meeting or online?
Thank you, Chair. We have not.
Great. Thank you. This brings me to the election of directors for the ensuing year. As determined by the board, the number of directors to be elected today is 13, with 12 having been elected previously. Sophie Brochu, who has served on the board since 2011, is not standing for reelection. I would like to thank Sophie for her many contributions, including serving on the Audit and Conduct Review Committee, Human Resource Committee, and Governance and Nominating Committee. We will miss her timely insights and deep leadership experience. A recently appointed director, Hazel Claxton, is standing for election this year. Until her retirement in 2018, Hazel was Chief Human Resource Officer for Morneau Shepell and a senior partner at PwC Canada previously. She was appointed to the BMO board on August 30th, 2023, and also joined the board's Audit and Conduct Review Committee.
Hazel brings extensive business performance improvement and finance and accounting knowledge combined with executive-level strategic human resources experience cultivating high-performance teams. You will find biographical information about each of the nominated directors in the management proxy circular. I call on Paul Noble to present the nominees for election. I would ask that each of the nominees stand when their name is called and remain standing until the nomination is seconded.
Thank you, Chair. I am a shareholder and proxy holder. I now nominate the following persons to be elected as directors of the bank until the next succeeding annual meeting of shareholders or until their successors are elected or appointed: Janice Babiak, Craig Broderick, Hazel Claxton, George Cope, Stephen Dent, Christine Edwards, Martin Eichenbaum , David Harquail , Linda S. Huber, Eric La Flèche , Lorraine Mitchelmor e, Madhu Ranganathan, and Darryl White.
Thank you, Paul. I now call on David Gore to second the nomination.
Thank you, Chair. My name is David Gore, and I am a shareholder and proxy holder. I second the nomination.
Thank you, David. If you have any question on the election of board of directors, please make your way to one of our microphones in the room. Are there any questions in the room relating to the election of board of directors today? Thank you. Paul, have we received any questions on the election of the bank's board of directors in advance of the meeting or online?
Thank you, Chair. We have no questions.
Great. Thank you, Paul. We will now proceed to the vote. Board members can be seated. I'll stay standing. The Bank Act provides for individual voting for directors. The Bank Act provides that you may vote for or withhold your vote for the election of each of the director nominees. I remind you that the board of directors recommended voting for all the nominees set out in the management proxy circular. We will pause for a few seconds to allow for voting. The next item of business is the appointment of auditors for the ensuing year. To facilitate motions at this year's meeting, we have asked Daniel Beaupré and Emina Bekovic to move management's motions related to the appointment of shareholder auditors and the advisory vote on executive compensation. Danielle?
Hello. My name is Daniel Beaupré . I'm Vice President for BMO's business banking in Quebec. In addition to my role at BMO, and for the past five years, I have been a passionate advocate of Jeunesse J'écoute, where I serve as a champion for our business banking, Quebec and maritime regions. Together, we work towards encouraging our teams to contribute and participate in our support of youth mental health services. As a shareholder and proxy holder, I move the motion to appoint KPMG as the shareholders' auditors for the 2024 fiscal year. Thank you.
Thank you. I call on David Gore to second the motion.
Thank you, Chair. I second the motion.
Are there any questions in the room related to appointment of the shareholder auditors? Seeing none, Paul, did we receive any questions on the appointment of shareholder auditors in advance of the meeting or online?
There are no questions.
Great. Thank you. I remind you that the board of directors and management recommend voting for the appointment of shareholder auditors. We will pause for a few seconds to allow for that voting. Thank you. The third item on the agenda is the consideration of an advisory vote on the bank's approach to executive compensation. I will call on Emina Bekovic to present the motion.
Hello. My name is Emina Bekovic . I am the bank manager at BMO's Hill Branch in St. Louis, Missouri. As a proud advocate for our employee resource group, BMO Alliance for Women, I serve as the chair for Women Alliance in the Kansas City, Missouri chapter. I am a shareholder and a proxy holder. I move the motion to approve the advisory vote on the bank's approach to executive compensation. Thank you.
Thank you. I call on David Gore to second the motion.
Thank you, Chair. I second the motion.
Okay. Are there any questions in the room related to the advisory vote on the bank's approach to executive compensation? Seeing none, Paul, anything additional to add?
No questions.
All right. Thank you. I remind you that the board of directors and management recommend voting for the advisory resolution to the bank's approach to executive compensation. We will now proceed to vote. Thank you. We will now turn to shareholder proposals. There are five shareholder proposals going to vote this year. I will call on each of the shareholder proponents to speak to and move their proposals. There were also seven withdrawn proposals, which will be heard after we've completed the voting. Shareholder proposal number one was submitted by MÉDAC relating to a commitment to hold annual shareholder meetings in person.
MÉDAC's proposal and supporting statements, as well as the bank's position on the proposal, are set out in full on pages 94 and 95 of the English management proxy and pages 107, 108 of the French version. Mr. Willie Gagnon is with us this morning to make a statement and move MÉDAC's motion. Mr. Gagnon, would you please address the meeting and move MÉDAC's motion? And good morning.
Good morning, Mr. Chairman. My name is Willie Gagnon, and I represent MÉDAC, the Mouvement d'Éducation et de Défense des Actionnaires. As each year, we make shareholder proposals. This year, we presented eight proposals, and we are happy that we were able to come to an agreement with the bank on five of our proposals, so only three are being put to a vote. On April 4th, during the funeral of our founder, Mr. Yves Michaud, we won a vote for the first time in memory at the CIBC annual meeting. Actually, we had won the same proposal at Metro. I imagine there are some people in the room who know that. We also had a proposal adopted at the Air Canada annual meeting. Air Canada did not oppose our proposal. They suggested that shareholders vote as they wished. They didn't say vote for or against.
They said, "Vote as you wish." This proposal is intended to maintain face-to-face meetings. This meeting today is a rarity in the world of public companies. Banks are among the only companies that are still required to have face-to-face meetings. We are asking banks who are still required to do so, but the government is about to allow you not to do that anymore, we are asking banks to maintain a commitment to face-to-face meetings. Some banks have agreed to make that commitment even if they become entitled no longer to do so. This is not the case for Bank of Montreal, and this is why this proposal is coming to a vote, and we are very interested in seeing the outcome of the vote. We are very surprised by the reasons that are invoked in our response.
You refer to the fact that your virtual meetings are exceptional. That's great. You also say, "And emerging technologies offer substantial opportunities, but why can't we see people who speak remotely on virtual meetings?" That has been a problem for all the virtual meetings where I participated, with one exception. Everybody can do a Zoom meeting. You can see everybody else, but in the shareholder meetings, it's not possible to see the person who's speaking. We can't see who's lined up at the microphone to speak. You can't talk to your neighbor in the room. Here, I can talk to the people who are around me. I can walk up to you and shake your hand. It's all possible in a virtual meeting. We feel that virtual meetings cannot replace face-to-face meetings.
We agree that there are cases for virtual meetings, but we believe that face-to-face meetings should remain the standard, and we wished that the bank had agreed to maintain them. We are very interested in seeing the outcome of the vote today. I hope that even if we don't win this vote, the bank will take into consideration the fact that our proposal was adopted at other meetings. It's not with MÉDAC's shares that we get proposals adopted. There are many other shareholders who agree with the idea. At Air Canada, Air Canada that allowed shareholders to vote their conscience, we got 82% of the vote. We hope that even if we don't get this proposal adopted at this meeting, you will take this question into account considering the results that we obtained at other meetings of public companies. I'm happy to see that Mr.
Darryl White appears to be reacting positively to what I'm saying. That is making me very happy. Would you like me to address the second proposal, Mr. Chairman?
Have you made the motion on this one? We'll come to the second one after.
D'accord. Donc.
Thank you.
Okay. So I would ask all shareholders to support this proposal.
Thank you very much. Any additional comments or questions in the room on proposal number one? Nope. Paul, have we received any additional?
No questions online, Chair.
Great. Thank you. I remind you that for the reasons stated in the management proxy circular, the board of directors and management recommend voting against shareholder proposal number one. We will now proceed to the vote. We will now turn to shareholder proposal number two relating to public disclosure of country-by-country reporting. The shareholder proposal was also made and submitted by MÉDAC. MÉDAC's proposal and supporting statements, as well as the bank's position on the proposal, are set out in full on page 96 of the English proxy circular and 109 and 110 of the French version. Mr. Gagnon, would you please make the motion? Your comments are welcome, of course.
Thank you very much, Mr. Chairman. Public disclosure of non-confidential information, country-by-country reporting, compensation ratios, and tax havens. We propose that the bank disclose its reports to the government entitled Country-by-Country Report. This is a report that the bank is required to provide each year to tax authorities pursuant to Canada's BEPS commitments. This is an OECD initiative designed to fight tax havens and tax avoidance. The reason we made this proposal was to obtain information that would allow us to break down the compensation ratio by jurisdiction. This would enrich disclosure on the compensation ratio that you're still not disclosing, and we have to calculate it ourselves. This year, we calculated that your compensation ratio is about 60. We generally recommend that it be between 20 and 30, and you are far from that.
One argument that had been raised against the publication of this ratio is that it lost meaning because the bank's activities are present in a number of jurisdictions. If the bank has operations in a country where the average compensation is less than in Canada, the compensatory ratio is less meaningful. The fact that the disclosure in your Country-by-Country Report would be published would allow us to break down the information by country. We also understand that the bank doesn't have operations in 120 countries. It's only in one other country than Canada, but it was an issue. We hope that this will one day come to pass. You know that this information is required to be disclosed in some countries.
Some countries require public companies to publish these reports, and we hope that you will one day accept that argument because perhaps this requirement will one day be imposed in Canada. Meanwhile, we have to make proposals on this, and I would invite all shareholders to vote in favor of this proposal. Thank you, Mr. Chairman.
Thank you. Are there any questions related to that item in the room? Paul, anything that you've received?
No questions online.
Great. Thank you. I remind you that the board of directors and management recommend voting against shareholder proposal number two for the reasons stated in the management proxy circular. We will now proceed to the vote. We will now turn to shareholder proposal number three relating to an advisory vote on environmental policies. This shareholder proposal was also submitted by MÉDAC. This proposal and its supporting statements, as well as the bank's position on the proposal, are set out in full in the management proxy on page 97, 98, and in the French language on page 111. Mr. Gagnon, over to you again.
Proposal number three, advisory vote on environmental policies. Be it proposed that the bank hold an annual advisory vote on its environmental and climate objectives and action plan. This is the Say on Climate proposal. I will read an excerpt from your response at page 98 of the circular. Given the complexity and depth of our strategies and commitments, shareholders would have difficulty making an informed decision. We are surprised by this argument. Shareholders are perfectly capable of reading your disclosure.
We have a number of arguments in favor of Say on Climate vote, but the main argument is that the reason why it makes sense is the same as the reason why Say on Pay vote is important as well. If it's not important to have Say on Pay vote, then stop doing it, but that's not what we're proposing. We want you to keep doing it. But you understand the argument.
Shareholders are quite capable of reading your disclosure. The complexity of climate issues, we don't have a choice. Yes, it's complex. That's how it is. Nonetheless, we should address them. When you suggest in your response that there are other instruments to consult shareholders, well, that would be one more. It's not because we have a Say on Climate vote that you would have to stop other engagement that you'd already do very well to consult shareholders on climate issues. So we don't see why the bank should not adopt this new instrument, and we would invite shareholders to vote in favor of this proposal. Thank you, Mr. Chairman.
Take that as motion made then as well. Thank you. Are there any questions or comments in the room related to that resolution? Hearing none, Paul, anything that you've received?
No questions.
Great. Thank you. I remind you that the board of directors and management recommend voting against shareholder proposal number three for the reasons stated in the management proxy circular. We will now proceed to the vote. Thank you for your comments. We will now turn to shareholder proposal number four relating to a report on the impact of oil and gas divestment. This shareholder proposal was submitted by InvestNow on behalf of Gina Pappano.
This proposal and its supporting statements, as well as the bank's position on the proposal, are set out in full on pages 98 and 99 of the English management proxy circular and pages 112 and 113 of the French version. I understand that Ms. Pappano from InvestNow has been appointed as a proxy and is here with us today. Ms. Pappano , please proceed with your statement and move InvestNow's motion. Thank you. Thank you, and good morning.
Good morning. Thank you for the opportunity to present InvestNow's shareholder proposal. My name is Gina Pappano. I am a shareholder of BMO, and I'm asking fellow shareholders to vote for proposal number four. I move this proposal. Last year, we asked the bank for an explicit commitment to continue to invest in and finance the Canadian oil and gas sector and for a clear signal that the bank would step away from policies like net zero that harm the sector. Fast forward to today. Net zero by 2050 is currently the number one ideological, political, and financial goal in Canada. Governments and regulatory agencies are creating and implementing policies to phase out oil and gas, and our financial institutions are following suit. This economically ruinous crusade is based on dogma and ideology, not on what's best for shareholders or Canadians at large.
This is why we are asking BMO and all the big five banks to commission reports qualifying and quantifying the impacts of divestment from the Canadian oil and gas sector on shareholder value and other relevant economic variables. If BMO continues on the path toward currently established net zero objectives, shareholders have a right to know the true costs and impacts. A taste of what BMO might find if they commission such a report can be found in the detailed analysis by the Canadian Centre for Policy Alternatives called Getting to Net Zero. This shows that Canada's federally set net zero targets cannot be met without degrowth and economic destruction.
We are already beginning to feel some impacts of this dogged pursuit of net zero by 2050: carbon taxes, soaring energy prices, emissions caps - really, production caps - for Canada's oil and gas sector, deindustrialization, and economic hardship for all. So far, the crusade hasn't done much for carbon emissions either. Demand for oil and gas around the globe has only gone up. Increasingly, it is being satisfied by nations far less environmentally friendly and responsible than Canada. Our loss in jobs and economic vibrancy has not been the environment's gain. To see the effects of net zero, we need only look to Europe. As countries there have pursued similar policies, many energy-intensive manufacturers of basic materials like chemicals, ceramics, glass, steel, and fertilizers have either gone elsewhere, drastically cut back production, or gone out of business entirely. We believe the banks are charging blindly towards net zero.
Pledging net zero by 2050 without a clear and complete understanding of the costs is irresponsible. For individual banks and corporations, it puts at risk the returns of their shareholders. For Canada and Canadians, it risks our prosperity and way of life. Please vote for proposal number four. Thank you.
Thank you. Are there any questions in the room related to shareholder proposal number four? Paul, did you receive anything in addition?
There are no questions online.
Great. Thank you. I remind you that the Board of Directors and management recommend voting against shareholder proposal number four for the reasons stated in the management proxy circular. We will now proceed to the vote. Thank you. We will now turn to shareholder proposal number five relating to the disclosure of a CEO-to-median employee compensation ratio. This shareholder proposal was submitted to Vancity Investment Management. This proposal and its supporting statements, as well as the bank's position on the proposal, are set out in full on pages 100 and 101 of the English management proxy and pages 114 and 115 of the French version. I understand that Ms. Kelly Hirsch from Vancity is here with us today. Ms. Hirsch, please proceed with your statement and also make the motion. Thank you and welcome.
Great. Thank you. Good morning. Thank you for the opportunity to speak on the merits of our shareholder proposal today. On behalf of Vanc ity Investment Management, I'd like to thank BMO for the constructive dialogue on this proposal this year. Over the past few decades, growth in executive pay has greatly outpaced growth in the average worker's pay. In 2022, the average CEO in Canada was paid 246 times what the average Canadian worker was compared to just 155 times as recently as 2009. This growing gap negatively impacts employee morale and can directly harm company performance through increased employee turnover and burnout. As a financial institution, BMO is heavily reliant on human capital to be successful. Senior executives need engaged employees to be able to execute on their strategic vision for the company.
While everyone expects the CEO to earn more than the average worker, they also expect the average worker to benefit financially from a company's success. When average worker wages stagnate while executive pay continues its overall upward trajectory, this can be very demotivating for employees, especially with inflation having pushed up living costs and increased financial stress on many. We believe the disclosure of the CEO-to-median employee pay ratio will provide useful information for investors to start monitoring this human capital risk. We understand that BMO has concerns about the methodology and scope of this disclosure, but we think these will be alleviated as the Global Reporting Initiative, which BMO already utilizes, provides a well-accepted methodology to calculate the CEO-to-median employee pay ratio. BMO's peer, Scotiabank, has calculated this ratio and begun disclosing this information annually in their proxy circular. We do understand BMO's concerns with data comparability between jurisdictions.
This is why we would generally recommend starting to disclose a country-specific pay ratio in the CEO's home market, like what Scotiabank provides, as this is more informative to investors than an aggregate number across jurisdictions. We agree that the numbers should not be disclosed without further context about which employees are included and what adjustments are made. This is how the information becomes useful for investors. It is important to recognize that it isn't about the absolute number. It is about being able to monitor the trend within a company over time. With BMO already reviewing and assessing CEO pay ratios as part of its annual assessment of CEO pay, it doesn't seem like a stretch to include it as one of many public disclosures on compensation practices.
Given BMO's position as a strong corporate and ESG leader in Canada, we believe BMO's disclosure will benefit the organization in the long term and help set an example for other Canadian corporations to follow. Therefore, we urge shareholders to vote for proposal number five, and I move this motion. Thanks.
Thank you very much. Are there any questions in the room related to shareholder proposal number five? Go ahead, Mr. Gagnon.
Mr. Chairman, Willie Gagnon on behalf of MÉDAC. We made a similar proposal over a number of consecutive years. It's not because we're no longer making a proposal on this subject that we don't agree with Vanc ity's proposal. We support, obviously, and strongly, investor proposal number five. Thank you.
Mercy, thank you. Paul, did you receive any additional questions?
We have no questions online.
Great. Thank you very much. I remind you that the board of directors and management recommended voting against shareholder proposal number five for the reasons stated in the management proxy. We will now proceed to vote. Thank you. That brings us to the end of the voting on the items of business before this meeting. Please complete your voting. I hereby declare that the polls are now closed with respect to all items of business. If you have completed a proxy ballot form, please raise it in the air, and someone from Computershare will pick it up from you. Here. The scrutineers will now count the vote and report back shortly. In the meantime, there were seven withdrawn shareholder proposals. MÉDAC submitted five proposals that were subsequently withdrawn after constructive dialogue with bank management. Mr.
Mr. Gagnon, we would like to thank you for your willingness and availability to engage with us. The withdrawn proposals, including MÉDAC statements and the bank's response, are set out on pages 102 to 107 of the English management proxy circular and pages 116 to 122 of the French version. Mr. Gagnon, would you like to speak briefly to the withdrawn proposals?
Briefly, yes, Mr. Chairman. Thank you. My name is still Willie Gagnon. I still act on behalf of MÉDAC. There are a number of proposals, so I will be very brief. We had made a proposal entitled Incentive Compensation for All Employees Based on ESG Objectives. We have been informed not only that incentive compensations based on ESG objectives already existed at the bank, but that they were about to be improved, and we're very happy about that. Proposal entitled Disclosure of Languages Spoken Fluently by Executives. The bank has agreed to do so, and we're very happy. We would have liked that, in addition, that information be broken down by individual. Maybe this will be the topic of a future proposal. We had made a proposal entitled Societal Dividend and Better Value Sharing.
It was proposed that the board of directors contemplate the creation of a societal contribution whereby a certain percentage of the corporation's profits would be devoted to supporting ESG causes. We wanted a mechanism to be created to ensure that if the bank's profits were to treble, then the bank's contributions to charity would also treble. In your response, you state, "In addition to our significant contributions to communities where we operate, we are pursuing our approach to investing in communities, and we will determine whether a minimum commitment presented as a percentage of profits can be adopted." We dare to hope that when you address this, you will adopt some measure. There are initiatives such as Imagine Canada. When you join that initiative, the company is expected to dedicate at least 1% of its profits to charities. There are other banks that have joined that initiative.
Elsewhere, we have also chosen not to bring this proposal to a vote for those banks that have joined this initiative. We look forward to seeing what you are going to do in this area. The next proposal, Reasonable Assurance for ESG Reports, you state in your response, "Our current estimation is that climate assurance will be implemented by 2030." So we expect to have a positive response to our proposal by then. Finally, a proposal on the appointment of the auditor. We would have liked that a provision be adopted to ensure that there be a rotation of the auditor at a certain time. Looking at your policies in place, we have found that you're already doing a lot in this area. You are still declining to adopt mandatory auditor rotation after a certain time.
We will continue to hope that you will and to monitor this question. Thank you very much for your engagement with us. I know that this took place in very special circumstances this year, but we are very happy that we were able to complete our discussions in time for this meeting. Once again, thank you.
Thank you. The Shareholder Association for Research and Education on behalf of the Atkinson Foundation, the Hamilton Community Foundation, the Pension Plan of the United Church, and the United Church of Canada Treasury, together with the British Columbia General Employees' Union , submitted a proposal which was subsequently withdrawn after constructive dialogue with bank management. The withdrawn proposal, including the supporting statements and the bank's response, are set out on pages 108 and 109 of the English proxy and pages 123 and 124 of the French management proxy. I understand that Ms. Mana Jacob from SHARE is here with us today. We would like to thank you for your willingness and availability to engage with the bank. Ms. Jacob, would you like to speak briefly on the withdrawn proposal? Good morning.
Good morning, fellow shareholders. My name is Mana Sarah Jacob. I'm the Engagement and Policy Officer at the Shareholder Association for Research and Education, also known as SHARE, and I'm a duly appointed proxy holder. In 2022, SHARE, on behalf of the Atkinson Foundation, along with the BC General Employees' Union , also known as the BCGEU, submitted a shareholder proposal requesting BMO to conduct and publish a third-party racial equity audit analyzing BMO's adverse impacts on the communities of color and indigenous people. The proposal received 38% support from shareholders at the bank's 2023 annual meeting. A similar proposal was filed in 2023 by SHARE on behalf of the Atkinson Foundation, the Hamilton Community Foundation, the Pension Plan of the United Church of Canada, and the United Church of Canada Treasury, together with BCGEU.
Subsequent to the filing, SHARE, BCGEU, and BMO engaged in meaningful and productive dialogue, resulting in BMO's public commitment to conducting a third-party racial equity audit on November 10th, 2023. Following this announcement, the Proponents withdrew the proposal based on the bank's commitment to aligning this audit with best practices. As shareholders, we are pleased to see that BMO is putting its commitment to equity, equality, and inclusion into action. BMO's decision to conduct a third-party racial equity audit also aligns with the commitment made by its Canadian peers. For the audit to effectively manage risk, BMO's third-party racial equity audit will involve a review of the bank's employment practices and business practices to identify existing or potential racial equity issues, particularly related to the communities of color and Indigenous people, with recommendations from a qualified auditor on how the bank can address them.
The bank expects to complete the audit by 2025. As critical intermediaries, financial institutions play a key role in society. They allow businesses and individuals to access economic opportunities through a broad range of financial products and services. Because of this important role, institutions such as BMO have a responsibility to serve the public equitably and fairly. Committing to the conduct of this audit is a step in the right direction as the call for greater corporate accountability on racial equity issues continues to grow. Thank you again for a productive exchange. We look forward to further engagement with the bank on this matter. Thank you.
Thank you. Aequo Shareholder Engagement Services , on behalf of Bâtirente, submitted a proposal which was subsequently withdrawn after a constructive dialogue with bank management. The withdrawn proposal, including the supporting statement and the bank's response, are set out on page 110 of the English management proxy circular and page 125 of the French version. I understand that Mr. François Meloche from the organization is here with us today. We'd like to thank you for your willingness and availability to engage with the bank, and we'd like to welcome your comments. Good morning.
Thank you, Mr. Chairman. My name is François Meloche . I'm Director of Engagement at Aequo, and I represent Bâtirente. Proxy circular, we supported Bâtirente in filing a proposal recommending BMO disclose how it's supporting its corporate clients in developing credible climate transition plans. After a positive discussion, we withdrew the proposal because BMO is moving in the right direction. You can see this in the most recent climate report in the section Engaging Clients on Climate Transition Readiness. BMO now provides a high-level view of how it assesses and categorizes its clients' transition plan. This is a good start, but there's more to be done. We're hoping BMO will now follow the example set by other banks and clearly indicate how it understands credible transition plans for its clients, but very importantly, how it sets clear expectations and timelines for these clients to adopt these credible transition plans.
After a certain amount of time, BMO should be willing to let go of clients if they're unwilling or ultimately unable to transition to a low-carbon economy. For a transition plan to be credible, it should include, obviously, quickly reducing GHG emissions, but it also must mean some reflection on gradually moving away from selling carbon-intensive products. On the issue of coal, just a note that we're concerned about the recent news that BMO withdrew its statement on coal lending. We understand that there's little appetite to lend to coal, but still, we think these types of policies are important signals sent to the market and stakeholders regarding these types of products. We believe the bank has a key role to play in allocating capital towards sustainable activities and products. Banks, in general, have a key role to play in allocating capital towards sustainable activities and products.
If BMO is to achieve its ambition to be the lead partner of its clients in the transition to a net-zero world, it should ensure that these clients quickly adopt transition plans that are truly credible and aligned with the ambition of where the world needs to go to avert the worst effects of climate change. We appreciate the engagement and look forward to continuing the engagement with you. Thank you very much.
Thank you. Thank you for taking the time. The scrutineers have completed their preliminary reports on the results of the voting and are now calling our transfer agent to read those results. The scrutineers' report in final form will be available after the meeting.
Mr. Chairman, we, the scrutineers, confirm the following preliminary results. One, no director standing for election today received less than 90% of the votes cast for a director. Two, appointment of shareholders auditor, approximately 91% for. Three, advisory resolution on the bank's approach to executive compensation, approximately 94% for. Number four, shareholder proposal number one, approximately 50% for. Five, shareholder proposal number two, approximately 10% for. Number six, shareholder proposal number three, approximately 15% for. Seven, shareholder proposal number four, approximately 1% for. Finally, number eight, shareholder proposal number five, approximately 10% for.
Thank you very much. I therefore declare that the 13 nominees listed in the management proxy circular are all duly elected as directors. Thank you for your support and confidence in us. KPMG LLP is duly appointed as auditors for the ensuing year. The advisory resolution on the bank's approach to executive compensation has been approved. Shareholder proposal number one has been approved. Shareholder proposal number two, three, number four, and number five have not been approved. We value the feedback we receive from shareholder proposals, and we will, of course, take this feedback into consideration. I now declare the formal business of the meeting terminated. We will now move to question and answer session. Questions should be by shareholders or proxy holders only and should be of interest to all shareholders and not of a personal nature.
If you have a question of a personal nature, management would, of course, be pleased to contact you after the meeting. If you do have a question, please either line up behind one of the microphones in the presentation hall, enter your question into the messaging box, or enter your phone number and the subject matter of your question into the messaging box if you wish to address the meeting. We will also read questions received by the corporate secretary prior to the meeting that have not already been raised. Questions with common themes may also be grouped together for efficiency. I will first go to the shareholders here in the room. Once I recognize you to speak, please identify yourself and state whether you are a shareholder or a proxy holder. Thank you. Are there any questions? Yes, please.
Good morning. My name is Matt Price. I'm with Investors for Paris Compliance , and we are a proxy holder. I have a question for Mr. White, which was resulting from his presentation this morning, his opening speech. So you identified the energy transition as one of the macro factors driving the economy, and I think that's absolutely correct, and also that the bank is positioning itself to take advantage of that. There's a question of how you measure that, what metrics you choose to measure that. One of the metrics, which is gaining some traction now, is the ratio of low-carbon energy to fossil fuel financing energy. Bloomberg NEF has been publishing these ratios, and RBC just accepted a proposal to be reporting on this on an annual basis.
The Bloomberg NEF measurement for this year found that BMO ranked number 88 in the world, slightly ahead of a couple of the other banks, but falling far short of the ratio needed to actually get to the transition. We recognize that BMO has set a target of $300 billion of sustainable finance, but I think there are some issues with definitions of that and whether it actually moves the number. Obviously, it doesn't feel like the metric is being moved very aggressively towards the right ratio given what Bloomberg is saying. My question to Mr. White, I guess, is: would BMO consider following suit with RBC in breaking out its sustainable finance targets and setting a more specific target around renewable energy? RBC has set a target for $15 billion to be invested in renewables by 2030. I'm wondering whether BMO will consider setting a similar target. Thank you.
First of all, thank you, Mr. Price, for being here. It's a good question, and it's an important question. I'll take you back to the framing of our journey where we have pretty clearly articulated that our ambition on climate is to be our clients' lead partner in the transition to a net-zero world. We take that pretty seriously, I think, as you know, through our engagement, including our accountability to be a thought leader and to be a leading advisor to our clients on their journey. Your point on metrics is a good one. It's an evolving science, I would say, across all of the metrics that are tracked on this journey, and we take those seriously, and there are lots of places we could look.
For example, our carbon-related assets metric is one that we do look at, and it's declined from 3.3% of our total lending in 2019 to less than half of that, 1.5% in 2023. On the metric that you're referring to with respect to effectively green, non-green financing ratios, I would say we are open to considering that approach and seeing what emerges, importantly, as good practice in the industry and comparability on ratios, and we'll provide further reporting in our future sustainability publications. Thank you for your suggestion.
Thank you for the question. I see no further questions in the room. Paul, are there any questions that we received in advance or during the meeting? Thank you.
Yes. We received the following question in advance from Federated Hermes. The question is: has the bank conducted a review of its trade associations and lobbying activities to ensure their alignment with the bank's own commitments and Canada's net-zero by 2050 goal, and would the bank consider conducting such a review and publishing its results?
I'm going to take that, Chairman. Trade associations. So we are a member, as many large companies and banks are, of numerous industry associations that interact with government on public policy issues. I will point out at the same time that membership of affiliations with these organizations doesn't necessarily mean that we at BMO support all of the policies of all of these organizations. How we use our voice is that we will voice concerns as appropriate through those organizations themselves or publicly if we determine appropriate. At this point, I would say we feel that practice adequately captures our position, and we don't contemplate additional or further disclosures on the matter. But thank you for the question.
Thank you. Are there any additional questions you've received?
There are no further questions, Chair.
That concludes our question and answer session. In closing, I'd like to thank everyone who was involved in supporting today's meeting. The input is extremely valuable for management and for your board of directors. Rest assured, we take all of your comments into consideration and do reflect on what our answers are and what we view as the best interest of your bank. Thank you for your confidence. Enjoy the day, and I'm picking tonight for the goal. Thank you.