Bonjour. Good morning, fellow shareholders, welcome to the 2023 annual meeting of your Bank of Montreal. My name is George Cope. I have the honor to serve as your Chair of the Board of Directors, I call this meeting to order. We'd like to begin today's meeting with a land acknowledgement by BMO team member, Mr. Dan Adams.
Ani boozhoo Dan Adams nindizhinikaaz anaa'akiwelgan nindoonji bindigen mamiwe minajuan. In the Anishinaabe dialect of the Ojibwe language, that was a greeting which meant hello, greetings. My name is Dan Adams. I live in Thunder Bay, Ontario, Canada, and I welcome you all altogether with respect. I'm not Indigenous. However, my children are. They are members of Saugeen First Nation in Treaty One. My daughter asked if I would take an Ojibwe language class with her, and I'm honored to do so, and I know her grandfather would be proud, too. I'm the Vice President of BMO's Indigenous Banking for Ontario. I would like to do a land acknowledgement for you all. First, let's take a minute to understand what it is and why we do it. Traditionally, Indigenous traders and visitors would acknowledge the territory of those who they were visiting out of respect and peace.
Today, relatively speaking, and in many ways, this is still the same. The purpose of today's land acknowledgement is to provide recognition in a meaningful and respectful way that the lands we live and work on are the traditional lands of the First Nation peoples for thousands of years and well before colonization. Doing a land acknowledgement for what is now the United States and Canada is difficult as the geography is massive, covering over 1,200 First Nation communities, tribes, Inuit communities, as well as Métis settlements. The history, the culture, the languages are also very different. How do we acknowledge the traditional lands of such a large area? First, let's be respectful and do it with a purpose of reconciliation. Reconciliation is a corporate responsibility, but also it's your own personal journey, striving for a better relationship based on knowledge and understanding.
The three parts to reconciliation are acknowledge, learn, and then act. With this learning, I would like to acknowledge the vast lands, the original people, and the rich cultures of the First Nations peoples, Inuit, and Métis. We acknowledge the oppression, we respect the treaties and sovereignty, and we honor our commitment of reconciliation. Thank you. Merci. Miigwech. Enjoy your meeting.
Thank you, Dan, and thank you to our shareholders for joining us this morning. Let me begin by warmly welcoming everyone who's joining us here, whether you're at today's meeting or also whether or not you're joining us remotely. I'm joined on stage today by Darryl White, our Chief Executive Officer, Tayfun Tuzun, our Chief Financial Officer, Sharon Haward-Laird, our General Counsel, and our Corporate Secretary, Paul Noble. Members of the board of directors and bank senior management team are joining us today as well, either in person or remotely. Members of the board will be introduced when it is time for the election of the 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 and is represented by proxy, or it's represented by proxy. I therefore declare this meeting to be properly constituted for the transaction of business. I appoint Patty Singh- Innes and Roxanne Persad, representatives of Computershare Trust Company of Canada, who are joining us today to act as our scrutineers for the meeting, and Paul Noble, our corporate secretary, to act as secretary. The shareholder auditors for fiscal 2022, KPMG LLP, are also joining us today, and we thank them for their service. I will now turn it over to our corporate secretary, Paul Noble, for some of the meeting's procedures. Paul, over to you.
Thank you, Chair. Closed captioning is being provided over the webcast, the meeting is being broadcast in both official languages. Usually, this year is no exception, the vast majority of our shareholders submit their proxy or voting instructions in advance of the meeting, with only a small number of shareholders choosing to vote their shares at the meeting. I will first describe how this voting will occur and second, how shareholders can ask questions. On registering for the meeting today, proxy holders and registered shareholders wishing to vote in person should have received a paper ballot. The ballot covers the items described in the management proxy circular that are being voted on today. Alternatively, any shareholder or proxy holder who has registered in advance with Computershare may log into the online platform and vote from your mobile device while in the meeting hall.
If you do vote online today and also complete a paper ballot, the paper ballot will be given priority. Any proxy holder or registered shareholder wishing to vote in person this morning by ballot who did not receive a paper ballot at registration, please raise your hand. Representatives from Computershare will give you one. Those of you participating in the meeting virtually can vote using the virtual voting platform on the webcast. Only registered shareholders and proxy holders who have 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 section of the voting platform, when you tap the voting icon, the meeting resolutions will be displayed. To vote, tap on one of the voting options. Voting will remain open during the formal portion of the meeting. You may vote on all agenda items and change your vote at any time during this 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 pose 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. I will read aloud your name and your question. If you wish to address the meeting verbally instead, insert into the messaging box your phone number and question topic and your preferred language. The webcast operator will telephone 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 to avoid a delay between what you hear on the phone and what you hear over the 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 wish 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. If you cannot make it to the microphone, raise your hand, and someone will bring you a handheld microphone. You may ask your question once the chair invites you to do so. Questions of a general nature will be addressed during the question and answer session following the formal business of the meeting. Questions of a personal nature will be addressed on an individual basis following the meeting, and we will do our best to respond to all of 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 phone numbers are on your screen now and can be found on our website. You cannot vote or ask questions over the phone lines.
Great. Thank you, Paul. We like to thank the thousands of registered and beneficial shareholders who took the time to vote by proxy prior to the meeting. The agenda today will consist of an address by the bank's leader and CEO, Darryl White, followed by a submission of the bank's 2022 annual financial statements. There will be three resolutions proposed by management. First, to elect the board of directors for next year. Second, to appoint the shareholder auditors for fiscal 2023. Third, to consider an advisory resolution on the bank's approach to executive compensation. We will consider the shareholder proposals. There were seven shareholder proposals submitted this year. Threeseven proposals were submitted for a vote and 4 were withdrawn. one of the proposals going to a vote is from MÉDAC.
The second proposal is from Invest Now on behalf of Gina Pappano. The third proposal is for the Shareholder Association for Research and Education on behalf of the Atkinson Foundation and the BC General Employees' Union, or BCGEU. Two of the withdrawn proposals were from MÉDAC. One of the withdrawn proposals was from BCGEU, and the Investors for Paris Compliance on behalf of the Salal Foundation, and fourth withdrawn proposal was from BCGEU. The shareholder proposals will be addressed following the votes on the three resolutions proposed by management. Following that, we'll have the time for an open question and answer session. On behalf of those speaking today, I note that their comments may include forward-looking statements, which involves assumptions that have inherent risk and uncertainties. Actual results may differ materially from forecasts projected 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 on an adjusted basis. It 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 2022 annual report as updated in our first quarter in 2023 report to shareholders. I'd now, at this point, like to call on our CEO, Darryl White, to address today's meeting. Darryl, over to you.
We closed our acquisition of the California-based bank, the largest acquisition in Canadian bank history and a major milestone in BMO's 205 years. It's the natural next step in our growth strategy, which has significantly expanded our market access to high growth regions in the U.S. and strengthened our competitive position as the eighth largest bank in North America by assets. Setting ambitious goals, prioritizing a strong risk management and ethical culture, and relentlessly executing on our agenda have helped us establish a strong foundation from which to serve our clients and grow our bank.
This allowed us to build a digital future-ready bank focused on efficiency, profitability, and loyalty, and driven by a culture of success as well as our purpose. This is important because this foundation for delivering strong shareholder returns on an ongoing basis also plays a critical role in fueling our progress towards a thriving economy, a sustainable future, and an inclusive society.
Events over the past month in the global banking system serve as a reminder of the importance of maintaining trust with our stakeholders. They've also reinforced the importance of a well-designed policy and regulatory system that provides confidence to our clients, businesses and consumers alike. For our part, BMO's strength and stability has been the foundation of our 205-year history. Our bank is highly diversified by customer sector and geography, with a strong capital and liquidity position well above regulatory requirements, and one that has in fact improved since the events of the last month. We have a long track record of leading risk performance as well as consistently strong credit ratings. We aim to deliver resilient revenue performance through economic cycles.
We're very proud of the prudent approach we've always taken as one of the founders of the North American financial system and as a responsible market participant. The trust that our clients place in us to serve them is our bank's most valuable asset. Strong financial performance, which we delivered in fiscal 2022, is what underpins this trust. Last year, we executed on our strategy to strengthen and grow each of our diversified businesses. We achieved pre-provision, pre-tax earnings growth, and we met our commitment to positive operating leverage as we have in each of the last five years. Over that period, our efficiency ratio improved by over 600 basis points, while we also invested in our sales force and technology to improve customer experience and drive future growth and returns.
Our return on equity in 2022 remained above target, even while building capital ahead of our acquisition. We've achieved these strong and consistent results against a rapidly changing economic background.
With increasing market volatility, skyrocketing interest rates, slowing global economic momentum, and ongoing geopolitical tensions, the BMO team is staunchly focused on maintaining our performance in order to position us to optimally support our clients, as well as create value for our shareholders.
Our consistent performance has delivered top-tier returns to our shareholders and the longest-running dividend payout record of any company in Canada at 194 years. It's underpinned by a leading and disciplined approach to risk management that has resulted in a 30-year average loss rate well below our peers. The bank's track record of consistent and resilient financial performance, together with a strong balance sheet, protects customers and shareholders through economic cycles. We have a stable and diverse base of customer deposits, we maintain high-quality liquid assets that can be accessed in times of stress. Although our capital position was elevated in advance of the closing of our acquisition, it is still expected to maintain well above regulatory requirements now that the acquisition has closed.
For more than 200 years, our consistent and sustainable performance has driven our growth. For example, our organization has gone from renting modest premises on St. Paul Street in Montreal to now becoming the 10th largest bank by asset value in the United States.
Our presence in the United States dates back to 1818, just one year after BMO opened for business. In fact, among our founders were several New England merchants who wanted to make it easier to do business between the two countries. Cross-border trade has been in our DNA since the very beginning. We've steadily grown our presence in the United States, most notably with our 1984 acquisition of the Harris Bank, followed by M&I in 2011, and now Bank of the West, to deliver new opportunities for our customers. Our U.S. segment has been a key contributor to our growth and success. The combination of organic growth, which has been 60% and highly successful acquisitions.
With the completion of our acquisition of Bank of the West on February 1st, once fully cost synergized, we expect the U.S. to contribute approximately 45% of pre-provision, pre-tax earnings. We've strengthened our position with increased scale. We've gained even greater access to growth opportunities in strategic new markets. This slide shows our position today. We've now doubled our footprint with a physical presence across 32 states. We now have a presence in three of the top five U.S. markets. We have digital, retail, and payments platforms across all 50 states, and we are a top five commercial lender in North America. As a high-performing U.S. super-regional bank, our clients benefit from the strength of our trillion-dollar balance sheet in North America and the stability of a Canadian bank.
This means that we're able to meaningfully invest in digital capabilities, offer integrated capital markets and wealth products and services, and attract top talent. Coupled with our deep integration across the Canada-U.S. border, it's what sets us apart in the U.S. market. When you factor in these differentiating strengths, we are well-positioned to pull ahead of the pack.
As a highly integrated bank, our one client approach allows our team to support clients with expertise, which allows us to deliver an experience that sets us apart. On the same day that we completed our acquisition, we began to see the business benefits of our expanded and consolidated teams as we processed our first one client transaction.
In these first 77 days, our newly completed combined teams have been delivering on opportunities to deepen client relationships and expand our offerings, complementing our efforts to improve the overall client experience. In the months ahead, we're focused on the successful integration and full conversion to BMO. We will report earnings inclusive of Bank of the West beginning in the second quarter of fiscal 2023. By the end of 2025, we expect the transaction will add over $2 billion in run rate, pre-provision, pre-tax earnings to our bank. This is a story of significant growth backed by opportunity and potential. Now, with Bank of the West, part of the BMO family, we're excited to come together as one bank. We're excited to share one vision to drive progress for our clients, our colleagues, and our communities.
On that note, I'd like to thank our community partners whose input helped us to develop the community benefits plan that we announced during our acquisition. Their valuable input and advice will help shape BMO's community impact across our expanded U.S. footprint over the next five years. It's all part of living our purpose, to boldly grow the good in business and life. It's the strong performance of our business that enables us to put our purpose into action.
The better we perform, the more of a difference we can make for all of our stakeholders. As our customers and communities make progress, their growth and loyalty, in turn, will fuel our performance. This is what supports our efforts to keep moving towards a thriving economy, a sustainable future, and an inclusive society.
A thriving economy is a resilient one, where businesses are free to compete and serve their clients. It's one where local branch staff, business bankers, investment advisors, commercial and corporate bankers, commodities and foreign exchange traders, compliance and risk management teams all work together so that clients can make progress and grow. As one of the world's strongest financial institutions, we play a fundamental role in creating economic growth and shaping a thriving economy. As bankers, we work at the crossroads of the hopes and dreams of millions of customers and the access to the financial system that they need to achieve them. Whether that's starting or growing a business, helping to purchase or renovate a home, saving for school or retirement, or creating wealth for their family, we're there to help them make real financial progress.
One of the ways we're investing in a thriving economy in the U.S. is through our inclusive economic recovery initiative, BMO EMpower. In fact, we've exceeded our five-year, $5 billion commitment to help minority businesses, communities, and families overcome barriers. Stephanie Hickman of Trice Construction is one such client. As a Black woman business owner in the construction industry, she faced very real challenges gaining access to capital and resources despite being a corporate attorney. With the help of BMO EMpower, Stephanie transformed her family's business into a prominent utility infrastructure contractor.
Last year in Canada, we announced a CAD 5 billion commitment to support women entrepreneurs and up to CAD 100 million to launch BMO's Business Banking for Black Entrepreneurs program. It is through financial inclusion that we can help our customers build resilience and achieve financial stability.
How we build a thriving economy is key. A thriving economy is not at odds with a sustainable, inclusive future. In fact, when we get it right, they reinforce each other. It doesn't have to be an either/or. It has to be an and. At our core, we're problem solvers. We're pragmatic in our approach to help solve the most pressing issues of our time, including climate change. Two of the shareholder proposals we're voting on today sit on both sides of the conversation about the most effective paths to enable the clean energy transition. Our purpose to boldly grow the good in business and life inspires our management and action on these issues, including our response to the climate crisis. Our climate ambition is to be our clients' lead partner in the transition to a net-zero world.
We are leading the way in financing an equitable transition to a carbon-neutral economy. We're doing so by working with our clients who are developing new technologies and by supporting clients in traditional energy industries who are working hard to evolve their emissions profile. Why do we do this? Climate financing is critical to achieving emissions reduction targets and represents an enormous economic opportunity for our bank.
It's like CarbonCure are helping support the decarbonization of the global concrete industry. Last year, we became the first North American bank to purchase carbon credits generated through CarbonCure's unique engineered carbon removal solutions to help offset a portion of BMO's operational footprint and support more rapid decarbonization worldwide. CarbonCure is contributing to a thriving economy and doing so sustainably. We're proud to support their efforts, and we're proud of our own leading efforts in catalyzing climate action. As a member of the Net-Zero Banking Alliance, we're quantifying financed emissions across our portfolio. We've set ambitious targets for energy lending, including Scope one, two, and three financed emissions.
We're mobilizing CAD 300 billion in sustainable lending and underwriting, and our sustainability leadership has consistently been recognized on a number of global rankings, like the Dow Jones Sustainability Index and as the most sustainable bank in North America, according to Corporate Knights.
We are motivated by the opportunities and challenges of making progress, and by actively removing any barriers to inclusion that could prevent that progress. Diversity, equity, and inclusion are the drivers of a thriving economy, and we strive to help groups facing barriers to inclusion overcome those barriers, both inside and outside of our walls.
Celebrated the 30th anniversary of our Indigenous Banking Unit. We've worked for more than three decades to remove barriers to economic self-determination and support the growth of Indigenous clients, colleagues, and communities. Within our bank, we launched a recruitment program helping immigrants, refugees, and displaced persons, including Ukrainians fleeing conflict and resettling in North America to find new employment opportunities. We're consistently recognized for our gender inclusivity practices on Bloomberg Gender-Equality Index, something that extends to our corporate go-governance model. Guided by our board diversity policy, we aspire to have at least one-third women directors. Today, that number is much higher. 50%, in fact, are women, and three of our board's four standing committees are chaired by women. As we continue to eliminate barriers to inclusion, we recognize that there is still work to do to ensure equitable access, entry, and growth into the highest-paying roles.
In recent years, we've continued our work to ensure that people doing the same work are paid comparably.
We believe that representation matters and that diversity of ideas, backgrounds, and experiences fosters a culture of ethical and responsible conduct that leads to better outcomes. Culture is key. The BMO team has also focused on enabling a culture of success and has made significant progress in a short period of time. I am proud to say that the health and performance of our culture makes us one of the best financial institutions surveyed globally.
Our employees are the embodiment of our bank, and our team's commitment to our clients and communities is world-class. I am very proud to share that last year, we reached a major milestone, achieving CAD 200 million in employee pledges over 10 years to charitable causes. This is a team that cares about our collective future, about our pro-prosperity, and about boldly growing the good in business and life. Together, we're driving progress for a better tomorrow. Against the dynamic backdrop of economic change, this represents an extraordinary period of opportunity and potential for our bank, our customers in new and in existing markets. We're excited to get the BMO name out there in a very big way with recently completed flagship locations in Toronto, Chicago, and Milwaukee. In our newest market in California, with the aptly named BMO Stadium in Los Angeles.
Our sponsorship of the stadium and the home teams, the LAFC and the Angel City FC, are powerful levers to help our brand stand out. Building and deepening relationships in our key markets will be critical to the execution of our strategy and our sustained performance. Over the next year, we'll bring together our four lines of business to operate across our 32 U.S. markets and across Canada to help customers make real financial progress. I can confidently say that as I look to the future, that for BMO, the best is yet to come. Thank you. Merci.
Thank you.
Wow. Doesn't that make you proud to be a shareholder of the Bank of Montreal? Thank you, Darryl. That's incredible. 194 years of consistent dividends, longer than Canada. That's remarkable. Obviously, an incredible future with the leadership you just saw and the BMO team. On behalf of all the shareholders, thank you, Darryl. That was a remarkable address on where the bank is at. We'll now turn to some additional procedural matters. This is when it gets really exciting for everyone after Darryl's speech.
I have been informed by our transfer agent that over 370,449,700 votes have been cast or received by proxy from both registered and beneficial shareholders in respect to the matters of business that come before this meeting, representing approximately 52% of the total outstanding shares eligible to vote. We will conduct all the votes in sequence, and later, when the votes are tallied, the scrutineers will report the outcome of each of the vote to the meeting. For shareholders and proxy holders who have accessed our online voting platform, 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 your proxy, there is no need for you to do anything unless you would like to change your vote. When proxies are submitted to our registrar and transfer agent, they are counted and tabulated by their officers. Scrutineers of the meeting will verify and report on the results. If you're on the webcast and wish to ask a question, you can now type your question or phone number, the subject matter of your question messaging box. To the first item of business, the submission of the financial statements. In March 2023, copies of our annual report for 2022 were mailed to shareholders or made available online.
The consolidated financial statements and notes for the October 31st, 2022 year-end were included on pages 141-209 of the annual report, the auditor's report therein can be found on page 135, it will be taken as read. Are there any questions in the room related to the 2022 financial statements? Thank you. Paul, have we received any questions on the 2022 financial statements in advance of the meeting or online?
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 reelected today is 13, with all 13 having been elected previously. You will find biographical information about each of the nominated directors in the management proxy circular. I'd like to take the opportunity at this point to thank all the board members for their service. Trust me, we are all honored to serve on behalf of you. I call on Paul Noble to present the nominees for election. I would like to ask that each of the nominees stand when their name is called and remain standing until the nomination is second. I note that both Eric La Flèche and Linda Huber are not able to join us in person today. Linda is online and is joining us.
With that, Paul, over to you.
Thank you, Chair. I am a shareholder and confirm that I'm a proxyholder. 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, Sophie Brochu, Craig Broderick, George Cope, Stephen Dent, Christine Edwards, Martin Eichenbaum, David Harquail, Linda S. Huber, Eric La Flèche, Lorraine Mitchell-Moore, Madhu Ranganathan, and Darryl White.
Thank you, Paul. I now call on Neil Puddicombe to second the nomination.
Thank you, Chair. My name is Neil Puddicombe, and I am a shareholder and a proxyholder. I second the nomination.
Thank you. If you have a question on the election of the bank's board of directors, please make your way to one of the microphones in the room. Are there any questions in the room related to the election of the bank's board of directors? Our directors could be seated. Thank you. Paul, have you received any?
I have not.
Great. Thank you very much. We'll now proceed to the vote. The bank 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 and management recommend voting for all the nominees set out in the management proxy circular. We will now pause for a few seconds to allow for voting. The next item of business is the appointment of the auditors for the ensuing year. To facilitate motions at this meeting, two of BMO's team members will join us by video to move manager's motion related to the appointment of the shareholder auditors and the advisory vote on executive compensation. You could run the video.
Hello. My name is Ranjeet Dosanjh-Saroia. I am the branch manager for BMO's Market Street location in San Francisco. On behalf of my Bank of the West colleagues, we are excited to be joining the BMO family in 2023. We look forward to uniting two like-minded organizations with the combined strength to deliver real financial progress for our customers. As a proxy holder, I move the motion to appoint KPMG as the shareholders' auditors for the 2023 fiscal year.
Great. Thank you, Ranjeet. I now call on Neil Puddicombe again to second the motion, please.
Thank you, Chair. I second the motion.
Are there any questions in the room related to the appointment of the shareholder auditors? Paul, anything that you've received?
There are no questions, Chair.
Okay. 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 the voting. Thank you. The third item on the agenda is the consideration of an advisory vote on the bank's approach to executive compensation. You could run the video.
Hello. My name is Ismaël Soumagne , Director, Specialized Sales in our Sherbrooke, Quebec office. As a BMO employee giving ambassador in our 2022 campaign, I participated in many events to share our individual stories on why giving is important to us and to inspire our colleagues to donate. I'm proud to say that with over 90% employee participation, BMO raised over CAD 31 million for the United Way and thousands of other community organizations across North America. The money provides local community-based solutions to systemic issues. This aligns with our purpose to boldly grow the good in business and in life. I'm a proxy holder, and I move the motion to approve the advisory vote on the bank's approach to executive compensation.
Merci, Ismael. I call on Neil Puddicombe to second the motion, please.
Thank you, Mr. Chairman. I second the motion.
Thank you, Neil. Are there any questions in the room related to the advisory vote on the bank's approach to executive compensation?
Mr. Chairman, my name is Willie Gagnon, I represent the MÉDAC. Each year, I'm sorry to say this, we are in the habit of voting against the advisory resolution on executive compensation. We've just heard in the video the amount of money that has been raised for United Way, CAD 31 million, I believe. If we take the total remuneration published on page 89 of the circular, CAD 14 million, CAD 4 million, CAD 9 million, CAD 6 million, another CAD 6 million, that adds up to a lot more than CAD 31 million. If we have a suggestion to make would be that the Bank of Montreal's contribution to United Way be higher than its contribution to its executives' wealth. This is a moral comment. Normally, I refrain from making such comments.
It would also be appropriate that the top executives' compensation, and we have been asking for this for 25 years now, the remuneration of the bank's best-paid employee align with an equity ratio. That is to say, a decent ratio to the median compensation of corporate employees, and that a similar ratio be observed with the median compensation of Canadians. This is what we have been requesting for a long time. We will request this in the future. It would be appropriate if in the criteria used to set the compensation for bank executives, social criteria be included, which would rule out the exorbitant remuneration that is being set. That remuneration is aligned only with the size of the bank. There appears to be a direct relationship between the size of an institution and the remuneration of its executives.
In short, we would hope that your executive compensation become more nuanced. We repeat this each year. I'm sorry to have to come to the microphone every year. I would like to do something else, right now. Thank you.
Thank you, thank you for your comments. Paul, did we also receive anything in addition to the comments?
We've not received anything online.
Thank you. Thank you again. I remind you that the board of directors and management recommend voting for the advisory resolution on the bank's approach to executive compensation. We will now proceed to vote. Thank you. We will now turn to shareholders' proposals. There were three shareholder proposals going to a vote this year. I will call on each of the shareholder proponents to speak to and move their proposals. There were also four withdrawn proposals, which will be heard after we have completed the voting. Shareholder proposal number one was submitted by MÉDAC relating to the adoption of an annual advisory vote on environmental and climate objectives.
MÉDAC's proposal and supporting arguments, as well as the bank's position and recommendations, are set out in full on pages 93 and 94 of the English management proxy circular and pages 105, 106 of the French management proxy circular. Mr. Wille 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 the motion as set forth in the shareholder?
Mr. Chairman, once again, good morning. My name is still Willie Gagnon. I still represent MÉDAC. We had made three proposals. I'm not sure if I should comment on all three right now or just the one that is being put to a vote. The other two will be addressed later.
Let's address the one now, and we'll come back to the other two. Thank you very much.
Very good. We are putting just one proposal to the vote, namely the proposal on an advisory vote on environmental policies. It is proposed that the bank adopt an annual advisory voting policy regarding its environmental and climate objectives and action plan. This is a proposal that we had made last year. This is a proposal that we have made to all of Canada's major banks. one bank, Laurentian Bank, has already committed to implement the practice of Say on Climate, an annual advisory vote on environmental and climate objectives. Last year, this proposal was supported by a substantial number of shareholders, in some cases over 25%. Last year, it was 15% at the Bank of Montreal.
Given that about 20% of the bank's shares are held by the banks themselves, that the banks are opposing this proposal and that the participation rate is about 50%, which you stated at the beginning of the meeting, such a result is substantial. Since in order to obtain 15 or 25 or 20% of votes, a substantial number of shareholders must be involved in the context where banks hold about 20% of their own shares. This argument is applicable to all shareholders' proposals. Shareholders must know that banks have cross-share holdings of about 20%. Beyond those technical considerations, you state that Say on Climate is unnecessary. We don't believe in this argument because it could also be used against the Say on Pay resolution we've just voted on.
It is a complex issue. Why do you hold an advisory vote on remuneration? In your response, you state that you're unable to discern why there is support or lack of support if investors are opposed to all climate strategy or wish to have more subtle changes. Our response is that if during a Say on Climate vote, you didn't obtain the desired results, this would be a spur to consult those shareholders who have voted against, who would be easy to identify, easy to approach, and I'm convinced that those shareholders would be happy to tell you why they voted against your climate and environmental policy. These are our key arguments, and of course, we would invite all shareholders to support our proposal, Mr. Chairman. Thank you.
Thank you. Thank you for your comments. Thank you for your continued work with the Bank. Are there any questions in the room related to shareholder proposal number one? Paul, did you receive.
We did not.
Okay. 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 vote. Thank you. We will now turn to shareholder proposal number two relating to the bank making clear its commitment to invest in and finance the Canadian oil and gas sector. This shareholder proposal was submitted by Invest Now on behalf of Gina Pappano. Invest Now's proposal and its supporting comments, as well as the bank's position on the proposal, are set out in full on pages 96 and 97 of the English management proxy circular and pages 110 and 111 of the French version. I understand that Ms. Pappano from Invest Now has been appointed as the proxy holder and is here with us today.
We are pleased if you proceed with your statement and motion now. Thank you.
Thank you.
Thank you for being here.
Thank you for the opportunity to present today. I am asking BMO 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 will step away from policies like net zero that hurt the sector. I am a shareholder. I have worked in capital markets. I am a daughter of factory worker immigrants. I'm a mother who cares about her children's future. Unless you change your tune, you will hurt all our children's futures. The oil and gas sector is central to Canada's economy and prosperity. Investing in the sector is investing in an industry that fuels everything we do.
It means investing in the livelihoods, not just of the hundreds of thousands who work in the sector, but the millions, that is all of us, who depend on it for heating and eating and driving to work, and really, for every aspect of life. Divesting from oil and gas means severely damaging our economy. It means the growing demand around the world will be met by other, less responsible, less environmentally friendly suppliers. It means emissions will actually go up and environmental performance will go down. It means we will see more hardship for everyday Canadians as our economy will be hobbled, businesses and industry will shut down, people will lose their jobs, and energy poverty will grow, all while watching the demand for oil and gas be supplied by countries other than Canada. Why would a bank and its shareholders want to commit to that?
On net zero, the bank should step back. The federal government net zero target is not a legal obligation. Adherence to anti-oil and gas investment policies like net zero suggests that the banks think that oil and gas extraction, development, and use are not essential. This couldn't be more wrong. Nothing happens without oil and gas. It is time for the banks to stick to their knitting by investing in and financing oil and gas. This sector is essential for the functioning of the economy, for jobs, for innovation, and for global emissions reductions. I am urging you to vote for proposal number two. BMO should invest in Canadian oil and gas for the good of the economy, the environment, shareholders, and all Canadians. I move this proposal. Thank you.
Thank you very much. Are there any shareholder questions in the room? Seeing none, Paul, did you receive any?
Yes. We have a question from Jeff Carlson who's on the line. Jeff, please go ahead.
Good morning. Can you hear me?
Yes, we can. Thank you.
Very good. Thank you, Mr. Chair. My name is Jeff Carlson, and I'm a shareholder and a proxy holder. Thank you for the opportunity to address the board, management, and fellow shareholders today. I fully support proposal two, and I encourage other shareholders to support it as well. Unfortunately, we hear a lot of rhetoric these days about the so-called evils of oil and gas production. As well described by the proponents of this proposal, BMO's commitment to the oil and gas sector in Canada is critical to the well-being of Canadians and in fact, the world at large. Life without these necessary fossil fuels would be very, very hard indeed. I would ask exactly how have you traveled to Toronto for this meeting? How did you come? By using wind power? By using solar energy? Did you walk? Of course not.
It was by the burning of fossil fuels produced by the oil and gas in the planes and cars that you arrived in. I would ask the ideologues and misguided who call for a reduction or an even an elimination of the oil and gas sector to attempt to live without the benefits that oil and gas provides them for just a single day. You wouldn't be able to. Unlike other jurisdictions in the world, Canada is a leader in technologies and best practices in the area of hydrocarbon production and refining. Canada needs more investment in the same, not less. BMO must strengthen its commitment to this important industry, not reduce it. Specifically stating this commitment is a necessary first step. For these reasons, I urge shareholders to vote for this proposal. Thank you.
Thank you. Thank you for your comments. Paul, any others?
Yes. We have a question from Shannon Joseph. The question is: The U.S. was able to meet Paris targets primarily by switching significantly from coal-fired electricity to gas-fired electricity. 2023 reports from both the Business Council of Canada and the Canadian Chamber of Commerce highlight the important role LNG export from Canada could play in reducing emissions. Given the U.S. experience in these reports, does BMO understand climate finance to include investment in natural gas development and LNG?
Darryl, I think I'll have you address the question. Thank you.
I'm happy to, Chair. The short answer is yes, we do. It is part of our financing strategies. Just very quickly, while I have the mic, I think it's important to acknowledge the comments that we've received on the floor today are very important to us. We take them seriously. I note that the two of you are sitting right beside each other, so I be interested in your conversation after the fact. This is why we emphasized in our presentation what I called the and. This particular proposal, we think is very important, but the reason that we're recommending against it, isn't because we don't think that divestment is a problem. It's because we don't think it's necessary in the context of the way we run our business.
As I mentioned in my prepared remarks, we continue to invest in traditional oil and gas hydrocarbon producers on their path to the transition. That's what ladders up to our purpose as we try to be our clients' lead partners in a net-zero world. That includes, Chairman, natural gas development and LNG.
Thank you. Thank you. Paul, any other questions?
No further questions.
Great. Thank you. Thank you for the dialogue. 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'll now proceed to a vote. Thank you. We will now turn to shareholder proposal number three, relating to the bank conducting a third-party racial equity audit. This shareholder proposal was submitted by the Shareholder Association for Research and Education on behalf of the Atkinson Foundation and the British Columbia General Employees' Union. This proposal and the supporting comments, as well as the bank's position on the proposal, are set out in full on pages 98 - 100 of the English management proxy circular and pages 112 - 114 of the French version. Ms. Manna Jacob from SHARE is with us today to present the proposal. Ms.
Jacob, please proceed with your statement and also the motion. Thank you and welcome.
Good morning, fellow shareholders. My name is Manna Sarah Jacob. I'm here today duly representing the Atkinson Foundation, a shareholder of BMO, which has filed proposal number three as listed in the 2023 proxy statement. The proposal asks the bank to conduct and publish a third-party racial equity audit analyzing BMO's adverse impacts on non-white stakeholders and the communities of color. In other words, we are asking BMO to initiate an independent assessment of its employment and business practices to identify where its activities may contribute to perpetuating the racial wealth gap and what can be done to mitigate the negative impacts on communities of color and the Indigenous people. As critical intermediaries, financial institutions play a key role in the society as 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. Although we acknowledge that BMO has taken steps to address racial equity issues within the workplace and beyond, we believe these steps are insufficient to identify, address, and prevent the discriminatory impacts that BMO business practices may have on certain demographic groups. Failing to provide the public with equitable and fair access to financial services could result in significant material risk for the bank and by extension, the shareholders. In addition to company-specific risk that BMO is facing, the economic cost of systemic racial inequalities exposes universal asset owners to lower returns across portfolios, thus further threatening long-term shareholder value. A racial equity audit would help BMO mitigate risk stemming from potentially discriminatory employment and business practices, including from its products and services.
Furthermore, the audit would help ensure that any racial equity policies and initiatives aiming at tackling systemic racism are effective, and that any related investments have merit. As one of the largest Canadian banks, BMO must play an integral role in closing the racial wealth gap and opening greater opportunities for the economic advancement of racialized communities. Given the nature and scope of its operations, it is crucial that the bank ensures it operates and is seen as an inclusive organization so as not to alienate stakeholders, including current and future customers and employees. While recognizing the company's efforts, existing efforts and commitments, we urge BMO to demonstrate a higher level of racial equity commitment and align with its U.S. and Canadian competitors by committing to conduct a racial equity audit. Fellow shareholders, I move the proposal and ask for your support.
I look forward to a more constructive and meaningful engagement with the company. Thank you.
Thank you very much. Are there any questions in the room related to shareholder proposal number three? Good morning.
Good morning, fellow shareholders. Thank you, Mr. Chairman, and thank you to my colleague, Manna, who presented this shareholder proposal. My name is Emma Pullman, and I am here duly representing the British Columbia General Employees Union, a long-term shareholder in BMO and the co-filer of this proposal that we are about to vote on. We cannot discuss racial equity today without mentioning by name Torianne and her grandfather, Maxwell Johnson, Indigenous customers from the Heiltsuk Nation who were handcuffed for 45 minutes outside a BMO branch in Vancouver for trying to open a bank account. In an interview after the event, then 12-year-old Torianne told reporters that the experience led her to be fearful of police and of banks, but in particular of the Bank of Montreal.
I acknowledge that BMO has made efforts to correct the situation within the bank and with the family itself, the story is unfortunately not an isolated one. In recent years, BMO has been the subject of negative media coverage regarding discrimination against customers and employees. BMO can and has introduced policies aimed at tackling systemic racism, without a means of independently monitoring these initiatives, it is hard to ensure those efforts will be truly effective. This is why a racial equity audit is so indispensable. It allows for an independent examination of company employment and business practices. If we're doing everything right, this audit will validate that. If we have more to do, the audit will also help us course-correct. As discerning investors, we appreciate a good investment and a racial equity audit is a good investment.
It makes sense to know that the initiatives we are taking part in are going to be impactful and will protect long-term company value. BMO already has substantial operations in the U.S., but in light of the acquisition of Bank of the West, which we have talked about today, our U.S. operations are going to increase significantly. Following this acquisition, our bank will have operations, as we've said previously, in 32 U.S. states with millions of additional customers operating in more communities with more employees. Ahead of the acquisition, many concerns were raised related to BMO's poor track record of mortgage lending to Black residents in Marion County.
In a letter, Fair Housing Center of Central Indiana executive Amy Nelson wrote, "Mergers rarely benefit communities already suffering from a history of redlining, racial covenants, and other discriminatory practices." The Fair Housing Center of Central Indiana found in a 2022 report that BMO Harris was one of the worst lenders in its rate of loans to black applicants. Only 10% of applications for loans from BMO Harris were black applicants from 2018-2021. According to the Fair Housing Center, again, BMO Harris denied loans to 56% of black applicants and 47% of Hispanic applicants, compared to 30% for white applicants during that time. Banks can and do, unfortunately, play a role in reinforcing racial segregation and blocking the potential for the economic advancement of racialized communities. The banks can also be part of that solution.
As our company expands its U.S. business, a racial equity audit is even more critical for ensuring our company's efforts to tackle systemic racism are effective. Already, some of our largest competitors in Canada, including TD Bank, CIBC, and National Bank, have all announced plans and commitments to conduct racial equity audits. So far, BMO has not. BMO has emerged as a leader on so many fronts, including, as we will talk about, free, prior, informed consent. I hope that BMO will also emerge as a leader on this issue. Thank you.
Thank you. Thank you for your comments. Are there any other questions in regards to this proposal in the room? Paul, did you receive anything?
We have no further questions.
Okay, great. Thank you. Thank you for the comments. 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 a vote. Thank you. That brings us to the end of the voting on the items of business before the 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. Got a couple, three. Someone's coming around. Thank you. I'll keep moving as they're tracking those down. The scrutineers will now count the vote and report back shortly. In the meantime, there were four withdrawn proposals.
MÉDAC has submitted two proposals that were subsequently withdrawn after a constructive dialogue with the bank's management. Mr. Gagnon, we would like to thank you for your willingness and availability to engage with the bank once again this year. The withdrawn proposals include MÉDAC's statements and the bank's response have been reproduced on pages 94 - 96 of the English management proxy circular and pages 107 - 109 of the French management proxy circular. Mr. Gagnon, would you like to speak briefly to the withdrawn proposals? Thank you.
Monsieur. Mr. Chairman, thank you. My name is still Willie Gagnon. I still represent MÉDAC. I will be very brief. We have agreed on the other two proposals that we had submitted to the bank. We have agreed not to put these proposals to a vote. One proposal dealt with disclosure of languages spoken fluently by directors. It was proposed that languages spoken fluently by directors be disclosed as part of their skills and expertise in the circular. In your response, you state that languages spoken by directors that might be of interest to our shareholders and stakeholders is now disclosed on an overall basis. It is stated that all directors speak English, that four are fluent in French, one in Hebrew, and one in Hindi. We are happy with this aggregate disclosure.
We would have hoped that individual disclosure be provided, and we would invite today to follow the example of National Bank and Laurentian Bank, which have both disclosed this information on an individual basis about their directors. There is no legal impediment to doing this. As I understand from the discussions I've had with the bank, it is a technical issue related to the wording of the questionnaire that is provided to directors. We would invite the bank to disclose this information on an individual basis in future. If there were a detail on which we would like to stress, which is that all directors be included in the disclosure list and not merely directors who are elected.
If a director joins the board during the year, we would also like to know about that director's linguistic fluency. Much for this proposal. We have made that proposal to all banks, and all banks have agreed to it, and we're very happy with that situation. It is an example to all public companies. The second proposal concerned artificial intelligence. It was proposed that the board of directors review the duties of the governance committee and the risk management committee in order to include an ethical component regarding the use of artificial intelligence. We have not obtained exactly what we would have wanted, which is a formal amendment to the mandate of the two committees. You say in your response that a trustworthy AI council was created in 2019.
A framework on the use of AI has been implemented. You've created a working group on data and analytics ethics, and that an escalation path has been provided to submit ethical issues to the Enterprise Data and Analytics Council and if necessary, to the executive committee. In short, you have created a mechanism to refer these issues to directors, which is what we were seeking in asking for amendments to the mandates of the two board committees. You said that the Risk Review Committee, the Audit Committee and Conduct Review Committee and the Governance and Nominating Committee are routinely addressing issues related to AI. We're very happy with our dialogue with the bank this year, and we hope that this continues in future on all the topics that we bring up. Thank you, Mr. Chairman.
BCGEU had submitted two additional proposals, one with Investors for Paris Compliance on behalf of the Salal Foundation, and one with support from the Union of British Columbia Indian Chiefs, which were subsequently withdrawn after constructive dialogue with the Bank's management. Both withdrawal proposals, including the supportive statements and the Bank's responses, have been reproduced on pages 100-102 of the English Management Proxy Circulator and pages 115-118 of the French Management Proxy. I understand that Mr. Matt Price from Investors for Paris Compliance has been appointed as a proxy holder and is with us today. Absolutely, you're welcome, sir, to make some comments and speak briefly. Thank you.
Thank you. My name is Matt Price. I'm with Investors for Paris Compliance. We're a shareholder advocacy organization, and we track publicly listed companies in Canada on their net zero commitments. We specialize in two areas. One is energy companies, and the other is financials. We do a deep dive and analysis on the net zero plans of the big six Canadian banks, including Bank of Montreal. I'd like to thank the British Columbia General Employees' Union for co-filing this resolution. It was calling for a greater disclosure of BMO's net zero transition plan. We had a very constructive engagement with bank employees this year, so we thank you for that. Withdrawing the proposal was a close thing.
I think what we agreed to in many ways was to continue to discuss a few certain items, three of which I'll just highlight briefly. One was this issue that I think we heard before when BMO's intention is to become the preferred partner for client transition. What does client transition mean? How do you define that? What is the yardstick? How is BMO evaluating clients on their transition pathway? How is BMO reporting on clients' progress in that regard in the aggregate? How is there any accountability in that process? It's a bit of a black box, how do we unpack that over time? Second issue is somewhat related to the Bank of the West acquisition in that Bank of Montreal agreed to review its coal policy.
The Bank of the West actually had a more science-based coal policy, which was coming from the parent company, BNP Paribas. We'd like to see some progress, I think, of BMO towards a more science-based coal policy in the same zone as BNP Paribas was. The third is on sustainable finance. I think it's very laudable that Bank of Montreal has made a commitment to CAD 300 billion in sustainable finance, I think by 2030, was it? I think there's still a lot of fleshing out of what that means. What is sustainable? Are there any safeguards against greenwashing under the sustainable label? In aggregate, what does CAD 300 billion buy you these days by way of emissions reductions?
These questions I think haven't been answered yet, so I think there's still a lot of work to be done there. I would end with an appeal to the executive team and the board in two things. One is to give your climate team greater encouragement and permission to set specific policy. I think you've done a pretty good job now of data analysis, but now the question is, what are you gonna do? Putting specific policies in place, I think is gonna be critical to reaching net zero. The second thing is Mr. White referenced before the Corporate Knights had identified BMO as kind of the leading North American bank on net zero. We don't think that's a very good benchmark.
We think that BMO should be benchmarking itself against the EU and UK banks in this regard, because a lot of the North American banks are really not on track for net zero despite having the pledges. We'd like you to begin to benchmark yourself globally against some of the leaders in the space as well, so that you can make progress. We look forward to continued dialogue, and thank you again for letting me speak to this today.
Thank you. Thank you for the feedback. I understand also that Emma Pullman from BCGEU has been appointed a proxy holder and is here today with us. You are going to speak briefly, I believe, on the re-withdrawn proposal regarding free, prior, and informed consent. Welcome back. Thank you.
Thank you, Mr. Chairman. Good morning again, fellow shareholders on land stewarded by Anishinaabe, Haudenosaunee, and Wendat nations. I acknowledge Treaty Thirteen, signed with the Mississaugas of the Credit First Nation, and the Williams Treaties signed with multiple Mississauga and Chippewa First Nations.
BCGEU, in partnership with the Union of BC Indian Chiefs, filed a shareholder proposal, as we've just learned, asking BMO to take steps to operationalize free, prior, and informed consent by revisiting its statement on human rights to recognize the material risk associated with overlooking FPIC, to align BMO's practices on Indigenous rights with international industry good practice, and by informing itself as to whether and how clients have operationalized FPIC in their business relationships with clients. This modest proposal is aligned with international industry good practice, the UN Guiding Principles on Business and Human Rights, and the Truth and Reconciliation Commission's Call to Action number 92. Truth and reconciliation require more than platitudes and symbolic acts. What matters is how we grapple with the hard truths, sorry, of colonialism and turn those into action. Financial institutions are the gatekeepers and backbone of the Canadian economy.
When banks begin to put their commitments to truth and reconciliation into action by operationalizing FPIC, it will ripple throughout the entire economy. FPIC will soon be a compliance issue, with legislation mandating human rights due diligence and federal legislation such as the Bank Act to be reviewed for consistency with the UN declaration. Based on productive dialogue with BMO, we were able to withdraw our proposal for commitments, specifically including that BMO will add the United Nations declaration to their human rights statement and will include FPIC and the United Nations declaration elsewhere in the Statement on Human Rights. They will engage in enhanced due diligence where FPIC violations arise, and they will enhance their education on FPIC.
We both agree, the BCGEU and the Union of BC Indian Chiefs, that the Equator Principles are an inadequate standard for assessing environmental and social risks in projects related to the respective Indigenous rights. From the perspective of our organizations, EP4 falls short of the minimum standards set out in the United Nations declaration and will not mitigate the material risks associated with ignoring Indigenous rights. While we are happy with the progress and our commitment from BMO, we again recognize that this is the beginning of a longer journey on reconciliation and that this is not the final step. We do look forward to engaging with you in good faith on this issue and appreciate your engagement. Thank you.
Thank you. Thank you all shareholders for the motions and your feedback. The scrutineers have completed their preliminary reports on the results of the voting, and I now call on our transfer agent to read those results. The scrutineers report in the final form will be available after the meeting. Go ahead, please. Thank you.
Thank you, Mr. Chair. We, the scrutineers, confirm the following preliminary results. On resolution number one, no director standing for election today received less than 90% of the votes cast for a director. Resolution two, the appointment of shareholders auditor, approximately 90% for, approximately 9% withheld. On resolution number three, advisory resolution on the bank's approach to executive compensation, approximately 95% for, approximately 4% against. On shareholder proposal number one, approximately 16% for, approximately 80% against, approximately 3% abstain. Shareholder proposal number two, approximately 1% for, approximately 97% against, and approximately 1% abstain. On shareholder proposal number 3, approximately 37% for, approximately 60% against, and approximately 2% abstain. Thank you.
Thanks very much. I therefore declare that the 13 nominees listed in the management proxy circular are all duly elected as director. Thank you for your confidence in all of 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. Shareholders' proposals one, two, and three have not been approved. We value the feedback we received from the shareholder proposals. With respect to proposal three, we will take this feedback into account as we continue to consider and assess ways to measure our progress in furthering an inclusive society. Thank you all for your feedback. I declare the formal business of the meeting to be terminated. We will now move to the question and answers session.
Questions should be 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 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 hall here, raise your hand, enter your question into a messaging box, or enter your phone number and we will also assist in letting you address the meeting. We also will read those questions received by the corporate secretary that came in prior to the meeting that have not already been raised. Questions with common themes may be grouped together for efficiency. I will go first to those shareholders in the room.
Once I recognize you to speak, please identify yourself and state whether you are a shareholder or proxy holder. Okay. Questions in the room or comments? I have one. If I could just get you to go to a microphone, please. Thank you.
Thank you. I'm Barbara Green, and I'm a shareholder. Given BMO's commitment to racial equality and inclusion, is there a plan to have people of color elected to the board of directors to help make those changes or accept those changes?
As we absolutely are striving as a board of directors to have our board of directors represent society at large across the world and across North America, and we continue to strive towards that. We've made significant progress, and we believe we have more progress to make over time, and we'll continue on that journey. Thank you very much for raising it. Other questions? Hearing none. Paul, any questions online that you've received?
Thank you, Chair, we do. We have one question submitted by Jeff Carlson. I'll read the question. "My name is Jeff Carlson, and I'm a shareholder and proxy holder. My question relates to BMO's use of derivatives as part of its risk management strategy. As reported by USBankLocations.com, we see that BMO's reported derivative holdings are held primarily by one of its U.S. subsidiaries, BMO Harris Bank, in the amount of U.S. $52.6 billion. This compares almost equally to the entire market capitalization of BMO of approximately CAD 88 billion. With the high systemic risk inherent in the derivative market, particularly from third-party banks in the U.S., why does BMO hold such a risky position, and what is BMO doing to mitigate its overall exposure to the derivative market?
Okay. Tayfun?
Thank you. Thank you, Mr. Chair. Thank you for the question. I'm Tayfun Tuzun, the CFO of the bank. I appreciate the size references. I just want to remind you that we have a CAD 1 trillion plus balance sheet, which generates a significant amount of net interest income. Our use of derivatives is solely focused on managing a stable net interest income for the company and a stable net interest margin. As such, you know, the derivatives that we use in our own business are purely related to actually reducing the risk associated with fluctuations in interest rates. As such, we believe it is the prudent approach.
Thank you. Paul, any further questions?
We have no further questions.
Great. Thank you. We have concluded all the questions. I just wanna end by thanking the shareholders for their questions, for your involvement, for your continued support, and hopefully you walk out with significant confidence after hearing what Darryl was saying in terms of our future direction. Thank you all for joining us. It's wonderful to see you all in person. Thank you.