Bank of Montreal (TSX:BMO)

AGM 2014

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Apr 1, 2014

Good morning, fellow shareholders, and welcome to the 196th annual meeting of the Bank of Montreal. My name is Robert Prichard. I have the honor of serving as your Chairman of the Board of Directors, and I call this meeting to order. On behalf of all members of the Board of Directors, I want to say how pleased we are to be holding this meeting at the Bank of Montreal's Institute for Learning. This building is a lasting testament to the bank's dedication to the power of lifelong learning. We are at a particularly auspicious moment as we are celebrating the IFL's 20th anniversary this year, about which Bill Downe, our Chief Executive Officer, will have more to say in a few minutes. For 20 years, the IFL has seen a steady stream of BMO employees flow through the doors. New hires will often do their orientation here. Bankers from across the system come here to learn new skills and improve their management abilities. At every stage along the way, we try to share the knowledge that will bring success to BMO's leaders of today and the leaders of tomorrow. I am delighted to be joined on stage this morning by, on my immediate right, Bill Downe; by Tom Flynn, our Chief Financial Officer; beside Tom, Simon Fish, our General Counsel; and on my far right, Barb Muir, our Corporate Secretary. Also joining me here today, seated in the first two rows of the presentation hall, are members of the bank's Board of Directors, and the senior management team for BMO. Members of the Board will be introduced individually when it is time for the election of directors. I appoint Steve Gilbert and Sonia Chevalier as representatives of Computershare Trust Company of Canada to act as scrutineers for the meeting, and I appoint Barbara Muir to act as our secretary. 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 bylaws of the bank is present in person or represented by proxy. I therefore declare this meeting to be properly constituted for the transaction of such business as may properly be brought before it. The shareholders' auditors for fiscal 2013, KPMG, are represented today by the following three individuals: Reinhard Dotzlaw, the Lead Partner, his colleague, Heather Kaine, and by Bill Thomas, the CEO of KPMG Canada and Chair of KPMG's Americas region. We are delighted to have the three of them with us. They do good work for you and for us, and we thank them for it. Now for some procedural matters concerning the meeting. Closed captioning is being provided here in the room for those who are hearing-impaired. The meeting is being broadcast live online in both official languages, and shareholders watching online are able to submit questions or comments to the meeting. Those wishing to do so should follow the instructions on the annual meeting webcast launch page. We would ask that any questions or comments from the floor or online be related to matters currently before the meeting, and when submitting questions, that individuals provide their name or indicate whether they are a shareholder or a proxyholder. We will do our best to respond to all such questions during the meeting, but any questions not answered will be responded to following the meeting. Facilities for simultaneous English/French interpretation have been provided, and you will find English on channel one and French on channel two. You are welcome, of course, to address your questions or comments in either French or English. At the appropriate time, any shareholders or proxyholder wishing to speak should raise their hand, move to the closest aisle, and wait for an attendant to approach them with a microphone. Each microphone is numbered, and once I recognize your microphone, you should ask your question or make your comment. In order to allow as many shareholders as possible to have the opportunity to speak, each shareholder will be allowed to speak only once on the matter before the meeting. Please keep any comments or questions to a maximum of five minutes. Regarding the physical layout of the room, in the event of an unforeseen emergency, I would like to point out that there are exits at the main doors where you came in and on the opposite side of the room to my left and your right. The agenda today will consist of an address by our CEO, Bill Downe, followed by the three resolutions proposed by management. First, to elect the board of directors for next year. Second, to appoint the shareholders' auditors for fiscal 2014. And third, to consider an advisory resolution on the Bank's approach to executive compensation. Following these three matters, we will then deal with the shareholder proposals. Finally, there will be a question and answer period, followed by a video presentation. On behalf of those speaking today, I note that forward-looking statements may be made during this meeting. Actual results could differ materially from forecasts, projections, or conclusions in these forward-looking statements. I would also remind you that the Bank uses non-GAAP financial measures to arrive at adjusted results to assess and measure the Bank's performance by business and overall Bank. Management assesses performance on a reported and adjusted basis and considers both to be useful in assessing the underlying business performance. Those speaking today will be referring to adjusted results in their remarks, unless otherwise noted. Additional information on adjusting items, the Bank's reported results, and the factors and assumptions related to forward-looking information can be found in our 2013 annual report and our first quarter 2014 report to shareholders. With those preliminaries behind us, I begin the formal part of our agenda. Your Bank has performed well over the past year. All of us who are privileged to serve on the board of directors are pleased with the results and confident about what can be accomplished in the year ahead. The Bank achieved record revenue, record net income, and record earnings in 2013. There was an attractive return of capital to common shareholders, over 60% of earnings through the combination of dividends and share buybacks under the normal course issuer bid. Our one-year total shareholder return, share price appreciation, and dividends led the Canadian banks. When we met for the annual meeting a year ago in Saskatoon, the share price was CAD 63.39. Yesterday, the share price closed at CAD 73.96, up over CAD 10. When combined with our strong dividend, this represents a total return of over 20% for the year, an impressive and encouraging result. The bank's performance reflects the dedication and commitment of a talented and motivated team of employees, led by a strong and experienced management group. In this regard, I want to acknowledge our CEO, Bill Downe, for his leadership and his commitment. His belief that BMO's success depends on the success of customers continues to guide our strategy and is increasingly embedded in the culture of the bank. Bill, you and your team are doing a terrific job. We're proud to serve with you on the board, and we thank you for your steady leadership of the bank. Please address our shareholders now and accept our gratitude for your very fine work. Bill Downe. Well, thank you, Chairman, and good morning, everyone. On behalf of the employees of the BMO Financial Group. Sir, could you introduce yourself, please? A point of order. My name is Willy Gagnon. I act on behalf of MÉDAC. A very small technical question. I see that the agenda, sometimes in meetings of shareholders of banks and other listed corporations, the question period is outside the formal meeting. As well on the proposed agenda on the table, there is no item at the end to note that the meeting is formally closed. I do not know if the question period is within or without the formal part of the agenda. Could you please confirm that? Because I wish I could've said that prior to the beginning of the CEO's presentation. I'm sorry to interrupt, but the process to get the microphone was a little complicated. I'm sorry. Thank you very much, Mr. Gagnon, for your question. The question is whether the question and answer period towards the conclusion of the meeting is part of the formal meeting, and the answer is that it is. Here you go. I thought you memorized it. Well, thank you again, Chairman. It's a pleasure to wish you all a good morning a second time and to say that on behalf of all of the employees of the BMO Financial Group, and that's all 45,000 of us, I would like to repeat the Chairman's words of welcome to the 2014 Annual Meeting. I would like to wish a warm welcome to the Bank of Montreal's Annual Meeting of Shareholders. Over the past few years, the meeting took place in several other cities, and today we are in Toronto. I'd add a special welcome to our honorary director, Mr. John Ellis. It's a pleasure to have you here again, Mr. Ellis, at age 99, knowing that you've crisscrossed the country to attend 51 consecutive annual meetings. Please join me in recognizing our honorary director. We don't forget that most of our shareholders, customers, and employees are in regional markets. Since our last annual meeting in Toronto, we've met in Quebec City, St. John's, Winnipeg, Vancouver, Halifax, and Saskatoon. Wherever we meet, it's a welcome opportunity to connect with our shareholders where they live and work. It's a reminder that BMO conducts business over a footprint that extends throughout North America and to select markets around the globe. This city, in particular, is hugely important to us and has been so for nearly two centuries, which is why we're here this morning. The Greater Toronto Area is a substantial market, home to well over 1 million BMO customers and more than 17,000 bank employees. It's also a thriving economy. BMO's economics department is about to release a report forecasting renewed employment growth throughout the GTA, with the creation of almost 230,000 jobs by 2017. As an indicator of what drives that growth, it's no coincidence that the city of Toronto attracts 80,000 new people every year with an average age of 30. Let me also acknowledge those across our footprint who are joining us this morning through a virtual connection. Our bankers in mainland China are with us, as are their colleagues in Hong Kong, and BMO's offices in London, Mexico City, Abu Dhabi, in all of the markets that are important to our customers. Technology shrinks distances and erases borders. We all expect to be accessing information and holding real-time conversations on the move and to never disconnect. At the same time, much is being made of technology's ability to disrupt existing business models and dramatically overturn the established order. The profitability of matured companies is seen as under threat from new ventures that initially attract market capitalizations many times their revenue. That risk can be overstated. The disruption caused by emerging technologies is in fact a catalyst for positive change. New entrants succeed in displacing some incumbents, but they're just as likely to illuminate new areas of potential and spur reinvestment in established business models that sparks growth. It's in this context that we're holding our annual shareholders' meeting at the BMO Institute for Learning, the IFL, which, as the chairman said, celebrates its 20th anniversary in 2014. This remarkable building is more than a symbol of innovation. It's a tangible investment in the change agenda that's driven our bank for more than two decades, and that was clear long before this building was even on the drawing board. More fundamentally, it confirms our belief in the power of reinvention. Since 1994, BMO employees have benefited from more than 460,000 sessions of IFL programs that span skills training, management education, and leadership development. This focus on continuing education reflects our commitment to cultivating the kind of agile and adaptable workforce that can cope effectively with a changing marketplace. Talented people naturally gravitate towards organizations that put a priority on achievement and offer the best career development opportunities. They want to work for employers who are committed to corporate social responsibility, and they expect to be part of a collective commitment to giving back to the community and to helping others succeed. People who know this company understand that these principles are embedded in our very nature. We want to ensure that BMO employees have the necessary knowledge and skills to stay ahead of a changing world, along with the agility to create and sustain value, not just in the short term, but over time. In responding to change, strategic agility must rest on a strong bedrock of fiscal reliability. If you'd bought your first 100 shares of the Bank of Montreal in the months just before the IFL opened, your initial investment would've been about CAD 1,300. In the years since, you would've received dividends totaling CAD 6,800, and the total value of your shares would've increased nearly six times. Over those two decades, the earnings of the bank have increased in the same proportion. In 2013, our continued success in balancing innovation with resilience and financial strength once again contributed to record results. This achievement was guided by the five strategic priorities that are the framework defining our path forward. They all put the customer first and recognize that we have to be productive in doing so, because what we do for customers ultimately has to generate a return for our shareholders. This confirms that value has been created. To grow, we're going to take full advantage of BMO's North American platform and continue to be strategic in how we expand into global markets while ensuring, without question, that the management of risk on behalf of our customers remains a defining characteristic of everything that we do. All four operating businesses are moving into 2014 with clear momentum and a great deal of confidence in our continued strong performance. We're well-positioned not only to meet expectations but to anticipate and surpass them. At the same time, we recognize that the world is far different than the one we faced a decade ago, because in the execution of our strategy, we have to contend with two large and disruptive forces. On the one hand, our strategic priorities are affected by societal expectations around resilience and financial strength. This has taken the form of significantly higher minimum capital levels in our industry and thousands of pages of new and complicated legislation animated by a much higher level of regulatory engagement. Even as our bank is working to simplify our customers' lives, we have to wrestle with necessary but increasing complexity. Finding the right balance between making customers' lives easier and maintaining confidence in a financial system that thrives on complexity means looking beyond regulation to the reasons behind it. The rules, however complicated, are meant to foster integrity and strengthen trust. These principles have been critical to BMO's success since 1817. The other force shaping the execution of our strategic priorities is driven by the expectations that customers have of their bank or of any business in a rapidly changing world. When technology offers people experiences that are simpler or better tailored to their needs in one area of life, it influences their expectations in all areas. As customers increasingly embrace mobile communications and continuous access to information, they look for instant responses to all of their transactional needs. They have a growing appetite for personalized service in the moment, and their preferences change frequently. There's a pressure to reconcile simultaneously the requirement for agility and the need for absolute reliability. We've demonstrated both. In 2013, BMO Financial Group posted net income of $4.3 billion and increased retained earnings by just under $1.7 billion. We paid common share dividends of $1.9 billion and repurchased $675 million of common stock, as the Chairman said, effectively returning over 60% of earnings to shareholders. We contributed $1.7 billion in government levies and taxes. We also completed the final most significant elements of the conversion and integration of our 2011 acquisition of Marshall & Ilsley, capturing cumulative annual run rate expense savings approaching $400 million. We positioned the bank for future growth in our four core customer segments: personal banking, commercial banking, capital markets, and wealth management. BMO's capital position remains strong with a Basel III Common Equity Tier One ratio at year-end of 9.9%, the highest among the Canadian banks. This capital strength enabled us to further increase the quarterly dividend by CAD 0.02 to CAD 0.76 per share in the first quarter of the year, and it gave us the flexibility to tender for F&C Asset Management in January, a transaction approved by its shareholders this past week and targeted to close in May or June. In the past year, we also made significant changes to the bank's leadership structure to reduce layers of management and increase the proportion of employees in customer-facing roles, reinforcing a consistent operating discipline under the leadership of our COO, Frank Techar. More broadly, we initiated longer-term measures that will increase our responsiveness to evolving customer behavior in a world where digital media and electronic commerce compel all companies to respond. This is something all of us at BMO identify with, and we're investing in capabilities that recognize the shift. We're helping define change in our industry rather than have change define us. That thought frames the two subjects that I'd like to touch on today. First, how we interpret the meaning of great expectations, not simply to stay in step, but to remain a step ahead of what customers expect from a bank. Second, how the bank's human capital will be an overwhelming determinant of the future business success and growth. We don't have to look far to see how quickly those expectations are changing. BMO retail customers now do 41% of their banking from their computer, their tablet, or their smartphone, and the growth rate is going exponential. Not surprisingly, there's been a corresponding drop in transactions at bank machines and through telephone banking. What may be surprising is that the volume of transactions conducted in branches has stayed more or less constant at around 22%. That's not to say that the business conducted at a typical branch remains the same, and this is the key point. Everywhere we do business, the bank is modifying distribution channels to mirror customers' habits and preferences. While digital platforms and communication devices are fundamentally changing how people purchase and consume our products and services, the technology is simply an enabler. You will always get the service and guidance you need regardless of how you bank with us. The scale of our branches is evolving as well with innovative formats that better fit customers' priorities while still promoting human interactions that drive our business. As we explore the new kinds of conversations that the digital world makes possible, instant, mobile, highly personalized, we're deciding together with our customers where those conversations will take us. We've incorporated the best features of the latest technology and gained recognition for how it's presented. When we introduced the newest version of our mobile banking app for BlackBerry 10 in February, we moved to a number 1 spot among banking apps. Android followed, immediately moving to a number 1 position in its category, as did the iPhone with 920,000 downloads in 23 days. The reasons we were named the best new finance app in the App Store included that customers can now book branch appointments from their mobile devices instantly. They can also send travel notifications on the move, alerting us if they're going to be using their credit or debit cards away from home. As effective as such features are in making people's lives easier, even more important is the feeling that the bank is both invested in and connected to what's happening in their lives. Some aspects of our mobile app were co-created with customers. Others reflect our anticipation of shifting preferences to offer guidance, sometimes in surprising ways. This is far less about an app's features than how it works. It's simple, intuitive, built around human nature. You can see the same responsiveness in the evolution of our web presence. BMO's public websites have gone from number six to number two in the annual rankings by Forrester Research. Our secure banking site is now ranked number two as well. Customers are not simply conducting day-to-day transactions, paying bills, or transferring money between accounts. More and more purchases of BMO products and services originate online as people embrace the convenience and flexibility of doing things for themselves, knowing they can ask questions or seek guidance at any step in the process. But there's another dimension to where all this is taking us. Embracing a future where constructive change is certain, we recognize that what's not certain is how customers will respond to the contradictions of the coming decade. As people seek greater transparency and connectivity, their desire for security and privacy creates an opposite impulse. What we know is that individuals and companies bring their business to our bank because of the trust built by our brand. Money is personal, and a bank should be, too. One of the challenges of the digital world is determining where its boundaries lie. Protecting privacy and data security has been implicit since BMO pioneered multi-branch banking more than 40 years ago. By being transparent with customers, we earn a level of trust that opens up more meaningful dialogue, and we trust them to tell us where the dialogue should begin and end. Whether customers connect with us in person or on their mobile screens, they count on having private, secure, and trusted conversations to help them control their spending, grow their savings, use credit prudently, and invest wisely. Equally important, as citizens of a connected world, fluent in social media, they want us to respect their intelligence, talk with them, not just to them, and also to learn from what they have to say. Above all, our customers want the kind of personalized experience that goes much deeper than simply having their preferences recognized by a database. A year ago, at our meeting in Saskatoon, I talked about the power of customers, the power not only to shape BMO's products and services, but ultimately through their loyalty and advocacy to drive sustainable growth. I asked the question: What remains to be done to add one million new customers every year? Today, we're that much more confident in our ability to turn non-customers into new customers and existing customers into lifelong relationships. What's clear is that while technology is an important driver and an enabler of change, it's our people who make the difference in the push to meet rising expectations. Our technology is simply an extension of them. The experience of the last decade confirmed the importance of financial capital in maintaining the trust and confidence of customers. In the decades ahead, human capital of the bank will be equally defining. The ability to attract, develop, and retain talent has never been more critical. BMO's track record in the management of human capital has been a key source of differentiation as our bank has come to be seen as an employer of choice. The extraordinary building we are meeting in today embodies our belief in the potential of all employees to acquire new knowledge, to grow both professionally and personally, to meet challenges with innovative solutions, and in doing so, drive the overall performance of the business. That is why the average BMO employee devotes more than 35 hours a year to learning. It is why last year, some 29,000 employees took advantage of the opportunities we offer in continuing education here at the IFL, at other campuses and venues across North America, and through our online learning platform, which accounts for nearly half of all the courses delivered. Our total annual expenditure in continuing education is just over CAD 90 million. It is a significant investment and so is the return as employees gain the skills they need to apply new insights and help customers spending, saving, borrowing, and investing. We have been well-served by this investment. The IFL and the programs radiating from it have strengthened our workforce. But the challenge we are addressing today is different from the one we addressed 20 years ago. The nature of the assignment around human capital has evolved to mirror the rising expectations of customers. As people become more connected and empowered, their focus has shifted from the need for particular products and services to desire for knowledge and confidence. Just as co-creation with our customers is yielding more relevant and flexible products and services, collaboration with them is inspiring new ways of doing our work. In the traditional organization, leaders were expected to deliver on goals. They set policies and the direction for others to follow. They alone decided what constituted success and how it would be recognized. In an organization designed for a world that never stops changing, leaders give up the need to control every aspect of decision-making. The people who report to them become more empowered and at the same time, more accountable in addressing customers' expectations. Like our customers, we are taking advantage of technology to find new ways of interacting and sharing information. What matters is not the specific facts we know, which can be searched in an instant, but our ability to understand different perspectives, to be agile in tailoring solutions for customers, and even creating them together. By the same token, learning fuels our drive to create a more diverse and inclusive workforce. It is no accident that cultural intelligence is now seen to play a crucial role in competitiveness and in opening minds and broadening opportunity. Above all, if we are going to define change rather than let it define us, we have to invest in learning that develops not only skills and expertise, but our readiness to change with the change. What makes us confident of success is the fact that education at BMO has always been a two-way street. We invest in people who invest in themselves, in their own potential to do work that moves the bank forward, and the need for that level of personal investment has never been clearer. One of the best examples of BMO's employees taking ownership of their own career development is the Advanced Leadership Program. This was initially aimed at the top 100 or so members of the management team to help them develop a common lens to view strategic decisions. The program proved to be so effective in developing leadership traits and strengthening collaboration, it evolved into a much larger initiative. Today, the Advanced Leadership Program is jointly taught by the faculty of the IFL and the University of Toronto's Rotman School of Management. Some of the world's most educated instructors and researchers share their insights through a curriculum designed to facilitate change in a changing world. Completing this program has shaped the perspective of a generation of emerging leaders at BMO. We can see its impact as they gain increased responsibility and progress in their careers. The value of the investment they've made in themselves is evident in the tangible contribution they make to the bank's performance. From a shareholder's perspective, any measure of the bank's performance will be increasingly framed by the big forces we discussed earlier: changing societal expectations around financial resilience and customers' expectations of a bank. These two forces will prevail in every sector of the economy. That insight has been top of mind as we've confirmed the strategic priorities of BMO, and it's our continued success in balancing those two opposing forces that will allow us to grow the bank and generate returns for our shareholders. Let me finish with the aspects of the operating focus that are going to be dominant in the execution of our strategy. These are the areas where we intend to direct our energy and capital, both financial and human, in the coming year. Extending the digital experience across all channels. It will allow us to further integrate it with our physical presence. Simplifying and automating for greater efficiency. It starts with empowering people to find new ways to streamline processes, modernize platforms, and embed cost controls. Leveraging data to serve customers better, depending on better analytics. It also requires human insights to interpret people's needs and be more effective in tailoring the products and services to acquiring new customers and assessing risk. Continuing to build a strong, differentiated brand around what we know, that money is personal and that what customers want is to feel valued, understood, and confident that they're making the right choices. When you visit any of our branches or offices across North America and around the globe, you're immediately struck by the remarkable people who work there. It's BMO's people who will enable us to define change in our industry, mapping its course and setting its pace. Rather than wait to see where the market is going, they will ensure that we stay ahead of it, leading through innovation, supported by unrivaled customer loyalty and grounded in a long history of trust. This is what makes it possible to talk about adding 1 million customers a year. We're confident that we'll meet the expectations of all of our stakeholders because we have the same great expectations of ourselves. Thank you. Chairman, I'll return the podium to you. Bill, thank you very much. That's a really good speech. Crystal clear. It reinforces my, our collective confidence in the bank's future and your leadership of it. Thank you for all you do for us. For the information of those shareholders here this morning, I'm informed by our transfer agent that 284,043,921 votes have been received by proxy in respect of the matters of business to come before the meeting, representing 44.07% of the total outstanding shares eligible to be voted. Given that our employees represent an important part of our shareholder base and to facilitate the proceedings, we've asked certain employee shareholders or proxy holders to move and second motions. I'll call upon them at the appropriate time. The votes on all matters of business before this meeting will be conducted by electronic ballot. Any procedural motions will be voted on by a show of hands. On registering for the meeting today, proxy holders and shareholders wishing to vote in person at the meeting should have received a handheld electronic voting device. At this point, I'd like to be sure that proxy holders and shareholders wishing to vote this morning have their electronic voting devices. Does anybody not have one who expected to have one? There are two people here. If we can get a couple more devices to these three people here who need devices, if someone could bring them. I'll keep going, if you don't mind, while they're being brought to you. Remember that if you completed and returned your proxy form or voted online, it is not necessary to vote today unless you wish to change your vote. Anyone entitled and wishing to vote in person who did not receive a device and wishes to change their original vote, I say, please use your device. If you don't have one, just raise your hand and the staff will bring you one. There's another person here who needs one, so we need four, whoever's bringing them in. Representatives from Computershare will ask you to register outside the room to permit you to vote today at the meeting. If you haven't registered, you'll need to do so. I'm now going to explain how the electronic voting process works, and we're going to do a practice statement. This is the device for those of you that have them. We're going to do a practice here to make sure everybody's got the hang of it. For each item of business, we'll ask you to vote by pressing one of the buttons on your keypad numbered one, two, or three at the top left-hand side of the electronic voting device to indicate your voting preference. You press one to vote for, you press two to vote against or withhold your vote, depending on the matter, and you press three to abstain from voting. Once you've made your choice, the word received will appear on the screen of your device to indicate that your vote has been counted. If you want to change your vote after you voted the first time, simply press on the appropriate button and the more recent vote overrides the first vote. The last button you press before the ballot closes will be the vote counted by the system. To make sure everybody's got the hang of this, we're going to proceed with a practice statement. When the poll opens, the handset will display the voting options. If you have a handset, get ready to practice. Here we go. The practice statement is the Toronto Raptors are more likely to win the NBA championship than the Toronto Maple Leafs are to win the Stanley Cup this year. The poll is now open, and if you agree with the statement about the Raptors having better chances, you press one for. If you disagree with the statement and you live in a fantasy world, press two. Or press three to abstain, and the device will state withhold, but pressing three will in fact be counted as an abstention. You may change your vote if you want by making a second choice. We're going to close the poll shortly. I'm watching the totals come up. Does anybody need more time to vote? I don't see anybody asking for more time, so we'll close the poll, and the results will appear on the screen. I hope. There. Boy, who are those 8%? I don't know whether we need more practice or whether we can take hope. Thank you. The poll is now closed, and the voting results are on the screen. Now that we're all ready to go, we'll move to the business of the meeting. The first item of business, the submission of the financial statements. In March 2014, copies of our annual report for 2014 were forwarded to shareholders together with a management proxy circular and notice of this meeting. The financial statements for the October 31, 2013 year-end were included at pages 125 to 188 of the annual report. Are there any questions on the financial statements, including any questions from those online? If you have questions at this stage, they should be related to the financial statements and not other matters. Barbara, are there any questions online? There are none. I see none in the room, so we'll go to the next item of business. The auditor's report, appended to the bank's financial statement, can be found on page 123 of the annual report, and we will take it as read. The third item of business is the election of the board of directors. As determined by the board, the number of directors to be elected today is 13, and all current directors are standing for re-election. I'd like to take this opportunity to thank the board members for their service. They work hard and well for our shareholders, and it's an honor for me to serve with them as their Chairman. I particularly want to note the contributions of Bob Astley, Ron Farmer, Phil Orsino, Martha Piper, and Don Wilson, who chaired our committees over the past year and did so with great effectiveness. I'm going to ask each director to stand when his or her name is called and to remain standing until all of the names have been called. I ask those in attendance to hold your applause until all of the names have been called and then join in congratulating the directors. I must note that Ms. Sophie Brochu, who's an outstanding director of the bank and is standing for re-election, is unable to attend the meeting today. She had to attend to an unexpected urgent matter in Quebec City this morning. I now call on Barbara Muir, our Corporate Secretary, to present the nominees for election. Barbara? Thank you, Mr. Chairman. 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. Robert Astley, Janice Babiak, Sophie Brochu, George Cope, William Downe, Christine Edwards, Ronald Farmer, Eric La Flèche, Bruce Mitchell, Philip Orsino, Martha Piper, Robert Prichard, and Don Wilson III. Thank you, colleagues. I'd now like to call on Michèle Magné to second this motion. Michèle? Thank you, Mr. Chairman. Good morning. My name is Michèle Magné. I have worked at BMO for five years. I am currently a manager in the Corporate Secretary's Department, and I am responsible for ensuring proper subsidiary governance for a portfolio of the bank's domestic and international subsidiaries. I second the motion. Thank you, Michèle, and you are doing a heck of a job in the corporate secretary's department. Thank you. Do we have any questions or discussion on this matter that is before us? I see no questions or discussion. I remind you that your board of directors recommends that you vote for all 13 nominees as set out in the management proxy circular. This year, unlike last year, we will be putting before the meeting each of the director resolutions at the same time. Once the electronic voting system is open, you will be presented with a full list of directors who will be nominated for election. You will need to follow the on-screen instructions and press the button on your handset corresponding the way in which you wish to vote for each of the nominated directors. It is a little tricky if you have got a machine. You get started by pressing the red triangle. Once you press the red triangle to get going, you will see the list, and then the green button is the key to doing the voting, and you need to press the green button to get a name of a director up. Then when you vote, you press the green button a second time. So 2 times 13, you need to press the green button 26 times in order to complete the voting procedure. If you want to vote for, that is the default position. If you want to withhold, you press 2, and then you press the green button the second time. The poll is now open. You can change your vote so long as the poll is open with your most recent vote being the vote that will be counted. As you work your way down the list of the directors, once you are satisfied with your vote on the first director, then move to the second and keep moving down. If you get lost or have questions, look at the instructions on screen or raise your hand and ask me and I will try to assist you, or someone from Computershare will come and help you execute your vote. We will just take a moment and watch for the voting to proceed. I have a screen here that tells me you are doing extraordinarily well. There are a lot of votes for Astley in, not many for Wilson yet. You are playing catch-up, Donny. No, Astley is still pulling away. They are still coming in, so we are going to leave the poll open. Don, you are now a lot behind. Oh, now the gap is narrowing. You have stalled, Bob, and Don is coming up behind you. There. That's encouraging. You just picked up a few more, Bob. They're still coming in, so we'll just wait till I stop seeing more votes being counted. Does anybody need any help? I don't see anybody asking for help who isn't already getting it. They're still coming in. Bob, you've stalled. Don, you're really nicely closing the gap now. There's still a gap from. So there's still more votes coming in. We're almost there, sir. With respect, Mr. Chair, how does one exit once one has finished, completed the electronic voting? How does one exit and get back to the start position of the electronic machine? I'll have someone come over and tell you. Can someone from Computershare explain to this gentleman how to exit? I think we'll exit it for you, in fact, once the poll closes. When it's closed, is that When we move to the next poll, it will just automatically exit you and take you to the next matter. Thank you. You are welcome. We have got almost the same number of votes have been exercised for each of the candidates. There are just a few coming in still with some names down towards the bottom of the list. Unfortunately, the fewest number of votes have come in for Prichard, so if you want to work that number up a little, we can close the poll. There we go. That is better. Does that gentleman over there still need more time? You are still voting? 30 seconds. Okay. We're just about there. Are you good to go over there? More or less. We'll leave the poll open, but I'm going to keep going through the script while this gentleman continues to vote, and we'll just move, continue with other items, and get ready to proceed further. The next item of business is the appointment of the auditors for the ensuing year. I call on Jeff Scott to present this motion. Jeff. Thank you, Mr. Chair. My name is Jeff Scott, and I've worked at BMO for just over 18 years, and I'm currently the senior manager of operations right here at the IFL. My team and I are responsible for many of the operational aspects that allow our employees across the enterprise to receive and track the training they need to be successful in their roles. I propose the firm of KPMG LLP be appointed as auditors of the bank for this ensuing year. Thank you very much, and congratulations to you and your colleagues for the work you are doing here at the IFL. I would like to call on Tracy Westlake to second the motion. Tracy. Thank you, Mr. Chairman. My name is Tracy Westlake, and I have worked for BMO Bank of Montreal for just over 24 years. I am currently a senior facilitator here at the Institute for Learning, delivering courses in sales and service and leadership programs, and I second the motion. Thank you, Tracy, for your work here at the IFL as well. I have the motion moved and seconded. Are there any questions on the motion? I see no questions. We need to close the poll. Does anybody object to closing. Has everybody finished voting on the first matter on the directors? Let us close that poll for the directors and put up the vote for the next matter. We are going to now vote on the appointment of shareholders' auditors. There are no questions. I remind you that your board of directors recommends voting for the appointment of the shareholders' auditors, and we will proceed with the voting. The poll is now open. If you wish to vote for, please press one. If you wish to withhold your vote, please press two. This is a whole lot easier. They are coming in fast. We have got a handful still to go. I think that has it. 54, 55, 6. No, there is one more. Does anybody else need more time? I think that is the full number of votes in the room. Thank you very much. We will close that poll as well, and we will go to the next item of business, which is the advisory resolution on the bank's approach to executive compensation. I would like to call on Joanne Thornton to present this motion. Joanne? Thank you, Mr. Chairman. My name is Joanne Thornton. I am a senior manager and learning partner here at the IFL. I support the learning needs of our capital markets employees. I move that the advisory resolution on the bank's approach to executive compensation, as set out on page 6 of the management proxy circular, be approved. Thank you, Joanne, and thank you for the work you do for us. I'd like to call on Randy Mullen to second this motion. Randy? Thank you, and good morning, Mr. Chairman. My name is Randy Mullen. I've worked for BMO for close to 4 years now. I'm currently a senior facilitator working here at the Institute for Learning. I am accountable for facilitating leadership and sales programs across the bank. I second the motion. Thank you very much, Randy, and we appreciate your having cast your lot with us 4 years ago and stick around. You're doing great. I recognize Mr. Gagnon back at the microphone. Mr. Gagnon? Mr. Chairman, my name is Willie Gagnon. I speak for MÉDAC, the Mouvement d'éducation et de défense des actionnaires. I would remind the shareholders of the bank that it is following MÉDAC proposal that the practice of submitting an advisory resolution on the bank's approach to executive compensation to shareholder approval was adopted. MÉDAC has read the report by Meridian, commissioned by five of Canada's seven largest banks, as proposed by Placements NEI, and Mr. Davis will be addressing this a little later. This report recommends that banks introduce a vertical review component in senior management compensation. That is to say, comparison of the proportionality ratio between the salary of top management and the average salary of staff. Has BMO introduced such an instrument in its remuneration policy, and if not, why not? Thank you, Mr. Gagnon, for your question. The bank's approach to executive compensation is fully set out in our proxy circular. Are there any other questions or comments anybody wishes to make on this matter? If there are no other questions, we'll go to a vote using the electronic device again. I remind you that your board of directors recommends voting for the advisory resolution on the bank's approach to executive compensation. The poll is now open. I invite you to press one if you wish to vote for the resolution, and I invite you to press two if you wish to vote against. The poll is open. The votes are coming in. There are a number more to come in. We'll just take a moment to make sure everybody has a chance to vote. That's about two more votes in the room. Just take a moment longer. There it is. Does anybody need more time? I think that's all the votes in the room that are now listed. Thank you very much. We'll close that poll, and we'll report the results of that as well towards the end of the meeting. The next items of business are the shareholder proposals, of which there are five, which were included in the management proxy circular. However, before going to the five shareholder proposals listed in the circular, I want to call on Mr. William Davis to address the meeting regarding the shareholder proposal he co-filed with NEI Investments a year ago and subsequently withdrew. We appreciated Mr. Davis' cooperative approach at that time and wanted to grant him the opportunity he sought to speak today. Mr. Davis, I welcome you to the meeting, and I invite you to address us, but I ask that you keep your comments to a maximum of five minutes. Mr. Davis. Thank you, Mr. Chairman. Yes, I am William Davis, a shareholder. I happen to have a couple of family proxies, and I also have the proxy of the United Church of Canada. I was a little afraid that Willy Gagnon was going to steal my speech. Anyway, I do very much appreciate the initiative that the Canadian banks all took when we filed our first shareholder proposal and also the sessions we have had with the Bank of Montreal since then. On page 53 of the proxy circular, it is noted that NEI Investments and I withdrew our proposal again this year. I want to start at the beginning. The intent of the original proposal was to deal with what I think is a widely held concern. Our global business model is broken. It has gradually fostered executive levels of compensation for senior executives, placing them in a small elite who are drawing resources from our shareholders' return and from other stakeholders. It was, and is our belief that an over-reliance on the practice of horizontal benchmarking has been a major factor in the past 20 years in spiraling senior levels of remuneration upwards. Let me offer a quick explanation what we mean by horizontal benchmarking. We base the compensation of our five senior people on a comparison with the level of compensation of five senior people in peer corporations, basically other banks of similar size. This horizontal benchmarking never asks the question. In the post-war period, top remuneration was around 25 times the average wages. Why is it 300 times the average wage? You do not ask the question. You simply assume that the existing ratio must be okay, and thus you perpetuate it. Not only that, if we strive to outperform our peer group, we could make the case that our executives' compensation ought to be above the median. If all five banks make such an assumption, obviously the gap to average wages grows even wider, and I think that has happened 15 years ago and has maybe slowed down, but still is in place. We spent 21 pages in the proxy circular giving a fuller explanation of horizontal benchmarking in an effort to justify the enormous quantum of remuneration lavished on our senior people. I have no doubt that we will probably approve the say on pay resolution, which we just voted on, despite what many feel is that things are still out of line. We passively accept the premise that senior executives are motivated by excessive remuneration far out of proportion to the range that senior leaders received 20 or 30 years ago. So now to our first proposal, as it was one potential remedy two years ago when we asked the banks to examine the addition of some vertical metrics to the process being employed. It is obvious that a practice that had become entrenched cannot be altered by one single corporation, and so we filed the same proposal at five major banks. Our banks have a well-deserved reputation for corporate citizenship. It seemed to the filers that the banks represent the most sensible starting point to begin a paradigm shift and bring senior compensation into a more sustainable and realistic relationship. The five banks asked Meridian Compensation Partners to prepare a report assessing the results and risks of basing senior executive compensation on horizontal comparison with peer companies and a discussion of the potential to integrate vertical comparison metrics. On page 65 of the circular, our bank refers to the study and how shareholders could review it for themselves, and I hope shareholders will take the time to look at their thing. The proposal we went through this year was simply a request that there would be a report to this meeting, and obviously, that has occurred. Turning to that report, the bank concludes its summary of the report, omitting any reference to the fact that Meridian saw the concept of incorporating vertical benchmarks into executive compensation design as potentially helpful. No reference either to the key recommendations, which include vertical metrics and best practices for using horizontal benchmarking. Our bank goes on to note that it retained Meridian to review the bank's own benchmarking practices in two categories: horizontal benchmarking and governance practices. No reference to vertical benchmarks. The consultant then assures us that all is well. Mr. Davis, I appreciate the comments you're making. I just want to note we're at six minutes, and if you could move towards the end of your remarks, I would appreciate it. I'm well along, and I'll go quickly. You're terrific. Thank you. I'll just say it's worth noting that RBC, Scotiabank, and CIBC, in their annual reports this year, all refer to vertical ratios being used in their recommendations for CEO compensation and provide a much fuller commentary. The intent of our original proposal was to start a process. If you read our bank's very quick reference, you could infer that the study's been done, the matter is closed. Don't expect any reference to the real world where the 99% live and work to intrude into our compensation plans. The filers do expect to continue dialogue with the banks, and I hope that this bank will be part of it. The inference that I take from reading doesn't encourage me, and I would like to, when I'm finished, a quick comment from your compensation people as to whether you will in fact continue the dialogue. I do have one quick little comment that I'd like to make, and that is that the Meridian report, and I think the bank's responses, have unfortunately narrowed the concept of vertical metrics down to one focus, the average employee. While this is important and welcome, it's hardly the entire societal context. How do compensation packages compare with the senior people at major universities or large medical facilities over the past 20 years? What role does the cost of living or the consumer price index play? What attention should be paid to quality of life or impact on society? These are part of the ongoing concerns we hope will be in what I hope will be an ongoing dialogue in which the Bank of Montreal will participate. Thank you. Thank you very much, Mr. Davis. I appreciate your coming. I appreciate your comments, and we welcome your contributions to our deliberations. I can assure you that the report prepared by Meridian was considered in detail by both the governance committee of the bank and the Human Resources Committee, and we will continue to have dialogue with all of our shareholders, and particularly on matters of executive compensation, through the chair of our compensation committee in the months and years ahead. But thank you very much for appearing and speaking so effectively. We'll now turn to the five shareholder proposals that are to be brought before the meeting today, and all of which are in the management proxy circular. All five proposals were submitted by MÉDAC. MÉDAC's proposals and their supporting comments were set out in full, pages 46 to 51 of the management proxy circular. For your convenience, an extract from the circular containing the five shareholder proposals was provided to you this morning. For each of the five shareholder proposals from MÉDAC, we will accept comments and questions from shareholders or proxy holders, and we will then vote on each of the proposals individually. Monsieur Willie Gagnon, who you have heard from already, is here today representing MÉDAC. Monsieur Gagnon, thank you for joining us today in Toronto for our annual meeting. I would ask you that you keep your comments as brief as you can and respect our limit of 5 minutes for each intervention. Your positions are very well stated in your written summaries, which have been made available to everyone in this room, and there is therefore no need for you to read the proposals themselves. We will begin with inviting Mr. Gagnon to address MÉDAC's first proposal dealing with the phasing out of stock options. Monsieur Gagnon, over to you. Merci, Monsieur le President. Thank you, Mr. Chairman. My name is Willie Gagnon, and I ask for the Mouvement d'éducation et de défense des actionnaires as you have just said. We reserve the right to read some extracts from our proposals. First, I would like to make a brief comment. MÉDAC, of course, unreservedly supports Mr. Davis' intervention and his objectives, as well as those of the organizations he represents. The first proposal deals with the phasing out of stock options as a form of compensation. It is proposed that the bank agree to phase out stock options as a form of variable compensation for its executives. As mentioned by the IGOPP in its study entitled "Cutting the Gordian Knot of Executive Compensation," it was a major mistake and a source of many shenanigans to make stock options a large component of executive compensation. That is not MÉDAC speaking, that is IGOPP. IGOPP is a think tank founded by Stephen Jarislowsky, whom you know, I am sure. Executive compensation must be based on solid performance criteria that executives can control and promote the creation of long-term added value for the organization. However, the main objective of stock options as a form of compensation is to reward and motivate executives by linking the executive's performance to the organization's share performance. However, such a linkage is far from being established. For example, results of an analysis performed by Michèle Magné and Sylvie St-Onge show that between 1998 and 2008, 90% of changes in stock market prices of the five largest Canadian banks are due to characteristics of the banking sector that have nothing to do with the quality of management, nor with their performance. Stock options must, for that reason, be phased out, which would also allow for a minimal rebuilding of our trust in the bank's approach to rewarding and motivating top management. I would attract shareholders' attention to page 113 of the circular, where it is stated that the bank is reserving 76 million shares or 11% of outstanding shares that would represent, if they were issued, those options were issued would represent the considerable sum of CAD 6 billion. This is not peanuts. This is a serious risk for the bank. It's a large amount, isn't it? CAD 6 billion. I know that the bank is bigger than that, but it's something to be considered. Thank you, Mr. Chairman. These are my comments on the first proposal. Thank you very much, Mr. Gagnon, for being so respectful of everybody's time. I will now take us to see if there are any other comments or questions on shareholder proposal number one. I see nobody rising to speak, so we'll take a vote on shareholder proposal number one. I remind you that your board of directors recommends voting against shareholder proposal number one for the reasons outlined in the management proxy circular. The poll is now open to receive your votes. Press one to vote for the proposal, vote two to vote against, and vote three to abstain. If you press three, the device will say withhold, but in fact, it will be treated as an abstention. The votes are coming in. There's still another dozen or so on the floor to come. We're almost there. I'd say there's still five to come. There should be one more in the room. There it is. Thank you. Does anybody need more time to vote? I see no one requiring more time, so we'll close the poll on shareholder proposal number one, and we'll go to shareholder proposal number two, which is MÉDAC's proposal concerning say on pay. I return the floor, the microphone, to Mr. Gagnon. Mr. Gagnon. Mr. Chairman, again, Willie Gagnon from MÉDAC. Proposal number two deals with the say on pay on executive compensation. We've just voted on that resolution. The issue is addressing dissatisfactions expressed last year. It is proposed that the bank inform its shareholders and stakeholders of the actions taken following a significant, and significant is the key word in our proposal, a significant vote against the executive compensation policy. For the past three years, Canadian banks have been consulting their shareholders on their executive compensation policy, and percentage of votes against such policy vary from year to year and may reach up to 15%, as was the case at the Royal Bank of Canada in 2011. You are not Royal Bank, you are Bank of Montreal, but it has happened that votes against say on pay resolutions have been that high. This year, the percentage of votes against the compensation policy reached 3.1%, or almost 9 million shares. 9 million shares, for shareholders' information, at the current share price, is about CAD 666 million. If you imagine roughly, by way of example, that an ordinary shareholder of the bank has about CAD 40,000 invested, it would be about 16,000 shareholders. This is by no means insignificant. We believe that any percentage higher than 3% is significant. 3% is the threshold beyond which a proposal submitted by a shareholder, as we have done, can be refiled. You will understand that we are well aware that 3% may not be a lot, but for us, this is a matter of principle. When we make a proposal, we have to get 3% to be entitled to refile it, and we believe that the same threshold should apply to you as well. Thank you very much, Mr. Chairman. These are my comments on the second proposal. Thank you very much, Mr. Gagnon. I really do thank you for being so respectful of everybody's time, given the good written commentary that accompanies each of your proposals. Does anybody else wish to address shareholder proposal number two or ask a question about it? I see no one rising to do so. We will move to vote on the proposal. Again, we will use the electronic devices. The poll is open. I remind you that your board of directors recommends voting against shareholder proposal number two for the reasons we have given in the management proxy circular. You press one to vote for, you vote two to vote against, and you vote three to abstain. Again, we will just keep the poll open long enough to make sure we get all the votes in. People are getting really quick at this. It is great. We are still missing a few, though. Should be about two more in the room. There we go. Does anybody need more time? I see no one seeking more time. We will close the poll for proposal number two, and we will turn to MÉDAC's third proposal dealing with pension plans and transparency. Mr. Gagnon, would you please present this third proposal? Thank you, Mr. Chairman. Willy Gagnon. So proposal number three, pension plans and transparency. It is proposed that the bank adopt, with regards to the status of the pension plans it administers, a more transparent reporting process focusing in plain language on the issues faced by such pension plans. This is our proposal. We believe that management should present a summary of all of the issues raised by the administration of its pension plans while outlining the actions it intends to take to remedy the situation. Among other things, we want shareholders to be informed of the process that led management to make assumptions on which financial reporting is based and their impact on financial statements. In your reply at page 48 of the circular, you state that the board recommends voting against this proposal, given that the bank's disclosure of pension obligations is comprehensive and clear. Yes, we know that. We've read it. But what we want is something transparent. We want a summary. We want a one-page clear statement in which all of these issues are succinctly set out. We believe that what you disclose is lengthy, and that's the reason why we maintain this proposal. With other banks, we have withdrawn this proposal, but not with you for that reason. You state that your social responsibility report covers your pension plan. You state this following the material on proposals. So congratulations on that report, but we would like to get a page in the annual report or a page in the circular dealing with the pension plans. Thank you very much. This is for proposal number three. Thank you very much, Mr. Gagnon, for those comments. Does anybody else wish to ask a question or make a comment on proposal number three? There's a person wishing to speak here. If we could give that person a microphone, and if you could introduce yourself as a proxy holder or shareholder and then address the meeting, please. My name is Michael Chang. I'm the shareholder. I'd like to find out what would be the limit that you consider that the auditor should be retained in perpetuity. Could you just repeat that question? I did not catch the end of it. I think you are not on this point. I will come back to you in the question and answer period because we are only focused on the point Mr. Gagnon has raised about pension disclosure. I think we are talking about the auditors. No, we are talking about pension disclosure at this point, but we will be happy, Mr. Chang, to come back to you in the question and answer period. Does anybody else wish to speak to the third item, the third proposal? I see no one, so we will open the poll on pension plans and transparency. I remind you that your board of directors recommends voting against the shareholder proposal number 3 for the reasons outlined in the management proxy circular. The poll is now open to receive your votes. Press 1 to vote for the proposal, 2 to vote against, and 3 to abstain. Votes are coming in fast, but there is still a dozen or so to come. I think we have got them all in. Does anybody need more time? I see no one asking for more time. We will close the poll on number 3 and move back to Mr. Gagnon. Would you please, sir, present MÉDAC's fourth proposal dealing with the request for proposals for auditors, and maybe Mr. Chang, you will want to intervene on this as opposed to in question and answer period after Mr. Gagnon introduces his fourth proposal. Mr. Gagnon. Mr. Chairman, thank you very much. Still Willy Gagnon here from MÉDAC. Proposal number 4, request for proposal for auditors. It is proposed that the bank issue a request for proposal every 5 years to retain auditor services. Since 2003, KPMG has been the bank's only audit firm after having shared this task with another firm from 1990 to 2003. It is going on 25 years. Last year, 2.68% of shareholders withheld from voting on their reappointment, which is rather high for this type of vote. The British Public Commission on Competition proposed in July a policy under which requests for proposals would be issued every 5 years. This is a government organization. These are people who are supposedly both independent and informed. The U.K. Competition Commission declared, "Additionally, although auditors are appointed to protect the interests of shareholders, who are therefore the primary customers, too often, auditors' focus is on meeting the needs of senior management who are key decision-takers on whether to retain their services. This means that competition for audit focuses on factors that are not aligned with shareholder demand." Does the percentage of votes withheld in respect of KPMG reflect this opinion? We believe that this service must be subject to a request for proposals every 5 years in order to assure shareholders that they receive the best service from their auditors at a competitive price. In the circular at page 49, you invite shareholders to vote against this proposal, given that the bank has implemented a robust process to evaluate the quality of the external auditor. Should that be taken to mean that given the process that you've just implemented, one could imagine that it would be acceptable for you never to change auditors? Thank you very much. This is my question, and these are my comments on proposal number 4, and I would invite all shareholders to support the proposal. Thank you very much, Monsieur Gagnon, for your comments on proposal number 4, dealing with proposals for auditors. Mr. Chang, I ask you if you wish to intervene at this time in the meeting. I think you do. Mr. Chang, a shareholder. I'd like to know whether the Bank intends to keep these present auditors in perpetuity, because some of the reasons that you have identified here that they have cumulative knowledge, audit knowledge, is not very sustainable as all seen major auditors have that capacity to conduct these type of audits. As is indicated in the board's response to proposal number 4, the board of directors believes in rigorous review of the performance of our external auditors annually. We believe in a comprehensive review of the auditor's performance every 5 years and publicly reporting on that review. But we do not believe that mandatory rotation should be adopted by the Bank, and that's the position we've stated in response to shareholder proposal number 4. What would be your timeframe? At what particular stage will you consider changing the auditors? As I indicated in my, I don't want to repeat myself, we review the question every year and do a comprehensive review every 5 years. But with no presumption as to whether they should be renewed or replaced. Are there any other questions or comments from shareholders on this, or proxy holders on this proposal? I see none, and so we will move to a vote on this one. I remind you that your board of directors recommends voting against shareholder proposal number 4 for the reasons outlined in the management proxy circular. The poll is now open. Please press 1 to vote for the proposal, vote 2 to vote against, and vote 3 to abstain. The votes are coming in rapidly, but there's still a dozen to come. Still got a number to come. Now we're getting there. Still got four or five to come. We'll take another moment just to make sure everybody has a chance to vote. I think that's everyone in. Does anybody still need more time to vote? I see no one, so we will close the poll on proposal number 4, and we'll go to Mr. Gagnon's fifth proposal, I should say, MÉDAC's fifth proposal dealing with the payment of taxes, and I invite Willy Gagnon to address the meeting. Sir. Mr. Chairman, thank you very much. Yes, you're right. It's not my proposal, but MÉDAC's, and we represent 1,500 members, 2,000. It depends on the time of year. So proposal number 5, paying its fair share of taxes. This proposal addresses tax havens and the fiscal exodus, the tax exodus. This is an issue that is particularly timely in Quebec these days. It is proposed that the bank disclose at the next annual meeting the actions it intends to take to conform to the plan filed by the OECD on July 20th with regards to the non-payment by multinationals of their fair share of taxes. When the action plan on base erosion and profit shifting was filed by the Organisation for Economic Co-operation and Development with the G20 finance ministers, OECD Secretary General Ángel Gurría said, "International tax rules, many of them dating from the 1920s, ensure that businesses don't pay taxes in two countries." This is laudable. This is called double taxation. This is laudable, but unfortunately, these rules are now being abused to permit double non-taxation. That is to say that an organization is taxed in neither jurisdictions. This is widespread in the financial sector. The action plan aims to remedy this so multinationals also pay their fair share of taxes. With this proposal, contrary to what you suggest in your response at page 50 of the circular you state that the bank complies fully with applicable tax laws. You state that you pay tax in accordance to law. We're not stating that you don't comply with the law. What we're asking you is to go further and to anticipate future actions. OECD says that something must be done. You are complying with the law, but go further. I have a corollary question to our proposal. Does the bank have interests in tax havens? When I talk about tax havens, I refer to the list that is drawn up every year by OECD. I believe that this question is relevant, and I would obviously invite all shareholders to support the MÉDAC proposal number 5 dealing with paying a fair share of taxes. Thank you very much, Monsieur Gagnon, for your comments on proposal number five. I now ask, does anybody else wish to address this proposal? I see no one who wishes to address the proposal, so we will move to a vote on it. I remind you that your board of directors recommends voting against shareholder proposal number five for the reasons outlined in our circular. The poll is now open. You press one to vote for, you press two to vote against, and you press three to abstain. The poll is open. We'll take a moment to make sure everyone has an opportunity to vote. We're getting extremely quick at this. There's one more vote to come in. There it is. Does anybody need more time? I see no one requiring more time, and I will declare that poll closed. We have completed our consideration of the shareholder proposals. I thank Monsieur Gagnon for his comments on each of the five and appreciate your attendance, sir. We'll now move to a period of question and answers on any matter relevant to the meeting and the bank. These questions should come from shareholders or proxy holders only and should be of general interest to all shareholders and not of a personal nature. I would just ask that in order for everyone to hear, that you move to the aisle, get yourself a microphone, and then stand and wait for me to recognize you to speak. When you do speak, please introduce yourself by your name and state whether you're a shareholder or a proxy holder. I also note that we welcome questions online, and I'll ask the secretary to let me know if there are any such questions coming in. Does anybody wish to speak? I see Monsieur Gagnon standing, but sir, since you've had a good innings, maybe we'll see if there's anybody else who has a question first, if that's all right with you. Is the gentleman standing there wishing to speak? Sir, do you wish to speak? I got a question. Yeah, please. Yeah, I'm a shareholder. What's your name, sir? Mike Seaton. Thank you. The bank promotes BMO at BMO Field in Toronto, which is the home of the Toronto FC soccer football club. How long is this deal going on? Do you expect to renew the contract with the owners to allow you to call it BMO Field? Thank you for your question, sir, and I will ask our Chief Executive Officer to respond. I am not sure if. Okay, I do not have to push the button. Well, thank you for your question. The contract we have with Maple Leaf Sports, the owner and manager of the facility, is like any commercial contract. It is subject to periodic renewal, and it is based on, from our perspective, the visibility that the bank gets in support of soccer in Ontario, in Canada, and the appeal it has to the broad community. I would just think you should consider the fact there's possible expansion there, and you'll have possible exposure to football fans as well. Toronto Argos. Have you- I sense you're an Argo fan. No. Toronto FC. Oh, Toronto FC? Okay. Well, Thank you for the suggestion. Our Chief Marketing Officer is here, and I know she's taking notes on the topic. Yeah, I have a question. You advertise on the Super Bowl, which to me has its pros and cons. Does anybody have any reason why it was, did anybody monitor the effects or value of advertising on the Super Bowl? Well, yes, we do. We actually calibrate every investment dollar in advertising against number of viewers. I don't believe we advertised in the Super Bowl this year. I think you may be referring to last year, and it was targeted against a specific audience. As I recall, it was local in nature. Thank you very much. Thanks for your question. Are there any other shareholders or proxy holders who wish to speak before I turn back to Mr. Gagnon? Sir, if you want to come over to the aisle and we'll give you a microphone. If you could introduce yourself by name and by your status. Sir. Yes. My name is Ron Thompson. I'm a shareholder. A question for management. Where are the three biggest areas of opportunity for the bank, and what are the innovations needed to get there? Thank you for your question, sir, and I ask our Chief Executive Officer to respond. Well, thank you for your question, Mr. Thompson. I think if you reflect on my opening remarks, the focus was on the fastest-growing areas of the economy. More specifically, if you read some of the financial disclosure we made around quarter ends, commercial banking is an area of specific strength of Bank of Montreal, both in Canada and the U.S., and we expect with economic recovery to see that business to grow strongly. In Canada, if you look at the size of our branch distribution system and the quality of our online offering, which is very competitive, we think there is clearly an opportunity to grow personal banking in Canada and as well personal banking in the U.S. Just to cite three areas where we think the investment that we are making in new ways of speaking to customers and in products that are relevant provide the best growth opportunity. Monsieur Gagnon, thank you for deferring to the previous two speakers, and I invite you now to ask your question. You're welcome, Mr. Chairman. I have a brief comment, a very positive one to make. You included under items 5 and 6 on the agenda presentations from the chairman, the chief executive officer funding the financial statements prior to electing the board of directors, and that is an exemplary practice. Not everyone does that. Some companies listed on the Toronto Stock Exchange don't do that. But it is logical, and this is something that we have been asking for. That is to say, placing the chair and CEO presentations prior to the vote on directors. We'll be using your practice to demand this from others. The fact that the question period is part of the formal business of the meeting, this is not done everywhere. In some companies, the meeting is closed and then there is a question period, which is not part of the record of the meeting. There's only one request I'd like to make, which is that every year there ought to be a set of minutes of the previous year's meeting. Laurentian Bank does so, National Bank of Canada does so. At the same time as the proxy circular, they send a set of minutes of what happened during the previous year's meeting. This is just a one sheet front and back. It's not complicated. I'm sure you have minutes somewhere, and it would be of interest to get it at the same time as the proxy circular. Thank you very much. It was just a comment that I hope was constructive. All right. Thank you very much for your positive comment. I'd like to take personal credit for the order of business, but I cannot. I have to acknowledge that this is the work of our Corporate Secretary, Barbara Muir, and our General Counsel, Simon Fish, who deserve your congratulations. I appreciate your positive comments on the point because it was their decision, not mine. With that, I'm going to ask our General Counsel to remind me, and remind the shareholders of where we stand on the issue of minutes of the annual meeting. Chairman, we make the minutes available after the meeting. They're posted online. We'll take Mr. Gagnon's suggestion into consideration for next year. Thank you very much. They are available to shareholders. They are indeed. Thank you very much. Are there any other questions or comments at this time? I see a woman here. Please make sure we get her a microphone. If you could introduce yourself by name and your status before the meeting. My name is Adrienne McGinnis. I am a shareholder. I just have a general question. I know that the bank uses MasterCard, and I just wondered if you could give a very quick explanation of, as a shareholder, do we make money in that? Seeing that a lot of products now are going to be sold with credit card rather than cash, how will that play into growth in the future for us? Thank you. Thank you for your question. Bill? Well, thank you for the question, Ms. McGinnis. MasterCard is a brand affiliation. We make money from the processing of card transactions and in essence from extending credit using the card. Yes, the direction that you're pointing in, the evolution of the card as a payment device taking many forms in the future is clearly part of what we expect to see develop over time. Just in case you don't have one, the BMO World Elite card is a fabulous card, and I recommend you get one. I think, Mr. Chang, you had another question. I'd like to find out from management whether it would have any effect with the reported slowdown in China's economy. Thank you for that, sir. I will ask our President and Chief Executive Officer to respond to that. I think to the extent that China now plays a major factor in total global economic growth, any slowdown in China clearly would have a knock-on impact. I think the real question is the likelihood of a sustained slowdown in, I would say in our view, when you look at the size of the population of China, the rate of urbanization in China, it is quite likely that the rate of economic growth will far exceed the growth rate in developed countries for quite some time to come. I see no one else rising to ask. Oh, I spoke prematurely. Sir, could you introduce yourself, please? My name is Larry Grupp. I am a shareholder. I noted this morning that Mr. Downe's comments, he made a point of emphasizing customer service. I know many of us here, when we go into a branch, we have had positive and sometimes negative results. My question is, how does the company monitor the activity of its agents in the banks to promote customer service? Thank you for that question. Back to you, Bill. Thanks for the question, Mr. Grupp. We do it in a number of ways. To me, it's quite interesting, in a very connected society, how much more communication we get directly from customers in the moment. We monitor customer feedback on social media. Clearly, email and texting provides us with a great deal more feedback than we used to get when we were entirely reliant on the Royal Mail. In addition to that, we have a very comprehensive process of sampling customer experience, both in the moment that relates to transactional business and over time that relates to the accumulation of experience and how it translates into a deeper banking relationship. I'm delighted to hear that you've had good experiences, and I hope there haven't been too many where we need to take corrective action. If you have any tips, the head of personal and commercial banking for Canada, Cam Fowler, is in the second row. You could connect with him before you left today. If you had any suggestions, I know he'd appreciate it. Thank you. Cam, do you just want to stand up so Mr. Grupp can see who you are? Does anybody else have a question or a comment they wish to make? At this time, I see none, and I thank all of you who did stand to make a comment or ask a question. We appreciate your participation in the meeting. I have a note here that the scrutineers have completed their preliminary report on the results of the voting, and I now call on Steve Gilbert to read those results to the meeting. The scrutineers' final report will be available shortly after the meeting. Steve? Good morning, Mr. Chairman. Sonia Chevalier and I, as scrutineers for the meeting, hereby confirm the result of the votes by ballot as follows. No director standing for election today received less than 96.6% of the votes cast for a director. On the appointment of auditors, 97.49% of the votes were in favor and 2.51% of the votes withheld. On the advisory resolution on approach to executive compensation, 93.51% of the votes were for and 6.49% against. On shareholder proposal number 1, 4.21% of the vote were for, and 95.79% voted against. Shareholder proposal number 2, 4.80% were for the proposal, and 95.20% voted against. Shareholder proposal number 3.18% of the votes for and 96.82% of the votes against. On shareholder proposal number 4, 3.62% of the votes were for and 96.38% against. On shareholder proposal number 5, 1.80% voted for and 98.20% voted against. This completes the result of the votes by ballots, Mr. Chairman. Thank you, Steve, very much, and thank you to Sonia as well. We appreciate your support of the bank with your excellent work for us. I, therefore, declare that the 13 nominees listed in the management proxy circular are all duly elected as directors. Thank you for your confidence in your board. 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, and the five shareholder proposals have been defeated. That concludes the meeting and its formalities. Please now turn your attention to the presentation screens as we celebrate 20 years of investing in our people, and I will then have a few closing remarks after the brief video. Learning is fundamental to growth for all of us. Welcome to the IFL. How are you today? I started out as a CSR, then an FSC, and now an FSM, and I'm still in my training period. Good morning, everybody. How are you doing? We all would like to build confidence, know best practices in other branches. The original investment in the IFL was incredibly forward-looking. We wanted to create the most committed, engaged, effective workforce in the industry. Any time we would do surveys and post-course evaluations of the employees, the impact was measurable. To work on reducing. We start with the strategic priorities of the organization. We want to be an enabler to the business in meeting their growth objectives, financial results. A second area of focus is brand. Our vision is to be the bank that defines great customer experience, and that means traditional in-classroom programs around customer conversations. A new site that we've built around financial education. We really try and have different groups collaborate and make connections across the company. It allows us to respond quickly to changes in the environment, changing customer needs, changing skill requirements. As the Institute for Learning moves forward, we will continue to encourage innovation and thinking progressively about how to engage our clients and our customers. 20 years of helping the company evolve and building a learning culture gives us a competitive advantage. It's the power of investing in our people. I see it here every day. Before we go, I'd like to thank all the people who were involved in supporting today's meeting, including those who handled the closed captioning, the English and French interpretation, and the electronic voting process. Most importantly, I'd like to thank all of you, our shareholders and our employees who joined us today in person or online. We are very grateful for your participation in our meeting and in our work. As you exit the meeting, please leave behind, because we need them next year, leave behind your electronic voting device and your translation device. If you just leave them on your seat, the staff will pick them up after we clear the room. Thank you all very much. I declare the meeting closed.

Data Source: Quartr Last updated: Apr 1, 2014

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