AGM 2017

Apr 4, 2017

Slides

Good morning, fellow shareholders, and welcome to the 2017 Annual and Special Meeting of the Bank of Montreal. Thank you very much for coming. We appreciate your interest and your participation today. My name is Robert Prichard, and I have the honor of serving as Chairman of the Board of Directors, and I call this meeting to order. We are meeting again this year at BMO's Institute for Learning. We are always pleased to meet here to give us an opportunity to showcase this amazing facility where thousands of BMO employees come each year to improve their skills and deepen their knowledge. It is also a much sought-out conference venue for groups from outside the bank. It is the best conference facility I know. If you would like to use us, give me a call and we will work something out. I am joined on the stage this morning by, on my immediate right, Bill Downe, our Chief Executive Officer, Tom Flynn, our Chief Financial Officer, Simon Fish, our General Counsel, and Barbara Muir, our distinguished Corporate Secretary. Also joining me here today, seated in the front two rows, are members of the bank's board of directors and the bank's senior management team. Members of the board will be introduced when it is time for the election of 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 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 be properly brought before it. I appoint Steve Gilbert and Sonia Chiavaglia, representatives of Computershare Trust Company of Canada, to act as our scrutineers for the meeting and Barbara Muir to act as our Secretary. The shareholders' auditors for fiscal 2016, KPMG LLP, are present here today, represented by Elio Luongo, CEO of KPMG, Jim Newton, the lead partner, and his colleague, Naveen Kalia. I want to extend a particularly warm welcome to Elio, who became CEO of KPMG last October. We enjoyed an excellent relationship with his distinguished predecessor, Bill Thomas, and we look forward to the same with Elio. Would the three of you please stand briefly so shareholders can see who their auditors are? We are delighted to have you with us. You do good work for all of our shareholders, and we appreciate it very much. 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. As the proceedings are being webcast, no photographing or videotaping of the meeting is permitted. We would ask that any questions or comments from the floor or submitted online be related to matters currently before the meeting, and when submitting questions, that individuals provide their name and indicate whether you are a shareholder or a proxy holder. We will do our best to respond to all such questions during the meeting, but any questions not answered during the meeting will be responded to immediately following the meeting. Facilities for simultaneous English/French interpretation have been provided, and you will find English on channel 1 and French on channel 2. You are welcome to address the meeting in either language. At the appropriate time, any shareholder or proxy holder wishing to speak should go to the closest standing microphones in the aisle. Each microphone is numbered, and once I recognize your microphone, please address the meeting. In order to allow as many shareholders as possible to have an opportunity to speak, each shareholder will be allowed to speak only once on the matter before the meeting at that point. Please keep any comments or questions to a maximum of two or three minutes. Finally, regarding the physical layout of the room, in the event of an unforeseen emergency, I'd like to point out that there are exits at the main doors where you came in, and there are also exit doors on either side of the stage here to my left and to my right. In the event of such an emergency, please exit the room and proceed to the parking lot outside. The agenda today will consist of an address by our leader, CEO Bill Downe, followed by the five resolutions proposed by management. First, to elect the board of directors for the next year. Second, to appoint the shareholders' auditors for fiscal 2017. Third, to consider a special resolution amending bylaw number eight regarding directors' aggregate compensation. Fourth, to consider a special resolution to enable the bank to implement changes to variable compensation for certain European Union staff to comply with regulatory requirements. Fifth, to consider an advisory resolution on the bank's approach to executive compensation. There are no shareholder proposals to be voted on this year. However, MÉDAC has asked and will be permitted to address the meeting. Following these six matters, we will conclude with a question-and-answer period. On behalf of those speaking today, I note that their comments may include forward-looking statements, and unless otherwise noted, they will be referring to non-GAAP financial measures referred to as adjusted results. Details regarding forward-looking statements and non-GAAP financial measures are on screen and can also be found in the bank's annual report as updated in our first quarter 2017 report to shareholders. Actual results could differ materially from forecast projections or conclusions in the forward-looking statements today. With those preliminaries behind us, I begin the formal part of our agenda for today. Remarkably, this is the 200th anniversary year of the bank. Our bank is 50 years older than our country itself, and it's gratifying for all of us as we enter this 200th year serving our customers that we have achieved a new high water mark in 2016. The bank's financial performance in the last fiscal year was excellent, building on the success of earlier years, and our shareholders have been rewarded for this strong performance with a buoyant stock price. More gratifying still is the fact that these results were attained across the board, on both sides of the border, and across all three principal lines of business. We have never been stronger as a bank as we delivered record revenues and earnings in 2016. Our total shareholder return for the past three-year and five-year periods has been the highest, the highest among our Canadian peers, exceeding 15% per year. I am confident that you are as pleased as we are with this outstanding performance. We have a long and distinguished history as a bank, and that long perspective is something that sets us apart, because we also have a long tradition of upholding a set of high ethical standards grounded in integrity and respect. Our leadership team lives and breathes these standards, and on your behalf, once again this year, I want to thank our leadership team and our outstanding Chief Executive Officer, Bill Downe, for the fine work they have done. Your board of directors has great confidence in this team and the strategic direction they have set for the bank. We, as directors, are proud to stand with them and serve with them. Bill, to you and all our employees around the world, thank you and congratulations on a terrific year. I now invite you to address our shareholders. Bill Downe. Well, thank you very much, Chairman, and good morning, everyone. The bank's bicentennial is an extraordinary moment in time. Only two other companies listed on the TSX have marked this milestone, the Hudson's Bay Company and Molson, whose Canadian roots go back to 1786. The Bank of Montreal is one of only 15 companies listed on the New York Stock Exchange to mark 200 years in business. I have been waiting quite some time to say these words of welcome to the annual shareholder meeting of the Bank of Montreal, a great Canadian company that has been serving customers for 200 years and counting. You can applaud. It is okay. BMO had a record year, as the Chairman said, in 2016, with results that reflect continued strong performance of all business groups. Adjusted net income exceeded $5 billion for the first time. Earnings per share increased by 7% over the previous year. We maintained our capital strength with a Common Equity Tier 1 Ratio of 10.1% after funding internally the acquisition of our transportation finance business during the year. Our adjusted return on equity was 13.1%. Now, to place these results in their broader contexts, I know that the global economy is accelerating after a period of expansion that has been the most gradual of the past century. In our home markets in Canada and the U.S., the prospect of stronger growth in GDP and rising employment and wages continues to build confidence. The bank's positive numbers for the first quarter of this year reflected continuing momentum. Our competitive advantage rests on a solid foundation that starts, as always, with our customer. We are well-positioned to grow our business in a way that outpaces the market, to keep expanding our footprint and customer base, and to maintain and grow the profitability of all of our businesses. We are generating strong returns for our shareholders and creating opportunities for everyone who works at the bank. The markers that define the business objectives we set are on the screen behind me, our strategic objectives. These five statements are not aspirations, they are commitments. As we review our priorities every year, they may evolve slightly to reflect the changing business environment, but they consistently point to the same goal, to serve our customers in ways that create lasting value for our shareholders. Our priorities are a touchstone for gauging progress, and they map out what we intend to do next. Because as much as our results confirm we're on track, the fact is we're just partway to achieving the bank's full potential. This morning, I'll speak about where we're focusing our efforts in order to sustain the current momentum. There are two main observations I'd like to share. First, our industry, like the rest of the world, is being transformed by digital technology, but it isn't really technology that's shaping how we deliver our services or how our people do their work. It's our customers changing priorities around how they prefer to manage their financial lives and how they want to do business with us. In all dimensions of change we're managing across the bank, everything begins and ends with the customer. Second, at a time when there's no shortage of uncertainty over impediments to global trade, geopolitical tensions, environmental degradation, even the basic functioning of civil society. We see firsthand what our customers and other stakeholders also see, that responsible, well-run companies can continue to thrive and will contribute to the overall good. What's critical for us in this context is to say, what are the underlying values that define our bank? Alongside the strategic priorities that guide our business decision-making, there's an equally clear set of principles explaining how we see corporate responsibility and our commitment to sustainability. I'm going to review how we blocked out those principles, which in fact have governed us for decades. Let me begin with the cornerstone of our advantaged position, a deep understanding of customers. Our relentless focus on the customer has shaped BMO's purpose, and it's at the heart of our first strategic priority to achieve industry-leading customer loyalty. We've built our reputation and our success on listening closely to customers, understanding their financial goals, and providing the right products and services to help them be confident in the future for themselves and those closest to them, and for the businesses that they build and lead. Today, what enables us to do all of that better than ever is technology. Last year, we elevated the deployment of digital technology to stand alongside the bank's other strategic priorities. The underlying technology of the bank at the end of five years of heavy investment has been repositioned. We're unencumbered by the limitations inherent in legacy systems. We've made processes more flexible and cost efficient and can deliver the fast, easy, intuitive service our customers are looking for. This digital transformation is supporting deeper relationships. When a customer chooses to speak with a banker for help or guidance in the moment, or to a relationship manager in a longer conversation, these points of connection are informed by an array of instantly available data and analytics. The information is visible to both the banker and the customer, and the insights we share are personalized and relevant. Every customer wants to be recognized as an individual. What people value is our bank's ability to understand them, and this inspires their advocacy. By building our capabilities, we're strengthening the BMO brand, and that, with the underlying technology, is what drives the bank forward. BMO has evolved through two centuries and grown and prospered precisely because we've always looked to the future. As with any long-lived company, our story is one of continuous adaptation. Learn, adapt, change. The result is a unique set of competitive advantages that are driving the bank's continued growth. Diversification in our business mix, geographical footprint, and customer segments. A strong balance sheet and capital position. A consistent, disciplined approach to the management of risk. An unwavering commitment to regulatory compliance. Most importantly, a workforce of engaged, dedicated, talented people, all of whom I would like to praise today, who are delivering our services through new channels and new ways of working. In every area of the bank, we're investing in the development of employees' knowledge and skills as traditional roles change and new ones emerge. The evolution of our workforce, like our technology transformation, reflects a more fundamental shift, not just in the bank's business model, but in our entire industry and in society generally. People have vast amounts of information at their fingertips. They're more mobile than ever. Empowered by these two factors, they want to have a greater sense of control over their finances and to take action. Whenever and wherever, consumers want autonomy. This is changing how customers purchase and use the services of the bank, and our interactions with them fall into two categories. There are everyday transactions within services they've previously arranged, paying a bill, moving money between accounts, sending an Interac e-Transfer to a family member. Most people prefer doing these kinds of things themselves, and we've put in place the technology to make that possible. Quickly, intuitively, reliably. Last year, our customers completed more than 1 billion of these transactions. The second type of interaction goes beyond the transactional. It's when a customer arranges a new service, such as a mortgage or an investment account, or the enhancement of an existing service, such as increasing a line of credit or raising the limit on a credit card. Last year, we had more than 7 million of interactions like these. In most cases, the customer initiates the conversation, surfacing a need for which we can provide support and guidance. In some instances, we initiate the conversation. This is the heart of our business model that hasn't changed. We're here to listen to customers, understand their needs, make sense of the various choices they face in deciding how best to achieve their goals. Any advice we offer on how to get there is grounded in the time-tested fundamentals of banking. Our best suggestions on how to control their spending, how to grow their savings, how to borrow smartly, and to invest wisely. In fact, while millions of everyday transactions have shifted to mobile and online, the vast majority of changes to any type of account, even if they begin in a digital channel, may still be concluded with a conversation. When in doubt, default to a human. Branches themselves are evolving. We use video links to assist with remote transactions while bankers provide answers to more complex needs, and additional avenues are no doubt just around the corner. But the underlying purpose of those interactions won't change. We provide support and guidance, and once customers have decided on the best path, we help them along the way. We also invest directly in consumer education. We've done a great deal in this area, and we're going to do a great deal more because it's good for all of our customers, including millennials, and financial literacy is important to the financial health of the nation. Last year, here at the IFL, by way of example, we hosted curriculum directors from education ministries from across Canada so they could have the opportunity to work together and share knowledge to expand and improve financial literacy education in Canada. It's good to be a partner in these ongoing efforts. With respect to our bankers, I have confidence that they know we're not in business to push product. We guide our customers in picking services that best meet their needs. The validity and the value of what they purchase is measured by how well it fulfills the promise we're here to help. But we also have in place a robust set of disciplines that ensure what we believe is occurring in our system can be confirmed by management controls. Our performance scorecard weights customer satisfaction equally with customer purchases. When a new service is purchased by a customer, it only satisfies a banker's objectives if it's used. Any account canceled soon after opening is scrutinized. The incidence of this is very low. Each of our businesses has a clear, easy-to-access process for customers or employees to escalate concerns not resolved at the first level. On issues that cannot be resolved by a bank officer, our ombudsman will conduct a confidential, impartial review. And lastly, there is a clear path to the independent ombudsman for banking services and investments. The rigor with which we safeguard our policies and processes reinforces our confidence in the integrity of the bank's practices, and we have fostered a culture where we are all protected from retaliation. Everyone at BMO can voice concerns without fear. Most importantly, we continuously invest in our employees to ensure that they have the knowledge and the skills to help them work effectively to meet customers' expectations. We're here at the BMO Institute for Learning in part because this place embodies our belief in human investment, which is the only way to be assured we have the quality of talent that we need to succeed. Last year, the bank invested CAD 78 million in education, delivering nearly 27 hours of training per full-time employee. This scale of investment has been a BMO hallmark for decades, and we see the return in the caliber of highly skilled people we're attracting and developing across the organization. We encourage a free exchange of knowledge, a creative blending and collision of ideas here and throughout every area of the bank. Our people are empowered to explore alternatives, reinvent processes, and replace existing models with smarter, more cost-efficient solutions. This critical investment in the bank's human capital affirms our fundamental belief that the value we create is not determined by financial performance alone. That's never been the case, and it's certainly not true today. Which brings me to the second major area I want to underline this morning. Just as our customers expect responsive, empathetic support in achieving their financial goals, all of our stakeholders expect thoughtful, responsible behavior from our bank and from the other institutions that affect their lives. For us, thinking about long-term responsibility is not an afterthought or a sidebar, it's central to who we are. That's why we've codified our commitment in a set of sustainability principles, which, as you can see, are paired with our strategic priorities. Social change, financial resilience, community building, environmental impact. These are issues that affect our collective wellbeing, and they can't be separated from the bank's strategic agenda. As we reflect on the role of companies in the pursuit of sustainability, it's inevitable that investors will discriminate and re-weight their portfolios. The most responsive companies will earn premium valuations, and we expect BMO to earn a premium valuation. The sustainability principles are a new addition to our guiding framework, but only in the sense that we're now stating overtly what was implicit in our actions as a responsible company. These too are not aspirations. They describe both how we act and who we are as a business and as a group of like-minded people. This goes far beyond simply following the rules better than other companies. It's our commitment, with or without a rule book, to consistently do the right thing because we believe this is the only way to do business. BMO's bicentennial has been an opportunity for us to reflect on the values that have shaped us, that haven't changed, even in changing times, recognizing it's these same values that continue to drive our success. Our commitment to transparency in every aspect of our business, to treating customers, employees, and other stakeholders with fairness and respect, to leading by example. These are significant contributors to the trust that others place in our bank. So too are our efforts to foster diversity and inclusion. We've long believed that everyone in our organization, as well as everyone we do business with or partner with or interact with, should be valued for who they are. This conviction is embedded in the bank's leadership, talent development, and culture in ways that reflect the aims and beliefs of our employees, of our customers, of all of our stakeholders. What's more, it's a commitment that will only gain relevance and value over the long term. For every key leadership role in the bank today, we have identified at least three qualified successors, drawing from a diverse field of candidates who represent the organization of the future. As we weave our diversity and inclusion practices into the bank's business strategy, it yields better decisions, grows the business faster, and builds stronger, more meaningful, and more profitable relationships. This is why we continue to set new targets, measure impact, and hold ourselves accountable for positive change within the bank and in our relationships with customers. A case in point is our recent initiative to connect with women investors and women entrepreneurs who often feel underserved by financial institutions. Understanding that these clients have unique expectations, we use those insights across our businesses to develop deeper relationships based on how women prefer to interact with us. With all of the bank's customers, our job is to listen, understand people's goals, and respond respectfully, fairly, and transparently with services designed to help them to get where they want to go. Let me recap. Our confidence in the future of Bank of Montreal reflects the continuing momentum evident in our results, backed by the readiness of all business groups to capitalize on the advantages we have built. The foundation of our confidence goes much deeper than that. The cornerstone, as I said, is our ability to understand customers and provide the kinds of services that will help them meet today's needs and reach their long-term goals. To do that effectively and in ways that match their priorities, we use technology. It is not technology alone that is shaping what we offer or how we work, it is customers. At the same time, we have a responsibility to ensure that what we do as bankers is grounded in the values we hold in common with all of our stakeholders. Their investment in us is based not simply on what we can do for them, but on who we are and on what we stand for. Affirming our sustainability principles independently of our strategic priorities would be pointless, and the reverse is especially true. No enterprise can prosper over the long term without embracing all dimensions of corporate responsibility, social, economic, environmental, and governance. Whether it is regulation and higher capital reserves for banks or the pursuit of energy alternatives and a reduced carbon footprint for all companies, upholding such principles helps build resiliency in the face of potential risks, and that translates into long-term shareholder value. Customers expect us to understand them and respond to their needs with smart thinking and innovative services. Equally, they expect us to be accurate, transparent, and reliable while securing their information and protecting their privacy. This is what a company must do, must be in order to double its revenues, as our bank has done over the past decade, and it is what will enable us to double our business again as we deepen our relevance to customers and continue to earn their loyalty, which is the key to profitable growth. Our bank is looking to the future through a lens of sustainable competitive advantage, as always, meeting our midterm commitments while benefiting from a long-term perspective. As we tackle the opportunities ahead, we are doing so with the confidence that can be summed up in a word, forward. Thank you. Chairman? Thank you very much, Bill. Excellent remarks. We'll now turn to some additional procedural matters. I've been informed by our transfer agent that over 307 million votes have been received by proxy in respect of the matters of business for today, representing approximately 47.46% of the total outstanding shares eligible to be voted. Given that our employees represent an important part of our shareholder base and to facilitate these proceedings, we've asked certain employee shareholders or proxy holders to move and second certain motions. I'll call on them at the appropriate time. The votes on the five items of business before this meeting requiring a vote by shareholders will be conducted by paper ballot. Any other motions will be voted on by a show of hands. On registering for the meeting today, proxy holders and registered shareholders wishing to vote in person at the meeting today should have received a paper ballot. The ballot covers the five items described in the proxy circular that I have previously referred to. If you have already voted by proxy before the meeting, you do not need to complete a ballot today. Any proxy holder or registered shareholder wishing to vote in person this morning and who did not get a paper ballot at registration, please raise your hand and we'll bring one to you. Is there anybody who needs a ballot who doesn't have one? One's coming to you, sir. Anybody else? That's it. Excellent. Now to the items of business. The first item of business is the submission of the financial statements. In March 2017, copies of our annual report for 2016 were forwarded to shareholders together with the management proxy circular and notice of this meeting. The financial statements for October 31, 2016, year-end were included on pages 139 to 205 of the annual report, and the auditor's report thereon can be found on page 137. I will take all of this as read. Are there any questions or comments on the financial statements? I see none, and so we'll continue with the business of the meeting. This brings me to the election of directors for the ensuing year. As determined by the board, the number of directors to be elected today is 13, with 12 being current directors who are standing for re-election and one new director, Linda Huber, who is standing for election for the first time. You will find biographical information about each of the nominated directors in the notice of meeting and proxy circular, but let me take a moment to introduce Linda Huber, who may not be as well known to you as our returning directors. Linda is Executive Vice President and Chief Financial Officer of Moody's Corporation, with executive responsibility for the corporation's global finance activities. She's also responsible for Moody's information technology, global communications, and corporate service functions, and responsible for the Moody's Foundation. I should hasten to add that Linda has no personal involvement in the work of determining the rating of our bank or any other bank as part of Moody's work. Linda had senior experience working in financial services companies and industry before joining Moody's in 2005. She also held the rank of captain in the U.S. Army, and during her military service, she received two meritorious service medals and became airborne qualified, one of the very few women to do so. Linda holds an MBA from the Stanford Graduate School of Business and a Bachelor of Science with high honors in Business and Economics from Lehigh University. We believe that Linda will be a terrific addition to our board, and we're very pleased that she is standing for election. We invite you to welcome Linda with a warm round of applause. I would like to take this opportunity to thank the continuing board members for their service. They are a special and immensely talented and dedicated group of men and women. They work hard and well for all of you, and it's an honor for me to serve with them as Chairman. I particularly want to note the contributions of Christine Edwards, Ron Farmer, Phil Orsino, and Don Wilson, who chaired our standing committees over the past year and did so to great effect. They are all terrific leaders of our board. I would now 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 the names have been called. I call on Barbara Muir, our very fine Corporate Secretary, to present the nominees for election. Barbara? Thank you, 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. Janice Babiak, Sophie Brochu, George Cope, William Downe, Christine Edwards, Martin Eichenbaum, Ronald Farmer, Linda Huber, Lorraine Mitchelmore, Éric La Flèche, Philip Orsino, Robert Prichard, Don Wilson III. Thank you, Barbara. Thank you, colleagues. I now call on Monica Patel to second the motion. Monica? What do you do for the Bank, Monica? Thank you, Chairman. My name is Monica Patel. I am a contract specialist in Talent and Learning. I second the motion. Thank you very much, Monica. Are there any questions or comments on the election of the Directors? I see none, so we will proceed to the vote. The Bank provides for individual voting for Directors. The paper ballot contains the names of the individuals nominated as 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 13 nominees as set out in the proxy circular. We will proceed with the voting. Please mark your paper ballot if you have one. We will just take a moment to give you time to do that. I should point out that the polls remain open for all items of business until we have voted on the last item of business to be voted on once the meeting has concluded. With that, we will move on to the next item of business, which is the appointment of auditors for the ensuing year. I call on Falene Templer to present this motion. Falene? Could you tell everybody what you do for the Bank? Thank you, Chairman. I am a Program Delivery Manager with Learning Operations. Thank you. I propose that the firm of KPMG LLP be appointed as auditors of the bank for the ensuing year. Thank you very much, Falene. I now call on David Boyartseen to second the motion. David, what do you do? Thank you, Chairman. My name is David Boyartseen, and I am a Senior Learning Consultant in HR division. I second the motion. Thank you very much for that. Are there any questions or comments on this resolution? I see none. I would ask those wishing to vote on the appointment of auditors to mark their ballots now. You are asked to either vote for the motion or to withhold your vote. I remind you that the board of directors and management recommend voting for the appointment of the shareholders' auditors. We will now go on to the next item of business, which is the consideration of a special resolution amending bylaw number eight regarding directors' aggregate compensation and removal of reference to the Non-Officer Director Stock Option Plan, which has been dormant for 14 years. I call on Greg Scott to present the motion. Greg, could you tell us all what you do for the bank, please? Thank you, Chairman. My name is Greg Scott. I lead the senior facilitation team here in Canada. These are the good folks who deliver all of our facilitated learning, in Toronto, Montreal, and across the country. Thank you very much. I move that the special resolution amending bylaw number eight regarding directors' aggregate compensation and removal of reference to Non-Officer Director Stock Option Plan, as set out on pages 6 and 7 of the management proxy circular, be approved. Thank you very much, Greg. Anne Marie Anderson, could you second the motion, please, but tell us what you do for the bank first. Sure. Chairman, my name is Anne Marie Anderson. I'm a learning consultant for leadership and enterprise development, and I second the motion. Thank you very much for what you do, and thank you for seconding the motion. Are there any questions or comments before we vote on this matter? I see none. I would ask those wishing to vote on amending bylaw number eight to mark their ballot. You're asked to vote either for or against the motion. I remind you that the board of directors and management recommend voting for the amendment of bylaw number eight. Please mark your ballots. We'll now continue to the next item on the agenda, which is consideration of a special resolution to enable the bank to implement changes to variable compensation for certain European Union staff to comply with regulatory requirements in Europe. I call on Dwayne Din to present the motion. Dwayne, I ask that you introduce yourself as well to our shareholders. Thank you, Chairman. My name's Dwayne Din, and I'm a senior manager in learning operations. I move that the special resolution to enable the bank to implement changes to variable compensation for certain European Union staff to comply with regulatory requirements, as set out on page seven of the management proxy circular, be approved. Thank you very much, Dwayne. Monica, do you mind coming back for a second innings to second the motion? Thank you, Chairman. My name's Monica Patel. I second the motion. Thank you very much, Monica. Are there any questions or comments on this resolution? I see none. I would ask those wishing to vote on this special resolution to mark their ballots now. You're asked to vote either for or against the motion, and I remind you the board of directors and management recommend voting for the special resolution. Please mark your ballots, and we'll continue with the next item of business, which is the last voting item on the agenda today. It's the consideration of an advisory resolution on the bank's approach to executive compensation, and I'd like to call on Greg Scott to come back to the microphone to present the motion. Greg? Thank you, Chairman. I move that the advisory resolution on the bank's approach to executive compensation, as set out on page 7 and 8 of the management proxy circular, be approved. Great job. Thank you, Greg. Anne Marie, could you come back, please, and second the motion? Thank you, Chairman. My name is Anne Marie Anderson, and I second the motion. Great. Thank you very much. Are there any questions or comments on this matter? Sir, at microphone number two. [Foreign language] My name is Felix Pinel. I am here on behalf of MÉDAC, the Mouvement pour l'Éducation et la Défense des Actionnaires. We are not as old as the bank. We are actually 20 years old, and for the past 20 years, we've submitted proposals about the bank compensation policy, especially in 2008. Since 2008, we tried to rebuild the trust between bank and investors. We proposed the implementation of best practices in terms of governance and in terms of compensation. In 2016, the largest seven banks paid CAD 216 million to their highest-ranking officers. After the NEI proposal, the bank agreed to carry out a study with the Meridian study, and a report was published. The report did not recommend the compensation ratio publication, but it did say that the compensation ratio could be a tool. A lot of banks admitted that they used this ratio, although they do not publish it, which is disappointing. There are numbers. Why are they not published? The Meridian report also concluded that the compensation of bankers had increased considerably over 40 years and had increased much more quickly and much faster than employees and inflation. This increase in executive compensation is of great concern. It affects motivation of employees and also of customers and everybody working in Canada. It affects staff engagement, and it also leads to resentment in the population, as we can see presently in Quebec with the Bombardier executive compensation. This year, the highest-ranking officer, the best-paid executive, is the CEO of RBC with CAD 12 million and also the Scotiabank CEO with CAD 11 million. At the other end of the spectrum, the CEO of the Laurentian Bank is paid about CAD 3 million. There is a correlation between the size of a bank and the compensation of their highest-ranking executive, which is something that is disappointing and that is not justified. I would like to conclude by saying that we have to publish the compensation ratio. It is published in the U.S., and I think that BMO should do the same thing. Let's not wait until the government decided to legislate. Thank you. Thank you, sir, for your intervention and your comments, which we'll take seriously. We listen to them, and we appreciate your coming to the meeting and sharing your views with us. Does anybody else have a comment or a question on this matter before we go to the ballot? I see no one else going to the microphone, so I would ask those wishing to vote on the advisory resolution on the bank's approach to executive compensation to mark their ballot. You are asked to either vote for or against the motion. I remind you that the board of directors and management recommend voting for the advisory resolution on the bank's approach to executive compensation. Please mark your ballot now. That brings us to the end of the voting on matters. Will the representatives of Computershare Trust Company of Canada please collect all the ballots. Those who have ballots to be collected, please raise your hand so Computershare can see you, or pass your ballots at the end of the row, and then they will pick them up at the end of the row. There's some in the middle here, Computershare, still to be picked up. Once they're all picked up, we'll declare the polls closed. They're still being gathered. Are there any more to be picked up? There's one more up here. Oh, and another one. Any more? I think that's cleared all the ballots. Thank you very much. I hereby declare that the polls are now closed with respect to all items of business. The scrutineers will now count the ballots while we continue with the meeting, and we'll have a report back in a few minutes when the ballots have been counted. We now turn to the shareholder proposals. This year, MÉDAC submitted two shareholder proposals. After discussions with the bank, MÉDAC agreed to withdraw those proposals, and we thank them for that. The proposals that were made and the bank's position with respect to each of them are set forth on pages 51 to 53 of the English management proxy circular and pages 57 to 59 of the French language management proxy circular. I understand that MÉDAC is represented here today by Monsieur Felix Pinel and that he is asked to speak to the proposals. Monsieur Pinel, thank you very much for joining us here today. I ask that you take the microphone again and address the meeting. Mr. Pinel. Thank you very much, Mr. Chairman. Felix Pinel, Mouvement d'éducation et de défense des actionnaires. I will simply read the shareholder proposals that we have withdrawn. First of all, about withdrawal from tax havens. It is proposed that the board of directors adopt a policy of withdrawal from tax havens or low-tax jurisdictions. As was explained, we agreed to withdraw this proposal. I would like to say that although tax avoidance is not illegal, it's not immoral, and it leads to CAD 6 billion in an estimated annual loss of tax revenues for Canada. We hope that what is now considered immoral could become illegal one day. Thank you. Our second proposal is about financial technologies. It is proposed that the board of directors create a new technology committee in order to reassure shareholders as to its ability to address these new challenges, including those created by fintech companies. We agreed to withdraw this proposal. We have seen in the CEO's speech presentation that efforts have been made in this regard. We hope that efforts continue to be made because we can see that some industries, like for example, the taxi industry, is greatly threatened by new technologies, for example, with Uber. We hope that the same will not happen with large Canadian bank that could be threatened by transnational technologies. We hope you can still work on improving technologies in the financial industry. Thank you. Mr. Pinel for both of those interventions. We appreciate the dialogue we have with you and your colleagues at MÉDAC. It won't surprise you, we agree, because you withdrew in light of our statements. We agree particularly on your second matter about the importance of the bank being a leader in this field, so thank you very much. The scrutineers, they're quick, have completed their preliminary report on the results of the voting. I now call on Steve Gilbert to read those results. The scrutineers' report in final form will be available shortly after the meeting. Steve? Steve's just giving the translators a copy of the same. Good morning, Mr. Chairman. Sonia Chiavaglia and I, as scrutineers for the present meeting, hereby confirm the following preliminary results on the vote by ballot. On the election of directors, no director standing for election today received less than 95.7% of the votes cast for director. For the appointment of shareholders' auditors, 97.3% voted in favor and 2.7% were withheld. On the vote for the amendment to the bank's bylaw regarding directors' aggregate compensation and removal of reference to Non-Officer Director Stock Option Plan, 97.8% of the votes were in favor and 2.2% were against. On the special resolution to enable the bank to implement changes to variable compensation for certain European Union staff, 97.2% of the votes were in favor and 2.8% of the votes were against. On the advisory resolution on the bank's approach to executive compensation, 92.8% were in favor and 7.2% voted against. This concludes the results of the vote by ballot, Mr. Chairman. Thank you very much, Steve, for your work. I therefore declare that the 13 nominees listed in the circular are elected as directors. Thank you for your confidence in us. KPMG LLP is duly appointed as auditors for the ensuing year. The special resolution amending bylaw number eight has been approved. The special resolution enabling the bank to implement changes to variable compensation for certain European Union staff has been approved, and the advisory resolution on the bank's approach to executive compensation has also been approved. This takes us to the final item of business, which is the question and answer portion of the meeting. Questions should be by shareholders or proxy holders only and should be of interest to all shareholders and not of a personal nature. I'd ask that in order for everyone to hear, please go to the closest microphone. Please stand by for me to recognize you to speak if you wish to speak. Once I do, please identify yourself by name and state whether you are a shareholder or a proxy holder. Questions from those shareholders participating online are welcome as well, and we've had a flurry of questions online. Let me just do the first one online, and then I'll come to you, sir. The first one comes from Harry Ruthnam. What he asks is as follows: What has BMO done to ensure the independence of its auditors? Has the bank set regulations so that the auditors, similar to employees, do not have the right to short the bank's stock? I can assure you, KPMG and we have in place a regulation that not only says that KPMG can't short our stock, they can't buy or sell our stock. They're prohibited from trading in BMO stock by virtue of being our auditors. With that, sir, I'll go to you on the floor at microphone number two, and then I've got some more questions from online. Felix Pinel for MÉDAC. One last question. A CBC report in March, on the 15th of March, told us about the fact that some bank employees were under pressure. We were disappointed to read that a financial planner that had quit the bank said that her boss had said that they should be giving misleading information when, for example, clients wanted to place money in a GIC. She was also said that she should offer a high rate of interest for a mortgage to customers when other rates that were lower were available. So what can you do so that this can be avoided and that we can avoid seeing such things in similar reports? Thank you very much. Before I call on Bill Downe to answer that question, I'm going to share also another question from Mr. Ruthnam that's in the same general area. Let me just get the right one. Mr. Runthem wrote, "As a shareholder, I have been very pleased with BMO's performance. What has BMO done to ensure that issues facing other banks, such as outsourcing and pressure sales, do not impact the bank's operations?" Bill, you've already addressed that in your principal remarks, but I thought you might combine that question online with Mr. Pinel's question with any further comments you wish to make. Okay. Well, thank you, Chairman, and Mr. Pinel, thank you for your question. I think the chairman summed it up. I specifically spoke about the framework that we have in place to safeguard against activities or behaviors that are inconsistent with the way the bank chooses to do business. I might add, and thank you for raising it, that my disappointment and the disappointment of all employees in the company were similar to yours at hearing a report. The way that we deal with any instance like this is when reported, we talk to the employee. If it's an ex-employee, we'll attempt to talk to the ex-employee. It gets discussed among management teams. It's reviewed. If there has been an instance of inappropriate behavior, there are guidelines around either remediation in the form of education, or if the behavior is deemed to be sufficiently disappointing, then the individual may be separated from the company. I feel the same way as you do, and I think I speak on behalf of all the employees of the company. Thank you. Thank you. Thank you very much, Bill. Sir, are you coming to the microphone? Microphone number 2, could you introduce yourself, please? Thank you, Mr. Chairman. My name is Jacques Derelet. I am a shareholder of the bank. First, I would like to congratulate all employees of Bank of Montreal worldwide for the excellent results of 2016, as well as the spectacular results of an increase of 39% for the first quarter of 2017, and in particular, P&C Canada, with an increase of 41%. I have no doubt that you will ensure that everyone does the utmost to continue achieving those record results. Of particular interest for the months to come will be your ability to bring US P&C results at par with Canadian P&C. Given the recently elected U.S. administration's intention to increase substantially the domestic manufacturing, the position of our subsidiary, Harris Bank in the Midwest, should greatly benefit from such policy. In late 2015, the bank initiated a change in the legal status of the pension plan society. Mrs. Edwards confirmed that the new structure was effective from February 2016. Shortly after, we received a communication indicating that neither an ad hoc grant nor a permanent increase will be provided to pensioners for 2016. This was followed with important changes in the U.S. plan, resulting in a $58 million financial gain for the bank. In his message to the shareholders, our CEO mentioned that pension benefit are also very much in his mind. We fear that this represent permanent directive for future years given by the bank to the new trustee of the new entity. These facts raise serious concerns to all pensioners. As of the end of 2015, last figure available for the Canadian plan, there were 15,000 plus beneficiaries of the plan, majority being women, averaging CAD 13,500 a year in annual benefits. Such figure is well below the poverty level in Canada. Should a 5% increase have been paid to pensioners, this would have represented only CAD 11.8 million, either 0.2% of the net results of the bank or 47% of the additional benefits granted to the five highest-paid executive over and above their base salaries. May I add that such expense would have been offset with returns on the fund's investment. Since 2017 marked the 200th anniversary of the bank, if results mentioned earlier were achieved, they were certainly the results of great efforts of all members of personnel since 1817 who built that franchise to its present level. Consequently, I urge all Directors and executive to recognize these past contribution and substantially reward former employees in a proper manner, and as the CEO just said earlier, to be a deep principle. Thank you for allowing me to present to you those important concerns of all pensioners. Thank you. Thank you very much, sir. Thank you for your service to the bank. Thank you for being a shareholder today, and thank you for the courtesy of sending me a copy of your remarks in advance, which I appreciate very much. I should clarify that responsibility for adjusting pension benefits lies with the Board of Directors on the advice of the Human Resources Committee each year, which acts on the advice of management. We consider the matter carefully each year, and will continue to do so, and we take account of the advice you've given us in your remarks. Richard Rudderham, who leads Human Resources for the bank, who's sitting in the second row, would be very pleased to speak with you after the meeting, if you would like to speak further with him. We appreciate your remarks. Thank you very much. We, of course, are deeply grateful to the 15,000 pensioners at the bank for all they did to build the bank of today. So thank you very much for your intervention. There's a very active and engaged shareholder, Brandon Chung, who's online. He's now sent me six questions online. I'm going to combine four of them into a single question, and I'm going to ask Tom Flynn to respond to it, to those four, and then I'm going to promise Mr. Chung, who's clearly watching, that we will send you answers to the remaining questions after the meeting in the interest of time. I'm going to paraphrase Mr. Chung's four questions as, one, are you ready for a buyback? Are you ready for a stock split? You got any M&A plans? And where are you going next in the U.S.A.? Tom? Well, thank you, Mr. Chairman, for that question. A series of questions, which I'm happy to handle. I will take them in order. Question number one on stock buybacks. We do have a history of buying back stock when our capital ratios are particularly strong and the capital ratio would be otherwise inefficient. We bought back stock before our last two acquisitions, buying back about 20 million shares between those two acquisitions. As you may have seen, we're now in the process of renewing our normal course issuer bid program, so that if we think it's appropriate, we're able to buy back stock. With that said, we have no specific plans at the moment to buy back our stock. As we think about this, we're guided by wanting to maintain a strong capital position, wanting to have capital to complete acquisitions that we believe make sense. When the capital position is otherwise overly strong relative to those two things, we will use the buyback as we have in the past. Second question with respect to share splits. I would say we are pleased to have this question, which is in part a reflection of the good performance that we've had in the share price. We're not considering a split at the current time. In arriving at that view, we consider a few things. Firstly, the price of our shares relative to our peers, the Canadian banks, and our share price is trading in a reasonable range relative to that peer set at the current time. We also believe it's easier to trade smaller share positions given the technology that's available today, which makes share splits a little less of a topical item. We will continue to monitor the situation, but at this point, we think it's premature to consider a split. Third question related to acquisitions. A few general points. Firstly, we do believe growing through acquisitions is a reasonable strategy to create shareholder value. We have done acquisitions over time, and we feel good about the ones that we've done. They've strengthened our business, advanced our strategies, and created value. Over time, our focus for acquisitions has principally been on U.S. banking and wealth management. We also look for opportunities in Canada, although there are fewer opportunities to complete acquisitions in Canada, given the consolidated nature of the market. I would note that we closed in Q1 of 2016 the acquisition of Transportation Finance in the U.S., which is an acquisition that builds on our commercial strength in the U.S., and we feel good about how that acquisition performed during the year for us. As we look forward, our areas of interest will be similar to the areas of interest that we've had in the past from a business perspective and will balance our desire to execute our strategy with financial discipline, which we do think we've done through time. With respect to question number four on the U.S., we do feel good about the opportunities to grow our U.S. business, both organically and through acquisitions. We're happy to have the position in the U.S., which advances our strategy, gives us a more diversified business, and we think gives us a better rate of growth. I would expect us to grow that business going forward, really in the way that we have through time across all of our business groups, banking, wealth management, and capital markets. Thank you very much, Tom, for that succinct answer to good questions from Mr. Cheung. I do not see anybody else at a microphone, so I will give you the last question from online. It comes from S. Enor, and the question is, "Is there any intention to bring cultural diversity to the board of directors in the near term to supplement the diversity of experience, geography, and some diversity of gender?" This question has been assigned to me, and let me answer as follows. First, the board is, of course, seized with the issue of diversity, and we are committed to it. We have led on gender diversity, and I note that with the election today, 42% of our independent directors are female, which I think is a very positive development for the bank. When we have opportunities to add directors, we do a search supported by independent search consultants. We work with the skills matrix that tries to articulate the skills we need and the gaps we need to fill with appointments to the board. As we think about it, we think about diversity in all dimensions. I might note that we are diverse in various respects. We are diverse between Anglophones and Francophones. We are diverse between Americans and Canadians. We are diverse between those of us who were born in our home countries and those of us who are immigrants to Canada. So there is already a diversity of perspectives, but we would like to continue to grow that diversity over time as the board evolves. We believe a diverse conversation is a richer and better conversation at the board table and makes us a better bank. I see no other individual standing with questions. With that, I would like to thank everyone, all of you, who were involved in supporting today's meeting and all of those who came today. I particularly want to thank our translators because I know I speak quickly, and they have to try to keep up, and it is not easy for them. I do ad-lib from time to time, which makes it even trickier and keeps them on their toes. Most importantly, I would like to thank all of our shareholders and employees who took the time to join us today, either here or in person, or like Mr. Cheung, online. This concludes the meeting and its formalities, and I declare the meeting terminated. Thank you. Please come back next year. Thank you very much.