AGM 2018

Apr 5, 2018

Slides

Good morning, fellow shareholders. Welcome to the 2018 Annual Meeting of the Bank of Montreal. Thank you very much for coming. We appreciate your interest and your presence. My name is Robert Prichard. I have the honor of serving as Chairman of your 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-after conference venue for groups from outside the bank, and if you would like to use it, give us a call, we will work something out. I am joined on stage this morning by, on my immediate right, Darryl White, our Chief Executive Officer. Beside him, Tom Flynn, our Chief Financial Officer. Beside him, Simon Fish, our General Counsel. Beside Simon, we have our wonderful Corporate Secretary, Barbara Muir. Also joining me here today, seated in the front two rows in the middle section, 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. Members of management will be called on if there are any hard questions in the Q&A, so they should be alert and on their toes. 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 business. I wish to appoint Steve Gilbert and Sonia Chiabagia, representatives of Computershare Trust Company of Canada, to act as our scrutineers for the meeting, and Barbara Muir to act as secretary. They have all done it before. They are all very good, and I appreciate their good work. The shareholders' auditors for fiscal 2017, KPMG LLP, are present here today, represented by their leader, Elio Luongo, CEO of KPMG, Jim Newton, the lead partner, and his colleagues, Naveen Kalia and Vivian Leung. I would be grateful if they would stand up, and they can be recognized. Our team from KPMG. Thank you very much for being here. We are delighted to have you with us. You do really good work for 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 of you that 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 AGM webcast launch page. As the proceedings are being webcast, we ask there be no photographing or videotaping during the meeting. We would ask that any questions or comments from the floor or submitted online be related to the matters before the meeting. When submitting questions, individuals provide their name and indicate whether they are a shareholder or a proxyholder. We will do our best to respond to all of your questions during the meeting, but any questions not answered during the meeting will be responded to following the meeting. Facilities for simultaneous English and French interpretation have been provided, and you will find English on channel one and French on channel two, and you are welcome to ask the meeting in either language. At the appropriate time, any shareholder or proxy holder wishing to speak should go to the closest standing microphone. There are two. Number one here and number two across the way here. I will recognize you at the microphone and invite you to speak. 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 each matter before the meeting. Please do your best to keep any comments or questions to two or three minutes. Finally, regarding the physical layout of this room, in the event of an unforeseen emergency, I would like to point out that there are exits at the main doors at the back where you came in and on either side of the stage behind me. In the event of an emergency, please proceed through either the front or the back and out to the parking lot outside. The agenda today will consist of an address by our leader, CEO Darryl White, followed by three resolutions proposed by management. First, to elect the board of directors for next year. Second, to appoint the shareholders' auditors for fiscal 2018. And third, to consider an advisory resolution on the bank's approach to executive compensation. There are no shareholder proposals to be voted on this year, as all that were submitted were withdrawn. Four of them came from MEDAC, which is represented here today, and one from Ms. Linda Xue, who is also here. The proposals will be addressed following the formal business of the meeting. Following that, we will have time for a question-and-answer period. On behalf of those speaking today, I must 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 2017 annual report as updated in our first quarter 2018 report to shareholders. Actual results could differ materially from forecast projections or conclusions in any forward-looking statements made today. With those preliminaries behind us, I will begin the formal part of our agenda. I do so noting that this meeting marks the beginning of a new era in the bank's long history as we start today our third century in business. When the fiscal year ended in October, we began our 201st year in business, and we did so with a new Chief Executive Officer at the helm. It is my pleasure to welcome Darryl White to his first annual meeting of shareholders as Chief Executive Officer of the bank, and I will be calling on him shortly to address the meeting. Darryl starts with a strong foundation as we delivered record financial results in 2017, with adjusted net income for fiscal 2017 rising to CAD 5.5 billion, a year-over-year increase of 10%, as earnings per share grew by 9% to CAD 8.16. These results reflected good revenue growth of 6%, matched with careful control of expenses, which increased by only 4%. We achieved this operating leverage even as we are investing significantly in our future. Darryl White is an excellent leader for the bank. He has been with the bank since 1994, and despite only being 46 years old, he has already served on the bank's senior leadership team for 12 years. He has delivered top-tier performance in every job he has held at the bank, and your board has great confidence in him to lead the bank. We know he is the right person to lead our bank. Darryl embodies BMO's values and takes every opportunity he can to reinforce them. He embraces our vision to be the bank that defines great customer experience, and he does so with passion, with energy, and with competitive zeal. Darryl leads a terrific team. They are united by their commitment to the bank and to each other, and we like our chances a lot with these fine bankers in charge. Darryl, congratulations on your appointment as chief executive officer, and I invite you now to address our shareholders. Darryl White. Well, thank you, Chairman, and good morning. [Foreign language] To everyone here at the BMO Institute for Learning and to all those joining us live via webcast, welcome. Bienvenue. It's a pleasure, and indeed a privilege to speak to the annual meeting of shareholders for the first time as CEO. In my 24 years at the bank, I've been part of many shareholder events, both as a BMO employee and, of course, as a shareholder myself. I have to say, from speaking with people since arriving here this morning, there's a clear sense of anticipation this year. It's the same feeling I've encountered over the past few months in meetings and in conversations all across BMO, and also in conversations with our customers, which I hope many of you are. There's an enthusiasm and a confidence, and at the same time, an eagerness, even impatience, to push ahead with the initiatives that we've been working on. This morning, I'd like to share a few thoughts on how we're moving forward. But first, let me take a moment to express my appreciation to our Chairman, Rob Prichard, and to the bank's Board of Directors. The support and counsel you provide the senior management team are invaluable. Let me add, the entire BMO team that I am fortunate to work with every day rivals, in my view, the very best in the industry. 2017 was a year of transition, but more importantly, it was a year of continuing transformation. I doubt this organization has ever been more clear about what we're achieving together. A few years ago, we spent a lot of time, like most consumer-facing companies, talking about how the world is changing. Now our focus is on how we are changing. BMO is on the move, and this morning I'd like to share my thoughts on three main points: our record, where the bank is today, and the advantages that set us apart; how we're building on those advantages, the top areas of focus on our agenda right now; and how we're positioning BMO for accelerated growth in a modern marketplace. As the Chairman just outlined, BMO maintained strong momentum through 2017, once again achieving record results. We achieved those numbers while hitting our target operating leverage of 2%, and at the same time increased our technology spend by 13%. We once again raised the bank's dividend 6% in the past year, and our strong capital position with the year-end common equity Tier 1 ratio of 11.4% gives us flexibility in how we choose to continue to grow. In the first quarter of the current fiscal year, the bank delivered adjusted net income of CAD 1.4 billion and earnings per share of CAD 2.12. Underlying performance remains on track as our operating businesses continue to deliver robust earnings growth and build long-term value for shareholders. Many factors contribute to this strength. A few are worth highlighting. Diversification of our business mix, of our customer segments that we serve, and in our geographical footprint. We continue to see especially good momentum in our U.S. operating businesses. They now generate over 25% of total bank profits, and they'll continue to grow faster than the rest of the bank. At the same time, BMO is a standard-setter when it comes to recruiting talent and developing future leaders. We've always been clear on what ultimately delivers value to our customers and our shareholders. It's people. Underpinning every management decision and every customer interaction is BMO's unique culture. Our workplaces are open and collaborative. Our people respect and support one another, and they rightly take pride when we're recognized. This bank maintains the highest ethical standards. We're one of only two companies in Canada and one of only four banks worldwide to be named among the most ethical companies by the Ethisphere Institute. Our commitment to acting responsibly is articulated through the bank's sustainability principles, which focus on social change, financial resilience, community building, and environmental impact. These principles matter to us, and they're reflected in how we go to market every day. At a time when trust in some institutions is being tested, our stakeholders know what they can expect from us. BMO's culture and defining values are a fundamental source of strength, and they sharpen our focus as we continue to transform the bank. Turning to how we build on these advantages, I want to underline that the bank's strategy remains consistent. We're confident that our five strategic priorities are the right ones. Effectively implemented, they're foundational to the bank's continued success. With that framework, let me briefly recap the areas we're focusing our efforts on right now. Growth in the U.S., which continues to be a key differentiator. Our U.S. businesses contributed $1.3 billion to the bottom line in 2017, and as I said, are growing faster than the rest of the bank. Our business mix is well-matched to the constructive economic environment in the U.S. In personal and commercial banking, we've seen steady growth as we take advantage of rising consumer confidence and the effects of lower taxes. Our strong U.S. commercial banking business continues to expand its footprint, and at the same time, we're delivering higher returns from the investment we've made in our U.S. capital markets business. BMO's total U.S. segment has delivered compound annual income growth of 12% over the past two years, and there's much more opportunity to grow. With each improvement in our U.S. business, we become that much more relevant to our Canadian customers. BMO has the expertise and the resources to help customers in all segments simplify the complexities of banking across the Canada-U.S. border. We have a distinct competitive advantage. We've been in the United States since 1818. We helped finance trade and infrastructure that fueled continental growth. Having grown our own business on both sides of the border, we're uniquely positioned to help our customers do the same, to help them navigate whatever changes lie ahead. Right now, there's uncertainty over how NAFTA may evolve. But we believe all parties see the benefit that flow from the freer movement of goods, services, people, and investment. Free trade has created growth opportunities for our Canadian customers and our U.S. customers. We're confident that the value of this balanced and successful trading relationship will be reflected in a positive conclusion to the negotiations. All of BMO's businesses, personal and commercial banking, capital markets, wealth and asset management, are led from a North American perspective. Our integrated understanding of these two markets is unmatched. Customers tell us what they're trying to achieve, and at BMO, it all comes together quickly and simply. For the bank, it also happens cost-effectively. Over the past two years, our U.S. businesses have improved their combined expense-to-revenue ratio by more than 6%, reflecting the leverage in our platform investments, which leads to the next area I will review, efficiency. This continues to be a top priority in every area of the bank. Shareholders who follow us closely recognize that we have made headway. We achieved our objective of 2% adjusted net operating leverage, a key measure of efficiency, in 2016 and in 2017. In the current year, we expect to deliver our 2% target once again. It is clear that we are making progress, but we also know that it is not enough. I would like our expense to revenue ratio to improve even faster, with an emphasis on expenses and revenues. This will not be a revelation to anyone who sees the value our bank has built to deliver. Lightening our structure will help. Since November, we have been taking a closer look at how BMO is organized and how work gets done, making sure that all roles are in line with the market opportunity, and this effort continues. Of course, any adjustments we may consider are in the context of a bank that has averaged more than 7,000 new hires in each of the last two years while keeping overall headcount flat. As we continue moving with pace to improve efficiency, we are also freeing up resources and dollars that we can reinvest in new capabilities to the benefit of BMO's customers. Last month, we unveiled what we see as the workplace of the future, the BMO Campus in the heart of Toronto. This will be a 350,000 square foot workspace designed from day one to help employees be more innovative, agile, productive, a place where flexible, multidisciplinary teams work together to create smarter, simpler, and more personalized experiences for our customers. Across the bank, we are focusing all of our efforts on delivering an industry-leading customer experience. We do it through two distinct but interrelated loyalty models. First, we are already industry leading in our relationship managed businesses where customers value advice and guidance. Second, we are strengthening our capabilities in high volume, lower touch transactions where our customers value convenience and speed and simplicity. We are looking at the entire customer journey from first interaction, opening a bank account or applying for a credit card, all the way to long-term loyalty. At every step, what allows us to create smarter, simpler, and more personalized experiences is technology. Over the past several years, we have invested significantly in a central architecture that is strong, flexible, and purpose-built for the future. We continue to spend over $2 billion a year as our focus begins to shift from building the underlying platform to expanding what it enables, technology deployment. We are automating more processes to put the customer in control to make transactions faster, easier, and more integrated for them, and more cost-efficient for us. Here is what we also know. New features on apps do not amount to much if they are not actually adopted. Real competitive advantage, of course, comes through engaging and growing with your customers. When we explore new applications like voice services, which we have launched for Amazon Alexa, what gives us confidence is that more than half of our Canadian banking customers already engage with BMO digitally. Our banking teams are well-versed and ready to help. Our branches support how customers like to bank, and our contact centers are integrated into the master plan, and our whole organization is designed for digital engagement. The app comes with human help and advice. We focused on this early, and now we're seeing the payoff in both originations and in product penetration. Today, over 25% of our retail products and services are acquired through digital channels, and that puts BMO in the top tier among Canadian banks. Because now we're generating new primary customers digitally, and once you gain a primary customer, you can really start to build a relationship. Of course, first you have to get the technology right, and BMO has with a solid platform and with effective scale. But having customers who are fully engaged with our newer channels and tools, that's what really counts. As we use analytics to become even better at thinking like our customers, we respect and protect their privacy, and we work to secure their information against cyber threats. These are top priorities, and they speak once again to trust as the bedrock of customer loyalty, which is the key to growing our business. Everything I talked about this morning reflects the broader transformation we've embarked on as we position BMO for accelerated growth. What do I see when I look ahead? A bank that's leaner, faster, and more unified than ever. We're activating BMO's unique culture, and we're thinking more like our customers because they lead our bank, and we couldn't imagine working for anybody else. As their world changes, we're quickly changing alongside of them and even one step ahead. Through any changes that may lie ahead, we're committed to achieving our business goals responsibly and sustainably. We're confident in our outlook and in the targets that we've set for ourselves, and we believe in this bank's inherent strengths, and we know that we're built for more. BMO has a plan. We have momentum, and as we said in our annual report, we aren't waiting for the future to arrive, we're creating it. Thank you. Merci. That was terrific, Darryl. Thank you. I told you he was good. Really good. We'll now turn to some additional procedural matters. I've been informed, excuse me, by our transfer agent that over 325 million votes have been received by proxy in respect of the matters of business to come before this meeting, representing approximately 50.43% of the total outstanding shares eligible to be voted, the highest turnout of shareholders since 2009. Given that our employees represent an important part of our shareholder base and to facilitate these proceedings, we have asked certain employee shareholders or proxy holders to move and second certain motions. I'll call on them at the appropriate times. The votes on the three items of business before this meeting requiring a vote by shareholders will be conducted by paper ballot. Any other motions will be voted 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 three items prescribed in the management proxy circular and that I've referred to previously. If you're a registered shareholder and 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 didn't get a paper ballot at registration, please raise your hand and a representative from Computershare will come to you. There's a gentleman here in the middle. Is there any other proxy holder, shareholder who wishes a paper ballot? I see no more. Thank you very much, Computershare. Now to our first item of business, the submission of the financial statements. In March 2018, copies of our annual report for 2017 were forwarded to shareholders, together with the management proxy circular and notice of this meeting. The financial statements for the October 31, 2017 year-end were included on pages 139 to 201 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 I will continue and go to the election of directors for the ensuing year. As determined by the board, the number of directors to be elected today is 14, with 13 being current directors and David Harquail, who is nominated for the election as a director of BMO for the first time this year, being the 14th. You will find biographical information about each of the nominated directors in the management proxy circular. Let me take a moment to introduce David Harquail to you. David is the Chief Executive Officer of Franco-Nevada Corporation, a role he has held since the company went public in 2007. The company has since grown into the world's leading gold-focused royalty and streaming company, active in both the mining and oil and gas industries, both of which, of course, are sectors of great interest to our bank and sectors where we are leaders in providing financial services. In addition to his remarkable leadership of the growth of Franco-Nevada, David has more than 35 years of experience on public and nonprofit boards. He is currently active on a campaign that is near and dear to all of us at BMO as a member of the Campaign Cabinet for the United Way of Toronto and York Region. David is a professional engineer, he's a philanthropist, he's an outstanding member of our community, and perhaps most importantly, he is a graduate, a distinguished graduate of the University of Toronto. Finally, what is not disclosed in the management proxy circular is that David started his outstanding career many years ago as a BMO banker. We believe David will be a terrific addition to our board, and we're very pleased that he's standing for election. We invite you to welcome David with a warm round of applause. Welcome home, David. I'd also like to take this opportunity to thank the continuing board members for their service. They're all sitting in the front row. They are a special and immensely talented and dedicated group of directors. They work hard, and they work well for all of you, and it's an honor for me to serve with them as Chairman. I especially want to note the contributions of Christine Edwards, Ron Farmer, Philip Orsino, and Don Wilson III, who chaired our standing committees over the past year and did so with great effect. They are terrific leaders of our board, and they make outstanding contributions to the governance of your bank. In addition, I want to particularly highlight and thank Philip Orsino, who's stepping down today as Chair of the Audit and Conduct Review Committee after leading the committee for the past 12 years. The Audit Committee and the board have benefited greatly from his steady leadership, sound advice, and wise counsel. Thank you, Philip, for your leadership, and thank you for your continuing service as Director. Phil Orsino, please stand up, Phil, and be recognized. 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 of you in attendance to hold your applause until all of the names have been called. Unfortunately, Sophie Brochu, who's standing for re-election as a Director of the bank, is unable to be here today due to an entirely temporary medical issue. I call on Barbara Muir, our Corporate Secretary, to present the nominees for election as Directors. 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, Christine Edwards, Martin S. Eichenbaum, Ronald Farmer, David Harquail, Linda Huber, Eric R. La Flèche, Lorraine Mitchelmore, Philip Orsino, Robert Prichard, Darryl White, Don Wilson III. Thank you very much. I'd now like to call on Alexa Begie to second this motion. Alexa, thank you for your work for the bank. You're a second generation in your family, with Chris Begie being one of the leaders of the bank. Alexa, take it away. Thank you, Mr. Chairman. My name is Alexa Begie, and I second the motion. Thank you very much. Are there any questions or comments with respect to the election of directors? I see none. We will proceed to the vote on the election of directors. 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 both recommend voting for all the nominees set out in the management proxy circular, and we will now proceed with voting. Please mark your paper ballot if you have one. The polls will remain open for all the items of business until the voting on the last item to be voted on at the meeting has concluded. I will just give you a moment to mark your ballot, and we will proceed to the next item of business. The next item of business is the appointment of auditors for the ensuing year, and I call on Anne Marie Anderson to present this motion. Anne Marie. Anne Marie, what do you do at the bank? I am a senior learning consultant for our strategic initiatives and leadership team at the IFL. Terrific. Okay. Thank you, Mr. Chairman. I propose that the firm of KPMG LLP be appointed as auditors of the bank for the ensuing year. Thank you very much, and I call on Greg Scott to second the motion. Greg, what do you do for the bank? Thanks, Mr. Chairman. I'm with PNC Learning Team. I lead the group of amazing facilitators that deliver our courses to branch personnel. Terrific. Thank you, Greg. Thank you, Mr. Chairman. I second the motion. Thank you. Are there any questions or comments on this motion to appoint the auditors? I see none. I would ask those of you wishing to vote on the appointment of the auditors to mark your ballots. 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 shareholders' auditors. Please mark your ballots. Thank you. We will now go on to the third item of business, and I say the poll stays open, so don't feel rushed in filling out your ballot. The next and last voting item on the agenda is the consideration of an advisory resolution on the bank's approach to executive compensation, and I call on Faelin Templer to present the motion. Faelin, what do you do for the bank? Thank you, Mr. Chairman. I work here at The Institute for Learning. I am a program delivery manager and lead a team of program delivery specialists who support learning in Canada and the United States. Fabulous. Thank you. Your motion? I move that the advisory resolution on the bank's approach to executive compensation, as set out on page six of the management proxy circular, be approved. Thank you very much. I call on Janet Young Garner to second the motion. Janet, what do you do for the bank? Thank you, Mr. Chairman. I am the So sorry, just took on a new role. I am the advisor for enterprise learning, and I'm part of the HR team, and the smaller group is Talent, Learning, and Inclusion. Great. Thank you. I second the motion. Terrific. Thank you very much for that. Are there any questions or comments on this motion? Sir, could you introduce yourself, please? Yes. Mr. President, my name is Daniel Thouin, and I represent the Mouvement d'éducation et de défense des actionnaires. I would have a few comments to make prior to shareholders voting on the bank's pay policy. As we have done over the past 20 years, MEDAC, which represents over 600 individual members, both shareholders and associations, including associations of retirees and some unions. All along, we have opposed the compensation policies that have been implemented at the end of the 1970s in order to compensate senior management in public companies. Banks' compensation policies have often been justified on the basis that they are comparable to those of other institutions. We feel that those comparisons are often ill-founded, since the organizations that are being compared are not on the same scale. In particular, comparisons between financial institutions like your bank and others that have far smaller assets are inappropriate. Therefore, the high salaries of leaders of financial institutions comparing themselves to leaders of other financial institutions, since no one wants to have a salary below the median, in the end, all the salaries of all leaders of all financial institutions increase disproportionately from one year to the next without any limit. Later, we will be commenting on Resolution 4 that MEDAC proposed this year in order to highlight the gap in salary between the senior management of the company and the median salary of the bank's employees. I will address this further in a moment. For the time being, I want to stress that ever since we've been compiling salary gaps since 2013, amongst bankers, the gap has always been over 60 to 65 times the average salary of employees, except at Laurentian Bank, where the ratio is about 30 to 35. For the time being, there is no limit to the increase in senior management's compensation, and we oppose this resolution. Thank you very much, Mr. Thouin. We appreciate your participation and your comments. Are there any other comments on this item before we take the ballot? I see none. I ask those of you wishing to vote on the advisory resolution on the bank's approach to executive compensation to mark your ballot. You are asked to vote either 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. We will now proceed with the voting. Please mark your ballot, and when you have, please hold your ballot up, and my colleagues from Computershare will pick up your ballots, and we will start counting them while we continue with the rest of the meeting. Anybody else got a ballot that has not been picked up yet? Yep, there are still some more to come. Are there any more ballots to come? Yep, there is one back here in the very back row. Any more? I see no more. Thank you very much. Computershare, go add them up, please. I hereby declare that the polls are now closed with respect to all items of business. The scrutineers will count the ballots and report back to the meeting shortly. We will now turn to the shareholder proposals submitted but withdrawn this year. Ms. Linda Xue of Outremont, Quebec, submitted a proposal requesting the bank cease all outsourcing of jobs. After discussion with management on the bank's principled approach to the use of third-party suppliers, Ms. Xue agreed to withdraw the proposal, and management agreed to outline its approach at this meeting, which I will do now. Over the past 5 years, the effect of outsourcing on the bank's employees' continued employment has been minimal. When a business decision is made to work with an external supplier, it is a decision made carefully, thoughtfully, and only after considering a myriad of factors, including how the supplier could increase the bank's speed, agility, quality, and productivity, all the while meeting the bank's commitments to its employees and customers, with employees often moving to the supplier. In the event an employee's job is displaced as a result of these considerations, that employee will be treated with fairness and respect and will be given assistance in finding alternative work, either within the bank or beyond. Incidentally, often they are retrained right here in this building, the Institute for Learning, if that is what is required to qualify them for a new opportunity within BMO. I understand Ms. Xue will address her withdrawn proposal during the question and answer period in just a few minutes. Ms. Xue, thank you for being here. MEDAC submitted four proposals, which they also agreed to withdraw following the discussions with management. The proposals and the bank's position with respect to each of them are set forth on pages 52 to 57 of the English management proxy circular and pages 56 to 61 of the French management proxy circular. I understand MEDAC is represented here today by Mr. Daniel Thouin, who you just heard from, who is its President of MEDAC. Mr. Thouin, thank you again for joining us today. I invite you to add any further comments you wish about your proposals, which were not already included in the proxy circular. I invite you to take the microphone and the floor. Mr. Thouin, thank you again for coming. Thank you, Mr. Chairman. This year, we proceeded as follows with Canadian financial institutions. We submitted four identical proposals, and we selected the best reply from a financial institution. In the first proposal that focuses on democratization of access to the bank, this was a request made last year by other shareholders, and we supported this proposal by using a concept that is already in use in Quebec with the Labor Solidarity Fund, a fund that has assets of several billion CAD. That fund invites shareholder candidates not just from management and finance, but from a far broader cross-section of society. The characteristics of candidates are competence, yes, but with more openness of access to proxies. The law currently specifies that a shareholder holding more than 5% of the bank's shares may make a proposal, a nomination, but small shareholders cannot do so. Following discussions, the bank showed us clearly that it is already offering shareholders a proxy access option that could be accepted by the Chair, and during our discussions, we agreed to withdraw this proposal. But the openness that we seek is an openness to democracy and to diversity for the boards of financial institutions. The second proposal, with your leave, Mr. Chairman. The second proposal was also submitted to all Canadian banks, and this proposal focuses on commitment to decarbonization. It is proposed that the bank annually publish a brief report allowing shareholders to assess its exposure to climate risk, as well as its contribution to a lower carbon economy. Such disclosure should be based on the recommendations of the Task Force on Climate-related Financial Disclosure, or TCFD. Society is facing major environmental challenges. Financial institutions are a leading indicator of these changes and are also in a position to address these situations. It is not the first time that we are facing these changes. Many other shareholders are also addressing that. So we withdrew our proposal because we realized that the bank had already taken the initiative of participating actively in a Carbon Disclosure Project, and the bank has also undertaken to follow the recommendations of the TCFD. So we were pleased to withdraw our proposal given that the bank's response was very positive. The third proposal focuses on certification of sound business practices for the sale of financial products and services. It is proposed that the board require senior executives to sign a declaration of compliance with the principles of loyalty, integrity, and honesty in dealing with customers, with disciplinary measures in the case of misrepresentation. This proposal does not flow from some vague idea, but rather from the investigation recently completed by the Financial Consumer Agency of Canada. We realized that FCAC could not report back in time, and therefore, we made this proposal in order to obtain the bank's response. For the benefit of shareholders, I would like to read a few recommendations from FCAC that investigated banks' business practices. The agency review found that the culture of retail banking services encourages employees to sell products and services and rewards them based on results. The fact that banks strongly focus on sales may increase the risk of abusive selling and contravention to principles of integrity. The controls the banks have put in place to identify and mitigate those risks are insufficient. This is a report to the major Canadian banks that were investigated by the agency. These are the key elements of the report that shareholders must know about. The culture of retail banking services focuses on sale of products and services, which increases the risk that customers' interests are not always a priority. To conclude the second part of the report, performance management programs, including sales objectives and performance reports, could increase the risk of abusive selling and contravention of the principles of integrity. Third key element, some commercial practices and sales circuits are associated with increased risk of abusive selling. Four, the governance framework is unable to identify and prevent these practices. And five, despite improvements noted in the report, controls are insufficient to mitigate this problem. We're at 8 minutes. I know you've got one more to go. Yes. I finish. Please sprint to the end. Yes. Thank you, sir. The end is, ultimately, we have work to do. But I found that in Mr. White's report, the emphasis on the customer should be accompanied by an accountability of the emphasis on customer service and not just on sales objectives. That is my challenge, Mr. White. Finally, the fourth proposal deals with the equity ratio between top management compensation and the average compensation of bank employees. We withdrew that proposal because you agreed to disclose one key term in that calculation, which is the number of full-time equivalent employees of the bank. Now that you have committed to disclose that information, we will be able to perform the calculation, even though if you do not wish to disclose it in a standardized manner. We can now make that calculation, and therefore, we are satisfied with your answer. Thank you, Mr. Chairman. Thank you. Thank you for your articulate and thoughtful comments, which we very much appreciate and benefit from. We appreciate working with MEDAC in a very cooperative and collegial relationship. Is Steve Reid good to go? The scrutineers have completed their preliminary report on the results of the voting, and I will now call on Steve Gilbert to read those results. The report in final form will be available shortly after the meeting. Steve, how did we do? Mr. Chairman, Sonia Chiabagia and I, as scrutineers, confirm the following preliminary results. No director standing for election today received less than 96.7% of the votes cast for director. On the appointment of shareholders' auditors, approximately 97.83% for and 2.17% withheld. On the advisory resolution on the bank's approach to executive compensation, approximately 95.84% for and 4.16% against. That completes the tabulation of the results, Mr. Chairman. Thank you very much for what I consider good news, Steve. We therefore declare the 14 nominees listed in the management proxy circular are all duly elected as directors. Congratulations to all of you, and thank you to all of our shareholders for vesting your confidence in us. KPMG LLP is duly appointed as auditors for the ensuing year. Please continue with your very fine work for us. The advisory resolution on the bank's approach to executive compensation has been approved. We now go to the final section of the meeting, which is opportunity for questions and answers. Questions should be made by shareholders or proxy holders and should be of interest to all shareholders, not just of a personal nature. If you have a customer-related question, management is here today and would be pleased to talk to you after the meeting. I would ask members of management to raise their hands now so you can see how many we have from management who'd be happy to take your questions. Please raise your hand. All of these people would be happy to take any customer questions at the end of the meeting. If you do have a question that is more general in nature, in order for everyone to hear, please go to the closest microphone and stand by for me to recognize you to speak. When I recognize you, please identify yourself by name and whether you're a shareholder or a proxy holder. Questions from those shareholders participating online are welcome also. If you're sending them in, please identify yourself, and our Corporate Secretary will give me your questions. With those introductory comments, I think I'd recognize Ms. Sway first, if you don't mind, because she's been patiently waiting, then I'll come to you, sir. Ms. Sway, thanks for being here. Thank you. My name is Linda Sway. I am from Outremont, Quebec. As Mr. Prichard mentioned, I made a proposal and decided to withdraw it. This was not something I was picking on BMO. This was something that I sent to all the banks. Last year, one of the big banks, it came out that they had outsourced some employees. Of course, as usual with all these announcements, it is prefaced by, "We have a responsibility to our shareholders." All of a sudden, I thought to myself, well, I am a shareholder, and I really do not think this job should be outsourced. I certainly do not want it to be done in my name. So I proceeded. Fortunately, I had enough shares so that I could write to the five banks, BMO, RBC, TD, Scotiabank, and CIBC. I did that and proceeded with conference calls and discussions with all the banks. Here, as in this case, I decided to withdraw my proposal because of the arrangements we made that each of the CEOs would say something about outsourcing at their shareholders' meetings. I found that to be satisfactory because having said something openly, publicly, perhaps this would draw attention to it, and perhaps the amount of outsourcing would be reduced even more in the future. I must say that there are very few outsourcing events taking place, but I just wanted to make sure that the banks were aware that we are watching, and maybe I shouldn't be speaking for all shareholders, but I just assume that you wouldn't like it. Of course, we all want our dividends to be increased, but you certainly don't want a quarter of a cent to be added because X number, hundreds of employees are thrown out of work or are replaced or whatever. So, as I say, I am very pleased with the remarks. I understand Darryl White will be saying something. Or sorry, you have said something. I must say I was very pleased with the results, as were with the other banks as well. We will see now in future if there is any more or not. So I thank you very much. I love the cooperation with BMO. I mean, cooperation was excellent with all the banks, but for some reason with BMO, it was even more so. I don't know if it's because BMO's Quebec-based or whatever, but I just found that- It's because we're here to help. Exactly. Yes. Thank you very much. Anyway, thank you very, very much. Thank you very much. Thank you. Thank you very much, Ms. Sway. May I congratulate you on your investing acumen, that you've been in all five big banks through a great run of bank stocks. So you're not only a good social activist, you're a good investor. They're all Canadian. Yes. Thank you very much for being here, and thank you for your comments. Thank you for your nice comments about BMO. I know you're dealing with Barbara Muir, and she's the best we have. So you were dealing with a really fine person in working it through. Thank you. Sir, microphone number 2. All right. Thanks. Well said, by the way. My name is Wayne Cadwallader. First, congratulations on terrific results last year. My question revolves around the efficiency ratio. You've done a Herculean task going from 65.5 down to 62.9 the last several years. To go further really requires a unique set of skills within the management team, and I'm wondering with this terrific learning center, what is being done to help managers? Because too often it can be anything from leading meetings to thinking about processes from beginning to end to how technology, the economics of technology and its leverage is changing dramatically where things that couldn't be done 20 years ago or 10 years ago can be done today. How is management really thinking about training the managers at the lower levels to really be thinking about processes and stuff to improve the bank further through efficiencies and drive those gains? Because that's a tough task. That's a great question. Yeah. Thank you for your kind comment about the performance. I'm going to ask our Chief Executive Officer to respond because this is a subject that we're engaged, as the board, we're engaged with him on the very question that you've asked. Thank you very much. Darryl? Let me echo the thanks for the question. It's excellent, and it's on point. You're quite right. In the last couple of years, we have made headway, as I referred in my remarks earlier. We have improved the productivity by 240 basis points, in fact, over the last couple of years. It is hard work, and it is important to do it the right way. You referenced the building that we're in right now, the Institute for Learning. It is a strategic asset for us, and we think it's a differentiated asset. When we think about the skills that are required for the bank of the future, you touched on technology. The technology skills are becoming increasingly important. The technology that we build and that we deploy is increasingly important. Coming around to your question, if you think about the training that occurs, which I think you were getting at, sir, we're having very modern conversations with our employees about are we spending our time on process, or are we spending our time on products and services that enhance the customer experience? That is a very important conversation. It sounds obvious on the surface, but it's fundamental, and it's core to the training that we do in this facility and all the facilities that we have around the world. I say that because remember, the productivity ratio that you refer to has a numerator and a denominator, doesn't it? It has expenses, and it also has revenues. So we make sure that we look very hard to find the balance in that, and it's core and embedded in our talent and training processes. Thank you for your question. Thank you very much, Darryl, for that. If you could come to a microphone, please, that would be better, then we can all hear it. Yes. Oh, there's a microphone coming to you. I have a mic. Are you okay? Even easier. Please introduce yourself, ma'am. Yes. My name is Stella Wong. I'm a shareholder. I got 3,000 shares. I'm quite happy about it. Thank you. We are happy too. Yeah. Bank of Montreal is my first bank when I got investment. Sorry. When my invest experience very young, so the BMOs, I heard so much about in BMO, so I bought 3,000 share with all my pension money. Now, I like to ask you why you do not disclose all the executive staff age. All the other company, including all the other banks, they display the age of all the management team. Why is that? You are not proud of your age? No, really, I usually look at that. It is a very good question. I do not know the answer to the question. I think we do disclose the age of the directors, and we are all older than we would like to be. Yeah. I did disclose the age of our CEO, and he is as young as I would like to be. Yeah. Well, you will when- We will take your question under consideration and think about doing so next year. We will look into it. Thank you. I hope I haven't offend anybody. Not at all. Not at all. By the way, I was at your inauguration meeting, Mr. White, in downtown Montréal. Bank of Montreal. It was very nice. Thank you. Great. Thanks for being here. Okay. Thank you. Thank you very much. I do not see anybody else at a microphone, so I am going to move to close the meeting. I would like to thank all the people who were involved in supporting today's event, including those who handled the closed captioning in the English and French interpretation. That is not an easy assignment, especially when you are trying to interpret me, so I appreciate their very good work. Most importantly, I would like to thank all the shareholders and employees who took the time to join us today, either here or in person online. Thank you to all of you for participating in our work. That concludes the meeting and its formalities. I declare the meeting terminated. Thank you, and see you again next year. Thank you very much.