AGM 2019

Apr 2, 2019

Good morning, fellow shareholders, and welcome to the 2019 Annual Meeting of the Bank of Montreal. Thank you for coming. We appreciate your interest and your presence 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 as we celebrate the 25th anniversary of the founding of the Institute. The Institute is the centerpiece of the bank's commitment to continuing education, advanced leadership development, and enabling innovation. The bank needs to evolve continually to make our customers' banking experiences more personal and intuitive and to meet their expectations. Education is at the heart of this evolution. The Institute was built for everyone who works at BMO, and we are proud to showcase our commitment to them. A note to those joining us in person today, we are in a smaller room than usual, as our usual auditorium is being renovated. If as you came down the long hall, if you heard hammering on the way in, that is just the sound of BMO creating the future. I am joined on the stage this morning on my immediate right by Darryl White, our Chief Executive Officer, by Tom Flynn, our Chief Financial Officer, by Simon Fish, our General Counsel, and by Barbara Muir, our distinguished Corporate Secretary. Also joining me today, seated in the first row, are members of the Board of Directors on this side, and the bank's senior management team on this side. Members of the board will be introduced when it is time for the election of directors. Members of management will be called on if you have any hard questions for them, so they should be attentive and ready to respond. 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 by proxy. I therefore declare this meeting to be properly constituted for the transaction of business. I appoint Steve Gilbert and Anna Pagliuca, representatives of Computershare Trust Company of Canada, to act as our scrutineers for the meeting and Barbara Muir to act as secretary. They have done it before, and they do it very well, and I thank them for their good work. The shareholders' auditors for fiscal 2018, KPMG LLP, are present here today, represented, and I ask each of them to stand when I mention their names. Their leader, Elio Luongo, CEO of KPMG, Jim Newton, the lead partner, and their colleague, Abhi Verma. Thank you to all three of you for being here. We are delighted to have you with us. You are outstanding professionals in your profession. You do 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. 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 the matters currently before the meeting, and when submitting questions, that 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, and any questions not answered during the meeting itself will be responded to following the meeting. Facilities for simultaneous English and 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 proxyholder wishing to speak should go to one of the standing microphones or raise your hand and someone will bring a microphone to you. 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 each matter before the meeting. Please do your best to keep any comments or questions to a maximum of 3 minutes. Finally, a comment on the physical layout of the room. In the event of an unforeseen emergency, I would like to point out there are exits at the main doors where you came in and also behind me on either side of the stage. In the event of an emergency in the building, please proceed outside to the parking lot. The agenda for today will consist of an address by our leader, CEO Darryl White, followed by 3 resolutions proposed by management. First, to elect the Board of Directors for the next year. Second, to appoint the shareholders' auditors for fiscal 2019. Third, to consider an advisory resolution on the bank's approach to executive compensation. In addition, there were 4 shareholder proposals submitted this year. Two proposals will be voted on, and the other 2 were withdrawn. All 4 of them were from MEDAC, which is represented here today by Mr. Willie Gagnon. Following that, we will have time for a question-and-answer period. On behalf of those speaking today, I note that their comments may include forward-looking statements. 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 2018 annual report as updated in our first quarter 2019 report to shareholders. Actual results could differ materially from the forecast projections or conclusions in the forward-looking statements made today. With those preliminaries behind us, I begin the formal part of our agenda. As I said in my forward to this year's annual report, a critical responsibility for your Board of Directors is to ensure that there is a smooth transition of management when there is a change in the leadership team. We have just completed a full year under our new Chief Executive, Darryl White, and I speak for everyone on the board when I say we have been very pleased with the results of Darryl's first year at the helm. Darryl is doing an outstanding job leading the bank, and he enjoys our full confidence and support. He is an excellent leader for the bank and the right person at the right time, and he is leading a terrific senior management team. We thank and congratulate Darryl and his colleagues for all their excellent work. The bank's financial results were strong. Adjusted net income was up 9% from the previous year, reaching CAD 6 billion, and we've increased the dividend by 6.2% over the past year. We're especially pleased by progress in the U.S. segment of our business, which grew at an accelerated pace in 2018. These strong financial results have translated into good returns for shareholders. The total return to shareholders has continued to grow faster than many of our peers, and well ahead of the TSX. Our employees have responded enthusiastically to our leadership team, inspired by a strong sense of purpose and the challenges of an exciting environment. The financial services marketplace continues to transform, and our people are embracing these opportunities with skill, determination, and excitement. Darryl is leading this charge tirelessly and with passion. He will tell you himself, but he has met with thousands of employees across the bank in the past year and a half, and he always returns from those visits inspired by their commitment and optimistic about our future prospects. You've all received our annual report summarizing the past year and laying the foundation for the year ahead. You should also have seen our 2018 Environmental, Social, and Governance Report and Public Accountability Statement. I commend it to you because we take great pride in how we, as an organization of more than 45,000 people, succeed in aligning our business objectives with our broader societal responsibilities, and that is well spelled out in the report. As Darryl likes to say, we're all bankers, but we're not just bankers. We act to foster economic inclusion in all its forms, whether it's unlocking opportunity for women in the boardroom and in the executive suite, or inner-city entrepreneurs trying to create jobs and lift entire neighborhoods. The shared value we create goes well beyond our total shareholder return. We are, at BMO, citizens committed to building stronger communities and a better world. While we reflect on our past year, our focus is always on moving the bank forward. We're facing the future with confidence, and it gives me great pleasure now to invite to the podium the person who will lead us this year and for many years to come. Darryl, the podium is yours. Congratulations on a very fine first year as our CEO. Darryl White. Well, thank you, Chairman, and good morning, everyone. It is a pleasure to welcome you to our annual meeting of shareholders, whether you're joining us online or here at the BMO Institute for Learning. In particular, I would like to thank our Chairman, Rob Prichard, and the members of the BMO Board. The executive team greatly appreciates your continued support and advice. Welcome, whether you're joining us online or here at the BMO Institute for Learning. The IFL, as the Chairman summarized, symbolizes the vital role that learning and innovation have always played in our bank. This is the 25th anniversary of the IFL, and it's an opportunity to reflect not just on the more than two decades, but on two centuries of progressive thinking, from the creation of Canada's first currency to our pioneering use of blockchain technology. The IFL has always been focused, like BMO itself, on the future and on helping talented people fulfill their potential. Here and in the other modern workspaces we're creating across our footprint, including soon at the BMO Urban Campus in the heart of downtown Toronto, we're introducing new ways of working to deliver competitive performance, to reshape how teams collaborate, how leaders lead, and to reimagine the speed at which we bring solutions to market. Today, I'd like to fill in a few details around the energy and the acceleration that we can feel right across BMO. Here is this morning's menu. We'll start with the financial highlights, and behind those numbers, the proven strategy and differentiating strengths that drive our performance. Then we'll drill down into three key areas of focus. First, the strategic profitable growth of our U.S. businesses and their tremendous ongoing potential. Second, our success in improving efficiency through innovation. Third, BMO's unique culture, which gives us a significant edge in attracting and empowering talented people and building customer loyalty. But to underline how our confidence in the future is, in fact, grounded in the present, let's start with the numbers. Adjusted net income for fiscal 2018 was CAD 6 billion, up 9% from the previous year. Return on equity was 14.6%. Earnings per share grew 10% to CAD 8.99. Our dividend grew by 6.2%, extending the unbroken record of annual payouts we've delivered since 1829. In fact, among all companies listed on the New York Stock Exchange, BMO holds the second longest streak of continuously issuing dividends, 190 years and counting. Our bank has a strong, prudently managed capital ratio. Over the past year, in addition to increasing our dividend, we bought back 10 million shares. We've sustained that momentum into the new fiscal year. First quarter earnings per share were up 10% from the same period last year, and we increased our CET1 ratio to 11.4%, reinforcing our capital strength and our strategic flexibility. Looking back over the past 52 weeks, BMO has the number one total shareholder return among our peers. Over the past 10 years, our TSR exceeds the average of our peer group, as well as the average annual growth of the S&P/TSX Composite Index. These strong outcomes demonstrate that we're fulfilling the commitment we made to shareholders at last year's annual meeting, and again, at our investor day back in October. Across the bank's businesses, we're growing by serving more customers, expanding relationships, and creating better value. We're building on our momentum, always aiming higher, thanks to a solid foundation. Up on the screen are the strategic priorities that drive the bank forward. We're leaning in on specific aspects of operational excellence, calibrating what needs to happen and when. But BMO's strategy remains consistent, and it's anchored in a set of fundamental differentiating strengths. Our attractive business mix. We're diversified by geography, by products, and by customer segment. As one of North America's largest banks, eighth by assets among more than 5,000, we have the scale to make investments, and the investments we need in technology, in marketing, in regulatory compliance. As always, our consistent effective management of risk, guided by the insights we gain through building customer relationships. The BMO brand, which is widely recognized and respected everywhere we do business. In fact, in the latest survey by American Banker and the Reputation Institute, consumers named BMO one of the most reputable in the U.S. industry, ranking us number two among the 40 largest U.S. banks. That vote of approval underpins all of the strengths that differentiate BMO, and it leads to the first main point I want to focus on this morning, profitable U.S. growth. Since 1818, the year after BMO was founded, we have been building a bank to serve customers in both Canada and in the United States, which, taken together, have always been our home market. It has been a continuous evolution, but certainly a key milestone was our acquisition of Harris Bankcorp in 1984. As Bill Mulholland, our Chairman and CEO at the time summed up, "This transaction gives the Bank of Montreal a full operating capability, both in Canada and in the United States, a status which is probably unequaled by any other bank." He was right. From that point, with U.S. operations then accounting for 14% of total earnings, we continued to grow our U.S. platform organically and through smaller acquisitions. We steadily expanded our workforce, our branch network, and the bank's total U.S. assets. The next major milestone was our acquisition in 2011 of Milwaukee-based Marshall & Ilsley, proof that it pays to wait patiently for the right opportunity at the right time. That was also true four years later when we acquired the Dallas-based transportation finance business of GE Capital to become the North American leading provider of truck and trailer financing. The value of acquisitions like these becomes more evident with every passing year as we take advantage of our strength and base to continue to grow organically. Since 2015, the bank's U.S. segment has achieved a compound annual earnings growth rate of 17%, nearly all organically. Over the past 12 months, our U.S. businesses have accounted for about 30% of BMO's total earnings, and we envision that percentage steadily increasing. Of course, this growth is anchored by the parts of BMO that generate the other 70% of net income. First and foremost, our flagship Canadian personal and commercial banking business, which is both a powerful earnings producer and a leader in innovation. But the breadth of our distinctive strengths comes through the combination of our U.S. and Canadian businesses. It is a win-win for shareholders. Diverse exposure to the world's largest, most creative, dynamic economy and, at the same time, the safety and soundness of a bank headquartered in Canada's widely admired financial system. From that perspective, it is satisfying to look back at the 35-year trajectory since we acquired Harris Bank, but our focus now is on the next 35 years as we leverage our strong position to continue growing. This is, of course, a strategy in motion, with now roughly 50% of the business that we do in the United States coming from our traditional seven-state core footprint anchored in the Midwest, and importantly, the other roughly 50% now coming from the rest of the country. Take commercial banking, where BMO's strengths are unquestionably differentiated. We're one of the top 10 commercial lenders in the U.S., and we've developed deep expertise in key sectors to the point where two-thirds of our new originations are in segments we serve on a national basis. Our leadership in commercial banking is a clear differentiator and a driver of long-term growth. Expansion of the U.S. and Canadian economies has, of course, slowed somewhat compared to a year ago. However, as low interest rates and low inflation persist, we continue to experience growth. At the same time, we've observed a moderation of growth in Canadian consumer loans and mortgages, an outcome that is both healthy and expected, while credit quality continues to be very good in these consumer portfolios. If you speak to our economists, they'll tell you that with underlying fundamentals like strong population growth, modest inflation, a more benign interest rate environment, the risk of recession in the year ahead remains relatively low. Based on what we hear from our customers in the small business segments of commercial banking, these are the people driving the real economy who make up over 90% of private sector workforce in Canada, the economic outlook generally remains positive, reflecting the good performances of the businesses that they own and operate. We hear the same confidence expressed by our customers transacting on both sides of the Canada-U.S. border, something we're particularly well-positioned to help with. After realigning and integrating functions and platforms on a north-south basis, we now have full cross-border capabilities bank-wide, in personal and business banking and wealth management and commercial banking and in capital markets, an offering unequaled by any other bank. When we know, for instance, that nearly three-quarters of our wholesale customers need cross-border services, it only adds to our opportunity. With more than CAD 800 billion in assets, we have the platform to share knowledge, capabilities, resources, and technology at a scale beyond the reach of regionally-focused U.S. banks. We also like to point out that the 15 U.S. metropolitan areas where our flag already flies, where BMO bankers are on the ground, account for about a third of the United States' total GDP. Looking at the map that way, we have an opportunity at our doorstep where we've already invested that's three times the size of Canada's economy. We're competing in a large market where BMO is a reputational leader, where our businesses together drive 30% of net income or CAD 1.9 billion of earnings, and yet, where we currently have only a very small share of the overall U.S. market, and I like the way that opportunity looks for us. Of course, to grow, you need an optimal balance between revenues and expenses, and that's my second area of focus this morning, efficiency and innovation, because at BMO, we know that you can't have one without the other. During the past year, we introduced a new bank-wide initiative that looks horizontally across all of our businesses, finding opportunities for us to operate more efficiently while also improving customer service. And what enables both dimensions is innovative technology. I'll give you an example. In P&C Canada, our customers now buy 25% of our products and services digitally, placing us in the top tier of our industry. And it's only going to keep growing, of course, because this is how customers want to transact with us. Our technology investments make digital purchases more convenient for our customers and more efficient for us to deliver. And here's another example from small business banking. Processing loans of up to CAD 500,000 used to take as long as 30 days. So we brought together a team of BMO experts in banking, in technology, and in risk to analyze the lending process end-to-end and integrate new ways of working backed by automated decision-making. And together, they've cut the average processing time for these loans to less than 30 minutes. From 30 days to 30 minutes. That's how innovation can make customers happier while also simplifying our work, freeing up bankers to find other ways to help, and building stronger relationships in the process. We're focused on improving both the numerator and the denominator of our expense-to-revenue ratio by operating more efficiently, we reduce expenses. But more importantly, as we improve customer service, we increase revenue. This holistic approach underpins a target we set out at our investor day in October and reiterated in our latest annual report. By 2021, we expect to reduce our adjusted net efficiency ratio from the current 62% to 58%. We're rigorously managing overall expense growth even as we sustain our critical investment in technology, which has grown at a double-digit rate over the past two years. As you can see, we've also been shifting the focus of our tech spend, further finding efficiencies in the systems and solutions that run the bank so that we can invest more in those that help transform and protect our business. We save in some areas so that we can make targeted investments and drive customer experience and revenues because, again, you can't have one without the other. That insight is inspiring our whole workforce to join into the action through an employee-led innovation program that engages everyone at BMO in shaping our future by doing something pretty straightforward, asking them for their ideas. The response we received to our first all-employee challenge on the topic of improving customer experience was tremendous. We received nearly 1,500 submissions reflecting the amazing energy and expertise of our employees in diverse regions and business areas. From there, a team of 50 champions selected four ideas that are now being incubated with a dedicated fund providing the resources to turn our best ideas into realities. Which brings me to the last area of focus I want to touch on this morning, the strength of our people. BMO's unique culture is a cornerstone asset. It's truly differentiating as we compete across geographies, business lines, and customer segments because standing behind our performance are people, talented individuals with diverse backgrounds who share a basic belief that by managing our bank responsibly and transparently with energy and with purpose, we create value for all of our stakeholders. To help customers reach their goal, we've built a highly collaborative culture cemented by our shared values. Our people are engaged in ways that count at levels that rank us among the leading global companies, not just in our industry but in all industries. Our commitment to doing what's right has once again earned BMO recognition from the Ethisphere Institute as one of the world's most ethical companies. We've also been recognized for how we put our principles into practice in responsible banking, lending, and investing practices, in our promotion of diversity and inclusion, in our environmental stewardship, and in our commitment to building strong communities. Because in a business built on transparency and sound governance, where performance depends not on cutting corners but on growing loyalty and trust, these responsibilities are non-negotiable. They matter more and more to our customers. They're proven drivers of business success. In the case of BMO, they are the foundation of our culture. When we talk about our purpose as a company, the why behind what we do every day, it's to leverage our role as a trusted financial intermediary and advisor to do something bigger, to create opportunities for lasting positive change. The focus we bring to building a better bank is guided and energized by a larger sense of purpose, to grow the good in business and in life. To sum it all up, BMO has a strong foundation for growth, a diversified business mix, and we're ideally positioned as a North American bank. Alongside our commitment on efficiency, we expect to continue rewarding shareholders' confidence with our medium-term target of earnings per share growth of 7%-10%. Driving these metrics is an unmistakable energy. Our bank is mobilized and accelerating. In every opportunity that we take on, we have a clear purpose and a bold ambition, one that mirrors the aspirations of our customers. Like them, we are constantly aiming higher. Like them, we're aiming higher. Thank you. Thank you very much, Darryl, for those excellent remarks. First class. We'll now turn to a few more procedural matters. I've been informed by our transfer agent that over 315 million votes have been received by proxy in respect of the matters of business to come before this meeting, representing approximately 49.44% of the total outstanding shares eligible to be voted. Given that our employees represent an important part of our shareholder base and to facilitate our proceedings today, we've 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 five items of business before this meeting requiring a vote of shareholders will be conducted by paper ballot. 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 our circular that have been previously referred to. If you are 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 at this meeting and who did not receive a paper ballot at registration should raise your hand now, and a representative of Computershare Trust Company of Canada will bring a ballot to you. There is one gentleman here, there is another over here, and another here. We have three. Are there any others? Now to our first item of business, the submission of the financial statements. In March 2019, copies of our annual report for 2018 were forwarded to shareholders together with the management proxy circular and notice of this meeting. The financial statements for the October 31, 2018, year-end were included on pages 143 to 209 of the annual report, and the auditor's report thereon can be found on page 141. I will take it all as read and ask, are there any questions or comments on the financial statements? I see none. 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 15, with 14 having been elected previously, and Craig Broderick, who was nominated for election by the shareholders as a director of the bank for the first time this year. You will find biographical information about each of the nominated directors in our management proxy circular. Let me take a moment to introduce Craig Broderick to you. He is an outstanding addition to our Board of Directors. Craig has had a distinguished career in banking over the past 32 years. He retired from Goldman Sachs in January 2018. He was, until then, the firm's Chief Risk Officer, a member of its Management Committee, and Chair or Co-Chair of the key risk committees at Goldman Sachs. When he retired, Craig was the longest-serving Chief Risk Officer on Wall Street, universally respected as one of the financial world's leading authorities on risk. Craig holds a bachelor's degree from the College of William & Mary, where he has been active as an alumnus, including serving nine years as a Trustee and Chair of its Investment Committee. Craig joined the board in August and is already making highly valued contributions to our work. We judge ourselves to be very fortunate that Craig chose to join BMO, and we are delighted that he is standing for election today. I would also like to take this opportunity to thank the continuing board members for their service to the bank. They are a special and immensely talented and dedicated group. They work hard and well for all of you, and it is one of the great honors of my life to serve with them as their Chairman. I especially want to note the contributions of Jan Babiak, Christine Edwards, Ron Farmer, and Don Wilson, who chaired our standing committees over the past year and did so to great effect. They are terrific leaders of our board, and they make outstanding contributions to our governance. I would now like to ask each director to stand when his or her name is called and to remain standing until all of the names have been called. I ask those of you in attendance to hold your applause until all the names have been read out. I call on Barbara Muir, our Corporate Secretary, to present the nominees for election to the Board of 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. Jan Babiak, Sophie Brochu, Craig Broderick, George Cope, Christine Edwards, Martin Eichenbaum, Ronald Farmer, David Harquail, Linda Huber, Eric La Flèche, Lorraine Mitchelmore, Philip Orsino, Don Wilson. Thank you very much, Barbara. Thank you, colleagues. You can take your seats again now. I now call on Suzanne Duncan to second this motion. Today is Suzanne's last day of service at BMO. She's retiring after 25 years of loyal service to the company. Suzanne has been one of the principal architects of the bank's Environmental, Social and Governance Report and Public Accountability Statement, which has been shortlisted for tomorrow night's Investor Relations Magazine's award for the best ESG reporting. Suzanne, thank you for your outstanding years of dedicated service and contribution to the bank. You've been an outstanding employee, and we congratulate you on your retirement. Please second the motion. Suzanne? Thank you, Chairman. My name is Suzanne Duncan, and I am a shareholder. I second the motion. Thank you very much. Are there any questions or comments on the election of the directors? I see none, so we will proceed to a vote. The bank provides for individual voting per 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 the nominees set out in the management proxy circular. We will now proceed with the voting. Please mark your paper ballot if you have one. The polls will remain open for all items of business until the voting on the last item to be voted on at the meeting has concluded. We will move on to the second item of business, which is the appointment of the auditors for the ensuing year. I call on Anne Marie Anderson to present this motion. Anne Marie, where are you? Please tell us what you do for the bank. I am a senior program manager for the IFL Strategic Initiatives and Leadership team. Terrific. Thank you for your work. 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, Anne Marie Anderson. Where is Alexa Begie? Please take the microphone, tell us what you do, and then second the motion. Thank you, Chairman. My name is Alexa Begie, and I am a shareholder. I work here at the IFL supporting our enterprise and leadership programs. I second the motion. Thank you very much, Alexa. Are there any questions or comments on this motion? I see none. I would ask those of you wishing to vote on the appointment of the auditors to mark your ballot. You are asked to vote either 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, and we will now proceed with the voting. Please mark your ballots. Elio, hold your breath. Now we will move on to the third item on the agenda, which is the consideration of an advisory vote on the bank's approach to executive compensation. I call on Karen Hodgson to present the motion. Karen, please take the microphone and let us know what you do for the bank. Thank you, Mr. Chairman. My name is Karen Hodgson. I am a shareholder. I work for People and Culture as a senior specialist in operation and risk governance. Terrific. Thank you very much, and thank you for being a shareholder. I move that the advisory resolution on the bank's approach to executive compensation, as set out on page 6 of the management proxy circular, be approved. Thank you very much, Karen. I call on Mark Etwell to second the motion and to let us know what you do for the bank, Mark. Thank you, Chairman. My name is Mark Etwell. I am a shareholder. I am a senior learning consultant here at the IFL, and I second the motion. Thank you very much, and thank you for being a shareholder. Are there any questions or comments on the resolution? Sir. Mr. Chairman, good morning. My name is Willie Gagnon. I don't work for the bank, contrary to other speakers. I represent MÉDAC, the Mouvement d'éducation et de défense des actionnaires. As is the case each year, we speak on this question, especially in terms of the compensation ratio. That is the ratio of the best-paid person in the bank compared to the average remuneration of employees. That is about CAD 62,000 this year. You have the second lowest ratio among banks, but for us, it's still far too high. We believe that it should be between 20 and 30 times the average remuneration of bank employees, maybe slightly higher compared to average household income in Canada. As is the case each year, once again, we invite shareholders to vote against the proposal. Thank you very much, Mr. Gagnon, for being here, and thank you for your comments. Are there any other comments on the resolution before the floor? I see none. I will move to take the vote. Those of you wishing to vote on the advisory resolution on the bank's approach to executive compensation, please mark your ballot. You can 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. We will proceed with the voting. Please mark your ballots. That brings us then to the shareholder proposals on which will be voted on, of which there are two. The first shareholder proposal is from MÉDAC relating to the creation of a new technology committee. MEDAC's proposal and their supporting comments, as well as the bank's position on the proposal, are set out in full on pages 53 and 54 of the English language management proxy circular and pages 55 and 56 of the French version. For your convenience, a copy of the management proxy circular containing this proposal was provided to you this morning. Mr. Willie Gagnon, who spoke to us just a few moments ago, is here today representing MEDAC. Mr. Gagnon, I thank you for joining us today in Toronto again for our annual meeting. As we agreed in advance of the meeting, the bank has waived the need for your shareholder proposals to be seconded before they're voted on. I'd be grateful if you would present MEDAC's proposal dealing with the creation of a new technology committee. Mr. Willie Gagnon. Mr. Chairman, thank you once again. My name is still Willie Gagnon, and I'm still representing MEDAC, Mouvement d'éducation et de défense des actionnaires. You have done half my job with everything you've just said. I understand that we will be putting this proposal to a vote. They won't both be put to a vote together? Okay. So creation of a new technology committee. It is proposed that the Board of Directors create a new technology committee to anticipate issues for the bank related to the integration of technological innovations on the bank. This year, we've sent the same four proposals to the seven major Canadian banks, including yours. Everybody received this proposal, and we did not withdraw it at any time. We received the same negative answer everywhere with practically the same rationale. Everybody said, "Well, this is such a big issue that the whole board has to deal with it, and not just a committee." While that's not at all what we were proposing. We were proposing that the work of a committee be added on top of the board's work. With an argument like that, namely, the more important an issue is, the less it should be dedicated to a committee. We should understand that the committees that already exist in the bank should be dissolved, given that the issues that they deal with are also important. So we would brush aside that argument, and that proposal is therefore being put to a vote. Obviously, we believe that the more important an issue is, the more it should be dealt with by a specialized committee in addition to the board, and that the specialized committee should report to the board. That doesn't prevent the Board of Directors from working on the issue. So we would invite all shareholders to support this proposal. Thank you. Very much, Mr. Gagnon, and thank you for being so respectful of the time of all our shareholders here today. Are there any further comments on this resolution? I see none. We will move to a vote on shareholder proposal number one, dealing with the creation of the new technology committee. I remind you that your Board of Directors and management recommend voting against this proposal for the reasons outlined in the management proxy circular. I would ask those of you wishing to vote on shareholder proposal number one to please mark your ballots now. We will now turn to shareholder proposal number two relating to the disclosure of the pay ratio. This proposal is to be voted on, was again submitted by MEDAC. MEDAC's proposal and their supporting comments, as well as the bank's position on the proposal, are set out in full on pages 54 and 55 of the English management proxy circular, and pages 56 and 57 of the French language version. Mr. Gagnon, thank you again for being here, and I would be grateful if you would present your proposal for dealing with the disclosure of the pay ratio. You do not need a seconder, as we have arranged to take the vote in any event. Mr. Gagnon. [Foreign language] Thank you, Mr. Chairman. We have a number of proxies from various shareholders who support the proposal in respect of the disclosure of the pay ratio. It is proposed that the bank disclose the equity ratio used by the compensation committee as part of its compensation-setting process. It will surprise no one that we are back with this proposal this year again. For some years now, we have been making this proposal each year. Last year, we had agreed that our proposal would not be put to a vote on the basis of your commitment to publish the number of full-time equivalent employees that would allow us to calculate the pay ratio with the same methodology for all banks. That does not mean that we do not want you to publish the ratio and the method you are using to calculate it. We have agreed on the fact that, of course, there are distortions between countries and between industries, between companies, given that the calculation method is not defined by a regulator, as is the case in the U.S. But we had dared to hope that you would yourselves get together with other major banks to establish a method of calculation of the pay ratio. We believe that even though the method is not the same, if you are always using the same method for yourselves each year, at least we can compare the bank with itself over time, which is something that is of interest. In order to limit distortions that are caused by your activities abroad, you are required to provide the information to revenue authorities every year in terms of your activities abroad, including taxes paid in all countries where you have activities, average salary, number of staff. That information is published in Europe. In Canada, you provide it to the CRA, but it remains private. We would like to have that information. It would give us an idea of how your ratio can be evaluated. We would invite all shareholders to vote in favor of our proposal. Thank you very much, Mr. Gagnon. You are an extremely articulate representative of MEDAC, and we thank you again for your participation in the meeting and your respect for your fellow shareholders. Are there any other comments on the matter before the meeting, which is shareholder proposal number 2? I see none. We will go to a vote on this matter, which is the disclosure of the pay ratio proposal. I remind you that the Board of Directors and management recommend voting against this proposal for the reasons outlined in the management proxy circular. I would ask those of you wishing to vote on the shareholder proposal number 2 to mark your ballots now. That brings us to the end of the voting on the items of business before this meeting. Will the representatives of Computershare Trust Company of Canada please collect the ballots. If you have a ballot, please hold it up high so the representatives can collect your ballots from you. There are lots more here. There is one here, 2, 3. Or pass them down to the side, and a representative will pick them up there. There is one coming in the third row here. Does anybody else have a ballot that has not been picked up yet? I see none. I hereby declare that the polls are now closed with respect to all items of business. The scrutineers will now count the ballots and come back to the meeting shortly to report on the results. There were 2 other shareholder proposals submitted but withdrawn this year. MEDAC submitted a proposal regarding integrating environmental, social, and governance criteria into executive compensation and a proposal regarding climate change measures taken to support the transition to a low-carbon economy. After discussion with management on the bank's current practices, MEDAC agreed to withdraw these proposals. Management has included both withdrawn proposals and the bank's responses to them in the management proxy circular, which you will find on pages 55 to 57 of the English proxy circular and pages 57 to 59 of the French circular. Mr. Gagnon, who represents MEDAC, has indicated he would like to comment on these 2 withdrawn proposals. Mr. Gagnon, the floor is yours. Monsieur le président, merci beaucoup. Thank you very much, Mr. Chairman. I shall be brief. I will merely list very briefly the reasons why we agreed that those two proposals should not be put to a vote. Again, we made the same proposals to all of Canada's major banks, integrating Environmental, Social, and Governance criteria into executive compensation. It is proposed that the compensation committee file, as part of the disclosure of its annual activities, a report on the importance given to the integration of ESG criteria in the assessment of executive performance and the process of determining incentive compensation. We wanted to know how your ESG policies were aligned to your compensation. We are happy to see that in your response, you refer to the various measures disclosed in the circular that are related to those criteria, and you also stated that there are specific compensation objectives that are related to ESG priorities. At the end of each year, each executive's individual performance is assessed against the objectives they are assigned, and the results of those assessments inform decisions their managers make as to the incentive compensation awards the executives receive. That is precisely what we wanted to know and that we couldn't manage to find out. We are happy to see that we see eye to eye on this point. The further proposal, climate change and measures taken to support the transition to a low-carbon economy. We were interested in the famous Task Force on Climate-related Financial Disclosures, or TCFD, which was created by the Financial Stability Board of the G20, as well as the pilot project created by that group organized by the United Nations Environment Programme Finance Initiative, of which you are part, and we congratulate you for that. The project is now entering phase 2, which is a voluntary project. The bank has stated that it intends to participate in phase 2, which satisfies us, which is why we agreed with you not to put this question to a vote. Not all banks are doing the same, whereas all should. We're very happy that you're doing so. Thank you very much, Mr. Chairman. Thank you. Thank you very much, Mr. Gagnon. We appreciate your endorsement of our work. Let me say, we also appreciate the collaborative way in which you work with our corporate secretary in considering proposals and working to a good mutual conclusion. So thank you very much. The scrutineers have completed their preliminary report on the results of the voting, and I now call on Steve Gilbert to read those results. The scrutineer's report in final form will be available shortly after the meeting and posted on our website. Steve, thank you again for your work this year. How did we do? Mr. Chairman, good morning. Anna Pagliuca and I, as scrutineers, hereby confirm the following preliminary results on the vote by ballot. For the election of directors, no director proposed by management standing for election received less than 96% of the votes for. On the appointment of the shareholders' auditors, approximately 97% of the votes were for, and approximately 2% were withheld. On the advisory resolution on the bank's approach to executive compensation, approximately 94% of the votes were for, and approximately 5% voted against. On shareholder proposal number 1, approximately 2% of the votes were for, approximately 96% were against, and less than 1% abstained. On shareholder proposal number 2, approximately 5% of the votes were for, approximately 93% were against, and once again, less than 1% abstained. The report is signed by Steve Gilbert, scrutineer, Anna Pagliuca, scrutineer, representing Computershare Trust Company of Canada. Thank you, Mr. Chairman. Thank you very much, Steve. That's all very welcome news. There's smiles in the front row here. There's smiles in the auditors. There's smiles in management. Mr. Gagnon's not smiling quite as much, but you still did a very good job, Mr. Gagnon, so thank you again for your participation. As a result of the votes, I declare that the 15 nominees listed in the management proxy circular are all duly elected as directors. Thank you to all our shareholders for vesting your confidence in us. KPMG LLP is duly appointed as auditors for the ensuing year. The advisory resolution on the bank's approach to executive compensation has been approved, and shareholder proposals numbers 1 and 2 have not been approved. We'll now move to 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. If you do have a customer-related question, a personal question, management is here today, and any one of the members of senior management in the front row here would be pleased to talk to you right after the meeting to resolve the matter. If you do have a question that is appropriate for the meeting, in order for everyone to hear, please go to the closest microphone and stand by for me to recognize you to speak. Once I do, please identify yourself by name and state whether you're a shareholder or a proxy holder. Given our space restrictions this year, a few people are watching the broadcast outside in the long hall. If any of you out there would like to come in to ask a question, please feel free to come into the room now and take your place at one of the microphones. Questions from those shareholders participating in this meeting online, which is a growing number every year, are also welcome to submit questions. If you are submitting a question online, please identify yourself by name and confirm that you are a shareholder, followed by your question. Our corporate secretary will give me your question to read out to the meeting and seek an answer from management. In that respect, with the question and answer period open, let me read to you the first question that I received online, and it is addressed to our Chief Financial Officer. Tom, since you have done such a good job of growing the bank's value, the price of the stock is too expensive now. When will there be a stock split? Will there be a stock split in the future, Tom? All right. Thank you very much for the question, and we are pleased to have the question given that it reflects the strong performance of our share price. A historical reason for having shares split in the past was that it was less efficient to trade what is referred to as an odd lot number of shares, which is a number of shares less than 100. With the advent of electronic share trading, that is really not the case today, so we do not think the high share price disadvantages shareholders who are trading a smaller number of shares. I would also point out that our share price is in the range of the share price of the other Canadian banks. For those two reasons, we are not considering a share split at this time. Thank you very much, Tom. I would like to recognize the gentleman at microphone number 2. My name is Art Wallace, and I am a shareholder. Somewhere during the meeting, someone referred to an investor day in October. Can you please explain what is an investor day and who attends it? Thank you, Mr. Wallace, for your question. Darryl White will answer your question because he made the reference. Thank you, Mr. Wallace. An investor day is an event that we host from time to time. It is not an annual event. It does happen, in our case, every few years, where we host what we call this year an all-bank investor day. It was hosted in October. It was directed at giving our shareholders, our employees, and our communities a bit of a deeper look at all of the strategies of the business. We unpack the strategies, we introduce the shareholders to all of our senior management. At the time, everybody played a part in the communication, and it was webcast, so it was available to anybody who was interested in seeing it on the day. The materials from that day are still available. If you are interested, we could make sure that you could get a copy of all of it. How do we let investors know that an investor day is coming? We do a few things. We do put out a release letting the community know that we're holding an event, and we also put the materials on our investor relations website. Thank you very much. Sir, over at microphone number 3. Thank you, Mr. Chair. My name is John Flanagan. I'm a shareholder. I'm also a small business person, and I've been reading through Mr. White's bio. I'm a member of the East Gwillimbury Chamber of Commerce and the Newmarket Chamber of Commerce, also a Director of the East Gwillimbury Chamber of Commerce. Recently I just was in the Bank of Montreal branch at Leslie Street and Green Lane in Newmarket and talked to the community manager at that branch. Her name is Susan Iyer, and she decided to join the East Gwillimbury Chamber of Commerce. Considering that our premier here in Ontario is announcing that Ontario is open for business, I would like to ask the CEO to put out to all the branches to join a chamber of commerce or board of trade, not only in Ontario, but throughout the country to grow small business and develop that relationship with small business owners. Thank you very much, sir, for your comment and your leadership in the community. Darryl, do you want to comment on that? I think it's an excellent point that you've made. We've been aligned on the notion of open for business, as you know, for a very long time. I did make reference in my remarks to small businesses in particular driving 90% of the workforce in Canada. Not only do they drive 90% of the workforce in Canada, they represent 90% of the net growth in the workforce in Canada, as you're probably aware, Mr. Flanagan. So in our branch networks, we do have representation on chambers of commerce across the country. We do encourage it, and if there's an opportunity to join yours and to help you along the way, we'd be happy to consider that. As I say, Susan Iyer, the community manager at the branch on Leslie Street and Davis Drive, joined just recently. Oh, even better. You're way ahead of us. That's great. I'm just saying to encourage it throughout the bank's branches throughout the country and considering the footprint we have in the U.S. as well in the U.S. It's a great suggestion. We do it, and we should do more. Thank you. Thank you. Thank you very much for that very good suggestion. I will recognize microphone number 2. Hi. Roseanne Dolatena, shareholder. First of all, I would like to say I am humbled and I am privileged to be here. Kudos to Barbara and Neil, who not only listen, but they hear what the customer is asking for. I quote the hear. To the Board of Directors, you are the best Board of Directors out of the 30 or 40 companies that I hold. This is why I am here. I am advocating for those people. You should come to these meetings more often. I am advocating for those people who are not as privileged to be here, those people who cannot afford bank accounts, those people who have not had the opportunities that people in this room have had. I was listening to Squawk Box, and there they are talking in the U.S. about people that do not have bank accounts, having to put money on a credit card or go to payday loans. What I think I am asking Bank of Montreal is to do an ethical thing and provide banking to those people who cannot afford it when they meet special criteria. It is a cry for help for those people that cannot afford it. We cannot ignore that population and those people who do not have the privileges we have. That is my request for future consideration is to provide banking. Sorry, on Squawk Box, if they are talking about someone who does not have any income and they have to load a credit card, I would be embarrassed to walk into a bank and load a credit card because I do not have a bank account. How can I live as a human being if I do not have a banking? It should be a right to have a bank account. Thank you very much for your comments. Thank you for your intervention. Barbara Muir has told me of her conversations with you and what a constructive shareholder you are in those conversations, so thank you for that. We hear your suggestion and your request for future consideration, and we will give it that, and we will ask the CEO to report to the Board of Directors in appropriate time on his reflections on your suggestions. So thank you very much for being here. Sir, at microphone number 3. Pardon me. My name is David Reed, and I am a shareholder. My question is on the roles and responsibilities and time commitments of the Board of Directors. We are very fortunate, as the roles and responsibilities of directors grows, to have at least 3 executives of companies that are publicly traded. It will come as no surprise that some of us who are shareholders in the BMO also hold shares in other companies, including those that are on the Board of Directors. As the roles and responsibilities of the Board of Directors grows and the demands of their own companies also grow, in the case of at least one of the Board of Directors, there were 24 of 25 committee meetings that the executive attended on behalf of the BMO. I just wondered how we balance our needs with recognizing the roles and responsibilities that they have. I do not think it is fair to ask them individually, but I would be asking the board how they recognize those other responsibilities that they have as well. Thank you. Thank you very much, and we are, like you, extremely pleased that we are able to attract three of Canada's most outstanding CEOs of publicly traded companies to serve on our Board. We think that brings a perspective to our Board that is very special in terms of empathy for the work of the leadership of our bank and providing wise counsel to our CEO. They are all terrific directors. While we do recognize that it is more difficult for a sitting CEO to serve on the Board, as a general approach, they and we expect that they will only serve on one external Board of Directors, and that is the case for Mr. Cope, Mr. La Flèche, and Mr. Harquail, that they each serve on only BMO and no other external board. We also work with them to adjust their committee workload to try to be sensitive to the other demands on their time, and we do that in each case. That said, the attendance record of each of these directors is fantastic, and it takes careful scheduling and a lot of discipline, but they are able to do it, and we benefit hugely from it. Thank you for your observation, and I am grateful that you gave me the opportunity to say how well-served we believe the bank is to have these three outstanding leaders on our Board. Thank you. Are there any other questions? I see no one else at the microphone. Mr. Gagnon, as usual. Mr. Chairman, thank you very much. Willy Gagnon for MEDAC. We are in the habit of asking this question more and more often over the past few years. I know that this is information that is probably public, probably disclosed in the annual report, but we like to hear it from senior management at this meeting because it allows us to get a rationale as well. You know that competition in digital transactions and financial services is extremely strong, extremely tough. I would like to know whether you have closed, and if so, how many branches you have closed this year. If you have closed branches, why did you close them? Is it, in fact, because of digital competition? Thank you very much, Mr. Gagnon, for your question. Darryl, are you going to take that or delegate that to Cam? No, I am going to take it, and I am going to offer a further conversation to Mr. Gagnon as well so that we can make sure we are addressing your concerns. The answer to your question is this is an important consideration. We have closed, I think, Cam, very few branches. Tom and I were conversing maybe in the 5 or 10, 15 range. And that would represent, Mr. Gagnon, a very small fraction of our 1,400 branches that we have. So you can consider that a pace of change that we consider quite slow. In terms of the reasons, I am looking at Cam Fowler, who runs our Canadian personal commercial business, and I think Cam would be happy to have a conversation with you afterwards over a coffee. We take the question very seriously. Thank you for it. Cam- If he wants coffee, I will have a coffee with him. Can you just put up your hand, Cam? He asked us to drink a cup of coffee with him. After the meeting. I see no one else at the microphone. With that, I am going to bring the meeting to a close. I would like to thank all the people who were involved in supporting today's event, including those who handled the closed captioning and the English and French interpretation. They did a terrific job on the translation, and that is not an easy assignment. Most importantly, I would like to thank all the shareholders and employees who took the time to join us today, either here in person or online. That concludes the meeting and its formalities. I declare the meeting terminated, and I thank all of you very much for your participation today. The meeting is adjourned. Thank you.