...My name is David McLean, and I am CN's Chairman of the Board. It's a great pleasure to welcome our shareholders, our employees, and our guests in Edmonton, Alberta, to this, our 18th annual meeting of shareholders. It has been our custom to hold our annual meetings in cities across CN's North American network, and we're delighted to be with you today in Edmonton. CN has had long ties to Edmonton through its predecessor companies. The Canadian Northern mainline reached Edmonton in 1905, which was the date you formed your province, with the main line of the Grand Trunk Pacific reaching here 4 years later. It was the Grand Trunk Pacific that built the hotel in which we're holding today's meeting, the Hotel Macdonald, which opened in 1915.
Soon afterwards, both the Canadian Northern and the Grand Trunk Pacific became components of the then newly formed Canadian National Railway, and the hotel's ownership eventually passed on to other hands. Today, CN maintains a significant presence in Edmonton. We employ 1,800 railroaders here at a range of facilities, including our Walker Freight Yard and our classification operation and CN's Network Operations Center, our Edmonton Intermodal Terminal, an automotive distribution facility, and various freight transloading and materials distribution operations. CN has invested significantly in Northern Alberta in response to strong traffic growth. We've purchased and upgraded four short line railways serving the resource-rich areas of Northern Alberta at a cost of roughly CAD 400 million.
We've spent major sums laying double track on our high-end volume mainline east of Edmonton, adding new capacity to our rail line to the oil sands region of Northern Alberta and improving productivity at Walker Yard. Clearly, CN has stepped up to the plate to drive new capacity and efficiencies to help its customers be more competitive in their markets at home. And, as a matter of fact, the board yesterday discussed at length additional capital expenses that will improve the main line between Edmonton and Winnipeg. We are constantly upgrading them. I'm now pleased to call to order the annual meeting of shareholders of Canadian National Railway Company. Before we begin with the business of the meeting, I would ask Sean Finn, our Executive Vice President, Corporate Services and our Chief Legal Officer, to give a safety briefing for this meeting. Sean?
Thank you, Chairman. Good morning. At CN, every work assignment begins with a safety briefing. This morning is no exception. Allow me to take a few moments to review the safety procedures for the Fairmont Hotel Macdonald. This room is equipped with an audible fire alarm system. The alarm consists of a slow and consistent warning signal, followed by a message providing directions. In case of evacuation, we ask that you follow the hotel staff outside and regroup in the park in front of the hotel. To exit this room, there are two exits that can be used, the main doors to your left, which you came in, and exit doors to your right that lead directly outside to the park. Should we need to evacuate through the main doors, turn left after exiting and then right towards the exit.
Fire extinguishers are located near the emergency exits in this room. In the event of a medical emergency, Dean Solowan, where is Dean? Stand up, is a qualified first aid medical responder, and Benoit Tessier has been designated to call 911. Benoit Tessier? There he is. Thank you very much.
Have a good meeting.
As Sean mentioned, every work assignment at CN begins with a safety briefing, and nothing is more important to us at CN than creating a safe place to work. The safety of the men and women who work for CN is of paramount importance to us as a company. We devote significant effort and resources to ensuring a safe environment and a culture that minimizes work-related injuries. The goal, of course, is to eliminate work-related risks altogether. Through technology, employee education, and the insistence of a safety mindset throughout the company, we work diligently each year to improve our results. CN's significant and ongoing investments in its training programs and its new state-of-the-art training facilities are designed to strengthen CN's safety culture and prepare a new generation of safety-conscious railroaders.
In spite of our best efforts, however, it saddens me to report that two of our employees have died in the service of our company since our last meeting. Please rise and join me for a moment of silence. For Brian Giesbrecht, British Columbia, and Fernando Borges, Alberta. Thank you. I would now like to introduce the senior officers of CN who are present on the stage today.... On my far right is Luc Jobin, Executive Vice President and Chief Financial Officer of the company. Next to Mr. Jobin is Claude Mongeau, President and Chief Executive Officer of the company. Next to Mr. Mongeau is Sean Finn, Executive Vice President, Corporate Services, and Chief Legal Officer and Corporate Secretary of the company. I will act as Chairman of the meeting, and Mr. Sean Finn will act as Secretary of the meeting.
During the meeting, I will entertain questions relating to a specific motion after that motion has been moved and properly seconded, but before the vote on that motion takes place. Please keep your questions as short as possible and focused on the business before the meeting. If you have questions or motions, please use the floor microphones when addressing the meeting. Also, there are two microphones, number one and number two. Also, identify yourself and state whether you are a shareholder or a proxy holder. There will also be two short presentations. Claude Mongeau will give the President's Address, and Luc Jobin will outline the highlights of CN's financial performance for the previous year. After Luc's remarks, we will welcome your general questions. On behalf of the board and the company, we would like to thank the shareholders who submitted their proxies in advance of the meeting.
Of course, only registered shareholders or their proxy holders are entitled to take an active part in or vote at the meeting. To move the meeting along, a number of shareholders have already agreed to move and second formal motions, and I will call upon them at the appropriate times. We will conduct a ballot on the election of directors and the non-binding advisory resolution on the company's approach to executive compensation. I will explain the procedure to be followed at the appropriate time. Regarding the nomination of auditors, we will proceed on this motion by a show of hands.
Corporate Secretary of the company has advised me that the notice calling this meeting and the accompanying information circular, form of proxy, and the annual report were mailed starting on March 22, 2013, to holders of common shares at the close of business on March 6th, 2013, which is known as the record date. A copy of the confirmation of mailing such documents has been filed with me for inclusion with minutes of this meeting. With your agreement, I will appoint Mark Thompson and Christopher Parsons of Computershare Trust Company of Canada, the transfer agent for CN's common shares, to act as scrutineers at the meeting. I see no great rebellion on that point, so I gather they're appointed.
I have been advised by the scrutineers that on the basis of proxies received prior to the meeting and the shareholders and proxy holders attending this meeting, there is a quorum present. I therefore declare that the meeting has been regularly called and properly constituted for the transaction of business. The next item of business is submission of the financial statements of the company. The annual report of the company, which contains the comparative, consolidated financial statements of the company and all its subsidiaries at December 31st, 2012, together with the auditors and the company's management discussion and analysis, has been mailed to shareholders of the company who have requested it. Copies were made available to you this morning in the adjacent room. There's no formal action required to be taken with regard to this item on the agenda.
However, as I previously mentioned, Luc Jobin, our Executive Vice President, Chief Financial Officer, will be delivering a report on the financial statements later this morning. We will now proceed with the election of directors. According to a resolution of the board, 13 directors are to be elected. Information regarding the nominees proposed by management is set out in the management information circular sent to all shareholders. I would now ask Sean Finn, Corporate Secretary of the company, to read the names of those nominated for election as directors in the management information circular.
Mr. Chairman, the following individuals are nominated for election as directors of the Canadian National Railway Company: Michael Armellino, Charles Baillie, Hugh Bolton, Donald Carty, Ambassador Gordon Giffin, Edith Holiday, Maureen Kempston Darkes, the Honorable Denis Losier, the Honorable Edward Lumley, David McLean, Claude Mongeau, James O'Connor, and Robert Pace.
Thank you, Sean. I'll ask Stephanie Miller to nominate the directors.
My name is Stephanie Miller. I am a shareholder of the company, and I'm pleased to nominate each of the persons named by the Secretary of the meeting to be elected as a director to hold office until the next annual meeting of shareholders, or until his or her successor is duly elected or appointed.
Thank you, Stephanie. Ken Ulmer, will you second the nominations?
Mr. Chairman, my name is Ken Ulmer, and I'm a shareholder of the company, and I second the nomination.
Thank you, Ken. As there are no further nominations, I declare the nominations closed. Pursuant to a resolution adopted by the board of directors, 13 directors are to be elected, and 13 eligible candidates have been nominated. I now direct that a ballot be taken on the motion to elect the directors. The names of 13 management nominees for election of directors are set out on the ballot. You should mark the ballot opposite the names of each of the persons for whom you wish to vote and complete the form. Please sign and print your name in the places indicated in the bottom of the ballot, and indicate the total number of shares that you are entitled to vote as a registered shareholder and/or proxy holder. The board of directors recommends voting for the election of each nominee. Many shareholders are pret...
that are present have already filed proxies with us. These shareholders should not complete the ballot, since their shares will be voted in accordance with the instructions contained in the proxies granted to their proxy holders. Registered shareholders who have not sent in their proxies and proxy holders who are present have received a ballot at the registration desk. It is included in the agenda package handed to you. If you are entitled to vote today but have not received a ballot, raise your hand so that the scrutineers may provide you with the ballot form. Please hold on to the ballot forms. We will collect them after the ballot on the advisory vote on executive compensation. We will now proceed with the appointment of auditors.
I would like to call upon Denis Losier, the Chairman of the Audit Committee of the Board, to present the motion to appoint the auditors of the company.
Mr. Chairman, my name is Denis Losier, and I'm a shareholder of the company. I move that KPMG LLP, Chartered Accountants, be appointed auditors of the company to hold office for the fiscal year 2013 or until the close of the next annual meeting of shareholders.
Thank you, Denis. Paul Butcher, would you please second the motion?
Mr. Chairman, my name is Paul Butcher. I am a shareholder of the company, and I second the motion.
Thank you, Paul. All those in favor of the motion, please do by raising your hand. All those opposed? Seeing no one opposed, I declare that KPMG LLP Chartered Accountants have been appointed as the auditors of the company to hold the office for the fiscal year 2013, or until the close of the next annual meeting of shareholders. The next item on the agenda is the consideration of the non-binding advisory resolution on the company's approach to executive compensation. The Statement of Executive Compensation section in the company's information circular was sent to shareholders and discloses in detail our approach. The results of the vote will not be binding on the board. However, the board will take into account the results of the vote, together with other pertinent information or comments from shareholders when considering the company's approach to executive compensation.
I will ask Jody Evely to present the motion. Jody?
Mr. Chairman, my name is Jody Evely. I'm a shareholder of the company. I move that the non-binding advisory resolution on the company's approach to executive compensation, as set out on page six of the Management Information Circular, be approved.
Thank you, Jody. Carole Cousineau, would you second the motion?
Mr. Chairman, my name is Carole Cousineau. I'm a shareholder for the company, and I second that motion.
Thank you, Carole. I direct that a ballot be taken on the motion to adopt the non-binding advisory resolution on the company's approach to executive compensation. You should sign and print your name on, in the places indicated at the bottom of the ballot. Please indicate the total number of shares that you're entitled to vote as a registered shareholder and/or a proxy holder. You're asked to either vote for or against the motion. The board of directors recommends voting for the motion. When your ballot form is completed, hand it together with the ballot on the election of directors to the nearest attendant. We will now proceed to vote. This is at the point where I do the soft shoe and entertain you while we're voting. Unfortunately, I...
It's been a long time since I did the soft shoe, so I think I'm just gonna sit here and tell stories. Are there any more ballots to be collected? We do have numerous proxies that have been support-- It's not like people are, are not interested in what's going on here. It's just a lot of institutional shareholders, particularly, vote by proxy. Any further ballots? I'll call once more. Any further ballots to be collected? Okay, I think we've given people ample time to vote. While the scrutineers are tabulating the ballots, we will continue with the meeting. We do not have any other business to bring before the meeting, so we now move to the next item, which is our Chief Executive Officer's presentation and address. 2012 was a record year for CN on many fronts.
Thanks to the company's agenda of operational and service excellence, our focus on supply chain collaboration and solid execution, CN's 2012 growth continued to outpace that of the overall economy, generating the highest volumes and earnings in the company's history. Claude Mongeau made significant contributions to our success, helping the team drive the major gains in service, safety and asset utilization, achieve superior growth through share gains, through a range of existing markets and new ones, and open new markets with breakthrough opportunities, and build stronger ties with our employees and key stakeholders. Claude, I call upon you now to address the shareholders about our substantial 2012 successes, and to talk about the next steps in CN's remarkable transformational journey. Claude?
Thank you, David, and thank you to all, to be here at our annual general meeting in Edmonton. It's very fitting that we would be here, in Edmonton for that, AGM. Edmonton is the base of our-
... operating network. We have here all of the people who day in, day out, manage the with the network function and try to ensure smooth service, efficient service across North America. It's also the home base for our Western region. Mike Cory, who leads our Western region, is based here in Edmonton with his team, and they oversee the activity of about half of our business volume. That's a high concentration of business going both for export, rest of Canada, and deep into the U.S. I wanted to spend a moment to talk to you about what CN stands for.
Luc will give you a more detailed report of our financial performance and some of our initiatives in 2012, but I thought it would be a good idea to step back and tell you what makes CN tick, what do we stand for, and why do we believe that we have a bright future in this business. As you know, our mantra, our core philosophy, is about delivering operational and service excellence. It's a balancing act. It's about both operating efficiency and quality service for our customers. It's about both inside-out management of the core metrics to sweat the assets and outside-in perspective on what it is that we need to do to help our customers win in our marketplace. We are truly trying to become a true supply chain enabler.
We are a railroad, first and foremost, but we wanna be a true supply chain enabler. We can play a role in the middle of it all, helping partners in the transportation chains, whether it's for bulk, intermodal, or general cargo traffic, have better end-to-end service experience. Now, these last three months, we were tested, particularly here in Western Canada. Mike and his team, and I see some of them in this room, have been fighting the battle of a very difficult winter for many months. It extended much longer than usual, and it was harsher than the norm, even for Canadian winters. Now, of course, in those kinds of circumstances, our service was impacted. Our network efficiency was also impacted. So our ability to deliver the balance between operational and service excellence was tested. We are coming out of it. It is spring in Edmonton.
It is a sunny day. There's only a little bit of snow on the ground, and we are, as we speak, recovering our fluidity and getting our service back where it needs to be to help our customers meet their demand in their own markets. We are truly supply chain enabler, and we are gonna learn from our difficulties over the last few months to come back even stronger next winter. We do this because, first and foremost, we wanna create value for our customers. We are a service business. At the end of the day, we can only move what our customers produce. This is why an outside-in perspective is important. This is why end-to-end supply chain thinking is critical, and this is why we believe firmly that we have the right agenda to help our customers win in the marketplace.
As we do this, because we are such an important part of the infrastructure in both Canada and the U.S., our network goes from Vancouver to Halifax, all the way to New Orleans. We truly believe that we are a backbone to the economy. We touch, on an ongoing basis, more than CAD 250 billion of goods in any given years. We connect North America to the rest of the world. We connect Canada and the U.S. on a northbound and southbound basis, and we connect Canadians and Americans all over our network. And that role we take seriously. We think we play it very well, and we are determined to continue to improve. Part of that improvement path is to deliver responsibly and safely. Safety is the cornerstone of our business. Safety makes good business sense.
Delivering responsibly, having a clear sustainability agenda is essential for your social license and the connection to the communities we touch across the country. We believe we are at the forefront of most companies in that agenda. We are more fuel efficient than the rest of the industry, by about 15%. We care about a clean right of way approach. We focus on connecting with the communities that we touch, and we support our employees in their efforts wherever they decide to champion causes. Delivering safely and responsibly is more than just a statement for the AGM. It's the way we do business at CN. At the end of the day, if you stand for the right principles, and if you do day in, day out, what I've just described, you create the conditions for solid shareholder value creation.
That's what business is all about, that's what CN is known for, and I am convinced that we have the right approach, the right asset, the right people, and will continue for many, many years to deliver solid shareholder value. Thank you.
... Thank you, Claude. Now our CFO's presentation. CN's overall corporate performance for 2012 was in the best, was the best in the company's history, with financial results exceeding targets for all corporate performance objectives. Revenues increased by 10%, adjusted diluted earnings per share rose by 16%, and free cash flow, which is my favorite item, topped CAD 1 billion. This was indeed a remarkable achievement. I now call upon Luc Jobin, CN's Executive Vice President, Chief Financial Officer, to discuss CN's 2012 financial performance. Luc?
Thank you, David. I would also like to thank CN shareholders for joining us this morning here in Edmonton and via webcast. It is my pleasure to be here today and to present my report at the Annual General Meeting of CN shareholders. So let me get right to it. 2012 was a record year for CN, a record year in terms of volumes, earnings, and safety. Claude has just reviewed with you how CN's strategic agenda is gaining momentum by balancing operational and service excellence as we deepen our supply chain approach. Through continuous service innovation in our supply chain partnerships, we're helping our customers win in their markets, which in turn, is allowing us to grow faster than the economy. We remain focused on the delicate balancing act involved in continuing to drive operational efficiency while improving service excellence.
This is the formula that allows us to accommodate revenue growth at low incremental cost. The net result, as we can see from our performance, not only delivers value to our customers, but it also rewards our shareholders. Clearly, the company's stellar financial results this past year substantiate our efforts to become a true supply chain enabler. In 2012, CN achieved the highest annual volumes, revenues, and earnings in the company's history. On a reported basis, earnings per share grew 13% to CAD 6.12. Both 2011 and 2012 include a number of items that affect the comparability of the financial results. Adjusting for these non-comparable items, CN's 2012 adjusted earnings per share grew an impressive 16% versus 2011. Allow me to walk you through the key drivers that underpin this performance.
The company handled record volume in 2012, with carloads up 4% versus 2011. Growth was driven by modest improvements in North American and Asian economies, as well as by the company's ability to leverage its supply chain focus. This allowed us to outperform base market conditions in a number of commodity segments. While all commodity groups grew revenues in 2012, notable growth was experienced in a few sectors, namely intermodal, which was driven by share gains in domestic and international markets. Also, in the petroleum and chemicals, as well as in the metals and minerals sectors, volumes grew significantly, fueled by strong demand for energy-related commodities. Overall, revenues increased 10%, just shy of CAD 10 billion, achieving the highest revenues in the company's history.
We benefited from a higher fuel surcharge as a result of higher volumes and year-over-year increases in fuel prices. Revenues were also positively affected by the impact of a weaker Canadian dollar on U.S. dollar-denominated revenues. On a constant currency basis, therefore, revenues were up 9% in 2012. At the same time, CN continued to maintain its disciplined approach to managing expenses. 2012 operating expenses increased by 9%. This increase was mainly due to higher labor and fringe benefit expense, increased purchase services and materials, as well as increased fuel costs. On a constant currency basis, expenses increased by 8% compared to 2011. In 2012, the company's operating ratio improved by 60 basis points to 62.9%. 62.9%. Now, that's close to seven points better than our U.S. competitors.
There's only one time in CN's history when the annual operating ratio dipped below that level, and that was in 2006, and we had some very favorable one-time fuel hedging gains and claims adjustments at that time. So let me assure you, when it comes to operating discipline, it's in our bones. We're passionate about it. But we're also focusing on how to balance day in, day out, that operating productivity with the service excellence required to grow our business. Looking ahead, we see a sustainable mid- to low-60s in terms of operating ratio. That's where we're at, and that's what we see looking into the future. So the key is to continue accelerating the growth and to continue managing our costs as tightly as ever, always with an eye to the customer as well as to the bottom line.
When you're successful in growing revenues at low incremental cost, you create the capacity to generate cash.... In 2012, CN generated just over CAD 1 billion of free cash flow. That's cash after capital investment and after dividends. Our 2012 free cash flow included proceeds of CAD 310 million, generated by the sale of a few segments of our Greater Toronto subdivisions. Adjusting for these asset sales, the company recorded free cash flow of CAD 695 million. We also made voluntary pension contributions of CAD 700 million in 2012. Over the last three years, we've made over CAD 1.3 billion dollar in such contributions, in anticipation of funding requirements and to strengthen the financial position of the company's pension plan. Turning now to capital expenditures. Excuse me.
CN invested just over CAD 1.8 billion on capital programs in 2012. Approximately CAD 1 billion of which was for basic track infrastructure, including the replacement of rail, ties, other track materials, and bridge improvements. These investments enable us to continue operating a safe railway and to improve the productivity and fluidity of the network. Over the last five years, the company has reinvested in the business more than CAD 8 billion. These investments provide us with a solid foundation, on top of which we're building and executing our model of operational and service excellence. For example, our investments to add and extend sidings, particularly in Western Canada, provide the infrastructure needed to run longer, more efficient trains.
Our locomotive renewal plan, including distributed power technology, is providing the locomotives to meet our growing volumes and improve service and reliability, especially in cold weather condition. Those new locomotives, combined with additional investments in technology and training, are keeping us at the forefront of the industry in terms of fuel efficiency. We're also investing in growth across a variety of commodity segments, such as in crude, frac sand, intermodal, and bulk. These investments, combined with process improvements, are allowing us to increase our performance in terms of customer order fulfillment rates. Little less obvious, perhaps, but a critical part of the CN foundation is our investment in information technology. We invest in the order of CAD 100 million per year in this particular area.
These investments help us streamline internal processes, provide the timely information required to make informed decisions, and are key to supporting productivity, enabling a supply chain approach, and driving our first mile, last mile customer service initiatives. So all of this investment is paying off for us and will continue to do so well into the future. Our strong cash flow performance and our disciplined approach to capital helps us maintain a solid balance sheet. Adjusted to include the impact of operating leases, our debt ratio was 40% at the end of 2012, while our adjusted debt to EBITDA ratio held steady at 1.6x . Prudent financial management, that's another key, another key piece to the CN foundation. Our investment-grade credit rating allows us to have continuous access to a low-cost source of funds. Let me turn now to our shareholders.
Rewarding shareholders for the confidence they entrust in us is a priority. With a strong balance sheet and more solid economic prospects, the company bought back nearly 17 million shares in 2012. As you can see, we've had a robust buyback program in place over the last five years, pausing only in 2009 during the worst part of the recession. Our current program, which began in October of last year and runs until October of 2013, provides for the repurchase of up to CAD 1.4 billion with a maximum number of 18 million shares. Dividend growth has also been a priority. The dividend has actually grown every year since the company was privatized. That's a 17-year track record of uninterrupted dividend growth.
Within this time frame, CN has grown dividends at an average rate of about 16% per year. For 2013, the company's board of directors has approved a 15% dividend increase. When you combine these two measures, the value returned to shareholders is over CAD 7 billion over the last five years. Now, this clearly demonstrates our commitment to delivering shareholder value. Of course, the reward in terms of stock price performance has also been substantial. Over the last five years, our Canadian stock price increased over 94%. When you add in the reinvestment of dividends, the cumulative total return is 111%. By comparison, over the same period, the TSX increased by 4%, while the S&P increased by nine.
So our supply chain approach is helping us improve not only service, but also is challenging us to seek new ways to gain efficiency. We have a great franchise, solid service, and new product innovation. It's helping us. It's helping our customers win in their markets, and it's helping us, as a result, grow both revenues and the bottom line.... Yesterday, the company reported its first quarter 2013 earnings. Diluted earnings per share decreased by 26% to CAD 1.30. However, both the first quarter of 2013 and 2012 included gains from asset sales. Excluding these gains, adjusted diluted EPS for the quarter was CAD 1.22, an increase of 3% over the same period last year.
The company faced a number of operational challenges in the first quarter, including harsh weather conditions in Western Canada, which hampered operations, congested the network, and constrained our volume growth. Fortunately, we've turned the corner since then, improving train velocity and reducing dwell times in yards across the network. CN will emerge stronger from this first quarter experience. To improve our network resilience, particularly given our expectation of continued strong volume growth, we're undertaking several capacity enhancement projects in the Edmonton, Winnipeg corridor. These and other productivity initiatives will increase CN's plan 2013 capital spending to CAD 2 billion, an increase of CAD 100 million dollars over our original plan. With this, allow me to review quickly our 2013 outlook. We're assuming a gradual, though modest, improvement in the North American economy and positive growth in Asian markets.
This should translate into cargo growth in the range of 3%-4%, with stronger revenue ton miles as we continue to gain length of haul. We do have about CAD 150 million worth of headwinds this year relating to pensions and depreciation studies. On the pension front, our expense will increase by about CAD 120 million in 2013. This is mostly the result of interest rates that have kept declining for several years now to an all-time low at the end of 2012. These lower interest rates turn into accumulated actual losses, which must be amortized into earnings. Depreciation studies, on the other hand, are carried out periodically, and they are used to adjust the useful life of certain assets, which affects our depreciation expense.
Despite these headwinds and a challenging first quarter, we are maintaining, however, our objective and our guidance, and that is to deliver high single-digit adjusted EPS growth in 2013. In terms of free cash flow, we're forecasting to generate in the range of CAD 800 million-CAD 900 million, and that's after dividends, capital investments, and also after CAD 100 million of special pension contribution, which we completed earlier this month. With regards to capital expenditures, as I mentioned earlier, our target is now CAD 2 billion. So as we look ahead to the balance of 2013 and beyond, we have a solid foundation in place. CN team remains more committed than ever to deliver superior results, creating value for customers and shareholders as we continue to unfold our strategic agenda and leverage a solid pipeline of growth and productivity initiatives.
We achieved an outstanding performance and a record year in 2012. I, for one, along with the CN leadership team, remain committed to ensuring that the CN franchise is well positioned to deliver customer and shareholder value well into the future. On that note, thank you very much. Back to you, Mr. Chairman.
Thank you, Luc. It's nice to know the finances are in good shape. I now have received the report of the scrutineers. According to the proxies received and ballots cast, each director nominee received at least 96.96% of the shares voted in favor of his or her election. I, therefore, declare that the 13 nominees set out in the management information circular have been duly elected as directors of the company to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed. I also declare that the non-binding advisory say on pay resolution on the company's approach to executive compensation has been approved by a majority of the shareholders. Just to give you an idea, it was 97.76%. So both of these resolutions have been passed.
I would now like to take a moment to present the members of your board of directors. They're a very talented group from all over North America, who make every effort to bring value to the shareholders of the company. Before I proceed further to nominate, I wanna tell you a little bit about them. These are people who really are very committed to this company. If you look at the proxy statement, you'll see we have an attendance record, and our attendance record is virtually 100%. There might be one or two meetings that someone misses 'cause they got a broken leg, and they've got their mouth taped. But other than that, they show up.
The second thing I think you should know about them is the average value of the shares owned by the board of directors, excluding the CEO, is CAD 9.8 million per director. Now, that's skin in the game, and I really think that it separates CN from a lot of other companies. I don't know as a fact, but I doubt that many other publicly traded Canadian companies have shareholdings of their directors of that magnitude. So these are not only directors that are committed to do the job, but they have big investment in the company, and everything they look at, at every board meeting, is viewed from the point of view of a shareholder. And I think one of the things I'm most proud of at CN is ...
is that we have a big focus on increasing shareholder value, and that's been our, our main focus from the day we, we started. So I'll now ask each of them who are seated before me to rise and face the audience. You've got to face your, your audience now, guys. Remain standing until all of them have been introduced, and I'd ask you to hold your applause until they've all been introduced. From Long Beach Island, New Jersey, a retired partner of the Goldman Sachs Group, where he was chair and CEO of the Goldman Sachs Asset Management and an outstanding transportation analyst for many years, Michael Armellino. From Toronto, Ontario, a former chairman and CEO of the Toronto-Dominion Bank, chair of the board of the Alberta Investment Management Corporation, a director of George Weston Limited and Telus Corporation, Charles Baillie.
From Edmonton, Alberta, the chairman of EPCOR Utilities, Inc., and a director of Capital Power Corporation, Teck Resources Limited, TD Bank Financial Group, WestJet Airlines Limited, and a former chairman and chief executive partner of Coopers & Lybrand, Canada, now PricewaterhouseCoopers, Hugh Bolton. From Dallas, Texas, the retired chairman and CEO of AMR Corporation and American Airlines, and a former vice chairman and chief financial officer of Dell, Inc. He currently serves as the lead director of Barrick Gold Corporation and also serves as a director of Dell, Inc. and Talisman Energy Inc. and Gluskin Sheff + Associates Inc. He's also chairman of Virgin America and Porter Airlines, Donald Carty. From Atlanta, Georgia, a senior partner in the law firm of McKenna Long & Aldridge.
Unfortunately, he couldn't join us today because it's a long story, but we had originally thought of having our meeting in Alberta, and we thought we might have done it in Calgary. We finally decided to do it in Edmonton, and he had moved the TransAlta board to Calgary, thinking we're gonna move there. So bottom line is, he can't chair the annual meeting like I'm doing and be in two places. But anyway, Ambassador Gordon Giffin is a director who would have very much liked to be here and was on the phone yesterday at our board meeting from Palm Beach, Florida, a lawyer and former general counsel of the United States Treasury Department, Secretary of the Cabinet of the White House under President George H.W. Bush.
She's also, I think, now a former director of Heinz Company or not former yet? Not yet. Okay, I know it's been taken over, so it's only a matter of time, but she has been a director of Heinz and still is. Hess Corporation, RTI International Metals, White Mountains Insurance Group, and the Franklin Templeton Group of Funds, Edith Holiday. From Fort Lauderdale, by the sea, the retired Group Vice President, President, Latin America, Africa, the Middle East, General Motors Company, and director of Balfour Beatty PLC, Enbridge Inc., Brookfield Asset Management Inc., and the Irving Oil Company, Maureen Kempston Darkes. From Moncton, New Brunswick, the President and CEO of Assumption Life and the director of Enbridge Gas New Brunswick, and Plaza Retail REIT, and Chair of the Board of Invest New Brunswick.
He's a member of the Security Intelligence Review Committee, and as such, is a member of the Privy Council of Canada and a former Ministry of Fisheries, Aquaculture, and the Minister of Economic Development and Tourism for the province of New Brunswick, the Honorable Denis Losier. From South Lancaster, Ontario, the Vice Chairman of BMO Capital Markets, a director of BCE Inc., Bell Canada, and a member of the advisory boards of Mercedes-Benz Canada, the Chancellor of the University of Windsor, and a former federal Minister of Industry, International Trade, Regional Economic Development, Communication, Science, and Technology, the Honorable Edward Lumley. From Fort Lauderdale, Florida, the former Chair and Chief Executive Officer of Republic Services, Inc., and a director of Clean Energy Fuels Corp.
He was named on the list of America's Best CEOs each year from 2005 to 2010 and 2011 on the Institutional Investors, All-American Executive Team, James O'Connor. I'm gonna skip the next one, and I'll tell you in a minute why. And maybe just leave his on, because I can do the rest by myself. From Montreal, Quebec, our President and Chief Executive Officer, Claude Mongeau, and myself. Now, the reason I didn't introduce the last director is I want to say a few things before I do.
First of all, about a year ago, I approached the board and, under the direction of our Chair of our Corporate Governance Committee, Michael Armellino, asked the board to develop a process to pick a vice chairman of the board, who would subsequently become chairman when I retired at the annual meeting in 2014. I'm pleased to say that the process was very, very well done, and I think one of the things about CN that we've been able to do over the 18 years I've been chairman is to get it right in terms of making proper appointments.
The process was very well done, and the board decided to unanimously elect a Vice Chairman, and he is Robert Pace from Glen Margaret, Nova Scotia, the president and CEO of The Pace Group, a director of High Liner Foods, Inc., and Hydro One, and he's been Chair of both our Audit Committee for a long period of time and Chairman of our HR Committee. I have no doubt whatsoever that Robert will make an excellent Chairman of CN. Ladies and gentlemen, this is your board. We are fortunate to have in attendance today at our meeting, a former senior vice president of operations, and I think he's here. Jack, Jack McBain, are you here? Yeah, Jack McBain is the author of the McBain International Terminal in Edmonton, and we're very, very proud to have Jack here.
Also the former Vice President, Chief Safety Officer, Paul Miller. Paul's standing right beside. Also with us today are two former CN directors, and we have a tradition in CN, which we started about many, many years ago now, to elect certain directors as the to the position of a director emeritus. Basically, what a director emeritus is at CN, it's somebody who has had at least a minimum of 10 years on the board, but more importantly than that, has made a very significant contribution to the company. We have three directors emeritus, two of whom aren't with us today, Purdy Crawford from Toronto, and Raymond Cyr from Montreal.
But we do have two of our directors emeritus with us today, who are absolutely outstanding individuals, who have given so much to us in the past and who continue to give us counsel and advice when asked, and I'm just delighted that they're both here. From the city of Toronto, the former chairman and chief executive officer for, I think, over 25 years at the Bank of Nova Scotia, Mr. Cedric Ritchie. And from the city of Calgary, a wonderful friend of mine and an incredibly effective director, Jim Gray. Got to get my script to catch up with me. We would also like to acknowledge the passing of a former senior vice president, western region of CN, a very old friend of mine, Ross Walker, during the past year.
CN's Edmonton Yard, the Walker Yard, was named after Ross, recognizing his long and preeminent career at CN. As we've now completed all of the formal business to come before the meeting, I'll entertain a motion to conclude the formal part of the meeting. Karen Phillips, would you introduce a motion?
Mr. Chairman, my name is Karen Phillips. I'm a shareholder of the company. I move that the formal part of this meeting be concluded.
Thank you, Karen. Matthew Lamothe, would you second the motion?
Mr. Chairman, my name is Matthew Lamothe. I'm a shareholder of the company, and I second the motion.
Thank you, Matthew. All in favor, raise your hand. Opposed? I declare the motion carried. We now have a period of time for general questions, so any shareholder or proxy holder who has a question should use the floor microphones. In the interest of fairness to everyone who wishes to ask a question, I ask you to restrict your questions to matters relevant to the business of the company. In order to allow the maximum number of shareholders who wish to ask questions, we ask that you keep your questions short. Anyone who wants to ask more than one question will be asked to hold his second question until anyone else that wants to ask a question has had the opportunity to do so. Prior to asking your question, state your name and whether you are a proxy holder or shareholder of the company.
Do we have anybody who wishes to ask any questions?
My name is Joe Torcia. I 'm a shareholder of the company.
Thank you.
CN opened its new Calgary logistics park earlier this year. What intermodal market opportunities does CN think it can capture in the Calgary region market?
Would you like to handle that, Claude?
Yes, I am. We were very pleased, and actually, it was just last week, to open that, you know, first-rate, world-class facility. It's gonna be a great operating terminal for our intermodal business, but also a real estate logistics park to bring customers closer to our terminals to gain efficiencies. You know, Calgary and Alberta, in general, are huge hubs for distribution for both domestic and international traffic. Large retailers, like Walmart, Target, and a range of others, have their main facility there. So we see a huge opportunity for growth for the Alberta proper market, but also export business, you know, particularly to Asia, out of Western Canada through that facility.
Thanks, Claude. Any other questions?
My name is Les Szumeo, and I'm a shareholder of the company. Crude by rail is grabbing the newspaper's headlines, and concerns have been raised about safety and greenhouse gas emissions. What does CN do?
Claude, do you want to handle that one?
Yeah.
You get the easy ones.
Yeah, good question, Les. The, you know, crude by rail is an entirely new phenomenon. It's something that has started really only a few years ago. Railroads are complementary to a pipeline. Both modes are helping serve the energy markets in Canada and in the U.S., which are, you know, growth opportunity for North America, efficiently and safely. We think railroads have. And pipeline, for that matter, both have an enviable safety record. Both are sustainable in transporting their goods.
We believe that the complementarity and the fact that rail has been able to develop a niche is something that's good for CN, but also good for the energy industry, because getting to market is critical to have value for the product and to sustain, you know, solid, safe, and sustainable development for years to come.
Okay, any further questions to come before the meeting?
Mr. Chairman, my name is Don Penny, and I'm proud to be a shareholder of CN.
...What is the status of the Canadian federal government's push toward regulated service level agreements, and what is CN's response to the move?
You want to handle that, Claude, or do you want Sean to handle that?
You know, let me handle it. I've been a spokesperson for CN for several months now, saying that I believe, as I said earlier in my remarks, that the railroads and CN in particular, are a true backbone to the economy. We take our responsibility very seriously. I think Canada is fortunate. We have a world-class rail system. It's the envy of the rest of the world. We have the lowest rates for freight rates for rail in the - of all of the OECD countries. We have, you know, by and large, a remarkable service record. Now, that, you know, winter is winter. It's always gonna be here. Our challenge is to get better. But when you step back, we're innovating, we're providing good service, and all of that is on the basis of tried and true commercial forces.
So I have said to the government, you know, maintaining the focus on commercial engagement, on supply chain visibility, on innovation, keeping to a deregulation agenda that has been so successful for Canada over the last 20 years, is the right approach. Now, the government has decided to introduce a legislation. We will see if it passes, and if it passes, we will work with stakeholders to make it as least impactful as we can be, as we can have it be, to make sure that it does not stifle innovation, and it allows us to continue to provide service on a commercial basis to our customers.
Okay. Do we have any further questions? Please go to the microphone.
My name is John Ware. I'm a shareholder. I noticed in The Globe and Mail, yesterday, I believe, a concern on the part of some shippers for, car supply for forest products. I wonder, is that a real concern?
Thank you for asking that question, actually. As I said yesterday during our analyst call, I think we have to be careful not to take press accounts at face value without proper review of the facts. There's quite a bit of advocacy, in particular by the forest product industry, and perhaps it's because they still want to convince the government to go forward with its legislation. We did have a difficult winter. Certainly, it impacted our ability to supply our customers. But if I take centre beams, for instance, which are used to move lumber, we had more than 11% increase in our fleet of centre beams this winter to accommodate what we believe would be the demand.
Now, obviously, with cycles, and velocity being impacted by winter, we cannot meet every order, and we are working hard as we speak, to recover. But I think it's important to, follow the facts and, to have balanced advocacy, because if you just try to paint the railroads as the bad guy, eventually you, you deprive us of our ability to be the true backbone that we want to be. And that's the message I would send to the forest products industry.
Okay. Any further questions? Any further questions?