AGM 2019

Apr 4, 2019

Good morning, ladies and gentlemen. Mesdames et messieurs, bonjour. Good morning, ladies and gentlemen. shareholders. I'm Kathleen Taylor, and I have the privilege of being Chair of the Board of Royal Bank of Canada. I'm pleased that so many of you could join us here in Halifax today, and many more are with us on the webcast. We're delighted to return to our roots to mark where RBC was incorporated 150 years ago as the Merchants Bank of Halifax. As notice of the meeting has been duly given and a quorum is present, I call the meeting to order. You may address this meeting in English or in French. If you'd like a translation headset, please raise your hand and an attendant will assist you. English is on channel 2, French on channel 10. After my introductory remarks, Dave McKay, our President and Chief Executive Officer, will make a presentation, followed by the regular items of business, including the election of directors and the appointment of our auditor. Shareholders will also be asked to approve a non-binding advisory resolution on our approach to executive compensation. We will then consider the shareholder proposals and deal with any other business, including questions from shareholders. After the meeting, RBC representatives will also be available at the information desk located in the lobby to answer any additional questions you may have. Please note the caution on the screen. At this meeting, we may make forward-looking statements which involve certain assumptions and have inherent risks and uncertainties. Actual results could differ from these statements. As always, we welcome questions and comments from shareholders. Some guidelines are set out in the agenda that you received this morning. Please keep your comments brief. In fairness to other shareholders, we ask that you limit your remarks to just a few minutes and speak only once to each matter that comes before the meeting. At the appropriate time, if you would like to ask a question, please proceed to a microphone. When you are called upon, please start by giving your name and tell us whether you are a shareholder or a proxy holder. Shareholders who are watching the annual meeting on the internet may also submit questions through our website. Before we begin, I would like to take a moment to introduce the leaders on stage. From your left to right, we have Rod Bolger, Chief Financial Officer, Dave McKay, President and Chief Executive Officer, and Karen McCarthy, Senior Vice President, Associate General Counsel, and Secretary. I will act as Chair of the meeting, and Karen will be our Secretary. Pina Pacifico and Joe Carrico, officers of our transfer agent Computershare Trust Company of Canada, will be our scrutineers. Also present today are members of our Board and senior management team. As the bank's stewards, your Board is responsible to ensure that RBC has the right strategy, risk management, and talent to deliver long-term value for shareholders. We advise management on RBC's strategic direction, challenge their assumptions, and assist in identifying and building pathways to sustainable growth within the bank's risk appetite. Of course, people are the cornerstone of our continued success. The leadership of our talented executive team and commitment of our dedicated employees drives the success of our strategy, embracing our purpose, helping clients thrive, and communities prosper. As a leading corporate citizen, RBC brings the full strength of our organization to create positive and lasting environmental and social impact in the communities where we operate. Once again, in 2018, RBC was recognized for its high standards, winning best overall governance and best practices to enhance boardroom diversity at the Excellence in Governance Awards in Toronto. We are also committed to continually improving our pursuit of governance excellence, and will always seek to engage with our key stakeholders in creating new and innovative approaches to strong stewardship that align with RBC's strategic objectives and core values and create long-term value for our shareholders. Now it is time to hear from Dave McKay about the bank's performance and its future outlook. Dave, over to you. Well, thank you, Katie, and welcome to RBC's annual meeting. I am proud that we are celebrating in the city where it all started 150 years ago, Halifax, Nova Scotia. As we enter our 150th year in a position of strength, coming off one of the most remarkable years in our history. In 2018, we achieved record earnings while reaching new heights in customer satisfaction and employee engagement. We earned CAD 12.4 billion and achieved 11% earnings per share growth. We met or exceeded all of our medium-term financial objectives. We also raised our dividend by 8% and returned a further CAD 1.5 billion of capital to shareholders through buybacks. In total, clap, thank you. In total, we delivered 58% of our profits back to shareholders last year. At the same time, we maintained a strong capital position, prudently managing risk, and continuing to make significant investments in technology and talent to drive future growth. These outstanding results demonstrate our ability to execute against our clear strategic goals while transforming our bank for the digital world. This momentum has carried over into 2019. Amid challenging market conditions, we posted solid performance across all our businesses with first quarter earnings of CAD 3.2 billion. Again, we increased our dividend by 4%. This is a clear testament to the strength of our diversified franchise and our ability to provide advice and insights to clients during periods of market uncertainty. It is our belief that we have the vision, the scale, strategy to create even more value for our clients in the years ahead, driving long-term sustainable growth for you, our shareholders, in the future. Thank you for your support. The foundations of our success have been laid over time. In fact, you can trace them back to our origins here in Halifax in 1869. I want to take a few moments to reflect on how we got here and why our past is helping us shape our future. Throughout RBC's history, we have held a few foundational principles that continue to define us today. They are grounded in our purpose. It is why we come to work each day, helping clients thrive and communities prosper. We know our success is only as sustainable as our clients' success. We also shoulder an important responsibility to help create positive social and economic impact within our communities. It is core to our business and our culture, and it is well documented that organizations who articulate a core purpose outperform the market over time. When our founders incorporated the Merchants Bank of Halifax in 1869, Canada was a young country still trying to find its place in the world. Over the next few decades, the bank grew for the same reason the country did. We placed our faith in entrepreneurs. In our earliest days, we thrived by supporting the aspirations of enterprises in Atlantic Canada who were not afraid to take risks and launch new ventures, demonstrating a relentless focus on helping clients thrive that continues to this day. One such client was Starr Manufacturing in Dartmouth, which revolutionized how ice skates were designed in the 1860s. The Acme skate, invented by a young employee named John Forbes, was wildly popular because it was the first skate to attach blades securely to a skater's boot using a mechanical lever. They allowed skaters to start, turn, and stop much more easily, contributing to the rise in popularity of ice skating and development of Canada's national sport, ice hockey. By the 1870s, the skate was the most sought-after skate in the market, with millions of pairs exported around the world. Six of seven starters on the 1902 Stanley Cup Montreal Hockey Club wore them, and even the King of Spain is believed to have owned a pair. Over the past 150 years, we have thrived by supporting businesses that have innovation built in their DNA. Enterprises that have reimagined industries, solved society's biggest challenges, and ultimately helped make life better for people. It was true then with companies like Starr Manufacturing, and it remains true today. That is why we have gone where our clients have gone, expanding across Canada, the United States, and to select global markets. Through our own bold ambition, the U.S. is now our second market and key driver of RBC's overall growth. I want to offer a sincere thank you to the 60 million clients who continue to put their trust in RBC. With client expectations shifting in today's digital world, we've been on a journey to transform our bank. We started building world-class capabilities in artificial intelligence much earlier than our peers. Today, this means we're able to deliver more personalized insights for our retail, commercial, and corporate clients, all while maintaining the trust those clients have invested in us to safeguard their data. Leveraging new technologies and creating an exceptional digital experience is only part of our strategy. We fundamentally believe that in order to stay connected with our customers and maintain relevance, we need to reimagine the role we play in our clients' lives. In 2018, we unveiled a bold new strategy through RBC Ventures with innovative services to help solve common problems faced by Canadians in their daily lives, at home, in mobility, in health, and in business. These services are helping us develop deeper relationships with RBC clients and build connections with new clients. We have bold ambitions to acquire up to 5 million new relationships, in part through ventures, and grow clients up to three times our current rate. With 13 ventures currently in market, we are well on our way. We've set similar bold goals in our unwavering commitment to helping communities prosper. This has been an absolutely foundational part of our history and story. That's why throughout our history, RBC has donated more than CAD 1 billion in 37 countries. Our ability to make a positive and lasting social impact starts with our 84,000-plus colleagues around the world. RBC employees commit countless hours every year to giving back and volunteering where they're needed most. I'm tremendously proud to say we've led the largest corporate giving campaign in Canada for 22 consecutive years. It's in this spirit that in 2017, we launched our 10-year, CAD 500 million commitment to empowering youth for the jobs of tomorrow through RBC Future Launch. As one example, here in Halifax, our partnership with Saint Mary's University created a new experiential-based learning and entrepreneurship program that will give hundreds of students across many disciplines access to meaningful work experiences in the region. Preparing our youth for a more automated future is one of the most pressing challenges facing our country today. But so too is climate change, and that's why we're leading efforts to support clean economic growth and the transition to a low-carbon economy. RBC has a strategy aimed at helping clients and communities in this effort, and we believe that capital can be a force for positive change. For example, in 2018, we were very active in supporting clients in renewable energy, clean transportation, and other low-carbon sectors with over CAD 13 billion in financing and advisory transactions. As we continue on this journey, we're supporting it with a clear new business target, CAD 100 billion in sustainable financing by 2025. This goal supports investments in sustainable companies and projects that today are widely recognized as contributing to the low-carbon, sustainable economy of the future. We're also balancing this strategy with additional investments to our natural resource and energy sector clients so they can continue to invest in innovation and technologies that help them remain leaders on the global stage. Underpinning all of this is our values. Along with having a clear purpose, strong values-driven culture has always been part of the fabric of RBC with a strong commitment to diversity and inclusion. It's why we've supported the Canadian Museum of Immigration at Pier 21, a place where over 1 million people entered Canada throughout the 20th century, many contributing immeasurably to our way of growth and life. Immigration and inclusion play a critical role in business growth and success as we know. Over the last several decades, increasing the participation from all parts of society has helped Canada grow its economy, just as it's helped grow RBC's business. Seeking out people with different backgrounds and experiences has helped us better innovate, better attract top talent, and better represent the communities in which we live and work. Our commitment to inclusion has been built for generations, and today we are one of the most diverse and inclusive organizations globally. I'm proud to report that in 2018, women represented 50% of senior executive appointments. We lead our Canadian peers in the representation of minorities and in women in executive roles, with our numbers putting us among the best globally. We know we have more work to do, but I am proud of our progress. I want to thank all of our colleagues for helping us continue to develop an inclusive culture within our organization and foster change in society more broadly. Up to this point, I've reflected on our history and the core principles that contributed to RBC's success. Now I want to look more broadly to our home country. Canadians have built a country that the world admires. Social programs, economic opportunities, education and free expression, commerce, and creativity. There is no other collection of 37 million people who have created the impact that Canadians have. As Canada's largest company and a top 15 global bank by market capitalization, the strength of our home market has been fundamental to our success. This is a great place to do business, the bedrock for a prosperous RBC. This has been true for generations. Now we're at a critical time in our country's history. We need to be honest with ourselves about our economic growth and our ability to compete globally in an era of disruption. When I travel overseas, I often hear concerns from investors about Canada's falling position in the world, and the numbers back up that sentiment. Since 2005, the stock of foreign investment in Canada has grown by only 5% a year, well behind the 8% growth for all OECD nations. Our exports of non-energy goods have been stagnant for a decade. Our resources sector is coping with a growing crisis. Over the last 20 years, our productivity growth has dropped by nearly half. Yet we know what our country looks like when Canada's at its best. We saw it back in the 1920s when the Bluenose raced from our shores in the Port of Halifax. We saw it in the 1940s when Viola Desmond challenged racial segregation at a local cinema. We saw it in 1980 when Terry Fox began his epic journey in Newfoundland. We saw it in 2010 when Sidney Crosby showed us again the meaning of a champion. We know what it means when Canada is at its best. It's about winning and importantly, how you win. It's about competing, improving, aspiring to bigger things, and constantly aiming to be at our best. Canadians do that every day as individuals and as communities in our hospitals, our colleges, our universities, and our small businesses. They show the world how to lead. Whether they're developing clean water technologies for remote communities or keeping the peace in some of the world's most troubled places. They remind us what we look like when Canada is at its best. Canada has lost some of that momentum. Our competitiveness is challenged. Our capacity to grow and advance our economy is stalling. As the world around us is rapidly changing, this is the time to pull together, and not pull apart. We need a new approach. How can we get there? I'd like to share four major steps our country can take to improve our competitiveness and reinvigorate brand Canada for the future. The first is building new foundations for a global Canada. Just as Canada was able to expand by building canals, railways, and roads over the last two centuries, we have to do much more to connect ourselves to a changing world, enable a generation of Canadian entrepreneurs and exporters to sell their goods and services to the world. This requires smart infrastructure, both digital and physical, that enables us to get our goods and services to market. You see that here in the Port of Halifax. Ports are critical to Canada's global success. That's something all Canadians can get behind. The same should be true for pipelines. For our energy sector, pipelines are as essential to success as ports are to manufacturers, and of course, they're interconnected. Investment in energy is critical to ensuring Canada remains prosperous, for now and for generations to come. We must balance the need to reduce our carbon footprint with the need to produce more energy to supply growing demand globally. We're putting our standard of living at risk if we don't strike this balance. Canada has lost CAD 100 billion in energy projects in the last two years alone. We simply can't afford to lose any more. Two, we need to better scale our big ideas to the world. The knowledge economy thrives on brands and intellectual property. These assets are the new assembly lines of economic production. Our ability to bring to market and scale Canadian products, services, and ideas will be critical to accelerating our economy in the future, even for our natural resources. Canada needs more ambitious thinking that stretches beyond our borders, like we saw at Nova Scotia's own Acadian Seaplants, a global leader in seaweed, and the largest independent marine plant processing company in North America. The entrepreneurs at Acadian have created their own industry, exporting their own seaweed-based food, agriculture, and chemical products to more than 80 countries. The company, founded in 1981, has flourished by focusing on the future through R&D, finding top talent, international expansion, and an unwavering focus on sustainability. They have continuously pushed beyond their borders and set big strategic goals, which is why they've become a presence in 12 countries around the world. This type of thinking is in our source code. Canadian entrepreneurs have always had big ambitions. Now they need to turn them into growth, both at home and abroad. Third, build a powerhouse of data innovation. Canada is a nation that has thrived on its natural resources. To prosper in the economy of the future, we also need to harness the power of data. We are in the midst of a data-driven revolution, and it is the fuel of tomorrow's smart economy. It will impact every key industry across Canada, and it is unquestionably the most important element of the knowledge economy. That is why we need a national data policy that both encourages innovation and ensures privacy protection. The Supercluster policy, which you are seeing here in Halifax around the oceans economy, is one that we have supported because of its focus on collaboration. When it comes to research and development, Canada ranked only 15th in the OECD for university industry collaboration. In a data economy, we need a Team Canada approach. Fourth, we need to create a future-focused skills development model. Who is going to put all this data to work? People will. Canada has one of the highest education rates in the world, with more than 60% of our young people going to college or university. Yet despite this supply, Canadian tech firms say they have an insufficient pool of talent. Canada also ranks well outside the top 10 in the OECD for PhDs in STEM fields and for business graduates. We are educating young Canadians, but not always for the jobs of tomorrow. To help change that, we have been promoting the concept of work-integrated learning alongside a coalition of business and academic leaders called the Business Higher Education Roundtable. Together, the group has set out to create 150,000, yes, 150,000, meaningful work placements each year to ensure every college and university student has access to these experiences during their educational journey. We applaud the federal government's recent budget announcement for its commitment to work-integrated learning and skills retraining. This investment signals a new approach that will help build strong bridges between classrooms and workplaces. This is great for students, but it is also great for businesses and for harnessing young people's talents to inject innovative thinking into the workplace. Our rich history as a nation proves that we have always been builders. If we do not find a way to get going with an ambitious plan for Canada, for Canadian competitiveness in a digital age, we will all pay a price. The rest of the world is growing in population and purchasing power, and on every continent, people want and need what Canadians produce and know how to produce better than anyone. The suggestions I have outlined today are all interconnected, and they require us to stand up for the value of business and entrepreneurship, where it has brought us, and most importantly, where it will take us. We need Canadian business leading the way in partnership with governments and communities. At RBC, we have lived through and led transformations during periods of great change by sticking to our principles. Although the next 150 years will look very different, I am confident our purpose and clear values will enable us to stay relentlessly focused on helping our clients reach new markets and our communities reach new heights. Now is the time for our nation to seize the opportunities ahead, translate these opportunities into growth, and show the world what Canada can do when we are at our best. With this kind of momentum, we can write the future. If we can hold the pen, we know the future will be a bright one. Thank you. As we continue to honor RBC's 150th anniversary, I'd like to share a special video. We asked our colleagues from around the world to do something special for others in their communities. What they did truly inspires me and reminds us all of how bright the future can be. Hi there. Bonjour. My name is Lori Cox. Jamie Torres. Amalia Lucaj. Vishaan Persad. I'm Sarah Thompson. Nibal Fisher. I am the HR business partner. Youth strategy and innovation. I'm the VP of sustainable finance. Global asset management group. RBC Hillhurst in Calgary. RBC Bank of Georgia, U.S. In St. John's. Downtown Vancouver. Capital markets based in London. What I decided to do- My RBC 150th idea is- To give back to the LGBTQ community. Buy one more robot for our kids' code camp. Helping women succeed in technology. RBC is really involved in the community, and part of that is those newcomer centers. I think that's the scariest thing when you move to a new country is feeling alone, feeling left out. There are so many environmental issues and challenges right now, but single-use plastics is a really big one. There's a lot of people, and there's a lot of waste generated on a daily basis. For people in Winnipeg that are experiencing homelessness, 30% of them are youth. I realized that they are struggling to get a job because they don't have ID or they don't have a place to live, so employers have no way of contacting them. I attended the Ocean Wise Youth Summit in Cambridge Bay, which brought together young people from all over the north. People came up to me, and they asked me to imagine being 12, 13 years old, walking on the streets of Cambridge Bay and thinking about what would inspire myself as a young person. My 150 is going towards Canadian welcome kits and hosting a newcomer networking event. Welcome, everybody. We're a country of newcomers. With my 150, I'm going to purchase reusable water bottles to help reduce waste on the trading floor. My 150 is focused on youth experiencing homelessness and poverty by providing them the tools and resources to make that leap to their first job. It is my first time actually doing a resume. No way. Really? Yeah. I am using my 150 to continue the conversation between youth in Cambridge Bay and their elders through simple coffee chats to share their voice and their opinion. I care about the future of our planet, so whatever we can do, I want to make sure that I play a role. I guess my dream is to now take these resumes and the youth that I have met. We are so connected in the community and with businesses, how do we open those doors for them? I can speak to- It makes me proud how I started as a newcomer versus where I'm at right now. My goal is to see everybody succeed the same that I've done. It's important for us to reach out to young people, put ourselves in their shoes, and then develop these solutions. Yes, we're doing great work, but there's so much more work to be done. Initiatives like that gets our employees to think outside the box, use their imagination to make it great. Everybody gives a little, it turns out to be a lot. Thank you, Dave, for that excellent presentation and such an inspiring video. At this time in the proceedings, I'd like to introduce Nicolas Marcoux and Samuel May, the representatives of PricewaterhouseCoopers, our auditor for the 2018 fiscal year. Copies of the auditor's report and the financial statements have been mailed to shareholders and are also available at the information desk. Shareholders will now have an opportunity to ask questions on the financial statements. If your question relates to a matter other than the financial statements, please wait until the time provided for shareholder questions following the formal proceedings and the business of the meeting. If you have a question on the 2018 financial statements, please proceed to the nearest microphone. I'm not seeing any questions at the microphones. As there are no questions, we'll now proceed with the business of the meeting. You've received the notice of meeting and the proxy circular, which outline the matters to be considered at the meeting. I'll now ask Karen to review the voting procedures. Karen? Good morning. Today, we'll be voting by ballot, except as otherwise advised by the Chair. Shareholders who haven't voted by proxy and proxy holders who are present receive the ballot at the registration desk. Please print your name clearly and sign this ballot. Votes will be counted by our scrutineers. Preliminary results will be announced later this morning, and final results will be posted on our website. Only registered shareholders or their proxy holders are entitled to propose or second motions. A simple majority is required to approve matters voted on at this meeting. Thank you, Karen. To facilitate proceedings, we've asked RBC employees who are shareholders or proxy holders to move and second motions. I'll call on them at the appropriate time. We'll now proceed with the first item of today's business, which is the election of directors. Your board places strong emphasis upon the selection of director candidates by assessing the board's existing strengths against the evolving needs of RBC. An important element of our process is ensuring that a diversity of viewpoints and backgrounds are presented at the board. I'd like to thank Tom Rennie, who retired from the board on November 30, 2018, for his dedicated service and enduring contributions to RBC over the past five years. This year, the number of director nominees has been fixed by the board at 12. Biographies of each of the nominees begin on page 11 of the circular. I will now ask Karen to read the names of those proposed for election as directors. I would ask each of them to stand and remain standing as their names are called. The following individuals are proposed for election as directors: Andrew Chisholm, Jacynthe Côté, Tushar Daruvalla, David Denison, Alice Laberge, Michael McCain, Dave McKay, Heather Munroe-Blum, Kathleen Taylor, Bridget A. van Kralingen, Thierry Vandal, and Jeffery W. Yabuki. Thank you, Karen. I will now ask Claude Thibault to nominate the directors. Madam Chair, my name is Claude Thibault. I have worked at RBC for 25 years, and I am currently a regional enablement coach for Cape Breton in Northeast Nova Scotia. I am pleased to nominate each of the persons named by the secretary to be elected as a director of the bank to hold office until the close of the next annual meeting of common shareholders or until their successors are elected or appointed. Thank you. Are there any questions or comments on the nominations? Again, seeing none, I declare the nominations closed and will now proceed with the vote. On ballot A, please mark your vote on the election of directors. The next item on the agenda is the appointment of the auditor, and I'll now ask Susan Ateah and Mervyn Broome to make a motion for the appointment of our auditor. Madam Chair, my name is Susan Ateah. I've worked with RBC for 10 years, and I'm currently a mortgage specialist in the Metro Halifax. I move that PricewaterhouseCoopers be appointed the auditor of the bank until the close of the next annual meeting of common shareholders. Madam Chair, my name is Mervyn Broome. I have worked with RBC for 38 years and presently in the current position of a business account manager for Atlantic. I second the motion. Thank you both so much. The motion has been moved and seconded. Is there any discussion on this motion? Again, seeing no discussion, we'll proceed with the vote. On ballot A, please mark your vote on the appointment of the auditor. The next item of business on the agenda is the shareholder advisory vote on our approach to executive compensation. The text of this advisory resolution is set out on page six of the circular. We hope you've had a chance to review our compensation discussion and analysis in this year's circular, which explains in detail how our compensation programs are designed to pay for performance and are aligned with effective risk management practices and the long-term interests of our shareholders. We take a progressive approach to continuously improving our compensation programs, integrating best practices, and responding to input from our shareholders and our independent compensation advisor. In considering our approach to compensation in the future, the board will take into account the results of today's vote, together with other feedback received from shareholders. I will now ask Angela Gloade and Alan Liu to make a motion to approve this resolution. Madam Chair, my name is Angela Gloade. I have worked with RBC for 16 years, and I am currently branch manager at RBC Clayton Park branch. I move on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in the management proxy circular, delivered in advance of the annual meeting of common shareholders. Madam Chair, my name is Alan Liu. I have been working with RBC since last year, and I am currently a financial advisor at Almon Street branch. I second the motion. Thank you. The motion has been moved and seconded. Is there any discussion on the motion? We will now proceed with the vote. On ballot A, please mark your vote on our approach to executive compensation. At this point in the meeting, I am going to ask the scrutineers to come around and collect ballot A. Please raise your hand in the audience if you have a ballot to be submitted. Are there any other ballots to be collected? Here is one right here beside microphone number 3. Thank you. Down here. Great. Anyone we have missed? Thank you very much. The voting is now closed on all matters other than shareholder proposals, which we will move directly to now. Shareholders had an opportunity to read these proposals and the board's responses, which are set out in the circular starting on page 98. The two proposals that are being put to a vote today were submitted by Mouvement d'éducation et de défense des actionnaires, or MÉDAC, which is represented here today by Marc-Yvan Poitras. For the information of shareholders, also included in the circular are the two other proposals that MÉDAC submitted but withdrew following discussions with RBC. Monsieur Poitras, I would ask that you take a few minutes to speak to the merits of each of the two proposals that are being put to a vote, and we will then open the floor for discussion. Shareholders may wish to vote on the proposals by marking ballot B as they are being presented. Monsieur Poitras, please proceed. Marc-Yvan Poitras, representative of MÉDAC. Concerning compensation, it is moved that the bank, in setting compensation, take into account the following. MÉDAC has been presenting motions on compensation being socially responsible and acceptable compensation. I would like to inform the shareholders about the relationship that exists between the CEO and the regular employees. I take the perspective of providing this information, and we ask that this information be able to take into account the main banks examining their practices of compensation between pairs of various companies. We ask that the board publish this information in the next circular. Even though there is no uniform method, this speaks for itself, and the bank should be able to make a comparison with itself, should be able to present data, and this would make it possible to do an assessment of the compensation. Thank you, Monsieur Poitras. Any further conversation on this proposal? Seeing none, then on ballot B, if you could please mark your vote on proposal number one. Monsieur Poitras, will you speak to proposal number two as well? Thank you. This concerns creating a new technologies committee. It is moved, or it is proposed that the board of directors create a new technologies committee aimed at anticipating issues for the bank when integrating technological innovations. A recent report by the firm PwC entitled Canadian Banks 2017 Perspectives on the Canadian Banking Industry reads as follows: "The industry changes, shifting consumer expectations, rising costs, a rapidly shifting technological landscape, and continued challenge to the traditional banking model." The board has an important role to play in anticipating issues arising from the integration of technological innovations and their effects on consumers. In summary, since this issue is increasingly important, that supports the creation of a separate committee. For example, some branches may be closed down. I would like to thank you. Thank you very much. Is there any further discussion on the second proposal? As I mentioned at the outset, the board's responses to both proposals are set out in great detail in the management proxy circular. In the interest of time, I won't repeat that point of view here. Seeing no further discussion, I would ask shareholders on ballot B, please, if you could mark your vote on proposal number 2. I'm now going to ask the scrutineers to collect ballot B. So when you're finished, please raise that again so we can see where you are. Are there any uncollected ballots? One over here. Any others? All right. Thank you very much. Voting on all matters is now closed. At this point, we will move on to the question period. I would like to remind you that questions should be of interest to all shareholders and not of a personal nature. If your question does relate to a personal matter, please speak with an RBC representative at our information desk in the lobby. If you are a shareholder or a proxy holder and have a question, please proceed to the nearest microphone. They're located in each of the aisles. Shareholders who are watching the annual meeting via the internet may also submit questions through the website. When you reach the microphone, please start by giving us your name and tell us whether you are a shareholder or a proxy holder. I'm now going to invite our CEO, Dave McKay, to lead the question period. Dave? Thank you, Katie, and I will now open the floor for questions or comments. Mr. Poitras. Jean-François Poitras of the MÉDAC. Madam Chair. It's about integrating ESG criteria in the compensation of senior executives. It is proposed that the compensation committee table in its annual report, a report on the importance that it affords to ESG, environmental, social, and governance criteria in the evaluation of senior executive compensations and in the establishment of their incentive compensation. According to the principles for sustainable development of the United Nations, ESG criteria can be an important factor in the protection and creation of value for shareholders. The percentage of women in its decision-making bodies, the level of utilization of paper, et cetera, should be disclosed. Thank you. Thank you, Mr. Poitras. I will take that question on behalf of the board of directors. No question that, as I mentioned earlier in my commentary, that we are continuing to evolve how we think about our compensation practices and what are the right metrics for us to be considering. Our philosophy on this is outlined in the circular and very clear. We are looking for some broad principles to follow, alignment with interests of shareholders, paying for performance, sound risk management principles, and compensation and incentives that promote the right kinds of behavior are really what the board is after, of course, in addition to being able to recruit and retain the kind of talent that the bank needs for the future. The issues that you have raised around ESG are obviously under discussion at the bank board on so many levels. At this point, I would say continuing to evolve. The board of directors is always, as I said, looking to try to continuously improve, and these factors are quite well integrated already today in our client and risk and performance metrics. It is one of the things that we do look at. We, of course, are very diligent in our disclosures around our ESG programs so that shareholders have a very good appreciation of the work that management is doing on this front, and we think the achievements that management has well underway and the initiatives they are working on are very appropriate. So thank you very much for this proposal and for engaging with us on this important discussion. Any other questions near the microphones? We have a question here in microphone five. Yes. Mr. Chairman, my name is Bill Gorman. I am from Halifax, and I thankfully do own some of your shares. I want to welcome you to Halifax. It is nice to see you. It has been about 10 years, I think. I have to check my records. Thank you very much for the dividends. Appreciate them. The question that I would like to ask you is, it has also been quite a long time since the Royal Bank has split, and I was wondering under what conditions you decide to split and how long before we split again, sir? Thank you. Do you want to I'll start. Thank you very much for that question, and we do get asked that question quite often. The history of stock splits certainly are that the lower the share price, the more active investor community you have. But we're not sure that tenet holds into the future given digitization of trading and the broadly held nature of our stocks. It's always a consideration for the management and approval of the board of directors. I can't give you a timeline on if and when that would happen. Our real goal is to grow the value of our franchise for our shareholders, grow our earnings per share, grow our share price, continue to grow sustainable earnings to increase our dividend. And those are the core objectives we set out for the organization at a premium ROE to the market. We set ROE objectives, as you've seen, and that's really what management focuses on. I can't really comment on when and if we'd split the stock. I don't think it has the impact on future stock price growth that maybe it had in the past in a less liquid traded world. Rod, do you want to add anything to that as our Chief Financial Officer, as you think about these things, too? No, thank you, Dave. I think you had a great answer. If you look at studies from 30 years ago when shares traded in 100-unit blocks, there was a positive benefit. Since then, studies have shown that the benefit is not as significant as it once was. And I think, as Dave mentioned, we are looking to drive sustainable earnings growth and dividend per share growth, and meet our medium-term financial objectives. So thank you. Thank you for that question. Do we see any more questions? I believe we have someone coming to microphone 5. Yes, microphone 5. Could you pull the microphone down a little bit or have someone help you? Is this perfect? Sorry, I know the lights are probably in your eyes there, and we'll help you out. Here we go. My name is Margaret Stewart. I thank you, first of all, for coming to Halifax, for coming to a coastal community, where 70% of our people in the province live in coastal communities. I've been a long time shareholder, and investor at RBC Dominion Securities. Thank you. I am very pleased with all the advice that I have received there. I was happy to read in the report and to hear today that Mr. McKay has said that he's pledged to help a lasting social impact in our communities, including supporting transition to a low-carbon future. At the same time as I was looking at the report, I looked at our local paper, which says, "Rising sea inevitable," report from our federal government. Why am I bringing this up? We know that this situation, we're told, is a permanent one, and the future will depend on how much carbon we are putting into the atmosphere. So, what does this have to do with RBC? I was rather distressed to read reports that RBC is number one worst bank in the world for the degree to which it invests in extreme fossil fuels, such as the tar sands, and that the Royal Bank is ranked in the shocking first four positions among all banks in the world for their total value of investments in fossil fuel industries over the years 2016 to 2018, after the Paris Agreement. Now, increasing amounts over that period each year. I wonder if this is going to continue to be the situation despite the fact that I realize it's important to our economy. I feel that the bank has a great power to combat climate change if we take this seriously, and the oil industry is only able to expand the greenhouse gas production because it's supported by the banks. I notice that you are investing in green energy, and I thank you for that. But it cannot really make up for the no matter how many solar panels we put in place for the greenhouse gases that are being produced. I ask, what proportion of your money is going into the green energy in relation to what you're putting into investing in the fossil fuel industry? I'm a grandmother, and I'm concerned about the future for my grandchildren. Very concerned. I noticed that we have quite a few women on the board. Some of them may be grandmothers like themselves, and I'm sure they feel the same way. I guess I'm throwing out the challenge that what is the future going to hold as far as the Royal Bank's investments are concerned? Are they going to continue to increase in fossil fuel? Or how do you propose to mitigate the effects? Okay. Thank you for that question. I throw that challenge to you. It is a very important question. I have young kids too, and they ask me those questions all the time. Let me start by saying we share your perspective that climate change is one of the greatest challenges that our society, our country, our planet faces. I think it is important that we have a dialogue about what is the best path to address that climate change and meet the targets that we have articulated as a country and partly as a world, but not holistically as a world. I think the first comment I will make after that is this is a global challenge, not a Canada challenge. I think we have to recognize that Canada is a small part of the emissions challenge in the world, therefore we have to tackle this problem as a global emissions challenge. I think this is not an exclusive challenge where there is only one outcome. You can support global climate carbon reduction, therefore you cannot support the development of our energy. We fundamentally believe, and I believe, that this is an inclusive strategy, that we have to support the development of our energy resources in Canada for two reasons. One, the exporting of clean energy, natural gas, and increasingly clean extraction of our resources, our oil resources in the western part of our country, can replace much higher carbon-emitting energy sources in emerging markets and other countries' exports, who particularly the rapidly expanding use of coal. I don't think Canada has negotiated, and I think we should request and require an offset to our carbon targets for higher emitting carbon fuels being burnt in other countries that we can replace with LNG and with other energy forms that are lower carbon footprint. I think that's an enormous opportunity for Canada to do that, and I think as Canadians, we should expect that, and that should be a net offset to our carbon targets, which is challenging our country. The second reason I really believe we have to invest in those energy resources, and it contributes to us meeting our targets and moving to a lower carbon world, is the economic dividend that comes from our energy resources is significant to this country. It's significant to our current way of life, and it's significant to our ability to make a transition in the future. The economic dividend from royalties alone, from developing our natural resources, we believe is upwards of CAD 200 billion to our government, CAD 200 billion. If we do not develop these resources, the world is still going to burn these fossil fuels. Other countries, maybe the U.S., maybe other countries who are exporters, will replace that supply and meet that demand who have not made a commitment to reducing their carbon footprint in the world. I challenge all Canadians to say: Why would we leave that economic dividend for others to use when we can take control of that ourselves? We can use that economic dividend, CAD 200 billion, to incent the transition to a lower carbon world, to subsidize and invest in cleaner technologies. CAD 200 billion goes a long way. I challenge the country to say, why would we cede that economic Why wouldn't we take control of our own destiny and maintain the quality of life? Because I don't think we've had the discussion of the sacrifices and job loss that could come if we just pursue a path of carbon reduction and ignore this incredible resource that we have, that we, I think, and RBC thinks will enable the transition in a much smarter, better way. That's why we believe we do this together and that RBC's investment in sustainable energy and investment in our current capabilities and our current resources is the best path forward for maintaining our quality of life, taking control of our future, and really truly making a difference in our world, replacing high-emitting coal around the world. Why wouldn't we want to take a leadership role in doing that? That's why we believe both are important to do. I completely am aligned with the objective of climate change is important. I believe this is the best path forward for our country. Thank you for your question. Do I see any more questions? Karen, do we have any questions from the internet? No questions from the internet. Oh, we have Mr. Melek. Welcome. Microphones for you. My name is Adel Melek. I am a customer, shareholder, a policy holder. I am a partner with Deloitte and a Global Vice Chairman, and I am privileged to be the one responsible for the relationship between Deloitte and RBC. First, I want to start by congratulating Katie, Dave, members of the board, members of the executive, of celebrating 150 years serving Canadians. Congratulations. At Deloitte, we are very privileged to have served RBC for the past 100 years of your 150 years serving Canadians. I want to thank Karen McCarthy, Secretary of the board, for helping us validate that. It is in fact 101 years, but who is counting? As a partner, I really believe that I am treated as a partner at RBC with integrity, with a high degree of ethics in all your dealings, with equity. Most importantly, I believe that I am dealing with people who share the same values that we share. Leadership, but at the same time, humility, humbleness, do not claim that they have all the answers, committed in the future of Canada, committed to innovation, and committed to making Canada a great place to continue to live in. We are very, very privileged to be your service providers. As an investor, and for the longest time, because we were the auditors of RBC, we could have never partaken of buying your shares. I am delighted to say that since that embargo has been lifted, my investment in RBC shares has yielded upward. I am not going to say exactly how much, but Rod could correct me, but it is double-digit percent and a very nice dividend. Thank you for that. As a customer, and again, I was not allowed to actually be a customer until recently. I am a customer of personal and commercial banking and wealth management with DS through the Harbour Group. I have got to say that they are fantastic. They help me comply with our many rules that we need to comply with. They help me diversify, and they produce handsome returns on the portfolio that they hold for me. I just wanted to acknowledge that. Hopefully, this is going to be a record, and maybe I am going to come to maybe the successor of Karen in 150 years from now just to get that on public record again. Thank you again, and congratulations. Thank you for those comments, Mr. Melek. Thank you for being a new loyal client and for your partnership with RBC as you partner with us in a very different capacity now as an advisor and a consultant, which we certainly enjoy that relationship. Seeing no more questions at the microphone, I will close this session and hand the meeting back to Katie Taylor. Thank you. Thank you, Dave, and thank you to all of our participants today for joining us and engaging at our shareholders' meeting. I have been informed that the scrutineers have now completed their preliminary tabulation of the votes cast in respect of each of the items on our agenda. I am now going to ask Karen McCarthy to speak to the preliminary voting results. Karen? The scrutineers have reported that 50.54% of eligible shares have been voted at this meeting. According to the scrutineers' report, I am pleased to announce that all 12 director nominees named in the management proxy circular have been elected with the majority of votes in favor. PricewaterhouseCoopers was reappointed as our auditor with 99.89% votes in favor. The advisory resolution on our approach to executive compensation was passed with 95.35% votes in favor, and the shareholder proposals were not approved. Proposal number one received 94.60% votes against, and proposal number two received 98.13% votes against. Final detailed results will be posted on the bank's website as well as on SEDAR. Thank you, Karen McCarthy. Ladies and gentlemen, I would like to thank you for participating in our special annual meeting today celebrating our 150th birthday. Before we close, on behalf of the board and our shareholders, I'd like to take a moment to express our sincere appreciation to all RBC employees whose dedication and commitment to the success of our clients continues to be a true competitive advantage for the organization. I'd also like to thank Dave McKay and his senior leadership team, not only for their continued strong leadership of RBC, but also for their values-led leadership, their focus on youth, and their commitment to helping our clients thrive and our communities prosper. The meeting is now concluded. Thank you all for joining us.