Royal Bank of Canada (TSX:RY)

AGM 2018

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Apr 6, 2018

Good morning, ladies and gentlemen. Madame et monsieur, bonjour. Welcome to our annual meeting of common shareholders. I'm Kathleen Taylor, and I have the privilege of being the chair of the board of the Royal Bank of Canada. I'm pleased that so many of you could join us here in the room today. Many more are with us on the webcast. 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 and 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 the auditor. Shareholders will also be asked to approve a non-binding advisory resolution on our approach to executive compensation. We will then 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 posted on the screens. At this meeting, we may make forward-looking statements which involve certain assumptions, 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'd 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 via the internet may also submit questions through our website. Before we begin, I'd like to take a moment to introduce the others who are with me on the podium. From your right to left, we have Rod Bolger, our Chief Financial Officer, Dave McKay, President and Chief Executive Officer, and Karen McCarthy, Vice President and Associate General Counsel and Secretary. I will act as chair of the meeting, and Karen will be our secretary. Pina Pacifico and Joseph Chirico, officers of our transfer agent, Computershare Trust Company of Canada, will be our scrutineers. Also present are members of our board and senior management team. At RBC, we believe good governance is good business. We regard governance as a dynamic and ongoing process that is foundational to RBC's success. Central to our role as your board is our responsibility to ensure that RBC has the right strategy, risk management, and talent to deliver long-term value for shareholders. We provide guidance to management as it builds a digitally enabled relationship bank and focuses on markets and segments where RBC is positioned to succeed. We advise management on strategic plans, challenge their assumptions, and assist in identifying and building pathways to sustainable growth within the bank's risk appetite. Equally essential to RBC's success is the leadership of a talented executive team backed by dedicated employees who execute our strategy with excellence. In that regard, we were pleased to announce at the end of last year that Graeme Hepworth will assume the role of Chief Risk Officer on Monday, succeeding Mark Hughes. Graeme's deep expertise in credit and market risk and exposure to all of our key businesses, along with his global perspective, will benefit RBC and its shareholders. I also want to thank Mark Hughes for his significant contribution to the bank's success over his 37-year career at the bank. Mark's strong understanding of RBC's businesses, along with his deep insights into the ever-evolving risk and regulatory environment, made him an exceptional Group Chief Risk Officer. Mark, on behalf of the board, your colleagues, and all of the shareholders, thank you so much for the contribution and dedication you have shown to RBC. Once again, in 2017, RBC was recognized for its high standards, winning best overall governance at the Excellence in Governance Awards in Toronto and best overall corporate governance international at the Corporate Governance Awards in New York. Continuous improvement has always been part of our commitment. We continue to set ambitious objectives in 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, create long-term value for our shareholders, and reflect the values we have as a bank. Now it's time to hear from Dave McKay about the bank's performance and its future outlook. Dave, over to you. Well, thank you, Katie, and good morning, everyone. Welcome to our 149th annual shareholder meeting. A couple of months ago, I traveled to Switzerland to join international leaders at the World Economic Forum. From an economic point of view, the mood among the Davos crowd was more bullish than I'd seen before, and companies and communities around the world have also felt that economic benefit. In our two core markets, Canada and the U.S., unemployment is at a 40-year low. Meanwhile, Europe is well into its recovery, and Asia is providing more synchronized growth than we've seen for decades. The message from the Swiss mountains was clear that overall global operating environment is better now than it has been for years. As I left Davos, thinking of everything I'd heard, one unifying theme was at the front of my mind. A belief that the next decade will be defined as a new era of mobility, of goods, of people, and of ideas. In the 90 days since, and certainly as we've seen volatility return to the markets, I've heard this theme again and again in conversations with clients, on stage at the IBM Think event, and during a visit to students at Conestoga College, a polytechnic in Cambridge, Ontario. I know our future success as a company, as a society, including here in Canada, will depend on how we prepare for and engage with this new age. Of course, many of us are already living our lives via one of these smartphones, and it's fundamentally reshaping our business and communities, and this will only accelerate. It'll not just be about devices in our pockets. Wearables, the Internet of Things, driverless trucks and cars. All of these are already into their second or third generations and will be more fully integrated into everyday society over the coming decade. It will affect our infrastructure and transportation requirements. It will change our conversations about data. It will create a need for different skills. And it will continue to alter how all businesses serve their clients. Today I wanted to take this opportunity to talk about how we are preparing RBC and our communities for the 2020s and a digitally-driven decade of mobility. And to show how our purpose will guide every step that we take on this journey together. Because as RBC moves into the next decade, how we achieve our success will be as important as what we achieve. And RBC certainly continues to achieve significant success. Our financial performance in the last year demonstrates our focus on building a sustainable growth trajectory with lower volatility and delivering a premium return on equity, even as we grow outside of our home market. It also illustrates the strength of our diversified business model and our disciplined approach to managing costs and allocating capital and investing in future growth. But most clearly, it demonstrates the power of our purpose to unify all of our colleagues under a common goal so that every RBCer can feel the impact that they are having on clients in our communities. In 2017, we reported record earnings of CAD 11.5 billion and achieved all of our medium-term objectives, delivering a return on equity of 17%. We returned a record CAD 8.2 billion of capital in dividends and share buybacks, reflecting our commitment to you, our shareholders, while at the same time continuing to execute on our growth strategies. And we carried this strong performance into 2018, posting first quarter earnings of CAD 3 billion and again delivering a premium return on equity of 17.4%. Overall, we have outperformed our global peer group, delivering compound annual total shareholder returns of 18% over three years and 16% over five years. Since our last AGM, we have made outstanding progress against our strategic goals, serving high-growth client segments in our core markets in Canada and the U.S. and select global financial centers. Beginning outside our home market, the U.S. The U.S. is absolutely fundamental to sustaining our growth. Central to the strategy of both our Capital Markets and wealth management businesses, our goal is to be the preferred partner to corporate, commercial, institutional, and high-net-worth clients in the U.S. We are already making excellent progress as we execute against that strategy. Five years ago, the U.S. accounted for 18% of our total revenue. Today, that figure is 23%. RBC Capital Markets now derives over half its global earnings from the U.S., and we're adding coverage in research, lending, advising, trading, and investment banking. I recently returned from visiting my Capital Markets colleagues in New York City, and you could really feel the energy that's buzzing through the business. Some of the signature deals that we worked on in the last few months include supporting Sempra Energy and its recent acquisition of Energy Future Holdings, Meredith Corporation's acquisition of Time Inc., and Blackstone and CVC's acquisition of Paysafe. This U.S. growth has been reflected in capital markets earnings overall, which in Q1 reached a record $748 million, up 13% over the previous year. Our U.S. wealth management business is also going from strength to strength with double-digit revenue growth in 2017 and again in Q1, and continues to benefit from the hugely successful integration of City National Bank. We've already realized significant synergies between City National and our existing broker-dealer business, and we see further opportunities to build on this. We continue to invest further in this momentum, adding more client-facing advisors in recent months as we grow our commercial banking coverage and expand our presence in large U.S. cities, including in Washington and New York. We believe the recent U.S. tax reform will be positive for the U.S. economy and our business. While uncertainty over NAFTA remains a concern for our customers on both sides of the border, so far, clients and markets have been broadly working through this uncertainty. We're in close dialogue with governments and our customers, and we remain hopeful of a good outcome for both sides. Outside of the U.S., we continue to improve our competitive position in select financial centers. Many of our businesses in the U.K. and Europe are enjoying positive momentum as part of our focused international strategy targeting institutional and high-net-worth clients. For example, our investor and treasury services business posted record results in Q1, reflecting the benefits of investments we've made into client technology and the favorable global market backdrop. Client acquisitions and favorable markets also benefited our wealth management business, whose earnings in Q1 were up 39%, with global asset management adding more than $40 billion in assets under management over the last 24 months, outgrowing the market. In Canada, where we hold the number one or two position in all key banking categories, we have had an exceptionally strong start to the year. We're continuing to deepen our relationships with our clients and explore new ways to add value. We see opportunities for further growth, specifically in commercial banking, investments, deposits, and in credit cards. Owning a home is an important part of the Canadian dream, and we want to help ensure that Canadians own homes that they can afford. After tighter conditions last year, we're seeing more balanced pricing in the housing market. Policy changes in Ontario and other provinces have contributed to a welcome shift in market psychology towards more caution. We remain very comfortable with the characteristics and credit performance of our mortgage portfolio. We're focused on bringing the best of the whole of RBC to our clients. We're developing new partnerships that give our customers greater value. Our priority is always providing an exceptional experience, and their feedback confirms that we're hitting the mark. In 2017, we were very proud to be awarded highest in customer satisfaction among the big five retail banks in Canada by J.D. Power for the second year in a row. We're also ranked highest among our peers in their first-ever award for financial advice. The trust and loyalty our clients place in us is core to our purpose. But we never take this trust for granted, particularly when it comes to our stewardship of our clients' personal data. We are diligent at maintaining the highest possible privacy and security standards and being transparent and explicit around customer consent. We've increased our investment in areas to make sure that we continue to stay ahead of this evolving issue. Our digital and innovation strategies are fundamental to fostering this trust and loyalty, particularly as we adapt to changing client preferences. We recently passed a significant milestone in our journey to becoming a digitally-enabled relationship bank. Mobile is now our number one digital channel, with 3.4 million active users, up 19% over the last year. 85% of our financial transactions are performed in self-serve channels. Our clients are increasingly finding added value as they engage with us on their mobile phones, resulting in RBC ranking first in J.D. Power's mobile app satisfaction survey in 2017. One great example from our insurance business is Path. This app was built by a team of co-op students. It provides our travel insurance clients with alerts, policy information, and advice on the nearest medical facilities in case of an emergency. More than 500 customers are already downloading it every month. For our Canadian banking clients, we recently launched NOMI Insights and NOMI Find & Save. Created in our innovation lab in Orlando, Florida, NOMI provides our 3.54 million mobile clients with increased insights to help them with their day-to-day needs while they're on the go. This makes the RBC mobile app the most used money management platform in the country. Our clients who use NOMI's predictive technology are twice as likely to save than those using traditional self-serve products. This was just one of 22 new mobile app capabilities that we released to retail customers in the last year. We are investing considerably in artificial intelligence for the benefit of all our clients. Today, we have over 200 data scientists working across RBC. This investment in helping us redefine our trading businesses, it is helping us improve our fraud detection rates, and is driving new products like NOMI. Through our machine learning institute, Borealis AI, we are ensuring that RBC is at the cutting edge of applied research, which will lead to many more innovative products in the future. But it's also about much more than that. This is a critical time for Canada as it reinforces its position as one of the leading global centers for artificial intelligence. We were the first company in Canada to launch an AI research and development facility. Borealis AI provides academics in Edmonton, Montreal, Toronto, and in Waterloo with the crucial freedom to focus on curiosity-driven fundamental research, including finding solutions to some of the greatest environmental challenges that our planet faces. Our focus on both applied and fundamental research shows how we are truly living our purpose when it comes to our investment in artificial intelligence. It is the most transformative technology of our age, driving new skill requirements, and it's a catalyst for a new era of mobility. The accelerating power of AI and machine learning is the most significant force of change that is impacting the relationship between the financial service industry and our customers. For example, in the past, we would be our customer's first stop. I remember this well from my own time in the branch. Besides family or closest friends, we were among the first to know about significant life events, business changes, or new financial needs. This has enabled us to build a deep connection with our clients. Today, our customers are increasingly broadcasting their intentions more publicly via social media and in their search patterns. This means that our newer competitors, the big players in search, in social media, in e-commerce, can quickly pick up on these data cues. As these technology players realize their digital dividend, there is a risk that our visibility with clients will diminish in the networked economies or ecosystems of the future. We hold some crucial assets in our home market, our deep relationship with our clients, our own secure data advantage, and most importantly, a trusted brand. As we look at our strategy in the 2020s and beyond, we recognize that to continue to succeed, we need to reimagine the role that we play in our clients' lives. This means moving from satisfying a part of the client's experience to orchestrating a broader experience for them. We have identified a number of ecosystems, those digital spaces where our clients live and work, where we believe we can play an integral role in their future. In the last year, we've already taken some bold steps on this journey, building new standalone customer propositions and creating some extremely exciting and mutually valuable partnerships. In the business-to-business space, we have collaborated with Wave to integrate invoicing, accounting into our financial insights, and financial insights into our business banking platform. This unique service makes it easier for small business owners to manage their finances, which means they can spend less time being a CFO and more time being the CEO. We recently released Drive, a digital glove box that empowers car owners. It centralizes your car needs from recall notices to valuations and gives you the ability to book service appointments directly from your phone. Drive is just one of many apps that we're working on to add value for our clients and to take away the friction and hassle of dealing with multiple service providers. We'll be talking more about our ecosystem strategy in the coming months, and we're very excited about what the future holds. We believe our ideas, our partnerships, and our new ventures will be game-changing. Together with our brand strength, we truly hold a unique position in our home market. But for all our investments in AI and a mobile-driven future, let me be very clear. While RBC may be enabled by technology, client-to-colleague relationships will always remain at the center of who we really are. We are very much a human bank, a relationship bank, powered by technology. Wherever we operate in the world, the continued success of this human bank will be driven by inspiring colleagues like Ava Royal Amero. It's almost unbelievable to think that only 40 years ago, it was illegal for a woman to be present on a trading floor. Ava, an RBC investment advisor, decided to change all that. Thanks to her persistent lobbying, the law in Canada was changed. Ava continued to advise our clients until her retirement from RBC just last year. I am delighted that Ava is here today and like to take this opportunity to recognize her for her huge contribution to society. Ava, thank you. Ava, you moved the dial, but there is so much more we need to do to create greater social and career mobility. Today, a year before we celebrate RBC's 150th anniversary, I would like to reinforce once again our commitment to inclusion, a fundamental part of our purpose. The last few months have shown that in our society, too many people are struggling to be treated equally and with dignity. I see it as a responsibility of every colleague to hold each other accountable for being inclusive and seeking out different opinions and perspectives. This is the only way to develop a workforce with the future-fit skills and capabilities we need. This is why diversity and inclusion runs through our new leadership model, which is driving a bolder, more nimble culture and encouraging an entrepreneurial spirit across the whole of RBC. As always, RBCers are continuing to rise to the challenge, driving new and innovative ideas every day. The results speak for themselves. With more than 94% of our colleagues telling us that they are proud to be a part of RBC. I see that pride in the eyes of my colleagues every day. I would like to also take this opportunity to thank every single RBCer for everything they have achieved. Thank you for your commitment and dedication to our clients. Ladies and gentlemen, five years ago, my predecessor outlined RBC's commitment to make every effort to provide employment opportunities in Canada. This will not change, and it remains explicit in our supplier code of conduct. RBC remains committed to supporting a strong Canadian workforce. Contributing to Canada's prosperity is at the heart of our purpose as a company. The operating environment in Canada is, in many ways, very positive, and this remains a great country to run and grow a business. Whatever the outcomes of the NAFTA negotiations, Canada must do more to ensure its competitive edge. This is not just about taxes, but addressing how we get our goods and resources to market by road, rail or pipeline in a sustainable way. The Canada of tomorrow will have to be more flexible, more open, and move faster than ever before. In particular, we have to help prepare the next generation for a future economy that will depend on a mobile, skilled workforce. In a recent landmark report, we identified the quiet crisis faced by Canada's youth. While the headline unemployment numbers in our country are strong, nearly a quarter of college and university graduates are in jobs that they are overqualified for. Almost 900,000 young Canadians are not in any education, employment, or training program. Many young Canadians are wondering whether they will be ready for the future of work. They are right to be asking the question. As our report found, in the next decade, at least 50% of Canadian jobs will require significant change to the skills needed to do them. More than 25% of Canadian jobs will be heavily disrupted by technology. Disruption, yes, but it does not need to be a threat. I described earlier how RBC is at its core a human bank powered by technology. This is defining how we are moving into the next decade. With nearly 2.5 million jobs expected to be added to the Canadian economy over the next four years, this humanity can also be our nation's competitive advantage. These new jobs will see a demand for foundational skills such as social perceptiveness and complex problem-solving. In other words, critical thinking, creativity, and collaboration. Just as we are reimagining our future at RBC and creating compelling experiences for clients, we are also helping Canadian youth reimagine their futures so that they can own the 2020s and beyond. RBC Future Launch is our answer. A 10-year, CAD 500 million commitment to help young people prepare for and navigate a new world of work that we believe will fundamentally reshape Canada and many of the communities within which we operate. We believe that we need to change the conversation. As a country, we have to rethink how we educate, train, hire, and reshape our nation's workforce to encourage mobility and to foster resilience. Through Future Launch, we're calling on educators, businesses, and governments to come together to help redesign and refund our education systems, training programs, and labor market initiatives. We're calling for bold steps for employers to hire for core skills, not for credentials. For a country to take new approach to financing, reskilling, and through funding lifelong learning opportunities. For all post-secondary institutions to agree to the goal of creating meaningful work-integrated learning placements for all undergrad students. We need to get this right, because when our young people succeed, so too does Canada. Our country is on the move. With RBC Future Launch, we have set out our plan for making a difference for our youth. This is one of the most important things that we have ever done, and it is truly our purpose in action. A future in which RBC will have an even greater role in helping our clients thrive and our communities prosper. I know that with our future leaders imagining, then building the Canada of tomorrow, we will be in good hands. Thank you. With that, I'll hand the meeting back over to Katie. Thank you, Dave, for that excellent, informative, and passionate presentation. At this time, I'd like to introduce Bill McFarland, Samuel May, and Alaina Tennison, the representatives of PricewaterhouseCoopers LLP, our auditor for the 2017 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 legal business of the meeting. If you have a question on the 2017 financial statements, please proceed to the nearest microphone. I'm not seeing any questions on the financial statements. As there are none, we'll proceed with the business of the meeting. You have received the notice of meeting and proxy circular, which specify the matters to be considered at this 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 received a ballot at the registration desk. Please print your name clearly and sign this ballot. Votes will be counted by the 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 a select group of RBC employees who are shareholders or proxy holders to move and second motions. I'll call on them at the appropriate time. Before moving to the first item of business, I'd like to take a moment today to remember our esteemed colleague, Rick George, who sadly passed away last August. Rick was an extraordinary member of our board and one of Canada's most highly regarded business leaders. We were very saddened by his passing, and he will be missed. On behalf of the bank, we once again extend our sincere condolences to Rick's family. Going back now to the business of the meeting, I'll begin with the election of Directors. Your board places strong emphasis upon the selection of Director candidates, assessing the board's existing strengths against the evolving needs of RBC. An important element of this is ensuring that a diversity of viewpoints, backgrounds, and experiences are present at the board. This year, the number of Directors to be elected has been fixed by the board at 13. Biographies of each nominee begin on page 10 of the circular. One of the nominees is standing for election for the first time. Jeffery Yabuki is the President and CEO of Fiserv, a leading global provider of financial services technology solutions. Since his appointment as CEO at Fiserv in 2005, Jeff has reshaped the company with a focus on the delivery of mission-critical technology solutions that enable its clients to deliver a differentiated financial services experience. We welcome the extensive expertise that Jeff brings to RBC, and we are very pleased to welcome him to the board. I'll now ask Karen to read the names of those proposed for election as directors, and 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, Toos Daruvala, David Denison, Alice Laberge, Michael McCain, Dave McKay, Heather Munroe-Blum, Thomas Renyi, Kathleen Taylor, Bridget A. van Kralingen, Thierry Vandal, and Jeffery Yabuki. Thank you, Karen. I'll now ask Rachel Megitt to nominate the directors. My name is Rachel Megitt. I have worked for RBC for seven years, and I'm currently the head of Business Transformation Canada in Capital Markets. 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 either elected or appointed. Thank you. Are there any questions or comments on the nominations? Again, seeing none, I'll declare the nominations closed, and we'll 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. I'll now ask Shaker Puri and Jason Ho to make a motion for the appointment of the auditor. Madam Chair, my name is Shaker Puri. I've worked with RBC for 16 years, and I'm currently Senior Director of RBC Mutual Funds Distribution and Financial Planning, Personal and Commercial Banking. I move that PricewaterhouseCoopers be appointed auditor of the bank until the close of the next annual meeting of common shareholders. My name is Jason Ho. I have worked with RBC since last year, and I'm currently Director, Internal Audit Services, Enterprise Risk. I second the motion. Thank you both. The motion has been moved and seconded. Is there any discussion? We'll now proceed with the vote. Again, 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 4 of the circular. We hope that 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 am going to now ask Mark Bayko and Nita Khalaf to make a motion to approve this resolution. Madam Chair, my name is Mark Bayko. I have worked with RBC for over 17 years, and I am currently Head of Portfolio Management at RBC Dominion Securities. 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 Nita Khalaf. I have worked with RBC for over seven years. I am a Director at the Chief Data Office in Technology and Operations. I second the motion. Thank you very much. The motion has been moved and seconded. Is there any discussion on the motion? Microphone number four. Madam President, bonjour. Madam President, my name is Willie Gagnon. I act on account of MÉDAC, the Mouvement d'éducation et de défense des actionnaires. As each year, we intervene on this point, this policy adopted after a proposal of the MÉDAC. Let me remind the shareholders that following a MÉDAC proposal in 2009, we are used to, and I will not speak for too long on the topic, as I will be coming back to it based on a proposal to the bank. Each year we calculate the equity ratio, which is the comparison of the highest-paid official of the bank and the median income. Last year, your ratio was 109. In 2014, it was 109, 74 in 2015, 2016, 76, and this year, your ratio is 79. The bank has given us this ratio without wanting to publish it. We would've appreciated being able to know this ratio, have it published in your proxy. You know that this is now a common practice in the U.S. It is regulated. Obviously, we invite you. Let me say that your ratio is not the highest of the sector. There are some banks whose ratio is much higher than yours, but other financial institutions, such as Desjardins, have a much lower ratio, around 30 to 33, whereas your equity ratio is 79 this year. For all these reasons, we invite all shareholders to vote against the resolution, the motion. Thank you very much. Thank you very much, Monsieur Gagnon. In terms of the comment on the executive pay ratio, thank you for being back again this year and bringing this to our attention. As I've said to shareholders before, and it's outlined in our proxy circular, we have a very detailed approach to reviewing and setting executive compensation at RBC. We take into account a number of benchmarks, including the executive pay ratio, the vertical ratio that Monsieur Gagnon has mentioned. It is one of the factors that the board looks to. It is a narrow measure, one that's not easily comparable institution to institution, as you've just pointed out in your comments around Desjardins. I think at this point, the board will continue with its practice of considering that pay ratio as part of our deliberations, along with many other benchmarks as we continue to supervise and oversee executive comp at RBC. Thank you. Again, microphone number 4. Good morning. I'm Nick Saracen. I'm a shareholder and a customer. I oppose your approach to executive compensation, not because it's illogical, it seems to make sense, but when the outcome defies common sense, there must be something wrong. I ask you and your senior management, how big does your house have to be? How many luxury cars do you have to drive? How big must your portfolio be for you to feel fulfilled? By my calculation, your CEO earned a little over $13 million last year. That's $139 a minute. Are you truly asking us to believe that he would be less fulfilled if he were paid half that, or even a tenth of that? If the leadership of the bank needs such trivial pointers to know whether they're doing a good job, they may not be the right people to lead this bank into the future. As a shareholder and a customer, I value their dedication, their hard work, their creativity. But not that much. Can you not find a better way to recognize and reward your loyal employees and leaders? Just a piece of perspective, if you take the non-executive officer compensation for the duration of this meeting, we're over $20,000 already. That's more than I can look forward from CPP. Thank you. Thank you very much for your comments today. I'll be brief in saying once again, that the board takes this responsibility very seriously, spends a great deal of time on it, receives external advice as to its approach to this, does a great deal of benchmarking. As we said in the circular, we are very comfortable that the approach we've taken with respect to Mr. McKay, who is an outstanding Chief Executive Officer of RBC, is the right one and in the best interest of the enterprise. But thank you for your point of view, and thank you for being with us today. We'll now proceed with the vote. Again, on ballot A, please mark your vote on our approach to executive compensation. At this point in the meeting, I'm going to ask the scrutineers to collect ballot A. Please raise your hand so that the scrutineers can identify you if you're holding a ballot here in the room. I'll do it right now while we're collecting the ballots. While we're collecting the ballots, I just wanted to let you know that we received a comment on the webcast that relates to this topic, and I think best handled while we're on it. The comment is, since management and directors are direct beneficiaries of the say on pay proposal, I suppose, directors because they have set the compensation and, of course, executives because they are receiving it's the considered opinion of this shareholder that they should not vote their shares on this issue. To vote on this issue, perhaps, in their view, puts them in a conflict position, and so should those groups be asked to withhold. I think to the extent that senior executives hold shares of the bank, it will be difficult to restrict shareholder rights. When they act as proxy holders for other shareholders and Directors, obviously, they're doing so to carry out the will of the broader shareholder group. That said, we'd like to thank you for bringing this topic up, and we'll take it into further consideration. Thank you. Any more ballots? Looks like we have them all. The voting is now closed on all matters. While the scrutineers are tabulating the ballots, we're going to see a short video celebrating a number of different ways that RBC helped clients thrive and communities prosper this past year. I want something just like this. Doo-doo-doo, doo-doo-doo. Doo-doo-doo, doo-doo-doo. Oh, I want something just like this. Doo-doo-doo, doo-doo-doo. Doo-doo-doo, doo-doo-doo. Oh, I want something just like this. I want something just like this. The books in gold. The legends and the myths. The testaments they told. The moon and its eclipse. And Superman unrolls. A suit before he lifts. But I'm not the kind of person that it fits. She said, where'd you wanna go? How much you wanna risk? I'm not looking for somebody with some superhuman gifts. Some superhero. Some fairytale bliss. Just something I can turn to. Somebody I can miss. I want something just like this. I want something just like this. Oh, I want something just like this. Doo-doo-doo, doo-doo-doo. Doo-doo-doo, doo-doo-doo. Oh, I want something just like this. Doo-doo-doo, doo-doo-doo. Doo-doo-doo, doo-doo-doo. Oh, I want something just like this. Oh, I want something just like this. Very nice. At this point in the program, we're going to move to 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 relates to a personal matter, please speak with the RBC representatives at our information desk in the lobby. If you are a shareholder or proxy holder and have a question, please proceed to the nearest microphone. Shareholders who are watching the annual meeting via the internet, may also submit questions through the website. Please give us your name and tell us whether you are a shareholder or a proxy holder. I'm now going to invite Dave McKay to lead the question period. Dave, once again, over to you. Thank you, Katie. Now I am going to open the floor for questions. It looks like they have lined up quickly at microphone 4. Please start. Mr. Chairman, my name is Nicol McNichol, and I am a shareholder. I wanted to congratulate the members of your team for the outstanding job they have done for shareholders this year. I am also interested in your diversity and inclusion, which I do not really quite understand exactly how you are going to implement that. You mentioned the Borealis AI and looking at artificial intelligence, and I am interested in just how that is going to fit into your program in the future. Sure. A couple of themes there. One, we fundamentally believe that diversity and inclusion is the foundation to innovation inside a company and inside a country and a society. Therefore, to achieve the innovation, the ideas, and the services that we want to bring to support our customers in the future really requires a diverse workforce, diversity across all dimensions. Therefore, that is the foundation of our diversity and inclusion. It is good for our country. It is good for innovation in our economy. It is good for RBC. It is a very important part of our culture and our values, and we live it every day. It is part of our leadership model, as I talked about in my speech. So that is how diversity and inclusion link to innovation. A big part of that innovation agenda is Borealis AI, and using the capabilities in the artificial intelligence world to support not only our customers, but our staff in delivering services to a customer. To bring ideas in real time, to connect with a customer, to be relevant to a customer. The world of AI and data, I think, allows us to be better for our customers, our employees to be better for our customers, and our customers to self-serve in a world that's changing rapidly. Our team of scientists, many of them here in Toronto, a number, as I said, across the country in Edmonton, Waterloo. Montreal is a big AI center. This is a technology that I think is going to deliver exciting new services and make our lives easier to transact and to work in a world that's changing digitally. We're very excited about Borealis AI and our leadership team there. That's how those two worlds of diversity and inclusion link to innovation, link to AI. But the final thing I'll say is, at its core, a really important message is that we are still a client relationship bank first. These technology tools, a digitally enabled relationship bank delivered through technology, putting people, customers at the center, and our employees with our customers is the real message. The stress you're putting on the client, too. Thanks. Thank you for your question and your support. Yes, microphone 4 again. Oh. Good morning. Hello, Mr. McKay. My name is Linda Shui. I am from Montreal. Came in special for this meeting. Last year, one of the major banks, not RBC, but they announced that they were outsourcing some jobs. Immediately I became curious and interested in what was happening. As these announcements go from a bank, they are usually preceded by the statement, "We have a responsibility to our shareholders," and rightly so. However, when I heard that this bank was outsourcing some jobs, I really became quite annoyed because I did not want them to do that, and I am a shareholder. As a result of that, I sent to the five banks a proposal to be put in to vote that the practice of outsourcing should cease. Because I did not think it was necessary anymore, and I thought it was disruptive to the families and employees involved. As a shareholder, I did not want this to be done in my name. As I say, I sent this proposal to all the banks. I have had many conference calls with all of them, and I agreed to withdraw the proposal in return for a statement of their future policy regarding outsourcing. This morning, I noticed something very oblique in your statement, but I was wondering if you could just expand a little more on RBC's policy regarding outsourcing. Thank you. Thank you for your question. Our commitment, as you heard in my speech, to jobs in Canada is paramount to us being a Canadian bank. We have 58,000 employees in Canada. If you look over the last five to 10 years, despite all the technology change that we constantly talk about, that number has grown by 5%. So we are creating new roles, we are creating new opportunities in Canada. The commitment we made is to only look at outsourcing in those situations where we do not have the capabilities in Canada. We cannot find and we do not have the skills in Canada, which is very different than our philosophy 10, 15 years ago, where we might have outsourced for other reasons, potentially cost competitiveness. That is our commitment in our supplier code of conduct to really focus on outsourcing in Canada and only seek those opportunities where we do not have the capability in Canada, we cannot find it. Much of our outsourcing is in Canada, and I think outsourcing as a term is not a bad term. There are things that our organization is not as good at as another company is. It could be a big company like IBM. It could be a smaller company in our country. We always look for relative capability, and if someone can help serve our clients better than we can, we should partner with them. Therefore, broadly, I would not put a negative connotation to outsourcing, but certainly support your context of creating jobs in Canada and being very clear on the reasons if and when we do, it has to be for a narrow set of reasons. That is the commitment we made, and we have had that dialogue with. Thank you for your question. I hope that clarifies and is consistent with your understanding of our policy to really focus on Canadian jobs. Yeah. No, I am very glad to hear that there will be no outsourcing with regard to our concern about cost. That will not be one of the factors. Am I correct in saying that? That would be not the sole factor. Not the sole factor. Well, okay. We will accept that. Everybody heard this, so that is fine. Well, thank you very much. You have the record. Thank you for your question. We have a question in microphone 5. My name is Leslie Dobos. I am a shareholder. My question is, about 15 years ago or so, you were so hot about getting into the insurance business and expanding it and have insurance facilities in every branch in this country. Last year, you sold it. Can you explain that to me? Why all of a sudden? I think insurance business is a great business because if you lose money this year, you jack up the prices next year and recoup what you lost and make more. You are saying not a very client-friendly business. Is that what you are saying? Well, look, I am an insurance broker, so I should know. Well, thank you for that question. Yes, we did do a strategic review, and this is a process that we do every year. We think about all our businesses in the context of a long-term customer franchise and the context of the returns it could provide to the shareholder going forward. So we're always forward-looking on this, not looking at the past, how it's performed, but necessarily how will it continue to perform in the future. As we look, and you're referring specifically to our property and casualty business, because we did maintain and are growing our life insurance business and our creditor protection business. But this is specific to home and auto insurance. We made a strategic determination that the returns to shareholders and the invested capital that we had in that business was not going to meet our target thresholds of profitability and return on investment. We saw volatility in claims rates. We saw significant fraud in claim rates. We saw legislative action that created an instability in the marketplace. It was hard for us to get comfortable that we could generate a fair return for shareholders. Therefore, as you'd expect a management team to do, we made the decision that we weren't the best owners of this franchise going forward. Despite it being an important customer service, we found an incredible partner in Aviva Canada, who has the scale and has the technology capability to manufacture and underwrite this risk, and we will distribute their product through to our customers. So we're still in the business from the perspective of offering these services because property and casualty is a very important financial service and a financial product to Canadians, as you know, as a broker. We were not the best manufacturer and underwriter of that risk and therefore, with Aviva and Royal, we have a broader product shelf. We limit our risk to distribution, and we have a long-term, a 15-year agreement to distribute that product. We maintain that service to customers, and I think we found a much better place, and we redeployed that capital into other business franchises. So I think that hopefully answers your question. But a great question. I'm going to go to six. Please go to the microphone if you have a question. Thank you. Oh, okay. Thank you for the question. Loud and loud. I hear you. I hear you. Microphone six, and then we'll go to four. Good morning, Mr. McKay. Yeah. I'm Paul Durnin from Burlington. You have spoken only briefly about NAFTA and maybe the idea that there is some risk there. I'm afraid that I'm a pessimist in this matter, and I believe Washington will turn it down, and that is what has been promised in previous election campaigns, as you recall. How will the bank be affected directly if NAFTA has a very negative final outcome? Thank you for your question. First, I would say I'm more of an optimist that we will come to a successful resolution of NAFTA. We remain very close to all constituents and parties in this, from governments to businesses on both sides of the border, as we have strong networks, not only in Canada, obviously, at the federal, provincial level, but also at the state and federal level in the U.S. When there's so much mutual benefit to maintaining this agreement, we are hopeful that all three parties come to an agreement at the end of the day. There are some very difficult changes that are being proposed that have to be resolved from rules of origin, which we've made a lot of progress on, but also the sunset clauses on the agreement, how it's going to terminate, and the dispute mechanism clauses are all very important to having a good agreement for Canada. Therefore, I think we know that the Canadian government's in Washington right now negotiating those key clauses. The agreement does need modernizing. If you look at the definition of what trade is in the auto sector, we don't count all the content that's digital content within the automobile, and therefore, as you look at what's an automobile is going to be going forward, to not count that is really ignoring the value creation and the trade that's happening in rules of origin. The agreement in a number of areas needs modernizing, and those discussions are ongoing. But I am hopeful that given the mutual benefits and how difficult it would be if this was torn up, I think we're going to find agreement. Having said that, if we don't, your question is, what's the impact? The strength of RBC is based on the strength of our economy and our clients. Therefore, you would expect that if commercial customers, corporates didn't have access to the U.S. market or had a significant tariff as we fall back, we expect WTO tariffs, that would impact our business. Having said that, if we look at the impact of falling back to WTO-based tariffs, our estimation is that it would only have roughly 0.1% effect on GDP. The WTO tariff structure, assuming that's the foundation to elimination or disruption to NAFTA, provides a fair degree of understanding certainty of the cost of that cross-border tariff. I think those are relative points to say there are other backups if NAFTA is disrupted. But again, commercial customers, if they lose their markets, will be challenged. Canadian jobs relying on that export will be challenged. It's difficult to say sector by sector, depending on how the tariffs are applied and whether we fall back to WTO. They're all great uncertainties. We've done a number of scenario analysis within the organization to look at various scenarios, but it's hard to put probabilities on those scenarios. We monitor that. But Canadians, if you look at markets, are largely looking through this disruption right now and looking to a positive outcome. I think those would be my perspectives right now. We're going to go to microphone four, and I think it's MEDAC. Mr. Gagnon. Bonjour, Mr. McKay. My name is Danny. Good morning. I'm Daniel Thouin, President of MEDAC. Thank you for letting me speak. Madam Chair, good morning. Members of the board. In preparing my comments on proposal one that we made and then withdrew, this is on page 105 of the circular. I would just like to say in preparation what we have done over the last few years, we have partnered with Canadian banks over 20 years, to improve their management and their activities in board organization. Let me mention a few good results that we are very proud of at MEDAC. The distinction, first of all, or independence between President of the Board and CEO of the company, the separation of roles, as I have just said. Consultative voting, which is a result in 2009 following the financial crisis. Voting also of shareholders in terms of percentage as a way of checking whether percentage-held shareholders are in line with the votes of smaller shareholders, and a term limit of 12 years of directors in public companies. Also, the presence of women on boards of administration. This was one of our strong proposals over the last years, which has given results, as we see today in Canada with three women at the head of boards under large banks. It's a result that we can be very proud of. As a preamble to our proposal, democratization of access to the board through making it easier for proxies to stand to director positions on the board. We submitted a proposal that will open up the way for more shareholders to be able to stand as directors to public companies. This proposal was modeled on other proposals. In Quebec, the FTQ has three designated positions for people from the worker organizations that are representing shareholders. You answered to this proposal that the bank already had a process that allows shareholders to stand for election at the board, that you have a specific policy set up in 2007. We considered that your policy was satisfying, and we withdrew that proposal. Let me come to our second proposal now, that will not be put to the vote either. You gave us a response, accepted to give us a response, which is published in the circular also. This is a commitment to decarbonization of our economy. You know, all shareholders know that the banks are really well-positioned to change, in a sustainable way, the habits that we have developed over the last century or two to use and abuse fossil fuels. We are currently at a critical point where change must happen in an urgent manner. Banks have set up a task force on climate-related financial disclosure, TCFD. This task force includes representatives from RBC, Scotia, BMO, TD, and also the teachers group and a Quebec group also, and also the retirees of the provinces public workers. We asked for you to publish the results of the task force and respect their conclusions. In your response, you say that you have already participated since 2007 in a committee and another group active on environmental issues. For these reasons, we accepted to withdraw our proposal. We see here again that your response was quite satisfactory compared to that of other banks. We are very satisfied, and we would like to recognize your leadership on that issue. Thank you very much. I will let my colleague speak to the other two proposals. Mr. Gagnon. Thank you for your engagement throughout the year and the dialogue and for your comments today. Mr. President, Willie Gagnon. I also act on behalf of MÉDAC. If I may add to my boss's intervention, Mr. Thouin, you were present regarding the environment and decarbonization. You should know that yesterday, Mr. Louis Morisset declared, we better understand now the state of communication on climate change in Canada. Now we will be hoping to improve communication on the risks and governance processes, taking into account the points of view of investors. This was a declaration made in the publication of a report on that topic, and we understand reading this report that new legislation will frame these issues, and we hope you will take all this into account, that you will consult the report and set up all necessary measures. I will now be speaking about the other two proposals that we sent to the bank. Let me mention that all proposals, the four proposals we sent to the Royal Bank this year, were also sent to the other banks and that we, in all cases, withdrew them from the vote. We think that the fact of having sent all same proposals to the five banks was good for us. The following proposal reads as the proposal number 3 reads as proposed. It is proposed that the certification of sound business practices for the sale of financial products and services is proposed that the Board of Director require its executive officers a written declaration on compliance with the principles of loyalty, integrity, and honesty. You understand the principle. This came in after emails from the employees of the bank. We agreed to withdraw this proposal because the bank has taken measures to face this issue. We also saw that the bank participated in the investigation by the Canadian authority, the Financial Consumer Agency of Canada, which investigated. Since we withdrew this proposal and the bank published its circular. Let me wait. Once again, the Financial Consumer Agency of Canada in March of last year published a report with five points. The culture of the banks is one that is at high risk. The compensation policies could increase the risk of financial risky sales. Some circuits are at higher risk. The governance framework does not allow a proper risk management linked to sales practices, and the policies deemed at risk mitigation are not sufficient. So this is not MÉDAC's position, but rather that of the Financial Consumer Agency of Canada in its report. We have spoken to two other banks with these issues, and they said that the Financial Consumer Agency did not have systemic issues in its report. Please let us know what you will do based on this report. Even if it is not a systemic problem, we want to know what the bank will do based on this report. Our last proposal had to do with the equity ratio. I will not come back to that, seeing as I already spoke about it at this mic this morning. Let me just say that in our discussions, which were good discussions with the bank, the question of the distortion per sector was raised. The question of this distortion of the equity ratio based on the formula. If you use, depending on whether you use the mean, the median remuneration of bank employees or of the general population in Canada, you have different results. Also, if you use different average incomes worldwide, this issue has been raised. Let me say that this is now the rule. It is the law in the U.S. for this ratio to be published. You also do publish this in your circular, saying that in the absence of legislation in Canada, it would be risky to publish this equity ratio. In fact, understood. The underlying question is that the legislation should be changed. This will no doubt be MÉDAC's next line of action, and we hope to have your support in our approach. Obviously, thank you for the quality of your responses. As Monsieur Thouin said before me, not all banks answered in such a clear fashion to our questions. Look at their circulars to understand this. Mr. McKay, can I thank you for your attention? Mr. Gagnon, thank you for your ongoing dialogue over the year and your interest in making our society and our company better. I know there wasn't a question in there, but I do want to maybe say a few words about one of the subjects you talked about, and that's sales practices in Canada. We are very proud of our culture as a sales organization. I know we put the customer at the center of everything we do. Customer satisfaction, number 1 in J.D. Power, is one of our key metrics, our internal customer sat metrics. So the customer comes first. Importantly, I think the primary conclusion from the FCAC result is that there is no systemic problems in sales practices in the country across the banks. That was the clear conclusion. To continue to mitigate against the risk of there being, there are a number of recommendations that you highlighted that all banks should maintain good governance over. We fully agree that this is an evolving world. We're constantly reevaluating our sales practices as the markets change, as customers change, as products change. But I can assure you, and the key results are there in our customer satisfaction numbers. We put the customer at the center of everything we do. The second thing I'll say is that compensation for sales of services and products for the majority of our employees is a very small part of their compensation. The majority of their compensation is salary, and therefore, we evaluate their performance at all times in conjunction of sales, but first with customer satisfaction in mind. We're very proud of our sales culture in the organization. We maintain it. We nurture it. We focus on it from top to bottom. The board always asks about us from a governance perspective. The primary conclusion we took from the FCAC result was that there is no systemic problem in the country, and therefore these recommendations are to continue to reinforce that. I thank you for your engagement and your dialogue over the past year and over the coming year. I am sure we will continue to have dialogue. We really appreciate your comments. Monsieur McKay. If you would like to come back up, I am going to move to microphone 6, but certainly would like to engage with you further. I should give a chance for the gentleman at microphone 6 and Mr. Gagnon. I will come back to 4 if you would like to continue. Yes. Mr. McKay, when you took City National, my understanding was that this was the bank of Hollywood movie stars, and you have sort of Yes, it is private wealth management to a big degree, and it has more cities than Los Angeles. It has major U.S. cities. Yep. Now, the question I have is just how much retail service have they got for Canadian tourists in the U.S.? I am going to expand this. Let's face it, the small U.S. banks don't want your Canadian money. They've got to get an agent just to get it back to Canada, to get their U.S. out of it, and you've got fees for that. Yeah. Just what kind of services retail are there in the U.S. for Canadian tourists that are as direct and convenient as possible? Okay, simplify. I got your question. Yep. The focus of City National Bank is an entrepreneurial company serving entrepreneurs, and entertainment was a big part of and the focus of the organization, City National, in the '50s, '60s, and '70s. Still is a major part of the business, but only roughly 20% of City National's franchise. There's a number of other sectors, from real estate to professional services, to technology, to quick service restaurants. There are a number of industries where City National focuses their commercial energy on serving customers. So a much more diversified company from a client perspective, from a product perspective, and from a geographic perspective, as you referenced, expanding out of the state of California to New York, into Nashville, into Nevada, and other markets, now Boston, now Washington, as we talked about. So a more expansive. But their focus is serving entrepreneurial customers in the United States. They are not focused, per se, on having a broad retail network. This is a commercial private bank focused on a small number of clients in a number of important markets, but not a broad retail bank. Particularly in those markets, in Florida, where Canadians like to spend their winter, this is not a franchise that we bought to serve that marketplace. We do have an online bank that has been incredibly successful with roughly a little over 300, I think 350,000 Canadians. This digital bank, with almost no physical footprint, has been really serving a large number of Canadian clients very well. There is no physical network to walk into, but the design of this bank to move money across Canada-U.S. currencies, to pay bills, to access ATMs in the United States, has proven to be very successful and has high customer satisfaction numbers. We've decided to serve Canadian snowbirds, as we call them, tourists, through this fashion rather than building a very expensive branch network. And customers have told us for the most part, other than there are other customers like yourself who have said, "Boy, I wish I could have a branch in Naples, Florida. Boy, I wish we were in Palm Beach." But we look at the cost return to the shareholder and how many people we think would access that, and we still come to the conclusion that I don't think the market's big enough for us to put that cost structure in at this point in time. We constantly reevaluate that. I was just in Palm Beach last week speaking to a whole group of snowbirds from the province of Quebec. There was roughly 300 or 400 there. I do get that question, but I've had the same answer then, that the feedback we're getting on our digital cross-border bank, it's so easy to use, so strong, best in class in the market. I think that's the strategy that we're going to continue with going forward. Unfortunately, I'm not going to have a network of branches for you to walk into in the U.S. But if you're in L.A., you're welcome to come to see City National. We'd love to see you there or in New York City. But we don't have any plans for an extensive network in the state of Florida and other markets where snowbirds go, in Nevada. Thank you for your question. There is a retail service then in L.A. and Chicago for- Certainly, those branches are available to support if you're in that marketplace. You're welcome to come into City National Bank. You do not have connectivity to your Canadian accounts, and we don't have plans because the focus of City National to convert that into a cross-border retail bank. City National is a very focused bank on high net worth commercial customers in those five segments, and their success has been because they're focused and disciplined and create real competitive advantage in the customers and the businesses they serve. I think the key to success in City National is to keeping them focused and not stretching them into something that is not part of their focus. Thank you. Do we have any other questions? Good morning. I'm still Nick Saracen, and I'm still a shareholder and a customer. Great. I'd like to commend- Thank you. Madam Chairperson, on her significant holdings of stock in the bank, I would like to join her in welcoming Mr. Yabuki. I would like to particularly congratulate him on having made a significant investment in the shares of the bank. It puts him as one of the largest shareholders of the board in terms of the money they have put in from their own pocket. I think that demonstrates alignment of the board with the shareholders, and I am all for shareholder, for sweat equity, but I think putting some of your own money demonstrates a commitment that I would like to commend. So thank you, sir. Thank you for your comment, Mr. Gagnon. Mr. President, here I am again. I am still acting on behalf of MEDAC. I would like, on the base, I guess, of the report that I mentioned earlier and based on your response earlier, I had hoped or planned for you to tell me that the report said indeed that there were no systemic issues. This gives the impression that this is a scripted response by all banks. My question is the following: Based on this report, will you change anything in your sales practices or not? In other terms, does the report give any follow-up or not? Follow-up question that the report is useful in highlighting areas that we need to continue to manage to make sure our practices don't slip. We are constantly changing our sales practices. They are not static. They are dynamic, as I mentioned. Customers change, products change, market opportunity changes, and therefore, to create an environment where our employees feel they're treated fairly and there's opportunity, and to make sure that we don't create the environment where our employees feel pressured to offer a service to a client, we're constantly reevaluating our services. We did our own internal study of our sales practices in Canada and the U.S. after the news of what happened at Wells Fargo. We didn't wait for the FCAC results. We conducted a very detailed third-party review of our sales practices. We looked at customer complaints. We looked at employee engagement. We have a policy. We want to hear from employees. We survey them all the time to hear how they're feeling about things. We take that, and we make changes based on that. We're always making changes to sales targets and sales practices and sales routines. It's part of why we're successful, because we're adjusting to a world that's changing. It's not static, and we're not disregarding the FCAC. I just don't want everyone to have the impression that there was a major finding that these processes and recommendations are solving for. They're there to make sure we don't change and we don't fall into these bad practices. But the conclusion was clearly, and you read it, that there is not a systemic risk in Canada, but we don't want there to be a systemic risk, and we have to stay on top, and we accept that, and we are working with those recommendations actively. Hopefully that is what you're hoping to hear. Yes. Microphone four. Mr. President, I'd like to go back to last year. Last year, you gave out CAD 150 to 150 young Canadians. We saw how they multiplied it. I have a granddaughter. One of my grandchildren. I'm proud of them all. Last year, her school, Tyrrell, teamed up with Sir John A. Macdonald on a walkathon to raise money for children to overcome cancer. By herself, she raised CAD 2,000 towards that project. Last year after the meeting, I went to her and I said, "Kiddo, why don't you go to see your local Royal Bank manager, make an appointment, and see if you can get CAD 150?" At 13 years of age, she's quite timid sometimes, and she didn't go to her Royal Bank branch. But that initiative of the bank last year inspired me to know that I'm dealing with the right bank since the age of seven. I'm now 85. Thank you so much for that comment. I know you're really proud of your granddaughter. We are incredibly proud of our Canada 150 campaign, as we call it, and really inspiring youth to make a difference in our world through random acts of kindness. The stories that we've gotten back from those youth across the country who have taken that CAD 150 and, just like your granddaughter did, multiplied it with other donations and really made a difference. The stories about the fabric of our country is incredibly heartwarming, and I think it's one of the great things that we've done, and I am very proud of the team. I'm proud of our clients who approached us and the emails I got and the letters I got from parents and grandparents like yourself, whose grandkids put on a suit and came in and talked to that branch manager and received that CAD 150 with the only requirement that they tell us what they did with it and what difference they made. We're incredibly proud. I know Mary DePaoli and the team designed this and implemented it. Thank you for mentioning that. I don't think we had it in the video, did we? Probably should have. Thank you for that comment. Do I have any other questions? I don't think so. Number one. Oh, sorry. Number one down here. Yes. Good morning. My name is Richard Sambrook. I am a customer and shareholder. I am not as long a shareholder or customer as the previous gentleman. I am very impressed. I did buy my first shares in Royal Bank about 30 years ago. I think they call that period Black Monday. I think I paid all of $4 for my shares. You have got good timing. You know what the dividends are. I don't think Warren Buffett is threatened, but I'm very impressed along with this year. Obviously, a great year financially. Like the previous gentleman, I want to compliment the firm on the qualitative aspects of the investment. Particularly, I guess, its continued focus on high ethical standards, risk management. It's one thing to achieve numbers, but still do it in a risk-controlled, and that's really tough. Love the ROE. I know investors, we talk about it all the time, and it's like the green light. I see divisions with different ROEs, and I know it's important to keep diversified. I've seen companies fail over that time because they thought they had, oh, this is the highest ROE, and they just got too concentrated and forgot the balance in the mix. What I also liked in the qualitative side was the customer service levels are maintained and are huge. In line with the previous gentleman's comment, it's really this supporting community engagement, which to me also makes good sense. Healthy communities are a great place to do business with. Personally, in particular this year, I have to compliment RBC's Winter Olympics support. I think we all became more engaged, and certainly we saw that girls can indeed play a great game of hockey. Other sports. I have a daughter. Yeah. Anyways, my question is something you mentioned last year, and I think you closed a bit with, which is Future Launch. Which is massive. As an investor, I guess I should be concerned that it's an investment, not an expense, so that there's a plan for how it helps. Obviously, it'll benefit a lot of people. Could you add a little more clarity to what the program is, especially for millennials, because I think they'd be highly interested, as well as the parents of millennials. Again, thanks for a great year. Well, thank you for your incredible summary of our investment thesis around volatility and ROE and premium growth. You said it perfectly. Thank you. Absolutely. We believe that a strong Canada leads to a strong RBC. We are going to celebrate our 150th anniversary next year in Halifax, which we're incredibly excited about, and we plan to be here for another 150 years. I won't be here, but there'll be these meetings, maybe digitally, and we'll be celebrating. Making sure our youth engage in the economy and are given opportunities to lead, we think is incredibly important. We're worried that the skill set shift is happening so fast that our youth are not being prepared for the future of work to lead our economy and to contribute to our economy at an early age. It's critical that we enable these youth to contribute and lead, and we feel very strongly that RBC has a role to play in making sure our communities prosper. It's very important in our business strategy to connect to youth. The world is changing. I would say when we asked youth 10, 20 years ago, how did they connect to RBC? They said, "My parents brought me in when I was six to open my first account." That's how I started. That's how I think most people started. Increasingly, that's not the case anymore. Parents are embedding banking capabilities within other products that enable youth to transact. It's so important that we connect to youth in different ways than we did before. But the primary objective is to make sure that youth are given the skills, the right education to work with educators. I think we can get a better return on our tax dollars, our investment in education if we focus on the right skills, if we have work-integrated learning opportunities, if we help them network to find the right jobs. Our program is also designed, we fundamentally believe work-integrated learning opportunities, which is part of this, which is co-ops, internships, apprenticeships. It's a great democratizer, a great supporter of diversity and inclusion, that when you don't know someone in that company, that there is a job access through your school, through your high school, through your post-secondary education to get into the job market, to get that experience that's so important. For me, I started as a computer programmer. It was really interesting, but after 8 months, I figured, I'm not going to do this my whole career. I switched streams. I changed my academic focus. I could have done 4 years of education, figured out, got a degree in computer science, worked for a couple of years, and then gone back to school to change. At the beginning of second year, I switched my focus. Better return on my investment and time, much better return on the province of Ontario's investment money and time, and therefore, that's what we're trying to achieve, is to make sure youth connect and understand. They're screaming for it. They just want to know where the opportunities lie. How should I apply myself? We think this is so important as a leading company in Canada to help make these connections. Last week, I just participated with John Stackhouse, who I work with in the office of the CEO, on a panel. We brought panelists from the agriculture industry, from different technology industries, and they talked about how they are providing work-integrated learning opportunities and how work was changing and how important it was early in your education process to get these experiences. After an hour of watching these amazing panelists, three different industries and companies, I said, "The best thing we can do is to send this one-hour video to every high school in the country, and I guarantee you they'll watch it." Because it gave a real insight. We see the need, we hear the need. We know we can make an impact. We know this is really, really important for our country. We want to have this dialogue with governments, and that's why it's important to Canada, and it's important to RBC. Thank you for that question. You're going to get a good return on your investment. Monsieur Gagnon. Monsieur le President, bonjour encore. Mr. President, it's me again, Willie Gagnon, on behalf of the MÉDAC, and I promise you that this will be my last question. It'll be short. You will know that there's a debate in Quebec right now on the closure of various branches of Desjardins in particular. We fully understand the reasons for these closures. Banking is done more and more over the internet now, and TD spoke about this at their general assembly last week, and CIBC spoke about it yesterday also. The President told us that 2% of their branches had been closed last year. I'd like to know if you closed any branches this year, and if you did so, how many? Mr. Gagnon. Thank you, Mr. Gagnon, for your question. I'm going to ask Neil McLaughlin, our head of the Canadian Retail Bank, Personal and Commercial Banking, to take the microphone. Yes, we absolutely have closed branches. I think it's really important as we watch, and you referenced it in your question, how Canadians' financial service needs are changing and how they're using us is changing. Hopefully, you heard in my speech how mobile is our number one channel now. Our strategy is to respond to changing customer needs and to allocate our capital and resources to meet those changing needs, and I think it's unquestionable in our society that those needs are changing. Our branch system is still a critical part of our delivery network, and I think the absolute number that Neil will quote, I think, is around 5%, Neil, but before I give out the data, you have all the data. I'll ask Neil McLaughlin to continue to answer your question, but a very good question. Thank you. Thanks for the question. Just maybe to give you the exact number. We closed 43 branches last year. We also opened branches, and really to Dave's point, it's about following our customers in terms of where do they want to access us and what are their behaviors. A couple things we'd point out. We do see trends. Fewer and fewer customers are coming into branches, and that's been a trend for a while, and you referenced that in terms of technology, the use of the phone that Dave mentioned. That is something we think about, and it's in response to customers as they're essentially requesting, and we're delivering more and more access points. We rewind the clock, it was ATMs, and then it was a contact center, and it was PC-based banking, and now mobile banking. There's more and more channels for our customers to access us, and there are some places where we've decided to take out some physical capacity. A couple of things that I think we'd also like to point out. We do look at this in terms of an overall way we make our capabilities convenient for customers. So it is that collection of capability. And many of these places we haven't had, up until this point, any staff that we've really had to part ways with. It's been over time in a very slow process. Our approach to this is that we are following our customers. We are not trying to take our branch network and all the services it provides and force customers to a place that on mass, we're seeing them really direct us what type of services do they want. We can say we've been very vocal. Our branches and our people, they've talked about the importance of advisors and relationships and that we're digitally enabled, but we're a relationship bank. We're very committed to that, and we've been very upfront with our employees that the branch will play a critical role now and for as far as we can plan, our branch network will be vital to our success and how we serve customers. Merci, Mr. Gagnon. Important question. If I understood correctly, 5%, 43 branches, is that right? Branches. Is that it? That would be below 5%. Okay. Merci. Okay. I think that brings. I don't see anyone at any microphone, so thank you very much for your questions. I'll hand the meeting back to Kathleen Taylor. Thank you, Dave. I'd just like to echo Dave's comments and thank all shareholders. We have one more question from the web that I'd like to address. It's for a shareholder who would love to see us bring the AGM to Ottawa in his lifetime. I'm not sure what that timeframe is. Just to say that we do, on occasion, as you've noticed, generally about every 3 years, we will move the RBC meeting to another Canadian destination location where we have a chance to engage with local customers, with local staff and teams, and also, of course, with local investors. That is in our regular cadence, and as a result of this comment, we will for sure take Ottawa into consideration in future years. I'd also just like to say thank you again to all shareholders for being with us today, for engaging so well, and in particular, Mr. Gagnon, Mr. Thouin, and Ms. Shui, who have been working with us, in the case of MEDAC, for years, in the case of Ms. Shui, all through this year. A high level of engagement and one that we really appreciate and look forward to continuing in 2018. I'm now going to call on Joseph Chirico to report the preliminary voting results, which will also be posted on the screens. Final results will be posted on the bank's website and on SEDAR. Joe? For the information of shareholders, the scrutineers wish to report that 788,173,755 shares, or 54.58% of eligible shares, have been voted at this meeting. The results for the election of directors are a substantial majority of the votes cast at the meeting were voted in favor of each of the 13 nominees named in the management proxy circular, with each nominee receiving in excess of 97.76% in favor. The results for the appointment of auditor are 99.84% voted in favor of PricewaterhouseCoopers LLP and 0.16% withheld from voting. The results for the advisory vote on the approach to executive compensation, 95.55% voted in favor and 4.45% voted against. Thank you, Joe. I now declare that the 13 nominees named in the circular have been duly elected as directors. PricewaterhouseCoopers has been appointed as the auditor for the 2018 fiscal year, and the advisory vote on the bank's approach to executive compensation has been approved. Ladies and gentlemen, I would like to thank you for participating in our meeting today. Just before we close, on behalf of the board and our shareholders, I would like to express our sincere appreciation to RBC employees everywhere, 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, not only for his continued strong leadership of RBC, but also for his values-led leadership, his focus on youth, his commitment to helping our clients thrive and our communities prosper. Thank you, Dave.

Data Source: Quartr Last updated: Apr 6, 2018

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