AGM 2016

Apr 6, 2016

Good morning, ladies and gentlemen. Good morning, fellow shareholders. Welcome to our annual and special meeting of common shareholders. I am Kathleen Taylor, Chair of the Board of Directors of Royal Bank of Canada. I am so very 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 the meeting in French or in English. Translation headsets have been provided on your chairs. French is on channel one, English on channel two. After my introductory remarks, Dave McKay, our President and CEO, 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 and a special resolution to confirm amendments to RBC's By-law Two to increase the maximum aggregate remuneration for the board and to delete references to a director stock option plan. We will then consider a shareholder proposal, followed by any other business and questions from you, our shareholders. Please note the caution posted on the screens. 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 three 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. Before we begin, I would like to take a moment to introduce the others who are here on the podium. From your right to left, we have Janice Fukakusa, Chief Administrative Officer and Chief Financial Officer; Dave McKay, our President and Chief Executive Officer; Karen McCarthy, 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 are members of our board and senior management team. One of our current directors, Vic Young, is not standing for re-election today. So before proceeding with today's business, I would like to take a moment to pay special tribute to him. During Vic's membership on our Board of Directors, he has made an outstanding contribution. His professionalism and experience have been great assets to the bank. He has served as a strong Chair of our audit committee and has worked hard on behalf of shareholders over the years, serving with distinction on the risk, human resources, and governance committees as well. Thank you, Vic, for your inspiring leadership, strong contribution, and dedicated service. We wish you so very well in your next exciting chapter. At RBC, we regard good governance as a business imperative, establishing the structures and processes that drive RBC to meet its objectives and achieve long-term sustainability. This year, in recognition of our high standards, RBC won best overall corporate governance in the annual Excellence in Governance Awards. Central to the role of your board is our responsibility to ensure that RBC has the right strategy, talent, and risk management to deliver long-term value for shareholders. Since we met with you last year, your board of directors has maintained its strong focus on ensuring that business decisions and initiatives align with RBC's risk appetite. This year, the board advised on and approved management's strategic acquisition of City National Corporation, a premier private and commercial bank, which will serve as a powerful expansion platform for our long-term growth in the U.S. Another priority for the board is ensuring RBC has the depth of talent to implement strategy, as well as top performers who exhibit excellence in its execution. In that connection, we were happy to announce the appointment of Doug Guzman as Group Head of Wealth Management and Insurance. Doug's track record of strong business results and his unparalleled client focus position him well to lead these strategically important businesses for RBC. Now it's time to hear from Dave McKay about the bank's performance and future outlook. Dave, over to you. Thank you, Katie, and welcome to our 147th annual general meeting. We're pleased to be back in Montreal for our AGM. It's a bit of a homecoming for me, as I was born in this city, grew up here, and still have family here. In fact, my first encounter with a bank took place in Ville Saint-Michel. When my father, a small business owner, took me to his local Royal Bank branch to show me a thing or two about managing money, I can still picture the manager coming out from his office to serve us as we were standing in line. He said he hated to see clients wait. For me, it was an early lesson in the Royal treatment. While a lot has changed since then, some things haven't. Client service is still at the heart of RBC. Doing what's right still matters perhaps more than ever, and being part of our communities continues to drive us. It's our purpose, and purpose can never be disrupted. Each time I'm back in Montreal, I'm impressed by the social and economic progress that were made here. Montreal has transformed its economy since the 1980s and is now a leader in many knowledge sectors, from aviation to medical science to computer animation and also gaming. If there is one thing behind this progress, it is the province of Quebec's investment in people, in education, in childcare, and in finding ways to positively engage the entire population in the economy. Diversity and inclusion are driving Quebec's and Canada's prosperity. They are also fundamental elements to RBC's success. Strategy to you with a focus on three pillars. First, to continue to grow as the undisputed financial services leader in Canada. Second, to expand in the U.S., their second home market. Third, to increase our reach in selected markets internationally. I'm pleased to say that because of this strategy in 2015, we were the first Canadian company ever to earn CAD 10 billion in a fiscal year. That was up 11% from 2014, reflecting record earnings in Canadian banking, capital markets, and I&TS. As you can see on the slide, our employees met all of our financial performance objectives. We remain committed to these same objectives going forward. The first quarter of 2016, in a challenging operating environment, we continued to deliver solid earnings of CAD 2.4 billion. Naturally, there have been concerns about the impact of low oil prices on our business, which I'd like to address. Oil and gas represents about 1.6% of our total loan book, and our provision for credit loss remains in line with historic norms. We also believe the significant gains that oil markets have made since January will hold, given that the U.S. economy continues to grow, albeit slowly. Here in Canada, the lower dollar has done its job, with exports and investments now on the rise. With this context in mind, I'd like to take you through our various businesses and describe some of their strategic progress. Our Canadian banking franchise remains a cornerstone of RBC. We're number one or number two in every major business segment and continued in 2015 to grow our market share in key categories. We have the most diversified customer base among banks in Canada, the strongest brand, and employee engagement levels that are amongst the best in the world. Our customers continue to recognize this, and our net promoter score has grown in every year but one since 2004. In fact, our score is now double what it was in the early 2000s, and explains why RBC is the number one bank when it comes to cross-selling and offering a wide range of products to meet our clients' complex financial needs. For these reasons and more, we were named by Retail Banker International magazine as Retail Bank of the Year for the second year in a row, an honor no other Canadian bank has ever achieved. We recognize that the world of finance and banking is changing. What made us successful in the past will not guarantee our success in the future. We see this evolution as an opportunity, an opportunity to grow as a digitally-enabled relationship bank. We're now seeing 60% of all financial transactions, excluding cash withdrawals, coming through digital and mobile channels. Last year, to better serve that demand, we launched an industry-leading mobile wallet, and this year we've revamped our iPhone and Android mobile banking experience. We'll be bringing new functionality into our mobile wallet. We've already seen more than five million downloads for mobile banking application. In this increasingly instant and digital world, consumers don't plan their finances like they once did, which means we need to know our customers' needs, their wants, their ambitions, and their fears, often without ever asking them directly. We need to place ourselves in the context of their lives. In short, we need to think of ourselves as their financial Siri. What are RBC's advantages? First, it's scale. With more than 14 million clients in Canada, we have the resources and the market knowledge to build, test, and improve on ideas that make our clients' financial lives better and attract premium partners. We've done just that with our Avion credit card by forging innovative partnerships with the brands and services that our clients love, including The Running Room, Airbnb, Saks Canada, and Apple. Second, reciprocity. We have critical mass to help our customers lever their purchasing power by giving them more reward points, better prices, and more premium services than our competitors. And third, data. Our client base gives us better insights on how they buy, borrow, invest, and trade, insights that help us to anticipate client needs. We're approaching these opportunities in very new ways for a bank. For the past two years, we've relied on dynamic, agile teams to build products and adjust them according to customer preferences. In the process, we have found our time to market is much faster, our employees are more engaged, and our costs are lower. It is one of the reasons we're ranked as the most cost-efficient bank in Canada, with an efficiency ratio of 53%. It's this efficiency that allows us to reinvest in exceptional client experiences. This is our DNA. Our strength in core banking continues to benefit other parts of our business, notably our wealth management business. RBC already is Canada's top asset manager and operates the largest network of advisors, and our reach among high-net-worth clients is expanding. Over the past five years, our Canadian wealth business increased its share of high-net-worth market by about 500 basis points to 20%. We expect that to grow. In the U.S., we've doubled our private client business since 2010 and are now the seventh-largest full-service brokerage house by assets under administration. The acquisition of City National Bank, a highly regarded private and commercial bank, was the largest strategic move in our history and positions us well for growth in some of the most dynamic U.S. centers. Since buying City National, we continue to hear from Americans who want to take advantage of RBC's global reach and expertise, our range of financial products, our strong balance sheet, and our reputation as a principled organization. We have an exciting future ahead of us, and we're off to a great start with City National, which generated more than $100 million of additional earnings in the first quarter. Across the U.S. last year, we generated $1 billion of earnings, and we believe we can double this. While investing for the future, we have also made significant progress in exiting businesses that we don't feel will be long-term contributors to shareholder value. We sold our Swiss private banking business and announced the sale of both our Caribbean wealth management operations and our Canadian home and auto insurance business. This emphasis on actively managing our portfolio with a sharp focus on strategy and execution is already producing dividends. A good example of this was our Caribbean banking segment, which has delivered strong results for the past several quarters, an impressive turnaround for a business that was losing money until 2 years ago. In capital markets, we maintained our leading position in Canada and were named Canada's best investment bank for the eighth straight year. Our team led the league tables in equity, debt, and M&A work, supported by an equity research team that's been ranked number one by Brendan Wood International for 6 years running. In the U.S., the capital markets group has doubled its market share in just 7 years and now counts as clients some 289 of the Fortune 500 companies. In London, we recently signed an agreement to relocate to a new building in 2020, underscoring our commitment to Europe. We've expanded our presence in France and Germany. What you don't see in these numbers is the culture of our capital markets business. It continues to set a standard both home and abroad. If you've read Michael Lewis' best-selling book, "Flash Boys," in which RBC played a central and very positive role, you're among the millions who now appreciate how financial services can and should be a force for good. Our growing investor and treasury services business is also making a mark. Not only did it deliver record results, it was rated by our clients as the number one global custodian for the fifth consecutive year. One of the reasons our I&TS business has become a global leader is its focus on innovation. It does this in partnership with our clients rather than in isolation. At our innovation lab in Luxembourg, there are currently four client firms that work with our own employees, building new products and platforms to address real market needs. This collaborative approach is core to all innovation at RBC. Our strategy is designed to put some of our best people together with some of our best partners to tackle some of the most interesting opportunities in financial technology. We've already built innovation labs in Toronto, London, Luxembourg, New York, and Orlando, where our work last year produced three commercial patents. We'll soon open a lab in Silicon Valley and another in the Toronto region. We seeded this effort with CAD 100 million of capital to invest in fintech venture funds and directly with startups. This will give us a window on emerging trends and an early opportunity to work with new technologies. We're also putting ourselves closer to leading universities to partner with the best, brightest, and boldest minds that we can find. We have supported innovation programs on campuses across this country. Yesterday, we announced a CAD 3 million groundbreaking initiative with the University of Toronto to build a startup accelerator for student and graduate entrepreneurs to develop commercial ideas that will contribute to Canada. In addition to our own innovation work, we're seeking to inform a national conversation about the state of innovative thinking in our colleges and universities, because that's what will help shape Canada for decades to come. Collectively, we need to better integrate the classroom and the workplace if we're to create the companies and campuses of the future. Through the Business Council of Canada, I'm leading a group of corporate CEOs and university and college presidents to explore ways to supercharge this approach to education, employment, and entrepreneurship. Canadian colleges and universities have come a long way since I was a co-op student in the 1980s, and nearly half of post-secondary students now graduate with some form of work-integrated learning, whether it be co-ops, internships, apprenticeships, or field placements. We need to ensure a majority of college and university students enjoy some level of work-integrated learning during their undergraduate years. The recent federal budget took a welcome step with a commitment of CAD 73 million over four years to help universities, colleges, and employers create a virtual superhighway for students to move back and forth between campuses and workplaces. It's now time for employers and educators to also fully recognize the value of student placements for their own benefit, as well as for Canada's next generation. At RBC, we're trying to do our part and more. This year, we'll hire 750 students in Canada to work on technology projects. A small number of them will be given additional challenges in a new program called Amplify, taking on special projects that we think will lead to new businesses for RBC or for the students, or even better, for both. In addition, we expect those students to challenge the way we do things and to up the education game when they return to the classroom. We want their disruption. That's the value of work-integrated learning. As a society, we must always strive to ensure future generations have what they need to both thrive and prosper. Whether it's our pledge to commit 1% of our earnings to important causes, more than CAD 100 million last year alone, or the millions of volunteer hours our employees commit, we make our communities and their challenges, or we take our communities and their challenges very seriously. We also draw inspiration from so many of the people we're privileged to support, especially our Olympians. We're honored to have four of Quebec's finest with us today. I invite you to meet them out in the foyer after the meeting and share in their stories, as I've had the great privilege to do. This common concern is fundamental to our purpose. More and more, we see purpose-driven organizations succeed where so many others struggle. Purpose-driven organizations attract the best and most dedicated employees. They appeal to the most valuable clients. They inspire better ideas. In troubled waters, they provide a North Star. In 2015, we invited employees to articulate their views about our purpose. It was an unprecedented company-wide conversation that led to what we call collective ambition. This drive for purpose, which has since been documented by the Harvard Business Review, put a simple question to RBCers: What will future success require from all of us? Over three days, some 20,000 employees joined a global, online, real-time exchange to discuss what makes a great bank. As one of the active participants, I learned a lot. I learned that RBCers are optimists. Despite all the challenges around us, we see the future with an open mind and with a view that it can be and should be better. I learned our employees also want to be part of something much bigger. We believe RBC can help our clients build that future for themselves, their families, their companies, and their communities. We came to see our purpose quite simply: to help our clients thrive and their communities prosper. It is why our employees come to work every day, and we think it is why our clients the world over continue to trust RBC. They know we put clients first. We innovate on their behalf. We collaborate within and outside RBC to set new standards. We hold each other to account, and we strive for diversity, and inclusion in all that we do. It is the RBC way. Ladies and gentlemen, we see this collective ambition tested anew almost every day by a world that is volatile and increasingly distrustful. In the face of such change, many people, unfortunately, want to close their doors to protect what they have. Yet history shows us that isolation only erodes what we have. We need a society that welcomes us all, regardless of origin, gender, physical needs, sexual orientation, or faith. It is good for society. It is good for business. Consider a recent study of American startups that have reached $1 billion in value, the kind popularly known in Silicon Valley as unicorns. Of 87 such firms, just over half, 44, have at least one immigrant founder, and in nearly three-quarters of the firms, newcomers hold key management roles. Silicon Valley knows what the city of Florence knew in the Renaissance and what Montreal is showing us today. Diverse groups make better decisions. They tend to take more chances. They build resilience in all that they do, and they look outward. Quebec Premier Philippe Couillard said it well in a speech a few weeks ago here in the city. Diversity is the gateway to the world. is the gateway to the world. In the years ahead, embracing difference will be the difference between prosperous societies and stagnant ones, between households that thrive and those that struggle, between companies that shape the future and those that remain defined by the past. We believe these values are fundamental to the record results we achieved over the past year. They are also at the root of all that we are excited to take on. It is why we believe our vision and values separate us from other companies. They attract and retain the best talent in banking. They give our long-term shareholders confidence, and they draw outstanding clients from around the world to RBC. Like that manager I met as a child in the Saint-Michel branch, we are here to serve those clients. Thank you for giving us that opportunity. Thank you for giving us that opportunity. Now I will turn the meeting back to Katie. Thank you. Thank you, Dave. We will now proceed to the next item on our agenda. At this time, I would like to introduce Richard Nunn and Frank Battiste, representatives of Deloitte LLP, our auditor for the 2015 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 for the time provided for shareholder questions following the formal legal business of the meeting. If you have a question on the financial statements, please proceed to the nearest microphone. Seeing none, any other questions? Since there are no questions, I will then proceed with the business of the meeting. You've received the notice of meeting and the 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 ballots at the registration desk this morning. Please print your name clearly and sign each 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, except for the resolution to confirm amendments to By-law Two, which must be approved by two-thirds of the shares represented here today. 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. The first item of business is the election of Directors, and biographies of each of the nominees begin on page 8 of the circular. Your Board places strong emphasis upon 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 experience are present at the Board. The number of Directors to be elected has been fixed by the Board at 14, and one of the nominees is standing for election for the first time. Thierry Vandal is the recently retired President and CEO of Hydro-Québec, and is now President of Axium Infrastructure US Inc. He brings to our Board extensive experience in the energy industry, regulatory affairs, and cyber risk. We welcome the expertise that Thierry brings to RBC, and we're so 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 always ask them to stand and remain standing as their names are called. Madam Chair, the following individuals are proposed for election as directors: W. Geoffrey Beattie, Jacynthe Côté, Thuz De Rubula, David F. Denison, Richard L. George, Alice D. Laberge, Michael H. McCain, David I. McKay, Heather Munroe-Blum, Thomas A. Renyi, Edward Sonshine, Bridget A. van Kralingen, Thierry Vandal, and Kathleen Taylor. Thank you, Karen. I now invite Sherry Diop to move nomination for election of the directors. Good morning, Madam Chair. My name is Sherry Diop. I have been working for the RBC for the past three years, and I am currently Deputy Vice President at the Ville-Marie branch. I am delighted to nominate each of the persons named by the Secretary of the bank 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. Diop. Are there any questions or comments on the nominations? 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. I would ask that you keep your ballots until after voting on the special resolution to confirm the amendments to By-law Two, after which they will be collected. The next item on the agenda is the appointment of the auditor. In keeping with our commitment to best practices in corporate governance, and as reported in our proxy circular, in 2015, the board's audit committee completed a comprehensive tender process for the 2016 external audit engagement. After careful consideration, and subject to confirmation by our shareholders at this meeting, the audit committee selected PricewaterhouseCoopers LLP based on the qualifications of its audit team, global staffing model, technology, and independence. I'd now like to introduce the representatives of PricewaterhouseCoopers, Rahul Chaudhary, Bill McFarland, and Alaina Tennison. I'll now ask Valerie Munn and Alexander Watson to make a motion for the appointment of the auditor. Madam Chair, my name is Valerie Munn. I have worked with RBC for five years, and I'm currently regional manager sales support, managing a team throughout Quebec. I move that PricewaterhouseCoopers be appointed auditor of the bank until the close of the next annual meeting of common shareholders. Madam Chair, my name is Alexander Watson. I worked at RBC for eight years, and I am currently a regional sales coach covering the markets of South Shore, Estrie, Montérégie, and Beauce. I second the motion. Thank you. The motion has been moved and seconded. Is there any discussion? Then 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 vote is set out on page three of the proxy 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 believe Approach to continuously improving our compensation programs, integrating best practices, and responding to input from shareholders and our independent compensation consultant. In considering our approach to compensation in the future, the board will take into account the results of the vote together with other feedback from shareholders. I will now ask Mario Di Bernardo and Saloua Benkhouya to make a motion to approve this resolution. Madam Chair, my name is Mario Di Bernardo. I have been working for RBC for the past 20 years, and I am currently branch manager at the Place Portobello at Brossard. 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 and special meeting of common shareholders. Madam Chair, my name is Saloua Benkhouya. I have worked for RBC for over three years, and I am currently Associate Vice President, Commercial Banking, Healthcare Professionals. I second the motion. The motion has been moved and seconded. Is there any discussion? Madam Chair, good morning. For shareholder or proxy holder, and give us your name. My name is Willie Gagnon. I act on behalf of the Mouvement d'éducation et de défense des actionnaires, MÉDAC. We are, of course, shareholders of the bank, and we hold a minimum of approximately 8 proxies. As every year, we take the floor to talk about compensation. We always focus on the amount of money paid to the senior executive. The second-best-paid individual at RBC receives almost the same sum as we've seen, which takes the compensation ratio, the quantity of money received by that individual, compared with the average of the salaries paid at the RBC at about 74. It's already been a worse ratio, but the reason for which it has come down is probably that the average salary has increased, for which we congratulate you. Although we consider that a multiple of 75 is very high. I would like to draw your attention to an article published this week in Le Devoir from Agence France-Presse, which says as follows: The Israeli parliament in the night from Monday to Tuesday, adopted an act limiting the salaries of bank bosses to 862,000 CAD per annum. According to this act, no salary paid in the financial sector, not just the banks, but the entire financial sector, can exceed a multiple of 35 times the salary of the least well-paid employee. As every year, I ask you the following question, In other words, how long are you going to take advantage of our patience? The gigantic salaries paid in the banking sector are such that ultimately the state has to intervene, and we would not be the first to do so. I would invite all shareholders to vote against the compensation policy of the bank. For your comments. We welcome your intervention in the meeting. In response to your question, as you know and is well set out in the proxy circular, the compensation committee, the HR committee of RBC, spends a great deal of time on compensation principles, on compensation structures, all of which are intended to drive superior results for shareholders, while at the same time aligning with our risk management principles, and of course, allowing us to attract and retain the kind of talent that Mr. McKay spoke of earlier. We appreciate the alternative point of view, and thank you again for coming. Are there any other questions or comment on the advisory vote? We'll now proceed with the vote. On ballot A, please mark your vote on our approach to executive compensation. The next item of business on the agenda is the special resolution to confirm amendments to By-law Two. The text of this special resolution is set out on page 4 of the proxy circular. This special resolution will delete from the bank's bylaw all references to a director stock option plan. In keeping with best practices in governance, stock options have not been granted to directors since 2002, and the board now intends to formally terminate this plan. The special resolution will also raise to CAD 6 million the upper limit on the aggregate remuneration that may be paid during the year to all the directors as a group. The existing CAD 4 million limit was approved by shareholders 10 years ago in 2006. A number of directors will retire from the board over the next several years. To manage board renewal and ensure smooth transition, it may be necessary to appoint additional directors before incumbents retire, resulting in an increase in aggregate board compensation during the transition period. The board also believes that an increase in the aggregate limit is advisable to provide flexibility to recruit highly qualified directors with top-tier expertise from geographies that align with our strategic objectives and to ensure that there is flexibility to compensate RBC directors for service on the board of RBC subsidiaries in jurisdictions outside Canada, including the U.S. and the U.K. I will now ask Hatim Tishout and Katia Benchetrit to make a motion to approve the resolution. Madam Chair, my name is Hatim Tishout. I have worked with RBC for the last 13 years. I am currently business manager of credit and investment by phone at the advice center in Montreal. I move that amendments to Section 1.1 of By-law Two, deleting reference to director stock option plan and deleting CAD 4 million and replacing it with CAD 6 million are confirmed. Madam Chair, my name Katia Benchetrit. I have worked with RBC for over 16 years, and I am currently sales manager, small business in Montreal Center. I second the motion. Thank you very much. The motion has been moved and seconded. Is there any discussion on the motion? We will now then proceed with the vote. On ballot A, please mark your vote on the special resolution to confirm amendments to By-law Two. At this point in the meeting, I am going to ask the scrutineers to collect the ballots. If you have a ballot to be handed in, could you raise it so our scrutineers can see you. Are there any more ballots to be collected? One more over here. Any more? Looks like we have them all. Very good. The voting is now closed for the election of directors, the appointment of the auditor, the advisory resolution on our approach to executive compensation, and the resolution to confirm the amendments to By-law Two. We will now move on to the shareholder proposal submitted by Mouvement d'éducation et de défense des actionnaires, or MÉDAC, which is represented here today by Willie Gagnon and Nicole Beaudoin. Shareholders have had an opportunity to read this proposal and the board's responses and voting recommendation, which are all set out in the proxy circular starting on page 98. For the information of shareholders, also included in the circular are three other proposals that MÉDAC had submitted but then withdrew following satisfactory discussions with RBC. Mr. Gagnon or Madame Beaudoin. Mr. Gagnon, Madame Beaudoin, I would ask that you take a few minutes to speak to the merits of your proposal, and we will then open the floor for discussion. Shareholders may wish to vote on the proposal by marking ballot B as it is being presented. We will collect the ballots following discussion of this proposal. Mr. Gagnon, Madame Beaudoin, please proceed. Madam Chair, thank you. My name is still Willie Gagnon, and I am still speaking on behalf of the Mouvement d'éducation et de défense des actionnaires, MÉDAC. We had submitted four shareholder proposals this year, as you have just said. We held discussions with the bank, which were fruitful, which is why we withdrew three of them. I will read out the titles of these three proposals. We had one on the duration of terms of office, which ultimately, at the end of your explanations, we came to realize that the individuals affected by your policy were not standing for re-election or fitted in with your policy. Then there was a proposal with respect to customer service, whose point was basically to inform us about your digital strategy and a proposal on the relationship you have with the AMF and lobbying vis-à-vis the Quebec government, and we were satisfied with your explanation. The proposals that we withdrew are included in the management proxy circular, as well as the discussions with you. We thank you very much for having published them. You're not obliged to do so, but we thank you for having done this. The outcome of that is that there's only one proposal we are submitting to the meeting, to the vote, titled Simplifying Financial Reporting. It is proposed that the board of directors adopt a plan of action to simplify the financial statements and to make them more accessible or create a committee with small shareholders to that end. Basically, the bank's answer, which is on page 115 of the French version, and the proposal is on page 114 of the French version. It states that you comply with legislation, you publish everything that you are obliged to publish. But in our proposal, we weren't asking you to publish less. We simply wanted a one-page, two-side document, and that is the starting point of steps that we're going to take vis-à-vis the Canadian Bankers Association, with which I hope you will be in agreement and that we hope you're going to support. To create this type of document, a single sheet, two-page, all you need is to create a template and then publish your results, as it's already possible to do. In fact, it's already the rule for a number of foreign countries, and I don't see why it would not be possible to do the same here. The purpose is to make sure that this type of document be harmonized across the industry. We do hope to be able to work together with you in future on this issue. And of course, we invite all the bank shareholders to support our proposal. Thank you very much. I have with me Mrs. Nicole Beaudoin, who will be seconding the motion with your permission. Good morning, Madam Chair. My name is Nicole Beaudoin, and I am acting as Vice-President of MÉDAC. MÉDAC acts as a proxy holder and holds the proxies of at least eight other shareholders. I second the proposal put forward by Mr. Willie Gagnon of MÉDAC. Thank you. Is there any further discussion on this proposal? Seeing none, on ballot B, please mark your vote on proposal number one. The scrutineers will collect those ballots. Are there any more ballots to be collected? I'm not seeing Oh, one more. There we go. All right. The voting is now closed. At this point in the program, we're going to show you a brief video about how RBC makes a difference in the lives of our clients, our employees, and our communities. Following the video, Dave McKay will lead the next part of the meeting, when shareholders will have the opportunity to ask additional questions. At this point of the meeting, our shareholders will have the opportunity to ask questions or make comments. If you have a question, please proceed to the nearest microphone. Please give your name and tell us whether you are a shareholder or a proxy holder. If your question relates to a personal matter, please speak with the RBC employees at our information desk in the lobby. I will now open the floor to questions or comments. Microphone 10. [Foreign language] My name is André Ouellet. I am a shareholder of RBC for many years now, and I was also a customer of Royal Bank when the head office was at 360 Saint-Jacques West in Montreal. Here is my question. These days, with the Panama Papers scandal The Royal Bank name has been mentioned. Why is it that the powers that be at the Royal Bank have allowed such actions? Your question is with respect to the Panama Papers that are in the news. What I can say is that RBC works within the regulatory and legal framework of every country that we operate in. Tax evasion is illegal, and we have procedures, policies, processes in place to detect and prevent it from happening. If we have reason to believe that there has been, or a client is seeking to commit a crime, we will certainly report that. As I said, we work within a legal and regulatory framework of all the countries we operate in. Thank you. Microphone 7. Madam Chair, gentlemen. Willie Gagnon for the MÉDAC again, and my question is along the same lines as the previous speakers. I forgot her name, my apologies. Here is an excerpt from an article on Radio-Canada's website. This is a Frédéric Zalac-penned article with respect to the Panama Papers story. The large banks play a leading role in the implementation of dummy corporations in tax havens. According to the leak, they created more than 5,600 such corporations. As for the Royal Bank, it regularly uses the Mossack Fonseca firm in Panama, and RBC and its subsidiaries have created, in fact, more than 370 such dummy corporations, mainly in Panama and in the British Virgin Islands. I was surprised that we have not seen pictures of those in your promotional video. As to the answer that you just gave us, well, it is the traditional answer. You comply with the law, with the legislative framework, and with the rules that be in all the countries where you are present. We would be very surprised if you were to say anything going against that you do not respect the law. In other words, we all agree that you abide by the laws and regulations. Quite obviously, this is not a very good thing for your image, for the bank's image, that your name be mentioned in these articles, whereas the names of other Canadian banks are not referred to. We are talking about 370 dummy corporations. These could be easily shut down. Why do you not cease your activities in these places? Your name would not be in these articles. It looks bad for you. It is not an appealing scenario, and politically, it is quite catastrophic, so we suggest that you withdraw from this type of activity. My question is, what do you intend to do? Certainly, you never like to be in the news with negative information. But I come back to the point that we operate within the legal and regulatory framework of all the countries we do business. There are legitimate reasons people set up holding company structures. We haven't had a chance to verify any of the information that has just come to light. But we have very strong established processes, policies, and procedures within the organization to really prevent it occurring within RBC. I can't comment on the data that's been released or the accuracy of the data. I can tell you that we've got very strong policies to detect this, and when we do detect it, we suspect it, we would not do business with that client, and we would take the appropriate action. May I ask a follow-up question? No, I'll come back to you, microphone seven. Okay. My name is Mark Lazar, and I'm a Royal Bank shareholder. Sir, your answer sounds that what the bank is doing legally in dealing with other countries, but as far as Canada is concerned, it is doing something illegal. That's why it seems to me the bank was in the news because of the conflict of legality between the bank and Canada, not between what the bank is doing legally offshore. Can you comment on that? There is no indication whatsoever that the bank has done anything illegal in this country or in any country we operate. As I said, the documents have come to light. We have strong policies in place to detect, manage, identify these situations, but there has been no claim of illegality. There are many appropriate holding company structures that have purpose, and we have very strong due diligence processes. But there has been no accusations of illegality whatsoever in the conduct of RBC, period. As far as I know, sir. The idea of offshore companies, basically bottom line is to avoid Canadian tax on the funds that are in the offshore company. Is not that illegal in Canada? There is a holding company structure in question that has many very legitimate reasons to exist, whether it is family planning, estate planning, corporate governance structures for corporations. There are many legitimate reasons for setting up a holding company structure. You cannot assume that every purpose is illegal. Therefore, we have strong processes in place to evaluate those structures, policy and procedures to evaluate those structures to determine their legality. There has been no indication of any wrongdoing by RBC in Canada or internationally. Microphone 7. Deux? Seven. I should go to 5, and then it's hard to see in the wings over here. Number 5. My name is Gilbert Martin. I'm an RBC client and have been for 50 years. Those who bought RBC shares seek basically an investment, a safe place for one's money. But those who bought shares must have been surprised when there were two-for-one splits. Nobody ever purchased RBC shares and lost money. Obviously, there's good management and good service. On the management side of things, shareholders who have acquired your stock have all made a lot of money. I hold quite a number of shares, and there's been a two-for-one split, and it's done a little bit unwittingly for us. I gave you the compliments, now I'm going to give you the criticism or the other way around, rather. With respect to your service, if you go to other banks, I am also a client of other banks, I can tell you that the Royal Bank truly has people who are keen to help if there's a problem. I've seen it for 50 years and in the last 10, 20 years, certainly anytime that I see people at the Royal Bank, I'm pleased with the service. So now we have performance on the shareholder side and a service that is highly satisfactory. I have had no issues. They've always been there to help me, and I would like to thank the Royal Bank. You never get compliments in question period, but I'm here to give you some compliments today. I very much appreciate your comments. We're very proud of our total shareholder return over a number of periods, three and five-year, where we significantly exceed the benchmarks we set for ourselves. We're very proud of our customer service. As I mentioned in my speech, we've been able to increase our customer satisfaction across our entire customer base in every year except one in the last decade, reaching what we think are exceptional highs. We're always in the top two in customer satisfaction in the country and lead the rest of the banks. We're very proud. It's a lot of hard work. We know we can't stop there, that we have to continue to reinvent and reinvest in customer service. But we're very proud, and it's one of the great reasons we success. It comes from having great employees who are engaged in the organization, which we have, and we focus very much on. Thank you for your question and your support. Do we have one at microphone 2 before I go back to 7? Where am I looking for 2? Right here. Just right there. Sorry. It is right in front of me. There we are. Microphone 2, then I will go to 7. Good morning, Mr. McKay. My name is Willie Gagnon, and no, I am not related to Mr. Gagnon over here. However, I am a recent Sherbrooke graduate, and I have a question to ask you. I am a first-time shareholder of RBC. My question is job opportunities for millennials. Yesterday, I was reading an article in The Globe and Mail explaining how 38% of financial advisors are planning to retire in the next 10 years. I am trying to see what kind of steps is RBC trying to take to recruit millennials and what kind of opportunities they are going to give to us since that is coming up for me. That is my question. That is a great question. In my comments, I talked a lot about Amplify and bringing more co-op students and helping them understand the opportunities and problems we are trying to solve, and then sending them back to school and unleashing that creativity. We are very excited about that program. You are right, across the organization, there are enormous opportunities, whether it is in capital markets operation as we expand our wealth management franchise, as you referenced, and our client-facing, we have the largest high-net worth broker in Canada. We are very proud of that. We have significant market share. That is a business which will go under transition franchises that will look for new young people to manage that client base. You have identified clearly a global trend, but one certainly within our country and our business where there is an opportunity. While continuing to be a customer-facing relationship bank, and while increasingly we will manage those relationships digitally, it will always have a person involved. Digital technology will enable us to connect people, but relationships are best built through people, and technology will enable that, not replace that. We are very excited about the future of using technology to leverage. We think millennials are best placed to do that as they grow up with this new technology, with a comfort in social media and interacting and communicating in very different ways. We will need that skill to adapt to a changing customer. I think the future is very bright, and I encourage you to apply at RBC. Michel, thank you so much. Thank you. Finally, Meg O'Sette. Madame Chair, I don't want to insult Mr. Gagnon, but basically all Gagnon's are descendants of three brothers and cousins who first arrived here, so we may actually be related, young Mr. Gagnon. Now, I too have some bouquets for you. It's not all brickbats from my side. The Royal Bank is far and away the bank with which we've had the best relationship over the years, and particularly this year. Our discussions were fruitful. So I hope that you will forgive me for insisting once again, a little bit longer, on the issue of tax havens. It's simple. In your answer, you said that you had not yet reviewed the numbers with respect to your activities with Fonseca. So I wonder whether this is something you were planning to do. Have you already begun reviewing everything that's happening with that Panama-based subsidiary? Have you decided to take measures to deal with this issue? In other words, do you have people currently working on this file? Yes. Certainly, this information, as the press has reported, and we don't have access to it, goes back 40 years. You can imagine how difficult it is to go back in your files 40 years. Having said that, we rely on the strength of our policies, procedures, and processes for identifying customers and determining the nature of the accounts they set up with us. And we're proud of those controls and knowing that we have very strong compliance and that we continue to work within the legal and regulatory framework of the countries we do business with, and we rely on those policies and procedures. Certainly, we're going to go back if we can find information that's not been shared with us. But we rely on our policies, procedures, and processes that are well-established over many, many years. If I understand you correctly, no specific measure has been taken since this news was published. Is that what you're telling me? No. I'm looking at our files in connection. Merci. Thank you. That's good to hear. Are there any other. We have, can't see the number, but I- Number 9. Number 9. There you go. My name is Robert Hurtubise. I'm a client of the Royal Bank, and we also hold shares of RBC. Compliment Monsieur Gagnon on his efforts for the Fonseca issue. I'm glad he pushed it a bit. My question has to do with discount brokerage fees. I was wondering when you were going to go down to CAD 0 for a fee on a transaction through the discount brokerage arm. That's CAD, of course. The reason why I bring it up is that recently, I think it's Robinhood, and if it isn't Robinhood, it should be Robinhood, is a site that is now charging $0 in the States for a trade, basically, making their money off of the bourse that they place the transaction in. I was wondering when you are going to get down to $0, which really brings up the question of how you compete with these one-off, but they are not one-off actually, because they grow quite fast, sites that provide financial services that reduce prices to the consumer. Thank you for your question. I think we have met before. I remember when I first started in the business and was running direct investing, and where average prices per trade were then to where they are today. I think the market has reduced by 75% over the last seven or eight years. But you have to balance the trade-off between investing in the technology that customers continually want more of and delivering a great customer experience and accessibility of quotes and information, which is not free. It costs a significant amount of money to provide all those free quotes and that information with shareholder return, with market and competitive pricing, and customer value. We look at all of that, and if you believe in the long-term health of the business, you have to find a balance between those two. My challenge would be for those who are giving away for free, how do they find the investment dollars to continue to build and evolve their product and to meet an ever-shifting and more sophisticated customer who wants more? I hear your point. I obviously will not comment on if and when we would go down in price, recognizing that we have the second-largest direct investing platform in the country. We are very proud of our platform. We want to invest for the future, and we are trying to balance all of those stakeholders. Thank you. I will go to number 8. Bonjour, Madame la Presidente. Good morning, Madam Chair, Mr. President. My name is Michelle Archambault, and I have been a shareholder of the Royal Bank for more than 25 years. I am very happy with the return on my investment in my portfolio, and I congratulate the executives for this very good return. I would like to pick up on the issue dealing with tax havens. I apologize for coming back to this point again. But just as the first speaker on this issue said, I think that the image of the bank, because it is the only bank mentioned currently, is at stake. You have confirmed that a team, a working group, is looking at the entire Panama file right now. I know that the Royal Bank is a large institution that has a global footprint. Since we're now at tax time, as citizens, and like any other organization, we would like everybody to pay their fair share of taxes in Canada, which would perhaps allow us to pay a little bit less. If everybody paid their fair share, then we would perhaps be able to pay a little bit less. My question is as follows. Over and above Panama, the OECD and the main leaders of countries, including President Obama yesterday and President François Hollande, whom I heard yesterday, as well as the Chief Executive Officer of the OECD, have decided to tackle tax havens very firmly, tax havens that allow corporations or individuals offshore to take advantage of certain structures entirely legally, but we're dealing with something that is more than just legal. I think there's a moral issue at stake here as well. My question is the following. Apart from Panama, there are other tax havens, Luxembourg, Barbados, and I'd like to know whether your bank does business with those other tax havens where entirely legally you have or you hold or you encourage through offshore corporations, portfolios of certain individuals or corporations. Is that part of your overall reflection within your group that is now examining the Panama situation? Thank you. Certainly we have operations across a number of businesses in Luxembourg and other markets. We have an Investor & Treasury Services operation in Luxembourg. We have a wealth franchise in London, England. But I come back to the key point that tax evasion is illegal, and we have established controls, policies, procedures, due diligence in place to prevent it from occurring with RBC. If we detect it, we will stop doing business or not do business with that client, period, if we suspect they're committing a criminal offense. Operating in those jurisdictions is not a criminal offense. They're very legitimate jurisdictions with many different types of businesses. I can tell you, we work within the legal and regulatory framework of every country within which we operate. We have very strong principles at the core of our organization. We've been around for 150 years, and we plan to be around for 150 and more years. That's my answer. Have a seat. Do we have any other questions? I don't see any. I'm having trouble. Anything else? No. Well, thank you. Katie, now I'll turn the meeting back to you. Thank you, Dave, and thank you to all of our shareholders for your interventions and comments today. I will now call on Joseph Chirico to report the preliminary voting results, which will also be posted on the screens. Copies of the preliminary voting results will be available at the information desk after the meeting, and the final results will be posted on the bank's website. Joe. For the information of shareholders, the scrutineers wish to report that 783,698,813 shares, or 52.71% 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 14 nominees named in the management proxy circular, with each nominee receiving in excess of 96.49% in favor. The results for the appointment of auditor are: 99.7% voted in favor of PricewaterhouseCoopers LLP, and 0.3% withheld from voting. The results for the shareholders' advisory vote on approach to executive compensation, 95.72% voted in favor and 4.28% voted against. The results for the special resolution to amend By-law Two, maximum aggregate board compensation, 97.96% voted in favor and 2.04% voted against. The result for the shareholder proposal number one, Simplifying Financial Reporting, 2.37% voted in favor, 97.07% voted against, and 0.56% abstained. Thank you. Thank you, Joe. I now declare that the 14 nominees named in the proxy circular have been duly elected as directors. PricewaterhouseCoopers LLP has been appointed as the auditor for the 2016 fiscal year. The advisory vote on the bank's approach to executive compensation has been approved. The special resolution to confirm the amendments to By-law Number Two has been approved, and shareholder proposal number one has been defeated. Ladies and gentlemen, I sincerely want to thank you once again for your participation today, and I'll conclude by expressing on behalf of all of us, our sincere appreciation to RBC employees, whose dedication and commitment to the success of our clients continues to be a true competitive advantage for the organization. On behalf of the board and our shareholders, thank you for all your efforts and your contribution to RBC's success. The meeting is now concluded. And all of you for joining us today.