Royal Bank of Canada (TSX:RY)

AGM 2012

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Mar 1, 2012

Ladies and gentlemen, the meeting is about to start. Please take your seats now. Mesdames et messieurs, l'assemblée est sur le point de commencer. Veuillez prendre vos places maintenant. Good morning, ladies and gentlemen. I'm David O'Brien, Chairman of the Board of the Royal Bank of Canada. Mesdames et messieurs, bonjour. Je suis David O'Brien, président du conseil de la Banque Royale du Canada. Welcome to our annual meeting of common shareholders. I'm pleased to have so many joining us here in the room today, and I know that we have many more on the webcast. I now call the meeting to order. Anyone addressing this meeting may do so in English or French. If you'd like a translation headset, please raise your hand and an attendant will assist you. You'll find English on channel one and French on channel two. The meeting will begin with a report from Gord Nixon, our President and CEO, which then will be followed by the regular items of business, including the election of directors and appointment of the auditor. Shareholders will be asked to approve a non-binding advisory resolution on our approach to executive compensation as disclosed in the proxy circular. We will then consider the shareholder proposals and deal with any other business, including questions from shareholders. I draw your attention to 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 invite and welcome questions and comments from shareholders. Some guidelines are set out in the agenda included in the package that you received as you came into the meeting. Please keep your comments brief. In fairness to all shareholders, we ask that presenters limit their remarks to three minutes. At the appropriate time, if you'd like to ask a question, please proceed to a microphone and give your name. Then tell us whether you are a shareholder or proxy holder. I would like to begin by introducing the others who are here with me on the podium. From your left to right, we have Janice Fukakusa, Chief Administrative Officer and Chief Financial Officer; Gord Nixon, President and Chief Executive Officer; and Carol McNamara, Vice President, Associate General Counsel, and Secretary. I will act as Chairman of the meeting, and Carol will be the Secretary. Joe Chirico and Mark Thompson, officers of Computershare Trust Company of Canada, will be our scrutineers. Also present are the members of our board and senior management team. At this time, I would also like to introduce the representatives of our auditor. From Deloitte & Touche, we have Allan MacGibbon, Bill Cunningham, and Richard Nunn joining us today. As a quorum is present, I declare that the meeting is properly convened. I will now call on Gord Nixon to address the meeting. Gord. Thank you, David. Good morning, ladies and gentlemen, and welcome to your annual meeting. I am very pleased to share with you our Q1 results, as well as a brief review of our 2011 performance. First, I want to describe the context for our performance. I think it is important to do so because RBC's success domestically and in the U.S., the U.K., and increasingly in Asia, exemplifies Canada's continued strength and opportunities. These attributes of ours are truly striking in a world where many industrialized countries are both succumbing to and contributing to a pall on the global economy. When looking south to our neighbor, there are early signs that the U.S. economy may be on the mend. However, there are significant structural issues that must be addressed. Nearly 13 million Americans are out of work, and the U.S. government is facing burgeoning and unsustainable debt, a shift in its role in the world, political paralysis, and an approaching election that debates some of the core values that Americans have about individual rights and responsibilities. In Europe, we are continuing to see significant problems. Unemployment rate at record levels in many countries, pervasive youth unemployment, and social unrest in the face of tough choices and even tougher decisions. We are monitoring the situation in Europe very carefully. We are hopeful and optimistic that the efforts to stabilize the euro will contain the current problems and avoid any disorderly breakup. We are continuously reviewing possible eurozone scenarios to make sure that we can respond to developments quickly. Add to the world's economic challenges, the cauldron of political, social, and religious conflicts, and we do have a world in troubling times. Even here, in what is viewed as the best nation in the world in which to live, we have important issues at various stages of brewing. 15 minutes listening to a news channel gives you a long list of challenges, including First Nations housing, debate over oil and gas pipelines, retirement savings, pension underfunding, high consumer leverage, Canadian productivity levels, and the challenges faced by immigrants finding jobs and securing wage equity. There are plenty of issues and plenty of debate. Regardless of one's views on the Occupy movement, it brought to focus not only issues of income disparity, but also the squeeze being felt by the middle class. We in the business community must find ways to be part of the solution to these social and structural issues, or we'll be part of the problem. However, in the face of all of this, I continue to hold fast my conviction that this is Canada's decade. We have shown ourselves to be a nation that is resilient, measured, and well managed. The kind of country that fosters one of the strongest and most stable financial services industries in the world. We are a country described as rich in resources, and this means much more than just oil and gas, minerals, and forests. It also means a highly skilled and highly educated population, and one that offers employers like us diverse international perspectives and insights, thanks to progressive immigration policy. It means flourishing communities where support for the arts, for sports, and for issues critical to our future well-being, like clean water and children's mental health, is provided by both our citizens and companies. Overall, Canada's reputation has grown as a country, as a safe place in which to invest, and as the home of a strong financial services system. I travel a lot, and I can tell you that being from Canada has never been viewed more positively. Frankly, it's cool to be Canadian. In a world where global financial institutions are de-leveraging and many are heading home to tend their domestic operations, we are fortunate to be from Canada. It's made the job of pitching RBC's strength to prospective clients outside of Canada much more appealing. We are a strong bank from a strong country. Despite the global and domestic challenges, we can either view our glass as half empty or half full, and I choose to see it as half full. We have used our domestic strength as a springboard, and we are not only the largest bank in Canada, but we're now the 10th largest bank in the world by market capitalization. In addition to size, we have strength thanks to a well-diversified business, strong capital base, and our highly liquid balance sheet. It's this financial strength and our reputation for integrity and stability that has allowed us to continue to invest for growth, even as regulatory changes and market volatility have redefined the marketplace. In this regard, we've continued to invest in new technologies to meet challenging client needs. We've used our scale to increase efficiency so that we can offer competitive pricing, even in a low-interest rate environment. We've used our strong balance sheet to support our clients, while many of our competitors have been unable to do so. We also continue to attract top talent and a diverse workforce to ensure we can meet our clients' needs with a better understanding and advice. Our results this quarter continue to demonstrate the strength of our long-term strategy based on generating approximately three-quarters of our earnings from our retail businesses and the balance from wholesale. Looking ahead, and based on our long-term plan, our retail platform should continue to deliver solid growth. While we expect the contribution from capital markets to continue to be strong and also grow, the percentage of our overall earnings from wholesale is forecasted to trend lower from the mid to the low 20s. We believe this is the right mix, not only from an earnings perspective, but also from a risk and diversification outlook. I point this out because, as some of you may be aware, Moody's recently placed our long-term credit rating under review, along with 16 other major global firms, simply because we are deemed to have significant global capital markets activities. In our view, we're being reviewed because of our profitability and success in this business, rather than due to specific performance or risk concerns. Our credit ratings and capital base are amongst the strongest of all banks globally. Over the past three years, Capital Markets has been consistently profitable with very high returns, something that is not true of other large global banks or even other Canadian banks. The relative size of our wholesale business is at the medium of our Canadian peers and well below other large banks included in the review. We look forward to discussions with Moody's over the review period to assist them in clearly understanding our business today and the steps we have taken over the past few years to optimize our balance sheet, reduce risk, and adapt to structural and regulatory changes that have been occurring in the marketplace. With respect to our strategy, we have stayed the course, which is to build a universal bank in Canada with a number one market position and to selectively grow premier, globally competitive businesses that serve corporate, institutional, and high-net-worth clients. Our strategy has given us what many banks in the world do not have today, flexibility. We can deploy our strong capital in a number of ways to best serve our shareholders. We can make further investments in our existing businesses to continue to advance our leadership. We can repatriate capital through share buybacks or dividends, as we have demonstrated. We could also take advantage of economic turbulence and market dislocation to make strategic acquisitions. We intend to find the right balance among these options. This flexibility is an important competitive advantage. With respect to returns, over the medium term, we continue to outperform our global peers on total returns to shareholders. Our annual total shareholder return over five years ranks us in the first quartile. In 2011, we delivered record results from continuing operations. This included record earnings in Canadian banking, in wealth management, and in insurance, and strong growth in our corporate and investment banking business in capital markets. We continue to extend our lead in Canada and selectively grow our presence globally. In 2011, we also announced the sale of businesses that did not meet our return thresholds, including our U.S. retail banking operations. We made these decisions consistent with our commitment to actively deploy our capital to where we can generate the highest returns. In our capital markets business, we scaled back some of our trading activities and invested in growing our lower risk and less capital-intensive investment banking business. I would also highlight that we were required last year to adopt International Financial Reporting Standards, which started effectively in 2012, and our comparative period results have also been provided in accordance with IFRS. These new standards will help make our results more comparable to other global financial institutions. In 2011, we delivered record net income from continuing operations, which under IFRS were approximately CAD 7 billion. Diluted earnings per share were CAD 4.55, and return on equity was 20.3%. On a continuing basis, we all met or exceeded our medium-term financial objectives, and we increased our quarterly dividend by 8%. On a consolidated basis, our results, again, under IFRS, were net income of CAD 6.4 billion, diluted earnings per share of CAD 4.19, and return on equity of 18.7%. In 2011, our Canadian banking group stood out for record earnings, for growing overall volumes faster than any other Canadian bank, and for ranking number 1 or 2 in market share in all consumer and business product categories. This business won numerous awards for client service over the year and was the first to launch a fully integrated mobile banking application for all platforms. We will continue to invest in this business to maintain unparalleled advice and products we offer individual and business clients. RBC Wealth Management has grown to be the sixth-largest wealth manager in the world by client assets, fifth in revenues, and fourth by profits. We continue to focus on profitable growth in the U.S., where we are the sixth-largest full-service wealth manager, and growing our business in the U.K. and emerging markets. In Canada, we're the leading wealth manager by a margin and are focused on extending our number 1 position among high-net-worth investors, driven by our global capabilities and collaboration across the organization. In addition, for the past 8 calendar years, our asset management business has exceeded 20% of the industry net sales of long-term mutual funds. RBC Insurance delivered record earnings and a strong year of business growth and continues to win service awards for customers and agents. In the Caribbean, we are undertaking an extensive reorganization. We have a solid brand in the region, and we are building a strong franchise to ensure we can take advantage of long-term opportunities in this business. RBC Dexia Investor Services, our 50% joint venture, is a top 10 global custodian serving a diverse base of institutional and corporate clients in 15 countries. This past year, RBC Dexia continued to execute its growth strategy and broaden its suite of products and services. This business is well-positioned to benefit from the long-term demographic trends that point to growth in wealth management around the world. We remain committed to the investor services businesses, which is very complementary and fits with our long-term diversification strategy. As has been previously reported, we continue to have discussions with our partner, and we hope to conclude negotiations shortly. Our capital markets business ranked 11th in the world by fees last year, up from 14th the previous. For the second year in a row, we were named the number one team in Canadian equity research, and we were named the top firm in Canada for debt and equity underwriting combined by the National Post. North America represents the vast majority of our business. Our past investments in the U.S. business are paying off, and we are successfully expanding our sector coverage, our corporate loan book, our client relationships, and our mandates. Globally, our investment banking team continued to gain market share and win significant mandates across geographies. Outside of our domestic markets, we focus in areas where we have competitive strength, areas such as global mining, energy, and infrastructure. In Europe, we continue to win awards for our credit, foreign exchange, and infrastructure businesses. Turning to our first quarter results we released this morning, we had a very strong start to 2012 with first quarter earnings from continuing operations of over CAD 1.8 billion, up 17% from last quarter. We had a record quarter in Canadian banking with earnings of nearly CAD 1 billion, as well as strong results in capital markets and continued strength in insurance and wealth management. We generated a strong Tier 1 capital ratio of 12.2% and a Tier 1 common ratio of 9.6%. I am also pleased to report that today we announced a three-cent or 6% increase to our dividend, bringing the quarterly dividend to CAD 0.57 per share. Our outlook for RBC this year, for the year ahead, remains optimistic. We are confident that RBC has positioned itself to grow and prosper even through what is a challenging environment. In Canadian banking, we want to continue outgrowing and outpacing the industry by a 25% premium, which was achieved in the quarter. We are leveraging our distribution network and our mobile sales force, the largest in the country, to continue cross-selling and taking advantage of our scale to reduce costs and to improve efficiency. We are investing in new digital solutions and advice channels so that we remain an unmatched resource for financial advice and for solutions. This includes our retail store concept, which provides a new way of delivering banking through a hybrid of best-in-class retail shopping and financial services. There has been a lot of attention lately on the housing prices and consumer debt levels in Canada. We analyze this very closely, and we continue to stress test, and I must say, we are comfortable with our retail portfolios. Overall, we believe the Canadian housing market continues to fare reasonably well. The annual housing price appreciation over the past several years is within historical long-term ranges. Housing affordability remains at reasonable levels in most markets, and we are confident in our underwriting standards. With respect to consumer leverage, while the absolute number appears high by historical standards, it is important to note that consumer debt service ratios are again within our normal historical ranges and clearly indicate that clients have the capacity to service debt. We will continue to monitor these issues very closely. Wealth management still faces some headwinds caused by the markets and continued to low interest rates, but it is extremely well-positioned to execute its growth strategy in Canada, the U.S., the U.K., and emerging markets. In insurance, we continue to deliver industry-leading services and a wide range of products to meet our clients' needs. Insurance is a growth business that is becoming a significant part of our overall retail offering, and it certainly diversifies our earnings. In international banking, we are strengthening our franchises to take advantage of attractive long-term potential returns. We expect the sale of our U.S. retail banking operations to close tomorrow. We have launched a new cross-border platform to continue to meet the U.S. banking needs for Canadians, and this also provides us with a good platform for growth. RBC Capital Markets is well-positioned to win business as we take advantage of our strong balance sheet and financial stability to add more client relationships and increase mandates. We continue to add quality names to our loan book, and our investment banking pipeline remains strong. In short, we enter 2012 well-positioned to grow our earnings, take advantage of opportunities while ensuring that we are managing risks. As I said, we are off to a good start. Regarding regulation, I would like to state, once more, a conviction that I have voiced since the financial crisis began four years ago. While ensuring a stable and secure global banking system is a critical objective, it is not appropriate to paint all banks with the same brush. There are significant differences in performance, in governance, and in risk management. Regulating to the lowest common denominator means that all banks and all markets will pay for the mistakes made in certain jurisdictions and by specific institutions, that all companies and industries will see their access to capital diminished, and that all consumers will ultimately be burdened with costs. Financial services companies are in the business of managing risk. It is at the core of what we do. Some banks in some jurisdictions have done it better than others. Avoiding the cost of yesterday's bad decisions by shackling all banks' ability to create value through their capital and expertise can mean not only new costs, but also new risks to the world's economic recovery. An example of this is the Volcker rule. We share the significant concerns that this legislation could negatively impact Canadian markets, including the ability of corporations to access capital, and for both Canadian financial institutions and Canadian governments to effectively manage their liquidity and funding requirements. That kind of extraterritorial reach simply should not be within the span of control of regulators outside the country. The rules as currently laid out will also have unintended consequences for all foreign banks operating in the United States, and in my opinion, could ultimately adversely affect U.S. capital markets and economic growth. In addition, I believe that the new Basel rules, again, while well-intended, could have consequences that may increase rather than decrease systemic risk. It is extremely important that we do not look back in the years to come and realize that regulatory policy served as an obstacle and destabilizer rather than a facilitator and a source of financial strength and growth. Now, it is important that we take a leadership role on these issues. We will continue to actively work with governments and regulators because we do support financial reforms. We clearly do need to create better transparency. We need stronger capital and liquidity standards, reduced risk, and enhanced financial stability. But we also need policies that continue to support capital flows and economic growth and avoid creating an unfair disadvantage within some jurisdictions. Finally, in my view, more focus should be placed on national, on market, and on individual bank regulation. That is a formula that worked well in this country. Having said all that, one thing is for certain, the banking industry is moving forward in a new environment that will require banks to adapt. One characterized by greater regulation, a more challenging economic period, and likely low interest rates. But we are confident RBC is well-positioned to succeed. Strong banks will adapt to the new rules, will seize new opportunities, and ultimately earn superior rates of return. We have set high standards for ourselves, but not just in terms of strategic growth goals and financial performance, but also as a corporate citizen. We focus on supporting issues where we can make a meaningful long-term impact. We know that our clients and communities expect this from us. They expect the companies they buy from to be visible corporate citizens. We will continue hard to meet this expectation. You will see behind me the highlights from RBC's membership on global sustainability indices and lists, as well as the recognition we received as an employer of choice. Our high employee engagement is a continued driver of our success. In 2007, RBC created the RBC Blue Water Project. We are now in the fifth year of a CAD 50 million donations program to help ensure people have access to clean and fresh water. The RBC Children's Mental Health Project has provided almost CAD 10 million since 2008 to organizations dedicated to providing early intervention, increasing public awareness, and reducing the stigma of mental illness. I am very proud of our recent launch of the RBC Impact Fund, which will provide CAD 10 million in capital to help finance projects by organizations and entrepreneurs tackling social and environmental challenges. It is our hope that this fund will inspire other organizations to make similar investments and in doing so, contribute to the next wave of innovation and productivity growth. Our consistent outperformance, our commitment to corporate citizenship in communities where we live and work, and our unwavering client focus of our employees have combined to build our brand and spur our growth. In Canada, we were named Brand of the Year by Strategy Magazine and the most valuable brand in Canada by Brand Finance. Our brand is increasingly an advantage for us outside of Canada. In today's environment, we are seeing increased opportunities as clients are reconsidering traditional banking relationships and are attracted to strength and stability and integrity of an organization like RBC. Our brand is not a logo or an icon, it is the people who stand behind our promise to represent RBC every day. These are the 74,000 knowledgeable, client-focused, and committed employees who help us earn the right to be our clients' first choice. They differentiate RBC as an exceptional source of advice for our clients. Our shared values of service, teamwork, responsibility, diversity, and integrity help guide our behaviors and decisions, inspire us to lead in diversity inclusion, and define what it means to be a responsible corporate citizen. On behalf of our board of directors and my colleagues on the executive team, I would like to thank all of our employees worldwide for their strong performance and hard work in 2011 and into 2012. I also want to thank our 16 million clients for trusting us with an increasing amount of their business. To our shareholders, our thanks for your continued confidence and support. I am honored to work with all of you to help make RBC a company that we can all be proud of. Thank you very much, and I will now turn the podium back to David. Thank you, Gord. Reports of the committees of the board can be found in the proxy circular. 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 the opportunity to ask questions on the financial statements. If your question relates to other matters, please wait until 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. Please tell us your name and whether you are a shareholder or a proxy holder. Yes, microphone one. Yes, my name is Lowell Weir, and I am a proxy holder today. I am from Bedford, Nova Scotia, in the East Coast. My question on the financial statements, I have a couple of little questions, and I will make them short. One is on the financial statements for 2011, which we are approving today, concerns goodwill. I have a position on goodwill that I do not believe the bank has written off the necessary goodwill on several of the acquisitions. The U.S. goodwill, with the exception of the part that was transferred to the Canadian operations, has all been written off now. Goodwill in relation to the Caribbean, about CAD 1.7 billion or CAD 1.8 billion remains on the accounts, and I just believe it was impaired actually years ago, and it has never been written off, and it is a bugbear with me, and I just want to know why this has not been written off. Thank you for your question. I will ask the Chairman of the Audit Committee, Vic Young, to respond. Good morning, Mr. Weir. Please state what city you're hearing in. Look, with respect to goodwill, let me just talk about it generally for a moment. It is a very important item with respect to the integrity of the financial statements. It's a very important item for the audit committee to consider. On an annual basis, goodwill across the board is reviewed annually and, of course, reviewed quarterly if any instances happen that would trigger any kind of an event. With respect to goodwill, I just want to assure you that the audit committee discusses all of goodwill, including goodwill in the Caribbean or not. Goodwill at this point in time, the way it has been treated, based on our discussions with the auditors. I take great exception here because I've come and reviewed the financial statements of the Caribbean operations on a couple of occasions, actually, and this is a very marginal operation. Its return is negligible. There's very large goodwill. It's very obvious to me, and I have a little skills in that area, that these should be written off. I just don't understand. I mean, Royal Bank at one time was 100% integrity, but more and more, I see little things that tell me that the standard of integrity in this bank has gone downhill and downhill sharply. Well, I take exception to that. Well, you can. I think that we have the highest integrity. No. We can disagree on a matter of accounting, and sometimes that does arise. But I don't think you should be impugning the integrity of the bank. Well, I'm just stating facts. Okay We had the same case in the U.S. goodwill that was impaired for at least four years before finally it was written off. At least four years. Do you have any new points, Mister? Well, I have one new point concerning this year's earnings and this quarter's earnings. I could have 100 points, but I'll just give one at this time. That is that if I'm correct and looked at, there was a substantial amount of deferred pension costs that were, and I don't know what the right word is, I'll say written off in the conversion to IFRS here. So on a comparative case, my question is, what would have been the first quarter earnings taking into effect the and this is another point of integrity on the write-off. A year ago in a circular, the bank said, "No, we're not writing off these costs. We're going to put them on the books." This year, in what I call was a little bit of a sneaky maneuver, they wrote them off to opening retained earnings so they don't show, they don't affect future profits. So in fact, we're seeing actually higher profit than there is because these costs have been written off. Again, I don't think that's an accurate portrayal, but perhaps Janice- Well, it's exactly accurate. Janice Fukakusa would just speak briefly to that, and then we have to move on. Good morning, Mr. Weir. With respect to the transition from Canadian GAAP to IFRS accounting, one of the transition adjustments was the non-amortization going forward of some of the asset losses where we took it through the transition adjustment. All of our disclosure is quite clear on the IFRS transition that the impact financially of that adjustment was around CAD 100 million in expenses. When you look forward, there is enough transparency in our disclosure to go through how we transition from Canadian GAAP to IFRS GAAP. I think everything is quite clear. I'm not saying it wasn't disclosed. I'm just saying it was a little sneaky. That's what I'm saying. Okay. Thank you, Mr. Weir, for your comments. We'll move on. You also mentioned that all of the Canadian banks follow the same format. These are rules set by the- Well, why did the Royal say last year that they weren't writing it off? They said they'd studied it. We had a committee report, we've studied it for umpteen years, and we're keeping it on. I think Janice has already replied to that, so we'll move on. Are there any other questions on the financial statements? Sir, are you proposing to- On the financial statements. Yes. Move up to the mic then. I don't have any questions on the financial statements. Oh, sorry. Okay. I saw you there, and I wasn't sure. Would you like to find a seat or? No. It's okay. As there are no further questions on the financial statements, we'll proceed with the business of the meeting. You've received the notice of meeting and proxy circular, which specify the matters to be considered at this meeting. I will now ask Carol McNamara to review the voting procedures. Carol. Good morning. Today, we will be voting by ballot, except as otherwise specified by the Chairman. Registered shareholders who have not sent in proxies and proxy holders who are present have received ballots at the registration desk. Please print your name clearly and sign each ballot. Votes will be tabulated by the scrutineers, and the results will be announced later this morning and posted on our website. Only registered shareholders or their proxy holders are entitled to propose or second motions. A simple majority of the votes cast by proxy or in person is required to approve matters voted on at this meeting. Thank you, Carol. In order not to delay proceedings, we've invited certain employees based here in Toronto who are shareholders or proxy holders to participate in the meeting by moving and seconding motions. I will call on them at the appropriate time. The first item of business is the election of Directors. Mr. Chairman, we haven't had any questions on the committees as yet. Normally, the bank entertains questions on the committees, and I have a couple of questions. Go ahead. Well, the first question I have is on the Audit Committee, and it pertains to the appointment of the, or the nomination of Deloitte & Touche to be the auditor this year. I have a substantive amount of concern over Deloitte & Touche based on a number of factors, including my reviews of their work in other Canadian financial institutions, including the work of the PCAOB, the Public Company Accounting Oversight Board in the U.S. and other factors which I've forwarded to the Audit Committee. These are serious concerns with the U.S. regulatory agency, the PCAOB. In the last 2 years, they conducted a substantive number of reviews of Deloitte & Touche's operations. Let me add here, Royal Bank of Canada is a reporting issuer in the U.S., so that concerns me. It's clear from the U.S. reviews that there was substantive problems in the Deloitte work. Matter of fact, in the majority of the reviews conducted, in their findings, that the auditors hadn't done enough work to actually even give an opinion on these statements. I've corresponded with the bank to try to address these issues. I've actually talked to the auditors as well, finally after 4 years. I've had no response from the Audit Committee. I don't think that's right. This is a serious matter and deserves some kind of response. I'll ask the Chairman of the Audit Committee to respond to you now. Thank you, Mr. Chairman. Mr. Weir, we are very much aware of all of these issues, and you have helped us be aware of those issues. Just let me say at the outset that we are very comfortable with our recommendation to the Board and the Board to the shareholders that Deloitte be reappointed as the shareholders' auditors. Deloitte, as you know, is the largest accounting firm in Canada. I think it's the fourth largest accounting firm in the world. The resources that are available to us are very substantial. We are extremely pleased with the manner in which Deloitte carries out its audits, and with respect to the PCAOB reports that you refer to, that has nothing to do whatsoever with Deloitte Canada, as you know, and nothing to do whatsoever with- That is factually wrong. No. Factually, the two audits they speak about specifically relate to Deloitte & Touche Canada. Well, CAN in the U.S., but the two ones where they specifically stated are the work of Deloitte & Touche Canada. Yes, and let me finish, and nothing to do with the audits of Deloitte related to the Royal Bank. So these are audits of- Well, we do not know that, and since it cannot be disclosed, I do not know how the Royal Bank could even know that. Well, if it was- You don't know that. You're saying that, but you don't know it because that can't be disclosed. You're not letting- No, I'm letting you talk, but you're not saying the facts here. The facts are that those can't be disclosed. If they are disclosed, it's a violation of the rules. No, I totally agree with you. They cannot be disclosed, but you really have to let me finish on this point. Deloitte have a legal obligation that wherever there is anything from the Canadian regulator or from the American regulator that impacts their work at Royal Bank, they have a legal obligation to disclose that to the audit committee. I know that the regulator doesn't- No Deloitte has a legal obligation to do so, and they do report to the audit committee on any investigations that are underway with respect to regulators in Canada or the U.S., and we have received nothing from Deloitte that would impact our ability to recommend them as the shareholders' auditors. Well, I'm confused here because the U.S. regulator has. This is a public report of Deloitte & Touche Canada. It's very specific that these can't be disclosed by the firms, even to the audit committee's appliance. So, if this is the rules, are Deloitte breaking the rules to- Of course they're not breaking the rules. Well, how can they be disclosing to you that they weren't involved in Royal Bank without breaking the rules? That's what I don't understand. No, they don't have- I'm just a simple guy here. Well, I'm pretty simple, too. I'm from the same area that you're from, so let me talk to you in simple language that they would have an obligation to disclose to us if the American regulator or the Canadian regulator- It can't disclose. Had made any findings that would impact on their ability to do the audit at the Royal Bank. That's how, without the regulator disclosing it, we would actually find out about it. That's not the question. The question is the risk to. These are shareholder auditors here, appointed by the shareholders. So when there's significant issues that are public issues, the shareholders here, the audit committee is supposed to represent the shareholders, and those are significant issues, and I don't think you're doing a proper job. Well- I've said my piece. Okay. You have said your piece, and now we'll hear what the shareholders say when they vote. Thank you. Thank you. I'll return to the first item of business, which is the election of directors. Three of the nominees are standing for election for the first time. Heather Munroe-Blum is Principal and Vice-Chancellor of McGill University. Heather joined the board last June, and she brings to the board valuable experience in international business, science and technology, and public policy. Bridget van Kralingen is Senior Vice President of IBM Global Business Services. Bridget was also appointed to the board last June, and the board is already benefiting from her expertise in financial services and information technology. The board is also pleased to nominate Rick George, Chief Executive Officer and a Director of Suncor Energy, where he has made a significant contribution to creating shareholder value. I also would like to take this opportunity to thank John Ferguson, who will be retiring from the board at the end of this annual meeting. John has been a director since 1990. His experience gained over a career in real estate development and management and his business and community leadership positioned him to provide valuable advice and perspective to the board. For many years, John was a member of the Human Resources Committee, as well as our Risk Committee, and in fact, he served as chair of each of those committees for various periods during his tenure. John, please stand up and be recognized. We thank you for your contribution and dedicated service. The number of directors to be elected has been fixed by the board at 16. Biographies of each of the nominees begin on page five of the circular. I would now ask Carol to read the names of those proposed for election as directors. I would ask them to stand as their name is called and remain standing until all the directors have been called. Mr. Chairman, the following individuals are proposed for election as directors: Jeff Beattie, Paule Gauthier, Rick George, Tim Hearn, Alice Laberge, Jacques Lamarre, Brandt Louie, Michael McCain, Heather Munroe-Blum, Gord Nixon, David O'Brien, Pedro Reinhard, Edward Sonshine, Kathleen Taylor, Bridget van Kralingen, and Vic Young. Thank you. I will now ask Tim Yu and Mary Ellen Brown to nominate the Directors. Chairman, I am pleased 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. Mr. Chairman, I second the nominations. The nominations have been made and seconded. Are there any other nominations? I have a question. Mr. Weir, are you here to speak on this? Yeah matter? Yes, I am. Go ahead. I have a concern, and the concern actually involves you, Mr. O'Brien, because you turned 70 this year, and normally you wouldn't be eligible for re-election to the board. But I see in the report that a committee of the board, headed by you, has modified the terms so that you can stand for re-election again, and I personally consider this self-dealing. I personally hate to see these directors hang on and hang on. When they're 70, out the door. This has been a policy at all the banks. I've said it at other banks, I'm saying it here. Bank of Nova Scotia had some kind of maneuver last year. The reality is here, sir, your time was up. You changed the rules for you. I don't like it one little bit. Yeah. I've said my piece. Thank you. The board as a whole made the decision and requested that I stay on. I'm not interested in your further views. I'm I- You were heading up that committee. That should've been disclosed in the annual report. It's another sneaky bit of work. You keep casting aspersions on the bank and the individuals on the bank, and if you continue to do so, you'll be asked to leave this meeting. Stop that. I- Stop the sneakiness. I don't need words like sneakiness. Why don't you- This was out in the open. The board as a whole asked me to stay on for a period of time, pending their choosing a new Chairman. I will now ask Sandra Odenhall and Fred Milborough to make a motion to close these nominations. Mr. Chairman, I move that the nominations be closed and that each of the persons nominated be elected 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. Mr. Chairman, I second the motion. Thank you. The motion has been made and seconded. Any further discussion? We 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 the motion to appoint the auditor. At that time, the scrutineers will collect the ballot for both the election of directors and the appointment of the auditor. The next item on the agenda is the appointment of the auditor. I will now ask Brian Dixon and Cassandra Watson to make a motion for the appointment of the auditor. Mr. Chairman, I move that Deloitte & Touche LLP be appointed auditor of the bank until the close of the next annual meeting of common shareholders. Mr. Chairman, I second the motion. Motion has been moved and seconded. Any further discussion? Yes, Mr. Weir. I'm just going to say, in my opinion, this is a very serious mistake, and I'm totally against it. Thank you. Well, I guess you've had your say. The rest of the shareholders, by voting, will now have their say. That's why it's democracy. There we go. On ballot A, please mark your vote on the appointment. Oh, sorry. Is there someone else? Yes, microphone number 4. Mr. Unbiased shareholder. I just wanted to ask a simple question. For how many years has Deloitte & Touche audited the Royal Bank? Does someone have that answer at their fingertips? I think the answer is over 75 years. Okay, so we had the same auditor for 75 years looking through the books. Isn't that a time for a change? Haven't we heard of Arthur Andersen and Enron scandal? For a long time, actually, we had dual auditors. We had, I think it was PricewaterhouseCoopers. Yeah. Just using this common sense, isn't it time for a change? Well, certainly at some point there will be. Thank you for your comment. Thank you. We'll now proceed with the vote. On ballot A, please mark your vote on the appointment of the auditor. I would now ask the scrutineers to collect ballot A, covering both the election of directors and the appointment of the auditors. If you have a ballot, most of the ballots have been already cast by proxy, but those in the room, put up your hand if you want someone to pick up your ballot. We'll give it a few moments here. Any further people, if they have a ballot, raise your hand so it can be collected. I see someone over here. Any others? The voting is now closed for the election of directors and the appointment of the auditor. The next item of business on the agenda is the shareholder advisory vote on our approach to executive compensation. We have in place a policy to hold an advisory vote on our compensation approach at each annual meeting. We hope you've had a chance to review our compensation discussion and analysis in this year's proxy 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 shareholders. As this is an advisory vote, the results will not be binding on the board. However, in considering our approach to compensation for the future, the board will take into account the results of the vote, together with other feedback received from shareholders. I will now ask Joseph Hillier and Nancy Santini to make a motion to approve the resolution. Mr. Chairman, 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. Mr. Chairman, I second the motion. The motion has been moved and seconded. Is there any discussion? Yes, microphone number one. Would that be you, Mr. Weir? That would be me. I always have my annual talk on compensation, but this year, one point that I find very annoying. In the write-up on compensation and on Mr. Nixon's compensation, one of the points dwelt upon is the selling of the U.S. operation. A year ago, I was here, as probably a lot of other people were here, and matter of fact, I didn't hear an objective last year of selling the operation. I think the objective came from the shareholders here, myself and another shareholder, who really put pressure on the bank to sell. But I see in the compensation that Mr. Nixon has a substantial amount of his bonus went to the job on his objective in getting rid of that and whatever. But last year at the annual meeting here, at this meeting, all I heard was stay the course in the U.S. Matter of fact, I think they said we're profitable in the first quarter, we're staying the course. I think that's a little misleading. I don't begrudge that the U.S. was sold, and I'm very happy it was sold, and it was a good price. So the team that sold it, let me say this, you got a lot more than I thought you would for it. But the compensation write-up isn't really as I remember the story. Now I'll move on to my other point, which is compensation. The board always writes every year, "We'll hear from shareholders," and so I'm giving this this year for the umpteenth year. I think the base salary is way too low. The base salary should be CAD 3 million or CAD 4 million for Mr. Nixon. This base salary as it is, way too low. The bonus, I think the bonus should be 100 to 200 times the base salary, I'll be quite frank. It should be at his option to take it in deferred units or cash. That's what I think. The extra compensation, the mid and the long term, should be lower. But based on long-term aspects three and five and whatever, where there's a reasonable amount of consideration paid for achieving the performance. Thank you. I think that's realistic. I have to give others a chance too. Microphone number 5. Chairman, my name's Bill Davis. I'm a proxy holder and a shareholder. I don't appear every year. It's 5 years since I spoke. I do want to offer comment about the advisory resolution accepting the approach to executive compensation. I remind shareholders that this particular resolution grew out of shareholder proposals over several years asking for "a say on pay." The resolution has appeared for several years, building on prior years' versions, tweaked annually by the board and consultants. Our proxy circular devotes about 40 pages of justification and description of how we calculate executive compensation, and the principles seem pretty solid. Pay for performance, align with sound risk management, encourage senior people to own shares and have a stake in the bank's performance, develop long-term careers. It's fine to affirm these principles, but something's missing. Of the 10 shareholder proposals, at least half are related to some level of dissatisfaction with the compensation itself. I want to address what I think is the elephant in the room. Our pay of senior officers, and it's not just this bank, is much too high. This is a widely held perception among ordinary citizens, and I suspect among many shareholders. 5 years ago, I asked Mr. Nixon if he agreed that the importance of remuneration as a motivation for performance was actually overemphasized, and he said yes. I looked at a recent survey of 71% of Canadian companies aim to use more non-financial rewards to spur innovation and growth. On page 45 of the proxy circular, we learn that Mr. Nixon voluntarily relinquished about CAD 5 million of compensation that would have been payable in 2011. I've been looking as he came in. He seems relatively fit. He doesn't seem to have suffered unduly. I don't think his motivation has waned or that his efforts were in any way diminished. On January 2nd, there was a lot of publicity in this city around the fact that the very senior executives in our corporate world had already earned an amount equal to the wage of the average employee. That's in 2 days. That's a pretty graphic contrast. The entire remuneration program is based, I think, on the fallacy that we can segregate our senior people into a comparator group with other overpaid executives and accelerate their remuneration at rates beyond the income growth of ordinary people or of the staff. I want to quote from an article that was written many years ago in CA Magazine. I'm not going to quote the whole article, just a little bit of one paragraph, which is, the article's entitled "Are CEOs Overpaid?" The paragraph is entitled "A Fictitious Market." This is a little part of that. "Salaries have little bearing on a CEO's decision to stay or go. Boards rely on peer comparisons to determine CEO salaries out of a sense of fairness for their CEO, not because they are driven by market forces. Unfortunately, this concern for horizontal equity has led to considerable vertical inequity." There's lots of studies comparing executives' remuneration with average employees. The results, in my mind, vary from wow to shocking. The worst feature is that the difference seems to be accelerating annually, and the ratios in North America go well beyond other parts of the world. I think this is simply not sustainable. The secular and the business press have been drawing attention to the growing gap between the few and the many. This tends to lead to the gradual elimination of the middle class. This poses a threat to the future of capitalism. I happen to think that capitalism has been an effective vehicle for wealth creation and distribution, but it is being undermined, and we cannot just watch as this gap widens and the system collapses. I want to close with an appeal. First, I want to be very clear. I have immense respect for this bank, for its board, and its management. It is the largest holding in my admittedly small portfolio, and it has served me well. But we are at a point in history where the present paradigm has to change. We can no longer set a small group apart, away above their staff, above senior people in government or academia or other fields of endeavor. I do not have any particular prescription, but I do know that somebody has to go first. We have heard Mr. Nixon, and I agree that this is a bank that has led in all kinds of places and in all kinds of initiatives. If shareholders really have a say on pay, I think we say it is too high at the top. I want to urge the board and the management to toss out the paid consultants and create a new paradigm based on vertical equity instead of horizontal equity. A paradigm related to the whole of society for the good of the bank and for the good of the communities it serves. Thank you very much. Thank you for your thoughtful comments. It is an issue we all struggle with and are concerned by. I would point out that in the last year, Mr. Nixon took an aggregate pay cut of about 8%, which I did not see among his fellow senior bankers at other banks. Okay. Yes. Welcome. This is the former chairman of the Royal Bank of Canada, Guy Saint-Pierre, who retired from the board in 2004. Many years ago. Mr. Chairman, I just want to say that because we are in democracy, I guess we have the right to differ with other people. I think the document that we have received goes in much detail about why executive compensation was at the level it was. I think inasmuch as I respect some of the points that might have been raised, I would like to disagree with them and think that the bank provided an awful lot of information concerning executive compensation. I know it is a subject that is open to a lot of, sometimes, misbelief. I am sure Mr. Nixon spent more hours on his job than many people in Canada. I think if we ask for people in Canada to spend in a year how many hours that Mr. Nixon spent, maybe their earning would go up, maybe some of the equation would change. [Foreign language] De nouveau, je crois que les détails fournis par la banque sont très éloquents. Je pense qu'elle montre beaucoup de sensibilité à ces questions-là et je suis en désaccord avec mes collègues actionnaires comme moi et je pense que la banque nous a donné beaucoup de détails. Merci Monsieur St-Pierre pour vos commentaires. Microphone number 4. Merci Monsieur le Président. Mon nom est Daniel Thouin, je suis membre du MÉDAC, le Mouvement d'éducation et de défense des droits des actionnaires et je profite de cette occasion sur la question de la politique de rémunération de la banque pour vous apporter notre lecture de cette politique en attendant de vous proposer des recommandations qui sont inscrites dans votre avis de convocation. Aujourd'hui, vous savez encore dans les manchettes des journaux, que ce soit au Canal Argent ou à Globe and Mail du 24 février, le président en chef de la Banque de Montréal va toucher cette année un montant de salaire équivalent à CAD 11.4 million. Cette rémunération va avoir fait augmenter sa rémunération cette année de 51%. Ça, c'est la Banque de Montréal? [Foreign language] Oui, Banque de Montréal, 11.4. OK. La Banque TD, cette année, son président et directeur de la direction va voir sa rémunération baisser, lui, de 6% par rapport à 2010, mais elle représente encore une somme de 11.2 millions CAD. Ça, c'est la TD. À la Scotia, le président et chef de la direction va toucher une rémunération de plus de 10.6 millions CAD, malgré une baisse de 2.5 millions CAD sur l'année précédente. Enfin, ici à la Royale, le président en chef de direction, on l'a mentionné, le monsieur derrière qui a parlé, voit sa rémunération baisser malheureusement de 6%, mais elle demeure tout de même à 11.2 millions de dollars. Au cours des 5 dernières années, on aura vu la rémunération de votre directeur et président des opérations passer à 11.2 millions CAD, c'est-à-dire une augmentation de 70%. Pendant cette même période, la valeur des actions ordinaires de la banque n'a pas progressé. Elle a même diminué de 3.5%, passant de 50.40 CAD il y a 2 ans à 48.62 CAD au moment de l'émission de vos états financiers actuels. En d'autres mots, la politique que vous pratiquez présentement n'a rien à voir avec la performance de vos dirigeants. Si rien ne change dans votre politique de rémunération à la Banque Royale du Canada au cours des 10 prochaines années, vous allez consacrer une somme de 370 millions de dollars aux salaires et aux avantages sociaux de vos 5 principaux dirigeants. Comme le revenu moyen au Canada qui a été émis en janvier est de 46,190 CAD, la moyenne de rémunération de vos 5 dirigeants cette année, soit 7.3 millions CAD, sera 160 fois supérieure à la moyenne des revenus des citoyens de ce pays. Ce dérapage dans l'inégalité et l'injustice, c'est sans égal dans l'histoire du Canada. C'est une des raisons qui motivent notre mouvement, le MÉDAC, à suggérer à nouveau des propositions pour tenter de sauver le système bancaire de la révolte populaire qui s'est manifesté dans les opérations Occupy Wall Street et Occupy Bay Street et toutes les autres occupations qui ont eu lieu dans le monde en 2011. Considérer éventuellement les propositions du MÉDAC comme des remparts aux indignés de la rue. Même si certains administrateurs considèrent notre indignation comme surfaite ou dépassée, ceux-ci devraient plutôt la reconnaître comme une indignation responsable et positive. Merci Monsieur le Président, nous allons revenir tantôt avec ces propositions. [Foreign language] We will now proceed with the vote. On ballot B, please mark your vote on our approach to executive compensation. Once you have done so, put up your hand so that the scrutineers can collect the ballots. Any other ballots? If so, put up your hand. They will be collected. Seeing none, I believe now the voting is now closed on this motion. Next on the agenda are four shareholder proposals that were submitted by the Mouvement d'éducation et de défense des actionnaires. That movement, sometimes known as MÉDAC, is represented here today by Daniel Touin and Clément Delaye. These proposals and the board's responses and voting recommendations are set out in Schedule B of the proxy circular. We normally limit the presentation of shareholder proposals to 3 minutes each, but the Chair will grant you 15 minutes and you can apportion it as you see appropriate across the four proposals. Do not feel obliged to take the entire time, however. Thank you, Mr. President, for your obligance. [Foreign language] First of all, I would simply like to introduce ourselves. I am a new retiree from the fonction publique du Québec. I have been a member of MÉDAC since 1997. So, for many years, I have been following MÉDAC and I am concerned about the issues raised in corporate governance and particularly those of financial institutions. I worked at the ministère de l'Industrie et du Commerce, I did economic development in cooperation, financing, support, business start-ups. Today, I have the opportunity to be on the board of directors of MÉDAC for a year, with the hope that I can eventually, through my work, my commitment, bring about changes that I deem necessary in this society. My colleague Clément Delaye is a life and group annuity insurance advisor. He has his own company. Il a été aussi instigateur de produits financiers et il est aussi membre d'un autre conseil d'administration d'un fonds de pension important d'une entreprise de l'Estrie. Je ne reviendrai pas sur l'ensemble de l'histoire du MDAC. Je pense que plusieurs d'entre vous la connaissez. On est présent à vos assemblées depuis plusieurs années et vous savez que l'on est là pour défendre les intérêts des actionnaires. On est là aussi pour faire de l'éducation économique sur la base des marchés financiers. Quelques petits rappels historiques sur l'histoire du MDAC. Dans trois mouvements importants, un jugement de la Cour supérieure du Québec en 1997 nous donne le droit, nous, actionnaires minoritaires, d'être présents aux assemblées et de faire des propositions lors d'assemblées générales. [Foreign language] Deuxième élément important, décembre 2009, introduction dans la Loi de la société du Québec des propositions d'actionnaires, donc la capacité que l'on avait dans la loi canadienne de faire la même chose dans les lois québécoises. Enfin, septembre 2009, un jugement de la Cour d'appel donne raison au MÉDAC contre Power Corporation pour avoir le droit de consulter les états financiers des filiales des compagnies sociétés canadiennes constituées en vertu de la Loi des sociétés canadiennes par actions. Enfin, disons que les propositions du MÉDAC ont été acceptées au fil des années à plusieurs occasions, avec de grands succès. Entre autres, la proposition qui, en 2009, demandait que les politiques de rémunération salariale soient diffusées dans les avis de convocation. C'est ce qui nous permet aujourd'hui d'en discuter ouvertement. C'est un des éléments qui avait été apporté par le MÉDAC en 2009. [Foreign language] Je vous ai lu tantôt un peu la situation que nous on voyait sur la politique salariale, donc je n'y reviendrai pas. Je vous demande tout de même de prendre en considération les derniers mots que je vous disais tantôt dans mon texte. Considérez les propositions du MÉDAC au fil des années comme des propositions positives, des propositions qui veulent amener plus de transparence dans les états financiers et dans la gestion des entreprises, plus de justice aussi et enfin, faire en sorte que les politiques de nos institutions financières soient le reflet des valeurs et des orientations de ce pays. Ce que je vous ai dit tantôt, c'est effectivement le contraire qui se présente. Donc nous proposons au MÉDAC quatre autres propositions qui visent particulièrement à nouveau la politique de rémunération de nos sociétés et particulièrement des banques. [Foreign language] Je vais demander à mon collègue Clément de lire les deux premières propositions et je vous reviens pour les deux suivantes. Merci. [Foreign language] Bonjour Monsieur le Président. Bonjour. Mon nom, c'est Clément Delaye. Merci. Je vais y aller avec la première proposition: option d'achat d'actions et performance réelle des dirigeants. La rémunération des hauts dirigeants sous forme d'options d'achat d'actions est une formule qui a contribué à l'augmentation fulgurante de leur rémunération totale. Ces options donnent le droit aux détenteurs d'acheter des actions à un prix stipulé d'avance. Les options ne pouvant être exercées qu'après une période d'attente. Le montant de la rémunération ainsi obtenue est égal à la différence entre le prix d'exercice convenu et le cours de l'action au moment de la levée. On souhaite ainsi aligner leurs intérêts sur ceux des actionnaires et les fidéliser. Cette formule de rémunération tient pour acquis que les hausses boursières sont fonction des décisions des hauts dirigeants. Des études ont démontré que la performance boursière des organisations, et ça a été mentionné tantôt, est influencée par de nombreux facteurs qui ne sont pas contrôlés par les hauts dirigeants, comme le taux d'intérêt ou l'inflation. Citons à cet égard l'étude réalisée par le professeur Magnan, qui montre qu'entre 1998 et 2008, 90% de l'évolution de la cote boursière des cinq grandes banques canadiennes s'explique par des caractéristiques du secteur bancaire, comme les taux d'intérêt faibles et un contexte économique favorable. Lier l'exercice des options d'achat uniquement à l'évolution des cours boursiers est donc loin d'être approprié. Afin que cette proportion de la rémunération variable atteigne réellement ses objectifs et tienne compte des éléments sur lesquels les hauts dirigeants peuvent avoir un impact, nous proposons que ces options ne puissent être exercées après le délai d'attente qu'en fonction de l'atteinte d'objectifs mesurables et quantifiables, comme la croissance du revenu par action, le rendement sur l'avoir des actionnaires ou autres indicateurs extrafinanciers jugés pertinents par le comité de rémunération. Ça, c'était la première proposition. La deuxième proposition que je vais lire assez rapidement aussi. Proposition numéro 2: rémunération selon la performance. Le Globe and Mail publiait en mai 2011 une étude mettant en relation la performance financière et la rémunération du plus haut dirigeant d'une société avec celle d'un groupe de sociétés comparables. En d'autres termes, cet outil compare le rang de la rémunération du plus haut dirigeant d'une organisation et celui de sa performance financière par rapport à un groupe d'institutions comparables. L'actionnaire peut ainsi se faire une idée quant à la question de savoir si la rémunération du plus haut dirigeant d'une organisation est adéquate, compte tenu de la performance financière relative de l'organisation qu'il dirige. Nous proposons qu'une telle comparaison soit présentée par le plus haut dirigeant et l'ensemble des quatre autres dirigeants les mieux rémunérés de l'entreprise. Les indicateurs utilisés pour calculer la performance de l'organisation devraient être des éléments sur lesquels les décisions des dirigeants peuvent avoir un impact. La rémunération variable constitue la plus grande part de la rémunération totale des hauts dirigeants. L'actionnaire doit être en mesure d'évaluer si cette rémunération variable est justifiée compte tenu de la performance financière et extrafinancière relative de la société. [Foreign language] Monsieur le Président. Je repasse la parole à Monsieur Touin pour les deux dernières. [Foreign language] mais peut-être dans le cas où la proposition se trouve dans la circulaire, ce n'est pas nécessaire de la relire. Peut-être simplement faire les commentaires là-dessus. [Foreign language] Monsieur le Président, je vais y aller avec les commentaires sur la proposition. [Foreign language] merci. [Foreign language] Dans la proposition 3 qui concerne l'indépendance des conseillers en rémunération. Nous savons tous que vous faites affaire avec des conseillers indépendants extérieurs à la banque et qui sont choisis par le comité de rémunération. Par contre, nous avons beaucoup de [Foreign language] de questionnement quant à l'indépendance de ces conseillers extérieurs sur la somme qu'ils touchent comme rémunération de la banque versus l'ensemble des rémunérations ou des revenus qu'ils ont d'autres institutions. Ce que l'on nous demande dans la résolution, c'est d'avoir le ratio ou le pourcentage des gains que ces conseillers en rémunération touchent de la banque versus leurs autres revenus, pour vraiment éviter tout conflit d'intérêts ou tout conflit d'influence. La quatrième proposition, c'est celle qui concerne le comité de rémunération, le comité qui procède à l'analyse et à l'application de votre politique de rémunération. Ce comité, à notre sens, doit vraiment être indépendant, encore une fois, de l'influence des personnes de l'intérieur de la banque. Totally independent from the influence of people within the bank. [Foreign language] Des actionnaires répondant aux demandes et recommandations. They should answer to shareholders. We are asking that this committee, as a group, we are asking that it have relevant experience of at least seven years. The people who are on this committee should have relevant [Foreign language] Merci beaucoup, Monsieur le Président. Thank you for your comments. Is there any further discussion on these four proposals? I would now ask the scrutineers to collect the ballots. This is ballot C, so you are marking your votes on proposals one to four and then hand them in. As you are aware, the vast majority of shareholders have voted by proxy already. This is just for those in the room who wish to vote now. Anyone remaining with a ballot they want to hand in? I think the voting is now closed on proposals one to four. Proposals five to 10 were submitted by Lowell Weir. These proposals are listed on ballot D. The proposals and the board's responses and voting recommendations start on page 75 of the proxy circular. Mr. Weir, as I indicated earlier, we normally limit the presentation of shareholder proposals to three minutes each, but I will give you 20 minutes to the extent you want to take that time, to present all six of your proposals, and you can apportion your time as you see fit. As I said, there is no need to reread what is already in the proxy circular. If you could just make your comments on it as opposed to repeat it. Then we will invite comments from others. Please proceed. Thank you, Mr. Chairman. Proposal number 5 was a proposed amendment to the bylaws, which would allow for the reimbursement of reasonable expenses in the nomination of a proposed director. This item is, I guess, another bugbear with me. In Canada, the threshold for nomination of a director to a bank is extremely high. You have to have support of 5% of the shareholders. In the Royal Bank, I don't know, there's 1 million, close to 1.5 billion shares, I guess, outstanding. So it's beyond the means of the average or any shareholder. Maybe there's one or two in Canada who could even muscle up that support. So it's a closed shop. One of the things in Canada is, God bless them, but Canadians are not too fond of change. We see this situation now in Canadian Pacific, where to get one or two directors on the board, people have to do a whole takeover of the whole board. It's a battle for control. That shouldn't be. It shouldn't be. If people want to elect one person to the board, it's not changing the world. It's not doing anything. It's giving another voice. My proposal allows that person to, allows the group or could be anyone. If they can muster the support, they still have to get the support, but to get their expenses paid in conducting that battle. The reason people have to elect a whole slate now is because if they're successful in electing the slate, they get their expenses paid. This is simple. I don't understand the logic in forcing that. We're going to see it here this year. It's a great test in Canadian Pacific, and may the best man win. I don't think that's the right way to go, and my proposal is designed so that a reasonable party with a reasonable amount of success would have a chance to be elected and to give them a fair fight, a fair fight in the election. Because the elections are rigged towards management here in collecting proxies. Let's face it, for the average person, there's a tremendous cost. Proposal number 6 is essentially the same proposal only in regard to shareholder proposals. Here in Canada, shareholder proposals, this hasn't been an easy road. I don't know how many times I've been in court. I know you, Michelle, before me, was in court a ton. Because the reality here is the banks make it extremely difficult to present proposals. They're much better today, I have to say, in the Royal Bank. Well, I'm not going to say a word. Their people are excellent. In reality, they're not every bank. The Royal, too, can head for the lawyer pretty quick, too. So in a fair situation here on a proposal, I don't see why time, effort, and expenses of a shareholder shouldn't be covered in a reasonable formula, which I believe my formula is. You have to get 20% support to get any kind of reimbursement. I'm not asking for all expenses. I'm saying this is a fair policy, and it deserves some support. It won't get any, but it deserves some support. That's all I have to say on that. I've got to move to my third one. No. Yeah. My third proposal, number 7, shareholder approval of equity compensation plans. Quite frankly, I believe that the shareholder should have the ability to approve all equity compensation plans and all amendments thereto. A few years ago, there were changes brought in that really moved some of that. Some banks are different from the other, and I am not going to get into things, but I fundamentally believe the shareholder should have the opportunity to approve all equity compensation plans and approve that equity. That is the bottom line. Because if they are suffering dilution, they should have the right to approve it. That is a fundamental right that has gone with shareholders since the beginning of time. It has changed. It slipped out the door. Proposal number 8, moving along, is a proposal to amend the bank definition of director independence. This is a proposal that I am very strong on and want to spend a little bit of time on. One thing I want to say here is I find the bank's response to this proposal a little misleading because I think that the bank distorted the real point in this proposal. Their answer, quite frankly, I think misled shareholders. But it is what it is. But the real issue here is this. In the bank's definition of independence, they exclude directors that are officers and directors of companies that are substantial clients of the bank. I believe that people who are officers and directors of substantial clients of the bank, companies that are dependent on the bank in a lot of cases, are not independent because the reality is they need the bank. The companies they are involved with, they need the financing. They need this. I will tell you why I have seen I have done a lot of work in Canada, and most shareholders do not know that a shareholder can go to the bank, and they can go read the conflict of interest disclosure in the bank. I have made my trek to, I think, five out of the six banks in Canada. I have not been to any other one yet, but I will. Some banks made it easy. They opened the doors. Some did not. I will tell you what I found there was not great. I found very poor recording, records, and a lot of cases where conflict of interest policies were not being followed. In certain institutions, and I am not naming any here for personal safety reasons, there were transactions, and there were clear conflict of interest situations where companies, people, directors involved with companies, obviously, they were using that in their favor. Anyway, I fundamentally believe that in certain cases, what I am asking here for the bank to do is amend that definition, make it so it includes somebody who is not independent, if they are an officer and director of a company that is a substantial client, a material client of the bank. I think that is very realistic. I am disappointed. I have to say, I am disappointed at the bank's response to that because they were well aware. I spent I do not know how many hours discussing this issue with bank people. They were well aware that my issue is not anything else. It is solely these officers and directors of companies that do a lot of business with the bank. I think their answer, they talked all around it, not the right question. I think it distorts a reasonable shareholder's view of what is actually happening here. I am going to ask the bank here to put this proposal in next year with a proper explanation behind it, which I think is only fair. I will leave that with the directors. They can look at it. Proposal number 9, full disclosure of director and officer self-dealing. Based on my visits to the various financial institutions, I believe this information should be public information. The Bank Act makes it public for shareholders, and it should be disclosed. It is to get it out of the bank. I can say, in all the banks that I have been in, not one bank has fully disclosed all the material. They have hidden certain material, marked out things, and whatever. In the Bank Act, there is nothing that allows them to do that. They just do it and say, "Tough luck." I would like to see the banks adopt a policy that gives full disclosure of director and officer self-dealing, quite frankly. Shareholders, when people have inside positions of trust, and I am not saying there is any violations, but if you have a transparent system, then we know that. We know what is happening. We know what is available. I notice the board is against it. One thing that I find very annoying is the bank saying, "We are not disclosing it because it is routine indebtedness." Everyone is treated like an outside customer. From my experience in reviewing this is not the case. God bless directors, and I am not saying it is because they are directors they get a better deal. Maybe it is because they are able to explain their situation better, more than the average person. I do not know. But from what I saw, in my professional opinion, the situation involved were probably a little better, from what I saw, most times you cannot see the details, than the ordinary client would get. The last one, number 10, is one I am primarily interested in. This proposal goes to the work that I have done over the last four years in reviewing the work of auditors at the bank. Quite frankly, I am very unsatisfied with the work I have seen. The quality of statements, both at the Royal Bank and two or three other banks. I believe the statements were materially misleading, to be quite honest. I think what has happened here in Canada years ago, I actually worked as an auditor for one of the big firms, and I worked on the audit for the Royal Bank. So there was rotational auditing back then. I think there was three auditors, and one come off every year while a new one went on. That system seemed to work fine. I do not know why we got so far away from it. I guess right now, and I am not the only one with this concern. Actually, I submitted this whole proposal, I think, a long time ago, maybe back a year ago almost. But since this time, the Public Company Accounting Oversight Board in the U.S. has identified the same issue that I have identified, that the auditors are not doing their job. Of course, they were up here to look. They actually have come out with the same proposal that I have, or they are supporting my proposal, but I would think that they probably do not even know about my proposal. Anyway, this is a Canadian first, so we should take that. I noticed the Canadian board, which God bless them, Canadian Public Accountability Board, they have actually come out against my proposal. Their solution is the problem is not the auditors, it is the audit committee. They are saying that that is why they do not want to change the auditors. The real problem is the audit committee, and the audit committee are not doing their job. That is the Canadian solution to this problem. Either one, I am supporting. I fundamentally believe that it would be good for the bank, it would be good for shareholders, and it would be good for the audit firms if there was some rotation in the audit. The 5-year period I selected was selected at random, but that is what the U.S. people are now proposing. Maybe we will see that mandatory. For once, I would like to see where people took a change before it was mandatory. We had the same issue on say on pay. God bless all the banks, but the instant they lost the vote, they were a big supporter. Before they lost the vote on say on pay, they were against it. People do not have that short of memories. I would like to see the bank be proactive. The Royal Bank of Canada is a great bank. It is one of the world's best franchises. There is no question in my mind. The job they have done in some areas makes you proud to be Canadian. Supporting Canadian sport, Canadian athletes. Golf, I love golf. The Royal Bank of Canada, God bless them. They are supporting it, and well to them. I do not think the Royal Bank of Canada is all bad. Matter of fact, I can tell you in my family, and this is a true story, my grandfather bought shares of Royal Bank of Canada sometimes back at the turn of the century. He used those to pay his property taxes every year. His advice to us as kids is that you have to buy Royal Bank of Canada shares to make sure you can pay your property taxes every year. Where I am from, the Royal Bank of Canada, there were no other banks. My mother, she was a very frugal individual, and her number one piece of information in the month was the Royal Bank of Canada Monthly Letter. She followed that religiously and maintained every one. I can say in her files. That was her composition of all her files, her will, a few little documents, and the Royal Bank of Canada Monthly Letter. So take it as it is. I am not 100% against the Royal Bank of Canada. I am just for better disclosure. I am for more pay for performance. I want to see the bank do well. I want the shares to advance. I am disappointed over the Royal Bank of Canada the last few years, to be quite honest. For years here, the Royal Bank of Canada was a money machine. I want to tell just one little story. Back in, I do not know when it was, 1982 or 1994, one day my broker called me with this or that, and all of a sudden, I get fed up. I got totally fed up, and I called my broker and said, "Sell everything I own and buy Royal Bank of Canada. I only want Royal Bank of Canada." What happened in this is, of course, the brokers called and concentration and the managers and executive, everyone said, "Oh, you cannot do that. You cannot do that. We wouldn't do it for you because it's too much concentration." It was the worst mistake I ever made. I listened to them. I should have bought everything. Thanks very much, Mr. Weir. Is there any further discussion on these proposals? If not, we'll then move to the vote on ballot D. Please mark your votes on proposals 5 through 10. If you have a ballot, please raise your hand so it can be collected. Are there any remaining ballots? If so, please raise your hand. I believe then that all the votes have been received, and we'll close the voting. While we wait for the results of these votes, we would like to show you a brief video about RBC and what we stand for. Following the video, Gord Nixon will lead the next part of the meeting when shareholders who haven't already had an opportunity have an opportunity to ask questions. The video. Thank you. Before we move to further questions and comments, I would like to extend a special welcome to the students from Emery Collegiate, I'm sorry, in North York, and their teacher, Corrine Thompson. Corrine is a former RBC employee, and we're pleased to have her business class joining us today. Please join me in welcoming them. Why don't you stand up? At this point in the meeting, our shareholders have the opportunity to ask further questions or to make comments. If you have a question, please proceed to the nearest microphone, give your name, and tell us whether you are a shareholder or proxy holder. If your question does relate to a personal matter, please speak with the RBC employees at the information desk in the foyers, if you don't mind. I will now open the floor to question, and we'll start with number one. Hi. My name is Kailash Bahadur, and I'm a shareholder. Mr. Nixon, you said that in your many travels as a Canadian, Canadians are quite popular, and it's cool to be Canadian. That's great, but one problem is that you become like the Koh-i-Noor diamond, and everyone wants to acquire you. My question is, I was familiar with the older rules, but at present, if somebody could explain, how does the government these days or the government rules protect banks directly and indirectly from being acquired? Secondly, can something like what is happening to Canadian Pacific happen to a Canadian bank? Thank you, Kailash, for your questions. With respect to ownership, as I often remind particularly people in the media, there is no foreign takeover restrictions of Canadian banks. But what there is there is a maximum ownership restriction for Canadian banks. Therefore, no one of the major Canadian banks can own control more than 20% of the, whether it is a foreign investor or a domestic investor. So with respect to the major banks in Canada, they are protected under the Canadian Bank Act and under legislation to be widely held, if you will. In terms of the CP activities, that is something that could happen with any Canadian company that does not have a controlling shareholder. And as Mr. Weir articulated, it is not easy for it to happen on any company, and it takes very significant institutional shareholder, I think leadership for it to occur. Potentially it could, if there was enough dissatisfaction with activities or with the board or with the management or with the CEO. Certainly, shareholders under their votes and their rights would have the same abilities with respect to a Canadian bank as they would with respect to CP. Yes, microphone number six. Hi, Mr. Nixon. My name is Paul Durning. I am a shareholder. Well, it looks like to go into retail banking in the U.S., you do not just follow the yellow brick road with Toto. It is not that easy. My question deals with RBC Bank US assets, which now are owned by PNC Pittsburgh. Almost. Tomorrow. Okay. Now that, as of tomorrow, you are getting right to my question. Is there anything retroactive that could come back to RBC by way of liability in the future that would be relevant to subprime, Alt-A's, or collateralized debt that were in your portfolio for those other years? This has not been worked out completely. Right with U.S. banks in the actual liability that could be ahead. Right that is not defined exactly. Thank you for your question, Paul. All of the assets of RBC Bank will be sold to PNC. The answer to your question for all practical purposes is no. All of the assets will be there. Now, I would remind people that we are in other businesses in the United States where we have loan book exposure, commercial trading exposure, et cetera. Across the rest of the bank, certainly the balance sheet, the liabilities have not changed, but there is certainly nothing there that should be any of concern. With respect to specifically around residential subprime, Alt-A mortgages, et cetera, any activities in the retail bank will go with the sale to PNC. I'm happy that you have a smile on your face saying it. Thank you for your question. Microphone number 6. Hi, good morning, Mr. Nixon. Good morning. My name is Otto Young. I am a shareholder. I have a comment regarding back in September 2010, Finance Minister Jim Flaherty made a public announcement regarding the Global Risk Institute in financial services and the partnership with the banks, insurance companies, pension plans, asset management companies. I just want to ask your current view or comments with this initiative. Thank you. Yeah. Thank you for your question. I am not 100% up to speed on exactly where everything is, although we are a partner in the Global Risk Institute. As far as my understanding, it is moving forward with respect to its mandate and its objectives. I think, Morten, were you involved in the Global Risk Institute as a representative from the organization? No. I think you were. I was part of the advisory committee before the board and the Chair was- Morten is Head of our Risk Management division. I'm the Chief Risk Officer for RBC, and I was representing RBC in the transition to having the board fully elected and get launched. The board has now been launched. The interim CEO has resigned. They're searching for a permanent CEO and working on the mandate for the institute. RBC is a supporter of the institute, but we no longer have formal representation on the board or direct governance of the institute. Thank you, Mr. Friis, and thank you, Mr. Nixon. Thank you for your question. I think microphone number 6 again. Surendra, shareholder. Morning. My question is on conflict of interest. One of the main causes for the credit crisis was conflict of interest related to residential mortgages. Canadian bank regulator has expressed concern about banks like RBC lowering their mortgage lending standards, such as lending without income verification, as an emerging risk to Canada's economy. Rating agencies like Moody's are reacting to these risk-takings with potential downgrade. RBC faces numerous challenges, including significant value drop in assets like mortgages. My concern is about RBC Board of Directors or senior executives who may be board members in companies that build residential homes. Home builders need loans, and they even help home buyers get RBC mortgages. These high-powered positions demand high standards of conduct. How does RBC deal if there is real potential or perceived conflict of interest in this matter? Thank you for your question. Firstly, I am not sure whether you were here for my comments, but I did make some specific remarks about our not only view of the housing sector in Canada, but also our view from a risk perspective. I would encourage you to actually listen to the webcast of our analyst meeting, which was held at 7:30 this morning, because Dave McKay, who runs our Canadian banking business, fielded a number of questions with respect to risk in the sector, our adjudication process, our standards, et cetera. I can assure you that from our perspective, while there potentially is more risk across the housing sector, from an RBC perspective, our lending standards and our credit standards have not been lowered. Our credit scoring, our adjudication processes are still very consistent with what they have always been. It is one of the reasons why we take great comfort, if you will, in the mortgage sector. I am not quite sure I understand your question with respect to conflict of interest. I am sorry. You are asking conflict of interest with respect to us supporting commercial developers? No, no. Let's say, Mr. Nixon, you are the CEO. Right. You have sales department who wants the sales to go sky high. Right. You have the credit granting who wants to keep the sales down. Right Because they need to make sure lending is done on a prudent way. Because otherwise, the Royal Bank Tower will crack. Right. You have a choice. You can let the sales go up, which is good. Sales, good profits. You get a good compensation. But then what happens? There will be crisis. Right. The same thing happens. No, no, I get it. That's a very good question. There's always a tension between sales growth and credit standards and ensuring that you've got the appropriate credit standards, which is why there's a complete separation between the sales part of the organization, in other words, our Canadian banking business, which Dave McKay is responsible for, and our risk management group, which our Chief Risk Officer, Morten Friis, is responsible for. The approval of all of our processes, our credit scoring, our credit standards, and ultimately loan approval and credit exposures is done through the risk process. I would say it's a very healthy tension. It gets to the issue of one of the most important aspects of banking because it goes far beyond mortgages. As you say, one of the challenges with the financial crisis was whether risk management policies were embedded enough into the decision-making process to grow loan books or to grow portfolios and so forth. It's a key tenet of banking, and I think it's something that we take great pride in terms of our historical performance with respect to risk. I can assure you that it's something going forward that we're going to continue to pay a great amount of attention to. It's one of the reasons on the mortgage side, as I say, I can say with a high degree of confidence that while there may be more vulnerability in the marketplace, when you look at our portfolio and our credit scoring and our loan approval processes, the standards continue to be very strong and very consistent with what they've been historically. So that conflict of interest is managed basically through the division between risk approval and sales approval. Mr. Nixon, I was trying to explain from your perspective, the question I asked was conflict of interest, if your board members or senior executives are also board members in companies that build residential homes. Oh. That will happen is that because normally, why does builders want your executives or board members to be directors there? They want them to be in their pockets so that they get enough loans, they can sell their mortgages, they can sell their homes. That may be not in good in the best interests of RBC. Yeah. That's my question. I get. I'm not sure we have any situations like that on our board. We do have some people that are involved in the real estate industry. I'm not sure whether we do on the commercial side. What I can tell you is that from a board governance perspective, if there was ever a risk-taking policy which impacted one of our directors and under our conflict of interest guidelines, of which we have a full set of guidelines, which you're happy to talk to our people about afterwards, that director would be excused from any decision-making process. Now, it's more likely to happen on a specific situation like a corporate loan or a corporate contract, as opposed to a major portfolio. But it's just not something that I don't think we've seen from a conflict perspective on the residential mortgage side. Let's say, I understand on page 67, you're talking about conflict of interest, but in the directors. How about senior executives who could be directors in these companies? Yeah. We've got an approval process, for any of the RBC executives cannot go on a board without the full approval of our board of directors. As part of that, there is a review process which is conducted by our risk group that goes into, if you will, a recommendation to enable one of our executives to go on a board of directors. It's not something that we encourage, and there are very few of our executives who are actually on external boards, and for the very reason of potential conflict of interest. If you look at someone like myself as an example, to go on any major Canadian corporation board would be very challenging given the interface and relationships that as a large bank we have with those with major corporations, and I don't sit on any outside boards. I'm trying to think whether there's any exceptions with respect to my group management committee, but I don't think anyone sits on an outside board. When you go down into the bank, there's a few exceptions, but they're all approved. They're reviewed by risk management and ultimately approved by the board of directors. I understand that it says there, as I mentioned to you, it's on page 67. Yep. Mr. Nixon, there are more than 67 ways to fool around the system. Well, I know, but I'm trying to answer your question in terms of our processes. I'm trying to think of an example where you potentially could see conflict in the bank. I'm not sure I see one. No, as I mentioned to you, say, for example, Mr. Nixon, say some of your senior executive who is in the business of lending. Right. All right? And now he or she sits as a board of Director in a residential home builder. Right. If that was the case, Yes under our approval process, they wouldn't be approved to go on the board of Directors of the home builder. You're absolutely sure? I believe so. If there's an example, I'd like to hear. Well. Morten, do you have any, again, you? Not the board, sir. Any senior executives. Pardon me? You're absolutely correct. I'm absolutely correct. Not board of directors, sir. I'm talking about any senior executives. No, that's what I'm talking about as well. If I have, then what will you do? Well, please come and talk to us afterwards. Well, I think I'm here to ask this question because I was surfing the net, and I came across some names who are board of directors in leading Canada's mortgage builders. So maybe, Mr. Nixon, if you don't mind, check up with your executives. We will certainly investigate that. Morten. And get back to me how- Absolutely you are balancing for the interest of the shareholders. Appreciate your comments. Thank you. Thank you, Mr. Nixon. Yes, Mr. Weir. I am just going to ask a quick question on going forward. Recently, in my opinion, obviously, there was excess capital in the banks. We saw pressure to lend money and very nice lending rates for consumers. It appeared that the federal government stepped into the market and put pressure on the bank to raise these rates. I guess I have two questions. One, do you see this as a bad item? Because as a shareholder, I kind of thought it was. Second, I am going to ask you, where do you see interest rates going long term, just as a general question first? Thank you, Mr. Weir, for your question. The federal government certainly didn't intervene and put any pressure on the banks. Again, there's always a little bit of spin, if you will, in the media. What got a lot of attention was the 299 special that was put out by one of our competitors, and then a number of the Canadian banks followed suit for competitive reasons. They were term mortgages, and from a risk perspective, it was actually a good thing in terms of de-risking the consumer, because what you want— One of the biggest risks to consumers right now is interest rates going up. To the extent that people were moving into term rate mortgages from variable rate mortgages— From a government perspective and from a policy perspective, that's a good thing. The 299 got a lot of headline attention in the media, but from a policy perspective, it was actually a good thing. We saw that shift. We've seen a very significant shift in our residential portfolio over the last number of months from variable rate to fixed rate mortgages. That's a good thing, because ultimately, interest rates will go up. When they do go up, to the extent that people have fixed their rates, particularly at current levels, it will provide greater security in terms of their ability to service that debt. So it was no intervention. I think that to some degree, it's a very competitive marketplace, and that was very much pushing the envelope in terms of margins for the industry itself. I think you've seen, they were announced as temporary sales. When the period ended, I think some of the banks saw that what they were doing was providing credit at spreads that were just not sufficient from a shareholder perspective. With respect to interest rates, again, I am not sure my crystal ball is any better than most, and the economists have been wrong year after year after year for the last number of years. As I say to our people, we should always hire more economists. We will have a better chance of getting the forecast right. My expectation, and I take a lot of I see our chief economist in the room smiling. The governor of the central bank has made it clear that interest rates are not going to go up in the near term, and that is very consistent with our forecast, and I think universally accepted. Canada is a little bit caught, I think, when you look at our mortgage market as an example, between the proverbial rock and a hard place. We have got a consumer market that is very strong, but we have a business market that is less strong, and the rest of the world is keeping interest rates low, and it is very difficult for us to buck that trend. The head of the Federal Reserve has said that interest rates are going to remain low for a couple of years in the U.S. Our governor has certainly indicated that as well. So I think we can expect low interest rates for an extended period of time here, whether it is one and a half, two years. They may creep up, and longer-term rates may creep up as market expects that timeframe to shorten. You may see the yield curve steepen a little bit. But I think by and large, we will be living with low rates for a period of time here. I think the CAD 64,000 question is, given stimulus and low rates for such an extended period of time, ultimately, does inflation start to come back down the road? And I think that the expectation of most economists, and I would agree with it, is that is potentially a longer-term problem, but probably not something we are going to be dealing with over the next five years. I think the biggest challenge we face in the near term is we would all like a little bit more inflation because it would be a sign of some degree of economic growth. Are there any further questions? If there are no further questions, then I would like to thank our shareholders for their participation in the meeting. There has been some very good points raised. We certainly appreciate that. With that, I will turn it back to our chairman. Thank you. Thanks, Gord. I'll now call on Joe Curaco, the scrutineer, to report on the voting results, which are also posted on the screens. Copies of the voting results will be available at the information desk after the meeting and posted on the bank's website. Joe. Thank you, Mr. Chairman. For the information of shareholders, the scrutineers wish to report that 660,980,864 shares, or 45.90% 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 16 nominees named in the proxy circular, with each nominee receiving in excess of 85.02% in favor. The results for appointment of auditor are 97.01% voted in favor of Deloitte & Touche LLP and 2.99% withheld from voting. The results on the advisory resolution to accept the approach to executive compensation, 84.97% voted in favor and 15.03% voted against. The results for the shareholder proposal are as follows. Proposal number one, regarding stock options and actual performance of executive officers, 5.54% voted in favor, 93.80% voted against, and 0.66% abstained. Proposal number two regarding performance-based compensation, 3.36% voted in favor, 95.83% voted against, and 0.81% abstained. Proposal number three regarding the independence of compensation advisors, 3% voted in favor, 96.35% voted against, and 0.65% abstained. Proposal number four regarding independence of the members of the compensation committee- 2.68% voted in favor, 96.64% voted against, and 0.68% abstained. Proposal number five regarding the reimbursement of expenses for nomination of a director, 2.6% voted in favor, 96.69% voted against, and 0.64% abstained. Proposal number six regarding the reimbursement of expenses for shareholder proposals, 2.76% voted in favor, 96.64% voted against, and 0.60% abstained. Proposal number seven regarding shareholder approval of equity compensation plans, 6.12% voted in favor, 93.2% voted against, and 0.68% abstained. Proposal number eight regarding amend the bank definition of director independence, 2.93% voted in favor, 96.31% voted against, and 0.76% abstained. Proposal number nine regarding full disclosure of a director and officer self-dealing, 3.38% voted in favor, 95.93% voted against, and 0.69% abstained. Proposal number 10 regarding the auditor to be appointed annually for a maximum five-year term, 3.03% voted in favor, 96.39% voted against, and 0.58% abstained. Thank you, Joe. I now declare that the 16 persons named in the proxy circular have been duly elected as directors. Deloitte & Touche LLP has been appointed as the auditor. The advisory vote to accept the bank's approach to executive compensation has been approved, and all the shareholder proposals have been defeated. Ladies and gentlemen, I sincerely want to thank you for your participation today, both those who supported various propositions and proposals and those who were silent. I will conclude by thanking our 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 shareholders, thank you all for your efforts and your contribution to RBC's success in 2011. The meeting is now concluded. Thank you for joining us today.

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