Good morning. My name is Jane Langford, and I am the General Counsel for TD. Before we call this meeting to order and begin our business together, I acknowledge that we are assembled today on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit, and Métis people. I also acknowledge that Toronto, where I stand, is covered by Treaty 13, signed with the Mississaugas of the Credit and the Williams Treaties signed with multiple Mississauga and Chippewa bands. I would like to welcome the chiefs, elders, youth, and members from the indigenous communities who have joined us today, either in this room or virtually from across North America, or as some indigenous peoples know it, Turtle Island, home to many diverse First Nations, Métis, and Inuit people.
In Canada, we begin a meeting with a land acknowledgement to remind us of our obligation to advance our collective efforts towards Truth and Reconciliation with Indigenous people. Speaking personally, I am a descendant from settlers to this land. When I speak the land acknowledgement, I recognize that my ancestors did not arrive to an empty land, but to a land that sustained and was nurtured by diverse Indigenous people and cultures for thousands of years. My personal journey to Truth and Reconciliation embraces a commitment to learn the full story of Canada, which includes the truth about the First Peoples of this land. At TD, we recognize there is more work to be done and are committed to doing our part in the journey to Truth and Reconciliation with all Indigenous people. Thank you.
Please welcome Brian Levitt, Board Chair, TD Bank Group.
Merci d'accueillir Brian Levitt, Président du conseil d'administration, Groupe Banque TD.
Good morning, everyone. Welcome to the 2023 TD Bank Group Annual Meeting of Shareholders.
Pour nos actionnaires francophones.
For our Francophone shareholders, I welcome you warmly to our annual meeting of shareholders. I'm Levitt, Chair of the Board of Directors, and I will act as chair of this meeting as stipulated by the Bank's bylaws. This meeting is called to order. With the consent of the meeting, I'll ask Jane Langford to serve as secretary. We're delighted to welcome some of you today in person, and we will also welcome those of you joining us by webcast or through the phone line. As was done last year, we've enabled question and comment capabilities through our phone lines and webcast with the aim of making the experience for our virtual attendees as interactive as possible. As in past years, both English and French will be spoken during this meeting. Simultaneous translation will be provided in person and over both our English and French webcasts and phone lines.
Additionally, shareholders and proxy holders will be able to ask questions in the room, over the phone line or in writing through the webcast. Let me explain how this works. With the goal of allowing all shareholders and proxy holders to participate, regardless of whether they are with us in person, on the phone or on the webcast, we'll take questions from the room first, and then from the phone, and then through the webcast. In each case, we ask that you identify whether your question relates to a motion being considered as part of the formal business of the meeting, or whether it's of a more general nature. We will address questions that directly relate to a particular motion at the appropriate time, and we ask that you save your general questions for the question and answer period, which follows the formal business.
If you're in the room with us and would like to ask a question, you'll be prompted to approach one of the microphones on the floor at the appropriate time. For those with limited mobility, please raise your hand and a microphone will be brought to you. To ask a question over the phone, you'll be prompted to enter the question queue at the appropriate time. When we are ready to take your question, the operator will introduce you. We would like all of our shareholders that wish to ask a question have the opportunity to do so. We ask that you limit yourself to two to three minutes and that you only ask one question at a time.
If you have additional questions, please re-enter the queue at the microphone or the telephone line to allow us to speak with as many shareholders as possible during the meeting. If you're on the webcast and have a question, click on the Ask a Question tab at the left side of the webcast page. If you're watching the webcast in full screen, you will need to minimize the video to access the question tab. Shareholders who wish to submit a question or comment through the webcast platform can do so at any time, and we will address them at the appropriate time. A TD representative will read out the questions received over the webcast. Questions will be read out in the language used by the submitting shareholder, and if submitted in French, an English translation will follow.
If we have several questions that are very similar in nature, we'll read out one of the questions and mention that we have received similar questions. As in past years, the vast majority of shareholders submitted their proxies or voting instructions in advance of the meeting. Shareholders and proxy holders, whether attending virtually or in person, will have the opportunity to vote during the meeting. To keep your vote confidential, proxies are tabulated and counted by TSX Trust Company, our transfer agent, and are only submitted to the bank when legally necessary, or when a shareholder clearly intends to communicate comments to management or the board. Here's how you can vote through our virtual voting platform. Once you're logged into the webcast, click the Vote tab at the left-hand side of the webcast page, and a separate browser window will open.
Shareholders that are not logged into the webcast can access the virtual voting platform from the 2023 annual meeting page on TD's website. Once you've accessed the voting platform, you can register to vote by entering your control number as your username and entering td2023, all lowercase, as your password. Voting will be open so long as the formal portion of the meeting is proceeding. If you are with us in the room and you wish to vote during the meeting, you will need the green and blue ballots that were offered to you at the registration desk. If you voted in advance of the meeting and do not wish to change your vote, then you do not need to do anything. I've received satisfactory proof that the notice calling this meeting was duly publicized and sent to all shareholders of the bank.
We've received proxies representing more than 52% of the approximately 1.8 billion outstanding common shares. Accordingly, we have a quorum present, and I hereby declare the meeting duly and properly constituted. As in past years, we'll have a question and answer session after the formal business of the meeting is completed. As I noted earlier, during the formal portion of the meeting, we will pause to address questions and comments submitted by shareholders and proxy holders that are specific to the motions being presented during the meeting. As always, we ask that any questions that you ask relate to the business or affairs of the bank and not be of a personal nature. For people in the room, we have a representative from TD Customer Care here with us. Can I ask Christina French to stand and be recognized? Thank you.
If your question is of a personal nature, we will defer your question and ask that you speak with Christina after the meeting, or we will have one of our customer care representatives get in touch with you after the meeting. The agenda for today's meeting is available on the annual meeting page on TD's website. For in-person attendees, the agenda can be found in the booklet that was on your chair. Please note that discussions during the meeting may contain forward-looking statements about the bank's outlook and objectives and strategies to achieve them. Bharat will be referring to non-GAAP financial measures, also known as adjusted results, in his remarks. Details regarding forward-looking statements and non-GAAP financial measures are on the slide presented in the room and on the webcast and can also be found in the bank's financial reporting.
Now I'd like to introduce the individuals who are with me today, Bharat Masrani, Group President and Chief Executive Officer of the bank, and Jane Langford, Executive Vice President and General Counsel of the bank. As noted earlier, Jane will act as Secretary of the meeting. In addition, members of the bank's senior executive team and board of directors are available to assist with questions if necessary. Pat Lee and Jordan Chaffee, representatives of TSX Trust Company, the bank's registrar and transfer agent, will act as scrutineers. Before I invite Bharat to address the meeting, I'd like to recognize the tremendous efforts of all TD colleagues over the past year. Through a period of change, they delivered every day, serving customers and clients and advancing the bank's priorities. On behalf of the board, I'd like to thank them for all that they have done.
Every day, they showed up for our clients and the bank. On behalf of the board, I would like to thank them.
2022, TD delivered strong growth and strong financial outcomes. Our balance sheet is strong, and we have deep liquidity, critical foundations for a successful bank. This performance enables us to invest in our business, add new capabilities, and continue to pay dividends to shareholders. We also took important steps to deliver on our environmental, social, and governance priorities. We advanced our diversity and inclusion efforts, invested in our communities, established new targets for financed emissions, and announced a new CAD 500 billion sustainable and decarbonization finance target.
In 2022, we offered excellent service to our clients, supported the communities where we are present and invested in our colleagues and our sectors.
I recognize the tremendous efforts of Bharat Masrani and his executive team, who delivered for all shareholders, all stakeholders, including our shareholders. In closing, I wanna thank our shareholders for their confidence and our millions of customers for the opportunity to serve them every day.
In closing, I want to thank our shareholders for their confidence and our millions of customers for the opportunity to serve them every day.
With that, I'll ask Bharat to address the meeting.
Thank you, Brian. Good morning, everyone. Thank you for joining us. It's great to see so many of you here in the room. I also want to welcome those on the webcast or on the phone. Since we last met a year ago, TD has continued to welcome new customers, generate capital, expand our business, and grow. As a result, TD's 2022 earnings reached $15.4 billion on an adjusted basis, a 5% increase from 2021. We also increased and continued to pay dividends to our owners. In fact, over the last decade, we had the highest total shareholder return among our Canadian peers. Strong-performing businesses supported by the best talent in the industry delivered significant progress in 2022.
The Canadian Personal Bank welcomed new customers, deepened relationships, introduced innovative products and services, and strengthened our position as Canada's leading personal bank. Finished the year with the highest net customer acquisitions since 2014, including record account openings in the important new to Canada segment. The Canadian Business Bank expanded its customer base and supported the aspiration of almost 900,000 small businesses across the country. We also increased loans and deposit volumes. Among Canada's largest banks, TD was ranked highest in customer satisfaction in small business banking by J.D. Power, reflecting the trusted relationships we have built with our customers. As you may recall, our business bank distributed more Canada Emergency Business Account loans than any other bank during the pandemic.
Today, as small businesses rebuild and contribute to Canada's future, we are there for them with sound advice and a full suite of financial services. Wealth management continued to operate Canada's largest direct investing business, which The Globe and Mail recently ranked as the top digital platform in the country. We also remain Canada's largest institutional money manager. TD Insurance solidified its leadership as Canada's largest direct-to-consumer home and auto insurer, and we recently launched small business insurance, another example of our commitment to support small businesses across Canada. Taken together, this is why Global Finance ranked TD as Canada's most valuable brand. In the United States, TD Bank, America's Most Convenient Bank, continued to grow and win new customers. For the sixth consecutive year, TD Bank was the largest Small Business Administration lender in our U.S. footprint and the second-largest in the United States overall.
From Maine to Florida, our reach continues to grow with new store openings and an expanding suite of products. TD's success in the U.S. over the past 15-plus years demonstrates the enormous potential we have in the world's largest banking market. As you know, we announced our proposed acquisition of First Horizon in February of 2022. As previously disclosed, we've come to believe that the deal is not expected to close by the May 27th expiry date. We have opened discussions with First Horizon about a possible extension, and we will update our shareholders when we can. Turning to TD Securities, the last 12 months have been transformative. We advanced our U.S. dollar strategy, served a growing roster of clients around the world, and participated in some of the largest transactions in the market.
With our recent acquisition of Cowen, almost 1,700 new colleagues have joined TD Securities. They bring a wealth of experience, complementary capabilities, deep client relationships, and provide industry-leading research. I am excited by what the future holds for our growing TD Securities team. Overall, we had a strong 2022 and a strong start to 2023, with continued momentum and record results in our first fiscal quarter. Over the past few weeks, we've seen new uncertainty in the global financial sector. TD's diversified business and strong foundations proved resilient once again. Deposits are stable. New account openings are up, and capital and liquidity are strong. With a Common Equity Tier 1 ratio of 15.5% at the end of the first fiscal quarter of 2023, we have the means to continue to invest and build for the future.
Three years after the onset of the global pandemic, we are stronger and more competitive than ever. We share our customers' aspirations and are eager to see their dreams and goals realized. We work hard to earn their confidence every day by making it easier to bank with us, offering value and trusted advice. That's what it means to be TD. Our commitment to serve goes even further. Our purpose is to enrich the lives of our customers, communities, and colleagues. Last month, we released our annual suite of ESG reports. They represent a tremendous effort by thousands of colleagues across the bank. Through the TD Ready Commitment, in 2022 alone, we contributed nearly CAD 150 million to our communities, and we are well on the way to meeting our CAD one billion target for community giving by 2030.
In addition, in 2022, TD surpassed our CAD 100 billion target for low-carbon lending, financing, asset management, and other programs. We began work toward a new goal. We recently announced a new 2030 target, CAD 500 billion to support environmental, decarbonization, and social activities to contribute to a more sustainable, equitable, and inclusive future. To build on the climate action plan announced in 2020, we also outlined expanded financial emissions targets for specific industries as we chart our paths to net zero. We continue to invest in our talented and diverse workforce, one that represents the communities we serve with engaged and empowered colleagues working in an inclusive environment where they can thrive and grow. I'm incredibly proud of our progress.
I'm proud that we have doubled the representation of Black executives, that we are on track to reach our Canadian target of 45% women in vice president and above roles by 2025, and that we have a senior executive team that includes leaders of different backgrounds with diverse experiences and perspectives. In recognition of our efforts, TD was listed on the 2023 Bloomberg Gender-Equality Index for the seventh consecutive year. We were listed on the Dow Jones Sustainability World Index for the ninth consecutive year. In fact, we are the only North American bank on the index. In an evolving market where more people are looking to work with businesses that share their values, TD is setting itself apart. As we meet today, we are navigating an ever-changing and often challenging macroeconomic and geopolitical environment.
Policy makers are taking action, including through the U.S. Inflation Reduction Act and measures proposed in Canada's recent budget. The ongoing conflict in Ukraine continues to devastate the lives of millions of people. It has also highlighted the need for global energy security, critical for the future of the global economy. Canada has one of the largest, most reliable sources of conventional energy on the planet with among the most stringent environmental standards in the world. We can and should support the responsible energy development the world needs today. At the same time, we must accelerate the work needed to transition to cleaner alternatives for a more sustainable future. It's not a question of either/or. We can and must do both. Canada's growing tech sector presents another opportunity. As new innovation disrupts entire industries, Canada needs to identify more avenues for growth, employment, and leadership.
In addition, we will further strengthen our country as we welcome millions of new Canadians in the years ahead. The immigrant experience is something I know a bit about. I know what it is like to arrive in a new country and work to build a new life. For these new Canadians to thrive, for everyone in Canada to thrive, let's continue to drive positive change, help foster new pathways to economic inclusion, and build a better future together. This includes better housing access with the transportation, healthcare, education, and other services critical for vibrant communities to thrive. Employment access with training and opportunities for millions of Canadians who face a changing job market or require new skills to compete. Financial access, regardless of where people live or what they earn. Let's empower them and help them build their future with confidence.
A Canada that is ready, willing, and able to do business with the world must focus on these issues. Canada's financial system, supported by effective regulation and stable, well-capitalized banks, is fundamental to our future and a competitive advantage on the world stage. At TD, we believe that it is our responsibility to directly contribute to Canada's future prosperity and to be a catalyst for growth. We will support businesses, large and small, to grow, create jobs, and adapt for the future. We will guide customers through uncertain times and help households achieve their goals. We will continue to invest in communities to help build a more inclusive and sustainable future. As part of that work, we will also challenge bias and racism and promote equity. We will listen, learn, and actively contribute to Indigenous reconciliation, a priority we share with millions of Canadians.
Importantly for our future and Canada's, we will help our colleagues acquire new skills and develop the next generation of innovators and leaders. The green shield TD bankers wear with pride represents our commitment to strive, as always, to be the better bank. I want to thank the more than 95,000 TD colleagues who work hard every day to bring our vision and our purpose to life. You are the true strength of the bank and our greatest competitive advantage. I also want to thank our board for their continued guidance and counsel. Fellow shareholders, in the months and years ahead, we will continue to work hard to earn your trust, your support, and your loyalty. Thank you.
Thank you, Bharat. At this point, we'll move to the formal business of the meeting. I'd like to recognize the fact that the movers for the motions presented by the bank are TD directors or employees who are also shareholders. For shareholders and proxy holders who are joining remotely and have registered to access our online voting platform, the polls will open soon and will close after the presentation of our items of business. Those of you who are here with us in person, ballots were made available to shareholders and proxy holders at the registration desk. We prepared a blue ballot for the first three items of business, namely the election of directors, the appointment of the auditor, and the advisory vote on the bank's approach to executive compensation. A green ballot has been prepared for the six shareholder proposals to be voted on today.
These proposals, along with the proponents' statements and the board's responses, are set out in the management proxy circular and in the booklet that was on your chair when you entered the room. That information booklet is also available on our annual meeting webpage. Scrutineers have a supply of ballots in both English and French. If you've not received a ballot and would like to vote during the meeting, please raise your hand now and the scrutineers will bring you a ballot. I'd remind you that if you have already voted or sent in a proxy, you do not need to do anything unless you wish to change your vote. When you sign your ballots, please print your name clearly above your signature. When proxies are submitted to our registrar and transfer agent, they are counted and tabulated by their officers.
The scrutineers of the meeting will then verify and report the results. A simple majority of votes cast during this meeting or by proxy is required to pass each of the matters to be voted on today. In the interest of having an open, fair, and orderly meeting, the front page of the booklet that was on your chair contains guidelines for shareholder participation. These guidelines are based upon the rules of order as well as common sense and courtesy. Those guidelines are also available online on our annual meeting webpage. If you're a shareholder or proxy holder joining us remotely and wish to ask a question via webcast, you can submit your question at any time and please indicate whether it relates to a specific motion or whether it is of a more general nature.
For example, if you'd like your question read out before shareholders vote on the advisory vote on executive compensation, please indicate that in your submission and we will read it out then. If it's of a more general nature, then we will read it out during the Q&A session. As a reminder, if you wish to ask a question in person or by phone, you will be prompted to do so at the appropriate time. I ask each speaker to please keep your comments brief and to the subject under discussion so that all shareholders will have an opportunity to participate. If a speaker has an additional question, and if there is sufficient time, they will be recognized again after we've heard from others who are waiting to speak. On behalf of your fellow shareholders, I thank you in advance for your cooperation.
Copies of TD's 2022 annual report, which contain the bank's 2022 financial statements and the auditor's report on them, were delivered to shareholders in advance of the meeting. You can also obtain a copy of our annual report at the entrance or on our website at td.com. We'll now address any questions or comments that have been submitted by shareholders or proxy holders directly related to the 2022 financial statements. If you're on the phone and have a question or comment directly related to this matter, please press star one now on your phone keypad. If at any time you wish to cancel your question, please press star two and you will be removed from the queue. As you register on the phone, we will proceed with questions from the room.
If you have questions or comments that are not directly related to the 2022 financial statements, please hold them until the appropriate time. Are there any questions or comments relating to the financial statements? I don't see any in the room. Are there any on the phone, operator?
No questions on the phone lines.
Okay. We'll move on to the webcast now. Have any questions come in through the webcast?
Chair, no questions have come in on the webcast related to this item.
Thank you. We'll now move to the election of directors.
We will now move to the election of directors.
Two of our current directors, Nadir Mohamed and Jean-René Halde, are not standing for re-election this year. On behalf of the board of directors and the bank's employees, I'd like to express our sincere gratitude for their invaluable contribution during their time on the board. It's been a privilege to work alongside both of you. Information about each nominee is included in the proxy circular. To facilitate the introduction of the nominees, we've prepared a slide presentation that introduces them.
Cherie Brant. Amy Brinkley. Brian Ferguson. Colleen Goggins. David Kepler. Brian Levitt. Alan MacGibbon. Karen Maidment. Bharat Masrani. Claude Mongeau. Jane Rowe. Nancy Tower. A.J. Virmani. Mary Winston.
Board of directors has fixed the number of directors to be elected at 14. I confirm that all the nominees are eligible for election. I'll now call on Charles McCarricker, Vice President with TD, to nominate the directors for the upcoming year.
Thank you, Chair. I hereby move the nomination of each of the persons whose name appears in the proxy circular under the heading Director Nominees to be a director of the bank until the close of the next annual general meeting of the bank's common shareholders.
I hereby move the nomination of each of the persons whose name appears in a proxy circular under the heading Director Nominees to be a director of the bank until the close of the next annual meeting of the bank's common shareholders.
Thank you, Charles. I will now address any questions or comments that have been submitted by shareholders or proxy holders directly relating to the election of directors. If you're on the phone and have a question or comment directly relating to this motion, please press star one now. At any time you wish to cancel your question, please press star two and you'll be removed from the queue. As you register on the phone, we'll proceed with questions and comments from the room. Are there any questions or comments relating to the election of directors? Seeing none, we'll now address questions from the phone, operator.
There are no questions on the phone lines.
Thank you. Any questions coming through the webcast?
Chair, there are no questions from the webcast related to this item.
Thank you. Voting is now open, and we'll invite shareholders and proxy holders to submit their votes if they have not already done so. In-person attendees are asked to move to item number one on the blue ballot, which relates to the election of directors. Please mark it now. As I mentioned earlier, if you have already voted or sent in a proxy, there is no need for you to do anything unless you wish to change your vote. The next item on the agenda is the appointment of the auditor.
The next item on the agenda is the appointment of the auditor.
The board recommends that Ernst & Young LLP be appointed as auditor of the bank until the close of the next annual meeting. Helen Mitchell and Troy Butner, representatives of Ernst & Young, are available to assist with questions if necessary. I'd now like to call on Alan MacGibbon, the chair of our audit committee, to make this motion.
Thank you, Chair. I move that Ernst & Young LLP be appointed auditor of the bank to hold office until the close of the next annual meeting of the bank common shareholders.
Thank you, Alan. We'll now address any questions or comments that are directly related to the appointment of the auditors. Seeing none, are there any questions on the phone?
No questions on the phone lines.
Thank you. Any questions on the webcast?
Chair, no questions have come in from the webcast related to this item.
Thank you. We'll now invite shareholders and proxy holders to submit their votes if they have not already done so. The appointment of the auditor is item number two on your blue ballot. Please mark it now. As a reminder, if you've already voted or sent in a proxy, there is no need to do anything unless you'd like to change your vote. The next item of business is the advisory vote on the bank's approach to executive compensation.
The next item of business is the advisory vote on the bank's approach to executive compensation.
Resolution on the approach to executive compensation is set out in the proxy circular under the heading Advisory Vote on Approach to Executive Compensation. I'll ask Anu Hirani, managing council with TD to move the motion.
Thank you, Chair. I hereby move that the resolution set out in the proxy circular under the heading Advisory Vote and Approach to Executive Compensation be passed.
Thank you, Chair. I hereby move that the resolution set out in the proxy circular under the heading Advisory Vote on Approach to Executive Compensation be passed.
Thank you, Anu. I will now address any questions or comments that have been submitted by shareholders or proxy holders that directly relate to this matter. If you're on the phone and have a question or comment directly related to this motion, please press star one now. As you register on the phone, we will proceed with questions from the room. See Mr. Gagnon like to address this.
Thank you, Mr. Chairman. My name is Willie Gagnon. I represent the MÉDAC. We are sorry that we feel compelled to speak on this point each year. We are against the bank's approach to executive compensation. We feel that there are only two criteria to set executive compensation, namely the size of the bank and the bank's performance. We would be happy that social criteria be taken into account. Last year, a shareholder's proposal was made to disclose the bank's internal compensation ratio. We understand that you receive 20- 30 times the median compensation of the bank, which is about CAD 137,000. We are obliged to calculate this ourselves based on public information. This compensation ratio is about one or 110. Each year, you are above 100.
This is very far from the 20-30 times that we believe is reasonable. Until when will you draw this out? There were 14% of shareholders who supported disclosure of this ratio. We see that banks are cross shareholders of each other up to about 20% of shares, 14% of shareholders is a significant percentage. What are you waiting for to disclose this ratio, which is now required to be disclosed in the United States? It would be well if your compensation policy would include a criteria related to the ratio, as is the case other financial institutions in Canada, especially in Quebec, such as Desjardins, that disclose this ratio.
We would be happy not only to see this ratio disclosed, but also that you use it in order to ensure that compensation does not reach such heights when we compare the compensation of the best paid executive to the medium income in Canada, the ratio is 381 to 1. If we add up compensation of the five best paid executives in the bank, we add up to CAD 43 million, 1,096x the average compensation in Canada. I am sorry that once again, I have to repeat what our founder, until when, until when, will you draw this out? The advisory vote on compensation obtains a stratospheric proportion of shareholders' favorable opinions.
If a similar vote were to be taken among the general population, I doubt that the outcome would be as high. This is a matter of the reputation of the bank. Thank you, Mr. Chairman.
I see, monsieur.
Thank you, Mr. Gagnon, for your remarks. We respect your opinion. As you will see our shareholders, as you have just mentioned, in fact, our shareholders in their vast majority have a different opinion.
Questions on the approach to executive compensation in the room. I don't see any. On the phone?
No questions on the phone, Mike.
On the webcast.
Chair, there are no further questions from the webcast regarding this item.
Thank you. We now invite shareholders and proxy holders to submit their votes if they've not already done so. If you've already voted or sent in a proxy, there is no need for you to do anything unless you'd like to change your vote. For in-person attendees, this item is item number three on your blue ballot. Please mark it now. I'd like to remind you that when you finish marking and signing the blue ballot, please print your name above your signature. I now ask the attendants to collect the blue ballot so the scrutineers can begin tabulating the votes on the first three items. Next to be put before the meeting of the shareholder proposals. Is that on that now, Pascio?
To the meeting are shareholder proposals.
Shareholder proposals for consideration at this meeting. Proposals 1 and 2 were submitted by the British Columbia General Employees' Union of Burnaby, BC. Proposal 3 was submitted by Mouvement d'éducation et de défense des actionnaires, also known as MÉDAC of Montreal, Quebec. Proposal 4 was submitted by Gina Papanno of InvestNow Inc. of Toronto, Ontario. Proposal 5 was submitted by Vancity Investment Management of Vancouver, BC, and proposal 6 was submitted jointly by Vancity Investment and Investors for Paris Compliance of Victoria, BC. I'd also like to mention that the British Columbia General Employees' Union submitted an additional proposal with the support of the Union of British Columbia Indian Chiefs. That was withdrawn following discussions with the bank, and MÉDAC submitted three additional proposals that were withdrawn following discussions.
We'll invite representatives of these organizations to present statements regarding their withdrawn proposals after we address all of the shareholder proposals that are to be voted upon. The withdrawn proposals and supporting statements, as well as the bank's response to them, were included in the proxy circular at the request of the proponents, and we thank them for their engagement on these topics.
I would also mention that the British Columbia General Employees' Union has made another proposal with the support of the Union of British Columbia Indian Chiefs that was withdrawn following discussions with the bank. MÉDAC submitted three additional proposals that were withdrawn following discussions with the bank. We will invite representatives of those organizations to present statements regarding their withdrawn proposals after we address all of the shareholder proposals that are to be voted on. The withdrawn proposals and supporting statements, as well as the bank's responses to them, were included in the proxy circular at the request of the proposers, and we thank them for their engagement on these topics.
We now turn our attention to the proposals. The proxy circular includes statements by the proposal in support of their proposal, as well as the reasons why the board is recommending to shareholders that they vote against the proposals. In the interest of time, we will not be revisiting the reasons for the board's position during the discussion of the proposals. Shareholders and proxy holders will be given an opportunity to comment on each of these proposals. As I indicated earlier, I ask that each speaker be mindful of the guidelines for shareholder participation. It would also be appreciated if each speaker could give his or her name and state whether they are a shareholder or a proxy holder. The first item is shareholder proposal one and is set out in the proxy circular under the heading Shareholder Proposals starting at page 80.
The first item is shareholder proposal 1 and is set out in the proxy circular under the heading Shareholder Proposals starting at page 80.
Now invite Emma Pullman to move the motion in connection with shareholder proposal one and to present a statement on behalf of the British Columbia General Employees. Over to you.
Thank you, Mr. Chair. My name is Emma Pullman, and I am a shareholder duly representing the British Columbia General Employees' Union, and I am here to present shareholder proposal number one. This proposal asks TD to disclose how it assesses and mitigates human rights in connection with its business relationships with clients that own multi-family residential properties in Canada. Housing financialization is a growing issue in Canada. According to the Federal Housing Advocate, 20% to 30% of Canada's purpose-built rental housing stock is owned by real estate investment trusts, and this number might not even tell the entire picture. Graduate students at Waterloo and McGill used sophisticated data scraping software to determine that financial actors own 32% of rental properties in Montreal, suggesting the problem might be bigger than we realize. In Yellowknife and Iqaluit, 80% of the multi-unit private residential housing is owned by REITs.
TD currently provides banking and lead capital market services to several REITs. In Canada, there are guidelines on human rights in the commercial real estate space that are informed by the United Nations Guiding Principles on Business and Human Rights and OECD guidelines. There are no such guidelines for REITs operating in the multi-family residential space. Without any guidelines, TD must ensure that it is complying with its own obligations. Specifically, TD must ensure that it is seeking to prevent and mitigate adverse human rights impacts linked to business relationships, even if they aren't contributing to those impacts directly. In its response to a similar proposal filed this year that was withdrawn, the Royal Bank of Canada acknowledged the potential for adverse human rights impacts stemming from the financialization of housing.
It updated its ENS risk management procedures for lending and underwriting, which included broadening its EN-ENS risk due diligence requirements and review procedures related to human rights impacts. Similarly, the Bank of Montreal committed to evaluating and enhancing its due diligence practices and training to address human rights due diligence considerations. TD currently has no equivalent or comparable disclosure or practices and leaves investors to question why TD refuses to broaden its due diligence procedures in this area. We believe that TD's risk management practices in this area need to move beyond reputational risks alone. In its response to our proposal, TD says that its existing human rights risk mitigation procedures are adequate. We respectfully disagree. Failing to adequately manage the human rights impact of the financialization of housing impacts society's most marginalized, the first and the worst.
It hurts Indigenous people, women, people who are black and racialized, people with disabilities, people who are 2SLGBTQ+ and other disadvantaged groups. I duly move this proposal and urge shareholders to support this resolution. Thank you.
Thank you, Ms. Pull man. Are there other comments or questions on this proposal? I don't see any in the room. Are there any on the phone?
Chair, no questions have come in related to this item.
On the webcast?
Chair, no questions related to this item.
Thank you. The board of directors has recommended voting against proposal one. Voting on our webcast is open, and we invite shareholders and proxy holders to submit their votes if they've not already done so. If you have already voted or sent in a proxy, there's no need for you to do anything unless you wish to change your vote. For in-person attendees, please mark shareholder proposal one on the green ballot. Thank you. The next item is shareholder proposal two, which was submitted by the British Columbia General Employees' Union.
The next item is shareholder proposal 2, which was also submitted by the British Columbia General Employees' Union.
I'll ask Emma Pullman to move the motion and present a statement regarding the proposal. Ms. Pull man.
Thank you, Mr. Chair, Hello again, fellow shareholders. TD is the second-largest Canadian financial institution contributors, contributor to transferred emissions. According to Bloomberg data compiled on oil and gas M&A transactions where assets move from a high-disclosure environment to a low-disclosure environment, TD advised on 61 oil and gas M&A deals worth CAD 63 billion since 2018. Of these, 20% were transferred emissions transactions. In its 2023 report, Transferred Emissions: How Risks in Oil and Gas M&A Could Hamper the Energy Transition, Environmental Defense Fund argues that banks have a critical role to play in advancing solutions that remake oil and gas deal-making for a net zero global economy.
On that vein, our shareholder proposal asks that when TD provides new project-specific financial services, including advisory services on brown spending transactions, TD will take reasonable staff parties to these transactions, take reasonable steps again to make disclosures consistent with TCFD. In response to our proposal, TD claims that its existing risk management policies and procedures, together with its climate action plan, substantially achieve the crux of our proposal. We disagree. TD's climate action plan has no relevance to TD's participation in brown spending transactions as these transactions do not affect or factor into TD's net zero or finance emissions targets. TD already prohibits lending to companies involved in conflict minerals, world heritage sites, and critical habitats, to name a few.
TD will not provide advisory services for oil and gas activities within the Arctic Circle and will not lend or provide capital markets or M&A advisory services for companies that have a certain level of exposure to thermal coal. Our ask of TD is a natural extension of work that TD already does with regards to its environmental and social risk processes for non-retail lending disciplines. TD argues that our proposal is unduly prescriptive, again, we disagree. Our proposal does not prevent TD from participating in any type of transaction. We simply ask that TD extend its existing policies to transactions involving pollution-intensive assets. Our proposal only asks TD to take reasonable steps as well. Canadian banks all have climate action plans and emission reduction targets.
If banks are facilitating the movement of polluting assets from high-disclosure entities to low or no-disclosure entities, banks have a responsibility to act in a manner consistent with those climate action plans. I duly move this proposal. Thank you.
Thank you, Ms. Pullman. Are there any other questions or comments on this proposal? I don't see any in the room. Any on the phone?
Chair, no questions have come in related to this item.
Website?
Chair, there are no questions related to this item.
Thank you. The board has recommended voting against proposal 2. We invite shareholders and proxy holders to submit their votes if they have not already done so. I'd remind you that if you've already voted and don't wish to change your vote, you don't need to do anything. For in-person attendees, please mark shareholder proposal 2 on the green ballot now. The next item is shareholder proposal 3.
The next item is shareholder proposal 3. I will now invite Mr. Willie Gagnon to move the motion and to present a statement on behalf of MÉDAC regarding proposal 3.
I now invite Mr. Gagnon of MÉDAC to move the motion and present a statement regarding this proposal.
Thank you, Mr. Chairman. My name is Willie Gagnon. I act for MÉDAC. We presented four proposals. Only one is being put to a vote. Proposal three is entitled Advisory Vote on Environmental Policies. It is proposed that the bank adopt a policy on it and an annual advisory vote on its environmental and climate action plan and objectives. This is the Say on Climate proposal. We would invite all shareholders to support that initiative, which was submitted last year with relatively high number of votes. About 25% of votes were cast in favor of this best practice that a number of other public companies have already implemented.
Major shareholder advisory firms have recommended against this proposal for a number of reasons that you repeat practically verbatim, especially that the bank has communicated with a number of shareholders who had voted in favor. We believe that such an advisory vote on climate policy could be a spirit to this kind of initiative. You also say that the benefits are outweighed by the risks of this vote. We would be curious to know what risks or what consequences would be involved in holding such a vote. You state in your answer that you acknowledge the complexity of the legal framework in related to this issue, and this is why the board is invested with powers in this area. The board, you state, has the exclusive power and responsibility to set corporate strategy.
We do not challenge this exclusive power and full accountability. This is an advisory vote. This would have no impact on the board's prerogatives. You also say that this is not a once a year exercise. Why do you have an advisory vote on executive compensation? In financial circles, it is generally argued that companies that ought to hold such a Say on Climate vote are first and foremost those that have massive impact on the environment. It is generally admitted that banks do have a massive impact on the environment through their loan portfolios in polluting industries. You also say that shareholders who are dissatisfied with the bank strategy can express that dissatisfaction in the election of directors. In that case, again, I repeat, I repeat myself.
Why do you have an advisory vote on compensation if all we have to do is to vote against directors if we're not happy with the compensation? Your response is disappointing. We would invite all shareholders to support this proposal. Thank you, Mr. Chairman.
Thank you, Mr. Gagnon.
Questions? Seeing none. Anything on the phone?
Chair, no questions have come in related to this item.
On the webcast?
Chair, no questions related to this item.
Thank you. Your board of directors has recommended voting against proposal three. We invite shareholders and proxy holders to submit their vote if they've not already done so. Again, I'd remind you that if you have already voted and don't wish to change your vote, you don't need to do anything. For in-person attendees, please mark shareholder proposal three on the green ballot now. Thank you. Next item is shareholder proposal four.
The next item is shareholder proposal four.
It would have been best now to move the motion and to present a statement regarding proposal 4. Go ahead.
Thank you. My name is Gina Patano, and I'm a shareholder representing on behalf of Invest Now Inc. Thank you for the opportunity to present today. I'm asking TD for an explicit commitment to continue to invest in and finance the Canadian oil and gas sector and for a clear signal that the bank will step away from policies like net zero that hurt the sector. I am a shareholder. I have worked in capital markets. I am a daughter of factory worker immigrants. I'm a mother who cares about her children's future. Unless you change your tune, you will hurt all our children's futures. The oil and gas sector is central to Canada's economy and prosperity. Investing in the sector is investing in an industry that fuels everything we do.
It means investing in the livelihoods, not just of the hundreds of thousands who work in the sector, but the millions, that is all of us, who depend on it for heating and eating and driving to work, and really for all aspects of life. One only has to look at TD's own board of directors to see the import of the sector. Eight of 14 directors are currently running or were senior executives of companies that wouldn't exist without oil and gas. Cargojet, Cenovus, Family Dollar Stores, Imasco, Johnson & Johnson, Dow Chemical, CN Railway, and Emera. Divesting from oil and gas means severely damaging our economy. It means the growing demand around the world will be met by other, less responsible, less environmentally friendly suppliers. It means emissions will actually go up and environmental performance will go down.
It means we will see more hardships for everyday Canadians as our economy will be hobbled, businesses and industry will shut down, people will lose their jobs, and energy poverty will grow, all while watching the demand for oil and gas be supplied by countries other than Canada. Why would a bank and its shareholders want to commit to that? On net zero, the bank should step back. The federal government net zero target is not a legal obligation. Adherence to anti-oil and gas investment policies like net zero suggest that the bank thinks that oil and gas extraction, development, and use are not essential. This couldn't be more wrong. Nothing happens without oil and gas. It is time for the banks to stick to their knitting by investing in and financing oil and gas.
This sector is essential for the functioning of the economy, for jobs, for innovation, and for global emissions reductions. I am urging you to vote for proposal number four. TD should invest in Canadian oil and gas for the good of the economy, the environment, shareholders, and all Canadians. I move this proposal. Thank you.
Thank you. We'll now address any questions or comments in the room on this proposal. I don't see any. Anything on the phone?
Chair, no questions have come in related to this item.
On the webcast?
Chair, no questions have come in related to this item.
Thank you. Your board of directors has recommended voting against proposal 4. We now invite shareholders and proxy holders to submit their vote if they've not already done so. I'd remind you that if you have already voted and you don't wish to change your vote, you don't need to do anything. For in-person attendees, please mark shareholder proposal 4 on the green ballot now. Thank you. Next item is shareholder proposal 5.
The next item is shareholder proposal five.
I'll now invite Kelly Hirsch to move a motion regarding this proposal and to present a statement on behalf of Vancity Investment Management.
Okay, thanks. My name is Kelly Hirsch. I'm a shareholder representing Vancity Investment Management. Good morning. Thank you for the opportunity to speak to the merits of our proposal. On behalf of Vancity Investment Management, I'd like to thank TD for their willingness to engage with us on the dialogue surrounding this proposal. We believe that CEO-to-median worker pay ratio is an important metric to disclose for several reasons that I'd like to highlight today. Economic inequality has been a persistent issue in our society, and one of the contributing factors is the growing disparity between executive and employee pay. In the U.S., CEO compensation has skyrocketed by a staggering 1,460% since 1978, while the average worker's pay has only increased by a mere 18.1%.
In Canada, average pay for the top 100 best paid CEOs hit an all-time record in 2021, increasing 31% from the previous year. Workers on average only saw a 2% increase over that same time period. The negative impact of widening compensation gaps on company performance cannot be overstated. Not only do such gaps increase labor costs due to higher employee turnover, but they also have a direct impact on employee morale. These costs can be particularly significant for human capital-intensive companies like TD. By prioritizing fair and equitable compensation practices, TD can ensure that its employees are motivated, engaged, and committed to the company's success. The impact of economic inequality extends far beyond individual companies and can have significant implications for the broader economy.
Research has shown that high levels of inequality can lead to lower productivity, reduced GDP growth, longer and more severe recessions, and increased social unrest. These risks are particularly relevant to financial institutions like TD, which depend on a thriving economy to drive business growth. The CEO-to-median worker pay ratio is a powerful metric that provides a quantifiable way to monitor this risk. As a leading financial institution in the Canadian economy, TD has an opportunity to set a precedent for other companies to follow by starting to disclose this information. It is critical to recognize that the ratio from a single year is not the focus. For the ratio to be useful, investors, employees, and management need to see the trend over time. This allows TD to ensure the wage gap is not widening.
If it is, as has been the tendency for the past few decades, this tool will be critical to identify that and make corrections to ensure employee sentiment stays positive, preventing turnover, cost, and decreased productivity. The CEO-to-median worker pay ratio disclosure is not just a trend, but a well-established practice in the U.S. and U.K. that benefits both companies and their shareholders. The GRI Standards provide clear guidelines for calculating and disclosing this information, making it a feasible and worthwhile initiative for TD. Therefore, we propose that the board of directors undertake a comprehensive review of executive compensation levels in relation to the entire workforce, and at reasonable cost amid proprietary information, publicly disclose the CEO-to-median worker pay ratio on an annual basis. I move this proposal forward. Thank you very much.
Thank you. Are there other questions or comments? Monsieur Gagnon.
Mr. Chairman. Mr. Chairman, we are obviously in favor of this proposal. We have made precisely this proposal on a number of occasions in previous years. Barring tomorrow's National Bank AGM, this is practically the final bank AGM this year. We have heard it said in the hallways by bank leaders, by bank directors that disclosure of the ratio is coming and is inevitable. Can you tell us when you have decided to disclose the compensation ratio? Can you tell us when you will be supporting a similar proposal? Not only are we hearing it in the hallways, but it is said to be unavoidable. What are you waiting for to publish and disclose this ratio? Not just to disclose it, but to use it as a criterion to establish executive compensation.
Once again, we are obviously in favor of this proposal. We hope that it will obtain an even better score than in the past. We would ask all shareholders to support it.
Thank you, Mr. Gagnon. Over there.
Yes. Mr. Chairman, Chair, Le Président , it's indeed my pleasure to address the shareholders board and executives today. My name is Thomas McCauley. I am a shareholder, but today I actually hold the proxy for my wife, so it's a two-fer. Our families have been clients of Canada Trust when it was called Eight to Eight, Six Days Straight back in 1974, and to this day. We call it the Green Bank. I've joined my friend, Mr. Davis, who you people are probably well acquainted of, who's been speaking for decades on executive compensation. Much has been said about this proposal, and much has been reported in the press, but perhaps a slightly different perspective.
I believe that TD has a very unique opportunity to continue to be leaders in Canada and North America, as it has demonstrated for decades in so many other areas: community programs, support of diverse communities, the environment, and many, many other things. Now is the time that TD has an opportunity to demonstrate its compassion for thousands of employees and provide leadership for equitable compensation. I understand following the lead of the Royal Bank. Mr. Chairman, include vertical compensation metrics on the board's agenda in the coming year, and TD will again demonstrate its leadership. Thank you.
Thank you, sir. Other questions or comments? Seeing none, anything on the phone?
Chair, no questions have come related to this item.
On the website?
Chair, no questions have come in regarding this item.
Thank you. Your board of directors has recommended voting against proposal 5. We invite shareholders and proxy holders to submit their vote if they've not already done so. If you have already voted and you don't wish to change your vote, you don't need to do anything. For in-person attendees, please mark shareholder proposal 5 on the green ballot now. The next item is shareholder proposal 6. The push and plan-
The next item is shareholder proposal six.
I'll ask Matt Price of Investors for Paris Compliance to move a motion regarding this proposal and to present a statement on behalf of Vancity Investment Management and Investors for Paris Compliance. Over to you.
Thank you. Thank you, and good morning. My name is Matt Price, with Investors for Paris Compliance. We're a shareholder advocacy organization that tracks the net zero commitments of publicly listed companies in Canada, and we pay very close attention to the financial sector and the big banks. I'd like to thank everyone for the time today. I'd like to thank Vancity for filing this proposal with us. I'd like to thank TD for the engagement on the proposal, which was very constructive, even though we didn't come to an agreement. A study out of Quebec recently that measured the financed emissions of the large Canadian banks actually found that TD had the highest of all the Canadian banks, which was a surprise. I think people were expecting that to be RBC.
450 million tons, which means that TD has the highest transition risk of all Canadian banks. It's, if you will, it's like the highest mountain to climb. I'd like to continue with this metaphor of the mountain. It's a mountain that, towards net zero compliance, which we all have to climb together. It's hopefully a rewarding climb because at the top of the mountain there's a clean energy future and a low carbon economy. How has TD done so far in terms of its climbing? Well, the good news is that TD has done, I think, a better job any other banks in terms of mapping out the mountain. TD's done a really good job of measuring and disclosing its financed emissions.
We gave TD the highest marks on a report card on this kind of task. Congratulations on the mapping. TD's also assembled a climbing party to go up the mountain. I think you have probably the most sophisticated climate team of all the big banks in Canada. You have clear governance practices governing that team. All is looking good so far. Where things begin to fall apart, though, is in the target setting. By 2030, three decades from now, TD is committed to being at the top of the mountain. It would sort of imply that in one decade you should be a third of the way up the mountain.
In TD's target setting, it sort of said that, "Well, we're climbing an upwards direction, but due to circumstances, we may be climbing sideways, maybe we'll be going backwards." This is what intensity-based targets actually amount to. What that means is that in the subsequent decades, TD's gonna have to sprint faster, may be more exhausted, and may trip. That's otherwise known as increased transition risk. The other problem brings to the kind of the focus of this proposal, which is that TD hasn't told us how it's going to get up the mountain, practically in what concrete steps it's going to take to actually get to net zero. For example, it hasn't told us how it's going to wind down sort of high carbon financing in areas like coal.
It hasn't told us on client engagements, how it's going to define what a credible client transition plan is and how it's gonna hold clients accountable to that. It hasn't told us in its sustainable and decarbonization finance target what CAD 500 billion gets you in terms of emissions reductions and how that relates to your targets. It hasn't said anything about how it'll use its lobbying and public policy muscle to get public policy that will actually help reduce its financed emissions. That's just a whole lot of vagueness and lack of specificity, which leaves investors in the dark about how TD is gonna climb up the mountain. The kicker is this, last week, there was a lot of press about RBC becoming the largest fossil fuel financier in the world.
What was little known in that discussion was that the bank with the biggest jump last year, was TD, adding CAD 9.5 billion in fossil fuel financing over its 2021 target. That metric would suggest that TD is actually going backwards, climbing down the mountain, not up. Why is TD stuck at the bottom? Is it inertia? Is it the discomfort with climbing at all? Is it fear of heights? Not knowing how to reinvent itself as a business. Ultimately, it's a climb we all have to make. It's a climb that TD will need in order to maintain investor returns in a low carbon economy. It's also a climb that we need to do for our kids and our grandkids.
We're not just bankers and investors in this, in this hall today, we're also mothers and fathers and grandfathers and grandmothers, and our grandkids and kids are allowing us to get a movement. In my hand, I also brought today this carabiner. It's as close to the green TD color as I could find. As an offering after the, the meeting proceedings are over today, I'd actually like to offer this to Mr. Masrani. It's a symbol of the climb ahead, and it's also a tool to be kind of tightly attached to the ropes going up the mountain. Hopefully, you can keep it on your desk as a symbol for taking action in the future. Also, just to close, if you're looking for a good Sherpa, we're happy to help. Sherpa Asset Management. Thank you.
Thanks very much. Are there other questions or comments in the room? I don't see any. anything on the phone?
Chair, no questions have come in related to this item.
Website?
Chair, no questions have come in regarding this item.
Thank you. Your board has recommended voting against proposal 6. We invite shareholders and proxy holders to submit their vote if they've not already done so. If you have already voted or sent in a proxy, there's no need to do anything unless you wanna change your vote. For in-person attendees, please mark shareholder proposal 6 on the green ballot now. That completes the proposals. I'll wait a moment while you finish voting. For in-person attendees, please remember to print your name above your signature on the ballot. Now I'll ask the attendants to collect the green ballots. Thank you. Excuse me. I now invite Emma Pullman to present a statement on behalf of British Columbia General Employees' Union and the Union of British Columbia Indian Chiefs regarding their withdrawn proposal. Ms. Pullman.
Thank you again, Mr. Chair. Again, hello, fellow shareholders on land stewarded by Anishinaabe, Haudenosaunee, and Wendat Nations. I acknowledge Treaty 13, signed with the Mississaugas of the Credit First Nation, and the Williams Treaties signed with multiple Mississauga and Chippewa First Nations. BCGEU, in partnership with the Union of BC Indian Chiefs, filed a shareholder proposal asking TD to take steps to operationalize free, prior, and informed consent by aligning its policies and practices with international industry good practice and taking further steps to operationalize FPIC by revisiting its environmental and social credit risk process. This modest proposal is aligned with international industry good practices, the UN Guiding Principles on Business and Human Rights, and the Truth and Reconciliation Commission's Call to Action number 92. Truth and reconciliation require more than platitudes and symbolic acts.
What matters is how we grapple with the hard truths of colonialism and turn those into action. Financial institutions are the gatekeepers and backbone of the Canadian economy. When banks begin to put their commitments to truth and reconciliation into action, it will ripple throughout the entire economy. FPIC will soon be a compliance issue, with legislation mandating human rights due diligence gaining steam around the world and federal legislation such as the Bank Act being reviewed for consistency with the United Nations Declaration. Free, prior, and informed consent is a game changer, and companies cannot lend acknowledge their way around it. Based on productive dialogue with TD, the BCGEU and the Union of BC Indian Chiefs agreed to withdraw our proposal for commitments with TD.
Namely, TD committed to a policy review of its current alignment with its own commitment to advance reconciliation and respect the rights of Indigenous Peoples, including in respect of the bank's approach to FPIC. TD committed to review its training programs regarding FPIC to consider whether they appropriately affect TD's support of the Truth and Reconciliation Commission Call to Action 92. If not, TD will update those programs accordingly. TD agreed to share insights and updates on these reviews. Our organizations disagree with TD that the Equator Principles are adequate for assessing environmental and social risk in projects related to the respect of Indigenous rights.
EP4 falls short of the minimum standards set out in the United Nations Declaration and won't mitigate material risks associated with ignoring Indigenous rights. While we are happy with this first step from TD and truly appreciate the engagement that we had with you, we also recognize that this is a first step in a much longer journey towards reconciliation. We truly look forward to continuing to engage with you on this issue. Thank you again.
Thank you, Ms. Pullman. The bank has provided its response to this withdrawn proposal in the management proxy circular, and so in the interest of time, I'm not gonna respond. I would like to take a moment, though, to say we have a long-standing commitment to the rights of Indigenous people, and we appreciate the engagement and dialogue that we've had with the representatives of the B.C. Government General Employees Union and the Union of B.C. Indian Chiefs regarding this matter.
I would now ask Mr. Willie Gagnon to make a statement on behalf of MÉDAC in respect of his three withdrawn shareholder proposals.
To speak to the three-
I will now ask Mr. Gagnon to present his statement on behalf of the three withdrawn proposals. National Bank. We would invite the bank. I understand this was an issue with the drafting of the form that had been submitted to directors. We imagine that this can be changed next year. We had made a proposal related to artificial intelligence. We wish the issue of artificial intelligence to be formally included in the mandate of one board committee. In your response, you state that you have agreed to amend the risk committee charter in order to cover more explicitly risks related to artificial intelligence.
We had made a third proposal to increase energy and environmental transition efforts, by adhering to the UNEP FI Principles for Responsible Banking. You have stated that you are already producing two reports that that seem to include that disclosure. We would have liked the information to be put on the public record on a permanent basis. We understand that there is no legal requirement for this information to be disclosed. For example, in SEDAR, there are a number of documents that are made available through SEDAR even though there's no legal obligation to do so. We are happy not only with your response but also with your engagement with us once again. Thank you, Mr. Chairman. Thank you, Mr. Gagnon.
I see that there's a general question that's come in, which says that I haven't responded to a number of questions that have been put to me by people making these proposals. I'd just like to clarify that, as I said at the outset, the bank's response to these proposals is contained in the circular, and if I haven't responded to each of the questions, it's just because I don't have anything to add to the bank's response. Are there any other, anybody like to make any comments on these withdrawn proposals? Okay. I understand that the scrutineers have a preliminary tabulation of votes cast in respect of each of the items of business before the meeting. I now ask Jordan Shafie, representing the bank's registrar and transfer agent, to provide us with the scrutineers report. Mr. Shafie.
Thank you. For the information of the shareholders, we wish to report that 52.2% of the eligible shares have been voted at this meeting. The results with respect to the election of directors are a substantial majority of votes cast at the meeting were voted in favor of the 13 nominees named in the management proxy circular, with each nominee receiving in excess of 96.9% in favor. The result with respect to the appointment of auditor is 97.7% voted in favor of Ernst & Young LLP, and 2.3% withheld from voting.
The result with respects to the advisory vote on the approached executive compensation is 95.7% voted in favor of the resolution and 4.3% voted against. The results with respects to the shareholder proposals are: Proposal 1, 16.9% voted in favor, 82.7% voted against, 0.3% abstained from voting. Proposal 2, 10.4% voted in favor, 85.4% voted against, 4.2% abstained from voting. Proposal 3, 21.4% voted in favor, 73.6% voted against, 4.9% abstained from voting. Proposal 4, 1% voted in favor, 98.2% voted against, 0.8% abstained from voting.
Proposal 5, 12.4% voted in favor, 83.2% voted against, and 4.4% abstained from voting. Proposal 6, 23.5% voted in favor, 71.1% voted against, and 5.4% abstained from voting. Mr. Chairman, that concludes the scrutineer's report.
Just one thing. In your report on the election of directors, I think you referred to 13 nominees. In fact, there are 14. I'd just like to clarify that.
Understood. Thank you.
Thank you. I now declare that the 14 director nominees named in the proxy circular have been duly elected. Ernst & Young LLP has been duly appointed as auditor. The resolution on the advisory vote on the approach to executive compensation has been passed. All shareholder proposals have been defeated.
I declare that the 14 director nominees named in the proxy circular have been duly elected. Ernst & Young LLP has been duly appointed as auditor. The resolution on the advisory vote on the approach to executive compensation has been passed, and all shareholder proposals have been defeated.
Voting results will be made available shortly on td.com. This concludes the formal business of the meeting. We'll now move to shareholders questions and comments. I remind you that questions should be of general interest and not of a personal nature. For those in the room with us, as I mentioned earlier, a representative of TD Customer Care is here today. Christina is located at the back of the room and can assist with personal questions after the meeting concludes. If you're asking a question of a personal nature on the phone, we will defer your questions and have one of our customer care representatives get in touch with you after the meeting. Before asking your question, please give your name and state whether you are a shareholder or a proxy holder. We'll now proceed with questions, and I'll turn the floor over to Bharat.
He'll conduct the remainder and portion of the meeting. Thank you.
Thank you, Brian. Happy to take questions from the floor first.
Hello.
Hello.
Hi. Thanks. In your speech, you mentioned that more people are looking to work with businesses that share their values, and as an employer, TD is setting itself apart. I'm wondering, as the discussions around ESG issues become more heated, has your perspective or your stance and as it relates to your climate action plan shifted?
Thank you. Thank you. Great question. To go generally on ESG, generally, and, you know, very proud. Actually, the bank's journey on the environmental front started many decades ago. I mean, this is not something that we started working on just because it became an item of concern and of interest to many stakeholders. In fact, we've had a long-term commitment at TD, you know, really proud of how we've conducted ourselves. You know, we were the first North American bank to go carbon neutral in 2010. A lot of banks, a lot of institutions, a lot of companies now talk about going carbon neutral at a future date. TD was there in 2010.
You know, we set up Friends of the Environment Foundation, TD Friends of the Environment Foundation more than 30 years ago from TD. You know, we've been leader in green bond issuance among the major financial institutions. We are the first Canadian bank to announce a CAD 100 billion target to finance journey towards a low carbon economy. You know, of course, we launched our climate action plan. We were, I think, among the first to do that. That shows a path to net zero by 2050. We also set, as I mentioned in my prepared remarks, you know, we just released our report on ESG. You know, what we call the ESG Suite reports. You see the progress we are making. We've set interim targets for certain sectors, particularly the carbon sensitive sectors.
Feel very proud as to how the bank is making progress in this important regard. To add to that, the CAD 100 billion target we set was set in, I think three years ago, three and a half years ago. I have good news to report. You know, we thought it would take us 10 years to get there. We got there this year. Hence, we have now set a new target of CAD 500 billion by 2030 to support sustainable and decarbonization finance, financing, you know, target. I feel very proud as to what the bank has done in this area. You know, we've also certainly taken note that is not just about climate, this is a wider issue and of course, the bank is working on that as well.
You know, we recently announced a $10 million investment in The Nature Conservancy. I think this is in Northern Ontario. I think we've done it through TD Securities. We continue to advocate for a just and orderly, you know, transition and at the same time, recognize the importance of the energy sector in Canada. You know, I don't know what else I can add, but I am really proud of, you know, our 95,000 colleagues around the world, you know, who this is important to them and the work they do day in and day out to achieve the targets that we've put out there. Thank you for your question. It's a terrific question. Thank you. Any other questions on the floor? Okay, hearing none and seeing none. Oh, sorry. I'm sorry. Yes. Yes, sir.
Okay. My name is David Peters, and I'm a shareholder. I have a one-minute story related to current events to tell you, and then I've got a quick question following that. This was back at around 1990, and I was a finance professor at Ithaca College. I was giving a lecture on leverage buyers. At the same time, in the news, the Trump Organization was trying to borrow a large sum of money to acquire another company and put Trump's name on it.
A student in my class asked me the question: "Professor Peters, if you were a banker, would you loan money to Donald Trump?" I responded to this very quickly and I said, "There's not a shot in hell that I would loan money to Donald Trump." Since Trump was a big wheel in New York City, the students wanted me to give an explanation why I would decline Trump. I said, "The reason is because with the investment that he's trying to make, I don't understand his motivation, whether he's making a decision to maximize wealth or a decision to splatter his name on all sorts of other companies." Anyway, that was my answer. Now, my question for Mr.
Masrani is, in your corporate lending, as particularly with those types of loans for acquisitions, do you think it's appropriate for the TD to look at the motivations of the borrower in making a credit decision?
David, nice to see you, and thank you for a great question. You know, we know David well. In fact, we, you know, his father was a very, is, you know, a very recognized figure in Canada. If people did not know, he was the TD economist and, of course, a minister in government as well. Nice to see you again. You know, we take great pride in, you know, how we articulate our risk appetite. You know, how, you know, we manage credit and different types of risks in the bank. You know, it would take me I don't know how many hours here to go through the whole risk appetite.
Essentially, you know, in a simplistic way, we have a few statements we make that, you know, we will only lend and take risk in support of our business strategies. You know, we are not a type of a bank that likes to deviate because, you know, something, it's a nice, new, shiny toy that might work, you know, for the next three months. We only take risks that we can understand and manage. As a bank, you know, we don't believe in betting the bank on one strategy or one deal or one acquisition. You know, we always wanna make sure that. This is a 168-year-old growth company.
You know, we are temporary custodians of this fine institution, and we wanna make sure we hand this off to the next generation of TD bankers in better shape than we found it. Finally, we would never wanna do anything that would damage the TD brand because that's what we live for, and that's why all of us wear this green shield with pride. Just to get to your question, of course, a lending decision is not just on ratios. It's just not on, you know, balance sheet. It means a lot to us as to what this means, you know, for the bank, as to the type of people we are dealing with, the type of companies we are dealing with.
You know, we like to make sure that, you know, the old-fashioned banking of it's not just collateral, it's not just cash flow, but character matters as well to us. A long way to say that, you know, this is a complicated question as to how exactly a loan or a risk is taken in the bank, but we have a proud history of getting it right most times and ensuring that the bank's balance sheet is protected and our capital is used wisely. Thank you for your question, and it's nice to see you again.
Okay. It's nice to you, and thank you for answering my question.
Thank you. Any other questions on the floor? One more. Yes.
Good morning, thanks very much for taking my question. My name is Peter Ross, I am a retail investor in Toronto. My question is with respect to the recent U.S. banking liquidity problems that emanated out of California, started out there. My question is, considering your extensive U.S. operations and with differing banking laws between the United States and Canada, does TD maintain Canadian standards for capital and liquidity use? What I consider less stringent U.S. standards for its American subsidiaries. My concern is that if you use the American standards, that might increase my risk in an investment in the TD Bank. I consider the Canadian standards higher, that was also proven during the financial crisis in 2008. Thanks.
Thank you. Thank you for your question. Obviously, you know, an important question. The simple answer is yes, and then some. You know, we maintain strong liquidity, strong capital. That's been a hallmark of TD over many, many years. All our ratios are published, including, you know, on a consolidated basis. Where appropriate, we also disclose what our U.S. subsidiaries hold by way of capital and liquidity. To us, you know, in the bank, liquidity and capital are paramount. You know, a lot of folks think of, you know, a strategy to increase market share or, you know, increase their balance sheet. For us, you know, this has been a tradition at the bank, you know, very strong capital levels, very strong liquidity, and a conservative risk appetite is very important to us.
It has worked well for us over many, many years, and we have no intention of changing that. Thank you for your question. I would like to add, you know, it's good to see, you know, that TD's brand resonates around the world. You know, we're very proud of what our colleagues have been able to achieve in the United States. In 15 short years, you know, we've become a very good player from Maine to Florida, and it has worked, you know, remarkably well for the bank. We're looking forward to continue to grow our franchise in the United States. It's a great, you know, it's the world's largest banking market, and TD does extremely well there. Thanks for the question. Any other questions from the floor? Yes. Louer, I can hear you.
Someone else would like the floor. Mr. Chairman, Willie Gagnon for MÉDAC. Interest rates have increased dramatically given the pace of increases from the Bank of Canada, and that has a direct impact on banking activities, including mortgage loans. My question is, are you looking at this closely? Has the bank done anything in particular with respect to the increase, the dramatic increase of these rates? What is the current risk that the bank is exposed to given this radical increase in rates, namely with respect to your mortgage portfolio?
Thank you again, Mr. Gagnon, for your question. Obviously, interest rate risk management, again, is a critical component of running a good and a strong bank. You know, it is something that, you know, we have to not only manage, but ensure that the level of risk that we, the bank is exposed to, it should be recognized and, you know, have adequate capital and adequate liquidity. I mean, rising rates, no doubt, you know, causes, you know, dislocations in various parts of the economy, including the mortgage market. Again, depending on which country, the United States or Canada, we are in both countries. We have large businesses in both countries. We certainly look at the risks around the mortgage portfolio on an ongoing basis.
You know, we stress test our book on a regular basis to ensure that the bank can withstand, you know, any kind of eventuality we may face from rising interest rates or any other shocks the system might have. Having said that, you know, we are also a bank that want to make sure that our customers, you know, understand as to what might be required, you know, if rates were to go up. As you know in Canada, you know, when we make loans, we stress test, you know, people's ability to repay and service their mortgages should rates go up.
You know, that's been a rule that we followed, very closely and very diligently to ensure there's capacity among the borrowers to withstand higher rates. Sometimes, you know, as much as we try, you know, there are certain hardships that happen as well among our customers. We have a very mature program that has worked for us, you know, for decades. We call it TD Helps, where we have an outreach program. We would reach out to customers if we feel that there's some vulnerability on their part, and work with them as to know what might make sense for the specific situation in order to manage a rising rate environment or some other type of hardship. I wanted to point that out as well.
Apart from, you know, very strong risk management on these portfolios, it is important to us, you know, we are a customer-centric bank. That is what we are known for. To reach out to our customers that might face hardship and ensure that we have products, advice as to how they may be able to navigate that, as rates at some point will stabilize and normalize. Thank you. Any other questions on the floor? Yes.
Hello. My name is Ryan. I'm a shareholder by virtue of holding Commerce Bank shares years ago. Just a few questions. Question number one, are you currently in discussions with FHN to extend the merger agreement that you referred to earlier in your presentation?
We've initiated extension arrangements or negotiations with FHN. Yes.
If you compare where you were back in late February when you announced this to now, do you have the ability to provide FHN with more information now than you did a few months ago as to what is causing the delay?
You know, we said in March, and I said it today, that our belief is that we will not be able to get approvals by the merger expiry date of May 27th, and therefore we've initiated negotiations to extend our agreement with FHN. That's all I can provide you today, and I have no other further update.
Okay. Just, I guess a follow-up to that last one. Is there a scenario where whatever is causing this delay, which you haven't shared is material to your stock, yet the regulator tells you you cannot disclose it publicly, or would that dynamic never happen?
I've made the statement I have on FHN. I will stay with that. I think my statement is very clear and very understandable. I cannot provide you any more insight.
Thank you.
Thank you. Any other questions on the floor? Seeing none, any on the phone, operator?
Mr. Masrani, no questions have come in.
How about the webcast?
Mr. Masrani, we've received three similar questions from shareholders regarding the First Horizon transaction, and we've summarized those questions as follows: Can you please give us an update on the acquisition of First Horizon and on the process of obtaining regulatory approvals?
I think it's the same as my answer to the earlier question. We disclosed in March that our belief is that we will not be able to get approvals to close the transaction by the merger expiry date of May 27th of this year. We have initiated extension negotiations with First Horizon to extend that date. That's all I can provide you at this stage. When we have more information to share, we will certainly update all of you with that information. Any other questions on the webcast?
Yes. Yes, Mr. Masrani. Are you still interested in buying the bank?
We see the benefits of the merger. We've outlined them very clearly, and I've said that many times before. You know, that's why we are into extension and on discussions with First Horizon.
Why is it taking so long to close?
I cannot provide you any more information on that. I think my earlier comments continue to be applicable.
When do you anticipate being able to provide shareholders with further information with respect to the timing and/or remedies required to obtain regulatory sign-off?
When I have them, I will update you.
Can you please provide an update on the negotiations to extend the walkaway date of the transaction that is currently May 27th?
I don't think it'd be appropriate for me to discuss that with you.
We've received the following question from Gary Coliopoulos. Oh, my apologies. P.W. Craig, a shareholder, has asked the following question: Wouldn't it be better for the optics of independence for someone other than the chair of the audit committee to nominate the auditor?
You know, we take independence of our external auditors, you know, very seriously. This is a whole process that we undertake in the bank. You know, we're very happy as to what processes, what policies, what, you know, controls we have in this regard. That, by the way, is not only a requirement of all external auditors, but also is a regulatory requirement. I'm happy to report we follow them all. No, we feel that the processes and the controls we have in place are more than adequate to address any issues of independence.
A comment has come in from John E. Flanagan, a shareholder, who notes the following, "Over the last eight years, I have attended in person or webcast the annual meeting of all five major Canadian banks that I am a shareholder of. I'd like to share that I am a 39-year member of the Society of Automotive Engineers, served 10 years on the governing board of the Central Ontario section of SAE. I'd like to comment against defunding the oil and gas industry.
I own stock in two oil and gas companies that are in the process of research and development into the production of hydrogen, which is required by the future solution of fuel cell electric vehicles, because plug-in electric vehicles are only an interim solution. A comment has come in from Jeff Carlson, a proxy holder, who states the following: "I have a comment on shareholder proposal number four. Unfortunately, I was not provided the opportunity to make my comment at the time this proposal was presented. That said, I am a shareholder and proxy holder, and I fully support proposal number four. I would encourage other shareholders to support it as well. Unfortunately, we hear a lot of rhetoric these days about the so-called evils of oil and gas production.
As well described by the proponents of this proposal, TD's commitment to the Canadian oil and gas sector is critical to the well-being of Canadians and in fact, the world at large. Life without these necessary fossil fuels would be very, very hard indeed. I would ask, how exactly did those of you who traveled to Toronto for this meeting come? By using wind power? Solar energy? Did you walk? Of course not. It was by the burning of fossil fuels produced by oil and gas in the planes and cars you arrived in. I would ask the ideologies and misguided who call for a reduction or even elimination of oil and gas, to attempt to live without the benefits that oil and gas provides them just for a single day.
Unlike other jurisdictions in the world, Canada is a leader in technologies and best practices in the area of hydrocarbon production and refining. Canada needs more investment in the same, not less. TD must strengthen its commitment to this important industry, not reduce it. Specifically, stating this commitment is a necessary first step. For those reasons, I urge shareholders to vote for this proposal." A question has come in from Jeff Carlson, a proxy holder, who notes the following, "My name is Jeff Carlson, and I'm a proxy holder and shareholder. My question relates to the use of derivatives by TD Bank. According to usbanklocations.com, we see that TD Bank and TD Bank, N.A.'s derivative positions total over $375 billion. This amount is over three times the value that shareholders place on TD Bank itself.
Even a small percentage negative change to these derivatives would have a catastrophic event on shareholder value. With such extreme leverage, especially with the counterparty risks that we see across the U.S. banking sector, what is the bank doing to protect against a collapse in shareholder value should its derivative position move negative?
Thank you. Thank you for your question. You know, firstly, it's important, you know, when we earlier and I got asked questions or there were some comments on interest rates and, you know, what happens to a bank. Many of these derivatives that you see on our balance sheet are used to hedge interest rate risk that the bank, you know, any bank undertakes, in its activities. At TD, we have a very strong tradition of ensuring that the level of interest rate risk that the bank takes is manageable. One way to do that is use of derivatives. The other part of our business obviously is that, you know, we provide, you know, interest rate risk management to our clients.
We have lots of, you know, customers who like to hedge their positions, and we act as a middle bank, you know, to provide those services, and some of them, you know, go on our balance sheet. Your point on, you know, what happens when values go up and down. I could again go for hours there, but hedging is a key part of our risk management framework at the bank. Counterparty credit risk, for the most part, not every time, but for the most part, is done on a collateralized basis. You know, we take the positions, of the value of a derivative, plus or minus, you know, each counterparty has to place collateral with each other. That's generally, you know, how this is managed.
If you look at the size of our balance sheet relative to the numbers you pointed out, you know, compared to any other major financial institution, this is a well-managed risk. It's an approach that has served us very well, particularly in volatile markets, particularly as it relates to interest rates.
Question has come in from Michael Fortner, a shareholder who states the following: Since the regional bank concerns appeared in March of this year as a consequence of the SVB failure, regional banks have lost substantial market cap, reduced deposits, et cetera. The closing date for the First Horizon transaction appears now in jeopardy due to regulatory issues. TD's market cap has been adversely affected by this pending First Horizon transaction, as the takeout price is substantially above the current market cap. It appears that the market has voted that TD is willing to pay way above market value for First Horizon. Is TD Bank committed to reviewing the terms of the purchase, including the takeout price?
I made it very clear that I don't plan to make any comment on First Horizon, and so my previous answer to these questions continue to be applicable.
We've received the following question from Richard Smith, a shareholder. FHN indexed to carry is worth less than $11 per share, even applying the original premium paid well below the current trading price. Why not walk away at this point? Thank you in advance.
I have no more further comments to add to my previous answer.
We have received a question from Jacques Paquet, a shareholder. How many out-of-court settlements have you signed over the past few years, and for what amounts?
How many out-of-court settlements has TD concluded in the past four years, and for how much? Where can we find these agreements?
You know, I don't have a running total in my head. Time to time, you know, the bank is subject to various legal actions depending on the jurisdiction, the issue. There are in many cases it makes sense for the bank to settle these, just to not have the distraction and as well as, you know, what it may do to our business and to our brand. We do that on an ongoing basis. I'm not sure where we disclose these numbers. You know, Kelvin Tran, our CFO, is in the room. If you are... I think you're on the webcast, and perhaps, you know, the operator or the webcast operator can take your name and address.
Maybe Kelvin can help you to navigate through our financial disclosures as to where some of this information might be contained. Thank you for your question.
Question from Pete Dee, a shareholder, who asks: Given the depressed valuations of regional and super-regional banks in the U.S. and TD's aspirations to grow market share and footprint in attractive MSAs, aren't there more attractive targets compared to First Horizon? Would it make sense to pursue other opportunities?
You know, I don't know how many times I say the same thing, you know, I'll say it again. You know, my earlier comments with respect to First Horizon continue to be applicable.
Mr. Paquet is asking how many employees have left TD for another bank over the past three years?
You know, in our business, you know, we actually are very proud as to, you know, the tenure of a lot of our people, and we are a growing bank. In fact, if you look at the bank's headcount, it has grown over the past three years. I don't have that information available. We've got our CHRO, Kenn Lalonde, in the room, and if you're on the webcast, you know, please pass on your contact details. He might be able to give you more insights on this.
A question from Angelo Panadimos: Can you discuss your large shareholding ownership of Charles Schwab?
Yes. You know, we, we have a fantastic shareholding. We own approximately 12% of Charles Schwab. What a great business model. It's an important relationship, strategic relationship, for the bank, where we do have governance rights, and the like. Very happy with our investment. Thank you.
Question from José Décroiselle . Je suis récemment retraitée et ex-employée de la TD depuis 33 ans. Les dernières années ont démontré que les autres banques rémunéraient mieux leurs employés. À titre d'exemple, j'ai perdu plusieurs employés à d'autres banques pour des postes équivalents pour des salaires supérieurs de CAD 25,000 et plus. Qu'allez-vous faire pour empêcher l'exode à part augmenter vos salaires? Mrs. Decroissel is wondering why other financial institution are paying their employees more than TD Bank, and what is TD going to do to stop that, apart from increasing salaries?
No, our compensation policies, you know, get reviewed at an ongoing basis, you know, by management, and of course, are also overseen by our committee of the Board, the HR committee of the Board. It's very important to the Bank that, you know, we are competitive and ensure that, you know, not only are we at market, and it's not just about the salaries, but the overall, what we call, the value of our offerings. You know, I'm surprised that the question suggests that we are not at market, which would surprise me.
Anyway, if you do have, you know, specific informations which, specific issues, I suggest once again that you get in touch with Kenn Lalonde, or he may get in touch with you if you can please leave your contact details with the webcast operator.
Mr. Masrani, there are no further questions from the webcast at this time.
Thank you very much. I don't see anything in the room either. Thank you very much. You know, great questions and great engagement. Believe it or not, this is a favorite time for us. It's great to talk to our owners, and we wish you well, and we will see you next year.
Thank you, Bharat. This concludes our meeting. On behalf of the bank, I'd like to thank you all for participating in this meeting and for your ongoing commitment to TD. Wish all the best to you and your families and hope that you stay safe and healthy.
I wish all the best to you and your families and hope that you stay safe and healthy.
Meeting is now terminated.
Thank you for attending the TD Bank Group Annual Meeting of Shareholders.