Royal Bank of Canada - Shareholder/Analyst Call

Feb.28.13 | About: Royal Bank (RY)

Royal Bank of Canada (NYSE:RY)

February 28, 2013 11:00 am ET

Executives

David P. O'Brien - Non-Executive Chairman, Chairman of Corporate Governance & Public Policy Committee and Member of Human Resources Committee

Gordon M. Nixon - Chief Executive Officer, President and Not Independent Director

Carol J. McNamara - Vice President, Secretary and Associate General Counsel

Brian Hjlesvold

Amir Khalid

Darren Henry

Hanan Rafih

Tazmoon Ratanshi

David I. McKay - Group Head of Personal & Commercial Banking

Janice R. Fukakusa - Chief Administrative Officer and Chief Financial Officer

David P. O'Brien

Good morning, ladies and gentlemen. I'm David O'Brien, Chairman of the Board of the Royal Bank of Canada. [French] Welcome to our annual and special meeting of common shareholders. I'm very pleased that we're meeting this year in Calgary, in a city in a province that are driving growth for our entire country. RBC has deep community ties, strong partnerships and a long history of supporting clients here. And we are proud to share in Alberta's success. I'm also pleased to have so many joining us here in the room today, and I know we have many more on the webcast.

I now call the meeting to order.

Anyone addressing this meeting may do so in English or French. If you would like a translation headset, please advise us by raising your hand and an attendant will assist you. You will find English on channel 1, and French on channel 2.

The meeting will begin with a report from Gord Nixon, our President and CEO, followed by the regular items of business, including the election of directors and the appointment of the auditor. Shareholders will be asked to approve a nonbinding advisory resolution on our approach to executive compensation as disclosed in the proxy circular. We will then consider the shareholder proposals and deal with any other business, including questions from shareholders. I draw your attention to the caution posted on the screens.

At this meeting, we may make forward-looking statements, which involve certain assumptions and have inherent risks and uncertainties. Actual results could differ from these statements.

As always, we invite and welcome questions and comments from shareholders. Some guidelines are set out in the agenda included in the package that you received as you came into the meeting. Please keep your comments brief. And in fairness to all shareholders, we ask the presenters limit their remarks to less than 3 minutes.

At the appropriate time, if you would like to ask a question, please proceed to a microphone and give your name. Then tell us whether you are a shareholder or a proxy holder. I'd like to begin by introducing the others who are here with me on the podium. From your left to right, we have Janice Fukakusa, Chief Administrative Officer and Chief Financial Officer; Gord Nixon, Chief Executive Officer; and Carol McNamara, Vice President, Associate General Counsel and Secretary.

I will act as Chairman of the meeting and Carol will be Secretary. Joe Chirico and Mark Thompson, officers of our transfer agent, Computershare Trust Company of Canada, will be our Scrutineers.

Also present are the members of our board and senior management team. At this time, I would also like to introduce the representatives of our auditor. From Deloitte, we have Allan MacGibbon, Richard Noonan and Michael Lloyd avoid joining us today.

As a quorum is present, I declare that the meeting is properly constituted. I will now call on Gord Nixon to address the meeting. Gord?

Gordon M. Nixon

Thank you, David, and good morning, ladies and gentlemen. On behalf of the members of our team here in Alberta and our 80,000 employees around the world, welcome to RBC's Annual General Meeting. It is a pleasure to be here in Calgary, a vibrant and economically dynamic city in a province known for its beauty, its resources and entrepreneurial spirit. RBC's history in Alberta goes back over 100 years to when we opened our first branch in Edmonton in 1906. Today, we employ more than 4,100 people in the province, have 137 branches and are privileged to serve more than 1 in 3 Albertans. We have an exceptional team here that has made this possible. I'd like to recognize some of my colleagues here from Calgary. Bruce Mckenzie, as our Royal Bank's Regional President for Alberta and the Territories; Derek Nelder is here, our Managing Director of RBC Capital Markets and Co-head of our Global Energy team; and we have 2 Vice Chairman from Capital Markets, Bill Sembo and Gord Ritchie.

I'd also like to acknowledge our Calgary-based directors. Our chairman, of course, David O'Brien, as well Rick George and Tim Hearn.

Over the years, our executives, current and past, and directors from Alberta have played a big role in our success. I would be remiss not to mention Ted Newall and Peter Loughheed, both long-term serving directors, whose sage advice, support and loyalty will always be part of the RBC legacy. Our bank has been honored to play a role in Alberta's growth. This province and particularly the -- its energy sector have been a vital to Canada's economic success. We are proud to be a global leader in the provision of financial services to the energy sector, and that leadership has been built from our base right here in Calgary. But Alberta is much more than just energy. Many sectors are contributing to its growth including agriculture, technology, manufacturing, healthcare, to name a few. And we are privileged to serve over 110,000 small and medium-sized businesses throughout the province. Before I go through our results, I'd like to empathize that Canada strength and diversity has given RBC a strong foundation or growth. Like Canada, RBC possesses a reputation for strength and stability and sound risk management. And like Canada, we draw on the strength of our diversity, we value good governance and we strive to create an environment where talented and skilled people can reach their full potential. Being the leading bank in a country with a sound banking system has provided significant competitive advantage. In short, we have the good fortune of being positioned to both benefit from and contribute to, the growing strength of our country.

So how does RBC ensure that we live up to our potential? I believe that the critical starting point is having a consistent vision. Our vision is always earning the right to be our clients' first choice. We are in a client service business, and RBC is always recognized that long-term success will only come from providing value and advice to our customers. RBC's strong foundation means we are well positioned to execute our strategy and drive growth for our clients and for our shareholders. While the market environment has forced many of our competitors to restructure and to change direction, our long-term strategic goals remain consistent. Because we refrain from many of the excesses of our global competitors leading up to the global economic -- to the economic crisis of '08, we're one of the few global banks whose business mix and strategic focus has remained constant. In Canada, our goal is to be the undisputed leader in financial services. Globally, we strive to be a leading provider of capital markets and wealth management solutions. And in targeted markets, we aim to be a leading provider of select financial services, complementary to our core strengths. In Canada, we have established a leadership position and continue to profitably extend this lead. Our objective is to grow our Canadian Banking business at 25% premium to the competition, and we have consistently exceeded that over the last number of years. Outside of Canada, we operate in areas where we have competitive strengths and can leverage our leading Canadian franchise to grow profitably. Our focus is on high net worth, corporate and institutional clients in the United States, the United Kingdom, Europe, and through emerging market hubs such as Singapore and Hong Kong. Our brand strength underpins our growth strategy. Not only is the RBC brand as strong as it has ever been in this country, but internationally, our brand has become known for integrity, strength and stability.

Turning to our financial performance, it is clear that our vision, strategy and commitment to customers has served us well. Our earnings in 2012 were not only a record for RBC, but they were the largest ever for a Canadian corporation. We had record results in 3 of our business segments: Personal & Commercial Banking, Capital Markets and Insurance. We delivered earnings of over $7.5 billion, up 17% from the previous year. And on a continuing operations basis, our earnings of $7.6 billion were up 9%. These results were a testament to our diversified business model and our ability to execute our long-term growth strategy, while maintaining a prudent risk profile and disciplined cost management. Last year, our return on equity was 19.5%, notwithstanding our high capital ratios that were well above regulatory minimums. Over the past year, we have gained market share across most of our businesses. We have deepened customer relationships. We have added new clients and invested in building a strong franchise, both in Canada and globally. We've been actively managing cost relative to revenue growth to improve efficiencies. This means we can reinvest savings in our businesses. We also continue to focus on effective deployment of capital including balancing, investing in our businesses with returning capital to our shareholders. We raised our dividend twice during 2012 for a total increase of 11%. We made strategic acquisitions, including buying out our joint venture partner in our Global Custody business and the acquisition of Allied Canada. And we put in place a share buyback program for 2013.

Thanks to our earning power across businesses and geographies, we achieved our financial performance objectives for the year, earnings per share growth, return on equity, capital and dividend payout ratios. Our 1 year total shareholder return during fiscal 2012 was 22%, the highest of the major Canadian banks. Having said that, our objective is to achieve top quartile shareholder returns over the medium term as we believe this reflects a longer-term view of strong and consistent financial performance.

For the 5-year period, we delivered top quartile returns compared to our peer group. And we're off to a good start in 2013. This morning, we released our results for the first quarter, and we earned over $2 billion, up 12% from last year and 8% from last quarter. Diluted earnings per share of $1.36 were up 11% from a year ago, and our return on equity was 19.6%. Our Basel III common equity Tier 1 ratio of 9.3% is well ahead of both internal and regulatory requirements, and we continue to aggressively manage our balance sheet.

I'm also pleased to tell you that we further -- we are further raising our quarterly dividend by announcing this morning an increase of $0.03 or 5%. This is the fourth increase of our dividend in 2 years, representing a total increase of 26% since the first quarter of 2011. All of our businesses contributed to our strong results this quarter with record earnings in Personal & Commercial Banking and Wealth Management and strong earnings in Capital Markets. We believe our financial and competitive strength positions us well to delivered continued growth and to achieve our 2013 objectives.

I would now like to provide you with a brief high-level overview of each of our businesses and tell you why we believe they are positioned for future success, starting with Personal & Commercial Banking, our largest business. We have the largest and most profitable retail bank in Canada and we hold a #1 or a #2 position in each of our core products. We are continuing to extend our lead by winning more market share and growing earnings faster than our peers. We have the largest distribution network, the broadest range of products and services and the size and scale to drive efficiency. We continue to focus on innovation and technology as a key to winning business. While our Caribbean banking operations are facing weak economic conditions, this continues to remain an attractive region for RBC. We've been working hard and doing a lot to improve our operations and our efficiency and are confident in the future operating performance of this business. Our U.S.-based internet bank is serving a growing a number of clients and provides a leading cross board of product offering for Canadian customers who want effective, low-cost banking and credit products in the United States.

Our Wealth Management division is a leading global wealth and asset manager. In Canada, we're the clear market leader with the largest full-service wealth manager, asset manager and mutual fund provider in the country, and we are gaining market share. Internationally, we are building a high-performing Global Asset Management business. We're expanding our high and ultra high net worth market share and leveraging our capabilities, again, to win more business. Where global competitors face capital challenges, we're stepping in to serve their clients and hire the best talent. While the operating environment in Wealth Management has been challenged by low interest rates and anemic markets over the past few years, we're confident that our foundation will provide strong future growth particularly as markets stabilize, client activity increases and interest rates normalize.

Our Insurance business is one of the largest Canadian bank-owned insurance companies. Its strength is fueled by the RBC brand, a broad product suite and leading distribution capabilities. We are winning business by making it easier and more convenient for clients to do business with us. Investor & Treasury Services is a new segment within RBC that combines RBC Investor Services, a leading global custodian, with our Global Financial Institutions and Treasury Services businesses. Bringing these activities together positions us to deliver a more integrated suite of products to our institutional clients in Canada and around the world to expand revenues and to improve efficiency.

And finally, Capital Markets is a top-10 global investment bank, and we are gaining market share in traditional investment banking businesses faster than any bank in the world. In Canada, we've successfully extended our lead and we have significantly increased market share in the United States, which is now our largest market. In the United Kingdom and Europe and Asia, we're winning business that was once the domain of the bulge bracket dealers. Over the last several years, we shifted our revenue balance from trading to lending and traditional investment banking activities. We have moved aggressively to reduce risk and eliminate complex assets from our balance sheet. We have built top teams and made a name for ourselves in advice, execution and balance sheet support for clients. While others are withdrawing credit in the United States, we have capacity because we significantly reduced our loan book when into the crisis, as we -- as we viewed the risk-reward balance as too low, counter to virtually all of our global competitors.

Across our businesses, RBC is well positioned to continue to win clients and market share. But as fortunate as we've been in Canada to date, we live in an era of global economic and market uncertainty. The headwinds in the operating environment are not new, but they will continue to shape our outlook. The European sovereign debt and banking crisis continues to create uncertainty. While we have seen increased stability in Europe, the structural imbalances remain and ultimately have to be managed and many of their economies restructured. Fiscal and regulatory uncertainty continues in the United States potentially creating a major risk not just to the United States but to the world. The consequences of America failing to effectively deal with its fiscal imbalance will be significant. And as we see daily, the political dysfunctionality is preventing reasonable compromise.

And domestically, we are not without our challenges. We have rising provincial debt levels, low relative productivity and concern over the state of the Canadian housing market, concern in my view that's been overstated by some, but nonetheless, has resulted in slowing consumer demand. Our industry continues to face considerable regulatory uncertainty. While Canada's principle-based approach to regulation as a source of strength for this country, other jurisdictions are looking at more prescriptive approaches and more protectionist measures. We need to ensure that we hold firm to our approach and promote quality of regulation over quantity.

And finally, the fundamental dynamics of the global economy are changing. Emerging market economies are providing the bulk of global growth while at the same time, intensifying global competition. Technology and the Internet are not only changing the way that we do business, but they are reshaping industries including financial services. So how does Canada adapt to this new global environment, and how do we at RBC both protect themselves from unpredictable events while taking advantage of the opportunities presented? 2 years ago, I said that this would be Canada's decade. And I still believe in our ability to outperform the rest of the developed world. But we must continue to transform our economy and create sustainable jobs. Canadian businesses need to aggressively pursue new export markets. When it comes to going global, our businesses are falling behind other industrialized nations. Our trade patterns have barely changed since Confederation. And if we are to achieve above average growth, we must increase overall export activity with the parts of the world that are actually growing.

And this is not just about the resource sector, we must expand trade with a strategic approach to other industry sectors such as agra foods, advanced manufacturing, healthcare and technology, areas where we can compete and take advantage of the growing middle class in emerging economies. We also need to close the productivity gap and invest in innovation and entrepreneurship. Canadian companies must rev up their commitment and find better ways to translate research and ideas into viable commercial successes. Immigration policies also are critical to our future prosperity. We continue to need more immigrants to Canada, but it's not just about the numbers. Immigrants need to be effectively integrated in our society, and we must assist them in finding meaningful work that is consistent with their education, experience and abilities. Done right, this drives economic growth and it is one of Canada's most obvious competitive advantages.

All this requires smart, efficient governments that encourage and facilitate the growth of emerging sectors and export activities. If we let process, inefficiency, bureaucracy and trade barriers get in the way, we will fall further behind.

Now it's easy to stand here and to identify weaknesses. We all know that finding solutions is more challenging. But we must start putting in place the policies to deal with these challenges or we will lose the benefit of the relative strength that we have built up over the last 5 years. If I worry about one thing in our country, it is complacency. On a relative basis, we have done incredibly well, so why change? But in today's world, the status quo is simply not an option. One can view the glass half full or half empty and I certainly choose the former, as we are in a position to tackle these issues, a luxury that many countries and many developed economies simply do not have. Canada has the fundamental strength to create jobs and prosperity, but we need to work differently and together to achieve our potential.

And at RBC, we must also continue to transform in order to capture business from higher growth markets and find better ways to more efficiently serve our clients. Today, we continue to invest in technology and in people. We have record spending on technology and innovation to improve efficiency and continue to attract diverse talent to better serve our clients. We entered 2013 with great momentum in all of our business platforms, high capital levels and strong earnings. So we have the ability to withstand headwinds and to invest in each of our businesses.

Before closing, I would like to briefly comment on corporate citizenship at RBC. Today, stakeholders expect much more from corporations, and society's expectations are only going to increase in the future. There is no question that the most important role of a global financial institution like ours is capital formation, helping individuals and businesses grow and prosper. But we also pay taxes. We purchase goods and services. We contribute approximately $100 million a year in charitable donations and community sponsorships. We also -- we know that it is possible to make healthy profits and support social and environmental progress at the same time. The definition of social response -- corporate social responsibility is changing, and companies that don't live up to societal expectations will pay a heavy price. We actively care about our communities, and we work hard to balance business and social interest because we believe that the right balance is critical to creating sustainable long-term value.

Some highlights of our activities include the RBC Blue Water Project, a $50 million commitment to protect the world's most valuable natural resource. The RBC Children's Mental Health Project has provided more than $16 million to help children and youth with mental illness. Last year, we launched a social finance initiative, which will provide $10 million in capital to help finance small businesses that tackle social and environmental challenges and an additional $10 million to be invested in socially responsible funds. Through RBC Play Hockey, we support hockey at the grassroot level so more young Canadians have the opportunity to play. We are honored to have 3 RBC Olympians with us today, current and past players from our women's national Team: Jennifer Botterill, as well as Calgary's own Bobbi-Jo Slusar and Carla MacLeod. On the way out today, please visit our Play Hockey display where you can get autographs and visit with these 3 remarkable women, but also hear about our program.

I'm also pleased to announce today our latest donation of $250,000 to the Calgary Police Foundation in support of the new Child Advocacy Center, which will assist children and their families facing issues of abuse. But it is not just about giving, it's also about improving communities where we live and work and ensuring that we have the right policies, the right culture to do the right thing for all of our stakeholders.

I'm particularly proud of the many hours of volunteer work and contributions made by RBC employees in support of a wide range of important causes. Corporate social responsibility is a complex equation, it's not easy. But we work hard to find the right balance. And we are pleased once again this year be included in the Global 100, a list of the world's most sustainable companies.

Finally, confidence in the future of RBC is founded in the strength of our people. For almost a century and a half, our employees have been earning the right to be our clients' first choice by delivering trusted advice in helping them achieve their financial goals. There's always room for improvement, we know that. But RBC does stand out for the talent and dedication of our people. Our 80,000 employees in over 50 countries share a client-focused vision and live our core values of service, teamwork, responsibility, diversity and integrity. These values unite our diverse workforce as we work together to understand and meet the needs of our clients and deliver value to our shareholders.

While 2013 will no doubt bring its share of industry and economic challenges, I'm extremely optimistic and excited about RBC's future. Our businesses are well positioned and each has an ambition -- ambitious but sound objectives and strategies. On behalf of our Board of Directors and my colleagues on our group executive team, I'd like to thank our employees for their continued hard work and commitment. I believe RBC has the right strategy, culture and people to deliver growth and build value for our clients, for our employees, for our communities and for our shareholders. Thank you very much, and I will now turn the meeting back to David O'Brien.

David P. O'Brien

Thank you, Gord. Reports of the committees of the board can be found in the proxy circular. Copies of the auditor's report and the financial statements have been mailed to shareholders and are also available at the information desk. Shareholders now have the opportunity to ask questions on the financial statements. If your question relates to other matters, please wait until the time provided for shareholder questions following the formal legal business of the meeting.

If you have a question on the financial statements, please proceed to the nearest microphone, please tell us your name and whether you are a shareholder or a proxy holder. I take it there are no questions on the financial statements. We'll now proceed with the business of the meeting. You have received notice of the meeting and proxy circular, which specify the matters to be considered at this meeting. I will now ask Carol McNamara to review the voting procedures. Carol?

Carol J. McNamara

Good morning. Today, we'll be voting by ballot, except as otherwise specified by the Chairman. Registered shareholders who have not sent in proxies and proxy holders who are present, have received ballots at the registration desk. Please print your name clearly and sign each ballot. Votes will be tabulated by the scrutineers and the results will be announced later this morning and posted on our website. Only registered shareholders or their proxy holders are entitled to propose or second motions. A simple majority of the votes cast by proxy or in person is required to approve matters voted on at this meeting, except for shareholder proposal #9, which will be voted on by special resolution and requires approval by at least 2/3 of the votes cast.

David P. O'Brien

Thank you, Carol. Our transfer agent advised us that over 757 million votes have been received in respect of matters that are before the meeting, and this represents 52.4% of total outstanding shares. To facilitate proceedings and given that our employees represent a significant portion of our shareholder base, we've asked some of our employees who are shareholders or proxy holders to move and second motions. I will call on them at the appropriate time.

The first item of business is the election of directors. The number of directors to be elected has been fixed by the board at 17. One of the nominees is standing for election for the first time. David Denison joined our board last August bringing valuable experience in the financial services industry. Most recently, David served for 7 years as President and Chief Executive Officer of the Canada Pension Plan Investment Board, leading it through a significant transformation and more than doubling its assets. Prior to that, David spent 10 years with Fidelity Investments, rising to the position of President of Fidelity's Canadian operation. His extensive experience in financial services includes various senior positions in investment and asset management businesses in Canada and internationally. David also spent 2 years as Chair of the Canadian Coalition for Good Governance, where he played a key role in advocating better corporate governance on behalf of investors, and we welcome him. Biographies of each of the nominees begin on Page 5 of the circular. I would now ask Carol to read the names of those proposed for election as directors, and I would ask them to stand and remain standing as their names are called.

Carol J. McNamara

Mr. Chairman, the following individuals are proposed for election as directors. Geoff Beattie, David Denison, Paul Gauthier, Rick George, Tim Hearn, Alice Laberge, Jacques Lamarre, Brandt Louie, Michael McCain, Heather Munroe-Blum, Gord Nixon, David O'Brien, Pedro Reinhard, Ed Sonshine, Katie Taylor, Bridget van Kralingen and Vic Young.

David P. O'Brien

Thank you.

I'll now ask Brian Hjlesvold and Tracy Long to nominate the directors.

Brian Hjlesvold

My name is Brian Hjlesvold. I've worked for RBC for almost 30 years and currently manage our Aboriginal Markets. I'm pleased to nominate each of the persons named by the Secretary of the Bank to be elected as the Director of the Bank to hold office until the close of the next Annual Meeting of Common Shareholders or until their successors are elected or appointed.

Unknown Executive

Mr. Chairman, my name is Tracy Long. I have been with RBC for 20 years and am currently the manager of the Hillhurst branch here in Calgary. I second the nomination.

David P. O'Brien

Thank you. The nominations have been made and seconded. Are there any other nominations?

I'll now ask Pam Shah [ph] and Amir Khalid to make a motion to close the nominations.

Unknown Executive

Mr. Chairman, my name is Pam Shah [ph] and I've been with RBC for 30 years and I am currently the Manager of Calgary main branch. I move that the nominations be closed and that each of the persons nominated be elected a Director of the Bank to hold office until the close of next Annual Meeting of Common Shareholders or until their successors are elected or appointed.

Amir Khalid

Mr. Chairman, my name is Amir Khalid. I worked with RBC for 13 years and currently Manager of McKnight Village branch here in Calgary. I second the motion.

David P. O'Brien

Thank you. The motion has been made and seconded. Any discussion?

We will now proceed with the vote. On ballot A, please mark your vote on the election of directors. I would ask then that you keep your ballots until after the motion to appoint the auditor. At that time, the Scrutineers will collect the ballot for both the election of directors and the appointment of the auditor. If you need a ballot, raise your hand so that it can be distributed to you. Looks like everyone voted in advance.

[Voting]

David P. O'Brien

Is there anyone who has not have the opportunity to have their vote submitted? The next item on the agenda is the appointment of the auditor. I'll now ask Darren Henry and Hanan Rafih to make a motion for the appointment of the auditor.

Darren Henry

Mr. Chairman, my name is Darren Henry, and I've worked with RBC for 11 years. I'm currently a regional sales coach for Alberta and Territories. I move that Deloitte LLP be appointed auditor of the bank 'til the close of next Annual Meeting of Common Shareholders.

Hanan Rafih

Mr. Chairman, my name Hanan Rafih. I've worked with RBC for 6 years. I'm currently the manager of Red Deer branch here in Calgary. I second the motion.

David P. O'Brien

Thank you. The motion has been moved and seconded. Any discussion? We'll now proceed with the vote. On ballot A, please mark your vote on the appointment of the auditor. And once you've done that, I'd ask the scrutineers to collect ballot A. And please indicate that your ballot is complete and by holding up your hand and the scrutineers will collect.

[Voting]

David P. O'Brien

Is there anyone more that has not had a chance to submit their ballot? The voting is now closed for the election of directors and the appointment of the auditor.

The next item of business on the agenda is the shareholder advisory vote on our approach to executive compensation. We have in place a policy to hold an advisory vote on our compensation approach at each annual meeting. We hope you've had a chance to review our compensation discussion and analysis in this year's proxy circular, which explains in detail how our compensation programs are designed to pay for performance and are aligned with effective risk management practices and the long-term interest of our shareholders. As this is an advisory vote, the results will not be binding on the board. However, in considering our approach to compensation in the future, the board will take into account the results of the vote together with other feedback received from shareholders. I would now ask Judith Ravensbergen and Tazmoon Ratanshi to make a motion to approve this resolution.

Judith Ravensbergen

Mr. Chairman, my name Judith Ravensbergen. I've worked with RBC for 25 years, and I'm currently a Private Banker with Wealth Management here in Calgary. I move on an advisory basis, and not to diminish the role and responsibility of the Board of Directors, that the shareholders accept the approach to executive compensation disclosed in the management proxy circular delivered in advance of the annual and special meeting of common shareholders.

David P. O'Brien

Thank you.

Tazmoon Ratanshi

Mr. Chairman, my name is Tazmoon Ratanshi, and I have worked with RBC for 14 years and I'm currently sales manager for Calgary Small Business. I second the motion.

David P. O'Brien

The motion has been moved and seconded. Any discussion?

Daniel Thouin

[French] My name is Daniel Thouin. I'm Vice President of the movement advocating for shareholders, and we have been working with the financial institutions especially banks in order to improve the system and to restore confidence in the banking system. Today, once again, I would like to talk about the compensation of executive officers. Fortunately, you're the first bank to hear me because you're the first AGM. But unfortunately, you are the first. So for people here in Calgary, if you are looking for snow, come to Quebec because we have quite a bit of snow. I was very sad to see that you don't have snow here in Calgary or not much. Now, last year, you'll remember, I spoke and I said that we wanted to give you a reminder. We said that 99% of the population told you that you needed to make changes and perhaps, Occupy Wall Street and Occupy Bay Street, perhaps they influenced your decision last year. Shareholders voted 15.07% that they were against your compensation policy and if we look at the result of the global vote, 50% to 55% this year, there are 52% of people voted. You can see that the banks' salaries would have been endangered by 30% of your shareholders if everyone had voted. So last year, Occupy Wall Street was what endangered you a bit. And now this year, it's something else or someone else that is endangering you. And it's an example that comes from far away, from the Governor General of the Bank of Canada. And in 2012 and on February 26, Mr. Mark Carney criticized once again bank officers for depending on the state, one of the things, and their dependency can be seen because you're borrowing costs are very low. A good measure of what you borrow is guaranteed by the government. He mentioned something else as well that the current system privatizes earnings and socializes losses. We saw for example the banking system that was saved a few years ago by the government less so in Canada because our system was in a privileged position. But so far, nothing has really changed in the way banks operate. Mr. Carney in the same article in November 2012 said that banks or the money made in 2012, a minimum of 20% of the profit comes from direct or indirect government support. Second element in -- is continuing to challenge the compensation given to executives on February 26 just a couple of days ago, Mr. Carney once again during a conference said what follows: "To restore confidence in the banking sector, it is up to the banks and also other stakeholders such as governments." To date, worldwide, there are very few cases or almost no cases of bankers who recognize their responsibility in what happened in 2008. And so, that banking system has created a lot of pressure and over the past 5 years, we have more pensioners as of pensioner and a small favor, I have not been able to make up the money lost. And so, the compensation style leads to too many risks and could end up with another crisis if nothing changes. I would like to mention an important article that was seen on February 4 in the Global Mail and the article congratulates the RBC for its position because it accepted a study of vertical and horizontal analysis of compensation for executive offices, and it is working with 3 other banks to look at what will be decided by the analyst -- analysis that was proposed by ethical funds advocates. And so we are confident that changes could be made, and we hope that where compensation is concerned that there will be changes made. For right now, we continue to say that we are against your current policy. Thank you very much, Mr. Chair. Thank you very much for your comments.

David P. O'Brien

Canadian banking system and Canadian banks have been the example around the world of a great banking system and very successful banks, and we're proud not only of the Royal Bank but the entire system. We'll now proceed with the vote. Oh, sorry.

Unknown Shareholder

Andrew Pollocks [ph], I'm a beneficial shareholder of 20 shares though not a proxy holder. Normally, I want to be a proxy holder...

David P. O'Brien

Well, in particular...

Unknown Shareholder

But I'm a shareholder.

David P. O'Brien

Oh, you are a shareholder. That's fine.

Unknown Shareholder

I mean, I'm a shareholder beneficially, but not a proxy holder.

David P. O'Brien

You're a beneficial shareholder, go ahead. Not too long, though.

Unknown Shareholder

I'm not aware of the Canadian banks being blamed for the economic crisis. I am aware that the RBC had over $7 billion of profit last year. I'm not going to complain about the fact as a very small shareholder or nor would I complain about where I -- a much larger one that your executives are well paid. I work as a security guard, I can't afford to buy large positions in companies because I don't earn very much money. But then, that's the kind of work I do, that's the kind of skill I have. Gord Nixon has a different set of skills and if he earns a greater amount of remuneration, the reason I'm not complaining about it is while you did get over $7 billion of profit, and so and you did not cause the economic crisis. And I think your executives are well worth what they're paid.

David P. O'Brien

Thank you very much. People are probably aware, but the Royal Bank's profit last year was the highest in Canadian history of any corporation. So this bank is doing very well. And as Gord pointed out in his opening remarks, we had a strong first quarter, which improved on the first quarter of last year. So it all goes well. We'll now proceed with the vote. On Ballot B, please mark your vote on your approach to executive compensation.

[Voting]

David P. O'Brien

And I'd ask the scrutineers to collect the ballots.

Everyone had a chance to submit their ballots? The voting is now closed on to this motion. Next on the agenda are the shareholder proposals. As we indicated on Page 81 of the circular, NEI investments withdrew a shareholder proposal that I co-filed with William Davis. NEI is represented here today by Michelle de Cordova, who will now briefly comment on the issues raised in the proposal. Ms. de Cordova, welcome.

Michelle de Cordova

Thank you, Mr. Chair. My name is Michelle de Cordova. I'm the Director of Corporate Engagement and Public Policy at NEI Investment. I'd like to thank the Chair for giving me an opportunity to speak on a withdrawn proposal that was co-filed by NEI, which holds 387,700 shares in RBC. And Mr. William Davis, a private shareholder who has raised pay issues at RBC previously. To very briefly our proposal, we had filed a proposal at the 5 biggest Canadian banks asking the board to report to shareholders on the results and risks of basing the quantum of senior executive compensation largely on horizontal comparisons with peer companies. And to discuss the potential to integrate vertical comparison and metrics, such as comparisons with the compensation of average workers. All the proposals that we had filed are actually now being withdrawn in the light of commitments by all 5 of the banks to consider the issues raised in the proposal. So just briefly to explain why we had filed this proposal. What we're looking for in executive compensation is a quantum of pay that is not executive and that it encourages and rewards strong performance in generating long-term sustainable value for shareholders and other key company stakeholders. We do feel that we're seeing progress on pay for sustainable performance, but we're concerned that current practice on setting quantum which seems largely based on comparison with the pay of senior executives at other companies can drive up the quantum of pay each time the company decides to compensate above the median. So in this context, we are going to be looking with interest at how RBC's compensation decisions this year are going to affect the decision-making at some of the other banks too. So our exploration of current research on compensation questions made us concerned that the current practice might not be in the interest of shareholders and the company, and that it could also have negative impacts on society as a whole. Just very briefly some of those concerned at the company level, we've been asking ourselves, is the high quantum of pay what really motivates our executives of talent, integrity and commitment to the success of the company? How much movement is there really between -- by the CEOs and senior executives of the major banks to competitors? And how much is that really driven by pay differences between the banks? We are also concerned about what the consequences might be of a very high quantum of senior executive pay for motivation and engagement and a sense of responsibility towards the company among employees at lower levels. So this is the kind of company level concerns. We have some wider concerns that have been driven by the discussions about the risk of incremented quality that have been now so widely discussed in very mainstream forums such as the World Economic Forum, Conference Board of Canada even the Economist magazine. There was a concern about the hollowing out of middle income -- the incomes of the people who really drive economic prosperity and social well-being. I think that's -- it's like a social responsibility question, but it's also a particular concern for financial services companies because these are our clients and customers. We're concerned that if top executives' pay maintains an upward trend while the incomes of other workers stagnate, this will be a driver of incremented quality in the economy. We recognize there's only one possible driver of incremented quality, but it is one that shareholders have some kind of influence over. We'd like to see a wider conversation about this issue in Canada. We think it would be great if some of Canada's biggest and most influential companies, like RBC, could take a lead in that discussion. We think it's particularly appropriate for the banks to be involved there given that they are specially regulated in recognition of the role that they play in society and in our economy. So to conclude, as just outlined, we have a lot of concerns and questions. We're not sure yet what the answers are, which is why we filed a proposal asking the banks to explore issues rather than asking for a specific change at this time. We do believe this is an issue of growing interest to shareholders. We note that in fact the New Canadian Coalition for Good Governance executive compensation guidelines call into question be an excessive emphasis on horizontal comparison in setting compensation. We're not calling for an end to horizontal comparison, we're just asking for an exploration of whether there are other factors that should be taken into account. We'd like to thank RBC for a very good engagement with us on this topic and for agreeing to put these issues onto their compensation research agenda. We very much look forward to the results of that research and of RBC's deliberations on this question. Thank you very much, Mr. Chairman.

David P. O'Brien

Thank you for your comments. And as you indicated and as indicated in the proxy circular, RBC will be examining these issues.

We'll now move on to the 5 shareholder proposals submitted by Mouvement d’éducation et de défense des actionnaires, which is represented here today by Daniel Thouin. Shareholders have had an opportunity to read the proposals and the board's responses and voting recommendations, which are set out in the proxy circular starting on Page 74. Mr. Thouin, I'll give you 10 minutes in total to speak to the merits of all your proposals. I would ask shareholders to vote on these proposals by marking Ballot C as they're presented. We'll collect the ballot following discussion of these proposals. [French] I will now give the floor to MÉDAC to present the proposals. Mr. Thouin, you have 10 minutes and you do not need to read the proposals again. Thank you.

[French]

You can see how [indiscernible] in your remarks, Mr. Thouin.

Daniel Thouin

[French] I'll be very brief, Mr. Chair. I'm sorry, for the inconvenience but my command of English isn't good enough to express what I have to say in such an official setting. So on retirement measures, our first proposal has a goal that new accounting standards that are applied to these companies and banks respond differently to the standard. These standards mean that pension plans, as of last year and this year more, they must show specific information, and we saw that during an AGM held in Montréal and we'll see it during other AGMs. The situation is as follows: the explanation for pension plans for your bank and for others, we see the explanation in a huge note that's part of your financial statements called other debt, and so it's a global note and it represents $165 billion. It's impossible to follow everything, so we would specifically like to see the Board of Directors or the AGM mention what the actual status is of the banks' pension plans, and we like to see it for all listed companies that we see on Page 166, 167, 168. It is Note 18 and you can see that the pension plans for their employees has a deficit of more than $2 billion. So 19% of your commitments as a pension plan. That's substantial and the deficit is growing over the years and we can see it in other financial institutions in Canada as well. So as a small pensioner and a small shareholder, I think that very worrisome to see that our own banks are not able to have balanced pension plans and to see that they continue to run deficits. We have to understand, it's not a reproach, I'm not criticizing the Royal Bank only, but everyone, because right now our pension plans are at 2%, 3%, 4%, others have a much higher profit. So I would like to have specific information on your pension plan and we're going to be asking that with other banks because right now, all of that information is part of global information we would like to see it apart. Thank you very much.

David P. O'Brien

The next proposal? Did you want to vote on it? No. We'll be voting after all 5 proposals. So go ahead and afterwards, there will be a vote.

Daniel Thouin

The second proposal is on equitable treatment under the pension plans. Over the years, once again, we've seen that pension plans are a form of senior executive compensation. However, this approach means that significant privileges are being given to these executive officers compared to other bank employees. And so what we are requesting, in our proposal, is that all employees of the bank receive the same treatment under the pension plan. So the same age and contribution capacity. And so not based on the compensation of executive officers and their cases. So we want to see a more equitable treatment. And as you know, today's executive officers are very well compensated, they don't need their own pension plan for their retirement age. So the third proposal is related to gender equality in executive positions. As you know, today, in Canada especially in banks, and in financial institutions, women are underrepresented. And so, if you don't have specific measures to increase the numbers of -- the number of women, it will never happen. In fact, if we look at the European community, they already have legislation in this area and our proposal is for -- or bank institutions in Europe are at 40, 40 and 23 and we have -- don't have that in Canada. Less so in the banks. So we would like to propose that you adopt a policy or goal to increase the presence of women in executive positions. So equal to their importance with society, up to 50%. Now, the fourth proposal comes back every year, and it's called the equity ratio. As was explained earlier by Ms. [indiscernible], a study will be carried out on how to come up with more equitable compensation for executive officers, and one of the ways is to look at the equity ratio between their salaries and other employees. So we have a proposal. We would like to see that CEO compensation not exceed 30x the average salary of nonmanagement employees of the bank. I would like to mention one example, from the Governor of the Bank of Canada. His salary is between $430,000 and $507,000. That's the governor's salary. If you benchmarked it, probably our bankers would have seen their salaries drop. He's leaving. Mr. Carney is going to England, to the oldest and probably most powerful bank in the world and his salary is going to be greater than his salary in Canada, but it's a far cry from the salaries that we see for executives in banks. So for the bank of England, the most prestigious and powerful bank, he will have a salary of $1,300,000 and that will include his housing and that's equal to about $700,000. So Mr. Carney is going to Bank of England not for the salary, he's going because it represents a challenge, for the prestige and he's going to complete the job he had begun, reforming the global banking system. So once again, with that, we'd like to propose that we establish that equity ratio and that we look at the ratio of CEO compensation to the average salary of nonmanagement employees and make sure that it does not exceed their salaries by more than 30x. And our final proposal is quite simple and not expensive in the least. So at the end of each Annual General Meeting, or rather, a few weeks or months later on, your website or by another means, we would like to see a summary of the discussions held during the annual general meetings. We could see minutes or it could just be 1 or 2 pages long summary of what happened during Annual General Meeting. That way, shareholders who are not able to see it on the web because it happens in the morning, I don't know very many people who are going to decide to watch a bank AGM rather than a hockey game. I think if you had a summary for them, it would be a great service and I think it would improve democracy for shareholders. So thank you very much. Thank you.

David P. O'Brien

Are there any further [indiscernible] on these proposals?

Unknown Shareholder

[French] My name is Andrew Collins, I own 20 shares. And I do not share the same points of view as Mr. Thouin. I'm going to try to explain this in French.

David P. O'Brien

[French] No, you don't have to. If somebody makes a proposal in French, you can answer in English. That's not a problem.

Unknown Shareholder

[French] But we have the right to speak French here. So I'm going to attempt it.

Mr. Thouin has made 2 proposals that I do not agree with. We're talking specifically about the proposal that says that we have to have 50% of women amongst executive officers. I believe that the percentage of men and women is not really the most important thing. What's way more important is diversity. Diversity will come naturally if we do not impose obstacles for people whichever race they are, whether they're men or women. I believe that we need to have competition -- barrier-free competitions, which would be open to various genders, races, ethnic groups, what we need is to make sure is that everyone working at the bank has a similar chance of being successful. There's another aspect. We're talking about compensation. If we want to have a compensation for the Chairman of the Board who would be 30x the average of bank employees' salary, well, that might not allow us to find the best candidates because what we are looking for are the best candidates for Mr. Nixon's job, for example. And if we want to have more than $7 billion profit at the bank, what we need is competent people, people like Mr. Nixon, and we need to attract people like Mr. Nixon, we have to pay more than those salaries suggested by Mr. Thouin.

David P. O'Brien

Thank you for your comments. The bank's responses to each of these propositions is found in the proxy circular. And if you wish to, you can read them.

Are there any other comments on this? If not, we'll move to mark Ballot C. Please mark your vote on proposals 1 to 5.

[Voting]

David P. O'Brien

You still have a ballot that you want picked up, please raise your hand with the ballot in it. Okay, the voting is now closed on proposals 1 to 5. The remaining proposals were submitted by Lowell Weir who, I understand, is not present at the meeting. He advised us that he was ill and was not attending. These proposals are listed on Ballot D. Proposal #9 will be voted on by special resolution and must be approved by at least 2/3 of the votes cast. Shareholders have had a chance to review the proposals and the board's responses and voting recommendations, which start on Page 77 of the proxy circular. Before proceeding to mark Ballot D, does anyone want to make any further comment in addition to what is already in the proxy circular on these proposals? If not, I would now ask that you mark your votes on Ballot D for proposals 6 through 9.

[Voting]

David P. O'Brien

And I would ask the scrutineers to collect the ballots. While we wait for the results of these votes, we would like to show you a brief video about how we, at RBC, serve our clients and communities. We'll just wait a minute before we do that to make sure all the ballots are collected. Following the video, Gord Nixon will lead the next part of the meeting when shareholders will have a chance to ask questions. So now, the video. Thank you.

[Presentation]

David P. O'Brien

At this point in the meeting, our shareholders will have the opportunity to ask questions or to make comments. If you have a question, please proceed to the nearest microphone. We'd appreciate it if you'd give your name and tell us whether you're a shareholder or proxy question -- holder. If your question relates to a personal matter, please speak with the RBC employees at the information desk in the foyer. I now open the floor for questions starting with microphone #1.

Question-and-Answer Session

Unknown Shareholder

My name is Neil Shribney [ph] and I'd like to thank the RBC Board of Directors for donating the $250,000 to the Calgary Police Association. My question is, as demographics prevail with more senior clients representing the population, will RBC Visa credit cards cover medical travel insurance for those of us that are over 65 and plus?

Gordon M. Nixon

Thank you very much for your question. A number of our cards do currently have medical insurance for people over 65. I think there's different terms and conditions and time limits. Dave McKay, who heads our Personal and Commercial Banking business and is our guru on the credit card business is with us. Dave, do you want to make any comments?

David I. McKay

Thank you for being an RBC credit card holder. Certainly, it's a segment of the market that is growing, as you say, and more Canadians are retiring and as we look at the insurance and the cost of delivering that insurance, embedding that into our products is something that we have to evolve going forward. So we've heard that issue from clients and it's something we're committed to looking at in greater detail moving forward. So thank you for your question. Thank you for being a card holder.

Gordon M. Nixon

Other questions? Yes, microphone #2.

Unknown Shareholder

Ethan Hopperman [ph], I'm a shareholder, as well as a customer and client and I asked a few years ago for a smartphone applications to be delivered and certainly, RBC has delivered very well on that. I'm also very happy with the website that RBC has for online banking, and I'd like to know, I know that with online banking, I also happen to have an RBC Direct Investing account and I can see the asset value on the RBC Direct Investing account when I log in online to the website and I'd like to know if that feature could be added to the smartphone app.

Gordon M. Nixon

Our guru.

David I. McKay

Great question. So we've invested a significant amount of money in our online banking capabilities and we're investing significantly in our mobile banking. As you said, we're the #1 online bank in Canada. So that feature and functionality is something we're looking at. We invest over $50 million in our online and mobile banking platforms. I can't tell you exactly when it's coming but it's certainly a feature and benefit that I'll take back and see where it is in the development cycle. So thank you for your suggestion.

Gordon M. Nixon

I would just add to that. I think, as I said in my comments, that technology is evolving so quickly in our industry. Sometimes, it's hard to always be first in everything. But it's certainly something that, as I'd say, one of our strategic focus is, is to make sure that we take advantage of our financial strength to lead the competition in terms of investing in technology. It doesn't mean we'll always be first in every area because people have different priorities but it's something that we put a lot of focus on. Microphone #1.

Unknown Shareholder

President Nixon, my name is Brian Northod [ph], I'm a shareholder and a proxy holder. Would the Board of Directors care to comment on measures in place to prevent our banks' information systems from being compromised by external forces?

Gordon M. Nixon

Thank you very much for your question. And it is not only a great question, it's one of the most important issues that, I think, all industry faces and certainly the financial industry faces and it's certainly getting a lot of attention. We have a lot of processes internally in terms of data, integrity information, protection and a significant investment from a technology perspective in preserving both the privacy and integrity of people's information. We actually, as a matter of interest, have a significant review currently underway, where we brought in an external third-party to review our technology and operating systems, really focused primarily around the area of cyber security. And we think we have best practices. But it is an area, as you know, where the criminals and bad people are equally as sophisticated as those that are trying to protect it. And you've seen some recent attacks, particularly in the United States. And that does include some attacks on some of their financial institutions. It is a major priority, it's a major priority for our Board of Directors, for our risk management committee of the board. It's a major priority for OSFI our primary regulator and there's a number of industry initiatives focused on it. And as I say, internally, there's a significant focus and an investment to ensure that we do everything the we possibly can in terms of protecting our clients and our industry, the whole industry, against cyber attacks and cyber security. It's a frightening number, the number of attacks that we have on our systems on a daily basis. The good news is, they don't go get through and our firewalls and our various protective measures have served us extremely well but as I say, it's something that you just can't take for granted. It's an area that is unfortunately, going to be an increasing growing expense center because it's just the nature of the industry and part of the transformation of the industry to a much more electronic delivery. I hope that answers your question.

Unknown Shareholder

Indeed.

Gordon M. Nixon

Thank you for your question. Yes, microphone #5.

Unknown Shareholder

Yes, Mr. Nixon. My name Ralph Viden [ph]. I'm here as a proxy for my wife. I realize this is now history, but we've read a lot about it in the press, about your venture into Florida? I wonder if you would tell us in your words, what happened?

Gordon M. Nixon

I'm sorry, what happened?

Unknown Shareholder

Yes.

Gordon M. Nixon

Into Florida. Well, the first thing I'd say is we're still in Florida. As I said in my comments, we have an Internet bank in the United States, we serve about 170,000 Canadian customers through that delivery mechanism. And as I say, it's a great product offering and it's a great low-cost, effective, cross-border product available to our Canadian customers. But it doesn't provide branch services in the United States. We made the decision essentially and it wasn't Florida, it was really -- it was based actually in North Carolina, the head office of our bank was in North Carolina, although we did have a presence in Florida as well. The decision was simply made that when we looked at the opportunities in the United States in the retail banking space, the level of competition, our position in the marketplace, our ability to generate a strong return on the investment that we were making. That we had better ways to deploy our capital outside of the branch banking business in the United States. And we looked at it for a number of years and took advantage of an improvement in the market, I guess, it was a couple of years ago, and made the decision, as I say, to exit what was a very underperforming business generating very low returns to our shareholders and have deployed the capital on other businesses that are generating more positive returns. It was important to us, as I emphasized, though, that we maintain a presence particularly for our Canadian and our high net worth clients in the United states but in particular, our Canadian customers. And that was why we essentially built our Internet-based bank, which does provide credit, credit cards, banking products, et cetera, to our Canadian customers. Further questions? Microphone #1, and then we'll go to #2.

Unknown Shareholder

Mr. Nixon, my name is Brian Farrell [ph]. I'm a longtime shareholder, proud to be so, and congratulations on a successful year in the past. My interest is in the annual report. As an amateur analyst evaluating my investments, I looked to the end of the report in the past, where there's been a 12-year summary of the historical parameters for the company. I find this very informative. In the past, and you had this history in the annual report, as far back as 1977, by my own observation. My question is, recently, you have moved to a more limited financial history reporting. New rules, regulations, I understand that. My question is that, with the limited reporting, I'd like to know if there were any changes or corrections to the history the past years that may not have been reported but were actually adjusted in previous years that would affect the earnings and earnings per share numbers that may have been observed in a footnote or wherever, but have not been reported in the tables.

Gordon M. Nixon

Thank you, Brian, for your question. I think with respect to information, the answer would be no. But I'm going to turn to my financial expert, our CFO and Chief Administrative Officer, Janice Fukakusa, it's probably complicated by the fact of our major IFRS conversion last year.

Janice R. Fukakusa

Thank you for your question and that is the complexity. In 2010, effectively, we converted to International Financial Reporting Standards, which is our new accounting base. In the process of doing that, there were certain adjustments that were made that are highlighted in the annual report. And we also only restated up to 2010. So in terms of providing a longer history than that, the accounting base is different and we didn't go back 10 years, we only went back for 2 years. So what you have there is the new reporting standard and if you have some -- a bit of time after this meeting, we can take you through some of the major changes that are in -- that are detailed in the annual report that we issued.

Gordon M. Nixon

But on the old methodology, the answer would be, there would be no adjustments that would go back to an extended period of time. As I say, it's just complicated by the fact that all of the Canadian banks were required under regulation to move towards an international standard as opposed to the Canadian traditional GAAP standard and that took place last year. Microphone #2. I think there was a question?

Unknown Shareholder

Yes. Andrew Polak [ph] of Calgary, Alberta, as a beneficial shareholder, 20 shares of Royal Bank common stock. My question is about the impact of your Board of Directors on the functioning of the bank. Now the day-to-day operations are performed by the bank's employees and yet, the bank, obviously, values having a very high quality Board of Directors. How does the -- and I know you're both the -- as a, I guess, a non-independent director, but how does the board's strength impact the day-to-day operations of the bank and what are the long-term benefits of having such a strong Board of Directors?

Gordon M. Nixon

Thank you. Do you want my perspective, or do you want our Chairman's perspective? It may be different.

David P. O'Brien

He wants mine. The board delegates to management, the day-to-day operations. So our impact on day-to-day operations would be very minimal, save and except in our broad oversight role if things go wrong. The board's role though in working with management to set the strategic direction of the bank and oversight of the execution of that direction is one of its most important roles. The only role that would be more important than that is the board's role in choosing the chief executive, and approving the choice of the other senior officers who then carry out the strategic direction that has been agreed upon. And I think and we've seen in the last number of years, that the role of the board has been -- become more important and people have scrutinized it much more. In the case of the bank, the regulators expect the board to play a very significant role in the stewardship of the bank, ensuring that the bank complies with all laws and regulations, and there are a lot of regulations tied to the banking business now, and ensuring that the financial statements through the audit committee properly disclose the financial condition of the company. And also, the risk committee which, has a more important role in a bank than in most other companies because of the nature of the bank's business, it plays an important oversight and guiding role on matters of risk. But in the end, having said all that, I still think the most important role is making sure that we have the right talent there, at the bank, to carry out the functions and as our results indicate, we've done very well in that regard.

Gordon M. Nixon

And management's view is they do a great job. You know what? The only thing I would add to that and -- because I do think it's important and a lot of credit should be given to groups like MEDAC and Cordova and many other areas of -- around corporate governance. The quality of discussion, the quality of governance, the challenging of management, which is a very important role of the board, it has improved so dramatically over the last number of years, and it's partially due to a lot of advocacy work done around corporate governance and areas like that. It doesn't mean it's perfect today, but it really is a very robust environment and relationship between management and the board today and I shouldn't say this with some of our directors having been on the board for many years but I can assure you, when I first started going to board meetings as more junior level of management, that level of discussion and level of interchange and so forth was not there to the same degree. So it certainly has come a long way in my view looking at it from management's perspective. Any other questions?

Unknown Shareholder

Yes, just a comment. The MEDAC is out to make -- present this member and we hope we have members like Mr. Polak [ph], which does take the word in general assembly and what we do, we try to do is what more and more people like him to bring their ideas on the general assembly of the bank and other company on the market. Mr. President, Mr. Nixon, thank you for your understanding. [French]

David P. O'Brien

[French]

Gordon M. Nixon

Thank you. If there are no further questions from shareholders, I will now turn the meeting back to David.

David P. O'Brien

Thanks, Gordon. I'll now call on Joe Chirico [ph] to report on the preliminary voting results, which are also posted on the screens. Copies of the voting results will be available at the information desk at the meeting and posted on the bank's website. Joe?

Unknown Executive

For the information of shareholders, the Scrutineers wish to report that 757,573,471 shares or 52.4% of the eligible shares have been voted at this meeting. The results for the election of the directors are a substantial majority of the votes cast at the meeting were voted in favor of each of the 17 nominees named in the proxy circular with each nominee receiving in excess of 96.38% in favor. The results for appointment of auditor are: 96.83% voted in favor of Deloitte LLP and 3.17% withheld from voting. The results on the advisory resolution to accept the approach to executive compensation, 93.81% voted in favor and 6.19% voted against. The results for shareholder proposals are as follows: proposal #1, regarding pension plans, more disclosure about their oversight, 2.70% voted in favor, 96.63% voted against and less than 1% abstained. Proposal #2, regarding the equality treatment under the pension plan, 2.81% voted in favor, 96.76% voted against and less than 1% abstained. Proposal #3, regarding gender equality in executive positions, 5.08% voted in favor, 94.46% voted against and less than 1% abstained. Proposal #4, regarding equity ratio, 2.54% voted in favor, 96.92% voted against and less than 1% abstained. Proposal #5, regarding summary of discussions at annual general meetings and more sustained dialogue with shareholders, 2.73% voted in favor, 96.80% voted against and less than 1% abstained. Proposal #6, regarding proposed amendment to the bylaws of the bank, 2.02% voted in favor, 97.49% voted against, less than 1% abstained. Proposal #7, regarding the revocation of the appointment of Deloitte LLP as auditor of the bank, 1.54% voted in favor, 97.88% voted against and less than 1% abstained. Proposal #8, regarding proposed amendment to bylaw 2 section 1.1, 3.05% voted in favor, 96.37% voted against and less than 1% abstained. Proposal #9, regarding special resolution proposed amendment to bylaw 1 section 1.1, 2.68% voted in favor, 96.71% voted against and less than 1% abstained.

David P. O'Brien

Thank you, Joe. I now declare that the 17 nominees named in the proxy circular have been duly elected as directors. Deloitte LLP has been appointed as of the auditor. The advisory vote to accept the banks' approach to executive compensation has been approved, and each of the shareholder proposals has been defeated. Ladies and gentlemen, I sincerely want to thank you for your participation today. I'll conclude by thanking our employees whose dedication and commitment to the success of our clients continues to be a true competitive advantage for the organization. On behalf of the board and shareholders, thank you, all, for your efforts and your contribution to RBC's success in 2012 and its continuing success this year. The meeting is now concluded. Thank you for joining us today.

Operator

Ladies and gentlemen, please return your translation headsets at the door, or leave them on your seat. [French]

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