Bank of Montreal 1997 Annual Report Download - page 99

Bank of Montreal 180th Annual Report 1997 93
For the Board to fulfill its responsibilities as
the overseer of the Bank’s business affairs,
its independence must not be compromised.
The director chairing the Board Gov-
ernance and Administration Committee
acts as “lead director”, and is respon-
sible for chairing the “in camera” sessions
(
those in which no “inside” directors
or other management personnel are
present), which are held during every
Board meeting.
In the case of the two committees where
Board independence is of greatest concern
(the Board Governance and Administration
Committee and the Human Resources
and Management Compensation Com-
mittee), no members of management sit
on these committees.
In addition, committees are empowered
to engage independent consultants in
appropriate circumstances to assist them
in discharging their responsibilities.
Given the climate of critical review
and independent judgment that the Bank
has sought to create, the Board strongly
believes that it functions independently
of management.
To align the interest of the directors more
fully with those of the Bank’s shareholders,
the Board in 1997 implemented a Directors’
Stock Plan. The plan requires directors
to
take a minimum of 50 per cent of their
retainer in the form of either common
shares or deferred share units. Further,
it offers directors the option to take up to
100 per cent of both retainer and meeting
fees in that form.
With respect to compensation, the
Board Governance and Administration
Committee annually reviews and sub-
mits its recommendations to the Board
regarding the existing form and adequacy
of compensation paid to directors.
The Bank continues to be fully com-
mitted to creating an environment
that confers equal and fair treatment on
shareholders, irrespective of the size
of their holdings, and that, at the same
time, recognizes the importance of
incorporating shareholder opinion into
the design and operation of its Corporate
Governance Program.
As a result, significant changes have bee n
implemented to improve shareholder
communications, particularly as it relates
to keeping the Board informed of share-
holder views. The Board now receives
comprehensive investor relations reports
at least twice a year.
Further, the mandate of the Board Gover-
nance and Administration Committee has
been expanded to include responsibility
for assessing the merits of shareholder pro-
posals received by the Bank, establishing
procedures for dealing with those propo-
s
als, and formulating the Bank’s proposed
response for approval by the full Board.
This ensures that proposals are handled by
outside, independent directors, and removes
management directors from any possible
conflict of interest.
The chairs of the Board Governance
and Administration Committee and the
Human Resources and Management Com-
pensation Committee are available at the
Bank’s Annual Meeting to respond to any
corporate governance and compensation
issues that may be raised by shareholders.
Communications with shareholders are
also being expanded to provide updates
and informational circulars on governance
issues. Vehicles such as the Bank’s quar-
terly shareholders’ reports will be used for
this purpose.
In addition to these practices, the Bank
continues to have a dedicated Shareholder
Services group responding to individual
shareholder inquiries, as well as an Investor
Relations group dealing with institutional
investors and financial analysts.
Bank of Montreal believes corporate governance is a core contract between the Bank and its shareholders, implemented through the Board
of Directors. Its rigorous implementation of this approach has earned the Bank a reputation as a leader among Canadian corporations in
the development of open, effective and accountable corporate governance.
As the regulatory, business and societal context has changed, Bank of Montreal has redoubled its efforts to ensure that its Corporate
Governance Program remains at the forefront of the Canadian business community.
It is the Board’s opinion that the Bank’s approach to corporate governance is comprehensive, progressive, and consistent with and in
many respects goes beyond  the high standards subscribed to by the Toronto and Montreal stock exchanges. The Bank continues to assess
its governance practices critically as part of its commitment to ensuring effective corporate governance.
Board Independence
Board Commitment
Shareholder Communications and Disclosure
Conclusion