Bank of Montreal 1999 Annual Report Download - page 106

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Interest in the corporate governance of public corpora-
tions has never been greater, both within the financial
community and among the investing public. Effective
corporate governance is no longer confined to the realm
of academic debate, nor is it viewed as peripheral to a
company’s real priorities. In today’s business world, a
board of directors with the independence, the authority
and the information it needs to fulfil its responsibilities
is seen as a primary resource for creating competitive
advantage and, in turn, shareholder value in the global
marketplace. At the same time, good corporate gover-
nance is increasingly seen as a continuous journey, not a
destination. As companies benchmark each other’s ini-
tiatives, standards will be driven even higher. Further,
nosinglesetofguidelinesorprocedurescanmeetthe
needs of every company. Opinions can and do legitimately
differ on the best way to define the responsibilities of
managementandboards.Theseandsimilarissuesare
stimulating lively and productive public discussion.
Bank of Montreal is proud of its history of innovation
in corporate governance, which was recognized in 1999
by the Award of Excellence for Leadership in Corporate
Governance sponsored by the Canadian Institute of
The Board’s Responsibility for Stewardship of the Bank
Corporate Governance
Statement of
Practices
Chartered Accountants and the National Post. We believe
our record over the last decade speaks for itself, but we
also recognize that corporate governance is a rapidly
advancing discipline. We will continue to enhance our cor-
porate
governance practices, whenever we are convinced
that new initiatives will create value for our shareholders
and, ultimately, for the communities we serve.
Best Practice Guidelines: Five Years of Steady Progress
In 1994 the Corporate Governance Committee of the
Toronto Stock Exchange published a report entitled
Where Were the Directors? on the state of corporate
governance in public Canadian companies. The report
made 14 recommendations on best practices, which
were subsequently adopted by the TSE as guidelines for
its listed companies. Each year, listed companies must
disclose and explain any differences between their cor-
porate governance practices and the TSE guidelines. In
1999, five years after the original report, the TSE pub-
lished a study of compliance by its listed companies,
which is in effect a “report card on corporate Canada.”
In these pages, Bank of Montreal gives its own “report
card” on its compliance with the TSE guidelines.
The Bank has a comprehensive policy for communications with
shareholders and other stakeholders. The policy incorporates
current best practices and gives fair treatment to all shareholders
,
irrespective of the size of their holdings. On an ongoing basis,
individual shareholder queries and problems are handled
by a dedicated Shareholder Services Group, while for institutional
investors, the Investor Relations Group provides the commu-
nications channel for their feedback and concerns to be received
and addressed.
The integrity of the Bank’s internal control and management
information systems is the responsibility of three Board Com-
mittees: the Audit Committee, the Conduct Review Committee
and the Risk Review Committee.
The Board is responsible for ensuring that management develops
a considered and creative strategic plan which takes into
account market and regulatory realities. All-day strategy sessions
offer directors the opportunity to gain a full appreciation of
the Bank’s planning priorities and to provide constructive feed-
back and direction to management as part of the Bank’s
strategic planning process.
The Board, through its Risk Review Committee, is responsible
for ensuring that the risk management framework implemented
by management incorporates a prudent and professional
approach to risk-taking. In 1999, the Bank’s risk management
program was further enhanced, including modifications to
the scope of the Committee’s mandate.
The Board’s Human Resources and Management Compensation
Committee is responsible for overseeing all aspects of succession
planning for senior management, including the succession to
the position of C.E.O.
100 Bank of Montreal Group of Companies 1999 Annual Report