Bank of Montreal 2002 Annual Report Download - page 13

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BMO FINANCIAL GROUP ANNUAL REPORT
2002
9
With both independence and effectiveness in mind,
the Board also authorizes individual directors to engage
outside advisors at the expense of BMO in appropriate
circumstances. Board committees, under the direction of
the committee chairs, are also able to engage independent
consultants as needed.
Accountability
The Board of Directors is responsible for ensuring the
accountability of the Board as a whole and the committees
of the Board. To fulfill this responsibility, the Board assesses
the contributions of each director and the adequacy and
form of compensation paid to directors. Together with the
CEO, the Board also develops position descriptions for the
Chairman and CEO as well as annual corporate objectives
that the CEO is responsible for meeting.
To further ensure accountability, the Board sponsors
an annual review of Board effectiveness in corporate
governance. Conducted by outside consultants, the survey
assesses areas ranging from the operational effectiveness
of the Board and its committees to the Chairman’s role and
succession planning.
As well, the Board oversees an annual director peer
feedback performance review. The survey, which is com-
piled by an outside consultant to ensure confidentiality,
requires each director to assess the contribution of each of
his or her peers on a wide variety of measures including
ethics, strategic insight, financial literacy, business judg-
ment, participation and communication. Both the Board
and peer assessments enable the Board to examine its
effectiveness and establish goals for constant improvement.
The Board, through the Governance Committee, also
assesses the performance of the Chairman and CEO in
his role as Chairman, while the Human Resources and
Management Compensation Committee evaluates his per-
formance as CEO.
The Board additionally benchmarks directors’ com-
pensation annually against BMO’s peer group in order to
ensure their compensation reflects the responsibilities and
risks involved in serving as a director. To further align
directors’ interests with those of shareholders, at least 50%
of a director’s annual retainer must be paid in Bank stock or
in deferred share units, with an option to receive 100% of
both the retainer and any fees in this manner. In addition,
directors are required to hold either common shares or
deferred share units with a value of not less than six times
their annual retainer.
At the same time, the Board abides by a set of policies,
which include an attendance requirement stipulating that
directors must attend 75% of meetings, as well as manda-
tory retirement at age 70 and resignation (for acceptance
orrejectionbytheBoard)uponachangeinprincipal
occupation.
At BMO Financial Group, we are committed to main-
taining and building upon our reputation as a leader in
corporate governance. Like the independent experts who
commend our actions, we believe that effective corporate
governance benefits our shareholders, employees,
com-
munities
–
and our business.
For a more detailed report on our corporate governance
program, please refer to our Proxy Circular.
JOSEPH L. ROTMAN,O.C.,LL.D.
Toronto, Ontario
Chairman and Chief Executive Officer
Roy-L Capital Corporation
GUYLAINE SAUCIER,C.M.,F.C.A.
Montreal, Quebec
Corporate Director
NANCY C. SOUTHERN
Calgary, Alberta
Co-Chairman and Chief Executive Officer
ATCO Ltd. and Canadian Utilities Limited
J. ROBERT S. PRICHARD,O.C.,O.Ont.
Toronto, Ontario
President and Chief Executive Officer,
Torstar Corporation
JEREMY H. REITMAN
Montreal, Quebec
President, Reitmans (Canada) Limited