Bank of Montreal 2010 Annual Report Download - page 21

BMO Financial Group 193rd Annual Report 2010 19
Corporate Governance
CORPORATE DIRECTORY
• Our core values guide the board’s oversight, relationship with
management and accountability to shareholders
• Our governance responsibilities are integral to our performance
and long-term sustainability
• We embrace high standards of corporate governance, which reflect
not only applicable legal and regulatory requirements but also
evolving best practices
• Sound corporate governance is the foundation for responsible
business behaviour towards our shareholders, employees,
customers, and the communities and environment in which
we operate
“ The Board of
Directors of
Bank of Montreal
is committed
to leadership
in corporate
governance.”
David Galloway
Chairman of the Board
The bank’s director and executive compen-
sation programs are strongly aligned with
governance best practices. Minimum share
ownership requirements for directors and
executives ensure the alignment of interests
with shareholders. Our executive compen-
sation programs establish clear pay for
performance linkages. The programs, which
include the use of clawbacks, do not
encourage excessive risk-taking.
The board and its committees play a central
role in the enterprise’s risk management
framework, including through the approval
of our corporate policies and the guidance
provided by the risk review committee
of the board.
The board supports the bank’s efforts
to communicate with its shareholders and
other stakeholders through a variety of
channels, including the annual report, proxy
circular, quarterly reports, annual information
form, news releases, website and industry
conferences. In 2010, the board approved
a shareholder engagement policy promoting
open dialogue and the exchange of ideas
with the bank’s shareholders.
Bank of Montreal’s Board of Directors is
responsible for the supervision of manage-
ment of the business and affairs of the bank
with the objective of enhancing shareholder
value. The recent financial crisis has high-
lighted the importance for the board to
provide well-informed strategic direction
and oversight that looks beyond short-term
financial performance. The board’s focus
on corporate governance is seen in its
various practices and procedures.
The board has adopted position descriptions
for the Chairman of the Board, the commit-
tee chairs and the directors, all of which are
available on our website. The board’s man-
date outlines the general responsibilities of
the board, while the bank’s board approval
and oversight guidelines define the roles
and responsibilities of the board and man-
agement and explicitly delineate the lines
of accountability within the bank.
The Chairman of the Board is an independent
director who ensures that the board oper-
ates separately from management and that
directors have an independent leadership
contact. The Chairman manages the affairs
of the board, with a view to ensuring that
the board functions effectively and meets
its obligations and responsibilities, including
its responsibilities to shareholders. In 2010,
the board approved a written process for the
appointment of the Chairman of the Board.
FirstPrinciples, our comprehensive code
of business conduct and ethics, provides
a frame work for directors, officers and
employees on their conduct and ethical
decision-making. The board, through its
Audit Committee, reviews the operation of
FirstPrinciples. Each year, every director,
officer and employee must sign an acknowl-
edgement that they have read, understood
and complied with FirstPrinciples.
Our whistleblower procedures allow
officers and employees to report violations
of FirstPrinciples, and concerns regarding
accounting, internal accounting controls or
auditing matters on a confidential and
anonymous basis. The board believes that
providing a forum for employees and
officers to raise concerns about ethical con-
duct and treating all complaints with the
appropriate level of seriousness, including
escalation to the board and Audit Committee
where appropriate, fosters a culture of
ethical conduct within the bank.