As I said, our proposal dealt with limiting the number of boards on which a director can sit at the same time.
We were saying that, right now, what exists is the old boys' club rule where “I appoint you, you appoint me and we appoint one another”, which makes boards of directors increasingly less efficient and less representative of shareholders. We believe that the number of boards of directors on which a person is allowed to sit should be very limited, because one needs time and a minimum of dedication to do a good job. The bill completely ignores those recommendations.
Second, there is the elimination of potential conflicts of interests between board members and those who provide goods and services to the institution. Our proposal dealt with the elimination of potential conflicts of interests between board members and service providers.
Bill C-8 contains no provision to that effect, except the general provision on very general conflicts of interests. As we know, in the United States and even in Canada, there has been some success in getting shareholders meetings to pass, often against the will and recommendations of bank managers and other corporate directors, resolutions making it a requirement to disclose at least the fees paid to external auditors for audit services, on the one hand, and general consulting services, on the other hand.
For example, a consultant who is paid $1 million to audit records, while at the same time being paid $10 million for various consulting services could presumably have some difficulty presenting a critical internal audit report. Everyone understands that.
Third, there is the requirement to submit financial statements for review and discussion during the annual shareholders' meeting. That proposal seeks to clarify the legislation so that the agenda of the yearly shareholders' meetings include the item “consideration of financial statements and auditor's report”.
In that regard, according to the Canadian Oxford Dictionary , the word consideration means more than just tabling, but the act of considering and careful thought means not just tabling, but giving careful thought.
Since the financial statements are the main report of the agents on their management of the corporation, consideration and discussion of that document is a basic right of the principal shareholders, even those of banks.
There is also the presentation of the officers' remuneration policy to the shareholders' approval. With respect to banks, which are essentially public service companies operating in a very protected environment compared to other companies in the private sector, we find the remunerationpaid to officers literally outrageous.
Of course we know the process through which they receive very positive recommendations about remuneration systems providing they are paid this or that amount. Nevertheless, the end result is that the officers of these institutions are not necessarily paid a basic salary, but aggregate remuneration with a very generous option plan, and that is unacceptable.
As for the adoption of a code of procedure respecting the conduct of shareholders' meetings, the purpose of this proposal is to facilitate active and effective shareholder participation in meetings and to protect them from the arbitrary decisions of presiding officers who are anxious to cut short shareholders' remarks. Our suggestion is that each corporation prepare a code of procedure respecting the conduct of these meetings and that this procedure be adopted at an annual meeting of shareholders within a reasonable timeframe.
Some banks, and more particularly the Laurentian Bank, have voluntarily adopted such a code, but it is not a requirement of the bill.
Corporations should also be required to prepare a comprehensive report on all shareholders' meetings and send it to all shareholders. Our recommendation is that corporations be required to do so. Some of them already do, but there is no requirement to that effect in the bill.
Another suggestion is to reduce the barriers that prevent shareholders from making proposals before and during shareholders' meetings. This suggestion is being made generally rather than by the board or the management of banks exclusively. At this time, a shareholder must hold 5% of the shares of a financial institution or public corporation or have control to be entitled to present candidates as directors on the board.
Do members know how much 5% of the Royal Bank shares represents? It represents $900 million. I do not think any members has that much money or has the proposed control of a bank to be able to present candidates. I do not know too many people with that kind of money.