Proxy Circular

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Proxy Circular ANNUAL MEETING APRIL 10, 2013 BANK OF MONTREAL Notice of Annual Meeting of Shareholders and Management Proxy Circular Please take a moment to vote. Your participation as a Shareholder is important to us. This document tells you who can vote, what you will be voting on and how to vote. Invitation to Shareholders Please join the Bank of Montreal’s Board of Directors and senior leadership team for the: Annual Meeting of Shareholders April 10, 2013 at 9:30 a.m. (local time) Delta Bessborough, 601 Spadina Crescent East, Saskatoon, Saskatchewan This important meeting is your opportunity to hear first-hand about our performance and plans for the future - and for us to respond to any questions you may have. We encourage you to attend in person or by webcast via the Internet. This meeting is also your opportunity to vote on important matters. Even if you plan to attend the meeting, please submit your proxy vote ahead of Invitation to Shareholders time by using the easy-to-follow procedure explained in this Management Proxy Circular. We urge you to make your vote count. Our website will carry live coverage of the meeting, as well as a recording after the meeting. Online, you can also find our 2012 Annual Report, our quarterly results, presentations to the investment community, and other useful information about us. Directors and management never lose sight of the fact that we guide this enterprise on behalf of you, our Shareholders. We look forward to your par- ticipation on April 10. Sincerely, J. Robert S. Prichard William A. Downe Chairman of the Board President and Chief Executive Officer February 28, 2013 Table of Contents Invitation to Shareholders 1 Directors 6 Notice of Annual Meeting of Shareholders of Nominees for Election to Board of Directors 6 Bank of Montreal 2 Continuing Education and Skills 14 Directors’ Compensation and Attendance 16 Management Proxy Circular 3 Corporate Governance 20 Annual Meeting of Shareholders 3 Report of the Audit and Conduct Review Committee 20 Management Proxy Circular 3 Report of the Governance and Nominating Committee 21 Business of the Meeting 3 Report of the Human Resources Committee 22 BMO’s Financial Statements 3 Report of the Risk Review Committee 23 Electing the Board of Directors 3 Statement of Corporate Governance Practices 24 Appointing Auditors 3 Board Mandate 30 Voting on our Approach to Executive Compensation 3 Considering Shareholder Proposals 4 Indebtedness of Directors and Executive Officers 31 Voting Information 4 Directors’ and Officers’ Insurance 31 Items of Business 4 Normal Course Issuer Bid 31 Who Can Vote 4 Shareholder Proposals 32 Voting Instructions for Non-registered Shareholders 4 Compensation Discussion and Analysis 36 Voting instructions for Registered Shareholders 4 Message from the Chair of the Human Resources Committee 37 Voting by Proxy 4 Compensation Governance and Oversight 39 Confidentiality 5 BMO’s Approach to Executive Compensation 41 Contacting the Bank’s Transfer Agent 5 Compensation Program 45 Questions at the Meeting 5 2012 Results 49 Shareholder Proposals Next Year 5 2012 Compensation for the Named Executive Officers 52 Date of Circular 5 Executive Compensation Tables 58 Other Information 63 Additional Disclosure 66 Directors’ Approval 68 1 Bank of Montreal Management Proxy Circular Notice of Annual Meeting of Shareholders of Bank of Montreal When: Wednesday, April 10, 2013 at 9:30 a.m. (local time) Notice of Annual Meeting Where: Delta Bessborough, 601 Spadina Crescent East, Saskatoon, Saskatchewan The meeting will be held for the following purposes: 1. receive the consolidated financial statements of Bank of Montreal (the “Bank”) for the financial year ended October 31, 2012; and the Shareholders’ Auditors’ report on those statements; 2. elect the Board of Directors for 2013; 3. appoint the Shareholders’ Auditors for 2013; 4. consider and, if deemed fit, approve an advisory resolution on the Bank’s approach to executive compensation; 5. consider the Shareholder proposals set out starting on page 32 of the management proxy circular; and 6. transact any other business properly brought before the meeting. Shareholders as at March 1, 2013 will be entitled to vote at the meeting. The number of eligible votes* that may be cast at the meeting is 652,776,083, such number being the total number of common shares of the Bank outstanding on March 1, 2013. Whether or not you plan to attend the meeting in person, please complete the enclosed form of proxy or voting instruction form and return it in the postage prepaid envelope provided, or follow the instructions on the form in order to vote your Shares. For your vote to be recorded, your proxy vote must be received by our transfer agent, Computershare Trust Company of Canada, no later than 5:00 p.m. (Eastern Daylight Time) on April 9, 2013. To vote in person at the meeting, please see the section “Voting Information” on page 4 of the management proxy circular. By order of the Board of Directors, Barbara M. Muir Senior Vice-President, Deputy General Counsel, Corporate Affairs and Corporate Secretary February 28, 2013 * The actual number of eligible votes may be fewer due to voting restrictions set forth in the Bank Act as described on page 5 under “Who cannot vote”. Bank of Montreal Management Proxy Circular 2 Management Proxy Circular Annual Meeting of Shareholders The annual meeting of Shareholders of the Bank on April 10, 2013 is our opportunity to discuss the Bank’s performance and our plans for the future. It is also your opportunity to vote on important matters. We encourage you to vote. Management Proxy Circular This circular provides Shareholders with important information to make voting decisions. References to ”BMO”, the “Bank”, “we”, “our” or “us” mean Bank of Montreal and where applicable, our subsidiaries. References to “Shareholders” mean Shareholders of the Bank and references to “Shares” mean common shares of the Bank. References to the “Board” mean Bank of Montreal’s Board of Directors. Business of the Meeting Business of the Meeting The meeting will cover the following five items of business: Auditors’ fees The Bank paid the fees below to the Shareholders’ auditors in the fiscal 1. BMO’s Financial Statements years ended October 31, 2012 and 2011: You can find BMO’s consolidated financial statements for the October 31, Fees in millions of dollars (1) 2012 2011 2012 year end in our 2012 Annual Report. Audit fees $15.8 $13.8 Audit-related fees (2) 1.7 0.8 Tax fees 0.0 0.0 2. Electing the Board of Directors All other fees (3) 1.2 0.2 Information about the director nominees starts on page 6. All but one, Total $18.7 $14.8 Jan Babiak, were elected as directors at the Bank’s previous annual meeting of Shareholders. Ms. Babiak was appointed to the Board of Notes Directors on October 23, 2012. The directors you elect at this meeting (1) The classification of fees is based on applicable Canadian securities laws and United States Securities and Exchange Commission definitions. will hold office from the close of the meeting until the next annual (2) Audit-related fees for 2012 and 2011 related to fees paid for accounting advice, specified meeting or until their successors are elected or appointed. procedures on the Management Proxy Circular and other specified procedures. (3) All other fees for 2012 and 2011 relate primarily to fees paid for reviews of compliance If Robert Prichard or William Downe is your proxyholder and you with regulatory requirements for financial information and reports on internal controls over haven’t given instructions on how to vote, he will vote for all of the services provided by various BMO Financial Group businesses. Also included in 2012 and 2011 were translation services. nominees listed in this circular. If, for any reason, at the time of the meeting any of the nominees are unable to serve, and unless you have specified otherwise, Robert Prichard or William Downe may vote at their 4. Voting on our Approach to Executive Compensation discretion for a substitute nominee or nominees. The governing objective of our executive compensation program is to align executive interests with those of our Shareholders. This objective Majority vote for directors is reflected in our philosophy of pay for performance based on com- The Bank has a majority voting policy for the election of directors. If a petitive market practice, without encouraging excessive or inappropriate director standing for election or re-election in an uncontested election risk taking. You can find the details of our executive compensation pro- receives more withheld votes than for votes, he or she must offer to gram starting on page 41 of this circular. resign. The Governance and Nominating Committee will recommend to The Bank believes that our approach is in the Shareholders’ best the Board whether to accept or reject the resignation. The nominee will interests, because executives and Shareholders share the common goal not participate in this decision. of success and improved Shareholder value. Independent studies com- missioned by the Human Resources Committee support the approach 3. Appointing Auditors we’ve taken. We are asking you to vote on the way we compensate our execu- The directors propose to appoint KPMG LLP as the Shareholders’ auditors tives. This vote is advisory and non-binding. However, it will influence for the 2013 fiscal year. KPMG LLP has been one of the Bank’s auditing how the Human Resources Committee looks at compensation in the firms since 1990, and became the Bank’s sole auditing firm on future. November 1, 2003. If Robert Prichard or William Downe is your proxy- The resolution, which needs a majority vote to be approved, is: holder and you haven’t given instructions on how to vote, he will vote “Resolved, on an advisory basis and not to diminish the role and for the appointment of KPMG LLP as the Shareholders’ auditors.
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