ANNUAL MEETING APRIL 10, 2013

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 1 4 3 3 Information Voting 1 Officer Executive Chief and President Downe A. William Meeting the of Circular Proxy Management of Shareholders of Meeting Annual of Notice Shareholders to Invitation Contents of Table 2013 28, February Board the of Chairman Prichard S. Robert J. par- your to forward look We Shareholders. our you, of Sincerely, behalf on enterprise this guide our we Report, that 10. Annual fact April 2012 the on our of ticipation find sight also lose can never you management us. Online, and about meeting. Directors information the useful after recording other and a community, as investment well of the as ahead count. to meeting, vote vote presentations the proxy your results, of your make quarterly coverage submit to live please you carry meeting, urge will the We website attend Circular. Our to Proxy plan Management you this if in Even explained procedure matters. questions easy-to-follow important any the on to using vote respond by to to time opportunity Internet. us your the for also via and is webcast - meeting by future This the or for person plans in and attend performance to our you about encourage first-hand We have. hear may to you opportunity your is meeting important This the: for team leadership senior and Directors of Board Montreal’s of Bank the join Please Shareholders to Invitation aeo iclr5 5 4 5 5 4 4 5 3 4 Circular of Date Year Next Proposals 4 Shareholder Meeting the 4 at 3 Questions Agent Transfer 3 Bank’s the Contacting Confidentiality Proxy by 3 Voting Shareholders Registered for instructions Voting Shareholders Non-registered for 3 Instructions Voting 3 Vote Can Who Business of Items Proposals Compensation Shareholder Executive Considering to Approach our on Voting Auditors Appointing Directors of Board the Electing Statements Financial BMO’s Circular Proxy Management Shareholders of Meeting Annual ako Montreal of Bank ako otelMngmn rx Circular Proxy Management Montreal of Bank et esoog,61SaiaCecn at akto,Saskatchewan Saskatoon, East, Crescent Spadina 601 Bessborough, Delta pi 0 03a :0am lcltime) (local a.m. 9:30 at 2013 10, April nulMeigo Shareholders of Meeting Annual 2 ietr’Apoa 68 32 Approval Directors’ 31 30 36 31 6 Analysis and Discussion 20 Compensation Proposals Shareholder 31 Bid Issuer Course Normal Insurance 24 Officers’ and Directors’ Officers Executive and Directors of Indebtedness Mandate Board Practices Governance Corporate of Statement Governance Corporate Directors te nomto 63 66 49 58 45 52 41 39 Disclosure Additional Information Other Tables Officers Compensation Executive Executive Named the for Compensation 2012 Results 2012 Program Compensation Compensation 37 Executive to Approach BMO’s Committee Oversight Resources and Human Governance the Compensation of Chair the from Message 23 22 14 16 20 21 6 Committee Review Risk the of Committee Report Resources Human the Committee of Nominating Report and Governance Committee the Review of Conduct Report and Audit the of Report Attendance and Compensation Directors’ Skills and Directors Education of Continuing Board to Election for Nominees Notice of Annual Meeting 2 Bank of Montreal Management Proxy Circular Delta Bessborough, 601 Spadina Crescent East, Saskatoon, Saskatchewan Wednesday, April 10, 2013 at 9:30 a.m. (local time) as described on page 5 under “Who cannot vote”.

and the Shareholders’ Auditors’ report on those statements; Bank Act * The actual number of eligible votes may be fewer due to voting restrictions set forth in the February 28, 2013 Barbara M. Muir Senior Vice-President, Deputy General Counsel, Corporate Affairs and Corporate Secretary By order of the , Whether or not you plan toand attend return the it meeting in in the person, postageyour please prepaid vote complete envelope to the provided, be enclosed or recorded, form followlater your of the than proxy proxy instructions vote 5:00 or on p.m. must voting the (Eastern be instruction form Daylight receivedInformation” form Time) in on by on order page our April to 4 transfer 9, vote of agent, 2013. your the Computershare To Shares. management Trust vote For proxy Company in circular. of person Canada, at no the meeting, please see the section “Voting Shareholders as at March 1, 2013meeting will is be 652,776,083, such entitled number to being vote the at total the number meeting. of The common number shares of of eligible the votes* Bank that outstanding may on be March cast 1, at 2013. the 1. receive the consolidated financial statements of Bank of2. Montreal (the elect “Bank”) for the the Board3. financial of year Directors ended appoint for the October 2013; Shareholders’ 31,4. Auditors 2012; for 2013; consider and, if5. deemed fit, consider approve the an Shareholder advisory6. resolution proposals set on the out transact Bank’s starting any approach on other to page business executive 32 properly of brought compensation; before the management the proxy meeting. circular; and The meeting will be held for the following purposes:

Shareholders of Bank of Montreal When: Where: Notice of Annual Meeting of Business of the Meeting 3 regulations. securities and comply standards auditors professional Shareholders’ and the policy by the ensure provided with to services Policy audit Independence the Auditor all Bank’s that proc- the rigorous under A applied helps auditors. is and Shareholders’ ess interest the of of conflicts independence services. from the specific function ensure for audit budgets the annual protect in helps or This basis case-by-case auditors, a Review Shareholders’ on Conduct the either and from Audit services the all audi- Moreover, pre-approves Shareholders’ Bank. Committee the the that to services provide other can limiting tors policy strict a have We auditors of Independence vote will he vote, to how proxy- on your instructions for is given Downe haven’t William you or and on Prichard holder firm Robert auditing auditing If Bank’s sole 2003. the Bank’s 1, of the November one became been and has 1990, LLP since auditors KPMG firms Shareholders’ year. the fiscal as 2013 LLP the KPMG for appoint to propose directors The Auditors Appointing 3. will nominee The decision. resignation. this the in reject participate or not accept to to recommend whether will Board Committee the Nominating and Governance The resign. election a uncontested If an directors. in more of re-election receives election or the election for for policy standing voting director majority a has Bank The directors for vote Majority vote will he vote, to how on instructions given haven’t appointed. annual or next elected the are until successors meeting their the until meeting of or this close meeting at the elect from you office directors hold of The will Board 2012. the 23, to October appointed on annual was Directors previous Babiak Bank’s Ms. the Shareholders. one, at of but directors meeting All as 6. elected page were on Babiak, starts Jan nominees director the about Information Directors of Board the Electing 2. Report. Annual 31, 2012 October our the in for end statements year financial 2012 consolidated BMO’s find can You Statements Financial BMO’s 1. business: of items five following the cover will meeting The Meeting the of Directors. of Business Board “Shares” Montreal’s to of references Bank and mean mean Bank “Board” “us” the the or of to “our” Shareholders References “we”, mean Bank. “Bank”, “Shareholders” the the to of References ”BMO”, shares subsidiaries. to common References our mean applicable, decisions. where voting and make Montreal to of information Bank important with It Shareholders future. provides the circular for This plans our and performance Circular vote. Bank’s Proxy to the you discuss Management encourage to We opportunity matters. our important is on 2013 vote 10, to April opportunity on your Bank also the is of Shareholders of meeting annual The Shareholders of Meeting Annual Circular Proxy Management iceinfrasbttt oie rnominees. their or at nominee vote substitute have may a you Downe for unless William discretion and or the serve, Prichard of to Robert time unable otherwise, the are specified at nominees reason, the any of for any If, meeting circular. this in listed nominees h ponmn fKM L steSaeodr’auditors. Shareholders’ the as LLP KPMG of appointment the ako otelMngmn rx Circular Proxy Management Montreal of Bank fRbr rcado ila on syu rxhle n you and proxyholder your is Downe William or Prichard Robert If withheld oe than votes for oe,h rsems fe to offer must she or he votes, for l fthe of all nomto so ae2 fti circular. this of contact 29 Applicable page Directors. on of is Board information you the or with program directly compensation communicate executive can our on questions and ments vote will he vote, to how on instructions given haven’t h akpi h esblwt h hrhles uiosi h fiscal the 2011: in and auditors 2012 Shareholders’ 31, the October to ended below years fees the paid Bank The fees Auditors’ o h ua eore omte ok tcmesto nthe in compensation at influence looks future. will Committee it Resources However, Human non-binding. the and how advisory is vote This tives. approach the support taken. Committee we’ve Resources com- Human studies the Independent by value. missioned Shareholder goal improved common and the success share of Shareholders and executives because interests, circular. pro- this compensation of executive 41 our page of on details starting the gram find can inappropriate You com- or taking. on excessive risk based encouraging performance without for practice, pay market of petitive objective philosophy This our Shareholders. in our reflected of is to those is with program interests compensation executive executive align our of objective Compensation governing Executive The to Approach our on Voting 4. ui-eae es(2) fees Audit-related fees Audit (1) dollars of millions in Fees a fees Tax l te es(3) fees other All Total 3 l te esfr21 n 01rlt rmrl ofe adfrrveso compliance of reviews for paid fees to primarily relate 2011 and 2012 specified for advice, fees accounting other for All paid fees (3) to related 2011 and States 2012 United for and fees laws Audit-related securities Canadian (2) applicable on based is fees of classification The (1) Notes o a otc h oprt ertr’ eatetwt com- with Department Secretary’s Corporate the contact can you You and proxyholder your is Downe William or Prichard Robert If Bank.” the of 2013 Shareholders the of of Meeting advance Annual in this delivered in Circular disclosed Proxy compensation Management executive Shareholders to the approach and that the role Directors, accept the of diminish Board to the not of and responsibilities basis advisory an on “Resolved, h eouin hc ed aoiyvt ob prvd is: approved, be to vote majority a needs which resolution, The execu- our compensate we way the on vote to you asking are We best Shareholders’ the in is approach our that believes Bank The evcspoie yvrosBOFnnilGopbsnse.As nlddi 02and 2012 in included Also services. . over translation Group controls were Financial internal 2011 BMO on various reports by and provided information services financial for requirements regulatory with procedures. specified other and Circular Proxy Management the on procedures definitions. Commission Exchange and Securities for $15.8 $18.7 2012 1.7 0.0 1.2 hsresolution. this $13.8 $14.8 2011 0.8 0.0 0.2 Voting Information 4 The . For the Share- from voting. If against abstain or or for . For other voting matters except Bank of Montreal Management Proxy Circular for, against withhold or for the Shareholder proposals the election of the nominee directorsthe to appointment the of Board the Shareholders’ auditors the advisory resolution approving Bank’s approach to executive If you properly complete and return your proxy form or voting the Corporate Secretary of the Bankday not before later the than meeting the (or last anyadjourned) business adjournment, at if the the address, meeting fax is numberof or this email circular provided on pagethe 29 Chairman before the meeting starts or any adjournment continues for for for compensation against by mail, in the envelope provided by fax, to 1-866-249-7775 (if faxingUnited within States) Canada or and 416-263-9524 the (other countries) by using the internet by goinging to the www.investorvote.com instructions and on follow- the screen Voting by Proxy You can choose any person orenclosed company proxy as form your or proxyholder. voting instructionWilliam form Downe, names each Robert a Prichard director or ofwish the instead Bank, to as appoint your your proxy-holder. ownname If in proxyholder, you write the that blank person’s space. YourShareholder proxyholder of does the not Bank. have Make to surethe be your meeting a chosen and proxyholder vote will for attend you.holder, If then you Robert don’t Prichard appoint or your William own Downe proxy- will vote for you. you have given voting instructions ininstruction your form, proxy your form proxyholder or must voting voteinstructions. according If to you those have not givenor voting voting instructions instruction in form, your your proxy proxyholderYour form will proxyholder decide will how also to decide vote. howvariation to to vote any of on the any matters amendmentmatters or in that the are notice properly of brought the before meeting the or meeting. any new instruction form, but do not appointgive another specific voting proxyholder and instructions, do Robert Prichard not vote or for William you Downe as will follows: holder proposals, you may vote the Shareholder proposals, you may vote How Your Proxyholder Will Vote For the election of directors andauditors, the you appointment may of vote the Shareholders’ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Returning the Proxy Form If you are a registered Shareholderhow the to enclosed submit proxy your form voting tellsshare, instructions. you must Our receive transfer it agent, by Computer- noon later April than 9, 5:00 2013. p.m. You (Eastern mayways: Daylight return Time) your proxy in one of the following Returning the Voting Instruction Form If you are a non-registered Shareholder,as return provided your by voting your instructions intermediary onRemember the that voting your instruction intermediary form. must receivein your sufficient voting time instructions for your intermediarycount, to it act must on be it. received For by(Eastern Computershare your Daylight by vote Time) no to on later April than 9, 5:00 2013. p.m. If You Wish to Change YourIf Voting you Instructions are a registered Shareholderhow and you you have change voted, your you mind mustyour about deliver instructions a to signed one written of notice the changing following people: against from voting on abstain , do not complete or , insert your name in the and vote in person, you and vote in person, you ,or for, against rshare Trust Company of Canada.

Appointment of the Shareholders’ auditors Approval of approach to executive compensation Shareholder proposals Election of directors return the enclosed proxy form butWhen bring you it arrive with at you the to meeting,Computershare. please the register meeting. with our transfer agent, If you do not intend tocan attend either the mark meeting your voting instructionsproxy in form the or voting choose section another of personthe the – meeting called and a vote proxyholder your – Sharesto to for complete attend you. and In return either the case, enclosed you proxy will form need to Computershare. Voting Instructions for Registered Shareholders You are a registered Shareholder ifdirectly the in Shares your you name. own If are thatShare registered is certificate or the a case, your statement name fromfirming appears a your on direct shareholdings. your registration system con- If you wish to vote in person at the meeting You are a non-registered Shareholder iffor the you Shares in you the own name are ofsecurities registered an broker intermediary, or such trust as company. a MostShareholders. bank, Shareholders If investment are you dealer, non-registered are a non-registeredwill Shareholder, send your you intermediary a voting instructionrecords form of with your this shareholdings circular. as We afollow may non-registered the not Shareholder, instructions have so from you your must intermediary to vote. Ifyouwishtovoteinpersonatthemeeting Voting Instructions for Non-registered Shareholders space provided for the proxy-holder appointmentform, in and the return voting it instruction as instructedthe by voting your section intermediary. of Do the not votingperson complete instruction at form, the since meeting. you When will youwith vote arrive our in at transfer the agent, meeting, Compute please register If you do not intend tocan attend either the mark meeting your voting instructionschoose on another the person voting – instruction called form avote or proxyholder your – Shares to for attend you. the Inreturn meeting either your and case, voting you instruction will form need as to instructed complete by and your intermediary. Who Can Vote You have the right to votevote if per you Share owned – Shares unless on youvote”. are March On described 1, that below 2013 date, under – we “Who one had cannot 652,776,083 Shares outstanding. ‰ ‰ ‰ each of them. If Robert Prichardand or you William haven’t given Downe instructions is on youreach how proxyholder of to these vote, proposals. he will vote ItemsofBusiness At the meeting, you will vote‰ on: Voting Information 5. Considering Shareholder Proposals The Shareholder proposals are set outfor starting you on to page consider. 32 You of may this vote circular Each item other than the electionmajority of (more directors than needs 50%) approval of by votes a cast to be approved. Voting Information hpPa rEpoe hr ucaePa,yumyvt orSae in Shares your ways: vote following may the you of Plan, Owner- one Purchase Share Share Employee Employee Montreal or of Plan Bank ship the through Shares hold you If Shareholders Employee for Instructions Voting do. contact to person, what in out vote find and to meeting intermediary the your attend to about decide mind or your vote, change your and intermediary your to instructions voting the at Computershare, agent, meeting. transfer our with registering by meeting hrsbnfcal we ytefloigcno vote: cannot following the by owned beneficially Shares Vote Cannot calls. Who telephone any for charges plus approximately outside services, pay our their to using for expect vote, $32,000 We to Partners. you Advisory ask contact Phoenix to also CST call may agency, phone We or Bank. email the letter, by meet- by paid the you are at solicitation use pur- the for the of management for Costs Bank’s you ing. the to by sent proxies being soliciting is of circular pose This vote. to you encourage We Vote to You Encourage We reecsdcnrlo ieto vrmr hn1%o h aksout- Bank’s the of 10% than Shares. more standing over indirectly, direction or or directly control owned, exercised beneficially or entity or person one no 2013, on Finance). vote of any Minister cast the not by may permitted entity (unless or eligible Shares person the the that of cast, 20% be than may more that aggregate, votes the in are, that Shares owns 5 ‰ ‰ ‰ ‰ ‰ ‰ h ak(nesteMnse fFnnehsapproved) of has Shares Finance of of class Minister any the of (unless 10% Bank than the more acquired has who person agencies a any its of of subdivision any political or any country or foreign country foreign agencies a its of of government any the or province a of approved) government have Minister the Council the in (unless Governor agencies and its Finance of of any or Canada of Government the instructions voting the online following and www.investorvote.com Shareholders visiting non-registered by electronically for instructions voting the following by ako otelMngmn rx Circular Proxy Management Montreal of Bank fyuaeannrgsee hrhle n aertre your returned have and Shareholder non-registered a are you If the at person in voting by instructions your change also may You sfra h aksdrcosadofcr nw sa eray28, February at as know, officers and directors Bank’s the as far As beneficially person, a by controlled entity an or person, a if well, As o eea hrhle nure,cnatortase agent: transfer our contact inquiries, Shareholder general For Agent Transfer Bank’s the Contacting contest. proxy a is there with when communicate or to management legally intends is clearly Shareholder it a when when Bank necessary, the with proxies Com- discusses proxies. only the putershare counts Computershare confidential, voting keep To Confidentiality hscrua sdtdFbur 8 03 n l nomto sa tthat at as is information stated. all otherwise and unless 2013, date, 28, February dated is circular This Circular of Date sub- 2013. be 5, must November Shareholders by of mitted meeting annual next the for Proposals Year Next Proposals Shareholder the of any in business its and ways: Bank following the about questions ask can You Meeting the at Questions .B alt h oprt ertr tteadespoie on provided address the at Secretary Corporate the to [email protected] mail at By Secretary Corporate the to 5. email By www.bmo.com at webcast 4. the During Computer- with meeting 3. the for register you when writing In meeting the at 2. person In 1. ae2 fti circular this of 29 page share ihnCnd n h ntdSae t1-888-453-0330 at States United the and Canada within 1-800-340-5021 at States United the and Canada within optrhr rs opn fCanada of Company Trust Computershare rmalohrcutisa 416-263-9394 at countries other all from 514-982-7800 at countries other all from [email protected] oot,OtroMJ2Y1 M5J Ontario Toronto, 0 nvriyAvenue University 100 t lo,NrhTower North Floor, 9th ytelephone: by yemi at: e-mail by ymi at: mail by yfax: by Directors 6 0-5 (5/12 directors) years (4/12 directors) years 6-10 (3/12 directors) >10 years 100% (9/12 directors) 90% - 99% (2/12 directors) (1/12 directors) 89% - 80 Bank of Montreal Management Proxy Circular Board, their skills and continuing education, Non-Employee Nominees Attendance at Board and Committee Meetings Non-Employee Nominees Attendance at Board Length of Tenure of Non-Employee Nominees Length of Tenure of Non-Employee d) b) ion about the director nominees for election to the Industrials (5 directors) (1 director) Telecommunications (2 directors) Energy (4 directors) Care Health (4 directors) Discretionary Cons (4 directors) Staples Cons Utilities (1 director) IT (2 directors) Financial Services (5 directors) Financial Services (1 directors) Materials Ontario (6/12 directors) Quebec (2/12 directors) (1/12 directors) Canada Western (3/12 directors) U.S. ectors’ attendance at meetings.

Industry Expertise of Non-Employee Nominees Geographical Mix of Non-Employee Nominees Geographical Mix of Non-Employee

a) c) directors’ compensation and dir The effective management of anbelow organization provide of summary the information Bank’s about sizeof the and non-employee skills scope director and requires nominees experience dedication, serving of diversitydetailed on the and information the non-employee experience. about Board director Pie each at nominees. charts nominee the Pie a),public for end chart b), board election of d) and memberships. to fiscal shows c) The the 2012. the profiles Board, The attendance value also including director of disclose their nominee their information expertise, profiles total on committee on compensation the memberships, pages received securities meeting 7 in held attendance to fiscal by 13 and 2012. nominees provide as at February 28, 2013, as well as the Nominees for Election to Board of Directors The Board is responsible for supervisingrepresentatives. the This management section of provides the informat business and affairs of the Bank. As Shareholders, you elect the Board as your Directors Nominees for Election to Board of Directors aieM Babiak M. Janice g:55 Age: 7 Expertise: Industry Independent 2004 Since: Director Canada Ontario Waterloo, 68 Age: Astley M. Robert nutyExpertise: Industry (1) Independent 2012 Since: Director States United Tennessee Franklin, iaca Services Financial nomto Technology Information Services Financial Staples Consumer Discretionary Consumer ako otelMngmn rx Circular Proxy Management Montreal of Bank (1) fetv coe 3 02 s aikwsapitdt h or fDirectors. of Board the to appointed was Babiak Ms. 2012, 23, † October Effective * n saFlo fteCnda nttt fActuaries. of Institute Canadian the the of from Fellow graduated a He is Board. and Investment unt CPP held the he of position director a a Canada, Financial Financi Life Life Sun through Sun of stakeholders and President its Clarica and of organization operations the the corporat led of a he combining and Canada, offering of public Life initial Mutual an of demutualization, Officer Executive Chief and President as n elhisrnecmayhaqatrdi aelo nai,adfre rsdn fSnLf iaca Canada, Financial weal Life and Sun insurance of health President and former life and Canadian Ontario, the Waterloo, comprising in Ch headquartered and company President insurance former health the and is Director, Corporate a Astley, Bob 03—101101$6,5 0,0 5442 0.4 (534,442) $ 600,000 $ (Chair) 65,558 Audit $ Committee. (100%) Review 2 Conduct of and 2 2010-2012 Audit the 1,021 to appointed was Babiak Ms. 2012, 23, October Present Effective – 2012 April 1,021 DSUs) in ($16,083 $16,083 2012: 2012 FISCAL IN RECEIVED COMPENSATION TOTAL — (TOTAL) OF ATTENDANCE VALUE Nil (100%) 1 of 1 HELD Shares OPTIONS 2013 Year ATTENDANCE HELD SECURITIES plc Logica 2.7 Walgreens FIVE LAST THE DURING MEMBERSHIP BOARD PUBLIC Review Conduct and Audit Directors* of Board 472,324 $ MEMBERSHIP 12.7 qualifications. BOARD/COMMITTEE accounting, UK and US 15.4 as Univer well Wallace as Baldwin control, from and M.B.A an and Adv Oklahoma Responsibility of Corporate University their and si Wales includes and portfolio England current in Her j Committees. she Finance 1,626,037 2012 the $ In as Africa. well and India assurance 2,098,361 East, Servi global $ Middle Sustainability including Europe, and roles Northern Change of 472,324 Climate number R global a 600,000 and their held $ Security led she $ Technology and onwards, in 1990 roles from 600,000 leadership Kingdom $ P&L United advisory the and in 2,226,037 based $ Part and Managing 2009, former of a end 2,698,361 is $ Director, Corporate a Babiak, Jan (100%) 3,835 46 of 46 38,189 DSUs) in ($100,000 $213,000 42,024 2012: 2012 FISCAL (100%) IN 10 3,835 RECEIVED of COMPENSATION 10 TOTAL OF VALUE 26,704 Nil 30,539 — (TOTAL) ATTENDANCE 11,485 HELD OPTIONS (100%) 8 11,485 (100%) 20 of Change of 8 Net 20 Shares 2012 (100%) 8 of 2013 8 Year ATTENDANCE HELD SECURITIES None YEARS FIVE LAST THE DURING MEMBERSHIP BOARD PUBLIC Review Risk (Chair) Resources Human Nominating and Governance Directors of Board MEMBERSHIP BOARD/COMMITTEE (7) (7) (2) (2) † (DSUs) Units Share Deferred (DSUs) Units Share Deferred (3)(10) (3)(10) hrsadDSUs and Shares of Total hrsadDSUs and Shares of Total ER URN OR OMTE MEMBERSHIPS COMMITTEE BOARD CURRENT YEARS f1(100%) 1 of 1 tRisk at Amount Total tRisk at Amount Total aecag oCaiaLf nuac opn.Wt the With Company. Insurance Life Clarica to change name e e tEnt&YugLP nacutn im rm18 ni the until 1982 From firm. accounting an LLP, Young & Ernst at ner lSrie fCnd n.i 02 r slywsappointed was Astley Mr. 2002, in Inc. Canada of Services al e rcie h losre nE’ aaeetbadfor board management EY’s on served also She practice. ces ie h or fWlresweesesre nteAdtas Audit the on serves she where Walgreens of board the oined sr ru.Sercie ...i conigfo the from Accounting in B.B.A. a received She Group. isory hmngmn prtoso u ieFnnilIc n1999, In Inc. Financial Life Sun of operations management th lhsrtrmn nSpebr20.M.Ate sCara and Chairman is Astley Mr. 2004. September in retirement his il (4) (4) s evcsadRgltr n ulcPlc;adsefounded she and Policy; Public and Regulatory and Services isk tn nteCuclo h nttt fCatrdAccountants Chartered of Institute the of Council the on tting e xctv fie fCaiaLf nuac opn,alife a Company, Insurance Life Clarica of Officer Executive ief nvriyo aioawt nHnusdge nScience in degree Honours an with Manitoba of University iyadhlsitrainlifrainssessecurity systems information international holds and sity Required Minimum Required Minimum (5) (5) iiu Required Minimum Exceeding Amount iiu Required Minimum Exceeding Amount Finance URN OR OMTE MEMBERSHIPS COMMITTEE BOARD CURRENT (5) (5) nulRetainer Annual of Multiple a as Risk at Amount Total nulRetainer Annual of Multiple a as Risk at Amount Total (6) (6) Nominees for Election to Board of Directors 8 (6) (6) Total Amount at Risk as a Multiple of Annual Retainer Total Amount at Risk as a Multiple of Annual Retainer (5) (5) Bank of Montreal Management Proxy Circular Corporate Governance Amount Exceeding Minimum Required Amount Exceeding Minimum Required (5) (5) project, which aims to combat school dropout in Minimum Required Minimum Required ere she specialized in the energy field. She sits on the Board ve Officer of Gaz Métro, a natural gas distributor. Ms. Brochu is nada and BCE Inc., leading the transformation of Canada’s m 2000. Previously, he served as President and Chief Executive (4) (4) s for 13 years. Holding a Business Administration (Honours) d competitor through a strategy of broadband network or to joining Bell in 2005, Mr. Cope was President and Chief 80, ruelle de l’Avenir Total Amount at Risk Total Amount at Risk YEARS CURRENT BOARD COMMITTEE MEMBERSHIPS YEARS CURRENT BOARD COMMITTEE MEMBERSHIPS Total of Shares and DSUs Total of Shares and DSUs (3)(10) (3)(10) Deferred Share Units (DSUs) Deferred Share Units (DSUs) (2) (2) (7) (7) VALUE OF TOTAL COMPENSATION RECEIVED IN FISCAL 2012 2012: $176,500 ($176,500 in DSUs) PUBLIC BOARD MEMBERSHIP DURING THE LAST FIVE BCE Inc.Bell AliantNII Holdings, Inc.SECURITIES HELD Year20132012 Shares Net Change 9,660OPTIONS HELD 9,660 —Nil 19,782 15,006 4,776 29,442 2004 – 2010 2008 – 2008 24,666 Present – Present 4,776 $ 1,890,471 $ 1,437,781 $ 600,000 $ $ 452,690 600,000 $ 1,290,471 Chairman $ 837,781 10.8 $ 452,690 8.2 2.6 the Centre-Sud and Hochelaga Maisonneuve neighbourhoods. Nil VALUE OF TOTAL COMPENSATION RECEIVED IN FISCAL 2012 2012: $176,500 ($176,500.00 in DSUs) George Cope is President and Chief Executive Officer of Bell Ca Officer of national wireless carrier Clearnet Communication BOARD/COMMITTEE MEMBERSHIPBoard of DirectorsHuman Resources ATTENDANCE 19 of 20 (95%) 7 of 8 ATTENDANCE (88%) (TOTAL) 26 of 28 (93%) of Gaz Métro as well asMontreal on campaign the for Boards 2010 of and Bell is Canada also and involved BCE. in Ms. the Brochu was co-president of theBOARD/COMMITTEE Centraide MEMBERSHIP of Greater Board of DirectorsPUBLIC BOARD MEMBERSHIP DURING THE LAST FIVE BCE Inc.SECURITIES HELD ATTENDANCEYear20132012 Shares Net Change 20 ofOPTIONS 20 HELD (100%) — — ATTENDANCE (TOTAL) — 5,694 3,959 1,735 5,694 2010 3,959 – Present 1,735 26 of 26 (100%) largest communications company into a customer-focuse investment, service enhancement and cost efficiency. $Executive $ Pri 365,612 Officer 264,479 of national wireless $ carrier 101,133 Telus Mobility fro degree $ from 600,000 The University of Western $School Ontario, 600,000 of Audit Mr. Business. Cope serves on the $ university’s (234,388) Advisory Board of the $ Richard (498,867) Ivey $ 264,479 2.1 0.6 1.5 Sophie Brochu holds the position ofa President graduate and in Chief Economics Executi from Université Laval in Quebec City wh Audit and Conduct Review 6 of 6 (100%) (1) (1) Telecommunications Energy Industrials Industry Expertise: Age: 51 Toronto, Ontario Canada Director Since: 2006 Independent George A. Cope Industry Expertise: Age: 49 Bromont, Quebec Canada Director Since: 2011 Independent Sophie Brochu Nominees for Election to Board of Directors 9 Expertise: Industry Independent 2010 Since: Director States United Illinois Chicago, 60 Age: Edwards A. Christine Expertise: Industry Non-Independent 2007 Since: Director Canada Ontario Toronto, 60 Age: Downe A. William iaca Services Financial Care Health Energy Services Financial ako otelMngmn rx Circular Proxy Management Montreal of Bank (1) (1) fetv ac 0 02 s dad a pone oteBado ietr fTePninFn oit fteBn fMontreal. of Bank the of Society Fund Pension The of Directors of Board the to appointed was Edwards Ms. 2012, 20, March Effective * an of member a not was but Committees the of request the at appropriate, as part in or full in meetings, Committee attended Downe Mr. 2012, fiscal During * ebro h uhUiest eia etrBado Tru of Board Pres Center past Medical the University is Rush Downe the Mr. operations. of U.S., U.S. member B the Group’s Nesbitt In Financial BMO Bank). BMO of the and Directors of Group of subsidiaries Client Board Private the Markets, on Capital serves BMO Downe oversaw Mr. he Chairman, which Deputy in as role years a four Burns, served in Downe Clie served Mr. Private has that, Markets, he to Capital 1983, Prior BMO in Operatin U.S., Bank Chief & the was Canada joining he P&C Since 2007, including Group. 1, Financial March BMO to of Prior Officer capacities. Executive several Chief and President is Downe Bill e hne100445545$3697$36972.2 1.9 4.1 386,927 $ (264,308) $ 122,619 $ 600,000 $ 600,000 $ 335,692 $ 386,927 $ 722,619 $ (100%) 40 of 5,759 40 5,495 11,254 DSUs) in ($192,833 $192,833 2012: 2012 FISCAL IN RECEIVED COMPENSATION TOTAL OF 3,934 VALUE 4,495 8,429 (100%) (100%) 10 8 of Nil 10 of (TOTAL) 8 ATTENDANCE 1,825 HELD OPTIONS 1,000 2,825 (100%) 20 Change of Net 20 Shares 2012 2013 Year (100%) 2 of 2 ATTENDANCE HELD SECURITIES None FIVE LAST THE DURING MEMBERSHIP BOARD Montreal* PUBLIC of Bank the of Society Fund Pension The Resources Human 5,972,691 $ Review Risk Directors of Board MEMBERSHIP BOARD/COMMITTEE Competiveness. Law. Markets t of Capital from School for Education Maryland Center and of 26,092,262 Commerce English $ University of in the Chamber B.A. U.S. a 32,064,954 Audit the received $ the of Edwards The Chairs Board Ms. in and Oversight listed Committees, ac the is Nominating leading on and and a D.C. 2011 Executive Center, Washington and Trustees, Medical 2010 of University 2009, Board 7,183,750 Rush 2008, $ the for in on Committee serves and Super Compensation Edwards 8,778,000 Executive Illinois Ms. $ an 500. named Legal an was Services Business; Financial for of 7,566,941 area $ Leading 33,276,012 the $ in re nationally compliance, ranked law, is 40,842,954 Vice-Pr Company’s $ Executive the was for she responsibilities 2003, with Pr in Corporate Strawn the & in Winston Partner joining Capital a is Edwards Christine 570,870 (100%) 65,214 52 of 52 636,084 Present – 2011 Committee. 359,676 and 65. director page 53,009 a on (100%) as described 10 services as 412,685 of his Plan 10 for Option compensation receive not did Downe Mr. 211,194 (100%) 8 (TOTAL) of 12,205 ATTENDANCE HELD 8 223,399 OPTIONS Shares Change Net (100%) 20 2012 of 20 (100%) (100%) 8 6 2013 of of 8 6 Year HELD SECURITIES ATTENDANCE Inc. Manpower FIVE LAST THE DURING MEMBERSHIP BOARD PUBLIC Review* Risk Resources* Human Nominating* and Governance Review* Conduct and Audit Directors of Board MEMBERSHIP BOARD/COMMITTEE E the Toronto. of of of Directors member University of a Board and the (IMC) of of Conference University Chair Monetary the past International for the Bo Campaign is the The he on for (CCEE), he Director Executive, Executives Canada, a Campaign Chief In currently of Board. is Council Advisory and Canadian Canadian Hospital the its Michael’s of and St. Board Inc. the Catalyst on of Director Director a a is and Committee, Resources Bo Human the and on Compensation Director a Committee, Development and Committee (7) (2) (2) (DSUs) Units Share Deferred Units (3)(10) (8) n DSUs and Shares of Total n Units and Shares of Total ER URN OR OMTE MEMBERSHIPS COMMITTEE BOARD CURRENT YEARS MEMBERSHIPS COMMITTEE BOARD CURRENT YEARS tRisk at Amount Total r fS.McalsHsia onainadamme fthe of member a and Foundation Hospital Michael’s St. of ard euiisRglto yCabr S n America’s and USA Chambers by Regulation Securities d te swl sterCmesto n ua Resources Human and Compensation their as well as stees oot.Adtoal,M.Dwei or ebro The of member Board a is Downe Mr. Additionally, Toronto. cieGopo iso tan ..lwfr.Pirto Prior firm. law U.S. a Strawn, & Winston of Group actice rsHligCroainadBOFnnilCr.(both Corp. Financial BMO and Corporation Holding urns (4) tGop ehooyadOeain n oprt Marketing. Corporate and Operations and Technology Group, nt r fMnoe n.adamme fterExecutive their of member a and Inc. Manpower of ard uaoyadgvrmn eain ucin.M.Edwards Ms. functions. relations government and gulatory dmcmdclcne nCiao s dad evsin serves Edwards Ms. Chicago. in center medical ademic dn fteFdrlRsreAvsr oni,adi urnl a currently is and Council, Advisory Reserve Federal the of ident M iaca ru n he xctv fie,BONesbitt BMO Officer, Executive Chief and Group Financial BMO eUiest fMrln n .. ihhnr,from honors, with J.D., a and Maryland of University he fie,wt epniiiyfralo M’ prtn units operating BMO’s of all for responsibility with Officer, g ooi lbo hcg.M.Dwehlsa ...fo the from M.B.A. an holds Downe Mr. Chicago. of Club conomic a o nildt eev pin ne h o-fie ietrStock Director Non-Officer the under options receive to entitled not was tRisk at Amount Total sdn n he ea fie tBn n Corporation One Bank at Officer Legal Chief and esident Required Minimum (4) (5) Required Minimum iiu Required Minimum Exceeding Amount ua Resources Human (9) (5) iiu Required Minimum Exceeding Amount nulRetainer Annual of Multiple a as Risk at Amount Total (9) y (6) Nominees for Election to Board of Directors 10 (6) (6) Total Amount at Risk as a Multiple of Annual Retainer Total Amount at Risk as a Multiple of Annual Retainer (5) (5) Bank of Montreal Management Proxy Circular Governance & Nominating Amount Exceeding Minimum Required Amount Exceeding Minimum Required (5) (5) Minimum Required Minimum Required increasing responsibility, including Executive Vice- eral charities in Quebec including United Way of Greater e Dean’s Advisory Council of the Schulich School of Business. He ro Inc., a leading food retailer and distributor, since April (4) (4) to 1997. Mr. Farmer is director of Integran Technologies, and aic in 2003, he spent 25 years with McKinsey & Company, serving rs, a Toronto-based management and holding company with Total Amount at Risk Total Amount at Risk 3 of 3 (100%) YEARS CURRENT BOARD COMMITTEE MEMBERSHIP YEARS CURRENT BOARD COMMITTEE MEMBERSHIPS Total of Shares and DSUs Total of Shares and DSUs (3)(10) (3)(10) Deferred Share Units (DSUs) Deferred Share Units (DSUs) † (2) (2) (7) (7) Nil VALUE OF TOTAL COMPENSATION RECEIVED IN FISCAL 2012 2012: $105,083 ($105,083 in DSUs) President and Chief Operating Officer (2005).degree Mr. from La the Flèche University holds of an Ottawa.Montreal. MBA He from is Harvard involved Business with School sev and a law BOARD/COMMITTEE MEMBERSHIPBoardofDirectors*Audit and Conduct Review PUBLIC BOARD MEMBERSHIP DURING THE LAST FIVE Metro Inc.SECURITIES HELD ATTENDANCEYear2013 11of13(85%)2012 Shares Net Change 2,000OPTIONS HELD 2,000 — 2,549 ATTENDANCE (TOTAL) 2,549 14of16(88%) — 4,549 2,549 2008 – Present 2,000 $ 292,091 $ 175,511 $ $ 116,580 600,000 $ $ 600,000 (307,909) $ (483,420) $ 175,511 1.7 0.7 1.0 20132012Net Change 5,000OPTIONS HELD 5,000 —Nil 35,216VALUE 28,973 OF TOTAL COMPENSATION RECEIVED 6,243 IN FISCAL 2012 2012: $202,583 ($202,583 40,216 in DSUs) 33,973 6,243Eric La $ Flèche 2,582,269 is President and2008. Chief He $ Executive joined 1,980,286 Officer Metro of in $ Met 1991 600,000 and $ has held several $ positions 601,983 600,000 of $ 1,982,269 $ 1,380,286 14.8 $ 11.3 601,983 3.5 BOARD/COMMITTEE MEMBERSHIPBoard of DirectorsAudit and Conduct ReviewGovernance and Nominating*Human ResourcesThe Pension Fund Society of the Bank ofPUBLIC Montreal BOARD (Chair) MEMBERSHIP DURING THE LAST FIVE Valeant Pharmaceuticals International Inc. 4 of ATTENDANCE 4 (100%) Afexa Life Sciences Inc.SECURITIES HELD 5 of 6 of 2011 5Year – (100%) 6 Present (100%) 20 of 20 (100%) ATTENDANCE (TOTAL) Shares 8 of 8 (100%) October Talent 2011 & – 43 Compensation December of 12, 43 2011 (100%) Ron Farmer is Managing Director ofinterests Mosaic in Capital several Partne private companies. Prioras to the joining Managing Mos Partner for the Canadian practice from 1991 Valeant Pharmaceuticals International Inc. He alsoholdsaB.A.andanM.B.A.fromTheUniversityofWesternOntario. serves on th * Effective March 20,† 2012, Mr. Effective La March Flèche 20, was 2012, appointed Mr. to La the Flèche Board was of appointed Directors. to the Audit and Conduct Review Committee. * Effective March 20, 2012, Mr. Farmer was appointed to the Governance and Nominating Committee. (1) (1) Consumer Staples Financial Services Health Care Industrials Materials Industry Expertise: Age: 51 Montreal, Quebec Canada Director Since: 2012 Independent EricR.LaFlèche Industry Expertise: Age: 62 Toronto, Ontario Canada Director Since: 2003 Independent Ronald H. Farmer Nominees for Election to Board of Directors 11 Expertise: Industry Independent 1999 Since: Director Canada Ontario Toronto, 58 Age: Orsino, S. Philip Expertise: Industry Independent 1999 Since: Director Canada Ontario Toronto, 67 Age: Mitchell H. Bruce Industrials Care Health Discretionary Consumer Technology Information Industrials Energy Staples Consumer ako otelMngmn rx Circular Proxy Management Montreal of Bank (1) (1) .. F.C.A. O.C., fetv ac 0 02 r icelwsapitdt h or fDrcoso h eso udSceyo h ako Montreal. of Bank the of Society Fund Pension The of Directors Committee. of Nominating Board and the Governance to the appointed of was member Mitchell a Mr. be 2012, to 20, ceased March Mitchell Effective Mr. 2012, † 20, March Effective * e hne1 ,5 ,6 2,9 2,9 5.3 925,798 25.5 $ 30.8 3,859,302 $ 4,785,100 $ Audit 925,798 600,000 $ $ 600,000 $ 4,459,302 $ 5,385,100 $ (100%) 34 of 34 7,365 76,502 DSUs) in ($218,000 Present $218,000 83,867 – 2012: 2012 1998 FISCAL IN RECEIVED 7,355 COMPENSATION TOTAL OF VALUE 42,147 (TOTAL) ATTENDANCE Nil 49,502 10 34,355 (100%) HELD 20 OPTIONS of 20 (100%) 8 34,365 Change of Net 8 Shares 2012 (100%) 6 of 2013 6 Year ATTENDANCE HELD SECURITIES Inc. Group Clairvest FIVE LAST THE DURING MEMBERSHIP BOARD PUBLIC Nominating and Governance (Chair) Review Conduct and Audit Directors 2003 of the Board of recipient the was and 2004 MEMBERSHIP in BOARD/COMMITTEE Canada of Order Award. the Year of the Officer of an CEO appointed Outstanding was Canada’s Orsino Mr. Inte NYSE. Masonite and of TSX CEO the and President formerly o was manufacturer He a integrated Network. is global and a Toronto Inc., of Jeld-Wen University of the President from B.A. a has Orsino Philip 2012 FISCAL IN RECEIVED COMPENSATION TOTAL OF VALUE (TOTAL) ATTENDANCE HELD OPTIONS ATTENDANCE HELD SECURITIES FIVE LAST THE DURING MEMBERSHIP BOARD PUBLIC MEMBERSHIP BOARD/COMMITTEE aaa ehlsaBS.(os)fo ue’ nvriyada ...fo avr University. Harvard from M.B.A. an and University Queen’s from (Hons.) B.Sc. a holds He Canada. nttt o dacdRsac n a evdo h Boa the on served Q has of and Councillor Research a Advanced and for Trustees Institute of Board food the American of North Vice-Chair the is in interests with Office company Executive holding Chief and and President founder, is Mitchell Bruce e hne—684684$8030$80304.7 830,380 $ 21.9 26.6 3,223,882 $ 4,054,262 $ 830,380 600,000 $ $ 600,000 $ 3,823,882 $ 4,654,262 $ (97%) 35 of 6,884 34 65,601 DSUs) in ($188,417 $188,417 72,485 2012: 6,884 (100%) 2009 10 – of 45,601 2006 10 Nil 52,485 — 20,000 20,000 (95%) 20 Change of Net 19 Shares 2012 (100%) 3 2013 of 3 Year Limited Holdings Garbell Montreal of Bank the of Society Fund Pension The Review Risk Nominating* and Governance Directors of Board (7) (7) (2) (2) (DSUs) Units Share Deferred (DSUs) Units Share Deferred (3)(10) (3)(10) n DSUs and Shares of Total n DSUs and Shares of Total † ER URN OR OMTE MEMBERSHIPS COMMITTEE BOARD CURRENT YEARS MEMBERSHIPS COMMITTEE BOARD CURRENT YEARS f2(100%) 2 of 2 tRisk at Amount Total tRisk at Amount Total ensUiest,amme fteBado h Canadian the of Board the of member a University, ueen’s dadeeuiecmite fRde olg n UNICEF and College Ridley of committees executive and rd uligpout,adps himno nvriyHealth University of chairman past and products, building f (4) (4) ntoa oprto ni coe 05 hc a itdon listed was which 2005, October until Corporation rnational elwo h nttt fCatrdAcutns ei the is He Accountants. Chartered of Institute the of Fellow fPrinIdsre iie,aTrnobsdmanagement Toronto-based a Limited, Industries Permian of r rwn,poesn n ehooyidsre.M.Mitchell Mr. industries. technology and processing growing, Required Minimum Required Minimum (5) (5) iiu Required Minimum Exceeding Amount iiu Required Minimum Exceeding Amount (5) (5) nulRetainer Annual of Multiple a as Risk at Amount Total nulRetainer Annual of Multiple a as Risk at Amount Total (6) (6) Nominees for Election to Board of Directors 12 (6) (6) Total Amount at Risk as a Multiple of Annual Retainer Total Amount at Risk as a Multiple of Annual Retainer (5) (5) Bank of Montreal Management Proxy Circular Nominating and Compensation Pension and Benefits Governance and Environment Amount Exceeding Minimum Required Amount Exceeding Minimum Required (5) (5) Minimum Required Minimum Required Mr. Prichard is President Emeritus of the University of sly served as dean of law and as a professor specializing in also served as President and Chief Executive Officer of itish Columbia Progress Board and the National University of nguin Canada, a Trustee of the Hospital for Sick Children and a ncellor of The University of British Columbia from 1997 to June f Chicago and earned law degrees at the Economic Advisory Panel. He studied honours economics at (4) (4) rolinx. Metrolinx is the regional transportation agency and – Present Lead Director Total Amount at Risk Total Amount at Risk 2 of 2 (100%) YEARS CURRENT BOARD COMMITTEE MEMBERSHIPS YEARS CURRENT BOARD COMMITTEE MEMBERSHIPS † Total of Shares and DSUs Total of Shares and DSUs (3)(10) (3)(10) Deferred Share Units (DSUs) Deferred Share Units (DSUs) (2) (2) (7) (7) Common Shares SECURITIES HELD Year20132012 Shares Net Change 11,500OPTIONS HELD 11,500 — 48,965Nil 38,735VALUE OF TOTAL 10,230 COMPENSATION RECEIVED IN FISCAL 2012 2012: 60,465 $329,212 ($329,212 in DSUs) 50,235Effective March 20, 10,230 2012, Mr. PrichardEffective was March appointed 20, to 2012, the Mr. Human Prichard Resources was Committee. appointed to the Board $ of 3,882,458 Directors of The Pension Fund $ Society 2,928,198 of the Bank $ $ of 600,000 Montreal. 954,260 $ 600,000 $ 3,282,458 $ 2,328,198 22.2 $ 16.7 954,260 5.5 Corporation, a leading Canadian media companyToronto from where 2002 he – served 2009. as Presidentlaw from and 1990-2000 economics. and He previou also servesmember as of Chairman Canada’s of Economic Metrolinx, Advisory Pe CouncilSwarthmore and College, Ontario’s received his M.B.A. fromand the University. o He is anSociety Officer of of Canada. the , a Member ofBOARD/COMMITTEE the MEMBERSHIP Order of Ontario and a FellowBoard of of the Directors Royal Governance and NominatingHuman Resources*Risk ReviewThe Pension Fund Society of the Bank ofPUBLIC Montreal BOARD MEMBERSHIP DURING THE LAST FIVE ATTENDANCE 8 of 8 (100%) 20 of 20 (100%) 5 of ATTENDANCE (TOTAL) 5 (100%) 10 of 10 2000 (100%) 45 of 45 (100%) OPTIONS HELD Nil VALUE OF TOTAL COMPENSATION RECEIVED IN FISCAL 2012 2012: $198,667 ($100,000 in DSUs) Robert Prichard is Chairman of the2012. Board He of is Bank the of non-executive Montreal, Chairas having of President been Torys and appointed LLP, Chief to a Executive this Canadian Officeroperator position law and for effective firm. a the March Before Director Greater 20, joining of Toronto Torys Met and LLP Hamilton in Area. September Mr. 2010, Prichard he served Onex CorporationTorstar Corporation 1994 – Present 2002 – 2009 Governance Human Resources BOARD/COMMITTEE MEMBERSHIPBoard of DirectorsAudit and Conduct ReviewGovernance and Nominating (Chair)PUBLIC BOARD MEMBERSHIP DURING THE LAST FIVE CorporationTransAlta Corporation ATTENDANCESECURITIES HELD 8 ofYear 8 (100%) 62013 of 6 (100%) 202012 of 20 2007 (100%) – PresentNet Change 1,190 ATTENDANCE (TOTAL) 1,120 70 21,202 2006 – Present 17,911 3,291 22,392 34 of 19,031 34 (100%) Compensation (Chair) 3,361 $ 1,437,790 $ 1,109,317 Human Resources $ $ 600,000 328,473 $ 600,000 $ 837,790 $ 509,317 $ 8.2 328,473 6.3 1.9 Martha Piper, a Corporate Director, was President and Vice-Cha 2006. Prior to this, she wasBoard Vice-President of Research the and Advisory External Council Affairs onSingapore at Science Council. The and In University Technology, 2001, of the she Alberta. Br servedthe She as Order has Campaign of served Chair Canada on of and the the aPartnership United recipient in Way of 2004 of the and the Order is Lower of a Mainland. British member Dr. Columbia. of Piper She the is was Trilateral an named Commission. Officer Educator of of the Year by the Learning * † O.C., O.B.C. (1) (1) O.C., O. Ont. Consumer Discretionary Consumer Staples Health Care Industrials (includes transportation) Consumer Discretionary Health Care Utilities Industry Expertise: Age: 64 Toronto, Ontario Canada Director Since: 2000 Independent J. Robert S. Prichard, Industry Expertise: Age: 67 Vancouver, British Columbia Canada Director Since: 2006 Independent Dr. Martha C. Piper, Nominees for Election to Board of Directors 13 Expertise: Industry Independent 2008 Since: Director States United Connecticut Greenwich, 65 Age: III Wilson M. Don iaca Services Financial ako otelMngmn rx Circular Proxy Management Montreal of Bank (1) 1)Temre rpyu auso etdsaebsdaad o adoto itiue sa coe 1 02uigtecoigSaepieo h S o TSX the on price Share closing the using 2012 31, October at as distributed or out paid not Requirements awards 42. share-based page vested on of requirements” values ownership payout “Share or under market described The are (10) Bank the the under of units executive share an restricted as and requirements Executives, ownership for share Plan Downe’s Unit Mr. Stock Deferred Bank’s (9) a the as under 65 units page stock on deferred described of Plan number Option the Stock to Director refers Non-Officer “Units” the under nominee (8) the by held options unexercised of number the to refers “Options” (7) a 2013 28, February at as nominee the by exercised, is direction or control un which described over as Board or owned, the beneficially by adopted Shares of standards number the the under to “independent” is refers director “Shares” a whether (2) of determination Board’s the to refers “Independent” (1) 6 TtlAon tRs saMlil fAna eanr sdtrie ydvdn TtlAon tRs”b h grgt ftecs eanradequ and retainer cash the of aggregate the by Risk” at Amount “Total dividing by determined is Retainer” Annual of Multiple a as requiremen Risk ownership at share Amount Board’s “Total the under hold (6) to required of is respect director in the 2013 DSUs 28, and/or February Shares at of as value nominee minimum each 20 the 28, by to held February refers Units at Required” and as “Minimum DSUs 16 Shares, page of on (5) number referenced the Plans multiplying Unit by Share determined Deferred is the Risk” under at nominee Amount the “Total by The held units share (4) deferred of number the to refers “DSUs” (3) fetv ac 0 02 r isncae ob ebro h or fDrcoso h eso udSceyo h ako Montreal. of Bank the of Society Fund Pension The of Directors of Board the of member a be Committee to Nominating ceased and Wilson Governance Mr. the 2012, to 20, appointed March was Effective Wilson Mr. † 2012, 20, March Effective * o isnII oprt ietr eie rmJ Morgan JP from retired Director, Corporate a III, Wilson Don omte n prtn omte.H rdae rmHradUiest n17 A u ad)adfo h Tuck the from and laude) cum (M.B.A.). (AB 1973 1970 in in College University Dartmouth Harvard at from School graduated He Committee. Operating and Committee OR/OMTE EBRHPATNAC TEDNE(TOTAL) ATTENDANCE ATTENDANCE MEMBERSHIP BOARD/COMMITTEE e hne—568568$5524$55243.0 525,204 9.2 $ 12.2 1,013,117 $ 1,538,321 $ 525,204 600,000 $ $ Audit 600,000 $ 1,613,117 $ 2,138,321 $ 5,628 (100%) 45 of 45 27,674 DSUs) in ($212,083 $212,083 33,302 2012: 2012 FISCAL IN 5,628 RECEIVED COMPENSATION TOTAL Present OF – VALUE 2010 14,174 Nil 19,802 — (100%) (100%) 8 10 13,500 of 10 HELD of OPTIONS 8 13,500 Change Net (100%) 20 of 2012 20 2013 (100%) 5 of 5 Year HELD SECURITIES Inc. Interiors Allen Ethan FIVE LAST THE DURING MEMBERSHIP BOARD Montreal PUBLIC of Bank the of Society Fund Pension The (Chair) Review Risk Resources Human Nominating* and Governance Directors of Board epniiiyfrcei,eut,market equity, credit, for responsibility o .Fre $,2,7) rcR aFèh $202,BueH icel(29134,Pii .Osn $,5,4) ataC ie ($1,174,805 Piper C. Martha ($2,750,248), ( Orsino Edwards S. A. Philip Christine ($2,941,344), ($1,029,578). ($1,055,662), Mitchell III Cope H. Wilson A. Bruce M. George ($62,012), Don ($244,815), Flèche and Brochu La ($2,584,335) Sophie R. Prichard ($16,102), Eric Babiak ($1,928,872), M. Farmer Jan H. ($1,713,180), Ron Astley M. Robert were ($59.02) aeo xhnefrtefsa era olw:fr21,U 10 d.$.02adfr21,U 10 d $0.9852. Cdn = $1.00 a US the 2011, at for dollars and (“Cdn”) $1.0032 Canadian Cdn. into = converted $1.00 n been US was has 2012, Downe salary for Mr. base follows: that Downe’s as Note Mr. year 2011. dollars. fiscal of Canadian the respect in for in reported exchange 2012 salary of 31, 16. base rate January page of and on multiple 2012 referenced a of Plans as respect Unit determined in Share 2013 Deferred 28, directors’ February the at under no as DSUs are Downe receive There Mr. to 2003. by entitled 1, held November Executives effective for discontinued Plan was Incentive Plan Option Stock Director Attendance”). Non-Officer and the plan. Compensation under this “Directors’ options under 16 of outstanding page granting see The — 2013. 28, structure February fee current the under ($175,000 fee director annual the of Bank. the of executive an is he as standards the under independent not is Downe Mr. 24. page on Independence” “Director heading rDU.Ti seuvln oteaon eurdudrtepirfesrcuewihrqie hr n/rDUhlig fa es i ie h annua the times six least at of retainer holdings annual DSU their and/or of Share portion required cash which the structure times fee eight prior least the at under $58.29, hold required and to amount ($64.21 16. required the date page are to such See directors equivalent each non-employee is on 2012, This (“TSX”) fiscal DSUs. Exchange of or Stock as Toronto adopted the structure on fee Shares the the of price closing the by 2011 of respect respectively). in 2012 31, January 2011. and of respect in 2012 31, circulars. January information and management 2012 year’s of last respect and this, of dates information respective the 2012, 31, January Shares Common (7) (2) (DSUs) Units Share Deferred (3)(10) n DSUs and Shares of Total n prtoa ikgoal.M.Wilson Mr. globally. risk operational and , † ER URN OR OMTE MEMBERSHIP COMMITTEE BOARD CURRENT YEARS f2(100%) 2 of 2 tRisk at Amount Total hs o,aUS ak n20 sCifRs fie with Officer Risk Chief as 2006 in bank, U.S. a Co., & Chase (4) Required Minimum (5) a loamme fJ ognsExecutive Morgan’s JP of member a also was iiu Required Minimum Exceeding Amount (5) nulRetainer Annual of Multiple a as Risk at Amount Total ,J oetS. Robert J. ), aksMid-Term Bank’s e the der e nShares in fee nd $389,170), t htdate that n t portion ity verage s Under ts. options retainer. l are 3in 13 2012 (6) ot Continuing Education and Skills 14 obal ios Bank of Montreal Management Proxy Circular , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management , presentation by management Dodd-Frank Wall Street Reform andincluding Consumer those Protection related Act to and whistleblowers,Basel related capital Committee proposals plan proposals, and reviews, principles requirements stress and of testingUS requirements various guidance Foreign agencies and Account and the Tax regulatory Volcker ComplianceFederal authorities, rule Act Budget measures Pension regulatory changes Global governance matters Executive compensation requirements and guidance Consumer Financial Protection Bureau Financial Services Bill UK ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Regular deep dive presentations with respect toExecutives selected Meet businesses Directors Program Presentations and publications by BMO’s Chief Economist and group on various subjects, including the Canadian housing market, North American and gl outlook and the European sovereign debt crisis Basel II Market Risk Amendments History of Credit Valuation Adjustment and DebtRepo Valuation and Adjustment Global Equity Finance Business Exchange Traded Funds Stock Futures Trading Article: “How to Break Up(February the 6, Banks” 2012) Interview with Roberta Karmel, FormerArticle: SEC “Don’t Commissioner, Bet Professor Against at CanadianServices Brooklyn Bank – Law Stocks: Banks School, Lessons (February Barron’s from 2012) the LDC CrisisArticle: & Institutional Commercial Investor: Real Europe’s Estate Companies Debacle” Raise John Sights ReucasselFinancial from Report Institutions Costs on Industry to Financial Growth (March 8, 2012) Canada Mortgage and Housing Corporation Article: New York Times: Loss stains JPMorgan’sArticle: Chief, New One York of Times: Banking’s The Top Bet Risk That Managers,Article: Blew (May New Up 11, York for 2012) Times: JPMorgan In Chase, JPMorgan (May Chase 11,OSFI Trading 2012) B20 Bet, Guidelines Its on Confidence Residential Yields Mortgage to Underwriting Loss,Bank’s (May Natural 12, Resources 2012) Portfolio The Role of Innovation Article: Hugessen Consulting Inc. Briefing: The CPArticle: Saga Osler: – Six A Lessons Message Learned to from Directors the (May,Article: CP 2012) New Proxy York Battle Times: (July Regulate, 9, Don’t 2012) SplitArticle: Up, The Huge Economist: Banks Searching (July for 31, Solid 2012) Ground:Article: An New Era York of Times: Frothiness Money-Laundering is Inquiry Over is (AugustArticle: Said 18, The to 2012) Dog Aim and at the U.S. Frisbee, Banks Andrew (September G. 14, Haldane, 2012) Executive Director, Financial Stability and member of the Financial Policy Committee and Vasile Madouros, Economist, Bank of England. (October 2012) Construction and Engineering Review Leveraged Finance Review Article: Advantage Ontario, Jobs & Prosperity Council,Article: 2012 Financial Times: Operational Risk Muscles into Focus (November 5, 2012) Regular legal and regulatory developments reports were provided to the Board and its committees on relevant topics, including: Fiscal Q1, 2012 Fiscal Q2, 2012 Fiscal Q3, 2012 Fiscal Q4, 2012 Fiscal Q1, 2013 QuarterOngoing presentations and programs Topic Continuing Education and Skills Continuing Education Directors must continually update theirmany knowledge opportunities and for understanding directors of to theIn make Bank’s connection site business with visits, and every and regulatory Board to environment.publications meeting, read The provided directors and Bank to are hear provides the also about Board referred specialized and to and its articles complex committees and topics this publications relevant year of to are interest. the set Some Bank’s out of operations. below: the presentations and Continuing Education and Skills j xeinei h eeomn n mlmnaino taei ieto falreorganization. organization. large major a or of company direction listed strategic publicly a a of with implementation in-house and practices. or development development practice the sustainable private in in in Experience involved either constituents lawyer the (j) a and as programs). practices Experience compensation responsibility executive corporate (i) particular, with reporting. (in experience and programs and assessments compensation Understanding risk and (h) pension controls, benefit, risk with internal Experience with experience (g) and acquisitions. of, and Knowledge mergers or (f) banking investment with Experience (e) 15 co financial/accounting internal Bank. with the familiarity of and director finance a corporate as reporting, serving and than accounting other financial industry with services experience financial and the entity. of in non-profit Knowledge experience or operational (d) private or public, organization. advisory a major Oversight, of or member company (c) board listed a publicly as a Served of (b) executive/officer senior as Experience (a) and strength overall the assess to used is information The year. below: each shown of as January Board, in the experience of and diversity skills their identify directors Non-employee rates. LIBOR Recent of Matrix engages expertise. manipulation Skills directors acknowledged the of and as board practices well the best as component, upon concerns, discussion drawing regional chairs group topics, activism, committee via contemporary shareholder include the learning on included will by based focused subjects Content confirmed issues discussions expertise. as the roundtable and initiatives, On group knowledge specific timely. in their BMO and regularly enhancing and relevant components, and issues as self-directed upon emerging management and building topics, senior didactic in foundational and the members training, lear both board compliance based support assist and issues to to legal director (iii) application pillars ethics, expanded and learning content an learning; online five spring, self-directed an on this (ii) through focus introducing medium; delivered will be electronic program, will via This and learning discussion. developed didactic group has (i) via Board of: the consisting Learning, program for education in Institute continuous Institute Bank’s Deloitte. Risk the and Global with session. LLP the conjunction Brainstorming Tory’s by In Innovation University, given an Harvard seminars in Management, and of participated conferences School including and Rotman programs, visits Services, development client Financial professional on in went participated directors also session, members strategy Board annual Bank’s the of part as year, This taei lnig(j) Planning Strategic (i) Legal (h) Responsibility/Sustainability Corporate (g) Resources Human (f) Management Risk Banking/Merg Investment (d) Finance and Accounting (c) Services Financial (b) Experience Board Other (a) Leadership Executive rnilsado nentoa iaca eotn Standards. Reporting Financial International and/or Principles ako otelMngmn rx Circular Proxy Management Montreal of Bank r custos(e) Acquisitions & ers

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Wilson III Directors’ Compensation/Attendance 16 Bank of Montreal Management Proxy Circular Total Shares: 111,525 Total DSUs: 295,186 Total Value of Shares: $7,161,020 Total value DSUs: $18,953,893 Total value Shares and DSUs: $26,114,913 What are Deferred Share Units? DSUs (or deferred share units) aresame ownership economic interests value that as have Shares. the Non-employeeand directors BMO of Financial the Corp. Bank receive DSUsrespective under DSU the plans. terms The of DSUs their vestequivalents immediately, when and dividends accrue are dividend paid onout Shares. their Directors DSUs are until not they paid leaveaffiliates. the At Board that and time, the they boards mayor of receive in payment all Shares for Bank purchased their on DSUs the in open cash market. Directors’ Compensation and Required Share Ownership Each non-employee director must hold atportion least of eight their times annual the retainer cash feethe in greater either of Shares the or following: DSUs (i)end based the of on closing the price fiscal of year and theat (ii) Shares the at their time the acquisition credited cost (for (for DSUs).ieved, Shares) a Until or director the value must minimum take shareholding all isform remuneration ach- of paid Shares to or him DSUs. or Underrequired her to the in hold prior the at fee structure, least directors sixDSUs. were times The their amounts, annual however, retainer under in theare Shares prior equivalent or and based new on fee the structures, current retainer amounts. Directors receive a minimum of $100,000retainer of fee their in $175,000 either annual Shares orpart DSUs. of They the may cash also portion elect ofor to their DSUs. take annual This all retainer election or fee also a in appliesmeetings additional to and Shares any travel. For fees for 2012, chair 10nominees retainers, of received special the all 12 of non-employee their director remuneration inShares Shares and or DSUs DSUs. Owned by Non-employeeAs Directors at February 28, 2013: ‰ ‰ ‰ ‰ ‰ (based on closing price of Shares2013). on TSX of $64.21 on February 28, As at October 31, 2012, allshare non-employee ownership directors requirements, met except for the minimum Ms.Ms. Babiak, Brochu, Mr. who La joined Flèche the and Boardand March on 22, October 2011, 23, respectively. 2012, March 20, 2012 $175,000 ($100,000 equity and a $75,000 cash retainer) (b) attending board and committee meetings. or DSUs. Chairman of the BoardAudit and Conduct Review CommitteeGovernance and Nominating CommitteeHuman Resources CommitteeRisk Review CommitteeThe Pension Fund Society of the Bank of Montreal $40,000 $20,000 per per year year $15,000 per year $350,000 per year (d) $25,000 per year (e) $25,000 per year (e) Description of fee (a)Annual retainer fee (including membership oncommittees) two Amount Fee for each additional committee (c)excess membership of in twoFee for each special Board meetingper in year excess of five Fee for each special committee (c)of meeting five in per excess yearChair retainer fees: $10,000 A travel fee: $1,500 per triptwo to or a more meeting(s) time where zones (i) from acountry the director’s border meeting principal from location; residence their or is principal (ii) residence. a director $2,000 must cross a $1,500 (a) We only pay non-employee directors. They are also(b) reimbursed for Subject expenses to incurred election in by directors to take all(c) or a Includes portion meetings of of the(d) the cash Board retainer Includes of in the Directors additional directors’ of Shares annual(e) The retainer Pension Increased fee Fund to and Society $40,000 all of per committee Bank year membership of effective fees. Montreal. fiscal 2013. Starting in fiscal 2012, the Boardfor adopted director the compensation. following The flat flat fee feeand structure structure disclose is and simpler aligns to better administer withBank. the A job director’s of duty is being a toBank director be 365 of available days to the a assist year. and Attendancethat at represent but the meetings not is the an whole important job.fying part Providing opportunities of for advice outside the of Bank meetings, andbest identi- generally interests being of attentive the to Bank the atrole all of times the are director. important A elements flatresponsibility. of fee structure the better compensates for this Directors’ Compensation and Attendance Directors’ Compensation – Fiscal 2012 Directors’ Compensation/Attendance o elcsaBadmeigfefo pi 6 01ta r isnIIwsntcmestdfri icl2011. fiscal DSUs. in 100% for elected compensated Saucier not Mme. was 2012, III 20, Wilson March Mr. to that 2012 2011 1, 26, January April for from 2011; fee 31, meeting December Board to a 2011 Reflects 1, (o) November for election Represents (n) 17 directors as served who directors non-employee to Corp. Financial BMO subsidiary its and Bank the 2012. by fiscal paid during compensation out sets table following The 2012 Fiscal for Compensation Directors’ m nldsU$075rcie yM.Pihr ncmesto o evn sadrco fBOFnnilCr.sneJl 02 uhaon a adi paid was amount Such 2012. July since Corp. Financial BMO DSUs. of 100% director elected a Piper as Dr. serving 2012, Board. for 31, the compensation October of in to Chairman Prichard 2012 appointed Mr. 1, was by January Prichard received for Mr. US$40,795 2011; Directors. 2012, Includes 31, of (m) 20, Board December March the to Effective 2011 to 1, appointed (l) November was for Flèche La election Mr. Represents 2012, (k) 20, March Effective (j) h nldsU$1,0 eevdb r alwyi opnainfrsriga ietro M iaca op uigfsa 02 uhaon a p was amount Such 2012. fiscal during Corp. Financial BMO DSUs. of 100% director elected a Board. Chevrier as the Mr. serving of 2012, for DSUs. Chairman 20, compensation 100% as March in elected and to Galloway Beatty director 2012 Mr. Mr. a 1, by 2012, as January received 20, retired for US$110,000 March Galloway 2011; Includes to 31, Mr. 2012 (h) 2012, December 1, 20, to January March 2011 for 1, Effective 2011; November Board. 31, (g) for the December election of to Represents members 2011 2 as 1, fiscal (f) retired November Directors. in Chevrier for of holdings and election Board DSU Beatty Represents the aggregate Messrs. to director’s (e) 2012, DSUs. appointed each 20, 100% was on March elected Babiak paid Effective Astley Ms. dividends Mr. 2012, and (d) 2012, 23, 2012 31, October fiscal October Effective in to earned 2012 (c) compensation 1, for January DSUs for of 2011; date 31, grant December at to value 2011 Includes 1, (b) November for election Represents (a) i ae oeyo evc nteBn fMnra or fDrcos sidctdblwudr“opnainfo usdaisAflae” r Ga Mr. Subsidiaries/Affiliates”, from “Compensation under below indicated As Directors. of Board Montreal of Bank the on service on solely Based (i) ereA oe1500150165010 nDU 2,8 7,0 – 176,500 222,883 – 176,500 184,780 DSUs in 100% 176,500 DSUs in 100% 79,167 176,500 1,500 1,500 (g) Galloway A. David 175,000 Farmer H. Ronald 6,250 Edwards A. Christine 72,917 Cope A. George 175,000 (d) Chevrier Robert Brochu Sophie o .Wlo I 7,0 4531,0 ,0()220310 nDU 5,2 1,8 – 212,083 256,620 DSUs in 100% 178,000 212,083 2,000(o) 10,500 3,000 14,583 175,000 175,000 III Wilson M. Don Saucier Guylaine (l) Prichard S. Robert J. hlpS rio15004,0 ,0 1,0 0%i Ss33102800– – 218,000 – – 105,083 343,140 188,417 184,000 106,041 323,067 255,902 DSUs in 100% DSUs in 100% DSUs 198,667 in 100% DSUs in 100% 218,000 105,083 188,417 184,000 12,000 3,000 3,000 3,000 9,000 11,667 175,000 40,000 175,000 10,417 Piper C. Martha 175,000 Orsino S. 102,083 Philip 175,000 Mitchell H. Bruce (j) Flèche La R. Eric Kvisle N. Harold oa 2,260,417 – Total 16,083 16,083 72,917 DSUs in 100% 16,083 213,000 1,500 3,000 72,917 10,000 14,583 (d) 25,000 Beatty R. David 175,000 (c) Babiak M. Janice Astley M. Robert Director oCn$a h aeo xhnea h rn ae fU 108 d 10 tJl 6 02adU$.8=Cn$.0a coe 5 2012. 15, October at $1.00 Cdn = US$0.98 and 2012 16, July at $1.00 Cdn = $1.0181 US of dates grant the at exchange of rate the at $ Cdn to evn sadrco fBOFnnilCr.adrcie S2,0 fta nulrtie nDSUs. in retainer annual that of US$20,000 received and Corp. Financial BMO of director a as serving icouet d ttert fecag ttegatdtso S102 d 10 tJnay1,21,U$.94=Cn$.0a pi 3 02 US$1.01 2012, 13, April at $1.00 Cdn = US$0.9984 2012, 13, January at $1.00 Cdn = US$1.0227 of dates 2012. grant 15, the October at at exchange $1.00 of Cdn rate = the US$0.98 at $ Cdn to disclosure ac in $ Cdn to (converted Corp. Financial BMO of directors to offered plan a of terms the to pursuant granted DSUs includes Prichard, Mr. and Galloway Mr. ako otelMngmn rx Circular Proxy Management Montreal of Bank 7,0 ,3 200128310 nDU 0,7 192,833 202,583 207,671 289,449 DSUs in DSUs 100% in 100% 192,833 202,583 12,000 3,000 5,833 15,833 8,750 175,000 175,000 29783324173004,9()392210 nDU 0,9 329,212 404,194 DSUs in 100% 329,212 40,795(m) 3,000 204,167 8,333 72,917 retainer Board ($) 2,0 16730006,0 5,3 3,001,014 – 154,931 69,000 350,000 41,667 125,000 Committee retainer Chair ($) Committee Additional fees ($) 4,3 1,3 h 5,6 0%i Ss()3784257,969 357,854 (i) DSUs in 100% 257,969 (h) 112,136 145,833 executive Chairman retainer Non- ($) rvlfee Travel ($) te fees Other ($) amounts l other All ($) Total ($) nulrtie:5%i cash in 50% retainer: Annual nulrtie:5%i cash in 50% retainer: Annual nulrtie:5%i cash in 50% retainer: Annual nulrtie:5%i cash in 50% retainer: Annual cash in 50% retainer: Annual oa espi nDSUs: in paid fees Total oa espi ncash: in paid fees Total n 0 nDU.(n) DSUs. in 50% and n 0 nDU.(e) DSUs. in 50% and n 0 nDU.(a) DSUs. in 50% and n 0 nDU.(k) DSUs. in 50% and n 0 nDU.(f) DSUs. in 50% and oa espi in paid fees Total omnShares: Common oto ffe ae ncash, in taken fees of Portion 2,642,598 5,1 3,756,744 358,416 hrsado DSUs and/or Shares 0 lwyere nana eanro S1000for US$110,000 of retainer annual an earned lloway 1 ntefr fadtoa Ss ntecs of case the In DSUs. additional of form the in 012 ($) S$adcnetdfrproe fti disclosure this of purposes for converted and $ US n i nU n ovre o upsso this of purposes for converted and $ US in aid odnewt oe i n m below). (m) and (i) notes with cordance 1=Cn$.0a uy1,2012, 16, July at $1.00 Cdn = 81 7,7 16731,250 41,667 173,672 1,2 0,0 78,000 100,000 212,822 5,2 0,0 98,667 100,000 153,324 7,8 0,0 113,000 100,000 178,586 0664,6 37,500 41,667 70,656 etdo earned or vested oa Ssvalue DSUs Total b ($) (b) ,4,9 358,416 2,642,598 Total DSU ($) – – – – Total Cash ($) Directors’ Compensation/Attendance 18 Board of Directors (4 meetings) TOTAL Society of the Options (as at Bank of Montreal The Pension Fund Value of Unexercised October 31, 2012) (b) Committee f The Pension Fund Society of the Bank of Risk Review (10 meetings) Bank of Montreal Management Proxy Circular e TSX on October 31, 2012 ($59.02 per Share). Date Committee Option Expiry (8 meetings) Human Resources Option-based Awards 3 100 3/3 100 4/4 100 1/2 50 96 Committee Nominating (8 meetings) Governance & Option Exercise Price (a) Audit and Committee (6 meetings) Conduct Review 97% 100% 100% 93% 97% 94% 96% Options Securities Number of underlying unexercised Board #%# % # % #%#%#%% (20 meetings) Montreal. Name KVISLELA FLECHE (j)MITCHELLORSINOPIPERPRICHARD (l)SAUCIERWILSON IIIAverage Percentage 11/13 17 85 86 19 3/3 (j) 95 20 100 – 20 100 20 – – – 100 100 6 19 3/3 (m) – – 20 – 100 6 95 100 100 3/3 (k) – 8 100 8 6 100 – – – 100 8 100 – 100 5 5/5 (n) – – 100 – 100 – – 63 5/5 (o) 10 – – 100 – 10 9 – 100 100 8 2/2 – – 90 (n) – 2/2 (k) – 100 100 100 – – – – 100 – 10 97 – – 88 – 100 9 2/2 (o) 82 – – 100 90 100 100 – – 100 – 94 Summary of Attendance of Directors ASTLEYBABIAK (b)BEATTY (d)BROCHUCHEVRIER (d)COPEDOWNEEDWARDSFARMERGALLOWAY (i) 20 1/1 100 100 8/8 1/1 1/1 (a) (c) 100 20 8/8 100 100 – 100 100 8 – 3/3 6 19 – 20 100 20 100 – 95 100 100 100 8/8 – 8 20 – 6 (e) – 2/2 – – (f) 100 100 100 – 100 100 – 3/3 10 – – – 6 8 (e) 2/3 – 100 100 – – 100 100 – – 67 3/ – 5/5 (h) – 8 (e) – 3/4 – 100 – – 100 – 75 8 10 – (e) – 8 – 7 100 100 – 100 – 100 – – 88 – 10 – – 2/2 100 100 – – – 100 2/2 (g) 87 – 100 100 – 100 – 100 4 100 – 100 100 – 93 Philip S. OrsinoJ. Robert S. PrichardGuylaine Saucier 3,000 3,000 3,000 $43.25 $43.25 $43.25 February 28, February 2013 28, 2013 February 28, 2013 $47,310.00 $47,310.00 $47,310.00 (a) Mr. Astley attended the(b) December Effective 5, October 2011 23, Audit 2012,(c) and Ms. Conduct Babiak Ms. Review was Babiak Committee appointed attended meeting to(d) the as the October an Effective Board 22, invitee. March of 2012 20, Directors Audit 2012,(e) of and Messrs. the Conduct Mr. Beatty Bank. Review Downe and Committee attended Chevrier meeting Board retired(f) as committee as an meetings members Ms. invitee. during of Edwards fiscal the attended(g) 2012 Board the as of August Effective an Directors 27, March invitee. of 2012 20, the and 2012,(h) Bank. October Ms. Effective 22, Edwards March 2012 was 20, Audit appointed 2012, and to(i) Mr. Conduct the Farmer Review Board Effective was Committee of March appointed meetings Directors 20, to(j) as of 2012, the an The Mr. Governance invitee. Pension Effective Galloway and Fund March retired Nominating Society 20,(k) as Committee. of 2012, Chairman the Effective Mr. of Bank March La the of Flèche 20, Board Montreal. 2012, was of Mr. appointed Directors Mitchell to of ceased the the to Board Bank. be of a Directors member of of the the Bank Governance and and to Nominating the Committee Audit and and was Conduct appointed Review to Committee. the Board of Directors o Directors’ Attendance for Fiscal 2012 The table below shows a summary of directors’ attendance for fiscal 2012. (a) “Option Exercise Price” is(b) the The closing value price of of unexercised Shares in-the-money on options the is TSX equal on to the the trading difference day between immediately the preceding Option the Exercise grant Price date and of the the closing option. price of the Shares on th Non-Officer Director Stock Option Plan The granting of options under theof Non-officer the Director plan. Stock There Option are Plan currently no was options discontinued effective outstandingThe November under table 1, this below 2003. plan. shows See the page non-employee 65 directors for who a had description unexercised option awards as at October 31, 2012. Compensation from Subsidiaries/Affiliates From time to time, non-employeereimbursed Bank for directors travel serve and as other directors expenses ofwere incurred subsidiaries the in and only attending affiliates non-employee board of Bank and the directorswere committee Bank. who directors meetings. They were of During are paid BMO fiscal paid for Financial 2012, for serving Corp.,was Mr. their as our in Galloway services directors U.S. DSUs and and of bank and Mr. a holding Mr. Prichard Bank company. Prichard,offered subsidiary Mr. who to or Galloway became directors affiliate. a was of Mr. director paid BMO Galloway in an Financial and July annual Corp. Mr. retainer 2012, Prichard of took US$110,000, his of pro-rated which annual US$20,000 retainer fee of US$41,099 in DSUs, pursuant to a plan Directors’ Compensation/Attendance 19 the of year follows: a as within except or capacity that in acting was person that while that Bank), the (including company any of officer executive or director a (b) been: Bank): has the or (including is company Bank any the of of officer director financial proposed chief no or years, officer 10 executive last chief the director, within a or 2013 (a) 28, February at as knowledge, Bank’s the Socie To Fund Pension Directors The our of th About member of a Disclosure Society be More Fund to Pension ceased The and of Committee Directors Nominating of and Board invitee. Governance the an the to as to and meetings appointed Committee Committee was Resources Review III Human Conduct Wilson the and Mr. Montreal. to Audit 2012, of 2012 appointed 20, Bank 22, was March the October Prichard Effective of and Mr. Board (o) 2012 2012, the 27, 20, of August March Chairman 2012, Effective as 22, appointed (n) May was the Prichard attended Mr. Prichard 2012, Mr. (m) 20, March Effective (l) Montreal. i)sbett nodr(nldn es rd re,a re iia oacaetaeodro nodrta eidterlvn opn access company relevant the denied that order an or order trade cease a to similar access order company an relevant order, the trade denied cease that a order (including an order or an order to trade subject cease a (ii) to similar order an order, trade cease a (including order an to subject (i) hlpOsn,adrco fteBn,wsadrco fCMCroainfo uy20 ni ersge nMrh20.I pi 08 F ie for filed CFM 2008, April In 2008. March in resigned he until 2007 July from Corporation CFM of director a CCAA. the was under Bank, protection the of director a Orsino, Philip ujc oo ntttdaypoedns ragmn rcmrms ihceioso a eevr eevrmngro rse appointed trustee or was manager or receiver insolvency receiver, or a bankruptcy had to or relating creditors legislation with any compromise assets, under or its proposal arrangement hold a proceedings, to made any bankrupt, instituted became or capacity, to that subject in act to ceasing person ako otelMngmn rx Circular Proxy Management Montreal of Bank esdt eadrco,cifeeuieofcro he iaca fie n hc eutdfo neetta curdwieta esnwas person that while occurred or that officer; event director financial an chief proposed from or the resulted officer after which executive issued and chief was officer director, that financial as days chief capacity consecutive or the 30 officer in than executive acting chief more director, of a period be a to for director ceased legislation) proposed securities the or under while officer; exemption issued financial any was chief to that or days, officer consecutive executive chief 30 director, than as more capacity of the period in a acting for was legislation) securities under exemption any to ako Montreal. of Bank e yo h or fDrcoso akof Bank of Directors of Board the of ty Committee Reports f 20 each lete ving nal ar. k’s Bank of Montreal Management Proxy Circular Monitored correspondence with regulators, currentlegal market and issues regulatory and developments havingoperations. an impact on theReceived Bank’s regular updates on TechnologyMet and at Operations each initiatives. meeting intors, private Chief with Auditor each and of General the Counsel. Shareholders’ Audi- Welcomed two new Board members:Chief Eric Executive La Officer, Flèche Metro (President Inc.),the and who previous was annual elected meeting as of(Corporate a Shareholders, Director), director and who at Jan was Babiak appointed2012. as a director in October Reviewed an independent third party’stion reports (final) on and the the Finance Complianceundertaken func- function periodically (interim). as Such a reviews matter are of good governance. ‰ ‰ ‰ ‰ Philip S. Orsino Chair ‰ Strategic matters The Committee is satisfied that itended has October 31, fulfilled its 2012. The mandate mandate forCharter is the at contained year www.bmo.com/corporategovernance. in the Committee’s ommittee is “financially literate”, as such term is defined under the rules o lect not only applicable legal and regulatory requirements but also evol r responsible business behaviour towards our key stakeholders. For a comp the Governance and Nominating Committee, the Human Resources Committee and mmission (“SEC”) and New York Stock Exchange (“NYSE”) standards, and that versees the Bank’s internal controls as well as the performance of its inter ement of Corporate Governance Practices starting on page 24 of this circul e acts as the audit and conduct review committee of certain designated armer, Eric La Flèche, Martha Piper, Guylaine Saucier Philip Orsino (Chair), Jan Babiak, Sophie Brochu, Ron F

Reviewed the effectiveness of theand key regulatory controls risk through is which managed,and legal including compliance reports matters, on significant material legislativedevelopments legal and and regulatory material transactions withreports, related and parties, the litigation Bank’s implementation of IFRS. Approved the Committee’s Charter; theCorporate Corporate Policies Audit and Mandate; Procedures and relatingand to Anti-Terrorist Anti-Money Financing Laundering and Sanctionsclosure, Measures financial Program, governance, dis- privacy ofrelated personal parties; information and and recommended theto Board’s FirstPrinciples approval – of the revisions Bank’s Code of Business Conduct and Ethics. Oversaw financial matters associated withintegration the of acquisition U.S.-based and Marshall &accounting, Ilsley reporting, Corporation control (“M&I”) and from Corporate an Audit perspective. Evaluated the appropriateness of thereporting, Bank’s the accounting effectiveness and of financial thethe Bank’s Shareholders’ internal Auditors control and framework, the Corporate Audit function. Recommended for approval by theStatements Board prepared the in Consolidated accordance Financial withReporting International Standards Financial (“IFRS”) and relatedand Management’s Analysis, Discussion financial releases, and the Annual Information Form. discussion of our corporate governance practices, please refer to ourThis Stat section includes reports of the Auditthe and Risk Conduct Review Review Committee, Committee, summarizing the responsibilities of the committees of the Board and highlighting key accomplishments in 2012. ‰ ‰ ‰ ‰ In 2012, the Committee: Financial reporting and internal controls ‰ best practices. We believe sound corporate governance is the foundation fo Report of the Audit and Conduct Review Committee Members: The Audit and Conduct Review Committee isfinancial responsible reporting for and assisting regulatory the compliance Board programs. in The fulfilling Committee its o oversight responsibility for the integrity of the Ban

Bank of Montreal embraces high standards of corporate governance, which ref Corporate Governance Compliance and Governance and external audit and compliance functions. Insubsidiaries. addition, the Committe The Board has determined that each member of the Audit and Conduct Reviewof C Mr. Orsino, Ms. Babiak and Mme. Saucier is an “Audit Committee Financial Expert” as such term is defined under SEC rules. the Canadian Securities Administrators and the Securities and Exchange Co Committee Reports oenneCommitment Governance 21 ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Composition Board and Assessments Director and committees Committee: Board the Board, the 2012, of In assessment and orientation for process Bank’s the managing and Board directors. the to appointment or gove election developing for for candidates responsible is Committee Nominating and Governance The Members: Committee Nominating and Governance the of Report h omte necs fto h or dpe h policy. the adopted Board of The consent two. the of requiring excess and in board may Committee company who the public directors same of the number inter- on the on sit two policy to Board limiting a directorships Board locking the to matters. recommended engagement and Shareholder Developed and emerging Board against including governance practices to best related practices Bank’s OSFI. the of directors Monitored E-17 of Guideline suitability with the accordance of in assessment the each supervised of and attendance director and shareholdings independence, the or Assessed circular this of 24 www.bmo.com/corporategovernance. page on Corporate starting of Practices Statement Bank’s Governance the the see of practices, discussion governance complete corporate a of For Superintendent (“OSFI”). the Institutions of Financial Office the and from requirements received regulatory correspondence and ensure legal to applicable governance with corporate compliance of system Bank’s the Reviewed session. strategy Bank’s the of effectiveness the appointment. Assessed for chairs Board and the the members recommended at committee and directors Shareholders as of election Meeting for Annual stand to nominees the and Recommended directors results. existing overall all the for reviewed process review peer and the chairs, Administered committee Board committee. the the Board Board, of each the effectiveness Board, the the of of assessment Chairman annual were the which in objectives used annual and then developed Board chair the committee of Board Chairman each the the whereby of process text the full Administered www.bmo.com/corporategovernance. The at Board. available the is by reflects policy adopted which was policy, third practice, The one best gender. than leading each less of no directors of independent goal effective of gender and a optimal including promote firm. composition, to search Board Policy independent identi- Diversity an specific Board of to a assistance response Developed the in with were and which as 2012 criteria of Babiak the fied each Jan at 2012, of Board in appointment the director the to a and Flèche Shareholders La of Eric Meeting of process Annual election renewal the Board in a resulted oversaw Board that and the members of committee skills Board and and competencies size, composition, the Evaluated ako otelMngmn rx Circular Proxy Management Montreal of Bank ataPpr(hi) oetAte,RnFre,Pii rio oetPihr,DnWlo III Wilson Don Prichard, Robert Orsino, Philip Farmer, Ron Astley, Robert (Chair), Piper Martha nnepicpe n udlnsfrteBn,ietfigadrecommen and identifying Bank, the for guidelines and principles rnance ucsinPlanning Succession ne coe 1 02 h adt scnandi h Committee’s the in www.bmo.com/corporategovernance. year contained at the is Charter for mandate mandate The 2012. its fulfilled 31, October has ended it that satisfied is Committee The Compensation Director ‰ ‰ ‰ ‰ ‰ Chair Piper C. Martha ‰ ‰ ‰ odr n h eieeto ai alwyatregtyasas years eight Share- after of Galloway Meeting David Annual Chairman. of 2012 retirement the the at and Board as holders the Prichard of Robert Chairman of new appointment the the for process the Administered Corporate Corp.’s Financial BMO Committee. of Governance Chair the from reports Reviewed committee Board and directors members. new and for Charter programs Committee’s orientation the the approved Guidelines), and Corpo- Policy Requirements rate Approval/Oversight Position Board Charters, the committee and Board Descriptions the documents Mandate, governance Board corporate the Bank’s (including the of review a Undertook Meet- Annual Shareholders. 2013 of the ing for submitted proposals program. Shareholder the Evaluated adopted via Board learning The issues-based discussion. (iii) electronic group and via learning, learning self-directed didactic (ii) (i) medium, of Bank’s consisting the Learning with for conjunction Institute in balanced developed and program comprehensive education optional director an Board the to Recommended orfetteicesdrsosblte fteerls hc increases Board. which the roles, by these approved of were responsibilities 2012 increased 1, the November reflect effective Resources to Committee Human Review the Risk of and chairs Committee the Bank. for the increases of of fee interests role Recommended best the the to and respect provid- director with on a alignment focused and is transparency that simplicity, 2011, ing 1, compensation November director effective fee” structure, “flat fee the of implementation the Reviewed process. succession Board Bank’s the of review a Undertook ding Committee Reports 22 o Bank of Montreal Management Proxy Circular Approved changes to the 2013to Capital reinforce Markets alignment compensation with program thegovernance Bank’s by: business 1) strategy fully and allocatinging good expenses calculation, to and the 2) incentive introducingthe pool a one fund- return used on for capital theUndertook metric, Bank a similar overall. third to party reviewprocesses, of which the confirmed Bank’s that talent BMO’sand and succession mature, succession practices and are exhibit solid leading practices. Confirmed that comprehensive succession andplans talent are management in place forreviewed the succession CEO plans and with key theContinued senior Board. to executives monitor roles, leadership and benchin strength key and operating talent groups. strategies Approved changes to the fiscalto 2013 reinforce executive alignment incentive with pay thegovernance metrics Bank’s by: business 1) strategy including and aenterprise-wide good new focus efficiency on ratio productivity, that andblended supports 2) return the introducing on a capital new metricappropriately so balanced that with use growth and andCompleted cost profitability a of measures. review capital of is theprogram. Bank’s Beginning executive in equity 2013, compensation stockincrease option the vesting alignment will between be compensationtaking. extended and to prudent risk arold Kvisle (retired October 31, 2012), Robert Prichard, Don Wilson III ‰ ‰ Robert M. Astley Chair ‰ ‰ ‰ ‰ The Committee is satisfied thatended it October has 31, fulfilled 2012. its The mandateCharter mandate for at is the www.bmo.com/corporategovernance. contained year in the Committee’s Strategic matters e period of time following their appointment, a thorough understanding of ing compensation and talent management. As required by its Committee bership in July 2012, and concluded the Committee has an appropriate level tutions and compensation practices. Five members of the Committee are als contribute to achieving the Committee’s objectives. The Governance and Robert Astley (Chair), George Cope, Christine Edwards, Ron Farmer, H Recommended to the Board seniorreassignments, executive and appointments reviewed and appointments andother reassignments executives. of all Approved annual performance assessments submittedthe by Bank’s the eight CEO most for seniorcompensation. executives and approved their Engaged the Committee’s independent advisorfor to performance conduct review, a which CEO confirmedBank pay CEO performance. pay was aligned to Assessed the President and Chiefance Executive against Officer’s his (“CEO“) objectives perform- forassessment the with past the fiscal Board, year, andthe reviewed recommended independent the his members compensation of to the Board for approval. Reviewed the performance of theMet Committee’s without independent management advisor. present atregularly the scheduled beginning meeting, and and end metindependent of with advisor every the without Committee’s management present. Reviewed material compensation programs withadvisor, an and independent concluded these programsinappropriate do risk-taking. not encourage excessiveEnhanced or the risk assessment thewhether Committee to uses apply when downward determining discretionpayouts. to the mid-term incentive plan Confirmed that compensation programs andFinancial practices Stability align Board’s with Principles, the theand related other requirements jurisdictions of in OSFI, whichHuman we Resources operate Committee and of worked BMOcompensation with Financial programs the Corp. to to meet enhance theSound U.S. U.S. Incentive Federal Compensation Reserve Policies. Guidance on ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Compensation oversight and governance ‰ In 2012, the Committee: Members: Report of the Human Resources Committee The Human Resources Committee oversees human resourcesMandate, strategies, members includ of this Committee have, orissues must relating acquire to within human a resources reasonabl and compensation,Nominating so Committee they completed can an fully annual review ofof the expertise Committee’s and mem experience related to riskmembers management of for the financial Bank’s insti Risk Review Committee. Talent and succession planning CEO and Senior Executive compensation Committee Reports taei Matters Strategic 23 ‰ ‰ ‰ ‰ Risk of Management and Identification Committee: man the and identification 2012, Bank’s In the for responsibilities an oversight Policies, its Corporate fulfilling Management in Risk Board to the adherence assisting risk, for responsible is Committee Review Risk The Saucier Members: Committee Review Risk the of Report aksItra aia dqayAssmn Process. the Assessment and Adequacy positions, Capital liquidity Internal and Bank’s capital forecast credit and structured current plan, exposures, resource Risk and the manage- strategy practices, risk group best perspective, Management industry risk to a compared from practices U.S. ment the Bank’s in the M&I including received of matters, and integration various profile, on risk management and the from units on updates business economy Bank’s global the the and of industry impact the on presentations Considered B-10. Guideline OSFI material of and satisfaction reports, in test arrangements stress outsourcing of technol- variety management a risk corpo- enhancements, on and ogy reports regulatory various with requirements, align audit and rate risks by key established control procedures to and management methods strat- core unit products, business and selected egies losses, credit for allowances Reviewed profiles. risk and funding reputational, and operational, liquidity market, credit, Bank’s the Assessed certain and policies. statement corporate appetite and risk-related risk plan adequacy, capital capital the of in risk- assessments inclusion Mandate, capital Officer’s for Risk demand Chief manage- based the to Charter, delegated Committee’s limits the process, exposures ment, exception risk policy credit credit certain the profile, and risk market Bank’s the Approved ako otelMngmn rx Circular Proxy Management Montreal of Bank o .Wlo I Car,Rbr sly hitn dad,Hrl Kv Harold Edwards, Christine Astley, Robert (Chair), III Wilson M. Don opinewt ikrltdrgltr requirements. regulatory risk-related with compliance d se(eie coe 1 02,BueMthl,Rbr rcad Guylaine Prichard, Robert Mitchell, Bruce 2012), 31, October (retired isle ne coe 1 02 h adt scnandi h Committee’s the in www.bmo.com/corporategovernance. year contained at the is Charter for mandate mandate The 2012. its fulfilled 31, October has ended it that satisfied is Committee The Change Regulatory ‰ ‰ ‰ ‰ Chair III Wilson M. Don vrih n Governance and Oversight euaoyrfr swl so ikadrcvr ln eeoe,as developed, plans recovery and OSFI. risk by on liquidity required as and well capital as III reform Basel regulatory on management from updates Received (“CRO”). Officer Risk Chief the with private basis. in scheduled meeting regularly each a at on governance Met practices risk management organization, risk risk various Bank’s and the of review conditions. the market prevail- Oversaw American and North crisis and debt global European ing the Oversight issues, Risk risk U.S.-based emerging the Committee, by discussed matters risk Monitored gmn of agement Statement of Corporate Governance Practices 24 Bank Act Bank of Montreal Management Proxy Circular All nominees standing for election atmeeting the are annual independent shareholders’ and unaffiliated exceptPresident William and Downe, CEO The independent Chairman of the Boardoperate allows independently the of Board management to and givesindependent directors leadership an contact In camera sessions attended by theheld independent at directors every are Board and committee meeting Directors are elected for a term of one year. Between Shareholder The Board, with help from the Governance and Nominating Commit- At a glance ‰ ‰ ‰ engagement of Board members, a highmanagement, quality the of calibre discussion and with scope ofability its to members’ ensure expertise, Board and committees the haverequired sufficient expertise. members The and Board the has adoptedfacilitate a more Board effective Diversity governance. Policy In to soitself doing, to the be Board made positions up ofgrounds highly and qualified who directors reflect from the diverse changingmarkets back- population in demographics which of the the Bank operates,required the expertise, and talent the available with Bank’s evolving the base. customer The and Board employee Diversity Policy includescomprise the at goal least that one-third each of gender thebelieves independent a directors. smaller The Board Board size isneed more to effective maintain while flexibility recognizing to the addressthey certain arise. needs One or director opportunities will as notshareholders’ stand meeting for on re-election April at 10, our 2013.nominated, 2013 No so annual additional 13 person directors has will been standThe for Board election believes at the the Board’s 2013 size meeting. is appropriate and effective. meetings, the Board may appoint additionalOctober directors, 2012. which The it Board did believes that in expertise, its skills, current geographic membership representation, has diversity, and the (i) size make to effective decisions, (ii) staffand Board (iii) committees plan appropriately, for succession. Key position descriptions The Board reviews position descriptions (listedfor on the our Chairman website) of the annually Board,Board committee develops chairs, the and position directors. description The forExecutive Officer the (“CEO”) President with and Chief that person’sResources input Committee and approves the it Human annually. Director independence The Board believes that it musteffective. The be Board independent of has management adopted to Director(“Standards”) Independence be to Standards assess if a directorcriteria from is independent. the The definition Standards of use affiliated(Canada) persons and under definitions the of independence fromAdministrators the (“CSA”) Canadian and Securities NYSE. The Standards are on our website. tee, uses the Standards to assessships personal, and business, dealings and between other directors relation- andBoard the considers Bank biographical and material, its reports, affiliates. andpleted The questionnaires by com- directors as well ason Bank entities records with and which reports, the and directors information are involved. The Board considers II. Independence (Canada) requires certain Bank Act

The Board annually reviews written positionChairman descriptions of for the the Board, the Presidentand and directors CEO, Committee Chairs, Regular assessment of the Board ensuresnumber it of has members the and appropriate diverse expertisedecisions to make effective Our Board’s role is to enhanceorous Shareholder approach value, to through accountability, a performance rig- andgovernance corporate Our high corporate governance standards reflectpractices emerging and best meet or exceed legal,requirements regulatory, TSX and NYSE We monitor regulatory changes and bestgovernance practices to in ensure corporate we have leading governance practices The Governance and Nominating Committee defines our approach This document communicates our corporate governance practices to Good governance starts with our Board of Directors. We get the

‰ ‰ At a glance ‰ ‰ ‰ At a glance Composition of our Board The Board considers its size annually,nating while Committee the does Governance so and regularly. Nomi- Atthere the were beginning 14 of directors fiscal on 2013, thedetermining Board. Board Factors size that include are the considered ability in to ensure a high level of important matters, such as approval ofdends, financial be statements approved and by divi- the Boardcommittees. and not delegated to the Board to corporate governance. This committee reviewsnance our framework, corporate guidelines, gover- and practices toindustry ensure and they Shareholder meet expectations, the regulatorybest environment, practices. and Role of our Board The Board supervises management of ourholder business value. to The enhance Board’s Share- Mandate, onresponsibilities. page The 30, Board outlines Approval/Oversight its Guidelines general defineand its responsibilities, roles plus those of managementaccountability and within also the specify Bank. The Board composition and structure right bywith having diverse well-informed backgrounds, people relevant experience, andmanagement. independence We from gain from their expertisereturn. and Directors pay sit them on fairly committees in thatand specialize conduct in review, key governance areas: and audit nominations,and human risk resources, review. you, our Shareholder. Overview Governance is important - to ourthe owners, communities our we customers, operate our in employees, -job and running to our us. business, It and it allowsand means us standards that to that we do apply comply to a with better us.ical the Good conduct laws is governance also central makes to sure our eth- business. I. Board structure

Governance Practices Statement of Corporate Statement of Corporate Governance Practices 25 chairing and CEO meetings. the Board with all consultation in sets to agendas website, relating meeting our duties Board include on setting available which responsibilities, is key which Chairman’s of the text out full the Board, Chair- the the of for man description position The shareholders. including to responsibilities, responsibilities and effec- obligations functions its Board meets the Chairman and that The tively ensure separate. are to affairs CEO Board’s and the Board manages the of Chairman of roles The Chair Independent directors. Bank’s this by determined judgment members. has independent Board Board of these The exercise Inc. the impair BCE of not board does relationship the on sit both who chu time. that at total interlocks the Board into particular, of takes in number Committee including, the considerations board, relevant same all than the account more on permit serve to to not directors Nomi- or two and whether Governance considering public the In same of Committee. the consent nating on prior sit the may without directors board a two company adopted than has more Board no also The that are company. policy members public Board another more of to or members commitments two board their when fulfill occurs to interlock time An enough us. and has judgment director independent each which exercise ensure circumstances to to are ability there director’s if a determine impact to would on sit outside directors the our monitors boards Committee Nominating and Governance The memberships board outside and interlocks Board 2012. fiscal in attendance meetings their committee and and Bank, Board the all in for holdings serve record equity they their boards of company value public the other on, includes which 19, to 6 pages are they that Standards. satisfied the is under Board independent the and with, directors relationships the have of they some entities with bank- arrangements lending, commercial have other we and While ing, committees. audit company public member- on for ship requirements independence U.S. and Canadian additional two. The to unaffiliated. directors and inside independent limit are election policies 2013 for Board’s 10, standing April directors on other Board All the Board. to the of member a be the must Under CEO. and President is he require. NYSE and Review CSA Conduct the and as Audit – our Committee of members for for threshold higher The independent. is independence not automati- is Bank) director the a of mean officer cally an Cer- being judgment. example, independent (for that of relationships exercise affiliates tain her its or of his any with or interfere Bank could the with relationship material a have relationship. organizations a and has people director the the on, which impact with and Bank to, the importance to the importance also the and both mind in keeping relationships these C n.Spi rcuAdtCommittee, Audit Brochu Sophie Director Inc. BCE Name Company h olwn al esotitrokn or ebrhp fthe of memberships board interlocking out sets table following The Bro- Sophie and Cope George between is interlock Board only The on is election for standing nominees director the on Information the meet Committee Review Conduct and Audit the of members All because Bank the with relationship material a has Downe William not does she or he if independent director a considers Board The ako otelMngmn rx Circular Proxy Management Montreal of Bank ereCp N/A Cope George akAct Bank Cnd) h aksCEO Bank’s the (Canada), Membership Committee Committee Governance Corporate I.Oinainadcniun education continuing and Orientation III. dcto eiasa u expense. external our relevant at in seminars participate education devel- to law encouraged securities are U.S. Directors and opments. Canadian and disclosure, risk and considerations, assessment accounting key planning, and succession reporting strategy, include financial Topics compensation, CEO. executive and governance, President corporate the the and of chairs, Chairman committee the Board, receive from also recommendations They reading year. and the materials throughout receive operations Directors Bank directors. on our presentations con- of the development for and responsible education is tinuing Committee Nominating and Governance The development director Continuing group. the corporate and supporting chair the committee of the head with on. meetings sit individual they have committee also each They for manual orientation an receive members our about learn to functions of business. corporate each and of groups heads business the principal with our individually meet preceding directors the New for months. meetings 12 committee and agendas Board and for documents, minutes disclosure and public recent bylaws, manual our The has policies. also corporate and directors, for com- requirements information, pliance governance director structure, orientation our an explaining receive manual directors New directors. orienting new for educating responsible and is Committee Nominating and Governance The orientation director New hntrepbi opn ui omteswtotBadapproval. Board without committees more audit on company serve public may three members than Committee of Review none Conduct Also, and necessary. Audit feel our ensure they helps as This advice management. independent receive consulting they without Bank, consultants, the outside by engage for can paid chair committee each and Chairman The mechanisms independence Other shareholders’ annual 2012 as meeting. the appointed at was re-election Prichard his Robert following process, Chairman this the of of result support a 75% As require three Board. ordinarily of would maximum term a renewal for A term for years. renewal be possible will one term with sig- normal years, the enjoying five policies, person Bank one current than Under more support. involve is nificant there may if which vote decision, a final and a deliberation make appropriate to most Board the the of for determination process as well as consultations directors, individual all Bank, with the facing issues Committee, of for Nominating identification considered and includes being Governance the is she of Chair or the he current reappointment, if the or, by Board led the is of which Chairman process, That Chairman. the in change present. management without session of a each has during also committee, meetings, Board its like Each topics strategy. includes and discussion planning and succession meetings, Board outside meetings happen Similar also without present. Chairman, directors the non-independent with or meet management to includes directors meeting independent Board for Each time management. from independent is Board ‰ ‰ glance a At ahBadcmiteas a noinainporm New program. orientation an has also committee Board Each h or a salse rcs o h ponmn ra or appointment the for process a established has Board The the ensures and directors to leadership provides Chairman The ietr’cniun education for continuing responsible directors’ is groups Committee business principal Nominating our and Governance of The each of heads the one-on-one with through meetings business our about learn directors New Statement of Corporate Governance Practices 26 . FirstPrinciples . Concerns about accounting, internal Bank of Montreal Management Proxy Circular FirstPrinciples , of which there have been none since inception. (available on our website) guides our ethical decision- . We have an online learning program for new employees FirstPrinciples Shareholders vote for individual directors –candidates not – for and a directors slate who of don’toffer get to a resign majority of votesDirectors must must offer to resign ifmeetings they don’t attend at leastThe 75% Governance of and Nominating Committee usesassessments the to results recommend of the mix ofimprovements, directors, and process continuing education opportunities Individual directors evaluate the Board, itsother committees, and each Directors must hold eight times theircommon annual shares cash or retainer deferred in share units Directors cannot hedge their Bank ofsecurities Montreal Shares or other We have adopted a comprehensive codeWe of foster conduct a and culture ethics of ethicalemployees conduct, and including officers by a giving confidential forumby to treating raise all concerns complaints and with appropriate seriousness Each year, every director, officer, and employee must sign an The Board has implemented whistle-blower procedures for officers To ensure ethical and independent decision-making, we have a At a glance ‰ ‰ ‰ ‰ ‰ ‰ At a glance ‰ ‰ acknowledgement that they have read, understood,FirstPrinciples and complied with and online testing for all employees on and employees to confidentially and anonymouslynon-compliance report with accounting controls, or auditing matters canand also anonymously. be We raised create confidentially a culturethis of forum ethical for conduct concerns by and providing byseriousness. treating all complaints with appropriate protocol to identify and deal withor director executive officers conflicts with of a interest. Directors materialrelated interest Board in materials, a and matter are do notrelated not present votes. receive for any discussions or Becoming a director – nomination andThe election Governance of and directors Nominating Committee decidescompetencies what the skills Board and requires, assesses themembers skills and of identifies current and Board recommends suitableWe director believe candidates. our directors should havefessional the ethics highest and personal integrity and and pro- beof committed the to shareholders. serving The the Committee interests considersmanage the risks need and for opportunities skills faced to byhelps the determine Bank. if This the assessment Board needsBoard’s new Diversity directors. Policy, In potential keeping candidates with areattributes screened the including for ethics several and integrity, range of experience, good busi- FirstPrinciples making and conduct by our directors,reviewed officers, annually and by employees. our It Legal, is Corporateensure and that Compliance it Group meets to all legalmendations requirements for and amendments best go practices. to Recom- theand Board Conduct Review for Committee approval. The must Audit approveunder any waivers granted VI. Directors – becoming a director,director, sitting and as resignation a policy V. Ethical business conduct The annual strategy session provides amanagement forum constructive for feedback on directors to our strategic give We plans are guided by an integratedthat risk is management embedded framework in our dailyprocess. business The activities Risk and Review planning Committee ofrisk the management Board framework reviews on our a regular basis Our enterprise-wide strategy is developed byBoard management. oversees The the strategic planning processapproves and our reviews strategic and plans An annual strategy session helps directors better appreciate plan- Directors identify their specific continuing education needs in dis- The Governance and Nominating Committee, in conjunction with ‰ ‰ ‰ At a glance Risk Oversight Our enterprise-wide risk management framework isgovernance comprised structure that of includes a a robustcomprehensive committee set structure of and corporate a policies, whichBoard are or approved its by committees, the together withand supporting operating guidelines. corporate This standards enterprise-wide riskerned framework through is a gov- hierarchy of committeesAll and elements individual of responsibilities. our risk managementregular framework basis are by reviewed the on Risk a Revieweffective Committee guidance for of the the governance Board of topage our provide 23 risk-taking for activities. information See on theCommittee. responsibilities Further of information the on Risk our Review riskincluding the management framework risk oversight responsibilities oftees, the our Board risk and appetite, its risk commit- policies92 and of limits our is 2012 set MD&A out (available on on pages our 75 website). to ning priorities and progress on strategicment plans. constructive Directors feedback give on manage- our strategicFeedback plans from and directors the and session management itself. isyear’s key session. to Directors receive planning updates the on next pal the business progress group’s of strategic each plans princi- throughout the fiscal year. Strategic planning The Board reviews and approves ourtiatives, strategic opportunities, plans, risks, including competitive key position, ini- financialand projections other key performance indicators forgroups. each of our principal business IV. Strategic planning and risk oversight the Bank’s Institute for Learning, hasprogram developed which a provides director a education comprehensive andexperience consisting balanced learning of (i) didactic learning(ii) via self-directed electronic learning; medium; and (iii) issuescussion. based Continuing learning education via and group development dis- ofis our summarized directors on in pages 2012 14 and 15. cussions with management, the Board andmeeting committees. minutes Committee are also given tocommittee. all Directors directors are who encouraged to are attend notmittee at on meetings least the (for two a other committee com- theyunderstand are the not issues we a member face. of) to better Statement of Corporate Governance Practices hr nthlig r itdi h igahe npgs7t 13. to 7 pages on 27 biographies the in listed deferred are and holdings 2012 Share unit 20, current share March Directors’ 2012, respectively. 23, 2011 October 22, March on and Board the and joined Flèche who La Brochu Mr. Ms. Babiak, share Ms. minimum for the except met requirements, directors requirement. ownership non-employee this all meet 2012, they 31, until January units At share remuner- deferred all or in take Shares fee must in annual Directors ation the units. share of deferred portion or retainer Shares cash must either the director times non-employee eight Each least 16). at page hold (see structure adoption fee the flat with its conjunction of in 2011 25, October effective guidelines 19. to 16 pages dis- on is about closed compensation information Directors’ further philosophy). for compensation 16 director page our (see struc- 2012 fee fiscal flat in new starting a ture adopted Board The the directors. and of recommended responsibilities Committee the with it consistent ensure and to competitive group is peer its against compensation and directors’ reviews benchmarks annually Committee Nominating and Governance The compensation year. Director fiscal the of they end the which at on resign committees to the offer and or Board least serve the at of attend meetings must all Directors of meetings. 75% required prepared all be attend to to expected and are for directors and advance are in dates well meeting established Board oversight. exercising and informed judgments making business while probe management, to challenge and appropriate, questions, as and and, discussion meet- facilitate of and advance encourage in to materials Board. ings meeting the review and to Bank expected the Bank are to a Directors duties as their role discharge their effectively to to energy director and time sufficient devote must Directors Directors of Responsibilities and Expectations years. two a than as longer continue not CEO term former a a for request director may Board the However, Board. Bank. the the on been has or she his or of he regardless long Chairman how as or term age year the her five of full Chairman a the serve least addition, may at In Board serve age. to their allowed of have regardless be they years, will or seven directors 70 all turn However, they years. when 1, 15 of January served earlier after the Board until the or serve to 70 may added turn 2010, Directors they years. when 20 of served earlier have the they until to serve prior may Board 2010, the 1, on January Directors sustain expertise. renewal, add Board and ongoing performance, ensure Board to 2011, in refined years. as 20 2009, to year a than less from ranges Service seven service. about of average years Board the on nominees director Non-employee tenure Board biographies 13. their to in 7 shown pages are on industry by expertise of areas Directors’ director a as Sitting expertise and skills the directors. indicating the matrix of skills each a of for 15 page See 3. page independent the of one-third least at set directors. comprise has gender Board each The that director. goal a a as commitment and to time ability sufficient candidate’s devote the and conflicts, takes possible also consideration Committee into The background. gender, geographic qualities, and and ethnicity skills age, personal expertise, of areas judgment, ness h or prvdaedet otedrco hr ownership share director the to amendments approved Board The by employed longer no when Board the from resign will officer An in Policy Tenure Director its to approach new a approved Board The on described is directors elect to voting majority on policy The ako otelMngmn rx Circular Proxy Management Montreal of Bank I.Cmite fteBoard the of Committees VII. n efrac ftesaeodr’auditors. shareholders’ the of performance t and assesses and functions. reviews compliance also and Committee finance The the of struc- effectiveness the and and resources requirements ture, regulatory and legal with compliance function, over cont control disclosure internal reporting), (including financial controls internal reporting, financial our of or hte oacp rrjc h resignation. the reject or accept to whether Board ietr utofrt eini they: if resign to offer must Directors policy Resignation self- process. the assessment through identified opportunities improvement of progress individually. results chair the committee discusses each Board with the of their Chairman of The standards description. the position and objectives their against annually assessed Chairman. the reviewed and are Board results the The with description. position performance, the Chairman’s account the into on taking director each from input with annually, relevant the charters. account committee into taking meetings, agenda committee and for members, planning committee the to committees, provided the information of of It operation adequacy the Board. the on for views director’s that each to includes similar is process assessment The survey. each with them. meets discuss and to assessment director peer receives director’s Board each the of of results Chairman the The consultant. con- outside compiled an are by results fidentially The standards description. performance position the director to the relative for peers their the of assesses each director of Every contribution directors. individual of effectiveness the on and skills management and experience business capabilities. and as such skills categories directors outlines broad of matrix on The skills based whole. the a review as to Board 15) the page and (see matrix The skills process. a and uses direction Board strategic and meetings, agenda Board structure, for Board planning directors, the to Board, provided the information of of operation adequacy the of covers Chairman interview the The with Board. interview the one-on-one annual an has self-assessment and Board survey anonymous an completes Chair annually the director and Each committees, directors, Board, the of Assessment officers. executive senior to applies financial prohibition related similar or A securities instruments. Shares, Bank in interest economic their ‰ ‰ glance a At ‰ ‰ ‰ h ui n odc eiwCommittee Review Conduct and Audit The the to recommend will Committee Nominating and Governance The h oenneadNmntn omte oiosadtracks and monitors Committee Nominating and Governance The are chair committee’s each of effectiveness and contribution The Chairman the assesses Committee Nominating and Governance The annual the through evaluated separately is committee Board Each feedback for process evaluation peer a includes survey annual The hedging from directors prohibiting policy a adopted has Board The omlwitncatr aalbeo u website) in our out on set (available are charters committee written each formal of responsibilities and roles The independent of entirely consist directors each committees four Board’s The requirement attendance meeting 75% annual the meet Shareholder to a fail at election for votes or of meeting, majority a receive to fail occupation, principal their change osadpoeue n nenlaudit internal and procedures and rols eqaiiain,independence, qualifications, he oese h integrity the —oversees Statement of Corporate Governance Practices 28 Bank of Montreal Management Proxy Circular The management Disclosure Committee oversees thepublic timely release of material information aboutInternal the controls Bank and procedures ensure materialeffectively information communicated is internally Our Shareholder Engagement Policy (available onpromotes our open website) dialogue and the exchangeShareholders of ideas with The Disclosure Committee consists of members of senior manage- We have a rigorous representation process to support the certifi- Our Shareholder Engagement Policy encourages open dialogue and Feedback from institutional Shareholders comes from one-on-one To communicate directly with the Board, Shareholders can use the See page 23 for a report on this Committee’s membership and activ- At a glance ‰ ‰ ‰ The Audit and Conduct Review CommitteeDisclosure reviews Policy and annually. approves The the policy coversmaterial the non-public timely information. distribution It of sets all outmaterial guidance information for and determining ensures proper (non-selective)wide disclosure distribution and of material information. ment including the Chief Financial OfficerCommittee (“CFO”), reviews who all chairs annual it. and This interimtimely filings public and release oversees of the material informationand about General the Counsel Bank. together The decide what CFO therefore information publicly is disclosed. material and cations by the President andfinancial CEO disclosure. and Almost the 110 CFO of onmake our the representations most adequacy (quarterly senior of and executives our annually) must This to includes our declaring Chief that Accountant. anyhave potentially been material escalated issues to they the knownance Chief of processes. Accountant The under representations our are financialof specific gover- responsibility. to the executive’s area the exchange of ideas with ourShareholders shareholders. and We other communicate stakeholders with through variousthe channels, annual including report, management proxy circular,information quarterly form, reports, news annual releases, website, andaddition, industry our conferences. quarterly In earnings call iswebcast open and to question all, and and answer features period.meeting a We of live also Shareholders hold at our different annual locationsto across year, Canada with from a year live webcast, so all our Shareholders canor participate. group meetings and from informaldepartment. Feedback surveys from by our retail Investor Shareholders usually Relations or comes telephone. by Our email Investor Relations andments Corporate reply Secretary’s promptly depart- to Shareholder concernsaction. and The take Board appropriate believes these proceduresShareholder reflect engagement. best practices in contact details below, in item XI., “Contacting our Board”. IX.CompliancewithNYSEstandards We are required to disclose anygovernance significant practices differences and between those our required bydomestic NYSE issuers standards of for which U.S. only oneShareholder difference approval exists. for The all NYSE equity requires compensationchanges plans to and such any plans material (with awhether few the limited securities in exceptions). This a plan applies open are market. newly issued or bought over the VIII. Communications and shareholder engagement material amount of risk and theuses methods to and control procedures key management risks. ities in 2012. —develops gover- —helps the Board perform its (Canada). It also monitors con- —helps the Board perform its over- Bank Act It sets standards of business conduct and ethics for directors, senior In addition to being independent, each member of the Committee See page 20 for a report on this Committee’s membership and activ- The Governance and Nominating Committee See page 21 for a report on this Committee’s membership andThe activ- Human Resources Committee This Committee works with a full-time executive responsible for See page 22 for a report on this Committee’s membership andThe activ- Risk Review Committee management, and employees and reviews reportssocial on and environmental, governance issues. It overseesself-dealing procedures provisions for of complying the with sumer protection measures and procedures forcomplaints, dealing plus with the customer use and disclosureemployee of information. personal customer and is financially literate, as defined inJan CSA, Babiak, SEC, Philip and Orsino, NYSE and rules GuylaineFinancial or Saucier Experts standards. are as Audit defined Committee by SECate” rules. and Definitions “Audit of Committee “financially Financial liter- Experts”Conduct are Review found Committee in Charter the (available Audit on and our website). ities in 2012. Additional Information respectingin this our committee 2012 is Annual set Information out FormCommittee under Information”. “Audit and Conduct Review sight duties for identifying and managingrelated risk regulatory requirements. and The complying Committee with reviews risk- organizational the structure, resources and effectiveness ofmanagement the function, risk our risk appetite statement,evaluation management’s of the performance of ourwith risk management, rating the systems, effectiveness and, of together ourbased systems capital for requirements. calculating It risk- also reviewsour and, risk as management applicable, corporate approves policies, transactions involving a nance principles and guidelines. It identifiesdates and for recommends election candi- or appointment tofor the orienting Board, and and assessing reviews the our Board,Committee process its also committees, reviews and Shareholder directors. proposals The andpriate recommends responses. Each appro- year, the Committeecharters, reviews position all descriptions, Board and committee the Board’sthey Mandate meet to all ensure regulatory that requirements and best practices. ities in 2012. oversight duties for the appointment, evaluation,succession compensation planning and of the CEO andthe other Bank’s senior strategy executives. for It attracting, oversees retainingleaders and at developing all high levels quality with thegoals. capabilities The to Committee execute has the oversight Bank’s overof strategic the compensation philosophy programs, and the principles design andcompensation application programs, of and material share ownership guidelines.ttee The is Commi- responsible for ensuring thegrams Bank’s meet material the compensation Bank’s pro- compensation principlesnot and encourage risk excessive risk profile taking. and do talent strategies. The Committee annually reviewsfor succession the planning President and CEO andough all review senior of executives. potential This successors’ includes capabilitiesplans. a and The thor- development Committee also annually reviewssuccession the report in-depth for talent the and entire executiveincludes group. roundtable This talent assessment, assessments which of thedetails Bank’s the executives, current also and projected leadershipand demographics, capabilities vacancy and risks readiness of thereviews successor detailed pool. reporting The on Committee the also profile,planning capabilities of and the development Bank’s emerging leadersneeds against of the the projected bank. executive In addition,culture, including the diversity, Committee inclusion assesses and the employee enterprise’s engagement. ities in 2012. Statement of Corporate Governance Practices 29 Corpo- the from available are these of Copies year 2012. fiscal 31, the October for ended analysis and state- discussion financial management’s consolidated and our ments in is us about information Financial depart- Secretary’s Corporate at: the ment ask who charge of free Shareholders to available are at copies website Print our www.bmo.com/corporategovernance. on documents to refers statement This information governance Additional X. following: the of any does amendment that the requires if specifically or plan approval the if plan only a amendments If Shareholder of issued. requires approval be TSX to the Shares amendment, of for procedures limits includes fixed have of not years do three that every plans approval Shareholder Addi- requires securities. TSX issued the newly tionally, involve they if only plans compensation ‰ ‰ ‰ ‰ -al [email protected] E-mail: 867-6793 (416) Fax: 867-6785 (416) Telephone: 1A1 M5X Ontario Toronto, Place Canadian First 1 Floor, 21st Montreal of Bank ncnrs,teTXrqie hrhle prvlo equity of approval Shareholder requires TSX the contrast, In ako otelMngmn rx Circular Proxy Management Montreal of Bank hne h mnmn procedure issued amendment be the to changes securities of plan number the the under on limit fixed participation any insider increases on limits by exceeds held or options removes of term the extends insiders or price exercise the reduces ietywt h or fDrcostruhteCara fteBoard, the of Chairman to: the writing through by Directors of Board the communicate with may directly parties interested other and employees Shareholders, Board our Contacting XI. aysdprmn include: department tary’s at http://www.sec.gov/info/edgar.shtml. website SEC the on at and Retrieval) www.sedar.com, SEDAR and Analysis on Document website, Electronic our for on (System available is other Bank) (and the This about above. information address the at department Secretary’s rate ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ -al [email protected] E-mail: 1A1 M5X Ontario Toronto, West Street King 100 Place Canadian First 1, Box P.O. Group Financial BMO Directors of Board the of Chairman ouet vial norwbieo rmorCroaeSecre- Corporate our from or website our on available Documents or iest Policy Diversity Board Policy Engagement Shareholder Practices Governance Corporate of Practices Statement and Policy Disclosure of Statement Standards the Independence Board, Director directors the the of and Chairman chairs the committee of each for commit- descriptions Board’s Position the of each for tees charters and Mandate Board The FirstPrinciples u oeo uiescnutadethics and conduct business of code our , Board Mandate 30 Bank of Montreal Management Proxy Circular ensuring processes are in place toBank’s identify businesses the and principal ensuring risks the of implementationsystems the of to appropriate measure and manage thesereviewing risks; and approving at least annuallypractices significant that policies ensure and respect for, andlegal, compliance regulatory with, and applicable internal requirements andable obtaining assurance reason- about the Bank’s compliance; reviewing and approving at least annuallytional the structure; Bank’s organiza- monitoring risk management activities for sufficientstatus independence, and visibility; overseeing the Bank’s internal controls andinformation management systems and monitoring their integrityness; and and effective- reviewing reports provided by management onof the internal effectiveness control over financial reporting. reviewing and approving the Bank’s significantments disclosure including docu- financial statements; approving the Bank’s disclosure policy thataccurate ensures disclosure timely to and analysts, shareholders, employeespublic and that the meets all applicable legaland and guidelines; regulatory requirements monitoring feedback received from the Bank’sensuring stakeholders; a and process whereby shareholders andmay other communicate stakeholders directly with the Bank’sthrough independent the directors Chairman of the Boardinstructions by in furnishing the publicly Bank’s available proxy circular and/or on its website. overseeing the Bank’s succession planning processesappointment, including training, the compensation and performance assessment of the Chairman of the Board,Executive Officer independent and directors, the other Chief senior managers; establishing annual performance expectations and corporateand goals objectives for the Chief Executiveagainst Officer, those monitoring expectations progress and dismissing andExecutive replacing Officer the as Chief necessary; approving the selection criteria for newtors directors, for nominating election, direc- appointing board Committeethe Members, independence of reviewing directors and overseeingcontinuing the education orientation of and new directors; and establishing expectations and responsibilities of thethe Chairman Board, of the Chief Executive Officer,of the the chairs Board of and each other committee directors,the which position includes descriptions the for approval each of of the foregoing. 4. Risk Management and Internal4.1 Controls 4.2 4.3 4.4 4.5 4.6 5. Communications and Public Disclosure 5.1 5.2 5.3 5.4 6. Evaluation and Succession Planning 6.1 6.2 6.3 6.4

approving and monitoring compliance with FirstPrinciples,Bank’s the code of business conduct andsatisfying ethics; itself, and to the extent feasible,Chief as Executive to Officer the and integrity other of executiveChief officers the Executive and Officer that and the other executiveof officers integrity create throughout a the culture organization. developing the Bank’s approach to corporateestablishing governance, and including maintaining a set ofples corporate and governance guidelines; princi- establishing appropriate structures and procedures toBoard allow to the function independently of management; establishing Board committees, appointing Board committeeand chairs approving their respective charters toing assist out the its Board duties in and carry- responsibilities; evaluating, on a regular basis, theindividual Board, directors, its and committees reviewing and the size,cies composition of and the poli- Board and itsness, committees contribution with and independence a of view the tomembers; Board the and and effective- its approving and adhering to the Bank’sGuidelines, Board which Approval/Oversight set out the rolesand and management. responsibilities of the Board overseeing the Bank’s strategic planning processapproving and a annually strategic plan, which takesthings, into the account, opportunities among and other risks ofAppetite, emerging the trends, Bank’s and business, the its competitive Risk industry; environment in the monitoring the implementation and effectiveness ofapproved the strategic Bank’s and operating plans; reviewing, approving and monitoring performance againstBank’s the financial objectives, plans and actions,capital including allocations significant and expenditures and thedends; declaration and of divi- approving all major corporate decisions and transactions.

1.2 2. Governance 2.1 2.2 2.3 2.4 2.5 3. Strategic Planning Process 3.1 3.2 3.3 3.4 1. Culture of Integrity 1.1 The board of directors (the “Board”)responsible of for Bank supervising the of management Montreal of (theof the “Bank”) the business is Bank. and In affairs carrying outobligations, these the responsibilities Board and will, discharging either its directlyperform or the through duties its set committees, out inother this duties Board as of necessary or Directors’ Mandate appropriate, including: and such Board Mandate Indebtedness/Insurance/Normal Course Issuer Bid 31 [email protected] 416-867-6793 Email: Fax: 416-867-6785 Telephone: 1A1 M5X Canada Ontario Toronto, Floor 21st Place, Canadian First 1 West Street King at: our 100 us of contacting TSX) by the Department charge, by Secretary’s without defined we Corporate TSX, (as which the float” under with “public 2014, Montreal filed the 31, of notice of January Bank the 2.3% ending of approximately and copy representing 2013, a Shares, 1, obtain BMO February may million commencing Shareholders 15 bid, Shares. to issuer up course cancellation normal for new repurchase a may announced we 2013, 30, Bid January On Issuer Course Normal million. $1.5 C is (Side premium itself annual BMO the and for $100,000,000 coverage entity of retention and officers; self-insured corporate year, and ha provides policy directors policy policy per its This insurance $150,000,000 indemnifies second omissions. of BMO The and limit that acts million. a event their $1.5 has the for is and policy in officers premium directors This B) and annual individual (Side directors the covers loss its and and indemnifiable deductible indemnify A) for no to (Side are reimbursement year, permitted, loss policies policy not non-indemnifiable insurance per is for of $300,000,000 or is types of not, policy Two limit does insurance subsidiaries. BMO first its where The and circumstances 2013. BMO in 31, for officers October insurance on liability expire officers’ both and and directors’ purchased expense, its at purchased, has BMO Insurance Officers’ and Directors’ not laws securities are it. Canadian We define as law. indebtedness this routine of disclose requirements to the required meet loans the if except terms, States United the as cers, Bank the by subsidiaries. provided its undertaking of or or letter agreement agreement, similar support other guarantee, or a credit of subject another the to was individuals no that such was entity of there any and subsidiaries, by incurred its indebtedness or outstanding Bank the pur- of the securities with of connection chase in its associates and respective Bank their the and of subsidiaries officers executive by and incurred no subsidiaries nominees was director its there directors, or 2013, Bank 28, February the at to indebtedness as outstanding Bank, the of knowledge the To Officers Executive and Directors of Indebtedness ed o aeproa on oordrcosadeeuieoffi- executive and directors our to loans personal make not do We ako otelMngmn rx Circular Proxy Management Montreal of Bank abnsOlyAto 2002 of Act Sarbanes-Oxley eie these defines sdfndb aainscrte laws. securities Canadian term by such defined as is indebtedness’ its ‘routine and excludes Bank amount and the This current of subsidiaries. by employees incurred and subsidiaries officers executive its directors, or former Bank the to at 2013 outstanding 31, indebtedness January aggregate the shows table following The Indebtedness Total te 48,798,706 ($) subsidiaries our or us To Other Purpose sa ). Shareholder Proposals 32 Bank of Montreal Management Proxy Circular

The Pension Fund Society (“PFS”) of the Bank of Montreal is the The Bank’s DB pension plans are funded according to regulatory The Bank also sponsors defined contribution (“DC”) plans in many The Bank believes that engaging members in their retirement plans The Board’s oversight and active involvement in retirement plans,

the Board makes recommendations to theplans Board or on changes to any new existing pension pension management plans regarding and the receives plans reports status from andHuman valuations. Resources Corporate and Finance jointly providethe guidance Human and Resources support Committee to and theto Board this of oversight Directors role, in including relation regularworking reports to to maintain the the Board, pension jointly plans’compliance and financial soundness, alignment regulatory with corporate objectives. Bank’s largest pension plan, and is(“DB”) a plan. federally The registered PFS defined board benefit ofmembers directors together is with comprised three senior of officers fourter of Bank and the Board by-laws Bank. provide The that PFS thethe Char- PFS plan’s actuarial Board valuations is and responsible its forment financial overseeing and position, performance the of manage- the investments,monitoring systems the and investments, controls compliance for with regulatoryand requirements approval of by-laws. The Bankfunction Board by provides approving a any by-law further oversight changes.active The members PFS and communicates retirees to by providingment a as customized well annual as state- an overallinformation annual on report, the both solvency of ratio which of include the PFS, when required. requirements and actuarial standards to meetplans. the The obligations funded of status the of thereported plans to is regulators closely and monitored members and ascommunicates is may DB be financial required. information The to Bank ShareholdersAnnual through Consolidated its Financial Statements, and noteinformation 23 about provides pension detailed plan funding, assetexpense allocation, and annual sensitivity plan of assumptions. Thein note the also estimated describes financial changes positions ofover our year. DB pension benefit plans year jurisdictions. These DC plans are subjectregulatory to requirements Board applicable to oversight, each as plan’s wellof jurisdiction. as its In Canadian respect DC plan, BMOrelevant administers regulatory principles the and plan it in applies accordancePension with the Supervisory Canadian Authorities Association “Guidelines of for CapitalPlans”, Accumulation which provide a uniform nationalselection, standard member for information investment and performance monitoringFor in its DC global plans. plans, the Bankprinciples as applies may similar be guidelines and available and regulatory applicable to each plan. helps them better understand and prepareeffective for plan their member retirement communication and enhances that transparency,support clarity, and confidence in the plans.BMO For provides all ongoing of communication its with pensionoptions members programs, regarding and their entitlements under their plans. together with ongoing extensive communications withand plan shareholders, members illustrate BMO’s sound pensionmanagement governance structure. and Comprehensive disclosure in connectionBMO’s with pension plans is provided toreceive disclosure plan of participants, the and financial Shareholders accountingBank’s of financial the statements. plans In through addition, the theing Bank disclosure will by enhance including the in exist- andocument, appropriate a publicly statement available confirming annual the soundmanagement pension structure governance of and the Bank’s pensionthe plans. Board For believes these that reasons the objectiveadequately of addressed. the proposal is already

THE BOARD OF DIRECTORS RECOMMENDS THATAGAINST SHAREHOLDERS THIS VOTE PROPOSAL BECAUSE THE OBJECTIVEALREADY OF FULFILLED. THE THE PROPOSAL BOARD IS OVERSEES AGOVERNANCE SOUND AND PENSION MANAGEMENT STRUCTURE AS DESCRIBEDPLAN BELOW. MEMBERS RECEIVE REPORTING ON THEIR PLANS’ FINANCIAL STATE. BMO helps its employees plan foring retirement and by governing sponsoring, employee administer- pension andglobally. retirement With savings respect plans to pension plandecision governance, making the for oversight these and plans restsBoard with regularly the monitors Board plan of structure, design, Directors.industry investment The and policy, jurisdictional competitiveness, affordability andistration. admin- As described in its Charter, the Human Resources Committee of Proposal No. 1 Pension Plans: Increased Disclosure of Oversight It is proposed that the Boardstakeholders of each Directors year reassure that shareholders the and pensionBank plans are provided managed by in the accordance withpractices. sound management best The Bank provides defined benefit andplans. defined Several contribution concerns have pension been raisedmanagement over of the such solvency plans and over the theexcellent last document few “20 years. Questions Based Directors on Shouldin the Ask Pension about Governance” their published Role by theAccountants, Canadian we Institute will of describe Chartered the challengesshareholders of and such employees plans - for in directors, short,tribution all pension stakeholders. plans Defined are con- more and“With more defined used contribution by pension organizations. plans, thement members risk. bear For the that invest- reason, conventionalcontribution wisdom plans holds carry little that (if defined any)exposure investment for liability directors. This and risk conventional wisdombear is responsibility wrong. because the Directors sponsor isinvestment involved managers, in in the the selection asset of classesfirming that that are the offered, book and value in limitMember con- education in and foreign monitoring investments of is investment notchoices performance are exceeded. and matters that warrant thetors Board’s bear ongoing risks attention. of Direc- litigationselection due and to retention failure of to poor educate members, investmentsSponsors or or bear managers. the funding and investmentpension risks plans. for They defined must benefit track theance. funded Specifically, status the and need for asset perform- additionalnificantly contribution affect outlays the may financial sig- results ofthe the tracking sponsoring entails organization. monitoring Also, capital marketsmarkets in abroad, Canada as and most in plans major investforeign close investments.” to the book value“Ultimately limit directors in are at risk, regardlessorganization of sponsors.” which type of planAccording their to a recent analysis ofpension approximately plans 500 in defined Canada benefit and theagency United DBRS, States nearly two by the thirds credit ofsignificantly rating such underfunded. plans during the lastAn year oral were report and a certificationthe of Board the of plans’ Directors’ soundness oversight and shouldannual quality be general of meeting. an agenda item at the

Shareholder Proposals Mouvement d’Éducation et de Défense desStreet Actionnaires West, (MÉDAC), Montreal, 82 Québec, Sherbrooke H2X 1X3translation has of submitted these five proposals proposals. and An MÉDAC’sin English supporting italics, comments below: are set out in full, Shareholder Proposals 33 compensation globally. competitive practices maintain to would ability proposal BMO’s shareholder restrict the unduly that believes Directors of Board The 52. page on manage- starting BMO circular the proxy in ment each provided which are participates in Officer plans Executive pension Named the about successfully Details talent. to for BMO compete permit and standards industry with are consistent programs in supplementary participate These also programs. they pension as supplemental contributions, and to earnings subject on be caps may higher Officers Executive Named management BMO’s financial sustainability. prudent and of purposes the the for within programs pen- implemented pension been on have limits contributions, as and such earnings caps, other sionable Various any entity. as corporate plan that pension of or employee program retirement same the in ipate require- practices. regulatory market in and differences for ments regional compete to to regard BMO having allow talent and top retirement, to their designed for are plan programs employees The help jurisdictions. different in plans employees pension its and for programs savings retirement various sponsors BMO PRESSURES. COMPETITIVE JURISDICTIONAL AND DIFFERENT REQUIREMENTS MEET WHICH PLANS PROVIDE GLOBALLY MUST OPERATIONS AND HAS BMO BECAUSE PROPOSAL VOTE THE SHAREHOLDERS AGAINST THAT RECOMMENDS DIRECTORS OF BOARD THE 2013. would effective who employees executives of new category all this to join apply retire- should predetermined policy a Such at age. payable that ment and service salary credited fixed of the years only of the includes number using the plan calculating pension for of in basis type level same same their the of to irrespective contribute Bank, organization, the the of employees all that retirement. propose at We benefits discriminatory” and still “extraordinary are to executives entitled organization, average the the of to employees compared of unfair compensation and context economic unacceptable difficult socially the organization, given the not of often performance is the that to compensation linked a part. receiving in to or addition whole that in in calculation Accordingly, compensation, of variable basis and broader salary a their and includes service credited with of treatment years preferential to a regard from benefit often retirement, also upon executives amounts the fixed an receiving time Besides the purchased. at is rates annuity interest the the in accumulated and account sums retirement the member’s on retire- things, upon other income among the depends, where ment plan pension contribution contribute defined pension employees a a other to the for whereas provides advance that in plan determined pension amount benefit pension defined executive a The often employees. is other plan to provided favour- ones more the are than that able plans pension from benefit executives Presently, predetermined a at payable age. be retirement and salary would fixed which the service, only credited include of same years the the use calculating would for plan basis pension The con- benefit). (defined defined plan or pension in tribution of level type their same of the irrespective provid- organization, institution, of the the policy of a employees adopt all Directors to of ing Board the that proposed Plans is Pension It to Respect with Treatment of Fairness 2 No. Proposal l M xctvsepoe yaseii oprt niypartic- entity corporate specific a by employed executives BMO All ako otelMngmn rx Circular Proxy Management Montreal of Bank n aefrlvdoe hl etn esnlneeds. personal meeting job while the ones on loved productive for be care employees and help to and resources sharing, of job set extensive or weeks work to shortened opportunity offsite, the work employees hours), provide work that of arrangements outside work scheduled off flexible be time cannot paid that (i.e., matters Days” personal Care for “People include that programs balance BMO. life at in roles leadership senior more to on moves take cross-group to bold, them with prepare them provides and and executives female – leaders promising emerging most its accel- of actively development and the women, erates talented hire to con- opportunities BMO seeks sponsorship. tinually and mentoring networking, to access development, including professional high-potential for provides opportunities BMO extensive goal. with that women achieve and to level action executive taking the are at we women roles executive of representation and greater senior achieve in to women is of goal representation its the 34%, increase at to executives women of representation for institutions senior in women to roles. regard segments, diversity with performance key diversity all our for including plans action business and goals ambitious efforts. our for repeatedly that recognized Since been diversity. have in we leader time a and as workplace reputation equitable Bank’s task an creating the pioneering established a to 1991, commitment In BMO’s constantly. out at set decades, force work two we for something workplace is the has it in BMO and diversity values. promoting core in our leader of a part been are inclusion and diversity BMO, At STRATEGIES. LEADER- DIVERSITY SENIOR AND BMO’S PLANS OF SHIP PART INTEGRAL AN ALREADY ARE DEVELOPING WOMEN AND HIRING INCLUDING BEING GOALS, ALREADY DIVERSITY IS ADDRESSED. OBJECTIVE ITS BECAUSE PROPOSAL VOTE THIS SHAREHOLDERS AGAINST THAT RECOMMENDS DIRECTORS OF BOARD THE results the gen- and annual goal the such at achieve obtained. or to report taken annual measures its meeting, parity in eral achieve disclose, to and undertake years Directors five of within Board the that propose offer. We of can complementarity it of quality terms and of in vision value sexes added both the of of representation itself equal senior deprives in Bank representation the female positions, increase management to incentives offering etc. not organizations, By within support talent help female would develop to that and efforts programs few sponsorship and and balance, mentoring work-life develop lack better executives, a male fostering certain policies posi- of of management barriers senior unconscious to or access conscious their tions: barriers to actual institutions and our psychological within willpower both exist and that experience believe Talent, we glass floor. present, the sticky being through the breaking off time getting hard or a ceiling having for are dis- positions but of senior decades, number holding several large been very have a women graduat- in Moreover, been institutions ciplines. have education women higher of our mass from critical ing a now, decades several For of comprised years. are five executives within of every women 50% make that to ensure undertake to Directors effort of necessary Board the that Positions proposed Management is Senior It in Men and Women Between Parity 3 No. Proposal M uprsisdvrewrfretruhcmrhniework- comprehensive through workforce diverse its supports BMO financial Canadian among leader a currently is BMO While set and strategy, inclusion and diversity its renewed BMO 2012, In LifeWorks: an Shareholder Proposals 34 Bank of Montreal Management Proxy Circular CEO compensation is approved by our Board. In addition, to assist The Board of Directors believes that the shareholder proposal of individual objectives. Each year targets andestablished individual and objectives approved are by the Boardegy to of support the the Bank long-term and strat- takethe into end consideration of the the Bank’s year, risk-tolerance. theperformance At Board against determines targets the and CEO’s his pay performanceobjectives. based against Comprehensive on individual disclosure actual of the Board’sto disciplined executive approach compensation is provided inand the Analysis Compensation starting Discussion on page 36compensation of arrangements the are disclosed circular and on the pagescircular. CEO’s 52 to 53 of the the Board in determining reasonability ofindependent CEO and pay, unaffiliated compensation the advisor. Board The hasthe Board an independent engages compensation advisor to conductthe studies CEO to pay make is sure aligned with the Bank’s performance, relative tocapping its CEO peers. compensation does not permitcretion the to Board properly adequate evaluate dis- and compensatean the opportunity CEO. to Shareholders review have and voiceCEO’s their pay say through on the the “Say structure on of Pay” the advisory vote. Proposal No. 5 Report of Discussions at Annual GeneralDialogue Meetings with and Shareholders Increased It is proposed that the Boardlishing of electronically Directors a adopt summary the report practice ofand of the the pub- discussions matters held brought at, up before,the the following annual four general months. meeting in Few communications are sent to shareholdersquestions regarding raised concerns by and other shareholders atsince annual minutes general of meetings, the annual generaltion meetings period merely was state held. that aContrary ques- to significant shareholders and analystsstructured who communication have channels periodic (conference calls) and withinstitution’s the executives, small shareholders have veryexchange few with platforms the to institution, the mostgeneral important meeting. Such being question the periods annual allowtheir shareholders concerns to and share expectations with regardthe to Board senior of management Directors and and toment get to their remedy feedback, situations. answers andTo commit- ensure that shareholders are keptpropose informed that of a such summary discussions, report we beon written the in Web plain site language of and theThe posted institution section within of the four Web months site ofshould dedicated contain the to an meeting. Dialogue interactive with box Shareholders offoster questions a and sustained answers dialogue in throughout order theAll to year. codes of good governance encourageprovide publicly-traded more companies transparent to disclosure and toand promote permanent a dialogue more with sustained their shareholders.disclosure The practice adoption would of enhance the such a Bank’sregard. achievements in this THE BOARD OF DIRECTORS RECOMMENDS THATAGAINST SHAREHOLDERS THIS VOTE PROPOSAL BECAUSE BMO’S SHAREHOLDERTION COMMUNICA- PRACTICES SURPASS THE REQUEST IN THE PROPOSAL. Following each annual meeting of Shareholders,of BMO the posts live an webcast archive of theavailable meeting online including at: the www.bmo.com/ir. question The period. archiveShareholders It is have is the available so opportunity that to hearanswers in provided full at all the of meeting. the Theaccurate questions Board reflection and of believes this the question is period a than more the proposed summary. calling for the overall proportion Catalyst Accord Variable compensation is the largest component of the CEO’s com- In light of management’s goals and ongoing achievements in this BMO’s commitment to gender diversity starts with the Board of pensation (comprising 87% of his targetresponsibility compensation) for to the reflect short-, mid-and long-termvariable compensation success of is the based Bank. on The Bankindividual and performance Shareholder against results predetermined and performance targets and The Board shares the concern thattakes CEO steps compensation to be ensure appropriate it and isnot linked believe to that the adding performance a of ceilingsalary the based would Bank. on be It the in average does the bank best employee’s interest of the Bank or its Shareholders. Fairness Ratio It is proposed that the chiefnot executive exceed officer’s thirty compensation (30) times theemployees, average excluding salary executives. of the Bank’s Since its foundation, MÉDAC hasof been executive continually compensation denouncing not increases linkednization. to MÉDAC the also performance denounces of the theincluding components orga- bonuses of and such stock compensation, options,the which, global given compensation, their encourage importance excessive in instead risk-taking of or long-term short-term decision making,closures which or leads lay-offs to merely asset to sales,turn, enhance plant variable short-term compensation profitability of and executives. in Inequality, In Joseph his E. book Stiglitz, The winner Pricesays of of that: the Nobel Prize in“One economics, of the problems we’rerations talking where about... the is CEOs that often weand run have their the large group corporation corpo- around for them theholders. and benefit That’s not of 21st for them century the capitalism.” benefitMÉDAC of has the been share- deploring forbetween several the years compensation the of unjustifiable several ratio institutions executives and of their our employees’ financial medianexcessive compensation. compensation For of many, executives the isthe one last of financial the crisis causes and thatpopulation fueled led towards the to the resentment wealthiest of in aTherefore, our large it society. part is of essential the tocompensation return of to every real employee, values i.e. thatwork, qualifications, should and experience, underlie quantitative team- the and qualitativeand goals be related focused to on their long-term position, corporation value as generation a for whole. shareholders andIn the this regard, a ratioemployees, of excluding 30 executives, times (… the or medianemployees), excluding compensation would the of limit five significantly highest the paid to chief approximately executive 3 officer’s million salary dollars per year. THE BOARD OF DIRECTORS RECOMMENDS THATAGAINST SHAREHOLDERS THIS VOTE PROPOSAL BECAUSE THE BOARDAPPROACH BELIEVES TO BMO’S CEO COMPENSATION DESIGN ISABLE APPROPRIATE, AND REASON- ALIGNED WITH THE BANK’S PERFORMANCE. Proposal No. 4 Directors. In 2012, BMO’s Board ofwhich Directors included adopted the a goal Diversity of Policy boardcomprises composition no in less which than each one-third gender ofBoard the currently exceeds independent that directors. goal BMO’s asBoard. women In comprise further 38% acknowledgment of of the achievements2012, in BMO this signed area, the also in of women in FP500 boardrecognized seats as to one increase of to Canada’s 25% Top bystrides Ten 2017, advancing employers, and greater in was gender diversity part in due to the workplace. its area, the Board does not believetargets it on is management. necessary to impose any specific Shareholder Proposals hog M’ nuladqatryrprs aaeetproxy management reports, quarterly and annual BMO’s through participate surveys. or informal management, in with meetings group views or their individual provide through the may Shareholders with addition, consultation In in Secretary. considered Corporate be will request which directors, with online available is www.bmo.com/corporategovernance. which at: Policy Engagement are Shareholder individuals the and in departments provided foregoing e-mail the and of Mail each Ombudsman. for the addresses of Office the and and Counsel, President General Vice Executive Relations the Services, Investor Shareholder the Department, CEO, the communica- directors, e-mail independent or with mail tion include dialogue Share- of of methods meetings these annual to holders, during addition period In answer dialogue. and a question in the engage to Shareholders for the means outlines various Policy Engagement Shareholder BMO’s and management 35 h or n aaeetcmuiaewt Shareholders with communicate Management and Board The meeting a for Board the of Chairman the ask may Shareholders and Directors of Board the to important is engagement Shareholder ako otelMngmn rx Circular Proxy Management Montreal of Bank et eidclyo h rgeso h review. propo- the the of advise progress to the and on proposal periodically the nents in commitment raised BMO’s issues of the explore light to in withdrawn com- was total proposal setting The to pensation. approach its as in such compensation, metrics, employee comparison average vertical integrate to dis- potential and companies, the peer cussing with executive comparison senior horizontal basing on of to compensation results report and a risks provide Directors the assessing of shareholders Board BMO the Human of the Committee that Resources requesting of proposal Davis a William co-filed Mr. Ontario and Toronto, Columbia, British Vancouver, of Investments NEI r ulcyrlae.Alteeclsaeaalbei eltm n in and time real in www.bmo.com/ir. available at are archives they calls after these practical All as released. publicly soon are as developments corporate earn- major quarterly and for ings calls conference holds investor and also Management industry conferences. at presentations through and releases, website, news BMO’s statements, accountability public and gover- reports and nance social environmental, forms, information annual circulars, Compensation Discussion and Analysis 36 n Bank of Montreal Management Proxy Circular ...... 37 ...... 52 ...... 41 ...... 39 ...... 58 ...... 45 ...... 66 ...... 63 ...... 49

Executive Compensation Tables 2012 Results 2012 Compensation for the Named Executive Officers Other Information Additional Disclosure Compensation Governance and Oversight BMO’s Approach to Executive Compensation Compensation Program Message from the Chair of the Human Resources Committee

Bank of Montreal’s vision is to be the Bank that defines great customer experience. Its guiding principle is to drive top-tier total shareholder retur Compensation Discussion and Analysis (“TSR”) and balance its commitments towork. financial performance, customers, employees, the environment andThis the section communities of where the we circular live describesinappropriate and how risk-taking. BMO’s compensation policies and structure support this vision, without encouraging excessive or Compensation Discussion and Analysis 37 with you help to and for your decisions pay our to behind approach process our the understand performance, you Compensation help this to written have Analysis We and Discussion BMO. at responsibilities its as of compensation part executive oversees Committee Committee Resources Resources Human The Human the of Chair the from Message n l fteohrNmdEeuieOfcr “Es)wslwrthan year. lower last was than (“NEOs”) lower Officers and Executive Downe target, Named Mr. other to the awarded of compensation all direct but and total aggressive result were a set as we and goals fair, The performance. for pay to approach Bank’s the to linked directly objectives. were strategic which 2012, fiscal we in goals early growth established challenging year the this below down was was performance pools because incentive all for relative funding and Nevertheless, absolute results. strong yielded leadership effective Downe’s Mr. lwn rai eeu rwhrltv oteBn’ oto doing of cost earnings. Bank’s affected the But business to customers. relative of growth minds revenue the organic in slowing position differentiated ongoing a of an occupy result by to furthered the effort strategy, — well-defined peers a banking and Canadian execution our good of at most and than year rate last faster to a relative North markedly expanded grew its Earnings of footprint). value American the and progress its reflects (which greater to path the along efficiency. move to continuing manage- and and processes platform ment American North the building architecture, ogy environment. well competitive Bank very the a positioned in have growth team continued his over for and exhibited he has believe he We leadership tenure. the and his with year satisfied this very leadership be Downe’s to Mr. continues with pleased very was Board The awards and performance 2012 ..Dwe$,0,0 7 -3% -7% $9,204,000 Downe W.A. er icsin o aho h Essato ae52. page on start NEOs the this of compensation each about for decisions Discussions our targets, year. on against had results this of effect discussion the detailed and a for 49 page to Turn TSR: 1-Year TSR: 3-Year share: per Earnings Revenue: equity: on Return tax: after Income Net results 2012 hsya’ opnaindcsosaeatnil lutaino our of illustration tangible a are decisions compensation year’s This h akhdsrn iaca eut,icuigrcr e income net record including results, financial strong had Bank The technol- Bank’s the improving M&I, integrating were successes Key ako otelMngmn rx Circular Proxy Management Montreal of Bank own eiinaotte‘a-npy oeti year. this vote ‘say-on-pay’ the about decision p16% up 5.2% annualized 10.8% p8 ai points basis 80 up p27% up p35% up compensation direct Total 2012 2011 from Change compensation target to Compared ‰ ‰ ‰ ‰ h aeteeprec eesr omk h hlegn decisions compensation. challenging executive the with make associated directors to six necessary experience of the comprised have is the who which of Committee, result the direct by a oversight are effective linkages performance for pay strong These oversight Effective for 52 analysis. page this to of Turn details Shareholders. complete our that by value received the been than have less of would been value actual has received the Downe that investment Mr. showed Shareholder compensation comparison a This of period. value same the the with for years for five compensation last Downe’s the Mr. of of each value current the compared also We value Shareholder to pay Linking granted equity for and earned actually incentive annual the plus salary base is pay Realizable (a) eo hto h Eso u er anybecause: mainly peers our of CEOs was the pay of realizable that Downe’s below Mr. that noted advisor independent The five. of out among fourth lowest ranked the TSR was while pay banks, realizable peer Overall, at analysis. available the not to of was 2007 time data for the compensation is peer chart 2012 The because banks. only, Canadian 2011 largest five the for TSR year the below are performance and pay both median. years Bank, five overall the the over of that performance compensa- and the CEO’s with our aligned that appropriately us three is informed one, tion study over The banks periods. peer year our five to and compared TSR and analyzed pay aligned advisor realizable independent is CEO our pay year, CEO This our performance. sure company make with to study a conduct periodically We performance to pay Linking i elzbepyicue n ero qiyaad rne ro to prior granted CEO awards as equity appointment of his year one includes pay realizable his targets performance Bank awards challenging the reduced the of and size structure relative pay the target reflecting his lower, was level pay target his low relatively reflecting appreciation low price Share was value option stock in-the-money his opnaindcsos oe elzbepyi acltdpirt n opnainforegone compensation any our to request. on prior CEO’s performance calculated the is of is at it impact pay after the Realizable compensation assessing Note: of for decisions. value method compensation estimated appropriate share or an performance actual is value, of the it grant payouts at awarded, original estimated looks their or pay at actual realizable units and Since at share options, units. accumulation deferred stock dividend voluntarily in-the-money no of of with value value units the the share period, restricted the of of value end the the period, year five the during h hr eo hw ieya E elzbepyrltv ofive- to relative pay realizable CEO five-year shows below chart The opn nulzdTSR Annualized Company erD18 84MM $8.4 MM $8.6 MM $8.6 MM $13.5 1.8% 3.5% $6.1MM 5.5% 6.8% 1.9% D Peer C Peer B Peer A Peer Montreal of Bank nulzdRealizable Annualized Pay (a) Compensation Discussion and Analysis 38 Bank of Montreal Management Proxy Circular The Committee is satisfied with the results of this year’s compensa- We are confident that the 2012 compensation awards, and the introducing new performance metrics to reinforcethe the Bank’s alignment business with strategy and goodcontinuing governance to apply a grant multipliercompensation to that our is executive’s tied variable to anhistorical increase relative or TSR decrease versus in peers. our Thisimpact 3-year has as the applying same performance economic metrics atformalizing time the of risk vesting criteria and we payout usediscretion when to determining reduce whether the to size use ofplan payouts (for from example, the credit mid-term losses, incentive financialoperational, losses market, and compliance key and indicators reputational of risk) extending vesting in the stock optioneach plan year for starting in four years 2013 to (fromincrease 50% 25% the in alignment the between third compensation and andtaking fourth prudent years) risk to reinforcing long-term performance and Shareholder alignmentreducing by the use of stock options,stock and units, replacing which them cannot with be deferred redeemedBank until the executive leaves the Turn to page 47 for morepensation about to our the process, achievement and of how our strategic we priorities. link com- We evaluate our compensation program everyseveral year, enhancements, and including: this year made Robert M. Astley Chair ‰ ‰ ‰ ‰ ‰ These enhancements helped us achieve thement pay described for above. performance You align- can readpage about 42. these and other changes on BMO’s business performance was very goodand this challenging year, environment. in While a it competitive didchallenging not goals quite set meet for the the incentivepleased plans, with the Mr. Board Downe’s was leadership very andpositioned believes for the continued Bank growth. is well tion decisions. We believe that compensationperformance, is Shareholder interests effectively aligned and with our peers,confirmed and by this our has analysis been this year,holders, feedback and from from you, our our say-on-pay Share- results. measures they were based on, areachievements. a fair reflection of the year’s Our compensation programs are aligned with the Financial Stability We have a formal process for overseeing BMO’s compensation poli- expand strategically in select global marketsensure to our create strength future in growth risk management underpins everything we do enhance productivity to drive performance andleverage Shareholder our value consolidated North American platformearnings to growth deliver quality achieve industry-leading customer loyalty by deliveringpromise on our brand align with prudent risk-taking attract and retain executive talent link compensation to Bank performance encourage a long-term view to increase Shareholder value Turn to page 39 for moreour about approach the to Committee, managing our risk. experience and ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Executives all have clear accountability fordirectly the linked achievement to of these goals priorities. Thecompensation Committee’s is role directly is linked to to make theexecutives sure are achievement of paid more these goals when – performanceand against that less the when goals performance is is strong, weakinappropriate – risk-taking. without We encouraging do excessive this or byvariable and giving deferred a compensation. significant weight to Our starting point is strategy. BMO’sgreat vision customer is experience. Its to aim be is thereturn to bank and deliver that balance top-tier our defines Shareholder commitments tocustomers, financial employees, performance, the environment and communities.strategy, BMO’s which you can read aboutfive in strategic our priorities: 2012 Annual Report, includes cies and practices, receiving advice fromworking an with independent two consultant management and committeescompensation that and are risk focused on oversight (see pagethese 39 committees). for information about Board’s Principles for Sound Compensation Practicesand (“FSB the Principles”) requirements of OSFI andStates of our other programs jurisdictions. are In aligned the withReserve’s United Guidance the on principles Sound of Incentive the Compensation U.S.bank Policies. Federal with As a a global footprint, wefinancial institution also compensation meet policies international and guidelines for practicesdictions in we the work juris- in, including China,Kingdom. Hong Kong, Ireland and the United Disciplined approach We have four compensation principles weing believe the are Bank’s important success for and driv- improving Shareholder value: Compensation Discussion and Analysis 39 ‰ commit- oversight: management compensation two on focused with tees works and compensa- practices, BMO’s and overseeing policies for tion process formal a has Committee The experience management. significant risk has institution and financial is Committee in committees, Review both Risk on the on sits of Chair sit who the also Wilson, Mr. members) Committee. its Review of Risk 80% the (over Committee the of members Five risk-taking. prudent and compensation aligns BMO compensation and risk Aligning of experience the members. shows current below make the table to The year appropriate. every remains Committee it the sure skills on of directors mix the the of experience at and looks Committee Nominating and Governance The companies. public compensation other the of on committees serving a experience of have equivalent) Three (or organization. officer major executive and chief resources as human serving in by experience compensation gained have members mandate. the its of out Three carry to needs Com- it the expertise that the so has compensation mittee and of resources understanding human thorough to a relating appointed, reason- issues being a after within time acquire of to period or able have, to required are members Committee activities its and Committee and 2012. the directors, in about the information of more biographies for for 22 13 page to is 7 tenure pages average See The years. Committee. 6.7 the on sit directors independent Six oversees plans. and compensation establishes Bank’s Board the the of Committee Resources Human The Oversight and Governance Compensation 1. edr rmHmnRsucs n h he uio sa observer. an as Auditor Chief the and senior Resources, Officer, Human Compliance from Chief leaders CFO, CRO, BMO the includes in 2011, established Committee, Oversight Compensation Enterprise The organization. public major a or of company executive/officer senior a as Experience experience leadership Executive reporting. and controls, assessments risk risk internal with experience and Knowledge experience management Risk compensation). executive particular, (in compensation programs and pension benefit, with Experience experience resources Human III Wilson M. Don a (also Board) 2000-2010) the from of member (Chairman Prichard S. Robert J. Farmer H. Ronald Edwards A. Christine Cope C. George Chair) (Committee Astley M. Robert ako otelMngmn rx Circular Proxy Management Montreal of Bank nteCmitesince Committee the On xeineo expertise or experience ebr ihspecific with members ubro Committee of Number 6of6 5of6 5of6 2009 2012 2003 2011 2010 2004 n21,PyGvrac eevdU$6,4 o h following the work: for committee-related US$365,442 received Governance Pay 2012, In on 2008. advisor since exclusive issues Committee’s compensation the been has compen- firm, executive advisory unaffiliated sation and independent an LLC, Governance Pay its out carry help to advisor outside mandate. an with works Committee The Kingdom. United advice the Independent and Ireland Kong, Hong we China, jurisdictions including the in, in work practices and policies finan- compensation for institution guidelines cial international meet Incentive also Sound They on Policies. Guidance Compensation Reserve’s the Federal with U.S. aligned the are of programs principles compensation our States United the In to Principles. respect FSB with with position compliance leadership its reported maintained GGA has process. BMO design that compensation the results of unit assessment business an and and BMO of extensive analysis analysis, volatility curve analysis, payout scenario testing, back per- and and testing Principles, stress FSB formed the against plans of compensation review material extensive BMO’s an completed (“GGA”) Advisors Governance Global taking. reducing risk by excessive institutions for financial incentives of soundness These and jurisdictions. stability other the of enhance requirements and and Principles OSFI FSB of requirements the the with aligned are programs compensation BMO’s that: satisfied is Committee The ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ rcie htaeraoal ieyt aeamtra des effect adverse material Bank. a the have on and to policies likely reasonably compensation are Bank’s that the practices in identified been have risks. risks excessive no or inappropriate NEO take any to encourage employee not or do practices and policies compensation BMO’s align that practices of risk-taking). list prudent a with for U.S. 43 of page oversight (See practices. the compensation in compensation support of additional head provides BMO’s It with programs. along Head, Resources Country Human U.S. Audit, the Compliance, and Finance, Risk, of includes heads 2012, U.S. in the formed Committee, Oversight Compensation U.S. The nldn iewt omte members. Committee with time meetings, including Committee Resources Human in participation regular review circular proxy management and pay performance CEO Bank’s between the alignment the of review historical independent the executives for senior recommendations compensation CEO’s com- the CEO and policies, pensation compensation on advice and review independent compensation executive benchmarking senior and practices best regu- trends, global latory and compensation executive emerging on updates sesn ikadohrcnrlfnto nus(e ae4) tmet It 47). 2012. page in (see times inputs seven function control other and risk assessing includes which the process, and decision-making design compensation compensation annual reviewing in involved actively is It Compensation Discussion and Analysis 40 Billed in 2011 Billed in 2012 Bank of Montreal Management Proxy Circular Executive compensation—related feesAll other fees US$365,632 US$365,442 $0 $0 The Committee considers the information andprovided recommendations by its advisor as wellabout as executive compensation. other factors when making decisions Compensation Advisory Fees paid to Pay Governance The Committee retained Mr. Iraadvisor Kay, in a 2008. Practice In Director January withown 2010, Watson consulting Watson Wyatt, firm, Wyatt as Ira merged its T. with independent LLC. Kay Towers & Perrin Company, and which Mr. amalgamated Kay in formed late his 2010 with Pay Governance discloses all work done by, andmanagement fees proxy paid circular. to, the advisor in the annual determines the advisor’s mandate and fees requires the advisor to obtain writtenChair approval before from providing the any Committee services todoes management not approve work that, insor’s its independence view, could compromise the advi- reviews the advisor’s independence and fees every year ‰ ‰ ‰ ‰ To provide assurance that the advisorCommittee: remains independent, the ‰ Compensation Discussion and Analysis 41 principles: core four has program compensation executive The organization. the of growth and health risk-taking. inappropriate or excessive encouraging value. without Shareholder linked, improving strongly and all success are Bank’s holders the driving for important are strategies compensation that believes Board The Compensation Executive to Approach BMO’s 2. h rga uprsBOsvso n taei roiis n nue xctvshv infcn esnlfnnilsaei h long-term the in stake financial personal significant a have executives ensures and Share- priorities, to strategic returns and financial vision and BMO’s executives, supports for program compensation The results, Bank so program compensation executive the structured has Committee The ako otelMngmn rx Circular Proxy Management Montreal of Bank A significantportionof variable pay for each executive isequity-based requirements for each executive ENCOURAGE ALONG-TERM There are share ownership SHAREHOLDER VALUE VIEW TO INCREASE A significantportionof each executive’s encourage excessive risk-taking and Executive compensation designand rewards appropriate useof capital Compensation structure doesnot implementation mustalignwith BMO strategy andlinkto both LINK COMPENSATION TO Bank andoperatingBank group compensation isdeferred PRUDENT RISK-TAKING BANK PERFORMANCE Principles ALIGN WITH performance Compensation helpsattract andretain talented peopleandmotivates them to excel to achieve objectives ATTRACT &RETAIN EXECUTIVE TALENT Compensation Discussion and Analysis 42 23% Cash Variable - Variable 60% Number of years they must hold shares after they leave the Bank Deferred Variable - Variable 17% Fixed Bank of Montreal Management Proxy Circular Shares (a) they must own while employed with the Bank direct compensationGreater of: • 1.0 times base 1 salary year and cash bonus, or • 3.0 times base salary — Share ownership requirements 12% Cash Variable - Variable 75% Deferred Variable - Variable 13% Fixed CEO Target MixTarget CEO Mix Target Executive Senior The charts below show the target amount of fixed, variable cash Executives must meet these requirements within three years of All executives and senior Capital Markets employees meet or The CEO and senior executives must also continue to meet their Holdings can be in Shares, restricted share units and deferred stock units. Bank President and CEOSenior ExecutivesExecutive Vice-Presidents 7.0Senior times Vice-Presidents base 3.0 salary times base salary 5.0Vice-Presidents times base salary 2.0Capital times 2 Markets base years salary — Chief Executive 1 Officer year — 1.5 times base salaryExecutive and Management 1.0 times targetCommittee total Members — Managing Directors 1.0 times base salary — and variable deferred compensation paid toexecutives the who CEO report and directly the to eight themix CEO is (the in “Senior line Executives”). with This BMO’s regulatory guidance, Canadian and peer within group. the range adopted by (a) Required holdings may be satisfied through Shares as well as deferred or restricted share units. Executives have share ownership requirements Executives and senior Capital Markets employeesshares are as required outlined to in own the table below. being appointed to the position (fiveManaging years Directors). for Share ownership Vice-Presidents and is measuredmarket annually, value either at at the time ofgrant measurement date or (whichever value is at greater). the purchase or exceed their share ownership requirements. Theexceed CEO their and requirements the (see NEOs pages 52 to 58 for details). share ownership requirements for a periodencourage after a leaving longer-term the perspective Bank, when to making strategic decisions. The Committee carried out an extensive review of the Bank’s equity The Committee also carried out a review of the Capital Markets Using a blended return onBank capital overall, metric, for similar the to incentive thebetween pool one risk, funding, used use providing for of a the capital stronger and link compensation. Fully allocating expenses (such ascompliance investments in in support infrastructure, of risk capital and calculation, markets) increasing to the the focus incentive on pool expense funding management A new blended return onequity capital and metric, 1/3 made net up economic ofappropriately profit, 2/3 balance will return use motivate on of executives capital to and managing risk effectively. A new efficiency ratio (non-interestwill expenses reinforce divided the by Bank’s total approach revenues) profitability, to and cost support management our and enterprise-wide longer-term ciency. focus This on ratio operational will effi- replacegiven the a operating higher leverage weighting. metric and is being The amount actually paid out as variable compensation depends on Bank compensation program in 2012, andplan extended starting vesting in in 2013 the (from stockthird 25% option and each fourth year years). for This fourtion increases years and the to prudent alignment 50% risk between in taking. compensa- the compensation plan. Although satisfied thatbusiness the strategy plan and remains competitive aligned with with two the enhancements market, to the the Committee Capital made Markets incentive plans for 2013: ‰ ‰ ‰ ‰ New for 2013 The Committee introduced new performancedrive metrics funding for for 2013 the that short-, will the and alignment mid-term with incentive the plan Bank’s and business will strategy reinforce and good governance: A significant portion of each executive’sA compensation significant is portion deferred of variable compensationages is executives to deferred. This stay encour- with theand Bank, helps focuses reduce them overly on risky the behavioron long-term because their future current payouts decisions. depend Encourage a long-term view to increaseCompensation Shareholder is value substantially weighted towards variablecompensation, or and “at-risk” a significant amount ofapproach, it combined is with also share ownership deferred. This requirements,executive sharpens focus on executing business strategies,ance, sustaining and perform- growing Shareholder value over the long term. and operating group performance against annualmeet targets longer-term that Bank have goals been and set strategies, to such including as Shareholder 3-year measures relative TSR (seeplans). page Awards 48 to for individual information executives about are theand based incentive achieving on Bank, Shareholder operating performance group andreinforce individual BMO’s performance strategic goals priorities that and values. Link compensation to Bank performance BMO’s compensation program links compensation togroup, individual Bank, performance operating targets and ShareholderExecutives performance. are compensated more when performancewhen is performance strong is and weak. less Compensation Discussion and Analysis niiul,a ecie eo.Sepg 5frdtisaoteach about details for plan. 45 incentive page See below. selected described and as groups and individuals, operating equity recipients, outstanding all cash, from back payouts claw equity can Committee the or Board The Clawbacks compensation align to risk-taking: mechanisms prudent following with the uses also Board The 43 ‰ ‰ ‰ ‰ ‰ ‰ compensation: variable in risk ‰ reflect appropriately to processes and Principles. FSB all to test alignment back confirms and and test plans stress compensation to material review risk- independent of an level oversees the It balancing taking. while value motivate Shareholder to create program to compensation executives the designs then and context, that a of organization. complexity services the financial within global risk-taking diversified optimize to – approve must capital. of return by and risk-taking outcomes excessive risk avoiding with while compensation earnings aligning its grow to seeks BMO risk-taking prudent with Align eino h xctv opnainprogram compensation executive the the to of changes design all reviews advisor independent Committee’s the Compensation the about information Committee). for Oversight the 39 finalizing page before (see assessment pools risk incentive comprehensive a out and carry incorporated, to appropriately compliance, are risk, considerations sure audit make and to finance, plans compensation design variable the the review of Committee Oversight Compensation Enterprise the uses it as capital) group, little management very wealth other the most within (except and pool employees employees incentive Markets determining Capital for executives, metric for primary funding a is risks equity other on and return liquidity include market, credit, funding pools for pool incentive incentive provisions long-term determine and to mid- used short-, results the business on cap a and is limit options there stock to used of are use units the balance stock deferred and deferred units is share compensation restricted executive of portion significant a usadn equity Outstanding works it How to applies it Who paid Cash back clawed be can What h xctv opnainpormicue eea strategies several includes program compensation executive The within strategy and philosophy compensation the sets Committee The Board the which – Bank the of appetite risk the sets Management ako otelMngmn rx Circular Proxy Management Montreal of Bank pinplans option stock and incentive term mid- the in participants All above and level Director Managing the at employees Markets Capital and Executives statements. financial its restates Bank the if back clawed be can awarded options unvested and vested or units share Restricted options. exercising from received value the or plan incentive mid-term a from payouts bonuses, cash includes This misconduct. employee is there or statements financial its restates Bank the if back clawed be can months 12 past the in paid compensation variable of part or All netv lnaad rohrBn hrso euiiste hold. they securities or Shares Bank other or long-term awards and plan mid- Share- incentive their and in risk embedded the effects undermine alignment to holder funds), exchange of swaps, units equity or contracts, collars of variable prepaid kind example, any (for using hedging from personal directors and employees prohibits policy BMO hedging Personal compensation decisions. making when and assessments, during performance accountabilities individual compliance and audit risk, consider Managers performance Individual mind. in success to overall them BMO’s perform- supports keep independence their affect This compensation. not does or assessment monitor ance or support performance they financial areas or business success of the and support, report they not businesses do into employees per- These and objectives. performance individual Bank against overall formance to linked is Compliance Resources Legal, Human Audit, and Finance, Risk, in employees for Compensation functions control of Independence after months 24 control. within cause of change without control the dismissed of change is participant a a is there if control. when only of immediately change vest a will undergoes options Bank Stock the accelerated when for options trigger stock double of a vesting for calls plan incentive long-term The control of Change ‰ ‰ unvested and vested when: and options units share outstanding all forfeit Executives Forfeiture omte natwieepoe ihteBn htwudhv led have would cause that for Bank Bank termination the the to with for employed works while longer act no an who committed executive an that discovered is it cause for terminated akWoi ple oHwi works it How to applies it Who payouts Equity back clawed be can What emicnieplans incentive term mid- the in participants All inlrisk). tional reputa- and compliance market, operational, of indicators key and losses financial losses, credit ple, exam- (for plan incentive mid-term the from payouts reduce to cretion dis- its use to whether determining when uses it criteria risk the formalized Committee the 2012, In example: For granted. was it thesizeofanawardwhen reduced have would that discovered is information if eliminated or reduced be can units share Restricted ‰ ‰ ‰ aeilyincorrect. materially be to out turned that information on part in or whole in based was award the of size the affected was reputation Bank’s the risk-taking excessive of because target below materially was performance financial Compensation Discussion and Analysis 44 Bank of Montreal Management Proxy Circular The Committee’s independent advisor reviewed the comparable Focused on enriching the Committee’s awarenessacross of the senior organization, executives to provide morepipeline insight and into comfort the in leadership senior leadershipaggressive capability business to goals deliver now on and intoMade the progress future. on an enterprise-wide strategyand to inclusion improve across diversity the organization, establishingleadership a council cross-enterprise and action plans within each business. Third-party reviewed the Bank’s talent andreview succession confirmed processes. that The BMO’s succession practicesmature, are and solid BMO and exhibits leading practicesMade in targeted a moves number in of the areas. executivepart leadership of team the this Bank’s year, disciplined as talentpractice, management to and strengthen succession the depth ofmoves succession will across also the allow groups. these The and leaders to advance their develop succession their readiness fullest and potential preparedness. New for 2012 The Committee approved changes tonize the our U.S. larger peer size group because thismended of year, by the to Risk M&I recog- Management acquisition. Group, Changessize, which were geographical considered recom- footprint each and bank’s business asset mix. ‰ ‰ The Committee reviews market data forprimary comparable group, positions considering within the relative the performanceinstitution and and size the of size each of rolesinformation and when incumbent setting experience, total and compensation uses andexecutive this roles. compensation mix for companies and roles used to benchmarkcompensation target mix compensation for and the CEO andthey senior were executives, appropriate. and concluded that BMO is focused on building ahas diverse, developed loyal a and culture of talented workforce, continuousand and career succession development, planning mentoring at all levels. Significant activities this year: ‰ ‰ The Canadian banks are direct competitors and share BMO’s economic and business challenges. In the United States, these banks are all publicly traded and are comparable to BMO’s U.S. operations, based on business mix and size, total assets, total revenue and market capitalization. The Canadian banks are direct competitors and share BMO’s economic and business challenges. The selected U.S. financial firms have similar revenue, scope and business challenges. Bank of Nova Scotia Canadian Imperial Bank of Commerce Royal Bank of Canada Toronto-Dominion Bank BB&T Corp Fifth Third Bancorp Huntington Bancshares Inc./MD Keycorp M&T Financial Regions Financial SunTrust Banks, Inc. Peer companiesPrimary Bank of Nova Scotia Canadian Imperial Bank of Why they areCommerce included Royal Bank of Canada Toronto-Dominion Bank Secondary BB&T Corporation Bank of New York Mellon Fifth Third Bancorp KeyCorp The PNC Financial Service Group Inc. Regions Financial SunTrust Banks Inc. U.S. Bancorp The Committee assesses the competitiveness of its compensation For the CEO, the Committee primarily reviews the Canadian bank Canadian– based executives and senior executives U.S.–based executives and senior executives CEO Attract and retain talented people BMO’s executive compensation program is designedenough to to be attract, competitive retain and motivate top talent. program by comparing it tofour two other groups: largest a Canadian Canadian banks peer for groupU.S. Canadian-based of peer executives, the group and of a nine regionalexecutives. It mid-sized also banks uses for general U.S.-based industrynon-industry compensation specific surveys roles for to benchmark competitive pay more broadly. competitors and as secondary information mayU.S. also financial consider firms selected with similar revenuethe (0.75 Bank). times For to added 1.5 calibration times andmay that a also of broader look scope, at the the Committee compensationTSX practices 60 of that companies have listed a on similar the market capitalization. Guarantees Incentive compensation received by new employeesfor can no be more guaranteed than 12 months,enough time which for the Committee their transition believes allows into the Bank. Compensation Discussion and Analysis 45 pag (see Plan Compensation Variable Markets Capital BMO the in participate Markets, Capital BMO of CEO the than other executives, Markets Capital (a) plans incentive the About allowanc cash taxable annual an and pension benefits, share receive (restricted also compensation Executives deferred units). and stock bonus) deferred annual executives, + some salary for (base and, cash options of stock combination units, a includes program compensation executive BMO’s Program Compensation 3. opnn omProeHwi sdetermined is it How Purpose Form (salary) pay Base Component hr-emicnieplan incentive Short-term i-emicnieplan incentive Mid-term ogtr netv plan incentive Long-term Benefits xctv allowance Executive Pension ln–cash – plan incentive Short-term etitdsaeunits share restricted – (“MTIP”) plan incentive Mid-term ako otelMngmn rx Circular Proxy Management Montreal of Bank aia Markets. Capital BMO of CEO the and Executives h atcptsTrsFretr Clawbacks award. the determining when holds currently executive the options stock or awards MTIP consider not does Committee The Forfeiture Terms participates Who aia Markets Capital BMO of CEO the and Executives ahArltvl ml opnn ftotal of component small relatively A Cash tc units stock deferred of election voluntary or Cash etitdsaeuisEcuae xctvst raesustainable create to executives Encourages units share Restricted tc pin n eerdsokuisEcuae xctvst eeaesustained generate to executives Encourages units stock deferred and options Stock elhcr nuac eeisPooe mlyehat n rdciiyin productivity and health employee Promotes benefits insurance care Health hr ucaepa (U.S.) plan purchase Share (Canada) program ownership share Employee nultxbecs loac uprsbsns eeomn n h roles the and development business Supports allowance cash taxable Annual eso plan pension contribution defined or benefit Defined (a). (a) . ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ etitdsaeunits share Restricted units: stock Deferred year. fiscal the of beginning the before irreversible) is (which decision this make and must units, stock deferred as all or some receive to choosing by awards cash defer voluntarily can Executives r rdtda diinlunits. additional as credited are which equivalents, dividend payout earn of date the on Share price the on based valued are provisions specific country and non-compete non-solicit, to subject cause, without terminated is or retires execu- tive an when vest to continue year three a term of end the by vest units. additional as credited are which equivalents, dividend earn the redeemed day are the units on Share a of market price the on based valued are ends Bank the with employment when redeemed be only can received when vest ufligterresponsibilities. their fulfilling for individuals Compensates compensation. pcfcidvda n uiesobjectives. business and individual specific against performance motivates and on Focuses efrac yl.Ain ihsaeodrreturn. shareholder with Aligns cycle. three-year performance a over returns and value Shareholder ihsaeodrreturn. Aligns shareholder term. with long the over growth price Share norgsSaeonrhp ae nbnft rvddi h industry. the in provided benefits on Based workplace. the ownership. Share Encourages xctvspa steBn’ ambassadors. Bank’s the as play executives o l lgbeepoes nldn executive including employees, eligible all For ‰ ‰ ‰ ‰ when: units share restricted all forfeit may Executives Bank. the of customers and employees solicits who executive retired a employees Bank solicits who executive terminated a cause for termination to led have would that Bank the with employed while act an committed the Bank for works longer no executive who an that discovered is it cause for termi- nated is or resigns executive an .Bsdo eeispoie nteindustry. the in provided benefits on Based s. capability. and responsibility executive’s each market, for comparable adjusted the of median the on Based opnainmix. compensation executive’s the on and the market of comparable median the on based are Targets Seepage48fordetails. shares BMO payout. of at price the on depends value Realized performance. executive on dependent and are based which performanced pools, incentive the of size on the depend awards incentive long-term and Mid- markets. comparable in allowances similar on Based 5frdetails). for 65 e h ieo naadwe twas it granted. when award an of size the reduced have would that information discover they if units share restricted eliminate or reduce also can They misconduct. employee is there or statements financial Bank its the restates if months 12 past the in out paid units share restricted back claw can They statements. financial its restates Bank the if awarded units share restricted back claw TheBoardortheCommitteemay hr sepoe misconduct. employee is there or statements financial its Bank restates the if units), stock deferred taken as or cash in were they months (whether 12 past the in made awards incentive short-term back claw TheBoardortheCommitteemay e. Compensation Discussion and Analysis 46 year). Percent deferred Percent variable The Board or the Committee canback claw any value received from redeeming deferred stock units in the past 12 months if the Bankits restates financial statements or there is employee misconduct. The Board or the Committee may claw back stock options granted after 2008 if the Bank restates itsstatements. financial They can also claw back any value an executive has received from exercising stock options in the past 12 months if the Bankits restates financial statements or there is employee misconduct. Deferred stock units(b) Bank of Montreal Management Proxy Circular ensation. Stock options compensation Equity (deferred) Restricted share units an executive resigns or isnated termi- for cause it is discovered that anwho executive no longer works forBank the committed an act while employed with the Bank that would have led to termination for cause a terminated executive who solicits Bank employees a retired executive who solicits employees or customers of the Bank. Executives may forfeit all vested and unvested options when: ‰ ‰ ‰ ‰ Executives may forfeit all unvested deferred stock units when they resign or are terminated for or without cause. As a percentage of target compensation Cash bonus(a) Cash BMO compensation aligns with the FSBcompensation is Principles. The significantly above CEO’s the deferred guidelinestotal (75% direct of compensation). his target compensation Base Fixed Variable salary See page 63 for more information. can vest over time can only be redeemed whenexecutive’s the employment with the Bank ends are valued based on theprice market of Shares on thedeferred day share the unit is redeemed earn dividend equivalents, which are credited as additional units. have a 10-year term and25% vest at the end offour each years. year for can only be exercised afterhave they vested. The exercise price depends on the TSX closingof price the Shares on thebefore trading the day grant date. are valued based on theence differ- between the option’s exercise price and the market price of the Shares onthe the option day is exercised. are granted on the dayDecember in when the Board approves the CEO’s compensa- tion, unless the trading window is closed. (Board meetings are set two years in advance.) Options: ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Select executives Deferred stock units: Who participatesExecutives and members of the BMO Capital Markets Executive Committee. The Committee does not consider TermsMTIP awards or stock options the executive currently holds when determining the award. Forfeiture Clawbacks 40 to 60 percent of totalSenior compensation Vice-President for level each and employee above, at andCapital the for Markets certain who employees may in have aBank. material impact on the risk of the at least 60 percent of total compensation of each Senior Executive President and CEOChief Executive Officer, Capital MarketsSenior ExecutivesExecutive Vice-PresidentsSenior Vice-PresidentsVice-Presidents 6% 34% 13% 30% 27% 12% 17% 23% 35% 18% 23% 38% 25% 28% 12% 44% 22% 30% 26% 26% 22% 94% 18% 15% 14% 24% 0% 60% 12% 87% 0% 6% 73% 75% 83% 0% 65% 50% 60% 40% 56% 30% Position Deferred stock plan – deferred stock units (not including deferred stock units received voluntarily under the short-term incentive plan) Long-term incentive plan Stock option plan – options ‰ ‰ The percentage of variable pay fortive the Vice-Presidents CEO, is Senior significantly Executives higher and thanbecause Execu- other of executive their roles involvement in strategicstewardship. decision-making and FSB Principles recommend that deferred compensation be: (a) Executives can choose to receive some or all of the short-term incentive bonus in deferred stock units, increasing the percentage of deferred comp (b) Deferred stock units awarded by BMO. Compensation mix The table below shows the targetnificant mix portion of of fixed, total variable, direct cash compensationequity. and at Each deferred risk. mix compensation It reflects for the also each executive’s ties executive ability compensation level. to to This influence longer-term combination business performance places results because a over a sig- the high short-term percentage (1-year), is mid-term paid (3-year) as and long-term (10- About the incentive plans (continued) Compensation Discussion and Analysis 47 year the of end the At year Committee). Compensation the Oversight the of Compensation including beginning the management, the about from At information input for with 39 year, page every (see decisions CEO compensation the its and make Committee to Oversight process disciplined a uses Committee The process decision-making Annual lnt h E,wote rsnshsrcmedtosto approval. recommendations for his Committee presents the then who CEO, the incentive to each plan for funding pool variable recommend They oktgte to: together work Committee Oversight Compensation the and Management details). (see for plan below incentive each for factor performance the business calculates and results business determines Finance ‰ ‰ funding pool and factors performance business Calculate strategy corporate Review hydsusteBn’ ieya lnadoeya goals. one-year and plan five-year where Bank’s meeting, the strategy discuss day they full a in participates Board The elc ik opineo te atr hnnecessary when factors other or compliance risk, to reflect holdbacks or adjustments additional recommend incentive variable calculations the pool in and results in business considered assessing been have implications risk ensure ako otelMngmn rx Circular Proxy Management Montreal of Bank Ņ Ņ efrac esrsadgoals. and the measures approves performance Committee The recommends Committee. turn the in to who them CEO, the to these recommend They ‰ ‰ ‰ plans incentive the for goals performance Set o h akoealadfrec prtn ru.These: group. operating each for and overall Bank goals the performance for set and plans, incentive the for weightings and measures performance business the determine jointly Committee Oversight Compensation the and Management ‰ ‰ of: assessment its on ‰ based of discretion size its the at to pool adjustment each final a make may Committee The funding pool Finalize tisojcie n requirements. and and compliance objectives Bank’s ethics the within achieved be can risk Bank’s the to appetite link and risk reflect appropriately values and the priorities reinforce strategic and Bank’s goals one-year business the support mato custosadohrfcosa needed. as factors other and acquisitions of the impact share, market items), earnings non-recurring of (including quality competitors, to relative results performance including considerations, secondary assessment compliance and risk financial, goals established results the performance against group operating and Bank actual Ņ Ņ Management: h Committee: The include: objectives performance Individual ‰ ‰ ‰ ‰ ‰ ‰ goals performance individual and targets compensation executive Set h Committee: The ‰ ‰ ‰ ‰ ‰ ‰ compensation annual Award aaeeticuigteCEO: the including Management opnaintrest h Board. the CEO’s to the targets recommends compensation and CEO, the for objectives performance individual approves and reviews executives senior for the targets compensation approves and reviews teamwork. and ers custom- to commitment demonstrated leadership, innovation, through organization the to con- tribution executive’s the like objectives, qualitative scores customer loyalty and growth profit management, expense growth, revenue like objectives, quantitative goals. annual and strategic Bank’s the with aligned objectives performance individual develops role the for median the market on based targets compensation develops n wrsfrohrepoeswihece a exceed threshold. which dollar employees other for awards Executives and Senior for awards Board individual the approves to compensation CEO’s the recommends operat- and groups. Bank ing within audit or compliance in risk, deficiencies control reportable of occurrence the considering objectives, individual performance against Executive Senior and CEO assesses executives. other all for mendations recom- compensation approves and reviews approval for Committee the to recommendations compensation presents objectives performance Executives individual Senior against the of performance the assesses Compensation Discussion and Analysis 48 funding. U.S. PCG CM P&C Thesumoftheamounts awarded under each incentive plan cannot be higher than the total funding available in the approved incentive pool. P&C Canada Bank of Montreal Management Proxy Circular ge of all operating group performance measures d average of all operating group measures TheCommitteecanadjust the pools up or down for other considerations not captured explicitly in business performance. Operating Group short-term incentive performance measures significant non-recurring items (not identified asimpact adjusting of items) acquisitions ROE (economic capital base) impact of provision for credit lossespeople versus leadership expected loss future growth/earning quality metrics NEP (“Net Economic Profit”) 2012 Operating group performance measures and weightings Adjusted revenue growthAdjusted net income growthAdjusted return on equityAdjusted return on tangible common equityAdjusted net income after taxAdjusted operating leverageCustomer 30% loyalty/experience 30% 30% 20% 30% 20% 40% 40% 10% 10% 10% 10% 10% 40% 10% 10% 10% 40% Other ‰ ‰ ‰ ‰ ‰ ‰ ‰ ool +/- Secondary considerations = Final pool funding ools. All three incentive pools use a similar formula for calculating final 100% Bank performance measures Operating group performance measures The Committee may make a final adjustment to the size of each pool at its discretion. 2012 Relative weightings by role 2012 Relative weightings by role 30% 30% 30% 10% 3-Year Total Shareholder Return (“TSR”) (relative to Cdn Peer Group) 0 to 150% for the short-term incentive pool. 80% to 120% for the mid- and long-term incentive pools. Target pool x Business performance factor = Incentive p adjusted expense growth. adjusted provisions for credit losses asacceptances a percentage of loans and adjusted revenue growth adjusted Earnings Per Share (“EPS”) growth adjusted net income growth adjusted Return on Equity (“ROE”) (regulatory basis) The sum of all of executive targets for the incentive plan. 2012 performance measures and weightings for3-Year all TSR participants (relative to Cdn Peer Group) Senior ExecutivesOperating Group executivesCorporate area executives 25% 100% 25% 75%, executive’s operating group performance measures — 75%, weighted avera CEO, CFO and CROOperating group executivesCorporate area executivesAdjusted earnings per share growth Adjusted return on equity Adjusted operating leverage 25% 100% 25% 75%, executive’s operating group measures — 75%, weighte 2012 Bank performance measures and weightings Adjusted revenue growth ‰ ‰ ‰ ‰ ‰ ‰ Secondary considerations Bank performance relative to Canadian peers Long-term incentive pool Mid-term incentive pool Adjusted measures are non-GAAP and are discussed moreSee fully page on 51 pages for 32, more 98 information and respecting 99 short-term of incentive the performance Bank’s measures. 2012 Annual Report. Short-term incentive pool The table below includes the 2012incentive business pool, performance as measures well and as weightings this used year’s to secondary calculate considerations. the business performance factor for each Funding the incentive pools There are three incentive pools: the short-term, mid-term and long-term p Compensation Discussion and Analysis onti er h omte iwdteegasa grsiebtfi.Ttldrc opnainfralNO a hrfr oe hntheir than lower therefore was NEOs all was for pools compensation incentive direct all Total for fair. funding year. but result, last aggressive a than as As lower goals 2012. and these fiscal target, viewed in Committee early The Committee year. the this by down established measures performance compensation the against customers. of minds the in 99. position and differentiated 98 a 32, occupy pages on Report Annual BMO’s in explained as measures non-GAAP are measures Adjusted d eut o 00aebsdo aainGA “GA” sdfnda httm.Rslsfr21 n 02aebsdo IFRS. on based reinve are assuming 2012 and and 2012 2011 31, for October Results on time. price percenta that share a at closing as defined the expressed as using revenues, (“CGAAP”) calculated 49 total GAAP banks, by Canadian Canadian divided on largest expense based other non-interest are five as 2010 the calculated for and is Results Bank It the (d) productivity. for of TSR measure Average key acceptances. a and (c) is loans ratio net efficiency average The of (b) percentage a as Calculated (a) strong. was year this performance financial Bank’s The 2011. 6, July performance on 2012 started he mi because US$6 compensation a Furlong’s received units. Mr. he stock for M&I, deferred comparison from as year-over-year transition taken no the voluntarily is of amounts There completion bonus recognize M&I. (e) cash to conversion. of of agreement, currency acquisition value employment of and The Furlong’s details negotiations Mr. for merger (d) of 58 the part page in As See contribution USD. Techar. significant in Mr. his is for for compensation US$600,000 compensation All and additional Downe received Mr. (c) Flynn for Mr. million 2011, US$1.25 In of (b) salaries base to Equivalent (a) and pay (at-risk) variable of proportion awards. the executive’s including each 2012, about fiscal details for for NEOs 57 the to to 52 awarded pages was See that pay. compensation performance-based deferred total the shows below table The Awards Compensation 2012 ‰ ‰ ‰ th groups: reflects operating (which the 2011 of from results 35% the up and billion, footprint), $4.2 American of North income expanded net financial its ‰ record right of including the value results, making the financial are and strong they progress year’s confidence Bank’s the the change. by regulatory them demonstrated global give clearly and to was uncertainty and This market succeed continuing customers despite our resilient help proven to has strategy – Bank’s choices the – Sense Make Money Making Results 2012 4. -erTR()1.%1.%1.%1.%45 .%-6 p 40bps -400 bps +970 bps -660 bps +280 4.7% 22.5% 4.5% 26.4% 15.2% 2.0% 17.4% 2.4% 11.2% 11.7% 10.8% 5.2% (c) TSR 3-Year (c) TSR 1-Year P 61 48 47 +27% bps +60 bps +80 bps -25 13.5% $4.75 bps +80 14.9% +16% 0.61% 12.0% $4.84 million $12,239 +35% 62.2% 15.1% million 0.56% $13,943 12.6% million $6.15 $2,810 62.7% million 15.9% $16,130 million $3,114 0.31% million $4,189 63.5% ratio capital 1 Tier ratio) (expense-to-revenue (b) ratio Efficiency (a) losses credit for Provision EPS Revenue ROE tax after income Net ..Mlo 0,0 ,3,0 ,6,0 ,1,0 4,0 ,5,0 3 2 4% - 12% (e) - n/a 16% - 62% 67% 60% 63% 93% 82% 82% 82% 7% - 7,650,000 3,401,920 2,825,000 3,400,000 75% 0 175,000 0 0 87% 420,000 9,204,000 Measure 945,000 630,000 0 339,000 430,400 1,415,000 1,050,000 2,360,000 525,000 508,500 645,600 2,430,000 601,920 847,500 1,076,000 500,000 648,000 1,300,000 630,000 2,100,000 600,000 500,000 3,550,000 (a) 1,000,000 Techar F.J. 1,254,000 Milroy T.V. (c) Furlong M.F. (b) Flynn T.E. (a) Downe W.A. 20.1%. of contributed ROE million strong $100 with over million with $948 million of $546 income to net 12% annual increased delivered income valuable Markets net and business. Capital Adjusted important U.S. BMO (“PCG”). an the Group developed of Client has value U.S. Private strategic Bank the the the The from for 2011. in Credit year increase over for good significant 48% Provision a a up the was been million, in 2012 has US$579 fully there of Report. more and year Annual discussed provi- franchise the 2012 is expected banking the for which uses U.S. income of losses, that net 40 actual basis adjusted page reflect a delivered on to on U.S. section results 0.6% P&C Information adjusts up Quality that billion, Credit basis $1.8 Other a was and on year Losses 3.4% the and for losses income credit net for reported sions Canada’s (“P&C”) Banking Commercial and Personal & merger. M&I ept M’ togrsls lwn rai eeu rwhrltv oteBn’ oto on uiesafce annsadperformance and earnings affected business doing of cost to Bank’s effort the ongoing to Bank’s relative the growth by revenue furthered organic strategy, slowing well-defined results, a strong and BMO’s execution Despite good of result the year, last to relative markedly grew Earnings ako otelMngmn rx Circular Proxy Management Montreal of Bank ie Variable ($) (deferred) Equity salary Base Fixed ($) Cash bonus Cash units share Restricted Bank Reported 2012 options Stock ru Bank Group Peer Cdn tc units stock deferred Awarded Reported 2011 tc nt (d) units stock deferred Voluntary ru Bank Group Peer Cdn ($) compensation direct Total eotd()21 s2011 vs 2012 (d) Reported 2010 ge. teto iied addrn h period. the during paid dividends of stment lo amn nteoeya niesr fthe of anniversary year one the on payment llion ru Bank Group Peer Cdn variable Percent deferred Percent 2011 from Change Group Peer Cdn e Compensation Discussion and Analysis 50 ially, supported by shifts in nce, create capacity for customer- Bank of Montreal Management Proxy Circular pful Steps for Parents, which helps parents teach p Canadians become mortgage-free faster, pay less anchise finance specialty and opening new offices rmance metrics at the line of business level and atform through the acquisition of a 19.9% equity r learning, recruiting and talent programs. tution business substant nagement and alternative investment research Head of U.S. Anti-Money Laundering and a Chief d and address the impact of regulatory changes. t, an innovative and personal service that provides nagement and banking client experience. ve productivity and expand into new markets. e our customers with guidance and advice, with an nversion and integrated all businesses. res, payments and commercial businesses. irst mindset in our people and culture: espond real-time to customer needs. ly growing area of the wealth market. lect high-priority risk areas. ieve a high-quality customer experie gainst rising interest rates. quire and grow client relationships: Canadian Banks (Forrester) for providing leadership on emerging legislation and regulatory developments. the global credit environment. Proactively managed our businesses to understan Regulatory Officer responsible Only Canadian bank and one ofChina. only three North American banks with anContinued established to subsidiary build bank our in Asian wealthinterest management in pl COFCO Trust Co., in aGrew rapid Trade Finance and International Financial Insti Reinforced our risk culture, focusing onmanaging risk risk independence across and the our enterprise. three-lines-of-defence approach to Executed a formalized risk practice benchmarkingand program implement to enhancements assess in our se processes, identify best practices Developed and implemented risk appetite and perfo Launched a multi-year strategy to upgradeneeded our to risk support technology enhanced infrastructure risk to management provide capabilities. the data and tools interest and protect themselves a Opened over 15,000 U.S. savings accountschildren through to Hel manage money responsibly. Integrated our acquired M&I businesses, andcapabilities continuing and to platforms develop in consolidated priority North areas: American Completed the core U.S. banking systemsAdvanced co our agenda to build apractices, consolidated beginning North-South with platform our to contact leverage cent scaleLaunched and a transfer unique best planning-focused wealth ma Broadened our commercial capabilities by creatingto a drive fr growth. Acquired CTC Consulting, enhancing our wealth ma Appointed a number of key roles, including a new integrated them into our strategic planning process. investing advice to online investors. Introduced e-statements. Launched lean mortgage redesign. Launched high-performance trading platform in Capital Markets Adjusting our organizational structure. Introduced new branch formats. Optimized our U.S. branch network. Implemented new office space standards. Built sales capacity in our CanadianRolling branch out network. technology to identify and r Promoted our award-winning mortgage product to hel Launched our Open for Business campaign,businesses making over up three to years $10 to billion help of them financing impro available to Canadian capabilities. BMO Investorline launched in Canada, adviceDirec Introduced BMO Harris Mobile Banking inIntroduced the innovative United new States. mobile capabilities inNow Canada. allow customers to book appointmentsMoved with to branch a staff unified online. coverage model in Capital Markets. Embedded customer experience as a coreRolled part out of and ou enhanced customer loyalty measurement systems across most of ourBest businesses. Private Bank in Canada (GlobalBest Banking Investment and Bank Finance in Review) Canada (WorldBest Finance Trade magazine) Bank in Canada (TradeBest Finance Website magazine) User Experience: Excellence in Telephone Banking (Synovate/IPSOS). ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Continued to expand our businesses and‰ capabilities in the United States: ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Reviewed our cost structure to find‰ ways to drive greater efficiency: ‰ ‰ ‰ Grew our distribution capacity: ‰ ‰ Introduced attractive new offers to ac ‰ ‰ ‰ ‰ ‰ ‰ ‰ Continued our focus on instilling a‰ customer-f ‰ Received several external customer awards: ‰ ‰ ‰ ‰ ‰ Redesigning our core processes to ach facing employees and reduce costs: Developed innovative new capabilities that provid emphasis on digital banking and investing, to help them make sense of their financial decisions: ‰ ‰ ‰ ‰ ‰ ‰ ‰ ‰ Expand strategically in select global markets to create future growth. Ensureourstrengthinrisk management underpins everything we do for customers. Leverage our consolidated North American platform to deliver quality earnings growth. Achieve industry-leading customer loyalty by delivering on our brand promise. Enhance productivity to drive performance and Shareholder value. ✓ ✓ ✓ ✓ ✓ Global expansion Risk management Leveraging North American network Area of focusCustomer loyalty Goal Results Productivity The Bank also made good progress against its enterprise strategic priorities this year. Compensation Discussion and Analysis 51 on of instead purposes, compensation for price Share average 90-day the on based Calculated (a) profitable sustainable of development the growth. strategy for proxy long-term useful mid-and a our our is to to and linked compared directly months is 24 TSR last 3-Year the peers. the in price in Share moderation BMO’s the reflects of peer valuation This Canadian target. the below to slightly relative was TSR group down 3-Year was Bank’s pools the because plan year incentive this long-term and mid-term the of Funding pools incentive long-term and Mid-term which basis, adjusted and basis GAAP a both on performance Bank’s the assesses Management (a) ‰ ‰ year, this down was reflecting: pools incentive short-term the for Funding pool incentive Short-term regulatory Bank’s the with concerns requirements. any variable capital to of rise payment give the not that confirmed did incentives also CFO multi- and final CEO in The reflected pliers. appropriately were elements con- these and that factors firmed compliance and financial risk, assessed Committees adjustments. any making without pools, the incentive approved all Committee for The multipliers year. the for compensation set challenging measures the than performance of lower short was fell pools performance incentive since the target of all for against funding progress priorities, and strategic performance financial strong Bank’s the Despite funding pool Incentive dutdRE1.%15.5% -2.8% 15.5% 17.6% (a) actual 2012 2.2% 9.7% (a) goal 12.1% 2012 leverage operating Adjusted 12.1% ROE Adjusted growth EPS Adjusted growth revenue Adjusted measures performance Bank esrs21 ol21 actual 2012 goal 2012 to (relative TSR 3-Year measures performance Bank awards. NEO of discussion the in about read performance can you most which on measures, target business). below doing was of performance cost group the Operating to relative slowed the growth – revenue productivity Bank’s lower (reflecting leverage operating operating and in income) performance growth its slower of (reflecting two growth revenue on measures: goals its below performance Bank Overall h lsn rc nOtbr3.Ti ubrde o ac h -erTRrpre bv or above reported TSR 3-year the match not Report. does Annual number 2012 This our 31. in October on price closing the core of reflective not considered was that revenue to PCG’s compensation to performance. measuring reduction operating for compensation a For results of groups. adjusted portion PCG’s operating a to the exclude made to was allocated adjustment was million and an $134 2011) purposes, totalled in which million Services assets, ($70 Corporate intangible 2012 to the acquisition-related in allocated of of were respect amortization items in the adjusting million) for the ($104 except of million $294 All million of items. $725 losses adjusting of credit preceding expenses for (2011) million), provisions 2012 ($201 and for million million) such $1,063 ($288 consistent as of basis and revenue a purposes excluding on compensation determined measured for were were goals above performance results Bank’s taxes actual the income Bank’s with and The costs items. restructuring those losses, activities, to credit credit related for structured allowance run-off amortization collective to the the related costs, in amounts integration changes credit-related M&I assets, certain portfolio, intangible of loan acquisition-related impact performing of the purchased excluded M&I were they the the purposes such, on of compensation As items 99 for basis. and goals adjusted 98 performance an 32, Bank on pages 2012 established on The fully Report. more Annual performance. discussed 2012 business are Bank’s of and understanding non-GAAP facilitate are to measures items Adjusted adjusting of impact the excludes d erGop (a) Group) Peer Cdn h E,adteUS n nepieCmesto Oversight Compensation Enterprise and U.S. the and CEO, The ako otelMngmn rx Circular Proxy Management Montreal of Bank d erGroup Peer Cdn the of average the above or At d erGroup Peer Cdn the of average the below bps 77 olfunding pool on Impact eo target below Slightly olfunding pool on Impact eo target below Slightly ainain ihSaeodrreturns. Shareholder with aligns sation com- highly most year. three each the compares in and also NEOs CFO chart pensated the The CEO, period. the same to the paid for invested compensation indices $100 TSX of two value of cumulative each the in with 2007 31, October on Shares years. five past the over compensation return executive Shareholder between and alignment the shows below chart The returns Shareholder performance with aligned be to continued Pay b 00bsdo GA,a eie tta time. that at defined as CGAAP, on based 2010 (b) included, payment With million. US$6 of payment completion transition Furlong’s Mr. Excludes 2012. (a) and proxy 2011 management 2010, the in in issued NEOs circulars for pension cost annual compensation the mid- and and short-, service compensation salary, other base incentives, of long-term total and the is compensation aggregate Total after acquisition. income M&I net the increased to of attributable result tax a sig- as has 2011 ratio from cost-of-management declined the nificantly and years three past consistent the relatively over remained has compensation illus- executive measure that This trates annually. a reported develop be to to institutions ratio financial cost-of-management Bank other the with 2005, working in to received committed proposal Shareholder a to response In ratio management of Cost compensated highly most three the and Flynn T.E. Downe, W.A were 2011 and 2012 in NEOs (c) incentive mid-term of value the payment, incentive price short-term Share annual in salary, change base the Includes reflecting 2007, (b) 31, October on invested $100 of value Cumulative (a) Cumulative Return($) oa grgt E opnain( millions) ($ compensation NEO aggregate Total millions) ($ tax after income Net oto aaeetrtoa ecnaeof percentage a as ratio management of Cost oa grgt E opnaini 3. ilo n oto aaeetrtowudbe would ratio management of cost and million $33.8 0.81%. is compensation NEO aggregate total highly most three the CFO. and and Maidment CEO K.E. the Downe, than W.A. other than were officers W.A. other 2007 executive were officers in compensated NEOs executive NEOs the compensated CFO. 2008 highly and and most CEO 2009 three the 2010, the For and CFO. Robertson and R.C. CEO Downe, year. the each than in other NEOs officers other the executive awards, for incentive cost long-term compensation the and of service value pension market annual fair the the and grant, compensation of time the at awards dividends. reinvested plus e noeatrtax after income net Compensation (b)(c) NEO Total Index Financials S&P/TSX Composite Composite Index S&P/TSX Performance(a) BMO Share e ae5 o oeifrainaothwM.Dwescompen- Downe’s Mr. how about information more for 52 page See in invested $100 of value cumulative the compares chart The 100.00 100.00 70.4 80.1 91.9 92.7 103.0 100.00 68.6 79.5 98.3 94.9 94.1 90.2 100.00 72.1 114.0 116.7 122.8 2. 2. 2. 2. 3. 33.8 31.7 27.7 24.7 22.4 24.7 2007 0820 2010 2009 2008 72.1 90.2 114.0 02(a) 2012 4,189 27.8 0.66% 116.7 2011 ,1 2,810 3,114 1727.7 31.7 .2 0.99% 1.02% 0121 (b) 2010 2011 122.8 2012 Compensation Discussion and Analysis 52 Shareholder value ($)(c) ng the sheet and share- Value on October 31, 2012 as a percentage of value at the time of the award (%)(b) Bank of Montreal Management Proxy Circular Value on Oct 31, 2012 ($)(a) Total direct compensation Value at time of the award ($) Weighted average 75 128 The Committee also periodically asks its independent advisor to The table below shows Mr. Downe’s total direct compensation over the October 31, 2012 valuethe of October share 31, units 2012 that in-the-money havecompensation value not received of vested in stock US$ options has awarded rates) been converted into Cdn$ (seefor page 2008 58 compensation, foreign the exchange amountMr. awarded Downe. reflects The the value total at compensationMr. October granted Downe 31, to subsequently 2012 declined. does The notas value include at of the October those 2008 31, awards equity 2012. would awards have that been $8.5 million actual salary and cash incentivethe payments actual received value in received the from yearduring vested of measurement share award period units and option exercises that were granted percentage of his total direct compensation in the year ofaward the year, award. including reinvested dividends. ‰ ‰ ‰ ‰ ‰ ‰ Fiscal year 200720082009 5,464,2452010 5,982,0002011 3,035,646 7,450,000 2,674,948 9,542,600 6,978,042 9,876,250 56 7,531,528 45 8,524,708 94 79 123 86 170 136 108 105 measures. Funding of the mid-term andwas long-term down incentive this plan year pools because thedian Bank’s peer 3-Year group TSR was relative slightly to below the target.Target Cana- See for page 2013 51 for details. Mr. Downe’s total compensation target forfrom 2013 2012. remains unchanged Aligning pay with performance One of the governing principles ofalign BMO’s compensation compensation with objectives Shareholder is interests. to Deferringis compensation one way to accomplish this,tion and is 75% deferred. of Mr. Downe’s 2012 compensa- review CEO pay for performance. Inbusiness 2012, performance the over advisor the compared last BMO’s one,CEO’s three total and compensation, five and years concluded with thatperformance: the BMO’s (a) pay the was Bank’s aligned performance to laggedperiod, its and peers (b) over Mr. this Downe’s compensationcompensation was for below CEOs the at median the other peer banks. the last five fiscal years, andvalue. its He current was value appointed compared President to and Shareholder CEO in 2007. (a) Mr. Downe’s total direct compensation as measured on October 31, 2012 includes: (b) The value of Mr. Downe’s total direct compensation(c) measured on October The cumulative 31, 2012 value as at a October 31, 2012 of $100 invested in Shares on November 1 in the 2011 ($) 2010 ($) 1,026,2501,150,000 1,042,600 2,850,000 2,176,250 3,892,600 4,000,000 3,000,000 2,300,0001,400,000 2,650,000 7,700,000 5,650,000 9,876,250 — 9,542,600 2012 ($) 1,254,000 1,000,000 2,254,000 3,550,000 2,100,000 1,300,000 6,950,000 9,204,000 The Bank, however, fell short against the performance measures In 2012, the Board increased his total target compensation from customer loyalty productivity leveraging the North American network global expansion risk management (Cdn $) Cash Salary (a) Short-term incentive (bonus) Total cash Equity Mid-term incentive Long-term incentive • stock options • deferred stock units Total equity Total direct compensation 19831999 Joined2001 the Bank Appointed2007 Vice-Chair, Bank of Montreal Named Deputy Chair of BMO Appointed Financial President Group and and Chief Chief Executive Executive Officer Officer, BMO Nesbitt Burns Mr. Downe provides leadership and vision. Through the Board of Directors, he is accountable to Shareholders for defining, communicating and achievi He has a Bachelor of Arts degree from Wilfrid Laurier University and a Master of Business Administration from the University of Toronto. Bank’s strategy and operational goals,holder and value is metrics, responsible and for defining enterprise-wide and performance, maintaining financial a results, cultureMr. including of Downe profit corporate has and responsibility. held loss, the balance following positions with the Bank, in Canada and the U.S.: Please see page 49 for astrategic full priorities discussion in of 2012. Bank performance againstIncentive its pool funding Mr. Downe’s incentive pools are fundedance. based Funding 100% for on his Bank short-term perform- incentivebecause pool the was overall Bank down fell this short year on two of its four performance ✓ ✓ ✓ ✓ ✓ $9.0 million to $9.5 millioneration to size reflect differences the among market, the taking banks. intounchanged. His consid- base salary remained Performance in 2012 The Board was very pleased withbelieves Mr. he Downe’s has leadership positioned this the year, Banksuccessfully and well integrating M&I, for improving growth. the Key total thisarchitecture, Bank’s building year was technology north-south platform and managementand processes continuing to move the Bank along the path to greaterestablished efficiency. for the incentive pools. Theaggressive Committee but felt fair, these and goals set were Mr.3% Downe’s below total target, direct and compensation 7% at below 2011. Individual objectives The Committee assessed Mr. Downe’s performanceBank’s this enterprise year strategic against priorities in five categories: (a) US$1.25 million in 2012; US$1.05 million in 2011 Target for 2012 At the end of 2011, theMr. Board Downe’s approved compensation a targets, remix without of increasingcompensation. the his The elements total result of target was a US$200,000to increase US$1.25 in million, his effective base November salary, 1,target 2012, variable and compensation a by decrease the in same his amount. 2012 compensation 5. 2012 Compensation for the NamedW. Executive A. Officers Downe, President and Chief Executive Officer Compensation Discussion and Analysis .E ln,EeuieVc-rsdn n he iaca Officer Financial Chief and Vice-President Executive Flynn, E. T. 53 ✓ ✓ ✓ ✓ individual key against performance objectives: 2012 Flynn’s Mr. assessed CEO The 2012 in Performance competitive. was and it compensation determined target Flynn’s Mr. assessed Committee The 2012. 2012 in for made was Target adjustment no and 2011 fiscal during $500,000 to increased was salary Base (a) compensation 2012 ‰ ‰ following: the in participates Downe Mr. Pension practices. Bank’s best governance the and of regulations oversight trading proper ensures with compliance This exercises options. he stock before his Chair of Committee any the with consult must Downe Mr. guidelines. the exceeds ownership share Downe’s Mr. ownership Share . 356031,0,0 334123,2,4 30.64 38,420,645 13,324,182 11,500,400 13,596,063 ($) DSUs ($) RSUs ($) Shares 7.0 multiple Required r ln a nHnusBceo fAt nBsns diitainadaMse fBsns diitainfo h vySho fBsns tUniver at Business of School Ivey the from Administration Business of Master a and Accountant. Administration Chartered Business a in is Arts and of Ontario, Bachelor Western Honours an has Flynn Mr. Officer CFO Risk Appointed Chief and Vice-President Executive Named Officer 2011 Financial Chief Acting Treasurer Became and 2008 Finance Vice-President, Executive Named 2007 Bank Bank: the the Joined with 2004 positions management senior following l 1992 the provides taxa held also and has He practices Flynn controls. management Mr. and treasury governance Bank-wide effective of ensuring implementation management. and and strategic reporting, development of management the office relations, leads investor He development, governance. corporate financial strategies, for accountable is Flynn Mr. oa ietcompensation direct Total equity Total units stock deferred • options stock • incentive Long-term incentive Mid-term Equity cash Total (bonus) incentive Short-term Salary Cash $) (Cdn arrange- pension overall his defines that agreement Bank-funded non-registered a (“RAA”), Agreement Allowance Retirement a Bank. Canadian the eligible of federally- all employees a for (“PFS”), plan Montreal pension of benefit defined Bank registered the of Society Fund Pension The otiuet ihrpromneclueadtln management talent and culture performance higher to Contribute M&I of integration productivity the on Support drive focused the lead and Establish year the performance throughout governance and controls financial strong Maintain ako otelMngmn rx Circular Proxy Management Montreal of Bank hr wesi sa eebr3,2012 31, December at as ownership Share 2,825,000 1,695,000 1,130,000 339,000 508,500 847,500 630,000 500,000 02($) 2012 wesi ($) ownership share Total ,3,2 3,200,000 3,339,425 1,920,000 2,106,000 1,110,000 1,170,000 1,280,000 1,233,425 3,0 810,000 936,000 880,000 772,000 400,000 (a) 461,425 01()21 ($) 2010 ($) 2011 —— aesalary base amultipleof as shares Total ttecretfrinecag rate. exchange dollars foreign Canadian current to the converted at pension million This US$1 basis. a unreduced represents an to benefit on and immediately cap payable the Cdn$999,000, reached is has date benefit pension retirement annual total His ‰ ‰ ‰ ‰ ‰ r on’ oa nulnra eieetpninbnftis: benefit pension retirement normal annual total Downe’s Mr. r ln’ hr wesi xed h guidelines. the exceeds ownership share Flynn’s Mr. ownership Share compensa- 2012 Flynn’s Mr. of deferred. 60% is and tion this, accomplish to way one compensation is Deferring to interests. is Shareholder objectives with compensation compensation BMO’s align of principles governing the of One interests Shareholder with Alignment remains and 2013. competitive market for unchanged is target compensation total Flynn’s Mr. 2013 for details. Target for 51 page peer See Canadian target. the below to slightly relative was TSR group down 3-Year was Bank’s pools the because plan year incentive measures. this long-term performance and four mid-term its the of of two Funding year on this short fell down Bank was the pool because incentive perform- short-term Bank his on for 100% Funding based ance. funded are pools incentive Flynn’s Mr. funding pool M&I. Incentive of acquisition and negotiations sig- merger his the for in compensation contribution additional nificant received Flynn Mr. down 2011, was In compensation year-over-year 16%. His the down. of was funding pool because incentive target His below year. was this compensation objectives direct individual total his against well performed Flynn Mr. . 1,0 ,2,9 4,7 ,8,7 8.38 4,189,277 344,779 3,426,390 418,108 ($) DSUs ($) RSUs ($) Shares 5.0 multiple Required nocs n adi upsmacrigt h em fteRAA. the of terms the to according sum lump a converted in is paid remainder and The cash payments. periodic into as PFS rules the plan from and paid regulations legislation, to subject immediately payable annually million US$1 short- at Canadian capped his of equivalent awards plan US$ incentive the term and salary US$ his on cred- based of years by multiplied service salary, ited base of the 145% and plan at salary incentive capped of short-term awards, consecutive months five 12 highest last his his of of average sum the of 2% as calculated t i nulpninbnftt S1mlinrgrls fhslength his bonuses. of or regardless level, million salary lim- service, US$1 and of to control, benefit of pension change annual a his is its there if entitlement his clarifies ment, hr wesi sa eebr3,2012 31, December at as ownership Share wesi ($) ownership share Total aesi othe to eadership aesalary base amultipleof as shares Total iyof sity tion Compensation Discussion and Analysis 54 n channels. He ess. Mr. Furlong perating leverage of 2011 was below target due to lower than target loan balances and lower than target spreads as the economic environment was weaker than anticipated at the time the target was established. 2011 was below target driven by lower than target revenue growth referenced above and higher than target expense growth. lower than target revenue growth and higher than target expenses. target as lower than target net income growth was only partially mitigated by lower equity. slightly below target. (0.4)% was below target due to Bank of Montreal Management Proxy Circular Short-term incentive plan Below Target Revenue growth of 49.9% versus Below Target Net income growth of 48.1% versus Below Target Adjusted o Below Target Customer loyalty measure was which totalled US$63 million inand 2012 are ($36 disclosed million more in fully 2011). Adjusted on pages measures 32, are 98 non-GAAP and 99 of the Bank’s 2012 Annual Report. payable at age 65 but canbasis be (reduction paid of up 3% to per 15 yearcedes years for age earlier each 60 on year for a that the reduced retirement portionprior pre- of to the July pension 1, based 2007, on andretirement service reduction precedes accrued age of 65 4% for per the yearservice for portion accrued each of after year June the that 30, pension 2007), basedand subject on plan to rules legislation, regulations paid as periodic payments, part fromSupplementary the Plan. PFS and the rest under the P&C U.S. measures (a)Adjusted 2012 Revenue PerformanceGrowth Commentary Adjusted Net Income Growth Adjusted Operating Leverage Adjusted Tangible ROE Below TargetCustomer Loyalty/ Tangible ROE wasExperience slightly below Impact on Pool Funding Below target, multiplier of 76% Incentive pool funding Mr. Furlong’s short-term incentive is fundedon based Bank on performance a and 25% 75% weighting ondown P&C this U.S. year performance. because Funding the was Bankance fell measures, short and P&C on U.S. two did ofFunding not its of meet four the its perform- mid-term five and financial long-termthis targets. incentive year plan because the pools Bank’s was 3-Year down group TSR was relative slightly to below the target. Canadian See peer page 51 for details. (a) Adjusted results reflect the exclusion of the amortization of acquisition-related intangible assets See page 51 for Bank short-term incentive performance measures. ‰ ‰ His total annual retirement pension benefiton to a date fully is unreduced $181,439, basis payable atadditional age years 65. of This credited amount service will andinformation. increase earnings. with See page 61 for more 2011 ($) 150,000 270,000 420,000 446,075 1,154,411 1,600,486 2,020,486 (July 6 to Oct 31) 2012 ($) 600,000 648,000 645,600 430,400 1,248,000 1,076,000 2,152,000 3,400,000 Successfully integrate our acquired M&I businesses. Maintain strong customer loyalty. Improve financial performance by growing revenue,managing effectively costs and continuing to optimizeDeploy the the distribution Bank’s unique network. commercial operatinggrowth model, by which delivering drives local access andacross industry a expertise broad to geographic clients footprint. (USD $) Cash Salary Short-term incentive (bonus) Total cash calculated as 1.25% of the totalthe of average his of average his pensionable short-term salary incentiveaverage and awards, pensionable capped salary at (all 145% subject of tohis certain years limits), of multiplied credited by service, less(“CPP”) an entitlement, offset plus for an a additional Canada 0.75%able Pension of salary Plan his multiplied average by pension- the yearshas of chosen contributory to service, enhance because a he portionmula of and his make pension optional benefit contributions to a 2% for- The Bank’s PFS the Executive Supplementary Pension Plan, anon-registered Bank-funded arrangement for executives, designated managing directors and designated officers (“Supplementary Plan”). Equity Mid-term incentive Long-term incentive • stock options • deferred stock units Total equity Total direct compensation Mr. Furlong leads the U.S. retail bank and is responsible for defining and implementing strategies for all products and sales and service distributio is accountable for delivering financialheld solutions the to following customers senior and management for positions financial with results Marshall2001 for & the Ilsley U.S. Corporation Personal before2004 and the Joined Commercial acquisition Marshall banking by & lines BMO Ilsley of Financial2007 Corporation Appointed busin Group: as to Senior President Vice of President2011 Marshall Appointed and & to Chief Ilsley President Financial Bank and Officer Chief Appointed Executive to Officer, currentMr. and role Furlong Chief on has Executive July a Officer 6, Bachelor and upon of Chairman close Science in of degree 2010 the from of acquisition Southern Marshall of Illinois & Marshall University. Ilsley & Corporation. Ilsley Corporation Performance in 2012 The CEO assessed Mr. Furlong’s 2012objectives performance as against well individual as P&C U.S.✓ Group objectives: ✓ ✓ ✓ See page 49 of our Annualobjectives Report and for achievements. a full discussion ofMr. 2012 Furlong group performed well against hisHis individual total objectives direct this compensation year. was belowing target of however, the because incentive fund- pools was down. As part of Mr. Furlong’s employmentpletion agreement, of to the recognize transition com- from M&I,on he the received one a year US$6 anniversary of million the payment M&I merger. 2012 compensation ‰ ‰ ‰ Pension Mr. Flynn participates in the Canadiandefined Executive benefit Pension pension Program, program a that includes: Mr. Flynn’s total annual normal retirement pension benefit is: M.F. Furlong, President and Chief Executive Officer, BMO Harris Bank, N.A. Compensation Discussion and Analysis ..Mlo,CifEeuieOfcr aia Markets Capital Officer, Executive Chief Milroy, T.V. 55 unchanged. remained salary to base 2012 His for market. compensation the target reflect Milroy’s Mr. increased Committee The 2012. 2012 in made for was Target adjustment no and 2011 fiscal during $500,000 to increased was salary Base (a) compensation 2012 guidelines. the exceeds ownership share Furlong’s Mr. ownership Share 2012 Furlong’s Mr. of deferred. 63% is and compensation this, accomplish to way one compensation is Deferring to interests. is Shareholder objectives with compensation compensation BMO’s align of principles governing the of One interests Shareholder with Alignment 2013. and competitive for unchanged market remains is target compensation total Furlong’s Mr. 2013 for Target . ,5,2 ,2,8 3,5 ,1,6 10.16 6,112,969 434,953 2,420,789 3,257,227 ($) DSUs ($) RSUs ($) Shares 5.0 multiple Required r iryhsaB rmMGl nvriy ahlradMseso a rmCmrdeUiest n nLBfo ahui nvriy n completed and University, Dalhousie from LLB an and University Cambridge from Law of School. Masters Business and Harvard Bachelor the a at University, Program McGill Management from Advanced BA a has Markets Milroy Capital Mr. of leadership Markets Assumed Capital BMO of Banking Co-President Corporate Named & 2008 Investment of Director Vice-Chair Managing Appointed as 2006 bank investment Bank: business. the the of Joined with dir 2001 lines positions strategic Products management implementing Trading senior and and following defining (“I&CB”) 1993 the for Banking held responsible Corporate has is and Milroy He Investment Mr. internationally. the and of U.S. results the financial Canada, and in solutions business customer Markets delivering Capital the leads Milroy Mr. oa ietcompensation direct Total equity Total units stock deferred • options stock • incentive Long-term incentive Mid-term Equity cash Total (bonus) incentive Short-term Salary Cash $) (Cdn ako otelMngmn rx Circular Proxy Management Montreal of Bank hr wesi sa eebr3,2012 31, December at as ownership Share 7,650,000 4,720,000 1,415,000 2,360,000 2,930,000 2,430,000 945,000 500,000 02($) 2012 wesi ($) ownership share Total ,8,3 7,000,000 7,983,333 3,400,000 5,150,000 1,672,500 2,575,000 1,727,500 2,575,000 3,600,000 2,833,333 3,200,000 2,350,000 8,3 400,000 483,333 01()21 ($) 2010 ($) 2011 aesalary base amultipleof as shares Total hsaon ilices iherig.Sepg 1frmore for 61 page See information. earnings. with increase will amount 62. This age payable at $391,743, basis is unreduced date an to on benefit pension retirement annual total His is: benefit pension overall Furlong’s Mr. ‰ ‰ ‰ ‰ ‰ following: the in participates Furlong Mr. Pension ru a lgtyblwtre.Sepg 1frdetails. for 51 page peer See Canadian target. the below to slightly relative was TSR group down 3-Year was Bank’s pools the because plan year incentive targets. this long-term financial and four mid-term of the three meas- of meet performance Funding not four did its Markets of Capital two and on ures, short this fell down Bank was the Funding because performance. year Markets perform- Capital Bank on on 75% 25% and based ance funded is incentive short-term Milroy’s Mr. funding pool Incentive down. was pools incentive below the 4% of and funding however, because His target 2011, year. below this was objectives compensation individual direct his total against well performed group Milroy 2012 Mr. of discussion full a for achievements. Report and Annual objectives our of 55 page See ✓ ✓ objectives: group 2012 Markets Capital BMO ✓ the individual as against well performance as 2012 objectives, Milroy’s Mr. assessed CEO The 2012 in Performance ada eidcpayments periodic as paid precedes retirement that year basis 62) each reduced age for a year on per earlier 4% paid of be (reduction can but 62, age at Montreal/Harris) payable of Bank the of Employees’ Plan the Retirement as (such com- programs other retirement and the sponsored benefits by pany government offset from years, paid 10 and last base earned the of benefit over sum incentive the term of short average plus 5-year salary highest the of 55% as calculated pension arrangement. overall his defines that arrangement Bank-funded non-registered a arrangement, retirement executive supplementary a Harris BMO employees of eligible executives all including to com- offered a plan account-based Montreal/Harris, paid, of pany Bank the of Plan Retirement Employees ifrnit hmevsi h market can the they in where themselves sectors differentiate in U.S. capabilities the Markets in Capital particularly Develop capabilities, out build to Continue unified a through approach experience coverage client great consistently a Deliver cin and ection, the Compensation Discussion and Analysis 56 of Denver. Exceeds requirement Total shares as a multiple of total target direct compensation tion channels. ) banking lines Total share ownership ($) Bank of Montreal Management Proxy Circular Share ownership as at December 31, 2012 Mr. Techar performed well against his individual objectives this Continue to enhance the customer experienceentiated and position create in a the differ- Canadian market. Launch attractive and compelling new offersImprove that productivity drive of results. the sales andContinue distribution the network. redesign of core processesa and high-quality technologies customer to experience, achieve create capacityfacing for employees customer- and reduce costs. Both Mr. Milroy and the BankThe contribute Bank to contributes the 3% plan. of earningssion to plan, the to defined a contribution maximum pen- ofMr. $3,500 Milroy per must year. contribute 2% of$2,000 earnings per up year, to either to a the maximumregistered defined of retirement contribution savings pension plan. plan He or hasdatory a chosen contributions to to direct a his registered man- retirementMr. savings Milroy plan. is responsible for managingment the funds investment in of the his defined retire- contributionretirement plan savings and plan. in the registered 1.0 243,988 7,252,486 13,541,381 21,037,855 Required multiple of total target direct compensation Shares ($) RSUs ($) DSUs ($) Performance in 2012 The CEO assessed Mr. Techar’s 2012objectives, performance as against well individual as the P&C✓ Canada 2012 group objectives: ✓ ✓ ✓ See page 46 of our Annualobjectives Report and for achievements. a full discussion of 2012 group year. His total direct compensation wasbelow below 2011, target because funding however, and of 12% the incentive pools was down. Share ownership Mr. Milroy’s share ownership exceeds the guidelines. Pension Mr. Milroy participates in the BMOPlan, Nesbitt a Burns provincially Employee (Ontario) Retirement registered definedplan contribution offered pension to all eligible employeesfollowing of terms: BMO Nesbitt Burns, with‰ the ‰ ‰ ‰ See page 61 for more information. gained several years of international experience in the U.S. and as Senior —— 2011 ($) 2010 ($) 541,860 573,430 843,000 1,287,000 1,384,860 1,860,430 1,228,500 1,081,500 1,228,500 1,081,500 2,457,000 2,163,000 3,841,860 4,023,430 target driven by higher than target expenses. Revenue was at target. of (4.2)% was below target due to higher than target expense growth. target due to lower than target net income and higher than target equity. was slightly above target. 2012 ($) 700,000 630,000 420,000 1,301,920 1,050,000 2,100,000 3,401,920 rget Adjusted operating leverage 601,920(a) e Target Customer loyalty measure Short-term incentive plan which totalled $1 million inare 2012 disclosed ($0 more million fully in on 2011). pages Adjusted 32, measures 98 are and non-GAAP 99 and of the Bank’s 2012 Annual Report. Cash Salary (Cdn $) Short-term incentive (bonus) Total cash Equity Mid-term incentive Long-term incentive • stock options • deferred stock units Total equity Total direct compensation He is accountable for deliveringof financial business. solutions to customers and for financial resultsMr. for Techar the has Personal, held Commercial the1984 and following Small senior Business management (Canada positions2001 with Joined the the Bank: Bank 2006 Served as President and CEO Appointed of to Harris current Bankcorp,He position Inc. began his career with the Bank in the Corporate Banking Division, and then Mr. Techar leads the Canadian retail bank and is responsible for defining and implementing strategies for all products and sales and service distribu Vice-President and General Manager London, England. Mr. Techar has a Bachelor of Science and an Engineering degree from Princeton University, and a Master in Business Administration from the University Capital Markets Measures (a) 2012Adjusted Performance Net Income Commentary Below TargetAdjusted Operating Leverage Below Ta Net income was below Adjusted ROECustomer Loyalty/Experience Abov Below TargetImpact on Pool Funding ROE was slightly below Below target, multiplier of 88% (a) US$600,000 Target for 2012 The Committee increased Mr. Techar’s targetreflect compensation the for market, 2012 increasing to his base salary to US$600,000. 2012 compensation Alignment with Shareholder interests One of the governing principles ofalign BMO’s compensation compensation with objectives Shareholder is interests. to Deferringis compensation one way to accomplish this,tion and is 62% deferred. of Mr. Milroy’s 2012 compensa- Target for 2013 Mr. Milroy’s total compensation target isremains market unchanged for competitive and 2013. (a) Adjusted results reflect the exclusion of the amortization of acquisition-related intangible assets See page 51 for Bank short-term incentive performance measures F. J. Techar, President and Chief Executive Officer, Personal and Commercial Banking Canada Compensation Discussion and Analysis 57 measures. performance incentive short-term Bank for 51 page See assets intangible acquisition-related of amortization the of exclusion the reflect results Adjusted (a) details. for 51 page See Canadian target. the below to slightly relative was TSR group 3-Year peer was Bank’s the pools because plan year incentive this long-term tar- down and financial mid-term per- five the four its of its meet Funding of not gets. two did on Canada short P&C fell and measures, Bank formance the because Funding year performance. this Canada’s down P&C was on weighting 75% 25% and a performance on Bank based on funded is incentive short-term Techar’s Mr. funding pool Incentive mato olFnigBlwtre,mlile f79% of multiplier target, Below Funding below Pool slightly on was Impact ROE Experience Loyalty/ Customer Target Below ROE Adjusted Leverage Operating Adjusted Growth Income Net Adjusted 0.3% of growth Revenue Commentary Target Below Performance 2012 Growth Revenue Adjusted (a) Measures Canada P&C r icoe oeflyo ae 2 8ad9 fteBn’ 02Ana Report. Annual 2012 Bank’s the of and 99 non-GAAP and are 98 measures 32, Adjusted pages 2011). on in fully million more ($9 disclosed 2012 are in million $10 totalled which ako otelMngmn rx Circular Proxy Management Montreal of Bank hr-emicnieplan incentive Short-term eo agtCsoe loyalty Customer Target Below operating Adjusted Target Below of growth income Net Target Below eo target. below slightly was measure equity. lower by mitigated partially only was growth income net target than lower as target target. than better growth expense in resulted growth revenue target than lower to due management expense Disciplined growth. revenue target than lower to due target below was (1.2)% of leverage above. referenced growth revenue target than lower by primarily driven target below was 2011 versus 0.7% target. than growth balance lower and established thetimethetargetwas at anticipated than lower was which 2012, fiscal in environment rate interest the to part in due target below was 2011 versus inlyaso rdtdsrieaderig.Sepg 1frmore for 61 page addi- See earnings. with information. and increase service will credited amount of This years 60. tional age payable at $486,713, basis is unreduced date an to on benefit pension retirement annual total His is: benefit pension retirement normal annual total Techar’s Mr. ‰ ‰ following: the in participates Techar Mr. Pension guidelines. the exceeds ownership Share Techar’s Mr. ownership Share units. stock portion deferred a into defer bonus to cash election compensa- his voluntary 2012 of Techar’s 25% Mr. his of including deferred, 67% is and tion this, accomplish to way one compensation is Deferring to interests. is Shareholder objectives with compensation compensation BMO’s align of principles governing the of One interests Shareholder with Alignment ‰ ‰ ‰ ‰ ‰ ean nhne o 2013. and for competitive unchanged market remains is target compensation total Techar’s Mr. 2013 for Target . ,7,0 ,6,5 ,5,4 1578519.27 11,597,805 5,055,644 3,669,752 2,872,409 ($) DSUs ($) RSUs ($) Shares 5.0 multiple Required hc snwcoe onwmembers new to Harris closed BMO now of is executives which including plan employees paid, eligible company all a to Montreal/Harris, offered of Bank Employees’ the the of of Plan portion Retirement benefit defined earnings average final the PFS Bank’s the pin.Ters scnetdit ahadpi nalm sum RAA. lump the a of in terms paid the and to cash Techar’s according into (Mr. converted sum is lump rest a The qualified in option). Harris or the payments from periodic either and as payments periodic plan as PFS rules the plan from and paid regulations precedes legislation, retirement to that basis subject year reduced 60) each a age for on year earlier per years 3% paid of be (reduction can but 60, age short- at Canadian payable his of equivalent awards plan US$ incentive the term and salary US$ his on credited based of years his by multiplied service salary, base the of plus awards, 145% salary incentive at of short-term capped consecutive months five 12 highest last his his of of average sum the of 2% as calculated control. of change a is there if entitlement his clarifies arrange- and pension ment overall his defines that agreement Bank-funded non-registered a (RAA), Agreement Allowance Retirement a hr wesi sa eebr3,2012 31, December at as ownership Share wesi ($) ownership share Total aesalary base amultipleof as shares Total Compensation Discussion and Analysis 58 Total compensation ($) All other rom November 1 to December 31, 2009. compensation ($)(f) 2 is $12.62 per option. 3,776. r anniversary of the M&I merger. nsultant uses a binomial pricing model, a 0032: in 2011, Cdn$0.9852; in 2010, ent the value at the grant date in each of d benefits where they are above $50,000, or k free rate of return 1.5% – 1.8% and expected ximately $5.54 per option. ic Share price volatility: 25.63%; risk free rate of 12, Cdn$0.9990; in 2011, Cdn$0.9967; in 2010, tandard 2, Share-Based Payments. A binomial ial purposes. (See page 61 for information about Bank of Montreal Management Proxy Circular Pension value ($)(e) plans (d) incentive Long-term Non-equity incentive plan plans (c) compensation ($) Annual incentive Option-based awards ($)(a)(b) Share-based awards ($)(a) Mr. MilroyMr. TecharMr. Milroy 25% 25% 25% 2010 400,000 1,110,000 810,000 880,0002010 573,430 1,081,500 113,572 1,081,500 1,287,000 11,967 3,325,539 21,257 168,457 4,213,144 Year201220112010 NEO Mr. Techar Mr. Techar % Deferred Mr. Downe 25% 25% 50% The value of options grantedThe during value this of period share-based was: awards Mr. during Downe this $2,350,000; period Mr. was: Flynn Mr. $750,000; Downe Mr. $2,350,000; Milroy Mr. $1,900,000; Flynn and $750,000; Mr. Mr. Techar Milroy $975,000. $1,900,000; and Mr. Techar $975,000. commonly used valuation method. Thereturn: consultant 2.0% gave and key period assumptions until used exercise: toFor 10 determine accounting years. the purposes, Based option the on fair option theseoption value: value assumptions, pricing historic methodology the model dividend and compensation was yield: assumptions value used 4.21%; usedperiod of with histor are until each the consistent exercise option following with 5.5 granted assumptions: the years to expected guidance – the dividend in 7.0 NEOs yield International years. in 6.8% Based Financial December – on Reporting 201 7.2%, these S expected assumptions, Share the price weighted-average volatility value 21.3% of – each 22.3%, option ris granted during fiscal 2012 is appro calendar years 2012, 2011 and 2010. The table does not show the value of option-based and share-based awards granted to each of the NEOs in fiscal 2010, f the pension plans and obligations). 10% of the total annual salary (whichever is lower). Mr. Techar’s 2012 amount includes an executive allowance of $31,000 and tax preparation fees of $1 ‰ ‰ (c) Executives can defer a portion of their short-term cash incentive award and receive DSUs instead. This is what they elected to defer: (b) A third party consultant prepared an estimate of the value of the options on the grant date, which was reviewed by the Bank’s market risk group. The co Cash compensation paid in US$ has been converted into Cdn$ at the average rate of exchange for each fiscal years as follows: for US$1.00 = In 2012, Cdn$1. Cdn$1.0426. Equity awards granted in US$ have beenUS$ converted pension values into have Cdn$ for beenCdn$1.0202. each converted fiscal into year Cdn$ values as at follows: for an(a) US$1.00 October in 31st The 2012, spot option-based Cdn$0.9936; rate and in into share-based 2011, Canadian awards Cdn$1.0203. dollar reported for are each the fiscal most year recently as approved, follows: rather US$1.00 than = those In 12 20 months in arrears. The amounts shown repres (f) These amounts represent the Bank’s contributions to the NEOs under the employee share purchase programs and the aggregate value of perquisites an (d) As part of(e) Mr. Furlong’s Pension employment value agreement, includes to the recognize current completion service of cost the and transition the from impact M&I, of he differences received between a actual US$6 compensation million and payment compensation(g) on estimated the for Mr. one actuar Furlong’s yea 2011 compensation represents the compensation he earned from July 6, 2011 to October 31, 2011 while employed by the Bank. Name and principal positionW. A. DownePresident andChief Executive OfficerT. E. FlynnExecutive Vice-President Year and Chief Financial 2010Officer 1,042,600 2012 2011 Salary ($) 1,254,000 3,000,000 1,026,250 4,850,000 5,400,000 2011 2,650,000 2012 2,100,000 461,425 2,300,000 2,850,000 500,000 1,170,000 1,000,000 1,186,500 1,150,000 936,000 508,500 626,526 772,000 1,531,923 384,013 630,000 12,772 12,069 12,540 10,181,898 94,966 11,420,242 9,600,553 66,854 13,693 14,959 3,448,084 2,906,813 M. F. FurlongPresident and Chief ExecutiveOfficer, BMO Harris Bank N.A. 2011(g)T. V. Milroy 147,780Chief Executive 1,177,846Officer, Capital MarketsF. J. Techar 2012President and Chief 455,130 ExecutiveOfficer, Personal 601,920 and 2010Commercial 2011 1,496,759Bank 2011 Canada 266,004 400,000 2012 541,860 1,727,500 483,333 1,228,500 500,000 641,468 2,575,000 3,305,000 1,672,500 2012 1,228,500 650,074 2,575,000 601,920 1,415,000 3,200,000 124,780 6,019,200 1,470,000 843,000 2,350,000 481,087 2,430,000 630,000 0 12,540 700,000 3,500 587,864 3,500 2,171,540 9,903,048 3,500 64,228 3,000 3,000 236,616 3,000 4,493,952 7,006,500 7,989,833 7,656,500 65,788 3,704,324 The table below shows the compensation earned in the last three fiscal years by the NEOs. Executive Compensation Tables Summary Compensation Table for Named Executive Officers Compensation Discussion and Analysis 59 2012. 31, October of as NEOs the of each for awards share-based and option-based outstanding the of value the shows below table The Awards Share-based and Awards Option-based Outstanding oa 5,5 0,1 122126020 1,256,072 21,282 106,718 157,257 Total aeGatdate Grant Name oa 6,0 ,2,7 770347780 3,407,798 57,740 2,420,576 0 11,495,763 10,520,497 362,708 178,253 2013 27, October 2,545,565 207.14 2,932 2003 27, October Furlong F. M. Total 24,805 978,590 2014 08, December 56.60 10,250 2004 08, December Flynn E. T. Total 416,384 2012 10, December 40.85 22,916 2002 10, December Downe A. W. ako otelMngmn rx Circular Proxy Management Montreal of Bank eebr1,21 1221,256,072 21,282 106,718 2021 13, December 56.00 35,337 2011 13, December 2011 13, December eebr1,21 2244,265,640 3,222,487 72,274 3,032,371 54,600 51,379 539,287 247,266 2021 13, December 0 56.00 0 1,020,391 2020 22, December 0 178,572 57.78 0 2019 10, December 2011 0 13, December 199,408 53.45 2011 0 2017 13, 13, December December 2010 0 2017 22, 13, December December 183,194 60.23 2010 0 2017 22, 13, December December 60.23 2009 0 2016 56,236 10, 14, December December 60.23 2009 2016 54,582 01, 14, December December 68.97 2007 2016 54,582 13, 14, December December 68.97 33,241 2007 2015 33,422 13, 08, December December 68.97 32,263 2007 2015 32,439 13, 08, December December 62.99 32,263 2006 2015 32,439 14, 08, December December 62.99 2006 2014 15,742 14, 08, December December 62.99 2006 2014 15,279 14, 08, December December 56.60 2005 2014 15,279 08, 08, December December 56.60 2005 13,736 08, December 56.60 2005 13,332 08, December 2004 13,332 08, December 2004 08, December 2004 08, December eebr1,21 1101,247,700 1,192,320 21,140 967,778 20,202 16,397 219,466 75,579 2021 13, December 325,656 56.00 0 2020 22, December 0 72,671 57.78 1,750,265 0 2019 10, December 2011 0 60,951 13, December 53.45 2011 0 2018 13, 11, December December 2010 0 2017 58,466 22, 13, December December 34.13 2010 2017 22, 13, December December 60.23 2009 2016 70,320 10, 14, December December 60.23 24,805 2009 2016 17,300 01, 14, December December 68.97 2008 2015 17,300 11, 08, December December 68.97 2007 2015 11,800 13, 08, December December 62.99 2007 2014 11,800 13, 08, December December 62.99 2006 10,800 14, December 56.60 2006 10,800 14, December 2005 10,250 08, December 2005 08, December 2004 08, December coe 9 083,0 4.5Otbr2,21 0 0 0 0 0 0 2018 29, October 0 2017 19, October 2016 30, 148.45 October 2015 28, 249.83 32,606 October 2014 27, 286.20 28,343 October 2014 27, October 254.95 2008 15,305 29, 2013 October 27, October 249.77 2007 17,006 19, October 249.77 2006 12,727 30, October 207.14 4,278 2005 28, October 8,723 2004 27, October 2004 27, October 2003 27, October aur 5 041,9 39 aur 5 0476,319 74,075 74,075 2014 05, January 2014 05, January 2014 05, 53.93 January 53.93 14,994 53.93 14,553 2004 14,553 05, January 2004 05, January 2004 05, January unexercised ubrof Number underlying securities options rc ($) price exercise Option pinbsdaad hr-ae awards Share-based awards Option-based xiaindate expiration Option pin ($)(a)(b) options in-the-money unexercised au of Value hrso units or shares fsae that shares of ubrof Number aenot have vested wrsta have that awards aotvleof value payout share-based o vested not aktor Market ($) aotvleof value payout o adotor out paid not itiue ($) distributed ae awards based etdshare- vested aktor Market (c) Compensation Discussion and Analysis 60 (c) Market or vested share- based awards distributed ($) not paid out or payout value of Non-equity incentive during the year ($)(c) ($) Market or not vested share-based plan compensation – Value earned payout value of awards that have ed. 12 ($59.02.). osing price on the TSX on the vesting date. ng the period. Dividend equivalents are valued at vested onal DSUs. ly deferred into DSUs. es on the TSX on October 31, 2012 ($59.02). This Bank of Montreal Management Proxy Circular have not Number of of shares that shares or units Share-based during the year ($)(b) awards – value vested Value of unexercised in-the-money options ($)(a)(b) Option expiration date Option-based awards Share-based awards Option-based Option exercise price ($) during the year ($)(a) awards – value vested options securities underlying Number of unexercised March 27, 2008 61,302 45.00 March 27, 2018 859,454 January 05, 2004 14,350 53.93 January 05, 2014 73,042 January 05, 2004January 05, 2004 16,533 17,034 53.93 53.93 January 05, 2014 January 05, 2014 84,153 86,703 February 07, 2006February 07, 2006 5,700 5,700 67.94 67.94 February 07, 2016 February 07, 2016 0 0 December 1, 2009 41,540 2,451,704 December 08, 2004December 08, 2004 8,200 8,200December 14, 56.60 2006December 14, 56.60 December 2006 08, 2014December 13, December 2007 08, 5,250 2014December 13, 2007 5,250 68.97 12,050 19,844 December 11, 68.97 12,050 December 2008 14, 2016 60.23 19,844 December 14, 2016 60.23 DecemberDecember 13, 10, 35,710 2017 2009 DecemberDecember 13, 22, 2017 2010 34.13 148,114December 22, 2010 DecemberDecember 11, 13, 2018 2011 53.45 0 125,853December 13, 2011 December 10, 0 2019 0 57.78 199,923 888,822 0 December 22, 2020 56.00 824,995 December 13, 2021 156,058 December 08, 2004December 08, 2004 603,767 December 08, 16,368 2004December 08, 16,368 2005 56.60December 08, 16,864 2005 56.60 DecemberDecember 08, 08, 17,061 2014 2005 56.60 DecemberDecember 08, 14, 17,061 2014 2006 62.99 DecemberDecember 08, 14, 17,578 2014 2006 62.99 DecemberDecember 08, 14, 20,988 2015 2006 39,611 62.99 DecemberDecember 08, 13, 20,988 2015 2007 39,611 68.97 DecemberDecember 08, 13, 21,624 2015 2007 40,811 68.97 DecemberDecember 14, 13, 26,136 2016 2007 68.97 DecemberDecember 14, 11, 26,136 2016 2008 60.23 DecemberDecember 14, 01, 26,928 2016 0 2009 60.23 DecemberDecember 13, 10, 86,149 2017 0 2009 60.23 DecemberDecember 13, 22, 2017 0 2010 34.13 31,440 DecemberDecember 13, 22, 76,006 2017 0 2010 DecemberDecember 11, 13, 2018 0 2011 53.45 46,527December 13, 1,855,615 81,381 0 2011 December 10, 2019 0 2,144,249 57.78 2,746,006 95,381 0 December 22, 2020 0 56.00 423,353 December 13, 2021 100,912 288,051 21,317 19,683 1,258,112 22,197 1,161,707 1,310,085 Options are valued at $0 if the Share closingShares price closing on price the on vesting the date TSX was on below October the 31, exercise 2012 price. ($59.02). includes options that have not yet vested or cannot be exercised because they are subject to 50% or 100% price condition hurdles that have not been reach (c) Represents the aggregate value of annual cash bonuses the NEO voluntarily elected to defer into DSUs and the dividend equivalents earned as additi (b) The value of share-based awards that vested(c) and were These paid are out the during annual the cash fiscal incentive year awards includes for dividend 2012. equivalents This earned table on includes outstanding the DSUs full duri amount of the annual cash incentive even if a portion was voluntari (d) As part of Mr. Furlong’s employment agreement, he received a US $6 million transition bonus to be paid on the first anniversary of the merger at M&I. (a) The value of the stock options that vested during the fiscal year is based on the difference between the exercise price of the options and the Share cl (a) The value of some of the unexercised options is $0 because the exercise price is higher than the closing price of the Shares on the TSX on October 31, 20 (b) The value of unexercised in-the-money options is equal to the difference between the exercise price of the options and the closing price of the Shar Name W. A. DowneT. E. FlynnM. F. FurlongT. V. MilroyF. J. Techar 116,787 421,748 1,098,527 0 519,469 1,761,930 0 3,148,762 2,034,572 0 630,000 1,000,000 2,430,000 700,000 6,669,274(d) T. V. Milroy January 05, 2004 14,350 53.93 January 05, 2014 73,042 TotalF. J. Techar January 05, 2004 16,533 53.93 January 05, 2014 662,002 84,153 Total 3,518,867 119,507 7,053,325 12,049,623 633,117 3,331,606 63,197 3,729,903 4,265,633 Name Grant date The table below shows the valueearned of during the fiscal 2012. option-based awards, share-based awards and non-equity incentive plan compensation that vested or was Incentive Plan Awards – Value Vested or Earned Compensation Discussion and Analysis 61 and scenarios termination five under treated are NEOs the for program compensation executive payment. the incremental the of applicable components where the how explains below table The Benefits Control of Change and Mi Termination Mr. of behalf on plan pension contribution defined the to contributions Bank’s the only includes disclosure this of component compensatory The (a) Milroy. Mr. for plan pension contribution defined the describes below table The Table Plan Pension Contribution Defined basis. benefit defined a time- on pension-eligibility determined three obligations for accrued NEOs and the - to 65 payable age pension and annual retirement the normal including end, plans, year pension - benefit frames defined the describes below table The Table Plan Pension Benefit Defined opnaineeetResignation element Compensation options) (Stock Plan Incentive Long-Term eerdSokUisUisare Units Units Stock Deferred hr emIcniePa Bns ofie ofie sneg As Forfeited Ceases (RSU) Forfeited Plan Incentive Mid-Term Bank (Bonus) Plan Incentive Term Short (Salary) Pay Base .V iry7,4 ,0 87,445 3,500 77,841 4,133,528 1,630,717 7,354,419 484,135 350,778 1,047,847 15,366,818 Milroy V. T. 481,087 66,854 Name 236,616 1,158,721 3,168,306 1,213,085 6,069,956 384,013 498,943 355,771 635,913(g) 550,450(g) 567,570 13,824,084 253,319 486,713(g) 391,743 181,439 999,000(f) 999,000(f) 999,000(f) 28.00 1.33 19.92 29.42 Techar J. F. Furlong F. M. Flynn T.E. Downe A. W. Name netetearnings”. investment e opnaoyCag osssmil ftesriecs tepeetvleo h diinlbnftere uigteya yvru facun s accruing of virtue by year the during earned benefit additional the of value present (the cost service the of mainly consists Change Compensatory (e) f oto fM.Dwesana eso eei ilb aal sa nut rmtePninFn oit fteBn fMnra PS.Tebalance The (PFS). Montreal of Bank the of Society Fund Pension the from annuity an as payable be will benefit pension annual Downe’s Mr. of portion A (f) the calculate to used methods and 62. assumptions of age actuarial same retirement the normal using a calculated has benefit, Furlong accrued Mr. 60. the retiremen of of early age value to retirement present due normal the benefits a is of obligation have reduction Techar Accrued the and (d) reflect Downe 2012 not Messrs. 31, do arrangements, October and pension of Bank their as the to earnings from According reflect entitlements shown pension (c) benefits all annual of All inclusive are (b) payable benefits Annual (a) g oto fM.Tca’ nulpninbnftwl epybefo h F,aprinfo h arsQaiidPa n h aac ftettlan total the of balance the and Plan Qualified Harris the from portion a PFS, the from payable be will benefit pension annual Techar’s Mr. of portion A (g) ako otelMngmn rx Circular Proxy Management Montreal of Bank o-opnaoypa xeine(uha eieetbhvorohrta sepce)adepoe contributions. assum employee in and changes expected) and b as obligation financia obligation than the consolidated accrued other on the the behaviour interest prepare to retirement includes to compared as Change used different (such Non-Compensatory assumptions significantly pensi experience purposes. the be of plan actuarial and may non-compensatory estimates for retirement) payment similar estimated of sum to compensation time lump comparable and the the directly compensation at retirement, be conditions on not economic payment may on sum shown dependent lump values are a the (which to so assumptions entitled events, sum is future 65. NEO of age an estimate retirement if best normal Also, a his reflect at assumptions unreduced The be statements. will pension total his and 60 age at unreduced ecnetdt upsmo eieet h nulpnini ujc oattlpninetteetcpo S10000 h d$9900ana bene annual 999,000 Cdn$ The US$1,000,000. of cap Table. entitlement Compensation pension Summary total the a to to notes subject the is in pension outlined annual rate The exchange retirement. the on at sum US$1,000,000 lump a to converted be upsmo eieet h eei mut hw aebe ovre rmU$a h xhnert ulndi h oe oteSmayCmesto Ta Compensation Summary the to notes the in outlined rate exchange the at US$ from converted been have shown amounts benefit The retirement. on sum lump er credited years ubrof Number cancelled are options All forfeited otherwise vested, if redeemed ofie ofie omlvsigadpyu dates payout and vesting Normal Forfeited Forfeited immediately service cuuae au tsato er()Cmestr ($)(a) Compensatory ($) year of start at value Accumulated ihcause with Termination cancelled are options All forfeited otherwise vested, if redeemed are Units immediately Ceases eie otiuinPninPlan Pension Contribution Defined erend year nulbnft aal ($)(a)(b) payable benefits Annual At ihu cause(a) without Termination icnutwieemployed while misconduct in engaged employee if or breached is provision non-solicit if forfeited are RSUs RSUs to apply instead. apply provisions retirement the age, retirement at is employee if However, cancelled. are options all breached, is provision non-solicit If days. 90 in expire options vested All tews forfeited otherwise vested, if redeemed are Units aaycontinuation or salary sum lump a as paid Severance eieetc tae65 age At retirement(c) tnormal At tae r-ae o h erN nrmna payment. incremental No year the for Pro-rated otiated cre obligation Accrued er($)(d) Year ieyasfo eieetor retirement from years five eryo oml hnei control in Change normal) or (early Retirement employed while misconduct in engaged employee if or breached are provisions non-compete and non-solicit if forfeited are RSUs RSUs to apply dates payout and vesting Normal cancelled are options all breached, are provisions non-solicit and non-compete If expiry. normal of earlier the at expire options All nt r eemdPriiaincontinues Participation redeemed are Units apply provisions retirement Normal tsatof start at Compensatory change ($)(e) ry h lnde o rvd aoemarket “above provide not does Plan The lroy. t. eso iblte ntecnoiae financial consolidated the in liabilities pension rie n ifrne ewe actual between differences and ervice) ulpninetteetwl ecnetdt a to converted be will entitlement pension nual tos hne necag rates, exchange in changes ptions, nlaiiisdslsdb te corporations. other by disclosed liabilities on ftettlana eso nilmn will entitlement pension annual total the of oto fM.Fynspninwl be will pension Flynn’s Mr. of portion A statements. l o-compensatory Non- cueo ifrne ewe h lump the between differences of ecause i aal a encnetdfrom converted been has payable fit apply dates payout and vesting Normal days 90 within expire will and vested fully become options all control, in change after months 24 within cause without terminated If oiceetlpayment incremental No cuuae au tya-n ($) year-end at value Accumulated eie otiuinPninPlan Pension Contribution Defined ble. change ($)(e) cre obligation Accrued tya end year at ($)(d) Compensation Discussion and Analysis 62 Change in control ($) , and Mr. Furlong’s severance are payable under his RAA. an. Retirement No incremental payment Termination Without Cause, if there is a change of controlwithin and 24 months the executive is terminated without cause e NEO is terminated without cause within (early or normal) ($) Bank of Montreal Management Proxy Circular r 31, 2012. Values are based on the closing Share Termination without cause ($)(b) incremental payment No incremental payment The payment is the same as No incremental payment No incremental payment Retirement (early or normal) Change in control Termination with cause ($) No incremental payment No No incremental paymentGranted an additional two years No incrementalof payment credited service plus severance payment equal to two times the sum of annual salary plus the average of the best No incremental payment Prior to age 55, bonus related pension provision (1.25% of best average earnings less the average pensionable salary, multiplied by credited service) is payable Termination without cause(a) five consecutive bonuses Total 0 0 6,794,700 0 8,661,915 Total 0 0 55,269 0 956,620 Total 0 0 5,113,222 0 145,020 Total 0 0 0 0 2,115,016 Total 0 0 3,124,810 0 4,487,580 No incremental payment No incremental payment No incremental payment No incremental payment Termination with cause Pension 0 0 0 0 0 Pension 0 0 55,269 0 55,269 Pension 0 0 0 0 0 Pension 0 0 30,941 0 30,941 Benefits(c) 0 0 38,302 0 38,302 Pension 0 0 0 0 0 Stock options 0 0 0 0 1,867,215 Stock options 0 0 0 0 901,351 Stock options 0 0 0 0 106,718 Stock options 0 0 0 0 2,115,016 Stock options 0 0 0 0 1,362,770 No incremental payment incremental payment No incremental payment No incremental payment would be in respect of salary and bonus for the24 remainder months of of the the term change of of his control. employment agreement. Payments for Mr. Flynn are governed by the Canadian Executive Pension Program, Mr. Furlong by his SREA and Mr. Milroy by the BMO Nesbitt Burns Pension Pl – Severance payments for Mr. Downe and Mr. Techar are governed by their RAAs. Common law would determine severance payments for Mr. Flynn and Mr. Milroy – Stock option values shown– are the in-the-money amount of options Pension vesting payments earlier for than Mr. normal. Downe Accelerated and vesting Mr. of Techar stock are options governed would by occur their if RAAs. th Mr. Downe has reached the US$1,000,000 pension cap and no additional amounts price on the TSX on October 31, 2012 ($59.02). Incremental payments in $US have been converted at US$1.00 = Cdn$0.9990. W. A. Downe Total cash severance 0 0 6,794,700 0 6,794,700 Name Type of Payment Resignation ($) T. E. Flynn Total cash severance 0 0 0 0 0 M. F. Furlong Total cash severance 0 0 5,074,920 0 0 T. V. Milroy Total cash severance 0 0 0 0 0 F. J. Techar Total cash severance 0 0 3,093,869 0 3,093,869 Benefits(b)Perquisites None Ceases None Ceases None Subject to negotiation Ceases None No incremental payment None Supplemental Retirement Executive Arrangement (SREA) BMO Nesbitt Burns Pension Plan No Retirement Allowance Agreement (RAA) Canadian Executive Pension Compensation element Resignation Program (b) Termination without cause includes(c) voluntary termination The by employment the agreement executive for for Mr. good Furlong reason. provides for three years of medical benefits following the date of termination. (a) The estimated incremental benefit received by the NEO excludes statutory benefits. Calculations assume the NEO ceased to be an employee on Octobe The table below shows the estimatedas incremental at payments October to 31, each 2012 NEO (a). at, following, or in connection with each of the termination scenarios below (a) Termination without cause includes(b) voluntary The termination employment by agreement the for executive Mr. for Furlong good provides reason. for three years of medical benefits following the date of termination. Compensation Discussion and Analysis 63 ‰ 2012): 31, ‰ October (at shows below table The Compensation Equity Plans the under Issuance for Authorized Securities options stock M&I outstanding of conversion the of of because percentage 2011 a in as increased expressed rate year, burn the The during issued (d) options stock of the number of the percentage is a rate as Burn expressed exercised, (c) not but issued options of number the is that Dilution outstanding options (b) all plus issued, be to available options of number total the is Overhang (a) on effect dilutive the minimize Shareholders. to awards option stock of management rate). (burn year each and issued options (dilution) of options outstanding number outstanding and the the issued monitors of also number Bank total The the Shares. of less or limiting 7.5% guideline to a on overhang established have has options Committee stock the effects value, dilutive share future known the are reduce These plus To exercised. issued, overhang. been be as yet to not available have options that of outstanding number options a are there time, any At Plan Incentive Long-Term of Impact Dilution Plan). information Option more Stock for Director 65 Non-Officer and the 18 on pages options (see stock plan no the currently under are outstanding the There under 2003. 1, options November granting effective discontinue plan to decided plan Board this The approved 2002. Shareholders in – 2009. Plan 3, Option March Stock on Director Shareholders Non-Officer of Meeting Annual the issuable at Shares Plan of the number under and the increase 1995, to in amendment plan an this approved approved Shareholders M&I. – acquired Plan it Option when Stock assumed BMO plans Plan option Option stock Stock M&I Director the Non-Officer and Plan, secu- Option equity Stock issues the Bank are the rities which under plans compensation only The Plans Option Stock Bank’s Information Other unrt c .9 .6 d 0.31% 2.69% 4.37% (d) 0.86% 2.66% 3.99% 0.39% 43% 2. 3.49% (c) rate Burn (b) Dilution (a) Overhang & tc pinpasadteNnOfcrDrco tc Option Stock Director Non-Officer the the Plan). under and issue plans for option available stock Shares M&I further no Stock are the (there under Plan issuance Option for available Shares of number remaining stock various exercised the are under plans options options outstanding when issued be to Shares & ovrin h unrt ol aebe .9 n2011. the in of 0.29% impact been the have Excluding would closed. rate acquisition burn M&I the the conversion, when M&I year. Shares fiscal purchase the to of options end into the at Shares outstanding and issued year. of fiscal number the total of the end the at Shares outstanding and issued of number and total issued of year. number fiscal total the the of of end percentage the a at as Shares expressed outstanding exercised, been yet not have h al eo hw hs e esrs n hw our shows and measures, key these shows below table The ako otelMngmn rx Circular Proxy Management Montreal of Bank esr sona fise n outstanding and issued of % a as (shown Measure 0221 2010 2011 2012 hrsa fOtbr3,2012) 31, October of as Shares aksSokOto ln–Isac Limits Issuance – Plan Option Stock Bank’s options. stock M&I converted the for price exercise Shares weighted-average purchase the to Includes options into (2) converted were that options stock M&I outstanding Includes (1) h suneo hrs e ae6 o6 o ecito fthe of description a plan. for each 65 of to features 64 material page See Shares. involve of that issuance plans the compensation equity all approved have Shareholders oa 58196$99 6,897,964 $79.96 15,801,966 Total holders security the by approved not plans compensation Equity holders security the by approved plans compensation Equity lncategory Plan (overhang) guideline Committee issuab Shares of number The limits Other issue for Available (dilution) issued Currently issuable Shares temporary a of on number employees and employees to granted Options Maximum Eligibility hnteMIaqiiincoe,i codnewt h ucaeagreement. purchase the with accordance in closed, acquisition M&I the when oa ubro h aksise n usadn Shares outstanding the and of issued less Bank’s or the 7.5% of be number should total exercised, that been outstanding yet options not all have of plus number issue, total for the available that options guideline a adopted Committee The outstanding and issued then Shares cannot the participant of one 5% any exceed to options under issuance Shares for of reserved number Maximum Shares. outstanding the and of issued 10% security exceed all cannot under arrangements, period, compensation year based one Shares any of within number insiders, the to and issued Shares; outstanding and issued the 10% of exceed cannot arrangements, compensation based security 2013) 28, February at outstanding as and Shares issued Bank’s the of 0.77% (representing issuance for available remaining Shares 4,995,022 2013) 28, Shares February outstanding at and as issued Bank’s the of options 2.60% outstanding (representing of exercise upon issuable Shares 16,982,296 2013) 28, February at as Shares and outstanding issued of 11.62% (representing Shares 75,876,632 Committee at affiliates its and discretion Bank the of absence of leave n ihs()(1) (a) rights and warrants options, outstanding of exercise upon issued be to securities of Number 58196$99 6,897,964 $79.96 15,801,966 i i Nil Nil Nil n ihs()(2) (b) rights and warrants options, outstanding of price exercise average Weighted- et nies taytm,udrall under time, any at insiders, to le nclm (a)) column in reflected securities (excluding plans compensation equity under issuance future for available remaining securities of Number Compensation Discussion and Analysis 64 e e ns and y of the funds in e yamount er ehas n, in rcustomers period is of re-issuing nts that have xercisable options to applicable tax ddition of covenants of the Bank for th ivalent in value to the in-the-mone Bank of Montreal Management Proxy Circular s vest immediately and the executiv nts of a “housekeeping” nature, the a per year over four years. For stock options that include a price-conditio except where an expiry date would have fallen within a blackout period of th on the exercise of the options, brokerage firm retains a portion of the sal ise of the options, he or she must pay the strike price, applicable commissio ge of control, the executive’s option e strike price and, to the extent that the amount debited exceeds available tions before options can be exercised. Beginning in 2013, the Committee ma ted in the event of a financial restatement or if it is discovered that a form ring a Bank trading black-out period to fifth business day after blackout ior to expiry in exchange for Shares equ l be treated as an amendment to reduce the exercise price of an option) e an expiry date would have fallen within a blackout period of the Bank) nt of certain corporate transactions, specifying practices with respect rmanent disability competes with the Bank or solicits the Bank’s employees o or termination without cause, the participant may exercise outstanding e ate the Plan at any time provided that any changes do not decrease entitleme sferred other than for normal estate settlement purposes n of full-time employment due to disability or death ject to Shareholder approval where such change ancellation or termination of an option of a Plan participant prior to its expiry date for the purpose X on the trading day immediately preceding the date of grant .S. taxpayer is excluded from this provision articipant’s award acknowledgement. the account, the executive is charged interest at the same rate charged to customers for purchases of securities on margin Bank) proceeds to cover the strike price, applicable commissions and taxes and debit interest options to the same Plan participant with a lower exercise price shal taxes and debit interest (iii) The 10-year anniversary of date of grant (i)(ii) The fifth anniversary of a The participant’s third retirement anniversary date of the date of terminatio (iii) when the executive has elected to sell all or some of the Shares issued up protection of participants, adjustments to outstandingwithholdings, options a in change the to eve the vestingterm provisions of of the an option option beyond and its a original change expiry to date the termination provisions of an option(ii) which does not entail an when extension the option is exercised, the account is debited for the amount of th (vii) permits awards, other than options andAmendments stock which appreciation may rights, be to made be without made Shareholder under approval the include Plan amendme (iv) when any executive has elected to hold the Shares issued upon the exerc (vi) extends the expiry date of an option beyond 10 years from its grant date ( An executive may also elect to surrender their in-the-money options a day pr accrued prior to the date of(i) change. Changes are sub increases(ii) the number of Shares reduces reserved the for exercise issuance price under of the an Plan option (the(iii) c extends the term(iv) of an option extends beyond eligibility the to(v) expiry participate date in (except the wher Plan permits to options non-employee or directors stock appreciation rights to be tran lifted; except that any option holder who is a U and when a participant who was terminated without causeIf solicits an the executive Bank’s is employees terminated or (other90 customers than days for to cause) exercise within 24 months of a chan Options may be forfeited where a retired participant or participant on pe executive while employed committed an act detrimental to the Bank within 90 days of termination. All remaining options areOnly then by forfeited will or under succession laws All or a portion of an executive’s vested and non vested options may be forfei Options are forfeited if a participant resigns or is terminated for cause. F The Committee has full discretion to determine the numberThe of earlier options of: to be granted in the form of standard options and price-conditioned options. outline different vesting terms in the p addition to vesting, the Shares must meet or exceed Share price growth condi Stock options must have vested before they can be exercised. Options vest 25% 10-year expiry date from date of grant. Term is extended if the expiry falls du Exercise process (i) executives open a BMO brokerage account Change of control Plan changes The Committee or Board of Directors may amend, modify or termin Forfeiture on competition Forfeiture on financial restatement or detrimental act committed while employed Transfer/ assignment Expiry of options Exercise priceVesting and Equal to the closingexercise price of of the Shares on theoptions TS Maximum option term Bank’s Stock Option Plan – Conditions Compensation Discussion and Analysis 65 Plan Compensation Variable Markets Capital BMO the of Features Key follows: as are plan the of features key The Plan plan. Bank’s Option this the Stock under of Director granted 0.02% Non-Officer be represent the may These of options Plan. Features more Option Key No Stock 2013. Director 28, Non-Officer February the at under as granted Shares were outstanding Shares and 147,000 issued of total a purchase to Options Plan Option Stock Director Non-Officer S em andvdn qiaet sadtoa RSUs. additional as equivalents dividend Earn terms RSU level. compensation and role the of nature on based RSUs, and cash between apportioned awards Individual award of Cap Form the to available amount the targets; performance business against performance business actual on based established is pool global A CEO) Markets Capital BMO the Unit (excluding Share funding employees Restricted Pool Markets Cash, Capital award of Form Eligibility regulatory any to subject Board, The changes Plan options be cannot director of each Expiry to granted options the of one-half grant, the assignment of time the at age of Transfer/ years 62 reached had who directors for the Except on Shares 25%peryearoverfouryearsfromthedateofgra the of price closing conditions the Price to Equal affiliates. its or Bank grant. the of of date Vesting employees from not date are expiry who 10-year directors to granted price Options Strike term Option Eligibility lwakCs,RU n Sspi u nteps 2mnh a ecae bac clawed be may months 12 past the in out paid DSUs and RSUs Cash, DSUs. in award cash their of all Clawback or some receive to choose may above and level Director Managing the at employees Markets Capital terms DSU ako otelMngmn rx Circular Proxy Management Montreal of Bank S qiyaadpyusmyb eue reiiae ae nifrainth information on based eliminated or reduced be may payouts award equity RSU em while act an committed participant if forfeited are RSUs Non-vested employees. taking risk. as such considerations other measure. reflect ROE to Markets adjusted Capital be a also incorporates may and Pool losses loan actual 56. for page adjusted on fully outlined is performance Pool group operating the on based is Committee et 5 nec ftefrttoyas n 0 vrtetidya,wt aotete ahya ra h n ftreyears. three of end su the cause, at without or termination year or each retirement either upon payout vest with to year, Continue third the resignation. over on 50% forfeited and are years, units two Non-vested first the of each in 25% Vests price. Share on based Value of 40% least at receive Markets Capital in employees taking risk- material DSUs. All into deferred voluntarily be can portion Cash au faDUi ae nteSaeprice. Share the on affiliates. based its is and DSU Bank a the of with Value ties all sever employees when only Redeemable DSUs. additional as equivalents dividend Earn oee,ta n uhaedeto emnto s termination. termination or or amendment such any that however, If grant. of date the since 50% by increased has Shares the of price ietrdet et rdsblt,ad(i)teepr fteoption. the of expiry the (iii) participan and the disability, of or anniversary death fifth to the due (i) director of earlier the on expire Options laws. succession under or will by Only RU)o eerdSokUis(DSUs) Units Stock Deferred or (RSUs) s rrqie hrhle prvl a h oe un power the has approval, Shareholder required or rdn a meitl rcdn h aeo grant. of date the preceding immediately day trading t losbett h rc odto e u below. out set condition price the to subject also nt; alntdces h nilmnso atcpn hc aeacudpirt h aeo uhamend such of date the to prior accrued have which participant a of entitlements the decrease not hall jc oanncmeepoiina provision non-compete a to bject uhpietrsodi o e,teotosepr worthless. expire options the met, not is threshold price such lydwt h akta ol aeldt emnto o cause. for termination to led have would that Bank the with ployed fteei iaca ettmn rmsodc,a e akpolicy. Bank per as misconduct, or restatement financial a is there if k esn ob ietr i)tetidanvrayo h atcpn ce participant the of anniversary third the (ii) director, a be to ceasing t hi netv wr nRU.Sepg 6frmr nomto nmateri on information more for 66 page See RSUs. in award incentive their twudhv eaieyipce h ieo naadwe twsgranted. was it when award an of size the impacted negatively have would at e hspa oaedo emnt hspa tany at plan this terminate or amend to plan this der do o-oii provision. non-solicit nd/or tlMresExecutive Markets ital xrie nesthe unless exercised ie provided, time, sn ob a be to asing lrisk- al ment Compensation Discussion and Analysis 66 Other material risk takers Senior Executives Other material risk takers Bank of Montreal Management Proxy Circular . 2012 2011 9 103 12 97 Senior 5,260,880 27,745,894 6,220,9806,550,074 25,135,767 60,681,879 9,141,9237,330,381 57,232,099 12,864,782 12,166,644 13,495,178 16,724,490 53,404,372 17,757,459 52,322,173 Executives variable compensation reflects pay for performancerisk and measures. appropriate the annual list of material plans changes to material plans after reviewCompensation by Oversight the Committee U.S. and and CEO enterprise (Seedetails page on 39 the for U.S. more and enterpriseCommittee) Compensation Oversight funding for the variable incentive pools,and after enterprise review Compensation by Oversight the Committee U.S. and CEO. non-financial metrics (such as risk limitsaudit exceeded reports) and are unsatisfactory consolidated in performancecompensation assessments decisions and deferred compensation for this group iscompensation 40 to 60 percent of their total businesses and larger spends on annualclassification compensation as would a lead material to plan. The Committee must approve: ‰ ‰ ‰ ‰ ‰ ‰ Material Risk-Taking Employees The Committee has approved the followingits categories material of risk-taking employees employees: as all Seniorin Vice the Presidents Bank and and above any Capitalhave Markets a employees material whose impact actions on could the Bank’s risk. The following standards apply to theemployees: compensation of material Generally, higher risk material. (a) The Committee is accountable for establishing and approving The risk level of a business (based on the Risk group’s assessment) Cash ($) Share-based ($) Option-based ($) Consider individual performance when determining variableRequire pay material risk-taking employees to defervariable a compensation portion of their Tie compensation payouts to business performance,shareholder strategy returns, and while balancing risk Category Number of employees (#) Total fixed compensation ($) Aggregate variable compensation Total deferred compensation ($) (b)Total variable compensation ($) (c) 24,755,443 68,009,210 35,865,825 32,580,671 154,696,927 69,213,158 39,066,026 123,049,451 (c) Total variable compensation represents the total of cash (excluding fixed compensation), share-based and option-based compensation. (a) Employees who have left(b) the Total Bank deferred during compensation the represents year the are total included value in of these DSUs categories. (voluntarily Senior deferred Executives from are cash the or Bank’s awarded), most RSUs senior and executives. option-based compensation ‰ ‰ ‰ compensation policies and philosophies for BMOrial Financial plans Group’s and mate- employees. Its overallapproach approach it is applies consistent to with executive compensation the modifications with to appropriate comply with requirements in local jurisdictions: Additional Disclosure This section of the management proxyabout circular compensation includes plans information and employees thatimpact can on have the a Bank’s material risk exposureand (“material is plans consistent and with employees”) the BaselRequirements. Committee Pillar 3 Disclosure and its total annual compensation spendcompensation determine plan whether is or considered not a Material Plans The Committee approved criteria for identifyingreceiving material input plans from after the Bank’s Risk,and Audit, Compliance Finance, groups. Human Resources (See the Compensation Discussion and Analysisinformation starting about on executive page compensation 36 and for the Committee’s role) Compensation Tables for Material Risk-Taking Employees Cash compensation paid in US$ hasUS$1.00 been = converted Cdn$0.9852. into Cdn$ atEquity the awards average granted rate in of US$ exchange havefiscal in been 2011 fiscal converted of 2012 into US$1.00 of Cdn$ = US$1.00 using Cdn = the $1.0203. Cdn$1.0032, NovemberTotal and month direct fiscal end compensation 2011 spot awarded rate in in fiscal fiscal 2012 2012 and of 2011 US$1.00 = Cdn$0.9936, and Compensation Discussion and Analysis 67 Fiscal in privacy. severance employee awarded protect were to or basis received confidential Executives Senior for No million takers. $8.5 risk risk were material material to 10 18 agreed to to payments out severance million paid the $31.4 2011. was 2011, out or million In paid restructurin 2012 $7.6 practice. Bank These and law The environment. takers common takers. business risk with risk future material aligned material and 5 were current 13 awarded the for payments with million severance structure $39.1 The cost totalling takers. Bank’s payments the severance align to agreed to share-based included charges and charges restructuring option took outstanding Bank of the value 2012, the In in reduc- reduction implicit implicit no paid an was compensation in there Other resulted 2012, which In price, adjustments. Share explicit in to decline ri due 2.2% (i.e., $6,992,069. taken a adjustments of were was explicit awards reductions there and no 2011 fluctuation) 2011, in price and and (Share 2012 tion adjustments In implicit forfeiture). to or pri subject clawback Share are adjustments, closing awards the and option-based options and the share-based price. of Share price Outstanding closing exercise the the by between multiplied difference 31st the October to on equal ($58.89). units is 2011 outstanding options 31, of in-the-money October number unvested and the and ($59.02) equals vested 2012 awards of 31, share-based value October unvested The on and TSX vested (c) the of on value price The Share closing (b) the on Based (a) 2011 and 2012 fiscal in out paid and outstanding compensation Deferred adi h iclyear fiscal the in Paid (a)(c) Option-based (a)(b) Share-based Cash Category Unvested Vested Unvested Vested Vested netdotosicueuvse pin n etdotosta antb xrie eas hyhv o e h rc odto hurdles. condition price the met not have they because exercised be cannot hurdles. that condition options price vested the and met options have unvested they include because options exercisable Unvested were and vested have that nomto nsg-npyet,gaate oue n h ihs eeac wre n21 n 01wspoie oOF na on OSFI to provided was 2011 and 2012 in awarded severance highest the and bonuses guaranteed payments, sign-on on Information ako otelMngmn rx Circular Proxy Management Montreal of Bank Executives 460768,6,2 6340467,885,142 26,384,044 86,666,720 14,610,726 143,978,512 31,738,030 33,503,179 53,531,151 219,939,689 46,879,976 33,770,530 39,576,896 ,4,1 372659922414,050,720 18,854,410 9,912,284 15,293,639 13,702,665 20,676,125 7,044,316 1,597,727 9,688,207 2,898,346 1,447,358 2,952,914 Senior 022011 2012 iktakers risk material eo coe 1t etdotosicueoptions include options Vested 31st. October on ce Other Executives Senior iktakers risk material Other sk g Directors’ Approval 68 Bank of Montreal Management Proxy Circular

BARBARA M. MUIR Senior Vice President, Deputy General Counsel, Corporate Affairs and Corporate Secretary February 28, 2013

Our Board of Directors approved the contents of this management proxy circular for distribution to Shareholders. Directors’ Approval [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] Corporate Responsibility

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Our approach involves:

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