Royal Bank of Canada Annual Shareholders Meeting Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Edmond Ho - Vancity Investment Management - Analyst : Thank you, Madam Chair. Morning, ladies and gentlemen. My name is Edmond Ho, and thank you for this opportunity to present our shareholder proposal today. I'd like to acknowledge that we're on Treaty 6 territory and homeland of 80 and other First Nations groups. On behalf of an Vancity Investment Management, I'd like to thank RBC for their willingness to engage with us and the dialogue we've had surrounding us. We bring this proposal forward because we believe the CEO-to-median-worker pay ratio is important metric to disclose and will provide value for shareholders. This proposal is not about limiting executive compensation, but rather to obtain data to show how value generated across an organization is attributed. Consider that the average pay for the 100 best-paid CEOs in Canada saw a one-year increase of 31% in 2021. Contrast this with the average pay for private sector employee only saw 3% increase. This effectively represents a 2% pay cut once inflation is factored in, whereas the 100 best-paid CEOs received on average a 26% increase net of inflation. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 05, 2023 / 2:30PM, RY.TO - Royal Bank of Canada Annual Shareholders Meeting The value created by companies is increasingly accumulating at the top of the organization rather than being proportionately attributes throughout. COVID-19 pandemic highlighted wage inequalities on an unprecedented scale. This has now been further exacerbated by high inflation. Nearly half of Canadian households saw their debt increase and have had to access savings to stay afloat. We've heard from Mr. McKay's opening remarks that for the average Canadian, it is increasingly more difficult to make ends meet. With day-to-day basics such as transportation, food, and shelter, among sectors of the highest price increase, employees are increasingly aware that wages are not keeping up. This negatively impacts employee morale and will result in high employee turnover and associated costs, which can be significant for human capital-intensive companies such as RBC, with now over 90,000 employees. The negative impact of widening compensation gaps on company performance cannot be overstated. Economic inequality has been a persistent issue in our society. And one of the contributing factors is this growing disparity between executive and employee pay. The CEO-to-worker pay gap was at 243 times in 2021, contrast to just 155 times in 2009. We believe this widening gap is not sustainable in the long run and will have negative implications for not only the company, but the broader economy. Research has shown that income quality hinders economic growth to the tune of 2% to 4% in lost GDP growth annually. Studies have also shown that income inequality result in more social unrest, increased levels of mental illness, and longer and more severe recessions. These risks are especially relevant to financial institutions like RBC, which depend on a thriving economy to drive growth. Public disclosure of the CEO-to-median-worker pay ratio provides all stakeholders a quantifiable way to monitor the trend over time and to help ensure this gap does not grow at an unsustainable pace. We emphasize that the ratio from a single year is not the focus, but rather the trend over time. In the management circular, RBC's Board statement points to the absence of a prescribed disclosure requirement in Canada as a reason to not disclose this ratio. We'd like to point out that mandatory disclosure are in place in the US and the UK, and very well-established frameworks for calculation are already in place. This includes standards from the GRI of which RBC is a supporter of. We would also like to point out that Pierre Scotiabank has started to disclose this ratio. Categorically reject the Board's assertion that disclosure of this ratio would not address the shareholders' concern as our proposal solely targets the disclosure of this ratio. Given RBC's position as a strong corporate and ESG leader in Canada, we believe RBC's disclosure will benefit the organization in the long term and help set an example for other corporations to follow. Therefore, we move the proposal and our shareholders to vote for that the Board of Directors undertake a review of executive compensation levels in relation to the entire workforce and a reasonable cost in omitting proprietary information publicly disclosed the CEO pay ratio on an annual basis. Thank you.