Why Canada's bank AGMs aren't what they used to be

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The last time Quebec experienced an outburst of separatist fervour, Royal Bank of Canada's chief executive officer took it upon himself to keep the country together.

During the bank's 1992 annual general meeting in Montreal, Allan Taylor delivered his case for unity in a speech entitled The March of Folly. To drive home his point, he outlined the heavy costs that would be associated with splitting the country up and stressed that prosperity stemmed from sticking together.

Such statesmanlike pronouncements used to be the norm at the Big Six banks' annual general meetings. CEOs often delved into public policy, delivering sweeping speeches on topics ranging from trade relations to monetary policy.

Not so any more. Today, the banks' annual meetings have become prosaic affairs, with less discussion of politics and much more focus on how the profit outlook is shaping up. What used to be formal events with lavish free breakfasts that would draw hundreds of shareholders have morphed into meetings mostly attended by bank employees. Two Big Six banks acknowledge that fewer than 20 shareholders probably showed up for their annual meetings last year.

The events have become increasingly dominated by the trivial. At RBC's annual meeting in February, one shareholder stood up to ask if it was possible to change the date of the Canadian Open golf tournament that the bank sponsors.

Despite the apparent irrelevancy of the gatherings, the banks must still hold them to formally elect boards of directors and to give shareholders a venue to voice complaints.

But this year's crop of annual meetings, which kicks into high gear with Bank of Montreal's event on Tuesday morning, elicits little anticipation.

That is a far cry from the annual meetings of the 1970s and 1980s, said Dick O'Hagan, former press secretary for Prime Minister Lester Pearson and senior vice-president for public affairs at Bank of Montreal. "We all took those occasions very seriously," he said. "There was kind of an expectation that the banks would provide some thought leadership."

The CEOs of that era regarded their speeches as major events. "It wasn't just about running a financial institution," said David Moorcroft, who served in communications roles at RBC under three different CEOs. "It was all about responsibility to the country."

If banks regret losing the national podium, they don't miss another aspect of those bygone meetings – the theatrical protests staged by reformers.

Bob Verdun was the most outlandish of the activists. "I was one of those 1960s radicals at university," he said by phone from Barbados, where he now resides. In his prime, Mr. Verdun dressed up as Fidel Castro at one annual meeting to signify that the banks' old boys clubs were like a communist regime. He also got into a heated exchange at a BMO gathering that resulted in a lawsuit against him.

Back when he started doing the annual meeting circuit, Mr. Verdun said he had to work up the courage to speak his mind. "I've never been so nervous in all my life," he said of the first time he stood up in 1992.

Today, banks encourage reform activists to submit their frustrations to the board ahead of time so they can be laid out in plain language in proxy circulars that are sent to all shareholders. Directors also meet with dissidents before the meetings to discuss issues.

Even Mr. Verdun acknowledges the shift. "The whole tone of the meeting has changed to actually welcome people to [stand up]," he said.

No one is quite sure why the banks' annual meetings have faded from their former glory. Everybody has their own theory, ranging from the banks' desire to be seen as cost conscious, to the fact that investors have better access to bank CEOs on quarterly earnings calls and at conferences throughout the year.

It may be, too, that investors no longer see banks as infallible sources of wisdom. "Once upon a time, Canadian banks never made a misstep," said Mr. Moorcroft. "That gave them a tremendous position in society to be able to speak out." But as mistakes piled up – from big losses on Latin American debt to the real estate busts of the 1980s – the banks lost their shiny veneer. Others believe they burned a lot of goodwill with policy makers during their failed efforts to merge in the late 90s.

Then there is the simple fact that banks have adopted many of the reforms that activists once demanded. Of the 14 requests Mr. Verdun first put forward in the early 1990s, 13 have since been achieved, he said. Reforms that were deemed controversial in the 1990s – such as splitting the role of bank chairman and CEO – are now, in many cases, bank policy.

Some reformers still show up, in order to keep the banks honest. But the change in tone is clear. "I think in 13 years, that's the easiest question period I've been through," RBC's outgoing CEO Gordon Nixon said with a small chuckle at the end of his final annual meeting in February.