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How Were the Bank's Directors Compensated in 2008? (a)
| Description of fee |
Amount |
| Annual Retainer (Director) |
$100,000 per year |
| Board meeting fee |
$2,000 per meeting |
| Committee meeting fee (b) |
$1,500 per meeting |
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Chair Retainers:
Chairman of the Board
Audit Committee
Governance and Nominating Committee
Human Resources and Management
Compensation Committee
Risk Review Committee
The Pension Fund Society of the Bank of Montreal
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$300,000 per year (c)
$35,000 per year
$15,000 per year
$25,000 per year
$25,000 per year
$15,000 per year |
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Travel fees: $1,500 per trip for directors having to travel more than 1,000 kilometres from their principal residence to participate in a meeting or series of meetings
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notes:
(a) Directors' compensation is only paid to non-employee directors. Directors are reimbursed for travel and out-of-pocket
expenses incurred in attending Board and Committee Meetings.
(b) Includes meetings of the board of directors of The Pension Fund Society of the Bank of Montreal.
(c) Aggregate amount inclusive of directors’ annual retainer. The Chairman of the Board receives
no additional fees in his capacity as a director.
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Director Share Ownership Requirements
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With a view to aligning directors’ compensation with shareholders’ interests, directors are required to hold at least six times their annual retainer in Common Shares and/or Deferred Share Units valued at the greater of (i) the closing price of the Bank’s Common Shares at the end of the fiscal year and (ii) their acquisition cost or value at the time credited. Until this level is achieved, directors must take 100% of their remuneration in the form of either Common Shares or Deferred Share Units. Once this threshold has been reached, directors must take 50% of their annual retainer in Common Shares (which are purchased on the open market) or in Deferred Share Units. Directors have the option to receive up to 100% of their annual retainer and meeting fees in this manner.
In fiscal 2008, 14 of 17 non-employee directors elected to take 100% of their annual retainer and meeting fees in Deferred Share Units. As at October 31, 2008, all non-employee directors met the minimum share ownership requirements with the exception of Dr. Piper (who joined the Board in July 2006).
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Non-Officer Director Stock Option Plan
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The granting of options under the Non-Officer Director Stock Option Plan was discontinued effective November 1, 2003.
Options to purchase a total of 147,000 Common Shares, representing 0.03% of the Bank’s issued and outstanding Common Shares as at October 31, 2008, were granted under the Non-Officer Director Stock Option Plan. As noted, no more options may be granted under this Plan. The key terms are as follows:
Key Features of the Non-Officer Director Stock Option Plan
| Eligibility |
Options granted to directors who are not employees of the Bank or its affiliates |
| Option term |
10-year expiry date from date of grant |
| Strike price |
Equal to the closing price of the Bank's Common Shares on the trading day immediately preceding the date of grant |
| Vesting |
25% per year over four years from the date of grant. Except for directors who had reached 62 years of age at the time of grant, one-half of the options were, in addition to vesting, subject to a condition that the price of the Bank’s Common Shares must have increased by 50% since the date of grant before the options could be exercised |
| Price conditions |
Except for directors who had reached 62 years of age at the time of the grant, one half of the options granted to each director cannot be exercised unless the price of the Bank’s Common Shares has increased by 50% since the date of grant. If such price threshold is not met, the options expire worthless |
| Transfer / assignment |
Not possible other than by will or pursuant to the laws of succession |
| Expiry of options |
Options expire on the earlier of (i) the fifth anniversary of the participant ceasing to be a director, (ii) the third anniversary of the participant ceasing to be a director due to death or disability, and (iii) the expiry of the option |
| Plan changes |
The Board of Directors of the Bank, subject to any regulatory or required shareholder approval, has the power under this Plan to amend or terminate this Plan at any time, provided, however, that any such amendment or termination shall not decrease the entitlements of a participant which have accrued prior to the date of such amendment or termination |
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