Canadian Imperial Bank of Commerce (CM) Earnings Call Transcript & Summary

Good morning. [Foreign Language]. My name is Holly Payton, and I am a Market Vice President on CIBC's personal banking team in Eastern Ontario, where I am a member of Curve Lake First Nation. My community is home to many trailblazers, including Elsie Knott, the first woman to become chief of a First Nation in Canada. She was elected in 1954, 3 years after the Indian Act was amended to allow women to participate in banned elections. Knott was an advocate for education and community in many ways, including her work to preserve the Ojibwe language and to help revive our community's powwow celebrations. I started my career at CIBC 2 years before Chief Knott passed away. I was excited to work at one of Canada's leading financial institutions. And that first summer internship 30 years ago, gave me a taste of the career I would build, helping people achieve their ambitions. Reconciliation involves understanding our history so that we can change the future. And as a member of our Canadian banking team, I'm privileged to share an indigenous viewpoint within our organization and act as a mentor and role model to other First Nations people working in financial services today. I'm now pleased to open CIBC's 2024 Annual Meeting of Shareholders by acknowledging that the land from which I am speaking in Toronto is the traditional territory of the Haundenosaunee, Anishnabeg and the Mississaugas of the Credit First Nation. Today the meeting place of Toronto is still home to many indigenous peoples from across Turtle Island, and we are grateful to have the opportunity to work in this community. I would now like to turn the meeting over to the Chair of our Board, Katharine Stevenson. [Foreign Language]. Thank you. [Foreign Language].

Thank you, Holly, for opening our meeting today and for your many contributions to our bank. I appreciate you sharing your story with us as we continue to foster an inclusive culture for our team, clients and communities. Good morning. My name is Kate Stevenson, and I'm the Chair of CIBC's Board of Directors. I'm pleased to be here with you today, and it's my pleasure to welcome you to CIBC's 2024 Annual Meeting of Shareholders. [Interpreted] Good afternoon, and welcome to CIBC's 2023 Annual Meeting of Shareholders. I received satisfactory proof that there's notice of this meeting, and it was duly given and that a quorum is present. Therefore, I declare the Annual Meeting of Shareholders duly constituted, and I call the meeting to order. I'm delighted to be joined today by Victor Dodig, President and Chief Executive Officer; Natalie Biderman, Vice President and Corporate Secretary. We also have our senior executive team here and our full Board of Directors with us as well. We are pleased to be holding our annual meeting today in person at CIBC SQUARE on this beautiful spring day, and also through our live webcast, we're also joined by shareholders and guests listening by phone. Natalie, could I ask you to explain how the meeting will proceed?

Thank you, Kate. Remarks will be made in both English and French today, and simultaneous translation will be provided in the auditorium as well as over both our English and French webcast and phone lines. If you are attending in person, interpretation is available through the device that was provided at the door as you entered the room. Please turn to Channel 1 for English and Channel 2 for French. Many shareholders submitted their votes before the meeting. Thank you. A small number of shareholders have decided to vote at the meeting. If you have voted in advance and you do not wish to change your vote, no further action is required. If you are a shareholder or proxy holder attending in the auditorium and you have not voted yet or you already voted but would like to change your vote, you should have received a ballot at the registration table. To assist the scrutineers in validating and tabulating ballots, after you vote, please print and sign your name in the space provided. If you are a shareholder or proxy holder attending through the live webcast and you wish to vote during the meeting or change your previous vote, you must click on the Vote tab at the top of your screen and a separate browser window will open. You can register to vote by entering your control number as a user name and entering cibc2024, all lower case, as a password. You would have received a control number with your meeting materials by mail or e-mail, or you received it when you registered as a proxy holder with TSX Trust Company, our transfer agent. Voting will be open throughout the formal portion of the meeting. If you are experiencing any technical difficulties, there is a help chat button at the bottom of your screen. If anyone in the room who is entitled to vote did not receive a ballot and would like to vote, please raise your hand and a scrutineer will bring a ballot to you. Would our scrutineers, please hand out the ballots. If you wish to make a comment or ask a question, and you are in the auditorium, please approach one of the microphones in the room, state your name and whether you are a shareholder or a proxy holder. Please limit your comments to 3 minutes so that other shareholders or proxy holders have an opportunity to speak if they wish. For those not in the room, if you wish to make a comment or ask a question, you should select the message icon at the top of your screen and type your question or comment in the text box at the bottom of the screen. Please indicate whether you are a shareholder or a proxy holder. Once you finish typing, click the Submit button. Your comment or question may be about the motion being considered or something more general. We will answer questions on a particular motion at the appropriate time in the meeting. Please hold your general questions to the comment period. I will read questions submitted online, and the appropriate person will address them. If we receive a number of questions on the same topic, we will group the questions together and provide a comprehensive response. We will respond to as many questions as possible during the meeting. If we are not able to address your question here, we will respond to you after the meeting, if you provide your e-mail address or a telephone number to a member of our Investor Relations team. Kate, that concludes my instructions.

Thank you, Natalie. The remarks you hear today may include forward-looking statements, and actual results could differ materially. Also, some of the matters discussed today may include references to non-GAAP financial measures. Details about forward-looking statements and non-GAAP financial measures are in our financial reports. Welcome to the 157th Annual Meeting of Shareholders of our bank. [Interpreted] As Natalie mentioned, this meeting is being held in both English and French and will be available on CIBC's website at www.cibc.com for your future reference. Natalie will act as Secretary of the meeting, [ Hamza Jakub ] and Pat Lee of TSX Trust Company will act as scrutineers. Our agenda for today's meeting will begin with a presentation of the 2023 annual financial statements, followed by remarks from our CEO, the election of directors, the appointment of auditors, an advisory resolution regarding our executive compensation approach, shareholder proposals, shareholder questions and comments and preliminary vote results. I'm pleased now to present the Annual Financial Statements and Auditor's Report for the year ended October 31, 2023, which can be found in our annual report. CIBC's annual report, management proxy circular and first quarter report are available on our website. The floor is now open. Does anybody have any questions on the 2023 financial statements? Please hold any questions not related to the financial statements to the comment period later in the meeting. Thank you. I don't see any in the room, Natalie, are there any comments or questions on the webcast?

There are no comments or questions on this matter, Kate.

Good. Well, then it's my pleasure now to invite Victor Dodig, CEO, President and Chief Executive Officer, to address the meeting. Thank you. Victor?

Thanks, Kate. Thank you, Kate, and welcome to CIBC Square our world headquarters. Welcome you all, everyone, to our global headquarters here at CIBC SQUARE as we mark another year of meaningful progress and momentum for CIBC. We have this momentum because we've transformed our bank and implemented a strategy that is true to our purpose and plays to CIBC's unique strengths and our unique capabilities. I'm pleased to be able to show you today how that strategy continues to deliver for our stakeholders and one that is well matched to the needs of our clients and our market opportunities for 2024 and beyond. As I reflect on what's changed since I stood here at last year's annual meeting, it's a long list. It's probably a long list for all of us. 2023 was a year marked by persistent inflation in softening economic conditions as well as growing geopolitical conflict. Our personal banking clients had to adjust to higher costs. They also continued to feel the effects of a more challenging housing market. And our business clients in some sectors experienced declining demand and rising costs, which squeezed their bottom lines. Across the banking industry globally, we saw volatility. We saw uncertainty following the rapid rise in interest rates and associated economic stresses. And while this created real challenges for some banks, at CIBC, we supported our clients. We maintained a strong balance sheet, and we grew our business. By that measure, 2023 was a resilient year of progress for our bank. We stood tall, thanks to our strong foundation. And we moved forward, thanks to a connected culture, the right strategy and team. A team, many of which are here in the room today that lives our purpose each and every day. Because what has not changed and what won't change is our CIBC team's commitment to making our clients' ambitions real every day. Through those efforts in 2023, we strengthened our capital position. We protected our margins. We delivered the most disciplined expense performance amongst our Canadian banking peers. And importantly, we generated the strongest net client growth in the Canadian banking industry, telling our client satisfaction scores continue to improve. [Interpreted] We are reaping the reward of the tremendous work we have done to implement our customer-focused strategy. We are leveraging our investments of recent years to CIBC's long-term success. The momentum we enjoyed today is well earned and it's sustainable. I want to talk more about CIBC's client-focused culture and strategy because it's really, really important to us and it's how we approach business differently. And it's something that our clients consistently tell us. When you bank with CIBC, we're always thinking about your full relationship with our bank and how our entire team can deliver our bank to meet your needs. It took a long time to build a culture like this, but we've done it, and we've done it collectively. It's a personal pride point for me. When we win a client's business because it means our team, our CIBC team, leaned in on each other to deliver more for our client. And this approach truly sets us apart from our competition, and it's an approach that's difficult to replicate. As successful as this strategy is proving to be, strategy is never static. So even as we managed our bank through the economic challenges of 2023, we also went to work to evolve our strategic priorities for 2024 and beyond by building on our client-focused culture. We now have 4 priorities that will help us build on our clear momentum, and they're aligned with CIBC's competitive advantages. They are first to grow our mass affluent business in Canada through our market-leading and payroll service offering and growing our private wealth franchise in Canada and the United States. Second, to expand our digital banking offering in Canada. Third, to deliver connectivity and to deliver differentiation to our commercial and capital markets clients who benefit from that team-based approach. And fourth, to continue to enable, simplify and protect our bank. As a result, CIBC will be well-positioned to seize the opportunities that lie ahead. We will continue to manage our business prudently and achieve our long-term goals. We are already seeing significant progress in each of these 4 pillars. As I highlighted earlier, we're also benefiting from the strategic investments that we've made in recent years, important strategic investments to transform our bank. So to give one example, our leadership in digital banking and our continued progress on delivering on the client experience are key drivers of our robust net client growth, helping to attract more than 650,000 net new clients across our CIBC and Simply brands in 2023. As you can see from our industry-leading performance on expenses in 2023 and early '24, the heavy investment phase is behind us, and we're now continuing to enjoy the benefits. But we will continue to invest prudently in strategies that increase our long-term sustainable advantages to compete and compete effectively and efficiently. Let's take artificial intelligence, for example. I'm proud of the prudent and proactive approach we're taking to use AI safely, to use it responsibly, to use it ethically, to increase efficiencies in our bank and to capture new possibilities and future uses so that we can compete effectively. We also continue to focus on developing our team, our talent, so that they can deliver the best experiences and ideas to our clients and to give them opportunities to continue to grow their careers within our bank. We do this at all levels of our bank. Recently, we announced senior leadership appointments that deepen our leadership capabilities, and I believe will make us even stronger, make us better at executing on our growth strategy. Just as our operating environment has evolved over time, so is our leadership team. Now that builds culture. We've worked a long time together to build the bank that we have today. It builds a shared commitment to our clients in all areas of our bank. And that is key to building the relationship-oriented bank that we have, the bench strength that we have and the culture that we have to keep it alive and make sure that it benefits all of our stakeholders. As a result of our work is evident in CIBC's strong 2023 results. While we weren't immune to the impact of the economic environment by sticking to our strategy and focusing on factors we can control, we delivered for our stakeholders. On an adjusted basis, our revenue of CAD 23.4 billion was up 7% from the prior year, and adjusted pre-provision pretax earnings of $10.2 billion were up 8%. Reported net income after tax for 2023 was $5 billion, which translates to $5.16 a share. On an adjusted basis, that was $6.5 billion or $6.72 per share. These results were affected by the economic environment as well as higher provisions for credit losses, which impacted our bottom line profitability. Notably, we held expense growth to just 6% in 2023 versus the prior year, and we expanded our margin by 20 basis points. In Canadian Personal and Commercial Banking, despite a very competitive environment, which I believe is a clear indication of the value of our relationship-focused strategy. Clients value that relationship that they have with us. Given the economic environment and our commitment to prudently managing the business, we consciously grew our capital base, ending 2023 with a CET1 ratio of 12.4%. This is well above the regulatory minimum. And since then, it's grown to 13% as of the end of the first quarter in fiscal 2024. We carried our momentum into this new fiscal year of 2024, reporting a strong first quarter at the end of February. Revenue was up 5% over the previous year's quarter, and we generated strong pre-provision pretax earnings of 8%. Notably, expenses were up to 3%. Again, the best in the banking industry in terms of expense management despite an inflationary environment. Across our businesses, our momentum was clear in fiscal 2023. In Canadian Personal and Business Banking, we're driving robust net client growth, particularly in the newcomer and student segments. Here, we're seeing the result of our focus on connectivity and deepening relationships. For example, you'll recall we acquired the Costco credit card portfolio in Canada in 2021. From that portfolio of CIBC Costco credit card clients, we now have 90,000 Costco cardholders who have a broader banking relationship with our bank, and that is growing month by month. [Interpreted] As I mentioned, we offer an exceptional customer experience. We moved up to third place overall in the J.D. Power Canadian Banking Satisfaction survey in 2023. Also in 2023, we ranked first in the J.D. Power Small Business Banking Customer Satisfaction Survey. In Canadian Commercial Banking and Wealth Management, we demonstrated strong momentum throughout 2023 and recorded a third consecutive year of increasing Net Client Promoter Scores or Client Net Promoter Scores. As expected, demand for loans was lower in 2023, but we're confident in both the credit quality of our existing portfolio and in our ability to deliver targeted growth in high potential sectors in the coming years. [Foreign Language]. Despite market volatility, we delivered a strong year in Wealth Management. The launch of our new customer relationship management tools and our CIBC GoalPlanner platform played an important role at CIBC Wood Gundy. We're increasing client engagement and connectivity, and it contributed to positive fund flows in 2023. This reflects our high-touch approach to meeting clients' needs in this important market, where our team interacts with our clients, and they're enabled by high-tech solutions. In U.S. Commercial Banking and Wealth Management, we continued to grow by deepening relationships in existing markets and expanding our footprint in fast-growing markets like Palm Beach, Florida and San Francisco, California, for example. With our overall -- while our overall performance was affected by provisions for credit losses in our office real estate portfolio, our core business performance of this strategic business unit, it was solid, thanks to the actions of our leadership team. We're well positioned to continue to grow this business with our clients in the United States in the year ahead. In Capital Markets and Direct Financial Services, we again leveraged our differentiated platform to drive consistent growth. Our direct financial services business delivered a 26% increase in revenue last year. And our traditional capital markets business performed well relative to our peers as it demonstrated robust risk-controlled growth in our trading businesses, despite more volatile markets, and delivering double-digit revenue growth in the United States again in 2023. Again, all of this, aligned with our Investor Day targets that we presented to you in June of 2022. CIBC's performance is deeply connected to our commitment to enabling a more secure and more equitable and a more sustainable future. The financial sector is uniquely positioned to drive change by activating resources to shape the kind of future that we all want. We are determined to play our part. Now let me take you through some highlights of the parts that we're playing. On the environmental front, we're focused on transitioning to a low-carbon future through investments in cleaner forms of energy, and financing products and sectors with strong social and environmental impact, and we're working with our clients to achieve that. We've now established 2030 interim targets to reduce the carbon intensity of our financed emissions across our oil and gas, power generation and automotive manufacturing portfolios. In 2023, we made further progress towards our oil and gas and power generation targets. From a social perspective, CIBC is committed to creating access to opportunities, beginning with our team and extending to all of the communities where we live and work. For example, we increased the share of women, Board-approved role -- executive roles to 39% in 2023, and we're very close to our goal of at least 40% by the end of 2024. [Foreign Language] We have also invested more than $4 million in community programs aimed at removing barriers to the ambitions of members of the black community. And since the launch of the CIBC Foundation in 2021, we have done a lot to open up more social and economic opportunities for all. Last year, the CIBC Foundation provided more than $66 million in corporate and team CIBC contributions globally. And that's part of our goal to contribute $800 million to community investment by 2032. From a governance perspective, integrity and transparency are at the heart of how CIBC conducts business and interacts with our stakeholders. In 2023, our CIBC developed and published generative AI guidelines for all CIBC team members, and we created a generative AI adoption oversight council, which is part of our broader effort to embrace new technologies to advance our business and to do it responsibly. We're already leveraging AI across our bank to do more for our clients, and to simplify and enhance our processes and to enable our team to focus their efforts on high-impact work. So I'm optimistic about the opportunities ahead of us as we work together to shape a more sustainable future. Importantly, against a more uncertain backdrop, we also need to address how Canada will succeed in the new economy over the long term. I've spoken before about 3 forms of capital required for Canada's future prosperity, that being human capital, financial capital and social capital. On the topic of human capital. We need to stay focused on growth areas such as cybersecurity, technology, professional services of varying forms because these are the industries of the future. That requires attracting the best and the brightest to our country, and offering them the educational opportunities to those growing up here to be leaders of the future. If we do this well, I believe we'll attract financial capital as a nation. We will create great businesses. We'll create great ideas that draw investment from outside our borders, and that's a sign of building financial capital. Where we need to put special focus right now is on social capital. The time now is to step up as a welcoming nation of opportunity because I think that status is at risk. We can't capitalize on the benefits of immigration and education, without investments in the supporting infrastructure to those people that come to Canada with their hopes and dreams. We see the stresses in areas such as our health care system. We see it most acutely in the housing market, something that you read about in the headlines each and every day, and we need to do more as a nation to find a solution. I've heard firsthand the obstacles families face in finding affordable housing to rent or to buy. I've talked to our developer clients about the challenges they encounter in building more homes. And I've talked to policymakers, not just me, but our entire team is talking to policymakers about levers that we can pull to speed up the construction of homes. What's clear is nobody yet has all the answers. But what's also clear is that we also -- we are seeing a growing understanding of the scale of the problem and a greater sense of urgency to identify the solution. We've been a thought leader in this area. Our CIBC economics team has really helped. It highlighted last year, for example, that far more people have been coming to Canada in recent years than official government figures reflected, which is a key point that has informed dialogue around the issue since then. So our CIBC team remains determined to be a catalyst for solutions and to building that human, financial and social capital. So in closing, I'd like to thank each and every one of our 48,000-strong team members for all they do for our clients each and every day. We wake up, we run out of bed, and we go to work to serve our clients. We love what we do. We collaborate together to make their lives better. We have put the paces in place for long-term success. We created a culture that is a competitive advantage and it sets us apart, and we made the necessary investments in key growth areas for the future. You see this in our results. We see it in our CIBC team every day. Thanks to their hard work in 2023. We demonstrated financial and strategic strength, robust risk and capital management and stability and resilience against a very challenging economic backdrop. And most importantly, we stood by our clients and they awarded us. [Interpreted] We are convinced that growth opportunities await us and that we are well positioned for 2024. We will be there for our customers, our investors, our communities and our team members. In short, for all our stakeholders in 2024 and beyond. This is the CIBC purpose that will always unite and guide us, making ambitions reality. We're proud of the bank we are today. We're excited about the opportunities that brings, and we're so grateful for your trust and our CIBC team. [Foreign Language] Thank you.

Thank you, Victor. It also makes me proud to hear that from you. On behalf of the Board, I'd like to thank you for your continued strong leadership, Victor, for our bank and for fostering an inclusive and connected culture for our team and our clients. I'd also like to recognize our entire CIBC team for delivering for our stakeholders in 2023. And so now I'd like to turn to the formal business of the meeting. For shareholders and proxy holders voting in the room, please mark your ballot for each item. The ballots will be collected after you voted on all of the items. For shareholders and proxy holders who have registered to access our online voting platform, polls are open and will remain open until we complete the formal business of the meeting. I'll pause briefly following each item of business to allow sufficient time for those voting online. If you've already voted, no further action is required unless you wish to change your vote. So the first order of business is the election of directors. The meeting is now open for the nomination of directors for the coming year. But first, I'd like to acknowledge Luc Desjardins who is retiring at the close of our meeting. And actually, the Board and management team celebrated Luc yesterday. It was his last board meeting. We'll really miss his operational focus, his entrepreneurial focus and just a great colleague and human being. And sorry that he's unwell today and couldn't be with us. We fully expected to be here today. [Interpreted] On behalf of CIBC's shareholders, Board of Directors and employees, I would like to thank Luc for his dedication and contribution to our bank. This year, the number of directors to be elected is 13. They are Ammar Aljoundi; Charles Brindamour; Nanci Caldwell; Michelle Collins; Kevin Kelly, Christine Larsen; Mary Lou Maher; William Morneau; Mark Podlasly, our newest Director; Martine Turcotte and Barry Zubrow and Victor Dodig and I, complete the list of nominees for election as directors. I'd ask that our nominees stand to be recognized. I will now call on Angela for a motion.

Thank you, Madam Chair. My name is Angela Botelho, and I am a shareholder. I am the Community General Manager for CIBC SQUARE and have been with CIBC for almost 10 years. It is my pleasure to nominate for election each of the 13 persons named in the 2024 Management Proxy Circular as a Director of CIBC until the close of the next Annual Meeting of Shareholders, or until their successors are elected or appointed, whichever is earlier. And I'll call on Fiona to second the motion.

Thank you, Madam Chair. My name is Fiona Campbell, and I am a shareholder. I'm Senior Counsel with CIBC's Legal department, and I've been with CIBC for 5 years. I second the motion.

Thank you, Fiona, and thank you, Angela. The floor is open for comments or questions on the election of directors. Seeing none Natalie, are there any comments or questions from the webcast?

There are no comments or questions, Kate.

Great. I declare nominations closed. All the individuals nominated are standing for election. If you are a shareholder or proxy holder in the room, please mark your vote for Item 1 on your ballot regarding the election of directors and hang on to it. The ballot will be collected after you voted on all items. If you're a shareholder or proxy holder and have used your control number to log into the webcast, you may record your vote on the election of directors now unless you've already done so. And please remember that if you voted in advance of the meeting and you don't wish to change that vote, no further action is required. So I'll pause now for a moment just to allow time for the casting of these votes. [Voting]

The next is the appointment of auditors. I'll call on Maria, if I may, for a motion.

Thank you, Madam Chair. My name is Maria Lopreiato and I'm a shareholder. I'm a Senior Product Manager in fee-based solutions and have been with CIBC for over 20 years. I move that Ernst & Young LLP be appointed as the auditors of CIBC until the close of next Annual Meeting of Shareholders.

And I now will call on Divya to second the motion.

Thank you, Madam Chair. My name is Divya Munjal, and I am a shareholder. I'm a senior human resources business partner, and I've been with CIBC for 8 years. I second the motion.

Thank you, Maria, and thank you, Divya. The floor is now open for comments or questions on the appointment of our auditors. Natalie, are there any comments or questions from the webcast?

There are no comments or questions.

Well, please mark your vote for Item 2 to record your vote on the appointment of auditors. And again, remember that if you voted in advance of the meeting and you don't wish to change that vote, no further action is required. [Voting]

The next item of business is an advisory resolution regarding our executive compensation approach. The Board considers this vote to be an important part of our shareholder engagement process, and we review the results of the vote when considering future executive compensation decisions. I'll call on Venice, please for a motion.

Thank you, Madam Chair. My name is Venice Tate and I am a shareholder. I am a senior analyst with enterprise and anti-money laundering and have been with CIBC for 5 years. I move that the shareholders accept the approach to executive compensation disclosed in CIBC's Management Proxy Circular for the 2024 Annual Meeting of Shareholders.

And I'll call on Anna, please, to second the motion.

Thank you, Madam Chair. My name is [ Anna Van Reno ] and I'm a shareholder. I'm a Director of People Change Management. I'm with CIBC for 26 years, and I second the motion.

Thank you, Venice and Anna. The floor is now open for comments or questions regarding our executive compensation approach. Any comments or questions from the webcast?

There are no comments or questions on this matter, Kate.

Okay. Thank you. So please record your vote for Item 3 on your ballots. Again, if you voted in events of the meeting and don't wish to change your vote, no further action is required. [Voting]

We ask to vote on 5 shareholder proposals. [Interpreted] submitted 8 proposals and following conversations with CIBC decided to submit 3 of these proposals to a vote for today's meeting. Then InvestNow each submitted 1 shareholder proposal for a vote. Now pleased to have Gina Pappano of InvestNow. Join us to present InvestNow's proposal. Ms. Pappano, please move your proposal.

Thank you, Madam Chair. Good morning. Thank you for the opportunity to present InvestNow's shareholder proposal. My name is Gina Pappano, and I am a shareholder of CIBC, and I'm asking fellow shareholders to vote for Proposal #1. Exactly 1 year ago today, we asked CIBC for an explicit commitment to continue to invest in and finance the Canadian oil and gas sector, and for a clear signal that the bank would step away from policies like net zero that hurt the sector. Fast forward to today, net zero by 2050 is currently the #1 ideological political and financial goal in Canada. Governments and regulatory agencies are creating and implementing policies to phase out oil and gas, and our financial institutions are following suit. This economically ruinous crusade is based on dogma and ideology, not on what's best for shareholders or Canadians at large. This is why we are asking CIBC and all the big 5 banks to commission reports qualifying and quantifying the impacts of divestment from the Canadian oil and gas sector on shareholder value and other relevant economic variables. If CIBC continues on the path toward currently established net zero objectives, shareholders have a right to know the true costs and impacts. We are already beginning to feel some impacts, this dogged pursuit of net zero by 2050. Carbon taxes, storing energy prices, emissions caps, really production caps for Canada's oil and gas sector, deindustrialization and economic hardship for all. So far, the crusade hasn't done much for carbon emissions either. Demand for oil and gas around the globe has only gone up. Increasingly, it is being satisfied by nations far less environmentally responsible than Canada. Our loss in jobs and economic vibrancy has not been the environment's gain. To see the effects of net zero, we need only look to Europe as countries there have pursued similar policies many energy-intensive manufacturers of basic materials like chemicals, ceramics, glass, steel and fertilizers have either gone elsewhere, drastically cut back production or gone out of business entirely. We believe the banks are charging blindly towards net zero, pledging that net zero by 2050 without a clear and complete understanding of the costs is irresponsible. For individual banks and corporations, it puts at risk the returns of their shareholders. For Canada and Canadians, it risks our prosperity and way of life. Please vote for Proposal #1. Thank you.

Thank you. The floor is open for comments and questions on shareholder proposal #1. Comments or questions from the webcast?

There are no comments or questions on the shareholder proposal.

Your Board and management are recommending shareholders vote against this proposal for the reasons set out in the management proxy circular. Please record your vote on shareholder proposal #1. And remember if you voted in advance of the meeting and don't wish to change your vote, there is no further action required. Before we move to the next shareholder proposal, I'd just like to take a moment to acknowledge the passing of Yves Michaud, who founded MÉDAC, the Movement for Education and Defense of Shareholders. He was a passionate advocate for shareholders, and I know that MÉDAC and the team will continue his legacy. And Monsieur Gagnon couldn't be with us today as it usually is, I gather, because of the funeral. [Foreign Language] We are happy to welcome [ Louis Philippe Suvee ] from the MÉDAC, Mouvement d'éducation et de défense des actionnaires, to introduce us to these proposals. Mr. [ Suvee ], I would invite you to present your 3 proposals. We will then take questions from the floor and put the 3 proposals to a vote. Mr. Suvee? [ His ] proposals now. And I gather he's coming in by webcast?

[Foreign Language] Hello?

Hello. [Foreign Language]

[Foreign Language] To follow the example of corporations such as Metro, such as Air Canada that have pronounced in favor of the return of in-person annual meetings. We are just out of an exceptional period during the pandemic, but we are back to normal, holding face-to-face meetings is essential and not holding them is problematic for shareholders' rights, the right of shareholders to communicate between them. It is much easier to communicate between shareholders at a face-to-face meeting, and shareholders should not be deprived of this right. We should also look to OECD whose governance principles are very much in favor of face-to-face meetings. We are told that exceptional circumstances could prevent the holding of face-to-face meetings during the second world war during the first world war, there were always face-to-face meetings and without any issues. So we don't believe that this is a valid argument. We are also told that the government has proposed to amend the Bank Act. To my knowledge, no bill has been presented. And I don't think we should anticipate on parliament's work before any legislative amendment is adopted. On a personal note, my father is an entrepreneur. He's been in business all his life. And we are here to make money, yes. But we are also here to do business. Holding face-to-face meetings allows business people to get together and to find unexpected opportunities to make money. I think this should be on the mind of all of our shareholders. That is for our first proposal. Our second proposal, which is number 3, deals with disclosure of nonconfidential information relating to country-by-country reporting to contribute to the fight against tax havens. This measure is already enforced in the United States. The United States is a big market, as you know that now, for banking. And we shouldn't wait on regulators to impose regime. We should go forward if we want to make profits. And I think showing transparency and good faith and being proactive in fighting against tax havens is good for business, and I would advise shareholders to vote in favor of Proposal #3. So our third proposal, which is number 4 deals with the annual advisory vote on environmental policies or so-called say on climate. I'm only 31 years old, and the issue of climate change is the issue of my generation. We're confronted with substantial challenges, and we have to be proactive. And banks and financial institutions play a key role in the economy. Our economic activities as a human species are what drives climate change. If we want to be around in 20 or 30 or 50 years, and making money and saying, "Wow, isn't it great that we're still getting 6% or 7% dividends?" Well, we have to sustain an economy and an environment in which we can do business. And our actions as financial institutions in finding climate change will be decisive. We have to avoid greenwashing and management shouldn't be afraid of a say on climate vote on these issues. If indeed as it says, it is proactive throughout the management circular management says, well, we're being proactive, and I believe you. So if what you're saying is true, you shouldn't be afraid of shareholders pronouncing on this and giving guidance to the bank about the environmental issues. So these are the 3 proposals. We feel that they're very good, and we would invite you to vote in favor of these 3 proposals.

Thank you, Mr. [ Suvee ]. The floor is now open for comments and questions on the shareholder proposals, which are numbers 2, 3 and 4. Comments or questions from the webcast, Natalie?

There are no comments or questions, Kate.

[Interpreted] Okay. Thank you. The Board of Directors and management recommend that shareholders vote against each of these shareholder proposals for the reasons set out in the management proxy circular. Please vote on shareholder proposal numbers 2, 3 and 4. Please note that if you voted in advance of the meeting and do not wish to change your vote, you do not need to take any action. We're now pleased to have Edmond Ho, Senior ESG Analyst, Vancity Investment Management, who's joined us in person here to present his proposal. Welcome, Edmond, and go ahead.

Thank you, Madam Chair. My name is Edmond Ho, and I represent Vancity Investment Management. Good morning, everyone. Thank you for this opportunity to speak on the merits of our proposal. And on behalf of Vancity Investment Management, I'd like to thank CIBC for the dialogue that we've had surrounding this. We continue to believe the CEO-to-median-worker-pay-ratio was an important metric to disclose. Economic and equality has been a persistent issue with our society. And one of the leading contributor factors is this growing disparity between executive and employee pay. The CEO-to-worker-pay gap was at 246x in 2022 compared to just 155x in 2009. We believe this widening gap is not sustainable in the long run, and we'll have negative implications for both the bank and the broader economy. As Mr. Dodig acknowledged in his earlier remarks, inflation has pushed up the cost of living for the average Canadian and salaries have not kept up, unfortunately. Since 2021, despite an average salary increase of 3%, the average worker took an effective 2% pay cut once inflation was factored in, compared to a 26% increase, net of inflation for the 100 Best Paid CEOs in Canada. Not only do CEOs not struggle to cover basic costs as many workers do, but they also benefit from inflation as a large part of their compensation is attributed to bonuses which are tied to company performance. As inflation has soared in recent years, so the corporate profit margins. As a result, bonus pay has also hit all-time highs. The value created by companies is increasingly accumulating a top of the organization rather than being proportionately attributed throughout. This negatively impacts employee morale and will result in higher employee turnover and associated costs, which can be significant for human capital-intensive companies such as CIBC. Research has shown that levels of inequality can lead to lower productivity, reduce GDP growth and longer and more severe recessions. These risks are particularly relevant to financial institutions like CIBC, which depend on the thriving economy to drive business growth. The CEO-to-median-worker-pay-ratio is a powerful metric that provides a quantifiable way to monitor this risk. It is critical to recognize that the ratio from a single year is not the focus. For the ratio to be useful, investors, employees and management need to see the trend over time. This allows CIBC to ensure the wage gap is not widening at an unsustainable pace. This proposal is not about limiting executive compensation. The CEO-to-median-worker-pay-ratio disclosure is a well-established practice in the U.S. and the U.K. that benefits both companies and their shareholders. The GRI standards followed by CIBC provide clear guidelines for calculating and disclosing this information, making it a feasible and workflow initiative. In fact, CIBC acknowledges in their proxy circular response that this ratio is used internally. So a form of this is already being calculated. We understand that CIBC may have concerns that disclosure of this ratio may bring about negative public attention to the bank, due to a misinterpretation of the data. We'd like to point out that [ Pierre Scotiabank ] has started to disclose this ratio last year, and it has resulted in no such negative attention or misinterpretation. Given CIBC's position as a strong corporate and ESG leader in Canada, we believe CIBC's disclosure will benefit the organization in the long term, and help set an example for other corporations to follow. Therefore, we urge shareholders to vote for proposal #5. Thank you.

Thank you very much. The floor is now open for any comments or questions on the shareholder proposal #5. Natalie, are there any questions or comments from the webcast?

I'm not seeing any questions or comments on this particular matter.

Thank you. Your Board and management are recommending shareholder's vote against this proposal for the reasons set out in the proxy circular. Please record your vote on shareholder proposal #5. And remember, if you've already voted in advance of the meeting, no further action is required unless you wish to change that vote. So that completes the matters to be voted on. I'll just pause for a moment so that shareholders and proxy holders can finish voting. [Voting]

And the polls are now closed. For those in the auditorium, please pass your ballots to the center aisle for collection by the scrutineers. Please ensure your name is clearly printed on your ballot, together with your signature, and we'll have the ballots collected as I see that's happening. [Interpreted] I would now invite Mr. [ Suvee's ] to comment on the MÉDAC's proposals, which have been withdrawn.

[Interpreted] Thank you, Madam Chair. So I am still [ Louis Philippe Suvee ] representing MÉDAC. We have chosen to withdraw 5 proposals since we found management's response to be satisfactory. The first proposal deals with incentive compensation for all employees based on ESG targets. We were proposing that the Board consider the advisability of introducing a new approach to incentive compensation, in order to link part of the compensation of all employees to the bank's performance against its key ESG targets. And we are satisfied with management's response. We believe that it is important to take into account the application of these criteria in determining compensation. That is the first withdrawn proposal. The second withdrawn proposal deals with the disclosure of language fluency of executives. We proposed that the language fluency of members of the executive be disclosed in the proxy circular. It will be remembered that the CEO's linguistic tribulations caused some reputational damage to the company, especially in Quebec. And we believe that proactive disclosure could be good for CIBC's financial interest, especially in the Quebec market and in the maritime provinces. Management has proactively disclosed this information in the circular, and we applaud this initiative in the matter. The third withdrawn proposal, dealt with a social dividend and better value sharing. So we were proposing that the Board consider the creation of a social dividend, whereby a certain percentage of the company's profits would be allocated to support ESG causes, especially dealing with the environment and inequality. So once again, I think we have to draw inspiration on initiatives taken by certain French banks, including Crédit Mutuel that has done excellent work in this area, and which invest in companies not necessarily in order to make profits, but to have an impact on inclusion. For example, creating bank share systems, supporting customers who are most exposed to climatic events or most economically vulnerable. So all these initiatives aren't necessarily quantifiably profitable, but we believe that -- and indeed management agrees that CIBC is a generous bank and should continue along that path. That was our third withdrawn proposal. Our fourth withdrawn proposal deals with reasonable certification of ESG reports. We were proposing that the Board commit to filing within the next 3 years, an ESG report with reasonable certification rather than limited certification. Many investors read the ESG reports published by Canadian banks. We read them. We believe that it could be very profitable for the bank to publish such reports, and we are satisfied with management's response. Finally, and our fifth withdrawn proposal is, one that we believe is very important, and it deals with the appointment of auditors. And it is proposed that the Board engaged other auditors. In other words, that auditor rotation be instituted. We understand the consequences of such a proposal on costs, we are told that there's a limited number of auditing firms that could provide the services to a large bank. But if we introduce such a requirement, this could lead to an increase in cost. But on the other hand, a compromise has been found with management, which consists in more adequate evaluation of the auditor's work in order to prevent excessive proximity between auditors and management. Thank you very much for your attention.

[Interpreted] Thank you, Mr. [ Suvee ] for MÉDAC's continued engagement to our bank's government.

Shareholders and proxy holders with a question or comment about CIBC and its business to submit your questions. For those shareholders and proxy holders in the room, please approach one of the microphones, state your name and indicate whether you're a shareholder or a proxy holder. If you are attending through the webcast, you can submit your questions by selecting the messaging icon at the top of your screen. Type your message within the text box. Please state your name and indicate whether you're a shareholder or a proxy holder. Once you finish typing your question, click the Submit button. So -- and now I'll take questions, starting with those in the room and then move to those who submitted online. So I see a few folks lined up at microphone #2. I'll turn it over to you. Welcome.

I'm a shareholder. Paul [ Durrens ] is my name from Burlington. Now on this floor last year, you reassured me that the CIBC mortgages based on loan to value are safe. And okay, I think I was wrong last year. They are. However as you are aware, we -- in 18 months, we have had 10 Bank of Canada rate increases. And I'm indirectly concerned about mortgages, not directly CIBC ones. As the 2019, 2020, '21 and '22 5-year mortgages are renewed, I believe some people could be looking at $400 or more a month on their mortgage. And looking forward and let's say, we're into the middle of 2027, I think this could be a multiyear hit to the whole Canadian economy. And some people are saying rates are low down. And well, there's such a labor shortage, I can't see in several areas. I can't see how that's going to let rates go down. Okay, go ahead.

Well, thank you, first of all, for joining us for the second year in a row and sharing your concern on mortgages. Do you have a question for us on the matter?

Well, no, just your comment. Well, let's just -- you give your comment.

Okay.

It's always -- it's good to see you. And I think your comments are always well placed. It's something that we think about and work with our clients each and every day. Mortgages are an important part of our balance sheet. They're an important part of our clients' livelihood and owning a home. We have worked with our clients who have equity in their homes, as you quite rightly state. The average loan to value of our mortgages is about 50%, give or take, depending on which community they live in. We've worked with those clients who have variable rate mortgages. Some of which have taken actions on our own, some of which have worked through different structures with us to alleviate some of the burden. We're encouraged by what our clients have been doing. We also see that they have been saving those excess deposits, relative to the deposits they had pre-pandemic and they're managing through this. We believe that rates will decrease as inflation is now getting to the target range and the economy is adjusting accordingly. Over the long term, if they don't decrease, that will create some stresses and it has all the makings of a double-dip consumer recession. However, from everything that we've seen with our clients' behavior and everything that we see in the economy today, we believe we can work toward a good place with our clients over '24 through '27 period. Thank you.

Okay. And this bank -- correct me if I'm wrong, it is the highest percentage of mortgages to total assets slightly above 50%. I think I am correct on that.

You're correct in that. We have -- mortgages are a big part of our balance sheet, but we're proud of how we've managed them, how we've originated them, how we work with our clients, to lend to them responsibly and how we work with them to actually have a financial plan because mortgage is only one part of an individual's financial plan. A lot of it is the retirement savings their personal savings, their earnings. And as we say, our CIBC, our purpose is to make our client's ambition real. That includes looking at their entire financial affairs, and that's something that we take great pride in.

Okay. I've got another question, but I'll let -- I'll go in rotation.

Hi. My name is Michael Sambasivam. I'm a proxy holder. I'm here speaking on behalf of investors for Paris Compliance. We are a Net Zero Shareholder Advocacy and Research Group. We also cover CIBC in our annual Canadian banks net zero progress report. So in CIBC's most recent sustainability report, it notes that over half of the $300 billion target in sustainable products and solutions has been met. While sustainable financing can be valuable in offering the bank exposure to the energy transition, shareholders need clear definitions to ensure that this financing is actually reducing the bank's emissions. RBC has begun, for example, granularizing its transition financing efforts with the establishment of specific renewable lending targets. In turn, increasing transparency. CIBC says in its reporting that its sustainable financing won't necessarily drive down its emissions. Given that, what can we expect in the coming year to better disclose? How it's sustainable financing contributes to its net zero ambitions such as with financing targets focused specifically on renewables?

Great. Well, thank you for joining us as well. And maybe I'll just start with an important comment in that the Board and the management team takes climate issues and sustainability issues very seriously. We recognize that we have a warming planet and that we have extreme weather events that are affecting many communities. And we are supporting our clients and encouraging consumer behavior, refining our own operations and reporting on our progress. And on the reporting, our recent climate report and sustainability report that has come out. It does provide more detail on our methodology for sustainable financing. It's such -- certainly, the whole area of renewables is extremely important to CIBC. But I'll turn it to Victor to see if you would like to add any comments there.

Sure, and thank you for the good work that you're doing. In fact, I think the comments on energy today all have their place. I will tell you that as a bank, we're very focused on the transition. But we're also very focused on being responsible and ensuring energy security is as important as carbon intensity reduction. And therefore, we work with our clients across the entire energy portfolio, whether it be hydro, that requires dams and that requires infrastructure to nuclear and everything in between, including our oil and gas clients, who we work with to ensure that they are highly aligned with our net zero ambitions, both on an interim basis and on a long-term basis. I'm proud of the work that we've done. You're asked for continued granularity of down disclosure is something that we will continue to provide as we issue our annual reports. And you should always see CIBC as a responsible citizen in that regard, both in terms of the security of energy as well as reducing carbon intensity. Thank you.

Thank you very much. Welcome back, Paul.

Okay. I'd like some further explanation about U.S. operations. Now I know you have a commitment to Chicago and Milwaukee. And now, is that primarily office buildings or industrial? What -- also say something about CIBC Wealth Management U.S. I have difficulty in picturing the average American knowing what these 4 letters mean, not really. So how are you handling CIBC Wealth Management U.S.? And what are your future ambitions which I assume is primarily American Midwest?

Again, thank you for your great question. I'm not going to comment on whether Americans know CIBC. I think many of them actually do. And over time as we grow our presence there, more and more do each and every day. Our ambition in investing in the United States is part of our regional economic strategy. North America today is probably one of the strongest, if not strongest economic regions in the world. And we took the opportunity over 10 years ago to begin diversifying our bank into the United States so that we can actually provide services to our Canadian clients that want to invest in the United States, and to focus on what we would define as the private economy in the United States. We're not retail in the U.S., which is why maybe our name wouldn't be as prominent. But we see a shift from public markets to private markets. We're banking entrepreneurs, for the businesses they manage. We bank our Canadian clients that want to invest in the United States. We manage their wealth, and it's a highly concentrated and focused strategy to be able to do that. I believe we've seen great success. Our U.S. exposure is not all about offices. In fact, less than half in declining in our balance sheet is real estate. The rest of it relates to our capital markets activities. And our commercial banking activities across a broad swath of the economy, including renewable energy. We are committed to the U.S. We're committed to Canada, and we believe that this integrated economy is something that will serve our shareholders well and certainly serve our clients well.

Your major focus in the U.S. is the Midwest?

Well, no. We operate in 9 out of the 10 largest metropolitan centers to varying size. But yes, the largest presence today is in the Midwest, and a growing presence in New York and the Northeast and ambitions to grow beyond that as well.

Thank you very much. Any more questions from the room? Seeing none at the moment, Natalie, I'll turn to you for any questions or comments from the webcast.

Yes. We have a question from a shareholder also on our U.S. operations. And the question is, "How will the strategy in the U.S. change or benefit the bank as interest rates come down this year?"

Our focus on the U.S. is a long-term focus. So it's not just as interest rates come down. It would certainly help as interest rates comes down because it's usually stimulative to the economy. Our focus in the U.S. is again to focus on the private economy. So we take our Wealth Management business, our commercial banking business, our capital markets business to serve entrepreneurs across a broad swath of the economy that are domiciled in the U.S. as well as following our clients from Canada into the U.S. And doing so in a very thoughtful way that's highly aligned with our strategy. As I said earlier, there's a big focus on renewable energy in the United States, with the inflation Reduction Act. With the Infrastructure Act, our CIBC team is highly geared to ensure that our banking is aligned with government policy that's going to grow the economy as well as our clients' ambitions to tap into those government policies to do that. As wealth gets created, we like to manage that as well. So what we try and do in the United States is to have a very focused strategy and very focused markets, largely on the private economy, where all of our teams work together to deliver for our clients and for our shareholders.

Thank you, Victor. Natalie, next question, if there is one?

There is another question from a shareholder. And the question is how much of the $5 billion in profit was distributed to shareholders?

Capital allocation is a very important part of what we do at our bank. We have a stated dividend payout policy of 40% to 50% of earnings. We are currently paying out $3.60 on an annualized basis in dividends, and that will be at the top end of that range. Our ambition is to be at the middle end of that range over time and to grow our dividends with growth. So those are the balancing acts that we try to manage against, but it's been very focused on returning to shareholders' capital in the form of dividends.

Great. Thanks, Victor. Next question?

There is another question. The question is, "Where does your priority in welcoming and keeping jobs in Canada stand and not abroad?"

CIBC is a top-tier Canadian employer. We employ many people in our bank in Canada, in the United States, in the Caribbean. We overwhelmingly employ our people in the markets that we operate. We also invest significantly with our vendors, many of which are domiciled in the markets that we operate and therefore, have a positive derivative effect through everything we do in our communities through our business activities. We do also partner with vendors, technology vendors around the world. We live in a global world. But -- and it's a balancing act. But overwhelmingly, our employment is based in the communities that we operate in.

Great. Is there another question or comment from the webcast?

There are no more questions, Kate.

Thank you. Any more from the room, thanking shareholders and proxy holders who joined us in person today. Okay. We'll move along. Thank you all for your questions and comments. Your participation in this meeting is important and truly appreciated. We'll now move to the vote results. I've been advised that the scrutineers have their preliminary report ready. Natalie, would you read the report, please?

Yes. I'm just waiting for it to be handed over, and I would be happy to read it. Thank you. The scrutineers report that 40.91% of eligible shares have been voted at this meeting. The shareholders who voted by proxy or ballot have voted as follows: on the election of directors, a substantial majority of the votes cast at the meeting were voted in favor of each of the 13 nominees named in the management proxy circular. Appointment of auditors, for 91.9%, withheld 8.1%. Advisory resolution regarding our executive compensation approach, for 96.6%, against 3.4%. Shareholder Proposal 1, oil and gas sector divestment impact, for 0.6%, against 99.4%. Shareholder Proposal 2, in-person annual meetings, for 53.1%, against 46.9%. Shareholder Proposal 3, country-level remuneration ratios, for 12.6%, against 87.4%. Shareholder Proposal 4, advisory vote on environmental policy, for 14.2%, against 85.8%. And finally, Shareholder Proposal 5, CEO to median worker pay ratio, for 10.4%, against 89.6%. Kate, that concludes the report.

Thank you, Natalie. Based on the vote results, I declare that each of the 13 nominees named in the 2024 Management Proxy Circular is elected as Director of CIBC until the close of the next Annual Meeting of Shareholders or until their successors are elected or appointed, whichever is earlier. Ernst & Young LLP is appointed as auditors of CIBC. The advisory resolution regarding our executive compensation approach is approved. Shareholder Proposals 1, 3, 4 and 5 are not approved, and shareholder Proposal #2 has received greater than 50% support. We acknowledge the strong shareholder support and sentiment on this proposal. Our current intention is to maintain a hybrid format while considering shareholder perspectives and developments over the long term. In the near term, we plan to engage in discussions with our shareholders to better understand the results and the desired approaches. We thank you for your votes today. The final votes will be available after the meeting, and we really appreciate your interest in our bank. And on behalf of the Board, I'd like to thank you very much for taking the time to join us today. I now declare the meeting terminated. Thank you all.