Governance and Ethics

At RBC, we believe that our first duty is to operate with integrity so that we can fulfill our responsibilities to all our stakeholders. We also believe that sound corporate governance is an essential element in maintaining our clients' trust and our investors' confidence, and is fundamental to enhancing shareholder value. Our blueprint for good governance and ethical behaviour integrates corporate responsibility into every part of our business.

Our priorities in this area include ensuring that we:

• Demonstrate sound corporate governance principles
  
• Provide clear disclosure of financial results, and disclose
  reliable performance data on key non-financial items
  
• Comply with all applicable laws and regulations in every country in which we operate
  
• Conduct business with honesty and integrity.
  

We assume our responsibility in these areas through a variety of means, and are committed to:

• High standards of corporate governance and disclosure
  
• Adhering to principles, codes and formal policies to protect consumers
  
• Combating corruption, such as money-laundering and terrorism
  
• High standards of mutual fund governance
  
• Ensuring business continuity
  
• Making it easy for employees to report auditing concerns

Performance Highlights

Over the past few years RBC has:

• Adopted policies requiring directors to tender their resignations following the Annual Meeting if they fail to receive majority shareholder support
  
• Increased the minimum share ownership guideline for directors to $500,000 from $300,000, to strengthen alignment of their interests with those of shareholders
  
• Increased minimum share ownership requirements for executive officers to further align management and shareholder interests
  
• Implemented a performance deferred share program to further align management's interests with those of shareholders
  
• Limited share dilution by reducing the number of stock option grants awarded to management by 70 per cent since 2003
  
• Evolved our comprehensive Director Independence Policy, which contains more stringent criteria for members of the Audit Committee, in response to best practices and regulatory refinements
  
• Held regular meetings of independent directors
  
• Enhanced our board and director evaluation procedures, with written peer reviews added to complement the established peer assessment practice of one-on-one interviews with the Chairman
• Formalized the process of selecting individuals for nomination as directors to ensure that the strengths of potential candidates are weighed against the competencies and skills that the board as a whole requires
  
• Enhanced disclosure in our Management Proxy Circular to improve transparency in our communications.
  

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