Corporate Governance at Royal Bank of Canada
|
Case Code: CGOX009 Case Length: 18 Pages Period: 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.300 Organization: Royal Bank of Canada Industry: Financial Services Countries: Canada Themes: - |
Abstract Case Intro 1 Excerpts
Excerpts
Business Segments
RBC operated in five major business segments: 1) RBC Banking, 2) RBC Insurance, 3) RBC Investments, 4) RBC Capital Markets and 5) RBC Global Services. RBC Banking was the bank's largest contributor to the net income (51% of net income in 2003)...
Background Note
The origin of RBC went back to the creation of Merchants Bank in 1864, in Halifax, Nova Scotia, a port city bustling with trade...
Corporate Governance Code
RBC had attempted to comply with the corporate governance guidelines of Toronto Stock Exchange (TSX). The Board of Directors (Board) had also taken note of the US Sarbanes-Oxley Act15 (SOX), as well as the New York Stock Exchange's (NYSE) corporate governance listing guidelines....
The Board of Directors
The Board consisted of an independent chairman, 16 independent directors and two executive directors and had in place four committees consisting only of independent directors. The Corporate Governance and Public Policy Committee (CGPC) had developed categorical standards of 'independence' with respect to the US's NYSE Corporate Governance listing Standards, in addition to the 'unrelated' standard as specified by the TSX Corporate Governance Guidelines...
Board Composition
RBC did not permit more than two Board members from management.The President and Chief Executive Officer (CEO) of the bank, Gordon M. Nixon and the Chairman Emeritus of RBC Centura Banks Inc., Cecil W. Swell Jr., represented the management. The bank complied with provisions of the Canadian Bank Act (Bank Act) and the TSX Guidelines with regard to directors being affiliated with or related to the bank. The CGPC, with advice from outside consultants, recommended the candidates suitable for nomination to the Board and continuously reviewed the composition and mandates of all the committees...
Board Responsibilities
The Board responsibilities included succession planning, evaluation of management performance, review and execution of major business decisions, review and approval of corporate financial goals and operational plans, identification of risks, supervision of communications and public disclosure, and assessment of the effectiveness of the bank's internal controls and management information systems...
Board Committees
Committees of the Board consisted solely of independent and unrelated directors. The Board delegated specific tasks to these committees...
Audit Committee (AC)
Five independent directors and a chairman represented AC and held 11 meetings in 2003...
Conduct Review and Risk Policy Committee(CRPC)
CRPC consisted of five members and a Chairman and reviewed the credits to the directors or the entities in which they were partners, directors or officers...
Directors – Compensation
RBC regarded attractive compensation as a primary tool to attract, retain and motivate independent directors with skills and commitment to enhance shareholder value. CGPC and HRC were responsible for designing the compensation structure for all independent directors and executive directors & senior officers respectively...
Corporate Disclosure
RBC emphasized excellence and timeliness in its communications. The investor relations staff provided information to existing and potential investors and responded to all inquiries...
Concluding Notes
RBC had its share of bitter experiences despite all the steps it had taken to embrace high standards of corporate governance. In 2000, RT Capital Management, the pension management division of RBC was involved in a high-profile trading scandal...
Exhibits
Exhibit I: RBC: Segments and Services
Exhibits II: RBC: The Board of Directors
Exhibit III: RBC: Board Committees & Meetings 2003
Exhibit IV: RBC: Director Compensation 2003
Exhibit V: RBC: Stockholding Position (October 2002)
Exhibit VI: RBC: Compliance with TSX Guidelines
Buy this case study (Please select any one of the payment options)
| Price: Rs.300 |
Price: Rs.300 | PayPal (7 USD) |
