Canopy Growth Corporation (WEED) Earnings Call Transcript & Summary

Hello, and welcome to the 2020 Canopy Growth Annual General and Special Meeting of Shareholders. Validated shareholders and proxy holders may ask questions in the designated field on the virtual meeting web portal. Questions may be submitted now until the close of the meeting. Questions regarding matters to be voted on will be addressed before voting is concluded. [Operator Instructions] Questions must be submitted in accordance with the rules of conduct, which are posted in the meeting materials section of the virtual meeting web portal. I will now turn the meeting over to Judy Schmeling, Chair of the Board of Directors for Canopy Growth.

Thank you. Good morning, and welcome to the 2020 Annual General and Special Meeting of Shareholders for Canopy Growth Corporation. I am Judy Schmeling, Chair of the Board of Directors of Canopy Growth, and I will be acting as Chair of the meeting today. For the first time, and as permitted in our bylaws, we are holding our meeting virtually by way of live audio webcast. It is just past 10:00 a.m. Eastern Time, and the annual meeting will now come to order. I would like to start by introducing the current members of Canopy's Board, in addition to myself, who are in attendance today: David Klein, Chief Executive Officer of Canopy; Robert Hanson; David Lazzarato; William Newlands; Theresa Yanofsky; Jim Sabia. I would also like to introduce the members of Canopy's management team, who are also in attendance today: Mike Lee, Executive Vice President and Chief Financial Officer; Rade Kovacevic, Chief Product Officer and President; Phil Shaer, Chief Legal Officer and Corporate Secretary; and Judy Hong, Vice President of Investor Relations. In addition, we are joined by Will Stephen from KPMG, our independent auditors. He will be available during the meeting to respond to appropriate questions, if needed. Finally, Canopy has appointed Broadridge Financial Services through its representatives to act as scrutineer. I would now like to introduce Phil Shaer, who will be acting as secretary for today's meeting.

Thank you, Judy, and good morning, everybody. During the meeting, we will review the matters described in our proxy statement dated August 7, 2020, following which voting will commence. When all matters of business have been voted on, the scrutineer will tabulate the votes, and I will announce the preliminary results. The final voting results will be promptly filed with the SEC and on SEDAR. Following the formal portion of the meeting, we will commence a brief question-and-answer period. The Board fixed July 28, 2020, as the record date for determining shareholders entitled to vote at this meeting. An affidavit has been delivered by Broadridge Financial Services. The notice of this meeting has been duly given, and attesting to the fact that the applicable meeting materials were mailed to all applicable shareholders as of the record date in accordance with applicable laws. This affidavit will be attached to the minutes of this meeting, as is scheduled. The scrutineers have advised me that prior to the meeting, proxies were received from the holders of a sufficient number of common shares to constitute a quorum for purposes of transacting business. The formal report of the scrutineers will be attached to the minutes of this meeting, as is scheduled. With a quorum present, this meeting is duly constituted for the transaction of all business. Judy, please commence with the review of the meeting proposals.

Thank you, Phil. No shareholder nominations or proposals have been properly submitted or filed in advance of this meeting, and therefore, the matters for this meeting are those listed on the meeting agenda. The first matter of business is the presentation of Canopy's audited consolidated financial statements as of March 31, 2020, and 2019 and for each of the years in the 3-year period ended March 31, 2020. The financial statements, along with the auditor's report thereon, are available to shareholders for review and presentation under the Meeting Materials section of the virtual meeting web portal. They are also available under our 2020 Annual Report filed with the SEC and on SEDAR on June 1, 2020. We will now move on to matters to be voted on. Further details of each proposal have been set out in our proxy statement, which has also been filed with the SEC and on SEDAR on August 7, 2020. Proposal 1, the election of each of the 7 Director nominees named in our proxy statement to serve until our 2021 Annual Meeting of Shareholders or until their successors are duly elected or appointed. The 7 Director nominees are: Judy Schmeling, David Klein, Robert Hanson, David Lazzarato, William Newlands, Theresa Yanofsky, Jim Sabia. Proposal 2, the reappointment of KPMG LLP, chartered professional accountants, as Canopy's independent registered public accounting firm for fiscal year 2021 and to authorize the Board to fix KPMG's remuneration. Proposal 3, the approval of all unallocated awards issuable under Canopy's Omnibus Incentive Plan as well as certain amendments to the plan, which increased the maximum term for options issued under the plan from 6 years to 10 years. Proposal 4, approval of certain amendments to Canopy's Employee Shareholder Purchase Plan to, among other things, increase the maximum number of shares issuable under the plan by 200,000 common shares. Proposal 5, the adoption of advisory nonbinding resolution approving the compensation of our named executive officers, commonly known as a Say-on-Pay proposal. Proposal 6, the adoption of an advisory nonbinding resolution to determine the frequency on which advisory Say-on-Pay votes are presented to shareholders. The options for such voting frequency are every 1, 2 or 3 years. The Board unanimously recommends voting in favor of each of proposals 1 through 5 and that the Say-on-Pay vote occur every year. The polls are now open. Every shareholder has 1 vote in respect of each share held. If you have already voted or sent in a proxy, there is no need for you to vote by poll unless you would like to change your vote. You may vote by clicking the Vote Here button on the virtual meeting web portal. Following your selections, you must click Submit in order for your vote to be counted. Polls will be open for roughly 1 minute to allow registered shareholders and duly appointed proxyholders an opportunity to vote. During this time, I will answer submitted shareholder questions that relate to the proposals being voted on. Judy Hong, have we received any such shareholder questions?

No, we have not received any questions regarding the proposals.

Thank you, Judy. With no questions, we will leave the line silent until voting is concluded. [Voting]

I now declare the polls closed. Phil, could you please announce the preliminary voting results?

I have been advised by the scrutineers that based on the votes represented by proxy at this meeting, a sufficient number of votes have been cast in favor of each of the resolutions presented at this meeting and in favor of holding Say-on-Pay votes every year. I, therefore, declare each of the resolutions carried.

Thank you, Phil. Rather than hold up the meeting for the final tabulation of votes casted online voting system, I direct that the final results of each poll be attached to the minutes of this meeting and filed with the SEC and on SEDAR as required. With all formal business of the meeting concluded, I would like to terminate the 2020 Annual General and Special Meeting of the Shareholders of Canopy Growth Corporation. Thank you. We will now begin a brief question-and-answer session, where our CEO, David Klein, will be answering questions submitted by shareholders. Judy Hong, our Vice President, Investor Relations, U.S., will moderate the question-and-answer session. Judy?