Chorus Aviation Inc. (CHR) Earnings Call Transcript & Summary

The meeting will now begin. I will turn the meeting over to Mr. McCoy. Thank you.

Good morning. It's now 11:00 Atlantic Time, and I will call the meeting to order. My name is Richard McCoy. I am the Chairman of Chorus, and it's my pleasure to welcome you to this Annual and Special Meeting of Shareholders of Chorus Aviation. I will act as Chairman of this meeting. We are pleased to host the meeting through this virtual meeting platform, which is accessible to all shareholders and appointees regardless of physical location and allows those who have appropriately registered their attendance to submit questions and vote. We are using a virtual-only format for this meeting in order to mitigate the risks to the health and safety of our shareholders, employees and other stakeholders posed by the COVID-19 pandemic. At the outset, I would like to introduce the people with me online today. Joe Randell, our President and Chief Executive Officer; Gary Osborne, our Chief Financial Officer; and Dennis Lopes, our Senior Vice President, Chief Legal Officer and Corporate Secretary, who will act as Secretary of this meeting. I would also like to acknowledge the other members of Chorus's Board of Directors and Executive team who have logged into the webcast of this meeting. I will begin today's meeting by explaining how questions and voting will be addressed using this virtual platform. Many of our shareholders have already voted in advance of the meeting. However, shareholders or proxy holders who have chosen to vote during the meeting today will do so through the online voting facility provided through this virtual platform. Registered shareholders as of May 15, 2020, the record date for this meeting, or their validly appointed proxy holders, will be eligible to ask questions and vote at this meeting. Registered shareholders must have logged onto this webcast using the control number set out on their proxy form. Proxy holders must have logged onto this -- into this webcast using a new control number obtained from AST as described in our -- in Chorus's meeting materials. When we are ready to present the first item of business for voting, you will see voting options appear on your screen. If you have voted in advance of this meeting, you do not need to do anything. To ask a question, please click the messaging icon that appears at the top of the screen. Type your message within the text box at the bottom of the messaging screen and then click the send button. When submitting your questions, please state whether your question relates to a motion being considered as part of the formal business of the meeting or whether it is of a general nature. We will hold questions relating to formal items of business until the resolution for those items have been moved and seconded for consideration by the shareholders and proxy holders. And we will save general questions for the end of the meeting after all formal items of business have been addressed. Questions with common themes may be grouped together. The secretary will state the question allowed. And either I or one of the members of the management team with me today will respond, and we will make every effort to address all questions raised during the question-and-answer period. There are 6 items of business to be dealt with. First, the tabling of the consolidated financial statements of Chorus for the year ended December 31, 2019, including the auditor's report thereon; second, the election of directors; third, the appointment of auditor; fourthly, consideration of an ordinary resolution ratifying and approving Chorus's shareholder rights plan set forth in the agreement between Chorus and AST Trust Company dated April 27, 2020, as described in the circular and available on SEDAR; fifthly, consideration of a special resolution authorizing and approving an amendment to Chorus's restated articles of incorporation in order to create preferred shares as described in the circular; sixth, the approval in an advisory nonbinding capacity of a resolution regarding Chorus's approach to executive compensation; and lastly, the consideration of any other business that might properly come before the meeting. I note that a detailed description of each item of business is set out within the management proxy circular. Let us now proceed with the business of this meeting. I have received from official of AST Trust Company (Canada), our transfer agent, proof of mailing of the notice of availability of proxy materials and the form of proxy for voting instruction form. I direct that a copy of the notice, together with proof of mailing, be kept with the minutes of this meeting. AST Trust Company (Canada), represented by Cindy Harrett and Pat Lee, will act as scrutineers for the meeting. The bylaws of Chorus provide that a quorum is present for a shareholder meeting, if shareholders holding not less than 25% of the shares entitled to vote are present or represented by proxy, provided that a quorum shall not be less than 2 persons. The scrutineers have advised me that a quorum is present. As notice of this meeting has been duly given and a quorum of shareholders is present, I declare that the meeting is properly convened and constituted for the transaction of business. In order to facilitate the conduct of the meeting, certain shareholders of Chorus have been asked to move and second motions for the items of business set out in the agenda. All votes will be conducted by electronic poll. The poll will be open for all resolutions at the same time. This will allow you to either cast your vote on all resolutions at once or await until the conclusion of any discussion on one or more resolutions prior to casting your vote. Again, if you voted your shares before the meeting, there is no need to vote again as your vote has already been recorded. There will be an opportunity to ask questions once all resolutions have been moved and seconded. Once discussion of all items of business has concluded, shareholders and proxy holders will be given a minute or so to cast their votes. And I will then declare voting closed on all resolutions. The precise vote count for each resolution will be made public via a news release after the meeting. Please make sure to scroll to the bottom of the screen to ensure your vote on all items of business. I now declare the polls open for all resolutions. As Chorus owns 2 airlines, certain Canadian regulatory requirements affect voting procedures at this meeting. I will now ask the secretary to explain these procedures.

Thank you, Mr. Chairman. The Canada Transportation Act requires Chorus to comply with the Canadian ownership requirements applicable to holders of domestic air service licenses. These requirements are reflected in Chorus's restated articles of incorporation. The first requirement is that at least 51% of Chorus's voting interest must be owned and controlled by Canadians as defined in the act, provided further that no single non-Canadian, either individually or in affiliation with others, holds more than 25% of the voting interest; and provided that non-Canadian air service providers do not, in the aggregate, hold more than 25% of the voting interest. The second requirement is that Chorus at all times be controlled, in fact, by Canadians as defined in the act. Please note the foregoing summary is described in more detail in the management proxy circular and is qualified in its entirety by the terms of Chorus's restated articles of incorporation, which are available on SEDAR and on Chorus's website. Based on a preliminary tabulation of votes submitted by proxy in advance of the meeting and to the votes that may be cast by shareholders or their proxy holders during the meeting, no adjustment will be required for this meeting.

Thank you, Dennis. Based on the preliminary tabulation of proxies received to date and of the shareholders who will be voting during the meeting using this virtual platform, the scrutineers have advised me that we have at least 51.1 -- 51 million shares represented, being 31.5% of Chorus's issued and outstanding shares. I now present the minutes of Chorus's Annual and Special Meeting of Shareholders, which was held on May 8, 2019, which will be kept with the records of the meeting. The minutes of the meeting are available on the information page under related links and documents for those shareholders registered for the meeting. Otherwise, they are available for inspection by e-mailing [email protected]. Now let's move to our 2019 annual financial statements. The consolidated financial statements of Chorus Aviation Inc. for the period ended December 31, 2019, including the auditor's report thereon, have been sent to all shareholders that have requested them, in accordance with security legislation, and have been made available on SEDAR and Chorus's website. I now place before the shareholders these financial statements together with the auditor's report and direct the secretary to keep them with the records of the meeting. It was noted earlier that the polls have been opened for voting since the start of the formal business of the meeting. As shareholders and their proxy holders are able to vote on all resolutions at once, I will ask Nathalie Megann, a shareholder of Chorus, to move motions for all 5 items of business, and I will ask Jolene Mahody, also a shareholder of Chorus, to second the motions. Before we get to the motions, I would like to take this opportunity to express my gratitude to the shareholders and my fellow directors for the privilege of having served as your Chairman since 2008. As indicated in the management proxy circular, I will be stepping down as Chairman of the Board following the conclusion of this meeting. However, subject to people's wishes, I will remain as a director for 1 more year, as we work through the effects of the unprecedented pandemic. I do not intend to seek reelection at next year's annual shareholders' meeting, and I wish my successor, Richard Falconer, every success as Chairman. In addition, as noted in the management proxy circular, Michael Rousseau is not standing for reelection this year. I very much want to acknowledge his contribution to the Board over the last 1.5 years. Mike has been a very thoughtful and dedicated director, and his contribution will be greatly missed. I also take this opportunity to welcome Amos Kazzaz, who, subject to the wishes of our shareholders, will replace Michael on our Board. And we look forward to working with Amos. Nathalie, can you please move the motions?

Good morning, Mr. Chairman. My name is Nathalie Megann, and I am a shareholder of Chorus. First, I hereby nominate Margaret Clandillon, Gary Collins, Karen Cramm, Richard Falconer, Stephen Hannahs, Sydney John Isaacs, Amos Kazzaz, Richard McCoy, Marie-Lucie Morin and Joseph Randell for election as Directors of Chorus Aviation Inc. to serve from today until the next annual meeting of shareholders or until such time as he or she leaves the board prior to such time. Second, I hereby move that PricewaterhouseCoopers LLP be appointed as Chorus's auditors until the close of the next annual meeting of shareholders or until their successors are appointed. Third, I hereby move that the shareholder rights plan be approved in accordance with the resolution set out in the management proxy circular and in today's presentation. Fourth, I hereby move that the amendments to Chorus's restated articles of incorporation to create preferred shares be approved in accordance with the resolution set out in the management proxy circular and in today's presentation. Fifth, I hereby move that the advisory vote on executive compensation be approved in accordance with the resolution set out in the management proxy circular and in today's presentation.

Thank you. Jolene, would you care to second the motions, please?

My name is Jolene Mahody. I'm a shareholder of Chorus, and I second all 5 motions.

Okay. Thank you. Dennis, are there any questions with respect to the motions?

There is just a question or a comment relating to director -- the level of director share ownership. If you'd like now, Mr. Chairman, I can read the question.

Sure, please.

The statement is as follows: I note that several Board members have very low commitments of their own money. I am all for sweat equity, but I do like Board members to demonstrate confidence in the business they are helping to lead. I note that directors Clandillon, Hannahs and Kazzaz have no shares that they have bought outright, and several other directors have low levels of ownership through investment of their own money. Do you have a plan to increase their skin in the game?

We do have a minimum shareholding requirement, which is -- which relates to a multiple of your -- of the [ retainer ], which I think is an appropriate one. A couple of the people that are mentioned there are basically new directors and are just building their position. And a number of directors are taking their -- some of their remuneration in the form of deferred share units, which is really putting your own skin in the game. So no, I'm -- as we work through -- as these people -- as these new directors pass more time, they will increase their ownership. So I'm quite comfortable.

There are no other questions at this time.

Okay. So a reminder that the voting is now open. For those of you who have not yet voted on the motions, please do so now. Please remember to scroll down to ensure your vote on all motions. I will close the polls on all resolutions after a brief pause here to allow online votes to catch up. [Voting]

The polls are now closed. I would like to thank you for taking the time to participate in the formal business of the meeting. The scrutineers have provided preliminary voting results on the motions tabled earlier in the meeting. I declare that all candidates nominated to serve as directors have been elected and that all motions have been approved. Detailed voting results for the election of directors will follow by news release and the report on voting will be filed on SEDAR as soon as possible thereafter. Ladies and gentlemen, that concludes the formal business of the meeting, and I declare the meeting terminated. We have now come to a point where we can address general questions about Chorus and its business. I'm happy to take your questions and may ask members of the management team to respond as appropriate. As a reminder, shareholders can submit questions using the virtual online platform. I will pause for a moment or 2 here to allow questions to come through. Dennis, are there any questions you see?

No, Mr. Chairman. No other questions.

Okay. Well, thank you, Dennis. That now concludes today's meeting. Thank you all for attending.