George Weston Limited (WN) Earnings Call Transcript & Summary

So thank you all for taking the time and braving the real world to come out and spend an hour with us. Good morning, and welcome to Weston's 94th Annual Meeting. I'm Galen Weston, the Chairman and Chief Executive Officer, of George Weston Limited. Each May, we look forward to this meeting and the opportunity that it provides to speak with our shareholders. As you know, over the last 2 years, with social distancing measures in place, we found ourselves unable to gather in-person. And so today, we are delighted that we're able to get together. At the same time, we'll broadcast this meeting via an online platform for those who are unable to make it in-person today. The new hybrid format will provide all shareholders with an opportunity to participate in the AGM regardless of their location. Joining me this morning on stage are Richard Dufresne, our President and Chief Financial Officer; and Andrew Bunston, the Vice President and General Counsel and Secretary of the company. The nominee directors, representatives of the auditor and other members of the company's senior management team are also here in attendance with senior executives from Loblaw and from Choice Properties. I would now like to call to order this Annual Meeting of Shareholders. I'll begin today's meeting by outlining how voting and questions will be addressed in this hybrid meeting format. Usually, and this year is no exception, the majority of shareholders submit their proxies or their voting instructions in advance of the meeting. The hybrid format allows shareholders to vote whether they are attending in-person or by virtual webcast. If you requested to vote in-person, please use the ballot that was given to you at the beginning of the meeting when you registered. If you have voted in-person with a ballot, please raise it in the air at the end of voting on all matters and a representative from the scrutineer will collect it at that time. To vote online, please use the virtual webcast platform. And when we're ready to table an item of business for the vote, you will see voting options appear on the webcast platform. If you have voted in advance of the meeting and do not wish to revoke your previously submitted proxies, then you do not need to do anything. The scrutineers will tabulate all of the votes cast during the meeting, and we will report on the results of each resolution towards the end of the meeting. Questions will be accepted in-person and through the virtual webcast platform. [Operator Instructions] We will address questions directly related to a particular motion at the appropriate time of the meeting and save general questions until the end of the meeting. We'll first answer questions posed from those in-person, followed by those questions submitted through the online platform. Andrew Bunston will read the questions submitted online allowed when requested, and either I or another member of the management team will respond. If you're attending the meeting virtually and logged on as a guest, you will not be able to ask a question as only registered shareholders and duly registered proxy holders may do so. Before proceeding with the formal part of today's meeting, I would like to take a moment to reflect on 2021 and provide an update on the progress we've made over the last year in executing our strategy at George Weston Limited. In 2021, Canadians continued to feel the impact of COVID-19 as we adjusted to a new sense of normal in our lives. Here at George Weston and across the group of companies, we've remained committed to serving the communities where we live and work and did so with a strong sense of pride and purpose. The common theme heard across the group is one of resilience. As we moved in and out of lockdowns, we've worked hard to overcome the challenges posed by the pandemic so that we could continue to keep our employees, our customers and our tenants fed, safe and well. In 2021, we also marked an important milestone on our transformation journey. Just over a year ago, we announced our intention to sell Weston Foods. And by the end of 2021, we finalized the sale with 2 excellent buyers and are pleased that they are well positioned to carry the Weston Foods business forward and unlock its growth potential in the years to come. I want to thank all our Weston Foods colleagues and management for their contributions over the years and their support in ensuring a smooth transition for the business. 140 years ago, our family business started with a single bread route. Today, we operate over 2,000 retail stores, actively manage hundreds of exceptional real estate properties and remain the largest private employer in Canada. Overall, that time, our values have remained the same, serving customers and communities well, offering quality products and seeking opportunities for innovation. Looking forward, those values will continue to guide us through both Loblaw and Choice. Having returned to Loblaw as its President this past year, we doubled down on our commitment to retail excellence in our core business, running great stores and serving customers better, all while keeping an eye on driving growth and investing in the future. And we're really happy with the progress that we've made so far. We see momentum building in every corner of the business. Choice Properties continued to deliver stable income growth and net asset value appreciation, and they've continued to strengthen their balance sheet while reinforcing the quality of their essentials-based portfolio of retail, industrial and residential properties. Across the group, we have reaffirmed our commitment to market-leading businesses and our focus on creating generational value through a combination of stability and growth. And as I reflect upon the strong financial and operating performance across our group of companies, equally important is our commitment to make a positive impact in the communities we serve. With that in mind, I'm delighted to announce the release of our 2021 ESG report, now online at weston.ca. The report shares the details of our progress to date and our ambitious goals for the future on a wide range of environmental, social and governance topics. Within it, you'll notice a particular focus on our 2 biggest internal priorities, advancing social equity and fighting climate change, 2 areas where we believe our group has a disproportionate opportunity to make an impact. This is an increasingly essential part of the shareholder value-creation model for George Weston Limited as we work to marry strong financial performance with excellent ESG credentials. While 2021 continued to test our resilience, we leaned heavily on the values that we've honed over generations as we continued to serve our customers, our tenants and our communities. Our strategy is built around 3 things: enhancing our core businesses through exceptional operating performance; driving growth through compelling strategic initiatives; and leading our industries in ESG. In 2021, we delivered handsomely on all 3. I'm encouraged by how far the company has come and inspired by what lies ahead. I look forward to an equally successful 2022. I will now proceed with the formal part of the meeting. I would ask Andrew Bunston to act as secretary of the meeting. Computershare Investor Services Inc. is acting as scrutineer of the meeting by way of its representatives, Patty Sigiannis and Kate Stevens. Only shareholders of record at the close of business on March 14, 2022 or their appropriate proxies are entitled to take part in and vote at this meeting. To make the best use of our time, certain shareholders have been asked to move and second the motions, which are called for in the notice of the meeting. A copy of the notice of the meeting and proof of its mailing have been filed with the company. The scrutineer's report indicates that a quorum is present. I now declare that this annual meeting has been properly called and is duly constituted for the transaction of business for which it has been called. Today's agenda will consist of the submission of the company's 2021 annual audited consolidated financial statements, followed by 3 resolutions: first, to elect the Board of Directors for next year; second, to appoint the company's external auditor for fiscal 2022; and third, to consider an advisory resolution on the company's approach to executive compensation. And at the conclusion of the formal items of business, we will move to our general question-and-answer period and the announcement of our voting results. On behalf of those speaking today, I would like to note that today's remarks may include forward-looking statements. Details regarding forward-looking statements can be found in the company's 2021 annual report and first quarter 2022 report to shareholders. I should also note that during the meeting, we may pause from time to time to review messages from Andrew Bunston as we coordinate the in-person and online components of the meeting. Thank you all for your patience as we do so. I would now like to welcome Richard Dufresne to say a few words.

Thank you, Galen. Good morning, everyone, and thank you for joining us today. As always, we welcome the opportunity to engage with our shareholders directly. For the past 2 years, the pandemic has created a sense of uncertainty for Canadians and businesses alike. In 2021, businesses also experienced pressures from inflation, supply chain challenges and a profound change in the way we conduct our everyday life. Despite these constant changes in our operating environment, the Weston Group of Companies continued to be flexible and adapted to the needs of its customers and tenants. Always with an eye to creating long-term value, at George Weston, we stayed focused on the strength of our assets and our strategic avenues for growth across the group of companies. 2021 was a successful year across the group, and I'm proud to share with you some highlights from the past year. With retail excellence as a consistent theme for most of 2021, Loblaw reset and refocused on strengthening core fundamentals in its food and drug retail business. This focus drove strong and consistent operational and financial performance throughout the year, even while the pandemic was continuing to impact consumer behaviors. In 2021, Loblaw delivered revenue growth of 0.9%. 0.9% sounds low, but 2020 delivered one of our highest sales growth ever because of the pandemic. Food retail same-store sales was up slightly at 0.3% as eat-at-home trends persisted and as inflation started to creep up midway through the year. Drug retail same-store sales was up 5%, reflecting strong growth in pharmacy services of over 170% driven by the administration of 3.4 million COVID-19 tests and 4.9 million vaccinations in support of communities across the country. Loblaw also saw a rebound in higher-margin categories as social restrictions loosened and Canadians returned to work and social settings. As Loblaw looked to strengthen its core, it also narrowed its focus on investing in initiatives, with the greatest potential to drive incremental growth and further strengthen its portfolio of best-in-class assets. Loblaw's online businesses surpassed $3.1 billion in sales as it continued to engage customers well above pre-pandemic levels. To meet customers' increasing demands for convenience, Loblaw improved operational processes, added micro fulfillment centers and expanded the reach of PC Express delivery to 50% of the country. With PC Optimum, one of Canada's most influential brands, Loblaw's personalized loyalty offerings continued to provide Canadians with great value. In 2021, Loblaw strengthened and built out its loyalty, issuing over $1 billion in loyalty points to its customers. As Shoppers Drug Mart played an increasingly important role to support Canadians during the pandemic, it created more opportunities to go beyond the traditional pharmacy by enhancing the in-store experience with a suite of compelling virtual health care tools. In 2021, the PC Health app reached nearly 1 million downloads as Canadians sought out new ways to access care, however and whenever they need it. In 2021, Loblaw strengthened its core business and demonstrated strong and consistent performance, while the team worked hard to keep Canadians fed and well. With this focus, along with its strategy to return capital to shareholders through buybacks and annual dividend increases, Loblaw was able to deliver an impressive total shareholder return, including dividends, of 67.9% in 2021. I would like to thank the entire team at Loblaw for their strong contributions this past year. At Choice Properties, the team continued to create enduring value through their ownership, management and development of high-quality commercial and residential properties. Throughout 2021, Choice delivered strong financial and operational results, demonstrating that their stable portfolio continues to position them well for future growth. Choice also meaningfully advanced its development pipeline and recycled capital to improve the quality of their portfolio. With nearly 700 income-producing properties totaling 64 million square feet of leasable area, Choice Properties saw strong occupancy, solid funds from operations, an increase in same-asset net operating income, while maintaining one of the strongest balance sheets in the REIT sector. Choice Properties benefit from a foundation of strong retail assets, making up 77% of its portfolio. During times of economic volatility, and the pandemic is no exception, investment-grade grocery-anchored retail properties has proven to be more and more valuable. Choice Properties' industrial portfolio continued its strongest performing -- continued to be the strongest-performing asset class in 2021. Located in key distribution markets across Canada, Choice is well positioned to meet the demands of tenants seeking space to accommodate their expanding businesses and to take advantage of further e-commerce growth. Choice has made significant progress in its mixed-use and residential platform. In 2021, Choice Properties completed 2 developments in Toronto, The Brixton and Liberty House. This category will continue to grow as Choice currently has over 80 properties in Canada's largest cities, with the potential to be transformed into residential-focused mixed-use communities. Within its active development program, Choice Properties has 2 energy-efficient projects currently underway to expand its residential footprint and several industrial projects underway to deliver new-generation logistics space for its omnichannel and retail tenants. These are some of the examples that showcase the pipeline Choice has for future growth. In 2021, Choice made the strategic decision to focus its resources and capital on the opportunities available in its 4 core business areas of essential retail, industrial, its growing residential platform and its robust development pipeline. This meant Choice would eventually exit office as an asset class. At the beginning of this year, Choice Properties entered into an agreement to accelerate its exit from office and sold 6 office properties to Allied Properties REIT. In 2021, Choice Properties delivered strong financial and operational results with a stable portfolio, made meaningful progress in their development program and continued to recycle capital to improve the quality of their portfolio. Choice successfully ended 2021 with having increased funds from operations by 3.6% from the year before. We are confident Choice's strategic decision will deliver both stability and growth over a long-term investment horizon and believe that the business is well positioned for continued success. I want to thank Rael Diamond and his team for the great work at Choice Properties in 2021. In 2021, George Weston's businesses demonstrated their ability to execute on their strategies and drive strong performance for the company. On a consolidated basis, George Weston Limited reported revenues of $53.7 billion in 2021, an increase of 0.9% compared to last year. The increases in revenue was achieved by item sales at Loblaw despite 2020 being a record year of sales. Adjusted net earnings available to common shareholders were $1.2 billion in 2021, an increase of $240 million compared to 2020. With its 2 strong businesses, George Weston generates strong cash flow from the dividends received from Loblaw, distributions received from Choice and proceeds from participation in Loblaw's normal course issuer bid. This cash flow supported the return of capital to shareholders through the repurchase of shares and ongoing annual dividend increase, contributing to a total shareholder return of 57.1% in 2021. I'm pleased to inform you that this morning, we announced a 10% increase in the GWL dividend. Looking ahead, we are confident in the strength and resilience of each of our market-leading businesses. We are committed to supporting our portfolio of companies to further strengthen best-in-class assets and build generational value in 2022 and for the years to come. We are proud of all our colleagues across the group and in meeting the everyday needs of our customers and tenants. I will now turn the meeting back over to Galen.

Okay. Thank you, Richard. That was terrific. I would now like to place before the meeting the annual audited consolidated financial statements of the company together with the notes and auditor's report to shareholders for the year ended December 31, 2021. These are included in the annual report, which was provided to shareholders and can also be retrieved from the company's website or SEDAR. Andrew, were there any questions or comments submitted online with the financial statements?

Galen, we haven't received any questions.

Thanks. Before moving to the director election process, I would like to take this opportunity to thank 4 directors who will not be standing for reelection: Andrew Ferrier; Christi Strauss; Pavi Binning; and Rob Prichard. Andrew joined our Board in 2018. Since then, George Weston Limited has been transformed. With each step, Andrew's distinctly global perspective and deep insight into food processing have contributed to that journey. As Chair of the Weston Foods Committee, he always asked pointed questions at management while never losing his enthusiasm for the business. Over the last 4 years, we've been lucky to have benefited from his unique expertise. Andrew, thank you. Christi has been a member of our Board for 6 years, during which time she consistently brought a passion for product to bear, both at the Boardroom table and as a member of the Weston Foods Committee. She would regularly push us to be more ambitious, whether with new products or on our approach to sustainability. She has left a lasting impression on all of us in the group. Christi, thank you. Those of you who joined the Loblaw AGM last week would have already heard me share that Pavi has been with our group for more than a decade, during which he's held several leadership roles, including President of GWL. Over that time, the impact he's had stretches far beyond what can be shared in a short thank you. He has been instrumental in so many transformational moments in our business, from the creation of Choice, to the acquisition of Shoppers Drug Mart and even Choice's combination with CREIT. With every step, he has brought excellence in thought, in strategy and in execution. Pavi, it has been an amazing decade at GWL, and you've been an incredible partner. Thank you. And finally, Rob. Rob leaves our Board today after more than 2 decades of service, including nearly a decade as our Lead Director. It's a bittersweet moment to be sure. Rob has always been prepared to share his perspective and in doing so, actively shaped the decisions that mattered most to our group and never more so than in his support for the generational transition at the company between my father and myself. The role he's played is a testament to the integrity and commitment that he brings to every aspect of his life. Our Board will miss you, Rob. Thank you. Although each of our retiring directors brought unique skills and insight to our work as a Board, they all share a common commitment to delivering generational value, and our group is better today as a result of their efforts. I would like our retiring directors to stand so we can thank them once more for their exemplary service. We also have 2 new director nominees standing for election today. With Pavi's retirement, Cornell Wright was appointed President of Wittington earlier this year, and we're looking forward to him joining the George Weston Board. Cornell has been a trusted adviser to our group of companies for many years, and we look forward to his contributions for many years to come. M. Marianne Harris, a long-standing and outstanding Loblaw director with deep expertise in executive management, financial matters, mergers and acquisitions and strategy, is also standing for election today. Marianne will be an excellent complement to our Board as we continue to advance George Weston's strategic agenda. With us today, seated in the front row or joining us online, are all of your director nominees. I would ask that you please stand to be recognized. There are 7 nominees for election at this meeting, and I'm pleased to report that based on the proxies received by the scrutineer in advance of the meeting, each nominee received votes in favor from at least 97% of votes cast. Our management proxy circular contains the detailed biographies, setting out the valuable qualifications and diverse backgrounds of the nominees proposed by management. We'll now consider the election of directors. To facilitate the introduction of nominees, we refer you to the slide on the webcast and projected behind me. I declare the polls open on all resolutions. Andrew, are there any questions?

No, Galen, no questions on this item.

Okay. So could I please have the nomination for the election of directors then?

My name is [ Chris Bergen ], and I'm a shareholder. Mr. Chairman, I nominate the following persons for election as directors of the company, to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed: M. Marianne Harris; Nancy H.O. Lockhart; Sarabjit S. Marwah; Gordon M. Nixon; Barbara Stymiest; Galen G. Weston; and Cornell Wright.

My name is [ Shinae Ingrew ], and I'm a shareholder. Mr. Chairman, I second the motion.

Thank you. I'll now call for a motion to move that the nominations be closed.

Mr. Chairman, I move the nominations be closed.

Mr. Chairman, I second the motion.

Thank you. If you have not already done so, I'll ask shareholders or their appointees to cast their votes by completing the ballots or through the online portal. As a reminder, if you've already voted or sent in your proxy, there's no need to do anything unless you wish to change your vote. Again, if you're voting by ballot in-person, the scrutineer will collect all ballots at the end of voting on all the various items of business. So just hang on a little longer. We'll now move to the appointment of the auditor. Andrew, were there any questions or comments submitted in connection with the appointment of the auditor?

Galen, no questions on this item.

Okay. Thanks. I'll now entertain a motion for the appointment of auditor and the authorization of the directors to fix the auditor's remuneration.

Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed as auditor of the company until the next Annual Meeting of Shareholders of the company and that the directors be authorized to fix the auditor's remuneration for the 2022 fiscal year.

Mr. Chairman, I second the motion.

Thank you. Once again, if you have not already done so, I'll ask shareholders or their appointees to cast their votes by completing the ballots or through the online portal. The next item of business is the advisory resolution regarding the company's approach to executive compensation. The resolution is more fully described on Page 17 of the company's management proxy circular. Andrew, were there any questions or comments submitted online in connection with this advisory resolution?

Again, no questions, Galen.

Thank you. I'll now entertain a motion to approve on an advisory basis the company's approach to executive compensation.

Mr. Chairman, I move that the advisory resolution regarding the company's approach to executive compensation be approved.

Mr. Chairman, I second the motion.

Thanks. If you have not already done so, I'll ask shareholders and their appointees once again to cast their votes by completing their ballots or through the online portal. [Voting]

Okay. This brings us to the end of voting on the items of business before the meeting, and I therefore declare the polls closed. Thank you for casting your votes. The scrutineers will be around to collect any in-person ballots at this time. Any other in-person ballots? Okay. I see none. Terrific. Okay. We got one more. As we approach the end of today's remarks and prepare to open the meeting for questions, I thought I would just share a little bit more perspective looking ahead. We can absolutely be proud of the accomplishments in 2021. Our portfolio delivered strong and stable performance amidst a lot of uncertainty and continued to build on generational value, serving customers, patients and tenants as well as we possibly can. Across our group, we played a meaningful role in supporting Canadians through the pandemic. And as people begin to come together once again, we're there to support their daily essentials as they stay fed and well. In doing so, we lived up to our commitment to make a positive difference. We sent less food waste to landfill, helped define global packaging rules to tackle the plastic waste challenge and increased green building certifications across our retail real estate portfolio, while also completing the first green bond offering for the company. Collectively, we deepened our sustainability commitment. We made meaningful progress with ambitious net-zero objectives. We exceeded representation goals for women executives many years early and initiated training across our entire workforce to embed the importance of diversity and of being an ally. We also raised nearly $100 million to thousands of charitable organizations to increase equitable access to mental health services, increased funding for women's access to care and to help feed children, individuals and families in need. None of this happens without our incredible colleagues. And so I would like to thank each and every one of them for their tireless and inspiring efforts in 2021 and finally, to all of you, our shareholders, for your ongoing support. I would now like to open the meeting for questions. And we'll answer first any questions from those who are in-person, followed by any questions that come through from our friends and shareholders online. [Operator Instructions] And we will make every effort to answer all questions. However, in the interest of time, we will limit the question-and-answer period to about 20 minutes, and then any unanswered questions will be addressed after the meeting by members of our management team. So we'll start in -- over here on my right.

My name is [ Doug Clary ], shareholder. After the decision was made to stop the Frito-Lay -- to stop shipping the chips, that was a lot of space, how did the team do? I mean you always had to go to alternatives. And as this is a shareholders' meeting, was the alternative profitable, neutral, negative?

Yes, that's a good question. So let me do my best to answer it without giving away any trade secrets. So I think, look, the starting point, and I think it's been widely reported in the media, for us, we're very, very focused on legitimate cost increases coming from our vendor partners across the country. There's a lot of cost pressure in the system today, and we want to make sure that real costs get reflected properly in the price of goods. However, we also want to make sure that people are not taking advantage and increasing their cost of goods higher than absolutely necessary. So we had a disagreement around the appropriateness of the cost increases with that particular vendor. And that led to an extended period, where they determined that they weren't going to ship the product to us. The good news in that is we were standing up, in our view, for the best interest of the consumer. And we also have some of the best private-label products in the world. We believe many of which are potato chips and virtually all of which sell substantially at substantially lower prices than our national brand competitors. In fact, as you walk out, you can see a big wall of no-name potato chips. And I think, what's the price, Robert, $2? $3? $3? $3, Okay, $3. $3 for 3. Okay, $1. $1, there we go. There we go, there we go. That's even better. Thank you. And then there are secondary suppliers who we worked with, who did an absolutely incredible job, I think, is fair to say, ramping up their own production so that we could fill the shelves in as many ways and forms as we possibly could while we were in this dispute with Frito-Lay. And so there was a financial impact to be sure. Frito-Lay is a very big and popular brand. But we were really pleased with how well the customer responded to the alternatives. And ultimately, we reached an appropriate settlement with Frito. And so for those of you who just can't shake your Doritos, you can make sure you'll see them in your supermarkets across the road every day. Thanks.

All right, I'm [ Paul Durnan ] from Burlington. The discontinued businesses, which include Fresh and Frozen Bakery primarily, and a loss of $317 million, as you did sold, that sounds a little bit excessive to me on what should be stable businesses serving the people every day. Somebody should have picked them up, a better profit, I would have thought.

Richard, do you want to take that one?

Yes. So yes, we never like to take losses on investments. But when you look at the whole situation, like you see -- like we exited that business, allowed us to focus on 2 strong businesses and focus all our energies on those. And that's how we see the best way to drive value for our shareholders.

Okay. I have one more question. Looking forward now, as we wind down in the COVID and people are not cooking at home as much and go back to restaurants, how directly is that going to affect the business? Now maybe your wholesaling food to restaurants is an important part of thinking. What -- how are you going to restructure things with less eating at home? Okay. Go ahead.

Yes. Yes. So it's a great question. And we're probably kind of 12 months into understanding how the Canadian consumers' behavior is going to shift. As Richard mentioned in his remarks, we have less sales ultimately today than we did during the peak of COVID. I think we were basically flat in 2021. We're starting to see sales soften perhaps even a little bit more than that. But at the same time, what's happening is we have food price inflation. So the cost of groceries is going up. That has a positive impact both in terms of the dollar amount of sales that we ring through the till, which is helpful. But it also keeps people eating at home more than you might anticipate. Restaurant food is even more expensive today than grocery store food. We have some of the biggest discount formats in all of Canada. So customers are rushing into our discount stores where they know they can get the best prices. And so, in fact, we see these 2 forces largely canceling each other out. And we don't see a major impact on the financial performance of the business coming from people eating more in restaurants.

Okay. What percent of Loblaw sales' are to foodservice at a, I'm sure, at a wholesale price? Like what percent is that number?

Very small, less than 3%.

Really?

Yes.

I had one more question.

Yes, go ahead.

Okay. Attention and -- attraction and retention of people is in the news. Does -- as Loblaw is one of the biggest employers in Canada, is that a problem with us? And there was a strike at Metro that was just settled, and Carmen Fortino, the Vice President of Ontario, said the raise was fair and reasonable. Is that something that -- is Loblaw just thinking of something like...

Yes, yes. So really excellent questions. Maybe I'll answer it in 2 sort of buckets. First of all, there's all of the colleagues we have in the enterprise who work in the offices. And then we have an enormous group of people who work in our stores. And the circumstances are a little bit different in both cases. There's pressure on employee retention in both. That pressure is significant, and we are taking meaningful and appropriate action to minimize the impact of that kind of turnover, that includes, in our offices, making sure that we have the right compensation for the most talented and important people inside the organization. But it's also about making sure that we have the best culture and the best environment for people to kind of prosper and develop inside the enterprise. And that's about culture, it's about making sure that we have the right diversity across the enterprise, it's about having the right working environment. We've just moved to a 3-and-2 balanced hybrid working environment, where we expect people in the office to come to work 3 days a week, but that they can work from home 2 days a week. These are all part and parcel of how we think we can create the most compelling and engaging environment for folks to work. And all of that, we believe, will help [ reduce retention ] and also improve productivity and performance in the business as a whole, okay? So that's, call it, the 5,000, 6,000 people across the company who work in the offices. The second is really in our stores and all of, call it, the out-in-the-market operating roles, truck drivers, people working in distribution centers and then people working in-stores and operations people in Choice Properties. So in Loblaw, we have a very substantially unionized workforce, and we negotiate on a regular basis labor contracts with a number of different unions. And we are actively engaged in a couple of union negotiations now. And like Metro, what they reported, we see constructively negotiated contracts at reasonable increases, call it, at the kind of slightly higher end of a normal range, between, say, 2% or 3%. Some of the things you've read about with other retailers who have had to increase wages in the 10% to 20%, that would have been in our view because they artificially held wages down over the previous 5 or 6 years. And so they were delivering that catch-up. So for us, we don't see any major risk on the horizon, but we remain as-ever focused on ensuring that our colleagues are the best paid in the market relative to competitors, and that helps a lot.

Hi, this is [ Linda Haswell ]. I'm a shareholder for many, many years.

Hey, [ Linda ].

Hi.

How are you?

Okay. Yes, I just have a comment to say that PC potato bread is absolutely fantastic. Don't stop it, okay?

All right. We're going to meet with Mary later today. Aren't we, Robert? So we're going to take a note and make sure that Mary, who runs the President's Choice and Loblaw Brands, we'll pass that message on to her.

Okay. Great.

Great feedback. Thanks.

My name is [ Anne Sutherland ]. I'm a beneficial shareholder.

Hey, [ Anne ].

I was wondering about what new green initiatives you might have. I know that you've become a partner or affiliated with ZooShare for a way of using your nondonatable food waste. Are there any other things that you're doing? And also, how is that working out? And what about all your flat roofs, any chance of making them green?

Oh, my goodness. Who raised that yesterday? One of our directors here was asking that question of our sustainability team who was presenting to us from Choice, when are we going to put green roofs and solar panels on every single flat top we have across the country. So it's a challenge that's already been laid down by one of our directors and certainly an area of active and intensive work on the part of Choice. I should note though, that Loblaw and Choice led the way in the first wave of putting solar panels on flat roofs across particularly Ontario. We continue, I think, to be one of the largest operators of the solar panels on our rooftops in the province certainly and continue to seek active and interesting ways to do more of that. It's really interesting, at the same time, we're aggressively and very successfully reducing the amount of energy consumption that is -- that our stores are responsible for and so really feeling confident about the journey that we're on in that respect. Some of the other things that we're doing, I think we just put out a press release, one of our major focus is on reducing plastic waste. In fact, I chair a global coalition, represents about $2 trillion worth of plastic packaging production around the world. And we've been working, over the last 18 months now, to establish a set of global packaging standards. And the idea there is that if all these manufacturers build their packaging with the same essential specifications, then it will allow recycling systems to get developed in such a way that we can substantially increase the level of recycling yield that comes from all of this plastic waste. It includes active work that we're doing with the Ontario Government to help redesign the Blue Box system in Ontario. We've already done this in British Columbia, and we've successfully transformed that system to have some of the highest plastic recycling yields in the country. And what's interesting about that, I can go on about this for quite a while, but what's interesting about that is that we're actually processing the plastic pallet -- or plastic pellets in British Columbia itself. So no garbage gets shipped outside of the province once it's been collected. We are, as I said, planning to do the same thing here in Ontario. What's not well known, I know this will be a little plug for the industry, we pay for the Blue Box systems across the country. You don't, we do. And our view is that we are experts at logistics. And that if we have more control over the way that these systems are designed, we can substantially improve their level of effectiveness. And so that's the journey that we're on. And Canada, with a high degree of confidence, is going to lead the way on this front. We have about 80% of the Canadian grocery packaging industry on board with this program, and I'm really excited about the results that it's going to deliver. And my last pitch, anybody who buys President's Choice coffee? We've just launched a revolutionary, new, no-plastic packaging solution for coffee. And I can't remember the striking statistics around how many plastic bottles, the equivalent of -- will stay out of landfill as a result of that effort. But it's another example of how we're innovating, not just with the system design that consumers don't see, but also given our strong relationship with the Canadian consumer, reaching out to them and encouraging them to take advantage of this kind of innovation when they do their own shopping. So that's just to name a few. And I'll introduce you to Kevin, who's no doubt here, and he can add to the list. It's really pretty impressive. He -- Kevin and his team are doing some extraordinary work across the board in environmental sustainability.

Thank you very much.

Okay. Thank you. Hi. I'm so pleased, by the way, aren't you, Richard, that we're getting all of these questions?

Yes. That was fun.

Somebody said to me that we don't ever get any questions, that George and I said, well, maybe because we didn't have a Loblaw in-person meeting, we'll get a few more here today. And we are, so that's terrific. Go ahead.

My name is [ Farzas ]. I'm from [ Purity Investment Trust ]. The question I have is I've seen that George Weston's debt-to-equity has raised from 84% to 110% over the past 5 years. And I was just wondering what sort of initiatives you guys are taking to reduce that.

Richard, do you want to take this one?

Yes. The way we look at our balance sheet at George level is we look at the balance sheet of each of our business to make sure that each is very strong. And Choice, being a real estate company, typically holds more debt than a retail company. So as Choice grows, the consolidated leverage at George grows. But for us, that's somewhat less important. We want Choice to have a strong balance sheet and Loblaw have a strong balance sheet. So if they do, we, George, on a consolidated basis are strong. So that's how we look at it, and we're actually feeling that George has a very strong balance sheet today. Thank you for your question.

Terrific. Thanks, Richard. Okay. Andrew, do we have any online questions?

No questions from the online platform, Galen.

Very disappointing. But it's probably good. Okay. All right. All right. We have -- okay, so let's bring to an end the question period and move on to our voting results. Yes, are we ready to do that? Okay. So we have received the voting results from the scrutineer on the 3 items of business, including the ballots that were collected just a few minutes ago. On the election of directors, the voting results show that each director nominee received votes in favor from at least 97% of votes cast. And I accordingly declare that the proposed director nominees have been duly elected to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed. On the appointment of the auditor, the voting results show that approximately 98% of the votes cast were in favor of the appointment of PwC as auditor of the company. And so I declare that PwC is appointed as auditor of the company and that the directors are authorized to set the remuneration for the 2022 fiscal year. And on the advisory vote on the company's approach to executive compensation, approximately 97% of the votes cast were in favor of the company's approach to executive compensation. And so I declare this motion to be passed. Final voting results will be available after the meeting and posted to the company's SEDAR profile. As there is no further business, can I have a motion to terminate the meeting?

Mr. Chairman, I move that the meeting terminate.

Mr. Chairman, I second the motion.

Thank you. I now declare the meeting terminated. On behalf of the company, I would like to take -- to thank you for taking the time to join us. I wish you all the best and your families, and I hope that those of you who are here in-person can join us in the atrium just outside for some delicious treats. I think what they said to me last night, the team said that you could get an entire lunch here if you stick around and sample everything that's available. So do -- don't sneak out. We got lots of terrific food on its way. And that's been provided by the team at President's Choice. Thanks, everyone.