MEG Energy Corp. (MEG) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to MEG Energy Corp.'s 2022 Annual Meeting. It's now my pleasure to turn the meeting over to Ian Bruce, Chairman of the Board of MEG. Mr. Bruce, the floor is yours.

Thank you, operator, and good morning, everybody. I'm Ian Bruce, and I'm the Chairman of the Board of MEG Energy Corp. It is my pleasure to welcome you to MEG's 2022 Annual Meeting of Shareholders. For the third year in a row, we are hosting our meeting virtually. We believe that hosting our meeting virtually is in the best interest of MEG stakeholders and in line with the corporation's commitment to protecting the health and safety of our employees and shareholders. On behalf of the MEG Board of Directors and all of us at MEG, I would like to extend our best wishes to all our stakeholders and our sincere wish that you and your families remain safe and healthy. I would like to take this opportunity to acknowledge the traditional territories of the people of the Treaty 7 region in Southern Alberta, which includes the Blackfoot Confederacy, comprising the Siksika, the Piikani and the Kainai First Nations; as well as the Tsuut'ina First Nation and the Stoney Nakoda, including the Chiniki, Bearspaw and Wesley First Nations. Let me take a minute to briefly outline procedures and guidelines to be followed. Your information screen displays instructions on how to participate in the meeting by voting and submitting questions. Voting and question functionality are only available for registered shareholders and duly appointed proxy holders. All other guests are in listen-only mode. Also, please note that because today's meeting is being webcast, there is a delay between what our speakers are saying in real time and what participants in the meeting are hearing. If at any time during the meeting you experience technical difficulties, please refer to the technical support button on the broadcast section of your screen. Polling is now open. Voting is displayed on your information screen. If you have already voted, you do not need to take any further action unless you would like to change your vote. If you're a registered shareholder or duly appointed proxy holder, you may submit a question at any time during the meeting by selecting the messaging icon on the information screen and typing in your question. The formal portion of the meeting will be followed by a question-and-answer period where we will have an opportunity to answer your questions that have been submitted online. If you are a registered shareholder or duly appointed proxy holder, you can submit your questions at any time during the meeting by selecting the messaging icon on the information section of your screen and typing your question. If your question relates to a voting matter, please submit your question immediately. We will answer your question when we reach that item during the meeting. All other questions will be answered at the end of the meeting. Before we begin the formal portion of the meeting, I would like to recognize Bill Klesse and Judy Fairburn, who have decided not to stand for reelection this year after serving on the Board since 2016 and 2019, respectively. On behalf of the Board, I would like to sincerely thank our 2 outgoing directors for their many contributions to the Board and corporation during their tenures. I am pleased that Kim Lynch Proctor has agreed to stand for nomination at today's meeting. If elected, Ms. Lynch Proctor will be a great addition to our Board of Directors, bringing extensive legal, accounting and tax expertise as well as executive experience. If the director nominees are elected as proposed, the Board will have undergone extensive renewal over the past few years with over half the members joining the Board since 2018. In addition, we remain committed to the corporation's diversity policy, which requires that females and males represent at least 30% of directors. I will now call the formal meeting to order. In accordance with the company's bylaws, I will act as Chairman of this meeting; and Lyle Yuzdepski, our Corporate Secretary, will act as Secretary of the meeting. I would like to begin with the introduction of our Board of Director nominees. In addition to Derek Evans, our President and Chief Executive Officer, who is present with us today, the Board nominees, the majority of whom are attending the meeting virtually are: myself, Ian Bruce, Grant Billing, Bob Hodgins, Kim Lynch Proctor, Sue MacKenzie, Jeff McCaig, Jim McFarland and Diana McQueen. Next, in addition to Derek Evans, the MEG leadership team attending the meeting virtually today are: Eric Toews, Chief Financial Officer; Darlene Gates, Chief Operating Officer; Chi-Tak Yee, Chief Technology Officer; Lyle Yuzdepski, Senior Vice President, Legal and General Counsel; Erik Alson, Vice President, Marketing; Jeremy Gizen, Vice President, Development; and Dave Granger, Vice President, Human Resources. Moving forward with the meeting, I appoint Elissa Rojo from Computershare Trust Company of Canada to act as scrutineer of the meeting. The business of today's meeting is described in the Notice of Meeting and Management Information Circular dated March 18, 2022, which were delivered and filed in advance of this meeting. A link to the management information circular is available on the information section of your screen. The business of the meeting is to receive the audited financial statements through the year ended December 31, 2021, and to consider and vote on 5 items as set out in the management information circular. They are: the election of the directors; the appointment of the corporation's auditor; the approval of unallocated awards under our stock option plan; the approval of unallocated awards under our restricted share unit plan; and the nonbinding advisory vote on the corporation's approach to executive compensation. For efficiency, we have prearranged for Darlene Gates and Dave Granger, both shareholders of MEG, to move and second the formal business motions. I've been advised by the Secretary that the notice of this annual meeting was properly given and that a quorum is present. Accordingly, I declare the meeting properly called and constituted for the transaction of business. We will now proceed with the formal business of the meeting. The first item of business is to receive the audited financial statements and the auditor's report for the year ended December 31, 2021. The financial statements were delivered to shareholders in advance of the meeting, and a link can be found on the information section of the screen and also on MEG's website at megenergy.com. We will now move on to the voting items. The polls are still open for voting on all items of business. You may vote at any time until the last item of business is completed, at which time I will declare the polls closed. As mentioned, voting will be conducted by online polling and your voting options should be visible on your screen if you are a registered shareholder or a duly appointed proxy holder. If you have already voted, you do not need to take any further action unless you would like to change your vote. Item 2 on the agenda of business is the election of directors. The Board of Directors has determined that 9 directors are to be elected until the next annual meeting. In accordance with MEG's majority voting policy, the directors will be voted on individually rather than as a slate. As described in the management information circular for this meeting, management proposes that the following persons be nominated for election to the Board: Grant Billing, Ian Bruce, Derek Evans, Robert Hodgins, Kim Lynch Proctor, Susan MacKenzie, Jeffrey McCaig, James McFarland and Diana McQueen. MEG's Board of Directors has adopted an advanced notice bylaw. This bylaw provides for certain requirements to be satisfied for additional director nominations to be valid. In particular, a nominating shareholder's notice of a director nomination must be given not less than 40 days prior to the applicable shareholder meeting. This advanced notice requirement is beneficial to all shareholders, including those shareholders not present or represented here today as it permits nominations to be received and considered by -- sorry, I missed this. I missed a page. To be considered and received by the corporation and the Board of Directors and all shareholders in a timely and orderly manner. As MEG did not receive any other director nominations within the prescribed notice period, we will not be considering any nominations in addition to those listed at this time. Accordingly, may I ask for a motion, please.

I move for a vote on item 2, a resolution individually electing each of the proposed nominees as a director of the corporation.

Thank you, Ms. Gates. Is there a seconder for the motion?

Mr. Chair, I second the motion.

Thank you, Mr. Granger. Are there any questions on this motion?

Mr. Chair, there are no questions on the motion.

Thank you. We will now move on to Item 3 -- sorry. Excuse me, I've got a missed -- got shuffled in the pages here. Thank you. We will now move to item 3 of the agenda, which is the appointment of PricewaterhouseCoopers LLP as auditors of the corporation as set forth on Page 6 of the management information circular for this meeting. May I have a motion, please?

I move for a vote on item 3, a resolution to appoint PricewaterhouseCoopers LLP as auditors of the corporation as set forth on Page 6 of the Management Information Circular.

Thank you, Ms. Gates. Is there a seconder for the motion?

Mr. Chair, I second the motion.

Thank you, Mr. Granger. Are there any questions on this motion?

Mr. Chair, there are no questions on the motion.

Thank you. We will now move to item 4 of the agenda, which is the approval of all unallocated stock options under the corporation stock option plan as set forth on Pages 7 and 8 of the management information circular for this meeting. May I have a motion, please?

I move for a vote on item 4, a resolution to approve all unallocated options under the corporation's stock option plan as set forth on Pages 7 and 8 of the Management Information Circular.

Thank you, Ms. Gates. Is there a seconder for the motion?

Mr. Chair, I second the motion.

Thank you, Mr. Granger. Are there any questions on this motion?

Mr. Chair, there are no questions on the motion.

Thank you. We will now move to item 5 of the agenda, which is the approval of all unallocated restricted share units under the corporation's treasury-settled restricted share unit plan as set forth on Pages 8 and 9 of the management information circular for this meeting. May I have a motion, please?

I move for a vote on item 5, a resolution to approve all unallocated restricted share units under the corporation's treasury-settled restricted share unit plan as set forth on Pages 8 and 9 of the Management Information Circular.

Thank you, Ms. Gates. Is there a seconder for the motion?

Mr. Chair, I second the motion.

Thank you, Mr. Granger. Are there any questions on this motion?

Mr. Chair, there are no questions on the motion.

Thank you. We will now move to Item 6 of the agenda, which is the nonbinding advisory resolution to approve the corporation's approach to executive compensation. May I have a motion, please?

I move for a vote on item 6, a nonbinding advisory resolution to approve the corporation's approach to executive compensation as set forth on Page 9 of the Management Information Circular for this meeting.

Thank you, Ms. Gates. Is there a seconder for the motion?

Mr. Chair, I second the motion.

Thank you, Mr. Granger. Are there any questions on this motion?

Mr. Chair, there are no questions on the motion.

Thank you. We will now pause for a moment to allow those voting online to do so. The line will go silent for 30 to 60 seconds while those online -- to allow those online to vote. [Voting]

Okay. Online polling is now closed. In order for today's resolution to be passed, the approval by a simple majority of the votes cast by shareholders must be received. I have received the scrutineer's report and confirm as follows: each director nominee is elected to the Board to hold office for the ensuing year or until their successors are elected or appointed. PricewaterhouseCoopers LLP are appointed as auditors of the corporation. All unallocated options under the corporation stock option plan are hereby approved and the corporation shall have the ability to continue granting options under the stock option plan until May 3, 2025. All unallocated restricted share units under the corporation's treasury-settled restricted share unit plan are hereby approved and the corporation shall have the ability to continue granting restricted share units under the plan until May 3, 2025. The nonbinding advisory vote to accept the approach to executive compensation has passed. I direct the Secretary to file the final scrutineer's report with the minutes of the meeting. Details of the voting results will be filed with the securities regulators and included in our news release following the meeting. This now concludes today's formal business. We will conclude the meeting and turn to the question-and-answer period of the meeting. Could I have a motion to terminate the meeting, please?

I move that this meeting be concluded.

Thank you, Derek. I declare the formal business of the meeting concluded.

Okay. We have no questions from registered shareholders or proxy holders at this time. We'll wait for 30 seconds to see if anyone has any questions to pose. If not, we will wrap up this meeting. I'm not seeing any questions. Ladies and gentlemen, on behalf of your Board of Directors and leadership team, thank you for attending our 2022 Annual Meeting of Shareholders. We wish you all a very pleasant day.