Open Text Corporation (OTEX) Earnings Call Transcript & Summary

Hello, and welcome to Open Text Corporation Annual General and Special Meeting of 2020. Please note that today's meeting is being recorded. It is now my pleasure to turn the meeting over to Tom Jenkins, Chairman of Open Text. The floor is yours.

Good morning, everyone, and welcome to the Annual General and Special Meeting of the Open Text Shareholders. My name is Tom Jenkins, and I'm Chair of Open Text. We have members of our Board of Directors and management in attendance today, and we look forward to meeting with you and answering questions about your company. This year, to proactively deal with the unprecedented public health impact of COVID-19 and to mitigate risks to the health and safety of our communities, our shareholders, our employees and other stakeholders, the meeting is being held as a completely virtual meeting, which, of course, is a first for Open Text. Although we always look forward to engaging in person with our shareholders at our annual shareholders' meeting, in light of the current global pandemic, we had to provide a safer alternative. We look forward to meeting you again in person when it's safe to do so. Holding our meeting virtually means there are some differences from the way our meeting is usually conducted. However, our goal is to replicate as best we can the experience you would have had if we were meeting in person. The people who will be speaking today are not all in the same physical location. For this reason, I may have to pause from time to time to allow coordination from the different locations. I'll also pause at certain points during the meeting to provide you with an opportunity to vote or ask questions online. As in past years, we expect the vast majority of all votes will be cast in advance of the meeting by proxy. That said, registered shareholders and duly appointed proxyholders will be allowed to vote online at the meeting in accordance with the instructions provided. Given the virtual format of the meeting and in order for us to expeditiously undertake discussion on any matter proposed for a vote, we would encourage shareholders who have specific questions on a formal item of business to submit such questions now, clearly identifying the applicable item of formal business as well as your name and contact info. [Operator Instructions] During the course of this meeting, at the appropriate time, such questions will be addressed prior to the voting on the applicable motions. We'll be following the agenda for the meeting displayed on your screens. First, we'll call the meeting to order and go through procedural matters. Then we have 6 matters of business to conduct today: the first, the presentation of the financial statements; then the election of directors; then the reappointment of the company's independent auditors; then the nonbinding say-on-pay advisory resolution on the company's approach to executive compensation, the approval of a resolution reserving for issuance an additional 4 million common shares under the company's 2004 employee stock purchase plan; and finally, the approval of a resolution reserving for issuance an additional 6 million common shares under the company's 2004 stock option plan. Following the formal meeting, we will have a question-and-answer session. If you have any questions on the business of the company, not specifically relating to any item of business to be discussed at today's meeting, please feel free to submit those questions at any time, and they'll be considered at the conclusion of the meeting. Questions that are of a similar nature or repetitive will be grouped together and addressed in a single response. When asking a question, please indicate your name and contact information. If we're unable to answer your question during this meeting, a member of our team will follow up with you after the meeting. I will now call the meeting to order. This meeting has been convened pursuant to resolutions of the Board of Directors in accordance with the company's bylaws. I will act as Chair of the meeting. Michael Acedo, Vice President, Corporate General Counsel and Corporate Secretary, will act as secretary of the meeting. And I appoint Computershare Investor Services through its representatives as scrutineers to compute the votes of the ballots taken at this meeting and report those results to me, which I will disclose after the close of the polls. Before commencing with the procedural matters, I would like to call upon the secretary to make statements concerning today's remarks.

Thank you, Mr. Chairman. Please note that in the course of today's meeting, officers or directors of Open Text may, in their remarks or in response to questions during the question period, make statements, which are forward-looking under the United States Private Securities Litigation Reform Act of 1995 and under Canadian Securities Legislation. Certain material factors and assumptions are applied in making these statements, and there are a number of other factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Open Text. Additional information concerning these factors and assumptions is contained in Open Text's filings with the United States Securities and Exchange Commission and the Canadian securities regulators, including Open Text's annual report on Form 10-K.

The secretary has confirmed that notice of this meeting was duly given in compliance with applicable requirements. A copy of the notice of this meeting is available on our website and under our profile on SEDAR. I will dispense with the reading of the notice of this meeting that has been filed with me prove the service of such mailing provided by the company's transfer agent. I direct that a copy of such proof of service be annexed to the minutes of this meeting as a schedule. I've also been advised that there are voting shares representing more than 33.3333% of all outstanding voting shares of the company present. And therefore, a quorum of shareholders of the company is present, and the meeting is properly called and duly constituted for the transaction of business. I've received the preliminary scrutineers' report, and I direct that their formal report following today's voting be annexed to the minutes of this meeting as a schedule. To facilitate the meeting, I've requested that certain persons make and second the formal motions, and I'll call on those persons at the appropriate time. The voting at today's meeting will be conducted by online ballot. If you are a registered shareholder or a duly appointed proxyholder that has already voted by proxy, there will be no need for you to vote online since your vote will be recorded in accordance with your proxy instructions. However, if you wish to change your previously submitted vote, you can simply vote when prompted. The polls will be open for all items of business to be voted on at the same time. This will allow you to vote on each item immediately, or if you prefer, you may wait until the conclusion of the discussion on each item prior to casting your vote. Once the polls have been opened, the items of business to be voted on and your available voting options will be visible on the voting panel, accessible at the top of your screen. To submit a vote, please click on the voting choice displayed on your screen. You will see a vote received message confirming your vote has been taken. Once discussion has concluded on all items of business, you will have a moment to enter your votes. I'll then declare voting closed on all matters of business. The summary results of the votes will be announced prior to the close of the meeting. I now declare the polls open on all items of business. The first item of business is the presentation of the company's audited consolidated financial statements and the auditors' report thereon. The 2020 annual report to shareholders, including the company's 2020 audited consolidated financial statements and the auditor's report were delivered to shareholders in advance of the meeting. Additional copies are also available on our website and under our profile on SEDAR. If any shareholder or proxyholder has questions relating to the 2020 audited consolidated financial statements, these questions can be submitted at any time and will be addressed after the formal business of the meeting concludes. The next item of business is the election of directors. The number of directors to be elected at the meeting is 11. The proxy circular for the meeting contains the names and the backgrounds of the individuals who will be nominated by the company for election as directors. I'll ask Mary Ann Valad to read the names of the nominees.

My name is Mary Ann Valad, and I nominate the following individuals for election as directors of the company: Thomas Jenkins, Mark Barrenechea, Randy Fowlie, David Fraser, Gail Hamilton, Robert Hau, Stephen Sadler, Harmit Singh, Michael SlaunWhite, Katharine Stevenson and Deborah Weinstein.

Thank you. 11 directors are duly nominated. In accordance with the company's bylaws, I declare the nominations closed. May I have a motion to elect the nominees as directors of the company?

My name is Greg Secord, and I move that each of the individuals nominated for election at this meeting be elected as a director to hold office until the close of the next annual meeting of shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the company.

Thanks. May I have the motion seconded?

My name is Gabrielle Sukman, and I second the motion.

Thanks. At this time, I would ask the secretary to please advise of any questions received on this item of business.

Mr. Chairman, I will pause for a moment to allow for questions to be submitted. Mr. Chairman, I confirm that we have not received any further questions specifically on this item of business.

Thank you. As previously noted, we will conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxyholders can vote throughout this meeting by online ballot by selecting the applicable voting options on the voting panel displayed on their screens. If you have previously submitted a completed proxy, you will have voted in respect of the 11 nominated candidates. It's not necessary to vote again on this ballot. You may vote up for 11 nominees. Only those individuals that have been nominated are eligible for election. At least 25% of the directors must be resident Canadians. In accordance with the company's majority voting policy on director elections, each nominee must be elected by at least the majority of the votes cast with regard to his or her election at this meeting. The next item of business is the appointment of the independent auditors of the company. May I have a motion that KPMG LLP, Chartered Accountants be reappointed as independent auditors.

My name is Mary Ann Valad, and I move that KPMG LLP, Chartered Accountants be appointed the independent auditors of the company to hold office until the close of business at the next annual meeting of shareholders.

May I have the motion seconded?

My name is Greg Secord, and I second the motion.

Thank you. In order to be carried, this motion must be passed by a majority of the votes cast at this meeting. At this time, I'd ask the secretary to please advise if there are any questions received on this item of business.

Thank you, Mr. Chairman. I will pause for a moment to allow for questions to be submitted. Mr. Chairman, I confirm that we have not received any further questions specifically on this item of business.

Thank you. As previously noted, we'll conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxyholders can vote throughout this meeting by online ballot by selecting the applicable voting option on the voting panel displayed on their screens. If you have previously submitted a completed proxy, you will have voted in respect of the appointment of the auditor, and it's not necessary to vote again on this ballot. The next item of business is the nonbinding say-on-pay advisory resolution of the company's approach to exact comp. The proxy circular for the meeting contains the description of the say-on-pay advisory vote, along with the full text of the say-on-pay advisory resolution. This vote is advisory only and nonbinding on the company and the directors. In order to be approved, the say-on-pay advisory resolution must be passed by a majority of the votes cast at this meeting. May I have a motion that the say-on-pay advisory resolution in the form attached as Schedule A for the proxy circular be passed as a resolution of the company?

My name is Greg Secord, and I move that the say-on-pay advisory resolution on the company's approach to executive compensation be approved.

May I have the motion seconded?

My name is Gabrielle Sukman, and I second the motion.