Optiva Inc. (OPT) Earnings Call Transcript & Summary

Good morning. Welcome to the Annual and Special Meeting of the Shareholders of Optiva Inc. My name is Robert Stabile. I am the Chair of the company's Board of Directors, and I will act as Chair of this meeting. I would also like to welcome members of our online audience who are listening to the meeting via audio webcast only. [Operator Instructions] In compliance with applicable government and public health authority recommendations, those joining us in person were provided with hand sanitizer upon entrance to the meeting room and are seated 6 feet apart, all wearing face masks. As Chair of the meeting, I asked Alisse Elliot, associate of Bennett Jones, to act as secretary of the meeting. And with the consent of the meeting, I appoint Kate Stevens and Mark Manalo from Computershare, the company's transfer agent, to act as scrutineers of the meeting. In order to cover all the business for which this meeting was convened, we have prearranged with certain persons attending this morning to move and second certain resolutions. This procedure is not an attempt to discourage participation, but merely a way to expedite proceedings. Has everyone registered with the scrutineers? If not, please do so now. The meeting materials were mailed or otherwise delivered to all shareholders entitled to receive a copy of the meeting materials. I direct that copies of the documents mailed to the shareholders and the affidavit of mailing -- proven service of the meeting materials to shareholders of the record be kept by the secretary with the minutes of this meeting. The reading of the Notice of Meeting will be dispensed with. The scrutineers have presented the scrutineers' preliminary report on attendance. Based on the scrutineers' report, which shows that a quorum is present, I declare that this meeting is regularly called and properly constituted for the transaction of business. I direct that a copy of the scrutineers' report on attendance be kept with the records of the meeting. Only shareholders of record as of July 9, 2020, being the record date for this meeting, or their properly appointed proxy holders who are present in person at this meeting, are entitled to speak and vote upon matters of the meeting. Each shareholder of the company is entitled to one vote for each share held by him or her. Voting on each of the matters set out in the management information circular and set before the meeting today will take place by ballot. If you are a registered shareholder and have already submitted a proxy, it is not necessary for you to complete and submit a ballot unless you would like to change your vote. In which case, you may use the form of ballot that was provided to you when you arrived today. The form of ballot distributed to you includes each of the formal items of the business being voted today. You will be provided with a few moments to complete your ballot with respect to each item of business when that item of business is considered. To complete your ballot for all matters other than the election of Directors and the appointment of the auditor, if you are in favor of the resolution, mark an X in the box opposite the resolution under the heading for it. If you are against a resolution, mark an X in the box opposite the resolution under the heading for it. For the election of Directors, please mark an X beside the names of those persons for whom you wish to vote under the heading for. If you're voting against the appointment of any nominee Director, please mark an X in the box opposite the nominee's name under the heading withheld -- withhold. Similarly, for the appointment of the auditor, please mark an X under the heading for beside the resolution appointing the auditors. If you wish to vote against the reappointment of KPMG as the auditors, please mark an X in the box under the heading withhold, opposite the resolution appointing the auditor. Please complete the ballot at the appropriate time by printing your name and signing where indicated. If you are a proxy holder, please indicate the name of the shareholder for whom you have been appointed proxy to vote. The number of shares you are voting on your ballot will be completed by Computershare. Please do not return your ballot until we have completed all items of business. At that time, you will be asked to raise your hand and one of the scrutineers will come around and collect your ballots. Once the ballots are collected, we will take a short recess to allow the scrutineers to tabulate the ballot results and report the results of the vote. To ensure that the meeting is conducted efficiently, I ask that registered shareholders and proxy holders wishing to ask a question or make a comment pertaining to the matter being voted on do so after the motion has been moved and seconded. To make a comment or ask questions, please rise and approach one of the microphones on the floor. Somebody want point out where the microphones are? So there's one here at the front of the room on the left of me and one on my right. Prior to making your comments or asking your questions, please wait to be recognized by me as Chair. As a matter of procedure, I ask that before anyone takes the floor that you please identify yourself and confirm whether you are a registered shareholder or a proxy holder, and if the case of a proxy holder, identify the shareholder on whose behalf you are speaking. I now place before the meeting the financial statements of the company for fiscal period ending December 31, 2019, together with the report of the auditor of the company thereon, a copy of which has been mailed to shareholders. Copies of the financial statements are also publicly filed and available on SEDAR. Additional copies are available at the registration desk. Accordingly, I propose to dispense with the reading of the auditor's report on the annual financial statements. The next item of business is fixing the size of the Board of the company at 8 Directors. Will someone please move for the passing of the resolution to fix the size of the Board of Directors at 8 Directors.

I so move.

I second the motion.

I now put the motion to the meeting. Is there any discussion on the matter? The vote will be completed by ballot. Please fill out your ballot in the manner earlier indicated. Does anyone require a ballot? I will give you a moment to complete your ballot. Is anybody here actually filling out a ballot? [Voting]

All right. We will now continue with the meeting then. And the next item of business is the election of Directors, the nominees for election and their respective backgrounds who are identified in the management information circular mailed to shareholders. The nominees for election are as follows: Robert Stabile, Andrew Day, Lee Matheson, Paul Yancich, Dan Goldsmith, Ryan Morris, Anuroop Duggal and Demetrios Anaipakos. I will now entertain a motion nominating each of these -- each of those persons for election as Directors.

I so move.

I second the motion.

I now put the motion to the meeting. Is there any discussion on the matter?

Mr. Chairman, so from this [ company's ] perspective, and I think shareholders want to know, it seems like there's been a [indiscernible] strong line in [indiscernible] from the transition ESW nominees to EdgePoint and Maple Rock. And we're just wondering, and I think shareholders want to know, how has this transition benefited the company? And what value has it brought to shareholders?

During the refinancing, there were some negotiations that we're not going to debate here at this meeting with respect to supporting shareholders who backstop that financing. And they support the names, acknowledging that they needed -- that they required Board members to replace some of the ESW nominees that had enterprise software experience. And if you read the information in the bios relating to these individuals, you'll see that they're certainly qualified in bringing that kind of experience. All right. The vote will now be completed by ballot. Please complete your ballot, and I will give you a moment to do so. [Voting]

All right. We will now continue with the meeting. The next item of business is the appointment of the auditor. I ask for a motion that KPMG be appointed auditor of the company until the next annual meeting of the company and that Directors be authorized to fix the auditors' remuneration.

I so move.

I second the motion.

I now put the motion to the meeting. Is there any discussion in the matter?

[indiscernible] So you mentioned the old earnings release that you're [indiscernible] also over starting by ESW related to -- through related part of the agreement. And we wanted to understand if you have a feel for the scale that [indiscernible] magnitude is like $1 million problem? A $10 million problem? Something more than that, something less than that? And it is a big problem. It -- does it make us derivative to our [indiscernible].

So thank you for your question. So that topic is not really relevant for the fixing of the auditors in appointing KPMG again for this year. As we said in the press release, we are still reviewing that. And the company has not made any assessment on the magnitude or what actions need to be taken further at this point.

So you're concerned that the problem is big? But you have no [indiscernible]?

Again, this is really not a matter to be discussed at this topic, under this appointment of the auditors.

I mean I think our concern is, if the auditors have missed [indiscernible] then it's kind of relevant, right, in that context?

I don't think the auditors' role is to scrutinize whether a vendor is providing services that are -- that the company is receiving, let's say, the adequate value from its vendors. Vote will now -- the vote is -- sorry, the vote will be completed by ballot. Please complete your ballot regarding the appointment of the auditor, and I will give you a moment to complete your ballot. [Voting]

And we will now continue with the meeting. The next item of business is to pass the resolution to ratify and adopt the company's bylaw #2, relating to the advanced notice requirements for the nomination of directors. Can someone please move to approve the resolution, a full text of which is included as Schedule I to the management information circular, to ratify and adopt the company's advanced notice bylaw.

I so move.

I second the motion.

I now put the motion to the meeting. Is there any discussion on the matter? Okay. Do you want to come up to the microphone hub?

I believe this is in relation to the capital structure [indiscernible] I really would like to share that [indiscernible] shareholders [indiscernible] shareholders of this company, the costs and other [indiscernible] structure that we [indiscernible].

This bylaw #2 that we are looking to adopt is -- was something that was recommended by the special committee back in, I believe it was January. So the movement -- or the motion we are looking to approve here has nothing to do with the outcome and the findings of that special committee review. And so I don't think there's -- this is the appropriate time to address that question and that review. And that is something that was completed by the special committee. And I guess, it's something that is privileged information within the company, not disclosed to the public. The vote will be completed by ballot. Please fill out your ballot, and I'll give you a moment to complete your ballot. [Voting]

And now we will complete our -- we will continue with our meeting. The next item of business is to pass the resolution to ratify the company's shareholder rights plan, a summary of which can be found in the management information circular and the full text of which is available on SEDAR. Will someone please move to approve the resolution, the full text of which is included as Schedule III to the management information circular approving, ratifying and confirming the company's shareholder rights plan?

I so move.

I second the motion.

I now put the motion to the meeting. Are there any discussions on the matter?

So [indiscernible]. It seems the shareholder rights plan is designed to [indiscernible] existing with ESW practices because of any recent products. In communication, we've seen quite bad actions when ESW had full control. We specifically mentioned overture, [indiscernible] probably [indiscernible].

I don't think the shareholder rights plan is in relation to that. It is just to ensure that all shareholders are treated equally and to ensure that any offer put forth by a third-party that is unsolicited and nonbinding will properly -- follow the proper course.

Okay. And then we've done an offer [indiscernible] there right now is, we don't think everybody knows other, it's $50 a share. Do you expect shareholders to be able to sell the higher price of $50 in the year-over-year in terms? And if so, when and what's your plan to get there?

It's not the Chairman's position to speculate on stock market price. So I'm not going to address that part of it. I will say, the company continues to operate in its normal course. The executives in place that have remained continue to do what's in the best interest of the company. As a Board being reconstituted after today's meeting, there will be some discussions around how to support actions that will enhance shareholder value.

[indiscernible] again with ESW. Just to go back to the statement you made earlier, Chairman, about the [indiscernible] not being [indiscernible]. I mean that seems slightly disingenuous given the timing.