Roots Corporation (ROOT) Earnings Call Transcript & Summary

Good morning. My name is Lindsay, and I will be your conference operator today. At this time, I would like to welcome everyone to Roots Corporation's Fiscal 2019 Annual and Special Meetings of Shareholders. [Operator Instructions] Upon completion of the formal portion of the meeting, there will be a question-and-answer session. [Operator Instructions] Before the meeting begins, Roots would like to remind listeners that some of the statements made this morning may contain forward-looking statements. These are subject to a number of risks and uncertainties that could cause actual results to differ, including as a result of the COVID-19 pandemic. Roots refers to listeners to the cautionary statements contained in its financial reports and other public documents for full details. I will now turn the line to Roots' President and Chief Executive Officer, Meghan Roach.

Thank you, operator, and good morning, ladies and gentlemen. On behalf of the Board of Directors in the company, it is a pleasure to welcome you to the Fiscal 2019 Annual and Special Meeting of Shareholders of Roots Corporation. Before we begin, I would like to acknowledge the current situation, which is causing us to meet virtually. These are unprecedented times, and the health and safety of our shareholders and the broader community is our top priority. As a result, due to the public health impact of the COVID-19 pandemic, we are unable to meet in person and are instead holding the meeting electronically by audio webcast and teleconference. For those shareholders listening to us on the phone or via webcast, you do not need to take any action during the formal part of today's meeting. We wish to thank you for submitting your proxies in advance, and your votes will be recorded as you have instructed. We look forward to returning to our regular meeting format next year and appreciate your understanding. Joining me this morning is Erol Uzumeri, our Chairman, who will oversee the formal portion of this meeting. Erol?

Thank you, Meghan. Good morning, everyone. I'd like to formally call to order the Annual and Special Meeting of Shareholders of Roots Corporation. In accordance with our bylaw, Kaleb Honsberger, Roots' General Counsel, will act as secretary of the meeting. I would also like to ask Louise Waltenbury of Computershare Investor Services, Roots' transfer agent, to act as scrutineer of the meeting. Notice of the Annual and Special Meeting was mailed to shareholders on June 26, 2020. We have received an Affidavit of Computershare Investor Services confirming the mailing. I direct that a copy of the affidavit be kept with the records of this meeting. I have been advised by the scrutineer that a quorum is present for today's meeting and I would ask that the secretary file a copy of the scrutineer's report with the minutes of the meeting. Of the approximately 42.12 million shares issued and outstanding, 21.1 million or 50.43% are represented by proxy. I, therefore, declare that the meeting is properly constituted for the transaction of business for which it has been called. I will now turn to our formal business. The items of business of the meeting are described in the management information circular, which accompanied the Notice of Meeting sent to all shareholders. There are 4 items of business to be considered today: first, to receive Roots' consolidated fiscal statements for the 52-week period ended February 1, 2020; second, to elect the directors; third, to reappoint the auditors and authorize the directors to fix their remuneration; and fourth, to consider, if deemed appropriate, to adopt, with or without variation, an ordinary resolution in the form set out in Appendix A to the management information circular, approving the amendment of the omnibus equity incentive plan, increasing the number of common shares authorized for issuance under the Omnibus equity incentive plan, as more particularly described in the management information circular. To make the best use of our time, I have arranged for Anne Hodkin and Pauline Landriault in their capacity as shareholders to move and second the proposals, which are called for in the notice of meeting. I kindly remind shareholders listening on the phone or via webcast that you do not need to take any action during the formal part of this meeting. I now place before the meeting the fiscal 2019 consolidated financial statements of Roots and the auditors' report thereon. These are included in the annual report, which has been made available to shareholders. No action needs to be taken by shareholders with respect to such financial statements. We'll now proceed to the election of directors. It is my pleasure to introduce the other Director nominees. Mary Ann Curran; Greg David; Dale Lastman, our Lead Independent Director; Rick Mavrinac, Chair of our Audit Committee; Meghan Roach, our President and CEO; Joel Teitelbaum; and Phil Bacal, who is standing for election as a Director of Roots for the first time today. Eric Zinterhofer has decided not to stand for reelection to the company's Board of Directors. On behalf of the Board and the management, I would like to thank Eric for his guidance and commitment during his time on the Roots' Board. 8 directors are to be elected. All of the nominees have consented to stand for election to the Board; 7 proposed nominees are currently members of the Board; and 1 nominee is standing for Board election for the first time. Our management and information circular contains detailed biographies setting out the professional qualifications and experience of these nominees. In keeping with best governance practices, shareholders voting by proxy vote for directors individually rather than by the full slate, I'm pleased to report that based on proxies received by the scrutineer in advance of the meeting, each director nominee received votes in favor from at least 99% of votes cast. Could I please have a nomination for the election of directors?

Hello. As a shareholder, I nominate the following persons for election as directors of Roots to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed: Phil Bacal, Mary Ann Curran, Greg David; Dale Lastman; Rick Mavrinac; Meghan Roach; Joel Teitelbaum; and Erol Uzumeri.

As a shareholder, I second each of these nominations.

Thank you. Roots' bylaw requires that nominations of directors by shareholders be received by the directors at least 30 days in advance of the meeting in order to be valid. As no nominations other than those set forth in the management information circular and included for election of the meetings -- of this meeting were received prior to the deadline, the nominations are closed. As this is an uncontested election, Roots' majority voting policy will apply, which, in short, means that any director receiving more withheld votes than votes for is required to promptly offer his or her resignation for consideration by the Board as described in the management information circular. I'm advised by the scrutineer that very few votes cast by proxy for nominees were withheld. The number of votes in favor and withheld for each individual Director nominee will be -- may be obtained from the scrutineer. You have now heard the motion for the election of directors. As there are 8 directors to be elected and the same number of nominees and based on the proxy votes received in advance of this meeting, each director has received at least 99% of the total votes in favor of their election. I now declare that the proposed nominees have been duly elected as directors of Roots to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed. I will now entertain a motion for the appointment of auditors of Roots, and the authorization of the directors to fix the auditor's remuneration for the 2020 fiscal year.

As a shareholder, I move that KPMG LLP, Chartered Professional Accountants, be reappointed as auditors of Roots until the next Annual Meeting of Shareholders and that the directors be authorized to fix the auditor's remuneration for the 2020 fiscal year.

As a shareholder, I second the motion.

Thank you. Adoption of this motion requires a favorable vote of a majority of those cast at the meeting. Management has received proxies that direct shares, representing 99% of the shares represented at this meeting be voted in favor of the resolution. I will assume that members of management here with me today are voting in favor of the resolution unless they otherwise indicate to me. As the total number of votes received by proxy in favor of this motion is substantial, I declare the motion carried and that KPMG LLP, Chartered Professional Accountants, are reappointed auditors of Roots, and that their directors are authorized to fix the auditor's remuneration for the 2020 fiscal year. The final item of business to consider and, if deemed appropriate, to adopt with or without variation, an ordinary resolution in the form set out in Appendix A to the management information circular, which accompanied the Notice of Meeting sent to shareholders approving the amendment of the omnibus incentive plan to increase the number of shares authorized for issuance under the omnibus equity incentive plan as more particularly described in the management information circular. The proposed 2 million increase in reserve shares serves to partially replenish the 2.2 million canceled shares related to options issued prior to management -- issued to prior management under legacy plans. In short, the total pool of shares allocated to management and employee incentives following the vote, will remain substantially in line with the total pool at the time of our IPO in October 2017. The purpose of the omnibus equity incentive plan is to promote the alignment of the interests of individuals eligible to participate in the omnibus equity incentive plan with those of the shareholders. An increase in the number of shares available for issuance under the omnibus equity incentive plan will allow Roots to continue to grant awards under the omnibus equity incentive plan to achieve that purpose as well as to motivate participants to achieve Roots' annual business and strategic objectives and to more closely align interests of participants with those of the shareholders. The Board of Directors unanimously supports this resolution and believes that its approval by shareholders is in the best interest of Roots and its shareholders. For this resolution to be approved by the shareholders of Roots and to be effective in accordance with applicable law, the resolution must be approved by not less than a majority of the votes cast by shareholders present in person or represented by proxy at this meeting. I now call for a motion with respect to the approval of the amendment to the Omnibus equity incentive plan.

As a shareholder, I move that the resolution to amend the omnibus equity incentive plan, as set out in Appendix A to the management information circular, which accompanied the notice of this meeting, be passed as an ordinary resolution of the shareholders of Roots.