RE:Corporate Governance, Canada's Big 3 scored lastBeing in this company for almost 5 years, I'm surprised that Canopy has not improved its corporate governance. I've sat on a Board many times the size of Canopy and I'm painfully surprised by its governance practices for the following reasons:
1. Bruce as Co-CEO and Chairman of the Board is not a good governance practice. Anyone who attends the Directors College courses in Niagra-on-the-Lake will learn that the CEO should not also be the Chairman. The CEO is the only employee that reports to the Board, everyone else reports up to the CEO. It's very difficult when the only emloyee reporting to the Board is also its Chairman. I've heard Bruce justify it by saying he has the most technical knowledge of how the company operates and the industry. This is not a valid reason. The Board provides overall leadership to the company and does not need to know how the company operates on a day-to-day basis, that's the CEO's job. The CEO and his/her staff provide advice/recommendations to the Board and based on the Board members knowledge/experience, decisions are made. That's why you need board members who bring a wide range of experience from governance to marketing, acquistions, legal, corporate, HR, finance, government relations, etc. I do like the fact that the Board now does have a number of independent directors (thanks to Constellation) becasue they don't have any conflict/alliance with Canopy. Bruce nededs to stop being Chairman.
2. If you watch some of Bruce's interviews, he will sometimes say "my company" or "my stock price" . That's a red flag because it's not Bruce's company, it's the shareholders (you and I). It always makes me nervous when I hear that because it makes me wonder if Bruce is making the best decisions for the shareholders or "Bruce". It goes back to the term "founderitis". The technical definition is "
Founder's syndrome (also founderitis) is a popular term for a difficulty faced by organizations where one or more founders maintain disproportionate power and influence following the effective initial establishment of the project, leading to a wide range of problems for the organization." Bruce needs to stop being Chairman.
3. Employee Stock Compensation. If you review last quarter's statements, there was $99 million in employee stock compensation. This is a non-cash item, but the amount is staggering and it leads to further dilution of the stock. Every quarter there are large amounts of this transaction and Bruce justifies it by saying that they need to attract and retain the best and that every employee from the janitor to senior management gets it. He also states that's an industry standard. OK, but the amount of stock is not justified becaue if you pay employees well, provide a good working environment and some limited stock compendsation that should suffice.
Time for football!!! GLTA
BigBagofWeed wrote: Must read.
https://www.theglobeandmail.com/business/article-why-three-of-canadas-big-cannabis-firms-scored-low/