Directors of Canopy Growth Corporation (“CGC”) are elected annually by CGC’s shareholders and, together with those appointed to fill vacancies or appointed as additional directors throughout the year, collectively constitute CGC’s Board of Directors (the “Board”). The Board subsequently elects a chairperson of the Board (the “Chairperson”). In the event that the Chairperson is not an “independent director” as such term is defined under the standards and requirements promulgated by all applicable regulatory bodies exercising control over CGC, including Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market (an “Independent Director”), the Board will elect a Lead Director. At all times, a majority of the Board shall be comprised of directors who are Independent Directors.
In addition to the duties of directors of a Canadian corporation as prescribed by statute, the Board is responsible for the stewardship of CGC, overseeing its operations and supervising CGC’s management (“Management”), which is responsible for the day- to-day conduct of the business.
Specifically, the Board shall:
a) review and approve standards for CGC in terms of moral and ethical norms, as well as interpersonal relationships and corporate social responsibility;
b) satisfy itself, to the extent feasible, as to the integrity of the Chief Executive Officer (the “CEO”) and the Chief Financial Officer as well as any other “executive officer” as such term is defined under Rule 3b-7 promulgated under the U.S. Securities Exchange Act of 1934, as amended (collectively, the “Senior Executives”), and that the CEO and other Senior Executives create a culture of integrity throughout CGC;
c) monitor compliance with CGC’s Code of Business Conduct and Ethics (the “Code”) and, as appropriate, grant any waivers to the Code;
d) appoint/terminate the CEO pursuant to the recommendations of the Corporate Governance, Compensation and Nominating Committee;
e) approve the compensation plan for the CEO and the other Senior Executives annually and any special bonuses to be paid to such individuals pursuant to the recommendations of the Corporate Governance, Compensation and Nominating Committee;
f) review and approve equity-based plans, any related agreements or amendments to such plans (the “Plans”) and any awards under such Plans pursuant to the recommendations of the Corporate Governance, Compensation and Nominating Committee;
g) review and approve the corporate compensation plan, significant employee benefit programs and any material changes to such plans and programs pursuant to the recommendations of the Corporate Governance, Compensation and Nominating Committee;
h) oversee all matters relating to the legal, regulatory and financial integrity of CGC;
i) interface, as required, with CGC’s independent auditors;
j) recommend to shareholders for their ratification, pursuant to the determination of the Audit Committee, the appointment of auditors;
k) adopt, and annually review, pursuant to the recommendation of the Corporate Governance, Compensation and Nominating Committee, a system of corporate governance policies and practices, which are set forth in this Mandate;
l) approve the corporate communications policy and Insider Trading Policy, and oversee their effective implementation, with primary emphasis on non-selective disclosure and communication with shareholders;
m) review and approve major organizational changes and significant new human resource policies/programs or material changes to existing human resource polices/programs;
n) ensure the protection and advancement of shareholder value;
0) oversee CGC’s internal control and management information systems;
p) adopt a strategic planning process and approve, on an annual basis, a strategic plan which takes into account the opportunities and risks of the business;
q) approve the annual operating plan;
r) approve CGC’s quarterly and annual financial results and MD&A, management proxy circulars and their publication;
s) approve CGC’s dividend policy, if any, and any dividend payments;
t) approve significant business expansions, alliances, joint ventures, mergers and acquisitions;
u) set expectations and responsibilities of directors, including basic duties and responsibilities with respect to attendance at Board meetings and advance review of Board meeting materials;
v) appoint the Chairperson of the Board (and Lead Director if required) annually or as otherwise required;
w) consider, annually, which individuals should be nominated to the Board, based on the advice of the Corporate Governance, Compensation and Nominating Committee;
x) annually conduct a self-evaluation to determine whether it and its committees are functioning effectively; and
y) annually review and reassess this Board Mandate and any other documents used by the Board in fulfilling its responsibilities.
3. Board Compensation
It is CGC’s policy to compensate non-management directors competitively relative to comparable companies and to align directors’ interests with the long-term interests of CGC’s shareholders. The Corporate Governance, Compensation and Nominating Committee will recommend annually to the full Board for its consideration, the form and amounts of compensation and benefits for non-management directors. In its deliberations, the Corporate Governance, Compensation and Nominating Committee and the Board shall consider whether the levels of director compensation could impair independence and shall critically evaluate any consulting, charitable contribution or other potential indirect compensation arrangements. In addition, the Corporate Governance, Compensation and Nominating Committee and the Board shall seek to ensure that the compensation realistically reflects the responsibilities and risks involved in being an effective director. Directors who are current employees of CGC receive no additional compensation for Board service.
4. Board Access to Management
Board members shall have complete access to CGC’s management and are encouraged to make regular contact. Board members are normally expected to inform the CEO prior to contacting any member of management on any substantive matter. Members, however, are not expected to inform the CEO that they are contacting members of management regarding the normal activities of their Board committees. Board members shall use sound business judgment to ensure that such contact is not distracting.
5. Director Orientation and Continuing Education
The Corporate Governance, Compensation and Nominating Committee shall ensure that newly elected directors and committee members receive effective and comprehensive orientation, and that all directors are provided continuing education opportunities, both to maintain and enhance their skills and abilities as directors and, as applicable, committee members, and to ensure their knowledge and understanding of CGC’s business remains current.
6. Succession Planning
CGC understands the importance of succession planning. The Corporate Governance, Compensation and Nominating Committee shall annually review and recommend to the Board the succession plan for the CEO and the other senior executives. Taking into consideration such recommendation, the Board shall periodically analyze the current management, identify possible successors to the CEO, and timely develop a succession plan including the succession in the event of an emergency or retirement of the CEO. The plan shall be reviewed by the entire Board, and reviewed periodically thereafter.
CGC’s current committee structure includes the following committees: Audit; and Corporate Governance, Compensation and Nominating Committee. The mandates of each standing committee are reviewed periodically by the Corporate Governance, Compensation and Nominating Committee with a view to delegating to committees the authority of the Board concerning specified matters appropriate to such committees. The members of each committee, and from amongst each such committee’s members, the chairperson of each committee, are appointed by the Board annually. The CEO, Chief Financial Officer and Chief Legal Officer shall attend committee meetings upon the respective committee’s request and, subject to a committee requesting otherwise, the Corporate Secretary, or their designee, shall act as secretary at all committee meetings.
8. Qualifications and Procedures
At least twenty-five percent of the directors shall be “resident Canadians” as defined by the Canada Business Corporations Act.
The independent directors shall meet at regularly scheduled sessions at least quarterly without Management present.
The Board may retain such outside consultants and advisors (at CGC’s expense), as it deems necessary from time to time to fulfill its duties and responsibilities.
9. Individual Directors
The Board is made up of directors from diverse professional and personal backgrounds with both a broad spectrum of experience and expertise, and a reputation for business acumen and integrity. Potential new directors are assessed on their individual qualifications in the context of the needs of the Board. Individual directors are also expected to:
a) prepare for each Board and committee meeting;
b) maintain a satisfactory Board and committee meeting attendance record of no less than 75% in the aggregate, subject to recusal by the Board or relevant committee;
c) participate fully and frankly in Board deliberations and discussions;
d) demonstrate a willingness to listen to others’ opinions and consider them;
e) be willing to raise tough questions in a manner that encourages open discussion;
f) establish an effective, independent and respected presence on the Board and a collegial relationship with other directors;
g) focus inquiries on issues related to strategy, policy and results rather than day-to- day issues of corporate management;
h) think, speak and act independently;
i) be willing to risk rapport with the Chairperson, Lead Director (if one is elected) and other directors in taking a reasoned, independent position;
j) participate on committees and become knowledgeable about the duties, purpose and goals of each committee;
k) become knowledgeable about CGC’s business and the industry in which it operates;
l) participate in director orientation and development programs;
m) maintain a current understanding of the regulatory, legislative, business, social and political environments in which CGC operates;
n) become acquainted with CGC’s Senior Executives; and
o) visit CGC’s offices when appropriate.
Last Approved by the Board: May 27, 2021