AGM 2020

Apr 21, 2020

Good morning. My name is Jesse, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TransAlta Corporation's annual meeting of shareholders. Thank you for joining us. Ambassador Giffin, you may begin your meeting. Thank you, and good morning to fellow shareholders. Welcome to the 2020 Annual and Special Shareholder Meeting of TransAlta Corporation. Thank you for joining us today. The Board and Management very much appreciate your interest, attendance, and obviously, your investment. I am Gordon Giffin, Chair of the Board of Directors of TransAlta. Due to the COVID-19 pandemic, we are hosting today's meeting through this virtual online platform. It's a new experience for me, and I expect for you as well. Hopefully it goes along without a problem. This will allow us to provide access and participation in the meeting to all shareholders wherever they may be situated, while minimizing the risk of spreading the virus. The health and safety of our stakeholders is of paramount importance during this unprecedented time. We trust you are all keeping safe and well. While the meeting is virtually only, we will proceed in the same manner as a physical meeting. I'm joined today on the line by Dawn Farrell, President and Chief Executive Officer, John Kousinioris, Chief Operating Officer, Todd Stack, Chief Financial Officer, and Scott Jeffers, Managing Director and Corporate Secretary. The other members of the Board of Directors and TransAlta's Senior Management team are joining us by webcast. We will begin the formal business of the meeting, which will be followed by some brief comments by me and remarks by Dawn Farrell, TransAlta's President and CEO. Following her remarks, we will open the meeting for questions and answers. In conducting the business of the meeting, I would appreciate your cooperation in allowing us to move efficiently through the agenda. In order to make the best use of our time, certain shareholders have been asked to move and second the resolutions which we will consider at the meeting. I will call on them at the appropriate time. As is common at TransAlta, I would like to begin this meeting with a safety moment. As we all deal with the continued impacts of COVID-19, it is important that we remain vigilant in our attempts to mitigate its impacts and to minimize the risk of contracting and spreading the disease. The most powerful thing you can do in this regard is to practice physical distancing and self-isolation. This is a challenging time, but through our combined efforts, we can slow the spread of the virus and ensure the health and safety of our families and communities. I would like now to call the meeting to order. In accordance with the Bylaws, as Chair of the Board, I will act as Chair of the meeting, and Scott Jeffers will act as Secretary. I will begin with a few brief procedural matters for the meeting. We welcome those of you who are not shareholders or proxy holders to the meeting, but I remind you that only registered shareholders or proxy holders are entitled to address the meeting, to vote, or to take an active part in the business of the meeting. Eligible shareholders or proxy holders that wish to ask questions or make comments during the meeting may do so through the text box located on your screen and in accordance with the instructions that appear on your webpage. You can submit your live questions beginning now. All questions submitted will be provided to a moderator and then to our Corporate Secretary, who will read them aloud for the entire meeting. If you have a question or comment specific to a business matter, please make this explicit within your question or comment. We remind shareholders that following the formal business of the meeting, we will open the meeting for a Question and Answer Session. For any questions or comments, we ask that you provide your name and indicate whether you are a shareholder or authorized proxy holder. Any questions not answered during the meeting will be answered promptly following the meeting, and responses will be posted on our website. Please note that only shareholders who held shares at the close of business on March 5, 2020, the record date for the meeting, are entitled to vote at this meeting. If you are a registered shareholder or a duly appointed proxy holder and wish to vote during the meeting, you can do so through the electronic ballot that will appear on your screen. For those shareholders that are beneficial shareholders that submitted your voting instruction form directly to your intermediary, or if you named Dawn Farrell or myself as your proxy holder and returned your voting instruction form as instructed by your intermediary, your votes have already been registered with our transfer agent, and there is nothing further that you need to do. I wish to express thanks to those many shareholders that have already submitted their proxies in advance. The Secretary has provided me with proof that the notice of this meeting and the accompanying proxy circular, proxies and voting instruction forms, an annual report containing the audited consolidated financial statements of the Corporation for the fiscal year ended December 31, 2019, were mailed on March 20, 2020, to shareholders of record at the close of the record date. With the consent of the meeting, Kyle Gould of Computershare Trust Company, the Corporation's registrar and transfer agent, will act as Scrutineer and report on the number of shareholders present in person and the number of shares represented in person or by proxy. Computershare is on the line and have detailed records relating to the holdings of common shares on March 5, 2020. The Scrutineers have provided me with a preliminary report on the attendance. The count indicates that approximately 60% of the common shares outstanding are currently represented at the meeting. I therefore declare that a quorum is present and that this meeting is properly constituted for the transaction of business. A copy of the Scrutineer's final report will be filed with the records of this meeting. There are seven formal items of business to be dealt with today. You are asked to elect 12 nominees for Directors of the Board for the coming year, to receive the annual report and financial statements of the Corporation for the fiscal year ended December 31, 2019, and the auditors' report on those statements, to reappoint the Corporation's auditors, Ernst & Young LLP for the ensuing year, to consider a non-binding resolution relating to the Corporation's approach to executive compensation, otherwise known as say on pay. To consider an ordinary resolution to ratify, confirm, and approve the amendment and restatement of the Corporation's amended and restated By-law Number 1. To consider an ordinary resolution to ratify, confirm, and approve the amendment and restatement of the Corporation's Advance Notice By-law Number 2. Finally, to consider an ordinary resolution to ratify, confirm, and approve the amendments to the Corporation's Stock Option Plan. These items are described in detail in this year's Management Proxy Circular. Voting for all matters will proceed by way of ballot. The polls are open and will remain open until the last item of business to be voted on has concluded. The ballot for each motion will be collected by the Scrutineers, and the results of each ballot will be tabulated by the Scrutineers and announced following the last item of business. Starting with the minutes of the last Annual Meeting of Shareholders, which was held on April 26th, 2019, I declare that the minutes have been verified and signed and are filed in the Corporation's minute book. Anyone wishing a copy of the minutes may contact the Corporate Secretary following this meeting. We will now move to the first item of formal business, the election of directors to the Board of Directors. Nominations have already been proposed in the Management Proxy Circular. The 12 individuals being proposed for nomination and election are Rona Ambrose, John Dielwart, Dawn Farrell, Robert Flexon, Alan Fohrer, Harry Goldgut, Richard Legault, Yakout Mansour, Georgia Nelson, Beverlee Park, Bryan Pinney, and Sandra Sharman. The detailed biographies of the directors standing for election to the Board are included in the Management Proxy Circular. With the exception of Sandra Sharman, each of the nominees being recommended are current members of the Board. Sandra is the Senior Executive Vice President and Group Head, People, Culture, and Brand at CIBC. She has over 30 years of human resources and financial services experience in both Canada and the United States. Sandra's executive experience and leadership accomplishments within an international and complex business make her a very valuable addition to our Board. Those are the 12 individuals being proposed, each of whom has agreed to serve as a Director, if elected. I now declare the meeting open for nominations. Scott Jeffers, would you please nominate the preceding 12 individuals as Directors for the coming year? My name is Scott Jeffers. I'm a shareholder, and I nominate the following nominees for election to the Board. Rona Ambrose, Harry Goldgut, John Dielwart, Richard Legault, Dawn Farrell, Yakout Mansour, Robert Flexon, Georgia Nelson, Alan Fohrer, Beverlee Park, Bryan Pinney, and Sandra Sharman, to be elected as Directors of the Corporation to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. Thank you, Scott. Under the Corporation's majority voting policy, in an uncontested director election, the votes cast in favor of each director nominee must represent a majority of the total votes cast at the meeting. Additional details about TransAlta's majority voting policy are contained in our management proxy circular, beginning on page 29. Under TransAlta's Advance Notice By-laws, shareholders are required to give at least 30 days advance notice of their intention to nominate any other directors at the meeting. As no notices were received under the Corporation's Advance Notice By-law, I will now ask Robert Millard to move a motion that the nominations be closed and Gary Woods to second that motion. My name is Robert Millard. I am a shareholder, and I so move. My name is Gary Woods. I'm a shareholder, and I second the motion. Thank you, Robert and Gary. Scott, have we received any questions or comments in regard to the election of Directors? We have not, Chair. Thank you. Thank you. Given that there are no comments or questions, we will now proceed to a vote. You are able to vote for or withhold for each of the individual director nominees. We remind you that the Board is recommending voting for each of the 12 director nominees set forth in the management proxy circular. The next item of business is the submission of our 2019 annual consolidated financial statements together with the auditor's report. A copy of the 2019 annual report, which contains the annual consolidated financial statements for the fiscal year ended December 31, 2019, together with the auditor's report, has been mailed to each registered and beneficial shareholder who requested a copy. Copies are also available online under the Corporation's profile. Are you ready? At sedar.com. You need to eat something? On TransAlta's website. Are you starving? The Board of Directors has approved these financial statements, and the Secretary will now be asked to table the financial statements and auditor's report. Mr. Chair, the corporation's annual consolidated financial statements for the fiscal year ended December 31st, 2019, together with the auditor's report, are tabled. Thank you, Scott. Ms. Janice Rath, a representative of Ernst & Young LLP, is also available to answer questions with respect to the annual financial statements of the corporation. Scott, have we received any questions or comments on the financial statements? We have not, Chair. Thank you. Thank you. The next item of business is the reappointment of the auditors. As you will see in the Management Proxy Circular, shareholders are being asked to authorize the reappointment of Ernst & Young LLP as auditors for TransAlta for the ensuing year at such remuneration as will be fixed by the Board. I will now ask Mr. Robert Millard to move a motion that Ernst & Young LLP be reappointed auditors of the Corporation to hold office until the close of the next Annual Meeting of Shareholders, and Gary Woods to second that motion. My name is Robert Millard. I am a shareholder, and I so move. My name is Gary Woods. I am a shareholder, and I second the motion. Thank you, gentlemen. Scott, have we received any comments or questions on this matter? We have not, Chair. Thank you. Thank you. We remind you that the Board is recommending voting for the reappointment of Ernst & Young LLP as the auditors for TransAlta. The next item of business is consideration and approval on an advisory basis of an ordinary resolution approving TransAlta's approach to executive compensation, commonly known as say on pay. The effect of this non-binding advisory resolution is to give shareholders the opportunity to endorse or not the Corporation's approach to its pay program and policies for its executives. The full text of this non-binding advisory resolution is set out on page 36 of this year's Management Proxy Circular. To be effective, the resolution must be passed by a majority of the votes cast at this meeting. I will now ask Robert Millard to move the resolution to accept the Corporation's approach to executive compensation and Gary Woods to second that resolution. My name is Robert Millard. I am a shareholder, and I move that the non-binding advisory resolution regarding TransAlta's approach to executive compensation, the text of which is set out on page 36 in this year's management proxy circular, be passed as a resolution of the shareholders of the corporation. My name is Gary Woods. I'm a shareholder, and I second the resolution. Thank you, gentlemen. Scott, have we received any questions or comments on this matter? We have not, Chair. Thank you. Thank you again. We remind you that the Board is recommending voting for the Corporation's approach to executive compensation. The next item of formal business is the consideration of an Ordinary Resolution ratifying and confirming and approving the amendment and restatement of the Corporation's Amended and Restated By-law Number One. Full details of the amendments, including the full text of the Ordinary Resolution, are set forth on pages 36-39 of this year's Management Proxy Circular. To be effective, this Resolution must be passed by a majority of the votes cast at this meeting. I will now ask Robert Millard to move a motion that the Ordinary Resolution approving the amendment and restatement of Amended and Restated By-law Number One be approved, and Gary Woods to second that motion. My name is Robert Millard. I am a shareholder. I move that the resolution with respect to the amendment and restatement of the Corporation's amended and restated By-law Number one, as set out on page 38 in this year's Management Proxy Circular, be passed as a resolution of the shareholders of the Corporation. My name is Gary Woods. I'm a shareholder, and I second the motion. Thank you, gentlemen. Scott, have we received any questions or comments on this matter? We have not, Chair. Thank you. Thank you. We remind you that the Board is recommending voting for the amendment and restatement of the Corporation's amended and restated By-law number 1. The next item of formal business is the consideration of an ordinary resolution ratifying, confirming, and approving the amendment and restatement of the Corporation's Advance Notice By-law number 2. Full details are described on pages 39-41 of this year's Management Proxy Circular. The complete text of the ordinary resolution approving the amendment and restatement of Advance Notice By-law number 2 is set out on page 41. To be effective, this resolution must be passed by a majority of the votes cast at this meeting. I will now ask Robert Millard to move a motion that the ordinary resolution approving the amendment and restatement of Advance Notice By-law number 2 be approved, and Gary Woods to second that motion. My name is Robert Millard. I am a shareholder. I move that the resolution with respect to the amendment and restatement of the Corporation's Advance Notice By-law number two, as set out on page 41 in this year's Management Proxy Circular, be passed as a resolution of the shareholders of the Corporation. My name is Gary Woods. I am a shareholder, and I second the motion. Thank you, Robert and Gary. Scott, have we received any questions or comments on this matter? We have not, Chair. Thank you. Thank you. We again remind you that the Board is recommending voting for the amendment and restatement of the Corporation's amended and restated By-law Number One. The next item of formal business is the consideration of an ordinary resolution ratifying, confirming, and approving an amendment to the Corporation's Stock Option Plan to increase the number of common shares that may be issuable upon exercise of options granted under the Stock Option Plan. Full details regarding this matter is set forth on pages 41-43 of this year's Management Proxy Circular. The complete text of the ordinary resolution approving the amendment to the Stock Option Plan is set out on page 43 of this year's Management Proxy Circular. To be effective, this resolution must be passed by a majority of the votes cast at this meeting. I will now ask Robert Millard to move the motion that the ordinary resolution approving the amendment of the Corporation's Stock Option Plan be approved, and Gary Woods to second that motion. My name is Robert Millard. I am a shareholder. I move that the resolution with respect to the amendment to the Corporation's Stock Option Plan, as set out on page 43 in this year's management proxy circular, be passed as a resolution of the shareholders of the Corporation. My name is Gary Woods. I am a shareholder, and I second the motion. Thank you, Robert and Gary. Scott, have we received any questions or comments on this matter? We have not, Chair. Thank you. Thank you. We remind you that the Board is also recommending for the amendment to the Corporation's Stock Option Plan. That brings us to the end of the items of formal business for this meeting. Scott, prior to closing the polls, can you confirm whether we received any questions or comments on any of the matters of business? We have not received any questions or comments specific to the items of business. Thank you. Thank you. Therefore, there being no further business, the polls are now closed. The scrutineers will now count the votes and report back to the meeting. This will take a moment. I will pause briefly and then be right back with you. Through the magic of technology, I have received from the scrutineers their preliminary report on the ballots. With respect to the election of directors, the scrutineers have reported, and I declare that the following 12 nominees have each been properly elected as directors of TransAlta for the ensuing year. Rona Ambrose, Harry Goldgut, John P. Dielwart, Richard Legault, Dawn Farrell, Yakout Mansour, Robert Flexon, Georgia Nelson, Alan Fohrer, Beverlee Park, Bryan Pinney, Sandra Sharman. A press release and report on voting results indicating the detailed outcome of the vote on the election of directors will also be publicly filed after this meeting on SEDAR. I will now ask Mr. Gould of Computershare and the Scrutineer for the meeting to report on the votes cast on the other motions voted on at this meeting. Mr. Gould? Thank you. The Scrutineers report that the shareholders present in person or represented by proxy have voted as follows. With respect to the appointment of Ernst & Young LLP as auditors of the Corporation for the ensuing year, the ballot results show approximately 98.93% of votes cast for the motion, and approximately 1.07% cast against the motion. Thank you. I declare that motion carried. With respect to the approval of the advisory resolution concerning TransAlta's approach to executive compensation, the ballot results show approximately 98.75% votes cast for the motion, and approximately 1.25% cast against the motion. Thank you. I declare that motion carried. With respect to the approval of the Ordinary Resolution approving the amendment and restatement of Amended and Restated By-law Number One, the ballot results show approximately 99.50% cast for the motion and approximately 0.50% cast against. Thank you. I declare that motion carried. With respect to the approval of the ordinary resolution approving the amendment and restatement of Advance Notice By-law Number Two, the ballot results show approximately 99.61% votes cast for the motion and approximately 0.39% cast against the motion. Thank you. I declare that motion carried. Finally, with respect to the approval of the ordinary resolution approving the amendment to the Stock Option Plan, the ballot results show approximately 94.94% votes cast for the motion and approximately 5.06% cast against the motion. Thank you. I declare that motion carried. That now concludes the formal business of this meeting. Since there is no further business, I declare that the formal business of the meeting is terminated. Before I turn the presentation over to Dawn, our CEO, I would like to make a few remarks of my own. I have been honored to serve as Chair of the TransAlta Board of Directors over the past nine years. This period has been one of remarkable transition for the company through a variety of challenges and headwinds, which I have discussed at prior annual meetings. While I won't review those details now, I must observe that through the dedication and diligence of the TransAlta family, thousands of TransAlta employees and executives, and the focus of our Board, your company has successfully transitioned from a 20th century coal-fired power producer to a 21st century leading clean power generator with a very bright future for the benefit of all stakeholders. I use the term family to convey the remarkable cohesion and spirit of the TransAlta team. From the plant floor to the executive office and the boardroom, the diligence and dedication has been extraordinary. I want to personally thank each TransAlta employee for their commitment to the company and to each other. Since our last annual meeting, TransAlta has made real and tangible progress in the execution of our strategic vision for the future. We consummated the strategic partnership with Brookfield Renewables, we reduced corporate debt, we accelerated the initiative to convert coal plants to natural gas, we expanded the renewable fleet, and we added four new dynamic and experienced professionals to our Board. The Company is truly positioned for success in the next decade. Even the stock market began to recognize this fact until one last headwind hit, the coronavirus. Like the other challenges before, this one will not stop our progress. I can report to you that the TransAlta family is responding to this challenge as it did to the previous ones, with spirited unity, dedication, and enthusiasm that ensures TransAlta will emerge from this challenge even stronger. They are not missing a beat. As I step aside, I want to express special thanks to our CEO, Dawn Farrell, the matriarch of the TransAlta family. Without doubt, Dawn is an intelligent, decisive leader with the keen insight for the future and judgment about how to manage in the present. The qualities that make Dawn truly special, however, are her passionate commitment to this company and its people, her innate character, integrity, and unwavering commitment to do the right thing. Dawn's leadership, under the watchful eye of my successor, John Dielwart, a good and talented man steeped in Alberta and its values and principles, in partnership with a renewed and dedicated Board, ensures that TransAlta's future is bright. It has been a true pleasure and honor to share the TransAlta journey. I plan to remain a part of this family, perhaps as a distant cousin. Dawn, I'm pleased to turn it over to you now. Thank you, Gordon, and we'll be happy to maintain that relationship. Thank you very much for those comments. Welcome, everybody, to our first-ever virtual annual meeting. Although I enjoy speaking with many of you when we get to meet in person, I guess this year we had to really undertake this virtual annual meeting. We very much have been working hard to ensure the safety of our employees and all our stakeholders, so it was just in keeping with our values. I will keep my comments short because I think we all have lots of time for questions. Today, I'm going to comment on the company's response to the COVID-19 pandemic, and I'll talk about our financial resiliency. Finally, I do want to make some comments about our incredible employees and the work that they're doing during this unprecedented time. Now, for us, since early March, we implemented our business continuity plan. What we did is we got every employee that could work remotely, starting to work remotely. We have about 600 people now working, connected through their computers, working at home, and working as if they're not missing a beat. The employees and the contractors that needed to stay in our facilities so that we could continue to operate and maintain them have modified their work schedules and practices to ensure that they remained healthy and safe, and at the same time are able to generate the essential power that's needed to run the economies for all of our customers across our fleet. Our changes in our practices have included health and temperature screening. We've enhanced our cleaning arrangements. Of course, we have travel bans. We've revised our crew schedules and have created contingent working teams so that we will never miss a beat. We've reorganized processes and procedures so that employees very much limit their contact with one another while they're at the site. As a result of that, currently, all of our facilities remain fully operational and capable of meeting our customer needs. Our employees remain healthy and safe. We do continue to monitor daily recommendations by the public health authorities related to the virus in all of our operating regions, and we are adjusting operational requirements as we learn new things about the virus and as we go. I would like to say that our frontline plant employees are some of the unsung heroes in this pandemic. They are absolutely leading the way on how to work and stay safe, and all of their experiences will be used as we move to phase two, past the crisis and begin to learn how to live and work with the virus. Now, in terms of our financial resiliency, we were very strong coming into this, and we remain strong. The company currently has CAD 1.7 billion of liquidity, and the additional CAD 400 million that comes in from the second tranche of the Brookfield investment will offset the upcoming debt maturity that comes in November of 2020. The company has strong access to additional capital should we need it, and we still have a lot of capability for project financing with our existing assets that are currently unencumbered. Our next major debt repayment is not till November 2022, so we feel that we are very well set up for the situation that's occurring as we speak. As you all know, we have a highly diversified asset portfolio, and that's by fuel type and operating region and as well, contract tenor. That provides stability in our cash flows and will highlight the strength of our company as we go through the next couple of years. We do today continue to work with and serve all of our customers and markets and our counterparties under the terms of the existing contracts. We have not experienced interruptions to any of our service requirements, including electricity and steam supply. We continue to remain a critical part of the service requirements that our customers and markets need. We have been deemed an essential service in all of our jurisdictions, which gives us the flexibility to ensure that we can keep our operations running. It also gives us a special obligation to ensure that as our essential service workers are out there doing their work, that we have the protocols in place to ensure that they remain safe during all of this. On that, I'd like to really say thank you to all of our employees and our contractors who have very quickly adapted to this new norm of social distancing and have embraced the challenges that working remotely has created. They are working hard every day to make the company more valuable by doing what the communities need most. They're continuing to deliver low-cost and clean power to our customers. I'd like to just make a special call-out to their families, who are a large part of the success of how we've been able to very quickly adapt to this new way of working. Lastly, on behalf of the Board of Directors and myself personally, I really do want to thank Ambassador Gordon Giffin, who has been with us for 18 years as a Director and nine of them as our Chair, and of course, has been my Chair since the day I started as our CEO. He has been enormously helpful as a partner in helping to steer the company through a period of what's been some really remarkable changes. He's been key in including the transformation of our platform, both in terms of our regional impacts and our technology. He's helped us successfully maneuver the company through some pretty unprecedented changes in regulatory regime, and he's helped us create a strategy which will ensure that our assets continue to generate strong cash flows into the future. Gordon talked earlier about being part of the TransAlta family. That's because TransAlta people hold a very strong set of core values, and Gordon has always exhibited those values alongside us in every decision that we've had to make. I personally, and our team and the Board will miss his guidance, and we know that we'll be connecting with him more than once as we go forward from here. I'm also very pleased to welcome Gordon's successor as Chair, John Dielwart. He served on our Board since 2014. He's a highly respected leader here in Canada, most notably as the former Chief Executive Officer of ARC, where he oversaw the growth of that company from a startup to a total capitalization of almost CAD 10 billion by the time he retired in 2013. John knows TransAlta well. He also holds dearly the TransAlta values in the way that he operates. His guidance and insight will be invaluable as he takes the helm and as we move forward. With that, Gordon, I'm going to turn the meeting back over to you for our Q&A. Again, thank you for all that you've done for TransAlta and for me personally. Thank you. We will now move to questions and answers. Questions may only be asked by registered shareholders and duly appointed proxy holders and should be of interest to all shareholders. If you have questions pertaining to specific matters of personal interest, management would be pleased to answer your questions following the meeting. We ask that you only ask questions at this meeting that are of general interest to shareholders. Questions can be asked by typing the question into the text box of your webcast. In your questions, please state your name and whether you are a shareholder or proxy holder. The meeting is now open for questions. Mr. Jeffers, do we have any questions? No, Mr. Chair, there are no questions. Are we sure the website's working? I hope so, Chair. Well, thank you. We appreciate the attendance at this meeting. We appreciate the support that shareholders have exhibited in their votes for the resolutions. At this point, there being no questions, the formal meeting having been concluded, on behalf of the Board, I would like to thank everyone for attending our meeting and for your participation. I wish you all the best. Please stay safe and healthy. Thank you for attending. Thank you for your commitment to TransAlta. This concludes today's conference. You may now disconnect.