The head of Zenabis Global Inc. (ZENA.V) wants shareholders to know he has skin in the game.
Andrew Grieve took the top job at the newly-minted Vancouver-based licensed producer in January. He’s foregoing an annual salary and bonuses in lieu of 750,000 options exercisable at current market price vesting over three years, and payments tied to the stock’s performance that he won’t be eligible to receive until June 2021.
The company’s TSX Venture-listed shares have plunged about 70 per cent since hitting the market at the beginning of January. For the record, this was Grieve’s idea.
“I would much rather simply deliver shareholder value, and be paid to the extent that I deliver that value. If I don’t, I don’t. In which case, I deserve nothing,” Grieve told Yahoo Canada Finance. “I refused to take the position unless they accepted that concept.”
Zenabis Global was formed in January through the combination of privately-held licensed producer Sun Pharm Investments Ltd. and Bevo Agro Inc., a provider of propagated vegetables and flowers. Its predecessor, Zenabis Ltd., was a licensed medical cannabis producer with operations in British Columbia and New Brunswick.
The new company has had a busy 2019, announcing a supply agreement with Shoppers Drug Mart, securing a $51 million credit facility from a major Canadian chartered bank, striking purchase orders in several provinces, announcing a three-year supply agreement with a German pharma research company, as well as landing conditional approval to list on the Toronto Stock Exchange, to name a few milestones.
“When we first signed the deal for the amalgamation of the two companies, Sun Pharm only had 5,000 or so kilograms of licensed capacity. We are going to have more than 130,000 kilograms of licensed capacity by the end of the third quarter,” Grieve said. “We are moving at full speed.”
Investors have long lamented the complexity of cannabis company valuations. Zenabis is hoping to boost transparency by releasing monthly cultivation numbers, harvest forecasts, and construction updates. The first, issued on April 29, boasts increasing month-over-month cultivation output that exceeds the design capacity of the company’s facilities.
“You have to give them a benchmark that they can use to evaluate you,” Grieve said. “People deserve to know whether or not we are hitting our cultivation objectives.”
While pinning your income to the performance of a declining pot stock may sound like a terrifying proposition, Grieve isn’t going to be destitute if Zenabis shares continue their decline.
He’s the co-founder and co-head of advisory Agentis Capital, which has advised on more than $20 billion of completed acquisition, financing, and project development transactions across a wide range of sectors. Agentis has an agreement to provide advisory services to Zenabis.
Then there’s his 25 per cent stake in a garage door business.
“It's my favourite part of the site tour (of the Zenabis facility) in Langley. I always ask people what they think of these beautiful garage doors. They say they don't really care,” Grieve said.
A cannabis sector analyst, who spoke to Yahoo Finance Canada on background, said the pay arrangement is certainly unique way of trying to be aligned with shareholders.
“It's someone definitely putting the gauntlet down in terms of wanting to be serious about executing,” they said. “I'm sure it keeps Andrew motivated.”