Document
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No.  )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material under §240.14a-12

CRONOS GROUP INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:




Table of Contents
April 28, 2020
Dear Shareholder:
On behalf of the Board of Directors and management of Cronos Group Inc., I am pleased to invite you to the 2020 Annual and Special Meeting of shareholders which will be held on June 25, 2020 at 10:00 a.m., Toronto time.
This year, given the unprecedented public health impact of the coronavirus disease 2019 (COVID-19), and to mitigate risks to the health and safety of our communities, shareholders, employees and other stakeholders, we will hold our 2020 Annual and Special Meeting in a virtual only format, which will be conducted via live audio webcast.
The attached Notice of 2020 Annual and Special Meeting and Proxy Statement describe the formal business to be conducted at the 2020 Annual and Special Meeting. Registered Shareholders and duly appointed proxyholders will have an equal opportunity to participate in the 2020 Annual and Special Meeting online regardless of their geographic location, including having the opportunity to ask questions and vote on a number of important matters. The attached Proxy Statement contains detailed instructions about how to participate in the virtual 2020 Annual and Special Meeting.
Your vote is important. Whether or not you plan to attend the virtual 2020 Annual and Special Meeting, please complete, sign, date and return the enclosed proxy card or voting instruction form in the envelope provided or vote by facsimile or electronically using the facsimile and Internet voting procedures described on the proxy card or voting instruction form at your earliest convenience.
Thank you for your continued support of Cronos.

Sincerely,
mikesignature2.jpg

Michael Gorenstein

Chairman, President and Chief Executive Officer





Table of Contents
CRONOS GROUP INC.
NOTICE OF 2020 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, JUNE 25, 2020
NOTICE HEREBY IS GIVEN that the 2020 Annual and Special Meeting (the “Annual and Special Meeting”) of the holders (the “Shareholders”) of common shares (“Shares”) of Cronos Group Inc. (the “Company”) will be held on Thursday, June 25, 2020 at 10:00 a.m., Toronto time, via live audio webcast online at https://web.lumiagm.com/287809092. The Annual and Special Meeting will be held for the following purposes:
1. the receipt of the audited consolidated financial statements of the Company as at and for the fiscal year ended December 31, 2019 and the auditors’ reports thereon;
2. the election to the board of directors of the Company (the “Board of Directors”) of the seven directors named in the attached Proxy Statement;
3. the adoption of an advisory (non-binding) resolution on the compensation of the Company’s named executive officers as disclosed in the attached Proxy Statement;
4. the adoption of an advisory (non-binding) resolution on the frequency of future “say on pay” votes as described in the attached Proxy Statement;
5. the adoption of an ordinary resolution approving the 2020 Omnibus Equity Incentive Plan of the Company, as described in the attached Proxy Statement;
6. the adoption of a special resolution (the “Continuance Resolution”) authorizing the Company to make an application for the continuance (the “Continuance”) of the Company from the laws of the Province of Ontario to the laws of the Province of British Columbia and approving the notice of articles and articles of the continued company, as described in the attached Proxy Statement;
7. the appointment of KPMG LLP to serve as the independent registered public accounting firm for the fiscal year ending December 31, 2020 and to authorize the Board of Directors to fix KPMG LLP’s remuneration; and
8. such other business as may properly come before the Annual and Special Meeting or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to be presented to a vote of the Shareholders at the Annual and Special Meeting.
This year, given the unprecedented public health impact of the coronavirus disease 2019 (COVID-19), and to mitigate risks to the health and safety of our communities, Shareholders, employees and other stakeholders, we will hold our Annual and Special Meeting in a virtual only format, which will be conducted via live audio webcast. Registered Shareholders and duly appointed proxyholders, including non-registered Shareholders who have duly appointed themselves as proxyholder, will have an equal opportunity to participate in the Annual and Special Meeting online regardless of their geographic location, including asking questions and voting, all in real time, provided they are connected to the Internet and comply with all of the requirements set out in the attached Proxy Statement.
The Board of Directors has fixed 5:00 p.m., Toronto time, on April 27, 2020 as the record date for determining the Shareholders entitled to notice of, and to vote at, the Annual and Special Meeting and any adjournments or postponements thereof.
Non-registered Shareholders who have not duly appointed themselves as proxyholder will be able to listen to the Annual and Special Meeting as guests, but guests will not be able to ask questions or vote at the Annual and Special Meeting. A Registered Shareholder who wishes to appoint a person other than the management nominees identified on the proxy card
i


Table of Contents
must carefully follow the instructions in the attached Proxy Statement and on their proxy card. These instructions include the additional step of registering such proxyholder with the Company’s transfer agent and registrar, TSX Trust Company, after submitting their proxy card. Failure to register the proxyholder with TSX Trust Company will result in the proxyholder not receiving a control number to participate in the Annual and Special Meeting and only being able to listen to the Annual and Special Meeting as a guest.
Registered Shareholders as of 5:00 p.m., Toronto time, on the record date of April 27, 2020 may exercise their right to vote by completing and submitting the proxy card provided to you. To be effective, the proxy must be received by the Company’s transfer agent and registrar, TSX Trust Company, prior to 10:00 a.m., Toronto time on June 23, 2020 or, in the case of any adjournment or postponement of the Annual and Special Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. Registered Shareholders may also vote their Shares by participating in the Annual and Special Meeting. Detailed instructions on how to complete and return proxies or vote by facsimile or electronically using the facsimile and Internet voting procedures are provided in the attached Proxy Statement.
Non-registered Shareholders, including those who hold Shares in the name of a bank, trust company, securities dealer or broker, or other intermediary, will receive a voting instruction form. The voting instruction form contains instructions on how to complete the form, where to return it to and the deadline for returning it, which may be earlier than the deadline for registered Shareholders and whether facsimile or Internet voting options are available. If you do not receive such voting instructions or are unsure about anything in such voting instructions, contact your bank, trust company, securities dealer or broker, or other intermediary through which you hold your Shares.
Registered Shareholders have the right to dissent with respect to the Continuance Resolution and, if the Continuance is implemented, to be paid the fair value of their Shares in accordance with the provisions of section 185 of the Business Corporations Act (Ontario) (the “OBCA”). A registered Shareholder wishing to exercise rights of dissent with respect to the Continuance Resolution must send to the Company a written objection to the aforementioned resolutions and must strictly comply with the dissent procedures prescribed by the OBCA. A Shareholder’s right to dissent is more particularly described in the attached Proxy Statement. A copy of the text of section 185 of the OBCA is set forth in Appendix G to the Proxy Statement.
WHETHER OR NOT YOU EXPECT TO ATTEND THE VIRTUAL ANNUAL AND SPECIAL MEETING, PLEASE SUBMIT YOUR PROXY WITH YOUR VOTING INSTRUCTIONS. YOU MAY VOTE BY FACSIMILE OR INTERNET (BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD OR VOTING INSTRUCTION FORM) OR BY MAIL.

By order of the Board of Directors,

mikesignature1.jpg

Michael Gorenstein

Chairman, President and Chief Executive Officer
Toronto, Ontario April 28, 2020

ii


Table of Contents
TABLE OF CONTENTS

Page

When used in this Proxy Statement, the terms “Cronos,” “we,” “our,” “us” and the “Company” refer to Cronos Group Inc., its consolidated subsidiaries and, if applicable, its joint ventures and investments accounted for by the equity method; the term “fiscal year” refers to our fiscal year, which is based on a 12-month period ending December 31 of each year ( e.g. , fiscal year 2019 refers to the 12-month period ended December 31, 2019); the term “Intermediary” means any bank, trust company, securities dealer or broker, or other intermediary; the term “cannabis” means the plant of any species or subspecies of genus Cannabis and any part of that plant, including all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers and the term “U.S. hemp” has the meaning given to term “hemp” in the U.S. Agricultural Improvement Act of 2018, including hemp-derived cannabidiol (“CBD”).
Unless otherwise specified, the information contained in this Proxy Statement is given as of April 28, 2020, the date of this Proxy Statement. Unless otherwise specified, all references to “dollars” or “$” in this Proxy Statement are to United States dollars and all references to “C$” are to Canadian dollars.
iii


Table of Contents
In addition, this Proxy Statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on or referred to on these websites is not part of this Proxy Statement.
This Proxy Statement includes forward-looking statements. These statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. For a discussion of some of the risks and important factors that could affect the Company’s business, operations, future results and financial condition, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (as amended).


iv


Table of Contents
CRONOS GROUP INC.
720 King Street West, Suite 320
Toronto, Ontario, M5V 2T3
PROXY STATEMENT
FOR THE 2020 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, JUNE 25, 2020
These proxy materials are furnished in connection with the solicitation by the board of directors (the “Board” or our “Board”) of Cronos Group Inc. (“Cronos” or the “Company”), a corporation incorporated under the OBCA, of proxies to be voted at the 2020 Annual and Special Meeting of the holders (the “Shareholders”) of common shares (“Shares”) of the Company and at any adjournment or postponement of such meeting (the “Annual and Special Meeting”). This proxy statement (this “Proxy Statement”), together with the Notice of Annual and Special Meeting and proxy card or voting instruction form, is first being sent to Shareholders on or about June 2, 2020.
ABOUT THE MEETING

Why am I receiving these materials?
We are providing these proxy materials to you in connection with the solicitation, by the Board, of proxies to be voted at the Annual and Special Meeting. You are receiving this Proxy Statement because you were a Shareholder as of 5:00 p.m., Toronto time, on April 27, 2020, the record date for the Annual and Special Meeting. The Notice of Annual and Special Meeting provides notice of the Annual and Special Meeting and this Proxy Statement describes the proposals presented for Shareholder action and includes information required to be disclosed to Shareholders.
When and where is the Annual and Special Meeting?
The Annual and Special Meeting will be held on Thursday, June 25, 2020 at 10:00 a.m., Toronto time, via live audio webcast online at https://web.lumiagm.com/287809092.
What matters will be submitted to Shareholders at the Annual and Special Meeting?
At the Annual and Special Meeting, you will be asked to vote on each of the following matters:
Proposal 1:  To elect the seven nominees named in this Proxy Statement to the Board;
Proposal 2 : To adopt an advisory (non-binding) resolution approving the compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement;
Proposal 3 : To adopt an advisory (non-binding) resolution on the frequency of future “say on pay” votes as described in this Proxy Statement;
Proposal 4:  To adopt an ordinary resolution approving the 2020 Omnibus Plan (as defined herein);
Proposal 5:  To adopt a special resolution authorizing the Company to make an application for the continuance (the “Continuance”) from the laws of the Province of Ontario to the laws of the Province of British Columbia and approving the notice of articles and articles of the continued company; and
Proposal 6:  To appoint KPMG LLP (“KPMG”) to serve as the Company’s independent registered public accounting firm for fiscal year 2020 and to authorize the Board to fix KPMG’s remuneration.
We will conduct such other business as may properly come before the Annual and Special Meeting or any adjournments or postponements thereof. The Board is not aware of any other business to be presented to a vote of the Shareholders at the Annual and Special Meeting.
1


Table of Contents
In addition, at the Annual and Special Meeting, Shareholders will receive the audited consolidated financial statements of the Company as at and for the fiscal year ended December 31, 2019 and the auditors’ reports thereon.
Who may vote at the Annual and Special Meeting?
Only record holders of our Shares as of 5:00 p.m., Toronto time, on April 27, 2020 (the “Record Date”) will be entitled to vote at the Annual and Special Meeting. On the Record Date, the Company had 348,823,936 Shares outstanding. Each outstanding Share entitles the holder to one vote on each matter to be voted upon at the Annual and Special Meeting.
How are votes counted and what is the required vote for each proposal?
As of April 27, 2020, the Record Date, there were 348,823,936 Shares outstanding, each of which entitles the holder to one vote on each matter to be voted upon at the Annual and Special Meeting.
Proposal 1: Election of Directors
You may select “For” or “Withhold” with respect to each nominee for director under Proposal 1. Directors will be elected by a plurality of the votes cast at the Annual and Special Meeting. However, the Board’s majority voting policy (the “Majority Voting Policy”) requires that any nominee for director who does not receive a greater number of votes “for” his or her election as a director than votes “withheld” from voting tender his or her resignation to the Board for consideration by the independent directors of the Company promptly following the meeting. The independent directors of the Company will consider the resignation and will provide a recommendation to the Board within 45 days following the meeting. The Board will consider the recommendation of the independent directors of the Company and determine whether to accept such recommendation within 90 days of the meeting. Absent exceptional circumstances, the Board will accept the resignation which will be effective upon such acceptance. A news release will be issued promptly by the Company announcing the Board’s determination, including, if applicable, the reasons for rejecting the resignation. A director who tenders his or her resignation will not participate in any meetings to consider whether the resignation shall be accepted. Shares held by brokers who are prohibited from exercising discretionary authority for beneficial owners who have not given voting instructions (“broker non-votes”) will not be counted as votes cast and will have no effect on the outcome of the voting on this proposal.
Proposal 2: Advisory Vote on the Compensation of Our Named Executive Officers
You may select “For”, “Against” or “Abstain” with respect to Proposal 2. The affirmative vote of a majority of the votes cast at the Annual and Special Meeting is required for the approval, on an advisory (non-binding) basis, of the compensation of our NEOs as disclosed in this Proxy Statement. The results of the vote on the proposal are not binding on the Board or the Compensation Committee. Abstentions and broker non-votes will not be included in the total votes cast and will not affect the results.
Proposal 3: Advisory Vote on the Frequency of Future “Say on Pay” Votes
You may select “One Year”, “Two Years,” “Three Years” or “Abstain” with respect to Proposal 3. You are not voting to approve or disapprove the Board’s recommendation on Proposal 3. The selection that receives the greatest number of votes cast at the Annual and Special Meeting will be deemed to have received the recommendation of the Shareholders and the vote will not be binding on the Board. Abstentions and broker non-votes will not be included in the total votes cast and will not affect the results.
Proposal 4: Approval of the 2020 Omnibus Plan
You may select “For”, “Against” or “Abstain” with respect to Proposal 4. The affirmative vote of a majority of the votes cast at the Annual and Special Meeting is required for the approval of the 2020 Omnibus Plan. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the voting on this proposal.
2


Table of Contents
Proposal 5: Approval of the Continuance
You may select “For”, “Against” or “Abstain” with respect to Proposal 5. The affirmative vote of 66 2/3% of the votes cast at the Annual and Special Meeting is required for the approval of the Continuance. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the voting on this proposal.
Proposal 6: Appointment of KPMG LLP
You may select “For” or “Withhold” your vote with respect to Proposal 6. Our independent registered public accounting firm for fiscal year 2020 will be appointed by a plurality of the votes cast at the Annual and Special Meeting. U.S. (but not Canadian) brokers may exercise discretion and vote on this matter and these will be counted as votes cast. Withholds and broker non-votes will not be counted as votes cast and will have no effect on the outcome of the voting on this proposal.
What are the Board’s recommendations as to how I should vote on each proposal?
The Board recommends a vote:
FOR ” the election of each of the seven director nominees named in this Proxy Statement;
FOR ” the advisory (non-binding) resolution approving the compensation of the NEOs as disclosed in this Proxy Statement;
For the option of having an advisory (non-binding) vote approving the compensation of our NEOs every “ ONE YEAR ”;
FOR ” the ordinary resolution approving the 2020 Omnibus Plan;
FOR ” the special resolution approving the Continuance; and
FOR ” the appointment of KPMG to serve as the Company’s independent registered public accounting firm for fiscal year 2020 and the authorization of the Board to fix KPMG’s remuneration.
How do I participate in the Annual and Special Meeting?
The Company is holding the Annual and Special Meeting in a virtual only format, which will be conducted via live audio webcast. Shareholders will not be able to attend the Annual and Special Meeting in person. Participating in the Annual and Special Meeting online enables registered Shareholders and duly appointed proxyholders, including non-registered Shareholders who have duly appointed themselves as proxyholder, to ask questions and vote, all in real time. Registered Shareholders and duly appointed proxyholders can vote at the appropriate times during the Annual and Special Meeting. Guests, including non-registered Shareholders who have not duly appointed themselves as proxyholder, can log in to the Annual and Special Meeting as set out below. Guests can listen to the Annual and Special Meeting but are not able to ask questions or vote at the Annual and Special Meeting.
To log in to the Annual and Special Meeting online visit https://web.lumiagm.com/287809092 on your smart phone, tablet or computer. You will need the latest versions of Chrome, Safari, Edge, Firefox or Internet Explorer 11. Please ensure your browser is compatible. For example, some operating systems may experience difficulty accessing the Annual and Special Meeting using Internet Explorer. We recommend that you log in at least one hour before the Annual and Special Meeting starts. To log in, either click:
“I Have a Control Number” and then enter your Control Number (see below) and Password “cronos2020” (case sensitive)
OR
3


Table of Contents
“I Am A Guest” and then complete the online form.
When successfully authenticated, the information screen will be displayed. You can view company information, ask questions and watch the webcast.
For registered Shareholders, the 12-digit control number located on the proxy card you received is your “Control Number” and serves as the “Username” for login purposes.
Duly appointed proxyholders must register with TSX Trust in advance of the Annual and Special Meeting by completing the “Request for Control Number” form which can be found at https://tsxtrust.com/resource/en/75 and emailing it to TSX Trust at tsxtrustproxyvoting@tmx.com. TSX Trust will then provide the proxyholder with a Control Number by email. Such Control Number serves as the “Username” for login purposes.
If you participate in the Annual and Special Meeting, it is important that you are connected to the Internet at all times during the Annual and Special Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Annual and Special Meeting. You should allow ample time to check into the Annual and Special Meeting online and complete the related procedures.
How can I submit questions during the Annual and Special Meeting?
We expect to hold, to the extent feasible and practical, a live question and answer session in connection with the Annual and Special Meeting. Registered Shareholders and duly appointed proxyholders, including non-registered Shareholders who have duly appointed themselves as proxyholder, will be able to submit questions for the question and answer session. Questions can be submitted only during the meeting and using the means specified during the Annual and Special Meeting. We anticipate that you will be able to ask relevant questions by selecting the messaging icon, typing your question within the chat box at the bottom of the messaging screen and, once you are satisfied with the question, clicking the send button. Confirmation that your message has been received should then appear.
We intend to answer properly submitted questions that are pertinent to the Company and Annual and Special Meeting matters, as time permits. Questions sent will be moderated before being sent to the Chairman of the Meeting. The Company reserves the right to edit profanity or other inappropriate language, or to exclude questions that are not pertinent to Annual and Special Meeting matters or that are otherwise inappropriate.
What if I need technical assistance?
If you encounter any technical difficulties accessing the virtual Annual and Special Meeting during the check-in or the Annual and Special Meeting, please access the frequently asked questions portal online at https://go.lumiglobal.com/faq.
How do I submit my vote?
Voting by Proxy before the Annual and Special Meeting
If you are a Shareholder of record as of 5:00 p.m., Toronto time, on the Record Date, April 27, 2020, you can vote by:
completing, dating and signing the enclosed proxy card and returning it to TSX Trust Company (“TSX Trust”), the Company’s transfer agent, by facsimile at (416) 595-9593 or by mail or courier to 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 4H1; or
logging on to the internet through TSX Trust’s website at www.voteproxyonline.com. Registered Shareholders must follow the instructions that appear on the screen and refer to the enclosed proxy card for the Shareholder’s 12 digit Control Number.
4


Table of Contents
If you are voting by proxy, you must ensure that the proxy is received not later than 10:00 a.m. (Toronto time) on June 23, 2020, or, in the case of any adjournment or postponement of the Annual and Special Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. The time limit for the delivery of proxies may also be waived or extended by the Chair of the Annual and Special Meeting at his or her discretion, without notice.
Voting at the Meeting
Registered Shareholders and duly appointed proxy holders can vote at the appropriate times by completing a ballot online during the Annual and Special Meeting. We anticipate that once voting has opened during the Annual and Special Meeting the resolutions and voting choices will be displayed and you will be able to vote by selecting your voting direction from the options shown on the screen. Confirmation that your vote has been received should then appear. We anticipate that while voting remains open during the Annual and Special Meeting you will be able to change your vote by selecting another voting direction or cancel your vote by pressing the cancel button.
What do I do if I hold my Shares through an Intermediary?
If you hold your Shares through an Intermediary, you can vote by following the instructions in the voting instruction form or in accordance with any other instructions provided by that Intermediary.
Non-registered Shareholders who have not duly appointed themselves as proxyholder will be able to listen to the Annual and Special Meeting but will not be able to ask questions or vote at the Annual and Special. This is because the Company and TSX Trust do not have a record of the non-registered Shareholders and, as a result, have no knowledge of your shareholdings or entitlement to vote unless you appoint yourself as proxyholder.
The Company has distributed copies of the Notice of Meeting, this Proxy Statement and a proxy card or voting instruction form (collectively, the “Meeting Materials”) to the Intermediaries for onward distribution to non-registered Shareholders. Intermediaries are required to forward Meeting Materials to non-registered Shareholders unless a non-registered Shareholder has waived the right to receive them. Typically, Intermediaries will use a service company (such as Broadridge Financial Solutions, Inc. (“Broadridge”)) to forward the Meeting Materials to non-registered Shareholders. The Company is a “Participating Issuer” under Broadridge’s Electronic Delivery Procedures. Non-registered Shareholders who have enrolled in Broadridge’s Electronic Delivery Procedures (at www.investordelivery.com) will have received an email notification from Broadridge that the Meeting Materials are available electronically, which notification includes a hyperlink to the page on the Internet where the Meeting Materials can be viewed. Generally, non-registered Shareholders who have not waived the right to receive the Meeting Materials will be given a voting instruction form which must be completed and signed by the non-registered Shareholders in accordance with the directions on the voting instruction form; voting instruction forms sent by the Company and Broadridge permit the completion of the voting instruction form by facsimile or through the Internet at www.proxyvote.com.
The Company will pay for an Intermediary to deliver proxy materials to non-objecting beneficial owners of Shares (“NOBOs”) and objecting beneficial owners of Shares (“OBOs”). The Meeting Materials sent to NOBOs and OBOs will be accompanied by a voting instruction form. By returning the voting instruction form in accordance with the instructions noted thereon, a NOBO or OBO is able to instruct the voting of the Shares owned by it. Voting instruction forms, whether provided by the Company or by an Intermediary, should be completed and returned in accordance with the specific instructions noted thereon. The purpose of this procedure is to permit non-registered Shareholders to direct the voting of the Shares which they beneficially own.
If you are a non-registered Shareholder and wish to vote at the Annual and Special Meeting, you should follow the instructions in the voting instruction form or contact your Intermediary for instructions and must follow all of the applicable instructions, including the deadline, provided by your Intermediary.
Can I appoint a proxyholder not named in the proxy card or voting instruction form?
5


Table of Contents
The persons named in the enclosed proxy card or voting instruction form are directors or officers of the Company designated by management of the Company. A registered Shareholder has the right to appoint as proxyholder a person or company (who need not be a Shareholder) other than the persons already named by management of the Company in the enclosed proxy card to attend and act on such registered Shareholder’s behalf at the Annual and Special Meeting. Such right may be exercised by crossing out the names of management’s nominees and inserting the name of the person or company in the blank space provided in the enclosed proxy card or by completing another proxy card.
If you are a non-registered Shareholder and wish to appoint someone as their proxyholder, including yourself, to participate in the Annual and Special Meeting, including asking questions and voting, please follow the instructions in the voting instruction form or contact your Intermediary for instructions.
If I have appointed a proxyholder, how can they participate in and vote at the Annual and Special Meeting?
Shareholders who have appointed someone other than the management nominees as their proxyholder to participate in the Annual and Special Meeting as their proxy and vote their Shares must obtain a new Control Number. Obtaining a new Control Number is an additional step to be completed after you have appointed a proxyholder. To request a Control Number that will permit that proxyholder to participate in the Annual and Special Meeting, by 10:00 a.m. (Toronto time) on June 23, 2020, a Shareholder must complete the “Request for Control Number” form available online at https://tsxtrust.com/resource/en/75.com and submit it in advance of the Annual and Special Meeting to TSX Trust at tsxtrustproxyvoting@tmx.com. TSX Trust will then provide a Control Number by email to the proxy holder. Failure to obtain a new Control Number will result in the proxyholder not receiving a Control Number that is required to participate in the Annual and Special Meeting, including asking questions and voting. Without a Control Number, proxyholders will not be able to participate in the Annual and Special Meeting but will be able to listen to the Annual and Special Meeting as a guest.
What do I do if I am located in the United States and hold my Shares through an Intermediary?
If you are a non-registered Shareholder located in the United States and wish to vote at the Annual and Special Meeting or, if permitted, appoint a third party as your proxyholder, in addition to the steps described herein, you must obtain a valid legal proxy from your Intermediary. Follow the instructions from your Intermediary or contact your Intermediary to request a proxy card if you have not received one. After obtaining a valid proxy card from your Intermediary, you must then submit a copy of such legal proxy to TSX Trust. Requests for registration from non-registered Shareholders located in the United States that wish to participate in and vote at the Annual and Special Meeting or, if permitted, appoint a third party as their proxyholder must be sent by facsimile or by courier to: 416-595-9593 (if by facsimile), or TSX Trust Company, 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 4H1, Canada (if by courier), and in both cases, must be labelled “Legal Proxy” and received no later than the voting deadline of 10:00 a.m. (Toronto time) on June 23, 2020. You will receive a confirmation of your registration by email after TSX Trust receives your registration materials.
What constitutes a quorum?
The Annual and Special Meeting will be held only if a quorum is present. A quorum will be present if the holders of 33 1/3% of the Shares outstanding as of 5:00 p.m., Toronto time, on the Record Date and entitled to vote on a matter at the Annual and Special Meeting are represented, directly or by proxy, at the Annual and Special Meeting. Shares represented by properly completed proxy cards or voting instruction forms either marked “abstain” or “withhold,” or returned without voting instructions, are counted as present and entitled to vote for the purpose of determining whether a quorum is present at the Annual and Special Meeting. If Shares are held by brokers who are prohibited from exercising discretionary authority for beneficial owners who have not given voting instructions, those Shares will be counted as represented at the Annual and Special Meeting for the purpose of determining whether a quorum is present at the Annual and Special Meeting.
Can I change or revoke my vote after I return my proxy card or voting instruction form?
Yes. In addition to revocation in any manner permitted by law, a registered Shareholder as of 5:00 p.m., Toronto time, on the Record Date who has returned a proxy card may revoke it at any time before it is voted at the Annual and Special Meeting by:
6


Table of Contents
completing and signing a proxy card bearing a later date, and delivering it to TSX Trust in accordance with the instructions (including the submissions deadlines) set out above;
delivering a written statement expressly revoking such proxy, signed by the registered Shareholder or by the registered Shareholders’ attorney, who is authorized in writing, to:
the Corporate Secretary of the Company at 720 King Street West, Suite 320, Toronto, Ontario, M5V 2T3, at any time up to and including the last business day prior to the Annual and Special Meeting, or the business day preceding the day to which the Annual and Special Meeting is adjourned or postponed; or
the Chair of the Annual and Special Meeting prior to the start of the Annual and Special Meeting.
If a registered Shareholder has followed the process for participating in and voting at the Annual and Special Meeting online, voting at the Annual and Special Meeting online will revoke all previously submitted proxies. If a registered Shareholder is using their Control Number to log in to the Annual and Special Meeting and the terms and conditions are accepted, this will revoke any and all previously submitted proxies and will provide such registered Shareholder with the opportunity to vote by online ballot on the matters put forth at the Annual and Special Meeting. If a registered Shareholder does not wish to revoke a previously submitted proxy, the terms and conditions should not be accepted, in which case such registered Shareholder can only listen to the Annual and Special Meeting by logging in as a guest.
A non-registered Shareholder who wishes to revoke their voting instructions must complete, sign and submit a voting instruction form bearing a later date or contact their Intermediary in respect of such instructions and comply with any applicable requirements imposed by such Intermediary. An Intermediary may not be able to revoke such instructions if it receives insufficient notice of revocation.
Who will count the votes?
A representative of our transfer agent and registrar, TSX Trust, will act as scrutineer at the Annual and Special Meeting and will count the votes.
Will my vote be kept confidential?
Yes. As a matter of policy, Shareholder proxies, ballots and tabulations that identify individual Shareholders are kept confidential.
Who pays to prepare, mail and solicit the proxies?
The Company pays all of the costs of preparing, mailing and soliciting proxies in connection with this Proxy Statement. In addition to soliciting proxies through the mail by means of this Proxy Statement, we may solicit proxies by advertisement, telephone, online or personally by directors or officers or other employees of the Company without additional compensation. The Company asks Intermediaries to forward proxy materials to the beneficial owners and to obtain authority to execute proxies. The Company will reimburse the Intermediaries for their expenses in forwarding the proxy materials. In addition to solicitation by advertisement, telephone, facsimile, email or personal contact by its directors, officers and employees, the Company has retained the services of Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of approximately $15,000 plus reasonable out of pocket expenses. The costs of solicitation will be borne by the Company.
How will my Shares be voted if I sign, date and return my proxy card or voting instruction form?
If you sign, date and return your proxy card or voting instruction form and indicate how you would like your Shares voted, your Shares will be voted or withheld from voting as you have instructed. If you sign, date and return your proxy card or voting instruction form but do not indicate how you would like your Shares voted, your proxy will be voted:
FOR ” the election of each of the seven director nominees named in this Proxy Statement;
7


Table of Contents
FOR ” the advisory (non-binding) resolution approving the compensation of the NEOs as disclosed in this Proxy Statement;
For the option of having an advisory (non-binding) vote approving the compensation of our NEOs every “ ONE YEAR ”).
FOR ” the ordinary resolution approving the 2020 Omnibus Plan;
FOR ” the special resolution approving the Continuance; and
FOR ” the appointment of KPMG to serve as the Company’s independent registered public accounting firm for fiscal year 2020 and the authorization of the Board to fix KPMG’s remuneration.
How will broker non-votes be treated?
A “broker non-vote” occurs when a broker who holds its customer’s Shares in street name submits proxies for such Shares but indicates that it does not have authority to vote on a particular matter. Generally, this occurs when brokers have not received any instructions from their customers. Without specific instructions, Canadian brokers are prohibited from voting their customers’ Shares.
Without specific instructions, U.S. brokers, as the holders of record, are permitted to vote their customers’ Shares on “routine” matters only, but not on other matters. Shares for which U.S. brokers have not received instructions from their customers will only be permitted to vote on the following proposal:
To appoint KPMG to serve as the Company’s independent registered public accounting firm for fiscal year 2020 and to authorize the Board to fix KPMG’s remuneration.
Shares for which U.S. brokers have not received instructions from their customers will not be permitted to vote on the following proposals:
to elect the seven director nominees named in this Proxy Statement to the Board;
to approve, on an advisory (non-binding) basis, the compensation of the NEOs as disclosed in this Proxy Statement;
to advise, on an advisory (non-binding) basis, as to the frequency of future “say on pay” votes;
to approve the 2020 Omnibus Plan; or
to approve the Continuance.
Does the Company have cumulative voting?
Shareholders have no cumulative voting rights with respect to the election of directors.
What if other matters come up during the Annual and Special Meeting?
If any matters other than those referred to in the Notice of Annual and Special Meeting properly come before the Annual and Special Meeting, the individuals named in the accompanying proxy card or voting instruction form will vote the proxies held by them in accordance with their best judgment. As of the date of this Proxy Statement, Cronos is not aware of any business other than the items referred to in the Notice of Annual and Special Meeting that will be considered at the Annual and Special Meeting.
How do I contact the Corporate Secretary of the Company?
8


Table of Contents
In several sections of this Proxy Statement, we suggest that you should contact the Corporate Secretary of the Company to follow up on various items. You can reach our Corporate Secretary by writing to 720 King Street West, Suite 320, Toronto, Ontario, M5V 2T3.
Principal Holders of Voting Securities.
As of the date of this Proxy Statement, to the knowledge of the directors and executive officers of the Company, no person or entity beneficially owns, or controls or directs, directly or indirectly, voting securities of the Company carrying 10% or more of the voting rights attached to any class of outstanding voting securities of the Company entitled to vote at the Annual and Special Meeting, other than Altria Group, Inc. (“Altria”), as indirect beneficial owner of 156,573,537 Shares or approximately 45% of the issued and outstanding Shares as of March 20, 2020 (calculated on a non-diluted basis).
Your vote is important.
Because many Shareholders cannot participate in the Annual and Special Meeting, it is necessary that a large number be represented by proxy in order to satisfy that a quorum be present to conduct business at the Annual and Special Meeting. Whether or not you plan to participate in the Annual and Special Meeting, prompt voting will be appreciated. Shareholders can vote their Shares via the Internet or by facsimile. Instructions for using this convenient service are provided on the proxy card or voting instruction form. Of course, you may still vote your Shares on the proxy card or voting instruction form. To do so, we ask that you complete, sign, date and return the enclosed proxy card or voting instruction form promptly in the postage-paid envelope.
Important Notice Regarding the Availability of Proxy Materials
for the Annual and Special Meeting of Shareholders to Be Held on Thursday, June 25, 2020:
This Proxy Statement and Our Annual Report on Form 10-K for the Year Ended December 31, 2019 (as amended) Are Available Free of Charge at:
ir.thecronosgroup.com/financial-information/annual-meeting.

9


Table of Contents
PROPOSAL NO. 1—ELECTION OF DIRECTORS

Board of Directors
The Company’s articles provide that the Board shall consist of a minimum of one and a maximum of ten directors. In accordance with the Company’s by-laws, the Board has determined that seven directors will be elected at the Annual and Special Meeting. Each director will hold office from the date of the Annual and Special Meeting until the close of the next annual meeting of Shareholders or until the successor of such director has been duly elected and/or appointed in accordance with the articles and by-laws of the Company, the Investor Rights Agreement dated as of March 8, 2019 between the Company and Altria (the “Investor Rights Agreement”), and applicable law.
The Investor Rights Agreement provides that, for so long as Altria, Maple Acquireco (Canada) ULC, Altria Summit LLC and each of their respective controlled affiliates (the “Altria Group”) continues to beneficially own at least 40% of the issued and outstanding Shares, and the size of the Board is seven directors, the Company will nominate for election as directors to the Board four individuals designated by Altria (each, an “Altria Nominee”). In addition, for so long as Altria Group continues to beneficially own greater than 10% but less than 40% of the issued and outstanding Shares, Altria is entitled to designate a number of Altria Nominees that represents Altria Group’s proportionate share of the number of directors comprising the Board (rounded up to the next whole number) based on the percentage of the issued and outstanding Shares beneficially owned by the Altria Group at the relevant time. At least one Altria Nominee must be “independent” as defined in the Investor Rights Agreement (“Investor Rights Agreement Independent”) as long as Altria has the right to designate at least three individuals to be nominated for election as directors to the Board and the Altria Group’s beneficial ownership of the issued and outstanding Shares does not exceed 50%. The meaning of Investor Rights Agreement Independent differs from the meaning of the term “independent” as defined under applicable NASDAQ listing standards and the NASDAQ marketplace rules (the “NASDAQ Rules”) and as defined in National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”). Directors who are not Investor Rights Agreement Independent may still be independent under the applicable NASDAQ Rules and/or NI 58-101. Jody Begley, Bronwen Evans, Murray Garnick and Heather Newman are the Altria Nominees. Other than the Altria Nominees, the nominees for election as directors of the Company were selected by a majority of the Board’s independent directors within the meaning of such term under the applicable NASDAQ Rules.
Nominees for Election as Directors at the Annual and Special Meeting
The Board has not established a formal nominating committee. Rather, the Board has determined that compliance with the NASDAQ Rules, which require that director nominees (other than the Altria Nominees) are recommended for the Board’s selection by independent directors within the meaning of such term under applicable NASDAQ Rules constituting a majority of the Board’s independent directors in a vote in which only independent directors participate, with the independence requirements applicable to such directors to be confirmed at such time, adequately encourages an objective nomination process. Individuals are selected with the desired experience and qualifications, taking into account the needs of the Board at the time. In making its recommendations, the Board’s independent directors consider:
the attributes and skills that the Board considers to be necessary for the Board, as a whole, to possess;
the attributes and skills that the Board considers each existing director to possess;
the attributes and skills each new nominee will bring to the boardroom;
whether or not each new nominee can devote sufficient time and resources to his or her duties as a Board member; and
diversity criteria, pursuant to the Company’s Diversity Policy as further described below under “– Diversity .”
10


Table of Contents
Each of the director nominees below is currently a director of the Company. The following table sets forth certain information regarding the director nominees. Additional biographical information on each of the nominees is included below under the section entitled “ Directors and Executive Officers .”
Director Name Age Director Since Residency Principal Occupation
Michael Gorenstein 33 2015
New York, NY
United States
Chairman, President and Chief Executive Officer of Cronos
Jason Adler (1)(2)(3)
48 2016
Pacific Palisades, CA
United States
Co-founder and Managing Member of Gotham Green Partners
Jody Begley (1)
48 2019 Midlothian, VA
United States
Senior Vice President, Tobacco Products of Altria
Bronwen Evans (1)(2)(3)
50 2019
Toronto, ON
Canada
Chief Talent Officer, Medcan
Murray Garnick (1)
60 2019
Manakin Sabot, VA
United States
Executive Vice President and General Counsel of Altria
Heather Newman (1)
43 2019 Midlothian, VA
United States
Senior Vice President, Corporate Strategy of Altria
James Rudyk (1)(2)(3)
53 2018
Oakville, ON
Canada
Executive Vice President and Chief Financial Officer of Sofina Foods Inc.
        
(1) “Independent” within the meaning of such term under the applicable NASDAQ Rules.
(2) “Independent” within the meaning of such term under NI 58-101.
(3) Investor Rights Agreement Independent.
In considering the nominees’ individual experience, qualifications, attributes, skills and past Board participation, the Board’s independent directors have concluded that when considered all together, the appropriate experience, qualifications, attributes, skills and participation are represented for the Board as a whole and for each of the Board’s committees.
There are no family relationships among any directors and executive officers. Each nominee has indicated a willingness to serve and has consented to being named in this Proxy Statement, and the Board has no reason to believe that any of the nominees will not be available for election. However, if any of the nominees is not available for election, proxies may be voted for the election of other persons selected by the Board unless the proxy specifies the Shares are to be withheld from voting in the election of the directors. Proxies cannot, however, be voted for a greater number of persons than the number of nominees named. Shareholders have no cumulative voting rights with respect to the election of directors.
Required Vote
With regard to the election of the director nominees you may select “For” or “Withhold”. A plurality of the votes cast at the Annual and Special Meeting is necessary to elect each director nominee.
However, under the Majority Voting Policy any nominee for director who does not receive a greater number of votes “for” his or her election as a director than votes “withheld” from voting is required to tender his or her resignation to the Board for consideration by the independent directors of the Company promptly following the Annual and Special Meeting. The independent directors of the Company will consider the resignation and will provide a recommendation to the Board within 45 days following the Annual and Special Meeting. The Board will consider the recommendation of the independent directors of the Company and determine whether to accept such recommendation within 90 days of the Annual and Special meeting. Absent exceptional circumstances, the Board shall accept the resignation which will be effective upon such acceptance. A news release will be issued promptly by
11


Table of Contents
the Company announcing the Board’s determination, including, if applicable, the reasons for rejecting the resignation. A director who tenders his or her resignation will not participate in any meetings to consider whether the resignation shall be accepted.
A copy of the Majority Voting Policy is available on the Company’s website at ir.thecronosgroup.com/governance/documents-charters.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED ABOVE.
12


Table of Contents
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding each director, director nominee and executive officer of the Company.
Name Age Position
Michael Gorenstein 33 Director, Chairman, President and Chief Executive Officer
Jason Adler 48 Director
Jody Begley 48 Director
Bronwen Evans 50 Director
Murray Garnick 60 Director
Heather Newman 43 Director
James Rudyk 53 Director
Todd Abraham 65 Chief Innovation Officer
Jerry Barbato 44 Chief Financial Officer
Jeff Jacobson 34 General Manager, Canada and Europe
Robert Rosenheck 53 Chief Executive Office of Redwood Wellness, LLC (“Redwood Wellness”)
Anna Shlimak 34 Senior Vice President, Corporate Affairs
Xiuming Shum 34 Executive Vice President, Legal and Regulatory Affairs

A brief biography of each person who serves as a director or executive officer of Cronos is set forth below:
Michael Gorenstein is the Chairman, President and Chief Executive Officer of Cronos. Mr. Gorenstein is also a Co-founder and passive Member of Gotham Green Partners. Before joining the Company, Mr. Gorenstein was the Vice President and General Counsel at Alphabet Partners, LP, a New York City based multi-strategy investment management firm, focused on identifying mispriced assets across various industries, asset classes and geographies. Prior to Alphabet Partners, LP, he was a corporate attorney at Sullivan & Cromwell LLP where he focused on mergers and acquisitions and capital markets transactions. Mr. Gorenstein graduated from the University of Pennsylvania Law School with a Juris Doctor, the Wharton School at University of Pennsylvania with a certificate in Business Economics and Public Policy and the Kelley School of Business at Indiana University with a Bachelor of Science Business in Finance. The combination of Mr. Gorenstein’s leadership capabilities and business and legal background, as well as his deep knowledge of the cannabis and U.S. hemp business, make him an ideal director and Chairman of the Board.
Jason Adler is the Co-founder and Managing Member of Gotham Green Partners, a private equity firm focused primarily on early-stage investing in companies in the cannabis industry. Prior to co-founding Gotham Green, Mr. Adler was the cofounder and Chief Executive Officer of Alphabet Partners, LP, a New York City based multi-strategy investment management firm, focused on identifying mispriced assets across various industries, asset classes and geographies. Prior to Alphabet Partners, LP, Mr. Adler also founded Geronimo, LLC, a broker dealer and member of the American Stock Exchange, that made markets in equity options, and he began his career as a Market Maker at G&D Trading. Mr. Adler graduated with a Bachelor of Arts from the University of Rhode Island. Mr. Adler’s extensive experience in the cannabis industry as well as in assisting startup companies to grow into successful, mature companies make Mr. Adler a valuable director.
Jody Begley currently serves as Senior Vice President, Tobacco Products for Altria, where he oversees more than $24 billion in net revenues. Prior to Mr. Begley’s current role, he served as President and General Manager of Nu Mark from July 2015 until May 2018, leading the company’s development and marketing of innovative tobacco products for adult smokers and vapers. He joined Philip Morris USA in 1995 and has held
13


Table of Contents
various leadership positions at several Altria companies, including Vice President, Brand Management, PM USA; Vice President, Strategy & Business Development; Vice President, Marketing & Promotion Services; Vice President, Brand Management, Smokeless; and Vice President, Customer & Marketing Services. Mr. Begley is a graduate of the University of Tennessee-Knoxville where he received a Bachelor of Science in Industrial Engineering in 1993, and a Master of Business Administration in 1995. He also serves on the Board for the Boys & Girls Clubs in the metro Richmond area. Mr. Begley was appointed a director by Altria.
Bronwen Evans is the Chief Talent Officer at Medcan with executive oversight on talent-related functions, including recruitment, development and retention. Ms. Evans was a Founding Director of the True Patriot Love Foundation, where she served as its first CEO from 2012 to 2019 and raised record funds to support 25,000 Canadian military and veteran families. Before that, Ms. Evans was the Vice President of Marketing and Corporate Affairs at Medcan Health Management, and became the company’s first Chief Privacy Officer. She is a recipient of The Queen’s Diamond Jubilee Medal (2012) and currently serves as Director, Secretary and Chair of the Governance Committee of Kingsway College School. Ms. Evans holds a Bachelor of Arts in Philosophy with Honors from McGill University, and a Master of Arts in Philosophy with a concentration in Biomedical Ethics from Carleton University. Ms. Evans was appointed a director by Altria.
Murray Garnick serves as Executive Vice President and General Counsel of Altria. In his role since 2017, he leads the company’s Law Department, Regulatory Affairs and Regulatory Sciences. Mr. Garnick previously served as Deputy General Counsel for Altria Client Services, a subsidiary of Altria, which provides professional services and support to Altria and its operating companies. At Altria, Mr. Garnick has led the legal support for sales, marketing, regulation, and product development and intellectual property matters. He has also supervised the management of tobacco, health and all other litigation brought against Altria and its operating companies. Prior to joining Altria in 2008 as Senior Vice President, Litigation and Associate General Counsel, Mr. Garnick served for more than two decades as a senior litigation partner at the law firm of Arnold & Porter in Washington, D.C. Mr. Garnick received his Bachelor of Arts from the University of Georgia and his Juris Doctor from the University of Georgia School of Law. Mr. Garnick was appointed a director by Altria.
Heather Newman serves as Senior Vice President, Corporate Strategy of Altria. In her role, she oversees Altria’s Strategy and Business Development as well as its Advanced Analytics, Investor Relations and Corporate Communications. Previously, Ms. Newman served as President and Chief Executive Officer for Philip Morris USA, where she led the company’s efforts to responsibly manufacture and market its brands, including Marlboro, the leading cigarette brand in all 50 U.S. states, and IQOS, to adult tobacco consumers in a financially disciplined way. Since 1999, Ms. Newman held numerous leadership roles in Sales and Brand Management including Vice President & General Manager, Marlboro, the leading cigarette brand in all 50 states. Ms. Newman received her undergraduate business degree from Saint Joseph’s University’s Erivan K Haub School of Business and completed her Master of Business Administration at Saint Joseph’s University with a concentration in Marketing in 2005. She serves on the Board of Directors of the Virginia Mentoring Partnership, The Executive Advisory Council for the University of Richmond Robins School of Business, as well as on the Board of Visitors for Saint Joseph’s University. Ms. Newman was appointed a director by Altria.
James Rudyk is currently the Chief Financial Officer at Sofina Foods Inc., a Canadian manufacturer of primary and further processed protein products for retail and foodservice customers as well as international markets. Prior to Sofina Foods, he was the Chief Financial Officer of Roots Corporation, a Canadian premium outdoor lifestyle brand publicly traded on the TSX, a position he held from January 2016 until August 2019. Mr. Rudyk is a seasoned executive with more than 25 years of financial and operational experience, and a track record of supporting ambitious growth plans. Prior to joining Roots Corporation, Mr. Rudyk served as the Chief Financial Officer of Shred-It International Inc. from 2009 to 2015, where he was instrumental in helping the company grow from approximately $200 million to over $700 million in revenue and expand to more than 17 countries around the world. He also served as Chief Financial Officer and Chief Operating Officer of Canada Cartage Systems Limited from 2004 to 2009. He received his Bachelor of Arts and Master of Accounting degree from the University of Waterloo. Mr. Rudyk is also a Chartered Professional Accountant and holds an ICD.D designation from the Institute of Corporate Directors. Mr. Rudyk’s financial and accounting experience, together with his experience with growth companies, make him a valuable director.
14


Table of Contents
Todd Abraham is Cronos’s Chief Innovation Officer. Prior to joining the Company in August 2019, Dr. Abraham was Senior Vice President of Research and Nutrition for Mondelēz International (formally Kraft Foods), and was responsible for worldwide technology development and strategy, scientific screening, nutritional science and communication, consumer guidance testing, analytical programs, research and development training and intellectual property strategy for a $35 billion multi-national business. Prior to Mondelēz, Dr. Abraham served in various research and development, technology, marketing and product development roles for The Pillsbury Company and Procter & Gamble. Dr. Abraham received his Bachelor of Science degree in Chemistry at Brown University and his Doctor of Philosophy in Chemistry from the University of Pennsylvania and his Master of Business Administration in Strategic Planning from the Wharton School at University of Pennsylvania.
Jerry Barbato is the Chief Financial Officer of Cronos. Mr. Barbato joined Cronos with 20 years of experience in strategic planning, corporate financial analysis and services, and brand management. Prior to joining Cronos, he held various roles within the Altria family of companies. Mr. Barbato joined Altria in 2003 and served in leadership roles within the Finance, Strategy & Business Development and Marketing functions, and most recently held the role of Senior Director of Corporate Strategy. He has broad experience in both finance and operating roles, as well as managing operations in regulated international markets. Mr. Barbato supported the Marlboro brand and provided analysis that shaped brand strategies for Altria’s smokeable segment. He also served as Assistant General Manager for a joint venture, Richmark GmbH, in Zurich, Switzerland. Mr. Barbato holds a Bachelor of Science in Accounting from Marquette University and a Master of Business Administration from the University of Maryland, University College.
Jeff Jacobson is the General Manager of Canada and Europe for Cronos. As General Manager of Canada and Europe, Mr. Jacobson is responsible for implementing and defining the strategy and execution across all areas of the Canadian and European business including sales, marketing and manufacturing operations. Prior to joining Cronos in December 2016, Mr. Jacobson founded a Toronto based marketing agency and successfully launched and licensed several innovative software products in the mobile industry. As a co-founder of Peace Naturals, Mr. Jacobson’s expertise and experience in licensing and compliance, new business development, project management and resource management help Cronos lead in domestic and international markets.
Robert Rosenheck is the Chief Executive Officer of Redwood Wellness, a wholly owned subsidiary of Cronos and a U.S. hemp-derived CBD brand and products platform. In his role, Mr. Rosenheck oversees Cronos’ operations, marketing and brand strategy for the U.S. hemp-derived CBD market. Mr. Rosenheck is also co-founder of the Lord Jones™ brand, which was the first hemp-derived CBD brand to be sold at both Sephora and SoulCycle. Prior to launching Lord Jones™ in 2013, Mr. Rosenheck was a partner at CAPOBIANCO, a Los Angeles-based creative agency specializing in launching and growing innovative brands, from 2007 until 2015. His past clients include General Mills, Sony Music, Puma, Credit Suisse, Paramount Pictures and Random House Publishing Group. Mr. Rosenheck received his Bachelor of Arts in Communications from the University of Pennsylvania.
Anna Shlimak is the Company’s Senior Vice President of Corporate Affairs and responsible for managing and directing the organization’s internal and external communications, government affairs and investor relations. Prior to joining the Company, Ms. Shlimak was the Head of Investor Relations at Quest Partners LLC, a research driven alternative investment firm. Ms. Shlimak was responsible for business development, investor reporting, marketing and communication initiatives for the fund. Previously, Ms. Shlimak held a range of diverse roles at the New York Stock Exchange in both the New York and London offices. Most recently, Ms. Shlimak was on the Investor Relations Team within the Corporate Finance Group, where she was responsible for developing relationships with investors and sell side analysts, as well as all creating investor communication and reporting. She received a Master of Business Administration from Columbia Business School and holds a Bachelor of Science in Economics from the Wharton School at the University of Pennsylvania.
Xiuming Shum is the Executive Vice President, Legal and Regulatory Affairs of Cronos. Ms. Shum manages the legal and regulatory affairs functions at Cronos, which informs the Company’s strategy and execution. Ms. Shum has a decade of transactional and in-house experience in mergers and acquisitions and regulatory change management. Prior to joining Cronos, Ms. Shum served as in-house counsel at BNP Paribas’ Corporate and Institutional Banking division in New York and London, where she provided advice to senior management on
15


Table of Contents
disruptive and transformative legislative changes, such as the BASEL banking reforms, the United Kingdom’s expected withdrawal from the European Union, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Previously, she was a corporate attorney at Sullivan & Cromwell LLP in New York, where she focused on mergers and acquisitions in large, complex cross-border transactions in diverse industries, including alcohol and spirits, insurance, banking, private equity, and hedge funds. Ms. Shum is a New York-qualified attorney, holding a Juris Doctor from Columbia Law School where she was a Harlan Fiske Stone Scholar and a first-class Bachelor of Laws degree from University College London in the U.K.

16


Table of Contents
BOARD OF DIRECTORS, COMMITTEES AND GOVERNANCE

Overview
The Board considers good corporate governance practices to be an important factor in the overall success of the Company. Under NI 58-101 and National Policy 58-201 Corporate Governance Guidelines , the Company is required to disclose information relating to its corporate governance practices, which disclosure is set out herein. With respect to the United States, the Company is required to comply with the provisions of the Sarbanes-Oxley Act of 2002 (the “Act”) and the applicable rules adopted by the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Act, as well as the NASDAQ Rules.
The Board is responsible for the oversight of the business and affairs of the Company. The Board oversees the development of the Company’s strategic plan and the ability of management to continue to deliver on the corporate objectives. The Board Mandate is attached as Appendix B to this Proxy Statement.
The independent judgment of the Board in carrying out its responsibilities is the responsibility of all directors. The Board facilitates independent supervision of management through meetings of the Board and through frequent informal discussions among independent members of the Board and management. In addition, the Board has free access to the Company’s external auditors, external legal counsel and to the Company’s officers.
Meetings
The Board held six meetings in 2019. Five Board members attended 100% of these meetings. One Board meeting (the “Redwood Board Meeting”) had been convened to consider the Company’s proposed acquisition of four operating subsidiaries of Redwood Holding Group, LLC (collectively, “Redwood”). Because Mr. Gorenstein is a Co-founder and passive Member and Mr. Adler is a Co-founder and Managing Member of a Delaware limited partnership that held an interest in Redwood Holding Group, LLC, in order to address the potential and perceived conflict of interest, each of Messrs. Gorenstein and Adler recused himself from all discussions and considerations of, and of voting upon, any matters relating to the proposed transaction. Other than the Redwood Board Meeting, Messrs. Gorenstein and Adler attended all of the Board meetings in 2019. Board members who served on the Audit Committee and the Compensation Committee attended 100% of the committee meetings held in 2019 on which they served.
Director Independence
The Board is currently comprised of seven directors: Michael Gorenstein (Chairman), Jason Adler, Jody Begley, Murray Garnick, Heather Newman, Bronwen Evans and James Rudyk. Please see the biographies of individual directors under “ Directors and Executive Officers ”.
The Board has determined that three of the seven directors of the Company (or approximately 43% of the nominees), namely Mr. Adler, Ms. Evans and Mr. Rudyk, have no material relationship with the Company, either directly or indirectly, which could, in the view of the Board, be reasonably expected to interfere with the exercise of such individual’s independent judgment, and are “independent” within the meaning of such term under the applicable NASDAQ Rules and NI 58-101. As Altria is the parent company of Maple Acquireco (Canada) ULC, the beneficial owner of approximately 45% of the Shares (calculated on a non-diluted basis), for the purposes of NI 58-101, the Company is considered to be “controlled” by Altria. As such, Messrs. Begley and Garnick and Ms. Newman are not “independent” within the meaning of such term under NI 58-101 (but are considered to be “independent” within the meaning of such term under the applicable NASDAQ Rules) as they are the Senior Vice President, Tobacco Products, the Executive Vice President and General Counsel and the Senior Vice President, Corporate Strategy, respectively, of Altria. Messrs. Begley and Garnick and Ms. Newman are considered to be “independent” within the meaning of such term under applicable NASDAQ Rules, other than for Audit Committee purposes. Mr. Gorenstein is not “independent” within the meaning of such term under the applicable NASDAQ Rules and NI 58-101 as he is the Chairman, President and Chief Executive Officer of the Company.
17


Table of Contents
While the majority of the directors of the Company are not independent within the meaning of such term under NI 58-101, only Mr. Gorenstein is a member of management, and thus the Board believes that it is able to exercise independent judgment in carrying out its responsibilities. In addition, to facilitate the exercise of independent supervision over management, the Board has provided for the role of an independent lead director (the “Independent Lead Director”) as described further under “Board Leadership Structure and Qualifications” below. This role is currently held by Mr. Rudyk.
The directors who are independent within the meaning of such term under NI 58-101 meet in executive session, without the presence of non-independent directors and members of management, in conjunction with each regularly scheduled meeting of the Board. During 2019, six executive sessions were held. These executive sessions are led by the Independent Lead Director. The Board encourages its independent directors to meet formally or informally without any non-independent directors, including members of management, being present on an as-needed basis. In addition, the small size of the Board helps to create an atmosphere conducive to candid and open discussion among all directors.
Board Leadership Structure and Qualifications
Each director must have an understanding of the Company’s principal operational and financial objectives, plans and strategies, and financial position and performance. Directors must have sufficient time to carry out their duties and not assume responsibilities that would materially interfere with, or be incompatible with, Board membership. Directors must advise the Chairman of the Board in advance of accepting an invitation to serve on the board of another public corporation.
Currently, Michael Gorenstein serves as our President and Chief Executive Officer and as Chairman of our Board, and James Rudyk serves as the Independent Lead Director of our Board. The primary focus of the Independent Lead Director is to provide leadership to ensure that the Board functions independently of management of the Company and non-independent directors and to foster the effectiveness of the Board. The Independent Lead Director acts as a liaison between the independent directors and the Chairman and:
chairs all Board meetings when the Chairman is not in attendance;
seeks to stimulate debate;
seeks to provide adequate time for discussion of issues, facilitate consensus, encourage full participation and discussion by individual directors and confirm that decision-making is reached and accurately recorded;
works with the Chairman to ensure that the appropriate committee structure is in place and makes recommendations for appointment to such committees; and
together with the Chairman, ensures that the responsibilities of the Board are effectively carried out in compliance with the Board’s mandate and that the functions of the Board delegated to the committees of the Board are effectively carried out and reported to the Board.
Position Descriptions
The Board has written position descriptions for the Chairman of the Board, Independent Lead Director, chairs of the Board committees and the CEO. The Board Mandate and the charters for the committees set out in writing the responsibilities of the Board and the committees for supervising management of the Company.
18


Table of Contents
Orientation and Continuing Education
All new directors are provided with an initial orientation regarding the nature and operation of the Company’s business and its strategy and as to the role of the Board and its committees, as well as the legal obligations of a director of the Company. Directors are periodically updated on these matters.
In order to orient new directors as to the nature and operation of the Company’s business, they are given an opportunity to meet with key members of the management team to discuss the Company’s business and activities. In addition, new directors receive copies of Board materials, corporate policies and procedures, and other information regarding the business and operations of the Company.
Board members are expected to keep themselves current with industry trends and developments and are encouraged to communicate with management and, where applicable, auditors and advisors of the Company. Board members have access to the Company’s external and in-house legal counsel in the event of any questions or matters relating to their corporate and director responsibilities and to keep themselves current with changes in legislation. Board members have full access to the Company’s records. In addition, external counsel and other external advisors of the Company will be regularly invited to present to the Board at Board meetings on topics and trends facing public companies and private companies in the cannabis industry.
The orientation and continuing education process are reviewed on an annual basis by the Board and revised as necessary.
Board Oversight of Risk Management
The role of our Board in our risk oversight is consistent with our leadership structure, with our Chief Executive Officer and the other members of senior management having day-to-day responsibility for assessing and managing our risk exposure and control processes, and our Board and its committees taking an active role in the management of critical business risks and providing oversight of risk management and control processes.
The Company’s senior management is responsible for reporting to the Board on the principal risks associated with the Company’s business and operations, implementing appropriate systems to manage these risks and reporting to the Board on the operation of, and any material deficiencies in, these systems. Such reports are provided by senior management to the Board at each regularly scheduled Board meeting.
The Audit Committee is responsible for monitoring procedures relating to financial reporting risk management and reviewing the adequacy of the Company’s internal control over financial reporting. The Compensation Committee has primary responsibility for the Company’s compensation policies, plans and practices regarding both executive compensation and the compensation structure generally and in particular, reviews the Company’s incentive compensation arrangements to ensure these programs do not encourage inappropriate or unintended risk-taking by the Company’s employees.
Committees of Our Board of Directors
The standing committees of our Board consist of the Audit Committee and the Compensation Committee. The responsibilities of these committees are described below. Our Board may also establish various other
19


Table of Contents
committees to assist it in its responsibilities. The following table summarizes the current membership of the Board and each of its committees:
Director Name Audit Committee Compensation Committee
Michael Gorenstein


Jason Adler (1) (2)  
Member Member
Jody Begley (1)

Chair
Bronwen Evans (1) (2)
Member

Murray Garnick (1)


Heather Newman


James Rudyk (1) (2)  
Chair Member
        
(1) “Independent” within the meaning of such term under the applicable NASDAQ Rules.
(2) “Independent” within the meaning of such term under NI 58-101.
Our Board has adopted a charter for each of the two standing committees that addresses the composition and function of each committee. Copies of such materials are available on our website at ir.thecronosgroup.com/governance/documents-charters.
The Investor Rights Agreement also provides that, subject to certain exceptions, for so long as Altria is entitled to designate one or more Altria Nominees, Altria may appoint to each committee established by the Board such number of Altria Nominees that represents Altria’s proportionate share of the number of directors comprising the applicable Board committee based on the percentage of our issued and outstanding Shares beneficially owned by the Altria Group at the relevant time.
Audit Committee.
The Company has a separately designated standing Audit Committee established in accordance with the NASDAQ Rules. The Audit Committee is currently comprised of three directors of the Company: James Rudyk (Chair), Jason Adler and Bronwen Evans, all of whom are considered to be “independent” within the meaning of such term under applicable NASDAQ Rules.
The Board has determined that James Rudyk, the Chair of the Audit Committee, qualifies as an “audit committee financial expert” for purposes of the SEC’s rules. The SEC has indicated that the designation of Mr. Rudyk as an audit committee financial expert does not make him an “expert” for any purpose, impose any duties, obligations or liabilities on him that are greater than those imposed on other members of the Audit Committee and the Board who do not carry this designation or affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.
The members of the Audit Committee are appointed by the Board, and each member of the Audit Committee serves at the pleasure of the Board until the member resigns, is removed or ceases to be a member of the Board.
The responsibilities and operation of the Audit Committee are set out in the Audit Committee Charter, a copy of which is available on the Company’s website at ir.thecronosgroup.com/governance/documents-charters.
Compensation Committee.
The Compensation Committee is currently comprised of three directors of the Company: Jody Begley (Chair), Jason Adler, and James Rudyk. Messrs. Rudyk and Adler are considered to be “independent” within the
20


Table of Contents
meaning of such term under applicable NASDAQ Rules and NI 58-101. Mr. Begley is not considered to be “independent” within the meaning of such term under NI 58-101 but is considered to be “independent” within the meaning of such term under applicable NASDAQ Rules. In order to ensure that the compensation process remains objective:
the Board is required to review and evaluate all recommendations and decisions put forward by the Compensation Committee regarding the design of the Company’s compensation plans, including any equity-based compensation and executive compensation; and
both the Board and the Compensation Committee hold meetings at which non-independent directors of the Company are not present.
The Compensation Committee is responsible for approval of, or making recommendations to the Board with respect to, the compensation of the executive officers of the Company and making recommendations to the Board with respect to the compensation of the directors of the Company.
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee is or has been one of our officers or employees, and none have any relationships with us of the type that is required to be disclosed under Item 404 of Regulation S-K. None of our executive officers serves or has served as a member of the Board, Compensation Committee or other Board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.
Nomination of Directors
The Board has not established a formal nominating committee. Rather, the Board has determined that compliance with the NASDAQ Rules, which require that director nominees (other than the Altria Nominees) are recommended for the Board’s selection by independent directors within the meaning of such term under applicable NASDAQ Rules constituting a majority of the Board’s independent directors in a vote in which only independent directors participate, with the independence requirements applicable to such directors to be confirmed at such time, adequately encourages an objective nomination process. Individuals are selected with the desired background and qualifications, taking into account the needs of the Board at the time. In making recommendations, the Board’s independent directors consider:
the competencies and skills that the Board considers to be necessary for the Board, as a whole, to possess;
the competencies and skills that the Board considers each existing director to possess;
the competencies and skills each new nominee will bring to the boardroom;
whether or not each new nominee can devote sufficient time and resources to his or her duties as a Board member; and
diversity criteria, pursuant to the Diversity Policy (as defined herein) as further described below under “ – Diversity ”.
See “ Proposal No. 1–Election of Directors ” above for a discussion of Altria’s right to designate director nominees under the Investor Rights Agreement. The Board’s independent directors will consider director candidates recommended by Shareholders and the Company’s by-laws contain advance notice provisions setting out advance notice requirements for the nomination of directors of the Company by a Shareholder, which are further described under “ Shareholder Recommendations for Director Nominations ” below.
21


Table of Contents
Diversity
The Board has adopted a written policy concerning diversity on the Board and in senior management (the “Diversity Policy”). The Board believes that diversity is important to ensure that Board members and senior management possess the necessary range of perspectives, experience and expertise required to achieve the Company’s objectives and deliver for its stakeholders. The Company believes that diversity mitigates the risk of group think, ensures that the Company has the opportunity to benefit from all available talent and enhances, among other things, its organizational strength, problem-solving ability and opportunity for innovation. The Diversity Policy states, among other things, that the Board should consider diversity criteria including, but not limited to, any characteristic that can be used to differentiate groups and people from one another such as gender, geographical representation, education, religion, ethnicity, race, nationality, culture, language, aboriginal or indigenous status and other ethnic distinctions, sexual orientation, political affiliation, family and marital status, age, disability, and industry experience and expertise, when determining the composition of the Board. It is an objective of the Company that diversity be considered when hiring members of the Company’s senior management and in connection with succession planning. There are currently two women on the Board (representing 29% of the directors of the Company) and two women in executive officer positions (representing 29% of the executive officers of the Company).
The Company has not adopted targets regarding the representation of women on the Board or in executive officer positions. The Company monitors the level of representation of women on the Board and in senior management positions.
Code of Business Conduct and Ethics
The Board has adopted a Code of Business Conduct and Ethics (the “Code”), a written code of business conduct and ethics for the Company’s directors, officers and employees. The Code sets out the Board’s expectations for the conduct of such persons in their dealings on behalf of the Company. The Company’s contractors, suppliers and third-party vendors are also expected to meet the standards contained in the Code.
The Board has delegated responsibility for monitoring compliance with the Code and for investigating and enforcing matters related to the Code to management, who will report breaches of the Code to the Company’s Legal department or for matters regarding accounting, internal accounting controls and other auditing matters to the Audit Committee or for matters involving the Chief Executive Officer or any other senior executive or financial officer of the Company to any member of the Board. The Company’s Legal department or Audit Committee, as applicable, will promptly address all allegations of non-compliance with the Code and recommend corrective actions to local or head office management, as appropriate. The Company’s Executive Vice President, Legal and Regulatory Affairs is responsible for allegations relating to the most serious violations of the Code. The Company’s Executive Vice President, Legal and Regulatory Affairs reports regularly to the Board and the Audit Committee regarding serious suspected and confirmed Code violations. Any waivers of the Code can only be granted by the Company’s Executive Vice President, Legal and Regulatory Affairs or the Chief Executive Officer and any such waivers are reported to the Audit Committee. Waivers of the Code for executive officers and senior management may only be granted by the Board or the Audit Committee and will be disclosed to Shareholders as required under applicable law.
Directors and executive officers are required by the Code to promptly disclose any potential conflict of interest that may arise. If a director or executive officer has a material interest in an agreement or transaction, the Code requires them to declare the interest in writing or request to have such interest entered in the minutes of meetings of directors and, where required by applicable law, abstain from voting with respect to the agreement or transaction. The Code requires the prior approval of the other members of the Board prior to any director accepting an appointment as a director or officer of a competitor or competing business, or becoming otherwise professionally engaged with a competitor or competing business.
A copy of the Code is available on the Company’s website at ir.thecronosgroup.com/governance/documents-charters.
22


Table of Contents
Conflicts of Interest Policy
The Board has adopted a Conflicts of Interest Policy (the “Conflicts Policy”) that applies to the Company’s directors, officers and employees. The Conflicts Policy also applies to employees of affiliates and/or joint ventures controlled by or under common control of the Company (other than the Altria Group). The Conflicts Policy establishes the ethical standards and accountability expected of such persons in situations where there may be a conflict of interest. The Conflicts Policy is in addition to any requirements imposed by the Code, the Related Party Transactions Policy (as defined herein) and the requirements of the Investor Rights Agreement, which, among other things, requires the prior approval of an Independent Committee (as such term is defined in the Investor Rights Agreement) for any transaction between any member of Altria Group and the Company or any of its subsidiaries, subject to certain exceptions.
The Conflicts Policy sets out the Company’s commitment to avoiding actual or perceived conflicts of interest and the obligation of the Company’s directors, officers and employees to disclose such situations. In addition to the requirements of the Conflicts Policy, directors are required to complete an annual questionnaire (the “Director Questionnaire”) with respect to any material interests or relationships that are, or could be perceived to be, an actual or potential conflict of interest with their obligation to act in the best interests of the Company, including details of the extent and nature of the actual, potential or perceived conflict of interest. Directors are also required to disclose any new actual, potential or perceived conflicts of interest if they become aware of them following the completion of the Director Questionnaire.
Insider Trading Policy; Hedging Transaction
In addition to the Code, the Company has an insider trading policy (the “Insider Trading Policy”) relating to the trading in securities of the Company by directors, officers and employees of the Company and its subsidiaries, and certain persons related to any such persons.
Among other things, the following transactions by directors and employees of the Company are prohibited by the Insider Trading Policy:
speculating in securities of the Company;
pledging securities of the Company as collateral for a loan;
buying the Company’s securities on margin;
short sales of the Company’s securities;
transactions in puts or calls; and
purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of securities of the Company held, directly or indirectly, including equity securities granted as compensation.
Board and Committee Assessment
The Board is responsible for assessing annually the effectiveness of the Board as a whole, the Board committees and the contribution of individual directors. Assessments of the Board and its committees will consider the Board mandate and the relevant committee charter, as the case may be. Assessments of individual directors will consider the position description and skills and competencies applicable to that individual. The full Board will discuss the collective assessment to determine what, if any, actions should be taken to improve effectiveness.
23


Table of Contents
Director Term Limits
The Board has not adopted a term limit for directors. In light of the tenures of the nominees for election to the Board at the Annual and Special Meeting and the nature of the industry in which the Company operates, the Board does not believe that adopting a term limit for directors is necessary or appropriate at this time.
Shareholder Communications with the Board of Directors
Shareholders and other interested parties who wish to communicate with our Board may do so by writing to the Corporate Secretary of the Company at the address of the Company’s headquarters. The non-management directors have established procedures for the handling of communications from Shareholders and other interested parties and have directed our Corporate Secretary to act as their agent in processing any communications received. Communications that relate to matters that are within the scope of the responsibilities of our Board and its committees are to be forwarded to the Independent Lead Director.
Communications that relate to matters that are within the responsibility of one of the committees are also to be forwarded to the Chair of the appropriate committee. Communications that relate to ordinary business matters that are not within the scope of our Board’s responsibilities, such as customer complaints, are to be sent to the appropriate Company personnel.

24


Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND MANAGEMENT

The following table sets forth information, based on data provided to us or filed with the SEC, with respect to beneficial ownership of our Shares as of March 20, 2020 for (i) all persons known by us to own beneficially more than 5% of our outstanding Shares, (ii) each of our NEOs named in the Summary Compensation Table included under “Executive Compensation” herein, (iii) each of our directors and (iv) all of our directors, NEOs and other current executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all persons listed below have sole voting power and dispositive power with respect to the Shares beneficially owned by them, subject to applicable community property laws. Except as otherwise indicated, the address for each Shareholder listed below is c/o Cronos Group Inc., 720 King Street West, Suite 320, Toronto, Ontario, M5V 2T3.
Name and Address of Beneficial Owner
Number of Shares Beneficially Owned 1
Percent of Class
Greater than 5% Shareholders


Altria Group, Inc. 2  
234,088,530 52.54%



Directors and Named Executive Officers


Michael Gorenstein 3
13,142,120 2.95%
Jason Adler 4
15,747,471 3.53%
Jody Begley
Bronwen Evans
Murray Garnick
Heather Newman *
James Rudyk 123,737 *
Jerry Barbato 7,522 *
Xiuming Shum 307,855 *
Robert Rosenheck 5
2,051,156
*
William Hilson 1,425,664 *
David Hsu 2,109,934 *
Directors, NEOs and other current executive officers of the Company as a group (15 persons)
31,792,674 7.93%
        
* Less than 1%.
(1)   Amount of Shares shown includes (i) Shares subject to options which may be exercised within 60 days as follows: Gorenstein – 3,216,894 Shares, Adler – 2,563,541 Shares, Rudyk – 87,500 Shares, Barbato – 7,522 Shares, Shum – 307,855 Shares and all directors, NEOs and other current executive officers of Cronos as a group – 6,589,125 Shares; (ii) Shares receivable upon the exercise of warrants which may be exercised within 60 days as follows: Gorenstein – 8,635,776 Shares, Adler – 3,987,132 Shares and all directors, NEOs and other current executive officers of Cronos as a group – 12,622,908 Shares.
(2)   The amount reported represents 156,573,537 Shares directly held by Maple Acquireco (Canada) ULC and beneficially owned by Altria, with respect to which Altria, Altria Summit LLC, Maple Holdco (Bermuda) Ltd, and Maple Acquireco (Canada) ULC have shared dispositive power and voting power and 77,514,993 Shares receivable upon the exercise of the Altria Warrant directly held by Altria Summit LLC, which is beneficially owned by Altria.
(3)  Excludes 503,478 Shares beneficially owned by Gotham Green 1, L.P. and 2,014,228 Shares beneficially owned by Gotham Green GP 1, LLC, as Michael Gorenstein is a non-managing member of Gotham Green Partners and therefore does not have beneficial ownership of such Shares.
25


Table of Contents
(4)  The amount reported represents 503,478 Shares beneficially owned by Gotham Green Fund 1, L.P., 2,014,228 Shares beneficially owned by Gotham Green Fund 1(Q), L.P. and 13,229,765 Shares beneficially owned by Jason Adler (which includes Shares subject to options and receivable upon the exercise of warrants which may be exercised within 60 days as set forth in Note 2 above). Gotham Green GP 1, LLC is the general partner of Gotham Green Fund 1, L.P. and Gotham Green Fund 1(Q), L.P., and Mr. Adler is the Managing Member of Gotham Green GP 1, LLC. Mr. Adler may be deemed to have beneficial ownership and shared dispositive and voting power with respect to 503,478 Shares beneficially owned by Gotham Green Fund 1, L.P. and 2,014,228 Shares beneficially owned by Gotham Green Fund 1(Q), L.P. Mr. Adler disclaims that he is the beneficial owner of such Shares.
(5)   Excludes 366,486 restricted share units, which are subject to vesting. Includes 19,879 Shares held by Mr. Rosenheck’s spouse for which Mr. Rosenheck disclaims beneficial ownership. Includes 1,997,086 Shares held by Laurel Canyon Associates, LLC, which is wholly owned by a family trust, of which Mr. Rosenheck and his spouse are the sole trustees.
Altria Strategic Investment
Pursuant to the Subscription Agreement dated December 7, 2018 (the “Subscription Agreement”), upon closing of the Altria Group’s investment in us (the “Altria Investment”) on March 8, 2019, the Company issued to certain wholly owned subsidiaries of Altria 149,831,154 Shares for total proceeds to the Company of approximately C$2.4 billion (approximately $1.8 billion). The aggregate purchase price for the Altria Investment was funded by the general working capital of Altria, including a portion of Altria’s proceeds from the issuance of seven series of SEC registered senior unsecured notes in February 2019. As a result of the Altria Investment, as of the closing date of the Altria Investment, the Altria Group beneficially held an approximately 45% ownership interest in the Company (calculated on a non-diluted basis) and, if exercised in full on such date, the exercise of the one warrant held by the Altria Group (the “Altria Warrant” represented and evidenced by the “Altria Warrant Certificate”) would have resulted in the Altria Group holding a total ownership interest in the Company of approximately 55% (calculated on a non-diluted basis). Since the closing of the Altria Investment, the Altria Group has exercised its top-up rights, as discussed further below, each time that top-up rights have been available for exercise, other than in connection with its top-up rights for the fiscal quarter ended December 31, 2019. As of March 20, 2020, the Altria Group beneficially held 156,573,537 Shares and has not exercised the Altria Warrant.
Investor Rights Agreement
On March 8, 2019, in connection with the closing of the Altria Investment, we entered into the Investor Rights Agreement with Altria pursuant to which Altria received certain governance rights which are summarized below.
Board Representation
See “ Proposal No. 1–Election of Directors ” above for a discussion of Altria’s right to designate director nominees under the Investor Rights Agreement.
The Investor Rights Agreement also provides that, subject to certain exceptions, for so long as Altria is entitled to designate one or more Altria Nominees, we agree to appoint to each committee established by the Board such number of Altria Nominees that represents Altria’s proportionate share of the number of directors comprising the Board (rounded up to the next whole number) based on the percentage of our issued and outstanding Shares beneficially owned by the Altria Group at the relevant time.
Approval Rights
The Investor Rights Agreement also grants Altria, until the Altria Group beneficially owns less than 10% of our issued and outstanding Shares, approval rights over certain transactions that may be taken by us. We have agreed that we will not (and will use our commercially reasonable efforts to cause our affiliates not to), without the prior written consent of Altria:
consolidate or merge into or with another person or enter into any similar business combination;
26


Table of Contents
acquire any shares or similar equity interests, instruments convertible into or exchangeable for shares or similar equity interests, assets, business or operations with an aggregate value of more than C$100,000,000, in a single transaction or a series of related transactions;
subject to certain exceptions, adopt any plan or proposal for a complete or partial liquidation, dissolution or winding up of the Company or any of our significant subsidiaries, or any reorganization or recapitalization of the Company or any of our significant subsidiaries, or commence any claim seeking relief under any applicable laws relating to bankruptcy, insolvency, conservatorship or relief of debtors;
sell, transfer, caused to be transferred, exclusively license, lease, pledge or otherwise dispose of any of our or any of our significant subsidiaries’ assets, business or operations in the aggregate with a value of more than C$60,000,000;
except as required by applicable law, make any changes to our policy with respect to the declaration and payment of any dividends on our Shares;
subject to certain exceptions, enter into any contract or other agreement, arrangement, or understanding with respect to, or consummate, any transaction or series of related transactions between us or any of our subsidiaries, on the one hand, and any related parties, on the other hand, involving consideration or any other transfer of value required to be disclosed pursuant to Item 404 of Regulation S-K promulgated pursuant to the United States Securities Act of 1933;
enter into any contract or other agreement, arrangement or understanding with respect to, or consummate, any transaction or series of related transactions between us or any of our subsidiaries, on the one hand, and certain specified persons; or
engage in the production, cultivation, advertisement, marketing, promotion, sale or distribution of cannabis or any Related Products and Services (as defined below) in any jurisdiction, including the U.S., where such activity is prohibited by applicable law as of the date of the Investor Rights Agreement (subject to certain limitations).
Exclusivity Covenant
Pursuant to the terms of the Investor Rights Agreement, until the earlier of:
(i) the six-month anniversary of the date that the Altria Group beneficially owns less than 10% of our issued and outstanding Shares; and
(ii) the six-month anniversary of the termination of the Investor Rights Agreement,
Altria has agreed to make us and the other members of the Altria Group its exclusive partner for pursuing cannabis opportunities throughout the world (subject to certain limited exceptions).
In particular, Altria has agreed not to, directly or indirectly, and shall cause the other members of the Altria Group not to, directly or indirectly:
develop, produce, manufacture, cultivate, advertise, market, promote, sell or distribute any cannabis or products derived from or intended to be used in connection with cannabis or services intended to relate to cannabis (such products and services, collectively, “Related Products and Services”) anywhere in the world, other than (A) pursuant to any Commercial Arrangement (as defined under “— Commercial Arrangements ” below), or (B) pursuant to a contract approved by an independent committee of our Board (or, at any time when Altria Nominees do not represent a majority of the Board, if fully disclosed to and approved by a majority of the independent members of the Board), entered into by and
27


Table of Contents
among or by and between, us and/or one or more of our subsidiaries, on the one hand, and any one or more members of the Altria Group, on the other hand (such other contract, an “Approved Company Agreement”);
acquire or make any investment in or otherwise beneficially own any interests in, or lend any money or provide any guarantee to, any person that develops, produces, manufactures, cultivates, advertises, markets, promotes, sells and/or distributes cannabis or any Related Products and Services, other than (A) pursuant to any Commercial Arrangement, on the terms and subject to the conditions of the Investor Rights Agreement, Subscription Agreement and the Altria Warrant Certificate, or (B) to us and/or any of our subsidiaries, so long as any such acquisition or investment is pursuant to an Approved Company Agreement;
use or allow the use of any of their respective trade names, trademarks, trade-secrets or other intellectual property rights in connection with any person that develops, produces, manufactures, cultivates, advertises, markets, promotes, sells and/or distributes cannabis or any Related Products and Services, other than (A) pursuant to any Commercial Arrangement, or on the terms and subject to the conditions of the Investor Rights Agreement, Subscription Agreement, the Altria Warrant Certificate and the Commercial Arrangement, or (B) to us and/or any of our subsidiaries, so long as any such use of trade names, trademarks, trade-secrets or other intellectual property rights with us and/or any of our subsidiaries is pursuant to an Approved Company Agreement; or
contract with or arrange for any third party (other than us or any of our subsidiaries) to do any of the foregoing.
Pre-Emptive Rights and Top-Up Rights
Pursuant to the terms of the Investor Rights Agreement, Altria, provided the Altria Group continues to beneficially own at least 20% of our issued and outstanding Shares, will have a right to purchase, directly or indirectly by another member of the Altria Group, upon the occurrence of certain issuances of Shares by us (including issuances of Shares to Ginkgo Bioworks Inc. (“Ginkgo”) under the collaboration and license agreement (the “Ginkgo Collaboration Agreement”) dated September 1, 2018 between Gingko and the Company (each, a “Ginkgo Issuance”)) (each, a “Triggering Event”) and subject to obtaining the necessary approvals, up to such number of Shares issuable in connection with the Triggering Event which will, when added to the Shares beneficially owned by the Altria Group immediately prior to the Triggering Event, result in the Altria Group beneficially owning the same percentage of our issued and outstanding Shares that the Altria Group beneficially owned immediately prior to the Triggering Event (in each case, calculated on a non-diluted basis). The price per Share to be paid by Altria pursuant to the exercise of these pre-emptive rights will be, subject to certain limited exceptions, the same price per Share at which the Shares are sold in the relevant Triggering Event; provided that if the consideration paid in connection with any such issuance is non-cash, the price per Share that would have been received had such Shares been issued for cash consideration will be determined by an independent committee (acting reasonably and in good faith); provided further that the price per Share to be paid by Altria pursuant to the exercise of its pre-emptive rights in connection with a Ginkgo Issuance will be C$16.25 per Share.
In addition to (and without duplication of) the aforementioned pre-emptive rights, the Investor Rights Agreement provides Altria with top-up rights, exercisable on a quarterly basis, whereby, subject to obtaining the necessary approvals and for so long as the Altria Group beneficially owns at least 20% of our issued and outstanding Shares, Altria (or another member of the Altria Group to which it has assigned such right) shall have the right to subscribe for such number of Shares in connection with any Top-Up Securities (as defined herein) that we may, from time to time, issue after the date of the Investor Rights Agreement, as will, when added to the Shares beneficially owned by the Altria Group prior to such issuance, result in the Altria Group beneficially owning the same percentage of our issued and outstanding Shares that the Altria Group beneficially owned immediately prior to such issuance. “Top-Up Securities” means any of our Shares issued:
28


Table of Contents
on the exercise, conversion or exchange of our convertible securities issued prior to the date of the Investor Rights Agreement or on the exercise, conversion or exchange of our convertible securities issued after the date of the Investor Rights Agreement in compliance with the terms of the Investor Rights Agreement, in each case, excluding any of our convertible securities owned by any member of the Altria Group;
pursuant to any share incentive plan of the Company;
on the exercise of any right granted by us pro rata to all Shareholders to purchase additional Shares and/or other securities of the Company (other than a right issued in a rights offering in which Altria had the right to participate);
in connection with bona fide bank debt, equipment financing or non-equity interim financing transactions with our lenders, in each case, with an equity component; or
in connection with bona fide acquisitions (including acquisitions of assets or rights under a license or otherwise), mergers or similar business combination transactions or joint ventures undertaken and completed by us,
in each case, other than (A) Shares issued pursuant to Altria’s pre-emptive right and (B) Shares issued pursuant to the Ginkgo Collaboration Agreement.
The price per Share to be paid by Altria pursuant to the exercise of its top-up rights will be, subject to certain limited exceptions, the volume-weighted average price of our Shares on the TSX for the ten full days preceding such exercise by Altria (or another member of the Altria Group to which it has assigned such right); provided that the price per Share to be paid by Altria pursuant to the exercise of its top-up rights in connection with the issuance of Shares pursuant to the exercise of options or warrants that were outstanding on the date of closing of the Altria Investment will be C$16.25 per Share without any setoff, counterclaim, deduction or withholding.
Standstill Covenant
For a period commencing on the date of the Investor Rights Agreement and ending on the earlier of (i) the date on which the Altria Warrant has been exercised in full by Altria, and (ii) the expiry or termination of the Altria Warrant, the Investor Rights Agreement provides that, without the prior approval of an independent committee of the Board, no member of the Altria Group shall, directly or indirectly, acquire our Shares (other than upon settlement of any Shares issued, sold and delivered pursuant to the proper exercise of rights contemplated by the Altria Warrant Certificate or the exercise of pre-emptive rights or top-up rights): (A) on the TSX, the NASDAQ or any other stock exchange, marketplace or trading market on which our Shares are then listed; (B) through private agreement transactions with existing holders of Shares; or (C) in any other manner or take any action which would require any public announcement with respect to any of the foregoing; provided that nothing shall prohibit any member of the Altria Group from making a take-over bid or commencing a tender offer, in each case, to acquire not less than all of our issued and outstanding Shares (other than any such Shares beneficially owned by any member of the Altria Group and its affiliates) in accordance with applicable law.
Registration Rights
The Investor Rights Agreement provides the Altria Group with the right, subject to certain limitations and to the extent permitted by applicable law, to require us to use reasonable commercial efforts to file a prospectus under applicable securities laws and/or a registration statement, qualifying our Shares held by the Altria Group for distribution in Canada and/or the U.S. In addition, the Investor Rights Agreement provides the Altria Group with the right to require us to include our Shares held by the Altria Group in any proposed distribution of Shares in Canada and/or the U.S. by us for our own account.
29


Table of Contents
Commercial Arrangements
In connection with the Altria Investment, we and Altria and/or one or more other members of the Altria Group have entered into certain commercial support arrangements (the “Commercial Arrangements”), pursuant to which Altria provides us with strategic advisory and consulting services on matters which may include research and development, marketing, advertising and brand management, government relations and regulatory affairs, finance, tax planning, logistics and other corporate administrative matters. The services under the Commercial Arrangements are provided on customary terms and for a services fee payable by us that is equal to Altria’s reasonably allocated costs plus 5%.

30


Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS

Throughout this Compensation Discussion & Analysis (“CD&A”), we describe our executive compensation philosophy, program and decisions made in 2019 for our NEOs. For a complete understanding of the executive compensation program, this disclosure should be read in conjunction with the Summary Compensation Table and other executive compensation-related disclosure included in this Proxy Statement.
For 2019, the Company’s NEOs included the Chairman, President and Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”), the former Chief Commercial Officer (who served as the Chief Commercial Officer until December 31, 2019 and CFO until April 15, 2019) and the Company’s next three most highly compensated executive officers. The following individuals are the NEOs for the year ended December 31, 2019:
Name Position
Michael Gorenstein Chairman, President and CEO
Jerry Barbato CFO
David Hsu Former Chief Operations Officer (until December 31, 2019) and Former Chief Operating Officer (until October 7, 2019)
Robert Rosenheck Chief Executive Officer, Redwood Wellness
Xiuming Shum Executive Vice President, Legal and Regulatory Affairs, formerly General Counsel (until May 21, 2019)
William Hilson Former Chief Commercial Officer (until December 31, 2019) and Former CFO (until April 15, 2019)

Executive Summary
Overview of Executive Compensation Program
The cannabis industry occupies a nascent space that is rapidly evolving due to legal and regulatory changes, competitive pressures and changes in the economy and market conditions. As a result, we believe it will take discipline, deliberate strategic growth and flexibility to succeed and create value in the long term.
In 2019, the Company’s business entered a stage where we would benefit from short-term incentives to drive shorter-term business objectives and long-term incentive equity grants to encourage executive retention. As a result, the Company had the opportunity to evaluate its legacy compensation practices and policies and define a go-forward approach tailored to our business and talent objectives. The Compensation Committee determined that the objectives of the executive compensation program are to reward strong performance and attract and retain core top talent.
Our executive compensation program is designed to attract, motivate and encourage long-term commitment from talented and high-performing executives to lead the Company’s global success in creating disruptive intellectual property by advancing cannabis research, technology and product development, developing a portfolio of iconic brands, and establishing an efficient global supply chain and expanding its production and distribution capabilities globally. Our program is further designed to advance our Shareholders’ interests by creating, and reinforcing, a pay for performance philosophy and culture. In addition to emphasizing long-term growth, our compensation program seeks to attract talented executives by offering a competitive base salary and short-term incentives, which encourage our executives to achieve short-term financial goals. The Compensation Committee has the responsibility for establishing, developing and implementing these programs while ensuring an appropriate level of risk-taking by the Company’s executives.
31


Table of Contents
The direct compensation for our NEOs in 2019 was designed to consist of base salary, short-term incentives and annual grants of equity in the form of options to purchase Shares (“Stock Options”) vesting quarterly over four years. In setting target compensation, the Compensation Committee reviewed the total compensation opportunity for each executive compared to comparable executives within the Cronos Peer Group (as defined below), along with other comparative factors. In 2019, the Board, with a recommendation from the Compensation Committee, adopted a short-term incentive compensation program (the “STIC Program”) in order to drive and reinforce the Company’s growth culture. Payments under the STIC Program are based on the employee’s achievement of predetermined performance goals for the Company as well as the employee’s achievement of individual performance goals.
The following table summarizes what we do and what we don’t do in connection with executive compensation. The notable features of the Company’s 2019 executive compensation program, which were designed to align with “best practice” compensation governance, are provided below.
What We Do What We Don’t Do
Make pay decisions aligned with our compensation philosophy Guarantee short-term cash incentive amounts
Regularly review the competitiveness and appropriateness of pay levels for senior executives versus industry peers Re-price or back-date equity awards
Deliver the majority of executive compensation in “at risk”, variable incentives Issue equity awards with an exercise price below market
Pay for performance, with the actual value received from incentive awards directly aligned with key Company operating and financial results and individual goals Gross-up the value of perquisites for taxes paid, other than in limited circumstances for business-related relocations and assignment-related benefits that are under our control
Grant equity-based long-term incentives which vest over multi-year periods Offer egregious executive benefits and perquisites
Reinforce an ownership culture, with long-term incentives settled in shares No “single-trigger” payments upon a change of control
Prohibit pledging, hedging and other securities transactions intended to lock in the gain on share price growth

Retain external and independent advisors to support the Compensation Committee on executive compensation decisions throughout the year


2019 Strategic Accomplishments
Our compensation decisions for 2019 were driven by our overarching goal of creating value for Shareholders. In pursuing this goal, we focused on four core strategic priorities: (i) growing a portfolio of iconic brands that resonate with consumers; (ii) developing a diversified global sales and distribution network; (iii) establishing an efficient global supply chain; and (iv) creating and monetizing disruptive intellectual property in the industries in which we operate.
32


Table of Contents
In March 2019, Altria closed the Altria Investment, which resulted in Altria beneficially holding a 45% ownership interest in us (calculated on a non-diluted basis). Our strategic partnership with Altria provides us with additional financial resources, product development and commercialization capabilities and regulatory expertise to better position ourselves to compete in the global cannabis industry.
We achieved other key strategic initiatives in 2019 that strengthened our foundation for long-term growth and success. These include:
In April 2019, we established Cronos Device Labs, our Israel-based global R&D center for innovation. This state-of-the-art facility, which is equipped with advanced vaporizer technology and analytical testing infrastructure and is home to an experienced team of product development talent. The Cronos Device Labs’ team, with over 80 years of combined experience in vaporizer development, is comprised of product designers, mechanical, electrical and software engineers, and analytical and formulation scientists. This global R&D center is expected to significantly enhance Cronos’ innovation capabilities and accelerate development of next generation vaporizer products specifically tailored to cannabinoid use.
In July 2019, we completed the acquisition of certain assets from Apotex Fermentation Inc., including a GMP-compliant fermentation and manufacturing facility in Winnipeg, Manitoba. The state-of-the-art facility, which will operate as “Cronos Fermentation,” includes fully equipped laboratories and two large scale microbial fermentation production areas, processing plants and bulk product and packaging capabilities. Cronos Fermentation is expected to provide the fermentation and manufacturing capabilities needed to capitalize on the progress underway in our R&D partnership with Ginkgo, the goal of which is to produce certain cultured cannabinoids at commercial scale with high quality and high purity.
In September 2019, we acquired Redwood. Redwood manufactures, markets and distributes U.S. hemp-derived supplements and cosmetic products through e-commerce, retail and hospitality partner channels in the U.S. under the brand Lord Jones™, a luxury beauty and lifestyle brand focusing on high-quality U.S. hemp-derived personal care products. We plan to leverage Redwood’s capabilities to capitalize on significant demand to further create and scale U.S. hemp-derived consumer products and brands.
In 2019, we added the provinces of Alberta, Saskatchewan, Manitoba, Quebec and New Brunswick to our Canadian distribution network for adult-use products. As a result of the addition of these provinces to our established distribution network in Ontario, British Columbia, Nova Scotia and Prince Edward Island, we now sell dried flower, pre-rolls, cannabis oils and vaporizers through our adult-use brands, Cove™ and Spinach™, to cannabis control authorities in nine provinces, which, as of December 31, 2019, represent approximately 98% of the Canadian population.
Key Changes to Our Compensation Program in 2020
For 2020, the Compensation Committee has implemented changes to our long-term incentive plan. Highlights of the new programs are summarized below.
Long-term Incentive Plan
Beginning in 2020, the Company will introduce grants of long-term incentives that could be in the form other than Stock Options, intended to attract, retain and motivate senior executives and key employees, align the interests of participants with Shareholders, and promote ownership of the Company’s equity. To facilitate future equity grants, the Board adopted the 2020 Omnibus Equity Incentive Plan (the “2020 Omnibus Plan”) on March 29, 2020, subject to Shareholder approval. For more information, see “ Proposal No. 4—Approval of the 2020 Omnibus Plan .”
33


Table of Contents
Under the 2020 Omnibus Plan, the Company will have flexibility to grant various forms of long-term incentive awards, including Stock Options, share appreciation rights (“Share Appreciation Rights”), restricted shares (“Restricted Shares”), restricted share units (“Restricted Share Units”), dividend equivalent rights (“Dividend Equivalent Rights”) and other share-based or cash-based awards. Equity grants may be settled in cash, Shares purchased in the market, or newly issued Shares from a reserve approved by Shareholders.
Historically, long-term incentives have been granted in the form of Stock Options. Subject to Shareholder approval of the 2020 Omnibus Plan, equity awards for 2020 will be granted in the form of Restricted Share Units, intended to reinforce share ownership and retention of participants. The Restricted Share Units will complement outstanding grants of Stock Options to provide a balanced focus on Shareholder value creation and share price appreciation.
Grants of Restricted Share Units for 2020 will vest ratably over three years and settle in newly issued Shares from treasury. Post-vesting and settlement in Shares, the actual value of compensation received from Restricted Share Units will be dependent on the value of the Share price on the date that a participant elects to sell his or her Shares. This relationship reinforces direct alignment with the interests of our Shareholders.
Governance of Executive Compensation
Framework for Compensation Decisions
Role of Compensation Committee
The Compensation Committee is currently comprised of three directors of the Company: Jody Begley (Chair), Jason Adler and James Rudyk. See “ Board of Directors, Committees and Governance—Committees of Our Board of Directors—Compensation Committee .”
The Compensation Committee is responsible for reviewing and determining the compensation of the executive officers of the Company and for reviewing and making recommendations to the Board concerning the compensation of directors. Based on the recommendations of the Compensation Committee, the Board is responsible for determining the compensation paid to the directors of the Company.
The Compensation Committee considers the performance of the Company and the individual executive officers in executing their objectives to determine total compensation for the Company’s executive officers. The Compensation Committee also considers compensation data gathered from the Cronos Peer Group (as defined below), and general industry market data in making compensation decisions.
The Compensation Committee’s assessment of corporate performance for executive compensation purposes is based on a number of qualitative and quantitative factors including execution of ongoing projects and transactions, operational performance and progress on key growth initiatives. The NEOs do not automatically receive any particular award based on the Compensation Committee’s determination of the overall performance of the Company, but rather the determination establishes the background for the Compensation Committee’s subsequent review of each NEO’s individual performance. Further, the Compensation Committee makes its final determination of executive compensation in executive session not attended by the NEOs whose compensation is being deliberated.
Role of the CEO, CFO and the Human Resources Department
The Compensation Committee works with members of our management team, including our CEO and CFO to formulate the specific compensation plan and award designs, including performance measures and performance levels, necessary to align our executive compensation program with our business objectives and strategies.
Generally, the CEO and CFO participate in meetings of the Compensation Committee at the Compensation Committee’s request to provide relevant background information regarding the Company’s strategic objectives and to evaluate the performance of and compensation recommendations for the other executive officers. The
34


Table of Contents
Compensation Committee utilizes the information provided by the CEO and CFO along with input from its independent compensation consultant and the knowledge and experience of the Compensation Committee members in making compensation decisions.
Role of Compensation Consultant and Independence
The Compensation Committee retained Mercer (Canada) Limited (“Mercer”) in 2018 and through 2019 to assist in evaluating our executive compensation programs and in setting executive officer compensation. During fiscal 2019, at the direction of the Compensation Committee, Mercer assisted the Compensation Committee by providing services, including the following:
participating in Compensation Committee meetings, as requested;
reviewing and updating the Cronos Peer Group;
conducting a comparison of the executive compensation to those of the Cronos Peer Group;
updating the Compensation Committee on evolving compensation trends and best practices; and
advising the Company on the competitiveness of our executive compensation program design and award values.
In order for the Compensation Committee to evaluate our executive compensation, Mercer supported the Compensation Committee in the development of the Cronos Peer Group, targeting companies in the cannabis, pharmaceutical and consumer products industries with similar market capitalization, and/or companies with whom we could potentially compete with for talent. Mercer benchmarked our aggregate pay, executive compensation program design and performance to those of the Cronos Peer Group.
Mercer is engaged directly by the Compensation Committee but regularly consulted with management in performing work requested or delegated by the Compensation Committee. Mercer did not perform any separate services for management.
The Compensation Committee has determined that Mercer is independent and that its work with the Compensation Committee during fiscal 2019 did not raise any conflict of interest.
In 2019, the Company’s management retained Willis Towers Watson to assist with reviewing and redesigning the long-term incentive plan for key employees, non-employee directors and consultants of the Company. This review continued into 2020, resulting in the adoption of the 2020 Omnibus Plan by the Board (as described in more detail below).
Compensation Governance Features
Insider Trading, Hedging and Pledging Policy . The Company’s insider trading policy applies to employees, officers, directors, consultants, secondees, interns and any third-party service providers who are in a position to possess inside information in the course of services provided to the Company (the “Covered Personnel”). The insider trading policy prohibits Covered Personnel from trading in our securities (or securities of any other publicly-traded issuer with which the Company does business) while in possession of material nonpublic information or during blackout periods, other than in connection with a Rule 10b5-1 plan adopted in compliance with the policy.
In addition, Covered Personnel are prohibited from, directly or indirectly, entering into any speculation, hedging or monetization transactions relating to our securities or otherwise trading in any instrument relating to the future price of our securities, such as a put or call option, futures contract, short sale, collar or other derivative security. The policy also prohibits Covered Personnel from pledging Shares as collateral for any loan, subject to
35


Table of Contents
exemption by the policy’s administrators on a case-by-case basis and other requirements and criteria set forth by the Company.
Anti-Fraud Policy . The Company’s anti-fraud policy sets out the Company’s expectations and requirements relating to the prohibition, recognition, reporting and investigation of suspected fraud, corruption, misappropriation and similar irregularities. Under the anti-fraud policy, any employee or director who violates the terms of such policy may be subject to disciplinary action up to and including termination or removal, as applicable, without notice.
Clawback Policy . The Company has a clawback policy adopted in February 2020 that applies to any current or former executive officer of the Company for purposes of Section 16 of the Exchange Act and any other employee who is designated by the Compensation Committee as a covered employee for purposes of the policy. The policy permits the Company to clawback any annual or long-term cash, equity or equity-based incentive or bonus compensation that either (i) is outstanding and unpaid covered award, whether vested or unvested, that was awarded to the covered employee; or (ii) was paid to and received by the covered employee (including gains realized through the exercise of Stock Options or share appreciation rights) during the three year period preceding the date of the clawback event. For purposes of the clawback policy, a “clawback event” means the occurrence of any of the following:
a material restatement of all or a portion of the Company’s financial statements;
a covered award was awarded to, or received by, the covered employee based on a financial statement, performance goal or metric that was materially inaccurate;
the indictment, arrest or conviction in a court of law for, or the entering of a plea of guilty or nolo contendere to, (x) a felony offense under U.S. state or federal law, an indictable offense under the Criminal Code (Canada) or a comparable offense under the law of any other jurisdiction or (y) any crime involving moral turpitude, fraud, dishonesty, bribery or theft; or
engaging in any act (including without restriction, an act of sexual or other harassment as determined by the Company) which is a violation of any law, rule, regulation or the Company’s Code of Business Conduct and Ethics, in each case, that causes material financial, reputational or other harm to the Company, as determined by the Compensation Committee in its sole discretion.
Risk Management . Among other duties, the Compensation Committee is responsible for reviewing the Company’s incentive compensation arrangements and determining whether those arrangements require modification to ensure that they do not encourage inappropriate or unintended risk taking. In its assessment, the Compensation Committee reviewed the Company’s compensation structure and noted numerous ways in which risk is potentially mitigated by practices and policies that include: the balanced mix between short- and long-term incentives; the use of multiple performance measures for short-term cash incentive awards of the NEOs; prohibitions against speculating, short-selling and hedging; prohibition on pledging of securities; and the existence of an anti-fraud policy. In light of its analysis, the Compensation Committee believes that the architecture of the Company’s compensation programs provides various safeguards to protect against undue risk-taking.
Tax and Accounting Considerations
The Compensation Committee considers tax deductibility and other tax implications when designing the executive compensation program. However, the Compensation Committee believes that there are certain circumstances where the provision of compensation that is not fully tax deductible, including by reason of Section 162(m) of the Internal Revenue Code, is more consistent with our compensation philosophy and objectives. The Compensation Committee retains discretion and flexibility to award non-deductible compensation to our NEOs as it deems appropriate and in furtherance of its compensation philosophy and objectives.
36


Table of Contents
Discussion and Analysis of 2019 Compensation
Compensation Philosophy
The Compensation Committee believes that Shareholder interests are advanced if the Company assembles, motivates and rewards a high-performing management team. To promote this objective, the Compensation Committee developed the executive compensation program with the following goals in mind:
attract and encourage a long-term commitment from talented executives necessary to lead the Company and advance Shareholders’ interests;
position us competitively among the companies against which we recruit and compete for talent;
align compensation with the Company’s business objectives and performance; and
motivate NEOs to enhance long-term Shareholder value.
Benchmarking Target Compensation
The Company’s level of compensation for its NEOs was compared to compensation paid by a group of peer companies approved by the Compensation Committee (the “Cronos Peer Group”). The companies selected to be part of the Cronos Peer Group were companies in the cannabis, broader pharmaceutical and consumer products industries that could potentially compete with the Company for talent and of similar size, complexity and operational scope based on then-current financials and operating model.
With respect to pay decisions regarding the 2019 NEO compensation, the Cronos Peer Group was comprised of the following 14 companies.
Company Industry Revenue (last 12 months) ($) (millions) Market capitalization as of December 31, 2019 ($) (millions)
Aphria Inc. Pharmaceuticals 338.0 1,290.2
Aurora Cannabis Inc. Pharmaceuticals 221.2 2,209.1
CannTrust Holdings Inc. Pharmaceuticals 41.2 128.0
Canopy Growth Corporation Pharmaceuticals 259.4 7,174.6
Corby Spirit and Wine Limited Distillers and Vintners 113.6 328.5
Green Thumb Industries Inc. Pharmaceuticals 161.4 1,988.0
GW Pharmaceuticals plc Pharmaceuticals 220.1 3,232.0
iAnthus Capital Holdings Inc. Pharmaceuticals 53.1 245.8
Knight Therapeutics Inc. Pharmaceuticals 10.6 774.8
OrganiGram Holdings Inc. Pharmaceuticals 70.2 375.7
The Green Organic Dutchman Holdings Ltd. Pharmaceuticals 7.3 176.8
HEXO Corporation Pharmaceuticals 42.5 563.3
The Supreme Cannabis Company Inc. Pharmaceuticals 36.3 168.2
Zynerba Pharmaceuticals Inc. Pharmaceuticals 0.1 140.0
Cronos Group Inc. Pharmaceuticals 23.8 2,678.9
(1)  All financials in the table above are from S&P Capital IQ as of December 31, 2019.
37


Table of Contents
(2)  Revenue values were converted from C$ to USD using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019. Market capitalization values were converted C$ to USD using the December 31, 2019 Bloomberg exchange rate of C$1.00 to $0.7698.
Elements of Compensation
Rather than strictly applying formulas and weightings to forward-looking performance objectives, which may lead to unintended consequences for compensation purposes, the Compensation Committee exercises its discretion and uses its sound judgment in making compensation determinations. For this reason, the Compensation Committee does not measure performance using pre-set formulas in determining compensation awards for NEOs.
The Compensation Committee’s comprehensive assessment of the overall business performance of the Company, including corporate performance against objectives (both quantitative and qualitative), business circumstances and, where appropriate, relative performance against peers, provides the context for individual NEO evaluations for total direct compensation.
The NEOs provide services pursuant to employment agreements, described in more detail below, which provide for fixed base salaries and certain benefits. Pursuant to their employment agreements, the NEOs are also eligible to receive performance-based incentive compensation. Fixed compensation and performance-based incentive compensation together represents total direct compensation.
A rapidly developing regulatory environment along with the nascent and emerging nature of the cannabis industry, markets and products make the kind of executive talent required to support the Company’s growth and expansion plans and designing a compensation structure to attract and retain such talent challenging. Industry practices have not stabilized and therefore compensation data analysis in the market remains relatively erratic. Market data and practices analysis comes with a need for business judgement and interpretation of underlying business conditions. The Compensation Committee considers the Company’s business strategy, the expertise of its executives, and the ongoing evolution of industry and competitive compensation practices in establishing tailored pay programs that will attract and retain its executive talent.
In determining appropriate compensation levels, the Compensation Committee considers, in addition to market data and practices:
the executive’s experience, performance, contributions, and job proficiency;
any retention risks and succession planning considerations;
best practices and regulatory considerations; and
internal equity relative to other executives.
Base Salary
Base salaries for our NEOs are intended to reflect the scope of their responsibilities, performance, skills and experience as compared with relevant and comparable market talent. Base salaries are fixed pursuant to each NEO’s employment agreement and are reviewed periodically by the Compensation Committee.
38


Table of Contents
NEO
Base Salary as of 12/31/2018 (1)
Base Salary as of 12/31/2019 (2)
Percentage Increase
Michael Gorenstein $200,000 $391,920 96%
Jerry Barbato $226,108 N/A
David Hsu $173,498 $293,940 69%
Robert Rosenheck $250,000 N/A
Xiuming Shum $134,943 $226,108 68%
William Hilson (3)
$131,896 N/A
(1)  The amounts reported for each of the NEOs other than Mr. Gorenstein are converted from C$ to USD using the Bloomberg average exchange rate of C$1.00 to $0.7711 for the 12-month period ended December 31, 2018.
(2)  Reflects base salaries in effect on December 31, 2019. As described in more detail below, all of the NEOs (except for Mr. Gorenstein) entered into new employment agreements during Fiscal 2019, providing for new base salaries. Mr. Gorenstein and the Company orally amended his employment agreement in Fiscal 2019 to provide for a new base salary. The amounts reported for each of the NEOs other than Mr. Rosenheck are converted from C$ to USD using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019.
(3)  Mr. Hilson was engaged by the Company during 2018 as a consultant as described in more detail below.
Short-Term Incentive Compensation
Short-term cash incentives are intended to reward executives for achieving the Company’s financial and business objectives (the “Business Performance”) and each executive’s own individual performance (the “Individual Performance”). The 2019 short-term cash incentive target as a percentage of base salary for each NEO was determined by the Compensation Committee after consideration of the executive’s position, scope of responsibilities, ability to influence Company results and competitive pay practices among the Cronos Peer Group and general industry market data. Short-term cash incentives are paid only after both the Company Performance and the Individual Performance results are assessed against targeted levels of performance. No individual is guaranteed a short-term incentive bonus amount.
Prior to 2019, the Company has had no formal or discretionary short-term cash incentives and as such, the total cash compensation was below market levels. In 2019, the Company implemented the STIC Program to better align the compensation mix of executives with market competitive practices, reduce reliance on long-term equity based incentive compensation (as further discussed below), to improve internal equity within the organization and to better assist in the attraction and retention of future executive talent to support the Company’s strategic growth plans and expansion globally.
As described in more detail below, the Company entered into an employment agreement on August 1, 2019 with Mr. Rosenheck and Redwood Wellness (the “Rosenheck Agreement”) in connection with the acquisition of Redwood on September 5, 2019 (the “Redwood Acquisition”). The Rosenheck Agreement does not provide for an annual target bonus opportunity and therefore pursuant to the terms of the Rosenheck Agreement, no short-term incentive compensation was granted in respect of 2019, and he is not included in the descriptions that follow.

39


Table of Contents
Target Incentive Amounts
The table below shows the target 2019 short-term incentive opportunities for each of our NEOs, expressed as a percentage of base salary and in dollars (each, a “Target Incentive Amount”).
NEO (1)
Base Salary as of 12/31/2019 Short-Term Incentive Target as Percentage of Base Salary
Target Incentive Amount (2)
Michael Gorenstein $391,920 150% $587,880
Jerry Barbato $226,108 100% $226,108
David Hsu $293,940 100% $293,940
Xiuming Shum $226,108 100% $226,108
William Hilson $131,896 86% $113,431
(1)   Excludes Mr. Rosenheck, whose compensation arrangements are described in more detail below. Messrs. Hilson and Hsu resigned from their positions as Chief Commercial Officer and Chief Operations Officer, respectively, effective as of December 31, 2019. Under the terms and conditions of their employment agreements, Messrs. Hilson and Hsu were not eligible for 2019 short-term incentive compensation.
(2)  The amount reported for each of the NEOs is a percentage of his or her 2019 base salary converted from C$ to USD using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019.
Performance Measures
For 2019, 60% of the actual amount of an NEO’s short-term incentive compensation payout under the 2019 STIC Program (the “NEO 2019 Bonus Amount”) is based on the Company’s Business Performance results against performance targets (the “Business Performance Rating”), with quantitative Business Performance results adjusted based on qualitative Business Performance factors. The remaining 40% of the NEO 2019 Bonus Amount is based on Individual Performance results (the “Individual Performance Rating”).
2019 Short-term Incentive Payout
The actual amount of an NEO’s 2019 short-term incentive payout will be determined by the following formula, subject to a maximum payout equal to 130% of the Target Incentive Amount:
a2019sticimage-forworkiva1.jpg
40


Table of Contents
In the first quarter of 2020, the Audit Committee, with the assistance of outside counsel and forensic accountants, conducted a review of certain bulk resin purchases and sales of products through the wholesale channel. On March 17, 2020, the Company, on the recommendation of the Audit Committee and after consultation with KPMG, determined that it will be required to restate its previously issued unaudited interim financial statements for the first, second and third quarters of 2019 that were previously filed on Form 6-K on May 9, 2019, August 8, 2019 and November 12, 2019, respectively. In light of the restatement, the Compensation Committee decided to defer making final determinations of the 2019 short-term incentive payouts for each NEO until remediation steps have been taken and internal controls over financial reporting are enhanced. Once determined, the Company will report the final 2019 short-term incentive payments on Form 8-K.
Business Performance Rating
For 2019, the Compensation Committee identified three key indicators to measure Business Performance (the “Business Performance Components”). The Business Performance Rating is calculated by taking the average of the ratings for each Business Performance Component and, subject to the sole discretion of the Compensation Committee, adjusting this result up or down based on qualitative Business Performance factors identified by the Compensation Committee.
Targets for each Business Performance Component were aligned to what we believed to be the expectations of our investors at the time of setting the 2019 annual budget. The Business Performance Components for 2019 are:
Net Revenue is the Company’s net revenue on a consolidated basis. This is considered a key measure of growth and expansion of the Company’s business.
Adjusted EBITDA * is the Company’s net income or loss on a consolidated basis, excluding interest expense, interest income, deferred income tax expense or recovery, share-based payments, unrealized change in the fair value of biological assets, realized fair value adjustments on inventory sold, financing and transaction costs, gain on revaluation of derivative liabilities, gain on revaluation of financial liability, share of income or loss from investments in equity accounted investees, gain or loss on investments, depreciation and amortization. This measure ensures that growth is achieved in a cost-effective manner and that cost efficiencies and productivity enhancements are pursued throughout the Company.
Production Volume (kilograms) is the volume of our cannabis produced at our facilities. This was considered a reasonably accurate available measure of organic growth of our operations for 2019 given the state of the cannabis market at the time, which was focused on capacity and licenses and prior to the Company’s entry into the U.S. This performance objective may not be relevant in future years as the Company’s operations and supply chain evolve, market prices for cannabis materials decrease and the Company balances its own growing capacity with supply from third parties to remain focused on its asset-light strategy.
Under the 2019 STIC Program, each Business Performance Component rating may range from 0% to 130%, where achieving the Target corresponds to a 100% rating for the Business Performance Component. Each of the Business Performance Components is subject to a minimum performance threshold (the “Threshold”) and a maximum performance level (the “Maximum”). If a Threshold is not met for a particular Business Performance Component it will be scored as 0% when calculating the Business Performance Rating. Actual Business Performance results that meet or exceed the Maximum will result in a score of 130% for the corresponding Business Performance Component.
41


Table of Contents
For 2019, the rating for each Business Performance Component can be calculated as follows:
Business Performance Component Actual Result:
Business Performance Component Rating Calculation
(expressed as a %):
Below Threshold 0
Greater than Threshold, less than Target [(actual result – Threshold) / (Target – Threshold)] * 100
Equal to Target 100
Greater than Target, less than Maximum ([(actual result – Target) / (Maximum – Target)] * 30) + 100
Equal to or greater than Maximum 130

The table below shows the (i) Threshold (ii) Target and (iii) Maximum Business Performance Component targets established by the Compensation Committee for the 2019 STIC Program, which were each set in the first quarter of 2019, (iv) the actual Business Performance Component results achieved in 2019, and (v) the Business Performance Component rating.
Business Performance Component Threshold Target Maximum 2019 Actual Component Rating
Net Revenue (in millions) $16.88 $50.27 $66.93 $23.75 20.6%
Adjusted EBITDA* (in millions) ($99.94) ($49.97) ($25.02) ($98.68) 2.5%
Production Volume (kilograms) 8,008 15,469 19,200 12,839 64.8%
*   Adjusted EBITDA is a non-GAAP financial measure. Please refer to the definition set forth above for the adjusted EBITDA-to-GAAP reconciliation.
Based on the Business Performance Component ratings above, the overall quantitative Business Performance Rating was 29.3%, which may be adjusted by the Compensation Committee in consideration of other qualitative achievements of the Company, in order to arrive at a final Business Performance Rating. As discussed above, in light of the restatement, the Compensation Committee decided to defer determining the final 2019 short term incentive payouts for each NEO until remediation steps have been taken and internal controls over financial reporting are enhanced.
Individual Performance Measures
Incentive awards are differentiated based on Individual Performance, with 40% of the Target Incentive Amount for our executives based on Individual Performance. For each NEO, the Individual Performance rating can range from 0% to 130%.

42


Table of Contents
Individual Performance factors were specific to each NEO’s job function and generally encompassed the following:
NEO (1)
2019 Objectives 2019 Results
Michael Gorenstein
Objective 1:
Grow long-term Shareholder value by (1) executing against strategy for global cannabinoid leadership and (2) communicating with investment community in order to align analyst perception with the Company’s long-term value creation hypothesis
Mitigated risks of falling cannabis prices, distribution and retail challenges of the Canadian cannabis market by implementing innovative strategy of cultivation-light asset base, leaving the Company well-positioned to deploy resources as market opportunity opens
Led acquisition of Cronos Fermentation in order to accelerate commercialization of Ginkgo technology
Successfully communicated benefits of patience, focusing on developing for the future and disruptive technology, to analyst and investment community

Objective 2:
Build and enhance executive leadership team and middle-management in order to create sustainable talent advantage
Added top tier R&D expertise
Managed transition of C-suite executives and initial right-sizing of manufacturing footprint
Jerry Barbato
Objective 1:
Build a diverse, highly functioning finance organization that phases out third-party service providers and incorporates the Company’s joint ventures as appropriate
Hired 14 people in the Company’s finance organization, resulting in a meaningful reduction in the finance organization’s reliance on third-party service providers
Selected and engaged vendors to implement enterprise resource planning

Objective 2:
Optimize use of cash while mitigating risk by diversifying assets through new banking relationships and ensuring acquisitions align with long-term financial objectives of the Company
Led successful purchase of Redwood and integration efforts
Added a new banking relationship to the Company’s existing relationships
Diversified the Company’s cash portfolio using network of banks
Successfully managed the funding of the Company’s strategic joint venture NatuEra S.à.r.l.
43


Table of Contents
NEO (1)
2019 Objectives 2019 Results
Xiuming Shum
Objective 1:
Develop a global quality control organization and system with defined responsibilities and known performance indicators
Successfully initiated implementation of quality management processes to allow for uniform system for management of, among other things, document management, data management, complaints and corrective action
Successfully managed Health Canada, Good Manufacturing Practices and Yakar audits and inspections across sites and maintained compliant status in all sites, eliminating disruptions to operations of sites during auditing process

Objective 2:
Build diverse, global and vertically integrated Legal and Regulatory Affairs functions
Developed Legal and Regulatory Affairs/Quality Assurance expertise to support global operations
Implemented central management system of all corporate organizational records
Increased legal and regulatory oversight over joint ventures

Objective 3:
Enhance knowledge and understanding of evolving cannabis regulations with focus on U.S. regulatory framework and integrate Legal and Regulatory Affairs into each project stream to provide advice
Developed U.S. legal and regulatory expertise to successfully navigate Redwood Acquisition, enter into the U.S. market and launch hemp-CBD product extensions
Successfully integrated the Legal and Regulatory Affairs/Quality Assurance teams resulting in the Legal and Regulatory Affairs/Quality Assurance teams being key stakeholders in the implementation of projects and initiatives to ensure management of legal and regulatory risk across the enterprise
(1)  Messrs. Hilson and Hsu resigned from their positions as Chief Commercial Officer and Chief Operations Officer, respectively, effective as of December 31, 2019. Under the terms and conditions of their employment agreements, Messrs. Hilson and Hsu were not eligible for 2019 short-term incentive compensation.
As discussed above, in light of the restatement, the Compensation Committee decided to defer making final determinations of the 2019 short term incentive payouts for each NEO until remediation steps have been taken and internal controls over financial reporting are enhanced.
Long-term Incentive Compensation
Long-term incentives, which have been provided in the form of grants of Stock Options, are intended to provide ties between executive compensation and performance of the Company and executive officers to achieve positive and long-term business results. Participants benefit only if the market value of the Shares at the time of a Stock Option exercise is greater than the exercise price of the Stock Options. Stock Options vest in such manner as the Board may determine.
The Compensation Committee is responsible for approving individual Stock Option grants, including grants that are awarded outside the annual compensation process for promotions or new hires. When reviewing and
44


Table of Contents
approving the grant of Stock Options, the decision of the Compensation Committee has not been contingent on the number, term or current value of other outstanding compensation previously awarded to an individual.
Stock Option grants have historically been determined on an ad hoc basis. In 2019, the Compensation Committee considered equity compensation practices of the Cronos Peer Group and general industry market data. Based on these considerations, the Compensation Committee approved the following long-term incentive grant values for NEOs:
NEO (1)
2019 Long-Term Incentive Grant Value (2)(3)
Michael Gorenstein $10,996,213
Jerry Barbato $301,392
David Hsu $391,812
Xiuming Shum $301,392
William Hilson $131,859
(1)  Excludes Mr. Rosenheck, whose compensation arrangements are described in more detail below.
(2)  The long-term incentive grant value reported for each of the NEOs is converted from C$ to USD using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019.
(3)  The amounts in this column represent the aggregate grant date fair value of the relevant award(s) presented, as determined in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation.” See note 17 of the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2019 regarding assumptions underlying valuation of equity awards.
NEO Number of Stock Options Granted on 5/11/19 Exercise Price
Michael Gorenstein 1,097,791 C$20.65
Jerry Barbato 30,089 C$20.65
David Hsu 39,116 C$20.65
Xiuming Shum 30,089 C$20.65
William Hilson 13,164 C$20.65

As described in more detail below, in 2019, the Company entered into new employment agreements with Messrs. Barbato, Hsu and Hilson and Ms. Shum, which include a target incentive opportunity for annual grants of equity-based awards beginning in 2019, expressed as a percentage of base salary.
As described in more detail below, pursuant to the Rosenheck Agreement, Mr. Rosenheck received a one-time grant of 366,486 Restricted Share Units with a long-term incentive opportunity of $4,250,000 (based on the grant date fair value of the award), which is governed by the terms and conditions of an employment inducement award plan (the “Employment Inducement Award Plan”) and will vest on the third anniversary of the grant date which was granted on September 5, 2019. Mr. Rosenheck is not eligible to receive annual grants of equity-based awards.
Mr. Rosenheck’s Compensation
As described in more detail below, Mr. Rosenheck co-founded Redwood in 2017 with Cindy Capobianco. In connection with the Redwood Acquisition, the Company entered into the Rosenheck Agreement on August 1, 2019, pursuant to which Mr. Rosenheck acts in the capacity of CEO of Redwood Wellness. Following the closing of the Redwood Acquisition, Mr. Rosenheck and Ms. Capobianco joined the Company and continue to lead the development of the Redwood platform with the support of the current team, brand names and operating locations. Redwood has built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality
45


Table of Contents
and consistency and the Company’s goal with the Redwood Acquisition is to preserve the integrity of the brands, preserve continuity of the business and leverage the Company’s resources to capitalize on the significant demand for skincare and other consumer products derived from hemp.
Since Mr. Rosenheck’s compensation terms were established in connection with the Redwood Acquisition, they are aligned differently than those of other NEOs. The Rosenheck Agreement provides for an annual base salary of $250,000, less applicable deductions and withholdings, for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Rosenheck’s duties. Mr. Rosenheck is eligible to participate any benefits programs on a basis that is no less favorable than similarly situated senior management members of Redwood Wellness, as may be in effect from time to time. Mr. Rosenheck was entitled to a one-time grant of Restricted Share Units with a long-term incentive opportunity of $4,250,000 (based on the grant date fair value of the award), which will vest on the third anniversary of the grant date, which was September 5, 2019. The Rosenheck Agreement does not otherwise provide for short-term incentive compensation or long-term incentive opportunities. The Board determined it was necessary to ensure the retention of Mr. Rosenheck to preserve the integrity of the brands, ensure continuity of the business and leverage the Company’s resources to capitalize on the significant demand for skincare and other consumer products derived from hemp, through long-term incentives in the form of equity awards. In addition, the Restricted Share Units directly align Mr. Rosenheck’s compensation to the long-term growth of the Company and align interests with our Shareholders and reinforce share ownership and retention.
Employment Agreements
Each of the NEOs provides services pursuant to employment agreements, and in 2019 the Company entered into new employment agreements with each of the NEOs (other than Mr. Gorenstein), which each provide for a fixed base salary, annual target bonus opportunity, and long-term incentive opportunity. The severance and change of control provisions of our NEOs’ employment agreements and other arrangements are described in detail in the section entitled “ Potential Payments Upon Termination or Change of Control .”
Gorenstein Agreement
The Company entered into an employment agreement dated August 10, 2016 with Mr. Gorenstein, as amended (the “Gorenstein Agreement”), pursuant to which Mr. Gorenstein acts in the capacity of CEO. The Gorenstein Agreement originally provided for an annual base salary of C$200,000, less applicable deductions and withholdings, and was orally amended effective June 2019 to provide for an increased annual base salary of C$520,000, less applicable deductions and withholdings, for acting in such capacity. The Gorenstein Agreement also provides for reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Gorenstein’s duties and reimbursement for all reasonable fees and dues for professional associations or memberships, as well as reasonable professional services expenses incurred in respect of his employment. Mr. Gorenstein is also eligible to participate in the Company’s employee benefit plan, program or arrangement and to receive an annual bonus as a lump sum cash payment and/or Stock Options to purchase Shares within 90 days following the end of each calendar year. Such bonus is at the discretion of the Board and shall be conditional upon Mr. Gorenstein’s performance and such factors as increase in Share price, growth in net asset value, growth of the Company, balance sheet position and such other considerations as the Compensation Committee may establish in its sole discretion. The Company made a one-time grant on May 11, 2019 to Mr. Gorenstein of 1,097,791 Stock Options and an equal number of tandem cashless exercise rights (sometimes referred to as “share appreciation rights”), each with an exercise price per Share of C$20.65, which vests in equal quarterly installments over four years.
Barbato Agreement
Hortican Inc. entered into an employment agreement dated April 2, 2019 with Jerry Barbato (the “Barbato Agreement”). Pursuant to the Barbato Agreement, Mr. Barbato acts in the capacity of CFO. The Barbato Agreement provides for an annual base salary of C$300,000 less applicable deductions and withholdings for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Barbato’s duties. Mr. Barbato is also eligible to participate in the Company’s benefits programs and in the Company’s annual cash
46


Table of Contents
bonus plan as may be in effect from time to time. Mr. Barbato’s annual target bonus opportunity is initially 100% of base salary, provided that the actual bonus amount, if any, will be determined pursuant to the terms of the applicable annual bonus plan. Mr. Barbato is eligible to receive annual grants of equity-based awards with an initial target incentive opportunity of C$400,000 (based on the grant date fair value of such awards), provided that the actual amount, if any, of the grants shall be determined by the Board at its sole discretion.
Hsu Agreement
Hortican Inc. entered into a new employment agreement dated July 19, 2019 with Mr. Hsu (the “Hsu Agreement”). Pursuant to the Hsu Agreement, Mr. Hsu acted in the capacity of Chief Operating Officer of the Company. The Hsu Agreement provided for an annual base salary of C$390,000 less applicable deductions and withholdings for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Hsu’s duties. Mr. Hsu was also eligible to participate in the Company’s benefits programs and in the Company’s annual cash bonus plan as may be in effect from time to time. Mr. Hsu’s annual target bonus opportunity was initially 100% of base salary, provided that the actual bonus amount, if any, would be determined pursuant to the terms of the applicable annual bonus plan. Mr. Hsu was eligible to receive annual grants of equity-based awards with an initial target incentive opportunity of C$520,000 (based on the grant date fair value of such awards), provided that the actual amount, if any, of the grants would be determined by the Board at its sole discretion.
Prior to entering into the new employment agreement, Hortican Inc. had an existing employment agreement with Mr. Hsu. Such employment agreement provided for a fixed annual base salary as well as reasonable expenses incurred in connection with each NEO’s duties. In addition, Mr. Hsu was eligible to receive an annual bonus and/or Stock Option grants in the Company’s discretion. Mr. Hsu was entitled to (i) a monthly lump sum payment to purchase health and dental, life insurance, disability and similar benefit coverages as Mr. Hsu could choose in his sole discretion and (ii) tax preparation assistance from an accounting firm designated by the Company.
On January 15, 2020, the Company entered into a separation agreement with Mr. Hsu (the “Hsu Separation Agreement”), who resigned from his position as Chief Operations Officer effective as of the close of business on December 31, 2019 (the “Separation Date”). The Hsu Separation Agreement is described in more detail below.
Rosenheck Agreement
Pursuant to the Rosenheck Agreement, Mr. Rosenheck acts in the capacity of CEO of Redwood Wellness. The Rosenheck Agreement provides for an annual base salary of $250,000, less applicable deductions and withholdings for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Rosenheck’s duties. Mr. Rosenheck is eligible to participate in any benefits programs on a basis that is no less favorable than similarly situated senior management members of Redwood Wellness, as may be in effect from time to time. Mr. Rosenheck was entitled to a one-time grant of Restricted Share Units with a long-term incentive opportunity of $4,250,000 (based on the grant date fair value of the award), which will vest on the third anniversary of the grant date, which was September 5, 2019.
Shum Agreement
Hortican Inc. entered into a new employment agreement dated May 18, 2019 with Ms. Shum (the “Shum Agreement”). Pursuant to the Shum Agreement, Ms. Shum acts in the capacity of Executive Vice President, Legal and Regulatory Affairs of the Company. The Shum Agreement provides for an annual base salary of C$300,000 less applicable deductions and withholdings for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Ms. Shum’s duties. Ms. Shum is also eligible to participate in the Company’s benefits programs and in the Company’s annual cash bonus plan as may be in effect from time to time. Ms. Shum’s annual target bonus opportunity is initially 100% of base salary, provided that the actual bonus amount, if any, will be determined pursuant to the terms of the applicable annual bonus plan. Ms. Shum is eligible to receive annual grants of equity-based awards with an initial target incentive opportunity of C$400,000 (based on the grant date fair
47


Table of Contents
value of such awards), provided that the actual amount, if any, of the grants shall be determined by the Board at its sole discretion.
Prior to entering into the new employment agreement, Hortican Inc. had an existing employment agreement with Ms. Shum. Such employment agreement provided for a fixed annual base salary as well as reasonable expenses incurred in connection with Ms. Shum’s duties. In addition, Ms. Shum was eligible to receive an annual bonus and/or Stock Option grants in the Company’s discretion and was entitled to participate in certain employee benefit plans, programs or arrangements.
Hilson Agreement
Hortican Inc. entered into a new employment agreement dated August 13, 2019 with Mr. Hilson (the “Hilson Agreement”). Pursuant to the Hilson Agreement, Mr. Hilson acted in the capacity of Chief Commercial Officer of the Company. The Hilson Agreement provided for an annual base salary of C$175,000 less applicable deductions and withholdings for acting in such capacity plus reasonable travel and other out-of-pocket expenses incurred in connection with Mr. Hilson’s duties. Mr. Hilson was also eligible to participate in the Company’s benefits programs and in the Company’s annual cash bonus plan as may be in effect from time to time. Mr. Hilson’s annual target bonus opportunity was initially 86% of base salary, provided that the actual bonus amount, if any, would be determined pursuant to the terms of the applicable annual bonus plan. Mr. Hilson was eligible to receive annual grants of equity-based awards with an initial target incentive opportunity of C$175,000 (based on the grant date fair value of such awards), provided that the actual amount, if any, of the grants would be determined by the Board at its sole discretion.
Prior to entering into the new employment agreement, the Company, through its wholly owned subsidiary, had a consulting agreement with Mr. Hilson. Such consulting agreement provided for a fixed monthly fee as well as reasonable expenses incurred in connection with his duties.
On January 17, 2020, the Company entered into a separation agreement with Mr. Hilson (together with the Hsu Separation Agreement, the “Separation Agreements”), who resigned from his position as Chief Commercial Officer of the Company effective on the Separation Date.
Separation Agreements
The Separation Agreements with Mr. Hsu and Mr. Hilson each provide for, among other things, the executive’s general release of all claims against the Company and its affiliates and the executive’s continuing obligations with certain covenants under his respective employment agreement with the Company, including agreements that he: (i) will not disclose or use any confidential information relating to the Company; (ii) will not solicit the Company’s customers for a period of one year from the Separation Date; (iii) will not solicit the Company’s employees for a period of two years from the Separation Date; (iv) will not compete with the Company and its business for a period of one year following the Separation Date; (v) will not disparage, defame or damage the goodwill of the Company or any of its affiliates, officers, directors, partners, agents, employees, clients or suppliers; and (vi) will cooperate with the Company in connection with any investigation, litigation, arbitration or regulatory proceeding regarding events that occurred during his tenure with the Company or its affiliates (the foregoing items, collectively, the “Payment Requirements”).
In exchange for the Payment Requirements, Mr. Hsu received cash severance in an aggregate amount equal to C$400,000 and Mr. Hilson received cash severance in an aggregate amount equal to C$167,500, less, in each case, applicable statutory deductions and withholdings, payable within 60 days after the Separation Date; and each executive is entitled to subsidized life insurance, medical and dental benefits until the earlier of June 30, 2020 and the date on which such executive obtains alternate benefit coverage. Outstanding unvested Stock Options held by each executive as of the Separation Date vested on an accelerated basis as of the Separation Date, and each executive’s vested Stock Options may be exercised, in accordance with the terms of the applicable award agreements, by the earlier of the date on which such Stock Options’ original exercise term expires and June 30, 2020.
48


Table of Contents
COMPENSATION COMMITTEE REPORT
The members of the Compensation Committee have reviewed and discussed the contents of the CD&A with management. Based on such review and discussion with management, and subject to the limitations on the role and responsibility of the Compensation Committee, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement issued in connection with our Annual Meeting and incorporated into our Form 10-K for the year ended December 31, 2019 (as amended).
Compensation Committee
Jody Begley, Chairman
Jason Adler
James Rudyk


49


Table of Contents
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the total compensation paid or earned by each of the NEOs for the fiscal years ended December 31, 2019, 2018 and 2017.
Name and Principal Position Year
Salary ($) (1)
Stock Awards
($) (1)(2)
Option Awards ($) (1)(2)
Non-Equity Incentive Plan Compensation ($) (1)(3)
All Other Compensation ($) (1)(4)
Total ($) (1)
Michael
Gorenstein 
CEO (5)
2019 318,561 10,996,213 15,010 11,329,784
2018
205,839
(6)
430,274 11,368 647,481
2017
206,046
(6)
2,043,219 2,249,265
Jerry Barbato 
CFO (7)
2019 156,536 301,392 79,536 537,464














David Hsu 
Chief Operations Officer (8)
2019 246,110 391,812 318,276 956,198
2018 93,425 110,338 203,763
2017 1,285,214 185,652 1,470,866
Robert Rosenheck 
CEO, Redwood Wellness (9)
2019 80,822 4,250,000 4,330,822
Xiuming Shum 
EVP, Legal and Regulatory Affairs (10)
2019 189,873 301,392 305 491,570
2018 134,948 717,123 852,071
2017 41,856 235,491 16,815 294,162
William Hilson 
Chief Commercial Officer (7)(11)
2019 80,152 131,859 126,245 338,256
2018 115,664 115,664
2017 22,385 115,784 138,169
(1)  The amounts reported for each of the NEOs other than Robert Rosenheck are converted from C$ to USD using the Bloomberg average exchange rate (a) for 2019 of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019, (b) for 2018 of C$1.00 to $0.7711 for the 12-month period ended December 31, 2018 and (c) for 2017 of C$1.00 to $0.7719 for the 12-month period ended December 31, 2017.
(2)  The amounts in this column represent the aggregate grant date fair value of the relevant award(s) presented, as determined in accordance with FASB ASC Topic 718, “Compensation—Stock Compensation.” See note 17 of the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2019 regarding assumptions underlying valuation of equity awards.
(3)  Incentive plan amounts determined as more specifically discussed under “—Compensation Discussion and Analysis—Elements of Compensation—Short-term Incentive Compensation.” The amounts in this column represent short-term cash incentive awards earned for 2019 to be paid in 2020. As discussed in more detail above, the Audit Committee has been conducting a review of certain bulk resin purchases and sales of products through the wholesale channel. On March 17, 2020, the Company, on the recommendation of the Audit Committee and after consultation with KPMG, determined that it will be required to restate its previously issued unaudited interim financial statements for the first, second and third quarters of 2019 that were previously filed on Form 6-K on May 9, 2019, August 8, 2019 and November 12, 2019, respectively. In light of the restatement, the Compensation Committee decided to defer making final determinations of the 2019 short-term incentive payouts for each eligible NEO until remediation steps have been taken and internal controls over financial reporting are enhanced and, accordingly, such information is not yet available for 2019. Once determined, the Company will report the final 2019 short-term incentive payments on Form 8-K.
(4)  The items comprising “All Other Compensation” for 2019 are:
50


Table of Contents
Name
Perquisites and Other Personal Benefits (a) ($)
Tax Reimbursements (b) ($)
Insurance Premiums (c) ($)
Severance ($) (d)
Total ($)
Michael Gorenstein 15,010 15,010
Jerry Barbato 37,061 42,237 238 79,536
David Hsu 11,900 301,480 313,380
Xiuming Shum 305 305
William Hilson 126,245 126,245
(a)  Reflects tax preparation and consultation fees for Mr. Gorenstein and relocation expenses in the amount of $37,061 and tax preparation and consultation fees in the amount of $1,881 for Mr. Barbato. Amounts are reported in USD using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019. Excludes perquisites for other NEOs where the aggregate amount of such compensation was less than $10,000.
(b)  Reflects the reimbursement of taxes in 2019 payable by Mr. Barbato in connection with his relocation.
(c)  Reflects life insurance premiums paid for the benefit of Mr. Barbato and Ms. Shum, and certain expenses incurred by Mr. Hsu and reimbursed by the Company in relation to a U.S. health insurance plan.
(d)  Reflects severance accrued in the fourth quarter of 2019 for Messrs. Hilson and Hsu.
(5)  Salary was remitted in C$ using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019.
(6)  The Gorenstein Agreement provided for an annual base salary of $200,000, which was remitted to Mr. Gorenstein in 2018 and 2017 in C$. Salary is reported in USD using the Bloomberg average exchange rate (a) for 2018 of C$1.00 to $0.7711 for the 12-month period ended December 31, 2018 and (b) for 2017 C$1.00 to $0.7719 for the 12-month period ended December 31, 2017.
(7)  Effective April 15, 2019, Mr. Barbato commenced employment as CFO, and Mr. Hilson assumed the newly created role of Chief Commercial Officer.
(8)  Mr. Hsu was engaged as an Operations Consultant from 2016 until his appointment as Chief Operating Officer on June 6, 2018. Prior to Mr. Hsu’s appointment as Chief Operating Officer, his salary was remitted in USD at the prevailing exchange rate at the time of payment. Thereafter, his salary was remitted in C$. For 2019, his salary was remitted in C$ using the Bloomberg average exchange rate of C$1.00 to $0.7537 for the 12-month period ended December 31, 2019. Mr. Hsu became Chief Operations Officer on October 7, 2019. Mr. Hsu resigned from his position as Chief Operations Officer, effective as of December 31, 2019.
(9)  Mr. Rosenheck commenced employment as the CEO of Redwood Wellness on September 5, 2019 upon the closing of Redwood Acquisition.
(10)  Ms. Shum was originally engaged by the Company as a consultant effective August 21, 2017 and was appointed as General Counsel effective October 1, 2017 and Executive Vice President, Legal and Regulatory Affairs effective May 21, 2019.
(11)  Mr. Hilson served as CFO in a consulting capacity until April 15, 2019, when he became Chief Commercial Officer. Mr. Hilson resigned from his position as Chief Commercial Officer effective December 31, 2019.
51


Table of Contents
Grants of Plan-Based Awards in 2019
The table below summarizes the equity and non-equity awards granted to the NEOs in 2019.
Name Grant Date Estimated Future
Payouts Under
Non-Equity Incentive Plan Awards
All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number of Securities Underlying Options (#) Exercise or Base Price of Option Awards ($/Sh)
Grant Date Fair Value of Stock and Option Awards ($) (1)


Threshold ($) (2)
Target
($) (2)
Maximum ($) (2)




Michael Gorenstein

587,881 764,245





5/11/2019
1,097,791 C$20.65 10,996,213
Jerry Barbato

226,108 293,940





5/11/2019 30,089 C$20.65 301,392
David Hsu

293,940 382,122





5/11/2019 39,116 C$20.65 391,812
Robert Rosenheck 9/5/2019
366,486 (3)
4,250,000
Xiuming Shum

226,108 293,940





5/11/2019 30,089 C$20.65 301,392
William Hilson

113,430 147,459





5/11/2019
13,164 C$20.65 131,859
(1)  The aggregate grant date fair value of awards presented in this column is calculated in accordance with ASC 718.
(2)  Represents the threshold, target and maximum applicable to short-term incentives. As described under “— Compensation Discussion and Analysis Elements of Compensation Short-term Incentive Compensation ” above, 60% of the funding of the short-term cash incentive is based on Business Performance results as compared to pre-established goals; the remaining 40% of the Target Incentive Amount is based on Individual Performance results. The Compensation Committee retains discretion to pay short-term incentive amounts above or below the estimated range shown in the table above. The actual short-term incentive amounts paid to our NEOs for 2019 performance have not yet been determined, and therefore are not included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
(3)  Represents the number of Restricted Share Units awarded to Mr. Rosenheck in 2019 under the Employment Inducement Award Plan.
Additional Information about Grants of Plan-Based Awards
2018 Option Plan
Certain directors, officers, key employees and service providers of the Company and its affiliates, including each of the NEOs, are eligible to participate in the 2018 Stock Option Plan (the “2018 Option Plan”), which provides for the grant of Stock Options to purchase Shares. The 2018 Option Plan is administered by the Board and was last approved by Shareholders on June 28, 2018, replacing the Amended and Restated Stock Option Plan (the “2015 Option Plan”). Stock Options reported in the Summary Compensation Table as compensation for the 2019 fiscal year were granted under the 2018 Option Plan.
Stock Options granted to the NEOs in 2019 vest on a quarterly basis over three to five years. The term of the Stock Options is established by the Board and set out in the Stock Option grant agreement, provided that, pursuant to the terms of the 2018 Option Plan, the term of a Stock Option may not exceed seven years from the date
52


Table of Contents
of the grant. Stock Options that would expire during a trading black-out period may be exercised within ten business days following the end of such trading black-out period.
The 2018 Option Plan also provides for the issuance of “share appreciation rights” in tandem with Stock Options. Such “share appreciation rights” are not separate grants of equity-based awards, but rather reflect the participant’s right to cashless exercise of the Stock Options. Under the terms of the 2018 Option Plan, each “share appreciation right” entitles the holder to surrender to the Company, unexercised, the right to subscribe for Shares pursuant to the related Stock Option and to receive from the Company a number of Shares, rounded down to the next whole Share, with a fair market value on the date of exercise of each such that is equal to the difference between such fair market value and the exercise price under the related Stock Option, multiplied by the number of Shares that cease to be available under the Stock Option as a result of the exercise of the “share appreciation right,” subject to satisfaction of applicable withholding taxes and other source deductions.
Each unexercised “share appreciation right” terminates when the related Stock Option is exercised or the Stock Option terminates, including upon a Change of Control (as discussed below). Upon each exercise of a “share appreciation right,” in respect of a Share covered by a Stock Option such Stock Option shall be cancelled and shall be of no further force or effect in respect of such Share. If any Stock Option is cancelled in connection with the exercise of the related “share appreciation right,” the aggregate number of Shares that may be issued pursuant to the 2018 Option Plan shall be reduced by the number of Stock Options cancelled in connection with the exercise of such “share appreciation right.”
2015 Option Plan
Stock Options granted prior to June 28, 2018 were granted under the 2015 Option Plan. On May 18, 2018, the Board approved amendments to the terms of all outstanding Stock Option grants under the 2015 Option Plan to reflect certain of the provisions of the 2018 Option Plan. Specifically, the Stock Option grants were amended to incorporate the automatic extension of the expiry date of a Stock Option where the original expiry date of a Stock Option falls during a trading black-out period and the termination of employment and change of control provisions of the 2018 Option Plan. Under the 2015 Option Plan, Stock Options can similarly be exercised cashlessly pursuant to the issuance of tandem “share appreciation rights.”
53


Table of Contents
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2019, our NEOs held outstanding equity-based awards of the Company as listed in the table below.

Option Awards Stock Awards
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)
Michael Gorenstein 406,250 81,250 C$0.50 8/5/2021

950,000 250,000 C$1.23 10/6/2021



866,666 433,334 C$3.14 4/12/2022



291,666 208,334 C$2.42 8/24/2022



59,375 90,625 C$7.57 5/17/2023



137,223 960,568 C$20.65 5/11/2024


Jerry Barbato 3,761 26,328 C$20.65 5/11/2024
David Hsu 487,500 C$0.50
6/30/2020 (1)

500,000 C$3.14
6/30/2020 (1)



750,000 C$1.16
6/30/2020 (1)



39,116 C$20.65
6/30/2020 (1)


Robert Rosenheck
366,486 (2)
4,250,000 (2)
Xiuming Shum 153,416 109,584 C$2.42 8/24/2022

98,958 151,042 C$7.57 5/17/2023



3,761 26,328 C$20.65 5/11/2024


William Hilson 487,500 C$1.23
6/30/2020 (1)

25,000 C$2.42
6/30/2020 (1)



13,164 C$20.65
6/30/2020 (1)


(1)  The Stock Options held by Messrs. Hilson and Hsu were accelerated so that all Stock Options vested immediately upon their respective departures from the Company.
(2)  The value of the Restricted Share Units granted to Mr. Rosenheck were established by the Rosenheck Agreement under the Employment Inducement Award Plan. The Restricted Share Units granted to Mr. Rosenheck vest on the third anniversary of their grant, subject to continued employment.
Stock Option Exercises and Stock Vested in 2019
None of the NEOs exercised any Stock Options, and none of Mr. Rosenheck’s Restricted Share Units vested in 2019.
Pension Benefits
The Company does not maintain any defined benefit pension plans.
Nonqualified Deferred Compensation
The Company does not maintain any deferred compensation plans for employees.
54


Table of Contents
Potential Payments Upon Termination or Change of Control
Employment Agreements
Gorenstein Agreement
As described in more detail above, the Company entered into the Gorenstein Agreement with Mr. Gorenstein on August 10, 2016. Pursuant to the Gorenstein Agreement, upon a termination without Just Cause (as defined below), Mr. Gorenstein would be entitled to:
(i) all unpaid base salary and unused vacation earned for the period up to the effective date of Mr. Gorenstein’s termination without Just Cause or, in the case of unused vacation, until the end of the statutory notice period required applicable employment standards legislation;
(ii) a pro-rated bonus for the period worked in the year of termination, to be determined by the Company, acting reasonably, after consulting with Mr. Gorenstein, taking into consideration the performance of the Company and Mr. Gorenstein in the year of termination;
(iii) a lump sum severance payment equal to one year’s base salary plus a bonus to be determined by the Company acting reasonably, after consulting with Mr. Gorenstein, taking into consideration the performance of the Company and Mr. Gorenstein in the year of termination;
(iv) continued eligibility to participate in any group insured benefits plan of the Company for a period of 12 months following the date of termination, subject to the terms and conditions of the benefit plans, as amended from time to time; and
(v) such other compensation and benefits that are expressly required pursuant to applicable employment standards legislation, if any.
In the case that Mr. Gorenstein’s employment is terminated without Just Cause by the Company between four months prior to, or 12 months following a Change of Control, or Mr. Gorenstein resigns for any reason effective within four to 12 months following a Change of Control then, in addition to the other entitlements described above:
(i) Mr. Gorenstein’s severance entitlement would be doubled to an amount equal to two years’ base salary plus bonus to be determined by the Company acting reasonably, after consulting with Mr. Gorenstein, taking into consideration the performance of the Company and Mr. Gorenstein in the year of termination, payable by way of lump sum within 30 days following such termination; and
(ii) any Stock Options previously granted that had not yet vested would immediately vest, with such options to remain exercisable by Mr. Gorenstein in accordance with the terms and conditions of the applicable equity award plan.
Pursuant to the Gorenstein Agreement, the Company may terminate Mr. Gorenstein’s employment at any time for Just Cause without prior notice or in the event of Mr. Gorenstein’s death or his Disability. On the termination of Mr. Gorenstein’s employment for Just Cause or on Mr. Gorenstein’s death or, at the discretion of the Company, upon his Disability, Mr. Gorenstein would be entitled to base salary and vacation pay accrued but unpaid until the date Mr. Gorenstein’s employment ceases and such other compensation and benefits that are expressly required pursuant to applicable employment standards legislation, if any. In the event that Mr. Gorenstein’s employment ceases because of his death, all of his group benefits coverage or reimbursement for benefits shall immediately cease upon his death, subject only to any further or minimum requirements under applicable employment standards legislation.
55


Table of Contents
For purposes of the Gorenstein Agreement, actions constituting “Just Cause” include: (i) the continued gross neglect or willful failure by Mr. Gorenstein to substantially perform his duties as CEO (except by reason of any bona fide disability), which failure is not cured within 15 days of receipt of written notice from the Company thereof; (ii) Mr. Gorenstein’s gross misconduct involving the property, business or affairs of the Company; (iii) any act of theft, fraud or material dishonesty by Mr. Gorenstein; (iv) any material conflict of interest involving Mr. Gorenstein, unless fully disclosed to the Company in advance and provided that any such conflict has been expressly waived and/or consented to in writing by the Company; (v) Mr. Gorenstein’s material breach of the Gorenstein Agreement, which breach, if curable, is not cured within 15 days of written notice from the Company; (vi) any material and repeated failure by Mr. Gorenstein to comply with the policies, rules and regulations of the Company (which failure is not cured within 15 days of receipt of written notice from the Company thereof); or (vii) any other conduct that is determined by a court or administrative tribunal of competent jurisdiction to constitute just cause at law for the termination of Mr. Gorenstein’s employment.
For purposes of the Gorenstein Agreement, “Change of Control” means the occurrence of any of the following events:
(i) the closing of a transaction or a series of related transactions undertaken in any form whatsoever involving a share acquisition, merger, consolidation, combination, share issuance, share exchange, reorganization of the Company or other extraordinary transaction with respect to the Company pursuant to which a third party, or third parties who are acting as a group, acquire more than 50% of the total voting power represented by the outstanding securities to which are attached the right to vote at all meetings of shareholders (the “Voting Securities”) of the Company, regardless of whether calculated on a fully diluted or an outstanding basis (provided that the same measure is used in both the numerator and denominator) or, if the outstanding Voting Securities are converted or exchanged in the transaction or series of related transactions into securities of a third party, more than 50% of the total voting power represented by the outstanding Voting Securities of the third party;
(ii) the closing of a direct or indirect acquisition by a third party, or third parties acting as a group, of substantially all of the Company’s assets;
(iii) more than 50% of the members of the board of directors of the Company in office (a) were not directors of the Company on the same day in the immediately preceding calendar year and (b) were not proposed by the directors of the Company existing prior to their appointment or election; or
(iv) the board of directors of the Company by resolution deem that a Change of Control has occurred.
For purposes of the Change of Control definition, a third party does not include any affiliate of the Company.
The Altria Investment does not constitute a change of control for purposes of the Gorenstein Agreement.
For purposes of the Gorenstein Agreement, “Disability” means Mr. Gorenstein’s inability to substantially perform the duties and responsibilities of his position by reason of mental or physical illness, injury or disability for a period of more than 180 days, whether or not consecutive, in any period of 12 months with or without accommodation.
Pursuant to the confidentiality, non-competition and non-solicitation agreement by and between Mr. Gorenstein and the Company, Mr. Gorenstein is subject to indefinite confidentiality provisions, and non-competition and non-solicitation requirements for a period of nine months immediately following the termination of Mr. Gorenstein’s employment with the Company for any reason.
2019 Employment Agreements
As described in more detail above, in 2019, the Company entered into employment agreements with each of the NEOs (other than Mr. Gorenstein) (collectively, the “2019 Employment Agreements”). Pursuant to the 2019
56


Table of Contents
Employment Agreements, the Company may terminate the NEO’s employment at any time for Just Cause (as defined below) without prior notice or in the event of the NEO’s death or Disability except for Mr. Rosenheck, where such terminations require written notice. On the termination of the NEO’s employment for Just Cause or on the NEO’s death or Disability, the Company would be required to:
(i) pay the NEO’s base salary and vacation pay accrued but unpaid until the date the NEO’s employment ceases;
(ii) reimburse the NEO’s expenses properly incurred until the date the NEO’s employment ceases; and
(iii) provide the NEO with such other compensation and benefits that are expressly required pursuant to applicable employment standards legislation, if any.
In such circumstances the NEO would be ineligible for any pro-rated bonus for the year of termination, and any entitlements in respect of equity-based awards shall be governed by the terms and conditions of the applicable equity award plan, any other applicable plan and the applicable award agreement (for Mr. Rosenheck, the Employment Inducement Award Plan and the applicable award agreement).
The 2019 Employment Agreements provide that upon a termination by the Company of the applicable NEO’s employment without Just Cause at any time or a resignation by such NEO for Good Reason within 24 months of the occurrence of a Change of Control (for Mr. Rosenheck, on a resignation for Good Reason irrespective of the occurrence of a Change of Control), subject to providing 30 days’ written notice to the Company for a resignation by such NEO and such NEO’s execution, delivery and non-revocation of a release in favor of the Company, the Company would be required to:
(i) pay the NEO’s base salary and accrued but unpaid vacation pay in accordance with applicable employment standards legislation;
(ii) reimburse the NEO’s expenses properly incurred until the date the NEO’s employment ceases;
(iii) in lieu of notice, pay the NEO the greater of (a) one month of the NEO’s base salary in effect at the time of termination for each completed year of service with the Company, to a maximum of 12 months of base salary, payable by way of lump sum payment within 60 days following such termination, and (b) the minimum termination pay and severance pay entitlements of the NEO pursuant to applicable employment standards legislation;
(iv) continue the NEO’s group insured benefits, if any, until the end of the severance period calculated under (iii) above or the date on which the NEO obtains alternate benefit coverage, whichever occurs first, subject to the terms and conditions of the benefit plans, as amended from time to time, and the minimum requirements of applicable employment standards legislation (or, if the Company is unable for any reason to continue its contributions to the benefit plans, pay the NEO an amount equal to the Company’s required contributions to such benefit plans on behalf of the NEO for such period); and
(v) determine the NEO’s entitlements in respect of equity-based awards in accordance with the terms and conditions of the applicable equity award plan, any other applicable plan and the applicable award agreement (for Mr. Rosenheck, the Employment Inducement Award Plan and the applicable award agreement).
The Altria Investment does not constitute a change of control for purposes of the 2019 Employment Agreements, which were entered into following the Altria Investment.
For purposes of the 2019 Employment Agreements with NEOs other than Mr. Rosenheck, actions constituting “Just Cause” include (i) any act or omission constituting “just cause” for dismissal without notice under applicable law; (ii) the NEO’s repeated failure or refusal to perform his or her principal duties and responsibilities
57


Table of Contents
after notice from the Board, the CEO or other officer of the Company, as applicable; (iii) misappropriation of the funds or property of the Company; (iv) use of alcohol or drugs in violation of the Company’s policies on such use or that interferes with the NEO’s obligations under the applicable agreement, continuing after a single warning (subject to the Company’s obligations under applicable human rights legislation); (v) the indictment, arrest or conviction in a court of law for, or the entering of a plea of guilty to, a summary or indictable offense or any crime involving moral turpitude, fraud, dishonesty or theft (subject to the Company’s obligations under applicable human rights legislation); (vi) the misuse of Company computers or computer network systems for non-Company business; (vii) engaging in any act (including, without restriction, an act of sexual harassment as determined by the Company) which is a violation of any law, regulation or Company policy; or (viii) any willful or intentional act which injures or could reasonably be expected to injure the reputation, business or business relationships of the Company.
For purposes of the Rosenheck Agreement, actions constituting “Just Cause” include (i) any act or omission constituting “just cause” for dismissal without notice under law, if applicable; (ii) Mr. Rosenheck’s repeated failure or refusal to perform his principal duties and responsibilities after notice from the CEO or other officer of the Company; (iii) misappropriation of the funds or property of Redwood Wellness; (iv) use of alcohol or drugs in violation of Redwood Wellness’ or the Company’s policies on such use or that interferes with Mr. Rosenheck’s obligations under the Rosenheck Agreement, continuing after a single warning (subject to Redwood Wellness’ obligations under applicable human rights legislation); (v) the indictment, arrest or conviction in a court of law for, or the entering of a plea of guilty to, a summary or indictable offense or any crime involving moral turpitude, fraud, dishonesty or theft (subject to Redwood Wellness’ obligations under applicable human rights legislation); (vi) engaging in any act (including, without limitation, an act of sexual harassment as determined by the Company) which is a violation of any law, regulation or Redwood Wellness or Company policy; (vii) any willful or intentional act which injures or could reasonably be expected to injure the reputation, business or business relationships of Redwood Wellness, the Company or their respective affiliates; or (viii) Mr. Rosenheck’s breach of the Rosenheck Agreement or the confidentiality, non-competition and non-solicitation agreement.
For purposes of the 2019 Employment Agreements, “Change of Control” generally means:
(i) the consummation of any transaction or series of transactions including any reorganization, recapitalization, statutory share exchange, consolidation, amalgamation, arrangement, merger or issue of voting shares in the capital of the Company, the result of which is that any person or group of persons acting jointly or in concert for purposes of such transaction or series of transactions becomes the beneficial owner, directly or indirectly, of more than 50% of the voting securities in the capital of the entity resulting from such transaction or series of transactions or the entity that acquired all or substantially all of the business or assets of the Company in a transaction or series of transactions described in paragraph (ii) below (in each case, the “Surviving Company”) or the ultimate parent entity that has beneficial ownership of sufficient voting power to elect a majority of the board of directors (or analogous governing body) of the Surviving Company (the “Parent Company”), measured by voting power of the outstanding voting securities eligible to elect members of the board of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) rather than number of securities (but shall not include the creation of a holding company or other transaction that does not involve any substantial change in the proportion of direct or indirect beneficial ownership of the voting securities of the Company prior to the consummation of the transaction or series of transactions), provided that the exercise by Altria Summit LLC (or any of its affiliates) of the Purchased Warrant (as defined in the Subscription Agreement by and among the Company, Altria Summit LLC and Altria Group, Inc. dated as of December 7, 2018) shall not constitute a Change of Control pursuant to clause (i);
(ii) the direct or indirect sale, transfer or other disposition, in one or a series of transactions, of all or substantially all of the business or assets of the Company, taken as a whole, to any person or group of persons acting jointly or in concert for purposes of such transaction or series of transactions (other than to any affiliates of the Company); or
58


Table of Contents
(iii) Incumbent Directors during any consecutive 12-month period ceasing to constitute a majority of the Board of the Company (for the purposes of clause (iii), an “Incumbent Director” shall mean any member of the Board who is a member of the Board immediately prior to the occurrence of a contested election of directors of the Company).
For purposes of the 2019 Employment Agreements with NEOs other than Mr. Rosenheck, “Good Reason” means the occurrence of any of the following events without the NEO’s consent, except in each case for any isolated, immaterial or inadvertent action not taken in bad faith and which is remedied by the Company within 30 days after a written notice thereof by the NEO (provided that such notice must be given to the Company within 60 days of the NEO becoming aware of such condition): (a) the assignment to the NEO of duties materially different than the duties assigned to him or her under the applicable agreement; (b) a material diminution in the NEO’s title, status, seniority, reporting relationship, responsibilities or authority; (c) a material reduction in the NEO’s base salary; or (d) the relocation of the NEO’s primary work location, except as permitted by the applicable agreement.
For purposes of the Rosenheck Agreement, “Good Reason” means the occurrence of any of the following events without Mr. Rosenheck’s consent, except in each case for any isolated, immaterial or inadvertent action not taken in bad faith and which is remedied by the Company within 30 days after a written notice thereof by Mr. Rosenheck (provided that such notice must be given to the Company within 90 days of Mr. Rosenheck becoming aware of such condition): (a) the assignment to Mr. Rosenheck of duties materially different than the duties assigned to him under the agreement; (b) a material diminution in Mr. Rosenheck’s title, status, seniority, reporting relationship, responsibilities or authority; (c) a reduction in Mr. Rosenheck’s base salary; (d) the failure of the Company to timely provide the one-time grant of Restricted Share Units described in more detail above; or (e) the relocation of Mr. Rosenheck’s primary work location, except as permitted by the applicable agreement.
For purposes of the 2019 Employment Agreements with NEOs other than Mr. Rosenheck, “Disability” means a physical or mental incapacity of the NEO that has prevented the NEO from performing the duties customarily assigned to the NEO for 180 calendar days, whether or not consecutive, out of any 12 consecutive months and that in the opinion of the Company, acting on the basis of advice from a duly qualified medical practitioner, is likely to continue to a similar degree.
For purposes of the Rosenheck Agreement, “Disability” means a physical or mental incapacity of Mr. Rosenheck that has prevented him from performing the duties customarily assigned to Mr. Rosenheck for 180 calendar days, whether or not consecutive, out of any 12 consecutive months and that in the opinion of a duly qualified medical practitioner selected by the Company and Mr. Rosenheck (or his representative), is likely to continue to a similar degree.
Pursuant to the 2019 Employment Agreements with NEOs other than Mr. Rosenheck, the NEOs are subject to indefinite confidentiality provisions, and non-competition and non-solicitation requirements for a period of one year immediately following the termination of the NEO’s employment for any reason.
Pursuant to the confidentiality, non-competition and non-solicitation agreement by and between Mr. Rosenheck and the Company, Mr. Rosenheck is subject to indefinite confidentiality provisions, and non-competition and non-solicitation requirements from and after September 5, 2019, the closing of the Redwood Acquisition, through the later of the third anniversary of the closing date and 12 months following Mr. Rosenheck’s termination of employment for any reason. The Company and Mr. Rosenheck also agreed to indefinite mutual non-disparagement provisions.
Stock Option Plans
In the event of the termination of a participant’s employment, the treatment of Stock Options is subject to the discretion of the Board on a case-by-case basis. In the event of the termination of the participant’s employment with the Company for cause, each vested and unvested Stock Option granted to that participant immediately terminates and ceases to be exercisable, subject to the discretion of the Board. If a participant’s employment with the Company is terminated other than for cause (or if a director who is a participant is not reelected to the Board), each
59


Table of Contents
Stock Option granted to such Participant that has not vested will immediately terminate, subject to the discretion of the Board, and each Stock Option that has vested may be exercised at any time within six months of the date of termination, death or ceasing to act as a director of the Company, as the case may be.
If the Company proposes to undertake a Change of Control, the Board may, in its discretion, accelerate the vesting of all outstanding Stock Options such that each outstanding Stock Option will be fully vested and either (as determined by the Board in its discretion) (i) conditionally exercisable for Shares or (ii) conditionally surrendered for a cash payment equal to the difference between the per Share consideration receivable by Shareholders in connection with the transaction resulting in the Change of Control and the exercise price of such Stock Option multiplied by the number of Shares that may be acquired under the particular Stock Option, upon (or where permitted by the Board, prior to) the completion of the Change of Control, provided that the Board may not, in any case, authorize the exercise or surrender of Stock Options beyond the expiration of the original exercise term of the Stock Options.
If, in connection with a Change of Control, the Board does not accelerate the vesting of Stock Options in accordance with the foregoing paragraph and the Stock Options continue, or are assumed, or rights equivalent to the Stock Options are substituted for the Stock Options, by the Surviving Company or Parent Company, or an affiliate thereof, and a participant’s employment is terminated by the Company or the Surviving Company or Parent Company or an affiliate of the Company or a successor thereto without cause in the 24-month period following the Change of Control, all unvested Stock Options or substituted rights outstanding on the participant’s termination date shall immediately vest, and the participant may exercise such vested Stock Options or substituted rights until the earlier of the expiration of the original exercise term of such Stock Option (or the Stock Option for which the right was substituted) and 12 months following the participant’s termination date, following which any unexercised Stock Options or substituted rights shall terminate and cease to be exercisable.
For the purposes of the 2018 Option Plan, “Change of Control” generally has the same meaning as in the 2019 Employment Agreements, except that the proviso in prong (i) regarding exercise by Altria Summit LLC (or any of its affiliates) of the Purchased Warrant does not apply to the 2018 Option Plan.
Employment Inducement Award Plan
As described above, the Rosenheck Agreement provided for a one-time grant of Restricted Share Units to Mr. Rosenheck with a long-term incentive opportunity of $4,250,000 (based on the grant date fair value of the award), governed by the terms and conditions of the Employment Inducement Award Plan and the applicable award agreement. The award agreement provides that if Mr. Rosenheck’s employment terminates because of death or disability, by the Company or its affiliates without Just Cause or by Mr. Rosenheck for Good Reason, the Restricted Share Units will vest and promptly be paid out in Shares. Except as set forth below, in the event that Mr. Rosenheck’s employment with the Company is terminated for any other reason prior to the vesting date, then the Restricted Share Units will be forfeited for no consideration.
The Employment Inducement Award Plan provides that in the event of a Change of Control where the resulting corporation agrees to continue, assume or replace the awards outstanding as of the date of the Change of Control (with such adjustments as may be required), then such awards or replacements therefor will remain outstanding and be governed by their respective terms. If and to the extent that outstanding awards under the Employment Inducement Award Plan are not continued, assumed or replaced in connection with a Change of Control, then all forms of awards then outstanding will fully vest immediately prior to the effective time of the Change of Control, with performance awards, if any, deemed earned at the target level of performance. If, within 24 months after a Change of Control and in connection with which outstanding awards are continued, assumed or replaced, a participant (including Mr. Rosenheck) experiences an involuntary termination of employment for reasons other than Just Cause, or the Participant resigns his or her employment for Good Reason, then outstanding awards issued to the participant will become immediately fully vested and non-forfeitable, with any performance awards deemed earned at the target level of performance.
60


Table of Contents
For the purposes of the Employment Inducement Award Plan, “Change of Control” generally has the same meaning as in the 2019 Employment Agreements, and “Good Reason” and “Just Cause” have the meanings set forth in the Rosenheck Agreement.
Potential Payments Upon Termination or Change of Control
The following table and footnotes describe certain potential payments that each NEO would receive upon certain terminations of employment, assuming that the termination event was effective as of December 31, 2019 and the value of our Shares is C$9.97, which was the closing price of our Shares on TSX on December 31, 2019, the last business day in 2019.
NEO Cash Severance ($) Group Insured Benefits ($) Accelerated Stock Options ($) Accelerated Restricted Share Units ($) Total ($)
Michael Gorenstein





Termination without Just Cause (absent a Change in Control) 979,801 979,801
Termination without Just Cause in connection with a Change of Control 1,959,602 10,259,273 12,218,875
Resignation in connection with a Change of Control 1,959,602 10,259,273 12,218,875
Death or Disability
Jerry Barbato





Termination without Just Cause (absent a Change in Control)
Termination without Just Cause in connection with a Change of Control (1)
253,013 253,013
Resignation for Good Reason in connection with a Change of Control (1)
Death or Disability
Robert Rosenheck





Termination without Just Cause or Resignation for Good Reason (1)
4,250,000 4,250,000
Death or Disability 4,250,000 4,250,000
Xiuming Shum





Termination without Just Cause (absent a Change in Control) 37,685 1,734 39,419
Termination without Just Cause in connection with a Change of Control 37,685 1,734 764,050 803,469
Resignation for Good Reason in connection with a Change of Control 37,685 1,734 39,419
Death or Disability
(1)  As of December 31, 2019, Messrs. Barbato and Rosenheck had not yet completed one year of service with the Company, pursuant to the 2019 Employment Agreements. Column does not reflect minimum termination pay and severance pay entitlements, if any, pursuant to applicable employment standards legislation.
Mr. Hsu resigned from his position as the Chief Operations Officer and Mr. Hilson resigned from his position as Chief Commercial Officer, both effective December 31, 2019. In exchange for the Payment Requirements described in more detail above, Mr. Hsu received cash severance in an aggregate amount equal to C$400,000 and Mr. Hilson received cash severance in an aggregate amount equal to C$167,500, less, in each case, applicable statutory deductions and withholdings, payable within 60 days after the Separation Date; and each
61


Table of Contents
executive is entitled to subsidized life insurance, medical and dental benefits until the earlier of June 30, 2020 and the date on which such executive obtains alternate benefit coverage. Outstanding unvested Stock Options held by each executive as of the Separation Date vested on an accelerated basis as of the Separation Date (for Mr. Hsu, in the amount of 595,644 Stock Options with a value of $830,645, and for Mr. Hilson, in the amount of 123,499 Stock Options with a value of $163,157), and each executive’s vested Stock Options may be exercised, in accordance with the terms of the applicable award agreements, by the earlier of the date on which such Stock Options’ original exercise term expires and June 30, 2020.
62


Table of Contents
DIRECTOR COMPENSATION

Framework for Director Compensation
On August 7, 2019, the Board adopted a remuneration policy for its directors (the “Board Remuneration Policy”), pursuant to which each non-employee director receives $37,685 (C$50,000) per year for services as a director, an additional $11,306 (C$15,000) per year for the chair of the Audit Committee, and an additional $11,306 (C$15,000) per year for the chair of the Compensation Committee. Cash fees with respect to Board membership or service as a committee chair are paid assuming 12 consecutive months of service from the date the particular membership or service commences and are paid in quarterly installments on or around the 15 th of March, June, September and December. Directors who are executive officers of the Company, within the meaning of such term under the applicable NASDAQ Rules, and Altria nominees do not receive compensation from the Company for their service as directors.
Under the Board Remuneration Policy, each director, other than directors who are executive officers and Altria nominees, is required to hold Shares and/or equity awards, including Deferred Share Units (as defined below), with a market value equal to three times such director’s annual cash retainer within five years of such director’s appointment or election to the Board.
Deferred Share Unit Plan
On August 7, 2019, the Board adopted the Deferred Share Unit Plan for Non-Executive Directors, pursuant to which each non-employee director (other than Altria nominees) received in 2019 an annual equity grant in the form of cash-settled deferred share units (“Deferred Share Units”) with a grant date fair value (as determined for financial reporting purposes) of $113,055 (C$150,000).
Starting in 2020, the Company expects to annual grants under the 2020 Omnibus Plan, as described in more detail below in the form of share-settled awards.
Incentive Plan Awards
All directors were entitled to participate in the 2018 Option Plan and the 2015 Option Plan. During the year ended December 31, 2019, no Stock Options were granted to, and 71,875 Stock Options were exercised by, non-employee directors under the 2015 Option Plan and no Stock Options were granted to, and no Stock Options were exercised by, non-employee directors under the 2018 Option Plan.
As discussed in more detail below, the Board adopted the 2020 Omnibus Plan on March 29, 2020, which will provide for the grant of equity awards and is intended to replace the 2018 Option Plan. Pursuant to the 2020 Omnibus Plan, each non-employee director may not be granted (in any calendar year) total compensation with a value in excess of $500,000, with the value of any equity-based awards based on the accounting grant date value; limited to $1,000,000 for the calendar year in which a non-employee director is newly appointed as a member of the Board or is designated the Chairman of the Board or Lead Director.

63


Table of Contents
2019 Director Compensation Table
The following table lists the individuals who received compensation in 2019 for their service as non-employee directors of the Company. Mr. Gorenstein’s compensation is reflected in the Summary Compensation Table above.
Name
Fees Earned or Paid in
Cash ($) (1)
Stock Awards ($) (2)
Total ($)
Jason Adler 37,685 113,055 150,740
Jody Begley (3)