As of June 14, 2022, the board of directors (the “Board”) of Canopy Growth Corporation (“Canopy” or the “Company”), upon the recommendation of its Corporate Governance, Compensation and Nominating Committee (“CGCN Committee”), took the following actions with regard to certain compensatory arrangements for certain of the Company’s senior management personnel, including the Company’s Chief Executive Officer, Chief Financial Officer and Chief Commercial Officer (the “named executive officers”). All dollar amounts shown are in U.S. dollars, except the exercise price of the stock options granted on June 14, 2022, which is expressed in Canadian dollars.

Short-Term Incentive Program

The Board approved its short-term incentive (“STI”) program for fiscal year 2023, which provides an annual cash incentive to the Company’s executive leadership team, including the named executive officers, based on performance relative to defined financial and individual objectives. The STI program is a leveraged bonus design, where executives may earn between 0% and 200% of the target bonus opportunity, which is defined as a percentage of base salary for each executive. Per the STI program, performance is assessed based on predetermined criteria established and approved by the Board. The STI program measures financial performance based on the following weighted factors for executive officers: 20% free cash flow, 35% revenue and 35% adjusted Earnings before Interest, Tax, Depreciation, and Amortization (“Adjusted EBITDA”), in addition to a 10% weighting of non-financial performance metrics related to the achievement of defined leadership objectives.

Long-Term Incentive Program

With input from the CGCN Committee’s external compensation consultant, Hugessen Consulting Inc., the CGCN Committee recommended and the Board approved the Company’s long-term incentive (“LTI”) program for fiscal year 2023, which provides the Company’s executive leadership team, including the named executive officers, annual long-term share-based equity awards through the Company’s Amended and Restated Omnibus Incentive Plan (the “Omnibus Incentive Plan”). The LTI program includes 50% stock options (“Options”) and 50% performance share units (“PSUs”).

Each of the options granted has a six-year term, subject to earlier termination upon the occurrence of certain events related to termination of employment, as specified in the Options Grant Agreement. One-third of the options become exercisable on each of the first, second and third anniversaries of the date of grant, subject to the terms of the Option Grant Agreement. The options will continue to vest upon the Retirement (as that term is defined in the Option Grant Agreement) of the recipient at any time after December 14, 2022 and prior to June 14, 2025, and will vest 30 days after the recipient’s service with Canopy terminates due to the recipient’s death or Disability (as that term is defined in the Option Grant Agreement). The exercise price of each option is CAD$4.84, which is equal to the five-day volume-weighted average price of the Common Shares on the Toronto Stock Exchange for the five trading days prior to the grant date of June 14, 2022.

The foregoing discussion of the Option Grant Agreement is qualified in its entirety by reference to the Option Grant Agreement, which is incorporated herein by reference.

Performance Share Unit Grants

The number of PSUs issued will be based on two metrics: Relative Total Shareholder Return (“RTSR”) against a custom group of cannabis industry peers approved by the Board and Adjusted EBITDA performance against predetermined targets established and recommended by the CGCN Committee and approved by the Board (as set forth below), with each weighted at 50%. The performance periods for each metric will consist of three one-year periods (fiscal year 2023, fiscal year 2024 and fiscal year 2025) and a three-year cumulative period beginning on April 1, 2022 and ending on March 31, 2025, each measured independently of one another. The PSUs will cliff vest after three years from the date of grant and the number of units vesting will vary based on performance over the defined performance periods relative to Board-approved performance targets. The following table sets forth information regarding target awards to the named executive officers identified below:

Pursuant to the terms of the PSUs, for each of the persons in the table above, the minimum PSU award is equal to 50% of the target number of PSUs, and the maximum PSU award is 150% of the target number of PSUs. Unvested PSUs are subject to forfeiture upon the occurrence of certain events related to termination of employment, as specified in the applicable award agreement. A participant may vest in his right to receive the applicable number of PSUs if the participant remains in continuous employment with the Company or any of its subsidiaries until June 14, 2025. In the event a U.S. resident recipient of PSUs retires (as the term “Retirement” is defined in the applicable award agreement) at any time after December 14, 2022 and prior to June 14, 2025, vested awards are payable on a pro rata basis (as set forth in the applicable award agreement). For U.S. residents, PSUs will vest 30 days after the recipient’s service with Canopy terminates due to the recipient’s death or Disability (as that term is defined in the applicable award agreement), subject to the terms of the applicable award agreement.

Amendment to Employment Agreement and Service Delivery Agreement

As of June 14, 2022, the Board amended the employment agreement of Mr. Klein and the service delivery agreement of Mr. Grant (the “Agreement Amendments”) as follows.

David Klein

Mr. Klein’s employment agreement was amended to increase the percentage of his LTI award from 350% of his base salary to 400% of his base salary.

Julious Grant

Mr. Grant’s service delivery agreement was amended to increase his monthly fee to $44,250 per month.

The foregoing discussion of the Agreement Amendments is qualified in its entirety by reference to the Agreement Amendments, which are filed as Exhibits 10.2 and 10.3 hereto and are incorporated herein by reference.