Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of ___April___ 2005
(Commission File No. 000-24876)
TELUS Corporation
(Translation of registrant's name into English)
21st Floor, 3777 Kingsway
Burnaby, British Columbia V5H 3Z7
Canada
(Address of principal registered offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F:
X
Form 20-F _____ Form 40-F _____
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
X
Yes _____ No _____
This Form 6-K consists of the following:
2005 annual and special meeting and class meetings
TELUS
March 21, 2005
TELUS Corporation
2005 annual and special meeting
Notice of annual and special meeting and class meeting of
holders of common shares i
Notice of class meeting of the non-voting shares iii
Invitation to shareholders 1
Frequently asked questions on voting 2
Business of the meetings 11
Mandate and report of the Corporate Governance Committee 47
Mandate and report of the Pension Committee 51
Mandate and Report of the Audit Committee 54
Mandate and Report of the Human Resources and Compensation Committee 58
Report on executive compensation 61
TELUS Pension Plan 75
Employment agreements 77
Indebtedness of directors and officers 78
Securities authorized for issuance under Equity Compensation Plans 80
Directors' and officers' insurance and indemnification 87
Additional matters and information 88
Appendix A: Statement of TELUS' corporate governance practices 89
Appendix B: Terms of Reference for Board of Directors 101
All figures reported in this information circular are in Canadian currency.
Notice of annual and special meeting and class meeting of holders of common
shares
Notice is hereby given that the annual and special meeting of TELUS
Corporation (the "Company" or "TELUS") and a class meeting of the holders of
common shares of the Company will be held on Wednesday, May 4, 2005 at 10:00
a.m. (MDT) at the Winspear Centre, 9720 - 102 Avenue NW, #4 Sir Winston
Churchill Square, Edmonton, Alberta, T5J 4B2 for the following purposes:
1. receive the Company's 2004 audited consolidated financial statements
together with the reports of the auditors on those statements;
2. consider, and if thought appropriate, pass a special resolution
amending Article 12.1 of the Articles of the Company;
3. consider, and if thought appropriate, pass (i) a special resolution
amending the Notice of Articles to remove the application of the
Pre-Existing Company Provisions of the Company, (ii) a special
resolution deleting the entire Articles and replacing them with new
Articles and (iii) a special separate resolution to change the votes
required to pass a special separate resolution of holders of common
shares of the Company, from 3/4 to 2/3;
4. consider, and if thought appropriate, pass a special separate
resolution amending the Articles of the Company to remove cumulative
voting and to add a provision to the Articles respecting the election of
directors;
5. consider, and if thought appropriate, pass a special separate
resolution amending the special rights and restrictions in the Articles
of the Company attaching to the common shares and the non-voting shares
to incorporate provisions relating to compliance with foreign ownership
requirements under the Radiocommunication Act and the Broadcasting Act;
6. elect directors of the Company for the ensuing year;
7. appoint Deloitte & Touche LLP as auditors for the ensuing year and to
authorize the directors to fix their remuneration;
8. increase the reserve of non-voting shares authorized for issue under
the TELUS Management Share Option Plan;
9. approve the amendment to the TELUS Management Share Option Plan to
permit the Company to settle exercise of options by the issue of
non-voting shares;
10. together with the holders of non-voting shares of the Company,
approve the amendment to, and reconfirm and approve the Company's
shareholder rights plan, as amended and restated; and
11. transact other business as may properly come before the meetings or
any adjournment thereof.
These meetings will be held at the same time and place as a class meeting of
the holders of the non-voting shares of the Company (the "non-voting shares")
for the purposes set out in the accompanying notice for the non-voting shares
meeting.
Dated at Vancouver, British Columbia this 21st day of March, 2005. By order of
the Board of Directors
/s/Audrey T. Ho
Audrey T. Ho
Vice-President, Legal Services and
General Counsel and Corporate Secretary
Holders of common or non-voting shares of the Company who are unable to attend
these meetings may vote by proxy. Simply sign and return a paper proxy or
submit a telephone or Internet proxy by following the instructions in the
information circular accompanying this notice or the instructions on the paper
proxy.
To be valid, proxies must be received by TELUS' Corporate Secretary, c/o
Computershare Trust Company of Canada at 9th floor, 100 University Avenue,
Toronto, Ontario, M5J 2Y1, by 5:00 p.m. local time on May 2, 2005 or, if a
meeting is adjourned, by 5:00 p.m. local time, on the second-last business day
prior to the date on which the meeting is reconvened.
Notice of class meeting of non-voting shares
Notice is hereby given that a class meeting (the "non-voting shares meeting")
of the holders of the non-voting shares of TELUS Corporation (the "Company" or
"TELUS") will be held on Wednesday, May 4, 2005 at 10:00 a.m. (MDT) at the
Winspear Centre, 9720 - 102 Avenue NW, #4 Sir Winston Churchill Square,
Edmonton, Alberta, T5J 4B2 for the following purposes:
1. consider, and if thought appropriate, pass a special separate
resolution, to change the votes required to pass a special separate
resolution of the holders of the non-voting shares of the Company from
3/4 to 2/3;
2. consider, and if thought appropriate, pass a special separate
resolution, amending the special rights and restrictions in the Articles
of the Company attaching to the common shares and the non-voting shares
to incorporate provisions relating to compliance with foreign ownership
requirements under the Radiocommunication Act and the Broadcasting Act;
3. transact other business as may properly come before the meeting or
any adjournment thereof.
The non-voting shares meeting will be held at the same time and place as an
annual and special general meeting and class meeting of the holders of the
common shares of TELUS for the purposes set out in the accompanying notice of
annual and special general meeting and class meeting of the holders of the
common shares.
Dated at Vancouver, British Columbia this 21st day of March, 2005.
By order of the Board of Directors
/s/Audrey T. Ho
Audrey T. Ho
Vice-President, Legal Services and
General Counsel and Corporate Secretary
Holders of non-voting shares of the Company who are unable to attend the
non-voting share meeting may vote by proxy. Simply sign and return a paper
proxy or submit a telephone or Internet proxy by following the instructions in
the information circular accompanying this notice or the instructions on the
paper proxy.
To be valid, proxies must be received by TELUS' Corporate Secretary, c/o
Computershare Trust Company of Canada at 9th floor, 100 University Avenue,
Toronto, Ontario, M5J 2Y1, by 5:00 p.m. local time on May 2, 2005 or, if the
non-voting shares meeting is adjourned, by 5:00 p.m. local time, on the
second-last business day prior to the date on which the meeting is reconvened.
Invitation to shareholders
On behalf of the TELUS Board of Directors and the rest of the TELUS team, we
invite you to join us at TELUS' shareholder meetings (the "meetings"). This
year, the meetings will be held:
Date: Wednesday, May 4, 2005
Time: 10:00 a.m. (MDT)
Place: Winspear Centre
9720 - 102 Avenue NW
#4 Sir Winston Churchill Square
Edmonton, Alberta, T5J 4B2
At the meetings, holders of common shares and holders of non-voting shares of
TELUS (collectively the "shareholders") will be asked to approve the business
items in the notices of the meetings and this information circular. We will
also update you on the Company's current financial situation and on how TELUS
is continuing to deliver on its strategy. At the end of the meetings, a
question and answer session will take place. At the reception following the
meetings, you will have an opportunity to personally meet your directors and
executive leadership team.
As a shareholder, your vote is very important to us and we encourage you to
participate either in person or by proxy. If you cannot attend the meetings in
person, we invite you to view our live Web cast at telus.com/agm at 10 a.m.
(MDT) on May 4.
We look forward to seeing you.
Sincerely,
/S/Brian A. Canfield /S/Darren Entwistle
Brian A. Canfield Darren Entwistle
Chair of the Board of Directors President & Chief Executive Officer
March 21, 2005
Information Circular
Frequently asked questions on voting
Q. Am I entitled to receive notice of the meetings and attend the meetings?
A. Yes, if you are a holder of common shares or non-voting shares of the
Company as of March 21, 2005, which is the record date for the meetings. All
shareholders, as of the close of business on that date, are entitled to receive
notice of, attend and be heard at the annual and special general meeting and to
vote at the appropriate meetings as described in the applicable notices for the
meetings.
Q. Am I entitled to vote and what am I voting on?
A. If you were a holder of common shares as of the close of business on March
21, 2005, you are entitled, subject to the cumulative voting provisions for
directors, to vote one vote per common share on each of the resolutions listed
in the notice of annual and special meeting and class meeting of the holders of
common shares (the "common share meeting").
If you were a holder of non-voting shares, as of the close of business on March
21, 2005, you have the right to vote, together with the holders of the common
shares, at the common share meeting, one vote per share on the resolution to
approve the amendments to, and reconfirm and approve the shareholder rights
plan, as amended and restated, and separately at the class meeting of the
non-voting shares (the "non-voting share meeting"), one vote per non-voting
share on each of the special separate resolutions listed in the notice of for
that meeting.
The common share meeting and the non-voting share meeting are herein together
the "meetings" and each one a "meeting".
Q. Am I a registered or non-registered shareholder?
A. You are a registered shareholder if you have a share certificate registered
in your name.
You are a non-registered shareholder if:
* your shares are registered in the name of an intermediary (for
example, a bank, a trustee or a investment dealer) or the name of a
clearing agency of which the intermediary is a participant, or
* you hold common shares through the TELUS Employee Share Purchase Plan.
Q. How can I vote my shares?
A. You can vote your shares either by attending and voting your shares
at the meetings or, if you cannot attend the meetings, by having your
shares voted by proxy. How you exercise your vote depends on whether you
are a registered or non-registered shareholder (for descriptions, see
the previous question).
Voting by attending the meetings - registered and non-registered shareholders
If you are a registered shareholder, you are entitled to attend the applicable
meeting and cast your vote in person.
If you are a non-registered shareholder, you are entitled to attend the
applicable meeting and cast your vote in person, provided you have submitted a
properly executed proxy, inserting your name in the blank space provided and
returning it in the envelope provided. When you arrive at the meeting, advise
the registration staff that you are a proxy appointee. If you have received a
voting instruction form, please follow the instructions on the form.
Royal Trust Corporation of Canada (the "Trustee") is the trustee of all common
shares (the "employee shares") held on behalf of members of the TELUS Employee
Share Purchase Plan. Holders of employee shares are treated in the same manner
as non-registered shareholders. If you hold employee shares, you are entitled
to attend the meetings and cast your vote in person, provided you have
submitted a properly executed proxy, inserting your name in the blank space
provided and returning it according to the instructions on the form. When you
arrive at the meeting, advise the registration staff that you are a proxy
appointee.
Voting by proxy - registered shareholders
If you are a registered shareholder, you may vote your proxy in one of
three ways:
* by paper proxy to be returned by mail or delivery
* by telephone
* by Internet.
If you intend to vote by paper proxy, please use the proxy identified for use
by holders of common shares to vote your common shares, and the proxy
identified for use by holders of non-voting shares to vote your non-voting
shares.
Whichever method you choose, your proxy must be received by TELUS' Corporate
Secretary, c/o Computershare Trust Company of Canada (9th floor, 100 University
Avenue, Toronto, Ontario, M5J 2Y1), no later than 5:00 p.m. (local time) on May
2, 2005 or, if a meeting is adjourned, by 5:00 p.m. (local time) on the
second-last business day prior to the date on which the meeting is reconvened.
* Proxy and voting by mail or delivery:
To vote by mail or delivery, your paper proxy must be completed, signed
and returned in accordance with the instructions on the paper proxy.
* Proxy and voting by telephone:
To vote by telephone, call the toll-free number shown on the proxy form
that was sent to you by mail or e-mail. Using a touch-tone telephone to
select your voting preferences, follow the instructions of the "vote
voice" and refer to your holder account number and proxy access number
provided on your proxy.
Note that you cannot vote by telephone if you wish to appoint a person
as a proxy other than someone named on the proxy form, or if you wish to
distribute your cumulative votes in any manner other than equally
regarding the election of directors. In either of these instances, your
proxy should be voted by mail, delivery or Internet.
* Proxy and voting by Internet:
To vote your proxy by Internet, visit the Web site address shown on the proxy
form that was delivered to you by mail or e-mail. Follow the online voting
instructions and refer to your holder account number and proxy access number
provided on your proxy.
Voting by proxy - non-registered shareholders
If you are a non-registered shareholder and you receive these materials through
an investment dealer or other intermediary, complete and return the materials
entitling you to vote, by following the instructions provided to you by the
investment dealer or other intermediary.
If you hold employee shares, use one of the three voting procedures outlined
above (mail, telephone or Internet), to direct the Trustee as to how your
employee shares are to be voted. The Trustee will deliver the proxy forms for
use at the meetings for all votes to be cast at the meetings as indicated on
all paper, telephone or Internet proxies. Computershare Trust Company of Canada
("Computershare") has agreed to act as the recipient of voting instructions by
holders of employee shares received by proxy and will tabulate the results for
the Trustee.
The voting rights attached to employee shares will be voted for or against or
withheld from voting only in accordance with the specifications made by the
employees. If a proxy is not received by Computershare on behalf of the Trustee
according to the above procedures, the employee shares will not be voted by the
Trustee.
For employee shares to be voted at the meetings by the Trustee or a duly
appointed proxy, proxies must be received by TELUS' Corporate Secretary, c/o
Computershare, (9th floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1) no
later than 5:00 p.m. (local time) on May 2, 2005 or, if a meeting is adjourned,
by 5:00 p.m., (local time), on the second-last business day prior to the date
on which the meeting is reconvened.
If an employee holds common and non-voting shares (other than employee shares),
another proxy must be completed to vote those shares, unless the employee
attends the meetings and votes the common and non-voting shares in person.
Q. Who votes my shares?
A. Each person named in the proxy to represent shareholders at the meetings is
a director and/or officer of the Company. You can appoint someone else to
represent you at the meetings, however, you must appoint that person by either
paper proxy or Internet proxy by inserting his or her name in the appropriate
space on the proxy form, or completing another acceptable paper proxy. The
person you appoint does not need to be a shareholder but must attend the
meetings in order for your vote to be cast.
Q. How will my shares be voted if I return a proxy?
A. By completing and returning a proxy, you are authorizing the person named in
the proxy to attend the meetings and vote your shares on each item of business
you are entitled to vote on, according to your instructions. If there are no
instructions with respect to your proxy, your common shares will be voted in
favour of:
1. the special resolution amending Article 12.1 of the Articles of the
Company;
2. the special resolution amending the Notice of Articles of the Company
to remove the application of the Pre-Existing Company Provisions,
replacing the Articles and the special separate resolution to change the
votes required to pass a special separate resolution of the holders of
the common shares from 3/4 to 2/3;
3. the special separate resolution amending the Articles of the Company
to remove cumulative voting and add a provision to the Articles
respecting the election of directors;
4. the special separate resolution amending the special rights and
restrictions in the Articles of the Company attaching to the common
shares and the non-voting shares to incorporate provisions relating to
compliance with foreign ownership requirements under the
Radiocommunication Act and the Broadcasting Act;
5. electing directors of the Company for the ensuing year;
6. appointing Deloitte & Touche LLP as auditors for the ensuing year and
authorizing the directors to fix their remuneration;
7. increasing the reserve of non-voting shares authorized for issue
under the TELUS Management Share Option Plan;
8. approving the amendment to the TELUS Management Share Option Plan to
permit the Company to settle exercise of options by the issue of
non-voting shares; and
9. together with the holders of the non-voting shares, approving the
amendment to, and reconfirming and approving the Company's shareholder
rights plan, as amended and restated.
If there are no instructions with respect to your proxy, your non-voting shares
will be voted in favour of:
1. the special separate resolution approving the change in the votes
required to pass a special separate resolution of the non-voting shares,
from 3/4 to 2/3;
2. amending the special rights and restrictions in the Articles
attaching to the common shares and the non-voting shares to incorporate
provisions relating to compliance with foreign ownership requirements
under the Radiocommunication Act and the Broadcasting Act;
3. together with the holders of the common shares, approving the
amendment to, and reconfirming and approving the shareholder rights
plan, as amended and restated.
Q. Can I revoke a proxy?
A. Yes, if you are a registered shareholder and have voted by paper, telephone
or Internet proxy, you may revoke it by delivering a duly executed proxy by
paper, telephone or Internet with a later date or a form of revocation of
proxy. Such paper proxies can be delivered to the registered office of the
Company, to the attention of TELUS' Corporate Secretary, 21 - 3777 Kingsway,
Burnaby, B.C. V5H 3Z7, any time up to and including May 2, 2005, or if a
meeting is adjourned, on the business day preceding the date of the adjourned
meeting.
Alternatively, you may revoke your proxy and vote in person, by delivering a
form of revocation of proxy to the Chair of the meetings at the meetings or any
adjournment thereof before the vote in respect of which the proxy is to be used
is taken. You may also revoke your proxy in any other manner permitted by law.
If you are a non-registered shareholder, you may revoke your proxy or voting
instructions by contacting the individual who serves your account.
As a holder of employee shares, if you have provided your proxy (by paper,
telephone or Internet) you may revoke it by delivering another proxy (by paper,
telephone or Internet) with a later date or a form of revocation of proxy, no
later than 5:00 p.m. (local time) on May 2, 2005 or, if a meeting is adjourned,
by 5:00 p.m. (local time) on the second-last business day prior to the date on
which the meeting is reconvened.
Q. Who has discretionary authority to vote on amendments or variations to any
of the business items and on any other matter that may properly come before the
meetings?
A. Your voting instructions provided by paper, telephone or Internet proxy give
discretionary authority to the person you appoint to vote as he or she sees fit
on any amendment or variation to any of the matters identified in the
applicable notice of the meetings and any other matters that may properly be
brought before a meeting, to the extent permitted by law. As of March 1, 2005,
neither the Board of Directors nor senior officers of the Company is aware of
any variation, amendment or other matter to be presented for a vote at any
meeting.
Q. Is my vote by proxy confidential?
A. Yes, your vote by proxy is confidential. Proxies are received, counted and
tabulated by our transfer agent, Computershare, in a way that preserves the
confidentiality of individual shareholders' votes, except:
* as necessary to meet the applicable legal requirements
* in the event of a proxy contest
* in the event a shareholder has made a written comment on the proxy.
Q. Who is soliciting my proxy?
A. Your proxy is being solicited on behalf of TELUS management. The
solicitation of proxies will be made either by mail to your latest address
shown on the register of shareholders or by electronic mail to the e-mail
address you provided. In addition to solicitation by mail, employees or agents
may solicit proxies by telephone or other ways at a nominal cost to the
Company. The Company may, if determined advisable, retain an agency to solicit
proxies for the Company in Canada and in the United States. The cost of
solicitation is paid for by the Company.
Q. What are the quorum requirements for the meetings and how many common shares
and non-voting shares are outstanding?
A. A quorum at either the common share meeting or the non-voting share meeting
will consist of at least two persons present and/or represented by proxy, being
two Canadians that hold not less than 1/20 (5 per cent) of each of the issued
and outstanding shares entitled to be voted at the applicable meeting. On March
15, 2005, the Company had 191,928,650 common shares issued and outstanding and
168,246,161 non-voting shares issued and outstanding.
Q. Does any shareholder beneficially own 10 per cent or more of the common
shares that are outstanding?
A. No.
To the knowledge of the directors and senior officers of TELUS, on March 1,
2005, no persons beneficially own, directly or indirectly, or exercise control
or direction over, common shares carrying more than 10 per cent of the voting
rights attached to all common shares entitled to be voted at the common share
meeting.
Q. What if I have a question?
A. If you have any questions regarding the meeting, please contact
Computershare:
* by phone: 1-800-558-0046 (toll-free within North America)
1-514-982-7270 (outside North America)
* by fax: (416) 263-9394
* by e-mail: telus@computershare.com
* by mail: Computershare Trust Company of Canada
9th floor, 100 University Avenue
Toronto, Ontario, M5J 2Y1
Non-voting shares
Subject to the prior rights of the holders of first preferred shares and second
preferred shares of the Company, holders of non-voting shares are entitled to
participate equally with the holders of common shares with respect to the
payment of dividends and the distribution of assets of the Company on the
liquidation, dissolution or winding up of the Company. The non-voting shares
cannot be subdivided, consolidated, reclassified or otherwise changed unless
the common shares are changed in the same manner.
Generally, the holders of non-voting shares are entitled to receive notice of,
attend and be heard at all general meetings of the Company and are entitled to
receive all notices of meetings, information circulars and other written
information from the Company that the holders of common shares are entitled to
receive from the Company, but are not entitled to vote at such general meetings
unless otherwise required by law. At these meetings, the holders of the
non-voting shares are entitled to vote together with the holders of common
shares on the resolution to approve amendments to, and to reconfirm and approve
the shareholder rights plan, as amended and restated and separately as a class
on the special separate resolutions to approve a change in the votes required
to pass a special separate resolution of the holders of non-voting shares from
3/4 to 2/3, and amendments to the special rights and restrictions attaching to
the non-voting shares to incorporate provisions relating to compliance with
foreign ownership requirements under the Radiocommunication Act and the
Broadcasting Act.
To ensure that the holders of non-voting shares can participate in any offer
made to holders of common shares (but that is not made to the holders of
non-voting shares on the same terms), the offer must, by reason of applicable
securities legislation or the requirements of the stock exchanges on which the
common shares are listed, be made to all or substantially all the holders of
common shares who are in any province of Canada to which such requirements
apply (an "exclusionary offer"). Each holder of non-voting shares will, for the
purposes of the exclusionary offer only, be permitted to convert all or part of
the non-voting shares held into an equivalent number of common shares during
the applicable conversion period. In certain circumstances (namely, the
delivery of certificates, at specified times, by holders of 50 per cent or more
of the issued and outstanding common shares to the effect that they will not,
among other things, tender to such exclusionary offer or make an exclusionary
offer), these conversion rights will not come into effect.
If the Telecommunications Act (Canada) (the "Telecommunications Act") and the
regulations thereunder relating to ownership and control are changed so that
there is no restriction on non-Canadians holding common shares, holders of
non-voting shares will have the right to convert all or part of their
non-voting shares into common shares on a one-for-one basis. The Company will
have the right to require holders of non-voting shares who do not make such an
election to convert such non-voting shares into an equivalent number of common
shares.
Business of the meetings
1. Report of management and consolidated financial report
The report of management and the audited consolidated financial statements for
the year ended December 31, 2004, including management's discussion and
analysis ("MD&A"), are contained in the 2004 annual report of the Company.
Shareholders who have requested a copy of the 2004 annual report will receive
one by mail. If you did not request a copy, you may view the annual report
online at telus.com/annualreport or obtain one upon request to TELUS' Corporate
Secretary at 21 - 3777 Kingsway, Burnaby, British Columbia, V5H 3Z7.
2. Amendments to the Articles of the Company
Approval of the amendment to the articles regarding minimum number of directors
Section 12.1 of the Articles of the Company currently provides for a minimum of
12 and a maximum of 16 directors and that the number of directors may be fixed
within such range by the Board of Directors.
The Board of Directors has concluded that the appropriate minimum number of
directors be set at 10. Currently the number of directors is 11, and 11 persons
are being nominated for election as directors at this meeting. While the
Corporate Governance Committee and the Board wish to increase the number of
directors, they require sufficient time to conduct the necessary searches and
interviews in order to select the individuals they feel will be effective board
members adding strengths to the Board in areas determined to be of benefit to
the Company. This will enhance Board effectiveness and benefit shareholders.
Accordingly, in the view of the Board of Directors, it is desirable to amend
the Articles of the Company to provide for the number of directors to be set at
a minimum of 10. All other provisions of Article 12.1 including the ability of
the Board of Directors to fix the number of directors within the range and to
appoint directors between meetings remain unchanged.
The proposed special resolution to be passed at the common share meeting is as
follows:
BE IT RESOLVED THAT, as a special resolution:
1. Article 12.1 of the Articles of the Company be amended by
deleting the number "12" and replacing it with the number "10"; and
2. the directors of the Company be and are authorized to revoke
this special resolution before it is acted on without further approval
of the holders of common shares.
To be effective, the special resolution must be approved by not less than 3/4 of
the votes cast by the holders of the common shares of the Company who vote in
person or by proxy at the common share meeting on the special resolution.
Management and the Board recommend that holders of common shares vote FOR
the amendment to Article 12.1. The persons named in the enclosed form of proxy
intend to vote FOR the special resolution approving the amendment to the
Articles of the Company, unless the holder of common shares specifies
otherwise.
It is intended that the foregoing special resolution will be voted on at the
common share meeting and, if passed, the amendment to the Articles will be
filed at the records office of the Company to be effective prior to proceeding
with the election of directors.
Approval of amendments relating to the new Business Corporations Act (British
Columbia)
Background change in legislation
The corporate legislation of the Province of British Columbia has applied to
the Company since incorporation. That legislation has recently undergone
significant modernization, with the replacement of the Company Act (the "Old
Act") by the Business Corporations Act (the "New Act") effective March 29,
2004. The Board of Directors passed the appropriate resolutions on February 16,
2005 to effect the basic transition of the Company from the Old Act to the New
Act, and the Company was transitioned on February 23, 2005. This simply means
that the Company has replaced its existing incorporating documents (the
Memorandum and Articles) with new incorporating documents (the Notice of
Articles and Articles) that are substantially similar but that adopt the more
simplified form and terminology prescribed by the New Act.
The New Act represents a significant modernization of corporate law in British
Columbia and is more in line with the approach followed by corporate statutes
of other jurisdictions in Canada and the United States. The Board has
determined that it is desirable to update the Articles to better reflect and
follow the New Act and to remove various provisions that have become outdated
over time or which are now no longer required as a result of, or are
inconsistent with, the provisions in the New Act. In addition, the New Act
gives companies greater flexibility in dealing with their affairs and
organization than the Old Act. The Board believes that it is desirable to
change the Company's Articles to take advantage of these new provisions and
maximize the Company's ability to act and respond more quickly and with greater
flexibility where appropriate. These proposed changes are embodied in the
special resolutions or special separate resolutions to be passed by the holders
of common shares and the holders of non-voting shares and are described below
under the heading "The New Act: Matters for Consideration at the meetings".
The New Act: Matters for consideration at the meetings
Removal of pre-existing Company provisions
The New Act prescribes and sets out in Table 3 in its Regulations certain
provisions that reflect the requirements of the Old Act (the "Pre-existing
Company Provisions"). Of these provisions, the following apply to the Company:
(a) a special resolution requires a majority of 3/4 of the votes cast in
order to pass;
(b) a special separate resolution requires a majority of 3/4 of the
votes cast in a class or series in order to pass; and
(c) subject to several exceptions, before purchasing any of its shares,
the Company must make an offer, to every shareholder holding shares of
the class or series to be purchased, to purchase the shares pro rata
(the "Pro Rata Requirement").
Generally, save for the three Pre-Existing Company Provisions described above,
the other Pre-existing Company Provisions do not apply to the Company because
of specific exemptions currently available to the Company. However, in order to
remove the application of any of the Pre-existing Company Provisions, it is a
requirement that the Company remove the application of all of the Pre-existing
Company Provisions. For all new companies incorporated under the New Act, the
majority required to pass special resolutions and special separate resolutions
may be 2/3 or 3/4 of the votes cast, or any number in between. The threshold
for passing such resolutions is 2/3 under the Canada Business Corporations Act
and most other provincial corporate legislation in Canada. As well, such new
companies are not subject to the pro rata purchase requirements.
Special resolutions and special separate resolutions
The New Act and the Company's Articles set out the types of corporate actions
and transactions that must first be approved by shareholders, by way of a
special resolution or a special separate resolution. For instance, special
resolutions (or their equivalent in which all shareholders vote) are required
to authorize a number of corporate actions such as certain amalgamations,
arrangements and continuances out of British Columbia. Such transactions also
may require approvals of each class and series of a company's shares by way of
special resolutions passed by the affected class and series in a separate class
meeting ("special separate resolutions") if they prejudice or interfere with
the rights or special rights attached to such shares. Any proposed changes to
the Articles of a company which prejudice or interfere with the rights or
special rights attached to a class or series of shares must also be approved by
a special separate resolution passed by the holders of the class or series
affected.
The Articles of the Company currently provide that the votes required to pass a
special resolution or special separate resolution is 3/4 of the votes cast at a
meeting. The Board believes that this threshold should be reduced from 3/4 to
2/3. Given that the Company is widely held, the Board believes that 2/3 of the
votes is an appropriate threshold required to reflect the wishes of
shareholders. The threshold under most other corporate legislation in Canada is
2/3 and this change will also put the Company in line with most other Canadian
public companies in this regard.
Pro rata purchase of Company shares
The Board also believes that the Pro Rata Requirement is an unnecessary
constraint on the Company and proposes that it be removed from the Company's
Articles. Any proposed repurchase by the Company of its own shares is already
governed by the securities laws of various provinces and elsewhere where the
Company has shareholders. In general, these laws mandate pro rata purchases or
their functional equivalent with certain exceptions. The Board believes that
securities law and not the Company's constitution should govern pro rata
purchases; this approach is also reflected in the New Act as it does not
include the pro rata requirement of the Old Act. The end result is that such
purchases, unless otherwise specified in a company's articles, are governed by
securities legislation. Approving the removal of the Pro Rata Requirement would
ensure that the Company is not more restricted than most other Canadian public
companies in this regard.
In order to make the above-described changes, the New Act requires the
following approvals from shareholders:
1. that the holders of common shares pass a special resolution approving
the removal of all Pre-existing Company Provisions that are part of the
Old Act;
2. that the holders of common shares and the holders of non-voting
shares each pass a special separate resolution to change the votes
required to pass a special separate resolution for the respective class
of shares, from 3/4 to 2/3; and
3. that the holders of common shares pass a special resolution that
authorizes the amendment to the threshold for special resolutions and
special separate resolutions in the Company Articles.
For the reasons set forth above, the Board believes it is appropriate for the
shareholders to authorize such changes and pass the requisite resolutions.
Other amendments to the Articles
The Articles of a company, among other things, set out rules for the conduct of
its business and affairs. For the reasons set out above, including the
enactment of the New Act, it is desirable to update the Company's Articles. The
proposed amendments principally reflect the provisions of the New Act that
modernize British Columbia corporate legislation, including, for instance,
those that facilitate electronic communications. The amendments also remove
certain provisions in the existing Articles that are now covered by the New Act
to avoid the possibility of conflict or the possibility of having to comply
both with the statutory provision and a corresponding but different provision
in the Articles. The Articles are also proposed to be changed to conform in
some respects with the bylaws of Canada Business Corporations Act public
companies while maintaining many features of Articles now permitted to be
adopted by New Act public companies. With the proposed changes, the corporate
actions available to the Company will align more closely with those of other
Canadian public companies.
The amendment includes a proposed change in quorum. Previously, with one
non-Canadian shareholder holding more than 25 per cent of the common shares,
the Board believed that the quorum requirement should ensure that the votes
reflect representation of at least five per cent of Canadians as defined under
telecommunications legislation. With the sale by Verizon Communications Inc.
("Verizon") of its interest on a widely distributed basis, the Board believes
that this requirement is no longer necessary and that it is in the interest of
shareholders to increase the quorum to 20 per cent of the issued and
outstanding shares entitled to vote. This significant increase in the quorum
requirement ensures that the results at general meetings better reflect the
wishes of shareholders.
Significant changes from the existing Articles effected by the proposed new
Articles include the following:
* provisions permitting that participation in a meeting of the Board of
Directors or a committee may be by telephone, electronic or other
communication facility if the directors participating are able to
communicate with each other, whether or not any director objects
* specifying the matters constituting a conflict of interest and the
steps required to be taken by a director or senior officer who has a
conflict of interest which are consistent with the New Act
* providing that the indemnification of directors and officers is now
authorized in all circumstances, and to the fullest extent permitted by
the New Act
* the new Articles do not require the President and Secretary of the
Company to be different persons
* the new Articles do not require the President of the Company to be a
director
* permitting the designation of such officers as the directors determine
(such as a Chief Executive Officer, a Chief Operating Officer and a
Chief Financial Officer), confirm that the officers must be qualified as
required by the New Act, and establish that the responsibilities and
terms of such appointments are as determined or permitted by the Board
of Directors, without naming specific offices
* the new Articles do not contain (unlike the existing Articles)
provisions regarding the creation by the Board of Directors of reserves
and other internal accounts to restrict or permit the payment of
dividends, as the rules on granting dividends have been amended by the
New Act
* in addition to the Company's ability to borrow money, issue debt and
mortgage, charge, or give other security on the undertaking, or on the
whole or any part of the property and assets, of the Company (both
present and future), provisions permitting the Company, without
restriction, to guarantee repayment of money by any other person or the
performance of any obligation of any other person. This change reflects
the modernization of corporate legislation to effectively respond to
increasingly complex financial transactions that companies may enter
into in the conduct of their business
* the quorum for a shareholder meeting is set as 20 per cent of the
holders of voting shares in the new Articles. The current Articles
provide that a quorum is five per cent of the holders of shares who are
Canadian
* the new Articles provide that the Company may give a notice or other
document to a shareholder, director or officer in electronic form if the
recipient has provided the necessary information to effect such delivery
* the new Articles provide that the general authority required to amend
all provisions of the Company's Articles and the Notice of Articles
(including amendments to the special rights and restrictions attached to
the issued shares of the Company) is a special resolution, except the
Company may by ordinary resolution, create new classes or series of
shares, increase or reduce the maximum number of shares that may be
issued, make certain changes to the par value of shares, change shares
with a par value to shares without a par value, change the designation
of shares or change the special rights and restrictions attaching to
unissued shares, and by resolution of the directors, subdivide or
consolidate the shares of the Company or change the name of the Company.
In addition, if the amendment prejudices or interferes with the rights
or special rights attached to any class of issued shares, by the
provisions of the New Act, the consent of the holders of that class of
shares by a special separate resolution is also required. Currently
there are 1,000,000,000 of each of the common shares, non-voting shares,
first preferred shares and second preferred shares authorized in the
Company's Notice of Articles. The two classes of preferred shares may be
issued in series as determined by the directors
* the ability of the directors to change the name of the Company. This
permits flexibility and eliminates costs associated with special
meetings seeking the amendment
* a special resolution and a special separate resolution (because of the
definition in the new Articles of "special majority") will require only
a majority of 2/3 rather than 3/4 of the votes cast in order to be passed.
See "Removal of Pre-existing Company Provisions".
The new Articles also incorporate a number of non-substantive changes,
including the use of the new terminology adopted under the New Act. For
example, "members" are now "shareholders" and "register of members" is now
"central securities register" under the New Act. In addition, the new Articles
contain provisions relating to the conduct of meetings (directors and
shareholders), the right to share certificates, dealings by the Company with
joint and similar holders of securities, proxy rules and notice rules, that are
not materially dissimilar from those contained in the existing Articles.
Non-substantive changes and changes that reflect statutory requirements that
the Company cannot alter or amend or are similar to those in the Company's
existing Articles have not been specifically described above.
The foregoing sections contain summaries of the principal changes to the
Articles, and are qualified in their entirety by reference to the text of the
proposed Articles. A copy of this document may be obtained from the Corporate
Secretary at 21 -3777 Kingsway, Burnaby, B.C. V5H 3Z7 or at telus.com.
Form of special resolutions
The following is the form of the special resolutions for holders of common
shares. The special resolutions must be passed by at least the favourable vote
of 3/4 of the votes cast by holders of common shares at the common share
meeting.
"BE IT RESOLVED THAT:
1. as a special resolution that the Notice of Articles of TELUS
Corporation (the "Company") be altered to remove the application of the
Pre-existing Company Provisions, being those provisions set out in Table
3 of the Regulation under the Business Corporations Act;
2. as a special resolution that the existing Articles of the Company be
deleted in their entirety and the Articles described in the Company's
Information Circular dated March 21, 2005 be adopted in substitution
therefore, such alteration not to take effect until the date and time
that this resolution is received for deposit at the Company's records
office;
3. as a special separate resolution, that Article 27.10 of the Articles
be amended to provide that the number of votes required to pass a
special separate resolution of the holders of the common shares be set
at 2/3 and that Article 27.10 be amended to delete "3/4" and replace the
same with "2/3" as it relates to the common shares;
4. after paragraph 1 of this resolution has been complied with, any one
director or officer, or any lawyer for the Company, is authorized to
complete, execute and file a Notice of Alteration to effect the
alterations described in paragraph 1 above;
5. this resolution and the new Articles described in paragraph 2 shall
forthwith be deposited at the Company's records office; and
6. the directors of the Company be and are authorized to revoke any of
the foregoing resolutions before it is acted on without further approval
of the shareholders."
Management and the Board recommend that holders of common shares vote FOR the
special resolution removing the Pre-existing Company Provisions from the
Articles of the Company and the special resolution and special separate
resolution approving the amendment to the Articles as set forth above. The
persons named in the enclosed proxy intend to vote FOR these motions unless the
holder of common shares specifies otherwise.
The following is the form of the special separate resolution for holders of
non-voting shares to be approved at the non-voting share meeting. The special
separate resolution of the holders of non-voting shares must be passed by at
least the favourable vote of 3/4 of the votes cast by holders of non-voting
shares at the non-voting share meeting.
"BE IT RESOLVED THAT, as a special separate resolution:
1. Article 27.10 of the Articles be amended to provide that the number
of votes required to pass a special separate resolution of the holders
of the non-voting shares be set at 2/3 and that Article 27.10 be amended
to delete "3/4" and replace the same with "2/3" as it relates to the
non-voting shares;
2. the resolution shall forthwith be deposited in the Company's record
office; and
3. the directors of the Company be and are authorized to revoke this
special separate resolution before it is acted on without further
approval of the shareholders."
Management and the Board recommend that holders of non-voting shares vote FOR
the special separate resolution of the Company as set forth above. The persons
named in the enclosed proxy intend to vote FOR this motion unless the holder of
non-voting shares specifies otherwise.
The alterations to the Articles of the Company to remove the Pre-existing
Company Provisions do not become effective until a Notice of Alteration has
been filed with the Registrar under the New Act and the new Articles and any
amendments to the new Articles do not become effective until the special
resolutions and special separate resolutions have been filed at the Company's
records office.
If the above special resolutions and special separate resolutions are passed by
the holders of common shares and non-voting shares, the Company will file with
the Registrar, a Notice of Alteration and will thereafter file with the records
office of the Company, the special resolutions and special separate resolutions
amending the Articles.
Special resolutions removing cumulative voting rights
The Articles of the Company currently provide that holders of common shares
elect directors through cumulative voting. See "Election of Directors". The
cumulative voting provisions were included in the Articles when the Company was
first created from the merger of BC TELECOM Inc. and the predecessor Alberta
based, TELUS Corporation.
Cumulative voting rights are often found in companies with a significant
shareholder, and may afford minority shareholders a greater ability to elect
directors to the board.
The Company no longer has a significant shareholder and the candidates for
election to the Board are assessed and recommended by an all-independent
Corporate Governance Committee and approved by an independent Board of
Directors. The Board believes that cumulative voting rights are not necessary
to protect the interests of shareholders. Rather, its continuation may serve to
enable the election of persons who represent the interests of particular and
small shareholder groups. The Board believes that the interests of shareholders
are better served by having a well-balanced Board of Directors that represents
the interests of all shareholders on an equal basis and not the special
interests of any particular and small group of shareholders. The Board further
believes that its process for selecting candidates for nomination results in a
group of directors with the breadth and diversity of experience and skills to
work effectively together and provide all shareholders with effective
representation on an equal basis.
It is the responsibility of the Corporate Governance Committee of the Board,
which is comprised entirely of independent directors, to recommend to the Board
of Directors all candidates being proposed for nomination as directors.
Accordingly, the selection of director candidates is completely outside the
control of management. The Corporate Governance Committee annually reviews the
composition of the Board to ensure it is comprised of persons having the skills
and experience necessary to allow it to supervise the business and affairs of
the Company, assesses the skills and performance of each director, and
identifies any skill gaps that should be filled through new directors. These
procedures ensure the optimal mix of skills and talents required for overall
Board effectiveness.
For these reasons the Board of Directors is recommending that the holders of
common shares approve a special resolution deleting Article 27.4.2, to remove
cumulative voting and adding Article 14.10 to the Articles to permit holders of
common shares to vote by a separate resolution for each director rather than by
a slate. This will ensure that holders of common shares can vote or withhold
their votes on any particular candidate for director.
The following is the form of the special resolution to be passed by holders of
common shares. The special resolution must be passed by at least the favourable
vote of 3/4 of the votes cast by holders of common shares at the meeting, to
approve the special resolution.
"BE IT RESOLVED:
1. as a special separate resolution that the Articles be altered by
removing Article 27.4.2 thereof; and as a special resolution that the
following be added as Article 14.10 to the Articles:
"14.10 Manner of Election of Directors
At any shareholders meeting at which directors are to be elected, a
separate vote of shareholders shall be taken with respect to each
candidate nominated for director.";
2. the special separate resolution and the special resolution described
in paragraph 1 shall forthwith be deposited at the Company's records
office; and
3. the directors of the Company be and are authorized to revoke these
resolutions before they are acted on without further approval of the
shareholders."
Management and the Board recommend that holders of common shares vote FOR the
special separate resolution and special resolution removing the cumulative
voting rights and approving the amendment to the Articles as set forth. The
persons named in the enclosed proxy intend to vote FOR this motion unless the
holder of common shares specifies otherwise.
Amendments to the Articles with respect to the Broadcasting Act and
Radiocommunication Act
The Canadian Telecommunications Common Carrier Ownership and Control
Regulations (the "Telecommunications Regulations") and the Telecommunications
Act contain restrictions relating to the holding of voting shares by
non-Canadians. To maintain the eligibility of certain of its subsidiaries,
which are Canadian common carriers under the Telecommunications Act, the level
of non-Canadian ownership of the common shares cannot exceed 33 1/3 per cent
and the Company must not be otherwise controlled by non-Canadians. To ensure
that the Company's operating entities continue to be able to operate under the
Telecommunications Act, certain provisions and constraints were incorporated
into the special rights and restrictions attaching to the common shares and the
non-voting shares.
An operating entity owned by the Company holds radio licences under the
Radiocommunication Act (Canada) (the "Radiocommunication Act"), which are
necessary to provide wireless telecommunication services.
In addition, a subsidiary of the Company has obtained a broadcast distribution
licence under the Broadcasting Act (Canada) (the "Broadcasting Act") to offer
digital television services to select communities across Alberta and British
Columbia, as well as a licence to offer commercial video-on-demand services.
These broadcasting licences could enable the Company to compete with cable
television companies and satellite service providers for television
entertainment services. The Company is testing and evaluating these services
for possible launch in the future.
Both the Radiocommunication Act and the Broadcasting Act imposes limitations on
foreign ownership similar to those found under the Telecommunications Act, by
restricting the number of voting shares of the Company that may be held by
non-Canadians.
It is in the interests of all shareholders that the Company's operating
entities be able to continue to provide wireless telecommunication services
which form a substantial portion of the Company's consolidated business, and
also be able to offer new services made possible by its broadcasting licences
and compete to the fullest extent possible in the provision of television
entertainment services should the Company determine to proceed. For this
reason, the Board has determined that the special rights and restrictions
attaching to the common shares and the non-voting shares should be amended to
ensure that those special rights and restrictions relating to foreign ownership
compliance under the Telecommunications Act attaching to the common shares and
the non-voting shares be extended to ensure similar compliance under both the
Radiocommunication Act and the Broadcasting Act. Given the similarity between
the foreign ownership restrictions under these pieces of legislation currently,
the Company does not expect that the proposed amendments, if passed, would give
rise to any immediate change. Generally speaking, the Company is proposing to
simply extend the existing Telecommunications Act compliance safeguards in the
Articles affecting the special rights and restrictions on common and non-voting
shares to apply also to take into account the Radiocommunication Act and the
Broadcasting Act. Specifically, the Company proposes to amend the Articles in
the following manners:
* by adding to the definitions in the Articles the definitions necessary
for the Radiocommunication Act and the Broadcasting Act;
* to provide that holders of non-voting shares will not have the right to
convert all or part of their non-voting shares into common shares on a one
for one basis and the Company will not have the right to require non-voting
shares who do not make such an election to convert such shares into an
equivalent number of common shares unless all of the Telecommunications
Act, the Radiocommunication Act and the Broadcasting Act have been amended
to remove their foreign ownership restrictions;
* the Company is currently required to give notice to each holder of common
shares before a general meeting of members at which holders of non-voting
shares will be entitled to vote as a class. In such event, holders of
common shares will have the right to convert all or part of their common
shares into non-voting shares on a one for one basis provided and to the
extent that the Company and its subsidiaries remain in compliance with the
foreign ownership provisions of the Telecommunications Act and the
regulations thereunder, the Radiocommunication Act and the regulations
thereunder and the Broadcasting Act and any direction thereunder;
* to extend the restrictions on transfer of the common shares to ensure the
Company's ongoing compliance with the foreign ownership provisions of the
Telecommunications Act and the regulations thereunder, the
Radiocommunication Act and the regulations thereunder and the Broadcasting
Act and the direction thereunder including the right to refuse to transfer
common shares or require sale of common shares. As well, holders of common
shares will have the right, if approved by the Board of Directors of the
Company, to convert common shares into non-voting shares in order that the
Company be in compliance with the foreign ownership provisions of the
Telecommunications Act and the regulations thereunder, the
Radiocommunication Act and the regulations thereunder and the Broadcasting
Act and any direction thereunder.
The Board is of the view that these amendments are in the best interests of all
shareholders. Currently the Company believes that it is in compliance with the
foreign ownership requirements.
The following is the form of the special separate resolution for holders of
common shares and holders of non-voting shares at their respective meetings.
The special resolution must be passed by at least the favourable vote of 3/4 of
the votes cast by each of the holders of common shares and the holders of
non-voting shares, voting separately at the meetings, to approve the said
resolutions.
"BE IT RESOLVED THAT, as a special separate resolution:
1. the Articles of TELUS Corporation (the "Company") be amended as
follows:
(a) by adding the following to "Article 1.1 - Definitions" and
renumbering the definitions contained in Article 1.1 accordingly:
"(2) "Broadcasting Act" means the Broadcasting Act (Canada), as amended
or re-enacted from time to time;
(3) "Broadcasting Direction" means the Direction to the CRTC
(Ineligibility of Non-Canadians) P.C. 1997 - 486 8 April 1997, as
amended from time to time and any replacement direction or regulation
under the Broadcasting Act or any other form of legislative
instrument, with respect thereto;
(7) "Radiocommunication Act" means the Radiocommunication Act (Canada),
as amended or re-enacted from time to time;
(8) "Radiocommunication Regulations" mean the Regulations respecting
Radiocommunications, Radio Authorizations, Exemptions from
Authorizations and the Operation of Radio Apparatus, Radio-
Sensitive Equipment and Interface Causing Equipment, P.C. 1996 -
1679 5 November, 1996, as amended or replaced from time to time,
whether by statute, regulation, direction or by any other form of
legislative instrument, and includes any licences under the
Radiocommunication Act held by entities controlled (as defined in
the foregoing Regulations) by the Company;"
(b) by deleting Article 27.6.2 and replacing it with the following:
"27.6.2 Regulation Conversion Right
If all of the Telecommunications Regulations, the Radiocommunication
Regulations and the Broadcasting Direction are changed so that there
is no restriction on any non-Canadians (as defined in the
Telecommunications Regulations or the Broadcasting Direction, as
applicable) holding Common Shares in the Company and no requirement
that Canadians (as defined in the Radiocommunication Regulations)
hold Common Shares in the Company, a holder of one or more
Non-Voting Shares shall have the right, at his or her option, at any
time after the date of the last to change of the Telecommunications
Regulations, the Radiocommunication Regulations and the Broadcasting
Direction, and prior to the close of business 90 days thereafter
(the "Regulatory Conversion Period") to convert, subject to these
provisions, any one or more of such Non-Voting Shares into Common
Shares on a one for one basis."
(c) by deleting Article 27.6.5 of the Articles and replacing it with
the following:
"27.6.5 Conversion by the Company
If all of the Telecommunications Regulations, the Radiocommunication
Regulations and the Broadcasting Direction are changed so that there
is no restriction on any non-Canadians (as defined in the
Telecommunications Regulations or the Broadcasting Direction, as
applicable) holding Common Shares in the Company and no requirement
that Canadians (as defined in the Radiocommunication Act) hold
Common Shares in the Company and following the Regulatory Conversion
Period there are Non-Voting Shares still outstanding, all holders of
Non-Voting Shares shall be deemed to have exercised their right to
convert the Non-Voting Shares held by them to Common Shares upon
receipt by all of the holders of written notice from the Company
stating that the Company is requiring all holders to convert their
Non-Voting Shares to Common Shares on the date specified in such
notice in the manner specified in this Article 27.6 and the date
specified in the notice shall be the date of conversion. Upon such
deemed conversion, pursuant to this Article 27.6.5, all holders of
Non-Voting Shares shall, as of the date of conversion, be deemed to
be holders of Common Shares to which they are entitled and the
provisions of Article 27.6.3 and 27.6.4 hereof shall apply to the
holders of Non-Voting Shares with respect to the issue and delivery
of certificates for Common Shares in exchange for the Non-Voting
Shares which are deemed to be converted."
(d) by adding the following to Article 27.7.1:
" "Broadcasting Qualified Corporation" means any corporation that is
a "qualified corporation" under the Broadcasting Direction;
"Qualified Parent Corporation" means any corporation that is
qualified under the Broadcasting Direction to be the parent of a
Broadcasting Qualified Corporation;
"Radiocommunications Holding Company" means any corporation that is
a Canadian (as defined in the Radiocommunication Regulations) that
controls (as defined in the Radicommunications Regulations) a person
or entity that holds licences under the Radiocommunication Act ;"
(e) by deleting the definitions "Constrained Class" and "Maximum
Aggregate Holdings" in Article 27.7.1 and replacing them with the
following:
""Constrained Class" means the class of persons each of whom is a
non-Canadian as defined in the Telecommunications Regulations or the
Broadcasting Direction, or is not a Canadian as defined in the
Radiocommunication Regulation;
"Maximum Aggregate Holdings" means the maximum number of Common
Shares that may be owned or controlled by persons in the Constrained
Class in accordance with the Telecommunications Regulations, the
Radiocommunication Regulations or the Broadcasting Direction,
whichever is the lowest, so that, when added to all other voting
shares (as defined in the Telecommunications Regulations, the
Radiocommunication Regulations or the Broadcasting Direction, as the
case may be) owned or controlled by the Constrained Class, the
Company will be and will continue to be a Telecommunications Common
Carrier Holding Company, a Radiocommunications Holding Company and a
Qualified Parent Corporation;"
(f) by adding the following in Article 28.1:
""Broadcasting Qualified Corporation" means any corporation that is
a "qualified corporation under the Broadcasting Direction;
"Radiocommunications Holding Company" means any corporation that is
a Canadian (as defined in the Radiocommunication Regulations) that
controls (as defined in the Radiocommunication Regulations) a person
or entity that holds licences under the Radiocommunication Act;
"Qualified Parent Corporation" means any Corporation that is
qualified under the Broadcasting Direction to be the parent of a
Broadcasting Qualified Corporation;"
(g) by deleting the definitions "Canadian", "non-Canadian" and
"Restricted Percentage" in Article 28.1 and replacing them with the
following:
""Canadian" has the meaning set forth in the Telecommunications
Regulations, the Radiocommunication Regulations or the Broadcasting
Direction;
"non-Canadian" has the meaning set forth in the Telecommunications
Regulations or the Broadcasting Direction, or is a person who is not
a "Canadian" as defined in the Radiocommunication Regulations;
"Restricted Percentage" means 33 1/3% or such other percentage as
may from time to time be prescribed by the Telecommunications
Regulations, the Radiocommunication Regulations or the Broadcasting
Direction, whichever is the lowest percentage, as the percentage of
voting shares which may be beneficially owned and controlled, by
non-Canadians, in order for a corporation to be a qualified
corporation as defined in the Telecommunications Regulations, a
Qualified Parent Corporation anda Radiocommunications Holding
Company, provided that if no such percentage is prescribed, it
shall be deemed to mean 100 per cent;"
(h) by deleting Article 28.2 and replacing it with the following:
"28.2 Incorporation of Provisions of Telecommunications Regulations
The provisions of Sections 3, 4, 15 and 27 of the Telecommunications
Regulations, are deemed to be incorporated in this Article 28. Any
provision of this Article 28 that may be read in a manner that is
inconsistent with the Telecommunications Regulations shall be read
so as to be consistent therewith. If the Telecommunications
Regulations are repealed the foregoing provisions in the form
immediately prior to the repeal shall continue to apply as if the
Telecommunications Regulations had not been repealed for the
purposes for this Article 28, including without limitation, the
purposes of Articles 28.14.4 and 28.17."
(i) by deleting Article 28.7 and replacing it with the following:
28.7 Suspension of Rights
The Company may, by director's determination, suspend all rights of
a shareholder to vote that would otherwise be attached to any voting
shares beneficially owned, or controlled, or considered by this
Article 28 to be beneficially owned, or controlled, by
non-Canadians, in the order as hereinafter provided, so that the
proportion of the voting shares beneficially owned, or controlled,
or considered by the Telecommunications Regulations, the
Radiocommunication Regulations or the Broadcasting Direction to be
beneficially owned, or controlled, by non-Canadians and with respect
to which voting rights are not suspended, is reduced to not more
than the Restricted Percentage of the total issued and outstanding
voting shares of the Company. The voting rights referred to above
shall be suspended in an order inverseto the date of registration in
the manner as provided in Article 28.6."
(j) by deleting Article 28.8(4) and replacing it with the following:
"(4) shall, in addition to any other information which may be
required by the Telecommunications Regulations, the Radiocommunication
Regulations or the Broadcasting Direction, specify in reasonable
detail the nature of the contravention of the non-Canadian share
constraint, the number of voting shares determined to be excess voting
shares and the consequences of the contravention specified in this
Article 28."
(k) by deleting Article 28.19 and replacing with the following:
"28.19 Termination of Application of Article 28
The provisions of this Article 28 shall cease to be binding
on the Company and its shareholders upon the repeal all of the
Telecommunications Regulations, the Radiocommunication
Regulations and the Broadcasting Direction, and shall cease to
be applicable and binding to the extent permitted by all of the
Telecommunications Act, the Radiocommunication Act and the
Broadcasting Act, from time to time."
2. This resolution shall forthwith be deposited at the Company's records
office; and
3. The directors of the Company be and are authorized to revoke this
special separate resolution before it is acted on without further
approval of the shareholders."
Management and the Board recommend that the holders of common shares and the
holders of non-voting shares vote FOR the special separate resolutions
approving the amendments to the Articles as set forth relating to the
Radiocommunication Act and the Broadcasting Act. The persons named in the
enclosed proxy intend to vote FOR the resolutions to be passed by each of the
holders of common shares and non-voting shares unless the holders specifies
otherwise.
3. Election of directors
General
The directors were elected by the holders of common shares on May 5, 2004
except for Ruston E.T. Goepel, who was appointed by the Board of Directors on
December 7, 2004 to fill a casual vacancy left on the Board. On November 30,
2004, Verizon and the Company entered into an agreement pursuant to which the
Company's independent members on the Board of Directors agreed to accommodate
Verizon's desire to divest all of its 20.5 per cent equity investment in the
Company. Such divestiture was effected on December 14, 2004 by a public
secondary offering of Verizon's entire equity interest in the Company.
Concurrently with the divestiture, Verizon and the Company adjusted their
business relationships to reflect changes in their business requirements since
the alliance was first established. As part of that adjustment, the Long Term
Relationship Agreement dated January 31, 1999 made among TELUS and certain
Verizon companies was terminated and Daniel C. Petri and John J. Lack, Verizon
executives, resigned from the Board of Directors of TELUS.
TELUS thanks all of the directors who have resigned or will not be standing for
re-election for their hard work, dedication and contributions to the TELUS
Board.
The Articles of the Company provide for cumulative voting in respect of the
election of directors. The Board has determined that the number of directors
should be set at 11. Accordingly, at the meeting, each holder of common shares
can cast the number of votes for election of directors equal to the number of
common shares held by him or her multiplied by 11, being the number of
directors to be elected. Each holder of common shares may cast all such votes
in favour of one candidate or distribute the votes among the candidates in any
manner. If a holder of common shares votes for more than one candidate without
specifying the distribution of the votes among the candidates, the votes will
be distributed equally among the candidates voted for by that holder of common
shares. If at the meeting, the number of candidates nominated for directors
exceeds the number of directors to be elected, the candidate who receives the
least number of votes will be eliminated until the number of candidates
remaining equals the number of positions to be filled. Unless the holder of
common shares specifies that the proxy be withheld from voting on the election
of all or any of the directors, or specifies how he or she wishes to distribute
the votes among the candidates, the persons named in the accompanying proxy
(the "management proxyholders") intend to vote for the election of all nominees
for directors whose names are set forth in the table on pages 20 to 22, and to
distribute the votes equally among such nominees. If a holder of common shares
wishes to distribute his or her votes in a specific manner among the candidates
for whom the holder of common shares has directed the person designated in the
accompanying proxy to vote, the holder of common shares must do so personally
at the meeting or by another separate paper or Internet proxy, providing clear
instructions on how votes are to be allocated.
Management believes that all nominees are able to serve as a director. If prior
to the meeting any nominee is unable or unwilling to serve, the management
proxyholders, unless directed to withhold the common shares from voting for the
election of directors, reserve the right to vote for another nominee or
nominees in their discretion if additional nominations are made at the meeting.
Unless his or her office is vacated in accordance with applicable law or the
Articles of the Company, each director elected at the meeting will hold office
until the next annual meeting or until his or her successor is elected or
appointed.
The following table provides the name and background information of each
nominee, including present principal occupation, principal occupations and
directorships during the past five years and positions held with the Company.
-------------------------------------------------------------------------------
R.H. (Dick) Auchinleck R.H. (Dick) Auchinleck was employed by Gulf
Calgary, Alberta Canada, an oil and gas company, for 25 years,
Age: 54 retiring in 2001 as President and Chief
Director Since(1): 2003 Executive Officer of Gulf Canada Resources
Shareholdings(2): 3185 / 0 after the sale of the company to Conoco Inc.
DSUs(3): 0 / 10,733 He continues an association with the company
Options(4): 0 / 0 / 0 as a member of the Conoco-Phillips Board.
From 1999 to 2001, he was the President and
Chief Executive Officer of Gulf. He is
currently a member of the Board of Directors
of Enbridge Commercial Trust and has served
in the past five years on the Boards of Sonic
Mobility Inc., Hydro One Inc., Gulf Indonesia
Resources Ltd. and Gulf Canada Resources Ltd.
He received a Bachelor of Applied Science in
Chemical Engineering from the University of
British Columbia. Dick currently serves as a
member of the TELUS Human Resources and
Compensation Committee and the TELUS
Corporate Governance Committee.
-------------------------------------------------------------------------------
A. Charles Baillie A. Charles Baillie served as Chairman and
Toronto, Ontario Chief Executive Officer of the
Age: 65 Toronto-Dominion Bank from 1998 until his
Director Since(1): 2003 retirement in 2003. In addition to his
Shareholdings(2): 0 / 55,200 affiliation with various educational and
DSUs(3): 0 / 9,483 cultural organizations, Charles currently
Options(4): 0 / 0 / 0 serves on the Board of Directors of Dana
Corporation, Ballard Power Systems Inc.,
Canadian National Railway Company and George
Weston Limited. In the past five years, he
has served on the Board of Directors of
Cadillac Fairview Corporation, Quebecor World
Inc., Texaco Inc., the Toronto-Dominion Bank
and TD Waterhouse Inc. Charles is President
of The Art Gallery of Ontario, Chancellor of
Queen's University and Chair of the Canadian
Council of Chief Executives. He holds an
Honours B.A. from Trinity College, University
of Toronto, an M.B.A. from Harvard Business
School and an Honorary Doctorate of Laws
Degree from Queen's University. Charles
currently serves as a member of the TELUS
Audit Committee.
-------------------------------------------------------------------------------
Micheline Bouchard Micheline Bouchard became President and Chief
Montreal, Quebec Executive Officer of ART Advanced Research
Age: 57 Technologies, a biomedical company, in 2002.
Director Since(1): 2004 From 2001 to 2002, she was Corporate
Shareholdings(2):1,713 / 0 Vice-President and General Manager,
DSUs(3): 0 / 7,093 Enterprise Services Organization of Motorola
Options(4): 0 / 0 / 0 Inc. in Chicago and from 1998 to 2000, she
served as Corporate Vice-President and then
President and Chief Executive Officer of
Motorola Canada Inc. Micheline currently
serves as a member of the Conference Board of
Canada and is a past president of the
Canadian Academy of Engineering. She has also
served on the Boards of Directors of Sears
Canada Inc., Alliance Forest Products and
Corby Distilleries. She holds a Bachelor's
degree in Applied Sciences and a Master's
Degree in Applied Sciences from Ecole
Polytechnique, Montreal, Quebec. She also
holds an Honorary Doctorate in Business from
University de Montreal (HEC), an Honorary
Doctorate in Engineering from each of the
University of Waterloo, the University of
Ottawa and Ryerson Polytechnic University and
an Honorary Doctorate of Laws from McMaster
University. Micheline was appointed to the
Order of Canada in 1995. Micheline currently
serves as a member of the TELUS Audit
Committee.
-------------------------------------------------------------------------------
R. John Butler R. John Butler, Q.C. is counsel to Bryan &
Edmonton, Alberta Company, a law firm. John served on the Board
Age: 61 of ED TEL (Edmonton Telephones) prior to its
Director Since(1): 1995 acquisition by TELUS Corporation and on the
Shareholdings(2): 984 / 4,263 Board of TELUS Corporation prior to its 1999
DSUs(3): 0 / 10,733 merger with BC TELECOM Inc. He is a member of
Options(4): 0/ 3,050 / 2,700 the Board of Directors of Trans Global
Insurance Company, Trans Global Life
Insurance Company, a trustee of the Liquor
Stores Income Fund and also Chair of the
Edmonton Eskimos Football Club and a member
of the Board of Governors of the Canadian
Football League. John holds a Bachelor of
Arts and a Bachelor of Laws from the
University of Alberta. He currently is Chair
of the TELUS Pension Committee and a member
of the TELUS Corporate Governance Committee.
------------------------------------------------------------------------------
Brian A. Canfield Brian A. Canfield is the Chair of TELUS
Point Roberts, Washington Corporation. His career with TELUS spans
Age: 66 nearly 49 years, including four years as
Director Since (1): 1993 Chair and Chief Executive Officer of BC
Shareholdings(2): 9,718 / 5,509 TELECOM Inc., three years as President and
DSUs(3): 4,506 / 18,400 Chief Executive Officer and one year as
Options(4): 80,000 / 74,000/ President and Chief Operating Officer. He
5,400 also served as President and Chief Executive
Officer of TELUS Corporation on an interim
basis from September 1999 to July 2000, after
which he resumed his role as Chair. He is a
member of the Boards of Directors of Terasen
Inc. and Suncor Energy Inc. and is a member
of the Canadian Public Accountability Board.
Brian has also served as a director of the
Toronto Stock Exchange. In 1997, Brian was
named an Honorary Doctor of Technology by the
British Columbia Institute of Technology, and
in 1998 was appointed to the Order of British
Columbia. Brian currently serves as a member
of the TELUS Pension Committee.
------------------------------------------------------------------------------
Darren Entwistle Darren Entwistle assumed the position of
Vancouver, British Columbia President and Chief Executive Officer of
Age: 42 TELUS Corporation on July 10, 2000. He began
Director Since(1): 2000 his career at Bell Canada in 1988 and joined
Shareholdings(2):22,593 / Cable & Wireless plc (C&W) in 1993 in the UK,
106,316 holding key positions in finance and
Options(4): 150,000 / 490,529 operations and becoming President, Global
RSUs(5) : 230,867 Services, UK & Ireland prior to joining
TELUS. Darren holds a Bachelor of Economics
(Honours) from Concordia University in
Montreal, an MBA from McGill University and a
Diploma in Network Engineering from the
University of Toronto. He is a member of the
Board of Directors of TD Bank Financial
Group, the Vancouver Symphony Orchestra and
the Leading Edge Endowment Fund. He is also
on the Board of Governors of the
International Institute of Telecommunications
and is the Chair of the Royal Conservatory of
Music's Capital Campaign.
-------------------------------------------------------------------------------
Ruston E.T. Goepel Ruston E.T. Goepel is the Senior Vice
Vancouver, British Columbia President of Raymond James Financial Ltd. He
Age: 62 is chairman of both the Business Council of
Director Since(1): 2004 BC and Yellow Point Equity Partners, and he
Shareholdings(2): 0/12,500 serves as director of several organizations
DSUs(3): 0/7,020 including the Vancouver 2010 Olympic
Options(4):0 / 0 / 0 Organizing Committee, The Vancouver Airport
Authority, Spur Ventures Inc., Amerigo
Resources Ltd., and Premium Brands Ltd. He is
a past director of Duke Seabridge Ltd., Smith
Tractor Inc. and Coast Tractor Ltd. Rusty is
also a member of both Simon Fraser
University's and the Canadian Olympic
Association's pension advisory committees,
and is a recipient of the Queen's Jubilee
Medal for Business Leadership and Community
Services. Rusty currently serves on TELUS'
Audit Committee.
-------------------------------------------------------------------------------
John S. Lacey John S. Lacey is the Chairman of the Board of
Don Mills, Ontario Directors of Alderwoods Group, Inc., an
Age: 61 organization operating funeral homes and
Director Since(1): 2000 cemeteries within North America. From January
Shareholdings(2):12,108 / 651 1999 to January 2002, John was the Chairman
DSUs(3): 0 / 10,733 of the Board of Directors of Loewen Group. He
Options(4):0 / 0 / 2,700 is an Advisory Board Member of Tricap, a
director of Cancer Care Ontario, Canadian
Tire Corporation, Limited, Western Forest
Products Ltd. and the Canadian Imperial Bank
of Commerce and is currently the Chairman of
Doncaster Racing Inc. and Doncaster
Consolidated Ltd. In the past five years, he
also served on the Board of Directors of the
Liquor Control Board of Ontario and Clarica,
Inc. John currently is the Chair of the TELUS
Human Resources and Compensation Committee
and a member of the TELUS Corporate
Governance Committee.
-------------------------------------------------------------------------------
Brian F. MacNeill Brian F. MacNeill retired as Chief Executive
Calgary, Alberta Officer of Enbridge Inc. on January 1, 2001.
Age: 65 Prior to that he was Executive Vice President
Director Since(1): 2001 and Chief Operating Officer of Enbridge Inc.
Shareholdings(2): 1,000 / 5,269 and he has served on the Board of Enbridge
DSUs(3): 0 / 22,835 Inc. He is currently Chairman of Petro-Canada
Options(4): 0 / 0 / 2,700 and Dofasco Inc. and a director of TD Bank
Financial Group, West Fraser Timber Co. Ltd.,
Veritas DGC Inc., Legacy Hotels REIT and
Sears Canada Inc. In the past five years,
Brian has served on the Board of Directors of
Western Oil Sands Inc. Brian is a chartered
accountant and is a Fellow of the Chartered
Accountants of Alberta. He also holds a
Bachelor of Commerce from Montana State
University. He currently is the Chair of the
TELUS Audit Committee.
-------------------------------------------------------------------------------
Ronald P. Triffo Ronald P. Triffo is the Chairman of Stantec
Edmonton, Alberta Inc., an engineering and international
Age: 65 professional services company where he served
Director Since(1): 1995 in various executive management positions for
Shareholdings(2): 1,567 / 522 more than 20 years. He is a past President of
DSUs(3): 6,454 / 23,858 the Consulting Engineers of Alberta and the
Options(4): 0 / 4,100 / 2,700 Association of Consulting Engineers of
Canada. He served as a director and board
chairman of ED TEL prior to its acquisition
by TELUS Corporation. He is currently
Chairman and director of ATB Financial. Ron
is the private-sector Co-Chair of the Alberta
Economic Development Authority. He also
serves on the Board of the Alberta Ingenuity
Fund and the Board of Governors of Junior
Achievement of Northern Alberta. Ron holds a
Bachelor of Applied Science from the
University of Manitoba and an MSc
(Engineering) from the University of
Illinois. Ron currently is the Chair of the
TELUS Corporate Governance Committee and a
member of the TELUS Pension Committee.
-------------------------------------------------------------------------------
Donald P. Woodley Donald P. Woodley is the President of The
Mono Township, Ontario Fifth Line Enterprise, a privately held
Age: 59 company providing strategic advisory services
Director Since(1): 1998 and executive coaching to the Canadian IT
Shareholdings(2): 5,168 / 437 industry. He currently serves on the Board of
DSUs(3): 0 / 10,733 Directors of DataMirror Corporation, Onx
Options(4): 0 / 3,050 / 2,700 Enterprise Solutions Inc. and Steam Whistle
Brewing Inc. and is a past director of Delano
Technology and Star Data Systems. Don is a
member and past Chair of the Board of
Governors of ITAC (Information Technology
Association of Canada) and is immediate past
Chair of the Board of Governors of The
Stratford Festival of Canada, and a member of
the Board of Directors of The Hospital for
Sick Children Foundation. He holds a Bachelor
of Commerce from University of Saskatchewan
and an MBA from the Richard Ivey School of
Business at the University of Western
Ontario. Don currently serves as a member of
the TELUS Human Resources and Compensation
Committee and the TELUS Pension Committee.
-------------------------------------------------------------------------------
(1) The Company or any of its predecessors.
(2) Common shares/non-voting shares, as at March 1, 2005.
(3) Deferred share units for common shares/deferred share units for non-voting
shares, as at March 1, 2005.
(4) Options acquired pre-merger, for 75 per cent common shares and 25 per cent
non-voting shares when exercised/options for common shares/options for non-
voting shares, as at March 1, 2005.
(5) Darren Entwistle also holds restricted stock units,, each equal to the value
of one non-voting share as determined under the applicable plan.
Board and committee meetings held and attendance by directors for the year ended
December 31, 2004
Number of Board and Attendance of directors
committee meetings held
Board Committee
Director meetings meetings
attended attended
---------------------------------------------------------------------------------------------------------------------------------
Board of Directors: [9]
(a) Audit Committee: [5]
(b) Corporate Governance Brian A. Canfield (Chair, d) (1) 9 of 9 5 of 5
Committee: [5] R.H. (Dick) Auchinleck(b, c) (2) 8 of 9 7 of 7
(c) Human Resources and A. Charles Baillie (a) 9 of 9 5 of 5
Compensation Committee: [5]Micheline Bouchard(a) 9 of 9 4 of 4
(d) Pension Committee: [5] R. John Butler (b, d-Chair) 9 of 9 10 of 10
Peter D. Charbonneau(3) 3 of 3 3 of 3
Darren Entwistle (4) 9 of 9 --
Ruston E.T. Goepel(a) (5) 1 of 1 --
John S. Lacey (b, c-Chair) 8 of 9 10 of 10
John J. Lack (6) 7 of 9 1 of 1
Brian F. MacNeill (a-Chair) 9 of 9 5 of 5
Daniel C. Petri (6) 7 of 9 2 of 2
Ronald P. Triffo (b-Chair, d) 9 of 9 10 of 10
Donald P. Woodley (c, d) 9 of 9 10 of 10
(1) In addition to Pension Committee meetings, Brian A. Canfield regularly
attended meetings of other committees.
(2) R.H. (Dick) Auchinleck served on the Audit Committee until February 10,
2004. He was appointed to the Corporate Governance Committee and the Human
Resources and Compensation Committee on February 11, 2004.
(3) Peter D. Charbonneau did not stand for re-election at the Company's annual
general meeting on May 5, 2004.
(4) The President and CEO does not serve on any committee of the Board, but
regularly attended committee meetings.
(5) Ruston E.T. Goepel was appointed to the Board and Audit Committee on
December 7, 2004.
(6) John J. Lack and Daniel C. Petri resigned from the Board on December 14,
2004. Prior to their resignation, they did not attend two Board meetings
wherein the Board discussed the then current negotiations with Verizon
Communications Inc. regarding the sale by Verizon of its interest in TELUS.
As of February 11, 2004, in support of the Board's determination that only
independent directors sit on certain board committees, each of them
resigned from the committees of the Board of which they were members, due
to the Board's
determination that they were not "independent" within the meaning of applicable
securities law requirements.
Cease trade orders, bankruptcies, penalties or sanctions
Other than as disclosed, for the ten years ended December 31, 2004, TELUS is
not aware that any current director or officer of TELUS had been a director or
officer of another issuer which, while that person was acting in that
capacity, became bankrupt or made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangements or compromises with creditors or had a receiver, receiver manager
or trustee appointed to hold its assets. B.A. Canfield was a director of Royal
Trust Co. in 1994 when it entered into a plan of arrangement with creditors.
In December 1998, J.S. Lacey was asked by a group of shareholders to lead the
Loewen restructuring, as Chairman of the Board, a position he held at the time
of Loewen's filing under Chapter 11 of the U.S. Bankruptcy Code and the
Companies' Creditors Arrangement Act (Canada).
For the ten years ended December 31, 2004, TELUS is not aware that any current
director or officer of TELUS had been a director or officer of another issuer
which, while that person was acting in that capacity, was the subject of a
cease trade or similar order or was subject to an event that resulted, after
the director or executive officer ceased to be a director or executive
officer, of the company being the subject of a cease trade or similar order
that denied the company relevant access to any exemption under securities
legislation for a period of more than 30 consecutive days.
4. Appointment of auditors
Arthur Andersen LLP was appointed auditors of the Company on May 1, 2002 at
the annual and special meeting of the Company. On June 3, 2002, Arthur
Andersen LLP ceased practising public accounting in Canada, and the partners
and staff of Arthur Andersen LLP in Canada joined Deloitte & Touche LLP. Upon
the recommendation of the Audit Committee, the Board of Directors appointed
Deloitte & Touche LLP to fill the vacancy. Deloitte & Touche LLP was
re-appointed auditors of the Company on May 5, 2004 at the annual general
meeting of the Company.
Upon the recommendation of the Audit Committee, holders of common shares will
be asked at the meeting to approve the appointment of Deloitte & Touche LLP as
auditors. This re-appointment will become effective only if approved by at
least a majority of the votes cast by the holders of common shares present in
person or by proxy, entitled to vote at the meeting.
The management proxyholders intend to vote for the appointment of Deloitte &
Touche LLP, Chartered Accountants, as auditors of the Company, unless the
holder of common shares specifies that his or her proxy be withheld from
voting.
Summary of billings and services by the external auditors
The two tables below set out the services provided by the Company's external
auditors. This extensive disclosure complies with the United States Securities
and Exchange Commission ("SEC") rules on auditor independence, and the
services have been separated into four categories as mandated by the SEC. This
information is also contained in the Company's 2004 Annual Information Form.
The following table is a summary of billing by Deloitte & Touche, LLP, as
auditors of TELUS, during the period from January 1, 2004 to December 31,
2004:
Summary of billings for TELUS for the period January 1 to December 31, 2004
Deloitte & Deloitte Total
Type of work Touche Consulting fees %
---------------------------------------------------------------------------------------------------------------------------------
Audit fees 2,102,260 -- 2,102,260 79.5
Audit-related fees 313,325 -- 313,325 11.8
Tax fees 231,278 -- 231,278 8.7
All other fees -- -- --
---------------------------------------------------------------------------------------------------------------------------------
Total 2,646,863 -- 2,646,863 100.0
=================================================================================================================================
The following table is a summary of billing by Deloitte & Touche, LLP, as
auditors of TELUS, during the period from January 1, 2003 to December 31,
2003:
Summary of billings for TELUS for the period January 1 to December 31, 2003
Deloitte & Deloitte Total
Type of work Touche Consulting fees %
---------------------------------------------------------------------------------------------------------------------------------
Audit fees $1,849,595 - $1,849,595 35.4
Audit-related fees 304,298 - 304,298 5.8
Tax fees 1,033,204 - 1,033,204 19.8
All other fees 13,930 2,019,960 (1) 2,033,890 39.0
---------------------------------------------------------------------------------------------------------------------------------
Total $3,201,027 $2,019,960 $5,220,987 100.0
=================================================================================================================================
(1) Fees to Deloitte Consulting were paid pursuant to contracts entered into
before Deloitte and Touche LLP became the auditors of the Company in 2002, and
were for systems integration services.
5. Amendment to TELUS Management Share Option Plan
Background
In 1999, following the merger of BC TELECOM Inc. ("BC TELECOM") and
predecessor Alberta-based TELUS Corporation, the Company adopted the share
option and compensation plan (the "Original Plan"). The Original Plan provided
for the grant of options to purchase common shares of the Company and provided
for the grant of options to designated employees and directors, and the
payment of compensation to directors through the issue of deferred share units
to directors. In 2001 the number of employees who were eligible to be granted
options was expanded. The Original Plan was also amended to provide for the
issuance of non-voting shares, and the issue of common shares was discontinued
going forward. The Board determined in 2003 that no further options would be
issued to directors under the Original Plan. On February 16, 2005 the Original
Plan was amended by the Board of Directors by splitting the Original Plan into
the Directors Share Option and Compensation Plan and the TELUS Management
Share Option Plan. No further shares of the Company are being issued under the
Directors Share Option and Compensation Plan except pursuant to options
outstanding. See "Securities Authorized for Issuance under Equity Compensation
Plans - Directors Share Option and Compensation Plan" for details of this
plan. Accordingly, no amendments were made in the plans which would require
shareholder approval in accordance with the rules and policies of the Toronto
Stock Exchange ("TSX") and this division has received the approval of the TSX.
Description of TELUS Management Share Option Plan
The purpose of the TELUS Management Share Option Plan (the "Management Plan")
is to strengthen retention of key management employees, to align their
interests with those of shareholders and to provide incentive compensation
based on the value of non-voting shares. As at March 1, 2005, there are
options outstanding under the Management Plan to purchase 2,220,710 common
shares and 10,095,232 non-voting shares representing 3.5 per cent of the
issued and outstanding equity shares of the Company. Of these options
outstanding, 936,645 common shares and 2,280,567 non-voting shares or 25.7 per
cent of the total number of options outstanding under the plans are held by
insiders (as that term is defined under applicable securities law).
Options are granted under the Management Plan to eligible employees as
determined by the Human Resources and Compensation Committee (the
"Compensation Committee"). Eligible employees are generally senior managers or
key management employees and include approximately 2,800 employees of the
Company and its subsidiaries. The Compensation Committee also determines the
total number of options to be granted to participants. These decisions of the
Compensation Committee are subject to approval by the Board of Directors of
the Company. The Management Plan provides that the number of non-voting shares
to be optioned to any participant under the Management Plan, together with any
other equity compensation plan for employees, cannot exceed five per cent of
the outstanding equity shares. In addition, a majority of the options granted
under the Management Plan cannot be granted to insiders and insiders are not
permitted to hold options under the Management Plan together with options
under any other equity compensation plans of the Company, exceeds 10 per cent
of the Company's issued and outstanding shares.
Under the Management Plan, options may be issued with vesting provisions as
determined at the time of grant and if not determined, the plan provides that
options vest on the third anniversary of the date of grant. The strike price
under these options, is the weighted average trading price of the non-voting
shares (or common shares for options granted prior to 2001) on the last
business day preceding the date of grant. The expiry date for options granted
under the Management Plan can be any time up to 10 years from the date of
grant. Currently options are being granted with an expiry date of seven years
from the date of grant. Options cannot be transferred or assigned by a
participant.
Options expire under the Management Plan on the earliest of (i) the day of
voluntary termination of employment by a participant (other than termination
upon normal retirement or by reason of disability), unless otherwise extended
by the Compensation Committee, (ii) 90 days after termination by the Company
or a subsidiary of employment other than for just case, unless otherwise
determined by the Compensation Committee, (iii) termination of employment of
the participant for just cause; (iv) 12 months following the death of a
participant for options vested and that vest within that period, or (v) the
expiry date of the option.
For certain options outstanding on January 1, 2001, the Management Plan
permits the participant to elect to receive in cash the difference between the
market price of the common shares exercised less the exercise price. The
Company may override the election and require that the common shares be
purchased.
The Board of Directors of the Company, subject to any regulatory or required
shareholder approval, has the power under the Management Plan to amend or
terminate the Management Plan at any time, provided, however, that any such
amendment or termination shall not decrease the entitlements of a participant
which have accrued prior to the date of such amendment or termination. This
power of amendment includes the right to amend any vesting requirements of any
option and the right to extend the time at which an option expires by reason
of the happening of an event, provided the extension is not beyond the
original expiry date. Shareholder approval is required for any amendment to
the Management Plan which is considered material including increasing the
reservation of shares, provided for cashless exercise or stock settlement if
the shares underlying the options are added back to the reservation, any
change in the exercise price of outstanding options, permitting the Company to
provide financial assistance or increasing participation by insiders.
Increase in shares reserved for issue under the Management Plan
Management believes that the granting of options to employees is an important
part of its compensation program, as a long-term incentive, to retain the
services of existing key and high potential employees, and to attract
outstanding personnel in a competitive employment market. Options align the
interests of employees with shareholders' interests and allow employees to
increase their financial interest in the Company. All option grants under the
Management Plan since 2003 are cliff-vesting three years after the grant date.
On February 16, 2005 the Board of Directors approved the reservation of
6,000,000 additional non-voting shares for issue pursuant to options to be
granted to eligible employees of the Company or its subsidiaries under the
Management Plan. As at March 1, 2005, there are 14,100,319 non-voting shares
reserved for issuance under the Management Plan and there are 10,095,232
options outstanding.
The purpose of the additional reservation is to ensure that there remains a
sufficient number of non-voting shares reserved for issuance under the
Management Plan to enable the Company to continue its current practice of
granting options to executive and key management employees as a long-term
incentive and retention feature that reinforces the interest of such key
personnel with those of shareholders.
The total shares reserved for issue pursuant to options granted under the
Company's continuing equity-based compensation programs will not exceed 10 per
cent of TELUS total issued and outstanding equity shares as at March 1, 2005
and would not exceed 10 per cent of TELUS total issued and outstanding equity
shares assuming completion of TELUS' normal course issuer bid for up to a
total of 25.5 million common and non-voting shares. As at March 1, 2005, the
number of equity shares currently the subject of options was 12,315,942 and
equity shares reserved for further options was 4,005,087.
This additional reservation has been approved by the TSX, subject to
shareholder approval and must be approved by a majority of votes cast by
holders of common shares at the meeting. Accordingly, shareholders will be
asked at the meeting to consider and, if thought advisable, to approve the
following resolution approving the amendment to the Management Plan. Approval
of the resolution by holders of non-voting shares is not required.
"BE IT RESOLVED THAT, as an ordinary resolution, with or without
amendment:
1. the TELUS Management Share Option Plan of the Company be
amended to increase the maximum number of non-voting shares
reserved for issuance pursuant to options granted under the plan
by 6,000,000 non-voting shares; and
2. any director or officer of the Company be and is authorized to
perform such further acts and execute such further documentation
as may be necessary or desirable to give effect to the
foregoing."
Management and the Board recommend that holders of common shares vote
FOR increasing the number of non-voting shares reserved for issue under the
Management Plan. The persons named in the enclosed proxy intend to vote FOR
this motion unless the holder of common shares specifies otherwise.
Amendment to Management Plan to permit stock settlement
On February 16, 2005, the Board of Directors approved an amendment to the
Management Plan to permit a stock settlement option, subject to approval of
holders of common shares.
As amended, the Management Plan provides that at the time that options for
shares are exercised, the Company may elect to have the options exchanged for
a right of the optionholder to receive a number of non-voting shares or common
shares, as the case may be, in settlement for the options so exchanged. The
number of non-voting shares or common shares to be issued to the optionholder
will be the number obtained by (i) multiplying the number of options exercised
by (ii) the number obtained when the difference between the current market
price of applicable shares under the options at the time of exercise and the
strike price for the options exercised is divided by the current market price
of the applicable shares. The options so exchanged are cancelled, and the
number of non-voting shares or common shares determined by the difference
between the number of options exchanged and the number of non-voting shares
issued in that exchange shall be added back to the reservation of non-voting
shares or common shares, as the case may be, under the Management Plan. The
stock settlement feature being proposed may apply to all options, including
those granted prior to the date of the amendment. If the stock settlement
feature is not approved, the Company anticipates that the reservation of an
additional 6,000,000 non-voting shares for option grants is expected to permit
the Company to continue its present option grant program to at least 2009. If
the stock settlement amendment is approved, the Company anticipates that the
reservation resulting therefrom should permit it to continue its present
option grant program for a further period of time.
The amendments to the Management Plan are available upon request from TELUS'
Corporate Secretary at 21 - 3777 Kingsway, Burnaby, British Columbia V5H 3Z7.
The Company recognizes the need to strike the proper balance between having a
long-term incentive program for employees to align their interests with those
of shareholders, and addressing shareholder concerns about excessive dilution
caused by the continual granting and exercising of options under a stock
option program. To better advance both goals the Company is proposing the
stock settlement option. The stock settlement option reduces the number of
shares issued on exercise of options. The Company makes the election as to
whether or not the stock settlement procedures will be used, thereby managing
the dilution. The difference between the non voting shares that underlie
options surrendered for the stock settlement and the number of non voting
shares issued under the option exercise become available for future option
grants. This will reduce the need for further increases in the number of
non-voting shares reserved for option grants.
The TSX has approved this amendment, subject to the Company obtaining
shareholder approval. Accordingly, shareholders will be asked at the meeting
to consider and, if thought advisable, to approve a resolution, as set forth
below, approving the amendment to the Management Plan. The resolution must be
approved by a majority of the votes cast by holders of common shares who vote
in respect of the resolution. Approval of the resolution by holders of
non-voting shares is not required. The following is the resolution to be
proposed at the meeting:
"BE IT RESOLVED THAT, as an ordinary resolution, with or without
amendment:
1. the amendment to the TELUS Management Option Plan to include a
stock settlement feature in the plan in the manner described in
the information circular of the Company dated March 21, 2005 is
hereby approved; and
2. any director or officer of the Company be and is authorized to
perform such acts and execute such further documentation as may
be necessary or advisable to give effect to the foregoing."
Management and the Board recommend that holders of common shares vote FOR
the amendment to the Management Plan to provide for a stock settlement option.
The persons named in the enclosed Proxy intend to vote FOR this motion unless
otherwise instructed.
6. Amendment to and reconfirmation and approval of shareholder rights plan
Holders of common shares and non-voting shares are being asked at the meeting
to approve proposed amendments to, and to reconfirm and approve, the Company's
shareholder rights plan, as amended and restated.
Background
The Company first adopted a shareholder rights plan in March 2000. In May 2000,
holders of the common and non-voting shares ratified and approved the Company's
shareholder rights plan. Holders of the common and non-voting shares
subsequently reconfirmed an amended and restated version of the shareholder
rights plan in April, 2003 (the "Current Rights Plan"). The purpose of the
Current Rights Plan, which takes the form of an agreement between the Company
and the rights agent, Computershare Trust Company of Canada, is to provide
holders of the shares sufficient time to assess a takeover bid for the Company,
if such bid were to be made, and to provide the Board of Directors of the
Company with the opportunity to explore and develop alternatives to any bid
that are in the best interests of the Company and its shareholders.
The Current Rights Plan is only triggered if a party becomes the beneficial
owner of more than 34.2 per cent of the outstanding Voting shares. The
threshold was set at 34.2 per cent in order to respect the terms of the Long
Term Relationship Agreement that was entered into between GTE Corporation
("GTE"), Anglo-Canadian Telephone Company ("Anglo-Canadian) and the Company at
the time of the merger between BC TELECOM and predecessor Alberta-based TELUS
Corporation. In particular, that agreement provided that Anglo-Canadian was
entitled to increase its approximate 26.7 per cent interest in the Company by
no more than 7.5 per cent without prior approval of a majority of the Company's
independent directors (i.e. directors who were neither GTE designees nor
members of Company management).
As a result of the sale by Verizon (the successor to GTE) of its entire equity
interest in TELUS in December 2004 and the concurrent termination of the
Long-Term Relationship Agreement, there is no longer a justification for
maintaining this 34.2 per cent threshold. The Board has therefore concluded
that it is appropriate to amend the Current Rights Plan to bring the threshold
at which the plan is triggered in line with that found in virtually every other
rights plan in place in Canada. The Board has also concluded that it is
appropriate at this time to make other minor amendments in order to reflect
developments in shareholder rights plans since the Current Rights Plan was
ratified by the holders of shares in April, 2003.
Many public companies in Canada continue to have shareholder rights plans in
effect. While securities legislation in Canada now typically requires a
takeover bid to be open for at least 35 days, the Board of Directors continues
to be of the view that this is not sufficient time to assess a takeover bid,
were such a bid to be made, and if the Board deems appropriate, to explore and
develop alternatives that are in the best interests of the Company and its
shareholders.
The Current Rights Plan is not intended to prevent a takeover bid or to deter
offers for the shares. It is designed to encourage any bidder to provide
shareholders with equal treatment in a takeover and full value for their
investment.
Board review
The Board of Directors, as part of its most recent review and analysis of the
continuation of the Current Rights Plan, considered matters including: (i)
developments in shareholder rights plans since the Current Rights Plan was
ratified by the holders of common and non-voting shares in April 2003, (ii) the
terms and conditions of rights plans recently adopted by other Canadian
companies, (iii) recent experience involving rights plans in the context of
takeover bids, and (iv) the commentary of the investment community on these
plans. Based upon this review, the Board of Directors is proposing the approval
of minor amendments to the Current Rights Plan in order to ensure both that the
Current Rights Plan remains consistent with the latest generation of Canadian
rights plans and that it addresses the concerns of investment industry
commentators on a basis which is consistent with the objectives of these
agreements. The proposed amended and restated version of the Current Rights
Plan (the "Amended and Restated Rights Plan") is not being proposed in response
to, or in anticipation of, an acquisition or takeover bid.
It is not the intention of the Board, in proposing that the Amended and
Restated Rights Plan be reconfirmed to secure the continuance in office of the
existing members of the Board or to avoid an acquisition of control of the
Company in a transaction that is fair and in the best interests of the
shareholders. The rights of shareholders under existing law to seek a change in
management of the Company or to influence or promote action of management in a
particular manner will not be affected by the Amended and Restated Rights Plan.
The reconfirmation of the Amended and Restated Rights Plan does not affect the
duty of the Board of Directors to act honestly and in good faith with a view to
the best interests of the Company and its shareholders.
Amendments to Current Rights Plan
The proposed amendments to the Current Rights Plan are limited in number and
effect. The main amendment is to the definition of "Acquiring Person". The
definition currently provides that any person who is the beneficial owner of
more than 34.2 per cent of the outstanding Voting Shares is deemed to be an
Acquiring Person. The amended definition of "Acquiring Person" will reduce that
threshold to 20 per cent, which is the level that securities laws in Canada
deem to constitute a takeover bid and that most rights plans in Canada treat as
the appropriate threshold for purposes of determining whether someone is an
Acquiring Person.
The only other material amendment being proposed is a change to the definition
of Beneficial Ownership to add a provision that is designed to make clear that
a manager of a mutual fund will not trigger the plan by virtue of holding
Voting Shares (as defined in the Current Rights Plan) in excess of 20 per cent
of the outstanding Voting Shares. As with other exemptions that are found in
the Current Rights Plan and that exempt other institutional investors who hold
Voting Shares as passive investors, the exemption for the manager of a mutual
fund is subject to the condition that that manager and the relevant mutual fund
have not made a takeover bid for TELUS.
Because reconfirmation of the amended and restated plan is being sought at this
annual meeting rather than in 2006 (as is currently provided for in the plan),
the plan is also being amended in order to ensure that holders of common and
non-voting shares are given an opportunity to reconfirm the plan in three
years. It is now customary in Canada for shareholders to be given an
opportunity to reconfirm a rights plan three years after it was last considered
by shareholders.
Summary of the rights plan
The following is a summary of the principal terms of the Amended and Restated
Rights Plan, which is qualified in its entirety by reference to the text of the
Amended and Restated Rights Plan. Copies of the Amended and Restated Rights
Plan are available from TELUS' Corporate Secretary, 21 - 3777 Kingsway,
Burnaby, B.C. V5H 3Z7.
Effective date
The effective date of the rights plan is March 20, 2000 (the "Effective Date").
Term
Ten years, subject to reconfirmation at the meeting and eighth annual meeting
following the adoption of the Current Rights Plan.
Issue of rights
On the Effective Date, one Series A right (a "Series A Right") was issued and
attached to each common share outstanding at one minute after the Effective
Date (the "Record Time") and will attach to each common share issued after the
Record Time and prior to the earlier of the Separation Time (as hereinafter
defined) and the expiration of the Agreement (the "Expiration Time").
Additionally, on the Effective Date, one Series B right (a "Series B Right")
was issued and attached to each Non-Voting Share outstanding at the Record Time
and will attach to each non-voting share issued after the Record Time and prior
to the earlier of the Separation Time (hereinafter defined) and the Expiration
Time.
Rights exercise privilege
The Series A Rights and the Series B Rights will separate from the common
shares and non-voting shares and will be exercisable eight trading days (the
"Separation Time") after a person has acquired, or commences a takeover bid
permitted by the rights plan (a "Permitted Bid"). The acquisition by any person
(an "Acquiring Person") of more than 20 per cent of the Voting Shares, other
than by way of a Permitted Bid, is referred to as "Flip-in Event." Any Rights
held by an Acquiring Person will become void upon the occurrence of a Flip-in
Event. Eight trading days after the occurrence of the Flip-in Event, each
Series A Right (other than those held by the Acquiring Person), will permit the
purchase of $320 worth of common shares for $160 (i.e. at a 50 per cent
discount) and each Series B Right (other than those held by Acquiring Person)
will permit the purchase of $320 worth of non-voting shares for $160 (i.e. at a
50 per cent discount).
The issue of the Rights is not initially dilutive. However, upon a Flip-in
Event occurring and the Rights separating from the Shares (as defined in the
Current Rights Plan), reported earnings per share on a fully diluted or
non-diluted basis may be affected. Holders of Rights not exercising their
Rights upon the occurrence of a Flip-in Event may suffer substantial dilution.
Certificates and transferability
Prior to the Separation Time, the Rights will be evidenced by a legend
imprinted on certificates for common shares and non-voting shares issued from
and after the Effective Date and will not be transferable separately from such
Shares. From and after the Separation Time, the Rights will be evidenced by
Rights certificates which will be transferable and traded separately from the
Shares.
Permitted bid requirements
The requirements for a Permitted Bid include the following:
(i) the takeover bid must be made by way of a takeover bid circular;
(ii) the takeover bid must be made to all holders of Voting Shares;
(iii) the takeover bid must be outstanding for a minimum period
of 60 days and Voting Shares tendered pursuant to the takeover
bid may not be taken up prior to the expiry of the 60 day period
and only at such time if more that 50 per cent of the Voting
Shares held by shareholders other than the bidder, its affiliates
and persons acting jointly or in concert (the "Independent
Shareholders") have been tendered to the takeover bid and not
withdrawn;
(iv) the Voting Shares deposited pursuant to the takeover bid
may be withdrawn until taken up and paid for; and
(v) if more than 50 per cent of the Voting Shares held by
Independent Shareholders are tendered to the takeover bid within
the 60 day period, the bidder must make a public announcement of
that fact and the takeover bid must remain open for deposits of
Voting Shares for an additional 10 business days from the date of
such public announcement.
The Shareholder Rights Plan allows for a competing Permitted Bid (a "Competing
Permitted Bid") to be made while a Permitted Bid is in existence. A Competing
Permitted Bid must satisfy all the requirements of a Permitted Bid except that
it may expire on the same date as the Permitted Bid, subject to the statutory
requirement that it be outstanding for a minimum period of 35 days.
Waiver and redemption
The Board may, prior to a Flip-in Event, waive the dilutive effects of the
rights plan in respect of a particular Flip-in Event resulting from a takeover
bid made by way of a takeover bid circular to all holders of Voting Shares, in
which event such waiver would be deemed also to be a waiver in respect of any
other Flip-in Event occurring under a takeover bid made by way of takeover bid
circular to all holders of Voting Shares. The Board of Directors may also waive
the rights plan in respect of a particular Flip-in Event that has occurred
through inadvertence, provided that the Acquiring Person that inadvertently
triggered such Flip-in Event reduces its beneficial holdings to 20 per cent or
less of the outstanding Voting Shares within 14 days or such other period as
may be specified by the Board. With the majority consent of holders of Shares
or Rights holders at any time prior to the occurrence of a Flip-in Event, the
Board of Directors may redeem all, but not less than all, of the outstanding
Rights at a price of $0.0001 each.
Exemptions for investment advisors
Investment advisors (for client accounts), managers of mutual funds, trust
companies (acting in their capacities as trustees and administrators),
statutory bodies managing investment funds (for employee benefit plans, pension
plans, insurance plans or various public bodies), administrators or trustees of
registered pension funds, plans or related trusts and Crown agents or agencies
acquiring greater than 20 per cent of the Voting Shares are exempted from
triggering a Flip-in Event, provided that they are not making, or are not part
of a group making, a takeover bid.
In order to be effective, the resolution to be voted on will require the
approval of a majority of votes cast by holders of common shares and non-voting
shares, voting together, who vote in respect of the resolution at the meeting.
The text of the proposed resolution is as follows:
"BE IT RESOLVED THAT the continued existence of the rights plan as amended and
restated (the "Amended and Restated Rights Agreement"), and the Rights therein,
be and are hereby, approved and the Amended and Restated Rights Agreement is
hereby ratified, reconfirmed and approved by the holders of the Shares of the
Company."
Management and the Board recommend that holders of common shares and
non-voting shares vote FOR the ordinary resolution of the Company as set forth.
The persons named in the enclosed proxy intend to vote FOR this motion unless
the holder of common or non-voting shares specifies otherwise.
A similar shareholder reconfirmation process must occur at the Company's annual
meeting of shareholders in 2008 in order for the Amended and Restated Rights
Plan to remain in effect until March 2010.
Failing such reconfirmation, the current rights agreement and all outstanding
Rights thereunder will terminate.
Mandate and report of the Corporate Governance Committee
The mandate of the Corporate Governance Committee is to assist the Board in
fulfilling and assessing its oversight responsibilities to ensure that the
Company has an effective corporate governance regime. The Corporate Governance
Committee is responsible for monitoring corporate governance developments, best
practices for corporate governance and the effectiveness of the Company's
corporate governance practices. The Corporate Governance Committee is also
responsible for identifying, recruiting, appointing and providing ongoing
development for directors and overseeing Board and director evaluations. The
Corporate Governance Committee also assesses and makes recommendations to the
Board for its determination of the "independence" and "financial literacy",
"financial expertise", "accounting or related financial management expertise"
of directors as defined under new corporate governance rules and guidelines.
Membership
The current members of the Corporate Governance Committee, consisting of Ron P.
Triffo (Chair), R. H. Auchinleck, R. John Butler and John S. Lacey, were
appointed on February 11, 2004 and reappointed on February 16, 2005. All
members of the Corporate Governance Committee are independent.
Meetings
The Corporate Governance Committee meets at least once each quarter and reports
on its activities to the Board. At each regularly scheduled quarterly meeting,
the Corporate Governance Committee holds an in-camera session without
management present. The Corporate Governance Committee met five times during
2004.
Highlights
Enhanced and renewed commitment to best practices for corporate governance:
* received and considered regular updates on corporate governance
initiatives taken by securities regulators and other stakeholders
and emerging best practices and implications of the proposals of
Canadian and U.S. regulators with respect to TELUS;
* reviewed and reconfirmed the Board Policy Manual, including the terms
of reference for each committee of the Board and, together with the
Pension Committee, recommended to the Board for approval changes to
the Pension Committee's terms of reference;
* reviewed and updated a Board Delegations Policy to align with the
revised Board Policy Manual;
* reviewed and recommended changes to the Company's Articles for which
shareholder approval is being sought at the annual and special
meeting;
* reviewed and recommended changes to the size of the Board;
* reviewed and recommended amendments to the Shareholder Rights Plan,
for which shareholder approval is being sought at the annual and
special meeting;
* developed and approved a succession plan for the chair of the Board.
Initiatives relating to directors:
* reviewed and recommended to the Board for approval nominees to stand
for election as directors or to be appointed to the Board;
* reviewed and recommended to the Board for approval the composition of
committees of the Board;
* initiated review of the compensation payable to the directors for
Board service;
* continued the orientation program for new directors and the ongoing
education program for all directors;
* conducted an evaluation of each director of the Company and of the
Board as a whole, expanding the evaluation process to include a
specific assessment on the performance of the Chair of the Board
and the Chairs of each committee.
For more information on director compensation see the following table.
Signed, members of the Corporate Governance Committee
/s/Ron P. Triffo
__________________________________
Ron P. Triffo (Chair)
/s/R.H. (Dick) Auchinleck
__________________________________
R.H. (Dick) Auchinleck
/s/R. John Butler
__________________________________
R. John Butler
/s/John S. Lacey
__________________________________
John S. Lacey
Director compensation
Each director of the Company who is not an employee of the Company receives an
annual fee for acting as a director on the Board and each committee served,
plus a further fee for each Board and committee meeting attended. The fees are
outlined in the table below. In February 2005, the Committee initiated a review
of the form and magnitude of director compensation.
Regular Board service
---------------------------------------------------------------------------------------------------------------------------------
Annual directors' retainer $25,000
Meeting fee $1,500
Annual equity grant 3,500 deferred share units
---------------------------------------------------------------------------------------------------------------------------------
Committee service: Audit
Chair's retainer $10,000
Member retainer $6,000
Meeting fee $3,000
---------------------------------------------------------------------------------------------------------------------------------
Committee service: All other committees
Chair's retainer $6,000
Member retainer $3,000
Meeting fee $1,500
---------------------------------------------------------------------------------------------------------------------------------
Chair of the Board
Annual retainer $200,000
Meeting fee -
Annual equity grant 6,000 deferred share units
---------------------------------------------------------------------------------------------------------------------------------
Directors who are requested by the Chair to perform additional tasks or
assignments on behalf of the Board may in certain circumstances receive an
additional $1,500 per diem fee for such services. No such fees were paid in
2004.
Mandate and report of the Pension Committee
The mandate of the Pension Committee is to oversee the administration,
financial reporting and investment activities of the Pension Plan for
management and professional employees of TELUS Corporation, the TELUS Defined
Contribution Pension Plan, the TELUS Edmonton Pension Plan, the TELUS
Corporation Pension Plan, the TELUS Corporation Pension Plan for Employees of
TELUS Communications (Quebec) Inc., any successor plans and related
supplemental retirement arrangements as mandated by the Board, and the related
trust funds (the "Pension Plans"). The powers delegated to the Pension
Committee in its mandate are subject to those instances where powers and duties
are specifically assigned to third parties in the Pension Plan documents
themselves. The Pension Committee is responsible for reporting to the Board
with respect to the actuarial soundness of the Pension Plans, the
administrative aspects of the Pension Plans, investment policy, performance of
the investment portfolios and compliance with government legislation. The
Pension Committee may, from time to time, recommend to the Board changes to the
Pension Plans and their administration.
Membership
The current members of the Pension Committee, consisting of R. John Butler
(Chair), Brian A. Canfield, Ron P. Triffo and Donald P. Woodley, were appointed
on February 11, 2004 and reappointed on February 16, 2005. All members of the
Pension Committee are independent.
Meetings
The Pension Committee meets at least once each quarter and reports on its
activities to the Board. At each regularly scheduled quarterly meeting, the
Committee meets in camera, without management present. The Pension Committee
also meets with Pension Plan auditors without management present. The Pension
Committee met five times in 2004.
Highlights
Governance review
The Pension Committee completed a comprehensive review of the defined benefit
and defined contribution pension plans' governance structure. The review was
conducted by management with the assistance of external consultants. One of the
major recommendations involved streamlining the number of decision-making
bodies through the creation of a management pension committee, under the
direction of the Chief Financial Officer, which will be responsible for
overseeing operations, implementing policy and reporting to the Pension
Committee of the Board. This focuses senior management's attention on pension
issues while leaving the most important policy related decisions to the Board
and Pension Committee. The Board has approved new terms of reference for the
Pension Committee to reflect the new governance structure that more clearly
delineates the responsibility and accountability of each of the governing,
managing and operating fiduciaries. Over the coming year the Committee expects
to oversee its implementation.
Administrator change to TELUS Quebec Pension Plans
The Board has changed the administrator of TELUS Corporation Pension Plan for
Employees of TELUS Communications (Quebec) Inc. from TELUS Communications
(Quebec) Inc. to TELUS Corporation and brought this plan under the mandate of
the Pension Committee. This change is consistent with implementation of a
standardized governance structure and improves plan supervision by making the
operation of the plan subject to the same policies and administrative practices
as the other Pension Plans.
Asset liability study
The Pension Committee directed a comprehensive asset and liability study during
2004, which was completed by management with the assistance of external
consultants. The asset liability study was designed to evaluate the risks
associated with the investment policy of the Pension Plans in conjunction with
the fund liabilities and the impact on TELUS financial statements. It evaluated
the basic policy asset mix (equities/fixed income) in light of changing
financial markets and the liability structure of the TELUS defined benefit
plans. As well it examined the feasibility of additional diversification of the
investment portfolios through the expansion of alternative investment mandates
and recommended risk reduction through extending the term of fixed income
assets. The study indicated that the investment policies developed by the
Committee to guide investment management were appropriate (see Note 18 of TELUS
2004 Consolidated Financial Statements).
Plan management and governance
In accordance with its mandate, the Committee approved the appointments of
auditors, actuaries, custodians, legal counsel and investment managers, as
needed. As well, the Pension Committee received and reviewed, and approved
where mandated, the following:
* an annual report, including annual financial statements and audit reports
prepared by the external auditors for all Pension Plans that fall within
the Pension Committee's mandate;
* receive and review audit scope report;
* regular briefings regarding legal matters that affect the Pension Plans;
* reports from each Pension Plan's actuaries, including the assumptions and
the results;
* plan budgets, including Pension Plan expenses and peer plan results;
* quarterly and annual investment results;
* plan insurance coverage;
* management self-assessment of internal controls;
* reports confirming compliance with pension plan ethical standards,
investment policies and procedures, derivative policies and legislation;
* surveys and reports concerning pension governance best practices;
* investment manager performance assessments;
* the strategic investment plan; and
* management presentations on the subjects of actuarial practices,
derivatives, pension risks, operations overview and performance measurement.
Signed, the members of the Pension Committee
/s/R. John Butler
__________________________________
R. John Butler (Chair)
/s/Donald P. Woodley
__________________________________
Donald P. Woodley
/s/Ron P. Triffo
__________________________________
Ron P. Triffo
/s/Brian A. Canfield
__________________________________
Brian A. Canfield
Mandate and Report of the Audit Committee
The Audit Committee supports the Board in fulfilling its oversight
responsibilities regarding the integrity of the Company's accounting and
financial reporting, the Company's internal controls and disclosure controls,
the Company's legal and regulatory compliance, the Company's ethics policy
and timeliness of filings with regulatory authorities, the independence and
performance of the Company's external and internal auditors, the management
of the Company's risks, credit worthiness, treasury plans and financial
policy and the Company's whistleblower and complaint procedures. For more
information on TELUS' Audit Committee, including the text of the Audit
Committee's terms of reference, refer to the heading "Audit Committee" in
TELUS' Annual Information Form.
Membership
Three of the Committee's current members, consisting of Brian F. MacNeill
(Chair), A. Charles Baillie and Micheline Bouchard were appointed on February
11, 2004. A fourth member, Ruston E.T. Goepel, was appointed on December 7,
2004. They were all reappointed on February 16, 2005.
The Board has determined that each member of the Audit Committee is
"financially literate", has "accounting or related financial management
expertise" and that the Audit Committee Chair is an "audit committee
financial expert" as defined by applicable securities laws. Information
regarding the education and experience of the members of the Audit Committee
is contained in TELUS' 2004 Annual Information Form. The Committee is
comprised entirely of independent directors.
Meetings
The Audit Committee meets at least once each quarter and reports on its
activities to the Board. At each regularly scheduled quarterly meeting, the
Committee meets separately, in camera, with both the internal auditor and
external auditors. The Committee also meets separately with management and
without management present, at each regularly scheduled meeting. The Audit
Committee met five times during 2004.
Highlights
Financial reporting:
* reviewed and discussed with the Company's President and CEO and
CFO their readiness to certify the annual financial statements and
related disclosure material, as required under the U.S.
Sarbanes-Oxley Act (SOX), and the interim financial statements and
related disclosure materials, as required under Canadian securities
legislation;
* reviewed and recommended to the Board for approval, the public
release and filing of the annual audited Consolidated Financial
Statements and quarterly unaudited Consolidated Financial Statements
of the Company and subsidiaries whose financial statements are
publicly filed, including related news releases and MD&A;
* reviewed and recommended to the Board for approval key securities
filings that contain financial information, including the Annual
Information Form;
* reviewed, throughout the year, any changes or adoption of
significant accounting policies and significant estimates impacting
the current and future financial statements of the Company.
External auditor:
* oversaw the work of the external auditors;
* reviewed and approved the annual audit plan;
* monitored the progress of the external audit;
* received reports on the external auditor's internal quality
control procedures, independence and confidentiality procedures;
* met quarterly with the external auditors without management
present;
* reviewed and set the compensation of the external auditor;
* reviewed and pre-approved all audit, audit-related and non-audit
services provided by the external auditor or its affiliates.
Accounting and financial management:
* reviewed the Company's major accounting policies, including
alternatives and potential key management estimates and judgments
and the Company's financial policies and compliance with such
policies;
* reviewed with management the adoption of new accounting standards
and emerging best practices in response to changes in securities
legislation;
* reviewed with management the Company's financial policies and
compliance with these policies;
* reviewed quarterly derivatives, and guarantees and indemnities
reports;
* recommended adoption of amended annual and long term policy
targets concerning matters such as leverage, liquidity, capital
structure and credit ratings;
* reviewed quarterly treasury update and approved key treasury
matters, including financing plans;
* reviewed and recommended to the Board changes to the Company's
target dividend payout ratio guideline;
* received quarterly reports regarding taxation matters and
structural/legal reorganizations;
* reviewed and discussed with management at each regularly scheduled
meeting the results of significant capital expenditures including
specific reviews of major capital projects.
Internal controls and disclosure controls:
* reviewed and approved the internal audit program to provide
assurance regarding risk exposures and internal controls;
* reviewed quarterly reports on internal audit activities and
internal audit's evaluation of the Company's internal control
systems and risk mitigation progress;
* met regularly with the Chief Internal Auditor without management
present;
* monitored the adequacy of resourcing and the independence and
objectivity of the internal audit function;
* received briefings from management regarding key audit report
follow-ups;
* reviewed, quarterly, the results of the cascading certifications
by key stakeholders in the financial reporting and disclosure
controls processes to provide reasonable assurance and confidence to
the President and CEO and CFO;
* considered reports from the Chief Compliance Officer and General
Counsel on matters relating to compliance with laws and regulations;
* received and considered quarterly reports regarding the receipt,
investigation and treatment of whistleblower, ethics and internal
controls complaints;
* reviewed, quarterly, the expenses of the executive leadership team
and annually reviewed the adequacy of, and compliance to, Company
policies covering executive officers' expense accounts and
perquisites and their use of corporate assets.
Enterprise risk management:
* reviewed the results of management's annual risk assessment, the
identification of key risks and the engagement of executives to
mitigate risk exposures;
* considered reports on the Company's business continuity, including
potential situations of work stoppage, and disaster recovery plans;
* reviewed reports on management's approach for safeguarding
corporate assets and information systems;
* monitored the Company's environmental risk management activities
and results, and reviewed the Company's corporate social
responsibility (CSR) report;
* reviewed the adequacy of the Company's insurance coverages and
monitored the Company's property risk management program;
* reviewed reports on employee health and safety programs and
results.
Audit Committee related governance:
* received and reviewed with management frequent updates throughout
the year regarding changing governance-related laws, rules and
emerging best practices and implications of the proposals of
Canadian and U.S. regulators with respect to the Audit Committee;
* received from management quarterly updates on the handling of
employee and anonymous complaints and inquiries regarding accounting,
auditing, ethics, and internal control issues;
* monitored management's annual conflict of interest disclosure and
review process;
* received and reviewed management's planning efforts to enable SOX 404
compliance for financial year 2005.
Signed, the members of the Audit Committee
/s/Brian F. MacNeill
__________________________________
Brian F. MacNeill (Chair)
/s/A. Charles Baillie
__________________________________
A. Charles Baillie
/s/Micheline Bouchard
__________________________________
Micheline Bouchard
/s/Ruston E.T. Goepel
__________________________________
Ruston E.T. Goepel
Mandate and Report of the Human Resources and Compensation Committee
The Human Resources and Compensation Committee (the "Compensation Committee")
of the Board of Directors is responsible for developing the compensation
philosophy and guidelines on executive compensation, overseeing succession
planning for the executive leadership team, determining President and CEO
goals and objectives relative to compensation and evaluating President and
CEO performance, reviewing and recommending President and CEO compensation
based on evaluation, and determining compensation for executive management
other than the President and CEO. The Compensation Committee annually reviews
and reports to the Board on senior management organizational structure,
management's succession plans for the executive leadership team including
specific development plans and career planning for potential successors for
both normal career progression and emergency replacement situations. It
manages the Board-approved equity-based incentive plans, employee benefit
plans and supplemental retirement arrangements for the executive leadership
team (other than registered pension plans).
Membership
The current members of the Compensation Committee, consisting of John S.
Lacey (Chair), R.H. (Dick) Auchinleck and Donald P. Woodley, were
appointed on February 11, 2004. They were all reappointed on February
16, 2005.
All members of the Compensation Committee are independent. There are no
interlocking relationships between the members of the Compensation
Committee and the executive leadership team.
Meetings
The Compensation Committee meets at least once each quarter and reports
on its activities to the Board. At each regularly scheduled quarterly
meeting, the Committee holds an in camera session without management
present. The Compensation Committee met five times during 2004.
Highlights
President and CEO
* reviewed and approved the corporate goals and objectives relevant to
President and CEO compensation;
* assessed the President and CEO's performance with input from the
Board of Directors;
* reviewed the form and adequacy of President and CEO compensation;
* reviewed the succession plan for the President and CEO;
* reviewed and recommended to the Board for approval the President and
CEO's compensation based on the Compensation Committee's evaluation
of the performance of the President and CEO and its review of the
form and adequacy of the compensation of the President and CEO.
Executive Management
* reviewed and recommended for approval to the Board the proposed
appointment of individuals to executive management and as corporate
officers of the Company;
* received and considered the President and CEO's evaluations of the
performance of individual members of executive management;
* reviewed and approved the form and adequacy of executive compensation
for executive management other than the President and CEO;
* reviewed and approved the compensation (including annual variable pay
and other incentive awards) of individual members of executive
management, other than the President and CEO, after considering the
evaluation and recommendations of the President and CEO;
* reviewed and approved the retirement and severance arrangements of
departing members of the executive management;
* reviewed and approved the levels and types of benefits, including
perquisites and vehicles that may be granted to executive management;
* reviewed the succession plans for each member of executive
management;.
Equity Plans
* received regular updates from management and expert external
consultants on alternative long-term incentives other than options,
including the implications for the Company and its shareholders;
* received regular updates on regulatory changes and corporate
governance trends in Canada and the United States regarding equity
compensation arrangements, including accounting treatment of
options, requirements for shareholder approvals of equity grants,
and implications for the Company;
* reviewed and recommended to the Board for approval the division of
the TELUS Share Option and Compensation Plan into the TELUS
Management Share Option Plan and the Directors Share Option and
Compensation Plan and the amendments to the TELUS Management Share
Option Plan;
* reviewed and recommended to the Board for approval amendments to the
Employee Share Purchase plan and the Channel Stock Incentive Plan to
eliminate the issuance of shares from treasury;
* reviewed and recommended to the Board for approval a fixed maximum
reserve with an increase in share reserve, and adoption of a stock
settlement feature in the TELUS Management Share Option Plan.
Public Disclosure
* prepared and approved for publication the report on executive
compensation below.
Report on executive compensation
One of the Compensation Committee's roles is to design a compensation
arrangement for the Company's executive leadership team that supports
its business strategy to enhance the growth and profitability of the
Company and allow the Company to attract and retain the key talent
necessary to achieve the business objectives of the Company, as approved
by the Board.
Compensation objectives and principles
The goal is to create a clear linkage between compensation and the
achievement of business goals in the short-term, medium-term and
long-term by providing appropriate components of fixed compensation,
compensation at risk, and future income.
The Compensation Committee has approved a performance management
philosophy that provides a direct linkage between short-, medium- and
long-term compensation at risk and the execution strategies required to
achieve the goals of continuous growth, quality of service and
operational excellence, while providing a workplace of choice.
In establishing the appropriate compensation levels, the Compensation
Committee receives expert advice from outside consultants who conduct
surveys and provide competitive data, and recommendations from
management.
The Compensation Committee relates total compensation levels for the
executives to the compensation paid to executives of general Canadian
industry with revenue similar to that of the Company and Canadian
telecommunications companies, as approved by the Committee. The
Compensation Committee selects and engages external consultants and
approves their fees.
Performance management
For 2004, the Compensation Committee has continued with a rigorous,
comprehensive and holistic approach towards the assessment of the performance
of the executive leadership team. Each executive leadership team member is
evaluated using the following assessment tools:
* personal value-add assessment model ("PVAAM")
* individual, business unit and corporate balanced scorecards
* strategic staffing model.
PVAAM is used to assess and rate an executive leadership team member's
achievement of results, leadership skills, retention risk and value to
achieving strategy. These ratings, in conjunction with competitive market
compensation data and the balanced scorecard results, are used to determine
an executive leadership team member's base pay, annual variable pay,
restricted stock unit allocations and share option grants.
The strategic staffing model is a comprehensive assessment tool used to
assess each executive leadership team member's development and is relied on
to design and regularly update succession plans for executive positions.
Compensation mix
The key elements of the Company's executive compensation program are base
salary and at-risk compensation, which comprises annual variable pay,
medium-term incentives and long-term incentives. These key elements are
addressed separately below. The Compensation Committee has adopted a
market-based approach to ensure that the Company provides competitive
compensation. Total compensation is generally targeted to be at the 75th
percentile of the comparator group described above, if performance warrants.
The Compensation Committee also considers other elements of an executive's
total compensation including health and welfare benefits, retirement programs
and perquisites.
The Compensation Committee is a proponent of linking compensation directly to
the achievement of business objectives. This philosophy results in a high
focus on performance driving pay with base salary comprising only 25 per cent
of total compensation for the executive team overall for 2004.
Base salary
In accordance with its market-based approach, the Compensation Committee has
targeted base salaries of the executive leadership team to be at
approximately the 50th percentile of the comparator group. In 2004, the
overall average of base salaries was below the overall average market 50th
percentile. Individual base salaries are adjusted by the Compensation
Committee to recognize varying levels of responsibility, prior experience,
breadth of knowledge, overall individual performance and internal equity, as
well as the pay practices of companies in the comparator group. For 2004,
there were no base salary increases for the named executives.
At-risk incentive pay
As a result of its philosophy, the target at-risk incentive pay for
executives is 75 per cent of total compensation for the executive leadership
team overall. The Company adopts three strategies for at-risk incentive pay:
1. Annual variable pay plan
This annual plan implements the Company's pay-for-performance philosophy by
providing executives with direct financial incentive in the form of an annual
cash award based on the achievement of corporate, strategic business unit and
individual performance goals. The actual achievement of annual business plans
as reflected through performance measurement and quantifiable goals will
ultimately determine the annual variable compensation received.
The awards payable to the executive leadership team are determined based on
meeting the corporate targets and their respective strategic business unit
targets as set out in the corporate balanced scorecard and strategic business
unit balanced scorecards, respectively, and achieving the results set out in
their personal performance objectives. Results at less than target would
result in a reduced or zero award.
All corporate and strategic business unit scorecard objectives were tied to
the six strategic imperatives of TELUS, which are as follows:
* building national capabilities across data, Internet protocol (IP),
voice and wireless
* focusing relentlessly on the growth markets of data, IP and wireless
* providing integrated solutions that differentiate TELUS from our
competitors
* partnering, acquiring and divesting to accelerate the implementation
of our strategy and focus our resources on core business
* going to market as one team, under a common brand, executing a single
strategy
* investing in internal capabilities to build a high-performance
culture and efficient operation.
Specific targets were established using a balanced scorecard approach with
2004 corporate targets tied to profitable growth, customer metrics, business
efficiency, and employee engagement. The profitable growth metrics (30 per
cent) were made up of TELUS Communications external revenue, TELUS Mobility
network revenue, free cash flow, net debt/EBITDA(earnings before interest,
taxes, depreciation and amortization) and earnings per share (from continuing
operations). Customer metrics (40 per cent) included TELUS Mobility churn
rate, high speed subscriber churn (TELUS Communications), a customer loyalty
index, and other indices that measure quality of performance and customer
loyalty. Business efficiency metrics (20 per cent) consisted of EBITDA margin
percentage for TELUS Communications and EBITDA before cost of acquisition for
TELUS Mobility. Lastly, employee engagement (10 per cent) was measured based
on a survey of all employees.
These measures are not only of broad relevance to the strategic goals of the
Company but are also readily quantifiable, easily measured by the Company's
information systems, auditable, and balance year over year consistency with
the Company's annual strategic direction. Balanced scorecard targets were
also set for each strategic business unit.
The weighting given to corporate results, strategic business unit ("SBU")
results and personal results for each executive leadership team member is set
out in the following table:
Component weighting Target award
---------------------------------------------------------------------------------------------------------------------------------
Average Average % of
Corporate SBU SBU customer facing Personal base
Position results results results SBU results results salary
---------------------------------------------------------------------------------------------------------------------------------
President & CEO 30% -- 20% 30% 20% 50%
EVP - Customer facing SBU 50% 30% -- -- 20% 50%1
EVP - Business enabling SBU 30% 20% -- 30% 20% 50%
---------------------------------------------------------------------------------------------------------------------------------
(1) The target award for the Executive Vice President & CEO of TELUS
Mobility is 100 per cent of base salary as he does not participate in
any mid-term incentive or pension plans.
The award for the executive vice-president of a business enabling strategic
business unit such as Finance or Human Resources, is based in part on the
success of the Company's customer facing strategic business units to ensure
direct line of sight to the achievement of customer facing business unit
objectives. The award for the President and CEO is based in part on the
average results of all the strategic business units.
The personal performance of each member of the executive leadership team
(other than the President and CEO) is assessed by the President and CEO, and
the performance of the President and CEO is assessed by the Compensation
Committee. The personal performance scorecard component is then determined
based on the ratings set out in the following table:
Personal performance
---------------------------------------------------------------------------------------------------------------------------------
Rating Performance rating Multiplier
---------------------------------------------------------------------------------------------------------------------------------
Not Meeting 2 - 3 0.0
---------------------------------------------------------------------------------------------------------------------------------
Partially Meeting 4 0.3
5 0.5
---------------------------------------------------------------------------------------------------------------------------------
Fully Meeting 6 0.8
---------------------------------------------------------------------------------------------------------------------------------
Exceeding 7 1.1
8 1.4
---------------------------------------------------------------------------------------------------------------------------------
Significantly Exceeding 9 1.7
10 2.0+
---------------------------------------------------------------------------------------------------------------------------------
This approach ensures that payouts reflect performance levels and require
truly outstanding results to deliver multipliers greater than 1.0.
For 2004, the overall annual variable pay plan results for the executive
leadership team members averaged 94 per cent of target. The corporate
balanced scorecard component of their variable plan was 87 per cent of
target. Comparing the 2004 actual results against comparable 2003 Corporate
Scorecard measures would have resulted in a variable pay plan payout of 136
per cent for that component. This is reflective of increased performance
expectations that are the foundation to the pay for performance philosophy,
resulting in stretch targets being established for the 2004 Corporate
Scorecard.
Following is a description of some of the results achieved in respect of the
various metrics comprising the Corporate Balanced Scorecard:
Overall, TELUS achieved strong results within the Profitable Growth quadrant
of the scorecard.
TELUS exceeded its targets with respect to:
* Mobility Network Revenue, deriving from strong TELUS Mobility performance
* Earnings per share reflecting strong TELUS Mobility results as well as
favourable tax settlements
* Net Debt: EBITDA
* Free Cash Flow resulting from reduced debt and strong TELUS Mobility
revenues
One of the metrics was below target:
* TELUS Communications external revenue results, resulting in a zero
payout under this metric
In the Customer scorecard quadrant:
* TELUS Mobility maintained its low customer churn rate and met its
target
* Results for customer service levels were very close to target,
reflecting significant improvements to the short-term customer service
challenges the TELUS team faced throughout 2003
* Results for the loyalty index and the quality of performance
measurement were also below target
Within the Business Efficiency quadrant:
* EBIT Margin % (TELUS Communications - after restructuring costs) was
below target resulting primarily from weakness in that segment's revenue
growth
* EBITDA before Cost of Acquisition (TELUS Mobility) results well
exceeded target due to strong Mobility revenue performance and
operational execution
Within the Employee Engagement quadrant:
* Results from TELUS' employee survey show that the Company has a solid
foundation in quality of leadership, sense of teamwork and is a
respectful and supportive employer, but overall results were below the
threshold target, reflecting in part the collective bargaining
challenges experienced in 2004.
2. Medium-Term Incentives
In 2004, the Compensation Committee continued with the Executive Stock Unit
Plan (formerly called the Restricted Stock Unit Plan II), a medium-term
incentive plan that was implemented in 2002 for executive leadership team
members and expanded in 2004 to include designated senior management
employees. The purpose of this plan is to link a portion of the at-risk
compensation to both the achievement of performance targets and total
shareholder return, and to promote the retention of executives. Under the ESU
Plan, participants are allocated restricted stock units ("ESUs"). The amount
and terms of any allocation are approved by the Compensation Committee
annually.
Generally, the number of ESUs allocated to an executive is based both on the
achievement by the executive of performance targets and the share price
performance of non-voting shares during the plan year. Each ESU is equal in
value to the price of one non-voting share calculated in the manner provided
in the plan. When dividends on non-voting shares are paid during the life of
an ESU, a participant receives an equivalent credit that is converted to
additional ESUs in the participant's account. These dividend equivalents do
not vest unless the ESUs vest.
Unless otherwise determined with respect to any particular allocation, the
number of ESUs allocated to a participant is determined by applying the
actual performance results against a target that is based on a percentage of
the participant's salary, then dividing by the value of the non-voting shares
at the beginning or end of the year preceding the year of allocation,
whichever is higher. The value of ESUs allocated in 2005 under the ESU Plan
for 2004 performance was $34.73 per ESU and was calculated based on the
trading price of the non-voting shares for the 15 trading days up to December
31, 2004 which was higher than the price for the 15 trading days preceding
January 1, 2004. This link, under the ESU Plan, to the share price of
non-voting shares further aligns the interests of the recipients with the
interests of shareholders. In this manner, any decline in the price of
non-voting shares of the Company directly reduces the value of the
participant's incentive compensation, despite the fact that performance goals
for the granting have been met.
The Company had previously implemented a separate RSU Plan for 2001
performance for certain executives. RSU Plan I provided that RSUs were
allocated at a value equal to the weighted average trading price per
non-voting share on the Toronto Stock Exchange on the day preceding the date
of allocation.
Retention is promoted through the vesting of RSUs/ESUs. RSUs allocated under
the RSU Plan I vested on October 18, 2004 and were paid out prior to the 2004
year-end. ESUs allocated under the ESU Plan vest and become payable in equal
annual installments over approximately a three-year period, with all ESUs
being paid out before the end of the second year after the year of
allocation. The value of the ESUs at pay-out is based on the value of
non-voting shares at that time, calculated as required by the applicable
plan. In this manner, the price of non-voting shares of the Company directly
impacts the value of the participant's incentive compensation at payout.
Payments under the RSU Plan I were paid in cash. Payments under the ESU Plan
may be in cash or non-voting shares purchased in the market or, subject to
all necessary corporate and regulatory approvals, in non-voting shares issued
from Treasury.
3. Long-term incentives
Long-term incentives are provided under the TELUS Management Share Option
Plan (formerly TELUS Share Option and Compensation Plan), and the Restricted
Stock Unit Plan (formerly Restricted Stock Unit Plan III) which was
introduced in 2003. The purpose of these plans is to align the interests of
executives with those of shareholders and to provide incentive compensation
based on the value of non-voting shares. This strategy provides an
opportunity for executives to acquire, through share options and RSUs, an
increased proprietary interest in the Company.
The amount and terms of any long-term incentive compensation determined by
the Compensation Committee will be consistent with the overall compensation
philosophy and objectives as set out above. Overall, long term incentives
represented 50 per cent of total compensation for the executive team in 2004.
As noted previously, long-term incentive compensation is based on two main
factors: competitive market compensation considerations and each executive
leadership team member's PVAAM ratings. The PVAAM assessments are based on
four elements: Achieving Results and Leadership Skills (the two performance
components) and Value to Achieving Strategy and Retention Risk (the two
potential components). The resulting assessment has a direct bearing on the
long-term incentive awards.
Share options are granted at an exercise price not less than the market value
of the non-voting shares on the last business day before the grant date as
determined pursuant to the plan. In order to strengthen retention, the
vesting period for options granted in February 2005 remained as 100 per cent
("cliff-vesting") at the end of three years. Prior option grants are not
taken into account in determining whether and, if so, how many new options
would be granted.
In order to provide a more appropriate mix of long-term incentives, the
February 2005 long-term incentive compensation grant was split between share
options and RSUs under the RSU Plan. This split represents an approximate
allocation of one-third options and two-thirds RSUs to the executive
leadership team on a collective basis, based on an estimated after tax
equivalency between the value of the RSUs and the value of the options to be
granted, using a Black-Scholes valuation. To strengthen retention, both the
options and the RSUs granted in February 2005 will in most instances
cliff-vest at or near the end of a three-year period. The Compensation
Committee has the right to determine the vesting of each RSU grant under the
RSU Plan. George Cope was not allocated stock options in February, 2005 but
received 87,183 RSUs under the RSU Plan. He will not receive any future
grants of options or RSUs under the annual program for 2005, 2006 and 2007.
Similar to the ESUs allocated under the ESU Plan, all RSUs allocated under
the RSU Plan must be paid out before the end of the second year after the
year of allocation. Each RSU is equal in value to the price of one non-voting
share calculated as provided in the RSU Plan. When dividends on non-voting
shares are paid during the life of an RSU, a participant receives an
equivalent credit which is converted to additional RSUs in the participant's
account. These dividend equivalents do not vest unless the RSUs vest. The
value of the RSUs at pay-out is based on the value of non-voting shares at
that time, calculated in the manner required by the RSU Plan. In this manner,
the price of non-voting shares of the Company directly impacts the value of
the participant's incentive compensation at payout. Payments under the RSU
Plan may be in cash or in non-voting shares purchased in the market, or,
subject to all necessary corporate and regulatory approvals, in non-voting
shares issued from treasury.
Compensation of President and CEO
The principles used for determining the compensation of the President and
CEO, Darren Entwistle, were identical to those established for the other
executives, other than as noted previously. The President and CEO's base
salary, which was increased mid-year 2003, was not increased in 2004 and
remained below median.
Share ownership guidelines
Share ownership guidelines were introduced for the executive leadership team
members in 2002 to provide a further link between the interest of executives
and shareholders, thereby demonstrating the ongoing alignment of executives'
interests with the interests of shareholders. The share ownership targets
established in 2002 were a value of at least three times annual base salary
for the President and CEO and one times annual base salary for executive
vice-presidents.
In 2003, the ownership target was increased to two times annual base salary
for executive vice-presidents and remain the same currently. The share
ownership targets can be met through a mix of common and non-voting shares
and ESUs/RSUs acquired over a five-year period. Most executive leadership
team members already have significant shareholdings and meet or exceed these
target levels.
Executive shareholdings summary table
The following table provides information concerning total TELUS shareholdings
held by each named executive (as set out in the Executive compensation
summary table on page *), dollar value of shareholdings and share ownership
level (based on dollar value) to base salary ratio, as at December 31, 2004
(see share ownership guidelines on page *).
TELUS shareholdings Share
(common shares/non-voting ownership
shares/ESUs for non-voting Dollar value of level as
shares/RSUs for shareholdings a multiple of
Name non-voting shares)(1) ($)(2) base salary
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 21,032/173,236/106,560/73,147 13,023,018 14.5
---------------------------------------------------------------------------------------------------------------------------------
George Cope --/165,048/--/-- 5,733,767 8.2
---------------------------------------------------------------------------------------------------------------------------------
Robert McFarlane --/113,729/18,102/17,850 5,199,917 13.0
---------------------------------------------------------------------------------------------------------------------------------
Joe Natale 3,362/--/17,057/20,991 1,443,559 3.0
---------------------------------------------------------------------------------------------------------------------------------
Wade Oosterman --/235,250/3,456/8,860 8,600,442 20.2
---------------------------------------------------------------------------------------------------------------------------------
(1) Excludes any TELUS non-voting shares that may be acquired by an
executive in 2005 in payment of ESUs that vested in 2004.
(2) At the close of trading on December 31, 2004 the market price of
common shares was $36.22 and the market price of the non-voting shares
was $34.74.
Conclusion
The Compensation Committee believes that the various components of
compensation are appropriately balanced to provide direction and motivation
for the executive leadership team to make a positive contribution to the
Company's overall success, thereby enhancing the value of the Company for its
shareholders.
Signed, members of the Human Resources and Compensation Committee
/s/John S. Lacey
__________________________________
John S. Lacey (Chair)
/s/Donald P. Woodley
__________________________________
Donald P. Woodley
/s/R.H. (Dick) Auchinleck
__________________________________
R.H. (Dick) Auchinleck
Executive compensation summary table
In accordance with executive compensation reporting requirements of
applicable securities regulations, the following table provides information
concerning the total compensation paid during the last three fiscal years
ending December 31, 2004 to the President and CEO and the Executive Vice
President and CFO of the Company, and the three other executive officers
employed by the Company as at December 31, 2004 who had the highest
individual aggregate annual salary and bonuses for 2004 (collectively with
the President and CEO and CFO, the "named executives"). The figures shown for
each of the three years represent those amounts paid by the Company to the
named executives.
Annual compensation Longer-term compensation
---------------------------------------------------------------------------------------------------------------------------------
Number of Restricted
securities stock units
Other annual under (ESUs/RSUs) All other
Name and principal Year ended Salary Bonus(1) compensation(2) options (5)(6) compensation
position Dec. 31 ($) ($) ($) granted(3) ($) ($)
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 2004 900,000 508,500 92,584(4) -- 3,662,533 34,500(7)
President & Chief 2003 857,500 529,506 95,915(4) 40,000 2,748,203 20,700(7)
Executive Officer 2002 785,000 371,305 97,247(4) 163,255 1,824,014 60,183(7)
---------------------------------------------------------------------------------------------------------------------------------
George Cope 2004 665,860 786,665 -- -- 3,045,302
Executive Vice-President 2003 600,000 963,000 -- 90,000 --
President & CEO, 2002 600,000 636,000 -- 95,000 --
TELUS Mobility
---------------------------------------------------------------------------------------------------------------------------------
Robert McFarlane 2004 400,000 215,600 -- 15,200 754,886 9,200(7)
Executive Vice-President 50,000(10)
& Chief Financial Officer 2003 400,000 238,200 -- -- 672,025 6,133(7)
2002 400,000 183,600 -- 50,000 191,387
---------------------------------------------------------------------------------------------------------------------------------
Joe Natale 2004 480,000 210,480 -- 16,800 892,072 18,400(7)
Executive Vice-President 2003 251,040 129,720 -- 115,800 804,640 11,040(7)
& President, 150,000(8)
Business Solutions9
---------------------------------------------------------------------------------------------------------------------------------
Wade Oosterman 2004 398,225 206,455 -- 15,000 698,086 4,887(7)
Executive Vice-President 2003 284,596 420,763 -- 12,500 219,285
& Chief Marketing Officer9 2002 269,538 312,518 -- -- --
---------------------------------------------------------------------------------------------------------------------------------
(1) Represents variable "at risk" component of cash compensation earned
under the annual variable pay plan. Amounts are paid in first quarter of
following year.
(2) Except as noted, the value of perquisites and other personal
benefits received by named executives is no greater than the lesser of
$50,000 and 10 per cent of annual salary and bonus of the respective
named executives.
(3) Annual option grants under the TELUS Management Share Option Plan
awarded to the named executives in relation to the 2004 financial year
were approved by the Compensation Committee and the Board on the 15th
and 16th of February 2005.
(4) Consists of $50,000 bonus paid to allow executive to repay Company
loan in that amount, deemed interest on interest-free Company loan and
bonus in an amount sufficient to cover the taxes on both the loan
repayment bonus and the deemed interest.
(5) The ESU/RSU grants in the Summary Compensation Table are made in the
February of the following year. Therefore, the grants shown for 2004
were made in February 2005. All numbers include accumulated dividend
equivalents. Note that George Cope will not be receiving any future
grants of options or RSUs under the annual program for 2005, 2006 and
2007.
(6) The aggregate number of ESUs/RSUs (including accrued dividend
equivalents) held by the named executives at December 31, 2004, their
value at the date of grant (excluding accumulated dividend equivalents),
their value at closing market price at December 31, 2004, and their
vesting are as follows:
Number of RSUs
(ESU Plan / Value at date Value at Vesting
RSU Plan) of grant December 31, 2004 2005/2006
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 57,021 / 73,147 $4,555,573 $4,522,036 49,540 / 80,628
George Cope -- / -- -- -- -- / --
Robert McFarlane 10,733 / 17,850 $855,633 $992,973 7,370 / 21,214
Joe Natale 17,057 / 20,991 $901,675 $1,321,788 5,737 / 22,823
Wade Oosterman 1,728 / 8,860 $317,765 $367,827 1,728 / 8,860
Note that the figures in the above table exclude ESU/RSUs which vested on or
before December 31, 2004 that were not paid out until 2005 and exclude
ESUs/RSUs allocated in February, 2005. The details of the ESU and RSU plans
are disclosed in the Report on Executive Compensation.
(7) Payment in lieu of accrued but unused vacation.
(8) Bonus paid on hire.
(9) Joe Natale joined the Executive Leadership Team on June 23, 2003 and Wade
Oosterman joined on June 25, 2004.
(10)Bonus paid in recognition of overall accomplishments during the year.
Options granted for the most recently completed financial year
As noted previously, in order to provide a more appropriate mix of long-term
and medium-term incentives, the February 2005 grant was split between share
options and RSUs. This split represents an approximate allocation of one-third
options and two-thirds RSUs among the executive leadership team on a
collective basis using a Black-Scholes valuation. In addition, in order to
strengthen retention the options and RSUs granted in February 2005 will in
most instances cliff-vest at or near the end of a three-year period.
In order to provide comprehensive and up-to-date information, the Company has
set forth in the table below option grants made in the current year.
Accordingly, the following option grants to the named executives were made in
February 2005 based on 2004 performance:
% of total
options Market value of
Securities granted to Exercise or securities underlying
under options employees in base price options on the date of
Name granted(1)(#) financial year(1) ($/security)(2) grant($/security)(3) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle -- 0.00% -- -- --
George Cope -- 0.00% -- -- --
Robert McFarlane 15,200 1.4% $35.56 $36.42 February 16,2012
Joe Natale 16,800 1.5% $35.56 $36.42 February 16,2012
Wade Oosterman 15,000 1.4% $35.56 $36.42 February 16,2012
(1) All grants are in respect of non-voting shares. Percentage refers to
percentage of total grant of TELUS share options, including all grants made
in February 2005 based on 2004 performance.
(2) TELUS options are granted at or above the weighted average trading price
of the non-voting shares on the last business day before the date of grant.
(3) Actual weighted average trading price on the date of grant.
The following option grants to the named executives were made in February 2004
based on 2003 performance:
% of total
options Market value of
Securities granted to Exercise or securities underlying
under options employees in base price options on the date of
Name granted(1)(#) financial year(1) ($/security)(2) grant($/security)(3) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 40,000 0.99% $24.79 $24.76 February 11, 2011
George Cope 90,000 2.22% $24.79 $24.76 February 11, 2011
Robert McFarlane -- 0.00% -- -- --
Joe Natale 15,800 0.39% $24.79 $24.76 February 11, 2011
Wade Oosterman 12,500 0.31% $24.79 $24.76 February 11, 2011
(1) All grants are in respect of non-voting shares. Percentage refers to
percentage of total grant of TELUS share options.
(2) TELUS options are granted at or above the weighted average trading price
of the non-voting shares on the last business day before the date of grant.
(3) Actual weighted average trading price on the date of grant.
Aggregated options exercised during the most recently completed financial year
and financial year-end option values for the named executives
Securities Aggregate Unexercised Value of unexercised in the
acquired on value options at FY-end (1) money options at FY-end
exercise realized (#) exercisable/unexercisable ($) exercisable/unexercisable
Name (#) ($)
---------------------------------------------------------------------------------------------------------------------------------
common shares/ common shares/
non-voting shares non-voting shares
Darren Entwistle 117,418 1,347,465 150,000 / 333,683 0 / 347,179 2,044,176 3,922,083
George Cope 208,335 2,241,685 261,852 / 275,972 0 / 0 2,784,100 0
Robert McFarlane 123,600 2,620,744 128,958 / 134,109 0 / 65,200 1,536,536 841,664
Joe Natale - - 0 / 33,333 0 / 99,267 410,996 979,214
Wade Oosterman - - 52,368 / 124,537 0 / 35,833 1,911,310 279,285
(1) At the close of trading on December 31, 2004, the market price of the
common shares was $36.22 and the market price of the non-voting shares
was $34.74.
TELUS Pension Plan
The TELUS Supplementary Retirement Arrangement ("SRA") establishes an overall
retirement income benefit which provides supplemental pension benefits to be
paid to a retired executive in addition to the pension income under the
existing registered company pension plans.
Named executives, other than George Cope and Wade Oosterman, participate in
the Company's contributory registered pension plans. The SRA for the named
executives, other than George Cope and Wade Oosterman, supplements these plans
by providing a total benefit at retirement determined as two per cent of a
person's highest consecutive three years' average pensionable remuneration
times the total number of years of credited service to a maximum of 35.
Pensionable remuneration is base salary increased by a fixed 50 per cent for
annual variable compensation to the named executives other than the President
and CEO, and by 60 per cent for the President and CEO. The following table
shows the total of the annual retirement benefits, payable from both the SRA
and registered pension plans, assuming retirement at age 60 or over:
Pension plan table
2004
---------------------------------------------------------------------------------------------------------------------------------
Remuneration ($) Years of service
15 20 25 30 35
---------------------------------------------------------------------------------------------------------------------------------
175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
225,000 67,500 90,000 112,500 135,000 157,500
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
350,000 105,000 140,000 175,000 210,000 245,000
400,000 120,000 160,000 200,000 240,000 280,000
450,000 135,000 180,000 225,000 270,000 315,000
500,000 150,000 200,000 250,000 300,000 350,000
550,000 165,000 220,000 275,000 330,000 385,000
600,000 180,000 240,000 300,000 360,000 420,000
650,000 195,000 260,000 325,000 390,000 455,000
700,000 210,000 280,000 350,000 420,000 490,000
750,000 225,000 300,000 375,000 450,000 525,000
800,000 240,000 320,000 400,000 480,000 560,000
850,000 255,000 340,000 425,000 510,000 595,000
900,000 270,000 360,000 450,000 540,000 630,000
950,000 285,000 380,000 475,000 570,000 665,000
1,000,000 300,000 400,000 500,000 600,000 700,000
1,050,000 315,000 420,000 525,000 630,000 735,000
1,100,000 330,000 440,000 550,000 660,000 770,000
1,150,000 345,000 460,000 575,000 690,000 805,000
1,200,000 360,000 480,000 600,000 720,000 840,000
1,250,000 375,000 500,000 625,000 750,000 875,000
1,300,000 390,000 520,000 650,000 780,000 910,000
1,350,000 405,000 540,000 675,000 810,000 945,000
1,400,000 420,000 560,000 700,000 840,000 980,000
1,450,000 435,000 580,000 725,000 870,000 1,015,000
1,500,000 450,000 600,000 750,000 900,000 1,050,000
1,550,000 465,000 620,000 775,000 930,000 1,085,000
1,600,000 480,000 640,000 800,000 960,000 1,120,000
1,650,000 495,000 660,000 825,000 990,000 1,155,000
1,700,000 510,000 680,000 850,000 1,020,000 1,190,000
1,750,000 525,000 700,000 875,000 1,050,000 1,225,000
(1) The compensation covered by the SRA for each of the named executives is
based on his respective salaries shown in the executive summary
compensationtable plus 60 per cent for the President and CEO and 50 per cent
for each of the other participating named executives.
(2) The benefits under the registered pension plans and the SRA are payable
for a member's lifetime with a 60 per cent benefit payable to the
surviving spouse.
(3) The pension at retirement, at age 60 with less than 15 years' service,
will be reduced.
(4) The above benefits are not offset by any CPP/QPP payments.
The years of credited service as of December 31, 2004 for pension plan
purposes for the named executives other than George Cope and Wade Oosterman
are as follows: Darren Entwistle, four years and six months; Robert
McFarlane, four years and two months, and Joe Natale, one year and six
months. Mr. McFarlane is accruing two years of pensionable service for each
year from January 1, 2005 to January 1, 2010.
The following estimated pension service costs, accrued pension obligations
and annual pension benefits under the Company's pension plans are being
disclosed by the Company on a voluntary basis.
Executive retirement income value disclosure (1)
Annual pension
2004 Accrued obligations at benefits payable
Name service costs ($)(2) December 31, 2004 ($)(3) at age 60 ($)(4)
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 223,000 1,003,000 638,400
---------------------------------------------------------------------------------------------------------------------------------
Robert McFarlane 109,000 454,000 331,900
---------------------------------------------------------------------------------------------------------------------------------
Joe Natale 114,000 171,000 326,800
---------------------------------------------------------------------------------------------------------------------------------
(1) Amounts shown include pension benefits under the Company's registered
pension plan and Supplemental Retirement Arrangement.
(2) Service cost is the value of the projected pension earned for pensionable
service in 2004. The value has been determined using the same actuarial
assumptions as those used to determine the year-end pension plan obligations
disclosed in the notes to the 2004 consolidated financial statements.
(3) Accrued obligations are the actuarial value of projected obligations for
service to December 31, 2004. The value has been determined using the same
actuarial assumptions as those used to determine the year-end pension plan
liabilities disclosed in the notes to the 2004 consolidated financial
statements.
(4) Amounts in this column are based on 2004 compensation levels and
assume accrued years of service to age 60 for each of the named executives.
Employment agreements
TELUS has entered into executive employment agreements for an indefinite term
with Darren Entwistle and Robert McFarlane. Both agreements provide that if
the employment of the executive were terminated at any time other than for
just cause or by reason of death, disability or retirement ("without cause"),
the executive will be paid a severance payment equal to two times his annual
compensation and will be provided with continued benefit coverage and
continued accrual of pensionable service for two years following the date of
termination. Both agreements contain a prohibition on the improper disclosure
or use of confidential information and a one-year non-competition restriction
after termination.
Under his agreement, Darren Entwistle received a $250,000 interest-free
forgivable loan net of tax obligations at the commencement of his agreement,
of which $50,000 was forgiven in each of 2001, 2002, 2003 and 2004. The
agreement with Mr. McFarlane provides that he will be accruing two years of
pensionable service for each year from January 1, 2005 to January 1, 2010.
TELUS has entered into an executive employment agreement with Joseph Natale
for an indefinite term which provides that upon termination without cause the
executive will be paid a severance payment equal to one and one half times his
annual compensation and will be provided with continued benefit coverage and
continued accrual of pensionable service for one and one half years following
the date of termination. The agreement contains a prohibition on the improper
disclosure or use of confidential information and a one-year non-competition
restriction after termination.
The employment agreement between TELUS and Wade Oosterman is for an indefinite
term which provides that upon termination without cause the executive will be
paid a severance payment equal to his annual compensation. The executive does
not participate in the pension plans of TELUS. The agreement contains a
prohibition on the improper disclosure or use of confidential information and
a one-year non-competition restriction after termination.
TELUS has entered into an executive employment agreement with George Cope for
a fixed term expiring on December 31, 2007. The executive does not participate
in the pension plans of TELUS. The agreement provides that if the employment
of the executive were terminated at any time prior to expiry of the term
without cause, he will be entitled to his salary and annual variable pay for
the balance of the term of his agreement. If his employment were terminated,
with the result that the one-year competition restriction becomes effective,
the executive will be entitled to one year of annual compensation.
Indebtedness of directors and officers
No director or officer of the Company or proposed nominee for election as a
director of the Company, or any associate thereof, is or has been indebted to
the Company or its subsidiaries since January 1, 2004 except with respect to
loans as noted below. The Company provided assistance by way of loans to
certain officers to minimize financial exposure associated with their
acceptance of a position with the Company or to assist with housing costs. The
aggregate amount of all indebtedness to the Company or to any of its
subsidiaries from directors or officers as at February, 2005 was $50,000. The
following table, presented in accordance with applicable securities laws,
shows the details of certain indebtedness owed by directors and officers of
the Company. All such indebtedness was incurred prior to the July 30, 2002
enactment date of the Sarbanes-Oxley Act. In compliance with that legislation,
no new personal loans to directors and executive officers were made or
arranged, and no pre-existing personal loans were renewed or modified, since
July 30, 2002.
Name and Involvement of Largest amount outstanding Amount outstanding as at
principal position issuer or subsidiary during 2004 ($) February 2005 ($)
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle Loan from
President & CEO Company (1) 100,000 50,000
---------------------------------------------------------------------------------------------------------------------------------
(1) Interest-free. Repayment in 2004 of $50,000 was offset by a Company bonus
in an amount sufficient to cover the amount repaid and taxes thereon.
Repayment of the balance of the loan of $50,000 due in 2005 will be offset by
a Company bonus in an amount sufficient to cover the amount repaid and taxes
thereon if the executive is an employee at that time. The loan will be repaid
in a similar manner on the executive's death or his termination without cause
or as a result of disability.
The Company from time to time has notional indebtedness outstanding for brief
periods from non-executive employees with respect to the cashless exercise of
their options.
Performance graph
The following graph compares the yearly change over the past five years in the
cumulative total shareholder return on the common shares and non-voting shares
of TELUS with the cumulative total return on the S&P/TSX Composite Index,
assuming a $100 investment on December 31, 1999 and reinvestment of dividends.
[Performance graph]
Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
1999 2000 2001 2002 2003 2004
---------------------------------------------------------------------------------------------------------------------------------
TELUS common shares 100 122 75 56 86 123
TELUS non-voting shares 100 117 72 53 81 120
S&P/TSX Composite Index 100 106 91 79 98 110
Securities authorized for issuance under Equity Compensation Plans
The following table provides information as at December 31, 2004 with respect
to equity shares of the Company authorized for issuance under equity
compensation plans that provide for the issuance of equity shares. The only
continuing equity compensation plan of the Company under which equity shares
may be issued pursuant to options being granted to employees is the TELUS
Management Share Option Plan.
While options remain outstanding under the Directors Share Option and
Compensation Plan, as reported below, in 2003, the Board determined that no
further options would be granted to directors under this plan and, in February
2005, determined not to issue any non-voting shares from treasury to satisfy
any payment of deferred share units under this plan.
Options remain outstanding under the Team TELUS Plan. This plan was
established to grant options to most employees of the Company and its
subsidiaries. In 2004 the grant of options under this plan was discontinued.
The Company also issued non-voting shares to dealers of TELUS Mobility under
the TELUS Channel Stock Incentive Plan. However, this plan has been amended by
the Board in February 2005 to provide that the non-voting shares to be
provided thereunder will be purchased in the open market.
In addition to the foregoing, there are options outstanding entitling holders
to acquire equity shares of the Company under the TELUS Corporation Stock
Option Plan and the BC TELECOM Stock Option Plan (the plans that were in place
prior to the merger of predecessor Alberta-based TELUS Corporation and BC
TELECOM in February 1999) and the TELUS Share Option Plan for Former Clearnet
Optionholders (the plan that was put in place for employees of Clearnet
Communications Inc. ("Clearnet") upon the acquisition of Clearnet by the
Company in 2000). No further options are being issued under these plans.
Number of securities
remaining available for
future issuance under
Plan category Number of securities to be Weighted-average exercise equity compensation plans
issued upon exercise of price of outstanding (excluding securities in
outstanding options (#) options ($) column A)(#)
A B C
---------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by securityholders 3,202,595 $35.28 Nil
---------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by securityholders 18,712,165 $24.49 7,462,017
---------------------------------------------------------------------------------------------------------------------------------
Total 21,914,760 $26.07 7,462,017
=================================================================================================================================
Stock option plans
TELUS Management Share Option Plan
The TELUS Management Share Option Plan ("Management Plan") has been amended
and restated as part of the division of the original TELUS Share Option and
Compensation Plan into the Directors Share Option and Compensation Plan and
the Management Plan. Holders of common shares are being requested to approve
an amendment to the Management Plan to increase the number of non-voting
shares reserved for issuance under this plan, and to approve the amendment to
the plan to permit stock settled options. See "Amendment to TELUS Management
Share Option Plan".
Directors Share Option and Compensation Plan
As at February 28, 2005, options to purchase a total of 14,200 common shares
and 18,900 non-voting shares or 0.02 per cent of the issued and outstanding
equity shares of the Company, were outstanding under the Directors Share
Option and Compensation Plan. Such options have an expiry date that is 10
years after the date of grant and a strike price equal to the weighted average
price of the Company's non-voting shares on the trading day immediately
preceding the date of grant. As noted above, no more options are being granted
under this plan and there is no reserve for additional options under this
plan. Options cannot be transferred or assigned by a participant other than by
will or the laws of succession on devolution.
Under the terms of the Directors Share Option and Compensation Plan, options
expire on the earlier of (i) 12 months after the participant ceases to be a
director due to death, and (ii) the expiry of the option, whether or not the
participant has previously ceased to be a director; provided that if the
participant becomes a director, officer or employee of a competitor after he
ceases to be a TELUS director the options will immediately terminate. For
options outstanding at January 1, 2002, the plan permits the participant to
elect to receive in cash the difference between the market price of the common
shares exercised and the exercise price. The Company may override the election
and require that the common shares be purchased. The common shares are not
added back to the reservation.
The Directors Share Option and Compensation Plan also provides that a
participant may elect to receive the annual retainer and meeting fees paid to
that participant in deferred share units, equity shares or cash. The annual
board retainer of a participant cannot be paid to the participant entirely in
cash unless the participant holds deferred share units and/or non-voting
shares having a market value at least equal to a defined ownership target as
determined by the Board of Directors. Deferred share units are credited to an
account for a participant based on the weighted average trading price of
non-voting shares or common shares (for deferred share units held prior to
January 2001) on the day the fees are paid. Deferred share units held for a
participant are credited with dividends paid on the Company's equity shares
and when paid out to a participant are paid at the then market price of the
applicable shares, as determined under the plan. If a participant elects to
acquire non-voting shares, the non-voting shares are acquired by the plan
administrator in the open market for the participant.
In February 2005 when the terms of the Directors Share Option and Compensation
Plan were separated from the TELUS Share Option and Compensation Plan, and the
plan was amended and restated, the right of the Company to issue non-voting
shares from treasury was cancelled.
The Board of Directors of the Company, subject to any regulatory or required
shareholder approval, has the power under the plan to amend or terminate the
plan at any time, provided, however, that any such amendment shall not alter
or impair any option previously granted, unless such amendment is not
prejudicial to a participant. This power of amendment includes the right to
amend any vesting requirements of any option and the right to extend the date
at which an option expires by reason of the happening of an event, provided
the extension is not beyond the original expiry date. Shareholder approval is
required for any amendment to the plan which is considered material including
increasing the reservation of shares, provided for cashless exercise or stock
settlement if the shares underlying the option are added back to the
reservation, any changes in the exercise price of outstanding options or
permitting the Company to provide financial assistance.
Team TELUS Plan
In 2001, the Company established the TELUS Corporation Employee Stock Option
Plan ("Team TELUS Plan"), which provided for 100 options to be granted, from
time to time, under the plan to all regular, part time, casual and temporary
employees of the Company and its subsidiaries, other than those who are
eligible to receive grants under the TELUS Management Share Option Plan. A
maximum of 11,040,000 non-voting shares representing 3.1 per cent of the
Company's equity shares issued and outstanding was reserved for issuance under
the plan. As at February 28, 2005, there were 5,813,449 non-voting shares,
representing 1.6 per cent of the Company issued and outstanding equity shares,
to be issued upon the exercise of outstanding options under this plan. The
Company has discontinued granting options under this plan.
Under the terms of the plan, all eligible employees received the same number
of options. Options were granted under this plan in 2001, 2002, 2003 and 2004.
Options granted under the plan have a maximum expiry date of ten years and
have a strike price equal to the weighted average trading price of the
Company's non-voting shares on the trading day immediately preceding the date
of grant. The options vested on the second anniversary after the grant date.
Options granted, terminate on the earliest of (i) the day of any voluntary
termination of employment by a participant, or the day a participant is
terminated for just cause, (ii) three years after the date of normal
retirement of a participant, (iii) 12 months after the date of death or
disability of a participant, (iv) 90 days after termination of a participant's
employment by the Company or a subsidiary, or after a subsidiary is sold by
the Company, or (v) the expiry date of the options. Options cannot be
transferred or assigned by a participant under the plan. A participant may not
assign any option other than by will or the laws of succession and devolution.
The Board of Directors of the Company, subject to any regulatory or required
shareholder approval, has the power under the Plan to amend or terminate the
Plan at any time, provided, however, that any such amendment shall not alter
or impair any option previously granted, unless such amendment is not
prejudicial to such participant. The plan was amended in 2004 to increase the
number of shares reserved for issuance.
TELUS Channel Plan
As at February 28, 2005, there were 172,425 non-voting shares or 0.05 per cent
of the issued and outstanding equity shares of the Company reserved for
issuance under the TELUS Channel Stock Incentive Plan (the "Channel Plan").
Under this plan, dealers of TELE-MOBILE Company ("TELUS Mobility") are
entitled to receive one non-voting share of the Company for reaching each
target number (as established) of active and good standing subscriber units
sold by the participant which are active for at least six months. The
non-voting shares earned under the Channel Plan are compensation for services
rendered to TELUS Mobility and TELUS Mobility pays the Company for the
non-voting shares issued, an amount for each share equal to the weighted
average trading price for the non-voting shares for the five consecutive
trading days prior to the date of issue.
A participant's rights under the Channel Plan cease (i) when the participant
dies, withdraws from the plan or ceases to be employed by a TELUS Mobility
dealer, or (ii) at TELUS Mobility's option if the participant fails to meet
the established criteria. In such event the participant is entitled to receive
non-voting shares for agreed subscriber units sold to that time. If the
participant is a defaulting participant, participation is terminated and the
participant loses all rights to any non-voting shares. A participant may not
assign any option other than by will or the laws of succession and devolution.
The Company has the right to terminate the plan or to amend or suspend the
plan with 30 days prior notice to the participants. No amendments to the plan
were made during 2004. The Company has amended this plan in 2005 to provide
that the non-voting shares will be purchased in the market.
Other Existing Share Equity Plans
TELUS Share Option Plan for Former Clearnet Optionholders (the "TELUS/Clearnet
Plan")
When TELUS completed the acquisition of Clearnet on October 20, 2000 (the
"Effective Date"), holders of options under the Clearnet Communications Inc.
Option Plan (the "Clearnet Plan") were given the right to elect to exchange
their options for options under the TELUS/Clearnet Plan.
As at February 28, 2005 options to purchase 570,080 non-voting shares or 0.2
per cent of the issued and outstanding equity shares of the Company were
outstanding under this plan. The exercise price for the options was determined
by subtracting from (a) the market price of the non-voting shares of the
Company on the Effective Date, (b) the amount obtained by dividing the
difference between the market price of Clearnet common shares on the Effective
Date and the exercise price of the options under the Clearnet Plan, by 1.636.
This exercise price reflected the exchange ratio at which TELUS acquired the
common shares of Clearnet. No further options are granted under the
TELUS/Clearnet Plan. The options under this plan are not assignable except by
the laws of succession and devolution.
The options under the TELUS/Clearnet Plan expire on the earliest of (i) six
months after the date of voluntary termination of employment by a participant
or the date of termination of the participant by the Company or a subsidiary
without just cause, (ii) three years following the date of normal retirement
of a participant, or disability of a participant, provided it is not beyond
the original expiry date, (iii) he date of termination of employment of a
participant for just cause (iv) 12 months after the death of a participant, or
(v) the original expiry date of the option as granted by Clearnet (which was
10 years from the date of grant).
The Board of Directors of the Company, subject to any regulatory or required
shareholder approval, has the power under the Plan to amend or terminate the
Plan at any time, provided, however, that any such amendment shall not alter
or impair any option previously granted, such amendment is not prejudicial to
such participant.
BC TELECOM Share Option Plan and TELUS Corporation Share Option Plan
At the time of the merger by way of a plan of arrangement of BC TELECOM and
predecessor Alberta-based TELUS Corporation in February 1999 (the "Merger"),
the options then existing under the BC TELECOM Share Option Plan ("BC TELECOM
Plan") and the TELUS Corporation Share Option Plan ("TSOP") were converted
into options to purchase common shares and non-voting shares of the Company
based on the exchange ratio for BC TELECOM shares and TELUS shares pursuant to
the plan of arrangement. The TSOP and the BC TELECOM Plan are together called
the Pre-Merger Plans. The exercise prices under the Pre-Merger Plans were
determined based on the exchange ratio and the exercise prices of the granted
options under the respective plans on the effective date of the merger. No
further options are issued under these plans.
As at February 28, 2005, there were options outstanding under the TSOP to
purchase 787 non-voting shares and 2,361 common shares or 0.001 per cent of
the issued and outstanding equity shares of the Company. The last expiry date
for these options is June 2005.
As at February 28, 2005, there were options outstanding under the BC TELECOM
Plan to purchase 109,958 non-voting shares and 329,874 common shares or 0.1
per cent of the issued and outstanding equity shares of the Company. These
options expire at varying dates up to 2008. Under the BC TELECOM Plan, the
participants hold share appreciation rights which entitle them to receive an
amount in cash equal to the difference in the exercise price and the closing
price of the applicable shares of the Company on the day prior to the date of
exercise. To the extent participants elect to receive a share appreciation
right, the corresponding option is cancelled. Options and rights under the BC
TELECOM Plan are exercisable on the earliest of (i) 12 months after (A) a
participant retiring or (B) a participant ceasing to be on officer or director
of the Company, or (C) a participant's death, (ii) in all other cases other
than as set out in (i), on the day a participant ceases to be an employee,
unless otherwise determined by the Compensation Committee, and (iii) the
expiry date of the options. All options are non-transferable.
The Board of Directors of the Company is permitted to amend the plan at any
time provided that the amendment does not alter or impair any options
previously granted and subject to any required regulatory approval.
Interest of certain persons in matters to be acted upon
None of the directors or executive officers of the Company, no proposed
nominee for election as a director of the Company, none of the persons who
have been Directors or executive officers of the Company since the
commencement of the Company's last completed financial year, none of the other
insiders of the Company and no associate or affiliate of any of the foregoing
persons has any substantial interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the
meetings other than the election of the directors and with respect to the
executive officers, the proposed amendments to the Management Plan.
Interest of certain persons in material transactions
None of the insiders of the Company, no nominee for election as a director of
the Company and no associate or affiliate of such persons or companies has any
material interest, direct or indirect, in any transaction since the
commencement of the company's last completed financial year or in any proposed
transaction, which, in either case, has materially affected or will materially
affect the Company or any of its subsidiaries.
Directors' and officers' insurance and indemnification
To the extent permitted by law, TELUS has entered into indemnification
agreements with its directors for liabilities incurred while performing their
duties. The Company also maintains insurance which protects directors and
officers and the Company against claims made, provided they acted in good
faith on behalf of TELUS, subject to policy restrictions. Such insurance
currently provides for an annual aggregate limit of $115 million coverage with
a $1 million deductible; where the Company is not able to indemnify the
insured persons the deductible is nil. The approximate premium associated
with the insurance protection of individual directors and officers was
$1,010,000 for 2004.
Additional matters and information
Additional financial information is contained in the Company's annual
information form and the audited financial statements of the Company for the
year ended December 31, 2004 and management's discussion and analysis thereon.
Copies of these documents are available upon request to TELUS' Corporate
Secretary at 21st Floor, 3777 Kingsway, Burnaby, British Columbia, V5H 3Z7.
All of the Company's public documents are filed with SEDAR and EDGAR and may
be found on the following websites, sedar.com and sec.gov.
Board approval
The Board of Directors has approved in substance the contents of this
information circular and the sending of this information circular to the
holders of common shares and non-voting shares.
DATED March 21 2005.
/s/Audrey T. Ho
Audrey T. Ho
Vice President, Legal Services and General Counsel
and Corporate Secretary
Appendix A: Statement of TELUS' corporate governance practices
TELUS is committed to adopting effective and best practices in corporate
governance. TELUS consistently assesses and adopts emerging best practices. In
a year of continued focus on corporate governance, the following are the most
noteworthy corporate governance measures taken by regulators that will impact
TELUS:
* the finalization in April 2004 of continuous disclosure obligations issued
by the Canadian Securities Administrators ("CSA");
* the finalization on March 31, 2004 of the Investor Confidence Rules issued
by the CSA ("CSA Investor Confidence rules");
* the coming into force of a new Business Corporations Act (British Columbia)
in March 2004;
* the release on October 29, 2004 and November 29, 2004 respectively of
proposed revisions to the CSA Investor Confidence Rules regarding the test
for director independence and the requirements relating to CEO and CFO
certification of internal controls issued by the CSA;
* the release in August and November 2004 of revisions to the New York Stock
Exchange Corporate Governance Rules ("NYSE Rules");
* the release on October 29, 2004 by the CSA of amendments to the previously
proposed Policy 58-201 Corporate Governance Guidelines ("NP 58-201") and
National Instrument 58-101 Disclosure of Corporate Governance Practices ("NI
58-101", together with NI 58-201 the "proposed CSA Governance Guidelines");
* the announcement on October 29, 2004 by the Toronto Stock Exchange that it
would require its issuers to disclose their corporate governance practices
against the proposed CSA Governance Guidelines;
* the finalization on January 1, 2005 by the Toronto Stock Exchange of
amendments to requirements regarding, among other things, shareholder
approvalof security-based compensation arrangements;
* the release on February 4, 2005 by the CSA of Multilateral Instrument 52-111
Reporting on Internal Control over Financial Reporting.
TELUS is committed to an ongoing process of clear disclosure of its corporate
governance practices in comparison with the TSX guidelines. TELUS has
disclosed its corporate governance practices in relation to the TSX guidelines
since the TSX adopted them in 1995. As a continued listing requirement of the
TSX, TELUS discloses in the next section its approach to corporate governance
with reference to the current TSX guidelines, and also provides voluntary
disclosure with reference to the proposed CSA Governance Guidelines. TELUS is
in full compliance with the current TSX guidelines, the proposed CSA
Governance Guidelines and the CSA Investor Confidence rules. TELUS is also in
full compliance with the NYSE Rules
Disclosure of TELUS' practices with reference to the current TSX guidelines
and the proposed CSA Governance Guidelines.
TSX guidelines
TELUS alignment
TELUS' practices
Guideline 1: The Board Yes * The Board of Directors has
explicitly assumes assumed responsibility for the
responsibility for stewardship of the Company by
stewardship of the supervising the management of
Company the business and affairs of the
Company and supervising
management, which is responsible
NP 58-101F1, section 2 for the day-to-day conduct of
the business.
* The TELUS Board Policy Manual
was developed to assist members
of the Board in fulfilling their
obligations, both individually
and collectively. The manual,
revised in 2004, is a guideline
for the Board and sets out
expectations for the Board,
committees, individual
directors, the Chair and the
President and CEO, along with
expectations for each of the
committees through their
respective terms of references.
It serves as a road map for the
Board to help it meet its
responsibilities in the most
effective manner possible on an
ongoing basis. The terms of
reference for the Board of
Directors is attached as
Appendix "B" to this information
circular. A copy of the entire
TELUS Board Policy Manual is
available at
telus.com/governance.
* To help the Board fulfill its
obligations, duties and
responsibilities, the Board
delegates certain duties and
responsibilities to committees
to ensure full review of certain
matters. The terms of references
of the committees outline the
approval process for various
activities performed by the
committees. The committees then
report back to the Board on
their activities, on a regular
basis, and recommend certain
matters to the Board for its
approval.
* To further delineate the
responsibilities of the Board, a
Delegations Policy under which
the Board delegates certain
decisions to management, was
first adopted in 1999. The Board
updated and revised the
Delegations Policy in 2004 to
align with the revised TELUS
Board Policy Manual. This policy
provides guidance to the Board
and management on matters
requiring Board approval
including major acquisitions,
investments or divestitures.
Guideline 1(a): The Yes * The Board has assumed
Board assumes responsibility for adoption of
responsibility for the the strategic planning process.
adoption of the It ensures there are long-term
strategic planning goals and strategies in place.
process Goals and strategies are
prepared and reviewed together
by management and the Board on
an annual basis and are a
component of the Board's annual
agenda. The Board as a whole
participates in discussions on
corporate strategy, taking into
account the opportunities and
risks of the business, and, if
appropriate, approves the
strategies and implementation
plans recommended by management.
* At least one extensive Board
strategic planning session is
held annually. A comprehensive
and interactive strategic
planning session with senior
management took place in
September 2004 at which the
directors reviewed current
issues faced by TELUS and the
telecommunications sector as a
whole.
* The Board provides periodic
guidance throughout the year on
the development of corporate
strategies based on the
strategic plan and annual
business plan. It also reviews
any changes to corporate
strategies or the strategic plan
that may be necessary in light
of any new developments that
impact TELUS.
* The Board monitors the
performance of management in
relation to both the strategic
objectives and operational
objectives.
Guideline 1(b): The Yes * The Board has assumed
Board assumes responsibility for identifying
responsibility for the the principal risks of the
identification of the Company's business and for
principal risks of the ensuring the integrity of the
Company Company's internal controls and
management information systems,
as set out in the TELUS Board
Policy Manual. The Board
determines the principal risks
associated with Company
business, based on the Board's
knowledge of the
telecommunications industry, the
regulatory and competitive
environment, general economic
conditions and information
provided by management. For a
detailed summary of the risks
and uncertainties of the
Company, see the Risks and
uncertainties section in the
Management's discussion and
analysis (MD&A) in the 2004
annual report.
* The Audit Committee is
responsible for reviewing and
monitoring the enterprise risk
management systems in place to
mitigate the Company's exposure.
In August 2004, it reviewed the
2004/2005 risk and control
assessment process including the
Company's risk management goals,
and proposed improvements (which
were adopted) to the Company's
annual risk and controls
assessment approach and
timeline. In October 2004 the
Audit Committee reviewed the
results of the annual TELUS risk
and control assessment process
which is designed to identify
key risks, key management risk
owners tasked with mitigating
the risks, perceptions of the
internal control environment
based upon the COSO (Committee
of Sponsoring Organizations of
the Treadway Commission) model
of internal control and the 2005
internal audit program to
provide assurance to the Audit
Committee regarding management's
progress towards mitigating
risks.
* The Audit Committee receives
quarterly reports on internal
audit program results (including
management's follow-up on
previously identified issues)
and evaluation of internal
control systems and risk
assessment updates, including
legal and regulatory claims;
environmental, health and safety
issues; business continuity and
disaster recovery plan; current
accounting policies, financial
derivatives and other exposures.
* The Audit Committee receives a
compliance report on material
legal and regulatory obligations
based on a quarterly compliance
survey cascaded to executives
and senior management, an annual
report on the relationship with
regulators and the accuracy and
timeliness of regulatory filings
and quarterly updates regarding
the work of the Compliance
office.
* The Audit Committee has
overseen the process for
significantly improving the
management of the control,
governance and operational
processes across the Company.
From a governance reporting
perspective, the Company
requires the Vice-President,
Risk Management and Chief
Internal Auditor to report
administratively to the CFO and
functionally to the Audit
Committee. This reporting
structure enables closer insight
and proactive monitoring of the
accounting and financial
management processes,
organizations and practices, the
safeguarding of the Company's
assets and the efficiency and
effectiveness of operations.
* The Chief Compliance Officer,
appointed in 2003, works to
ensure that the Company has in
place appropriate policies,
standards and practices to
comply with legal and regulatory
requirements. The Chief
Compliance Officer is required
to report administratively to
the Executive Vice-President,
Corporate Affairs and
functionally to the Audit
Committee. In October 2004, the
Chief Compliance Officer
reviewed with the Audit
Committee the 2004 progress in
the adoption of proposed
compliance with key laws and
regulations and identified 2005
compliance focus areas.
Guideline 1(c): The yes * The Board assumes the responsibility
Board assumes the for succession planning and
responsibility for the delegates to the Compensation
succession planning, Committee the responsibility to
including appointing, oversee and approve the
training and monitoring Company's plans for senior
senior management management succession,
development and retention.
NI 58-101F1, section 7 * The Compensation Committee
periodically reviews the
Company's overall organizational
structure for executive
management, and approves and
recommends to the Board for
approval the appointment of
executive leadership team
members.
* The Compensation Committee
reviews, approves and reports to
the Board on an annual basis, or
more frequently as required,
succession plans for executive
management including specific
personal development plans and
career planning for potential
successors.
* For more information on the
Compensation Committee's
responsibilities, including the
process by which it determines
compensation of TELUS' executive
leadership team, see the Mandate
and Report of the Human
Resources and Compensation
Committee on page 39.
* The performance of executive
management is annually measured
against specific objectives. See
the Report on Executive
Compensation on page 40.
Guideline 1(d): The yes * The Board has implemented
Board assumes appropriate structures to promote
responsibility for a complete, timely and effective
communications policy communications between TELUS, its
members, the public and regulatory
agencies. Through the Audit
Committee all material public
financial information is reviewed
and recommended to the Board for
approval for release prior to
public disclosure.
In 2003, the Board approved a
Policy on Corporate Disclosure and
Confidentiality of Information, a
copy of which is available at
telus.com/governance. The Policy
sets out the Company's policies and
practices on corporate disclosure
and maintaining confidentiality of
information. The Policy's
objectives include:
i) disclosing information in a
timely, consistent and
appropriate manner; and
ii) disseminating material
information pursuant to all
applicable legal requirements.
The Policy applies to TELUS
directors, officers and employees.
Any material changes to TELUS'
practices and this Policy, as
approved by the Disclosure
Committee of the Company, will be
reported back to the Audit
Committee and must be approved by
the Board.
Guideline 1(e): The yes * The Board is responsible for
Board assumes ensuring the integrity of internal
responsibility for the control and management information
integrity of internal systems and executes its
control and responsibility through its
management delegation to the Audit Committee.
information systems The Audit Committee receives
quarterly reports on the internal
audit activities conducted during
each quarter and updates on the
internal control systems. It also
receives results from the
Web-enabled risk and control
assessment survey designed to
identify strengths and weaknesses
with the system of internal
controls within TELUS. This survey
aligns with the COSO model of
internal controls and covers the
following components of internal
controls: the control environment
("Tone at the Top"), risk
assessment, control activities
(policies and procedures),
information and communications
systems and monitoring.
* The Audit Committee receives
annual reporting of a Web-enabled
conflict of interest report by
senior managers and others with key
roles within the internal control
system of the Company.
* The Audit Committee reviews and
approves methods of controlling
corporate assets and information
systems. It also reviews on a
quarterly basis, major accounting
policies including: the impact of
alternative accounting policies and
key management estimates or
judgments that could materially
affect financial results. As well,
the Audit Committee receives
reports on the certification
process implemented by the Company
regarding annual and quarterly
financial reporting and disclosure
processes. See the Mandate and
Report of the Audit Committee on
page 36.
Guideline 2: The Board yes * Following the recommendations of
is constituted with a the Corporate Governance Committee,
majority of "unrelated" the Board has determined which
directors directors are considered "unrelated"
pursuant to the definitions set out
in the current TSX guidelines.
* Following the recommendations of the
Corporate Governance Committee, the
Board has further determined which
directors are considered
"independent" pursuant to the
definitions set out in the proposed
CSA Governance Guidelines (NP
58-201, Guideline 3.1), the CSA
Investor Confidence rules, the U.S.
Sarbanes-Oxley Act (SOX), the U.S.
Securities and Exchange Commission
rules and the NYSE Rules.
* On rigorous application of these
definitions, 10 of the 11 proposed
directors of the Company are
considered "unrelated" to the
Company and "independent". See
Guideline 3 below.
Guideline 3: Disclose yes * Mr. Entwistle is the only director
whether each director is who is a member of management of the
"unrelated" or Company. Consequently, by virtue of
"related" to the being a member of management,
circumstances of each Mr. Entwistle (President and CEO) is
director and the a "related" director pursuant to the
analysis of the current TSX Guidelines. If elected
application of at the meeting, Mr. Entwistle will be
supporting this the only director who is a "related"
conclusion director.
* For similar reasons, the Board has
NI 58-101F1, section 1 determined that Mr. Entwistle is
not an "independent" director
pursuant to the proposed CSA
Governance Guidelines and the NYSE
Rules, and that a material business
relationship exists between TELUS
and Mr. Entwistle. If elected at
the meeting, Mr. Entwistle will be
the only director who is not an
"independent" director.
* The chair of the Board, B.A.
Canfield, is not considered a
"related" director under the current
TSX guidelines by virtue of his
office.
The Board considers Mr. Canfield to
be "independent" under NP 58-201,
Guideline 2.1 and 3.2 and under the
NYSE Rules. He was CEO of BC TELECOM
Inc., predecessor to TELUS from
October 1990 to July 1997. He also
served as President and CEO of the
Company from September 1999 to July
10, 2000 and, therefore, has passed
the "cooling off period" required by
the NYSE Rules for establishing his
"independence" from management.
* The Board is satisfied that, except
for Mr. Entwistle, there is no
material relationship existing
between any of the proposed
directors and the Company, either
directly or as a partner, shareholder
or officer of an organization that
has a material relationship with the
Company. Each director owns TELUS
securities; these holdings are
disclosed under the Election of
Directors on page 19, along with the
names of other corporations and
organizations on whose boards the
TELUS directors serve. The Board
has made such determinations based
on a comprehensive questionnaire
completed by each director.
* Additional disclosure on Board
members, including their business
experience and backgrounds, can be
found in the Election of Directors
in this information circular, the
annual information form, the 2004
annual report, and at telus.com/bios.
Guideline 4: The Board yes * The Corporate Governance Committee,
has a committee which is comprised entirely of
responsible for "unrelated" and "independent"
appointment/assessment directors, is responsible for
of directors, composed assessing and making recommendations
of exclusively non- regarding Board effectiveness and
management/unrelated establishing a process for
directors identifying,recruiting, appointing,
and providing ongoing education
and development for directors.
NI 58-101F1, section 6
* In 2004, the Corporate Governance
Committee undertook a director
search, which resulted in the
appointment on December 7, 2004
of Ruston E.T. Goepel to the Board
of Directors. In conducting its
search, the Corporate Governance
Committee considered the
competencies, skills and personal
qualities it should seek in a new
Board member to add value to the
Company. It then retained an
external consultant for the director
search. Prospective director
candidates then met with the Chair
and the President and CEO. See
Mandate and Report of the Corporate
Governance Committee on page 32 and
Guideline 7 below.
Guideline 5: The Board yes * The Corporate Governance Committee,
has implemented a inconjunction with the Chair,
process for assessing the carries out an annual assessment
effectiveness of the process thatrates the effectiveness
board, its committees of the Board,reviews Board and
and contribution of committee processes,and reviews the
individual directors Board's relationship with management.
In 2004, the annual assessment was
revised to include a specific
NI 58-101F1, section 9 assessment of each committee and
each committee chair.
* An annual director peer evaluation
program first implemented in 2002
provides each director with feedback
from director peers on his or her
performance. It provides directors
with suggestions for improving his
or her effectiveness as directors
and contributions to the Board.
* In 2004, the Corporate Governance
Committee established a succession
planning process for the position
of the Chair of the Board.
* The TELUS Board Policy Manual sets
out the duties and responsibilities
of individual directors, including
preparation for and expected
attendance at Board and committee
meetings. The Board also monitors
and discloses attendance at Board and
committee meetings by the directors,
as set out in the Election of
Directors on page 19.
Guideline 6: The yes * The TELUS Board Policy Manual was
Company, as an established to assist new and
integral part of the existing Board members in
process for appointing understanding the role of the Board,
new directors, has an the role of Board committees and the
orientation and contribution individual Board members
education program for are expected to make, including the
new directors commitment of time and energy
expected by the Company. The manual
is subject to periodic review and
NP 58-101F1,section 4 approval by the Corporate Governance
Committee and the Board. In October
2004, the Corporate Governance
Committee recommended, and the Board
approved, revisions to the Pension
Committee's Terms of Reference.
* The Corporate Governance Committee
reviews, approves and reports to the
Board on the directors' orientation
processes and plans for the ongoing
development of existing Board members.
* The Company's newest director,
Mr. Goepel, participated in an
orientation process that included:
1) receiving TELUS' most recent
public disclosure documents,
including the annual information
form and the annual report, and the
TELUS Board Policy Manual; and 2)
attending an orientation session
whereby key management provided an
overview on the TELUS organization
structure, strategy and financial
plan.
* As part of the strategic planning
session in September 2004, the
President and CEO, in conjunction
with the Chair, selected special
educational topics for presentation
and discussion at the strategic
planning session. Topics dealt with
included the business and regulatory
environment, new technology and the
telecommunications sector in general.
Guideline 7: The Board yes * An appropriate number of Board
has examined the size of members presenting a diversity of
the Board, and has views and business experience have
undertaken a program been nominated for election to the
to reduce the number of Board in order for the Board to
directors with a view to function effectively.
improve effectiveness
* The Corporate Governance Committee is
conducting a director search for a
12th director, given the resignation
of the two Verizon executives in
December 2004 following Verizon's
sale of its equity interest in the
Company. The Committee believes that
it is in the Company's best interest
to take the necessary time to conduct
a careful search for optimal
candidates who will enhance and
complement current Board membership.
Accordingly, the Committee has
proposed 11 directors for election at
the Annual and Special Meeting. The
Committee further proposes that the
Company's Articles be amended such
that the minimum size of the Board
be decreased from 12 to 10 members.
* The Board annually reviews the size
and composition of the Board and the
committees, in accordance with the
TELUS Board Policy Manual.
Guideline 8: The Board yes * The Corporate Governance Committee
has reviewed the reviews and recommends to the Board
adequacy and form of the compensation and benefits of
compensation of Board members. In this regard, the
directors in light of Committee considers factors such as
the risks and market data, time commitments, fees
responsibilities of paid by similar organizations and
being a director responsibilities of the directors.
In February 2005, the Corporate
Governance Committee initiated a
NP 58-101F1, section 7 review of directors' compensation and
(directors' engaged external consultants to
compensation only) analyze market data and fees payable
by similar organizations. If the
Corporate Governance Committee
determines that a change in
compensation is appropriate, the
revised compensation adopted will be
disclosed at telus.com/governance.
For details on current levels of
director compensation, see Director
Compensation on page 33.
* The Company has aligned the Board's
interests with the interests of
shareholders, by increasing the
equity ownership thresholds to be
attained by directors, and by
choosing payment of deferred share
units to directors in lieu of
options. Currently, the Chair's
equity ownership threshold is a value
that is two times the annual retainer
paid to the Chair, to be acquired
within five years of joining the
Board. For all other directors, the
minimum equity ownership is eight
times the annual Board retainer paid
to a director, to be acquired within
five years of joining the Board. In
addition, the Company requires that
a minimum level of the annual board
retainer be directed to the purchase
of TELUS shares, or paid in the form
of deferred share units, until the
target equity ownership threshold is
reached. As of March 1, 2005, 10 of
the 10 proposed non-management
directors have reached the minimum
equity ownership level. Mr.
Entwistle's holdings exceed the
higher ownership threshold required
of the President and CEO.
Guideline 9: yes * As a minimum requirement, each TELUS
Committees should committee must be comprised of a
generally be composed majority of "unrelated" directors,
of non-management all of whom are non-management
directors and the directors, and a majority of
majority of committee "independent" directors under the
members should be proposed CSA Governance Guidelines
unrelated and the NYSE Rules. Directors who
are also members of the Company's
management may not be members of any
committee.
* Each of the Corporate Governance
Committee, the Human Resources and
Compensation Committee, and the
Pension Committee are comprised
solely of "unrelated",
"non-management" and "independent"
directors.
* The Audit Committee is comprised
solely of "unrelated",
"non-management" and "independent"
directors, in compliance with the
CSA Investor Confidence Rules, the
amendments thereto and the
requirements of SOX and the United
States Securities and Exchange
Commission.
* All directors may attend all
committee meetings. The President
and CEO may not be a member of any
committee. The Chair of the Board
may not be Chair of any committee.
* At the end of regularly scheduled
committee meetings, the committee
members regularly meet "in camera"
without management present.
Generally, the Chair of the committee
presides over these sessions.
* The Board encourages attendance by
executive management at Board and
committee meetings to provide
additional insight into the items
being discussed and exposure to
executive management.
Guideline 10: Appoint a yes * The Corporate Governance Committee
committee responsible is responsible for governance issues,
for determining the including:
Company's approach to * monitoring and assessing corporate
corporate governance governance developments, best
issues and the practices for corporate governance
Company's response to and the effectiveness of the
these governance Company's corporate governance
guidelines practices
* recommending to the Board for
approval, the Company's disclosure
in response to these guidelines
* annually reviewing the TELUS Board
Policy Manual, including all terms
of reference
* periodically reviewing Board and
committee composition and the
scope, duties and responsibilities
of those committees.
Guideline 11: The yes * The Board has a broad responsibility
Board, together with for supervising the management of the
the CEO, has developed business and affairs of the Company.
position description for This responsibility is outlined in
the Board and CEO, the TELUS Board Policy Manual. In
including defining August 2004, the Board updated and
limits to management's approved revisions to its Delegations
responsibilities. The Policy. The policy further defines
Board had approved the authority of management with
the corporate objectives regard to decisions involving the
the CEO is responsible operations of the Company and its
for meeting subsidiaries.
* The TELUS Board Policy Manual also
NP 58-101F1, section includes terms of reference for the
3(b) President and CEO. The Board
annually approves the Company's goals
and objectives for which the
President and CEO is responsible for
meeting. As well, his annual
performance objectives relevant to
compensation, which are reviewed and
approved by the Compensation
Committee, supplement his mandate.
The Compensation Committee evaluates
the performance of the President and
CEO against his annual objectives and
reports back to the Board. For
further details, see Mandate and
Report of the Human Resources and
Compensation Committee on page 39.
Guideline 12: The yes * The Board recognizes that its
Board has implemented independence from management is
structures and primary to fulfilling its duties.
procedures to enable The Board is committed to the
the Board to function principles of independence and
independently of accountability. Management is
management, including accountable to the Board. The Board
separate roles of the has statutory obligations to act in
Board Chair and CEO the best interests of the Company and
it has fiduciary responsibility to
the shareholders. Refer to
NP 58-101F1, section disclosure on Guideline 1 for further
3(a) information on Board structure and
processes to ensure the effective
NP 58-101F1, section operation of the Board.
1(e)
* The Corporate Governance Committee is
responsible for establishing
structures and processes to enable
the Board to function independently,
and to ensure that prospective
candidates fully understand the role
of the Board and contributions they
are expected to make.
* The TELUS Board Policy Manual
contains a written description of the
duties of the Chair of the Board and
stipulates that the positions of the
Chair and the President and CEO must
be separate, further enabling the
independence of the Board. It also
requires that the Chair of the Board
must be independent. The manual also
contains terms of reference for the
committees of the Board, including a
brief description of the duties of
the chairs of committees.
* As a regular feature of each
regularly scheduled Board meeting,
the Board meets without management
other than the President and CEO,
followed by an "in-camera" session
without the President and CEO. The
Chair generally presides over these
"in-camera" sessions of the Board.
In February 2005, the Board also
conducted its annual "in-camera"
session without non-independent
directors present, as required by
the TELUS Board Policy Manual.
* Each committee has specific authority
to retain external advisors.
Guideline 13: The Audit yes * The Audit Committee is comprised
Committee has a entirely of outside and "independent"
specifically defined directors as defined under the CSA
mandate, with all Investor Confidence Rules and SOX.
members being outside
directors, including * The Board has determined that all
direct communication current Audit Committee members are
channels with the "financially literate," the Chair of
internal and external the Audit Committee is an "audit
auditors and oversight committee financial expert" as
for management reporting defined under the CSA Investor
on internal control Confidence Rules, SOX and the SEC
rules, and all current Audit
Committee members have "accounting
or related financial management
expertise" as defined under the NYSE
Rules.
* The Audit Committee has direct
communication channels with the
internal and external auditors to
discuss and review specific issues
as appropriate. The Audit Committee
has sole authority to recommend for
approval by shareholders the external
auditors, and the external auditors
report directly to the Audit
Committee.
* The Vice-President, Risk Management
and Chief Internal Auditor has a dual
reporting function and reports
directly to both the CFO and the
Chair of the Audit Committee. The
Audit Committee meets separately
"in camera" at every regular
Committee meeting, with both the
external auditors and internal
auditor, without management present.
The Audit Committee also meets
separately with management and by
itself, without management present,
at each regularly scheduled meeting.
* The Audit Committee is responsible
for reviewing the Company's audit
functions and financial statements,
and reviewing and recommending for
approval to the Board for release
material public disclosure
information such as financial
statements, quarterly reports,
financial news releases, annual
information forms, management's
discussion and analyses, and
prospectuses.
* The Audit Committee is responsible
for overseeing the Company's internal
control function and ensuring that
management has effective internal
control systems in place. It reviews
the scope of responsibilities and
effectiveness of the internal audit
group, including internal audit
reporting lines and their working
relationship with the external
auditors.
* The Audit Committee is also
responsible for overseeing the
process with the external auditors
including:
* reviewing and approving the annual
audit plan, including the scope of
the audit to be performed, the
audit plan and any changes therein
and the fees involved;
* pre-approving all audit and
non-audit services and fees related
thereto;
* reviewing and confirming the
independence of the external
auditors;
* reviewing any problems found in
performing the audit, such as
significant disagreements with
management regarding financial
reporting and limitations or
restrictions imposed by management;
* the Company's major accounting
policies, including the impact of
alternative accounting policies and
key management estimates and
judgments that could materially
affect the financial results; and
* emerging accounting issues and
their potential impact on the
Company's financial reporting.
* The Audit Committee terms of
reference explicitly set out the
role and oversight responsibility
of the Audit Committee. For further
details, see the Mandate and Report
of the Audit Committee on page 36.
These practices are in compliance
with the CSA Investor Confidence
Rules.
Guideline 14: The yes * In addition to the authority of the
Board had implemented Board and committees to retain
a system to enable external advisors at the Company's
individual directors to expense in connection with their
engage outside advisers, responsibilities, individual
at the Corporation's directors may engage outside advisors
expense at the Company's expense at any time
to provide advice with respect to a
corporate decision or action.
Disclosure regarding TELUS has adopted an Ethics Policy,
Ethics Policy(not which applies to all directors,
required under TSX officers and employees of TELUS.
guidelines) Copies of the Ethics Policy are
available at telus.com/governance.
NI 58-101F1, section 5 As part of the policy, TELUS created
the TELUS EthicsLine (1-866-515-6333)
which provides the public and TELUS
team members with a channel for
anonymous and confidential questions or
complaints on accounting, internal
controls or ethical issues that are
reported on a quarterly basis to the
Audit Committee. In addition, TELUS has
established an Ethics Office, which
conducts investigations, provides
advice on ethical dilemmas and
establishes appropriate policies,
guidelines and training on TELUS'
expected standards of business conduct.
Appendix B - Terms of reference for the Board of Directors
The entire TELUS Board Policy Manual, including the appendices
referenced below, can be found at telus.com/governance
1. INTRODUCTION
The Board is responsible for the stewardship of the Company and
overseeing the management of the Company's business and affairs. The
Board may discharge its responsibilities by delegating certain duties to
committees of the Board and to management. The specific duties delegated
to each committee of the Board are outlined in the terms of reference
for those committees.
2. NO DELEGATION
2.1 The Board may not delegate the following matters to any
committee:
a) any submission to the shareholders of a question or matter
requiring the approval of the shareholders;
b) the filling of a vacancy on the Board or any Board committee;
c) the allotment and issuance of securities;
d) the declaration and payment of dividends;
e) the purchase, redemption or any other form of acquisition of
shares issued by the Company;
f) the payment of a commission to any person in consideration of the
purchase or agreement to purchase shares of the Company from the
Company or from any other person, or procuring or agreeing to
procure purchasers for any such shares;
g) the approval of management proxy circulars;
h) the approval of any takeover bid circular or directors' circular;
i) the approval of the financial statements and management's
discussion and analysis of the Company;
j) the appointment or removal of the CEO;
k) the power of the directors set forth in the Company's charter
documents with respect to ownership and voting restrictions;
l) the establishment of any Board committee and its mandate;
m) the adoption, amendment or repeal of the charter documents of the
Company; and
n) any other matter which is required under applicable corporate or
securities laws to be decided by the Board as a whole.
3. BOARD OF DIRECTORS
3.1 COMPOSITION
a) The number of directors to be elected at a meeting of the
shareholders will be a minimum of 12 and a maximum of 16
directors, including the Chair, a majority of whom are
Independent Directors.
b) Subject to election by the shareholders and the requirements of
the applicable laws, the Company's charter documents and the
rules of any stock exchanges on which the shares of the Company
are listed, the CEO will be a member of the Board. Upon ceasing
to be CEO, he or she will be expected to volunteer to resign from
the Board and, in any event, will not be eligible for re-election
to the Board upon ceasing to be CEO.
c) The CEO will be the only management director on the Board,
provided, however, that the directors may fill a casual vacancy
on the Board with another member of management, to hold such
position until the next annual and special meeting of the
Company.
d) The Chair of the Board must be an Independent Director.
3.2 MEETINGS
a) The Board will meet at least once each quarter and, including
such quarterly meetings, a minimum of six times a year. Some of
the Board's meetings should be held in locations other than
Vancouver.
b) The Chair and CEO, with the assistance of the Corporate
Secretary, will be responsible for the agenda for each Board
meeting.
c) The Board encourages management to attend Board meetings, where
appropriate, to provide additional insight to matters being
considered by the Board.
d) The Board should have an in-camera session without management
present, including any management directors, as a regular
feature of each regularly scheduled Board meeting.
e) Once a year at a regularly scheduled Board meeting, the Board
should hold an in-camera session without non-Independent
directors in attendance.
f) Resolutions may not be approved by the Board during any in-camera
session of a Board meeting in the absence of directors who have
been excluded from such in-camera session but who have attended
the Board meeting, unless such excluded directors have consented
to such resolution being approved in their absence during the
in-camera session.
g) The quorum necessary for the transaction of business of the
directors will be a majority of the directors.
h) To the extent possible, Board materials will be made available in
electronic format.
3.3 ELECTION OR APPOINTMENT OF DIRECTORS
The Board, following recommendation by the Corporate Governance
Committee, will:
a) approve the management slate of nominees proposed for election at
annual and special meetings of the Company;
b) approve candidates to fill any casual vacancy occurring on the
Board; and
c) fix the number of directors as permitted by the Company's charter
documents.
3.4 COMPENSATION AND SHARE OWNERSHIP REQUIREMENT
Appendix I - Director Compensation and Share Ownership Criteria lists
the current levels of directors' compensation and the shareholdings
required of directors of the Company.
3.5 COMMITTEES OF THE BOARD
The Board will have the following committees and, after considering the
recommendation of the Corporate Governance Committee, approve and/or
modify their terms of reference:
a) Audit Committee - Appendix E
b) Corporate Governance Committee - Appendix F
c) Human Resources and Compensation Committee - Appendix G
d) Pension Committee - Appendix H
The Board may establish a new standing or ad hoc committee, after
considering the recommendation of the Corporate Governance Committee.
Not less than a majority of the members of any new standing or ad hoc
committee will be Independent Directors.
Each committee will report to the Board on its meetings and each
member of the Board will have access to minutes of committee meetings,
regardless of whether the director is a member of such committee. See
Appendix D - Terms of Reference for Committees of the Board of
Directors.
4. SELECTION OF MANAGEMENT
4.1. In accordance with the Company's charter documents, the Board will
appoint and replace the CEO of the Company and, after considering the
recommendation of the Human Resources and Compensation Committee,
approve the CEO's compensation.
4.2. Upon considering the advice of the CEO and the recommendation of
the Human Resources and Compensation Committee, the Board will approve
the appointment of all members of the Executive Leadership Team.
4.3. The Board is responsible for satisfying itself as to the integrity
of the CEO and other senior management of the Company.
4.4. The Board is responsible for overseeing succession planning.
5. STRATEGY DETERMINATION
The Board will:
5.1. annually consider and approve the Company's objectives and goals,
its strategic plan to achieve those objectives and goals and approve any
material changes thereto;
5.2. monitor and assess the resources required to implement the
Company's strategic plan;
5.3. monitor and assess developments which may affect the Company's
strategic plan;
5.4. evaluate and, as required, enhance the effectiveness of the
strategic planning process; and
5.5. monitor and, as required, enhance the execution of the strategic
plan by management and monitor corporate performance against the
Company's objectives and goals.
6. MATERIAL TRANSACTIONS
6.1 Subject to delegation by the Board to management and to
committees of the Board, the Board will review and approve all material
transactions and investments.
7. PUBLIC REPORTING
The Board is responsible for:
7.1 ensuring that the financial performance of the Company is adequately
reported to shareholders, other security holders and regulators on a
timely and regular basis;
7.2 ensuring that the financial results are reported fairly and in
accordance with generally accepted accounting standards and related
legal disclosure requirements;
7.3 ensuring that appropriate policies and procedures are in place
to ensure the timely disclosure of any other developments that have a
significant and material impact on the Company;
7.4 reporting annually to shareholders on its stewardship for the
preceding year; and
7.5 providing for measures that accommodate feedback from
shareholders.
8. MONITORING RISKS AND INTERNAL CONTROLS
The Board is responsible for:
8.1 identifying the principal risks of the Company's business and
ensuring the implementation of appropriate systems to manage these
risks; and
8.2 ensuring the integrity of the Company's internal control and
management information systems.
9. PROCEDURES AND POLICIES
The Board will monitor compliance with all significant policies and
procedures by which the Company is operated.
10. LEGAL REQUIREMENTS
10.1 The Board will monitor and ensure compliance with all applicable
laws and regulations.
10.2 The Board will strive to ensure that all corporate documents and
records have been properly prepared, approved and maintained.
11. EVALUATION
The Board will evaluate annually the effectiveness of the Board as a
whole, individual directors, committees and the Chair. See Appendix L -
Board and Director Evaluation Process.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TELUS
3777 Kingsway
Burnaby, British Columbia
V5H 3Z7
telus.com
---------
Dated: April 5, 2005
SIGNATURES
TELUS Corporation
/s/ Audrey Ho
_____________________________
Name: Audrey Ho
Title: Vice President, Legal Services and
General Counsel and Corporate Secretary