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___ 2006
(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:
2006 annual general meeting
___________________________
TELUS
March 10, 2006
TELUS Corporation
2006 annual general meeting
notice of annual general meeting
invitation to shareholders
frequently asked questions on voting
business of the meeting 10
mandate and report of the Corporate Governance Committee
mandate and Report of the Pension Committee
mandate and Report of the Audit Committee
mandate and Report of the Human Resources and Compensation Committee
report on executive compensation
indebtedness of directors and officers
securities authorized for issuance under Equity Compensation Plans
directors' and officers' insurance and indemnification
additional matters and information
Board approval
appendix A: Statement of TELUS' corporate governance practices
appendix B: Terms of reference of the Board of Directors
All figures reported in this information circular are in Canadian currency.
Notice of annual general meeting
Notice is hereby given that the annual general meeting of TELUS Corporation
(the "Company" or "TELUS") will be held on Wednesday, May 3, 2006 at 11:00 a.m.
(PDT) at the Orpheum Theatre, 601 Smithe Street, Vancouver, British Columbia,
for the following purposes:
1. receive the Company's 2005 audited Consolidated financial statements
together with the report of the auditors on those statements;
2. elect directors of the Company for the ensuing year;
3. appoint Deloitte & Touche LLP as auditors for the ensuing year and
authorize the directors to fix their remuneration; and
4. transact other business as may properly come before the meeting or any
adjournment thereof.
Dated at Vancouver, British Columbia this 10th day of March, 2006.
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 shares. of the Company who are unable to attend this 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 1, 2006 or, if the
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' annual general meeting (the "meeting"). This
year, the meeting will be held:
Date: Wednesday, May 3, 2006
Time: 11:00 a.m. (PDT)
Place: Orpheum Theatre
601 Smithe Street
Vancouver, British Columbia
At the meeting, holders of common shares of TELUS (the "shareholders") will be
asked to approve the business items in the notice of meeting 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 meeting, a question and answer session will take place. At
the reception following the meeting, you will have an opportunity to 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 meeting in
person, we invite you to view our live webcast at telus.com/agm at 11 a.m.
(PDT) on May 3.
We look forward to seeing you.
Sincerely,
/S/Brian A. Canfield
__________________________________
Brian A. Canfield
Chair of the Board of Directors
/S/Darren Entwistle
______________________________________
Darren Entwistle
President and Chief Executive Officer
March 10, 2006
Information circular
Frequently asked questions on voting
Q. Am I entitled to receive notice of the meeting and attend the meeting?
A. Yes, if you are a holder of common shares or non-voting shares of TELUS as
of March 15, 2006, which is the record date for the meeting. All shareholders,
as of the close of business on that date, are entitled to receive notice of,
attend and be heard at the meeting.
Q. Am I entitled to vote and what am I voting on?
A. If you are a holder of common shares as of the close of business on March
15, 2006, you are entitled to cast one vote per common share on each of the
resolutions relating to i) the election of directors and ii) the appointment of
auditors. If you are a holder of non-voting shares as of the close of business
on March 15, 2006 you have the right to attend and be heard at the 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 common 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 common shares?
A. You can vote either by attending and voting your common shares at the
meeting or, if you cannot attend the meeting, by having your common 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 meeting - registered and non - registered shareholders
If you are a registered shareholder, you are entitled to attend the meeting and
cast your vote in person.
If you are a non-registered shareholder, you are entitled to attend the 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
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 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
How you vote depends on whether you are a registered shareholder, a
non-registered shareholder or a holder of employee shares.
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.
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
1, 2006 or, if the 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. In that instance, your
proxy should be voted by mail, delivery or Internet.
* Proxy and voting by Internet:
To vote your proxy by Internet, visit the website 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 meeting for all votes to be cast at the meeting 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 meeting 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 1, 2006 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 shares other than employee shares, another proxy
must be completed to vote those shares, unless the employee attends the meeting
and votes the common shares in person.
Q. Who votes my shares?
A. Each person named in the proxy to represent shareholders at the meeting is a
director and/or officer of the Company. You can appoint someone else to
represent you at the meeting, 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
meeting 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 meeting 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. electing as a director each person nominated by management of the Company
for the ensuing year; and
2. appointing Deloitte & Touche LLP as auditors for the ensuing year and
authorizing the directors to fix their remuneration.
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 1, 2006, or if the
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 meeting at the meeting 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 1, 2006 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
meeting?
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 notice of
the meeting and any other matters that may properly be brought before the
meeting, to the extent permitted by law. As of March 10, 2006, neither the
directors nor senior officers of the Company are aware of any variation,
amendment or other matter to be presented for a vote at the 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 meeting and how many common shares
are outstanding?
A. A quorum at the meeting will consist of at least two persons present who
are, or represent by proxy, holders of common shares holding in the aggregate
at least 20 per cent of the issued and outstanding shares entitled to be voted
at the meeting. On March 10, 2006, the Company had 183,329,413 common 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
10, 2006, 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
meeting.
Q. What if I have a question?
A. If you have any questions regarding the meeting, please contact
Computershare:
* phone: 1-800-558-0046 (toll-free within North America)
1-514-982-7270 (outside North America)
* fax: (416) 263-9394
* e-mail: telus@computershare.com
* mail: Computershare Trust Company of Canada
9th floor, 100 University Avenue
Toronto, Ontario, M5J 2Y1
Restriction on ownership of shares
The Canadian Telecommunications Common Carrier Ownership and Control
Regulations (the "Telecommunications regulations") and the Telecommunications
Act (Canada) (the "Telecommunications Act"), contain restrictions relating to
the holding of voting shares by non-Canadians. To maintain the eligibility of
certain of its subsidiaries that 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. The Telecommunications regulations give
carrier-holding corporations of Canadian common carriers certain powers to
monitor and control the level of non-Canadian ownership of voting shares. As a
carrier-holding corporation, the powers and constraints of the
Telecommunications regulations have been incorporated into the Articles of the
Company. The powers include the right to: refuse to register a transfer of
voting shares to a non-Canadian; require a non-Canadian to sell any voting
shares; convert voting shares to non-voting shares; and suspend the voting
rights attached to the voting shares. The Company monitors the level of
non-Canadian ownership of its common shares and periodically reports thereon to
the Canadian Radio-television and Telecommunications Commission.
Certain subsidiaries of the Company also hold radio licences under the
Radiocommunication Act (Canada) (the "Radiocommunication Act"), which are
necessary to provide wireless telecommunication services, and broadcasting
distribution licences under the Broadcasting Act (the "Broadcasting Act"),
which are necessary to offer digital television services.
Both the Radiocommunication Act and the Broadcasting Act impose 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. Following approval from the shareholders in 2005, the Company
amended its Articles to ensure that the special rights and restrictions
relating to foreign ownership compliance under the Telecommunications Act
attaching to the common shares and the non-voting shares were extended to
ensure similar compliance under both the Radiocommunication Act and the
Broadcasting Act.
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 meeting, 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. 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, the Radiocommunication Act, and the Broadcasting
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 meeting
1. Report of management and consolidated financial report
The report of management and the audited Consolidated financial statements for
the year ended December 31, 2005, including Management's discussion and
analysis ("MD&A"), are contained in the 2005 annual report - financial review
of the Company. Shareholders who have requested a copy of the 2005 annual
report will receive it 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. Election of directors
General
All of the directors, with the exception of Pierre Y. Ducros, were elected by
the holders of common shares on May 4, 2005. Mr. Ducros was appointed to the
Board on September 26, 2005
The Board has fixed the number of directors at 12. Accordingly, at the meeting,
shareholders will be asked to vote for the 12 nominees proposed by the Company
for election as directors of the Company. Unless otherwise instructed, the
persons named in the accompanying proxy as proxyholders (the "management
proxyholders") intend to vote for the election of all 12 nominees whose names
are set forth on pages 8 to 10.
At the annual and special and class meetings of the Company held in May 2005,
shareholders approved an amendment to the Company's Articles to remove
cumulative voting and add a new section to the Articles to permit holders of
common shares to vote for directors by a separate resolution for each director.
Accordingly, at this meeting, each holder of common shares will be entitled to
cast their votes for, or withhold their votes from, the election of each
director.
Management believes that all nominees are able to serve as directors. 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 were 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 Resources Ltd, an oil and gas company,
Age: 55 for 25 years, retiring in 2001 as President
Director since(1): 2003 and Chief Executive Officer of Gulf Canada
Shareholdings(2): 3,185/ 6,000 Resources after the sale of the company to
DSUs(3): 0 / 15,811 Conoco Inc. He continues an association with
Options(4): 0 / 0 / 0 the companyas 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 Red Mile
Entertainment, Inc. In the past five years,
Dick has served 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: 66 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 / 14,178 cultural organizations, Charles currently
Options(4): 0 / 0 / 0 serves on the Board of Directors of Dana
Corporation, 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, Ballard Power Systems Inc.,
Qebecor 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: 58 Technologies, a biomedical company, in 2002.
Director since(1): 2004 From 2001 to 2002, she was Corporate
Shareholdings(2): 1,713/ 1,082 Vice-President and General Manager,
DSUs(3): 0 / 10,737 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, the IWF Leadership Foundation 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 Inc. and Corby
Distilleries Ltd. 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
Universite 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 is a member of the
Order of Canada. 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: 62 of ED TEL (Edmonton Telephones) prior to its
Director since(1): 1995 acquisition in 1995 by TELUS Corporation and
Shareholdings(2): 984/ 4,263 on the Board of TELUS Corporation prior to
DSUs(3): 0 / 14,451 its 1999 merger with BC TELECOM Inc. He is a
Options(4): 0/ 3,050 / 2,700 member of the Board of Directors of Trans
Global Insurance Company and Trans Global
Life Insurance Company, and a trustee of the
Liquor Stores Income Fund. In the past five
years, John has also served as 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: 67 nearly 50 years, including four years as
Director since (1): 1993 Chair and Chief Executive Officer of BC
Shareholdings(2): 9,718/ 7,103 TELECOM Inc., three years as President and
DSUs(3): 4,595/ 24,774 Chief Executive Officer and one year as
Options(4): 40,000 / 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
director of Suncor Energy Inc., a member of
the Canadian Public Accountability Board and
a member of the Crawford Panel on a Single
Canadian Securities Regulator. In the past
five years, Brian has also served as a
director of Terasen Inc. and 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.
_______________________________________________________________________________
Pierre Y. Ducros Pierre Y. Ducros is President of P. Ducros &
Montreal, Quebec Associes Inc. Previously, he was President
Age: 66 and CEO of DMR Consulting Group, Inc.
Director since (1): 2005 (Canada), which he co-founded in 1973. Pierre
Shareholdings(2): 0 / 329 has also held various management positions at
DSUs(3): 0/7,020 IBM Canada Limited and served as an officer
Options(4): 0/0/0 of the Royal Canadian Navy. He is presently a
member of the Boards of Directors of Manulife
Financial Corporation, Cognos Incorporated,
Emergis Inc., Nstein Technologies Inc., and
RONA Inc. In the past five years, he served
as a director of Engenuity Technologies Inc.
Pierre obtained a Bachelor of Arts Degree
from the Universite de Paris at College
Stanislas in Montreal in 1956. He graduated
from the Royal Military College of Canada in
1960 and also obtained a Bachelor of
Engineering (Communications) degree from
McGill University in 1961. Pierre is a member
of the Order of Canada and an officer of the
Order of Belgium. He currently serves on the
TELUS Audit Committee.
_______________________________________________________________________________
Darren Entwistle Darren Entwistle has been President and Chief
Vancouver, British Columbia Executive Officer of TELUS Corporation since
Age: 43 July 10, 2000. He began his career at Bell
Director since(1): 2000 Canada in 1988 and joined Cable & Wireless
Shareholdings(2): 42,335/ 283,947 plc (C&W) in 1993 in the UK, holding key
Options(4): 0/ 234,618 positions in finance and operations and
RSUs(5) : 283,328 becoming President, Global Services, UK &
Ireland prior to joining TELUS. 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. 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.
_______________________________________________________________________________
Ruston E.T. Goepel Ruston E.T. Goepel is Senior Vice President
Vancouver, British Columbia of Raymond James Financial Ltd., an
Age: 63 investment firm. Rusty serves as a director
Director since(1): 2004 of Spur Ventures Ltd., Amerigo Resources
Shareholdings(2): 0/12,500 Ltd., Premium Brands Income Trust and Baytex
DSUs(3): 0/10,662 Energy Trust. Rusty is also the Chairman of
Options(4):0 / 0 / 0 the Business Council of BC and serves on the
Boards of two not-for-profit organizations -
the Vancouver 2010 Olympic Organizing
Committee and The Vancouver Airport
Authority. He is a past director of Duke
Seabridge Ltd., Smith Tractor Inc. and Coast
Tractor Ltd. Rusty is a recipient of the
Queen's Jubilee Medal for Business Leadership
and Community Services. He currently serves
on the TELUS Audit Committee.
_______________________________________________________________________________
John S. Lacey John S. Lacey is the Chairman of the Board of
Thornhill, Ontario Directors of Alderwoods Group, Inc., an
Age: 62 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 / 15,034 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., an integrated
Age: 66 pipeline company, on January 1, 2001. Prior
Director since(1): 2001 to that he was Executive Vice-President and
Shareholdings(2): 1,000 / 5,269 Chief Operating Officer of Enbridge Inc. and
DSUs(3): 0 / 27,826 he has served on the Board of Enbridge Inc.
Options(4): 0 / 0 / 2,700 He is currently Chairman of Petro-Canada and
Dofasco Inc. and a director of TD Bank
Financial Group and West Fraser Timber Co.
Ltd. Brian also serves as Chair of the Board
of Governors of the University of Calgary. In
the past five years, Brian has served on the
Board of Directors of Veritas DGC Inc.,
Legacy Hotels REIT, Sears Canada Inc. and
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. Brian is a member of the Order of
Canada. 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: 66 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 served as a director
DSUs(3): 6,544/ 27,843 and Board Chairman of ED TEL (Edmonton
Options(4): 0 / 4,100 / 2,700 Telephones) prior to its acquisition in 1995
by TELUS Corporation. He is currently
Chairman and director of ATB Financial. Ron
also serves on the Board of the Alberta
Ingenuity Fund, Alberta's Promise, the
Advisory Council of the Faculty of Medicine
and Dentistry at the University of Alberta
and the Board of Governors of Junior
Achievement of Northern Alberta. Ron is a
past president of the Consulting Engineers of
Alberta and the Association of Consulting
Engineers of Canada, and a past Chair of the
Alberta Economic Development Authority. Ron
holds a Bachelor of Science in engineering
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 CEO and President of
Mono Township, Ontario GENNUM Corporation, a technology company, as
Age: 60 well as the President of The Fifth Line
Director since(1): 1998 Enterprise, a privately held company
Shareholdings(2): 5,678/ 864 providing strategic advisory services and
DSUs(3): 0 / 14,451 executive coaching to the Canadian IT
Options(4): 0 / 3,050 / 2,700 industry. He currently serves as a director
of DataMirror Corporation and of GENNUM
Corporation. Don also serves as a director of
Steam Whistle Brewing Inc. and two
not-for-profit organizations - The Hospital
for Sick Children Foundation and the Advisory
Board for the Richard Ivey School of Business
at the University of Western Ontario. In the
past five years, Don has served as 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 a past Chair of
the Board of Governors of The Stratford
Festival of Canada. 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.
Don will assume the role of Chair of the
TELUS Pension Committee immediately following
the Company's annual general meeting.
_______________________________________________________________________________
(1) The Company or any of its predecessors.
(2) Common shares/non-voting shares, as at March 10, 2006.
(3) Deferred share units for common shares/deferred share units for
non-voting shares, as at March 10, 2006.
(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 10, 2006.
(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, 2005
Number of Board and Attendance of directors
committee meetings held Board Committee
meetings meetings
attended attended
Director
_______________________________________________________________________________________________________________________
Board of Directors: 8
Audit Committee (AC): 5
Corporate Governance
Committee (CGC): 6 Brian A. Canfield(1) (Board Chair) (PC) 8 of 8 4 of 4
Human Resources and R.H. (Dick) Auchinleck(HRC, CGC) 8 of 8 10 of 11
Compensation Committee A. Charles Baillie (AC) 8 of 8 5 of 5
(HRC): 5 Micheline Bouchard(AC) 8 of 8 5 of 5
Pension Committee (PC): 4 R. John Butler(CGC, Chair) (PC) 8 of 8 10 of 10
Pierre Y. Ducros(2) (AC) 3 of 3 1 of 1
Darren Entwistle (3) 8 of 8 --
Ruston E.T. Goepel(AC) 8 of 8 5 of 5
John S. Lacey(HRC, Chair) (CGC) 8 of 8 11 of 11
Brian F. MacNeill(AC, Chair) 8 of 8 5 of 5
Ronald P. Triffo(CGC, Chair) (PC) 8 of 8 10 of 10
Donald P. Woodley (PC) (HRC) 8 of 8 9 of 9
(1) In addition to Pension Committee meetings, Brian A. Canfield regularly
attended meetings of other committees.
(2) Pierre Y. Ducros joined the Board and the Audit Committee on September
26, 2005.
(3) The President and CEO does not serve on any committee of the Board, but
regularly attended committee meetings.
Cease trade orders, bankruptcies, penalties or sanctions
Other than as disclosed, for the ten years ended December 31, 2005, 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. 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, 2005, 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,
in 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.
3. Appointment of auditors
In 2002, upon the recommendation of the Audit Committee, the Board of Directors
appointed Deloitte & Touche LLP to fill the vacancy which resulted from the
Company's then current auditors, Arthur Andersen LLP, ceasing to practice
public accounting in Canada. Deloitte & Touche LLP were re-appointed auditors
of the Company on May 4, 2005 at the annual and special and class meetings 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 and authorize the directors to fix the remuneration of the 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 2005 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, 2005 to December 31, 2005:
Summary of billings for TELUS for the period January 1 to December 31, 2005
Deloitte & Touche Deloitte Total Fees %
Type of work Consulting
-------------------------------------------------------------------------------
Audit fees $2,237,606 -- $2,237,606 90.7
Audit-related fees $195,584 -- $195,58 47.9
Tax fees $33,180 -- $33,180 1.4
All other fees -- -- -- --
-------------------------------------------------------------------------------
Total $2,466,760 -- $2,466,760 100.0
===============================================================================
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 & Touche Deloitte Total Fees %
Type of work Consulting
------------------------------------------------------------------------------
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
===============================================================================
Mandate and report of the Corporate Governance Committee
The mandate of the Corporate Governance Committee is to assist the Board in
fulfilling 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, emerging best
practices and the effectiveness of the Company's corporate governance
practices. The Corporate Governance Committee is also responsible for
identifying, recruiting, and recommending nominees for election as directors,
and providing ongoing development for directors and overseeing Board and
director evaluations. The Corporate Governance Committee 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 corporate governance rules
and guidelines.
Membership
The current members of the Corporate Governance Committee, Ron P. Triffo
(Chair), R. H. Auchinleck, R. John Butler and John S. Lacey, were appointed on
February 16, 2005 and reappointed on February 15, 2006. 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 six times during
2005.
Highlights
Enhanced and renewed commitment to best practices for corporate governance
* received and considered with management frequent updates on changing laws
and regulations, rules and corporate governance initiatives taken by
securities regulators and other stakeholders, emerging best practices and
their implications for the Company;
* reviewed the implications of Bill 198 regarding secondary market liability
in Ontario, including the impact on the Company's policies and processes;
* recommended to the Board for approval changes relating to the terms of
reference of both the Pension Committee and the Human Resources and
Compensation Committee, reviewed and reconfirmed the Board Policy Manual,
including the terms of reference for each committee of the Board as amended,
and updated the definition of "independence" to reflect securities rules and
guidelines as they were finalized by regulatory authorities;
* developed and approved a succession plan process for the Chairs of the
committees of the Board; and
* reviewed and approved amendments to the insider trading policy.
Initiatives relating to directors
* reviewed and recommended to the Board for approval nominees for election
as directors or to be appointed to the Board;
* assessed and recommended to the Board an increase in the size of Board
from 11 to 12 in order to increase representation from the province of
Quebec, an important market to the Company, and undertook an extensive
search for a 12th director following such determination, which resulted in
the appointment of Pierre Y. Ducros to the Board on September 26, 2005;
* reviewed and recommended to the Board for approval an increase in the
share ownership criteria for directors from $200,000 to $300,000 and an
increase in the Chair's share ownership criteria from $400,000 to $500,000;
* reviewed succession planning for committees and committee Chairs of the
Board, and reviewed and recommended to the Board for approval the
composition of the committees of the Board, including a change in the Chair
of the Pension Committee to take effect immediately following the annual
general meeting as part of succession planning for that position;
* developed and recommended to the Board a philosophy on directors'
compensation, engaged external consultants to review market data, and
recommended to the Board directors' compensation for 2005;
* reviewed the impact of the new Business Corporations Act (British
Columbia) on directors' indemnification, received legal advice on the
appropriate indemnification for directors, and recommended a new form of
indemnity agreement based on such advice;
* continued the orientation program for new directors and the ongoing
education program for all directors; and
* conducted an annual evaluation of each director of the Company, the Chair
of the Board and the Chairs of each committee and of the Board as a whole.
For more information on director compensation see the following table.
/S/Ron P. Triffo /S/R.H. (Dick) Auchinleck
________________________ __________________________
Ron P. Triffo (Chair) R.H. (Dick) Auchinleck
/S/R. John Butler /S/John S. Lacey
________________________ __________________
R. John Butler 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 annual
board retainer of a participant cannot be paid to the participant entirely in
cash unless the participant holds deferred share units and equity shares having
a market value at least equal to a defined ownership target, which was
increased in February 2006 by the Board of Directors. All of the proposed
non-management directors have met this threshold and the Chair of the Board has
exceeded this threshold. The fees received by each director for 2005 are
outlined in the table below.
_______________________________________________________________________________
Regular Board service
_______________________________________________________________________________
Annual director's 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
2005. Directors also receive an additional fee of $1,500 per meeting if they
are, or otherwise would be, required to travel in excess of six hours (return)
from their principal residence and in certain other circumstances to a TELUS
Board meeting. For more information on directors' compensation, see page 44 of
Appendix A.
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, R. John Butler (Chair), Brian A.
Canfield, Ron P. Triffo and Donald P. Woodley, were appointed on February 16,
2005 and reappointed on February 15, 2006. All members of the Pension Committee
are independent.
Meetings
The Pension Committee meets at least once each quarter and reports its
activities to the Board. At each regularly scheduled quarterly meeting, the
Pension Committee meets in-camera, without management present. The Pension
Committee also meets with Pension Plan auditors without management present. The
Pension Committee met four times in 2005.
Highlights
TELUS Defined Contribution Pension Plan review
The Pension Committee completed a comprehensive review of the defined
contribution pension plans. The review was conducted by management with the
assistance of an external consultant. The review resulted in the streamlining
of investment fund choices and the negotiation of lower plan fees for members
of the plan. The review also established that TELUS defined contribution plans
were in compliance with the new guidelines of the Canadian Association of
Pension Supervisory Authorities, which came into effect as of January 1, 2006.
As of January 1, 2006, the Pension Plan for Management and Professional
Employees of TELUS Corporation was closed to new entrants. Existing members of
this defined benefit plan will continue to have the option of converting to the
TELUS Defined Contribution Pension Plan.
Pension administration
The Pension Committee requisitioned a review of the pension administration
processes associated with the Pension Plans. TELUS management performed the
review and recommended the alignment of pension payment and administration
processes for all of the Pension Plans. As a result, TELUS outsourced pension
payments for approximately 10,000 pensioners during 2005.
Currency manager mandate
The Pension Committee previously directed a comprehensive asset and liability
study during 2004, which was completed by management with the assistance of
external consultants. While the study indicated that the investment policies
developed by the Pension Committee to guide investment management were
appropriate (see Note 18 of TELUS' 2005 Consolidated financial statements), the
study also identified a further opportunity to reduce investment risk and
potentially increase returns by actively managing the currency exposure arising
from foreign investments. During 2005, two currency managers were appointed to
actively manage the currency exposure in the defined benefit pension plans.
With the elimination of the foreign property limits, management evaluated the
use of a synthetic foreign equity mandate being used to ensure that foreign
property exposure remained below the limit. On the basis of the analysis, the
existing mandate was replaced by an enhanced index mandate.
Plan management and governance
In accordance with its mandate, the Pension Committee approved the appointments
of auditors, actuaries, custodians, legal counsel and investment managers, as
needed. As well, the Pension Committee received, 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;
* an 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 /S/Ron P. Triffo
__________________________ _______________________
R. John Butler (Chair) Ron P. Triffo
/S/Donald P. Woodley /S/Brian A. Canfield
__________________________ ______________________
Donald P. Woodley 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, creditworthiness, 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
Four of the Committee's current members, Brian F. MacNeill (Chair), A. Charles
Baillie, Micheline Bouchard and Ruston E.T. Goepel were appointed on February
16, 2005. Pierre Y. Ducros was appointed on September 26, 2005. All five
members were reappointed on February 15, 2006.
The Board has determined that each member of the Audit Committee is
"financially literate" and that the Audit Committee Chair is an "audit
committee financial expert" and has "accounting or related financial management
expertise" as defined by applicable securities laws. Information regarding the
education and experience of the members of the Audit Committee is contained in
TELUS' 2005 Annual Information Form. The Audit 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
Audit Committee meets separately, in-camera, with both the internal auditor and
external auditors. The Audit Committee also meets separately with management
and without management present, at each regularly scheduled meeting. The Audit
Committee met five times during 2005.
Highlights
Financial reporting
* reviewed and discussed with the Company's President and Chief Executive
Officer and the Chief Financial Officer 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 Management's discussion and analysis;
* reviewed and recommended to the Board for approval key securities filings
that contain financial information, including the Annual Information Form
and Form 40-F; and
* 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 auditors
* 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 auditors; and
* reviewed and pre-approved all audit, audit-related and non-audit services
provided by the external auditors 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 updates and approved key treasury matters,
including financing plans such as the early redemption on December 1, 2005
of the Company's 7.50%, Series CA, Notes due June 1, 2006;
* reviewed and recommended to the Board for approval an increase in November
2005 to the Company's dividend within the target dividend payout ratio
guideline;
* received quarterly reports regarding taxation matters and structural/legal
reorganizations; and
* 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 disclosure controls and 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; and
* 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 (and quarterly
updates thereto), the identification of key risks and the engagement of
executives to mitigate risk exposures;
* considered reports on the Company's business continuity, including 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 report;
* reviewed the adequacy of the Company's insurance coverages and monitored
the Company's property risk management program; and
* 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, including the Company's comment letter
to the provincial securities commissions on Multilateral Instrument 52-111
Reporting on Internal Control Over Financial Reporting and the impact of
Bill 198 on the Company's disclosure practices and policy;
* received from management quarterly updates on the handling of employee and
anonymous complaints and inquiries regarding accounting, auditing, ethics,
and internal control issues;
* reviewed and recommended for approval by the Board TELUS' 2006 Ethics
Policy;
* monitored management's annual conflict of interest disclosure and review
process; and
* received and reviewed management's planning efforts to enable SOX 404
compliance for financial year 2006.
Signed, the members of the Audit Committee
/S/Brian F. MacNeill /S/A. Charles Baillie
_________________________________ ___________________________
Brian F. MacNeill (Chair) A. Charles Baillie
/S/Micheline Bouchard /S/Pierre Y. Ducros
_________________________________ ___________________________
Micheline Bouchard Pierre Y. Ducros
/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, and manages the
Board-approved equity-based incentive plans and supplemental retirement
arrangements (other than registered pension plans) for the executive leadership
team.
Membership
The current members of the Compensation Committee, John S. Lacey (Chair), R.H.
(Dick) Auchinleck and Donald P. Woodley, were appointed on February 16, 2005.
They were all reappointed on February 15, 2006.
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 2005.
Highlights
President and CEO
* reviewed and approved the corporate goals and objectives relevant to
President and CEO compensation;
* assessed performance of the President and CEO with the input of the Board
of Directors and reported the results to the Board;
* reviewed the form and adequacy of President and CEO total compensation;
* reviewed the succession plan for the President and CEO; and
* reviewed and recommended to the Board for approval the President and CEO's
compensation based on the 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;
* considered the President and CEO's evaluations of the performance of
individual members of executive management;
* reviewed the Company's compensation philosophy and guidelines for
executive management by assessing the linkage of executive compensation
philosophy and executive incentive plans to the Company's financial and
non-financial performance, support of the Company's business strategy, and
alignment with the Company's employee compensation philosophy;
* reviewed and approved the form and adequacy of executive total
compensation for executive management other than the President and CEO;
* reviewed and approved the compensation 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; and
* reviewed the succession plans for each member of executive management,
including specific development plans and career planning for potential
successors for both normal career progression and emergency replacement
situations.
Equity plans
* received regular updates from management and expert external consultants
on alternative long-term incentives, including an assessment of 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 including an assessment of
implications for the Company and its shareholders;
* reviewed and recommended to the Board for approval an increase in the
Company's matching contribution to the TELUS Employee Share Purchase Plan
during the 2005 work stoppage;
* reviewed and recommended to the Board for approval the annual stock option
and restricted stock unit grants to management (including executive
management) for 2005 performance;
* reviewed and recommended to the Board for approval a one-time long-term
incentive program in relation to the 2005 merger of the Company's wireline
and wireless businesses; and
* received reports on the status of the option share reserves and monitored
and approved discretionary long-term incentive awards.
Governance
* reviewed and approved the role of the external compensation consultant and
recommended changes to the Compensation Committee Terms of Reference to
require notice to the Compensation Committee on the engagement of the
consultant by management to perform significant work.
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 Compensation Committee has approved a performance management philosophy
that creates a clear and direct linkage between compensation and the
achievement of business objectives 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 is a strong proponent of
linking compensation directly to the achievement of business objectives.
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; and
* 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.
Benchmarking
The Compensation Committee has adopted a market-based approach to ensure that
the Company provides competitive compensation. The Compensation Committee
relates total compensation levels for the executives to the compensation paid
to executives of other Canadian telecommunications companies as well as
executives of companies in the general Canadian industry with revenue similar
to that of the Company, as approved by the Compensation Committee.
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.
In establishing the appropriate compensation levels, the Compensation Committee
engages and receives expert advice from outside consultants who conduct surveys
and provide competitive data. The Compensation Committee also considers
recommendations from management.
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.
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. 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.
At-risk incentive pay
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. Targets to determine when these goals have been
met are set out in the corporate balanced scorecard and strategic business unit
balanced scorecards, and the executives' personal performance objectives. The
actual achievement of annual business plans as reflected through performance
measurement and quantifiable goals ultimately determine the annual variable
compensation received.
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;
* 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;
* focusing relentlessly on the growth markets of data, IP and wireless;
* going to market as one team, under a common brand, executing a single
strategy; and
* investing in internal capabilities to build a high-performance culture
and efficient operation.
The specific measures developed each year for the scorecard must also be
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
__________________________________________________________________________________________________________________
Position Corporate SBU Average Average Personal Percentage
results results SBU customer-facing results of base
results SBU results salary
__________________________________________________________________________________________________________________
President and 30% -- 20% 30% 20% 50%
CEO
__________________________________________________________________________________________________________________
EVP 50% 30% -- -- 20% 50%
Customer -
facing SBU
__________________________________________________________________________________________________________________
EVP - 30% 20% -- 30% 20% 50%
Business
enabling SBU
__________________________________________________________________________________________________________________
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 Multiplier
rating
_______________________________________________________________________
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.
2. Medium-term incentives
The Executive Stock Unit Plan ("ESU Plan") is a medium-term incentive plan that
was implemented in 2002 for executive leadership team members and expanded in
2004 to include designated senior management team members. 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 to
executive leadership team members 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 performance year (being the year preceding the year
of allocation), whichever is higher. 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 over the performance year directly reduces the
value of the participant's incentive compensation, despite the fact that
performance goals for the grants have been met.
Retention is promoted through the vesting of ESUs. ESUs allocated under the ESU
Plan vest and become payable in equal annual instalments over approximately a
three-year period, with all ESUs being paid out before the end of the second
year after the year of allocation. If the participant resigns during this
period, all unvested ESUs are forfeited. The value of the ESUs at payout is
based on the value of non-voting shares at that time, calculated as required by
the ESU 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 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 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 restricted
stock units ("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. 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 resulting assessment has a direct bearing on the long-term
incentive awards. Prior equity grants are not taken into account in determining
whether and, if so, how many new grants would be granted.
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. The Compensation Committee recommends to the
Board the vesting schedule and the term of the share options. If no
recommendation is made, then the share options will vest on the third
anniversary of the grant and have a term of seven years. The term of the share
options may not exceed 10 years. Share options may not be transferred or
assigned by a participant.
Similar to the ESUs allocated under the ESU Plan, all RSUs allocated annually
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 payout 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. The Compensation Committee has the right to determine the vesting of
each RSU allocation under the RSU Plan.
2005 performance
For 2005, the Compensation Committee has continued with a rigorous,
comprehensive and holistic approach towards the assessment of the performance
of the executive leadership team applying the principles described above.
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 2005.
Base salary
For 2005, four of the named executives received base salary increases (none
received base salary increases in 2004 while a member of the executive
leadership team) and the fifth received an increase on his appointment to the
executive leadership team during 2005.
At-risk incentive pay
Upon application of the Company's philosophy, the target at-risk incentive pay
for executives is 75 per cent of total compensation for the executive
leadership team overall. The at-risk incentive pay has three components:
1. Annual variable pay plan
Each year specific targets are established using a balanced scorecard approach
for the Company as a whole and for each business unit.
For 2005, the corporate scorecard targets were tied to profitable growth,
customer excellence, business efficiency and effectiveness, and team
engagement. The profitable growth metrics (35 per cent) were made up of TELUS
wireline external revenue, TELUS wireless network revenue, strategic initiative
revenue, free cash flow (after restructuring payment and before cash dividends)
and earnings per share (from continuing operations). Customer metrics (35 per
cent) included TELUS wireless churn rate, high speed internet subscriber churn
(wireline), gross wireless subscriber additions, network access line loss
(wireline) and customer loyalty and satisfaction indices. Business efficiency
metrics (20 per cent) consisted of earnings before interest and taxes or "EBIT"
(before restructuring costs) for the wireline operations and EBIT for the
wireless operations. Lastly, team engagement (10 per cent) was to be measured
based on a survey of all team members.
As a result of the work stoppage in 2005, it was not possible to survey team
engagement. The Compensation Committee determined that it would be more
appropriate to remove the team engagement measure from the 2005 corporate
scorecard to ensure that the scorecard remains objective and accurate.
Accordingly, for 2005 only, the corporate scorecard result was calculated
without that metric.
Similarly, the Compensation Committee has determined that it would be difficult
to apply the 2005business unit scorecard results to accurately measure efforts
of team members within business units that were impacted by the 2005 work
stoppage in western Canada, where managers were largely reassigned to perform
bargaining unit work either within or outside their business units.
Accordingly, for 2005 only, the Committee approved the adoption of the
corporate scorecard result as the business unit result for affected business
units. This change was applied to all team members including executive
management. For team members in the wireless operations and TELUS Quebec, the
actual business unit scorecard result was used in calculating variable pay.
For 2005, the overall annual variable pay plan results for the executive
leadership team members averaged 104 per cent of target. The corporate balanced
scorecard component of their variable plan was 97 per cent of target. Comparing
the 2005 actual results against comparable 2004 corporate scorecard measures
would have resulted in a variable pay plan payout of 110 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 2005 corporate scorecard.
Following is a description of some of the results achieved in respect of the
various metrics comprising the 2005 corporate balanced scorecard:
Profitable growth
Overall TELUS achieved strong results.
TELUS exceeded its targets with respect to:
* wireless network revenue, deriving from continued strong wireless
performance at TELUS;
* free cash flow resulting from reduced capital expenditures arising from
the labor dispute, and favorable tax settlements; and
* earnings per share reflecting strong wireless results and favorable tax
settlements
Two metrics were below target:
* wireline segment external revenue, but was still within the range for a
payout for this metric; and
* strategic initiative revenue, with results marginally below target
Customer excellence
Results were mixed in part due to increased competition and the impact of the
labour dispute.
Targets were exceeded for two metrics:
* wireless gross subscriber additions, again reflecting strong wireless
performance at TELUS; and
* high-speed Internet subscriber churn (wireline)
Three metrics were below target but still within payout ranges:
* wireless client churn, reflecting an increasingly competitive marketplace;
and
* customer service results, which slipped with the labor disruption in the
second half of the year
* the loyalty index
Two metrics were below threshold target:
* wireline network access line loss, driven by the emergence of cable
company competition in the local marketplace and the impact of the labor
disruption; and
* quality performance
Business efficiency and effectiveness
* wireline EBIT before restructuring costs was below threshold target due to
costs associated with the labour disruption; and
* wireless EBIT exceeded target due to strong revenue performance
TELUS team
* as noted above, a team engagement survey could not be conducted due to
labour disruption and the Compensation Committee removed this metric from
the calculation of the overall multiplier for the 2005 year only.
To determine the personal performance component of the incentive award to each
executive vice-president, the President and CEO evaluated their achievements
under PVAAM, and recommended to the Compensation Committee the total annual
incentive award for each executive vice-president. The Compensation Committee
then reviewed and determined their annual incentive payments. For 2005 only,
the Compensation Committee determined that a common personal multiplier should
be applied to most of the executive vice - presidents in recognition of their
shared responsibilities on some of the most significant Company objectives.
TELUS Performance Comparisons
The Compensation Committee considered other performance results achieved by the
Company, in 2005 and over a five-year period, that benefited shareholders.
TELUS produced top-quartile financial growth results among global telecom peers
for the third year in a row. TELUS is also generating strong cash flow that
yielded initiatives to return capital to investors in the form of substantial
dividend increases and programs to repurchase TELUS shares, as well as a
significant early debt retirement. An investment in TELUS common shares
significantly outperformed an investment in global telecom stocks on average by
83 per cent over the last five years.
2. Medium-term incentives
In 2005, the Compensation Committee continued with the ESU Plan. The number of
ESUs granted for 2005 to each executive leadership team member was calculated
based on the individual's annual incentive award and the share price
performance of non-voting shares during 2005 as described previously. Each
award was determined and approved by the Compensation Committee. The value of
ESUs allocated in 2006 for 2005 performance was $46.28 per ESU and was
calculated based on the trading price of the non-voting shares for the 15
trading days preceding December 31, 2005, which was higher than the price for
the 15 trading days preceding January 1, 2005.
3. Long-term incentives
Overall, the Compensation Committee recommended and the Board of Directors
approved long-term incentives that represented 50 per cent of total
compensation for the executive team in 2005. To provide a more appropriate mix
of long-term incentives, the February 2006 long-term incentive compensation
grant was split between share options and RSUs under the RSU Plan. This split
represents an approximate allocation of one-half options and one-half RSUs to
the executive leadership team (excluding the President and CEO) 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, the options granted in February 2006 will
cliff-vest three years from the grant date and the RSUs will, in most
instances, vest at or near the end of the second year after the year of
allocation. The term of these stock options granted in 2006 is seven years.
Applying the methodology described above, the award to each executive
leadership team member was based on the executive's PVAAM ratings.
In conjunction with the merger between the Company's wireline and wireless
operations announced in November of 2005, the Compensation Committee
recommended to the Board of Directors, who then approved, a one-time long-term
incentive grant of RSUs and stock options to certain members of the executive
leadership team to further enable the retention of these key team members,
provide for an increased level of team stability and to ensure a high level of
contribution and commitment towards the long-term success of TELUS' strategy.
The combination of RSUs and stock options granted under this program will vest
over 2008, 2009 and 2010 for grants made in 2005 and over 2008, 2010 and 2011
for grants made in 2006. The stock options have a term of seven years.
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 or in this section.
The President and CEO's base salary, which was increased mid-year 2003, was not
increased in 2004 and remained below median. It was increased in 2005 but his
2005 base salary still remained below the median.
Given his already significant ownership in TELUS shares, the Compensation
Committee recommended and the Board of Directors approved an all-cash annual
and medium- term variable pay award to the President and CEO for 2005
performance, and accordingly, no ESUs were awarded to him.
The Compensation Committee also recommended and the Board of Directors approved
in February 2006 a one-time long-term incentive grant of RSUs and stock options
to the President and CEO in recognition of his accomplishments and
contributions since joining TELUS, and to provide for an increased level of
team stability and ensure a high level of contribution and commitment towards
the long-term success of TELUS' strategy. The combination of RSUs and stock
options granted under this program will vest over 2008, 2010 and 2011.
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.
First established in 2002, the current share ownership targets are three times
annual base salary for the President and CEO and two times annual base salary
for the executive vice-presidents.
The share ownership targets must be met over a five-year period and can include
a mix of common and non-voting shares and ESUs and RSUs. Most executive
leadership team members already have significant shareholdings and all have
exceeded these target levels, even those newly appointed to the executive
leadership team.
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 28), dollar value of shareholdings and share ownership level
(based on dollar value) to base salary ratio, as at December 31, 2005 (see
share ownership guidelines above).
Name TELUS shareholdings Dollar value of Share
(common shares/non-voting shareholdings ownership level
shares/ESUs for non-voting ($)(2) as a multiple of
shares/RSUs for base salary
non-voting shares) (1)
___________________________________________________________________________________________________________________
Darren Entwistle 39,762/283,947/30,151/160,482 24,014,260 24.8
___________________________________________________________________________________________________________________
Robert McFarlane 0/113,529/13,179/32,615 7,435,604 16.5
___________________________________________________________________________________________________________________
Joe Grech 11,220/1,580/11,416/37,013 2,870,909 7.2
___________________________________________________________________________________________________________________
Joe Natale 4,929/--/23,553/37,340 3,077,778 5.9
___________________________________________________________________________________________________________________
John Watson 429/--/5,155/31,164 1,715,540 4.3
___________________________________________________________________________________________________________________
(1) Excludes any TELUS non-voting shares that may be acquired by an executive
in 2006 in payment of ESUs that vested in 2005.
(2) At the close of trading on December 31, 2005 the market price of common
shares was $47.86 and the market price of the non-voting shares was $46.67.
Conclusion
The Compensation Committee believes that the various components of compensation
are appropriately balanced to provide direction and motivation for the
executive leadership team to make a positive contribution to the Company's
overall success, thereby enhancing the value of the Company for its
shareholders.
Signed, members of the Human Resources and Compensation Committee
/S/John S. Lacey /S/ Donald P. Woodley
_______________________________ ___________________________
John S. Lacey (Chair) Donald P. Woodley
/S/R.H. (Dick) Auchinleck
_______________________________
R.H. (Dick) Auchinleck
Executive compensation summary table
In accordance with executive compensation reporting requirements of applicable
securities regulations, the following table provides information concerning the
total compensation paid during the last three fiscal years ending December 31,
2005 to the President and CEO and the Executive Vice-President and CFO of the
Company, and the three other executive officers employed by the Company as at
December 31, 2005 who had the highest individual aggregate annual salary and
bonuses for 2005 (collectively with the President and CEO and CFO, the "named
executives"). The figures shown for each of the three years represent those
amounts paid by the Company to the named executives.
________________________________________________________________________________________________________________________________
Annual compensation Longer-term compensation All other
compensation
($)
_________________________________________________________________________________________________________________________________
Name and principal Year Salary Bonus (1) Other annual Number of Restricted
position ended ($) ($) compensation securities stock units
Dec. 31 (2) under (ESUs/RSUs)
($) options (4) (5)
granted(3) ($)
________________________________________________________________________________________________________________________________
Darren Entwistle 2005 970,000 1,200,000 90,142(6) 140,200 4,473,780 59,493(7)
President & Chief 2004 900,000 508,500 92,584(6) -- 3,662,533 34,500(7)
Executive Officer 2003 857,500 529,506 95,915(6) 40,000 2,748,203 20,700(7)
________________________________________________________________________________________________________________________________
Joe Grech 2005 400,000 205,200 55,450 831,823 29,133(7)
Executive Vice-President, 2004 350,000 181,388 15,400 960,750 12,075(7)
Network Operations 2003 350,000 211,750 8,825(8) 11,700 521,625 13,417(7)
________________________________________________________________________________________________________________________________
Robert McFarlane 2005 450,000 230,850 69,880 939,166 17,250(7)
Executive Vice-President 2004 400,000 215,600 -- 15,200 754,886 9,200(7)
& Chief Financial Officer 50,000(9)
2003 400,000 238,200 -- -- 672,025 6,133(7)
_______________________________________________________________________________________________________________________________
Joe Natale 2005 525,000 269,325 67,770 1,018,539 36,225(7)
Executive Vice-President 2004 480,000 210,480 -- 16,800 892,072 18,400(7)
& President, 2003 251,040 129,720 -- 115,800 804,640 11,040(7)
Business Solutions 150,000(11)
________________________________________________________________________________________________________________________________
John Watson 2005 349,736 266,645 81,450 1,199,520 100,000(11)
Executive Vice-President 2004 311,731 176,505 12,500 1,174,288 23,460(7)
& President, Consumer 2003 250,000 420,580 12,500 204,242
Solutions10
________________________________________________________________________________________________________________________________
(1) Represents variable "at risk" component of cash compensation earned
under the annual variable pay plan. Amounts are paid in first quarter of
the following year.
(2) Except as noted, the value of perquisites and other personal
benefits received by the 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 2005 financial year
were approved by the Compensation Committee and the Board on February 14
and 15, 2006. Option grants were also approved in November 2005 and made
in either 2005 or 2006 with respect to the wireline-wireless merger, and
in February 2006 with respect to the recognition award for the President
and CEO.
(4) The aggregate number of ESUs/RSUs (including accrued dividend
equivalents) held by the named executives at December 31, 2005, their
value at the date of allocation (excluding accumulated dividend
equivalents), their value at closing market price at December 31, 2005,
and their vesting are as follows:
_______________________________________________________________________________________________________________________________
Number of Value at date Value at December Vesting
ESUs/RSUs of grant 31, 2005 2006/2007/2008
(ESU Plan /
RSU Plan )
_______________________________________________________________________________________________________________________________
Darren Entwistle 17,551 / 160,842 $3,259,648 $8,325,601 87,223 / 91,170/ -
_______________________________________________________________________________________________________________________________
Joe Grech 6,591 / 37,013 1,557,676 2,034,999 21,556 / 16,373 / 5,675
_______________________________________________________________________________________________________________________________
Robert McFarlane 7,639 / 32,615 1,384,878 1,878,654 23,751 / 16,503 / -
_______________________________________________________________________________________________________________________________
Joe Natale 5,980 / 44,905 1,745,142 2,374,803 25,357 / 17,974 / 7,565
_______________________________________________________________________________________________________________________________
John Watson 3,437 / 31,164 1,372,763 1,614,829 8,573 / 12,224 / 13,805
_______________________________________________________________________________________________________________________________
Note that the figures in the above table exclude ESU/RSUs which vested
on or before December 31, 2005 that were not paid out until 2006 and
exclude ESUs/RSUs allocated in 2006. The details of the ESU and RSU
plans are disclosed in the Report on Executive Compensation.
(5) The annual ESU/RSU allocations in the Summary Compensation Table
are made in February of the following year. Therefore, the annual
grants shown for 2005 were made in February 2006. The allocation
made in respect of the wireline-wireless merger were approved and
granted in either 2005 or 2006 (all numbers include accumulate
dividend equivalents), and the allocation for CEO recognition was
approved and granted in February 2006.
(6) 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 of
both the loan repayment bonus and the deemed interest. This loan was
fully repaid in 2005
(7) Payment in lieu of accrued but unused vacation.
(8) Deemed interest as a result of an interest-free repayable
Company loan. Loan fully repaid on November 23, 2003
(9) Bonus paid in recognition of overall accomplishments during the
year
(10) Joe Natale joined the Executive Leadership Team on June 23,
2003 and John Watson joined on April 12, 2005
(11) Bonus paid upon appointment to the Executive Leadership Team
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 2006 grant was split between share
options and RSUs. This split represents an approximate allocation of one-half
options and one-half RSUs among the executive leadership team (other than the
President and CEO) on a collective basis using a Black-Scholes valuation. In
addition, in order to strengthen retention the options and RSUs granted in
February 2006 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 approve
in November 2005 and made in either 2005 or 2006 respecting the
wireline-wireless merger, and in February 2006 with respect to 2005 performance
sand the one-time recognition award to the President and CEO described earlier
_______________________________________________________________________________________________________________________________
Name Securities % of total Exercise or base Market value of Expiration date
under options options price securities underlying
granted (1) (#) granted to ($/security) (2) options on the date o
employees grant ($/security) (3)
in financial year(1
________________________________________________________________________________________________________________________________
Darren Entwistle 140,200 5.9% $42.96 $43.51 February 15, 2013
________________________________________________________________________________________________________________________________
Robert McFarlane 26,300 3.0% $42.96 $43.51 February 15, 2013
43,580 $46.06 $46.67 March 9, 2013
________________________________________________________________________________________________________________________________
Joe Grech 29,150 2.3% $45.40 $45.25 November 24, 2012
26,300 $42.96 $43.51 February 15, 2013
________________________________________________________________________________________________________________________________
Joe Natale 38,870 2.9% $45.40 $45.25 November 24, 2012
28,900 $42.96 $43.51 February 15, 2013
________________________________________________________________________________________________________________________________
John Watson 38,870 2.8% $45.40 $45.25 November 24, 2012
28,000 $42.96 $43.51 February 15, 2013
_______________________________________________________________________________________________________________________________
(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 2006 based on 2005 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 2005
based on 2004 performance:
_______________________________________________________________________________________________________________________________
Darren Entwistle -- 0.0% -- --
Robert McFarlane 15,200 1.4% $35.56 $36.42 February 16, 2012
Joe Grech 15,400 1.4% $35.56 $36.42 February 16, 2012
Joe Natale 16,800 1.5% $35.56 $36.42 February 16, 2012
John Watson 12,500 1.1% $35.56 $36.42 February 16, 2012
_______________________________________________________________________________________________________________________________
(1) All grants are in respect of non-voting shares. Percentage refers to
percentage of total grant of TELUS share options.
(2) TELUS options are granted at or above the weighted average
trading price of the non-voting shares on the last business day
before the date of grant
(3) Actual weighted average trading price on the date of grant.
________________________________________________________________________________________________________________________________
Aggregated options exercised during the most recently completed financial year and financial year-end option values for the
named executives
________________________________________________________________________________________________________________________________
Name Securities Aggregate Unexercised Value of unexercised in the
acquired on value options at FY-end (1) money options at FY-en
exercise(#) realized ($) (#) exercisable/unexercisable ($) exercisable/unexercisable
________________________________________________________________________________________________________________________________
common shares/ common shares/
non-voting shares non-voting shares
Darren Entwistle 736,444 7,303,221(2) -- / -- 0 / 94,418 -- 2,606,237
Robert McFarlane 40,000 1,267,199 128,958 /127,442 0 / 31,867 3,885,834 699,049
Joe Grech 75,000 1,040,288 26,800 / 54,209 0 / 79,584 1,338,875 1,206,365
Joe Natale - - 0 / 66,667 0 / 104,803 1,617,341 3,155,073
John Watson 58,332 1,206,824 26,184 / 8,334 0 / 94,810 507,553 726,147
________________________________________________________________________________________________________________________________
(1) At the close of trading on December 31, 2005, the market price of
the common shares was $47.86 and the market price of the non-voting
shares was $46.67.
(2) Mr. Entwistle reinvested the entire net after tax gains to increase
his TELUS share ownership.
TELUS Pension Plan
The TELUS Supplementary Retirement Arrangement ("SRA") establishes an overall
retirement income benefit, which provides supplemental pension benefits to be
paid to a retired executive in addition to the pension income under the
existing registered company pension plans.
Named executives, other than John Watson, participate in the Company'
contributory registered pension plans. The SRA for the participating name
executives supplements these plans by providing a total benefit at retirement
determined as two per cent of a person's highest consecutive three years
average pensionable remuneration times the total number of years of credited
service to a maximum of 35. Pensionable remuneration is base salary increase
by a fixed 50 per cent for annual variable compensation to the participating
named executives other than the President and CEO, and by 60 per cent for the
President and CEO.
The following table shows the total of the annual retirement
benefits, payable from both the SRA and registered pension plans, assuming
retirement at age 60 or over:
Pension plan table 2005
__________________________________________________________________________________________________
Remuneration ($) Years of service
15 20 25 30 35
____________________________________________________________________________________________________
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
1,800,000 540,000 720,000 900,000 1,080,000 1,260,000
1,850,000 555,000 740,000 925,000 1,110,000 1,295,000
1,900,000 570,000 760,000 950,000 1,140,000 1,330,000
__________________________________________________________________________________________________
(1) The compensation covered by the SRA for each of the
participating named executives is based on his respective salaries
shown in the executive summary compensation table 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, 2005 for pension plan purposes
for the participating named executives are as follows: Darren Entwistle, five
years and six months; Robert McFarlane, six years and two months; Joe Natale,
two years and six months; and Joe Grech, ten years and three months. Mr. Grech
accrued an additional five years of pensionable service during his first five
years of employment. 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)
______________________________________________________________________________________________________________________
Name 2006 Accrued obligations at Annual pension
service costs ($)(2) December 31, 2005 ($)(3) benefits payable
at age 60 ($)(4)
______________________________________________________________________________________________________________________
Darren Entwistle 391,000 2,153,000 837,000
______________________________________________________________________________________________________________________
Robert McFarlane 316,000 975,000 368,800
______________________________________________________________________________________________________________________
Joe Natale 155,000 386,000 326,800
______________________________________________________________________________________________________________________
Joe Grech 123,000 1,264,000 321,000
______________________________________________________________________________________________________________________
(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 2006. 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 2005
Consolidated financial statements. With respect to Mr. McFarlane, the
service cost is the cost in 2006 for two years of pensionable service
credit.
(3) Accrued obligations are the actuarial value of projected
obligations for service to December 31, 2005. 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 2005 Consolidated financial statements.
(4) Amounts in this column are based on 2006 compensation levels
and assume accrued years of service to age 60 for each of the named
executives.
Employment agreements
TELUS is a party to executive employment agreements for an indefinite term with
each of the named executives. The 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, receive continued benefit coverage and be credited
with continued accrual of pensionable service as follows: for Darren Entwistle,
Robert McFarlane and Joseph Grech - severance equal to two times annual
compensation and two years of benefit continuation and pension credit; for Joe
Natale - severance equal to one and one half times annual compensation and
eighteen months of benefit continuation and pension credit; and for John Watson
- severance equal to one and one half times annual compensation and eighteen
months of benefit continuation. Each agreement contains a prohibition on the
improper disclosure or use of confidential information and a one-year
non-competition restriction after termination.
The agreement with Mr. McFarlane provides that he will be accruing two years of
pensionable service under the SRA for each full year of employment from January
1, 2005 to January 1, 2010. The agreement with Mr. Grech also provided that he
accrued two years of pensionable service under the SRA for each full year of
employment from November 1, 2000 to November 1, 2005.
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 $50,000 was forgiven in each year from 2001 to 2005 inclusive (this loan
has now been extinguished).
Indebtedness of directors and officers
No director or officer of the Company or proposed nominee for election as a
director of the Company, or any associate thereof, is or has been indebted to
the Company or its subsidiaries since January 1, 2005 except as noted in the
table below. In compliance with the July 30, 2002 enactment of the
Sarbanes-Oxley Act, no new personal loans to directors and executive officers
were made or arranged, and no pre-existing personal loans were renewed or
modified, since July 30, 2002.
___________________________________________________________________________________________________________________
Name and Involvement of Largest amount outstanding Amount outstanding as at
principal position issuer or during 2005 ($) February 2006 ($)
subsidiary
_________________________________________________________________________________________________________________________
Darren Entwistle Loan from 50,000 0
Company(1)
_________________________________________________________________________________________________________________________
(1) Interest free. Repayment in 2005 of $50,000 was offset by a
Company bonus in an amount sufficient to cover the amount repaid and
taxes thereon. Accordingly, this loan was fully extinguished in 2005.
The Company from time to time has notional indebtedness outstanding for brief
periods from non-executive team members 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, 2000 and reinvestment of dividends.
GRAPH
__________________________________________________________________________________________________________________________________
Dec 31, 2000 Dec 31, 2001 Dec 31, 2002 Dec 31, 2003 Dec 31, 2004 Dec 31, 2005
__________________________________________________________________________________________________________________________________
TELUS common shares 100 61 46 70 101 135
TELUS non-voting shares 100 62 45 70 103 141
S&P/TSX Composite Index 100 87 77 97 111 138
Securities authorized for issuance under Equity Compensation Plans
The Company has a number of equity compensation plans, but the only continuing
equity compensation plan of the Company under which equity shares may be issued
from treasury on the exercise of options is the TELUS Management Share Option
Plan.
Options remain outstanding under the Directors Share Option and Compensation
Plan. But as reported below, the Board discontinued the option program for
directors in 2003 and no further options have been granted to directors since
then. This plan provides for the issuance of deferred share units to directors.
In February 2005, the Board determined that all obligations to deliver
non-voting shares to satisfy the payment of deferred share units under this
plan will be met through market purchase and not through issuance from
treasury.
Options also 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, this option program was completed and further option
grants under this plan were discontinued.
In addition to the foregoing, there are options outstanding entitling holders
to acquire equity shares of the Company under the BC TELECOM Stock Option Plan
(the plan that was in place prior to the merger of predecessor Alberta-based
TELUS Corporation and BC TELECOM Inc. 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.
The following table provides information as at December 31, 2005 with respect
to equity shares of the Company authorized for issuance under equity
compensation plans that permit the issuance from treasury of equity shares.
________________________________________________________________________________________________________________________________
Plan category Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options outstanding options future issuance under
(#) ($) equity compensation
A B plans (excluding
securities in column A)
(#)
C
________________________________________________________________________________________________________________________________
Equity compensation 1,596,125 $36.44 Nil
plans approved by
securityholders
________________________________________________________________________________________________________________________________
Equity compensation 12,337,976 $26.07 9,634,623
plans not approved
by securityholders
________________________________________________________________________________________________________________________________
Total 13,934,101 $27.33 9,634,623
________________________________________________________________________________________________________________________________
Stock option plans
TELUS Management Share Option Plan
The TELUS Management Share Option Plan ("Management Plan") was amended and
restated in 2005 as part of the separation of the original TELUS Share Option
and Compensation Plan into the Directors Share Option and Compensation Plan and
the Management Plan. The purpose of 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 10, 2006, there were options outstanding under
the Management Plan to purchase 1,115,466 common shares and 9,037,580
non-voting shares representing 2.9 per cent of the issued and outstanding
equity shares of the Company. Of these options outstanding, 388,433 options for
common shares and 1,855,728 options for non-voting shares or 22.1 per cent of
the total number of options outstanding under the plans were 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 Compensation Committee. Eligible employees are generally
senior managers or key management employees and include approximately 2,870
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 as a group are not permitted to hold options under the Management Plan
that, together with options under any other equity compensation plans of the
Company, exceed 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 cliff-vest on the third anniversary of the date of grant. The exercise
price of 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 cause, unless otherwise
determined by the Compensation Committee; (iii) the date of 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.
Pursuant to an amendment approved at the Company's annual and special and class
meetings on May 4, 2005, the Management Plan provides that at the time 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 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 exercise
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 or common
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.
At the same meeting, the shareholders also approved an amendment to the Plan to
increase the number of non-voting shares reserved for issuance under the Plan
on exercise of the options by 6,000,000.
In February 2006, the Board of Directors approved an amendment to the Plan to
clarify the termination date of options for an Optionee who is terminated
without just cause by the Company, where such Optionee continues into
retirement. In such a case, all options held by such Optionee whether
exercisable or unexercisable as at the termination date, shall be exercisable
on and after at the retirement date for the remaining term of the options as
granted. In accordance with the rules of the Toronto Stock Exchange and the
amendment provisions of the Management Plan text noted below, shareholder
approval was not required for this amendment.
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 that the amendment will 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 the vesting provisions of any option and the right to extend the
expiry date of an option to a date that is not beyond the original expiry date.
Shareholder approval is required for any amendment to the Management Plan that
is considered material including any increase in the reservation of shares, any
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, and any financial assistance by the Company or increase in
participation by insiders.
Directors Share Option and Compensation Plan
As at March 10, 2006, options to purchase a total of 14,200 common shares and
18,900 non-voting shares or 0.01 per cent of the issued and outstanding equity
shares of the Company, were outstanding under the Directors Share Option and
Compensation Plan. These options have a 10-year term and an exercise price that
is equal to the weighted average price of the Company's common or non-voting
shares, as applicable on the trading day immediately preceding the date of
grant. As previously noted, no options have been granted under this plan since
2003 and the share reservation under this plan is only sufficient to meet the
exercise of the outstanding options. 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 date 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 or
she ceases to be a TELUS director the options will immediately terminate. For
options outstanding on 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 common shares are not added back
to the reservation if this election were selected. The Company may override the
election and require that the common shares be issued from treasury in their
entirety.
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. 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 be paid in equity shares, non-voting shares are acquired by the plan
administrator in the open market for the participant. In February 2005, the
ability of the Company to issue non-voting shares from treasury in that
circumstance was cancelled.
The Board of Directors of the Company, subject to any regulatory or required
shareholder approval, has the power under the Directors Plan to amend or
terminate the Directors Plan at any time, provided that the amendment will not
prejudice the entitlements of a participant that have accrued prior to the date
of such amendment or termination. This power of amendment includes the right to
amend the vesting provisions of any option and the right to extend the expiry
date of an option to a date that is not beyond the original expiry date.
Shareholder approval is required for any amendment to the Plan that is
considered material, including any increase in the reservation of shares,
any 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, and any financial assistance by the Company.
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 were
eligible to receive grants under the TELUS Management Share Option Plan. As at
March 10, 2006, there were 3,698,500 non-voting shares, representing 1.06 per
cent of the Company's 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 an
exercise 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
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 required regulatory or
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.
Other existing share equity plans
TELUS Share Option Plan for Former Clearnet Optionholders (the "TELUS/Clearnet
Plan")
When TELUS acquired 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 exchange their options under that plan
for options under the TELUS/Clearnet Plan.
The exercise price of 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.
As at March 10, 2006 options to purchase 294,837 non-voting shares or 0.09 per
cent of the issued and outstanding equity shares of the Company were
outstanding under the TELUS/Clearnet plan. 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) the 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 Inc.
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.
Any outstanding options granted under the TSOP either expired or were exercised
in 2005. As at March 10, 2006, there were options outstanding under the BC
TELECOM Plan to purchase 64,271 non-voting shares and 192,795 common shares or
0.07 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 that 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 exercise the share appreciation rights,
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
retires, or (b) a participant ceases to be an 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 meeting other
than the election of the directors.
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
TELUS has entered into agreements to indemnify its directors for liabilities
incurred while performing their duties, to the extent permitted by law. This
indemnification was updated in 2005. The Company also maintains insurance,
which protects directors and officers of the Company against claims made,
provided they acted in good faith on behalf of TELUS, and subject to policy
restrictions. Such insurance currently provides for an annual aggregate limit
of $120 million USD coverage with a $1 million USD 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 $1,114,000 for 2005.
Additional matters and information
Additional financial information is contained in the Company's Annual
Information Form and the audited Consolidated financial statements of the
Company for the year ended December 31, 2005 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 content of this
information circular and the sending of this information circular to the
holders of common shares and non-voting shares.
DATED March 10, 2006.
/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 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 amendments in April and June 2005 of the Investor Confidence Rules
issued by the CSA ("CSA Investor Confidence rules");
* the finalization on June 17, 2005 by the CSA of Policy 58-201 Corporate
Governance Guidelines ("Governance Guidelines") and National Instrument
58-101 Disclosure of Corporate Governance Practices ("Governance Disclosure
Rule");
* the proposal by the CSA of Multilateral Instrument 52-111 Reporting on
Internal Control over Financial Reporting;
* the repeal in 2005 by the Toronto Stock Exchange ("TSX") of the TSX
governance guidelines and subsequent adoption of the Governance Disclosure
Rule as its disclosure standard;
* the coming into force in Ontario on December 31, 2005 of Bill 198, which
creates civil liability for secondary market disclosure; and
* the proposed revisions to section 303A of the New York Stock Exchange
Governance Standards (the "NYSE Governance Rules") released in December
2005.
TELUS is in full compliance with the Governance Disclosure Rule, the Governance
Guidelines and the CSA Investor Confidence rules. TELUS is also in full
compliance with the NYSE Governance Rules including certain elements that are
not legally required of TELUS.
TELUS is committed to transparent and comprehensive disclosure of its corporate
governance practices. The Company has disclosed its corporate governance
practices in relation to the TSX guidelines since the TSX adopted them in 1995,
and has voluntarily disclosed its practices in relation to draft rules and
guidelines that preceded the final Governance Disclosure Rule and NYSE
Governance Rules. In 2005, the TSX repealed its guidelines and adopted the
Governance Disclosure Rule and accordingly, TELUS now discloses its approach to
governance as required by the Governance Disclosure Rule. In December 2005, the
Canadian Institute of Chartered Accountants recognized TELUS for excellence in
corporate governance and reporting by presenting to the Company the Award of
Excellence for Best Corporate Governance Disclosure across all industry sectors
in Canada.
Consistent with TELUS' commitment to fulsome disclosure, TELUS regularly
assesses emerging best practices and has provided voluntarily additional
disclosure on its corporate governance practices that often exceeds legal
requirements. The disclosure contained on the following pages follows the
Governance Disclosure Rule but includes voluntary disclosure not mandated by
those rules.
Disclosure of TELUS' practices
Board of Directors
Independent directors
Since 2000, the TELUS Board of Directors has adopted a policy requiring that at
least a majority of its Board of Directors be "independent." In determining
"independence," the Board of Directors has adopted a set of criteria that goes
beyond applicable securities rules. The Board has chosen to voluntarily comply
with all elements of the "independence" test pronounced by the New York Stock
Exchange including those that are not binding on TELUS. Accordingly, the
"independence" tests applied by TELUS comply with the Governance Disclosure
Rule, the CSA Investor Confidence Rules and the NYSE Governance Rules. These
policies are reflected in the TELUS Board Policy Manual.
The Board applied this expanded test of independence to the relationship
between each director and the Company based on information updated annually
through a comprehensive questionnaire.
As Canada's second largest telecommunications company and the incumbent local
exchange carrier in several provinces, the Company provides service to its
directors and their family members, and to many organizations with whom the
directors are associated. The Board has determined that the provision of
services per se does not create a material relationship between the director
and the Company. Rather, the Board examines a variety of factors including the
magnitude of the service provided, the monetary and strategic value of those
services to each party, the degree of dependence on such relationship by either
party, and how easily a service may be replaced, in determining if any such
relationship creates a material relationship. The Board considers similar
factors in assessing the materiality of any relationship between the Company
and any supplier or lender with whom a director is associated.
Applying the above tests and process, the Board is satisfied that, except for
Darren 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. The Board has therefore determined that all of the proposed
directors, other than Mr. Entwistle, are independent.
Additional disclosure on Board members, including their business experience and
backgrounds, and the names of other reporting issuers or organizations on whose
boards they serve, can be found in the Election of directors on page 7 of this
information circular, the 2005 annual report - business review, and at
telus.com/bios.
Non-independent directors
Mr. Entwistle is the only director who is a member of management of the
Company. Mr. Entwistle is President and CEO of TELUS and consequently, is not
an "independent" director pursuant to the Governance Disclosure Rule. If
elected at the meeting, Mr. Entwistle will be the only director among the
nominees identified in the information circular who is not an "independent"
director.
Interlocking boards
Brian MacNeill and Darren Entwistle both sit on the Board of the TD Bank
Financial Group.
Meetings of independent directors
As a regular feature at regularly scheduled Board meetings, the Board meets
without management other than the President and CEO and the Corporate
Secretary, followed by an "in-camera" session without the President and CEO or
any other member of management present. The Chair presides over these in-camera
sessions of the Board. Pursuant to the TELUS Board Policy Manual, the Board is
also required to hold at least one annual in-camera session without
non-independent directors present. In 2005, the Board held five such in-camera
sessions.
Attendance records for each director can be found on page 11. Directors are
expected to fully attend all Board and committee meetings.
Independent Chair of the Board
The Board has adopted a number of policies to better ensure the independence of
the Board. The Chair of the Board is required to be independent. In addition,
the positions of Chair and CEO must be separate. Mr. Canfield 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 Governance
Disclosure Rule and the NYSE Governance Rules for establishing his
"independence" from management. The Board has determined that the Chair of the
Board, Mr. Canfield, is an "independent" director under the Governance
Disclosure Rule and the NYSE Governance Rules.
Board mandate
The TELUS Board Policy Manual provides guidelines to the Board and was
developed to assist Board members in fulfilling their obligations, both
individually and collectively, and to make very explicit the expectations on
the Board, Board committees, individual directors, the Chair, Board committee
Chairs, and the President and CEO. The terms of reference for the Board of
Directors are contained in the Manual and also attached as Appendix "B" to this
information circular. A copy of the TELUS Board Policy Manual in its entirety
is available at telus.com/governance.
To help the Board fulfill its duties and responsibilities, the Board delegates
certain powers, duties and responsibilities to committees to ensure full review
of certain matters. The terms of references of the committees set out the
mandates, duties and authority of the committees, and the scope of their
authority. The committees report to the Board on their activities on a regular
basis.
To further delineate the responsibilities of the Board, the Board adopted a
Delegations Policy in 1999 under which the Board delegates certain decisions to
management. The Board last updated and revised the Delegations Policy in 2004.
This policy provides guidance to the Board and management on matters requiring
Board approval including major capital expenditures, acquisitions, investments
or divestitures.
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 applies to all TELUS team members, including
directors, officers and employees. 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. Material changes to the policy, as approved by the Disclosure
Committee, must be reported to the Audit Committee and approved by the Board.
Position descriptions
The Board has developed a description of the role and responsibilities the
Chair of the Board, and brief position descriptions for the Chair of each Board
committee, all of which are described in the TELUS Board Policy Manual. The
duties of the Chair include leading the Board in its management and supervision
of the business and affairs of the Company, its oversight of management and
promoting effective relations with shareholders.
The Board has also developed terms of reference for the President and CEO,
which are described in the TELUS Board Policy Manual. 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 20.
Orientation and continuing education
The Corporate Governance Committee reviews, approves and reports to the Board
on the Directors' orientation program and plans for the ongoing development of
existing Board members.
The Company's newest director, Pierre Y. Ducros, participated in an orientation
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 a day-long orientation session covering
topics including TELUS' organizational structure, strategy and financial plan,
securities laws and TELUS' approach to corporate governance, key corporate
policies including the Ethics Policy, the Insider Trading Policy and the
Corporate Disclosure Policy, roles and responsibilities of directors, mandates
of the Board and its committees, directors' liability and indemnification, and
the TELUS Board Policy Manual.
On a regular basis, educational topics are presented at either meetings of the
Board or the committees for review and discussion, and the directors are
canvassed each year for topics of interest. Topics presented in 2005 included:
developments in the telecommunications industry and the major players and
impact on the Company; the impact of emerging technologies on the
communications industry; emerging best practices in corporate governance; civil
liability under Ontario's Bill 198; updates on corporate governance regulations
and privacy law; emerging issues in pension governance; updates on SOX 404,
including delays in implementation for non-U.S. issuers listed on U.S.
exchanges and emerging guidance arising from the implementation of SOX 404 for
U.S. domestic issuers; and, potential changes in federal regulations regarding
income trusts.
Directors identify topics for continuing education through discussions at Board
and committee meetings and through the skills self-assessment surveys, which
they complete annually.
Ethical business conduct
TELUS has adopted an Ethics Policy, which applies to all TELUS team members,
including directors, officers and employees of TELUS. The Ethics Policy is
available at telus.com/governance. As part of the policy, TELUS created the
TELUS EthicsLine, 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.
TELUS has also established an Ethics Office, which conducts investigations,
provides advice on ethical dilemmas and establishes appropriate policies and
guidelines on TELUS' expected standards of business conduct. The Ethics Office
oversees ethics training, including an online interactive ethics course that is
mandatory for all TELUS team members, and annually requires each director to
review the Ethics Policy and affirm that he or she has done so.
The Audit Committee of the Board is required to review the Ethics Policy on an
annual basis and recommend changes for approval to the Board as appropriate.
The Audit Committee also receives quarterly reports from the Chief Internal
Auditor on the results of any investigation of whistleblower, ethics and
internal controls complaints. Waivers granted under the Policy must be
pre-approved by the Board of Directors or their designate.
The Ethics Policy also provides guidelines on how to deal with conflicts of
interest and requires disclosure of actual or potential conflicts by TELUS team
members. Furthermore, under the Business Corporations Act (British Columbia)
and the Company's Articles, any director or executive officer who holds any
office or possesses any property, right or interest that could result in the
creation of a duty or interest that materially conflicts with the individual's
duty or interest as a director or executive officer of the Company, must
promptly disclose the nature and extent of that conflict. A director who holds
a disclosable interest in a transaction or contract into which the Company has
entered or proposes to enter may not vote on any directors' resolution to
approve that contract or transaction.
Nomination of directors
Upon the recommendation of the Corporate Governance Committee, the Board
annually reviews the size and composition of the Board and the committees, and
proposes nominees for election as directors, in accordance with the TELUS Board
Policy Manual, to advance the objective of forming an effective-functioning
Board that presents a diversity of views and business experience.
The Corporate Governance Committee, which is comprised entirely of
"independent" directors, is also responsible for assessing and making
recommendations regarding Board effectiveness and establishing a process for
identifying, recruiting, nominating and appointing new directors. The terms of
reference for the Corporate Governance Committee are set out at
telus.com/governance. For a summary of the responsibilities, powers and
operation of the Corporate Governance Committee see Mandate and report of the
Corporate Governance Committee on page 13.
In 2005, the Corporate Governance Committee assessed and recommended to the
Board an increase in the size of the Board from 11 to 12 in order to increase
representation from the province of Quebec, an important market to the Company.
After an extensive director search, Mr. Ducros was appointed to the Board of
Directors.
The steps taken to find the 12th director illustrate the process followed by
the Board to identify and select new candidates for Board nomination. The
Corporate Governance Committee followed the process outlined in the TELUS Board
Policy Manual considering, among other things, the strategic imperatives for
the Company, the attributes and experience that would best enhance the
Company's business plan and strategies, the skills and competencies of the
current directors, and the existence of any gaps in Board skills as a whole, as
identified through Board and director evaluations and skills self-assessments.
Through this process, the Chair of the Board and the President and CEO were
consulted. A list of most desirable attributes, including track record of
business success and relevant industry experience, was formulated. An external
search firm was retained to assist in the identification and qualification of
candidates. To further encourage an objective process, the search firm was
asked to evaluate and rank prospective candidates based on an assessment of
their accomplishments against the specified attributes. The search firm
reported on its findings to the Corporate Governance Committee. Prospective
candidates then met with the Chair of the Board and the President and CEO. The
Corporate Governance Committee also assessed the financial literacy and
independence of the prospective candidates prior to making its recommendation
to the Board.
Compensation
Officers' compensation
The Board has delegated to the Compensation Committee, which is comprised
entirely of "independent" directors, the responsibility for reviewing and
recommending to the Board compensation of the President and CEO, and approving
the compensation of the remaining executive management.
The Compensation Committee is a proponent of linking executive compensation
directly to the achievement of business objectives and has adopted a
market-based approach to executive compensation to ensure that the Company
provides competitive compensation.
In addition to setting executive compensation, the Compensation Committee
reviews the Company's overall organizational structure for executive
management, and recommends to the Board for approval the appointment of
executive leadership team members. The Compensation Committee also 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 20.
Compensation consultant
The Compensation Committee engages the services of an external compensation
consultant, Hewitt Associates. The mandate of the consultant is to serve TELUS
and work for the Committee in its review of executive compensation practices,
executive compensation design, market trends and regulatory considerations. The
consultant does not recommend compensation levels. The Compensation Committee
is responsible for reviewing and making all final decisions subject to
necessary Board approval. The Committee has the final authority to hire and
terminate the consultant, and the Committee evaluates the consultant annually.
The consultant may perform other services for TELUS on the condition that the
Compensation Committee is informed of any significant work outside the
executive compensation role. For 2005, this work included an employee survey,
flexible benefit redesign and pension redesign; the Compensation Committee has
reviewed the fees paid for these other services. The individual executive
compensation consultant at Hewitt Associates who advises the Compensation
Committee is not permitted to be the overall account manager for TELUS and does
not report to the overall account manager. The Compensation Committee approves
all invoices for executive compensation work performed by the consultant.
Directors' compensation
The Corporate Governance Committee reviews and recommends to the Board the
compensation and benefits of Board members. In this regard, the Committee
considers factors such as market data, time commitments, fees paid by similar
organizations and responsibilities of the directors. In 2003, TELUS stopped
granting options to directors. In 2005, the Corporate Governance Committee
initiated a review of the philosophy underlying directors' compensation with
the assistance of external consultants on market data. As part of its review,
the Corporate Governance Committee considered a variety of factors, including
whether directors' compensation should include equity, the appropriateness of
the Company's peer group for benchmarking and consistency with the Company's
philosophy on executive compensation. It determined that generally, overall
compensation should be targeted at (be in touch with) the 75th percentile
within a comparator group of companies of comparable size and responsibility to
the Company, with the cash component of the compensation targeted at the 50th
percentile. Compensation should be skewed towards equity more than cash.
Applying that philosophy, the Corporate Governance Committee intends to conduct
the next comprehensive review of directors' compensation in 2006. If at that
time, the Committee determines that a change in compensation is appropriate,
the revised compensation adopted will be disclosed at telus.com/governance. The
Corporate Governance Committee also recommended for approval an amendment to
the TELUS Board Policy Manual to reflect its updated philosophy on directors'
compensation. For details on current levels of director compensation, see
Director compensation on page 14.
The Company aligns the Board's interests with the interests of shareholders
by maintaining equity ownership thresholds to be attained by directors, and by
choosing equity payment in the form of deferred share units in lieu of options.
In February 2006, the Corporate Governance Committee recommended for approval
to the Board an increase in the Chair's equity ownership threshold from
$400,000 to $500,000, to be acquired within five years of joining the Board.
For all other non-management directors, the minimum equity ownership was also
increased from $200,000 to $300,000 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 10, 2006, all of the proposed non-management directors
(including the Chair) have reached or exceeded their respective minimum equity
ownership level. Mr. Entwistle's holdings well exceed the higher ownership
threshold required of the President and CEO. All directors' shareholdings are
disclosed under the Election of directors on page *.
Other Board committees
In addition to the Audit, Corporate Governance and Human Resources and
Compensation Committees, the Board has established a Pension Committee. The
Pension Committee is responsible for overseeing most of the pension plans
pertaining to the Company and its subsidiaries. Its specific duties include
responsibility in respect of the actuarial soundness of the Pension Plans (as
defined in the Pension Committee's terms of reference), the administrative
aspects of the Pension Plans, investment policy, the performance of the
investment portfolios and compliance with government legislation.
All committees have the authority to retain external advisors at TELUS'
expense in connection with their responsibilities. Detailed descriptions of
each committee's mandate are found in this information circular on pages 13,
15, 17 and 20, while the full text of each committee's terms of reference can
be found at telus.com/governance.
Assessments
The Corporate Governance Committee, in conjunction with the Chair, carries out
an annual assessment of the Board and its members that is comprised of three
components: a Board effectiveness survey, a peer evaluation and a skills
self-assessment. In the first, directors are asked to rate the effectiveness of
the Board, review Board and committee processes, and review the Board's
relationship with management. In 2004, this Board effectiveness survey was
revised to include a specific assessment of each committee and each committee
Chair. The director peer evaluation survey was first implemented in 2002 and
provides each director with feedback from his or her peers on his or her
performance. It also provides directors with suggestions for improving their
effectiveness as directors and contributions to the Board. Finally, the
directors complete an annual skills self-assessment, designed to assist in
determining the strengths and gaps in Board skills as a whole and to enable a
comprehensive and meaningful assessment of skill requirements for nominating
future directors. This self-assessment also assists the Corporate Governance
Committee in determining topics for continuing education.
The Board effectiveness assessment and peer evaluation are conducted
confidentially and, in accordance with the TELUS Board Policy Manual, the Chair
conducts separate interviews with each director to discuss the results of the
director's evaluations and self-assessment, and reports the collated results to
the Board. Similarly, the Chair of the Corporate Governance Committee reviews
the assessments of the Chair of the Board, discusses them with the Chair of the
Board and reports the collated results to the Board.
Appendix B: Terms of reference of 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 10 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 meeting of the Company.
d) The Chair of the Board must be an Independent Director.
3.2 MEETING
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.
Dated: April 5, 2006
TELUS Corporation
/s/ Audrey Ho
_____________________________
Name: Audrey Ho
Title: Vice President, Legal Services and
General Counsel and Corporate Secretary
______________________________________________________________________________
For further information:
External Communications: Investor Relations:
Allison Vale, Robert Mitchell,
(416) 629-6425, (416) 279-3219,
allison.vale(at)telus.com robert.mitchell2(at)telus.com