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___ 2003
(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:
TELUS Corporation Information Circular
Dated March 14, 2003
evolving our business
delivering on our strategy
notice of annual and special general meeting
information circular 2003
table of contents
notice of annual and special general meeting 1
information circular 2
invitation to shareholders 2
frequently asked questions on voting 3
restriction on ownership of shares 7
non-voting shares 7
business of the meeting 8
1.report of the directors and consolidated
financial report 8
2.election of directors 8
3.appointment of auditors 13
summary of billings for TELUS for january 1 to
december 31, 2002 13
4.amendment to the articles of the company to allow a
committee of directors to fill a vacancy of the auditors 14
5.amendment to the articles of the company to amend quorum
requirements for general meetings 14
6.reconfirmation and approval of an amended and restated
shareholder rights plan 15
mandate and report of the corporate governance committee 19
mandate and report of the audit committee 21
mandate and report of the human resources and compensation 24
committee
report on executive compensation 24
executive compensation summary table 29
TELUS pension plan 33
employment agreements 34
indebtedness of directors and officers 34
performance graph 35
directors' and officers'insurance and indemnification 36
additional matters and information 36
board approval 36
certificate 36
appendix a:
statement of TELUS' corporate governance practices 37
disclosure of TELUS'practices with reference to
the current TSX guidelines 38
notice of annual and
special general meeting
Notice is hereby given that the annual and special general meeting (the
"meeting") of the holders of the common shares and/or non-voting shares of
TELUS Corporation (the "Company" or "TELUS") will be held on Wednesday, April
30, 2003 at 10:00 a.m. (Mountain Daylight Savings Time) at the TELUS Convention
Centre, North Building, Second floor, Exhibition Hall C, 136 - 8th Avenue S.E.,
Calgary, Alberta. The purpose of the meeting is to:
1. receive the Company's 2002 audited consolidated financial statements
together with the reports of the auditors on those statements;
2. elect directors of the Company for the next year;
3. appoint Deloitte & Touche LLP as auditors for the next year;
4. consider and, if thought fit, pass a special resolution authorizing
amendment of the Articles of the Company to allow a committee of
directors to fill a vacancy of the auditors;
5. consider and, if thought fit, pass a special resolution authorizing
amendment of the Articles of the Company respecting the quorum
requirements for general meetings;
6. consider and, if thought fit, pass, with or without variation,
an ordinary resolution reconfirming and approving an amended and
restated shareholder rights plan; and
7. transact other business as may properly come before the meeting or any
adjournment thereof.
The British Columbia Registrar of Companies has approved the Company's
application to hold this meeting outside British Columbia. A copy of this order
may be obtained upon request to TELUS' Corporate Secretary. Also, pursuant to
the Company Act (British Columbia), advance notice of the meeting was published
in the Vancouver Sun on February 14, 2003.
Dated at Vancouver, B.C. this 14th day of March, 2003.
By order of the Board of Directors
James W. Peters
Executive Vice-President, Corporate Affairs and Chief
General Counsel and Corporate Secretary
Holders of common shares and/or non-voting shares of the Company who are unable
to attend the 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.
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 April 28, 2003 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.
1
information
circular
invitation to shareholders
-------------------------------------------------------------------------------
On behalf of the TELUS Board of Directors, management and employees, we invite
you to join us at TELUS' annual and special general meeting (the "meeting").
This year, the meeting will be held:
Date: Wednesday, April 30, 2003
Time: 10:00 a.m. (Mountain Daylight Savings Time)
Place: TELUS Convention Centre
North Building, 2nd floor, Exhibition Hall C
136 - 8th Avenue S.E., Calgary, Alberta
At the meeting, holders of common shares and/or non-voting shares
("shareholders") of TELUS will be asked to approve the business items in the
notice of annual and special general meeting and this information circular. We
will also update you on how TELUS is continuing to execute on its strategy and
give you an update on the Company's current financial outlook. 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 personally meet your
directors and executives.
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 Web cast at telus.com/agm at 10 a.m. on
April 30.
We look forward to seeing you.
Sincerely,
Brian A. Canfield Darren Entwistle
Chairman of the President &
Board of Directors Chief Executive Officer
March 14, 2003
2
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 shareholder as of March 14, 2003, 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 were a holder of common shares as of the close of business on
March 14, 2003, you are entitled to vote one vote per common share on
the resolutions relating to:
(i) electing directors for the next year;
(ii) appointing the auditors for the next year;
(iii) amending the Company's Articles to allow a committee of directors
to fill a vacancy of the auditors;
(iv) amending the Company's Articles respecting the quorum
requirements for general meetings; and
(v) reconfirming and approving the amended and restated shareholder
rights plan.
If you were a holder of non-voting shares, as of the close of business
on March 14, 2003, you are entitled to vote one vote per non-voting
share on the resolution to reconfirm and approve the amended and
restated shareholder rights plan, as your interests could be affected.
Q How can I vote my shares?
A You can vote your shares by either attending and voting your shares at
the meeting or, if you cannot attend the meeting, by having your shares
voted by proxy. How you exercise your vote depends on whether you are a
registered or non-registered shareholder.
* You are a registered shareholder if you have a share certificate
registered in your name.
* You are a non-registered shareholder if: (i) your shares are
registered in the name of an intermediary (for example, a bank,
a trustee or investment dealer) or the name of a clearing agency
of which the intermediary is a participant, or (ii) you hold
common shares through the Employee Share Purchase Plan.
Voting by attending the meeting
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
shares (the "employee shares") held on behalf of members of the TELUS Employee
Share Purchase Plan of the Company. 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.
3
Voting by proxy
How you vote by proxy depends on whether you are a registered shareholder, a
non-registered shareholder or a holder of employee shares.
1. Voting by proxy-registered shareholder
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, or
* 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
April 28, 2003 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
provided. 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 the proxy that was delivered to you
by mail or e-mail.
Note that voting by telephone is not available if you wish
to appoint a person as a proxy other than the persons named on the proxy form
or if you wish to exercise your cumulative voting rights regarding the election
of directors. In either of these instances, your proxy should be voted by mail,
delivery, or Internet.
Proxy and voting by Internet
To vote your proxy by Internet, visit the Web site address as shown on the
proxy form provided. Follow the on-line voting instructions given to you over
the Internet and refer to your holder account number and proxy access number
provided on the proxy that was delivered to you by mail or e-mail.
2. Voting by proxy-non-registered shareholder
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, in accordance with the instructions provided to you by
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 at the meeting. 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 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 April 28, 2003 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.
If an employee holds common and non-voting shares (other than employee
shares), another proxy must be completed to vote the shares, unless such
employee attends the meeting and votes the shares in person.
4
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
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,
common shares will be voted in favour of:
1. electing each person nominated by management as a director;
2. appointing Deloitte & Touche LLP as auditors of the Company;
3. amending the Articles of the Company to allow a committee of
directors to fill a vacancy of the external auditors;
4. amending the Articles of the Company respecting the quorum
requirements for general meetings; and,
5. reconfirming and approving the amended and restated shareholder
rights plan.
If there are no instructions with respect to your proxy, your non-voting shares
will be voted in favour of reconfirming and approving the amended and restated
shareholder rights plan.
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. Paper proxies can be delivered to the
registered office of the Company, c/o TELUS' Corporate Secretary, 3777
Kingsway, Burnaby, B.C. V5H 3Z7, any time up to and including April 29,
2003, 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 Chairman of the meeting
at the meeting or any adjournment thereof. 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, at any time up to and including the second
last business day preceding the day of the meeting or any adjournment
thereof.
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
sees fit on any amendment or variation to any of the matters identified
in the notice of meeting and any other matters that may properly be
brought before the meeting. As of March 14, 2003, neither the Board of
directors nor management of the Company is aware of any variation,
amendment or other matter to be presented for a vote at the meeting.
5
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 Trust Company of
Canada ("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; or
* 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
your e-mail address that you provided.(1)
The cost of solicitation is paid for by the Company.
(1) Pursuant to a court order of the B.C. Supreme Court (the"Court"), the
Company is exempt from any requirements in the Articles of the Company
and the Company Act (British Columbia) that would prohibit the Company,
or agent, from delivering the notice of meeting, information circular,
proxy form, annual financial statements and any other meeting materials
for the meeting solely by electronic means to those shareholders of the
Company who consent to such electronic delivery.
Q What are the quorum requirements for the meeting and how many common
shares and non-voting shares are outstanding?
A A quorum at the meeting will consist of at least two persons present
and/or represented by proxy, being shareholders that hold not less than
1/20 (5 per cent) of the issued and outstanding shares entitled to be
voted at the meeting. One of the items of business is to amend these
quorum requirements. On February 28, 2003, the Company had 188,114,132
common shares and 158,899,604 non-voting shares issued and
outstanding.
Q Does any shareholder beneficially own 10 per cent or more of the common
shares and/or non-voting shares that are outstanding?
A Yes, Verizon Communications Inc. ("Verizon"), through Anglo-Canadian
Telephone Company ("Anglo- Canadian") owned 48,551,972 common shares
representing approximately 25.8 per cent of the issued and outstanding
common shares and 24,908,020 non-voting shares representing
approximately 15.7 per cent of the issued and outstanding non-voting
shares on February 28, 2003. Anglo-Canadian is 100 per cent directly
and indirectly beneficially owned and controlled by Verizon. To the
knowledge of the directors and senior officers of TELUS, on February
28, 2003, no other persons beneficially own, directly or indirectly, or
exercise control or direction over, common shares or non-voting shares
carrying more than 10 per cent of the voting rights attached to all
common shares or non-voting 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:
* by phone: 1-800-558-0046 (toll-free within North America)
1-514-982-7270 (outside North America)
* by fax: (416) 263-9394
* by e-mail: telus@computershare.com
* by mail: Computershare Trust Company of Canada
9th floor, 100 University Avenue
Toronto, Ontario, M5J 2Y1
6
Restriction on ownership of shares
On October 25, 1994, the Canadian Telecommunications Common Carrier Ownership
and Control Regulations (the "Telecommunications regulations") were adopted
under the Telecommunications Act (Canada) (the "Telecommunications Act"). To
maintain the eligibility of certain of its subsidiaries which are Canadian
common carriers under the Telecommunications Act, the level of non-Canadian
ownership of the common shares cannot exceed 33 1/3 per cent and the Company
must not be otherwise controlled by non-Canadians. 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.
Non-voting shares
Subject to the prior rights of the holders of first preferred shares and second
preferred shares of the Company, holders of non-voting shares are entitled to
participate equally with the holders of common shares with respect to the
payment of dividends and the distribution of assets of the Company on the
liquidation, dissolution or winding up of the Company. The non-voting shares
cannot be subdivided, consolidated, reclassified or otherwise changed unless
the common shares are changed in the same manner. Generally, the holders of
non-voting shares are entitled to receive notice of, attend and be heard at all
general meetings of the Company and are entitled to receive all notices of
meetings, information circulars and other written information from the Company
that the holders of common shares are entitled to receive from the Company, but
are not entitled to vote at such general meetings unless otherwise required by
law. The holders of non-voting shares are entitled to vote at the meeting on
the resolution to ratify, reconfirm and approve the amended and restated
shareholder rights plan because their interests could be affected. 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 and Telecommunications regulations 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.
7
business of
the meeting
1. Report of the directors and consolidated financial report
The report of management and the audited consolidated financial statements for
the year ended December 31, 2002, including management's discussion and
analysis (MD&A), are contained in the Annual Report of the Company which
accompanies this information circular.
2. Election of directors
General
The current directors were elected by the holders of common shares on May 1,
2002. Michael T. Masin and Fares F. Salloum were both Verizon nominees on the
TELUS Board, and each of them resigned as a director of TELUS when he resigned
from his position at Verizon. Alfred C. Giammarino was appointed by the Board
of directors to replace Michael T. Masin, effective October 4, 2002. Daniel C.
Petri was appointed by the Board of directors to replace Fares F. Salloum on
October 30, 2002. Also, Geraldine B. Sinclair and Pierre Choquette resigned as
directors of TELUS, effective November 10, 2002 and November 19, 2002,
respectively, due to the demands of their other business interests. Currently,
there are 13 directors on the TELUS Board. Lawrence A. Pentland has decided not
to stand for re-election to the TELUS Board. G.N. (Mel) Cooper has reached the
retirement age for directors and will not be standing for re-election.
TELUS thanks all of the directors who have resigned or will not be
standing for re-election for their hard work, dedication and contributions to
the TELUS Board.
The Articles of the Company provide for cumulative voting in respect of
the election of directors. The Board has determined that the number of
directors should be set at 12. Accordingly, at the meeting, each holder of
common shares can cast the number of votes for election of directors equal to
the number of common shares held by him multiplied by 12, being the number of
directors to be elected. Each holder of common shares may cast all such votes
in favour of one candidate or distribute the votes among the candidates in any
manner. If a holder of common shares votes for more than one candidate without
specifying the distribution of the votes among the candidates, the votes will
be distributed equally among the candidates voted for by that holder of common
shares. If at the meeting, the number of candidates nominated for directors
exceeds the number of directors to be elected, the candidate who receives the
least number of votes will be eliminated until the number of candidates
remaining equals the number of positions to be filled. Unless the holder of
common shares specifies that the proxy be withheld from voting on the election
of all or any of the directors, or indicates that such holder wishes to
exercise cumulative voting rights, the persons named in the accompanying proxy
(the "management proxyholders") intend to vote for the election of all nominees
for directors whose names are set forth in the table on pages 9 to 11. If a
holder of common shares wishes to distribute votes other than equally among the
candidates for whom the holder of common shares has directed the person
designated in the proxy to vote, the holder of common shares must do so
personally at the meeting or by another paper or Internet proxy, providing
clear instructions on how the holder's votes are to be allocated.
Management believes that all nominees are able to serve as a director.
If, prior to the meeting, any nominee is unable or unwilling to serve, the
management proxyholders, unless directed to withhold the common shares from
voting for the election of directors, reserve the right to vote for another
nominee or nominees in their discretion if additional nominations are made at
the meeting. Unless his 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 successor is elected or
appointed. The Board of directors intends to further enhance diversity on the
Board by adding one more director but does not expect to conclude a director
search in this regard until after the meeting.
8
The following table provides the name and background information of each
nominee, including present principal occupation, principal occupations during
the past five years and positions held with the Company.
-------------------------------------------------------------------------------
R.H. (Dick) Auchinleck
Calgary, Alberta
Age: 52
Director Since(1): New Nominee
Shareholdings(2): 400/6000
DSUs(3): 0/0
Options(4): 0/0
R.H. (Dick) Auchinleck was employed by Gulf Canada, an oil and gas company, for
25 years, retiring in 2001 as President and Chief Executive Officer of Gulf
Canada Resources after the sale of the company to Conoco Inc. He continues an
association with the company as a member of the Conoco-Philips Board. From 1999
to 2001, he was the President and Chief Executive Officer of Gulf. From 1995 to
1999 he held the position of Senior Vice-President and Chief Operating Officer
of Gulf. He is also a member of the Board of Directors of Sonic Mobility and
Plurion Systems. He received a Bachelor of Applied Science in Chemical
Engineering from the University of British Columbia. Dick is expected to serve
on the TELUS Audit Committee ("Audit Committee").
-------------------------------------------------------------------------------
R. John Butler
Edmonton, Alberta
Age: 59
Director Since(1): 1995
Shareholdings(2): 984/3,423
DSUs(3): 0/0
Options(4): 2,487/3,050/2,700
R. John Butler, Q.C. is counsel to Bryan & Company, a law firm. John served on
the Board of ED TEL (Edmonton Telephones) prior to its acquisition by TELUS
Corporation, and on the Board of TELUS prior to its 1999 merger with BC
TELECOM. He is a member of the Board of Directors of Trans Global Insurance
Company, Trans Global Life Insurance Company and Edmonton Eskimos Football
Club. John currently is Chair of the TELUS Pension Committee and a member of
the TELUS Corporate Governance Committee ("Governance Committee").
-------------------------------------------------------------------------------
Brian A. Canfield(5)
Point Roberts, Washington
Age: 64
Director Since(1): 1993
Shareholdings(2): 9,718/5,509
DSUs(3): 4,279/0
Options(4): 245,800/175,585/5,400
Brian A. Canfield is the Chairman of TELUS Corporation. His career with BC TEL
spans nearly 47 years, including four years as Chairman and Chief Executive
Officer of BC TELECOM, and three years as President and Chief Operating
Officer. He also served as President and Chief Executive Officer of TELUS on an
interim basis from September 1999 to July 2000, after which he resumed his role
as Chairman. He is a member of the Board of Directors of BC Gas Inc., Terasen
Pipelines (Trans Mountain) Inc., Suncor Energy Inc. and the Toronto Stock
Exchange. In 1997, Brian was named an honourary Doctor of Technology by the
British Columbia Institute of Technology, and in 1998 was appointed to the
Order of British Columbia. Brian currently serves on the TELUS Pension
Committee ("Pension Committee").
-------------------------------------------------------------------------------
Peter D. Charbonneau
Ottawa, Ontario
Age: 49
Director Since(1): 2001
Shareholdings(2): 3,658/0
DSUs(3): 0/0
Options(4):0/0/2,700
Peter D. Charbonneau is a partner in Skypoint Capital, an Ottawa-based venture
capital firm focused on early-stage investments in telecommunications
technology companies. Peter began his career with Deloitte & Touche. He then
joined Newbridge Networks as Chief Financial Officer in 1987. He subsequently
became President and Chief Operating Officer in 1996, and Vice Chairman from
June 1998 to May 2000. Peter served as Executive Vice-President of March
Networks from June 2000 to January 2001, and retains an advisory role with the
company. He is a chartered accountant and has an MBA from the University of
Western Ontario. Peter currently serves on the Audit Committee.
-------------------------------------------------------------------------------
Darren Entwistle
Vancouver, British Columbia
Age: 40
Director Since(1): 2000
Shareholdings(2): 11,050/71,468
Options(4): 350,000/758,280
RSUs(6): 148,579
Darren Entwistle assumed the position of President and Chief Executive Officer
of TELUS Corporation on July 10, 2000. He began his career at Bell Canada in
1988 and joined Mercury Communications Ltd. in 1993 in the UK, holding key
positions in corporate finance and strategy. He then moved to Cable & Wireless
plc as Merger Director and implemented the largest merger in UK history and the
world's first four-way merger, involving cable-TV and telecom companies. He
subsequently was Managing Director, Business of Cable & Wireless Communications
plc from May 1997 to August 1999, Chief Commercial Officer of Cable & Wireless,
UK & Europe, from August 1999 to April 2000, and President, Global Services of
Cable & Wireless, UK & Ireland, from May 2000 to July 2000. Darren holds an MBA
in finance from McGill University and a diploma in network engineering from the
University of Toronto. Darren is a member of the Board of Directors of The
Toronto-Dominion Bank and the Vancouver 2010 Bid Corporation.
-------------------------------------------------------------------------------
9
Alfred C. Giammarino(5)
Wilton, Connecticut
Age: 47
Director Since(1): 2002
Shareholdings(2): 0/0
DSUs(3): 0/0
Options(4): 0/0
Alfred C. Giammarino is the Senior Vice-President and Chief Financial Officer
of Verizon International and Verizon Information Services, subsidiaries of
Verizon Communications Inc., a holding company of a consolidated group of
telecommunications companies. In addition, he is responsible for the management
of Verizon Airfone and oversees all of Verizon's investments in Europe and
Asia. Before the merger of GTE and Bell Atlantic to form Verizon in June 2000,
Al served as Senior Vice-President-International Finance, Planning and
Business Development for GTE Corporation since July 1998. Prior to that, he
served as Vice- President of Finance and Planning for GTE Telecommunications
Products and Services. He is a member of the Board of Directors of the
following international affiliates of Verizon: Telecomunicaciones de Puerto
Rico Inc., Compania Anonima Nacional Telefonos de Venezuela, Grupo Iusacell,
S.A. de C.V. (Mexico) and Vodafone Omnitel, N.V. (Italy). Al currently serves
on the Audit Committee.
-------------------------------------------------------------------------------
Iain J. Harris
Vancouver, British Columbia
Age: 57
Director Since(1): 1997
Shareholdings(2): 750/250
DSUs(3): 4,717/7,313
Options(4): 0/3,050/2,700
Iain J. Harris is Chairman of BC Gas Inc. and Chairman and Chief Executive
Officer of Summit Holdings Ltd., a private holding and investment company. From
1982 to 1995, he was President and Chief Executive officer of AirBC Limited.
Prior to that, he was Vice-President of Finance and Administration of the Jim
Pattison Group, one of the largest private companies in Canada. He is a
recipient of the Governor General's Commemorative Medal for his community and
public service. Iain currently is Chair of the Audit Committee.
-------------------------------------------------------------------------------
John S. Lacey
Don Mills, Ontario
Age: 59
Director Since(1): 2000
Shareholdings(2): 8,044/0
DSUs(3): 0/0
Options(4): 0/0/2,700
John S. Lacey became the Chairman of the Board of Directors of Alderwoods
Group, Inc. (emergent company of Loewen Group), an organization operating
funeral homes and cemeteries within North America and the UK, on January 2,
2002. From January 1999 to January 2002, John was the Chairman of the Board of
Directors of Loewen Group, of which he was a director from December 1998. From
July 1998 to November 1998, he was President and Chief Executive Officer of The
Oshawa Group Ltd. in Toronto, Ontario. From November 1996 to July 1998, he was
President and Chief Executive Officer of WIC Western International
Communications in Vancouver, British Columbia. Prior to that, John served as
President and Chief Executive Officer of Scott's Hospitality Inc. from 1990 to
1996. In addition to TELUS, he is an Advisory Board Member of Tricap, a
director of Cancer Care Ontario and is currently the Chairman of Doncaster
Racing Inc. and Doncaster Consolidated Ltd. John currently is the Chair of the
TELUS Human Resources and Compensation Committee ("Compensation Committee") and
a member of the Governance Committee.
-------------------------------------------------------------------------------
Brian F. MacNeill
Calgary, Alberta
Age: 63
Director Since(1): 2001
Shareholdings(2): 1,000/0
DSUs(3): 0/5,270
Options(4): 0/0/2,700
Brian F. MacNeill retired as Chief Executive Officer of Enbridge Inc. on
January 1, 2001. He directed Enbridge as Chief Executive Officer from 1990
until his retirement. Prior to that he was Executive Vice-President and Chief
Operating Officer of Interprovincial Pipe Line Inc. (now Enbridge Inc.). Brian
has also held financial positions with Interhome Energy Inc., Home Oil Company
Limited and Hiram Walker Resources Ltd. He is currently Chairman of
Petro-Canada and a director of The Toronto-Dominion Bank, Dofasco Inc., Western
Oil Sands Inc., West Fraser Timber Co. Ltd., Veritas DGC Inc. and Sears Canada
Inc. He is a member of the Governance Committee and Pension Committee.
-------------------------------------------------------------------------------
Daniel C. Petri(5)
Bedford, New York
Age: 54
Director Since(1): 2002
Shareholdings(2): 0/0
DSUs(3): 0/0
Options(4): 0/0
Daniel C. Petri is Group President, International, for Verizon Communications
Inc., the holding company of a consolidated group of telecommunications
companies. Verizon was formed by the merger of GTE and Bell Atlantic in June
2000. He is responsible for Verizon's wireless and wireline operations in
Mexico, Venezuela, the Dominican Republic, Puerto Rico and Canada. Prior to
this appointment, Dan served as President, International-Europe and Asia from
July 2000 to October 2002 and was responsible for wireless and wireline
operations in those markets. During his telecommunications career of more than
30 years, Dan has held a number of key positions in domestic and international
operations. He is a member of the Board of Telecom Asia, Iusacell, Codetel,
CANTV, and is the Chair of the Business Council for International
Understanding. Dan currently serves as a member of the Compensation Committee.
-------------------------------------------------------------------------------
10
Ronald P. Triffo
Edmonton, Alberta
Age: 63
Director Since(1): 1995
Shareholdings(2): 1,567/522
DSUs(3): 6,128/12,415
Options(4): 2,487/4,100/2,700
Ronald P. Triffo is the Chairman of Stantec Inc., an engineering and
international professional services company where he served in various
executive management positions for more than 20 years. He is a past President
of the Consulting Engineers of Alberta and the Association of Consulting
Engineers of Canada. He served as a director and board chairman of ED TEL prior
to its acquisition by TELUS Corporation. He is currently Chairman and director
of Alberta Treasury Branches. Ron is the private-sector Co-Chair of the Alberta
Economic Development Authority. He also serves on the Board of the Alberta
Ingenuity Fund, the Advisory Councils of the Faculties of Business and Medicine
at the University of Alberta, the Council of the Association of Professional
Engineers, Geologists and Geophysicists of Alberta, and the Board of Governors
of Junior Achievement of Northern Alberta. Ron is currently the Vice Chairman
of TELUS, and Chair of the Governance Committee and a member of the Pension
Committee.
-------------------------------------------------------------------------------
Donald P. Woodley
Mono Township, Ontario
Age: 57
Director Since(1): 1998
Shareholdings(2): 3,668/437
DSUs(3): 0/0
Options(4): 0/3,050/2,700
Donald P. Woodley is the President of The Fifth Line Enterprise, a privately
held company providing strategic advisory services to the Canadian IT industry.
From February 1997 to September 1999, he was President of Oracle Corporation
Canada Inc. and from 1987 to February 1997, President of Compaq Canada Inc. He
currently serves on the Board of Directors of DataMirror Corporation, Onx
Enterprise Solutions Inc. and several private companies. Don is a member and
Past Chair of the Board of Governors of ITAC (Information Technology
Association of Canada) and is currently Chair of the Board of Governors of The
Stratford Festival of Canada, and a member of the Development Council of the
Toronto Hospital for Sick Children. He holds a Bachelor of Commerce from
University of Saskatchewan and an MBA from the University of Western Ontario.
Don currently serves as a member on the Compensation Committee and Pension
Committee.
-------------------------------------------------------------------------------
(1) The Company or any of its predecessors.
(2) Common shares/non-voting shares, as at February 28, 2003.
(3) Deferred share units for common shares/deferred share units for
non-voting shares, as at February 28, 2003.
(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 February 28, 2003.
(5) Nominee designated pursuant to the Long-Term Relationship Agreement
dated January 31, 1999 among the Company and Verizon's subsidiaries,
GTE Corporation and Anglo-Canadian Telephone Company.
(6) Darren Entwistle also holds restricted share units (RSUs), each equal to
the value of one non-voting share as determined under the applicable
plan.
11
Board and committee meetings held and attendance by directors for the year
ended December 31, 2002
Number of Board and Attendance of directors
committee meetings held
---------------------------------------------------------------------------------------------------------------------------------
Board of Directors: 11 Board meetings Committee
Director attended meetings attended
(a) Audit Committee: 4 Brian A. Canfield(Chairman) 11 of 11 13(1)
(b) Governance Committee: 6 R. John Butler(a, d) 11 of 11 11 of 12
(c) Compensation Committee: 6 Peter D. Charbonneau(a) 10 of 11 4 of 4
(d) Pension Committee: 6 G.N. (Mel) Cooper(b, d) 11 of 11 12 of 12
Darren Entwistle 11 of 11 Nil(2)
Alfred C. Giammarino(a) 1 of 2(3) Nil(4)
Iain J. Harris(a-Chair, b) 11 of 11 10 of 10
John S. Lacey(a, c-Chair) 9 of 11(5) 8 of 10
Brian F. MacNeill(b, c) 10 of 11 7 of 7
Lawrence A. Pentland(c) 11 of 11 5 of 6
Daniel C. Petri(c) 2 of 3(6) 1 of 1(7)
Ronald P. Triffo(a, b-Chair) 11 of 11 10 of 10
Donald P. Woodley(a, d) 11 of 11 10 of 10
---------------------------------------------------------------------------------------------------------------------------------
(1) The Chair of the Board did not serve on any committees of the Board
last year, but regularly attends committee meetings.
(2) The CEO does not serve on any committee of the Board, but regularly
attends committee meetings.
(3) Alfred C. Giammarino was appointed to the Board on October 30, 2002,
replacing Fares F. Salloum who resigned as a director effective
October 30, 2002.
(4) Alfred C. Giammarino was appointed to the Audit Committee on December
9, 2002. No meetings were held in 2002 after that date.
(5) John S. Lacey was appointed Chair of the Compensation Committee on
December 9, 2002, replacing the former Chair, Pierre Choquette, who
resigned as a director effective November 19, 2002.
(6) Daniel C. Petri was appointed to the Board of directors on October 4,
2002, replacing Michael T. Masin who resigned as a director effective
October 4, 2002.
(7) Daniel C. Petri was appointed to the Compensation Committee on December
9, 2002, replacing Geraldine B. Sinclair who resigned as a director
effective November 10, 2002.
(8) All the then serving Board members, other than Michael T. Masin and
Ronald P. Triffo, attended the strategic planning session held on
September 22-24, 2002.
12
3. Appointment of auditors
Arthur Andersen LLP was appointed auditors of the Company on May 1, 2002 at the
annual general meeting of the Company. On June 3, 2002, Arthur Andersen LLP
ceased practising public accounting in Canada and the partners and staff of
Arthur Andersen LLP in Canada joined Deloitte & Touche LLP.
Upon the recommendation of the Audit Committee, the Board of Directors
appointed Deloitte & Touche LLP to fill the vacancy. Upon the recommendation of
the Audit Committee, holders of common shares will be asked at the meeting to
approve the appointment of Deloitte & Touche LLP as auditors. This
re-appointment will become effective only if approved by at least a majority of
the votes cast by the holders of common shares present in person or by proxy,
entitled to vote at the meeting.
The management proxyholders intend to vote for the appointment of
Deloitte & Touche LLP, Chartered Accountants, as auditors of the Company, unless
the holder of common shares specifies that his proxy be withheld from voting.
Summary of billings and services by the external auditors
The two tables below provide for greater disclosure of the services provided by
the Company's external auditors, separating the services into the four
categories of work performed.
The fees for non-audit services performed by Arthur Andersen while they
were the Company's external auditors constituted a minor portion of the overall
fees paid to them. With regard to the non-audit fees paid to Deloitte & Touche
LLP and Deloitte Consulting, a substantial portion of those fees were paid
pursuant to contracts entered into before Deloitte & Touche LLP became the
auditors of the Company. Since October 2002, the Company has adopted a
procedure to ensure that the future engagement of its external auditors for
non-audit services is subject to pre-approval by the Audit Committee in
accordance with the proposed process and fundamental principles articulated by
the Securities and Exchange Commission (SEC) to further ensure auditor
independence.
Tax fees of $146,165 paid in 2002 to the auditors of the Company, Arthur
Andersen LLP and Deloitte & Touche LLP, were related to legal entity
restructuring, appeals and litigation and shareholder-related matters, and all
other fees of approximately $1.7 million were substantially related to fees
paid to Deloitte Consulting for information systems integration and consulting
services related to the design and implementation of a new Siebel based
integrated trouble-ticket management system. Deloitte & Touche LLP has
announced its intention to separate from Deloitte Consulting. The following
table is a summary of billings by Arthur Andersen LLP and Deloitte & Touche
LLP, for their respective periods as auditors of TELUS, during the period from
January 1, 2001 to December 31, 2002:
Summary of billings for TELUS for the period January 1 to December 31, 2002
---------------------------------------------------------------------------------------------------------------------------------
Deloitte & Arthur Deloitte
Type of work Touche(1) Andersen(2) Sub-total Consulting(1) Total Percentage
---------------------------------------------------------------------------------------------------------------------------------
Audit fees $1,224,500 $270,750 $1,495,250 - $1,495,250 42.5
Audit-related fees 124,435 33,500 157,935 - 157,935 4.5
Sub-total $1,348,935 $304,250 $1,653,185 - $1,653,185 47.0
=================================================================================================================================
Tax fees 77,390 68,775 146,165 - 146,165 4.2
All other fees 60,250 45,800 106,050 1,611,830 1,717,880 48.8
Total $1,486,575 $418,825 $1,905,400 $1,611,830 $3,517,230 100.0
=================================================================================================================================
Summary of billings provided by Arthur Andersen LLP for the period from January 1 to December 31, 2001
Type of work Fees Percentage
Audit fees $1,453,250 52.1
Audit-related fees 585,990 21.0
Sub-total $2,039,240 73.1
=================================================================================================================================
Tax fees 695,204 25.0
All other fees 52,455 1.9
Total $2,786,899 100.0
=================================================================================================================================
(1) For the period from June 3, 2002 to December 31, 2002 while Deloitte &
Touche LLP were the external auditors of TELUS.
(2) For the period from January 1, 2002 to June 2, 2002 while Arthur
Andersen LLP were the external auditors of TELUS.
13
4. Amendment to the Articles of the Company to allow a committee of
directors to fill a vacancy of the auditors
Canadian and U.S. corporate governance regulatory bodies have recently proposed
that to enhance the independence of the external auditors, the audit committee
should be responsible for the engagement, evaluation and termination of the
external auditors, subject to shareholder ratification as required by
applicable corporate legislation. In the past, TELUS has acted consistently
with the intent of this approach as our external auditors were selected by the
Board based on the recommendation of its Audit Committee and then brought
forward before you as shareholders for approval.
Article 17.1 of the Articles of the Company currently prohibits the
Audit Committee from having the authority to hire the external auditors if
a vacancy were created.
Article 17.1 states that:
"The Directors may by resolution appoint one or more committees
consisting of such member or members of their body as they think fit
and may delegate to any such committee between meetings of the Board
such powers of the Board subject to such conditions as may be
prescribed in such resolution. Notwithstanding the foregoing, no
committee of Directors shall have authority to:
(b) fill a vacancy among the Directors, any committee or the Auditor."
The Board of directors unanimously recommends to the shareholders the removal
of this prohibition by adopting the special resolution set out below, so that
the Board may delegate to the Audit Committee the authority to fill a vacancy
of the external auditor.
Accordingly, the Board requests the approval at the meeting of the
special resolution set out below:
BE IT RESOLVED, as a special resolution, THAT:
Article 17.1(b) of the Articles of the Company be amended and replaced
with the following: "The Directors may by resolution appoint one or
more committees consisting of such member or members of their body as
they think fit and may delegate to any such committee between meetings
of the Board such powers of the Board subject to such conditions as may
be prescribed in such resolution. Notwithstanding the foregoing, no
committee of Directors shall have authority to:
(b) fill a vacancy among the Directors or any committee."
To be effective, the special resolution must be approved by not less than 3/4
of the votes cast by holders of common shares present in person or by proxy,
who are entitled to vote at the meeting on the special resolution.
The management proxyholders intend to vote for the special resolution
approving the amendment to the Articles of the Company to remove the prohibition
that a committee of directors may not be delegated authority to fill a vacancy
of the external auditors, unless the holder of common shares specifies that
those common shares be voted against the special resolution.
5. Amendment to the Articles of the Company to amend quorum requirements
for general meetings
Article 10.3 of the Articles of the Company currently
states that:
"Save as herein otherwise provided, a quorum shall be two persons
present and being, or representing by proxy, members holding not less
than 1/20 of the issued shares entitled to be voted at the meeting. The
Directors, the Secretary, or, in his or her absence, an Assistant
Secretary, and the solicitor of the Company shall be entitled to attend
at any general meeting but no such person shall be counted in the
quorum or be entitled to vote at any general meeting unless he or she
shall be a member or proxyholder entitled to vote thereat."
The Company desires to strengthen the presence of Canadians at general meetings
by changing the quorum requirements for general meetings, to more strongly
demonstrate its continued compliance with foreign ownership requirements
under the Telecommunications Act and Radiocommunication Act (Canada). For
further information on the foreign ownership requirements that TELUS is subject
to, see section on Restrictions on ownership of shares on page 7.
14
Accordingly, the Board unanimously recommends that the quorum be changed from
two persons holding not less than 1/20 (5 per cent) of the issued shares
entitled to be voted at the meeting, to two "Canadians" holding not less than
that same number of shares entitled to vote, while foreign ownership rules
remain, by the approval of the special resolution set out below:
BE IT RESOLVED, as a special resolution, THAT:
1. Article 10.3 of the Articles be deleted and replaced with the
following: "Save as herein otherwise provided, a quorum shall be two
persons present and being, or representing by proxy, members holding
not less than 1/20 of the issued shares entitled to be voted at the
meeting; provided that until such time that the Radiocommunication Act
and regulations are changed so that the Company and its subsidiaries
are not required to be "Canadian-owned and controlled" to be eligible
to hold licences issued thereunder, a quorum shall be two persons
present and being, or representing by proxy, members who are Canadians
holding not less than 1/20 of the issued shares entitled to be voted at
the meeting. The Directors, the Secretary, or, in his or her absence,
an Assistant Secretary, and the solicitor of the Company shall be
entitled to attend at any general meeting but no such person shall be
counted in the quorum or be entitled to vote at any general meeting
unless he or she shall be a member or proxyholder entitled to vote
thereat." and,
2. Article 1.2 of the Articles of the Company be amended to add the
following definitions:
"Canadian-owned and controlled", for the purpose of the quorum
requirement, has the meaning set forth in the Radiocommunication
Regulations.
"Canadian", for the purpose of the quorum requirement, has the meaning
set forth in the Radiocommunication Regulations.
"Radiocommunication Act" means the Radiocommunication Act (Canada), as
amended from time to time.
"Radiocommunication Regulations" means the Radiocommunication
Regulations pursuant to the Radiocommunication Act, as amended from
time to time.
To be effective, the special resolution must be approved by not less than 3/4
of the votes cast by holders of common shares present in person or by proxy,
who are entitled to vote at the meeting on the special resolution.
The management proxyholders intend to vote for the special resolution
approving the amendment to the Articles of the Company to amend the quorum
requirements for general meetings, unless the holder of common shares specifies
that those common shares be voted against the special resolution.
6. Reconfirmation and approval of an amended and restated shareholder
rights plan
Shareholders will be asked at the meeting to reconfirm and approve
the Company's shareholder rights plan, as it is proposed that it be amended and
restated.
The Company first adopted a shareholder rights plan in March 2000. In
May 2000, shareholders approved the Company's current shareholder rights plan
(the "current rights plan"), which takes the form of an agreement between the
Company and the rights agent, Montreal Trust Company of Canada (now
Computershare Trust Company of Canada). The purpose of the current rights plan
is to provide shareholders with sufficient time to assess a takeover bid for
the Company, if such bid were to be made, and to provide the Board the
opportunity to explore and develop alternatives to any bid that are in the best
interests of the Company and its shareholders. The current rights plan will
terminate unless it is reconfirmed at the meeting. The Board, as discussed
below, has considered and concluded that the continuation of the current rights
plan, subject to certain minor amendments thereto which the Board proposes be
adopted, would be in the best interests of the Company and its shareholders.
Many public companies in Canada continue to have shareholder rights
plans in effect. While securities legislation in Canada now typically requires
a takeover bid to be open for at least 35 days, the Board is of the view that
this is not sufficient time to adequately assess a takeover bid, if such a bid
were to be made, and if the Board deems appropriate, to explore and develop
alternatives that are in the best interests of the Company and its
shareholders.
The current rights plan is not intended to prevent a takeover bid or to
deter offers for the shares. It is designed to encourage any bidder to provide
shareholders with equal treatment in a takeover and full value for their
investment.
15
Board review
The Board, as part of its most recent review and analysis of the continuation
of the current rights plan, considered matters including:
* developments in shareholder rights plans since the current rights plan
was ratified by the holders of shares in May 2000;
* the terms and conditions of rights plans recently adopted by other
Canadian companies;
* recent experience involving rights plans in the context of takeover
bids; and
* the commentary of the investment community on these plans.
Based upon this review, the Board is proposing the approval of minor amendments
to the current rights plan to ensure that it both remains consistent with the
latest generation of Canadian rights plans and addresses the concerns of
investment industry commentators on a basis consistent with the objectives of
these agreements. The proposed amended and restated version of the current
rights plan (the "amended and restated rights plan") is not being proposed in
response to, or in anticipation of, an acquisition or takeover bid. It is not
the intention of the Board, in proposing that the amended and restated rights
plan be reconfirmed, to secure the continuance in office of the existing
members of the Board or management or to avoid an acquisition of control of the
Company in a transaction that is fair and in the best interests of the
shareholders. The rights of shareholders under existing law to seek a change in
management of the Company or to influence or promote action of management in a
particular manner will not be affected by the amended and restated rights plan.
The reconfirmation of the amended and restated rights plan does not affect the
duty of the Board to act honestly and in good faith with a view to the best
interests of the Company and the shareholders.
Amendments to the current rights plan
The proposed amendments to the current rights plan are limited in number and
effect. The main amendment is to the definition of a permitted "Lock-up
Agreement". The definition currently provides that persons who have entered
into an agreement to tender their Voting Shares (as defined in the current
rights plan) to a particular takeover bid must be allowed to withdraw their
Voting Shares in order to tender them to an offer that provides for an offer
price which exceeds the original offer price by a specified percentage. The
amended definition of a "Lock-up Agreement" now also makes clear that a person
must be allowed to withdraw Voting Shares in order to tender them to an offer
which provides for the purchase of a number of Voting Shares that exceeds the
number of Voting Shares to be purchased under the original offer by more than a
specified percentage. In addition, the amended definition of "Lock-up
Agreement" clarifies that such an agreement may provide for break-up fees
within certain specified parameters.
Other minor amendments include changes to the following definitions:
(i) "Affiliate" - The definition has been modified to address only entities
controlled by corporations, as other entities in which a corporation has a
non-controlling interest and that need to be captured for purposes of
triggering the rights plan are captured through the definition of "acting
jointly or in concert";
(ii) "Beneficial Ownership" - The exemption for Investment Managers set out
in this definition has been amended to make clear that Investment Managers will
not trigger the plan by virtue of holding securities that are in
non-discretionary accounts held on behalf of clients; and
(iii) "Competing Permitted Bid" - This change has been made to make clear
that a Competing Permitted Bid must include a provision that no Voting Shares
will be taken up under such a bid unless more than 50 per cent of the Voting
Shares held by the parties other than the bidder making such a bid and those
acting in concert with that bidder have been tendered to the bid.
16
Summary of the rights plan
The following is a summary of the principal terms of the amended and restated
rights plan which is qualified in its entirety by reference to the text of the
amended and restated rights plan. Copies of the complete TELUS amended and
restated rights plan are available from the Corporate Secretary.
Effective date
The effective date of the rights plan is March 20, 2000 (the "Effective Date").
Term
Ten years, subject to reconfirmation at this meeting and at the sixth annual
meeting following the adoption of the current rights plan.
Issue of Rights
On the Effective Date, one Series A right (a "Series A Right") was issued and
attached to each common share outstanding at one minute after the Effective
Date (the "Record Time") and will attach to each common share issued after the
Record Time and prior to the earlier of the Separation Time (as hereinafter
defined) and the expiration of the amended and restated rights plan (the
"Expiration Time"). Additionally, on the Effective Date, one Series B right (a
"Series B Right") was issued and attached to each non-voting share outstanding
at the Record Time and will attach to each non-voting share issued after the
Record Time and prior to the earlier of the Separation Time and the Expiration
Time.
Rights Exercise Privilege
The Series A Rights and the Series B Rights will separate from the common
shares and non-voting shares and will be exercisable eight trading days (the
"Separation Time") after a person has acquired, or commences a takeover bid
permitted by the amended and restated rights plan (a "Permitted Bid"). The
acquisition by any person (an "Acquiring Person") of more than 34.2 per cent of
the Voting Shares, other than by way of a Permitted Bid, is referred to as a
"Flip-in Event." Any Rights held by an Acquiring Person will become void upon
the occurrence of a Flip-in Event. Eight trading days after the occurrence of
the Flip-in Event, each Series A Right (other than those held by the Acquiring
Person), will permit the purchase of $320 worth of common shares for $160 (i.e.
at a 50 per cent discount) and each Series B Right (other than those held by
the Acquiring Person) will permit the purchase of $320 worth of non-voting
shares for $160 (i.e. at a 50 per cent discount).
The issue of the Rights is not initially dilutive. However, upon a
Flip-in Event occurring and the Rights separating from the Shares, reported
earnings per share on a fully diluted or non-diluted basis may be affected.
Holders of Rights not exercising their Rights upon the occurrence of a Flip-in
Event may suffer substantial dilution.
The Flip-in threshold was set at 34.2 per cent in order to respect the
terms of the Long-Term Relationship Agreement entered into between GTE
Corporation ("GTE"), Anglo-Canadian and the Company at the time of the merger
between BC TELECOM and TELUS. In particular, that agreement provides that
Anglo-Canadian may increase its approximate 26.7 per cent interest in the
Company, held at the time of the agreement, by no more than 7.5 per cent
without prior approval of a majority of the Company's independent directors
(i.e. directors who are neither GTE designees nor members of Company
management).
Certificates and Transferability
Prior to the Separation Time, the Rights will be evidenced by a legend
imprinted on certificates for common shares and non-voting shares issued from
and after the Effective Date and will not be transferable separately from such
shares. From and after the Separation Time, the Rights will be evidenced by
Rights certificates which will be transferable and traded separately from the
Shares.
Permitted Bid Requirements
The requirements for a Permitted Bid include the following:
(i) the takeover bid must be made by way of a takeover bid circular;
(ii) the takeover bid must be made to all holders of Voting Shares;
(iii) the takeover bid must be outstanding for a minimum period of 60 days
and Voting Shares tendered pursuant to the takeover bid may not be
taken up prior to the expiry of the 60-day period and only at such time
if more than 50 per cent of the Voting Shares held by shareholders
other than the bidder, its affiliates and persons acting jointly or in
concert (the "Independent Shareholders") have been tendered to the
takeover bid and not withdrawn;
17
(iv) the Voting Shares deposited pursuant to the takeover bid may be
withdrawn until taken up and paid for; and
(v) if more than 50 per cent of the Voting Shares held by Independent
Shareholders are tendered to the takeover bid within the 60-day
period, the bidder must make a public announcement of that fact
and the takeover bid must remain open for deposits of Voting Shares for
an additional 10 business days from the date of such public
announcement.
The amended and restated rights plan allows for a competing Permitted Bid (a
"Competing Permitted Bid") to be made while a Permitted Bid is in existence. A
Competing Permitted Bid must satisfy all the requirements of a Permitted Bid
except that it may expire on the same date as the Permitted Bid, subject to the
statutory requirement that it be outstanding for a minimum period of 35 days.
Waiver and Redemption
The Board may, prior to a Flip-in Event, waive the dilutive effects of the
amended and restated rights plan in respect of a particular Flip-in Event
resulting from a takeover bid made by way of a takeover bid circular to all
holders of Voting Shares, in which event such waiver would be deemed also to be
a waiver in respect of any other Flip-in Event occurring under a takeover bid
made by way of a takeover bid circular to all holders of Voting Shares. The
Board may also waive the amended and restated rights plan in respect of a
particular Flip-in Event that has occurred through inadvertence, provided that
the Acquiring Person that inadvertently triggered such Flip-in Event reduces
its beneficial holdings to 34.2 per cent or less of the outstanding Voting
Shares within 14 days or such other period as may be specified by the Board.
With the majority consent of holders of Shares or Rights holders at any time
prior to the occurrence of a Flip-in Event, the Board may redeem all, but not
less than all, of the outstanding Rights at a price of $0.0001 each.
Exemptions for Certain Holders
Investment advisors or managers (for client accounts), trust companies (acting
in their capacities as trustees and administrators), statutory bodies managing
investment funds (for employee benefit plans, pension plans, insurance plans or
various public bodies), administrators or trustees of registered pension funds,
plans or related trusts and Crown agents or agencies acquiring greater than
34.2 per cent of the Voting Shares are exempted from triggering a Flip-in
Event, provided that they are not making, or are not part of a group making a
takeover bid.
Recommendation of the Board
The Board has determined that the amended and restated rights plan is in the
best interests of the Company and its shareholders. The Board unanimously
recommends that shareholders vote at the meeting in favour of the resolution to
ratify, reconfirm and approve the amended and restated rights plan.
In order to be effective, the resolution will require the approval of a
majority of votes cast by holders of common and non-voting shares, voting
together, who vote by person or proxy in respect of the resolution at the
meeting. The text of the proposed resolution is as follows:
BE IT RESOLVED THAT:
The continued existence of the rights plan as amended and restated (the
"Amended and Restated Rights Agreement"), and the Rights therein, be
and are hereby, approved and the Amended and Restated Rights Agreement
is hereby ratified, reconfirmed and approved by the holders of the
shares of the Company.
A similar shareholder reconfirmation process must occur at the Company's annual
meeting in 2006 in order for the amended and restated rights plan to remain in
effect until March 2010.
Failing such reconfirmation, the current rights agreement and all
outstanding Rights thereunder will terminate.
The management proxyholders intend to vote for the special resolution
reconfirming and approving the amended and restated rights plan, unless the
holder of shares specifies that those shares be voted against the ordinary
resolution.
18
mandate and report of
the corporate governance committee
The mandate of this Committee (the "Governance Committee") is to provide a
focus on corporate governance that will enhance corporate performance and
ensure on behalf of the Board and shareholders that the Company has an
effective corporate governance regime. As at December 31, 2002, the Committee
was comprised of Ron P. Triffo (Chair), R. John Butler, G.N. (Mel) Cooper, Iain
J. Harris and Brian F. MacNeill. The current Committee members were appointed
on February 28, 2003. The Governance Committee's responsibilities include a
duty to assess and, where appropriate, recommend changes to enhance Board
effectiveness. The Committee is also responsible for identifying, recruiting,
appointing and re-appointing directors and providing ongoing development for
directors. Furthermore, the Governance Committee assesses and ensures the
independence from management of the Board and Board committees.
The Governance Committee is comprised of members who are all unrelated,
independent and non-management directors as defined by applicable securities
regulators. In-camera sessions, without management present, are regularly held
as part of each Committee meeting.
The Company is reviewing the terms of reference of the Governance
Committee with a view to include further enhancements, and expects to make
available the revised terms of reference on TELUS' Web site at telus.com when
the review is completed. Current terms of reference of the Governance Committee
are available upon request from the Company's Corporate Secretary.
TELUS already has in place many practices that are now mandated or
recommended by regulatory requirements or guidelines, and in 2002 has reviewed
and where appropriate further enhanced its corporate governance program. The
Governance Committee is committed to effective corporate governance at TELUS.
The following are highlights of some of the initiatives taken by the Governance
Committee in the past year:
* Enhanced the Board, committee and director evaluation processes
This involved extensively re-designing the Board and committee survey
(which is conducted on an annual basis) to provide directors an
opportunity to evaluate the mechanisms in place for the Board to not
only operate effectively and make decisions in the best interests of
the Company, but also to be a strategic asset of the Company. The
result is a solid measure of the contributions made by the Board, both
collectively and individually, for the long-term success of TELUS.
* Enhanced and renewed commitment to corporate governance
Regular updates were received throughout 2002 on corporate governance
initiatives taken by securities regulators and others. The Company also
held a joint Corporate Governance/Audit Committee meeting in January
2003 to educate directors on current corporate governance proposals by
securities regulators and ensure TELUS continues to institute best
practices in corporate governance and financial reporting (also, see
Mandate and report by the Audit Committee on page 21).
* Reduced the size of the Board to enhance effectiveness
The Governance Committee recommended a reduction in Board size from 15
to further enhance the Board's effectiveness (See Election of directors
on page 8).
* Recommended against granting options to directors in 2003 and
recommended a review of total compensation in 2003
The Governance Committee recommended against the granting of options
to directors in 2003. The Governance Committee will review in 2003
both the form and quantum of director compensation in order to
ensure it is appropriate. The Governance Committee will also review
the sufficiency of the current requirement that directors own at
least $100,000 in TELUS equity within five years of joining the TELUS
Board.
19
TELUS' statement of corporate governance practices, attached as Appendix A to
this information circular, further discloses the Board's continued commitment
and efforts to be at the forefront of corporate governance. It highlights the
corporate governance systems in place at TELUS and reviews its systems against
the Toronto Stock Exchange corporate governance guidelines ("TSX guidelines").
Signed, the members of the Corporate Governance Committee
R.P. Triffo - Chair R.J. Butler
G.N. Cooper J.S. Lacey
B.F. MacNeill
Director compensation
Each director of the Company who is not an employee of the Company, other than
Alfred C. Giammarino and Daniel C. Petri, 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.(1) The following sets out the fees paid
to directors for the year ending December 31, 2002:
---------------------------------------------------------------------------------------------------------------------------------
Board retainers and meeting fees
for non-management directors Compensation
---------------------------------------------------------------------------------------------------------------------------------
Vice Chair's retainer fee $44,000 per annum
Directors' retainer fee $22,000 per annum
Directors' meeting fee
(including Vice Chair) $1,200 per meeting
Chair's meeting fee No meeting fee
---------------------------------------------------------------------------------------------------------------------------------
Committee retainers and meeting
fees for non-management directors Compensation
---------------------------------------------------------------------------------------------------------------------------------
Directors' retainer fee $3,000 per annum
Directors' meeting fee $1,200 per meeting
Chair's retainer fee $6,000 per annum
Chair's meeting fee $1,200 per meeting
---------------------------------------------------------------------------------------------------------------------------------
Chairman
Total retainer (instead of Board and
committee retainers and meeting fees) $175,000 per annum
---------------------------------------------------------------------------------------------------------------------------------
Directors who are requested by the Chairman to perform additional tasks or
assignments on behalf of the Board may in certain circumstances receive an
additional $1,200 per diem fee for such services.
(1) A.C. Giammarino and D.C. Petri do not receive director compensation due
to Verizon's policy that no director, by virtue of his employment with
Verizon or any of its affiliates, should receive director compensation.
20
mandate and report of
the audit committee
Although the Company's management has the primary responsibility for
the financial reporting process, the Audit Committee is responsible for
overseeing the Company's financial reporting process and ensuring its
integrity. The Committee also assumes specified responsibilities beyond
those of overseeing the reporting process as delegated by the Board. As
at December 31, 2002, the Committee was comprised of Iain J. Harris
(Chair), Peter D. Charbonneau, Alfred C. Giammarino, John S. Lacey and
Donald P. Woodley. The current Committee members were appointed on
February 28, 2003.
As required by mandate, the Audit Committee discusses with the
external auditors the scope of their examination, monitors the progress of the
independent audit and ensures the adequacy of accounting controls.
The Audit Committee receives quarterly reports on internal audit
program results and an evaluation of internal control systems and risk
assessment updates, including legal and regulatory claims, environmental
issues, disaster recovery plans, financial derivatives and other exposures. It
also receives an annual update on insurance coverage.
The Audit Committee reviews any changes or adoption of significant
accounting policies and estimates impacting the current and future financial
statements of the Company. The Audit Committee also regularly reviews updates
to the financing plan and policy as well as indemnities and guarantees. The
Audit Committee meets at least quarterly and reports on its activities to the
Board on a quarterly basis. At each quarterly meeting, the Committee meets
separately, in-camera, with both the internal auditor and external auditors.
The Audit Committee reviews and, if satisfied, recommends to the Board
for approval, the public release and filing of any annual audited consolidated
financial statements and quarterly unaudited consolidated financial statements
of the Company and any subsidiary whose financial statements are publicly
filed, including related news releases and management's discussion and analysis
(MD&A).
TELUS is firmly committed to full and fair financial disclosure. The
Company is widely recognized as a leader for the quality of its reporting and
comprehensiveness of its disclosure. In fact, we have a long history of
recognized excellence with eight consecutive years of medal wins (six of them
gold) in the telecommunications industry at the Corporate Reporting Awards, a
program sponsored by the Canadian Institute of Chartered Accountants (CICA) and
the National Post.
As part of the Company's commitment to remaining best-in-class in
financial reporting, the Audit Committee has implemented a number of
initiatives that enhance our corporate reporting and provide clear
communication to our shareholders. While some of these improvements have
recently become mandatory under the rules of various regulators and accounting
bodies, many of our measures go beyond those required. The following are some
of the Audit Committee's initiatives implemented in 2002, as well as several
which are targeted for implementation in 2003:
* Audit Committee oversees the CEO and CFO certification process
New requirements under the Sarbanes-Oxley Act ("SOX") in the U.S.
require both the CEO and CFO to personally certify to the effect that
they:
* have reviewed and will certify that certain reports, including the
annual audited financial statements, MD&A, this information circular
and the annual information form, based upon their knowledge, are
materially accurate and not misleading;
21
* are responsible for establishing and maintaining disclosure controls
and procedures; have designed those controls and procedures to
ensure material information is made known to them; have evaluated
the effectiveness of those controls and procedures; and have
presented their conclusions about the effectiveness of those
controls and procedures in the annual report;
* have disclosed to the Audit Committee and external auditors all
significant deficiencies and material weaknesses in the design or
operation of internal controls as well as any material weaknesses in
the internal controls; have disclosed any fraud that involves anyone
with a significant role in internal controls; and have indicated any
significant changes in internal controls or other factors that could
significantly affect internal controls.
TELUS already has in place an extensive and robust set of procedures and
controls including a conflict-of-interest disclosure checklist and quarterly
legal and regulatory complaint questionnaires. To lend additional support to
the certification, TELUS enhanced and formalized a more vigorous internal
process that provides the necessary due diligence and investigation to allow
the CEO and CFO to sign these certificates with confidence.
* Financial reporting and disclosure control checklist
Comprehensive checklists have been developed to provide validation and
assurance of financial reporting and proper disclosure controls. These
have been cascaded through the organization to senior managers in each
of the business units as well as those employees with key roles within
the financial and disclosure process. These checklists are based on
Guidance on Control issued by the Criteria of Control (CoCo) Board at
the CICA and guidance from other accounting and securities regulating
bodies.
* Improvements to risk management process
Under the direction of a newly appointed Vice-President, Risk
Management and Chief Auditor, TELUS has conducted a thorough
enterprise-wide risk assessment to support the certification process.
In September 2002, TELUS implemented an extensive risk assessment
survey of management employees across TELUS. TELUS conducted the survey
for the second time in January 2003. The survey results provide an
internal controls assessment of the entire organization and individual
business units. A report of the risk assessment and survey findings was
presented to the Audit Committee and the executive leadership team in
the fourth quarter of 2002. Individual executive leadership team
members have taken responsibility to address risk mitigation efforts
and the risk assessment results drove the development of the 2003 TELUS
internal audit plan. The survey is based on the Internal Control -
Integrated Framework, published by the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission. This model represents
the U.S. integrated framework for internal control.
* Management's discussion & analysis enhancements reviewed with the Audit
Committee
Beginning with the disclosure of the second quarter results in 2002,
off-balance sheet arrangements and contractual liabilities are now part
of the MD&A. Under the recently issued CICA guidelines, this change was
not mandatory until the end of 2002. As part of the MD&A changes,
contingent liabilities and contractual obligations are now included in
TELUS' financial report.
* TELUS ethics policy
In 2002, TELUS updated its ethics policy, which applies to the
Company's directors, officers and all employees. It was introduced to
employees through an on-line interactive course, which all employees
were required to complete by early 2003. The Board is responsible for
monitoring compliance of the TELUS Ethics Policy and granting any
waivers from compliance for directors and officers of the Company. The
TELUS Ethics Policy is available on TELUS' website at telus.com and
upon request to the Company's Corporate Secretary.
* Whistle Blower ethics hotline
As part of its Ethics Policy, the Company's whistle blower hotline
allows employees and others to anonymously raise accounting, internal
controls and ethical issues or complaints. (Hotline phone number:
1-866-515-6333)
22
* External auditors independence and pre-approval of non-audit and audit
services
The Audit Committee considers the independence of the Company auditors
to be critical to the integrity of its financial reporting and a key to
maintaining best practices in corporate governance. One initiative
adopted by the Audit Committee in October 2002 to enhance the
independence of the Company's auditors, and to proactively comply with
rules proposed by the SEC, was to institute a process to identify,
monitor and approve all non-audit and audit services provided by its
external auditors.
* Amendments to the Audit Committee's terms of reference
The Company is reviewing the terms of reference of the Audit Committee
with a view to include further enhancements and changing regulatory
requirements, and expects to make available the revised terms of
reference on TELUS' Web site at telus.com when the review is completed.
Current terms of reference of the Audit Committee are available upon
request from the Company's Corporate Secretary.
Signed, the members of the Audit Committee
I.J. Harris - Chair P.D. Charbonneau
A.C. Giammarino
23
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 for executive and management compensation, and for
reviewing executive compensation. The Compensation Committee annually reviews
and reports to the Board on the Company's organization structure, management's
succession plans for the executive leadership team, including specific
development plans and career planning for potential successors. It administers
Board approved option plans and employee benefit plans (other than pension
plans) and recommends option grants to the Board for approval.
Committee members and non-management directors are not eligible to
participate in any of the Company's compensation programs for employees, except
for the Share Option and Compensation Plan, which contains separate provisions
related to the grant of options, purchase of shares and issuance of deferred
share units to non-employee directors. There are no interlocking relationships
between the members of the Committee and executives of the Company. As of
December 31, 2002, the Committee was composed of John S. Lacey (Chair), Brian
MacNeill, Lawrence A. Pentland and Daniel C. Petri. Michael T. Masin (former
Committee Chair), Pierre Choquette (former Committee Chair replacing Michael T.
Masin) and Geraldine B. Sinclair were members of the Committee during 2002 but
resigned prior to December 31, 2002 (October 4, 2002, November 19, 2002 and
November 10, 2002, respectively). The current Committee members were appointed
on February 28, 2003.
The Company is reviewing the terms of reference of the Compensation
Committee with a view to including further enhancements and expects to make
available the revised terms of reference on TELUS' Web site at telus.com when
the review is completed. Current terms of reference of the Compensation
Committee are available upon request from the Company's Corporate Secretary.
Report on executive compensation
One of the Compensation Committee's roles is to design a compensation
arrangement for the Company's executives that will allow the Company to attract
and retain the key talent necessary to achieve the business objectives approved
by the Board and to enhance the growth and profitability of the Company.
Compensation objectives and principles
The goal is to create a clear linkage between compensation and the achievement
of business goals in the short term, medium term and long term by providing
appropriate components of fixed compensation, compensation at risk and future
income security.
The Compensation Committee has approved a performance management
philosophy that provides a direct linkage between short-, medium- and long-term
compensation at risk and the execution strategies required to achieve the goals
of continuous growth, excellent customer service and operational excellence
while providing a workplace of choice. In establishing the appropriate
compensation levels, the Committee receives, the expert advice of outside
consultants who conduct surveys and provide competitive data, and
recommendations from management.
The Compensation Committee relates total compensation levels for
executives to the compensation paid to executives of two comparator groups:
general Canadian industry with revenue similar to that of the Company and
Canadian telecommunications companies. The Compensation Committee approves the
selection of external consultants, and from time to time reviews the selection
of companies used for compensation comparison purposes.
24
Performance management
For 2002, the Compensation Committee has approved a rigorous, comprehensive and
holistic approach towards the assessment of the performance of the executive
leadership team. Each executive leadership team member is evaluated using the
following assessment tools:
* personal value-add assessment model
* individual, business unit and corporate balanced scorecards
* strategic staffing model.
The personal value-add assessment model is used to assess and rate an executive
leadership team member's achievement of results, leadership skills, retention
criticality 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 annual variable pay,
and restricted share unit 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
develop and regularly update succession plans for executive positions.
Compensation mix
The key elements of the Company's executive compensation program are base
salary and at-risk compensation, which comprises annual variable pay,
allocations of restricted share units and long-term incentives. These key
elements are addressed separately below. The Compensation Committee has adopted
a market-based approach to ensure that the Company provides competitive
compensation. Total compensation is generally targeted to be at the 75th
percentile of the two comparator groups. The Compensation Committee will also
consider all elements of an executive's total compensation including health and
welfare benefits, retirement programs, perquisites and severance arrangements.
This philosophy results in base salary comprising less than 50 per cent of
total compensation.
Base salary
In accordance with its market-based approach, the Compensation Committee has
targeted base salaries to be at approximately the 50th percentile of the
comparator groups. 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
issues, as well as the pay practices of companies in the comparator groups.
At-risk incentive pay
The Compensation Committee is a proponent of linking compensation directly to
the ultimate achievement of business objectives. As a result, the target
at-risk incentive pay for executives is greater than the base salary. 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 incentives in the form of an annual
cash award based on the achievement of corporate, strategic business unit and
individual performance goals. The actual achievement of annual business plans
as reflected through performance measurement and quantifiable goals will
ultimately determine the annual variable compensation received.
Specific targets were established using a balanced scorecard approach
with 2002 corporate targets tied to profitable growth, targeted market revenue
growth, business efficiency and employee engagement. Balanced scorecard targets
were also set for each strategic business unit. The awards payable to the
executive leadership team members are determined based on meeting the corporate
targets and their strategic business unit targets, as set out in the corporate
balanced scorecard and their respective strategic business unit balanced
scorecards, and achieving the results set out in their personal performance
objectives. Results at less than target would result in a reduced or zero
award.
Corporate and strategic business unit scorecard objectives were tied to the
strategic imperatives of TELUS, which are as follows:
* provide integrated solutions;
* build national capabilities across data, IP, voice and mobility;
* partner, acquire and divest as necessary;
* focus relentlessly on growth markets;
* go to the market as one team; and,
* invest in internal capabilities.
25
The weighting generally given to corporate results, strategic business unit
(SBU) results and personal results and their respective target awards for each
executive leadership team member is set out in the following table:
---------------------------------------------------------------------------------------------------------------------------------
Component weighting Target award
---------------------------------------------------------------------------------------------------------------------------------
Average
Corporate SBU customer facing Personal % of
Position results results SBU results results base salary
---------------------------------------------------------------------------------------------------------------------------------
President & CEO 30% 20% (composite) 30% 20% 50%
EVP - Customer facing SBU 50% 30% n/a 20% 50%(1)
EVP - Business enabling SBU 30% 20% 30% 20% 50%
---------------------------------------------------------------------------------------------------------------------------------
(1) The Executive Vice-President & President & CEO of TELUS Mobility's
target award is 100 per cent of base salary as he does not participate in any
mid-term incentive or pension plans.
The award for the Executive Vice-President of a business enabling strategic
business unit such as Finance and 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 line objectives. The award for the
President & 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 & CEO) is assessed by the President & CEO, and
the performance of the President & CEO is assessed by the Compensation
Committee. The personal performance scorecard component is then determined
based on the following table:
---------------------------------------------------------------------------------------------------------------------------------
Personal Performance
---------------------------------------------------------------------------------------------------------------------------------
Performance
Rating rating Multiplier
---------------------------------------------------------------------------------------------------------------------------------
Below expectation 2 0.0
Needs improvement 3-4 0.2-0.6
Contributing 5-6-7 0.7-1.0
Superior 8-9 1.1-1.5
Distinguished 10 Greater than 1.5
---------------------------------------------------------------------------------------------------------------------------------
This approach ensures that payouts reflect performance levels that require
truly outstanding results to deliver multipliers greater than 1.0.
For 2002, the TELUS corporate balanced scorecard result was 76% of
target, while the overall annual variable pay plan results for the executive
leadership team members were below target, with the exception of the result for
the Executive Vice-President & President & CEO of TELUS Mobility.
2. Mid-term incentives
In 2002, the Compensation Committee approved a reduction in the cash component
of annual variable pay ranges and substituted it with the implementation of a
mid-term incentive plan in the form of Restricted Share Units (RSUs) for
executive leadership 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. The amount and terms of any allocation are determined by the
Compensation Committee.
Generally, the number of RSUs allocated to an executive is based on the
achievement by the executive of performance targets in the preceding year. For
2002, Darren Entwistle received an additional award of RSUs in lieu of a full
grant of share options (award split between 60% RSUs and 40% share options).
Each RSU is equal in value to one non-voting share calculated in the manner
provided in the respective RSU plans. Dividends on non-voting shares are
credited to a participant's account and are recorded as additional RSUs during
the three-year life of each allocation. In order to protect and further align
the executive leadership team's interests with shareholders' interests, the
value of the award is linked to the share price on non-voting shares.
26
The 2001 RSU plan provided that RSUs were allocated at a value equal to the
weighted average trading price per non-voting share on the Toronto Stock
Exchange on the day preceding the date of allocation. Unless otherwise
determined with respect to any particular allocation, the RSU plan implemented
in 2002 (the "RSU II plan") provides that the RSUs are allocated at the value
of the non-voting shares at the beginning or end of the year preceding the year
of allocation, whichever is higher. For the implementation year of the RSU II
plan, the beginning of the year was set at May 1, 2002 rather than January 1,
2002. The value of the non-voting shares is calculated on the basis of the
weighted average trading price of the non-voting shares of the Toronto Stock
Exchange for the 15 business days preceding the date of allocation. For
example, for the RSUs allocated in 2004, the RSUs will be allocated based on
the trading values of the non-voting shares determined in the above manner at
January 1, 2003 or December 31, 2003, whichever is higher.
Retention is promoted through the vesting of RSUs. Under the 2001 RSU
plan, the allocated RSUs vest on October 18, 2004 and are paid out prior to that
year-end. The allocated RSUs under the RSU II plan vest and become payable in
equal installments over a three-year period. All RSUs must be paid out before
the end of the third year. The value of the RSUs at pay-out is based on the
value of non-voting shares at that time, calculated in the manner required by
the applicable plan. Payments under the 2001 RSU plan may be in cash or in
non-voting shares purchased in the market and under the RSU II 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 Share Option and Compensation Plan.
The value of long-term incentives was established using a similar methodology
to that used for the annual incentive plan of the Company. The purpose of the
plan is to align the interests of shareholders with those of executives and
non-employee directors and to provide incentive compensation based on the
appreciation in value of the common shares and non-voting shares. This strategy
provides an opportunity for executives to acquire, through share options, an
increased proprietary interest in the Company.
The amount and terms of any grant as determined by the Compensation
Committee will be consistent with the overall compensation philosophy and
objectives as set out above. As noted previously, share option grants are based
on two main factors: competitive market compensation considerations and each
executive leadership team member's personal value-add assessment model ratings.
Share options will be 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. For 2002, primary grants were
issued with graduated vesting over three years. One named executive was granted
options with possible vesting no later than two years after the grant. Prior
option grants are not taken into account in determining whether and, if so, how
many new options would be granted.
Compensation of CEO
The principles used for determining the compensation of the President & CEO,
Darren Entwistle, were identical to those established for the other executives,
other than noted previously.
Share ownership guidelines
Share ownership guidelines have been introduced to provide a further link
between executive share ownership and that of our shareholders, thereby
demonstrating our executives' ongoing alliance with our shareholders.
The share ownership targets provide for a value of at least three times
annual base salary for the President & CEO and one times annual base salary for
the executive leadership team. The share ownership can be a mix of common and
non-voting shares and is to be acquired over a five-year period (i.e. by the
end of 2007). Certain executives already have significant shareholdings and
meet or exceed these targets.
27
Executive shareholdings summary table
The following table provides information concerning the total TELUS
shareholdings held by each named executive (as set out in the Executive
compensation summary table on page 29), dollar value of shareholdings and share
ownership level (based on dollar value) to executive base salary ratio, as at
December 31, 2002 (see share owner-ship guidelines on page 27).
---------------------------------------------------------------------------------------------------------------------------------
TELUS Shareholdings
(common shares/non-voting Executive's share
shares/restricted share units for Dollar value of ownership level to
Name non-voting shares) shareholdings ($)(1) base salary ratio
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 10,723/71,468/28,626 1,803,639 2.3
George Cope -/165,048/- 2,665,525 4.4
John Maduri 6,743/-/- 117,665 0.3
Robert McFarlane 0/176,829/13,397 3,072,154 7.7
Barry Baptie 8,648/526/11,330 342,380 1.0
---------------------------------------------------------------------------------------------------------------------------------
(1) At the close of trading on December 31, 2002 the market price of the
common shares was $17.45 and the market price of the non-voting shares
was $16.15.
Conclusion
The Compensation Committee believes that the various components of compensation
are appropriately balanced to provide direction and motivation for the
executives to make a positive contribution to the Company's overall success and
to deliver growth and synergy opportunities, thereby enhancing the value of the
Company for our shareholders.
Signed, the members of the Human Resources
and Compensation Committee
J.S. Lacey - Chair B.F. MacNeill
L.A. Pentland D.C. Petri
D.P. Woodley
28
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 to the CEO of the
Company in the year ended December 31, 2002 and the four other executive
officers employed by the Company as at December 31, 2002 who had the highest
individual aggregate annual salary and bonuses during 2002 (collectively, the
"named executives"). The figures shown for each of the three years represent
those amounts paid by the Company or its predecessors to the named executives.
The amounts shown in the following tables may include the issuance of
options, and options given under the former option plan of Clearnet
Communications Inc., adjusted in number to take into consideration the
conversion of such options into options for Company shares pursuant to an
option plan adopted only for this purpose, in addition to the options granted
under the Company's Share Option and Compensation Plan.
---------------------------------------------------------------------------------------------------------------------------------
Compensation
---------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Other Number of Restricted
annual securities shares or All other
compen- under restricted compen-
Name and Year ended Salary Bonus(1) sation(2) options share units LTIP sation
principal position December 31 ($) ($) ($) granted(3) ($) payouts ($)
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 2002 785,000 371,305 97,247(4) 163,255 1,824,014(6) - 60,183(8)
President & Chief 2001 785,000 510,250 109,075(5) 380,000 510,250(7) - 60,183(8)
Executive Officer 2000 335,000 279,390 - 215,025 - - 150,000(9)
(2000-07-10 to present) - - - 350,000 - - -
---------------------------------------------------------------------------------------------------------------------------------
George Cope 2002 600,000 636,000 - 95,000 - - -
Executive Vice-President 2001 560,080 596,858 - 208,335 - - 1,400,000(10)
& President & CEO, 2000 70,278 127,417 - 352,824 - - -
TELUS Mobility
(2000-11-15 to present)
---------------------------------------------------------------------------------------------------------------------------------
John Maduri 2002 360,000 138,060 171,260(11) 80,000 138,060(6) - -
Executive Vice-President 2001 360,000 361,080 368,479(12) 75,000 - - 11,040(8)
& President, - - - - - - 10,000(13)
Business Solutions 2000 240,000 166,800 - 31,758 - - 35,000(9)
(2000-05-01 to present) - - - 142,820 - - -
---------------------------------------------------------------------------------------------------------------------------------
Robert McFarlane 2002 400,000 183,600 - 50,000 191,387(6) -
Executive Vice-President 2001 400,000 238,800 - 50,000 238,800(7) - 15,333(8)
& Chief Financial Officer - - - - - - 875,000(10)
(2000-11-06 to present) 2000 61,111 92,667 44,109 - - 7,900(13)
128,958 10,000(13)
---------------------------------------------------------------------------------------------------------------------------------
Barry Baptie 2002 350,000 153,125 32,462(14) 50,000 159,710(6) - 13,416(8)
Executive Vice-President, 2001 350,000 201,950 27,481(14) 60,000 201,950(7) - 57,441(15)
Technology & Operations - - - - - - 90,044(16)
(1977-08-22 to present) 2000 320,154 222,507 18,378(14) 38,595 - - 75,000(9)
- - - - - - 10,000(13)
---------------------------------------------------------------------------------------------------------------------------------
(1) Represents variable "at risk" component of cash compensation
earned under the annual variable pay plan. Amounts are paid in first
quarter of following year.
(2) Except as noted, the value of perquisites and other personal
benefits received by named executives is no greater than the lesser of
$50,000 and 10 per cent of annual salary and bonus of the respective
named executives.
(3) Annual option grants under the Share Option and Compensation
Plan awarded to the named executives in relation to the 2002 financial
year were approved by the Compensation Committee and the Board on the
11th and 12th of February 2003. Similarly, previous years' grants have
been reclassified to the financial year to which the grant is
attributed. The details with respect to the option grants made in 2000
with respect to 1999 performance are in the 2001 information circular.
(4) Consists of $50,000 bonus paid to allow executive to repay
Company loan in that amount, deemed interest on interest-free Company
loan and bonus in an amount sufficient to cover the taxes on both the
loan repayment bonus and the deemed interest.
(5) Consists of $50,000 bonus paid to allow executive to repay
Company loan in that amount, deemed interest on interest-free Company
loan, deemed interest on a relocation expense payment in 2000 in the
amount of $49,350, and bonus in an amount sufficient to cover the taxes
on both the loan repayment bonus and the deemed interest.
29
(6) Except as noted below for Darren Entwistle, amounts shown for
2002 for Misters. Entwistle, Maduri, McFarlane and Baptie represent
awards made on February 11, 2003 under the Company's RSU II plan which
were converted into RSUs based on a share price of $16.11, which was
the weighted average trading price of the non-voting shares on the
Toronto Stock Exchange for the 15 business days ending December 31,
2002. The closing price of non-voting shares on the Toronto Stock
Exchange on December 31, 2002 was $16.15. The number of RSUs awarded
under the RSU II plan are as follows: Darren Entwistle - 23,048; John
Maduri - 8,570; Robert McFarlane - 11,397; and Barry Baptie - 9,505.
The amount for 2002 also includes the value as of December 31, 2002 of
additional RSUs which were credited to such participants on the RSUs
under the 2001 RSU plan to reflect payment of dividends on the
non-voting shares during 2002. The RSUs under the RSU II plan vest in
equal numbers over three years. During the life of the RSU, the named
executives will also receive additional RSUs equal to any dividends
paid on the non-voting shares. On vesting, the value of the RSUs is
equal to the 15-day weighted average trading price of the non-voting
shares on the Toronto Stock Exchange on the day prior to vesting
multiplied by the number of RSUs held. Payout at vesting may be made in
cash, non- voting shares purchased in the market or subject to all
necessary corporate and regulatory approvals, in non-voting shares
issued from treasury. The number of RSUs awarded is based on the
achievement of 2002 performance results. For Darren Entwistle, his
grant was comprised of 23,048 RSUs for 2002 performance (based on
$16.11) and 96,640 RSUs (based on $14.86, the weighted average trading
price of the non-voting shares on the Toronto Stock Exchange on
February 11, 2003). The 96,640 RSUs were an additional award granted to
Mr. Entwistle in lieu of a full grant of share options (award split
between 60 per cent RSUs and 40 per cent share options).
(7) The number of RSUs awarded under the 2001 RSU plan are as
follows: Darren Entwistle - 27,596; Robert McFarlane - 12,915; and
Barry Baptie - 10,922. Dollar figures shown represent the number of
outstanding RSUs multiplied by the weighted average trading price of
non-voting shares as of February 12, 2002 being the date of grant. Each
RSU is equal to the value of one non-voting share, as calculated under
the plan. The RSUs vest on October 18, 2004. During the life of the
RSUs, the executive will also receive additional RSUs equal to any
dividends paid on the non-voting shares. On vesting, the value of the
RSUs is equal to the weighted average trading price of the non-voting
shares on that day multiplied by the number of RSUs held. Payout at
vesting may be made in cash or in non-voting shares purchased in the
market.
(8) Payment in lieu of accrued but unused vacation.
(9) Special bonus related to Clearnet acquisition.
(10) Payment of obligations assumed by TELUS upon acquisition of
Clearnet Communications Inc.
(11) Consists of $100,000 bonus paid to allow executive to repay
Company loan in that amount, deemed interest on interest-free Company
loan and deemed interest on a housing cost-differential payment in the
amount of $105,951 for 2002, and bonus in an amount sufficient to cover
the taxes on both the loan repayment bonus and the deemed interest.
(12) Consists of $200,000 bonus paid to allow executive to repay
Company loan in that amount, deemed interest on interest-free Company
loan and deemed interest on a housing cost-differential payment in the
amount of $205,951 for 2001, and bonus in an amount sufficient to cover
the taxes on both the loan repayment bonus and the deemed interest.
(13) Relocation expense payment.
(14) Housing cost-differential payment.
(15) Payment in lieu of accrued but unused vacation from years prior
to the executive leadership team appointment.
(16) Payment to cover tax differences between provinces.
Options granted for the most recently completed financial year
A change in the timing of share option grants to executives occurred
for the 2001 fiscal year. In the prior years, the executives received
share option grants in the same fiscal year as the year for which such
options were awarded. In 2001, share option grants for 2001 performance
were not awarded until 2002. Accordingly, for this transition year only
and in order to provide shareholders with the most recent and complete
information, two tables are published below. The first table is for
option grants made in February 2003 for fiscal year 2002 performance,
and the second table is for option grants made in February 2002 for
fiscal year 2001 performance.
30
The following option grants to the named executives were made in February 2003
in respect of 2002 performance:
---------------------------------------------------------------------------------------------------------------------------------
Market value
% of total of securities
Securities under options granted to Exercise or underlying options
options granted(1) employees in base price on the date of grant
Name (#) financial year(1) ($/security)(2) ($/security)(3) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 163,255 3.41 $14.86 $15.16 February 12, 2010
George Cope 95,000 1.98 $14.86 $15.16 February 12, 2010
John Maduri 80,000 1.67 $14.86 $15.16 February 12, 2010
Robert McFarlane 50,000 1.04 $14.86 $15.16 February 12, 2010
Barry Baptie 50,000 1.04 $14.86 $15.16 February 12, 2010
---------------------------------------------------------------------------------------------------------------------------------
(1) Percentage refers to percentage of total grant of TELUS share
options. All grants are in respect of non-voting shares.
(2) TELUS options are granted at or above the weighted average
trading price of the non-voting shares on the last business day before
the date of grant.
(3) Actual weighted average trading price on the date of grant.
The following option grants were made to the named executives in 2002
in respect of 2001 performance:
---------------------------------------------------------------------------------------------------------------------------------
Market value
% of total of securities
Securities under option granted to Exercise or underlying options
options granted(1) employees in base price on the date of grant
Name (#) financial year(1) ($/security)(2) ($/security)(3) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 380,000 7.93 24.00 18.15 February 13, 2012
George Cope(4) - - - - -
John Maduri 75,000 1.57 24.00 18.15 February 13, 2012
Robert McFarlane 50,000 1.04 24.00 18.15 February 13, 2012
Barry Baptie 60,000 1.25 24.00 18.15 February 13, 2012
---------------------------------------------------------------------------------------------------------------------------------
(1) Percentage refers to percentage of total grant of TELUS stock
options. All grants are in respect of non-voting shares.
(2) TELUS options are granted at or above the weighted average trading
price of the non-voting shares on the last business day before the date
of grant.
(3) Actual weighted average trading price on the date of grant.
(4) No options were granted to Mr. Cope in 2002 because 208,335
options were granted to him on December 21, 2001 under his employment
agreement.
Aggregated options exercised during the most recently completed financial year
and financial year-end option values for the named executives
---------------------------------------------------------------------------------------------------------------------------------
Securities Aggregate Value of unexercised
acquired on value in the money options
exercise realized Unexercised options at FY-end
Name (#) ($) at FY-end(1) ($) exercisable/unexercisable
---------------------------------------------------------------------------------------------------------------------------------
common shares/ common shares/
non-voting shares non-voting shares
(#) exercisable (#) unexercisable
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle - - 0/71,675 350,000/523,350 -/-
George Cope - - 0/234,824 261,852/268,983 529,655(2)/-
John Maduri - - 65,586/10,586 87,820/96,172 -/-
Robert McFarlane - - 51,060/178,303 77,898/79,403 423,724(2)/-
Barry Baptie - - 13,765(3)/17,100/12,865 26,945/85,730 -/-
---------------------------------------------------------------------------------------------------------------------------------
(1) At the close of trading on December 31, 2002 the market price
of the common shares was $17.45 and the market price of the non-voting
shares was $16.15.
(2) Based on the difference between the exercise price and the
closing market price of the underlying non-voting shares ($16.15 for
the non-voting shares) on December 31, 2002.
(3) Options acquired pre-merger for 75 per cent common shares and
25 per cent non-voting shares when exercised.
31
SAR grants during the most recently completed financial year
The following RSUallocations were made to the named executives in February 2003
in respect of 2002:
---------------------------------------------------------------------------------------------------------------------------------
Market value
% of total of securities
Securities under SARs granted to underlying SARs on
SARs granted employees in Base price the date of grant
Name (#) financial year(1) ($/security)(2) ($/security)(3) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 23,048 11.42% $16.11 $14.86 December 1, 2005
96,640(4) 47.89% $14.86(4) $14.86 December 1, 2005
George Cope - - - - -
John Maduri 8,570 4.25% $16.11 $14.86 December 1, 2005
Robert McFarlane 11,397 5.65% $16.11 $14.86 December 1, 2005
Barry Baptie 9,505 4.71% $16.11 $14.86 December 1, 2005
---------------------------------------------------------------------------------------------------------------------------------
(1) Percentage refers to percentage of total allocation of RSUs at
the date of allocation.
(2) RSUs are generally granted under the RSU II plan based on the
weighted average closing price of the non-voting shares of the Company
on the Toronto Stock Exchange for the 15 business days ending December
31, 2002.
(3) The weighted average trading price of the non-voting shares on
the Toronto Stock Exchange on the allocation date of February 11, 2003.
(4) RSUs granted based on a split in equity grant of 60 per cent
RSUs and 40 per cent options. The number of RSUs granted was based on
the value of the weighted average trading price of the non-voting
shares on the Toronto Stock Exchange on February 11, 2003.
The following RSU allocations were made to the named executives in 2002 in
respect of 2001:
---------------------------------------------------------------------------------------------------------------------------------
Market value
% of total of securities
Securities under SARs granted to underlying SARs on
SARs granted employees in Base price the date of grant
Name (#) financial year(1) ($/security)(2) ($/security)(2) Expiration date
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle 27,596 29.65% $18.49 $18.49 October 18, 2004
George Cope - - - - -
John Maduri - - - -
Robert McFarlane 12,915 13.88% $18.49 $18.49 October 18, 2004
Barry Baptie 10,922 11.73% $18.49 $18.49 October 18, 2004
---------------------------------------------------------------------------------------------------------------------------------
(1) Percentage refers to percentage of total allocation of RSUs at date of
allocation.
(2) RSUs were granted based on the weighted average trading price of the
non-voting shares of the Company on the Toronto Stock Exchange on the
allocation date of February 12, 2002.
Aggregated SARs exercised during the most recently completed financial year and
financial year-end SAR values for the named executives
S>
---------------------------------------------------------------------------------------------------------------------------------
Securities Aggregate Value of unexercised
acquired on value Unexercised SARs in the money SARs
exercise realized at FY-end at FY-end
Name (#) ($) (#) exercisable/unexercisable(1) ($)exercisable/unexercisable(2)
Darren Entwistle - - -/148,314 -/2,390,484
George Cope - - -/- -/-
John Maduri - - -/ 8,570 -/138,063
Robert McFarlane - - -/24,794 -/399,967
Barry Baptie - - -/20,835 -/336,105
---------------------------------------------------------------------------------------------------------------------------------
(1) Also includes the RSUs credited under the 2001 RSU plan to
named executives reflecting dividends paid on non-voting shares during
2002.
(2) RSUs under the 2001 plan are valued at the weighted average
trading price of the non-voting shares on the Toronto Stock Exchange on
December 31, 2002. RSUs under the RSU II plan are valued at the
weighted average trading price of the non-voting shares on the Toronto
Stock Exchange for the 15 days ending December 31, 2002.
32
TELUS pension plan
The TELUS Supplementary Retirement Arrangement ("SRA") establishes an overall
retirement income benefit which provides supplemental pension benefits to be
paid to a retired executive in addition to the pension income under the
existing registered company pension plans.
Named executives, other than George Cope, participate in the Company's
contributory registered pension plans. The SRA for the named 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 increased by 50 per
cent for annual variable compensation payments to the named executives other
than the CEO, and by 60 per cent for the 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 2002
Years of service
---------------------------------------------------------------------------------------------------------------------------------
Remuneration ($) 15 20 25 30 35
---------------------------------------------------------------------------------------------------------------------------------
175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
225,000 67,500 90,000 112,500 135,000 157,500
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
350,000 105,000 140,000 175,000 210,000 245,000
400,000 120,000 160,000 200,000 240,000 280,000
450,000 135,000 180,000 225,000 270,000 315,000
500,000 150,000 200,000 250,000 300,000 350,000
550,000 165,000 220,000 275,000 330,000 385,000
600,000 180,000 240,000 300,000 360,000 420,000
650,000 195,000 260,000 325,000 390,000 455,000
700,000 210,000 280,000 350,000 420,000 490,000
750,000 225,000 300,000 375,000 450,000 525,000
800,000 240,000 320,000 400,000 480,000 560,000
850,000 255,000 340,000 425,000 510,000 595,000
900,000 270,000 360,000 450,000 540,000 630,000
950,000 285,000 380,000 475,000 570,000 665,000
1,000,000 300,000 400,000 500,000 600,000 700,000
1,050,000 315,000 420,000 525,000 630,000 735,000
1,100,000 330,000 440,000 550,000 660,000 770,000
1,150,000 345,000 460,000 575,000 690,000 805,000
1,200,000 360,000 480,000 600,000 720,000 840,000
1,250,000 375,000 500,000 625,000 750,000 875,000
1,300,000 390,000 520,000 650,000 780,000 910,000
1,350,000 405,000 540,000 675,000 810,000 945,000
1,400,000 420,000 560,000 700,000 840,000 980,000
1,450,000 435,000 580,000 725,000 870,000 1,015,000
---------------------------------------------------------------------------------------------------------------------------------
(1) The compensation covered by the SRA for each of the named
executives is based on his respective salary shown in the executive
summary compensation table plus 60 per cent for the 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, 2002 for pension plan purposes
for the named executives other than George Cope are as follows: Darren
Entwistle, two years and six months; John Maduri, four years and four months;
Robert McFarlane, two years and two months; and Barry Baptie, twenty-five years
and four months.
33
Employment agreements
TELUS has entered into executive employment agreements with an indefinite term
with Darren Entwistle and Barry Baptie. Pursuant to these agreements, the
executive's base salary for 2002 was established and an incentive compensation
target of 50 per cent of base salary in 2002 was set. At the commencement of
his employment, Darren Entwistle received a $250,000 interest-free forgivable
loan net of tax obligations under his contract, of which $50,000 was forgiven
in each of 2001 and 2002.
Each agreement provides 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, the executive will be paid a severance payment equal
to two times his annual compensation and will be provided with continued
benefit coverage and continued accrual of pensionable service for two years
following the date of termination. Each agreement contains a prohibition on the
improper disclosure or use of confidential information and a one-year
non-competition restriction after termination.
TELUS has entered into an agreement with John Maduri which is similar
to the agreements with Darren Entwistle and Barry Baptie, except that the
agreement with John Maduri provides that if the employment of the executive
were terminated other than for just cause or by reason of death, disability or
retirement, he will be paid a severance payment equal to one and one-half times
his annual compensation and will be provided with continued benefit coverage
and continued accrual of pension plan rights for 18 months following the date
of termination. John Maduri received a $300,000 interest-free forgivable loan
net of tax obligations under his contract, of which $200,000 was forgiven in
2001 and $100,000 was forgiven in 2002. Under his agreement, John Maduri is
entitled to credit under the SRA of two years of pension service for each full
year of employment during the first five years.
TELUS has entered into an agreement with George Cope which is similar
to the agreements with Darren Entwistle and Barry Baptie, except that the
agreement with George Cope is for a fixed term expiring on December 31, 2004
and he does not participate in the pension plans of TELUS. George Cope's stock
option grant is structured to vest on December 31, 2004, subject to the terms
of his agreement. The agreement provides that if the employment of the
executive were terminated at any time prior to expiry of the term other than
for just cause or by reason of death or disability, he will be entitled to his
salary for the balance of the term of his agreement.
In addition, if his employment were terminated, with the result that the
one-year competition restriction becomes effective, the executive will be
entitled to one year of annual compensation.
TELUS has entered into an agreement with Robert McFarlane which is
similar to the agreements with Darren Entwistle and Barry Baptie, except that
the agreement with Robert McFarlane provides that if the employment of the
executive were terminated during the first three years other than for just
cause or by reason of death, disability or retirement, he will be paid a
severance payment equal to one and one-half times his annual compensation and
will be provided with continued benefit coverage and continued accrual of
pension plan rights for 18 months following the date of termination. In
addition, if his employment were terminated with the result that the one-year
competition restriction becomes effective, he will be entitled to one year of
annual compensation.
Indebtedness of directors and officers
No director or officer of the Company or proposed nominee for election as a
director of the Company, or any associate thereof, is or has been indebted to
the Company or its subsidiaries since January 1, 2002 except with respect to
loans as noted below. The Company provided assistance by way of loans to
certain officers to minimize financial exposure associated with their
acceptance of a position with the Company or to assist with housing costs. The
aggregate amount of all indebtedness to the Company or to any of its
subsidiaries from directors or officers as at February 28, 2003 was $450,000.
The following table, presented in accordance with applicable securities laws,
shows the details of certain indebtedness owed by directors and officers of the
Company. All such indebtedness was incurred prior to July 30, 2002, the
enactment date of the Sarbanes-Oxley Act (SOX). In compliance with that
legislation, no new personal loans to directors and executive officers were
made or arranged, and no pre-existing personal loans were renewed or modified,
since July 30, 2002.
34
---------------------------------------------------------------------------------------------------------------------------------
Involvement of Largest amount outstanding Amount outstanding as at
Name and principal position issuer or subsidiary during 2002 ($) February 28, 2003 ($)
---------------------------------------------------------------------------------------------------------------------------------
Darren Entwistle
President & CEO Loan from Issuer(1) 200,000 150,000
Joseph Grech
Executive Vice-President
& President, Partner Solutions Loan from Issuer(2) 300,000 300,000
John Maduri
Executive Vice-President
& President, Business Solutions Loan from Issuer(3) 100,000 -
---------------------------------------------------------------------------------------------------------------------------------
(1) Interest-free. Repayment in 2002 of $50,000 was offset by a
Company bonus in an amount sufficient to cover the amount repaid and
taxes thereon. Repayment of the balance of the loan in increments of
$50,000 due in each of 2003 through 2005 will be offset by Company
bonuses in an amount sufficient to cover the amount repaid and taxes
thereon if the executive is an employee at those times. The loan will
be repaid in a similar manner on the executive's death or his
termination without cause or as a result of disability.
(2) Interest-free. Loan payable on November 23, 2003.
(3) Interest-free. Repaid in 2002, with payment offset by a Company
bonus in an amount sufficient to cover the amount repaid and taxes
thereon.
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(1) with the cumulative total return on the S&P/TSX Composite Index,
assuming a $100 investment on December 31, 1997 and re-investment of dividends.
[PERFORMANCE GRAPH]
Foot-note belongs to graph
(1) For the period December 31, 1997 to December 31, 1998 TELUS
common share and non-voting share total returns are calculated at the
January 31, 1999 merger ratio of 52.5 per cent of BC TELECOM's and 47.5
per cent of predecessor TELUS' share prices and dividends.
---------------------------------------------------------------------------------------------------------------------------------
Dec 31 1997 Dec 31 1998 Dec 31 1999 Dec 31 2000 Dec 31 2001 Dec 31 2002
---------------------------------------------------------------------------------------------------------------------------------
TELUS common 100 101 88 108 66 50
non-voting 100 101 88 102 63 46
S&P/TSX Index 100 97 126 133 115 99
---------------------------------------------------------------------------------------------------------------------------------
35
Directors' and officers' insurance and indemnification
To the extent permitted by law, the Company has entered into an indemnification
agreement with each of its directors and officers. The Company has directors'
and officers' liability insurance which, subject to the provisions and
exclusions contained in the policy, protects the directors and officers, as
such, against any claims made during the term of their office against any of
them for a wrongful act, provided they acted honestly and in good faith with a
view to the best interests of the Company. Such insurance provides for a total
of $125 million coverage for both directors and officers as a group. The policy
carries a $500,000 per-event deductible for each claim made under the
indemnification liability coverage of the Company with a premium of $959,000
for the term from July 1, 2002 to July 1, 2003. A separate deductible of
$1,000,000 per event applies to any action brought by Verizon.
Additional matters and information
Additional information about the Company is contained in the Company's annual
information form and the audited financial statements of the Company for the
year ended December 31, 2002. Copies of these documents are available upon
request from TELUS' Corporate Secretary at 21st Floor, 3777 Kingsway, Burnaby,
British Columbia, V5H 3Z7.
------------------------------------------------------------------------------
board
approval
The Board of directors has approved in substance the contents of this
information circular and the sending of this information circular to the
holders of common shares and non-voting shares.
Certificate
The foregoing contains no untrue statement of a material fact and does not omit
to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in light of the circumstances in which it was
made.
Darren Entwistle Robert G. McFarlane
President & Executive Vice-President
Chief Executive Officer & Chief Financial Officer
36
appendix a: statement of
TELUS' corporate governance practices
We at TELUS are committed to adopting effective and best practices in corporate
governance. TELUS consistently assesses and adopts emerging best practices, and
never more so than in 2002. In a year of significant turmoil and regulatory
focus on corporate governance, the following are the most noteworthy corporate
governance measures taken by securities regulators that will impact TELUS:
* proposed amended guidelines issued by the TSX ("proposed TSX
guidelines");
* Sarbanes-Oxley Act ("SOX") passed by the U.S. legislature in
July 2002 and various rules adopted by the Securities and Exchange
Commission ("SEC rules") under SOX;
* proposed New York Stock Exchange ("NYSE listing standards");and
* proposed bills by the Ontario Government, Keeping the Promise
for a Strong Economy Act, 2002 and Investor Protection Act, which are
expected to be proclaimed effective in the first quarter of 2003, and
will provide the Ontario Securities Commission with additional power to
make rules with respect to corporate governance.
TELUS is committed to an ongoing process of robust disclosure of its corporate
governance practices in comparison with the TSX guidelines. TELUS has disclosed
its corporate governance practices in relation to the TSX guidelines since the
TSX adopted them in 1995. In the following section, TELUS has endeavoured to
include in its disclosure against the current TSX guidelines its practice or
changes in practices in relationship to SOX and SEC rules, and the proposed TSX
guidelines and NYSE listing standards, where appropriate.
As a continued listing requirement of the TSX, TELUS has disclosed in the next
section its approach to corporate governance with reference to the current TSX
guidelines. TELUS is in full compliance with the current and proposed continued
listing requirements outlined in the proposed TSX guidelines.
37
disclosure of TELUS' practices
with reference to the current TSX guidelines
---------------------------------------------------------------------------------------------------------------------------------
TELUS
Alignment
Toronto Stock with TSX
Exchange Guideline Guidelines TELUS' Practices
---------------------------------------------------------------------------------------------------------------------------------
Guideline 1: The Board yes * The Board of Directors has assumed responsibility for the stewardship of the
explicitly assumes Company by overseeing the management and operations of the business of the
responsibility for Company and supervising management, which is responsible for the day-to-day conduct
stewardship of the of the business.
Company * The TELUS Board Policy Manual was developed to assist members of the Board
in fulfilling their obligations, both individually and collectively. The manual
sets out guidelines and expectations for the Board as a whole, committees as a
whole, individual directors, the Chairman, Vice-Chair and the CEO, along with
expectations for each of the committees through their respective terms of
reference. It serves as a road map for the Board to help them meet their
responsibilities in the most effective manner possible on an ongoing basis.
* To further delineate the responsibilities of the Board, a Framework of
Delegation of Decisions from the Board to executive management was put in place in
June 1999. The framework provides guidance to the Board and management on matters
requiring Board approval including major acquisitions, investments or divestitures,
or any other specific transaction. To help the Board fulfill its obligations,
duties and responsibilities under this framework, the Board delegates certain
duties and responsibilities to committees to ensure full review of certain matters.
The terms of reference of the committees outline the approval process for various
matters and activities performed by the committees. The committees then report back
to the Board on their activities on a regular basis, and recommend certain matters
to the Board for its approval.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 1(a): The yes * The Board has assumed responsibility for adoption of the strategic
Board assumes planning process. It ensures there are long-term goals and strategies in place.
responsibility for the Goals and strategies are prepared and reviewed together by management and the
adoption of the Board on an annual basis and are a primary component of the Board's annual
strategic planning agenda. The Board as a whole participates in discussions on corporate strategy,
process taking into account the opportunities and risks of the business and, if
appropriate, approves the strategies and implementation plans recommended by
management.
38
* At least one extensive Board strategic planning session is held annually. A
comprehensive and interactive strategic planning session with senior management and
external advisors took place in September 2002 at which the directors reviewed
current issues faced by TELUS and the telecommunications sector as a whole.
* The Board provides periodic guidance throughout the year on the development
of corporate strategies based on the strategic plan and annual business plan. It
also reviews any changes to corporate strategies or the strategic plan that may be
necessary in light of any new developments that impact TELUS.
* At least quarterly, the Board monitors the performance of management in
relation to both the strategic objectives and operational objectives set out in the
annual budget.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 1(b): The yes * The Board has assumed responsibility for identifying the principal risks of
Board assumes the Company's business and for ensuring the implementation of appropriate systems
responsibility to manage these risks, as set out in the terms of reference for the Board and its
for the identification committees. The Board determines the principal risks associated with Company
of the principal risks business, based on the Board's knowledge of the telecommunications industry, the
of the Company's regulatory and competitive environment, general economic conditions and information
business and ensures provided by management. For a detailed summary of the risks and uncertainties of
implementation of the Company, see the risks and uncertainties section in the MD&A in the annual
appropriate risk report.
management systems * The Audit Committee is responsible for reviewing and monitoring the risk
management systems in place to mitigate the Company's exposure. In July 2002, it
reviewed the 2002/2003 risk assessment process including risk management goals,
proposed changes, annual risk assessment flow, benefits, a risk management matrix
and timeline. In October, the Audit Committee reviewed the results of the annual
TELUS risk assessment process which identified key risks, key management risk
owners tasked with mitigating the risks, and internal audit plans to provide
assurance to the Audit Committee regarding the risk during the 2003 audit plan.
* The Audit Committee receives quarterly reports on internal audit program
results and evaluation of internal control systems and risk assessment updates,
including legal and regulatory claims, environmental issues, disaster recovery
plans, current accounting policies, financial derivatives and other exposures.
* The Audit Committee receives a compliance report on material legal and regulatory
obligations based on a quarterly compliance survey cascaded to executives and
senior management and an annual report on the relationship with regulators and the
accuracy and timeliness of regulatory fillings.
39
* The Audit Committee has overseen the process for significantly improving
the risk-management processes across the Company. A Vice-President, Risk Management
and Chief Auditor was appointed in May 2002, who has a dual reporting obligation to
both the CFO and the Chair of the Audit Committee. In both September 2002 and
January 2003, an extensive risk assessment survey of management employees was
conducted across TELUS, the results of which were reported back to the Audit
Committee. The results provided the Audit Committee with an internal controls
assessment of the entire organization and individual business units.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 1(c): The yes * The Board assumes the responsibility for succession planning and delegates
Board assumes to the Compensation Committee the responsibility to oversee the Company's plan for
responsibility for executive and management succession, development and retention.
succession planning, * The Compensation Committee periodically reviews the Company's overall organizational
including appointing, plan and structure.
training and * The Compensation Committee reviews, approves and reports to the Board on an
monitoring annual basis, or more frequently as required, succession plans for executive
senior management management and senior management, including specific personal development plans and
career planning for potential successors.
* The performance of executive management is annually measured against
present objectives.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 1(d): The yes * The Board has implemented appropriate structures to promote complete,
Board assumes timely and effective communications between TELUS, its members, the public and
responsibility for regulatory agencies. Through the Audit Committee all public financial information
a communications is reviewed and recommended to the Board for approval for release prior to public
policy disclosure.
* The Company is also preparing a Corporate Disclosure Policy, to be
completed after regulatory requirements applicable to it are finalized. This policy
will confirm in writing TELUS' existing policies and practices on corporate
disclosure and confidentiality of information including:
(i) how the Company interacts with analysts, investors, other key stakeholders and
the public;
(ii)measures for compliance with disclosure obligations including establishing a
disclosure committee (comprised of management), determination of material
information, meeting timely disclosure obligations and providing a recommended
financial disclosure model.
* Once finalized, this policy will be presented to the Board for approval.
Any changes to TELUS' practices and this policy, as approved by the Disclosure
Committee of the Company, will be reported back to the Audit Committee
---------------------------------------------------------------------------------------------------------------------------------
40
Guideline 1(e): The yes * The Board ensures the integrity of internal control and management information
Board assumes systems through its delegation to the Audit Committee. The Audit Committee receives
responsibility for quarterly reports on the internal audit activities conducted during each quarter
the integrity of and updates on the internal control systems. It also receives results from the risk
internal control and management survey designed to identify strengths and weaknesses with the system of
management information internal controls within the TELUS environment. This survey aligns with the COSO
systems (Committee of Sponsoring Organizations of the Treadway Commission) internal control
environment and covers the following components of internal controls: the control
environment ("Tone at the Top"), risk assessment, control activities (policies and
procedures), information and communications systems and monitoring.
* The Audit Committee reviews and approves methods of controlling corporate
assets and information systems. It also reviews on a quarterly basis, major
accounting policies including alternatives and potential material key management
estimates or judgments. Furthermore, it oversees the financial reporting process in
accordance with applicable accounting principles including Canadian and U.S.
generally accepted accounting principles (GAAP).
---------------------------------------------------------------------------------------------------------------------------------
Guideline 2: The yes * Through the Corporate Governance Committee, the Board has reviewed and
Board is determined which directors are considered "unrelated" pursuant to the definitions
constituted with set out in the current and proposed TSX guidelines.
a majority of * On rigorous application of these definitions, 8 of the 12 proposed
"unrelated" directors directors of the Company are considered "unrelated" to the Company.
* The Company does not have a "significant shareholder" as defined under the
current and proposed TSX Guidelines. Pursuant to the Long-Term Relationship
Agreement dated January 31, 1999 among the Company and Verizon's subsidiaries, GTE
Corporation and Anglo-Canadian Telephone Company, B.A. Canfield, A.C. Giammarino
and D.C. Petri have been designated director nominees by Verizon.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 3: Disclose yes * The Board has reviewed and analyzed each of the proposed directors'
whether each director circumstances as they relate to TELUS. The Board has determined that B.A. Canfield
is "unrelated" or (Chairman), D. Entwistle (President & CEO), A.C. Giammarino and D.C. Petri are
"related" to the "related" directors pursuant to the current and proposed TSX Guidelines. If elected
circumstances of at the meeting, Messrs. Canfield, Entwistle, Giammarino and Petri will be the only
each director and the directors who are related directors.
analysis of the * D. Entwistle is the only director who is also a member of management of the
application Company. Consequently, by virtue of being a member of management, the Board has
supporting this determined that a material business relationship exists with TELUS.
conclusion
41
* The Board has determined that A.C. Giammarino and D.C. Petri have a
material business relationship with TELUS by virtue of their relationship with
Verizon and Verizon's relationship with TELUS. A.C. Giammarino and D.C. Petri are
members of senior management of Verizon and Verizon nominees on the TELUS Board.
Verizon has a material business relationship with TELUS through its Software and
Related Technology and Services Agreement.
* B.A. Canfield would be considered a "related" director under the proposed
TSX guidelines. He was CEO of BC TELECOM, predecessor to TELUS, from October 1990
to July 1997. He also served as CEO from September 1999 to July 10, 2000 and,
therefore, has not satisfied the "cooling off period" for establishing his
"independence" from management. The Board acknowledges that the current Chairman of
the Board is a "related" director under the proposed TSX guidelines, and will
assess this as part of the Chair succession plan.
* 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 relationship with the Company. Each director owns
TELUS securities; such holdings are disclosed in this information circular on page
8, Election of directors.
* The Board has made such determinations based on a comprehensive
questionnaire completed by each director.
* Additional disclosure on Board members, including their business experience
and backgrounds, can be found in Election of directors in this information
circular, the annual information form, the annual report and the TELUS Web site at
telus.com.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 4: The yes * The Governance Committee, all of whose members are "unrelated", is
Board has a responsible for assessing and making recommendations regarding Board effectiveness,
committee responsible and for establishing a process for identifying, recruiting, appointing,
for appointment/ re-appointing and providing ongoing education and development for directors.
assessment of directors, * The Governance Committee undertook an extensive disciplined review to
composed exclusively determine, in light of the opportunities and risks facing the Company, the
of non-management competencies, skills and personal qualities it should seek in new Board members to
/unrelated directors add value to the Company. The Governance Committee retained an external consultant
for a director search, and undertook a process for adding a director to the
proposed slate of directors. Prospective director candidates met with the Chairman
and the CEO.
* Annually, the Governance Committee reviews and recommends to the Board for
approval the long-term plan for composition of the Board. This recommendation takes
into consideration the current strengths, skills and experience on the Board,
appropriate retirement criteria and the strategic direction of the Company.
---------------------------------------------------------------------------------------------------------------------------------
42
Guideline 5: The yes * The Governance Committee, in conjunction with the Chairman, carries out an
Board has implemented annual assessment process that monitors the effectiveness of the Board, reviews
a process for Board and committee processes, and the Board's relationship with management.
assessing the * A director peer evaluation program was implemented to provide each director
effectiveness of with feedback from director peers on his performance. It provides directors with
the Board, its suggestions for improving his or her effectiveness as directors and contributions
committees and the to the Board.
contribution of * Going forward, each committee will also conduct its own performance review,
individual directors which will be added to its terms of reference.
* The Board also notes the disclosure on attendance at Board and committee
meetings by the directors, as set out in the Election of directors on page 8 in the
information circular, and confirms that each director had an outstanding attendance
record.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 6: The yes * The TELUS Board Policy Manual was established to assist new and existing
Company, as an Board members in understanding the role of the Board, the role of Board committees
integral part of the and the contribution individual Board members are expected to make, including the
process for appointing commitment of time and energy that the Company expects of its directors. The manual
new directors, has an is subject to periodic review and approval by the Governance Committee and the
orientation and education Board, and is updated from time to time.
program for new directors * The Governance Committee reviews, approves and reports to the Board on the
directors' orientation process and plans for the ongoing development of existing
Board members.
* During 2002, A.C. Giammarino and D.C. Petri were appointed to fill the
vacancy of directors created by M. Masin and F. Salloum when they resigned from the
Board. The new directors went through an extensive orientation process which
includes each of them receiving a large information package on TELUS, including the
most current annual information form and the annual report. Each of them also
attended an orientation session where key management provided an overview on the
TELUS organization structure, TELUS' strategy and performance scorecard, TELUS'
strategic financial plan and the TELUS/Verizon relationship.
* In addition, the committee Chairs ensure there is a committee orientation
process in place for any directors newly appointed to a committee.
* As part of the strategic planning session in September 2002, the President
and CEO, in conjunction with the Chairman, selected special educational topics for
presentation and discussion at the strategic planning session. Topics dealt with
the business and regulatory environment, new technology and the telecommunications
sector in general.
---------------------------------------------------------------------------------------------------------------------------------
43
Guideline 7: The Board yes * An appropriate number of Board members representing a diversity of views
has examined the size and business experience have been nominated for election to the Board in order for
of Board, and has the Board to function more effectively.
undertaken a * The Governance Committee has completed a comprehensive review of the long-term plan
program to reduce for Board composition and Board size and recommended that the size of the Board be
the number of reduced from 15.
directors with a * The Board has also approved the Governance Committee's recommendation to reduce the
view to improve size of the committees to enhance ongoing effectiveness of the committees.
effectiveness
---------------------------------------------------------------------------------------------------------------------------------
Guideline 8: The Board yes * The Governance Committee, which is comprised of "unrelated" directors,
has reviewed the reviews and recommends to the Board the compensation and benefits of Board members.
adequacy and form of In this regard, the Committee analyses market data, time commitments, fees payable
compensation of by other similar organizations and the responsibilities of directors in general.
directors in light For details, see Director compensation on page 20.
of the risks and * The Company will also align the Board with the interests of shareholders
responsibilities of through the promotion of increased share ownership by directors, and payment of
being a director performance-based, long-term equity-based incentive compensation to directors.
* The Board has approved a minimum equity ownership level for directors of
$100,000, to be acquired within five years of joining the Board. As of February 28,
2003, 6 of the 12 proposed directors have reached the minimum equity ownership
level. As well, the Company adopted a Share Option and Compensation Plan, whereby
separate provisions are maintained for share compensation for directors. Pursuant
to this plan, a minimum level of the annual board retainer is directed to the
purchase of TELUS shares, or paid in the form of deferred share units, until the
appropriate level is reached. Pursuant to the plan, a portion of the total annual
directors' compensation is also delivered through options, the value and number of
which are determined by market factors.
* The Compensation Committee, which is comprised of a majority of "unrelated"
directors, is responsible for ensuring the Company has a broad plan for executive
and management compensation, development and retention. A detailed report on
executive compensation has been provided by the Compensation Committee in the
section on Mandate and report of the Human Resources and Compensation Committee on
page 24 in this information circular.
---------------------------------------------------------------------------------------------------------------------------------
44
Guideline 9: Committees yes * Each TELUS committee is comprised of a majority of "unrelated" directors,
should generally be all of whom are non-management directors.
composed of non- * The Governance Committee is comprised solely of "unrelated" and
management directors "non-management" directors.
and the majority * The Audit Committee is comprised solely of "unrelated" and "non-management"
of committee members directors, other than A.C. Giammarino, who is considered "related" but is a
should be unrelated "non-management" director. If securities regulators mandate or adopt that the Audit
Committee should be comprised solely of "unrelated" and "non-management" directors,
TELUS intends to comply with their requirement.
* The Compensation Committee is comprised solely of "unrelated" and
"non-management" directors, other than D. Petri who is considered "related" but is
a "non-management" director. If securities regulators mandate or adopt that the
Compensation Committee should be comprised solely of "unrelated", and
"non-management" directors, TELUS intends to comply with their requirement.
* The President and CEO and Chairman of the Board may attend all committee
meetings. The President and CEO is not a member of any committee and the Chairman
of the Board is only a member of the Pension Committee.
* At the end of committee meetings, the committee members regularly meet
"in-camera" without management present. Generally, the Chair of the committee
presides over these sessions.
* The Board encourages attendance by executive management at Board and
committee meetings to provide additional insight into the items being discussed and
exposure to executive management.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 10: Appoint a yes * The Governance Committee is responsible for governance issues, including:
committee responsible * recommending to the Board for approval the Company's disclosure in response
for determining the to these guidelines;
Company's approach to * annually reviewing all terms of reference;
corporate governance * periodically reviewing Board and committee composition; and
issues and the * ensuring, on behalf of the Board, that the corporate governance system
Company's response to effectively supports the discharge of the Board's obligations to the shareholders.
these governance
guidelines
---------------------------------------------------------------------------------------------------------------------------------
45
Guideline 11: The Board, yes * The Board has a broad responsibility for supervising the management of the
together with the CEO, business and affairs of the Company. This responsibility is outlined in the
has developed position Board's terms of reference in the TELUS Board Policy Manual. On June 8, 1999, the
descriptions for the Board approved a Framework for Delegation from the Board to Executive Management,
Board and CEO,including which further defines the authority of executive management with regard to
defining limits to decisions involving the operations of the Company and its subsidiaries.
management's * The TELUS Board Policy Manual also includes terms of reference for the President
responsibilities. The and CEO. As well, his annual performance objectives, which are reviewed
Board had approved and approved by the Compensation Committee, supplement his mandate and further
the corporate objectives define the responsibilities of management. The Compensation Committee reviews the
the CEO is responsible performance of the President and CEO against his annual objectives and reports
for meeting back to the Board. For further details, see Mandate and report of the Human
Resources and Compensation Committee on page 24.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 12: The Board yes * The Board recognizes that its independence from management is primary to
has implemented fulfilling its duties. The Board is committed to the principles of independence and
structures and procedures accountability. Management is accountable to the Board. The Board is accountable to
to enable the Board the stakeholders of the Company while at all times focusing on the best interests
to function of the Company and the enhancement of shareholder value and the financial viability
independently of of the business. Refer to disclosure on Guideline 1 for further information on
management, including Board structures and processes to ensure the effective operation of the Board.
separate roles of the * The Governance Committee is responsible for establishing structures and
Board Chair and CEO processes to enable the Board to function independently, and to ensure that
prospective candidates fully understand the role of the Board and contributions
they are expected to make.
* The independence of the Board is further enabled through the separation of
the positions of Chairman, Vice-Chair and President and CEO. Both the Chairman and
Vice-Chair are non-management directors.
* At the end of each meeting the Board meets without management other than
the CEO, followed by an "in-camera" session without the CEO. The Chair generally
presides over these "in-camera" sessions of the Board.
* Upon notice to the Governance Committee, each committee has specific
authority to retain external advisors.
* Members of the Board can request, at any time, a meeting restricted to
non-management members of the Board for the purpose of discussing matters
independently of management
46
* The Board also encourages attendance by executive management and senior
management, who are subject matter experts, at Board and committee meetings, to
further the Board's exposure to management and knowledge in certain subjects.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 13: The Audit yes * The Audit Committee is comprised of a majority of "unrelated" and
Committee has a "independent" directors.
specifically defined * The Board believes that all current Audit Committee members, I.J. Harris,
mandate, with all P. Charbonneau and A.C. Giammarino are "financially literate" and have "accounting
members being outside or related financial experience", as defined under the proposed TSX guidelines and
directors, including are "audit committee financial experts" as defined under SOX and the final SEC rules.
direct communication * The Corporate Governance Committee agreed, as a general rule, that Audit
channels with the Committee members will not sit on any other Board committees so as to enable more
internal and external dedicated attention to increased responsibilities of the Audit Committee. It also
auditors and oversight plans to review compensation for Audit Committee members in 2003.
for management reporting * The Audit Committee has direct communication channels with the internal and
on internal control external auditors to discuss and review specific issues as appropriate. Going
forward, the Audit Committee will have sole authority to retain the external
auditors and the external auditors will report directly to the Audit Committee.
* The Vice-President, Risk Management and Chief Auditor has a dual reporting
function and reports directly to both the CFO and the Chair of the Audit Committee.
The Audit Committee meets separately "in-camera" at every regular Committee
meeting, with both the external auditors and internal auditor, without management
present.
* The Audit Committee is responsible for reviewing the Company's audit
functions and financial statements, and reviewing and recommending for approval for
release to the Board all public disclosure information such as financial
statements, quarterly reports, financial news releases, annual information forms,
management's discussion and analysis and prospectuses.
* The Audit Committee is responsible for overseeing the Company's internal
control function and ensuring that management has effective internal control
systems in place. It reviews the scope of responsibilities and effectiveness of the
internal audit group, including internal audit reporting lines and their working
relationship with the external auditors.
* The Audit Committee is also responsible for overseeing the process with the
external auditors including discussing and reviewing:
* the scope of their examination, the audit plan and any changes therein and
the fees involved;
* factors that might impair, or be perceived to impair, the independence of
the external auditors, including pre-approval of audit and non-audit services and
fees related thereto;
47
* any problems found in performing the audit, such as limitations or
restrictions imposed by management or situations where management seeks a second
opinion on a significant accounting issue;
* major positive and negative observations of the auditors during the course
of the audit;
* the Company's major accounting policies, including the impact of
alternative accounting policies and key management estimates and judgments that
could materially affect the financial results;
* emerging accounting issues and their potential impact on the Company's
financial reporting.
* The Audit Committee terms of reference explicitly set out the role and
oversight responsibility of the Audit Committee. For further details, see the
Mandate and report of the Audit Committee on page 21 in this information circular.
---------------------------------------------------------------------------------------------------------------------------------
Guideline 14: The Board yes * In addition to the authority of the Board and committees to retain external
has implemented a advisors in connection with their responsibilities, individual directors may engage
system to enable outside advisors at any time, subject to the approval of the Governance Committee,
individual directors to provide advice with respect to a corporate decision or action.
to engage outside
advisers, at the
Company's expense
---------------------------------------------------------------------------------------------------------------------------------
48
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 10, 2003
TELUS Corporation
__ "James W. Peters"___
Name: James W. Peters
Title: Corporate Secretary