Demonstrating our commitment to excellence
TELUS has a strong commitment to excellence in corporate governance, as well as full and fair disclosure. We aim for the highest standards and pursue new approaches that ensure greater transparency and integrity in all we do.
TELUS was one of the first companies in Canada to voluntarily adopt a say-on-pay vote, which we announced in 2010. The first vote in May 2011 received an 80 per cent approval from common shareholders and the second vote in May 2012 received a 97 per cent approval.
Our commitment to governance was demonstrated in February 2012, with the announcement that TELUS was giving shareholders the opportunity to decide whether to eliminate the Corporation’s dual class share structure based on a one-for-one conversion ratio of non-voting shares into common shares. This was to be done by holders of both shares classes voting separately at TELUS’ annual meeting of shareholders on May 9, 2012. The proposed share conversion was responsive to shareholder feedback, would simplify the share structure to one class and extend voting rights to all shareholders, all of which is consistent with good corporate governance.
However, the company withdrew the proposal on May 8, 2012 in the face of opposition (including an April 20 dissident proxy circular) from U.S. based Mason Capital, who had rapidly acquired approximately 33 million common shares or 19.0 per cent of that class. This did not allow TELUS to reach the 66 2/3rds approval level of votes cast in that share class for the proposal to proceed. Disturbingly, Mason had also sold short an almost equal amount of non-voting and common shares so that its net economic interest in TELUS was only 416 thousand shares or about 0.13 per cent of TELUS total shares. In the May 8 release, TELUS noted that if Mason’s shares were factored out, the proposal was on track to be overwhelmingly approved by both classes of shareholders, with 92.4 per cent of voted shares in favour of the proposal. TELUS stated that its best option was to reintroduce a new proposal in due course and that it remained committed to a one-for-one share conversion ratio.
We continue to gain external recognition for our disclosure practices. The Canadian Institute of Chartered Accountants (CICA) once again recognized TELUS’ leadership in late 2011. We received the Overall Award for Excellence for Corporate Reporting, and Honourable Mention (second best) for Excellence in Sustainable Development Reporting. The overall award comes from being among the top scorers in financial reporting, corporate governance, sustainability reporting and online website. TELUS has received the top award for four of the last five years.
In 2011, the TELUS 2010 annual report was again rated amongst the best in the world, according to a global survey of annual reports. The Annual Report on Annual Reports by e.com awarded TELUS an A and ranked our report eighth best in the world, making TELUS the only company in the world that has ranked in the top 10 for eight straight years.
Key governance bodies
TELUS Board of Directors
The TELUS Board of Directors has 12 members, all of whom were elected at the Company’s May 2012 annual and special meeting. All of our directors are independent, except for Darren Entwistle, president and chief executive officer (CEO). He is the only director who is a member of management of the Company and, as such, is not independent. The Board determines independence using a set of criteria that goes beyond applicable securities rules and has chosen to voluntarily comply with all elements of the independence test pronounced by the New York Stock Exchange (NYSE), including those that are not binding on TELUS. Accordingly, the independence tests applied by the Board comply with Canadian securities rules and the independence rules of the NYSE. It has been a long-standing policy of the Board to require that at least a majority of its directors be independent, that the Board Chair is required to be independent and the positions of Board Chair and CEO must be separate. These established requirements are captured in TELUS’ Board Policy Manual and better ensure the independence of the Board. In late 2010, we established firstname.lastname@example.org, an email address for shareholders to enhance shareholder communication and engagement. While more than 140 emails were received in 2011, only two were Board related while the rest were mostly customer related. A response was sent for each of the Board -related emails, which primarily concerned Say on Pay, and the other 138 emails were referred to more appropriate areas for response, such as Client Care.
Committees of the Board of Directors
Each quarter, the Corporate Social Responsibility team provides an update and seeks input and guidance from various committees of the Board of Directors. Additionally, CSR related issues are regularly given oversight from independent Board committees as described below.
The Audit Committee supports the Board in fulfilling its oversight responsibilities regarding the integrity of the Company’s accounting and financial reporting, internal controls and disclosure controls, legal and regulatory compliance, the independence and performance of the company’s external and internal auditors, the management of the company’s risks, creditworthiness, treasury plans and financial policy, and the company’s whistleblower and complaint procedures. In 2011, the committee also oversaw the Ethics policy together with the Human Resources and Compensation Committee and Corporate Social Responsibility strategy.
All members of the Audit Committee are independent.
Corporate Governance Committee
The Corporate Governance Committee’s mandate is to assist the Board in fulfilling its oversight responsibilities to ensure that the company has an effective corporate governance regime. The committee is responsible for monitoring corporate governance developments, emerging best practices and the effectiveness of the Company’s governance practices. The committee is also responsible for identifying, recruiting and recommending nominees for election as directors, providing ongoing development for directors and overseeing Board and director evaluations. In 2011, one new director, Stockwell Day, was appointed as part of the program to recruit high–calibre individuals that strengthen the Board. The committee assesses and makes recommendations to the Board for its determination of the independence, financial literacy, financial expertise, and accounting or related financial management expertise of directors, as defined under corporate governance rules and guidelines. In 2011, the Corporate Governance Committee began overseeing the Company’s Corporate Social Responsibility strategy, Environmental policy, and insurance and property risk governance.
All members of the Corporate Governance Committee are independent.
Human Resources and Compensation Committee
The Human Resources and Compensation Committee of the Board of Directors is responsible for developing the compensation philosophy and guidelines on executive compensation as well as overseeing succession planning for the executive team and Respectful Workplace practices. The committee also determines CEO goals and objectives relative to compensation, evaluates CEO performance and recommends to the Board CEO compensation based on its evaluation.
The committee manages the supplemental retirement arrangements (other than registered pension plans) for the executive team and all of the Company’s equity-based incentive plans. In addition, they determine executive compensation and evaluate the risks associated with executive pay. In 2011, the Human Resources and Compensation Committee began overseeing the Ethics policy together with the Audit Committee. The committee also oversees health and safety policies, business continuity and disaster/emergency operation planning.
All members of the Human Resources and Compensation Committee are independent.
The Pension Committee
The mandate of the Pension Committee is to oversee the administration, financial reporting and investment activities of the Pension Plan for Management and Professional Employees of TELUS Corporation, the TELUS Defined Contribution Pension Plan, the TELUS Edmonton Pension Plan, the TELUS Corporation Pension Plan, the TELUS Québec Defined Benefit Pension Plan, any successor plans, any related supplemental retirement arrangements as mandated by the Board, and the related trust funds (collectively the Pension Plans). The committee is responsible for reporting to the Board with respect to the actuarial soundness of the pension plans, the administrative aspects of the pension plans, investment policy, performance of the investment portfolios and compliance with government legislation. The committee may, from time to time, recommend to the Board for approval, fundamental changes in the nature of the pension arrangement for any pension plan, and changes in the governance structure for the pension plans.
All members of the Pension Committee are independent.