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At TELUS, we have a long-standing commitment to sound and effective corporate governance and full and fair disclosure practices, continually reviewing and enhancing them to achieve higher standards and pursue greater transparency and integrity.
In 2016 and early 2017, we continued to implement enhancements that help us achieve good governance and increase investor confidence. Some of these initiatives are highlighted below.
Conducting a comprehensive review of CEO succession planning in 2016, which included a review of the process itself, as well as a review of the leadership skills and experience being sought and developed in candidates for the role of CEO.
In particular, the Board examined the manner in which competencies and skills should be evaluated on an ongoing basis and approved checkpoints against which to measure candidate progress. The Board also discussed the strengths and development opportunities of the current candidates for the role of CEO, as well as the strengths and development opportunities of the next generation of candidates.
Reframing our Board diversity objectives in February 2016 and expressing them in terms of a minimum percentage of both men and women. This reflects the principle that a board consisting entirely of women is no more diverse than a board consisting entirely of men. The Board also accelerated the target date for achieving a minimum 30% of each gender representing independent directors from 2019 to 2018.
TELUS’ diversity objective now states that diverse members will represent not less than 30 per cent of the Board’s independent members by May 2017, with a minimum of each gender representing 25 per cent of such members by May 2017, increasing to not less than 30 per cent of such members by 2018. Currently, diverse members (five directors) represent 42 per cent of the independent directors of the Board, and female members (three directors) represent 25 per cent of our independent directors.
Demonstrating our ongoing commitment to diversity and the implementation of our succession plan for our Board with the addition of one new director, David Mowat in May 2016 and two new directors,Claude Mongeau and Kathy Kinloch, who joined the Board in May 2017. All bring strategic expertise and significant operational experience in key markets.
The nomination of these three individuals over the past year aligns with the prioritized skills and attributes that the Corporate Governance Committee identified early in 2016, which include technology and/or industry knowledge, retail experience, geographic representation in Western Canada and Quebec, and gender diversity. The Corporate Governance Committee continues to review and assess the skills gaps and priorities of the Board when it assesses its list of director candidates.
Adopting a Board interlock policy stating that no more than two of our directors should serve on the same public company board or committee, unless otherwise agreed by the Board. In February 2016, the Board approved an amendment to this policy to clarify those factors the Corporate Governance Committee should consider in making a recommendation to permit additional interlocks. In considering whether or not to permit more than two directors to serve on the same board or committee, the Corporate Governance Committee will take into account all relevant considerations including, in particular, the total number of Board interlocks at that time and the strategic requirements of TELUS.
Continuing to facilitate regular communication and create an open and constructive dialogue with our shareholders pursuant to a shareholder engagement policy that was adopted in February 2015. This policy outlines how the Board may communicate with shareholders, how shareholders can communicate with the Board and the topics that are appropriate for the Board to address. It also provides an overview of how management interacts with shareholders.
In 2016, we participated in four TELUS-hosted conference calls with simultaneous webcasts, as well as numerous investor conferences and tours. TELUS executives also met with many institutional investors in Canada, the United States and Europe. Throughout the year, we respond to any shareholder concerns and letters we receive to our Board email inbox at board@telus.com, which provides Shareholders and other stakeholders with a tool to communicate directly with the Board on appropriate topics between annual meetings.
Alternatively, Shareholders and other stakeholders can also communicate with the Board by mail, marking the envelope as confidential, to (c/o Chief Governance Officer) 7th Floor, 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3. The Board strives to respond to all appropriate correspondence in a timely matter. On a quarterly basis, the Corporate Governance Committee considers all communications sent to the Board inbox and reviews and considers responses in relation to corporate governance matters. A copy of our shareholder engagement policy is available at telus.com/governance.
Continuing to issue our annual transparency disclosure, providing insight into our approach to responding to request for information about our customers from law enforcement agencies and other government organizations. Our transparency reporting is integrated into our annual sustainability report. Visit telus.com/about/sustainability.
At TELUS, we take a proactive approach to corporate reporting and governance, often surpassing what is legally required for the benefit of our investors.
Adopting a Board Diversity Policy ensuring that the Corporate Governance Committee, which is responsible for recommending director nominees to the Board, will take into account diversity considerations such as gender, age and ethnicity, with a view to ensuring that the Board benefits from a broader range of perspectives and relevant experience. In 2015, the principles of the Board Diversity Policy were cascaded to the Board committee composition succession process.
Adopting a term limit policy for directors who join the Board after January 1, 2013, requiring them to tender their resignation to the Corporate Governance Committee after 15 years of service on the Board.
Moving to a tiered flat-fee structure for directors' compensation, in line with current industry trends and best practices. The Board believes that this flat-fee structure is better aligned with the changing role of directors and is more reflective of the continuous nature of their contributions during the year rather than a fee structure based on attendance at meetings.
Increasing the share ownership guidelines for both directors and executives. Non-management directors are now required to reach an equity ownership target equal to three times the annual retainer within five years of his or her appointment date. Executives are required to hold three times their base salary in common shares and the CEO seven times his base salary in common shares.
Holding an annual say-on-pay vote on executive compensation at our annual meetings - our seventh annual say-on-pay vote at our 2017 annual meeting received 93 percent approval from common shareholders.
Having a majority voting policy for the election of directors since 2007
Adopting a formal clawback policy in 2012 (effective as of January 1, 2013) that allows the Company to recover or cancel certain incentive or deferred compensation paid to executive officers in circumstances where there has been a material misrepresentation or material error resulting in the restatement of the Company’s financial statements, an executive would have received less incentive compensation based on the restated financials, and the executives' misconduct (such as an act of fraud, dishonesty or wilful negligence or material non-compliance with legal requirements) contributed to the obligation to restate the financial statements.
Of note, the Company has not had to claw back any compensation pursuant to this policy since it has been put in place and we have not previously encountered a situation where a compensation recoupment or adjustment would have been required had a clawback policy been in place.
Having the Chief Data & Trust Officer report to the Audit Committee on a quarterly basis
Continuously improving enterprise risk governance by:
Securing independent verification of select information in the annual TELUS corporate social responsibility report
Publicly disclosing, on a voluntary basis, our corporate disclosure policy, insider trading policy, board diversity policy, shareholder engagement policy and the entire Board policy manual, including all of the Board committees' terms of reference. Only the Audit Committee's terms of reference is required by regulation. This information is available on our Corporate Governance website.
Some of these practices include:
Conducting in-camera sessions at each meeting of the Board and its committees where the independent directors meet without management present
Having both the Chief Internal Auditor and the external auditor report to the Audit Committee
Conducting in-camera sessions at each quarterly Audit Committee meeting where committee members meet separately with the external and internal auditors without management present
For a full statement of TELUS corporate governance practices, please refer to the “Statement of TELUS’ corporate governance practices” in TELUS’ 2017 Information circular.
