Information Circular - About TELUS

isk versus reward
Our compensation program incorporates many long-standing
elements that are intended to ensure our compensation
practices do not encourage excessive or inappropriate risktaking.
For example:
. our mix of short, medium and longer-term compensation
encourages executives to take a balanced view and mitigates
against excessive risk-taking or behaviour that is too
conservative
. at-target, only 12.5 per cent of an executive’s pay (annual
performance bonus) is tied to short-term results, while 50 per
cent is tied to long-term incentives (RSUs and options)
. the annual performance bonus and medium-term incentives
(EPSUs) are directly linked to, and determined by, corporate
performance (as measured by the corporate scorecard)
and individual performance
. targets for performance metrics in the corporate scorecard
are stress tested and generally made more difficult each
year to promote continuous stretch and performance
improvement year over year
. EPSU (medium-term) awards are linked to share price
performance and are reduced in proportion to a decline
in share price during a performance year (but are not
increased in proportion to an increase in share price
during a performance year)
. annual performance bonus and EPSU award payouts can
be as low as zero, if minimum threshold levels of corporate
and individual performance are not met, and are capped at
200 per cent where corporate and individual performance
objectives are exceeded, to prevent excessive payouts and
to act as a disincentive against excessive risk-taking
. individual performance objectives are tied to a strong team
culture which precludes individual executives from acting
unilaterally without clear leadership team knowledge,
involvement or approval
. long-term incentive awards can range from zero for an
executive with a low PVAAM rating, to an amount that would
place the total direct compensation (base salary + annual
performance bonus + EPSU awards + RSU/option awards)
at or near the 75th percentile of the comparator group
for an executive who is determined to be a crucial resource
to the Company based on his or her PVAAM rating
48 . TELUS 2012 information circular
. we require all of our executive vice-presidents to own at
least 1x their annual base salary in Shares and the CEO to
own at least 3x his annual base salary in Shares. Options,
EPSUs and RSUs are not included in the calculation of an
executive’s share ownership
. long-term incentives are granted on an annual basis, based
on performance, to encourage consistent performance year
over year and to prevent behaviour that might be intended
to maximize a multi-year award.
The Board maintained its strong focus on risk oversight in
2011 by considering the results of an extensive review that was
conducted in three parts starting in 2010: an assessment of
the adequacy of the Board’s framework for risk oversight, an
assessment of the key enterprise risks and an in-depth risk
analysis of our executive compensation programs. As a result
of this review, in 2011, the Board formally expanded the
Compensation Committee’s risk oversight activities by amending
its terms of reference to include a mandatory annual review
of the linkage between our pay practices and risk. In 2011, this
assessment was conducted by the Committee’s independent
consultant, Meridian, who concluded that there are appropriate
measures in place to mitigate or balance any potential for
undue risk-taking. Meridian based its assessment on a
scorecard that reviewed 47 dimensions across the following
five categories:
. pay philosophy and governance
. pay mix and balance
. incentives and performance measurement
. stock-based ownership guidelines
. compensation policies and provisions.
After considering the results of the assessment, the
Compensation Committee did not identify any risks arising
from the Company’s compensation policies and practices
that would be reasonably likely to have a material adverse
effect on the Company.