Enhancing corporate reporting and governance

TELUS is firmly committed to full and fair financial disclosure and best practices in corporate governance for our security holders. We are recognized as a leader for the quality and comprehensiveness of our financial reporting and have a long history of good governance practices. TELUS also strives to maintain accounting policies that are appropriate and conservative.

Recent developments

For 2006, we maintained our focus on good corporate governance and continued to seek out opportunities for improvement. Notably, TELUS is in full compliance with the corporate governance standards of Canadian securities regulators and the applicable standards of the New York Stock Exchange (NYSE). The new practices we adopted include:

• Adopting a majority voting policy in 2007 on the election of directors, which furthers the principle that directors should only be elected if they receive a majority of the votes of shareholders represented at the meeting
• Removing the mandatory retirement age for Board members, enabling us to retain high-performing directors
• Improving the quality of our disclosure relating to executive compensation for 2006 to present more easily understandable information to shareholders
• Starting a regular practice of quarterly reporting by the Respectful Workplace Officer to the Human Resources and Compensation Committee
• Enhancing opportunities for strategy discussions with the Chief Executive Officer by introducing a new "Ask the CEO" in-camera strategy and key issue discussion at regular Board meetings to supplement existing sessions.

In 2006, TELUS continued to receive recognition for excellence in corporate governance and reporting. For example:

• TELUS won for the second year in a row the CICA's Award of Excellence for Best Corporate Governance Disclosure across all industry sectors for the 2006 TELUS Information Circular and telus.com website
• TELUS was recognized for having the best corporate privacy policy in the Canadian telecommunications industry and one of the top 10 privacy policies among Canadian companies by Nymity, Canada's leading private research firm
• TELUS' internal audit activity received a top rating from the Institute of Internal Auditors following a comprehensive quality assessment.

At a time when expectations for high quality reporting have never been greater, TELUS has taken action. In addition to fulfilling the updated corporate governance requirements set by Canadian and U.S. securities regulators, we have adopted a number of mandated initiatives ahead of their effective dates and implemented a number of voluntary initiatives that enhance our corporate reporting beyond what is required.

Some of the voluntary practices we have in place include:

• Voluntary compliance with the NYSE Board of Directors independence criteria
• Having the Chief Compliance Officer report to the Audit Committee on a quarterly basis
• Making continuous improvements to our sophisticated enterprise risk management processes by:
  • Conducting extensive enterprise risk and control assessment surveys and updating our key risk profile and internal audit program throughout the year
  • Assigning executive-level owners for mitigation of key risks and having them provide briefings to the Audit Committee
  • Further integrating information between the ongoing strategic planning process and our enterprise risk assessment activities
• Continuing to blend the more comprehensive management's discussion and analysis (MD&A) framework recommended by the Canadian Institute of Chartered Accountants (CICA) with the required disclosure framework of the Canadian Securities Administrators
• Publicly disclosing our corporate disclosure policy, insider trading policy, and entire Board policy manual, including all of the Board committees' terms of reference, not just the Audit Committee's terms of reference as is required
• Voluntarily initiating in mid-2006 an internal audit of our stock option and long-term incentive compensation practices, which resulted in a "well controlled" rating