A woman walks in front of the Telus head office in Toronto on Feb. 11, 2021.Frank Gunn/The Canadian Press
Telus Corp. chief executive officer Darren Entwistle has reclaimed the title of best-paid telecom CEO – and a major shareholder proxy adviser says it’s too much money.
Telus T-T paid Mr. Entwistle $21.06-million in 2023, up from $17.49-million in 2022 and $19.82-million in 2021.
Glass Lewis & Co., in its advisory report to shareholders in advance of Telus’s May 9 annual meeting, recommended a “no” vote on the company’s non-binding advisory vote on executive compensation, otherwise known as “say on pay.” Glass Lewis also gave Telus a “D” grade in its pay-for-performance model.
Mr. Entwistle’s 2023 pay package included a $1.6-million salary and a $1.32-million cash bonus, plus pension and other benefits. The biggest part of the package was $16.81-million in stock awards – up nearly $2.4-million from 2022.
The CEOs of the two other large telecoms made less than $14-million in 2023.
Rogers Communications Inc. RCI-B-T CEO Tony Staffieri received just $12.98-million after making $31.52-million in 2022, his first full year in the role, owing to a number of one-time compensation items linked to his promotion to the top job and the company’s acquisition of Shaw Communications Inc.
BCE Inc. BCE-T chief Mirko Bibic made $13.43-million, as previously reported by The Globe and Mail.
Mr. Entwistle is easily the longest-serving CEO among the three, having been in the job since 2000. That, coupled with Telus’s long-term stock returns over the past 20 years, has typically led the company’s board to compensate him more handsomely than his peers.
Over the past two decades, Telus generated a total shareholder return of 725 per cent, outperforming the S&P/TSX Composite Index’s return of 349 per cent and the MSCI Telecom Index’s return of 170 per cent, Telus spokesman Steve Beisswanger said in an e-mail summary of Mr. Entwistle’s accomplishments.
The Glass Lewis analysts noted that Mr. Entwistle’s compensation “was already outpacing the median of peers” before “a significant jump in 2023.” His target direct compensation – salary, target bonus and value of long-term stock awards – increased about 20 per cent year-over-year. As part of that, the target amount for his long-term incentive award increased 18 per cent, and the target for his annual cash bonus increased 46 per cent, Glass Lewis said.
As a result, despite his annual bonus plan paying out below its target in 2023, he received 16 per cent more than in 2022, Glass Lewis said. This is “particularly concerning,” Glass Lewis said, because Telus stock had a negative return in 2023 when dividends were included.
Telus sent a letter to subscribers to Glass Lewis’s service to contest the report and to urge a “yes” vote on say on pay. It noted that Institutional Shareholder Services, a larger and older proxy advisory firm, recommended a “yes” vote, saying Telus’s pay and performance aligned.
Telus argues that its has aligned its pay practices with shareholder returns, noting that the decline in the share price has cut the disclosed value of Mr. Entwistle’s pay in the past three years. Direct compensation valued at $16.22-million in 2022 was worth $10.17-million at the end of 2023, Telus says in its response letter.
Telus also objects to Glass Lewis using a comparator group with companies from industries such as energy and pipelines, insurance, grocery retail, railways and banking, “which do not reflect the same business challenges and industry dynamics as Canadian telecom companies.”
In 2023, Telus gave itself a 73 out of a possible 100 points on its corporate-performance scorecard, which drives 80 per cent of annual bonuses, after missing all of its goals.
The majority of the scorecard – 65 per cent – is based on a mix of social capitalism metrics, internal work processes and customer acquisition and retention. Telus said it came up short on all those goals.
The remaining 35 per cent of the bonus is based on a cash-flow goal, which Telus missed in 2023 by posting a $4.390-billion result rather than the $4.464-billion target.
Mr. Entwistle’s bonus partially recovered, however, when the Telus board decided he deserved 180 per cent of his target for “individual performance.” His $1.32-million bonus was up 22 per cent over 2022′s $1.08-million.
His stock awards included $1,181,066 in executive performance share units, which Telus paid him in cash instead “in light of his significant shareholdings” in the company. (Mr. Entwistle owned shares worth $18.85-million as of Dec. 31.) The remaining $15-million he received was divided equally between restricted shares, which vest three years after the grant, and performance shares, which will pay out based on whether Telus achieves targets for relative total shareholder return and total customer connections.
In its proxy circular to shareholders, Telus said its board decided to award Mr. Entwistle $15-million in shares because he “continues to demonstrate extraordinary leadership” and the board “considered the criticality of retaining Darren for the next several years to guide the expansion of TELUS’ portfolio of growth companies,” which include Telus International Inc. and Telus Health. The board rated Mr. Entwistle’s “retention value and future potential in the highest categories available for the CEO” in its evaluative approach.
Telus also made changes in 2023 to improve Mr. Entwistle’s executive pension, adding his target bonus to the compensation formula and removing the cap on what he can be paid in retirement. In a letter to shareholders included in the proxy circular, director Mary Jo Haddad, chair of the board’s compensation committee, called removing the cap “a highly effective way to continue to engage Darren.”
In its response letter to Glass Lewis, Telus said that “despite strong disclosure of the rationale for the compensation decisions made more than a year ago, Glass Lewis appears not to acknowledge the importance or challenges of retaining a fully retirement-eligible, exceptional, and extraordinarily long-tenured CEO.”