Martino continued, “It is unfortunate that TELUS has sought to distract investors and deflect attention from its flawed proposal by making egregious comments about a significant shareholder. We encourage voting shareholders to consider the way that TELUS has conducted itself and treated shareholders over the last several months. In addition to ignoring shareholder concerns regarding the proposed exchange ratio, TELUS has taken several actions to push through its one-for-one proposal at any cost, including actions aimed at manipulating the October 17 vote that raise serious concerns regarding TELUS’ commitment to ethical standards and corporate governance.”
Mason cited the following issues as causes for significant voting shareholder concern:
TELUS’ board is shirking its fiduciary duties.
- TELUS continues to ignore the fact that voting shares are historically – and fundamentally – more valuable than non-voting shares.
- Despite repeated attempts to engage TELUS to discuss conversion options and an exchange ratio that would treat ALL shareholders fairly, TELUS’ board and management remain unwilling to consider anything beyond the unfair and oppressive one-for-one exchange.
- TELUS was forced to withdraw the very same proposal it is seeking today because it faced certain rejection by shareholders in May.
- Despite material conflicts of interest at the board and management level, TELUS never obtained a fairness opinion for the voting shareholders.
- Instead, TELUS relied on a severely flawed opinion from Scotiabank, which was based upon the wrong precedents and misinterpreted the facts. Specifically, like TELUS, Scotia gave no weight to market trading prices – whether at TELUS or in its precedents – in determining what is fair.
TELUS has engaged in questionable actions aimed at manipulating the vote.
- Rather than respecting the rights afforded to shareholders by allowing the vote to play out fairly, TELUS continues to engage in a highly-controversial tactic known as “vote buying,” paying dealer solicitation fees for votes – but only for votes in favor of the proposal.
- TELUS has reduced the minimum voting level for approval by voting shareholders from 66.6% to 50% in a coercive effort to tip the scale in its favor and force through its proposal.
- The majority of TELUS’ management team and board’s holdings are tied to the non-voting shares. As a group, the management team and board hold approximately $150 million more in non-voting shares than voting shares and stand to make approximately $4 million at the expense of voting shareholders (based on the elimination of the historical price premium) if this proposal is approved.
- Bernard Black, Professor of Law at Northwestern University’s Law School and Kellogg School of Management, notes this clear conflict of interest, stating that the board and management “have a negative economic interest in the value assigned to votes.” 2
- Mr. Black adds that, “in the US, this conflict-of-interest would cause a court to assess management’s decision to propose a zero-premium,” and highlights the fact that “despite their conflict of interest, management plans to vote its own voting shares in favor of the share swap.” 2
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