SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant
to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of: March 2005 | Commission
File Number: 1-8481 |
BCE
Inc.
(Translation of Registrants name into English)
1000,
rue de La Gauchetière Ouest, Bureau 3700, Montréal, Québec
H3B 4Y7, (514) 397-7000
(Address of principal executive offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F | Form 40-F | X
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Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes | No | X
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Notwithstanding any reference to BCEs Web site on the World Wide Web in the documents attached hereto, the information contained in BCEs site or any other site on the World Wide Web referred to in BCEs site is not a part of this Form 6-K and, therefore, is not filed with the Securities and Exchange Commission.
BELL CANADA ENTERPRISES
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Notice of 2005
Management |
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Our annual shareholder meeting will be held at 9:30 a.m. (Eastern time) on Wednesday, May 25, 2005 at the Metro Toronto Convention Centre, South Building, 222 Bremner Blvd., Toronto, Ontario. A simultaneous webcast of the meeting will be available on our website at www.bce.ca. As a shareholder of BCE, you have the right to vote your shares, either by proxy or in person at the meeting. YOUR
VOTE IS IMPORTANT |
Whats inside
Letter from the Chairman of the board and the President and Chief Executive Officer | 1 |
Notice of 2005 annual shareholder meeting | 2 |
Management proxy circular | 3 |
About voting your shares | 4 |
What the meeting will cover | 7 |
About the nominated directors | 8 |
Committee reports | 12 |
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12 |
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15 |
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16 |
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25 |
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25 |
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26 |
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41 |
Other important information | 42 |
How to request more information | 43 |
Schedule A Shareholder proposals | 44 |
Dear Fellow Shareholder:
You
are invited to attend this years annual shareholder meeting. It will
be held on Wednesday, May 25, 2005 at 9:30 a.m. (Eastern
time), at the Metro Toronto Convention Centre, South Building, 222 Bremner
Blvd., Toronto, Ontario. This will be a particularly memorable meeting as
we celebrate Bell Canadas 125th anniversary. If you
cannot attend the meeting in person, you can view a simultaneous webcast on
our website at www.bce.ca.
As a shareholder of BCE, you have the right
to vote your shares on all items that come before the meeting. You can vote
your shares either by proxy or in person at the meeting.
This circular tells you about these items and
how to exercise your right to vote. You will also find information about the
nominated directors, the auditors, our corporate governance practices, compensation
of directors and officers, as well as shareholder proposals. In addition,
we have provided detailed reports from our four board committees audit,
corporate governance, management resources and compensation, and pension fund
to give you a better understanding of the roles of these committees
and their activities during the past year.
Adhering to “best practices” in
corporate governance in all of the jurisdictions we operate in is the cornerstone
of our corporate governance philosophy. Today, we are fully aligned with the
corporate governance guidelines of the Toronto Stock Exchange (TSX), and in
many instances exceed them. The same is true with the newly proposed best
practices guidelines issued by the Canadian Securities Administrators which
are scheduled to replace the TSX guidelines later this year. As a U.S.-listed
company, we comply with the stringent requirements that apply to our company
under U.S. law, as well as under the rules adopted by the U.S. Securities
and Exchange Commission and the New York Stock Exchange. In addition, we also
have stepped up to voluntarily meet many of the U.S. standards that we are
not required to comply with as a Canadian company. We believe that these high
levels of compliance are not only appropriate, but more importantly, in our
view, are in the best interests of our shareholders.
We believe that our company cannot excel unless
we share the same successes and opportunities, and face the same risks and
challenges, as our shareholders. Consequently, we require that all of our
officers and directors hold a meaningful stake in the company, ensuring they,
too, are committed shareholders.
Above
all, we are committed to:
Please
visit the companys website at www.bce.ca where you can download our 2004
annual report, our recent quarterly reports and a variety of other information,
including our corporate governance guidelines.
Thank you for your continued confidence in BCE.
We look forward to seeing you at this year's annual meeting.
Sincerely,
Richard J. Currie
Chairman of the board
March 2, 2005 |
Michael J. Sabia
President and Chief Executive Officer
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Bell Canada Enterprises Management proxy circular |
1 |
Notice of 2005 annual shareholder meeting
You are invited to our annual shareholder meeting
When
Wednesday, May 25, 2005
9:30 a.m. (Eastern time)
Where
Metro Toronto Convention
Centre
South Building
222 Bremner Blvd.
Toronto, Ontario
Webcast
A simultaneous webcast
of the meeting will be available on our website at www.bce.ca.
What the meeting is about
We will be covering four
items at the meeting:
You have the right to vote
You are entitled to receive notice of and vote at our
annual shareholder meeting, or any adjournment, if you were a holder of BCE common
shares on March 27, 2005.
You have the right to vote your shares on electing
directors, appointing the auditor, all shareholder proposals and any other
items that may properly come before the meeting or any adjournment.
Your vote is important
As a shareholder of BCE, it is very important that you
read this material carefully and then vote your shares, either by proxy or
in person at the meeting.
The following pages tell you more about how to exercise your right to vote your shares.
By order of the board,
PATRICIA A. OLAH
Corporate Secretary
Montréal, Québec
March 2, 2005
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Bell Canada Enterprises Management proxy circular |
Management Proxy Circular
In this document, you
and your refer to the shareholder.
We, us, our and BCE refer to BCE Inc. The information
in this document is at March 2, 2005, unless otherwise indicated.
This management
proxy circular is for our annual shareholder meeting on May 25, 2005
(meeting). As a shareholder, you have the right to vote your shares on electing
directors, appointing the auditor, all shareholder proposals and any other
items that may properly come before the meeting or any adjournment.
To help you make
an informed decision, please read this circular and our annual report for
the year ended December 31, 2004. This circular tells you about
the meeting, the nominated directors, the proposed auditor, our corporate
governance practices, compensation of directors and officers, and shareholder
proposals. The annual report gives you a review of the activities of the BCE group
of companies for the past year and includes a copy of our annual financial
statements and annual managements discussion and analysis of financial
condition and results of operations (MD&A).
Your proxy is solicited
by the management of BCE. In addition to solicitation by mail, our employees
or agents may solicit proxies by telephone or other ways at a nominal cost.
We have retained Georgeson Shareholder Communications Canada Inc. (Georgeson)
to solicit proxies for us in Canada and the United States at an estimated
cost of $55,000.
We pay the costs of these solicitations.
If you have any
questions about any of the information in this document, please call Georgeson
at 1-800-288-8784 for service in English or in French.
Approval of this management proxy circular
The board of directors approved the contents of this management proxy circular and authorized it to be sent to each shareholder who is eligible to receive notice of and vote his or her shares at our annual shareholder meeting, and to each director and to the auditor.
PATRICIA A. OLAH
Corporate Secretary
Montréal, Québec
March 2, 2005
Bell Canada Enterprises Management proxy circular |
3 |
About voting your shares
Your vote is important
Your vote is important As a shareholder of BCE, it is very important that you read this information carefully and then vote your shares, either by proxy or in person at the meeting.
Voting by proxy
This is the easiest way to vote. Voting
by proxy means that you are giving the person or people named on your proxy
form (proxyholder) the authority to vote your shares for you at the meeting
or any adjournment. A proxy form is included in this package.
You can choose from four different ways to vote
your shares by proxy:
The
directors who are named on the proxy form will vote your shares for you, unless
you appoint someone else to be your proxyholder. If you appoint someone else,
he or she must be present at the meeting to vote your shares.
If you are voting your shares by proxy, our
transfer agent, Computershare Trust Company of Canada (Computershare), or
other agents we appoint, must receive your completed proxy form by 4:45
p.m. (Montréal time) on Tuesday, May 24, 2005.
You are a registered shareholder
if your name appears on your share certificate. Your proxy form tells you
whether you are a registered shareholder.
You are a non-registered (or beneficial)
shareholder
if your bank, trust company, securities broker or other financial institution
holds your shares for you (your nominee). For most of you, your proxy form
tells you whether you are a non-registered (or beneficial) shareholder.
If you are not sure whether you are a registered or non-registered shareholder, please contact Computershare.
COMPUTERSHARE TRUST COMPANY OF CANADA
100 University Avenue
9th Floor
Toronto, Ontario, Canada M5J 2Y1
TELEPHONE
1-800-561-0934 (toll-free in Canada and the United States)
514-982-7555 (in the Montréal area or from outside Canada
and the United States)
FAX
1-888-453-0330 (toll-free in Canada and the United States)
416-263-9394 (outside Canada and the United States)
E-MAIL
bce@computershare.com
How to vote registered shareholders
A. By proxy
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By telephone
If you vote by the telephone, you cannot appoint anyone other than the directors named on your proxy form as your proxyholder.
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On the Internet
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By mail
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By fax
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By appointing another person to go to the meeting and vote your shares for you
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Bell Canada Enterprises Management proxy circular |
B. In person at the meeting
You do not need to complete or return
your proxy form.
You will need an admission ticket to enter
the meeting. Your ticket is attached to your proxy form.
You should see a representative of Computershare before entering the meeting to register your attendance at the meeting.
Voting in person at the meeting will automatically cancel any proxy you completed and submitted earlier.
How to vote non-registered shareholders
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By proxy
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In person at the meeting
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Bell Canada Enterprises Management proxy circular |
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Completing the proxy form
You can choose to vote For, Against
or Withhold, depending on the items listed on the proxy form.
When you sign the proxy form, you authorize
Mr. R.J. Currie, Mr. M.J. Sabia, Ms. J. Maxwell or Mr. A. Bérard,
who are all directors of BCE, to vote your shares for you at the meeting according
to your instructions. If you return your proxy form and do not tell us
how you want to vote your shares, your vote will be counted:
Your
proxyholder will also vote your shares as he sees fit on any other matter
that may properly come before the meeting.
If you are appointing someone else to vote your
shares for you at the meeting, strike out the four names of the directors
and write the name of the person voting for you in the space provided. If
you do not specify how you want your shares voted, your proxyholder will vote
your shares as he or she sees fit on each item and on any other matter that
may properly come before the meeting.
If you are an individual shareholder, you or
your authorized attorney must sign the form. If you are a corporation or other
legal entity, an authorized officer or attorney must sign the form.
If you need help completing your proxy form,
please contact Georgeson at 1-800-288-8784 for service in English or in French.
Changing your vote
You can revoke a vote you made by proxy by:
How the votes are counted
You have one vote for each common share
you hold on March 27, 2005. At March 2, 2005, 926,195,599
common shares were entitled to be voted at the meeting.
The election of directors, the appointment of
the auditor and all shareholder proposals will each be determined by a majority
of votes cast at the meeting by proxy or in person. If there is a tie, the
Chairman of the meeting will cast the deciding vote.
Computershare counts and tabulates the votes.
It does this independently of us to make sure that the votes of individual
shareholders are confidential. Computershare refers proxy forms to us only
when:
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Bell Canada Enterprises Management proxy circular |
What the meeting will cover
Four items will be covered at the meeting:
The meeting may also consider other business that properly comes before the meeting. As of the date of this circular, management is not aware of any changes to these items, and does not expect any other items to be brought forward at the meeting. If there are changes or new items, your proxyholder can vote your shares on these items as he or she sees fit.
1. Receiving our financial statements
We will place before the meeting BCEs financial statements, including the auditors report, for the year ended December 31, 2004. The financial statements are included in our 2004 annual report.
2. Electing directors
You will be electing a board of directors
(board) of 15 members. Please see About
the nominated directors on
the next page for more information. Directors appointed at the meeting will
serve until the end of the next annual shareholder meeting.
All of the
individuals nominated for election as directors are currently members of the
board and, other than Mr. James A. Pattison, O.C., O.B.C., who was appointed
to the board on February 16, 2005, were all elected at our 2004
annual and special shareholder meeting.
If you
do not specify how you want your shares voted, the directors named as proxyholders
in the enclosed proxy form intend to cast the votes represented by proxy at
the meeting FOR the election as directors of the nominated directors in this
circular.
3. Appointing the auditor
The board, on the advice of the audit
committee, recommends that Deloitte & Touche LLP be re-appointed as auditor.
Deloitte & Touche LLP and its predecessors have been the auditor of Bell Canada
since it was created in 1880, and of BCE since we were created in 1983.
The audit firm appointed at the meeting will serve until the end of the next
annual shareholder meeting.
If you
do not specify how you want your shares voted, the directors named as proxyholders
in the enclosed proxy form intend to cast the votes represented by proxy at
the meeting FOR the appointment of Deloitte & Touche LLP as auditor.
4. Considering shareholder proposals
You will be voting on four shareholder
proposals that have been submitted for consideration at the meeting. These
four proposals are set out in Schedule A. The board, on the advice of the
corporate governance committee, recommends that shareholders vote AGAINST
shareholder proposals No. 1, No. 2, No. 3 and No. 4.
If you
do not specify how you want your shares voted, the directors named as proxyholders
in the enclosed proxy form intend to cast the votes represented by proxy at
the meeting according to the boards recommendations noted in the above
paragraph.
Other business
Following the conclusion of the formal business to be conducted at the meeting, we will:
If you are not a shareholder, you may be allowed into the meeting after speaking with a representative of Computershare and if the Chairman of the meeting allows it.
Bell Canada Enterprises Management proxy circular |
7 |
About the nominated directors
The table below tells you about the people who have been
nominated as directors and the voting securities that they own directly or
indirectly. We encourage non-management directors to sit on at least one board
committee and on the board of at least one of our principal subsidiaries.
We believe that greater participation in the business of our subsidiaries
makes for more effective governance. All of the non-management directors sit
on boards of BCE subsidiaries. We have also included the directorships
the nominated directors have held during the past five years with public companies
that are currently listed on an exchange.
Also see Management resources and compensation
committee report Directors compensation Directors
share unit plan for a description of our deferred share unit plan for
non-management directors.
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ANDRÉ
BÉRARD, O.C. BCE director since January 2003 Member of:
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CORPORATE
DIRECTOR
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1,225
BCE common shares |
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RONALD
ALVIN BRENNEMAN5 BCE director since November 2003 Member of:
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PRESIDENT
AND CHIEF EXECUTIVE OFFICER AND A DIRECTOR, PETRO-CANADA (petroleum
company) (SINCE JANUARY 2000)
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12,950
BCE common shares
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RICHARD
JAMES CURRIE, O.C.2,5 BCE director since May 1995 Member of:
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CHAIRMAN
OF THE BOARD, BCE AND BELL CANADA (SINCE APRIL 2002)
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1,030,264
BCE common shares 27,335 BCE deferred share units |
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ANTHONY
SMITHSON FELL, O.C.2,5 BCE director since January 2002 Member of:
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CHAIRMAN
OF THE BOARD, RBC DOMINION SECURITIES LIMITED (investment bank) (SINCE
DECEMBER 1999)
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100,000
BCE common shares 11,970 BCE deferred share units |
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Bell Canada Enterprises Management proxy circular |
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DONNA
SOBLE KAUFMAN BCE director since June 1998 Member of:
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LAWYER,
AND CORPORATE DIRECTOR
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2,000
BCE common shares
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BRIAN
MICHAEL LEVITT BCE director since May 1998 Member of:
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CO-CHAIR,
OSLER, HOSKIN & HARCOURT LLP (law firm) (SINCE JANUARY 2001)
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2,813
BCE common shares 28,337 BCE deferred share units |
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THE
HONOURABLE EDWARD C. LUMLEY, P.C.4 BCE director since January 2003 Member of:
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VICE-CHAIRMAN,
BMO NESBITT BURNS INC. (investment bank) (SINCE 1991)
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10,000
BCE common shares
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JUDITH
MAXWELL, C.M. BCE director since January 2000 Member of:
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PRESIDENT,
CANADIAN POLICY RESEARCH NETWORKS INC. (non-profit organization conducting
research on work, family, health, social policy and public involvement)
(SINCE 1995)
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1,000
BCE common shares 12,463 BCE deferred share units |
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JOHN
HECTOR MCARTHUR BCE director since May 1995 Member of:
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SENIOR
ADVISOR TO THE PRESIDENT, THE WORLD BANK GROUP (SINCE MARCH 1996)
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879 BCE common
shares 33,713 BCE deferred share units |
Bell Canada Enterprises Management proxy circular |
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THOMAS
CHARLES ONEILL, F.C.A.5 BCE director since January 2003 Member of:
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CHARTERED
ACCOUNTANT, AND CORPORATE DIRECTOR
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3,000
BCE common shares 9,093 BCE deferred share units |
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JAMES
ALLAN PATTISON, BCE director since February 2005
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CHAIRMAN
AND CHIEF EXECUTIVE OFFICER, THE JIM PATTISON GROUP |
100,000 BCE common shares | ||
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ROBERT
CHARLES POZEN BCE director since February 2002 Member of:
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CHAIRMAN
OF THE BOARD, MFS INVESTMENT MANAGEMENT (global investment manager)
(SINCE FEBRUARY 2004)
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121,970
BCE common shares 18,944 BCE deferred share units |
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MICHAEL
JONATHAN SABIA BCE director since October 2002
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PRESIDENT
AND CHIEF EXECUTIVE OFFICER (SINCE APRIL 2002) AND A DIRECTOR,
BCE, AND CHIEF EXECUTIVE OFFICER (SINCE MAY 2002) AND A DIRECTOR,
BELL CANADA
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30,708
BCE common shares 122,740 BCE deferred share units |
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Bell Canada Enterprises Management proxy circular |
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PAUL
MATHIAS TELLIER, BCE director since April 1999 Member of:
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CORPORATE
DIRECTOR
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1,700
BCE common shares 29,576 BCE deferred share units |
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VICTOR
LEYLAND YOUNG, O.C. BCE director since May 1995 Member of:
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CORPORATE
DIRECTOR
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5,835
BCE common shares 12,179 BCE deferred share units 4 BCI common shares 1,500 Aliant common shares 3,224 Aliant share units |
Aliant = Aliant Inc., BCI = Bell Canada International Inc., Bell Globemedia = Bell Globemedia Inc., Telesat = Telesat Canada |
1. | Bell Canada and Telesat are wholly-owned subsidiaries of BCE. |
2. | Mr. Currie and Mr. Fell were directors of Teleglobe Inc. until April 2002. Teleglobe Inc. filed for court protection under insolvency statutes on May 28, 2002. |
3. | Mr. Pattison was a director of Livent Inc. until September 1999. Livent Inc. filed for court protection under insolvency statutes on November 18, 1998. |
4. | Mr. Lumley was a director of Air Canada until October 2004. Air Canada filed for court protection under insolvency statutes on April 1, 2003. |
5. | Mr. Brenneman and Mr. Currie both serve as directors of Petro-Canada. Mr. Currie and Mr. Fell both serve as directors of CAE Inc. Mr. Fell and Mr. ONeill both serve as directors of Loblaw Companies Limited. |
SHAREHOLDINGS OF NOMINATED DIRECTORS AS AT MARCH 2, 2005:
Bell Canada Enterprises Management proxy circular |
11 |
Committe reports
The board has four standing committees:
This section includes reports from each committee, which tell you about its members, responsibilities and activities in the past year.
Audit committee report
The purpose of the audit committee is
set forth in its written charter which is available in the governance section
of BCEs website at www.bce.ca.
Under its charter, the audit committee assists
the board in the oversight of:
About the audit committee
The audit committee is currently made
up of five unrelated and independent directors: Mr. T.C. ONeill
(Chair), Mr. A. Bérard, Ms. J. Maxwell, Mr. R.C. Pozen and
Mr. V.L. Young. The audit committee communicates regularly and directly
with management and the internal and external auditors. The audit committee
met six times in 2004. Time was set aside regularly to meet without management,
and without the internal and external auditors.
The audit committee continued to focus on three
key areas in 2004:
Since
BCE has securities registered in the United States, we are subject to
certain provisions of the United States Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley
Act) and related rules and regulations of the U.S. Securities and Exchange
Commission (SEC) (related SEC rules). In addition, since BCEs common
shares are listed on the New York Stock Exchange (NYSE), we are subject to
certain NYSE corporate governance rules that were finalized in November 2003,
and amended in November 2004 (NYSE rules). In early 2004, the Canadian
Securities Administrators also issued final rules relating to audit committees
and certification of financial information and proposed changes to these rules
in October 2004 (Canadian rules).
Under the Sarbanes-Oxley Act and related SEC
rules, BCE is required to disclose whether its audit committee members
include at least one financial expert, as defined by these rules. In addition,
the Canadian rules and the NYSE rules require that all audit committee members
be financially literate. BCEs board of directors has recently determined
that all members of the audit committee are financially literate and that
at least its Chair, Mr. T.C. ONeill, is a financial expert.
Financial reporting
The audit committee meets to review the following documents with management and the external auditor and recommends them to the board for approval:
The
audit committee also reviews new legal and regulatory initiatives that apply
to us and the adoption and disclosure of new accounting pronouncements. It
also assesses the potential impact of choosing certain alternatives, when
appropriate.
Under the Sarbanes-Oxley Act and related SEC
rules, and under the Canadian rules, BCE is required to design and maintain
controls and procedures to ensure that the information we publicly disclose
is recorded, processed, summarized and reported on a timely basis. The board
has approved guidelines reflecting BCEs disclosure controls and procedures
as well as a written charter outlining the responsibilities, membership and
procedures of BCEs disclosure and compliance committee. This committee
consists of officers and other key employees responsible for overseeing the
accuracy and timeliness of BCEs disclosure documents.
As part of its disclosure controls and procedures,
BCE has established a comprehensive process to support the annual certifications
required under the Sarbanes-Oxley Act and related SEC rules, and to support
the annual and quarterly certifications required under the Canadian rules.
Among other things, these certifications by the President and Chief Executive
Officer and the Chief Financial Officer state that:
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Bell Canada Enterprises Management proxy circular |
INTERNAL CONTROL OVER FINANCIAL REPORTING
The audit committee
has the overall responsibility of providing reasonable assurance that BCEs
internal control systems are adequate and effective. It reviews the policies
in place, monitors compliance and approves recommendations for changes.
The audit committee also ensures that BCEs
processes for identifying and managing risks are adequate and that BCE complies
with its business ethics policies, including its conflict of interest policy
for officers. The Sarbanes-Oxley Act and related SEC rules require, as part
of the annual certifications discussed above, that the President and Chief
Executive Officer and the Chief Financial Officer certify that they have disclosed
to BCEs external auditor and to the audit committee:
The audit committee also oversees the requirements of the Sarbanes-Oxley Act and related SEC rules for the certification of BCEs internal control over financial reporting. These rules are scheduled to be applicable to BCEs 2006 annual report that will be filed in 2007. They require a management internal control report that contains:
BCE is on schedule to comply with these rules when they come into effect. In February 2005, the Canadian Securities Administrators issued for comments proposed rules on internal control over financial reporting which, if adopted, would be substantially similar to the Sarbanes-Oxley Act and related SEC rules.
Audit function
EXTERNAL
AUDITOR
Deloitte & Touche LLP is the current external auditor.
The audit committee is responsible for recommending
to the board the appointment of the external auditor and its compensation.
The audit committee is directly responsible for:
AUDITOR INDEPENDENCE
POLICY
BCE's Auditor Independence Policy is a comprehensive policy governing all
aspects of BCEs relationship with the external auditor, including:
The
complete Auditor Independence Policy is available in the governance section
of BCEs website at www.bce.ca.
The following summary includes a breakdown of
fees for services provided in 2004 and 2003.
EXTERNAL AUDITORS
FEES
The table below shows the fees that Deloitte & Touche LLP billed to BCE and
its subsidiaries for various services for each year in the past two fiscal
years.
2004 | 20031 | ||||||
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(millions) | |||||||
Audit fees | $ | 11.4 | $ | 13.3 | |||
Audit-related fees | $ | 3.1 | $ | 2.2 | |||
Tax fees | $ | 1.9 | $ | 2.6 | |||
Other fees | – | $ | 1.1 | ||||
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TOTAL | $ | 16.4 | $ | 19.2 | |||
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1 | Figures for 2003 have been restated to eliminate the fees paid by CGI Group Inc. in the calculation of our aggregate fees paid and reclassify translation services from Other fees to Audit fees so they can be compared to 2004 fees. |
Bell Canada Enterprises Management proxy circular |
13 |
Audit fees
These fees include professional services provided
by the external auditor for the review of the interim financial statements,
statutory audits of the annual financial statements, the review of prospectuses,
consulting on financial accounting and reporting standards, other regulatory
audits and filings and translation services.
Audit-related
fees
These fees relate to non-statutory audits, Sarbanes-Oxley
Act initiatives, pension plan audits and consulting on prospective financial
accounting and reporting standards.
Tax fees
These fees include professional services for administering
our compliance with our conflict of interest policy, tax compliance, tax advice,
tax planning and advisory services relating to the preparation of corporate
tax, capital tax and commodity tax returns.
Since November 2004, we generally do not engage
the external auditor to perform tax planning and consulting services.
Other fees
These fees include professional services provided
for the redesign of product introduction and new applications for account
management, inventory programming, promotion and research processes. This
work started in 2002 and was completed in early 2003.
In 2004, Deloitte & Touche
LLP has not been engaged to design any information system or provide implementation
services (IS/IT) or other consulting services to BCE or its subsidiaries.
INTERNAL AUDITOR
The audit committee also oversees the internal audit
function. This includes:
The senior vice-president, audit and risk management reports directly to the Chair of the audit committee.
COMPLAINT PROCEDURES
In early 2004, BCE implemented a policy
detailing procedures for:
BCEs
procedures for filing complaints on accounting and auditing matters is available
in the governance section of BCEs website at www.bce.ca.
In the fall of 2004, BCE launched
an innovative on-line web tool that allows all employees of BCE and its
subsidiaries to report questionable accounting and auditing practices in complete
confidence. This is in addition to the other means of communications available
to our employees.
OTHER
The audit committee also reviews our risk management processes and compliance
with respect to our environmental policies.
The audit committee also carries out an annual
evaluation of its performance with the CGC, including a review of the adequacy
of its charter.
Finally, the audit committee reports regularly
to the board on its activities.
Report presented March 1, 2005 by:
T.C. ONeill,
Chair
A. Bérard
J. Maxwell
R.C. Pozen
V.L. Young
14 |
Bell Canada Enterprises Management proxy circular |
Corporate governance committee report
The purpose of the CGC
is set forth in its written charter which is available in the governance section
of BCEs website at www.bce.ca.
Under its charter, the CGC assists the board
in:
About the corporate governance committee
The CGC is currently
made up of five unrelated and independent directors: Mrs. D. Soble Kaufman
(Chair), Mr. A.S. Fell, Mr. T.E. Kierans (who is not standing for
election at the meeting), the Honourable E.C. Lumley and Mr. J.H. McArthur.
The CGC communicates regularly and directly with BCEs officers. The
CGC met four times in 2004, including time without management, as appropriate.
Under its charter, the CGC reviewed and reported,
or made recommendations, to the board on the following matters in 2004
and up to the date of this management proxy circular:
The
CGC also carries out an annual evaluation of its performance with the board,
including the review of the adequacy of each committees charter.
Finally, the CGC reports regularly to the board
on its activities.
Directors attendance record
In 2004, there were 12 board meetings and 20 committee meetings. Each director attended at least 86% of the combined meetings of the board and the committees he or she served on. The overall combined attendance by BCEs directors at both board and committee meetings was over 96%.
Report presented March 2, 2005 by:
D. Soble Kaufman,
Chair
A.S. Fell
T.E. Kierans
The Honourable E.C. Lumley
J.H. McArthur
Bell Canada Enterprises Management proxy circular |
15 |
Statement of corporate governance practices
The board and
management believe that good corporate governance practices can help create
and maintain shareholder value. As a result, we seek to attain high standards
of corporate governance.
Following the CGCs careful review, the
board has examined our corporate governance practices and concluded that we
comply with, and in some cases exceed, the TSX guidelines for corporate governance.
The CGC and the board have also been reviewing our corporate governance practices
against the Sarbanes-Oxley Act, related SEC rules, NYSE rules and Canadian
rules relating to audit committees and certification of financial statements,
as well as other initiatives in this area. Although we are not required to
comply with most of the NYSE rules, our governance practices generally comply
with them. You will find a summary of the differences between our governance
practices and the NYSE rules in the governance section of our website at www.bce.ca.
In October 2004, the Canadian Securities
Administrators republished the proposed NP 58-201 for comments, which policy
details best practices relating to corporate governance standards. It is anticipated
that once the proposed policy is implemented, the TSX will withdraw its current
corporate governance guidelines. The proposed policy is in many ways similar
to the NYSE rules with which BCE already complies on a voluntary basis.
Although they are not in effect, we already meet most of the best practices
under the proposed policy and we will take additional actions as required
so that we meet all of them when they become final and effective.
As new regulations come into effect, the CGC
and the board will continue to review our corporate governance practices and
make any appropriate changes.
How we are meeting the TSX guidelines
We fully align with all of the TSX guidelines. The table below lists the TSX guidelines and tells you how we are meeting each one. In some cases, it also lists certain requirements under the Sarbanes-Oxley Act, related SEC rules, NYSE rules, Canadian rules and proposed NP 58-201, which may differ from the TSX guidelines.
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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1. |
The board should explicitly assume responsibility for our stewardship. | The board has overall responsibility for managing and supervising our business in BCEs best interests. In doing so, the board acts in accordance with:
You will find the Bell Canada Enterprises Code of Business Conduct and charters of the board committees in the governance section of our website at www.bce.ca. The board approves all significant decisions, including:
The board also has procedures for:
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16 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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And, as part of its overall stewardship responsibility, the board should assume responsibility for: | |||
(a) |
the adoption of a strategic planning process | The
board approves our overall strategic direction and objectives during
a key planning session. This session is held once a year, usually in
November, at the same time that the business plan and budget are approved
for the following year. |
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(b) |
the identification of the principal risks of the business and ensuring implementation of appropriate systems to manage these risks | The audit committee reviews, reports and makes recommendations to the board on the processes for identifying and managing BCEs principal risks. These include risk management policies, internal control procedures and standards relating to risk management. The audit committee makes sure that these policies are implemented and reviewed regularly. |
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(c) |
succession planning, including appointing, training and monitoring senior management | As part of its responsibilities, the board focuses on the integrity, quality, and continuity of management needed to achieve our corporate goals. The MRCC regularly reviews and reports to the board on:
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(d) |
our communications policy |
The board periodically approves communications plans for
communicating with shareholders, employees, financial analysts, governments
and regulatory authorities, the media and the Canadian and international
communities. |
Bell Canada Enterprises Management proxy circular |
17 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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(d) |
our communications policy (cont'd) | the
board by contacting the Corporate Secretarys Office at
corporate.secretariat@bell.ca or
514-786-3891. All communications received
are carefully reviewed and forwarded to appropriate board members.
We also have detailed information about our business on our
website at www.bce.ca. |
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(e) |
the integrity of our internal control and management information systems. | As a public company, we are required to have an audit committee. The audit committee assesses whether BCEs internal controls are adequate and effective by:
It also makes sure that we have processes for identifying and managing
risks. This includes making sure that we comply with our conflict of
interest policy.
As described in the audit committee report, BCE established a financial
controls project to make sure that we comply with these new regulations. |
|
SEC
RULES The SEC rules require disclosure on whether or not and, if not, the reasons why, a company has adopted a code of ethics for the principal executive officer and senior financial officers, applicable to the Chief Executive Officer, Chief Financial Officer, Controller and Treasurer. |
All of our employees, directors and officers must follow the Bell Canada Enterprises Code of Business Conduct, which provides guidelines for ethical behaviour. The Bell Canada Enterprises Code of Business Conduct includes additional guidelines for the President and Chief Executive Officer, the Chief Financial Officer, the Controller and the Treasurer. Our Code is available in the governance section of our website at www.bce.ca. |
18 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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2. |
A
majority of directors should be “unrelated” (independent
of management and free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere
with the director’s ability to act with a view to our best interests).
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The
board, on the recommendation of the CGC, is responsible for determining
whether or not each director is unrelated and independent. To achieve
this, the board analyses all of the relationships each director has
with BCE and its subsidiaries. To assist in this analysis, the
board adopted director independence standards. These standards are consistent
with the NYSE rules and are available in the governance section of our
website at www.bce.ca. In general, a director who meets these standards
and who does not otherwise have a material relationship with BCE would
be considered unrelated under the TSX guidelines and independent under
the NYSE rules.
Mr. Levitt and Mr. Tellier, who both make valuable contributions to the board, may again qualify as independent directors as defined under the NYSE rules beginning in 2006. At all times, a majority of the board will be unrelated under the TSX guidelines and independent under the NYSE rules. |
NYSE
RULES AND PROPOSED NP 58-201 The NYSE rules require, and proposed NP 58-201 recommends, that the majority of directors be independent. No director qualifies as independent unless the board determines that he or she has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Companies must disclose these determinations. However, certain prescribed relationships are deemed to be material.
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Bell Canada Enterprises Management proxy circular |
19 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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3. |
The board should appoint a committee of directors composed exclusively of non-management directors, a majority of whom are unrelated directors, with responsibility for proposing new nominees to the board and for assessing directors on an ongoing basis. |
The
Members of the CGC are all unrelated and independent directors. The
CGC proposes new candidates to be nominated for election or
appointment to the
board, and has developed qualifications and criteria to assist in the
selection process. |
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NYSE RULES AND PROPOSED NP 58-201
|
The CGC performs the functions of a nominating committee. The CGCs written charter addresses the minimum requirements of the NYSE rules as well as some of our additional corporate governance practices and certain recommendations of the proposed NP 58-201. You will find the complete text of the CGCs written charter in the governance section of our website at www.bce.ca.
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4. |
The board should implement a process, to be carried out by an appropriate committee, for assessing the effectiveness of the board, its committees and the contribution of individual directors. |
As part of
its charter, the CGC is required to conduct a survey every year of all
directors on the effectiveness and performance of the board
Chair, the board and the boards committees (including
their respective Chair), as well as individual directors. This includes
distributing a set of questionnaires to each director and usually includes
individual interviews with the board Chair and the
Chair of the CGC. |
20 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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5. |
We should provide, as an integral element of the process for appointing new directors, an orientation and education program for new directors. |
New directors are
given the opportunity to individually meet with members of senior management
to improve their understanding of our business. All directors have regular
access to senior management to discuss board presentations and other
matters of interest. |
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6. |
The board should examine its size and, with a view to determining the impact of number upon effectiveness, undertake where appropriate, a program to establish a board size which facilitates more effective decision-making. PROPOSED NP 58-201 |
The board aims to have:
Directors are chosen for their ability to contribute to the broad range
of issues that the board must deal with. The board reviews each directors
contribution through the CGC and determines whether the boards
size allows it to function efficiently and effectively. |
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7. |
The board should review the adequacy and form of compensation of directors in light of the risks and responsibilities involved in being an effective director. |
Each year,
the CGC reviews how directors are compensated for serving on the board
and its committees. It compares their compensation to that of similar
companies and recommends any changes to the board. |
Bell Canada Enterprises Management proxy circular |
21 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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8. |
Committees of the board should generally be composed of non-management directors, a majority of whom are unrelated. |
Each committee of the board consists only of non-management directors, all of whom are unrelated and independent with the exception of the members of the pension fund committee. |
|
NYSE RULES, CANADIAN RULES AND PROPOSED NP 58-201 The NYSE rules require, and proposed NP 58-201 recommends, that the compensation (the MRCC) and the nominating (the CGC) committees be composed only of independent directors. In addition, the NYSE rules and the Canadian rules require not only that the audit committee be composed only of independent directors, but also that audit committee members accept directly or indirectly no consulting, advisory or other compensatory fee (other than ordinary director fees) from BCE or any of its subsidiaries. |
None of the members of the audit committee has directly or indirectly accepted any consulting, advisory or other compensatory fee (other than ordinary director fees) from BCE or any of its subsidiaries. |
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9. |
The board should assume
responsibility for, or assign to a committee of directors responsibility
for, developing the approach to corporate governance issues. |
The CGC:
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10. |
The
board, together with the President and Chief Executive Officer, should
develop position descriptions for the board and for the Chief Executive
Officer, including the definition of the limits to managements
responsibilities. |
The
responsibilities of the board and of the President and Chief Executive
Officer are set out in our schedule of authorities. It also lists the
type and dollar limits of transactions that management may carry out
without prior approval from the board. Any corporate action that is
not specifically authorized, or that exceeds the dollar limits of authority
under the schedule, requires approval from the board. |
22 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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11. |
The board should have in place appropriate structures and procedures to ensure that it can function independently of management. An appropriate structure would be to:
Appropriate procedures may involve the board meeting on a regular basis without management present or may involve expressly assigning responsibility for administering the boards relationship to management to a committee of the board. |
The current Chair
of the board is not an executive officer of BCE or of our subsidiaries,
which we believe ensures that the board functions independently of management. |
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12. |
The audit committee should be composed only of non-management directors. The roles and responsibilities of the audit committee should be specifically defined so as to provide appropriate guidance to audit committee members as to their duties. The audit committee should have direct communication channels with the internal and external auditors to discuss and review specific issues as appropriate. The audit committee duties should include oversight responsibility for management reporting on internal controls. While it is managements responsibility to design and implement an effective system of internal controls, it is the audit committees responsibility to ensure that management has done so. |
The audit committee consists only of unrelated and independent directors. Its roles and responsibilities are set out in its written charter. The purpose of the audit committee is to assist the board in overseeing:
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NYSE
RULES AND CANADIAN RULES
In addition, the NYSE rules require that if an audit committee member serves simultaneously on the audit committee of more than three public companies, the board must determine and disclose that this simultaneous service does not impair the ability of that member to effectively serve on the audit committee of BCE. |
Mr. Bérard currently serves on the following public companies' audit committees: BCE Inc., Bombardier Inc., Noranda Inc. and Vasogen Inc. Mr. ONeill currently serves on the following public companies audit committees: BCE Inc. (Chair), Nexen Inc., Adecco, S.A., Loblaw Companies Limited and Dofasco Inc. The board therefore needs to make a determination as to whether such simultaneous service impairs their ability to effectively serve on the BCE audit committee. The board has carefully reviewed Mr. Bérards and Mr. ONeills involvement with other companies audit committees, and concluded that as both of them are retired and not involved in professional activities other than sitting on various public company boards and audit committees, these other activities do not impair their ability to effectively serve on BCEs audit committee. In addition, the experience of these two individuals serves the best interest of BCE and they make valuable contributions to the audit committee. |
Bell Canada Enterprises Management proxy circular |
23 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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RELATED
SEC RULES |
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SARBANES-OXLEY
ACT, RELATED SEC RULES AND CANADIAN RULES
|
The auditor
independence policy and the audit committees written charter govern
all aspects of BCEs relationship with the external auditors. The
audit committee is responsible for setting the policy, approving recommendations
for changes and making sure that management complies with it.
Please see audit committee report for more information. The auditor independence policy can be found in the governance section of our website at www.bce.ca. |
||
CANADIAN
RULES The Canadian rules will require, starting next year, certain specific information with respect to public companies audit committees to be disclosed in the Annual Information Form and to include in the management proxy circular a cross-reference to the sections of the Annual Information Form which contain the required disclosure. |
We are voluntarily providing this disclosure on our audit committee. See Schedule 1 of BCEs annual information form for the year ended December 31, 2004 (BCE 2004 AIF). The BCE 2004 AIF can be found in the Investors section of our website at www.bce.ca. | ||
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13. |
The board should implement a system to enable an individual director to engage an outside advisor, at our expense, in appropriate circumstances. The engagement of the outside advisor should be subject to the approval of an appropriate committee of the board.
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The board and each committee may hire outside advisors at our expense. Individual directors may also hire outside advisors if it is appropriate and the CGC approves it. |
24 |
Bell Canada Enterprises Management proxy circular |
Management resources and compensation committee report
The purpose of the MRCC is set forth in its written charter which is available in the governance section of our website at www.bce.ca. Under its charter, the MRCC assists the board in the:
INTERNAL CONTROL OVER FINANCIAL REPORTING
The audit committee has
the overall responsibility of providing reasonable assurance that BCEs
internal control systems are adequate and effective. It reviews the policies
in place, monitors compliance and approves recommendations for changes.
The audit committee also ensures that BCEs
processes for identifying and managing risks are adequate and that BCE complies
with its business ethics policies, including its conflict of interest policy
for officers. The Sarbanes-Oxley Act and related SEC rules require, as part
of the annual certifications discussed above, that the President and Chief Executive
Officer and the Chief Financial Officer certify that they have disclosed to
BCEs external auditor and to the audit committee:
The audit committee also oversees the requirements of the Sarbanes-Oxley Act and related SEC rules for the certification of BCEs internal control over financial reporting. These rules are scheduled to be applicable to BCEs 2006 annual report that will be filed in 2007. They require a management internal control report that contains:
BCE is on schedule to comply with these rules when they come into effect. In February 2005, the Canadian Securities Administrators issued for comments proposed rules on internal control over financial reporting which, if adopted, would be substantially similar to the Sarbanes-Oxley Act and related SEC rules.
Audit function
EXTERNAL AUDITOR
Deloitte & Touche LLP is the current external auditor.
The audit committee is responsible for recommending
to the board the appointment of the external auditor and its compensation. The
audit committee is directly responsible for:
AUDITOR INDEPENDENCE
POLICY
BCE's Auditor Independence Policy is a comprehensive policy governing all aspects
of BCEs relationship with the external auditor, including:
The
complete Auditor Independence Policy is available in the governance section
of BCEs website at www.bce.ca.
The following summary includes a breakdown of
fees for services provided in 2004 and 2003.
EXTERNAL AUDITORS
FEES
The table below shows the fees that Deloitte & Touche LLP billed to BCE and
its subsidiaries for various services for each year in the past two fiscal years.
2004 | 20031 | ||||||
|
|||||||
(millions) | |||||||
Audit fees | $ | 11.4 | $ | 13.3 | |||
Audit-related fees | $ | 3.1 | $ | 2.2 | |||
Tax fees | $ | 1.9 | $ | 2.6 | |||
Other fees | – | $ | 1.1 | ||||
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TOTAL | $ | 16.4 | $ | 19.2 | |||
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1 | Figures for 2003 have been restated to eliminate the fees paid by CGI Group Inc. in the calculation of our aggregate fees paid and reclassify translation services from Other fees to Audit fees so they can be compared to 2004 fees. |
Bell Canada Enterprises Management proxy circular |
13 |
Audit fees
These fees include professional services provided by
the external auditor for the review of the interim financial statements, statutory
audits of the annual financial statements, the review of prospectuses, consulting
on financial accounting and reporting standards, other regulatory audits and
filings and translation services.
Audit-related fees
These fees relate to non-statutory audits, Sarbanes-Oxley
Act initiatives, pension plan audits and consulting on prospective financial
accounting and reporting standards.
Tax fees
These fees include professional services for administering
our compliance with our conflict of interest policy, tax compliance, tax advice,
tax planning and advisory services relating to the preparation of corporate
tax, capital tax and commodity tax returns.
Since November 2004, we generally do not engage
the external auditor to perform tax planning and consulting services.
Other fees
These fees include professional services provided for
the redesign of product introduction and new applications for account management,
inventory programming, promotion and research processes. This work started in 2002
and was completed in early 2003.
In 2004, Deloitte & Touche LLP
has not been engaged to design any information system or provide implementation
services (IS/IT) or other consulting services to BCE or its subsidiaries.
INTERNAL AUDITOR
The audit committee also oversees the internal audit
function. This includes:
The senior vice-president, audit and risk management reports directly to the Chair of the audit committee.
COMPLAINT PROCEDURES
In early 2004, BCE implemented a policy
detailing procedures for:
BCEs
procedures for filing complaints on accounting and auditing matters is available
in the governance section of BCEs website at www.bce.ca.
In the fall of 2004, BCE launched an
innovative on-line web tool that allows all employees of BCE and its subsidiaries
to report questionable accounting and auditing practices in complete confidence.
This is in addition to the other means of communications available to our employees.
OTHER
The audit committee also reviews our risk management processes and compliance
with respect to our environmental policies.
The audit committee also carries out an annual
evaluation of its performance with the CGC, including a review of the adequacy
of its charter.
Finally, the audit committee reports regularly
to the board on its activities.
Report presented March 1, 2005 by:
T.C. ONeill,
Chair
A. Bérard
J. Maxwell
R.C. Pozen
V.L. Young
14 |
Bell Canada Enterprises Management proxy circular |
Corporate governance committee report
The purpose of the CGC
is set forth in its written charter which is available in the governance section
of BCEs website at www.bce.ca.
Under its charter, the CGC assists the board in:
About the corporate governance committee
The CGC is currently made
up of five unrelated and independent directors: Mrs. D. Soble Kaufman (Chair),
Mr. A.S. Fell, Mr. T.E. Kierans (who is not standing for election
at the meeting), the Honourable E.C. Lumley and Mr. J.H. McArthur. The
CGC communicates regularly and directly with BCEs officers. The CGC met
four times in 2004, including time without management, as appropriate.
Under its charter, the CGC reviewed and reported,
or made recommendations, to the board on the following matters in 2004
and up to the date of this management proxy circular:
The
CGC also carries out an annual evaluation of its performance with the board,
including the review of the adequacy of each committees charter.
Finally, the CGC reports regularly to the board
on its activities.
Directors attendance record
In 2004, there were 12 board meetings and 20 committee meetings. Each director attended at least 86% of the combined meetings of the board and the committees he or she served on. The overall combined attendance by BCEs directors at both board and committee meetings was over 96%.
Report presented March 2, 2005 by:
D. Soble Kaufman, Chair
A.S. Fell
T.E. Kierans
The Honourable E.C. Lumley
J.H. McArthur
Bell Canada Enterprises Management proxy circular |
15 |
Statement of corporate governance practices
The board and management
believe that good corporate governance practices can help create and maintain
shareholder value. As a result, we seek to attain high standards of corporate
governance.
Following the CGCs careful review, the board
has examined our corporate governance practices and concluded that we comply
with, and in some cases exceed, the TSX guidelines for corporate governance.
The CGC and the board have also been reviewing our corporate governance practices
against the Sarbanes-Oxley Act, related SEC rules, NYSE rules and Canadian rules
relating to audit committees and certification of financial statements, as well
as other initiatives in this area. Although we are not required to comply with
most of the NYSE rules, our governance practices generally comply with them.
You will find a summary of the differences between our governance practices
and the NYSE rules in the governance section of our website at www.bce.ca.
In October 2004, the Canadian Securities
Administrators republished the proposed NP 58-201 for comments, which policy
details best practices relating to corporate governance standards. It is anticipated
that once the proposed policy is implemented, the TSX will withdraw its current
corporate governance guidelines. The proposed policy is in many ways similar
to the NYSE rules with which BCE already complies on a voluntary basis.
Although they are not in effect, we already meet most of the best practices
under the proposed policy and we will take additional actions as required so
that we meet all of them when they become final and effective.
As
new regulations come into effect, the CGC and the board will continue to review
our corporate governance practices and make any appropriate changes.
How we are meeting the TSX guidelines
We fully align with all of the TSX guidelines. The table below lists the TSX guidelines and tells you how we are meeting each one. In some cases, it also lists certain requirements under the Sarbanes-Oxley Act, related SEC rules, NYSE rules, Canadian rules and proposed NP 58-201, which may differ from the TSX guidelines.
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
|
|
|||
1. |
The board should explicitly assume responsibility for our stewardship. | The board has overall responsibility for managing and supervising our business in BCEs best interests. In doing so, the board acts in accordance with:
You will find the Bell Canada Enterprises Code of Business Conduct and charters of the board committees in the governance section of our website at www.bce.ca. The board approves all significant decisions, including:
The board also has procedures for:
|
16 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
|
|
|||
And, as part of its overall stewardship responsibility, the board should assume responsibility for: | |||
(a) |
the adoption of a strategic planning process | The
board approves our overall strategic direction and objectives during a
key planning session. This session is held once a year, usually in November,
at the same time that the business plan and budget are approved for the
following year. |
|
|
(b) |
the identification of the principal risks of the business and ensuring implementation of appropriate systems to manage these risks | The audit committee reviews, reports and makes recommendations to the board on the processes for identifying and managing BCEs principal risks. These include risk management policies, internal control procedures and standards relating to risk management. The audit committee makes sure that these policies are implemented and reviewed regularly. |
|
|
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(c) |
succession planning, including appointing, training and monitoring senior management |
As part of its responsibilities, the board focuses on the integrity, quality, and continuity of management needed to achieve our corporate goals. The MRCC regularly reviews and reports to the board on:
|
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(d) |
our communications policy |
The
board periodically approves communications plans for communicating with
shareholders, employees, financial analysts, governments and regulatory
authorities, the media and the Canadian and international communities. |
Bell Canada Enterprises Management proxy circular |
17 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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(d) |
our communications policy (cont'd) | the
board by contacting the Corporate Secretarys Office at corporate.secretariat@bell.ca
or 514-786-3891. All communications received
are carefully reviewed and forwarded to appropriate board members.
We also have detailed information about our business on our
website at www.bce.ca. |
|
|
|||
(e) |
the integrity of our internal control and management information systems. | As a public company, we are required to have an audit committee. The audit committee assesses whether BCEs internal controls are adequate and effective by:
It also makes sure that we have processes for identifying and managing
risks. This includes making sure that we comply with our conflict of interest
policy.
As described in the audit committee report, BCE established a financial
controls project to make sure that we comply with these new regulations. |
|
SEC
RULES The SEC rules require disclosure on whether or not and, if not, the reasons why, a company has adopted a code of ethics for the principal executive officer and senior financial officers, applicable to the Chief Executive Officer, Chief Financial Officer, Controller and Treasurer. |
All of our employees, directors and officers must follow the Bell Canada Enterprises Code of Business Conduct, which provides guidelines for ethical behaviour. The Bell Canada Enterprises Code of Business Conduct includes additional guidelines for the President and Chief Executive Officer, the Chief Financial Officer, the Controller and the Treasurer. Our Code is available in the governance section of our website at www.bce.ca. |
18 |
Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
|
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2. |
A
majority of directors should be “unrelated” (independent of
management and free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere
with the director’s ability to act with a view to our best interests).
|
|
The board, on the recommendation
of the CGC, is responsible for determining whether or not each director
is unrelated and independent. To achieve this, the board analyses all
of the relationships each director has with BCE and its subsidiaries.
To assist in this analysis, the board adopted director independence standards.
These standards are consistent with the NYSE rules and are available in
the governance section of our website at www.bce.ca. In general, a director
who meets these standards and who does not otherwise have a material relationship
with BCE would be considered unrelated under the TSX guidelines and
independent under the NYSE rules.
Mr. Levitt and Mr. Tellier, who both make valuable contributions to the board, may again qualify as independent directors as defined under the NYSE rules beginning in 2006. At all times, a majority of the board will be unrelated under the TSX guidelines and independent under the NYSE rules. |
NYSE
RULES AND PROPOSED NP 58-201 The NYSE rules require, and proposed NP 58-201 recommends, that the majority of directors be independent. No director qualifies as independent unless the board determines that he or she has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Companies must disclose these determinations. However, certain prescribed relationships are deemed to be material.
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Bell Canada Enterprises Management proxy circular |
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TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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3. |
The board should appoint a committee of directors composed exclusively of non-management directors, a majority of whom are unrelated directors, with responsibility for proposing new nominees to the board and for assessing directors on an ongoing basis. |
The
Members of the CGC are all unrelated and independent directors. The CGC
proposes new candidates to be nominated for election or appointment
to the board, and has developed qualifications and criteria to assist
in the selection process. |
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NYSE RULES AND
PROPOSED NP 58-201
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The CGC performs the functions of a nominating committee. The CGCs written charter addresses the minimum requirements of the NYSE rules as well as some of our additional corporate governance practices and certain recommendations of the proposed NP 58-201. You will find the complete text of the CGCs written charter in the governance section of our website at www.bce.ca.
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4. |
The board should implement a process, to be carried out by an appropriate committee, for assessing the effectiveness of the board, its committees and the contribution of individual directors. |
As
part of its charter, the CGC is required to conduct a survey every year
of all directors on the effectiveness and performance of the board
Chair, the board and
the boards committees (including their respective Chair), as well
as individual directors. This includes distributing a set of questionnaires
to each director and usually includes individual interviews with the board
Chair and the Chair
of the CGC. |
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Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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5. |
We should provide, as an integral element of the process for appointing new directors, an orientation and education program for new directors. |
New directors are given
the opportunity to individually meet with members of senior management
to improve their understanding of our business. All directors have regular
access to senior management to discuss board presentations and other matters
of interest. |
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6. |
The board should examine its size and, with a view to determining the impact of number upon effectiveness, undertake where appropriate, a program to establish a board size which facilitates more effective decision-making. PROPOSED NP 58-201 |
The board aims to have:
Directors are chosen for their ability to contribute to the broad range
of issues that the board must deal with. The board reviews each directors
contribution through the CGC and determines whether the boards size
allows it to function efficiently and effectively. |
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7. |
The board should review the adequacy and form of compensation of directors in light of the risks and responsibilities involved in being an effective director. |
Each
year, the CGC reviews how directors are compensated for serving on the
board and its committees. It compares their compensation to that of similar
companies and recommends any changes to the board. |
Bell Canada Enterprises Management proxy circular |
21 |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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8. |
Committees of the board should generally be composed of non-management directors, a majority of whom are unrelated. |
Each committee of the board consists only of non-management directors, all of whom are unrelated and independent with the exception of the members of the pension fund committee. |
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NYSE RULES, CANADIAN RULES AND PROPOSED NP 58-201 The NYSE rules require, and proposed NP 58-201 recommends, that the compensation (the MRCC) and the nominating (the CGC) committees be composed only of independent directors. In addition, the NYSE rules and the Canadian rules require not only that the audit committee be composed only of independent directors, but also that audit committee members accept directly or indirectly no consulting, advisory or other compensatory fee (other than ordinary director fees) from BCE or any of its subsidiaries. |
None of the members of the audit committee has directly or indirectly accepted any consulting, advisory or other compensatory fee (other than ordinary director fees) from BCE or any of its subsidiaries. |
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9. |
The board should assume
responsibility for, or assign to a committee of directors responsibility
for, developing the approach to corporate governance issues. |
The CGC:
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10. |
The
board, together with the President and Chief Executive Officer, should
develop position descriptions for the board and for the Chief Executive
Officer, including the definition of the limits to managements responsibilities. |
The responsibilities
of the board and of the President and Chief Executive Officer are set
out in our schedule of authorities. It also lists the type and dollar
limits of transactions that management may carry out without prior approval
from the board. Any corporate action that is not specifically authorized,
or that exceeds the dollar limits of authority under the schedule, requires
approval from the board. |
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Bell Canada Enterprises Management proxy circular |
TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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11. |
The board should have in place appropriate structures and procedures to ensure that it can function independently of management. An appropriate structure would be to:
Appropriate procedures may involve the board meeting on a regular basis without management present or may involve expressly assigning responsibility for administering the boards relationship to management to a committee of the board. |
The current Chair of
the board is not an executive officer of BCE or of our subsidiaries,
which we believe ensures that the board functions independently of management. |
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12. |
The audit committee should be composed only of non-management directors. The roles and responsibilities of the audit committee should be specifically defined so as to provide appropriate guidance to audit committee members as to their duties. The audit committee should have direct communication channels with the internal and external auditors to discuss and review specific issues as appropriate. The audit committee duties should include oversight responsibility for management reporting on internal controls. While it is managements responsibility to design and implement an effective system of internal controls, it is the audit committees responsibility to ensure that management has done so. |
The audit committee consists only of unrelated and independent directors. Its roles and responsibilities are set out in its written charter. The purpose of the audit committee is to assist the board in overseeing:
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NYSE RULES AND
CANADIAN RULES
In addition, the NYSE rules require that if an audit committee member serves simultaneously on the audit committee of more than three public companies, the board must determine and disclose that this simultaneous service does not impair the ability of that member to effectively serve on the audit committee of BCE. |
Mr. Bérard currently serves on the following public companies' audit committees: BCE Inc., Bombardier Inc., Noranda Inc. and Vasogen Inc. Mr. ONeill currently serves on the following public companies audit committees: BCE Inc. (Chair), Nexen Inc., Adecco, S.A., Loblaw Companies Limited and Dofasco Inc. The board therefore needs to make a determination as to whether such simultaneous service impairs their ability to effectively serve on the BCE audit committee. The board has carefully reviewed Mr. Bérards and Mr. ONeills involvement with other companies audit committees, and concluded that as both of them are retired and not involved in professional activities other than sitting on various public company boards and audit committees, these other activities do not impair their ability to effectively serve on BCEs audit committee. In addition, the experience of these two individuals serves the best interest of BCE and they make valuable contributions to the audit committee. |
Bell Canada Enterprises Management proxy circular |
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TSX GUIDELINE |
ALIGNED |
OUR CORPORATE GOVERNANCE PRACTICES |
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RELATED SEC RULES
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SARBANES-OXLEY
ACT, RELATED SEC RULES AND CANADIAN RULES
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The auditor independence policy and the audit committees written
charter govern all aspects of BCEs relationship with the external
auditors. The audit committee is responsible for setting the policy, approving
recommendations for changes and making sure that management complies with
it.
Please see audit committee report for more information. The auditor independence policy can be found in the governance section of our website at www.bce.ca. |
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CANADIAN
RULES The Canadian rules will require, starting next year, certain specific information with respect to public companies audit committees to be disclosed in the Annual Information Form and to include in the management proxy circular a cross-reference to the sections of the Annual Information Form which contain the required disclosure. |
We are voluntarily providing this disclosure on our audit committee. See Schedule 1 of BCEs annual information form for the year ended December 31, 2004 (BCE 2004 AIF). The BCE 2004 AIF can be found in the Investors section of our website at www.bce.ca. | ||
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13. |
The board should implement a system to enable an individual director to engage an outside advisor, at our expense, in appropriate circumstances. The engagement of the outside advisor should be subject to the approval of an appropriate committee of the board.
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The board and each committee may hire outside advisors at our expense. Individual directors may also hire outside advisors if it is appropriate and the CGC approves it. |
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Bell Canada Enterprises Management proxy circular |
Management resources and compensation committee report
The purpose of the MRCC is set forth in its written charter which is available in the governance section of our website at www.bce.ca. Under its charter, the MRCC assists the board in the:
About the management resources and compensation committee
The MRCC
met five times in 2004, including time without management, as appropriate.
The MRCC communicates regularly and directly with BCE’s
officers.
The MRCC reviewed and reported or
made recommendations to the board on the following items in 2004 and up
to the date of this management proxy circular:
Directors compensation
BCEs objective is to ensure that the membership of our board is of the highest quality, with an extensive and relevant breadth of experience. As a result, the directors compensation program is designed to attract and retain high quality individuals to serve on the board and its committees and to align the interests of directors with those of BCEs shareholders. BCEs objective is to provide adequate compensation in light of the risks and responsibilities of being an effective director. The board sets the compensation of non-management directors based on the CGCs recommendations. Any director who is also an employee of BCE, or any of its subsidiaries, does not receive any compensation as a director.
CASH COMPENSATION
Directors receive annual fees and do not receive additional retainers or attendance fees. The table below shows the annual fee for each position. The fees are paid quarterly.
POSITION | ANNUAL FEE |
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Non-management directors who live in Canada and future directors who live outside of Canada | $150,000 |
Two non-management directors who live outside of Canada and who were members of the board when the annual flat fee arrangement was approved in November 2002 (Mr. J.H. McArthur and Mr. R.C. Pozen) | US$150,000 |
Chair of the board, who also currently serves as Chair of the board of Bell Canada with no additional compensation | $300,000 |
Chair of the audit committee, who also currently serves as Chair of Bell Canadas audit committee with no additional compensation | $225,000 |
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Bell Canada Enterprises Management proxy circular |
25 |
Directors share unit plan
The Share
unit plan for non-employee directors (1997) serves to
more closely link the interests of the non-management directors to those of
BCEs shareholders.
Each non-management director receives
his or her compensation in the form of share units. One share unit is equal
in value to one BCE common share and each director accumulates share units
until he or she reaches the minimum share ownership requirement of 10,000 BCE common
shares or share units. Once the director reaches this minimum requirement, he
or she can choose how much, if any, of his or her compensation will be paid
in share units.
Each director has an account where
share units are credited and held until the director leaves the board. The number
of share units credited to each directors account is calculated by dividing
the amount of the payment by the BCE common share price on the day the
credit is made.
Holders of share units are credited
additional units that are equal to the dividends on BCEs common shares.
Additional share units are credited to each non-management directors account
on each dividend payment date. The number of share units is calculated using
the same rate as the dividends paid on BCE common shares.
When a director retires from the
board, BCE will buy the same number of BCE common shares on the open
market as the number of share units the director holds in the plan, after deducting
the appropriate tax. These shares are then delivered to the former director.
Compensation of directors of subsidiary boards
BCEs non-management
directors are also directors of some of its subsidiaries. The flat fee discussed
above (see Cash
compensation) also compensates non-management directors
for their services as directors of subsidiaries whose common shares are not
publicly traded, such as Bell Canada. As a result, only those directors
who sit on boards of subsidiaries whose common shares are publicly traded (public
subsidiaries) receive additional compensation.
During all or part of 2004,
the non-management directors who served as directors of public subsidiaries
of BCE at the time were:
These directors received regular director fees from these companies according to their rates for non-management directors. The following table shows the compensation these companies paid to these directors during their terms as directors in 2004.
ALIANT INC. | EMERGIS INC. | ||||||
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Annual retainer 1 | |||||||
board |
$35,000 | $20,000 | |||||
committees |
$3,000 | $1,000 | |||||
Attendance fees | |||||||
board |
$1,500 | $1,000 | |||||
committees |
$1,500 | $1,000 | 2 | ||||
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1 | All or part of the annual retainer and fees may have been paid in share units under share unit plans of Aliant Inc. or Emergis Inc. |
2 | The fee for attending an audit committee meeting of Emergis Inc. was $1,500. |
Minimum share ownership requirement
Non-management directors
must own at least 10,000 BCE common shares or share units. They must meet
this requirement within five years of being elected to the board or November 26, 2002
(when this requirement was adopted), whichever is later.
The board believes that the current
share ownership requirement continues to effectively link the interests of the
non-management directors to those of the shareholders.
Executive officers compensation
REPORT ON EXECUTIVE COMPENSATION
The executive compensation policy is designed to attract, motivate
and retain the executive officers needed to achieve and surpass BCEs corporate
objectives and to build a company that leads the industry in terms of operational
performance and creation of value for our shareholders.
Our compensation philosophy is to
offer total compensation that is competitive in the marketplace. To complement
this market positioning, we also ensure (for internal equity) that the compensation
of each position fairly reflects the responsibilities of that position compared
to other positions at BCE.
A substantial portion of every executive
officers cash compensation each year is based on meeting annual corporate
performance objectives. In addition, BCE has in place mid-term and long-term
incentive programs. These are mainly in the form of restricted share units and
stock options that are designed to:
We
periodically review our executive compensation policy to make sure that it continues
to meet our objectives. This review also includes a specific review of the compensation
of the President and Chief Executive Officer and of the executive officers.
In this document, executive officers whose compensation is disclosed in the
Summary compensation table are referred to as the named executive
officers.
In 2003, in light of the evolving internal
and external environments, we conducted a comprehensive review of our executive
com-
26 |
Bell Canada Enterprises Management proxy circular |
pensation policy. Following this review, we recommended changes to the compensation policy which were approved by the board in November 2003. The changes to the compensation policy were introduced early in 2004, creating an even stronger link between executive compensation and BCEs mid-term and long-term operational and financial success. These changes are highlighted throughout this report.
TOTAL COMPENSATION
In 2004, total compensation consisted of:
As
part of the revised compensation policy introduced in 2004, the positioning
of total compensation was increased from the 50th percentile to the 60th percentile
of compensation paid by the group of companies that BCE compares itself
against (comparator group). Paying at the 60th percentile of the comparator
group means that 40% of the companies in the comparator group pay more than
BCE and 60% pay less for similar positions. This allows BCE to attract
and retain high-performing executives.
Base salary remains positioned at
the 50th percentile (median), while the annual short-term incentive was increased
from the median to the 75th percentile. This further reinforces the importance
of meeting annual financial targets. The other components of total compensation
are used to bring overall compensation of the various executive officers to
the 60th percentile. This reflects our objective to put more emphasis on pay
for performance.
Starting in 2004, we reduced
the value of the long-term incentive plans under which stock options are granted
to account for the introduction of a new mid-term incentive plan under which
Restricted Share Units (RSUs) are granted. We also introduced performance vesting
for stock options granted in 2004. For more information on key features
of these plans, see Mid-term incentive plan and Long-term incentives.
We did not assign specific weightings
to any element of the total compensation other than the positioning of base
salary, short-term incentive and total compensation value to the market.
The comparator group for 2004
consists of 43 publicly traded Canadian and U.S. companies. The companies in
the comparator group were selected based on one or more of the following criteria:
telecommunications/high technology, strategic use of technology, most admired
companies and revenues. This is the same comparator group that was used in 2003.
Please see Other compensation
information Executive compensation table for more information on
compensation paid to the named executive officers over the past three years.
BASE SALARY
We determine the base salary of each executive officer within a salary range
to reflect individual performance and responsibilities related to the position.
The mid-point of the salary range corresponds to the median of the comparator
group for similar positions. The minimum for the salary range is 20% below the
mid-point and the maximum is 20% above.
ANNUAL SHORT-TERM INCENTIVE
AWARDS
The short-term incentive program is designed to support the achievement
of corporate objectives and reward executive officers based on BCEs success.
To recognize the increased focus of BCEs senior executives on Bell Canada,
BCEs core asset, we decided that all short-term incentive awards for executive
officers would have their corporate performance factor based on Bell Canadas
results. In 2004, the following components of Bell Canadas
performance were used for setting short-term incentive awards:
This
resulted in a Bell Canada corporate performance factor of 59%. EBITDA targets
set for executives were more aggressive than targets set for non executive employees.
We determine the annual short-term
incentive awards by taking both the corporate performance and the executive
officers individual contribution into consideration.
In 2004, the individual contribution
was evaluated based on the achievement of objectives (results) and demonstration
of leadership behaviour required to drive BCEs success (leadership attributes).
The individual performance factor may vary between 0 and 200%.
Each year, we set target values for
the awards. In 2004 the target awards ranged from 40% of base salary for
the lowest eligible officers position to 125% of base salary for the President
and Chief Executive Officer. The lowest target for the named executive officers
was 75% of base salary.
On the basis of the above factors,
we determine the size of the annual short-term incentive awards. Awards are
calculated based on the product of the target award, the corporate performance
factor and the individual performance factor. The maximum payout is two times
the target award. In most cases, awards granted for a year are paid at the beginning
of the following year.
1 | The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and is therefore unlikely to be comparable to similar measures presented by other issuers. We define it as operating revenues less operating expenses, which means it represents operating income before amortization expense, net benefit plans credit (cost) and restructuring and other charges. EBITDA should not be confused with net cash flows from operating activities. The most comparable Canadian GAAP earnings measure is operating income. |
2 | Represents the total value of products and services sold. |
3 | For 2004, Bell Canada determined a Customer Value Index (CVI) by conducting telephone interviews every month with customers of all its business units. To determine the CVI, customers rank Bell Canada value using a 10 point scale ranging from very high (10) to very low (1). Performance is determined by the percentage of survey participants who give Bell Canada positive response (a score of 7 or more). |
Bell Canada Enterprises Management proxy circular |
27 |
Executive
officers who are eligible to participate in the BCE share unit plan for
senior executives and other key employees (1997) (deferred share unit plan)
or in the employees profit sharing plan can choose to have up to 100%
of their annual short-term incentive award paid in deferred share units (DSUs)
under the deferred share unit plan or contributed to the employees profit
sharing plan. They must decide how they wish to receive their award by the end
of the year in which the award is earned. Please see Deferred share unit
plan for more information. Executive officers who choose to have their incentive
awards contributed to the employees profit sharing plan will be taxed
for the year the contribution was made. Taxes will need to be paid by the time
they file their income tax return for that year.
Awards in the form of DSUs can be used as a means
to achieve mandatory share ownership levels described under Share ownership
requirements.
MID-TERM INCENTIVE PLAN
We may grant to BCE executive
officers and other key employees, and those of certain of BCEs subsidiaries,
restricted share units (RSUs). The RSU plan is designed to more closely link
the compensation of the executives with the achievement of operating objectives
that are key in supporting the overall business strategy.
RSUs are granted for a given performance period
based on position and level of contribution.
At any time, the value of one RSU is equal to
the value of one BCE common share. RSUs vest according to the vesting schedule
relating to the performance period for the award. Under the vesting schedule,
RSUs vest over time, provided operating objectives are met. RSUs that are granted
during a given performance period will be subject to the same vesting rules
and operating objectives attached to the performance period.
Dividend equivalents in the form of additional
RSUs are credited to the participants account on each dividend payment
date and are equal in value to the dividend paid on BCE common shares.
These additional RSUs are subject to the same vesting schedule that applied
to the original grant of RSUs.
At the end of the performance period, we assess
the actual performance against pre-set objectives to determine the percentage
of RSUs that will become vested (vesting percentage). RSUs become vested on
the date the board confirms the vesting percentage. All unvested RSUs as of
that date are forfeited. If an employee participating in the plan is terminated,
he or she must have participated in at least half of the performance period
to be entitled to receive his or her vested RSUs.
Participants may choose to receive their payment
of RSUs in cash, in BCE common shares, or a combination of both. We may,
however, determine that all or a portion of a participants RSUs is to
be paid out in BCE common shares if he or she has not met the minimum share
ownership requirements described under Share ownership requirements.
Payment in cash is calculated based on the number of vested RSUs in the participants
account (after withholding taxes and any other deductions) times the percentage
chosen for payment in cash times the market value of a BCE common share
on the day before the board confirms the vesting percentage. For payment in
BCE shares, BCE will buy a number of BCE shares on the open market
equal to the number of vested RSUs chosen to be taken in BCE common shares
less withholding taxes and any other deductions.
For more information on the vesting schedule of
the RSUs granted for the two-year performance period from January 1, 2004
to December 31, 2005 (2004-2005 RSUs), see the table under Other
compensation information Mid-term incentive plan.
LONG-TERM INCENTIVES
STOCK
OPTIONS
We may grant to BCE executive officers
and other key employees as well as those of certain BCE subsidiaries, options
to buy BCE common shares under stock option plans.1
Under
the BCE Inc. Long-Term Incentive (Stock Option) Program (1999), not more
than 50% of the BCE common shares covered by options under the plan may
be granted to insiders (as defined in the Plan) who participate in it. We may
recommend special grants of stock options to recognize specific achievements
or, in some cases, to retain or motivate executive officers and key employees.
We may also determine, within the parameters of the stock option plans (see
Amendments section)
and subject to board approval, the terms and conditions of each grant. The number
of outstanding options held by an employee is not taken into account when determining
if and how many new options are awarded to him or her.
The exercise price is the price at which a common
share may be purchased when an option is exercised. The exercise price2
is at least equal to the market value of a BCE common share on the day
before the grant goes into effect, except under certain circumstances. However,
we may set a higher exercise price when we grant the option. Or, we may set
a lower exercise price to maintain the economic position of the option holder.
This may only be the case when an option to acquire shares of one of BCEs
subsidiaries or of a company that BCE is acquiring is converted into an
option to acquire BCE common shares. The lower price would be subject to
any required regulatory approval.
In 2004,
as part of our new compensation policy, we decided to reduce the use of stock
options that vest solely over time (time vesting options) and introduced a performance
component to the vesting schedule of options granted. We also determined that
these options would be Front-loaded meaning that options are granted at the
beginning of a performance period or later in the period when someone is hired
or promoted, for the entire performance period.
1 | Three (3) stock option plans are in place: the BCE Inc. Long-Term Incentive (Stock Option) Program (1985), the BCE Inc. Long-Term Incentive (Stock Option) Program (1999) and the BCE Inc. Replacement Stock Option Plan (Plan of Arrangement 2000). All such plans are substantially similar in their terms and, unless specifically noted where material differences exist, this section refers to the terms of the 1999 Stock Option Program. |
2 | In the BCE Inc. Replacement Stock Option (Plan of Arrangement 2000), the exercise price was set in direct relation to the value of the optionee’s existing options immediately prior to the effective date of the 2000 Arrangement and this was in connection with the spin-off of Nortel by BCE in 2000. |
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Bell Canada Enterprises Management proxy circular |
Performance vesting options granted
in 2004 have a performance period of January 1, 2004 to December
31, 2006 and are called the 2004-2006 Front-loaded options.
The 2004-2006 Front-loaded options1
were granted to all executives in 2004 in lieu of annual grants of time
vesting options.
Under the terms of our stock option plans, the
right to exercise an option accrues or vests by 25% a year for four
years from the day of grant, unless we determine otherwise. In 2004, we
determined that the vesting of the 2004-2006 Front-loaded options
would be based on a combination of time and performance. The performance
condition will be achieved if the BCE total shareholder return (BCE TSR)
meets or exceeds the median total shareholder return (median TSR) of a group
of 12 Canadian and U.S. publicly traded telecommunications companies. Subject
to meeting the performance goal, 50% of the stock options will vest at the end
of 2005 and 100% will vest at the end of 2006. For more information
on the vesting schedule of 2004-2006 Front-loaded options, see the tables
under Other compensation information Stock options. Vesting can
be accelerated in certain circumstances if there is a change of control of BCE or
of a subsidiary as described under Change of control.
The stock option plans provide that the term of
any option may not exceed 10 years from the day it is granted. The term of the 2004-2006
Front-loaded options is six years. If the option holder retires, leaves the
BCE group of companies, dies, or the company he or she works for is no
longer part of the BCE group of companies, the term may be reduced according
to the stock option plan under which it was granted or if we use our discretionary
authority under the relevant plan as described under Amendments.
Option holders will lose all of their unexercised
options granted after 2001 if they engage in prohibited behaviour after
they leave the BCE group of companies. This includes using BCEs confidential
information for the benefit of another employer. In addition, the option holder
must reimburse BCE the after-tax profit realized on exercising any options
during the twelve-month period preceding the date on which the unfair employment
practice began.
Prior to November 1999, some options were
granted with related rights to special compensation payments (SCPs). SCPs are
cash payments equal to the excess of the market value of the shares on the day
of exercise of the related option over the exercise price of the option. SCPs,
if any, are attached to options and are triggered when the options are exercised.
Effective January 1, 2003, BCE adopted
the fair value method of accounting for stock option compensation on a prospective
basis. Options are not assignable by the optionee, except to the optionees
estate upon the optionees death.
Change of control of BCE
In 1999, we introduced special vesting provisions that will apply if there is
a change of control. A change of control of BCE occurs when:
If there is a change of control of BCE and the option holders employment is terminated within 18 months of the change of control for a reason other than for cause or if the option holder terminates his employment for good reason, his or her unvested options can be exercised for a period of 90 days from the date of termination, or for a longer period that we may determine.
Change of control or partial change
of control of Bell Canada or a designated entity
Unvested options of an option holder who is employed in one of BCEs
business units, such as Bell Canada or another subsidiary that we identify
as a designated business unit, will become exercisable if:
The option
holder has up to 90 days from that day, or longer if we so determine, to exercise
the options.
If BCEs interest in a designated business
unit falls below 20%, option holders who are employed in that business unit
may exercise all of their unvested options effective upon the earlier of:
The option holder has up to 90 days from that day, or longer if we so determine, to exercise the options.
Termination clauses
The following provisions for early termination apply to stock options, unless
we have, for specific circumstances, determined otherwise either at the time
an option is granted or later, based on our discretionary authority under the
relevant stock option plan. See Amendments for more information.
All non-vested options are forfeited when an employee
ceases to be employed by BCE or an applicable subsidiary. Participants
have 30 days following their termination date (without exceeding the original
option period) to exercise their vested options. At the end of the 30-day period
or, as of the expiry date, all outstanding options are forfeited. The same provisions
apply when someone dies except that the estate has 12 months instead of 30 days
to exercise all vested options (without exceeding the original expiry date).
When an employee retires, options granted after
September 2000 continue to vest for three years after retirement. Participants
have three years following their retirement date (without exceeding the original
expiry date) to exercise their vested options. At the end of the
1 Such grants were made under the BCE Inc. Long-Term Incentive (Stock Option) Program (1999).
Bell Canada Enterprises Management proxy circular |
29 |
three-year period or, on the original
expiry date if it is earlier, all outstanding options are forfeited.
For options granted before September 2000
which are already vested, participants have five years following their retirement
date (without exceeding the original expiry date) to exercise their vested options.
At the end of the five-year period or on the original expiry date if it is earlier,
all outstanding options are forfeited.
We have determined that the termination provisions
applicable to the 2004-2006 Front-loaded options will be as follows:
If an employee ceases to be employed before January 1, 2006,
all options are forfeited on the date employment is terminated. If an employee
ceases to be employed in 2006, vested options on the termination date can
be exercised within 30 days. Unvested options are forfeited. If an employee
ceases to be employed in 2006 and the vesting percentage established at the
end of 2005 is 0%, 25% of the participants options will vest at the
end of 2006 if the performance goal is met. The participants will have
30 days after the date the board confirms the vesting percentage to exercise
vested options. Unvested options are forfeited. The same provisions apply if
someone dies except that the estate has 12 months to exercise vested options.
At the end of this period, all outstanding options are forfeited.
If retirement occurs in 2004, two-thirds
of the options are forfeited. If retirement occurs in 2005, one-third of
the options are forfeited. No options are forfeited if retirement occurs in 2006.
Options that are not forfeited upon retirement continue to vest for three years
after the retirement date according to the vesting schedule. Participants have
three years following their retirement date (without exceeding the original
expiry date) to exercise their vested options. At the end of this period or,
on the original expiry date if it is earlier, all outstanding options are forfeited.
Amendments
Under the discretionary authority granted
to our committee in the relevant stock options plans,1
we may use such authority to depart
from standard vesting provisions, exercise schedules or termination provisions
at the time of grant of new options or later on with respect to any outstanding
option, without shareholder approval. We may not, without shareholder approval,
extend the term of any option beyond 10 years from the original date of grant.
Our committee
is also authorized to interpret the rules of the plans and effect non-material
amendments including those of a housekeeping nature to the plans, without shareholder
approval.
DEFERRED SHARE UNIT PLAN
The deferred share unit plan is designed to more closely link the interests
of the executive officers to those of the shareholders. Deferred share units
(DSUs) may be awarded to certain executive officers and other key employees
and those of certain subsidiaries.
DSUs have the same value as BCE common shares.
The number and terms of outstanding DSUs are not taken into account when determining
if DSUs will be awarded and how many DSUs will be awarded under the plan. DSUs
vest immediately.
Dividend equivalents in the form of additional
DSUs are credited to the participants account on each dividend payment
date and are equal in value to dividends paid on BCE common shares.
Eligible executive officers can choose to have
up to 100% of their annual short-term incentive award paid in DSUs instead of
cash. The award is converted into DSUs based on the market value of a BCE common
share on the day before the award goes into effect. These DSUs count towards
the minimum share ownership requirements, which are described under Share
ownership requirements.
We may also grant special awards of DSUs to recognize
outstanding achievements or for reaching certain corporate objectives.
Holders of DSUs may not redeem their DSUs while
they are employed by a company of the BCE group. Once they leave the BCE group,
BCE will buy a number of BCE common shares on the open market equal
to the number of DSUs a participant holds in the plan, after deductions for
applicable taxes. These shares are then delivered to the former employee.
SHARE OWNERSHIP REQUIREMENTS
BCE believes in the importance of substantial share ownership and has compensation
programs designed to encourage share ownership by executive officers. A minimum
share ownership level has been set for each position as a percentage of annual
base salary:
These
officers must meet their target within five years (5-year target) with the objective
that 50% of their target will be reached within 3 years (3-year target). The
5-year target must be reached by April 2006, or within five years of when
they were hired or promoted if it was after April 1, 2001. Share ownership
requirements also apply to all Vice-Presidents with a target of 100% of annual
base salary.
Shares or DSUs received under the following programs
can be used to reach the minimum share ownership level:
As part of our new compensation policy, concrete measures are taken if the 3-year target or the 5-year target is missed. These measures include, but are not limited to, the payment of a portion of the short-term annual incentive award in DSUs and, when BCE stock options are exercised, the requirement to hold BCE common shares having a market value equal to a portion of the net financial gain resulting from the exercise. These measures remain in effect until the target is reached.
1 See footnote 1 on page 28.
30 |
Bell Canada Enterprises Management proxy circular |
CHIEF EXECUTIVE OFFICERS COMPENSATION
When Mr. Sabia was appointed President and Chief Executive Officer in 2002,
he asked that his current and future base salary and incentive compensation
be adjusted to place more weight on variable (at risk) compensation. As a result,
we reduced the mid-point of the salary range for the Chief Executive Officer
from the median of the comparator group to 90% of that value. At the same time,
we increased the target value of the annual short-term incentive from 100% to
125% of base salary to preserve the alignment of the total cash compensation.
We determined, based on Mr. Sabias
request, to keep his annual salary for 2004 at $1 million, which is the
same level as his annual salary in 2003. His current salary corresponds
to the minimum of the salary range for the President and Chief Executive Officer
position.
We evaluate at the beginning of each year the
performance of the CEO for the preceding year based on his contribution to the:
The board
believes that the company made considerable progress in 2004 – especially
with respect to the resolution of important labour negotiations, the development
and implementation of the Galileo initiative and the company’s accelerated
transition to Internet Protocol and a new generation of services. The board
is of the view that Mr. Sabia has made a particularly substantial contribution
to this progress. By virtue of this contribution, this committee recommended
and the board awarded him a short-term incentive in the amount of $1,475,000
for the year 2004. However, given the disruption in customer service that
occurred in 2004 as a result of the implementation of the new wireless
billing system and Mr. Sabia’s belief in the final accountability
of the CEO, he has declined payment.
As President and Chief Executive Officer, Mr. Sabia
received a grant of 100,604 RSUs in February 2004 which covers the two-year
performance period of January 1, 2004 to December 31, 2005.
Mr. Sabia also received a grant of 300,000 2004-2006 Front-loaded
options in February 2004 which covers the three-year performance period
of January 1, 2004 to December 31, 2006.
In 2004, we approved the purchase of an additional
$10 million of life insurance in Mr. Sabias name. The annual premium
for this additional life insurance is $19,721. We did not make any changes to
Mr. Sabias pension arrangements in 2004.
COMPENSATION POLICY OF SUBSIDIARIES
Bell Canadas compensation policy is the same as BCEs. The board
approved the recommendations of Bell Canada for grants of BCE options
and RSUs to Mr. Blouin and Mr. Wetmore in 2004.
COMPOSITION OF MRCC
The MRCC currently consists of five unrelated and independent directors: Mr. R.J.
Currie (Chair), Mr. R.A. Brenneman, Mr. A.S. Fell, Mr. J.H. McArthur
and Mr. V.L. Young. Mr. P.M. Tellier was Chair of the MRCC until May 26, 2004
and Mr. B.M. Levitt was a member until the same date.
Over the past few years, BCE and
Bell Canada have realigned their structure and business strategy to deliver
on the changing competitive landscape and customer needs. In 2004, a new
redesigned executive compensation policy was put in place to ensure close alignment
and support with the companys direction and strategic objectives. The
policy was designed to promote greater individual accountability and higher
levels of performance while linking a large part of executive officers
compensation to the achievement of corporate performance objectives and the
creation of shareholder value. As well, more emphasis was placed on variable
compensation through the use of three different compensation vehicles
short-term, mid-term and long-term incentive plans.
In our view, the total compensation of the named
executive officers for 2004 was appropriate in supporting the business
strategy and very competitive in the marketplace with
the exception of the CEO and it is the intention of this committee to correct
the situation in the short term.
We believe that compensation must reflect corporate
performance. As a result, the annual short-term incentive award for the named
executive officers was based on a corporate performance factor of 59% because
the corporate objectives were not fully achieved.
Overall, we are confident that our approach to
compensation has allowed BCE to attract, motivate and retain executive
officers whose type of leadership is considered essential for success now and
in the future, and align their interests with those of our shareholders.
Report presented March 1, 2005 by:
R.J. Currie, Chair
R.A. Brennem
A.S. Fell
J.H. McArthur
V.L. Young
Bell Canada Enterprises Management proxy circular |
31 |
Other compensation information
This section describes how the named executive officers are compensated, their pension arrangements and termination and other employment arrangements.
Executive compensation table
Compensation information for 2004, 2003 and 2002 for the President and Chief Executive Officer, the Chief Financial Officer and the three most highly compensated executive officers other than the President and Chief Executive Officer and the Chief Financial Officer (our named executive officers) in 2004 is presented in the following table.
SUMMARY COMPENSATION TABLE
|
||||||||||||||||||
ANNUAL COMPENSATION |
LONG-TERM COMPENSATION |
|||||||||||||||||
|
|
|||||||||||||||||
SECURITIES UNDER OPTIONS OR (SARS) GRANTED | SHARES OR UNITS SUBJECT TO RESALE RESTRICTIONS |
LONG-TERM INCENTIVE PLAN (LTIP) PAYOUTS |
||||||||||||||||
OTHER ANNUAL COMPENSATION | ALL OTHER COMPENSATION | |||||||||||||||||
Name and principal position | YEAR |
SALARY |
BONUS |
|||||||||||||||
($) |
($) |
($) | (#) | (#) | ($) | ($) | ||||||||||||
(1) | (3) | (4) | (5) | (6) | (7) | |||||||||||||
|
||||||||||||||||||
MICHAEL
J. SABIA President and Chief Executive Officer, BCE Chief Executive Officer, Bell Canada |
2004 |
1,000,000 |
(2) |
33,006 | 300,000 | (2) |
| 180,595 | ||||||||||
|
||||||||||||||||||
2003 |
1,000,000 |
|
12,788 |
525,000 |
41,918
deferred share units based on $1,250,000 |
| 29,574 |
|||||||||||
|
||||||||||||||||||
2002 |
931,667 |
|
9,177 | 360,000 | 23,222
deferred share units based on $650,000 |
| 27,542 | |||||||||||
|
||||||||||||||||||
SIIM
A. VANASELJA |
2004 |
465,000 |
208,000 | | 100,000 | | | 31,499 | ||||||||||
|
||||||||||||||||||
2003 |
440,000 |
|
|
117,899 |
11,136 deferred share units based on $332,100 |
|
|
14,332 |
||||||||||
|
||||||||||||||||||
2002 |
410,000 |
148,400 | | 115,389 | | | 190,624 | |||||||||||
|
||||||||||||||||||
PIERRE
J. BLOUIN Group President – Consumer Markets, Bell Canada |
2004 |
671,667 |
379,170 |
| 150,000 | 1,454
deferred share units based on $42,130 |
| 39,706 | ||||||||||
|
||||||||||||||||||
2003 |
585,134 |
177,200 |
131,651 | 120,000 40,000 (Emergis) |
19,032
deferred share units based on $552,960 |
215,040 | 19,601 | |||||||||||
|
||||||||||||||||||
2002 |
483,805 |
155,320 |
22,684 | 130,000 230,000 (Emergis) |
449
deferred share units based on $12,580 |
| 105,096 | |||||||||||
|
||||||||||||||||||
WILLIAM
D. ANDERSON President, BCE Ventures |
2004 |
557,500 |
500,000 | 792,162 | 90,000 | | | 25,871 | ||||||||||
|
||||||||||||||||||
2003 |
545,000 |
408,800 | |
136,299 |
|
|
14,104 |
|||||||||||
|
||||||||||||||||||
2002 |
530,000 |
267,120 | | 150,000 | | | 13,733 | |||||||||||
|
||||||||||||||||||
STEPHEN
G. WETMORE |
2004 |
617,000 |
355,000 |
| 110,000 | |
| 66,755 | ||||||||||
|
||||||||||||||||||
2003 |
614,167 |
231,400 |
| 181,860 | |
494,800 | 497,511 | |||||||||||
|
||||||||||||||||||
2002 |
591,731 |
146,700 |
61,154 | 395,000 60,832 (Aliant) |
|
| 652,147 | |||||||||||
|
32 |
Bell Canada Enterprises Management proxy circular |
(1) | MR. SABIA was appointed Executive Vice-President of BCE and Vice-Chairman of Bell Canada on July 3, 2000. On December 1, 2000, he was appointed President of BCE while maintaining his responsibilities at Bell Canada. On March 1, 2002, he became President and Chief Operating Officer of BCE and Chief Operating Officer of Bell Canada. He became President and Chief Executive Officer of BCE on April 24, 2002 and Chief Executive Officer of Bell Canada on May 2, 2002. The board determined his compensation for 2004 according to our compensation policies. We paid his total compensation, but charged 75% of it to Bell Canada for services provided to Bell Canada.. The main terms of his employment with us are described under Pension arrangements and Termination and other employment arrangements. |
MR. VANASELJA was appointed Chief Financial Officer of BCE on January 15, 2001 and also Chief Financial Officer of Bell Canada on December 13, 2003. | |
MR. BLOUIN was President and Chief Executive Officer of Bell Mobility Inc., a subsidiary of Bell Canada, between January 27, 2000 and March 1, 2002. In addition to his role at Bell Mobility Inc., he was Executive Vice-President at BCE from March 1, 2002 until his appointment as Chief Executive Officer of Emergis on May 13, 2002. On May 14, 2003, he was appointed Group President Consumer Markets of Bell Canada. Emergis paid his compensation from May 2002 to May 2003, according to its compensation policy. Emergis is no longer a BCE subsidiary or affiliated company as of June 2004. His 2004 compensation was paid by Bell Canada according to its compensation policy. | |
MR. ANDERSON was appointed President, BCE Ventures on January 15, 2001. In addition to his role at BCE Ventures, he also served as Chief Executive Officer of Bell Canada International during all of 2004. His compensation for 2004 was paid by BCE according to our compensation policies. We paid his total compensation, but charged 100% of it to BCE Ventures. The main terms of his employment with us are described under Termination and other employment arrangements. | |
MR. WETMORE was appointed Vice-Chairman, Corporate of Bell Canada on March 1, 2002 and also Executive Vice-President of BCE on May 2, 2002. On June 1, 2003, he was appointed Executive Vice-President of Bell Canada while maintaining his responsibilities at BCE. In addition to his role at BCE, he became Group President National Markets of Bell Canada on November 10, 2003. Prior to March 1, 2002, he was President and Chief Executive Officer of Aliant, a subsidiary of Bell Canada. His 2004 compensation was paid by Bell Canada according to its compensation policy. The main terms of his employment with Bell Canada are described under Pension arrangements and Termination and other employment arrangements. | |
(2) | The board believes that the company made considerable progress in 2004 – especially with respect to the resolution of important labour negotiations, the development and implementation of the Galileo initiative and the company’s accelerated transition to Internet Protocol and a new generation of services. The board is of the view that Mr. Sabia has made a particularly substantial contribution to this progress. By virtue of this contribution, the MRCC recommended and the board awarded him a short-term incentive in the amount of $1,475,000 for the year 2004. However, given the disruption in customer service that occurred in 2004 as a result of the implementation of the new wireless billing system and Mr. Sabia’s belief in the final accountability of the CEO, he has declined payment. |
(3) | This column does not
include an amount for perquisites and other personal benefits if they
total less than $50,000 or 10% of the total of the annual salary and bonus,
which is the disclosure threshold set by the laws that apply to us. Other
types of annual compensation are disclosed in this column, as described
below. For MR. SABIA, this includes in 2004 an amount of $18,363 for payment of taxes on an additional life insurance policy of $10 million in his name. For MR. BLOUIN, this includes a special compensation payment (SCP) of $120,689 triggered by the exercise of options in 2003. Please see Long-term incentives for details. For 2002, this includes $16,284 paid in lieu of vacation. For MR. ANDERSON, this consists of a special compensation payment (SCP) of $792,162 triggered by the exercise of options in 2004. Please see Long-term incentives for details. For MR. WETMORE, this consists of $61,154 that Aliant paid to him in lieu of vacation in 2002. For MR. WETMORE, this consists of $61,154 that Aliant paid to him in lieu of vacation in 2002. |
(4) | All options granted
in 2004 are 2004-2006 Front-loaded options granted under BCEs
stock option plans. This column also includes options granted by Emergis
to MR. BLOUIN in 2003 and by Aliant to MR. WETMORE in 2002. Please
see Long-term incentives and the tables under Stock options
for details. In 2002, MR. BLOUIN received the following grants of stock options under the Emergis share option plan:
In 2003, MR. BLOUIN
also received 40,000 options under the Emergis share option plan. When
MR. BLOUIN left Emergis, the original expiry dates of all his Emergis
options were changed to May 14, 2006. Options continue to
vest until this date as long as MR. BLOUIN remains employed by Bell Canada,
BCE or one of its subsidiaries. The sale by BCE of its interest
in Emergis did not impact the vesting terms of MR. BLOUINs options.
On June 30, 2004 Emergis paid a one-time special cash distribution
of $1.45 per share by way of return of capital to its shareholders.
As a result, in accordance with the terms of the Emergis plan, the exercise
price of all outstanding stock options on June 25, 2004 was
reduced by $1.47 by the Board of Directors effective July 2, 2004.
This amount was based on a calculation agreed upon between Emergis and
the TSX. |
(5) | DSUs have the same
value as BCE common shares. The number of DSUs awarded was calculated
using the closing price of BCE common shares on the TSX on the day
before the award of DSUs was effective. The dollar amount included in
this table is the pre-tax value of the DSUs on the day the award was effective.
This column includes DSUs granted as payment of the annual short-term
incentive award. For 2003, this column also includes DSUs granted
as payments made under the two-year capital efficiency incentive plan
of Bell Canada for MR. VANASELJA and MR. BLOUIN. The two-year capital
efficiency incentive plan expired in 2003. For more information on
this plan please see BCEs 2004 management proxy circular filed
with Canadian securities regulatory authorities. Additional DSUs are credited
to each named executive officers account on each BCE common
share dividend payment date. The number of DSUs is calculated using the
same rate as the dividends paid on our common shares. Please see Deferred
share unit plan for details. RSUs are not included in this column,
See Mid-term incentive plan for further details. The table below shows the total number of DSUs that each named executive officer held and their value at December 31, 2004, based on a BCE common share price of $28.92 at year-end. The total number of DSUs shown excludes DSUs granted in 2005 as payment of the 2004 annual short-term incentive award which are disclosed in the Summary compensation table. |
|
|||
AT DECEMBER 31, 2004 |
|||
NAME | TOTAL NUMBER OF | TOTAL VALUE | |
DSUS HELD | $ | ||
|
|||
Michael J. Sabia | 121,521 | 3,514,401 | |
Siim A. Vanaselja | 19,552 | 565,453 | |
Pierre J. Blouin | 21,491 | 621,528 | |
William D. Anderson | 2,859 | 82,707 | |
Stephen G. Wetmore | – | – | |
|
Bell Canada Enterprises Management proxy circular |
33 |
Since December 31, 2004, MR. SABIA received DSUs credited in lieu of dividends on January 15, 2005, for a total number of DSUs currently held of 122,740, as shown on page 10. | |
(6) | For 2003, this includes amounts payable under the two-year capital efficiency incentive plan of Bell Canada for MR. BLOUIN and MR. WETMORE. The two-year capital efficiency incentive plan expired in 2003. We have not reported an amount for MR. SABIA because he declined payment of $1,437,500 that he was entitled to receive under the two-year capital efficiency incentive plan. For more information on this plan, please see BCEs 2004 management proxy circular filed with Canadian securities regulatory authorities. |
(7) | For all the named executive officers, amounts in this column include company contributions under the BCE employees savings plan. For MR. BLOUIN, it also includes company contributions under the Emergis employee share purchase plan for the years 2002 and 2003. |
Under BCE employees savings plan, when our employees and Bell Canadas employees, including executive officers, use up to 6% of their base salary, short-term incentive awards and/or, for 2003, payment under the two-year capital efficiency incentive plan to buy BCE common shares, BCE or Bell Canada contributes $1 for every $3 that the employee contributes. Emergis plan is similar, but Emergis contributed $1 for every $2 that the employee contributed. | |
This column also includes payments for life insurance premiums for all of the named executive officers. | |
For MR.
SABIA, it includes an amount of $19,721 for premiums paid in 2004 for
an additional life insurance policy of $10 million in his name. For MR. VANASELJA, it also includes a special cash award of $180,000 in 2002 to recognize an important contribution in supporting BCE actions taken regarding its investments and other issues during 2002. For MR. BLOUIN, it also includes a $35,000 relocation allowance in 2002. |
|
For MR. WETMORE, it also includes:
|
|
In 2004, this also includes the value of additional DSUs credited in lieu of dividends on BCE common shares represented by DSUs, except for MR. WETMORE who does not participate in the DSU plan. This represents an amount of $129,494 for MR. SABIA, $19,531 for MR. VANASELJA, $22,420 for MR. BLOUIN and $3,340 for MR. ANDERSON. | |
|
Mid-Term Incentive Plan
The following table illustrates potential future payouts to the participating named executive officers under the Restricted share unit plan established in 2004. For a description of the terms of the Plan, refer to Mid-term incentive plan.
RESTRICTED SHARE UNIT GRANTS DURING THE MOST RECENTLY COMPLETED YEAR
|
|||||||||||
ESTIMATED
FUTURE PAYOUTS UNDER THE RESTRICTED SHARE UNIT PLAN NON-SECURITIES PRICE-BASED PLANS (1) |
|||||||||||
|
|||||||||||
RESTRICTED
SHARE UNITS (RSUS) |
|||||||||||
GRANTED | PERFORMANCE | ||||||||||
(#) | PERIOD | THRESHOLD | TARGET | MAXIMUM | |||||||
NAME | (2 | ) | (3 | ) | #(4 | ) | #(4 | ) | #(4 | ) | |
|
|||||||||||
Michael J. Sabia | 100,604 | Jan. 1, 2004 to | 50,302 | 100,604 | 100,604 | ||||||
Dec. 31, 2005 | |||||||||||
Siim A. Vanaselja | 40,242 | Jan. 1, 2004 to | 20,121 | 40,242 | 40,242 | ||||||
Dec. 31, 2005 | |||||||||||
Pierre J. Blouin | 50,302 | Jan. 1, 2004 to | 25,151 | 50,302 | 50,302 | ||||||
Dec. 31, 2005 | |||||||||||
William D. Anderson | | | | | | ||||||
Stephen G. Wetmore | 40,242 | Jan. 1, 2004 to | 20,121 | 40,242 | 40,242 | ||||||
Dec. 31, 2005 | |||||||||||
|
(1) | Participants may choose to receive payment of RSUs in cash, in BCE common shares, or in a combination of both subject to meeting share ownership requirements. For payment in BCE common shares, BCE will buy a number of shares on the open market equal to the number of vested RSUs a participant holds in the plan after deductions for applicable taxes. |
(2) | The 2004-2005 grant of RSUs is based on achieving operating objectives directly aligned to achieving strategic goals for each of the core business units of Bell Canada. Additional RSUs are credited to each named executive officers account on each BCE common shares dividend payment date. The number of additional RSUs is calculated using the same rate as the dividends paid on our common shares. Please see Mid-term incentive plan for details. |
(3) | The performance period associated with the 2004-2005 grant of RSUs is from January 1, 2004 to December 31, 2005. |
34 |
Bell Canada Enterprises Management proxy circular |
(4) | Early in 2006, the results
of each business unit over the two years ending December 31, 2005
will be evaluated by the MRCC and will translate into a specific vesting
percentage for executives, including the named executive officers, in each
business unit. The result for the corporate centre will be an average of
the results of all business units and will also translate into a specific
vesting percentage for executives, including the named executive officers,
in the corporate centre. The MRCC will base its recommendations to the board on the following vesting schedule: |
RESULTS OF EACH BUSINESS UNIT | VESTING PERCENTAGE | ||
|
|||
100% of operating objectives are achieved | 100 | % | |
90% - 99% of operating objectives are achieved | 50 | % | |
<90% of operating objectives are achieved | 0 | % | |
|
Amounts shown in the threshold column show the number of RSUs that will become vested at the end of the performance period assuming that between 90% and 99% of operating objectives are achieved. Amounts shown in the target and maximum columns show the number of RSUs that will become vested at the end of the performance period assuming that 100% of operating objectives are met.
Stock options
The table below shows grants of stock options made to each of the named executive officers under BCEs stock option program for the financial year ended December 31, 2004.
OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR | |||||||||
|
|||||||||
MARKET VALUE OF SECURITIES UNDERLYING OPTIONS/ SARS ON THE DATE OF THE GRANT ($/SECURITY | |||||||||
% OF TOTAL OPTIONS/ SARS GRANTED TO EMPLOYEES IN FINANCIAL YEAR | EXPIRATION
DATE |
||||||||
SECURITIES UNDER OPTIONS/SARS GRANTED (#) | EXERCISE OR BASE PRICE ($/SECURITY) | ||||||||
) | |||||||||
NAME | (1) (2 | ) | (2 | ) | (3 | ) | (3 | ) | |
|
|||||||||
Michael J. Sabia | 300,000 | 5.1 | % | $29.82 | $29.82 | Feb. 3, 2010 | |||
Siim A. Vanaselja | 100,000 | 1.7 | % | $29.82 | $29.82 | Feb. 3, 2010 | |||
Pierre J. Blouin | 150,000 | 2.5 | % | $29.82 | $29.82 | Feb. 3, 2010 | |||
William D. Anderson | 90,000 | 1.5 | % | $29.82 | $29.82 | Feb. 3, 2010 | |||
Stephen G. Wetmore | 110,000 | 1.9 | % | $29.82 | $29.82 | Feb. 3, 2010 | |||
|
(1) | The performance period of the 2004-2006 Front-loaded options is from January 1, 2004 to December 31, 2006. The vesting of the 2004-2006 Front-loaded options is based on the BCE total shareholder return (BCE TSR) meeting or exceeding the median total shareholder return (median TSR) of a group of 12 Canadian and U.S. publicly traded telecommunications companies. The performance will be evaluated at the end of 2005 and 2006:
Each option granted under one of the BCE stock option plans covers one common share of BCE. No rights to SCPs were attached to options granted in 2004. Please see Long-term incentives for details. |
(2) | These numbers represent stock options. No freestanding SARs are granted. |
(3) | The exercise price of the stock options in this table is equal to the closing price of the common shares of BCE on the TSX on the day before the grant was effective. |
Bell Canada Enterprises Management proxy circular |
35 |
The table below is a summary of all of the stock options that each of the named executive officers exercised under BCEs stock option plans, the Aliant stock option plan and the Emergis share option plan in the financial year ended December 31, 2004. It also shows the total value of their unexercised options at December 31, 2004.
AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES
|
|||||||||||||||||||
VALUE
OF UNEXERCISED IN-THE-MONEY OPTIONS/ SARS AT DECEMBER 31, 2004 |
|||||||||||||||||||
SECURITIES ACQUIRED ON EXERCISE |
AGGREGATE VALUE REALIZED | UNEXERCISED
OPTIONS/SARS AT DECEMBER 31, 2004 |
|||||||||||||||||
NAME | |||||||||||||||||||
($) | (#) | ($) | |||||||||||||||||
(#) | (1 | ) | (2 | ) | (2) (3 | ) | |||||||||||||
|
|||||||||||||||||||
EXERCISABLE | UNEXERCISABLE | EXERCISABLE | UNEXERCISABLE | ||||||||||||||||
|
|||||||||||||||||||
Michael J. Sabia | BCE(4) | 65,000 | 611,052 | 691,650 | 886,250 | 2,085,054 | 366,188 | ||||||||||||
Siim A. Vanaselja | BCE | | | 160,218 | 264,870 | 374,857 | 82,235 | ||||||||||||
Pierre J. Blouin | BCE | | | 267,041 | 331,409 | 256,988 | 50,400 | ||||||||||||
Pierre J. Blouin | Emergis(5) | | | 37,500 | 232,500 | | | ||||||||||||
William D. Anderson | BCE | 64,925 | 792,162 | 356,414 | 299,975 | 31,689 | 95,069 | ||||||||||||
Stephen G. Wetmore | BCE | | | 220,465 | 466,395 | 341,082 | 575,047 | ||||||||||||
Stephen G. Wetmore | Aliant(6) | | | 234,074 | 20,277 | | | ||||||||||||
|
(1) | The total value realized is calculated using the closing price of a board lot of common shares of BCE, Aliant or Emergis, whichever applies, on the TSX on the day the options were exercised less the exercise price. It does not include SCPs. These appear under Other annual compensation in the Summary compensation table. Please see Long-term incentives for more information. |
(2) | These numbers relate only to stock options. No freestanding SARs are granted. |
(3) | An option is in-the-money when it can be exercised at a profit. This happens when the market value of the shares is higher than the price at which they may be exercised. The value of unexercised in-the-money options is calculated using the closing price of a board lot of common shares of BCE, Aliant or Emergis, whichever applies, on the TSX on December 31, 2004, less the exercise price of those options. |
(4) | MR. SABIA has retained 16,713 BCE common shares which corresponds to the net financial gain resulting from the exercise of the 65,000 options just before the expiry date. |
(5) | Emergis granted these options to buy its common shares under its share option plan. Options vest as to 25% after two years, 75% after three years and 100% after four years, except for 80,000 options granted in 2002 which vest after three years from the date of grant. |
When MR. BLOUIN left Emergis, the original expiry dates of his options were changed to May 14, 2006. Options continue to vest until this date as long as MR. BLOUIN remains employed by Bell Canada, BCE or one of its subsidiaries. | |
The sale by BCE of its interest in Emergis did not impact the vesting terms of MR. BLOUINs options. On June 30, 2004 Emergis paid a one-time special cash distribution of $1.45 per share by way of return of capital to its shareholders. As a result, in accordance with the terms of the Emergis plan, the exercise price of all outstanding stock options on June 25, 2004 was reduced by $1.47 by the Board of Directors effective July 2, 2004. This amount was based on a calculation agreed upon between Emergis and the TSX. | |
(6) | Aliant has a stock option plan that is almost the same as BCEs, except that the options vest at 33 1/3% a year for three years from the day of the grant. As President and Chief Executive Officer, MR. WETMORE participated in Aliants stock option plan until the end of February 2002 and still had outstanding options in that plan as of the end of 2004. |
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Bell Canada Enterprises Management proxy circular |
ADDITIONAL INFORMATION WITH RESPECT TO SECURITY-BASED COMPENSATION PLANS | |||||||
EQUITY COMPENSATION PLAN INFORMATION | |||||||
|
|||||||
NUMBER OF SECURITIES | |||||||
REMAINING AVAILABLE FOR | |||||||
FUTURE ISSUANCE UNDER | |||||||
NUMBER OF SECURITIES | WEIGHTED-AVERAGE | EQUITY COMPENSATION | |||||
TO BE ISSUED UPON | EXERCISE PRICE OF | PLANS (EXCLUDING | |||||
EXERCISE OF OUTSTANDING | OUTSTANDING OPTIONS, | SECURITIES REFLECTED | |||||
OPTIONS, WARRANTS AND RIGHTS | WARRANTS AND RIGHTS | IN COLUMN (A)) | |||||
PLAN CATEGORY | # (A) | $ (B) | # (C) | ||||
|
|||||||
Equity compensation plans approved by securityholders |
1,858,437 | 17 | 2,294,209 | ||||
Equity compensation plans not approved by securityholders1 |
26,623,242 | 33 | 36,256,331 | (2) | |||
Total | 28,481,679 | 32 | 38,550,540 |
(1) | The material features of the BCE Inc. Long-Term Incentive (Stock Option) Program 1999 are provided in section Stock Options and the material features of the Employees Savings Plans 1970 and 2000 are provided in the section Employees Savings Plans. |
(2) | This number includes 13,513,812 BCE common shares issuable pursuant to employee subscriptions under the Employees Savings Plan (1970). |
The following table sets the number of securities issued and issuable under each of the Corporations security based compensation arrangements and the number of BCE common shares underlying outstanding options and percentages represented by each calculated over the number of outstanding BCE common shares as at December 31, 2004.
COMMON
SHARES |
COMMON
SHARES |
COMMON
SHARES UNDER OUTSTANDING OPTIONS |
|||||||||||||
|
|||||||||||||||
# | % | (2) | # | % | (2) | # | % | (2) | |||||||
|
|||||||||||||||
BCE Inc. Long Term Incentive (Stock Option) Program 1985 |
2,294,209 | 0.2 | % | 4,310,395 | 0.5 | % | | | |||||||
BCE Inc. Long Term Incentive (Stock Option) Program 1999 |
49,365,761 | 5.3 | % | 328,144 | | 26,623,242 | 2.9 | % | |||||||
BCE Inc. Replacement Stock Option Plan (Plan of Arrangement 2000) |
1,117,614 | 0.1 | % | 2,583,877 | 0.3 | % | 1,117,614 | 0.1 | % | ||||||
Teleglobe Stock Options |
740,823 | 0.1 | % | 3,803,183 | 0.4 | % | 740,823 | 0.1 | % | ||||||
Employee Savings Plans 1970 and 2000 |
13,513,812 | 1.5 | % | 16,574,937 | 1.8 | % | n/a | n/a | |||||||
|
(1) | This number excludes BCE common shares issued to date and represents the aggregate of BCE common shares underlying outstanding options and BCE common shares remaining available for future grants of options and subscriptions under the Employees’ Savings Plans. |
(2) | Outstanding BCE Common Shares as at December 31, 2004 = 925,935,682 |
Bell Canada Enterprises Management proxy circular |
37 |
Employees savings plans (ESPs)1
ESPs are designed to encourage employees
of BCE and its participating subsidiaries to own shares of BCE. Each year,
eligible employees who participate in the plans can choose to have up to a certain
percentage of their annual earnings withheld through regular payroll deductions
to buy BCE common shares. In some cases, the employer may also contribute
up to a maximum percentage of the employees annual earnings to the plan.
The number of shares which may be issued under the ESPs to any insider, within
any one-year period, combined with the number of shares issued to such insider
within the same one-year period under any stock option plan may not exceed 5%
of all outstanding BCE common shares.
Each participating
company decides on its maximum contribution percentage. For BCE, employees can
contribute up to 12% of their annual earnings. BCE contributes up to 2%.
The trustee
of the ESPs buys BCE common shares for the participants on the open market,
by private purchase or from BCE (issuance of treasury shares). The price
of the shares purchased by the trustee on the open market or by private purchase
is equal to the value paid by the trustee for such shares. The price for treasury
shares (if any) purchased from BCE shall be equal to the weighted average
prices of the shares purchased by the trustee on the open market and by private
purchase (if any) in the week immediately preceding the week in which the purchase
is made from BCE. The purchase price for treasury shares could not be below
the market price of the securities. All the shares have been purchased on the
market in 2004, but we may issue shares from treasury from time to time to fill
employee subscriptions. Upon termination of employment, participation in the
ESPs ceases and the participant receives all the shares or the value of such
shares in the participants account, excluding those purchased by contributions
made by the participating company during the year of termination unless the
participating company authorizes it. In instances of retirement or death, such
entitlement to the company contribution is automatic. Participation in the ESPs
is not assignable. Under the terms of the ESPs, we are authorized to interpret
the rules of the plans and effect amendments, including those of a housekeeping
nature to the plans, without shareholder approval.
Pension arrangements
All of the named executive officers participate in the BCE or Bell Canada non-contributory defined benefit pension plan. The BCE and Bell Canada plans are very similar. In addition, officers including the named executive officers enter into supplementary executive retirement agreements (SERPs).
SERPs
Named executive officers receive 1.5 year
of pensionable service under SERPs for every year they serve as an officer of
BCE, one of its subsidiaries or an associated company. Retirement eligibility
is based on the executive officers age and years of service. The board
may credit additional years of service towards retirement eligibility, pension
calculation or both, through a special arrangement.
In general,
a named executive officer will receive SERP benefits when he or she reaches:
Pensions
are calculated based on pensionable service and pensionable earnings.
Pensionable
earnings include salary and short-term incentive awards, up to the target value,
whether they are paid in cash or DSUs. The one-year average of the named executive
officers best consecutive 36 months of pensionable earnings is used to
calculate his or her pension. There is a maximum limit on the amount of annual
short-term incentive awards that can be included.
A named executive
officer may receive up to 70% of his or her average pensionable earnings as
total pension benefits under the pension plan and SERP.
Pensions are
payable for life. Surviving spouses receive about 60% of the pension that was
payable to the named executive officer.
Named executive
officers receive a retirement allowance equal to one years base salary
when they retire. This is not included in their pensionable earnings.
1 | Two ESPs are in place: The BCE Inc. Employees Savings Plan (1970) and the BCE Inc. Employees Savings Plan (2000). The ESP (2000) is not currently in use and thus, there are no accumulated shares currently issued under this plan. The terms of both plans are substantially similar. |
38 |
Bell Canada Enterprises Management proxy circular |
ESTIMATED ANNUAL PENSION BENEFITS
The table below shows the estimated annual
pension benefits for various categories of pensionable earnings and years of
pensionable service that would be payable under the pension plans and SERPs,
assuming that a named executive officer retired on December 31, 2004 at
age 65.
These benefits are not subject to any deductions for government benefits or other offset amounts. They are partly indexed every year to increases in the Consumer Price Index, subject to a maximum of 4% per year.
YEARS OF PENSIONABLE SERVICE | ||||||||
|
||||||||
PENSIONABLE EARNINGS ($) | 20 YEARS | 30 YEARS | 40 YEARS | 50 YEARS | ||||
|
||||||||
500,000 | 164,300 | 243,600 | 315,900 | 350,000 | ||||
700,000 | 232,300 | 344,400 | 446,700 | 490,000 | ||||
900,000 | 300,300 | 445,200 | 577,500 | 630,000 | ||||
1,300,000 | 436,300 | 646,800 | 839,100 | 910,000 | ||||
1,700,000 | 572,300 | 848,400 | 1,100,700 | 1,190,000 | ||||
2,100,000 | 708,300 | 1,050,000 | 1,362,300 | 1,470,000 | ||||
2,500,000 | 844,300 | 1,251,600 | 1,623,900 | 1,750,000 | ||||
2,900,000 | 980,300 | 1,453,200 | 1,885,500 | 2,030,000 | ||||
|
PENSION BENEFITS FOR NAMED EXECUTIVE OFFICERS
The number of years of service for calculating total pension
benefits at December 31, 2004 was 23.0 years for Mr. Sabia (age 51),
15.8 years for Mr. Vanaselja (age 48), 23.3 years for Mr. Blouin (age
46), 19.3 years for Mr. Anderson (age 55), and 8.3 years for Mr.Wetmore
(age 52).
Eligibility
for SERP benefits for Mr. Anderson, Mr. Blouin and Mr. Wetmore
occurs at age 55 and is at age 60 for Mr. Sabia and Mr. Vanaselja.
If Mr. Sabias
employment is terminated on or after age 55 but before age 60, his pension will
be at least equal to 40% of his pensionable earnings. In this case, the calculation
will be based on the annual average of his best consecutive 60 months of pensionable
earnings. If Mr. Sabias employment is terminated before age 55 for
a reason other than for cause or a change of control, his pension from age 55
will be calculated as if he was age 55 when he left the company.
Mr. Vanaselja
is eligible for SERP benefits if he retires on or after age 60. If he retires
from the company between age 55 and 60, he will receive a pension calculated
according to the company pension plan with the exclusion of the maximum pension
provision prescribed by the Income Tax Act (Canada).
Mr. Wetmore
can retire at age 55 under his SERP. His pension will equal 25% of his average
pensionable earnings if he retires at age 55, 40% at age 60 and 55% at age 65.
This includes pension benefits he earned when he was employed at Aliant.
Based on current
compensation and service accrual to the earliest eligibility date for a supplementary
pension or the next anniversary if eligibility date is already reached, the
estimated annual benefits payable are as follows:
AGE AT EARLIEST | ESTIMATED | |||||
ELIGIBILITY | ANNUAL | |||||
EXECUTIVE | DATE | BENEFIT | ||||
|
||||||
Michael J. Sabia | 55 | $ 545,700 | ||||
Siim A. Vanaselja | 60 | $ 292,300 | ||||
Pierre J. Blouin | 55 | $ 438,300 | ||||
William D. Anderson | 56 | $ 222,000 | ||||
Stephen G. Wetmore | 55 | $ 215,300 | ||||
|
Bell Canada Enterprises Management proxy circular |
39 |
Termination and other employment arrangements
We entered
into an agreement with Mr. Sabia on April 24, 2002 setting out the terms
of his employment. In addition to the total compensation elements and pension
arrangements described above, the agreement provides for the following principal
terms:
Mr. Sabia will receive payments if:
The above
payments are subject to Mr. Sabias compliance with the non-competition
and non-solicitation provisions of his employment agreement.
If there is
a change of control, all of Mr. Sabias BCE stock options will
vest, whether his employment is terminated or not.
Mr. Sabias
employment agreement also covers compensation (providing an annual salary of
$1 million which is to be reviewed annually) and treatment of stock options
if he leaves BCE because of illness or disability, if he retires or if
he dies.
Mr. Anderson
is eligible to receive in mid 2005 a cash payment subject to successfully meeting
strategic objectives set for 2004 and the first half of 2005.
Upon retirement
after December 31, 2004, Mr. Anderson will be entitled to receive
salary and short-term incentive award at target for a period of 12 months. In
addition, his short-term incentive award for the last six months of employment
will be paid at target.
Under Mr. Wetmores
employment agreement dated December 22, 2003 with Bell Canada, a salary
of $617,000 (which is to be reviewed annually) is provided. In addition, he
will receive payments if:
The above payments are subject to Mr. Wetmores compliance with the non-competition and non-solicitation provisions of his employment agreement.
Performance graph
The graph below compares the cumulative annual total shareholder return on our common shares with the cumulative annual total return of the S&P/TSX Composite Index and the S&P Global 1200 Telecommunication Services Index. It assumes an initial investment of $100 and that all dividends were reinvested. Percentages shown within the graph represent compounded annual rates of return over the period.
FIVE-YEAR CUMULATIVE TOTAL RETURN ON $100
INVESTMENT
December 31, 1999
December 31, 2004
BCE Inc | ||||||||||
100 | 143 | 123 | 102 | 107 | 112 | |||||
|
||||||||||
S&P/TSX Composite Index | ||||||||||
100 | 108 | 94 | 82 | 104 | 119 | |||||
|
||||||||||
S&P Global 1200 Telecommunication Services Index | ||||||||||
100 | 61 | 46 | 33 | 42 | 50 | |||||
|
Our total shareholder return index is based on our share price on the S&P/TSX, assuming that all dividends paid have been reinvested. The five-year cumulative total return graph has been adjusted to reflect the distribution of our approximate 35% ownership interest in Nortel Networks Corporation (Nortel) to our shareholders on May 5, 2000.
40 |
Bell Canada Enterprises Management proxy circular |
This graph assumes that:
S&P/TSX Composite Index
The S&P/TSX Composite Index consists
of approximately 71% of the total market capitalization of Canadian-based
companies listed on the TSX. These companies include BCE, Bombardier Inc.,
Nortel, Royal Bank of Canada and Canadian National Railway Company, among many
others.
The S&P/TSX total return data is from The
Globe and Mail.
S&P Global 1200 Telecommunication Services Index
The S&P Global 1200 Telecommunication
Services Index consists of 43 companies worldwide. They include BCE, Telus Corporation,
the U.S. Regional Bell Operating Companies (BellSouth Corp., SBC Communications Inc.,
Verizon Communications Inc., Qwest Communications International Inc.),
European Incumbent Local Exchange Carriers (BT Group, Deutsche Telekom AG, France
Telecom SA, Telecom Italia SpA, Telefonica S.A.), U.S. long-distance providers
(Sprint Corp., AT&T Corp.) and wireless companies (Nextel Communications,
Vodafone Group PLC, China Mobile (Hong Kong) Ltd. and NTT Docomo Inc.).
The S&P
Global 1200 Telecommunication Services total return data is from Standard &
Poors.
Pension fund committee report
The purpose of the PFC is set forth in
its written charter which is available in the governance section of BCEs
website at www.bce.ca.
A pension
fund committee is not required under the Sarbanes-Oxley Act, related SEC rules,
NYSE rules, Canadian rules or the proposed NP 58-201. However, the board believes
that having the PFC enhances BCEs corporate governance practices.
Under its
charter, in 2004, the PFC assisted the board in the oversight of:
This report tells you how the PFC is managed and how it makes sure that BCEs applicable pension plans, pension fund and master fund are properly managed.
About the pension fund committee
The PFC currently consists of four directors:
Mr. R.C. Pozen (Chair) Mr. T.E. Kierans (who is not standing for election
at the meeting), Mr. B.M. Levitt, and Mr. P.M. Tellier. The PFC communicates
regularly and directly with BCEs officers. The PFC met five times in 2004,
including time without management, as appropriate.
The PFC advises
the board on policies relating to the administration, funding and investment
of the pension plan, pension fund and master fund. The master fund is a unitized
pooled fund that BCE sponsors for the collective investment of its pension
fund and the pension funds of its participating subsidiaries.
The PFC focused
on three key areas in 2004:
The PFC also reviewed and reported or made recommendations to the board on the following key items in 2004 and up to the date of this circular:
The PFC
reports to the board on the appropriateness of these operating and control systems.
The PFC also
carries out an annual evaluation of its performance with the CGC, including
the adequacy of its charter.
Finally, the
PFC reports regularly to the board on its activities.
Report presented March 2, 2005 by:
R.C. Pozen, Chair
T.R. Kierans
B.M. Levitt
P.M. Tellier
Bell Canada Enterprises Management proxy circular |
41 |
Other important information
Personal loans to directors and officers
BCE and its subsidiaries have not granted loans or extended credit to any current or nominated directors or executive officers or to individuals who have held these positions during the last fiscal year, or to any of their associates.
Directors and officers liability insurance
We and our subsidiaries have bought directors
and officers liability insurance coverage of US $200 million (approximately
$250 million). This insurance is to protect the directors and officers and those
of our subsidiaries against certain liabilities they may incur in this capacity.
In 2004, BCE charged a total of $6,951,954 against earnings for its portion
of the premium.
When we are not permitted by law to indemnify
a director or officer, the deductible is zero. When we are permitted to indemnify
him or her, the deductible is US$10 million (approximately $12.5 million). In
addition, BCE pays 25% of all defence costs, as well as 25% of losses,
if any, relating to securities claims.
Canadian ownership and control regulations
Since 1994, the Telecommunications
Act and associated regulations have governed Canadian ownership and control
of Canadian telecommunications carriers. Bell Canada and certain of its
affiliates are subject to this Act.
Under the Telecommunications Act, in order
for a corporation to operate as a Canadian common carrier, the following conditions
have to be met:
In addition, where a parent company owns at least 66 2/3% of voting shares of the carrier company (Carrier holding company), the Carrier holding company must have at least 66 2/3% of its voting shares owned by Canadians and must not be controlled by non-Canadians. Regulations give certain powers to the Canadian Radio-television and Telecommunications Commission (CRTC) and to Canadian carriers themselves to ensure that they comply with the Telecommunications Act. These powers include the right to:
However,
in BCEs case, there is an additional control restriction under the Bell Canada
Act. Prior approval by the CRTC is necessary for any sale or other disposal
of Bell Canadas voting shares unless BCE retains at least 80%
of all Bell Canada voting shares.
Similarly, the Canadian ownership rules for broadcasting
licensees, such as CTV (one of our subsidiaries) and Bell ExpressVu LP,
is generally in line with the rules for Canadian common carriers by restricting
allowable foreign investments in voting shares at the licensee operating company
level to a maximum of 20% and at the holding company level to a maximum of 33
1/3%. The CRTC is precluded under a direction issued under the Broadcasting
Act from issuing, amending or reviewing a broadcasting licence of an applicant
that does not satisfy these Canadian ownership criteria.
Cultural concerns over increased foreign control
of broadcasting activities led to a restriction that prevents a holding company
that exceeds the former 20% limit or its directors from exercising control or
influence over any programming decisions of a subsidiary licensee.
In addition, because we hold a broadcasting licence
as a limited partner in Bell ExpressVu LP, we are subject to the 20% foreign
ownership limit for broadcasting licensees.
The percentage of non-Canadian ownership of our
common shares was approximately 16.7% at December 31, 2004. We monitor
and periodically report on the level of non-Canadian ownership of our common
shares.
42 |
Bell Canada Enterprises Management proxy circular |
How to request more information
Documents you can request
You can ask us for a copy of the following documents at no charge:
Please write to the Corporate Secretary
office of BCE or the Investor Relations Group of BCE at 1000, rue
de La Gauchetière Ouest, Suite 3700, Montréal, Québec,
Canada H3B 4Y7 or call 1-800-339-6353.
These documents are also available on our website
at www.bce.ca, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.
All of our news releases are also available on our website.
Receiving information electronically
You can choose to receive electronically
all of our corporate documents, such as this management proxy circular and our
annual report. We will send you an email telling you when they are available
on our website.
To sign up, go to our website at www.bce.ca, click
on the Vote online link and follow the instructions. You will need
your holder account number and proxy access number, or your 12-digit control
number, which you will find on the information sheet attached to your proxy
form or on your voting instuction form.
If you do not sign up for this service, we will
continue to send you these documents by mail, unless you tell us otherwise on
your proxy form or voting instruction form.
Shareholder proposals for our 2006 annual meeting
We will consider proposals from shareholders to include as items in next years management proxy circular for our 2006 annual shareholder meeting. Please send your proposal to us by December 28, 2005.
Bell Canada Enterprises Management proxy circular |
43 |
Schedule A Shareholder proposals
The following shareholder proposals have been submitted for consideration at the meeting:
The Association de Protection des Épargnants et Investisseurs du Québec (APEIQ) located at 82, rue Sherbrooke Ouest, Montréal, Québec, H2X 1X3 has submitted four proposals. Its proposals and supporting comments (translated from French to English) are set out in italics below.
Proposal No. 1 Forbid any commercial relationship with the external auditor and its affiliates other than in connection with the auditing of BCEs financial statements
It is proposed that Bell Canada
Enterprises adopt a by-law so that it does not entertain any business relations,
other than those relating to the certification of the financial statements,
with the firm(s) acting as external auditors of the corporation. This prohibition
extends to all entities related to or affiliated with the firm.
The external auditors, who are appointed by
the shareholders, are the guarantors of the integrity of the financial statements
and, in that capacity, they are responsible for safeguarding the interests of
those by whom they are appointed. Their independence from management and the
board of directors must be absolute and above suspicion. Accounting firms that
combine certification engagements and engagements for associated services, directly
or through related entities, put themselves in a real or threatened conflict
of interest situation. The combination of engagements in itself poses a threat
to the integrity of the audit process and the veracity of the financial statements.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST PROPOSAL NO. 1 FOR THE FOLLOWING REASONS:
BCE recognizes the essential role
that auditor independence plays in ensuring the integrity of financial statements
and protecting the interests of investors. For that reason, we believe that
obtaining proper assurance that the external auditor is independent is one of
the most important functions of the audit committee. Accordingly, the board
and the audit committee have taken specific steps to ensure the independence
of the external auditors. For example, BCE adopted an auditor independence
policy that fully complies with the Canadian and U.S. legal requirements.
Under these legal requirements, certain listed
services cannot be provided by the external auditor, while other services, such
as tax services, can be provided. The board believes that it has put in place
appropriate safeguards with respect to auditor independence, including:
As a result,
of the $16.4 million billed to BCE and its subsidiaries by Deloitte &
Touche in 2004, only $1.9 million was billed for tax and other services.
The proposal, as drafted, would not permit BCE to
retain the services of the external auditor for audit-related and tax services.
The board believes that it would not be in your best interest to prevent BCE from
retaining audit-related and tax services from the external auditor when they
provide the best solution, from the standpoint of cost, competence or understanding
of our business. We also believe that the objectives of this proposal can be
attained without the adoption of a by-law by BCE.
Since November 2004, BCE no longer retains
the services of the external auditor for matters other than audit, audit-related
and tax services. This approach extends to all affiliates (as such term is defined
in the Canada Business Corporations Act) of the external auditor. Audit-related
services include the accounting research relating to prospective transactions,
non-statutory audits, audits of internal control procedures, pension plan audits,
financial due diligence services and services relating to legal requirements.
Tax services include the services for administering our compliance with our
conflict of interest policy and tax compliance, tax advice, tax planning and
advisory services relating to the preparation of corporate tax, capital tax
and commodity services. Since November 2004, we do not generally engage
the external auditor to perform tax planning and consulting services. These
initiatives, which clearly go beyond applicable legal requirements, demonstrate
BCEs strong commitment to ensure that the external auditor is always independent
and is best positioned to protect the interests of investors.
We therefore recommend that you vote AGAINST Proposal
No. 1.
Proposal No. 2 Limit the number of years during which an independent director may serve on the board
It is proposed that Bell Canada
Enterprises limit to 10 the number of years during which an independent director
can serve on the Board of Directors.
The complexity of the political, technological
and economic environments in which businesses operate requires new directors
to undergo a period of familiarization. Accordingly, it is normal that a director
should serve on the board of directors for a few years once he or she has gained
a good understanding of the strategic issues faced by the business.
Change is also a feature of business. Consequently,
it is in the interest of corporations to regularly renew their boards of directors
by calling upon persons who not only bring new skills but can analyse the challenges
faced by the business with a certain distance. Warren Buffet, who is very familiar
with the workings of boards of directors, has frequently denounced the conformist
attitude prevalent in boardrooms and has drawn attention to the difficulties
associated with the loss of objectivity and of a critical attitude among directors.
The purpose of the constant renewal of the independent directors is to counter
the harmful effects of prolonged membership of a businesss board of directors,
which include reduced perceptiveness and analytical skills and reluctance to
express views that may be awkward for colleagues or executives.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST PROPOSAL NO. 2 FOR THE FOLLOWING REASONS:
The telecommunications industry is highly technical, is evolving rapidly and is difficult to fully understand. As a result of the steep learning curve our directors have to face, replacing knowledgeable independent directors would not be in the best interest of BCE.
44 |
Bell Canada Enterprises Management proxy circular |
The board,
with the assistance of the CGC, reviews periodically the composition of the
board to ensure that it has the right mix of skills, expertise and experience
and that it is geographically representative of BCEs shareholder base.
Moreover, the performance of the board members is assessed annually based on
parameters established by the CGC.
Imposing a mandatory term limit for directors
would be an unnecessary and counterproductive impediment to the creation and
renewal of a competent, experienced and effective board of directors. We therefore
recommend that you vote AGAINST Proposal No. 2.
Proposal No. 3 Implement a cumulative voting mechanism for the election of the directors
It is proposed that Bell Canada
Enterprises implement the cumulative voting procedure for the election of directors,
thereby giving the minority shareholders a much more active role in the appointment
of directors.
Electing directors is one of the fundamental
rights of shareholders. Good governance codes adopted by various countries encourage
improvements to the process of selection and election of directors. Cumulative
voting is provided for in the Canadian legislation to facilitate the expression
of the will of the minority shareholders in the process of electing the directors
of a corporation. This procedure allows all or some of the votes of a shareholder
to be cast for the election of one or more of the nominees to the board of directors.
Corporations must implement the procedure in order for their shareholders to
use cumulative voting. In view of the board of directors responsibility
for providing guidance to the senior executives and its duty to safeguard the
shareholders and the corporations interests, it is indispensable
that the shareholders should be able to participate much more actively in the
selection of the directors of business corporations.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST PROPOSAL NO. 3 FOR THE FOLLOWING REASONS:
Cumulative voting is a procedure pursuant
to which any shareholder entitled to vote at an election of directors is allowed
to cast a number of votes equal to the number of shares owned by the shareholder,
multiplied by the number of directors to be elected, and to cast all such votes
in favour of one or more candidates as the shareholder sees appropriate. The
purpose of a cumulative voting system is generally to enable minority shareholders
to obtain representation on the board of directors of a corporation with a controlling
shareholder or a controlling group of shareholders.
BCE is a widely held public corporation with
no controlling shareholder. Cumulative voting would allow certain shareholders
to elect directors who would see their role as representing the interests of
a special group of shareholders. The board believes that it can function most
effectively by sharing the common objective of advancing the best interests
of all shareholders rather than those of any particular group. The board also
believes that a balanced board should consist of individuals with a wide range
of knowledge and experience, and that flexibility should be maintained to ensure
the board as a whole is comprised of persons who reflect changing circumstances
in our business. We therefore recommend that you vote AGAINST Proposal No. 3.
Proposal No. 4 Replace the stock option plan with a restricted share plan
It is proposed that Bell Canada
Enterprises replace the stock option plan for executives with a restricted share
plan which provides for such shares to be held for a minimum of two years.
Stock option plans must be abolished because
they have contributed to undermining the credibility of corporate compensation
policies. These plans are unfair to the shareholders as a whole and it has been
shown that stock option plans are not compatible with management for the long
term.
From the shareholders point of view,
the grant of restricted shares will motivate executives to manage as owners,
with a longer-term vision. Moreover, executive compensation costs will be easier
to identify in the financial statements. It is important to grant restricted
shares that must be held for a minimum of two years, as this will force the
executives to hold such shares for a minimum period before trading them. Thus,
executives will be less inclined to seek short-term gains. That is why a number
of corporations in the United States have chosen to replace stock option plans
with restricted share plans.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST PROPOSAL NO. 4 FOR THE FOLLOWING REASONS:
BCEs compensation policy was completely
redesigned in 2004, to create a shift towards greater individual accountability
and high level of performance. The underlying philosophy of this new policy
is to remain conservative with fixed compensation while placing more emphasis
on variable (at risk) compensation.
As part of that new policy, a restricted share
unit (RSU) plan was implemented.
Under the plan, RSUs either vest or are forfeited two years from the grant date,
based on the achievement of specific operational targets.
BCE reduced the value of stock option grants
in 2004 to account for the introduction of the restricted share unit plan and
introduced performance-based vesting for new option grants in 2004.
BCEs compensation policy is based on the
fundamental need to stay competitive with industry competitors in the ability
to attract and retain highly qualified and highly motivated executive officers
whose expertise is crucial in maximizing shareholder value.
We believe that a restricted share unit plan coupled
with a properly structured stock option plan, which is modestly dilutive and
includes performance based vesting, provides alignment between management compensation
and the creation of shareholder value. We therefore recommend that you vote
AGAINST Proposal No. 4.
Bell Canada Enterprises Management proxy circular |
45 |
www.bce.ca
PRINTED IN CANADA
Out of concern for the environment, BCE’s Notice of 2005 annual and special shareholder meeting and management proxy circular is printed with vegetable-based ink and is completely recyclable. |
Registered shareholders |
Computershare
Trust Company of Canada |
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Mr A Sample Designation (if any) Add1 Add2 add3 add4 add5 add6 |
Proxy form for our annual shareholder meeting on May 25, 2005 In the proxy
form, you and your refer to the holder of BCE Inc. common
shares. We, us, our and BCE refer to BCE Inc. The proxy
form is solicited by and on behalf of the management of BCE. |
Your vote is important As a shareholder, you have the right to vote your shares on electing directors, appointing the auditor, shareholder proposals and any other items that may properly come before the meeting. You can vote your shares by proxy or in person at the meeting or any adjournment. If you receive more than one proxy form, please complete, date, sign and return each one. If you are voting in person at the meeting Do not complete the proxy form. Please detach the admission ticket below and bring it with you to the meeting. |
Voting by proxy This is the easiest way to vote. Voting by proxy means that you are giving the person named in section A of the proxy form (the proxyholder) the authority to vote your shares for you. If you are voting by proxy, Computershare Trust Company of Canada or other agents we appoint must receive your signed proxy form by 4:45 p.m. (Eastern time) on Tuesday, May 24, 2005. There are five ways to vote your proxy. See the reverse side of this information sheet for details. Note: The proxy form attached to this information sheet is also to be used by the participants in the BCE Inc. Employees Savings Plan (ESP). |
Admission
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Please present this ticket to the registration desk of Computershare when you enter the meeting. Please confirm your attendance by calling Computershare at 1-800-561-0934. Let us know if you need any special assistance. |
Holder account number C1234567890
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Five ways to
vote by proxy By telephone |
Your access codes |
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You will need these codes to vote by telephone or on the Internet, or to receive documents electronically: Holder account number C1234567890 Proxy access number 12345 Receiving documents electronically You can choose to receive future shareholder communications electronically. To sign up, go to our website at www.bce.ca, click on the Vote online link and follow the instructions. You will need your holder account number and proxy access number. If you do not sign up for this service, we will continue to send you these documents by mail unless you otherwise instruct us as per section B on page 1 of the proxy form.
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DETACH YOUR TICKET ALONG THIS PERFORATION. |
Admission
ticket for Our annual shareholder
meeting will be held at 9:30 a.m. (Eastern time) on Wednesday, May
25, 2005 at the Metro Toronto Convention Centre, South Building, 222
Bremner Blvd., Toronto, Ontario.
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This is your proxy
form.
p.1 Detach this proxy
form by tearing along the perforated line, and complete it, ensuring
that you sign and date it to exercise your right to vote your shares
by mail or fax or to appoint someone else to vote your shares for you
at the meeting. |
A |
Complete
this section to appoint a proxyholder |
B | Tell
us if you want to receive financial reports |
By
completing this proxy form in one of the five ways indicated, you are
appointing as your proxyholder
You have the right to appoint someone other than these four people as your proxyholder. To do this, strike out the four names listed above and print the name of the person you are appointing in the space below. This person does not have to be a shareholder of BCE. Please print the name in the box below.
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We
will not send BCE’s quarterly reports to you in 2005, unless you
tell us that you want to receive them by checking the box below.
Please send me BCE’s quarterly reports in 2005 If you do not check the box above or do not return pages 1 and 2 of this proxy form, we will assume that you do not want to receive BCE’s quarterly reports in 2005. Annual report By law, we must send to our registered shareholders BCE’s annual financial statements and related management’s discussion and analysis (MD&A), unless you tell us that you DO NOT want to receive them by checking the box below. Please DO NOT send me BCE’s annual financial statements and MD&A If you do not check
the box above or do not return pages 1 and 2 of this proxy form, we
will assume that you want to receive BCE’s annual financial statements
and MD&A.
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PLEASE COMPLETE THE OTHER SIDE OF THIS FORM BEFORE MAILING OR FAXING. PLEASE SEND BOTH PAGES IN ONE FAX TRANSMISSION.
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C | Complete this section to provide voting instructions Please check For,
Withhold or Against for each of the following
items. Please print in ink. |
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1. Election of directors: The board of directors recommends voting FOR all nominees. The proposed nominees are: |
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FOR WITHHOLD | FOR WITHHOLD | FOR WITHHOLD | ||||||||
01. A. Bérard | 06. B.M. Levitt | 11. J.A. Pattison | ||||||||
02. R.A. Brenneman | 07. E.C. Lumley | 12. R.C. Pozen | ||||||||
03. R.J. Currie | 08. J. Maxwell | 13. M.J. Sabia | ||||||||
04. A.S. Fell | 09. J.H. McArthur | 14. P.M. Tellier | ||||||||
05. D. Soble Kaufman | 10. T.C. O’Neill | 15. V.L. Young |
2. Appointment of auditor: The
board of directors recommends voting FOR this item. |
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Vote for Deloitte & Touche LLP as auditor |
Withhold vote for Deloitte & Touche LLP as auditor |
3. Shareholder proposals: The
board of directors recommends voting AGAINST proposals No. 1, No.
2, No. 3 and No. 4. |
Proposal No. 1 | FOR |
AGAINST |
Proposal No. 3 | FOR |
AGAINST |
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Forbid any commercial relationship
with the external auditor and its affiliates other than in connection with the auditing of BCEs financial statements. |
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Implement
a cumulative voting mechanism for the election of the directors. |
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Proposal No. 2 | FOR |
AGAINST |
Proposal No. 4 | FOR |
AGAINST |
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Limit the number of years during which an independent director may serve on the board. |
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Replace the stock option plan with a restricted share plan. |
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D | Please sign this proxy form You must sign this
proxy form to ensure that it will be accepted as valid. When you sign
this proxy form, you authorize the proxyholder to act and vote your shares
on your behalf at the meeting and any adjournment and to carry out your
voting instructions. If you do not include
a date, we will deem it to be the date that we mailed the form to you. |
PLEASE COMPLETE THE OTHER SIDE OF
THIS FORM BEFORE MAILING OR FAXING. PLEASE SEND BOTH PAGES IN ONE FAX TRANSMISSION.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BCE Inc. | ||
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(signed)
Patricia A. Olah |
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Patricia
A. Olah Corporate Secretary |
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Date: March 11, 2005 |