share-based compensation

6 Months Ended

Jun. 30, 2024

14	share-based compensation

(a)

Details of share-based compensation expense

Included in Employee benefits expense in the Consolidated statements of income and other comprehensive income, and in Cash provided by operating activities in the Consolidated statements of cash flows, are the share-based compensation amounts set out in the accompanying table.


Periods ended June 30 (millions)		2024						2023
				Associated		Statement				Associated		Statement
		Employee		operating		of cash		Employee		operating		of cash
		benefits		cash		flows		benefits		cash		flows
	Note	expense ¹		outflows		adjustment		expense		outflows		adjustment
THREE-MONTH
Restricted share units	(b)	$	42	$	(3)	$	39	$	30	$	—	$	30
Employee share purchase plan	(c)		8		(8)		—		12		(12)		—
		$	50	$	(11)	$	39	$	42	$	(12)	$	30
TELUS technology solutions		$	37	$	(9)	$	28	$	39	$	(12)	$	27
TELUS digital experience			13		(2)		11		3		—		3
		$	50	$	(11)	$	39	$	42	$	(12)	$	30
SIX-MONTH
Restricted share units	(b)	$	72	$	(6)	$	66	$	74	$	(2)	$	72
Employee share purchase plan	(c)		16		(16)		—		23		(23)		—
Share option awards	(d)		—		—		—		1		—		1
		$	88	$	(22)	$	66	$	98	$	(25)	$	73
TELUS technology solutions		$	73	$	(18)	$	55	$	76	$	(24)	$	52
TELUS digital experience			15		(4)		11		22		(1)		21
		$	88	$	(22)	$	66	$	98	$	(25)	$	73

Within employee benefits expense (see Note 8) for the three-month and six-month periods ended June 30, 2024, restricted share units expense of $42 (2023 – $32) and $68 (2023 – $74), respectively, is presented as share-based compensation expense and the balance is included in restructuring costs (see Note 16) of the TELUS technology solutions segment.

(b)

Restricted share units

TELUS Corporation restricted share units

We also award restricted share units that largely have the same features as our general restricted share units, but have a variable payout (0% – 200%) that depends upon the achievement of our total customer connections performance condition (with a weighting of 25%) and the total shareholder return on TELUS Corporation Common Shares relative to an international peer group of telecommunications companies (with a weighting of 75%). The grant-date fair value of the notional subset of our restricted share units affected by the total customer connections performance condition equals the fair market value of the corresponding TELUS Corporation Common Shares at the grant date, and thus the notional subset has been included in the presentation of our restricted share units with only service conditions. Reflecting a variable payout, we estimate the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition using a Monte Carlo simulation. Grants of restricted share units in 2024 and 2023 are accounted for as equity-settled, as that was the expected manner of their settlement when granted.

The following table presents a summary of outstanding TELUS Corporation non-vested restricted share units.


	June 30,	December 31,
As at	2024	2023
Restricted share units without market performance conditions
Restricted share units with service conditions only	9,348,363	5,769,038
Notional subset affected by non-market performance conditions	735,577	429,281
	10,083,940	6,198,319
Restricted share units with market performance conditions
Notional subset affected by relative total shareholder return performance condition	2,021,139	1,191,563
Number of non-vested restricted share units	12,105,079	7,389,882

The following table presents a summary of the activity related to TELUS Corporation restricted share units without market performance conditions.


	Number of restricted		Weighted
	share units ¹		average
			grant-date
	Non-vested	Vested	fair value
THREE-MONTH PERIOD
Outstanding, April 1, 2024
Non-vested	10,079,801	—	$	26.70
Vested	—	32,745	$	24.40
Granted
Initial award	62,899	—	$	22.21
In lieu of dividends	175,316	570	$	21.06
Vested	(57,877)	57,877	$	26.69
Settled – in cash	—	(57,876)	$	26.69
Forfeited	(176,199)	—	$	27.11
Outstanding, June 30, 2024
Non-vested	10,083,940	—	$	26.70
Vested	—	33,316	$	28.83
SIX-MONTH PERIOD
Outstanding, January 1, 2024
Non-vested	6,198,319	—	$	28.68
Vested	—	32,521	$	28.97
Granted
Initial award	4,083,914	—	$	24.06
In lieu of dividends	274,081	1,092	$	21.92
Vested	(117,986)	117,986	$	24.70
Settled – in cash	—	(118,283)	$	24.71
Forfeited	(354,388)	—	$	26.44
Outstanding, June 30, 2024
Non-vested	10,083,940	—	$	26.70
Vested	—	33,316	$	28.83

1	Excluding the notional subset of restricted share units affected by the relative total shareholder return performance condition.

TELUS International (Cda) Inc. restricted share units

We also award restricted share units that largely have the same features as the TELUS Corporation restricted share units. A subset of the TELUS International (Cda) Inc. restricted share units have a variable payout (0% – 200%) that depends upon TELUS International (Cda) Inc. financial performance (with a weighting of 50%) and the total shareholder return of TELUS International (Cda) Inc. subordinate voting shares relative to an international peer group of customer experience and digital IT services companies (with a weighting of 50%). A second subset of the TELUS International (Cda) Inc. restricted share units have a variable payout (0% - 300%) that depends upon the financial performance of certain TELUS Digital Experience products and services. The grant-date fair value of the notional subset of our restricted share units affected by financial performance conditions equals the fair market value of the corresponding subordinate voting shares at the grant date. Reflecting a variable payout, we estimate the fair value of the notional subset of our restricted share units affected by the relative total shareholder return performance condition using a Monte Carlo simulation. Grants of restricted share units in 2024 and 2023 are accounted for as equity-settled, as that was the expected manner of their settlement when granted.

The following table presents a summary of the activity related to TELUS International (Cda) Inc. restricted share units.


	Number of restricted		Weighted
	share units		average
			grant-date
	Non-vested	Vested	fair value
THREE-MONTH PERIOD
Outstanding, April 1, 2024	5,238,584	—	US$	13.38
Granted – initial award	9,333,403	—	US$	5.82
Vested	(353,945)	353,945	US$	16.83
Settled in equity	—	(353,945)	US$	16.83
Forfeited	(262,797)	—	US$	23.01
Outstanding, June 30, 2024	13,955,245	—	US$	8.05
SIX-MONTH PERIOD
Outstanding, January 1, 2024	2,615,746	—	US$	21.36
Granted – initial award	12,594,420	39,116	US$	6.64
Vested	(788,303)	788,303	US$	20.59
Settled in equity	—	(827,419)	US$	20.03
Forfeited	(466,618)	—	US$	23.31
Outstanding, June 30, 2024	13,955,245	—	US$	8.05

(c)

TELUS Corporation employee share purchase plan

We have an employee share purchase plan under which eligible employees can purchase TELUS Corporation Common Shares through regular payroll deductions. In respect of TELUS Corporation Common Shares held within the employee share purchase plan, dividends declared thereon during the three-month and six-month periods ended June 30, 2024, of $14 million (2023 - $13 million) and $27 million (2023 - $26 million), respectively, were to be reinvested in TELUS Corporation Common Shares acquired by the trustee from Treasury, with a discount applicable, as set out in Note 13(b).

(d)Share option awards

TELUS Corporation share options

Employees may be granted share option awards to purchase TELUS Corporation Common Shares at an exercise price equal to the fair market value at the time of grant. Share option awards granted under the plan may be exercised over specific periods not to exceed seven years from the date of grant.

These share option awards have a net-equity settlement feature. The optionee does not have the choice of exercising the net-equity settlement feature; it is at our option whether the exercise of a share option award is settled as a share option or settled using the net-equity settlement feature.

The following table presents a summary of the activity related to the TELUS Corporation share option plan.


Periods ended June 30, 2024	Three months			Six months
	Number of	Weighted		Number of	Weighted
	share	average share		share	average share
	options	option price¹		options	option price¹
Outstanding, beginning of period	1,690,001	$	22.38	1,778,901	$	22.35
Exercised ²	(6,000)	$	21.25	(64,200)	$	21.35
Forfeited	(62,700)	$	21.79	(93,400)	$	21.97
Outstanding, end of period	1,621,301	$	22.41	1,621,301	$	22.41
Exercisable, end of period	—		—	1,621,001	$	22.41

1	The weighted average remaining contractual life is 3.0 years.

2	For the three-month and six-month periods ended June 30, 2024, the weighted average price at the dates of exercise were $22.31 and $23.76, respectively.

TELUS International (Cda) Inc. share options

Employees may be granted equity share options (equity-settled) to purchase TELUS International (Cda) Inc. subordinate voting shares at a price equal to, or a multiple of, the fair market value at the time of grant and/or phantom share options (cash-settled) that provide them with exposure to appreciation in the TELUS International (Cda) Inc. subordinate voting share price. Share option awards granted under the plan may be exercised over specific periods not to exceed ten years from the time of grant. All equity share option awards and most phantom share option awards have a variable payout (0% – 100%) that depends upon the achievement of TELUS International (Cda) Inc. financial performance and non-market quality-of-service performance conditions.

The following table presents a summary of the activity related to the TELUS International (Cda) Inc. share option plan.


Periods ended June 30, 2024	Three months			Six months
	Number of	Weighted		Number of	Weighted
	share	average share		share	average share
	options	option price ¹		options	option price ¹
Outstanding, beginning of period	2,452,934	US$	9.89	2,536,783	US$	10.39
Forfeited	—	US$	—	(83,849)	US$	25.00
Outstanding, end of period	2,452,934	US$	9.89	2,452,934	US$	9.89
Exercisable, end of period	—		—	2,363,846	US$	9.32

For 2,096,582 share options, the range of share option prices is US$4.87 – US$8.95 per TELUS International (Cda) Inc. subordinated voting share and the weighted average remaining contractual life is 2.5 years; for the balance of share options, the price is US$25.00 and the weighted average remaining contractual life is 6.7 years.