COMMON SHARES

12 Months Ended

Dec. 31, 2022

Common Stock, Number of Shares, Par Value and Other Disclosure [Abstract]

COMMON SHARES

COMMON SHARES

	Number of Shares	Amount
	(thousands)	(millions of Canadian $)
Outstanding at January 1, 2020	938,400	24,387
Exercise of options	1,664	101
Outstanding at December 31, 2020	940,064	24,488
Acquisition of TC PipeLines, LP, net of transaction costs (Note 23)	37,955	2,063
Exercise of options	2,797	165
Outstanding at December 31, 2021	980,816	26,716
Issued under public offering1	28,400	1,754
Dividend reinvestment and share purchase plan	5,916	342
Exercise of options	2,830	183
Outstanding at December 31, 2022	1,017,962	28,995

1Net of underwriting commissions and deferred income taxes.

Common Shares Issued and Outstanding

The Company is authorized to issue an unlimited number of common shares without par value.

Common Shares Issued Under Public Offering

On August 10, 2022, TC Energy issued 28,400,000 common shares at a price of $63.50 each for total gross proceeds of approximately $1.8 billion.

Dividend Reinvestment and Share Purchase Plan

Under the Company's Dividend Reinvestment and Share Purchase Plan (DRP), eligible holders of common and preferred shares of TC Energy can reinvest their dividends and make optional cash payments to obtain additional TC Energy common shares. Commencing with the dividends declared on July 27, 2022, the Company reinstated the issuance of common shares from treasury at a two per cent discount. For dividends declared between January 1, 2020 and July 27, 2022, common shares purchased with reinvested cash dividends under the DRP were acquired on the open market at 100 per cent of the weighted average purchase price.

Acquisition of TC PipeLines, LP

On March 3, 2021, TC Energy issued 37,955,093 common shares to acquire all the outstanding publicly-held common units of

TC PipeLines, LP. Refer to Note 23, Non-controlling interests, for additional information.

TC Energy Corporation At-the-Market Equity Issuance Program

In December 2020, the Company established an At-the-Market (ATM) program that allowed, from time to time, for the issuance of common shares from treasury at the prevailing market price when sold through the Toronto Stock Exchange, the New York Stock Exchange or any other existing trading market for TC Energy common shares in Canada or the United States. The ATM program was effective for a 25-month period to assist in managing the Company's capital structure. Under this program, the Company had the ability to issue up to $1.0 billion in common shares or the U.S. dollar equivalent. In January 2023, the ATM program expired with no common shares issued thereunder.

Basic and Diluted Net Income per Common Share

Net income per common share is calculated by dividing Net income attributable to common shares by the weighted average number of common shares outstanding. The weighted average number of shares for the diluted earnings per share calculation includes options exercisable under TC Energy's Stock Option Plan and, subsequent to July 27, 2022, common shares issuable from treasury under the DRP.

Weighted Average Common Shares Outstanding
(millions)	2022	2021	2020
Basic	995	973	940
Diluted	996	974	940

Stock Options

	Number of Options	Weighted Average Exercise Prices	Weighted Average Remaining Contractual Life
	(thousands)		(years)
Options outstanding at January 1, 2022	7,769	$61.29
Options granted	1,396	$66.49
Options exercised	(2,830)	$58.09
Options forfeited/expired	(226)	$63.96
Options Outstanding at December 31, 2022	6,109	$63.86	4.4
Options Exercisable at December 31, 2022	3,175	$63.13	3.4

At December 31, 2022, an additional 3,656,518 common shares were reserved for future issuance from treasury under TC Energy's Stock Option Plan. The contractual life of options granted is seven years. Options may be exercised at a price determined at the time the option is awarded and vest equally on the anniversary date in each of the three years following the award. Forfeiture of stock options results from their expiration and, if not previously vested, upon resignation or termination of the option holder's employment.

The Company used a binomial model for determining the fair value of options granted and applied the following weighted average assumptions:

year ended December 31	2022		2021		2020
Weighted average fair value	$8.24		$7.39		$7.73
Expected life (years)1	5.4		5.4		5.7
Interest rate	1.6	%	0.5	%	1.5	%
Volatility2	22	%	25	%	17	%
Dividend yield	5.5	%	6.0	%	4.2	%

1Expected life is based on historical exercise activity.

2Volatility is derived based on the average of both the historical and implied volatility of the Company's common shares.

The amount expensed for stock options, with a corresponding increase in Additional paid-in capital was $10 million in 2022 (2021 – $12 million; 2020 – $12 million). At December 31, 2022, unrecognized compensation costs related to non-vested stock options were $12 million. The cost is expected to be fully recognized over a weighted average period of 1.9 years.

The following table summarizes additional stock option information:

year ended December 31	2022	2021	2020
(millions of Canadian $, unless otherwise noted)
Total intrinsic value of options exercised	33	28	31
Total fair value of options that have vested	89	110	101
Total options vested	1.6 million	1.9 million	2.0 million

As at December 31, 2022, the aggregate intrinsic values of the total options exercisable and the total options outstanding were each less than $1 million.

Shareholder Rights Plan

TC Energy's Shareholder Rights Plan is designed to provide the Board of Directors (Board) with sufficient time to explore and develop alternatives for maximizing shareholder value in the event of a takeover offer for the Company and to encourage the fair treatment of shareholders in connection with any such offer. Attached to each common share is one right that, under certain circumstances, entitles certain holders to purchase an additional common share of the Company.