Telstra 2007 Annual Report Download - page 99

96
Telstra Corporation Limited and controlled entities
Remuneration Report
CEO remuneration mix
The remuneration mix for the CEO for fiscal 2007 incorporates a greater proportion of “ at risk” remuneration
than for fiscal 2006 to reflect the key role that the CEO plays in the realisation of the transformation
strategy.
Figure 7 shows a comparison of the fiscal 2006 and fiscal 2007 remuneration mix based on the maximum
level of reward available for the CEO.
Figure 7: CEO remuneration mix
CEO STI opportunity and performance levels required
The CEO has a STI cash opportunity of 100% of fixed remuneration where maximum performance is met. If
target performance is achieved across all performance measures he will receive a STI cash payment of 50%
of the value of his fixed remuneration. In addition, he will receive Telstra deferred shares to a value
equivalent to his cash STI payment for the year.
The CEO’s STI payment is determined by the Board based on the same performance measures as detailed in
Figure 3 and by assessment of his individual performance objectives by the Board. As illustrated in Figure 4,
each of the performance measures has three different levels of performance. Refer to Figure 14 for details of
the CEO’s actual STI payment.
However, where the senior executives are required to receive 25% of their actual STI payment in Telstra
shares, the above arrangement effectively requires the CEO to take 50% of the total actual value of his STI in
the form of Telstra deferred shares. The number of STI deferred shares is based on the volume weighted
average price of Telstra shares for the 5 trading days prior to allocation of the deferred shares.
The CEO is not eligible for the cash dividends on the deferred shares during the period up to 30 June 2009 but
instead will have the number of STI deferred shares increased at the time of vesting by the value of the cash
dividends. The volume weighted average price of Telstra shares for the five days prior to the dividend
payment date will be used to calculate the number of additional deferred shares which will be allocated.
These STI deferred shares are held in trust until the earlier of 30 June 2009, or 6 months following ceasing
employment with Telstra, at which time they will be automatically transferred to the CEO and all
restrictions on dealing will cease.
0%
20%
40%
60%
80%
100%
CEO (fiscal 2006) CEO (fiscal 2007)
Fixed Remuneration Max imum STI Max imum L TI
40%
30%
30%
58%
28%
14%
Performance targets must
be met before any of this
value vests to the CEO.
The maximum amount
that could be payable
should all STI targets be
met.