Telstra 2008 Annual Report Download - page 221

Telstra Corporation Limited and controlled entities
218
Notes to the Financial Statements (continued)
(a) Telstra Growthshare Trust (continued)
(i) Instruments issued in fiscal 2008 and fiscal 2007 (continued)
A gateway TSR hurdle is applicable for the fiscal 2007 allocation of
options. For all eligible executives, if the hurdle is not met at 30 June
2010 (30 June 2008 for the CEO), none of the options granted under the
plan will be exercisable, irrespective of whether any options have
previously vested.
Details of each type of option issued, including the relevant
performance hurdles, are set out below:
ESOP options (fiscal 2008 only)
As part of the employee share option plan, certain eligible employees
were provided options that vest upon completing certain
employment requirements. If an eligible employee continues to be
employed by an entity that forms part of the Telstra Group three
years after the commencement date of the options, the options will
vest. The options are not subject to any performance hurdles.
Total Shareholder Return (TSR) options (fiscal 2008 and fiscal 2007)
For TSR options, the applicable performance hurdle is based on the
market value of Telstra shares and the value of any other benefits paid
or made available to Telstra shareholders, including dividends. This
performance hurdle is set by the Board.
There are three performance periods (except for the CEO) and TSR
options have been allocated to each period. The TSR hurdle for each
of the three performance periods is measured over the following
periods:
(i) The CEO is also eligible for a further 5.17 million options to be
allocated in fiscal 2009 under the Growthshare 2007 - tranche 3
allocation.
These TSR options vest if the growth in Telstra's total shareholder
return exceeds certain targets over the relevant performance period.
The performance period result is calculated as follows:
• if the threshold target is achieved, then 50% of the allocation of
options for that period will vest;
• if the result achieved is between the threshold and stretch targets,
then the number of vested options is scaled proportionately
between 50% and 100%; or
• if the stretch target is achieved, then 100% of the options will vest.
The number of options that will vest in the first and second
performance periods is based on the performance period result
calculated as above. The maximum number of options that can vest
is limited to the initial number allocated less any options that may
have lapsed.
For the third performance period, the number of options that will vest
is based on the performance period result (other than for the CEO).
Furthermore, if the threshold target in the third performance period is
met, then the following options will also vest:
• if the stretch target is achieved in the third performance period,
then 100% of options that did not vest in the first and second
performance periods (provided they have not lapsed); or
• if the threshold target is not achieved in the first and/or second
performance period respectively, and the result achieved in the
third performance period is less than the stretch target, then 50% of
the options that did not vest in the first and/or second performance
period respectively.
Return on Investment (ROI) options (fiscal 2008 and fiscal 2007) and
Revenue Growth (RG), Next Generation Network (NGN), Information
Technology Transfomation (ITT) options (fiscal 2007 for all executives
except CEO, and fiscal 2008 and fiscal 2007 for CEO)
Allocations of ROI, RG, NGN and ITT options are tested at set intervals
over the applicable performance periods.
For each of the performance periods, the number of options that will
vest is calculated as follows:
• if the threshold target is achieved in the applicable performance
period, then 50% of the allocation of options will vest;
• if the result achieved is between the threshold and stretch targets,
then the number of vested options is scaled proportionately
between 50% and 100%; or
• if the stretch target is achieved, then 100% of the options will vest.
The maximum number of options that can vest is limited to the initial
number allocated less any options that may have lapsed.
27. Employee share plans (continued)
Performance Period
1st 2nd 3rd
All eligible executives
except CEO
Growthshare 2007 . . . .
1 July 2006 to
30 June 2008
1 July 2006 to
30 June 2009
1 July 2006 to
30 June 2010
Growthshare 2008 . . . .
1 July 2007 to
30 June 2009
1 July 2007 to
30 June 2010
1 July 2007 to
30 June 2011
CEO (i)
Growthshare 2007 -
tranche 1 . . . . . . . . .
1 July 2006 to
30 June 2008 n/a n/a
Growthshare 2007 -
tranche 2 . . . . . . . . .
1 July 2007 to
30 June 2008 n/a n/a