Telstra 2008 Annual Report Download - page 89

86
Telstra Corporation Limited and controlled entities
Remuneration Report
4.2 Short Term Incentive (STI) Plan fiscal 2008
The COO’s STI payment was 81 per cent of the maximum achievable. The COO’s STI payment is recommended by the CEO and
decided by the Board, based on the same performance measures as the senior executive team and by assessment of his individual
performance objectives. Refer to section 6.4 for details of the results of the fiscal 2008 STI plan.
4.3 Transformation Plan
The COO does not participate in the equity-based long-term incentive plan as his initial contract was for a fixed two year period.
Instead, a cash-based transformation incentive plan measured on operational, financial and transformation performance hurdles
has been established. The performance measures of this plan are the same as the performance measures of the fiscal 2007 CEO LTI
plan (refer page 83) and were selected for the same reasons linked to the business and transformation strategy.
Performance against each of the measures in this plan was assessed on 30 June 2008 and a number of performance measures were
achieved consistent with the outcome as described in Section 3.3 above following assessment by the Board. As such the COO is
eligible to receive 65% of the maximum payment prescribed in his transformation plan payable after announcement of the fiscal
2008 annual results, being $3,900,000.
4.4 Share Price Incentive
The COO may also be entitled to a cash bonus dependant on performance hurdles linked to the achievement of increases in
Telstra’s share price. Performance for this element of his remuneration will be assessed on the average closing share price of
Telstra shares for the 30 calendar days following the announcement of Telstra’s fiscal 2008 annual results. If Telstra’s average
closing share price during this period reaches $6.00 then Mr Winn will be eligible for a payment of $2,000,000. If the share price
reaches $7.00 an additional payment of $6,000,000 is payable. Where the share price is between $6.00 and $7.00 the additional
payment will be based on a linear scale.
4.5 Contract payment
The COO received a cash payment of $500,000, in accordance with his employment contract, as he was employed with Telstra on
8 August 2008.
5. Other Senior Executives’ remuneration
The following provides information on the remuneration arrangements for the other senior executives.
5.1 Remuneration structure
The remuneration structure ensures that rewards are linked to strategic outcomes, and are at risk if those strategic
outcomes are not achieved.
For fiscal 2008, the remuneration structure for these senior executives comprised the following components:
Both the STI and the LTI are at risk and no reward is received by the executives unless the threshold performance levels are
achieved.
Figure 3 shows a comparison of the fiscal 2006, fiscal 2007 and fiscal 2008 remuneration mix based on the maximum level of
reward for the senior executives.
Component At-risk? Description
Fixed remuneration No Fixed remuneration is made up of base salary (including salary sacrifice benefits
and applicable fringe benefits tax) and superannuation.
Short term incentive Yes The STI for fiscal 2008 is an annual “at risk” component of remuneration for the
senior executives and is delivered in cash and incentive shares.
Long term incentive Yes The LTI for fiscal 2008 is a grant of share options, which are subject to
performance measures tested over a two to four-year period.