Telstra 2011 Annual Report Download - page 98

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Telstra Corporation Limited and controlled entities
Remuneration Report
7.7 Value of options, performance rights and restricted shares granted, exercised and lapsed/forfeited
in fiscal 2011
(1) The grant date of the fiscal 2011 LTI plan was 17 February 2011. The fair value of the RTSR and FCF ROI restricted shares granted in fiscal 2011 at the
grant date is $1.06 and $2.43 respectively. The fair value reflects the valuation approach required by AASB 2 using a Monte Carlo simulation option pricing
model, as explained in Note 27 to the financial statements.
(2) Each equity instrument was exercised for one fully paid Telstra share by paying the prescribed exercise price of $1 in total for all of the performance rights
exercised on a particular day. The values reflect the market value at the date of exercise after deducting any exercise price paid.
(3) The value of equity instruments that have lapsed during the year represents the value foregone and is calculated at the date the equity instruments lapsed
using an option pricing model and after deducting any exercise price that would have been payable. The expiry date of the restricted shares that expired
during fiscal 2011 was 30 June 2011.
(4) As the options granted under the fiscal 2008 and fiscal 2009 LTI plans had an exercise price that was greater than the market price of Telstra shares (ie
were out of the money), there was no value associated with these lapsed options.
7.8 KMP Contract Details
The key terms and conditions of service contracts for current Senior Executives are summarised below. There are
no individual contracts for services with our non-executive Directors.
(1) Upon notice being given, Telstra can require the Senior Executive to work through the notice period or terminate employment immediately by providing
payment in lieu of notice.
(2) Payment is calculated on fixed remuneration as at date of termination. There will be no payment if termination is a result of serious misconduct or
redundancy in cases where Telstra’s redundancy policy overrides the termination provisions of the service contract.
(3) All KMP contracts with an effective date on or after 24 November 2009 are subject to the Executive Termination Provisions of the Corporations Act that
became effective from that date. This includes contracts for Gordon Ballantyne and Brendon Riley.
(4) In relation to David Thodey’s contract, if the Board forms the view that the CEO is not performing to the standard required of a CEO, Telstra may terminate
by providing four months written notice.
(5) Due to the fixed term nature (four years) of Gordon Ballantyne’s employment, his contract allows for participation in a cash based LTI plan to a stretch
value of $4,579,548 in lieu of participation in Telstra equity LTI plans. Any payment under this plan is subject to the same terms and performance criteria
as Telstra’s fiscal 2011 LTI plan that applies to other Senior Executives in this Report. If the performance criteria for Free Cashflow Return On Investment
and Relative Total Shareholder Return are not met then this is nil payment opportunity under this cash based LTI plan.
(6) If Telstra terminates Gordon Ballantyne’s employment, his contract allows for a termination payment that is the lesser of 12 months fixed remuneration
or the period from the termination date to the original completion date of his contract.
Name Granted during
period (1)
($)
Exercised
(2)
($)
Expired/Forfeited
Value Foregone (3) (4)
($)
David Thodey 2,366,101 26,860 182,517
Bruce Akhurst 1,263,499 29,065 196,603
Gordon Ballantyne -- -
Nerida Caesar -- -
Paul Geason 423,902 - 20,454
Kate McKenzie 527,939 42,017 69,679
Brendon Riley -- -
Michael Rocca -25,647 -
Deena Shiff 1,004,056 19,821 153,597
John Stanhope 1,351,803 26,870 144,755
Name Term of
Agreement Fixed Remuneration at end of fiscal 2011 Additional Conditions Notice Period (1) Termination Payment (2)(3)
David Thodey Ongoing $2,300,000 (4) 6 months 12 months
Bruce Akhurst Ongoing $1,335,000 Nil 6 months 12 months
Gordon Ballantyne Fixed Term $1,100,000 (5) 6 months (6)
Paul Geason Ongoing $825,000 Nil 6 months 12 months
Kate McKenzie Ongoing $892,500 Nil 6 months 12 months
Brendon Riley Ongoing $1,100,000 Nil 6 months 12 months
Deena Shiff Ongoing $1,060,875 Nil 6 months 12 months
John Stanhope Ongoing $1,482,300 Nil 6 months 12 months