Telstra 2013 Annual Report Download - page 55

REMUNERATION REPORT
Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 53
2.3 Putting Policy Into Practice
2.3.1 Remuneration Mix of Senior Executives
The graph below shows the FY13 remuneration mix for Senior
Executives as at 30 June 2013. The variable components of STI
(including any potential deferred amounts) and LTI are expressed
at target, which is 50 per cent of the maximum opportunities.
The STI and LTI plans will only provide a reward to a Senior
Executive if the performance measures of the relevant plans are
met.
Note that the Chief Customer Officer currently participates in a cash LTI
related to his fixed term contract, however will align to this structure from
FY14 onwards as noted in section 1.5.
2.3.2 Plan Variation Guidelines
The Board may, in its absolute discretion, amend the terms of the
LTI Plan or the targets of the STI Plan where an event occurs that
means the targets of the relevant plan are no longer appropriate.
Situations where this discretion can be applied include:
• Material change of the strategic business plan;
• Material regulatory or legislative change; and
• Significant out of plan business development such as
acquisitions and divestments.
Adjustments made in relation to the plans are outlined in sections
2.2.1 and 3.2.2.
2.3.3 Executive Share Ownership Policy
The intent of Telstra’s Executive Share Ownership Policy is to align
a significant portion of executive remuneration to the creation of
longer term shareholder value. Under the policy, Senior Executives
are required to hold Telstra shares to the value of 100 per cent of
their Fixed Remuneration by the later of 30 June 2015, or within
five years of first appointment to Senior Executive level.
Any Deferred Shares and Restricted Shares held by Senior
Executives are included in calculating their shareholding for the
purposes of this policy. Senior Executives must obtain Board
approval before they sell shares if they have not yet met their
share ownership requirements under the policy.
Progress is monitored by the Board on an ongoing basis and Senior
Executives are tracking well against this requirement. Details of
Senior Executives’ interests in Telstra shares as at 30 June 2013
are set out in Table 5.8 of this report, but do not include Restricted
Shares from the FY10 and FY11 LTI plans.
2.3.4 Restrictions and Governance
All KMP must comply with Telstra’s Securities Trading Policy and
shares can only be traded during approved trading windows.
KMP are prohibited from using Telstra shares as collateral in any
financial transaction (including margin loan arrangements) or any
stock lending arrangement.
They are also prohibited from entering into arrangements which
effectively operate to limit the economic risk of their security
holdings allocated under Telstra’s equity plans during the period
the securities are held on their behalf by the Trustee or prior to the
date of exercise or lifting of the Restriction Period of the relevant
securities. This ensures that KMP are not permitted to hedge
against participation in Telstra’s equity plans.
KMP are also required to confirm on an annual basis that they
comply with these policy restrictions, which enables Telstra to
monitor and enforce our policy.
2.3.5 NBN and Remuneration
From FY13 the NBN Transaction was incorporated into Telstra’s
established corporate planning processes and Senior Executives
continue to be accountable for achieving planned outcomes,
including NBN cashflows. The value of the NBN Transaction to be
received over the next 30 years is subject to a range of
dependencies and assumptions.
Performance measures for future STI and LTI plans will continue
to be developed using the most up to date forecasts for the
financial impacts of the NBN Transaction.
The Board may use its discretion to amend STI and LTI plans based
on Telstra’s Plan Variation Guidelines or how it determines the FCF
ROI calculation to ensure the NBN Transaction impact is
appropriately reflected.
This may include prior LTI plans that have not fully incorporated
the NBN Transaction. LTI and STI plans may also be adjusted if,
due to external factors, the NBN roll-out does not proceed
according to NBN Co’s published business plan at the time the
measures are developed to avoid windfall gains and losses.
The Board excluded the impact of the NBN in the FCF ROI
calculation for the FY11 LTI Plan, as explained in section 3.3.
NBN adjustments made to the STI for FY13 are outlined in section
3.2.2.
CEO
FR STI Deferred STI LTI
41.7% Equity
37.5% Equity
30.5% Equity
Other Senior
Executives GMD Telstra Wholesale
33.3% 28.6% 22.2%
8.3%
8.6%
8.3%
25.0% 26.8%
25.0%
33.3% 35.7%
44.4%