Telstra 2003 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2003 Telstra annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

www.telstra.com.au/investor P.43
(5) For allocation after fiscal 2001, an option or performance right represents a right to own a share in Telstra. Generally, options or performance rights may only be
converted to Telstra shares if a performance hurdle is satisfied in the performance period and, in the case of options, a payment of the exercise price is made. The
performance hurdle for options and performance rights allocated in fiscal 2002 is that the Telstra 30 day average total shareholder return ‘TSR’ must exceed the 50th
percentile of the 30 day average TSR performance of the companies comprising the ASX 200 Industrials (“Peer Group”) at allocation date between the third and fifth
anniversary of allocation.Options and performance rights vest on a performance scale.If the 50th percentile ranking is achieved 100% of the allocation will vest. If at
least the 50th percentile ranking is achieved in the first quarter of the performance window, additional options and performance rights may vest on a sliding scale
where a higher ranking is achieved up to 75th percentile ranking. The full allocation (ie. 200%) will vest if the 75th percentile ranking is achieved. If the 50th percentile
ranking is not achieved in the first quarter of the performance period, half of the maximum allocation will have a $nil value and will lapse. If the performance hurdle
is satisfied in the performance period, options may be exercised at any time before the tenth anniversary of allocation; otherwise they will lapse. If the performance
hurdle is satisfied in the performance period, performance rights may be exercised at any time before the fifth anniversary plus 90 days of allocation; otherwise they
will lapse. The market value was calculated as the weighted average price at which Telstra’s ordinary shares were traded on the ASX during the 5 days prior to and
including the allocation date.
(6) September 2001 Growthshare allocations of options and performance rights. The number of options and performance rights allocated has been determined
based on the market price of a Telstra share at the date of allocation. The price at this date was $4.90 which is also the exercise price of an option applicable to
this allocation. In determining the fair value of each option and performance right to be included in remuneration, a simulation methodology consistent with
assumptions that apply under the binomial and modified Black-Scholes methods was used. This returned a fair value of $1.13 per option and $2.86 per performance
right. The number of performance rights and options disclosed represent the number of instruments that have been allocated and may potentially vest if the
relevant performance hurdle is achieved.
(7) March 2002 Growthshare allocations of options and performance rights. The number of options and performance rights allocated has been determined based on
the market price of a Telstra share at the date of allocation. The price at this date was $5.63 which is also the exercise price of an option applicable to this allocation.
In determining the fair value of each option and performance right to be included in remuneration, a simulation methodology consistent with assumptions that
apply under the binomial and modified Black-Scholes methods was used.This returned a fair value of $1.19 per option and $3.08 per performance right. The number
of performance rights and options disclosed represent the number of instruments that have been allocated and may potentially vest if the relevant performance
hurdle is achieved.
(8) September 2002 Growthshare allocations of performance rights and deferred remuneration. The number of performance rights and deferred shares allocated
has been determined based on the market price of a Telstra share at the date of allocation. The price at this date was $4.87. In determining the fair value of each
performance right and deferred share to be included in remuneration, a simulation methodology consistent with assumptions that apply under the binomial and
modified Black-Scholes methods was used.This returned a fair value of $2.99 per performance right and $4.41 per deferred share. The number of performance rights
and deferred shares disclosed represent the number of instruments that have been allocated and for performance rights,the number of instruments which may
potentially vest if the relevant performance hurdle is achieved.