Telstra 2007 Annual Report Download - page 101

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Telstra Corporation Limited and controlled entities
Remuneration Report
8. Chief Operations Officer remuneration
The COO continues to be a key executive in delivering the transformation of the company. The COO was
initially employed on a 2 year contract with a completion date of 10 August 2007, with an option to extend
his employment for a further year. Mr Winn’s contract has been renewed on the terms set out below and in
Figure 18.
Remuneration mix (Fiscal 2007)
During the initial 2 year term of his contract, the COO did not have a LTI and as such his fixed remuneration
made up 33.3% of his maximum potential remuneration and his at risk reward (STI) made up 66.7% of his
maximum potential remuneration. In addition to these contractual entitlements he also received a cash
bonus for delivery of the Next GTM wireless network as approved by the Telstra Board (refer to Figure 12).
Short Term Incentive Plan (Fiscal 2007 and 2008)
The COO has a STI cash opportunity of 100% of fixed remuneration where target performance is met, with
the opportunity to achieve up to 200% of his fixed remuneration if stretch targets are achieved. The COO’s
STI payment is determined by the Board based on the same performance measures as detailed in Figure 3
and by assessment of his individual performance objectives by the Board. As illustrated in Figure 4, each of
the performance measures has three different levels of performance. Refer to Figure 14 for details of the
COO’s actual STI payment for fiscal 2007.
Long Term Incentive Plan
The COO is eligible to participate in a cash long term incentive plan. The Board will assess performance
under the plan as at 30 June 2008 against IT transformation, network transformation, financial and total
shareholder return performance measures. These performance measures provide alignment with the long
term incentive measures for other senior executives.
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.
C. LINKING SENIOR EXECUTIVE REMUNERATION AND COMPANY PERFORMANCE
1. Defining “company performance”
Telstra ultimately assesses its company performance by reference to increases in “earnings” and
“shareholder wealth”.
The key objective of Telstra’s transformation strategy is to lay the foundations for sustained increases in
earnings and shareholder wealth going forward. The transformation objectives set by the Board represent
the measures the Board considers to be essential to the enhancement of shareholder wealth and the
delivery of superior earnings. Our remuneration structure continues to reflect this and plays a key role in
driving the achievement of the transformation objectives.
2. Linking the remuneration structure to the transformation strategy
Our remuneration structure continues to drive the achievement of transformational objectives.
Given that the transformation strategy is seen as the key to sustained company performance going forward,
it is essential that senior executive remuneration is structured in a way that rewards executives for delivery
of the transformation objectives. By linking senior executive rewards to achievement of the transformation
strategy, the interests of shareholders and senior executives are aligned.