Telstra 2007 Annual Report Download - page 98

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Telstra Corporation Limited and controlled entities
Remuneration Report
Exercising Options
An Option can only be exercised:
• if the relevant performance measure is satisfied and the Option vests;
• if the gateway TSR hurdle is satisfied as at 30 June 2010; and
• upon payment of the exercise price.
Once the Options have been exercised the executive becomes the owner of the underlying shares and is
entitled to any dividend, bonus issue, return of capital or other distribution in respect of those shares.
Restrictions on hedging
The senior executives are restricted from entering into arrangements which effectively operate to limit the
economic risk of their security holdings in instruments allocated under LTI plans during the period the
instruments remain unvested.
Board discretion
As with the fiscal 2006 plan, the Board has discretion to reset the performance hurdles governing the fiscal
2007 plan in certain limited circumstances. Under the terms of the fiscal 2006 plan exercise of the discretion
depends on the occurrence of one or more of the following factors:
• a material change in the strategic business plan;
• a significant adverse business change occurs; or
• an adverse regulatory change occurs.
The Board's discretion to reset the hurdles governing the fiscal 2007 LTI depends on the occurrence of one or
more of the following factors:
• a material change in the strategic business plan;
• a material regulatory change occurring; or
• a significant out-of-plan business development occurring resulting in a material change to EBITDA. This
material change could be either a positive or adverse change for Telstra, but does not include improved
or deteriorated operating or financial performance of Telstra's existing businesses.
No such change occurred during the year.
LTI awards made
Details regarding the Options granted for fiscal 2007, as well as details of other LTI awards outstanding
during the year, are set out in section D below.
7. Chief Executive Officer remuneration
The CEO is rewarded on the delivery of transformational and operational outcomes in line with the
key elements of the business strategy.
While the remuneration strategy and structure for the Chief Executive Officer (CEO) are generally the same
as that described above, there are some differences from the senior executives that reflect the unique and
important role the CEO plays in delivering the transformation strategy. The CEO’s remuneration
arrangements are detailed below.
During fiscal 2007 the Board undertook an extensive review of the remuneration arrangements for the CEO.
The revised remuneration arrangements reflect the importance of the transformation required at Telstra
and of the competitive domestic and global CEO market. The new arrangements further re-inforce the
principle of linking significant proportions of the CEO’s reward to company performance.