Telstra 2010 Annual Report Download - page 81

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Telstra Corporation Limited and controlled entities
Remuneration Report
with this policy restriction on an annual basis, this
enables the Company to monitor and enforce the policy.
4. Chief Executive Officer Remuneration (David
Thodey)
4.1 CEO Remuneration Mix
The structure of the CEO’s remuneration package is
consistent with the principles and structure of Telstra’s
remuneration for other Senior Executives as detailed in
Section 3 of this Report.
Effective 19 May 2009, the fixed remuneration (referred
to as “Total Fixed Remuneration” in his service
agreement) of the CEO is $2 million per annum.
The fiscal 2010 annual STI opportunity for the CEO was
80 per cent of fixed remuneration at target performance
and 160 per cent of fixed remuneration at stretch
performance.
The fiscal 2010 annual LTI opportunity for the CEO was
100 per cent of fixed remuneration at target
performance and 200 per cent of fixed remuneration at
stretch performance.
Upon his appointment to CEO, Mr Thodey’s STI
opportunity was held at the same level as his previous
position of Group Managing Director, Enterprise and
Government. For the 2011 fiscal year, the Board has
approved an increase in the CEO’s STI opportunity to
100 per cent of fixed remuneration at target
performance and 200 per cent of fixed remuneration at
stretch performance. This adjustment aligns the CEO’s
variable remuneration more closely to our competitive
market and reflects appropriate internal relativity.
The Board has also approved an increase of 15% in Mr
Thodey’s fixed remuneration, taking it to $2.3 million
effective as of 1 October 2010(i). Information related to
the CEO’s remuneration compared to the external
market was provided by Ernst and Young.
No changes are recommended for the CEO’s LTI
opportunity.
Details of the CEO’s total remuneration are provided in
table 7.1 of this Report.
4.2 CEO Separation Arrangements
Table 7.8 in this Report provides details of the CEO’s
termination arrangements.
5. Linking Remuneration and Company
Performance
The table in section 5.1 provides a summary of the key
financial results for Telstra over the past five financial
years. The tables in sections 5.2 to 5.4 provide a sum-
mary of how those results have impacted the remuner-
ation outcomes for Senior Executives.
(i) Since the Remuneration Report was finalised, as part of the internal
decisions being made in focusing on meeting our goals for fiscal 2011,
Mr Thodey has decided to defer acceptance of his salary increase. This
decision will be reviewed in March 2011.
5.1 Financial Performance
Details of the Group’s performance, share price, and
dividends over the past five years are summarised in
the table below:
(1) Comparatives for fiscal 2006 have been adjusted to reflect the impact of
the transition to AASB Interpretation 4 “Determining whether an
Arrangement Contains a Lease”.
(2) This includes special dividends of 6 cents per share in fiscal 2006 paid to
shareholders as part of Telstra’s Capital Management Plan.
(3) The share price displayed is as at 30 June for the respective fiscal year.
5.2 Average STI Payment as a Percentage of
Maximum Payment
The average STI payment for Senior Executives as a
percentage of maximum is shown in the following table:
5.3 Detailed Results of LTI Plans as at 30 June
2010
The fiscal 2006 and fiscal 2007 LTI plans reached their
final testing points on 30 June 2010.
In addition, the fiscal 2008 and fiscal 2009 LTI plans
reached their interim test points on 30 June 2010 in
accordance with the Terms of those Plans.
The Board assesses each measure that is required to be
tested as at that time to determine if the performance
hurdles have been achieved. The following tables show
the results of the Board’s assessment and the
percentage of options, performance rights and/or
restricted shares that have vested as a result.
Performance
Measure Fiscal 2010
$m
Fiscal
2009
$m
Fiscal
2008
$m
Fiscal
2007
$m
Fiscal
2006
$m(1)
Earnings
Sales revenue 24,813 25,371 24,657 23,673 22,712
EBITDA 10,847 10,948 10,416 9,861 9,575
Net profit available
to Telstra
3,883 4,073 3,692 3,253 3,183
Shareholder value
Share price ($) (3)3.253.394.244.593.68
Total dividends
paid/declared per
share (c)
28.0 28.0 28.0 28.0 34.0
(2)
Performance
Measure Fiscal 2010 Fiscal 2009 Fiscal 2008 Fiscal 2007 Fiscal 2006
STI Received 22.7% 50.9% 81.9% 78.5% 73.8%