Telstra 2010 Annual Report Download - page 83

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Telstra Corporation Limited and controlled entities
Remuneration Report
6. Non-executive Director Remuneration
6.1 Remuneration Policy and Strategy
Telstra’s non-executive Directors are remunerated in
accordance with Telstra’s Constitution which provides
for:
• An aggregate pool of fees, set and varied only by
approval of a resolution of shareholders at the
annual general meeting (AGM);
• The Board determining how fees are allocated
among the Directors within the fee pool, based
on independent advice and market practice; and
• The total non-executive Director fees not
exceeding the annual limit of $3 million per
annum, as approved by shareholders at the AGM
in November 2007.
6.2 Remuneration Structure
Telstra’s non-executive Directors continue to be
remunerated with set fees. This enables them to
maintain their independence and impartiality when
making decisions about the future direction of the
Company. The Board has established guidelines to
encourage non-executive Directors to hold Telstra
shares equivalent to at least 50 per cent of their annual
fees. Such shares are to be acquired over a five year
period from 1 July 2009 to align the remuneration
structure with the interests of our shareholders.
All Board and Committee fees, including
superannuation, paid to Directors in fiscal 2010 remain
within the approved fee pool. Section 3.7 of this Report
provides details on Restrictions and Governance as they
apply to non-executive Directors.
Board and Committee fees are set out in the table
below. Additional Committee fees do not apply to the
position of Chairman of the Telstra Board. Director fee
levels do not incorporate an at-risk component.
In fiscal 2010, selected non-executive Directors
provided services to the Telstra Board NBN (National
Broadband Network) Committee that were over and
above their regular Committee obligations. Fees for
services rendered in relation to the NBN Committee are
paid out of the funds of the Company and not the
Directors’ Fee Pool.
There has not been an increase in the level of non-
executive Directors’ fees since 1 July 2008. Effective 1
July 2010, the Board has approved a 3 per cent increase
to the non-executive Director base fee and an increase
to the Remuneration Committee fee structure. These
fee increases are within the annual fee pool of $3 million
as approved by shareholders at the 2007 AGM.
Table 7.2 provides full details of non-executive Director
remuneration for fiscal 2010.
6.3 Components of the Total Remuneration
Package (TRP)
Each year non-executive Directors allocate their total
remuneration between the three components below.
The Growthshare Trustee retains discretion to
determine whether to accept the Director’s application
for the relevant percentage to be received as
Directshares.
6.4 Equity Compensation – Directshare
The Directshare Plan aims to encourage a longer-term
perspective and to align the Directors’ interests with
those of Telstra’s shareholders. The shares are allocated
to the participating non-executive Director at market
price. To preserve non-executive Director independence
and impartiality, there are no performance hurdles in
respect of this Plan.
6.5 Retirement Benefits
Superannuation contributions, in accordance with
legislation and Telstra policy, are included as part of
each Director’s total remuneration. Directors may
choose to increase the proportion of their remuneration
taken as superannuation, subject to legislative
requirements.
Telstra does not provide retirement benefits for
Directors, other than superannuation contributions.
Table 7.2 provides full details of non-executive Director
remuneration for fiscal 2010.
Board Fees Chairman Director
Board (fiscal 2010) $660,000 $220,000
Committee Fees Committee
Chair Committee Member
Audit Committee $70,000 $35,000
Remuneration Committee $40,000 $20,000
Nomination Committee - $7,000
Technology Committee $7,000 $7,000
Cash Directshare Superannuation
Minimum 30 per
cent of TRP as
cash.
From 1 July 2009
nominating a per
cent of TRP as
Telstra shares
through the
Directshare plan.
This is optional.
Minimum
superannuation
guarantee applies.