Telstra 2011 Annual Report Download - page 85

70
Telstra Corporation Limited and controlled entities
Remuneration Report
1. Introduction
The Directors of Telstra Corporation Limited (the
Company) present the Remuneration Report (the
Report), prepared in accordance with section 300A of
the Corporations Act 2001, for the Telstra Group for the
year ended 30 June 2011 (fiscal 2011).
The information provided in this Report has been
audited as required by section 308(3C) of the
Corporations Act 2001. This Report forms part of the
Directors’ Report.
2. Key Management Personnel (KMP)
KMP comprise the Directors of the Company and Senior
Executives. The term “Senior Executives” refers to:
• The Chief Executive Officer; and
• All other executives who fall within the definition
of Key Management Personnel of the Group
(being those persons with authority and
responsibility for planning, directing and
controlling the activities of the Company and the
Group, directly or indirectly).
The Senior Executives disclosed in this Report are as
follows:
The Senior Executives in the above table include the five
highest paid Company and Group executives for the
fiscal 2011 year.
Tables 7.1 (Senior Executives) and 7.2 (Non-executive
Directors) provide details of the period during which an
individual has held a particular KMP position (or more
than one position) during fiscal 2011.
3. Principles and Structure of Senior Executive
Remuneration
3.1 Key Principles
The key principles of our remuneration philosophy are
to:
• Implement best practice programs to help drive
the achievement of our strategic and financial
objectives;
• Reinforce Telstra’s values and cultural priorities;
• Link a significant component of at-risk
remuneration to annual performance results and
the creation of long term shareholder value; and
• Provide market competitive remuneration to
attract, motivate and retain highly skilled Senior
Executives.
Total Remuneration comprises fixed remuneration,
short term incentives and long term incentives. The
aggregate value of these components creates the
overall structure by which Telstra measures the
competitiveness of our executive remuneration position
versus the market.
3.2 Fixed Remuneration
Fixed remuneration is made up of base salary (including
salary sacrifice benefits and applicable fringe benefits
tax) and superannuation.
The level of fixed remuneration is set based on the
Senior Executive’s responsibilities, performance,
qualifications and experience. Telstra benchmarks its
Senior Executives’ fixed remuneration against
organisations within the ASX 20 and also against
international telecommunications firms. During fiscal
2011 the Remuneration Committee received market
data from Ernst & Young. Ernst & Young were engaged
by and reported directly to the Remuneration
Committee. The information did not include a
remuneration recommendation (as defined in the
Corporations Amendment (Improving Accountability on
Director and Executive Remuneration) Act 2011) which
came in effect on 1 July 2011.
Additional information is obtained from publicly
disclosed remuneration sources and the Remuneration
Committee considers various inputs before making
decisions on KMP remuneration.
3.3 Short Term Incentive Plan (STI)
3.3.1 STI Plan Design
The STI is an annual “at-risk” component of
remuneration for the Senior Executives and is delivered
in cash and deferred shares. Senior Executives are paid
an annual STI only when they have met thresholds
linked to Telstra’s financial performance, customer
satisfaction and individual key performance indicators.
The performance measures of the STI plan operate
independently of each other.
For all Senior Executives (other than for Sensis), the
fiscal 2011 performance measures of the STI Plan were
Free Cashflow, EBITDA, Total Income, Customer
Satisfaction and Individual Accountabilities.
For the GMD - Sensis, the above Company measures
comprise 20 per cent of the STI Plan with the remainder
covering Sensis Revenue, Sensis EBITDA, and
Individual Accountabilities.
These performance measures were selected for the STI
Plan as they are seen as a critical link between achieving
Name Most Recent KMP Position Title
David Thodey Chief Executive Officer (CEO)
Bruce Akhurst Group Managing Director (GMD) - Sensis
Gordon
Ballantyne
GMD - Telstra Consumer and Country
Wide
Nerida Caesar Former GMD - Telstra Enterprise and
Government
Paul Geason GMD - Telstra Enterprise and Government
and former GMD - Telstra Wholesale
Kate McKenzie GMD - Telstra Innovation, Products and
Marketing
Brendon Riley Chief Operations Officer - Telstra
Operations
Michael Rocca Former Chief Operations Officer – Telstra
Operations
Deena Shiff GMD - Telstra Business
John Stanhope CFO and GMD - Finance and
Administration