Telstra 2012 Annual Report Download - page 90

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Telstra Corporation Limited and controlled entities
Remuneration Report
3.2.3 STI Payment results for FY 2012
STI payments for FY 2012, compared to FY 2011, as a
percentage of the maximum STI opportunity were as follows:
(1) The FY 2011 average total of 48.4% reflects the total disclosed in the 2011
Remuneration Report. Not all Senior Executives in FY 2011 qualified as Senior
Executives in FY 2012.
The graph below demonstrates the link between actual STI
payments and Total Revenue growth. For FY 2012, STI
payments as a percentage of the maximum STI opportunity
continues to broadly align with Telstra’s total revenue
percentage growth over the previous four fiscal years.
Telstra believes that the strong customer satisfaction outcomes
for FY 2012 will result in increased revenue growth over time
and further strengthen the alignment of revenue growth and STI
outcomes.
3.3 Long Term Incentive outcomes
Both the FY 2009 and FY 2010 LTI plans reached their final
testing points on 30 June 2012. Options (with an exercise price
of $4.36) that vest under the FY 2009 plan will expire 30 June
2014 if not exercised prior to that date. Vested shares under the
FY 2010 LTI plan are subject to a further one year restriction
period.
The following tables show the results of each plan against each
measure and the percentage of options and restricted shares
that have vested as a result. The results of Telstra’s TSR
relative to the other companies in the peer group was calculated
by an external provider and audited by Telstra’s internal Risk
Management and Assurance team. The calculation of the FCF
ROI result, as well as the adjustments referred to in section
2.3.6, were reviewed by Telstra’s Auditors Ernst & Young. The
Board has determined that the vesting outcomes are in
accordance with the results and the Plan rules.
3.3.1 FY 2009 LTI Plan Final Testing as at 30 June 2012
Sixty per cent of the FY 2009 LTI plan was tested in equal
tranches as at the end of FY 2010 and FY 2011. The remaining
forty per cent of the Plan was tested as at 30 June 2012.
As disclosed in Telstra’s 2009 Remuneration Report, the FY
2009 LTI plan is the last of Telstra’s LTI plans with a re-test
provision. Under the re-test provision, 75% of the options that
did not meet the RTSR performance hurdles at 30 June 2009
and 30 June 2010 may vest if Telstra exceeds the 50th
percentile of the RTSR comparator group in the final plan test at
30 June 2012 and where the final test has exceeded the rank
achieved in the relevant earlier performance periods. There is
no re-test provision in relation to the ROI component of the Plan.
The vesting table for the entire FY 2009 plan including the re-
test provisions is detailed in the following table. For the
performance periods ending 30 June 2010 and 30 June 2011,
the vested RTSR components of 5.85% reflects the portion that
vested as a result of the RTSR result in FY 2012.
The RTSR vesting result was based on Telstra ranking at the
59th percentile of the global peer group.
FY 2009 LTI plan outcomes
The 22.1% of the Plan that has vested is in the form of options
with an exercise price of $4.36 that will lapse by 30 June 2014 if
not exercised before that date. Senior Executives will only
benefit from these options if Telstra’s share price is greater than
$4.36 before 30 June 2014.
3.3.2 FY 2010 LTI Plan Final Testing as at 30 June 2012
One hundred per cent of the FY 2010 LTI plan was tested as at
30 June 2012.
FY 2010 LTI plan outcomes
Name FY 2012 FY 2011 (1)
David Thodey 66.1% 49.0%
Gordon Ballantyne 69.1% 49.0%
Rick Ellis 66.1% n/a
Stuart Lee 58.1% n/a
Kate McKenzie 67.1% 46.5%
Andrew Penn 66.1% n/a
Brendon Riley 67.1% 46.5%
Average Total: 65.6% 48.4%
0%
10%
20%
30%
40%
50%
60%
70%
FY 2009 FY 2010 FY 2011 FY 2012
-3%
-2%
-1%
0%
1%
2%
3%
% STI of maximum
Total revenue growth
Comparison of Total Revenue Growth to % of STI maximum paid
Total revenue growth % of STI Maximum Paid
Test Date Measure
% of Plan
tested
% of plan
vested
30-June-2010 RTSR 15.00% 5.85%
ROI 15.00% 0.00%
30-June-2011 RTSR 15.00% 5.85%
ROI 15.00% 0.00%
30-June-2012 RTSR 20.00% 10.40%
ROI 20.00% 0.00%
Total 100.00% 22.10%
Test Date Measure
% of Plan
tested
% of plan
vested
30-June-2012 RTSR 50.0% 41.0%
FCF ROI 50.0% 25.0%
Total 100.0% 66.0%