Telstra 2013 Annual Report Download - page 49

REMUNERATION REPORT
Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 47
1. REMUNERATION SNAPSHOT
1.1 Key Points
Telstra performed strongly in FY13, delivering growth in financial results and achieving a second successive year of Total Shareholder
Return (TSR) of approximately 37 per cent. These results were underpinned by progress against our key strategic objectives, including
continued strong growth in customer numbers and improvements in customer service and productivity, and serve to reinforce Telstra’s
position as a leading telecommunications and information services company.
Remuneration outcomes in FY13 were consistent with the company’s positive performance against financial and customer objectives.
The governance of these outcomes remains a key focus of the Board and Remuneration Committee, and we regularly review our policies
to ensure that remuneration outcomes for our executives continue to be aligned with company performance.
The structure and layout of this year’s report is similar to the FY12 report.
1.2 Changes During FY13
The overall structure and philosophy of Telstra’s approach to remuneration remained consistent throughout FY13. We have made some
adjustments to aspects of our remuneration framework and practices to further align our remuneration structures with company
strategy and enhance remuneration governance. The two principal changes were:
• we replaced the Customer Satisfaction measure with a Net Promoter Score (NPS) measure in the FY13 STI Plan during FY13.
Improving customer service remains a key pillar of our strategy. By connecting people to the things they love, we aspire to make
Telstra customers advocates of our company. The NPS measure was introduced in the STI plan to increase alignment to this strategy.
Our results against this measure were encouraging and we are committed to ensuring that Telstra continues to make advancements
in this area going forward. All other key terms of the FY13 STI Plan remained unchanged from the previous year; and
• we sought and obtained shareholder approval for David Thodey’s FY13 LTI allocation at our 2012 AGM, as foreshadowed in our 2012
Remuneration Report. This was in response to shareholder feedback and in line with common market practice and we intend to
continue this practice at our 2013 AGM.
Total Shareholder Return of
36.9%
Telstra’s share price continued to rise in FY13, and with a full year dividend payment of 28c
delivered a total shareholder return of 36.9% over the financial year.
Chief Executive Officer (CEO)
Remuneration
The CEO’s Fixed Remuneration (FR) increased by 8.7% effective 1 October 2012 to $2,650,000. This
increase positioned his FR close to the median of the ASX 20 CEO positions and was an
acknowledgement of David Thodey’s performance for the preceding year.
Total Remuneration for the CEO increased from $7.2m to $8.8m, primarily due to higher STI and LTI
outcomes based on stronger financial and customer outcomes.
Short Term Incentive Outcomes The STI outcome for Senior Executives was an average of 66.0% of the maximum opportunity based
on the achievement of financial, customer and individual performance measures. This outcome is
consistent with Telstra’s strong financial performance and progress in creating customer
advocacy.
Long Term Incentive Outcomes 100% of the FY11 LTI Plan vested in the form of Restricted Shares as a result of top quartile
performance in TSR relative to a peer group of global competitors, and the achievement of the Free
Cashflow Return On Investment (FCF ROI) stretch target over the three year performance period.
These shares are subject to a further Restriction Period ending August 2014.
Non-executive Director
Remuneration
Effective 1 July 2012, Board fees for the Chairman and non-executive Directors were increased by
3.7%. There was no increase in Committee fees. At the 2012 Annual General Meeting (AGM),
shareholders approved an increase in the annual fee pool of $500,000 to a maximum of $3,500,000
per annum.