Telstra 2015 Annual Report Download - page 161

Notes to the Financial Statements (continued)
NOTE 27. EMPLOYEE SHARE PLANS
Telstra Corporation Limited and controlled entities 159
_Telstra Financial Report 2015
We have a number of employee share plans that are available for
executives and employees of the Telstra Group. These include
those conducted through the Telstra Growthshare Trust, the
Telstra Employee Share Ownership Plan Trust (TESOP99) and our
controlled entity Autohome Inc.
The nature of each plan, details of plan holdings, movements in
holdings, and other relevant details are disclosed below.
27.1 Telstra Growthshare Trust
The Telstra Growthshare Trust commenced in financial year 2000.
Under the trust, we operate a number of different equity plans,
including:
• short term incentive plans
• long term incentive plans
• other equity plans.
The trustee for the trust is Telstra Growthshare Pty Ltd. This
company is 100 per cent owned by Telstra. Funding is provided to
the Telstra Growthshare Trust to purchase Telstra shares to
underpin the equity instruments issued.
In financial year 2015, we recorded an expense of $40 million
(2014: $37 million) for our share-based payment plans operated
by the Telstra Growthshare Trust. As at 30 June 2015, we had an
estimated total expense yet to be recognised of $28 million (2014:
$29 million), which is expected to be recognised over a weighted
average of 1.7 years (2014: 1.7 years).
(a) Short term incentive (STI) plans
The purpose of the STI is to link key executives’ rewards to
individual key performance indicators and to Telstra's financial
performance. The STI is delivered in cash and restricted shares
and the executive is paid an annual STI only when the threshold
targets are met or exceeded.
(i) Description of equity instruments
Restricted shares
For financial years 2015, 2014, 2013 and 2012, the Board
approved 25 per cent of executives’ STI to be allocated as
restricted shares. The effective allocation dates were 1 July 2015,
1 July 2014, 1 July 2013 and 17 August 2012 for financial years
2015, 2014, 2013 and 2012 respectively.
For Telstra’s Executive Committee, half these shares are
restricted for 12 months and half for 24 months. For other
executives, these shares are restricted for three years from their
effective allocation date.
The shares will be forfeited in certain circumstances where the
executive ceases, before the end of the restriction period, to be
employed by any entity in the Telstra Group. However, in certain
other circumstances the shares may be retained if the executive
ceases employment, for example in case of death, total and
permanent disablement or redundancy (in each case subject to
applicable law relating to the provision of benefits).
Restricted shares may also be retained if the executive ceases
employment due to retirement or expiry of a fixed term contract,
providing that notice of retirement or fixed term contract expiry is
more than six months after the actual allocation date. Restricted
shares allocated in financial years 2015, 2014 and 2013 may be
forfeited if certain clawback events occur during the restriction
period.
The executives are able to vote and receive dividends as and from
the actual allocation date. Performance hurdles are applied in
determining the number of restricted shares allocated and
therefore restricted shares are not subject to any further
performance hurdles.
(ii) Summary of movements and other information
Allocations of Telstra’s shares have been made in the form of
restricted shares under our STI plans and are detailed in the
following table:
(a) The weighted average share price for restricted shares
exercised during the financial year was $5.59 (2014: $5.01).
(b) The fair value of restricted shares granted is based on the
market value of Telstra shares on grant date.
(c) Exercise refers to restricted shares being released from
restriction. As at 30 June 2015, there were no exercisable STI
instruments.
(d) The number outstanding includes restricted shares that are
subject to a restriction period.
(b) Long term incentive (LTI) plans
The purpose of LTI plans is to align key executives’ rewards with
shareholders’ interests and reward performance improvement
whilst supporting business plans and corporate strategies.
Telstra Growthshare Pty Ltd administers the plans as trustee of
the Telstra Growthshare trust, and the Remuneration Committee
and the Board determine who is invited to participate in these
plans.
Performance of the LTI plans is measured with respect to the
relevant performance period and subject to subsequent
verification, ratification and sign off by the Remuneration
Committee and approval by the Board.
Telstra Group
Restricted shares (a)
Number
Weighted
average fair
value (b)
Outstanding at 30 June 2013 4,048,652 3.10
Granted 3,156,996 3.96
Forfeited (162,702) 2.98
Exercised (c) (928,022) 3.67
Outstanding at 30 June 2014 6,114,924 3.46
Granted 2,460,563 5.64
Forfeited (378,465) 3.50
Exercised (c) (923,108) 4.43
Outstanding at 30 June 2015 (d) 7,273,914 4.07