Telstra 2015 Annual Report Download - page 50

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Executive Summary
This report details the remuneration framework and
outcomes for Key Management Personnel (KMP) of the
Telstra Group for the year ended 30 June 2015 (FY15).
Our aim in preparing this report is to enable you, our
shareholders and interested stakeholders, to understand
the links between remuneration, company strategy and
Telstra’s performance, and the framework we have in place
to provide effective governance over remuneration at Telstra.
To support this we have sought to provide a comprehensive
overview of our performance and remuneration outcomes,
including additional voluntary disclosures, as well as a
summary of our governance practices.
The report has been prepared in accordance with section
300A of the Corporations Act 2001 (Corporations Act).
The information in this report has been audited as required
by section 308(3C) of the Corporations Act.
Remuneration outcomes in FY15
The overall structure and philosophy of Telstra’s approach
to remuneration remained consistent throughout FY15.
Telstra continued to perform well in FY15 across key measures,
including  nancial results, growth and customer service.
Our remuneration philosophy is based on linking  nancial
rewards directly to employee contributions and company
performance. The remuneration outcomes for FY15 therefore
re ect the strong performance of the business and the value
created for shareholders over the past four years.
• Since David Thodey ceased to be CEO on 30 April 2015, he has
continued to receive his ordinary  xed remuneration throughout
his six month notice period which ends on 21 August 2015.
Upon ceasing employment Mr Thodey will receive his accrued
statutory entitlements. He will receive a cash STI payment of
$3,402,600 based on actual company performance and individual
performance at target for FY15. For FY16, he will receive a pro rata
STI payment of $377,534 up to 21 August 2015 based on
performance at target. These are both in accordance with the STI
plan policy. The Board exercised its discretion to permit Mr Thodey
to retain 274,083 of the 939,716 performance rights allocated to
him under the FY15 LTI plan. He will also receive his entitlements
under the FY12, FY13 and FY14 LTI plans. All of these are subject
to the original performance conditions and restriction periods
of the relevant plan terms. He will forfeit half of his FY14 STI
Restricted Shares (62,432 shares) consistent with the plan rules.
• Andrew Penn commenced in the role of CEO on 1 May 2015.
His reported remuneration includes 10 months where he held
the role of CFO and GE International and two months as CEO.
Mr Penn’s  xed remuneration as CEO of $2,325,000 was set
between the 25th percentile and median of the ASX20 which
the Board considered appropriate for a new CEO, with maximum
annual STI and LTI opportunities set at 200 per cent of  xed
remuneration respectively.
• Warwick Bray was appointed CFO effective 1 May 2015, moving
from the role of Group Managing Director Products. Mr Bray’s
 xed remuneration as CFO of $1,100,000 was set between the
25th percentile and median of the ASX20 which the Board
considered appropriate for a new CFO, with maximum annual
STI and LTI opportunities set at 200 per cent and 160 per cent
of  xed remuneration respectively.
• Robert Nason announced his retirement from the role of
GE BS&I on 17 April 2015. Mr Nason continued in his role until
30 June 2015 and will continue to provide transition support
and other assistance within the business until his cessation date
of 30 September 2015. He will receive his accrued entitlements as
well as his entitlements under relevant incentive plans. He will
forfeit the FY15 LTI allocation and half of FY14 STI Restricted
Shares (23,768 shares) consistent with the plan rules.
• Following a review, the Board (other than the Chairman) decided
to increase the Chairman’s fee, to position it appropriately against
the ASX20. The increase was 9.9 per cent to $775,000, effective
1 October 2014. Prior to this, the last change to the Chairman’s
fee was made in 2012. No other changes were made to any of
the Committee or non-executive Director fees.
THE KEY OUTCOMES UNDER
OUR INCENTIVE PLANS THIS YEAR WERE
Senior Executives received an average
of 61.0% of the maximum opportunity
available based on the assessment
of  nancial, customer advocacy and
individual performance.
Short term
incentives
The FY13 LTI plan was tested on 30 June 2015.
The outcome was that 85.5% of the maximum
opportunity vested as Restricted Shares.
The results of the two plan measures were
that the Telstra Relative Total Shareholder
Return (RTSR) ranked at the 72nd percentile
of the comparator group and Telstra achieved
a Free Cash Flow Return on Investment (FCF
ROI) outcome of 20.5%, which exceeded the
target of 19.3% for the FY13 LTI plan. The value
of these Restricted Shares re ects the fact that
Telstra’s share price increased by more than
66% over the three year performance period.
Long term
incentives
REMUNERATION
REPORT
Key changes in FY15
During the year there were signi cant changes to our Senior
Executive team, with the Chief Executive Of cer (CEO) announcing
his retirement, appointment of a new CEO and a new Chief
Financial Of cer (CFO), and the Group Executive (GE) Business
Support and Improvement (BS&I) announcing his retirement.
In FY15 Telstra also reviewed its non-executive Director fees
relative to the ASX20.
The remuneration implications of these changes are:
The overall structure of our Remuneration Report
remains consistent with the way in which it has been
presented for the last few years. We hope you  nd it
helpful and informative in evaluating our performance
and the effectiveness of our governance framework.
Telstra Corporation Limited and controlled entities