Telstra 2016 Annual Report Download - page 61

Telstra Corporation Limited and controlled entities | 59
Performance hurdles explained:
Relative Total Shareholder Return (RTSR)
RTSR measures the performance of an ordinary Telstra share
(including the value of any cash dividends and other shareholder
bene ts paid during the period) relative to the other companies
in the comparator group over the same period.
The Board believes that RTSR is an appropriate performance
hurdle because it links executive reward to Telstra’s share price
performance relative to its global peers.
The comparator group for the FY16 LTI plan is the following large
market capitalisation telecommunication  rms:
The FY16 LTI plan comparator group is consistent with the
FY15 LTI plan except that Portugal Telecom SGPS SA has been
removed due to a signi cant restructure during FY16.
The Board has discretion to change members of the comparator
group under the LTI plan terms.
Free Cash ow Return On Investment (FCF ROI)
FCF ROI as determined by the Board is calculated by dividing
the average FCF for LTI over the three year performance period
by Telstra’s Average Investment over the same period.
The Board selected the FCF ROI measure as an absolute LTI
target on the basis that cash generation by the business over
the longer term is central to the creation of shareholder value.
Vesting of Performance Rights as Restricted Shares:
At the end of FY18, the Board will review Telstra’s audited
 nancial results for FCF ROI and the RTSR outcome to
determine the percentage of Performance Rights that vest
as Restricted Shares under the FY16 LTI plan.
(d) Group Executive Telstra Wholesale
Due to the requirements of the SSU, the GE Telstra Wholesale
participates in a separate equity plan. Restricted Shares are
granted in lieu of the LTI plan for other Senior Executives,
based on performance against the GE Telstra Wholesale’s
STI measures for the previous  nancial year. The Restricted
Shares are subject to a three year Restriction Period, during
which time the GE Telstra Wholesale is entitled to earn
dividends and exercise voting rights attached to those shares.
If the GE Telstra Wholesale leaves Telstra before the end of the
Restriction Period for any reason, other than a Permitted Reason,
the Restricted Shares will be forfeited. If cessation of employment
occurs for a Permitted Reason, a pro rata number of Restricted
Shares are retained subject to the original Restriction Period.
In FY16, the former GE Telstra Wholesale, Stuart Lee, was
allocated 66,031 Restricted Shares in lieu of the FY15 LTI plan,
based on performance against his FY15 STI measures. The
Restriction Period for these shares ends on 30 June 2018.
The current GE Telstra Wholesale, Mr Irving, will begin to
participate in this plan from FY17 onwards rather than the
Senior Executive LTI plan. In lieu of participation in the Senior
Executive FY17 LTI plan, Mr Irving will be allocated Restricted
Shares in FY18 based on his performance against his FY17 STI
plan measures, namely Wholesale Total Income, Wholesale
EBITDA, Wholesale NPS and individual performance. However,
any existing equity plans that were granted to Mr Irving prior
to his appointment will remain on foot in accordance with the
terms and conditions of those arrangements and in compliance
with the requirements of the SSU.
Remuneration Report | Telstra Annual Report 2016
FY16 LTI plan comparator group
AT&T Inc
Bell Canada Enterprises Inc
BT Group Plc.
Deutsche Telekom Ag
Koninklijke KPN N.V.
KT Corporation
Nippon Telegraph & Telephone Corp
NTT DoCoMo Inc
Orange SA
Proximus SA
Singapore Telecommunications Ltd
SK Telecom Co Ltd
Spark NZ Ltd
Swisscom AG
Telekom Austria AG
Telecom Italia SpA
Telefonica SA
Telenor ASA
Telia Company AB
Verizon Communications Inc
Vodafone Group Plc.