Public

Telstra (TLS) 2015 AGM Voting Intention

Company/ASX Code : Telstra Corporation Limited (TLS)
Registry : Link Market Services
Poll/Show of Hands : Proposed poll on items 3, 4 and 5
Webcast : Yes
Venue :
9.30am Grand Hyatt Hotel (Savoy Ballroom) Melbourne, Victoria
Monitor : Mr Mervyn McDougal
AGM Details / NoM : Tuesday 13th October, 2015
ASA Position
Not Applicable
Item 2: Consideration of accounts and reports

Considering that the previous year included the one-off profit from the sale of the Hong Kong mobile business, CSL, as well as 11 months of operating revenues and profits, Telstra has done very well to achieve an increase in total revenue of 1.2% to $26.6 billion. Earnings per share increased marginally to 34.5 cents per share, enabling the board to declare a final dividend of 15.5 cents per share, taking the total dividend for the year to 30.5 cents per share, up 3.3% on the previous year. On these results the transition from David Thodey to the new CEO, Andrew Penn, seems to have been quite successful and reflects credit on the board and the senior management team.


ASA Position
For
Item 3a: Re-election of Mr Russell Higgins as a Director

Mr Higgins has been a Non-executive Director since September 2009. He is a very experienced company director who has worked at very senior levels of both government and private sectors. He holds three current directorships in addition to Telstra, and has a 100% attendance record at Telstra board meetings and as a member of the Audit and Risk Committee. ASA supports the re-election of Mr Higgins.


ASA Position
For
Item 3b: Re-election of Ms Margaret Seale as a Director

Ms Seale has been a Non-executive Director since May 2012. She has more than 25 years’ experience in senior executive roles in Australia and overseas, including the transition of traditional business models to adapt and thrive in a digital environment. She holds three current directorships in addition to Telstra, and has a 100% attendance record at Telstra board meetings and as a member of the Audit and Risk Committee. ASA supports the re-election of Ms Seale.


ASA Position
For
Item 3c: Re-election of Mr Steven Vamos as a Director

Mr Vamos has been a Non-executive Director since September 2009. He has more than 30 years’ experience in the information technology, internet and online media industry. Mr Vamos has been CEO of ninemsn as well as leading Microsoft Australia and New Zealand. He has one other current directorship as well as being a Member of the Advisory Board of the University of Technology Sydney Business School. Mr Vamos has a 100% attendance record at Telstra board meetings and as a member of the Nomination and the Remuneration Committees. ASA supports the re-election of Mr Vamos.


ASA Position
For
Item 3d: Election of Ms Traci Vassalio as a Director

With the retirement of Mr Geoffrey Cousins and Mr John Zeglis from the board, Telstra has taken the opportunity to nominate a US-based technology executive, investor and advisor, Ms Traci Vassalio, for election as a Non-executive Director. Ms Vassalio is extremely well-qualified with a BSc, MSc and an MBA from Stanford. She holds 13 patents across a broad array of technologies and disciplines and was previously the co-founder of Good Technology, a company that provides end-to-end wireless email services to enterprise customers. ASA supports the election of Ms Traci Vassalio. 


ASA Position
For
Item 4: Grant of Performance Rights

Shareholder approval is sought for the proposed grant of Performance Rights to the CEO, Andrew Penn, under the Telstra FY16 LTI Plan. Each Performance Right entitles the CEO to one fully paid ordinary Telstra share at the end of a three year performance period (1 July 2015 to 30 June 2018), subject to the satisfaction of certain performance measures and to further trading restrictions until 30 June 2019. The CEO’s maximum opportunity is 200% of his fixed remuneration of $2,325,000.  

The relevant hurdles are relative total shareholder return (TSR) and free cash flow return on investment. While ASA would like to see a performance period of at least 4 years, the additional 1 year restriction period mitigates our objections somewhat. Other good features are that only 25% vesting occurs at the 50th percentile and that clawback remains at the board’s discretion. For these reasons, ASA supports the proposed grant of performance rights.


ASA Position
For
Item 5: Approval of Remuneration Report

The remuneration report is thorough and provides details of cash payments received during the year as well as the statutory earnings. We would still like to see the 25% equity component of STIs raised to 50% and we will be raising this point with the Chairman. The 13% reduction in the new CEOs fixed remuneration seems reasonable when taken in the context of no increase during the previous year. Board fees remain unchanged again, with the exception of a 9.9% increase in the Chairman’s fee, following a review of Non-executive Director fees relative to other major companies in the ASX20. ASA supports the approval of the Remuneration report. 



 



The individual(s) (or their associates) involved in the preparation of this voting intention has a shareholding in this company. 


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