Telstra has been hit by a first strike over executive bonuses

Thomas Lohnes/Getty Images
  • The numbers went against Telstra’a remuneration report at the telco’s AGM.
  • The board of directors expected a first strike, a vote of more than 25% against the remuneration report, and the shareholders delivered with almost 62% against.
  • Chairman John Mullen said: “Some observers out there seem to think that directors sit around like the Witches of Macbeth scheming as to how they can manipulate incentive schemes…”

Telstra’s, Australia’s biggest telco, recorded a first strike as shareholders voted against executive pay at the annual general meeting.

The vote was almost 62% against the remuneration report, according to numbers released after the AGM. A first strike happens when 25% of votes are against the report. A second strike at the AGM next year would mean an automatic spill of the board of directors.

Telstra is the biggest company to be hit since AMP’s remuneration report was rejected by 61.4% of shareholders in May this year.

In a copy of his speech, released before the AGM, Chairman John Mullen said he knew a substantial number of shareholders would not approve the remuneration report.

“This will give us what is termed a first strike,” he told the AGM.

“This is deeply, deeply disappointing to my board colleagues and me.

“I simply cannot overstate the amount of time we devote to remuneration and how seriously we take the responsibility.

“Some observers out there seem to think that directors sit around like the Witches of Macbeth scheming as to how they can manipulate incentive schemes to give improper benefit to already excessive executive salaries.

“The Telstra board, like other big company boards, takes this responsibility incredibly seriously and we spend an inordinate amount of time really trying to get the balance right between protecting shareholders’ interests and not over-paying executives, while motivating, incentivising and retaining the best management talent we can at the same time.

“Executive remuneration in very large listed companies is always a vexed issue particularly, as in Telstra’s case, where market dynamics have been challenging and shareholder returns have not been at the level we would have hoped for.”

He says Telstra is a $35 billion company, with around 30,000 employees and 1.3 million shareholders, operating at the competitive cutting edge of telecommunications markets.

“We are also operating in times of great challenge and volatility and the future of the company demands that we implement one of the world’s largest, fastest and most complex transformation strategies,” he says.

“In this environment, first class leadership could not be more critical and a number of things contribute to our being able to attract, retain and motivate high calibre executives, one of which is remuneration.

“This is especially the case when attracting first class talent from overseas as we have recently done and will continue to do. These overseas executives will simply not give up well paid jobs overseas to join Telstra unless we have competitive remuneration strategies.”

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