Urgent Plea for Help !!!, page-5

Hi Markco,

Not well known from out of last week's FY02 results were the new Corporate Governance rules adopted by Telstra.

In summary:

1)
Share Option Plans under the Telstra Growthshare Plan have been brought to an end.

Existing share option arrangements involving the on-market purchase of shares which are subsequently awarded in the form of restricted shares, or otpion grants, subject to various performance hurdles being met, will be grandfathered, but no new option plans will be introduced in their place.

Replacing telstra Growthshare will be a revised, and updated deferred remuneration plan, comprising:
1)
cash salary (and immediate sbenefits, such as superannuation, etc);
2)
STIs (of short-term duration, to 12 months), but subject to various operational and /or financial performance hurdles);
3)
LTIs (of a longer term duration) which seek to align shareholder returns to the contributions of management in and towards achieiving business outcomes (known as Participation Rights which will be redeemed for shares at a later date); and
4)
deferred remuneration, extending rights to acquire shares on a 3 year vesting basis (ie: with inbuilt value incentives).

In effect, the shares will be acquired at an early point intime, with remuneration contributions being made. This contrasts to the previous option arrangements where a sub-exercise price translated to no downside for management.

Any related costs of exercise will also be expensed in the year of allocation.

Whilst not perfect, the new remuneration arrangements will be designed to ensure that management directly bears the pain of a lagging share price, as opposed to remaining immune to it.


2)
The existing arrangements for Directors' Retiring Allowances (ie: for non-executive directors) has also been brought to an end.

As for 1), existing arrangements for currently serving directors will be grandfathered.


3)
Telstra's Audit Committee will be comprised of non-executive directors,with no management representation. Neither Ziggy, or Mansfield will be represented on the Committee which will be empowered to meet with the external auditors independently of management representation, presence, or participation.

It would appear (but has not been verified) that internal audit may also have a dotted reporting line into the Audit Committee.

4)
Executive remuneration arrangements will be determined by the remuneration Committee of the Board, with input from Ziggy. The CEO, however, will have no membership rights to the Committee.

So, in answer to your observation, I doubt that the forthcoming AGM will deal with a raft of new options being awarded. It may, however, need to consider and /or approve the proposed new Participation Rights' arrangements, and the proposed new Deferred Remuneration scheme.