Where to now for long term investors of Telstra, page-899

There are at least 2 issues to consider:

1. Are they worth the incentives that they are provided with in the rem report

AND

2. Are the incentives paid in a manner to ensure that directors interests are aligned with those of shareholders.

The first is questionable in view of the loss of value to SH in the last year; the hurdles in the rem report should be sufficient for the incentives to be obtainable but also high enough to ensure that they earn them.

The second issue is the one where cash is a cop out (IMO). If directors get cash then they are not aligned to the Long term interests of shareholder and could "take the money an run". It is important that incentives are in equity (or at least mostly equity) and have a holding period (e.g 3 to 4 years) to ensure that the directors are aligned with the long term interests of shareholder. In other words I feel getting the incentives in cash motives short termism and not long term value aligned to SH's. My view is that we should vote "no" simply on the basis that the rem report is not adequately aligned with Shareholder interests, particularly given the managements expressed view that they really don't care what shareholders think.