Ann: OFFICE: TEL: Telecom appoints Simon Moutter

• Release Date: 23/04/12 10:30
• Summary: OFFICE: TEL: Telecom appoints Simon Moutter as CEO
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TEL
23/04/2012 08:30
OFFICE

REL: 0830 HRS Telecom Corporation of New Zealand Limited

OFFICE: TEL: Telecom appoints Simon Moutter as CEO

MEDIA RELEASE

23 April 2012

Telecom appoints Simon Moutter as CEO and Managing Director

Telecom has today announced that it has appointed Simon Moutter to the role
of Chief Executive Officer (CEO) and Managing Director, effective 1 September
2012.

Mr Moutter is currently CEO of Auckland International Airport. He has
previously held senior roles at Telecom, including Chief Operating Officer.
Prior to that he was Chief Executive at Powerco.

"Simon's knowledge of the telecommunications industry in New Zealand is
strong and deep, and he is a proven CEO of a significant listed
organisation," said Mark Verbiest, Telecom Chairman.

"He has also demonstrated that he can deliver growth in a challenging
environment by transforming the customer experience at Auckland International
Airport.

"As such, the Telecom Board is confident Simon has the right skill-set to
lead Telecom as it adapts to the opportunities and challenges driven by
significant changes to its structure and operating environment."

The appointment follows an extensive global search, which commenced in
December 2011.

Each candidate was assessed and benchmarked against a wide range of criteria
in order to ensure the successful candidate has the right mix of skills to
lead Telecom through the next phase of its business.

"The recruitment process has been extremely robust, conducted over a period
of several months, and many high calibre candidates were attracted to the
role.  Ultimately the board was unanimous that Simon was the best candidate,
and we are delighted to have secured his services.

"It is also pleasing that the best candidate for the job has been shown to be
a New Zealander.

"Simon has a proven ability to lead companies in developing and delivering
compelling services for customers.

"He was instrumental in the transformation of Telecom in the early 2000s,
where the company pushed strongly into the IT services sector with the
acquisition and expansion of Gen-i, the turnaround of Telecom mobile, and the
roll-out of nation-wide broadband services."

"He has also led the transformation of Auckland International Airport, which
has significantly improved the international traveller experience as well as
growing customer numbers.

"His focus on customer experience has seen AIA voted best airport in Asia
Pacific four years running, as well as significantly growing revenues from
non-airport business.

"This customer focus, in a challenging environment, in addition to deep
knowledge of telecommunications and experience as CEO of a large listed
company, means Simon is superbly qualified to lead Telecom," he said.

Simon Moutter said he was excited to be returning to Telecom.

"I feel privileged to be selected to lead a resurgent Telecom as it reshapes
for success in an even more dynamic communications services market post the
demerger.

"I am looking forward to returning to the telecommunications industry, where
Telecom, now subject to significantly less regulation, is free to focus on
delivering world class products and services to our customers throughout New
Zealand," he said.

CEO Remuneration

Mr Moutter will receive a base salary of $1.35m, and he will also be eligible
to receive short and long term incentives.

He will receive an annual short term performance incentive of $750,000 in
cash if he meets the targets set by the board. He will also receive shares
to a value of $600,000 for achievement of those targets, with the shares
received as part of this performance incentive restricted from sale for two
years.

The total value of the incentive payment and share grant may increase if Mr
Moutter significantly exceeds the targets set by the board.

Mr Moutter will also be eligible for $1m in share rights annually, as his
long term incentive.  The vesting of these share rights will typically not
occur until three years after they have been granted, and vesting is subject
to meeting financial and shareholder return performance hurdles to be
determined by the board.

In all cases, the performance targets will be closely aligned to the delivery
of shareholder value.

"This package represents the market rate for a CEO position of this
magnitude," said Mark Verbiest.

"While Telecom is a smaller company than it was following the Chorus
demerger, it retains a significant level of scale, challenge and complexity
and the package reflects that. Telecom is currently the largest listed
company by market capitalisation on the NZX."

"If challenging performance targets are met then Simon will be rewarded
appropriately, in a manner that is closely aligned with shareholder value.
As such, the majority of Simon's remuneration package is at risk, with a high
proportion of incentives paid in shares."

Mr Moutter will also receive a one-off grant of share rights on commencement
with a value of $750,000.  This grant vests in two tranches; the first half
after 12 months and the second half after 24 months.

ENDS

For media enquiries:
Ian Bonnar
Head of Group Communications
+64 (0)27 215 7564

For investor enquiries:
Stefan Knight
Head of Investor Relations
+64 (0)27 252 9438

Simon Moutter Bio
Simon is currently responsible for the overall leadership, strategic
direction and executive management of Auckland International Airport.
Prior to joining Auckland International Airport in 2008, Simon was chief
operating officer at Telecom, managing most parts of the business at one time
or another. This was preceded by 13 years in the electricity and gas
industries.
Simon has a Master's Degree in Engineering (Electrical and Electronics) from
University of Canterbury and a Bachelor's Degree in Science (Physics) from
Massey University.
Summary of employment and experience

2008- AUCKLAND INTERNATIONAL AIRPORT LTD
Present Auckland

   Chief Executive Officer

1999-2008  TELECOM CORPORATION OF NEW ZEALAND LTD
   Auckland and Wellington

2006-2008  Chief Operating Officer, Business

2002-2006  Chief Operating Officer, New Zealand

2000-2002  Group General Manager, Network and International

1999-2000  General Manager, Network Delivery

1991-1999  POWERCO LTD
   New Plymouth

   Chief Executive Officer

1991-1992  ELECTRICITY CORPORATION OF NZ LTD
   New Plymouth

   Station Manager, New Plymouth Power Station

1987-1990  ELECTROTECH CONSULTANTS LTD

   Managing Director and Owner

1983-1987  NEW ZEALAND MINISTRY OF ENERGY

   Electrical Engineer, Electricity Division

Simon Moutter - Summary of Key Terms

The key terms of the employment arrangement are summarised below.  These
terms have been established taking into account the high calibre of Mr
Moutter, external expert advice on both best practice remuneration
structures, and NZ, Australian and international comparative company
benchmarks.

The remuneration package is linked to the performance of the Telecom Group so
that higher levels of performance attract higher rewards, and is aligned with
shareholder outcomes.

Term

The employment agreement is for an indefinite duration, subject to the
termination provision detailed below.  Mr Moutter will commence employment on
the 1st September 2012.

Remuneration

There are four components to Mr Moutter's remuneration package, the quantum
of which will be reviewed annually.  Any grants of equity are subject to the
approval of shareholders which will be sought at the 2012 annual shareholders
meeting in October.

o Base Remuneration of NZ$1,350,000 per annum.

o Annual Performance Incentive with a target value of NZ$750,000.  The actual
short term incentive awarded will be determined by the Board based on Telecom
and CEO performance against annual performance criteria.

o Performance Equity Incentive with a target value of $600,000.  The actual
value of the shares to be granted will be determined by the Board based on
Telecom and CEO performance against the annual performance criteria.  The
number of restricted shares to be awarded (subject to shareholder approval)
will be determined by dividing the after tax value of the performance grant
value by the share price on the date of issue. Shares granted will be
restricted from sale or disposal for two years from grant date. Dividends
will be payable on these restricted shares.

o A long-term incentive (LTI) of up to $1,000,000 by way of performance share
rights with a zero-exercise price, subject to shareholder approval.

Allocation
The number of share rights issued will be calculated by dividing the LTI
amount ($1,000,000) by the share price on the date of the issue.  The initial
effective date will be the commencement date.

Vesting Periods
Share rights granted in September 2012 will be eligible for vesting 50% in
2014 and 50% in 2015.  Share Rights granted in 2013 and subsequent years will
be eligible for vesting after three years.

Vesting Conditions
The ability to vest any of the Share Rights and the number of Share Rights
that will vest following the end of the vesting period is dependent on
achievement of performance hurdles.  The performance hurdles for 2012 are yet
to be determined by the Board but are likely to be 50% relative TSR and 50%
an internal measure of earnings or free cash flow.

Mr Moutter will also receive a one-off grant of share rights on commencement
with a value of $750,000. The share rights will have a zero-exercise price
and are subject to shareholder approval. This grant vests in two tranches;
the first half after 12 months and the second half after 24 months.

Termination

o Mr Moutter may resign at any time giving six months' notice.

o Telecom may terminate Mr Moutter's employment with three months' notice.  A
payment of nine months' base remuneration will be made, plus pro rata annual
performance incentive (STI) in the case of termination by the Company, other
than for termination for cause.

o If there is a change of control that results in Mr Moutter no longer being
the CEO of a publicly listed company then he will be able to terminate his
employment with three months' notice and receive payment as if Telecom had
terminated his employment.

o Telecom may also terminate Mr Moutter's employment without notice for
defined causes in which case he will receive no further entitlement to any
remuneration.

o Any additional entitlement to incentives on termination due to notice by
Telecom or change of control will be at the discretion of the Board, subject
to the rules of those schemes. In particular, If Telecom terminates Mr
Moutter's employment on notice then his performance equity incentive shares
that are due to vest within one year will transfer into his ownership, and if
Mr Moutter terminates his employment as a result of a change of control then
he will receive a prorata grant under the performance equity incentive, his
equity incentive scheme shares will vest into his ownership as will his LTI.

Restraints
For a period of twelve months after ceasing working for Telecom (including
any period of garden leave) Mr Moutter is restrained in New Zealand,
Australia and other countries where Telecom operates in a substantial manner
from being associated with a business operating in a sector within which
Telecom competes.  He is further restrained for the same period from
soliciting from Telecom, Telecom employees or customers.
End CA:00222083 For:TEL    Type:OFFICE     Time:2012-04-23 08:30:25