The CEPU Communications Union stated it was ‘heartening’ to see Telstra’s remuneration report rejected at the telco’s annual general meeting (AGM).
“Shareholders have rightly held Telstra executives to account today [16 October],” said Shane Murphy, secretary and national president at CEPU Communications Union NSW branch.
“Telstra executives’ attempt to give themselves big bonuses at a time when jobs are being axed and workers are being asked to accept a cut in take-home pay, is beyond offensive.”
Furthermore, Murphy said executives were so far out of step with reality “it’s unbelievable”.
“The top six executives are collectively paid 200 times more than the average Telstra worker. The inequity is ridiculous,” he stated.
The remuneration report, which outlines the salary and bonuses received by directors and senior executives attracted a 62 per cent vote against it, seeing the telco hit with its ‘first strike’.
“While the executives were trying to give themselves massive bonuses, Telstra workers are being asked to swallow a pay cut in real terms in enterprise bargaining, which is still underway. It’s great to see that shareholders have seen the inequity in that and rejected the remuneration report,” Murphy said.
According to the union, it received close to 200,000 proxies from Telstra workers and supporters ahead of the AGM.
During his address to shareholders, Telstra chairman John Mullen, took aim at critics, saying it takes its responsibilities seriously when it came to getting the balance right between protecting shareholders’ interests and not ‘over-paying’ executives, while motivating, incentivising and retaining the best management talent at the same time.
“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 salaries,” Mullen said.
“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.”
In following through his statement that in order to attract ‘first class talent’ it needed to have competitive remuneration strategies, Mullen said he personally believed executive salaries were too high across the board.
“Changing this takes time and needs to be embraced by all of corporate Australia and not just one company or one industry, as the marketplace for talent is international and is industry agnostic,” he said. “The share price cannot be the only metric by which we evaluate management performance."
Mullen pointed to the external factors like the NBN as the substantial driver of Telstra’s share price performance.
“We believe the decline in the company’s financial performance and share price would have been far worse if management had not done such an excellent job in such an environment,” Mullen said.
Mullen further pointed out that former Telstra CEOs' salaries had declined with Andy Penn’s salary lower than David Thodey’s and Thodey’s was lower than Sol Trujillo.
Penn’s remuneration has dropped almost 50 per cent in two years as the company has been under pressure, Mullen said.
“We are not only reducing overall remuneration levels, but our remuneration clearly does flex downwards with shareholder outcomes, even when management has done a good job,” Mullen said.
“The whole question of remuneration has become the single most difficult issue for big company boards, has become incredibly over-complicated, and has spawned a whole industry of advisors and consultants trying to help us make sense of all this.”