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Shareholders should reject obscene pay package for new Telstra CEO.

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Senator Stephen Conroy Deputy Opposition Leader in the Senate Shadow Minister for Communications and InformationTechnology

9 June 2005

Shareholders should reject obscene pay package for new Telstra CEO

In a major breach of accepted international corporate governance standards, the salary package for new Telstra CEO Mr Solomon Trujillo, endorsed today by the government, includes a termination payment of two years base remuneration plus pro rata performance payments.

This provision in Mr Trujillo’s contract will see him receive a payment of at least $6 million if his employment with Telstra is terminated before 1 July 2006.

Mr Trujillo’s contract entitles him to up to $7 million annually in incentive based remuneration. Shareholders have been left in the dark as the Telstra board has not yet set out the performance criteria for these payments.

Today, Telstra shareholders have no idea whether Mr Trujillo’s incentive payments will be tied to genuine performance standards, or whether they are merely an elaborate way to hide the true size of Mr Trujillo’s remuneration.

Mr Trujillo will also receive a golden hello of $2.5 million just to turn up for work on 1 July 2005.

This package is more than three times the amount paid to Telstra's outgoing CEO Dr Switkowski.

Telstra shareholders should reject this obscene package.

Mr Trujillo has a big task ahead of him. The first step for Mr Trujillo will be to listen to the numerous complaints of Telstra’s retail AND wholesale customers. Mr Trujillo will need to lead a cultural change within Telstra to improve the level

of customer service it provides to its customers.

Labor believes that to this end, Mr Trujillo’s priorities should be:

• Remedying Australia’s badly lagging level of broadband take up; • Developing a model for the genuine operational separation of Telstra’s wholesale and retail arms. • Ensuring that all wholesale customers obtain access to regulated services

on genuinely equivalent terms to Telstra retail; and • Ensuring that Australians in rural and regional Australia have access to the same quality of services as Australians in metropolitan Australia.

Further information: Stephen Conroy on (02) 6277 3295 or Tim Watts 0439315848 Thursday, 9 June 2004