Telstra has cut executive bonuses and apologised to shareholders in response to anger over the amount paid to management amid falling profits.
The telecommunications giant says executive bonuses will be cut by a discretionary 30 per cent because some shareholders felt they were unreasonably high for a year in which the full-year dividend fell almost 30 per cent and profit fell 8.4 per cent.
Chairman John Mullen defended multimillion-dollar remuneration as essential in attracting talented managers, but acknowledged Telstra had erred.
“Some shareholders still feel that our remuneration outcomes were either not sufficiently transparent or resulted in higher payouts than shareholders felt were reasonable,” Mr Mullen said in a letter sent to shareholders on Thursday.
“With hindsight, we recognise we perhaps did not provide enough transparency around some of the metrics that we adopted to measure management performance and the reasons as to why these were chosen.”
Telstra chief executive Andy Penn in February said the impact of things like the NBN were a worldwide phenomenon and were having an enormous impact on business.
“Wholesale prices have risen, meaning we and other industry participants are facing a fixed-line market where reseller margins are rapidly reducing,” he said.
“At the same time, competition in the mobile market is increasing with the expected entrance of a fourth mobile network operator.”
Telstra cut its full-year dividend to 22 cents, down from 31 cents last year.
Telstra, which announced in June it would slash a quarter of its workforce, sell off $2 billion in assets and break off its fixed network infrastructure as a new business, on Thursday fleshed out details of an executive remuneration plan to replace short- and long-term incentives with a single variable payment.
The company faces a protest vote against its remuneration plan at its annual general meeting next week.