SYDNEY, Oct 11 (Reuters) - Australia’s largest telecom firm, Telstra Corp Ltd, wrote an apology to shareholders on Thursday to head off a vote against executive pay at its annual meeting, after a tumultuous year where profit fell and shares hovered near all-time lows.
Telstra has struggled for growth as competition and technology hammer its mainstay businesses, pounding its share price and pushing it to its weakest annual profit in six years in August.
The company has already cut executives’ bonuses by nearly a third, which it re-iterated in the letter, sent out days before shareholders vote on pay structures at the company’s annual general meeting in Sydney on Oct. 16.
Telstra is keen to avoid a protest vote because if more than a quarter of shareholders disapprove of the pay packets in consecutive years it triggers a vote to spill the board under Australian law.
“We know that a number of you are disappointed with this year’s remuneration outcome,” Telstra Chairman John Mullen wrote in a note address to shareholders and released to the Australian Securities Exchange on Thursday.
“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. For this we apologise,” he wrote.
Only 9 percent of shareholders voted against the executives’ remuneration last year, however Telstra is bracing for a stronger vote this time after large proxy advisor CGI Glass Lewis recommended shareholders oppose it.
CGI Glass Lewis found the pay structure placed overly heavy reliance on customer satisfaction metrics and meeting earnings targets, however lacklustre.
Telstra Chief Executive Officer, Andy Penn, was entitled to a salary of A$2.4 million ($1.7 million) in cash, plus bonuses worth just over A$2 million in cash and shares for the 2018 financial year, according to the annual report.
Telstra dominates Australia’s mobile telephone and broadband markets, but its business has been upended by a new government broadband network.
In response Telstra has unveiled a plan to slash 8,000 jobs - a quarter of its workforce - as well as flagging asset sales.
Telstra shares have shed 10.8 percent for the year to date and almost halved since Penn took charge in May 2015.
On Thursday Telstra shares fell 1.4 percent in a plunging broader market, which dropped 2 percent.
$1 = 1.4144 Australian dollars Reporting by Tom Westbrook; Editing by Stephen Coates