Thodey's pay: at least $2m per year

update Telstra's new chief executive David Thodey will receive a fixed annual remuneration of $2 million or $1 million less than his predecessor, compensated by a significant incentive scheme.

The $2 million base salary was outlined in Thodey's contract, penned by law firm, Freehills, which Telstra released to the Australian Stock Exchange this morning.

Thodey's regular pay will be somewhat smaller than Sol Trujillo's, who received $3 million annual fixed pay throughout his tenure. Trujillo's package also included a $3 million short-term cash incentive as well as $3 million in deferred shares and up to 5 million Telstra shares as long-term incentives. In 2007, Trujillo's total annual remuneration was over $11 million.

Thodey's short-term incentives have been split into two components. Should Thodey meet "target hurdles" in the coming financial year, he could expect an extra 80 per cent addition to his $2 million fixed pay. And, if the board agrees he has met its conditions separate to target hurdles, he could be in for a bonus equivalent in value to 160 per cent of his base salary.

Thodey's receipt of those incentives are subject to deferral "as determined by the board in accordance with Telstra policies", the contract states.

Long-term incentives will come in the form of a "grant" payment equivalent to a 200 per cent of Thodey's $2 million fixed pay, again subject to conditions set by the Telstra board.