There’s a big question for Telstra’s
directors to answer: Just how low did you set the hurdles for Sol Trujillo’s
multi-million bonus payments – sub-sea level?

As Michael Sainsbury reports in The Oz,
Sol
has somehow qualified for a short-term bonus of $2.58 million despite
the share price and profit plunging. That of course is just part of an
$8.7 million pay packet with the potential for more to come from
longer-term
bonus payments. On current form, the cynical might think he’ll qualify
for
those if Telstra goes into receivership.

One of the problems with hiring Trujillo is that he
certainly didn’t need the job or the money, thanks to his massive $95 million trousering when departing Qwest in 2000, never mind some nice non-executive directorships.
Thus the Telstra board had to throw lots of cash at him to attract him to the
far end of the earth. That doesn’t leave the board with much leverage in what
should be the usual balance of power between board and CEO.

The Trujillo defence of
course is that he hasn’t trashed Telstra – Ziggy and the board did. Oops, “the
board” includes most of the incumbent directors. Just as well they’re not on
bonus payments.

There’s another theory that for someone in Trujillo’s
position, it’s not really about the money anyway – it’s either about the
pleasure of power or the satisfaction of doing good work. I’d guess Sol has about 18 months to show
which trip he’s on.

In the meantime, it looks like he won’t be
straining himself stretching over any hurdles.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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