Telstra Agency Problem Essay

Telstra Agency Problem Essay

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The agency problems or conflicts are continuously happening between the principal and the agent. It particularly arises when an interest conflict occurs between the principal and the agent. In terms of finance, there are two core agency relationships; managers and stockholders and managers and creditors. To balance the interests and satisfactions between managers and stockholders which helps firm to improve performance, there are a variety of different measures have been generated and implemented by Telstra in order to optimize the bond and monitoring costs.

Bonding Costs
Telstra’s remuneration policy aims to achieve high level performance, reinforce the company's value and culture and motivate and retain highly skilled people. Telstra's directors' remuneration framework is categorised by executive remuneration and non-executive director remuneration (Telstra Annual Report, 2013).
(a) Executive Remuneration
● Fixed Remuneration
The fixed remuneration is set for attracting, motivating and retaining highly skilled people by Telstra, which provide basic salary and superannuation through cash payment. The payment is decided and influenced by the market, internal relativities, experience, qualifications and performance. It is the base level of reward in the bonding costs of Telstra but plays a significant role in competition with the market (Telstra Annual Report, 2013).


● At Risk Remuneration
In order to reinforce Telstra's value and culture. Telstra rewards directors' strong performance towards financial and strategic objectives. This creates long term shareholders. At risk remuneration is related to the performance of executives and is set via short term and long term incentive payments through cash and equity rewar...


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Works Cited

Current credit ratings. (2013). Retrieved from: http://telstra.com.au/abouttelstra/investor/treasury/credit-ratings/index.htm?red=1
Telstra Annual Report. (2012). Retrieved from: http://www.telstra.com.au/abouttelstra/download/document/Telstra-Annual-Report-2012.pdf
Telstra China. (2013). Retrieved from: http://www.telstrainternationalgroup.com/telstra-china
The Structure of Telstra. (2003). Retrieved from: http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CDIQFjAB&url=http%3A%2F%2Fwww.aph.gov.au%2Fparliamentary_business%2Fcommittees%2Fhouse_of_representatives_committees%3Furl%3Dcita%2Ftelstra%2Fsubs%2Fsub064.pdf&ei=PCsyU43NDMXqlAXdtoD4Dg&usg=AFQjCNE3BN5sNR7SEbdW9zjjAqwVqSXFYA&bvm=bv.63738703,d.dGI
The Telstra Story. (2013). Retrieved from: http://www.telstra.com.au/abouttelstra/company-overview/history/telstra-story/

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