Telstra's new chief executive David Thodey will earn a total fixed annual remuneration of $2 million, including superannuation payments.

Documents filed with the Australian Securities Exchange today said Mr Thodey's fixed remuneration will be reviewed each year.

Any resulting changes will take into account Telstra's performance, Mr Thodey's personal performance and relevant market and economic information.

Telstra said Mr Thodey may elect to receive part of his fixed remuneration as benefits, in line with the company's salary packaging guidelines.

Mr Thodey will also be entitled to short and long term incentives under his contract.

"Subject to any necessary shareholder approvals being obtained at the company's 2009 annual general meeting, the executive will received a (long term incentive) award for the financial year commencing 1 July 2009," Telstra said.

Mr Thodey's short term incentive can amount to 80 per cent of his total fixed remuneration pending the meeting of performance target hurdles, up to a maximum of 160 per cent.

The long term incentive grant will be equivalent to a maximum of 200 per cent of his total fixed remuneration, subject to conditions.

Mr Thodey can terminate his employment "at any time" by giving six months notice in writing.

The contract includes a clause allowing Mr Thodey to notify the company of grievances related to a "fundamental change", with Telstra having 21 days to "remedy the situation".

If the situation is not rectified, he can resign immediately.

On the other hand, if the Telstra board believes Mr Thodey is not performing to the standard required, and those issues aren't addressed within a certain timeframe, it can terminate his employment with four months notice.

Mr Thodey was named as Telstra's new chief executive on May 8, replacing Sol Trujillo.

Mr Trujillo left the company later in May.

Mr Trujillo was paid $3 million in fixed remuneration for 2007/08, according to the telco's last annual report.

His total remuneration package was $13.4 million.

AAP