Former Telecom boss Theresa Gattung says the appointment of Simon Moutter as Telecom's new chief executive feels good, as she always intended him or former chief financial officer Marko Bogioveski to succeed her in the job.

Moutter, the former Telecom chief operating officer and Auckland International Airport chief executive, will take over from Scotsman Paul Reynolds as chief executive in September.

He will receive an earning package of $3.7 million, including a base salary of $1.35m, if he meets his performance targets, but he could be paid more if he exceeds them.

Gattung, who left Telecom under controversial circumstances in 2006 in the wake of government regulation of the company, would not say whether she felt vindicated by today's appointment but said Moutter was "a great choice".

Moutter and Bogioveski were being groomed to replace her as chief executive before the board appointed a new chairman, Wayne Boyd, and hired Reynolds as chief executive.

"That was understood by them and the board. I promoted Simon on to the executive team and gave him progressively larger roles. He totally understands the business and he is an experienced chief executive," Gattung said.

There has been speculation Reynolds, who was on a package worth about $5m, may be able to secure a large pay-out because of the way the succession has been handled.

Telecom spokesman Ian Bonnar would not confirm whether Reynolds had yet resigned or been given notice, but said more information would made available soon.

"Simon's knowledge of the telecommunications industry in New Zealand is strong and deep, and he is a proven chief executive of a significant listed organisation," said Mark Verbiest, Telecom chairman.

"He has also demonstrated that he can deliver growth in a challenging environment by transforming the customer experience at Auckland International Airport. As such, the Telecom board is confident Simon has the right skill-set to lead Telecom as it adapts to the opportunities and challenges driven by significant changes to its structure and operating environment."

Telecom's board shortlisted thee candidates, including the boss of its Gen-i division, Chris Quin, in February and the length of time it has taken to make the appointment has sparked rumours of difference of opinion on who should get the job.

"Ultimately the board was unanimous that Simon was the best candidate, and we are delighted to have secured his services," Verbiest said. "It is also pleasing that the best candidate for the job has been shown to be a New Zealander."

Moutter was instrumental in the transformation of Telecom in the early 2000s, where the company pushed into the IT services sector with the acquisition and expansion of Gen-i, the turnaround of Telecom mobile, and the roll-out of nation-wide broadband services, he said.

Moutter said he was excited to be returning to Telecom.

"I feel privileged to be selected to lead a resurgent Telecom as it reshapes for success in an even more dynamic communications services market post the demerger.

"I am looking forward to returning to the telecommunications industry, where Telecom, now subject to significantly less regulation, is free to focus on delivering world class products and services to our customers throughout New Zealand," he said.

He will receive an annual short term performance incentive of $750,000 if he meets targets set by the board. He will also receive shares worth $600,000 for achieving those targets, restricted for sale for two years.

The total value of the incentives may increase if Moutter significantly exceeds his targets.

He will also be eligible for $1m in share rights annually, as a long term incentive.

The package represented the market rate for a chief executive position of this magnitude, Verbiest said.

Moutter will also receive a one-off grant of share rights on commencement with a value of $750,000. This grant vests in two tranches; the first half after 12 months and the second half after 24 months.

Auckland International Airport chairman Joan Withers announced Moutter's resignation and thanked him for his "significant contribution".

"Under his leadership, Auckland airport has transformed its business model and focus to one of providing a world class service to all who use the airport.

"He has also built a talented and dedicated team of senior management who have consistently focused on achieving commercial strategies to deliver on the Airport's 'Flight Plan to Growth'.

"For shareholders this has delivered solid returns during a period of unprecedented global market upheaval and provided excellent value to passengers, business partners and New Zealand."

She said the board will immediately begin a process to consider internal, local and international candidates to replace Moutter. Auckland International Airport's chief financial officer Simon Robertson will become acting chief executive in the interim.

- © Fairfax NZ News