CSL takes first strike on pay as CEO Paul Perreault’s pay surges

CSL shareholders have lodged a protest vote over remuneration after CEO Paul Perreault’s pay surged to nearly $11m.

CSL boss Paul Perreault’s salary has doubled over the last three years. Pic: Aaron Francis

Shareholders have lodged a protest vote against CSL’s generous director remuneration, which has seen chief executive Paul Perreault’s pay packet surge to nearly $11 million.

Mr Perreault’s pay is a fifth higher than his predecessor Brian McNamee, who left the company in 2013 after a 20-year long stint with the Australian vaccines manufacturer (CSL).

It was the first strike recorded against the company, which is Australia’s largest biotechnology group, with shareholders registering their displeasure at Mr Perreault’s salary doubling over the last three years.

CSL chairman John Shine said he was disappointed that “just over” 25 per cent of shareholder votes went against the remuneration report and pledged to get the salary model right before next year’s annual general meeting.

“I don’t believe that this has resulted from shareholder concern about the performance of CSL; rather, while we have endeavoured to explain our approach to globalising the way we remunerate our executives, we clearly have some more work to do,” he told shareholders at today’s annual general meeting in Melbourne.

The company has been hit by criticism it has moved to a US-style remuneration plan, in which bonuses are vested for clearing non-financial hurdles. Mr Shine said with more than 90 per cent of revenue and profit sourced outside the country, CSL was a unique case for board remuneration. Seven out of nine CSL key management figures live outside Australia.

“We need to, and have, a clear strategy to ensure that our remuneration practices are appropriate, appealing and competitive in each of the locations in which we operate,” he said. “Attracting and retaining highly-skilled executives who can successfully lead our complex and demanding operations around the world is critical to CSL’s future success.”

“Your board believes that CSL’s remuneration model is closely aligned with providing long-term value to our shareholders. With the right people in place the company does well, the share price does well and importantly, CSL shareholders do well,” he said.

“But getting the remuneration model right is something we will continue to work on, and there is a clear need to better communicate this to our shareholders. We undertake to do this more effectively before next year’s AGM.”

CSL also confirmed it will launch a further on-market buyback of up to $500 million, following a just-completed $1 billion buyback.

CSL, a perennial buyer of its own shares, recently revealed a 10 per cent drop in annual profit in its centenary year as the costs associated with its purchase of the Novartis influenza vaccine hamper its headline results. Net profit for the year through to June came in at $US1.24 billion.

Mr Shine said the latest $908.5m share buyback, which was announced in October last year, has together with previous share buybacks contributed to a 26 per cent boost to earnings per share

Mr Shine said the balance sheet remained “very sound and appropriately geared” and the company continued to witness strong free cash flow.

“Through this ongoing program of buybacks, all CSL shareholders benefit from improved investment return ratios, including earnings per share and return on equity,” Mr Shine said.

CSL has a workforce of 16,000 across 30 countries and the group has seen its share price rally 400 per cent over the last five years.