- CSL isn’t increasing the base pay or short term incentive of its CEO this year.
- Instead, Paul Perreault is getting a 13% increase in his long term incentive target.
- The blood products group had a first strike against its remuneration report two years ago.
Paul Perreault, the chief executive of CSL, the blood products and flu vaccine group whose shares have grown by 40% over the last year to more than are $200 each, isn’t getting a rise in his base pay this year.
For the second year in a row, the biotech’s remuneration committee made no increase to Perreault’s fixed reward or short term incentive target.
His take-home pay, a metric created by CSL, was $US7,394,489 for 2018, about 0.2% below the year before.
However, his statutory pay came to $US11,266,445, with 84% of that performance based, up from $US8,180,831 last year.
Last month CSL reported a full year net profit after tax of $US1.729 billion, on a 14.7% lift in sales to $US7.6 billion.
The pay of CEOs at ASX-listed companies is at record highs, mainly because of generous bonuses which keep getting awarded for hitting targets rather than exceptional performance.
However, shareholders are being increasingly vocal at this largess, voting against remuneration reports presented at annual general meetings.
Megan Clark, CSL’s Chair of the Human Resources and Remuneration Committee, says the decision takes into “consideration shareholder feedback and global market positioning”.
The company has decided that the best incentive is longer term.
“Consistent with CSL’s guiding principles for remuneration the Board has decided to rebalance the remuneration pay-mix toward LTI (long term incentive),” says Dr Clark.
“To ensure our CEO has market appropriate incentives and remains aligned with the interests of our shareholders, in 2019 he will receive a 13% increase in his LTI target which is both time and performance hurdled.”
Perreault’s base pay stays at $US1,751,000, his short term incentive target at 120%, with the maximum payout at 180%, and the long term incentive target of 310%.
Directors gave themselves a rise
However, board directors decided, after looking at ASX Top 12 companies, to give themselves a healthy pay rise.
“The increases have been applied to take fees to the median of the peer group and ensure a competitive reward package,” according to the company’s annual report released today.
The Board Chairman fee will increase 11.7% to $782,500 from $700,000 and the base fee for non executive directors by 7.3% to $227,500 from $212,000. The directors get extra pay for serving on committees but there are no change to these.
In 2016, CSL was hit by a first strike at its AGM, with shareholders rejecting the remuneration report.
A spill of the board of directors is triggered if more than a quarter of votes go against the remuneration report for two years in a row.
Last year the remuneration report got through with only 18% voting against.
“Thank you for your constructive feedback over the past year — it is important to us as we embed our new remuneration framework and seek your support for this year’s Report,” says Dr Clark.
“We are committed to ensuring that our senior executives’ interests are aligned with yours. We will adjust our remuneration framework wherever there are opportunities to make it even more effective, aligned to shareholders and to support our global talent in their achievement of CSL’s long-term global business goals.”
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