As expected Australia’s biggest pharma company, CSL will buy back up to $500 million worth of shares for the next year in what is now a regular occurrence.
The announcement to yesterday’s AGM in Melbourne came as chairman John Shine said the company’s existing $1 billion buyback, announced last October, is 91% complete.
The $500 million buyback was flagged when the company released its 2015-16 results in August.
CSL has been running buybacks now for a number of years as it geerates more cash than it can reinvest in the business.
The news was also used by the company to try and soften opposition from shareholders to the remuneration report.
It wasn’t enough and the company received a 26% ‘first strike” whereby more than 25% of shareholders voted to reject the remuneration report.
Mr Shine told the meeting the board would endeavour to communicate better about the way in which it is evolving its executive pay model to one suited for a global company after receiving the “first strike” against its remuneration report.
If a second strike is recorded at the 2017 AGM in a year’s time, then could be a spill of the board.
Shareholders took aim at the way the remuneration of CEO, Paul Perreault has risen sharply in the past couple of years. The vote was triggered by jump in the CEO’s annual salary to $US8.17 million ($10.8 million) for 2015-6, up from $US5.81 million a year earlier, thanks to higher performance-based pay.
Mr Perreault’s pay is 20% higher than his predecessor Brian McNamee, who left the company in 2013 after a 20-year long stint driving the company to a major global position in vaccines and blood products.
It was the first strike recorded against the company, which is with shareholders especially registering their displeasure at Mr Perreault’s salary doubling over the last three years.
Mr Shine said he was disappointed that “just over” 25% of shareholder votes were against the remuneration report and pledged to get the salary model right before next year’s AGM.
“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 yesterday’s AGM in Melbourne.
Mr Perreault confirmed the company’s full year guidance for 2016-17 for an 11% rise in net profit after tax at constant currencies, and 14% growth in trading profits, also at constant currencies.
Perreault said the company expected earnings per share growth to exceed trading profits growth this year. Net profits dipped 10% last year as CSL wrapped up the Novartis acquisition and the northern hemisphere enjoyed a mild flu season.
CSL shares rose 1% to end at $106.54.
