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CSL faces shareholder revolt over pay

AAP logoAAP 12/10/2016 Marty Silk

Biotech CSL is launching another $500 million buyback to improve returns for the shareholders who used the company's annual meeting to protest against executive pay.

Chairman John Shine said the buyback comes on top of the $1 billion buyback announced last October. That first initiative is nearly complete and boosted earnings per share by 25 per cent by June, he said.

"Through this ongoing program of buybacks, all CSL shareholders benefit from improved investment return ratios, including earnings per share and return on equity," Professor Shine said in a statement.

However, more than one in four shareholder votes at CSL's annual general meeting went against the company's move from an Australian model of executive pay to an international model.

The new model could result in chief executive Paul Perreault earning up to $US10.7 million ($14.1 million) if he gets all bonuses on offer, 20 per cent more than Brian McNamee got for leading the company to huge success over 23 years.

Proxy advisor Ownership Matters director Dean Paatsch said his organisation advised shareholders to vote against the model of executive pay.

"Obviously what's struck a chord with shareholders is a sense of proportionality of pay, without the track record of performance being delivered," he told AAP.

A vote of more than 25 per cent against executive pay is known as a "first strike", and if repeated at two consecutive AGMs can lead to a vote for a board spill.

Prof Shine said a change of the executive pay model was appropriate given CSL operates in 30 countries and derives 90 per cent of revenue and profit outside Australia.

"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," he added.

"We undertake to do this more effectively before next year's AGM."

CSL shares gained $1.06 to $106.54.

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