Stock Analysis

We Think Shareholders Will Probably Be Generous With CSL Limited's (ASX:CSL) CEO Compensation

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It would be hard to discount the role that CEO Paul Perreault has played in delivering the impressive results at CSL Limited (ASX:CSL) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 11 October 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for CSL

How Does Total Compensation For Paul Perreault Compare With Other Companies In The Industry?

Our data indicates that CSL Limited has a market capitalization of AU$131b, and total annual CEO compensation was reported as US$10m for the year to June 2021. That's a notable decrease of 8.9% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.7m.

For comparison, other companies in the industry with market capitalizations above AU$11b, reported a median total CEO compensation of US$13m. So it looks like CSL compensates Paul Perreault in line with the median for the industry. Moreover, Paul Perreault also holds AU$52m worth of CSL stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary US$1.7m US$1.7m 17%
Other US$8.4m US$9.4m 83%
Total CompensationUS$10m US$11m100%

Talking in terms of the industry, salary represented approximately 57% of total compensation out of all the companies we analyzed, while other remuneration made up 43% of the pie. CSL sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ASX:CSL CEO Compensation October 5th 2021

A Look at CSL Limited's Growth Numbers

CSL Limited has seen its earnings per share (EPS) increase by 11% a year over the past three years. It achieved revenue growth of 13% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has CSL Limited Been A Good Investment?

Most shareholders would probably be pleased with CSL Limited for providing a total return of 54% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for CSL that you should be aware of before investing.

Important note: CSL is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Valuation is complex, but we're helping make it simple.

Find out whether CSL is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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