Why is the CSL share price outperforming the ASX 200 on Friday?

The CSL Limited (ASX: CSL) share price is in investors’ good books on Friday. At this rate, Australia’s third largest listed company looks set to finish the week higher than where it started.

During an eventful week for equities, the ASX biotech giant has reminded the market of its blue-chip appeal. For context, the S&P/ASX 200 Index (ASX: XJO) is on pace to descend 3.6% this week. Meanwhile, the pharmaceutical behemoth is marching upwards.

Bringing the focus to today, CSL shares are currently 0.8% elevated at $296 apiece. Whereas, the broader Aussie index is currently down 0.05%.

Today, the only new information injected into the public domain is the company’s FY22 annual report. Let’s see if there is anything meaningful for the CSL share price within this.

Holding onto a winning formula

For the most part, CSL’s annual report rehashed the same information shared in the company’s full-year results around two weeks ago. This included the underwhelming US$2.255 billion in after-tax profits from the 12-month period, reflecting a decline of 6% from the prior year.

However, long-term shareholders can forgive a single difficult year for the bottom line. What is important is the future, and how the company will bounce back. Some investors might already have a partial answer to this question, with Goldman Sachs pointing toward the subsiding high plasma collection prices.

Though, leadership retention is often one key risk that hangs over companies that have experienced a long stretch of great success. For CSL CEO and managing director, Paul Perreault, it’s been more than nine long years of commitment to take the CSL share price from around $60 a pop to the near $300 heights of today.

As such, losing Perreault now might send shivers down the spines of some long-standing shareholders. For that reason, the market might be responding positively to the CSL board’s motion to further incentivise the current CEO.

According to the report, the board has determined that Perreault will get a 3.5% increase in his fixed reward. Meanwhile, the CEO’s long-term incentive will be jacked up from 400% to 450% of Perreault’s base salary of US$1.9 million.

CSL share price compared to the index

There’s no doubt Perreault has led the biotech to riches, both for the business and shareholders. During his tenure thus far, the CSL share price has scaled approximately 380%. This translates to a compound annual growth rate (CAGR) of 19.2%.

A less fortunate investor, backing the Aussie index, has witnessed a more mild return of 43% over the same period. For an apples-to-apples comparison, this works out to be around 4% CAGR.

The post Why is the CSL share price outperforming the ASX 200 on Friday? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 shares declared $42b of dividends in August. Here’s how you can get a slice
• How do CSL shares stack up against Cochlear following earnings season?
• Top ASX shares to buy in September 2022
• Here’s the CSL dividend forecast through to 2025
• How have ASX dividend shares been performing this earnings season?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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