Dear Shareholder
On behalf of the Board, I am pleased to present Telix’s Remuneration report for the year ended 31 December 2023.
The Board’s view continues to be that remuneration elements should provide a range of appropriate reward outcomes linked to performance, behaviour and culture, market benchmarking and Telix’s strategy and long-term sustainability.
Remuneration report enhancements
This year we have evolved and enhanced the Remuneration report to increase readability. The Board has taken the first step towards providing retrospective disclosure of short-term variable remuneration (STVR) outcomes, while acknowledging Telix’s growth stage, current placement within the ASX 200 and commercial sensitivities related to our strategic objectives.
We have also provided the current shareholding of Executive KMP as a proportion of their base salary at year end (section 11.1.2). Equity incentives provide future potential for increased shareholdings, aligned to performance against measurable, pre-determined targets. Future changes to the pay mix in 2024 will also increase shareholdings for Executive KMP.
Telix performance and 2023 remuneration outcomes
2023 has seen Telix’s continued sustainable growth as a commercial-stage radiopharmaceutical company, with our first commercial diagnostic product, Illuccix®, generating significant revenue and contributing to total revenue growth of 214% from $160,096,000 in 2022 to $502,547,000 in 2023. The adjusted EBITDAR result was $180,920,000 in 2023 compared to $8,228,000 in 2022.
Re-investment of income generated from sales of Illuccix® into our priority therapeutics and diagnostics product pipeline will help us deliver on our purpose of supporting longer and healthier lives for patients, and ultimately longer-term value to the Group and shareholders.
Telix’s strong performance in 2023 resulted in STVR outcomes for Executive KMP of 79% of target/maximum opportunity (there is no over-earn potential for STVR).
As Telix rapidly grows the retention of talent is critical for continued commercial success. To retain and ensure achievement of operational and strategic objectives over the next three years, in 2023 the Board approved the future grant in 2024 of Performance Share Incentive Rights to two members of the Executive KMP as detailed in section 5.4.2.
Looking forward to 2024
The Board continues to face the unique but positive challenge of Telix’s consistent and rapid growth and alignment with remuneration market benchmarks. As Telix’s market capitalisation increased from $2.21 billion in 2021 to $3.26 billion at the end of 2023, KMP pay (Executives and Non-Executive Directors (NEDs)) faced a growing shortfall against market benchmark remuneration. To remain competitive and align with remuneration principles, the Board is focused on achieving KMP remuneration aligned to the market median (P50) of the competitive global talent market. The Board decided a full review was necessary and in 2023 the People, Culture, Nomination and Remuneration Committee (PCNRC) appointed Mercer Consulting (Australia) Pty Ltd (Mercer) to assist with market benchmarking for all KMP.
For Executive KMP, Mercer provided an external remuneration recommendation under section 9B of the Corporations Act 2001 to address the gap. This includes increases to total fixed remuneration and the weighting of variable and performance pay (STVR and LTVR) to align pay mix to the benchmark over time. The Board has adopted Mercer’s recommendation and increases to fixed remuneration and remuneration mix for Executive KMP will apply from 1 January 2024, as detailed in section 8.3.1 and with full details to be disclosed in the 2024 Remuneration report.
For NEDs, Mercer’s review found that similar to Executive KMP, NED remuneration is well below market benchmark (P25). The Board has adopted an approach provided by Mercer (not a recommendation) to achieve NED remuneration aligned to P50 over time. Subject to shareholder approval, the Board will increase the NED aggregate fee level via shareholder resolution at the 2024 Annual General Meeting (AGM) from $700,000 to $1,350,000. If approved by shareholders, the Board will increase Director and Committee fees with effect from 1 January 2024 to match the Executive KMP changes and bring NED fees to the market median, as detailed in section 9.2.2.
I invite you to read the Remuneration report which will be presented for adoption at Telix’s 2024 AGM.
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H Kevin McCann, AO | |