CSL Ltd Annual Report 2019

17. Remuneration Report Dear Shareholder, On behalf of the Board, I am pleased to present CSL’s Remuneration Report for the year ended 30 June 2019. This Report contains detailed information regarding the remuneration arrangements for the directors and senior executives who are the Key Management Personnel (KMP) for CSL during 2019. The Board is committed to an executive remuneration framework that is focused on driving a performance culture and linking pay to the achievement of CSL’s long-term strategy and business objectives. These in turn drive long-term shareholder value. Two years ago, CSL overhauled its remuneration framework to reflect the global nature of our business, simplify our approach, create stronger alignment with shareholders and, attract and retain executives of the requisite calibre. Our current plan has been in place since 2017 and we consider it important that our executives are provided with a period of clarity and certainty in respect to the basis of their remuneration. The Board firmly believes that our current framework is fit for purpose for CSL. Our framework is effective, aligned to shareholders and supports our global talent in their achievement of CSL’s long-term global business goals. Our framework is effective at attracting talent as evidenced by the recent addition of our new Chief Operating Officer and the EVP, GM Seqirus. CSL’s strategy is to develop and deliver innovative medicines that save lives, protect public health and help people with life-threatening medical conditions live full lives. Consistent with this strategy CSL has delivered sector-leading growth through growth in plasma production and product sales, expansion in existing and newmarkets, and expansion of our product portfolio in existing and new therapeutic areas. The remuneration outcomes for 2019 reflect delivery of our strategy across CSL’s operational and development activities. These results are further outlined across this Directors’ Report. CSL’s sector-leading performance and global reach have delivered against our objective of growing shareholder value with a 12.91% increase in Total Shareholder Return (TSR) over the 12 month period. As a result, CSL has grown to be the third largest listing on the Australian Securities Exchange (ASX) as at June 30 2019. We note that CSL ranks second in our global pharmaceutical / biotechnology peer group with a TSR outcome of 163.75% over the period 1 July 2015 to 30 June 2019, ahead of companies such as AstraZeneca, Bayer, GlaxoSmithKline and Merck. Key measures of the results achieved in 2019 included: • 17% increase in Net Profit After Tax (NPAT) on a constant currency basis; • 11% increase in revenue on a constant currency basis; • 16% increase in earnings per share on a constant currency basis; • Return on Invested Capital (ROIC) for 2019 of 24.30%; • Opening of 30 new plasma centres taking our total to 237 centres globally; • Acquiring South Carolina Haemonetics manufacturing facility and assets; • Seqirus record revenue and profit and expansion of its products globally; • Patient recruitment for CSL112 trial for cardiovascular disease progressing ahead of target; • Progress of major capital projects to increase future capacity; • Progressing our diversity strategy with 57% female representation in our workforce. We have surpassed our target percentage of 30% for female representation across our senior executive positions and our target of 40% female representation for all people management positions; and • Employee engagement scores above IBM norms across CSL. 2019 Chief Executive Officer Remuneration Outcomes In 2019, our Chief Executive Officer and Managing Director (CEO), Mr Paul Perreault, received no increase to his fixed reward from the previous year remaining at US$1,751,000, and no increase to his STI percentage of 120% for target performance and 180% for outstanding performance. The STI outcome for Mr Perreault was 94% of target based on the two key measures of above target performance for NPAT and below target performance for Cash Flow From Operations (CFO), resulting in a cash payment of US$1,979,386 (to be paid in September 2019). This was 34% lower than the previous year. Our CFO below target performance outcome was primarily due to a decision taken to build inventory to ensure future supply of our plasma-derived products over the coming years. As part of the long term incentive (LTI) program, Mr Perreault was granted 37,449 PSUs (representing 350% of fixed reward) in October 2018 which are subject to both time and performance hurdles over the next four years. Total statutory remuneration as described in table 9 is 4% higher than the previous year at US$11,718,242. CSL Limited Annual Report 2019 58 Directors' Report