CSL Ltd Annual Report 2019

Board discretion – Prior to approving all remuneration outcomes, the Board reviews the Clawback and Malus Policy and also ensures that the interaction of remuneration outcomes is in alignment with risk management outcomes for the year and that any material risk issues and behaviours and/or compliance breaches are addressed. This review is done in conjunction with the Audit and Risk Management Committee (ARMC). The Board has discretion to determine final vesting outcomes to ensure outcomes are in line with CSL performance, market reported financial outcomes and shareholder outcomes. The discretion can be used to both increase or reduce vesting outcomes, which includes reducing to zero. New Hires and Internal Promotions – The Remuneration Framework as set out in this section 2 will apply to the remuneration arrangements for any newly hired or promoted Executive KMP, ensuring a market competitive Total Reward offering. In the case of external hires, the HRRC and Board may determine that it is appropriate for a commencement benefit to be offered. Commencement benefits in the form of cash and/or equity can be made to compensate for remuneration being forfeited from a former employer. For any foregone equity awards, CSL equity will be used as compensation. Awards may be discounted to take into consideration any performance conditions on the award at the former employer and the HRRC will determine the appropriate service and performance conditions on the CSL award within the CSL framework. For internal promotions, the HRRC may determine that an award of equity should be made to ensure an appropriate Total Reward package. This is done as hurdled equity under the LTI framework described later in this section. 2.2.2 Remuneration Delivery The diagram below shows the period over which potential 2019 (1 July 2018 – 30 June 2019) remuneration is delivered and when the awards vest. STI and LTI outcomes are linked to CSL performance – STI payments are only made when both CSL and our Executive KMP have performed well, and LTI will only vest and have value when performance has been strong over the longer term. Fixed Reward Short Term Incentive – “Performance” Long Term Incentive – “Alignment” 2019 2020 2021 2022 2023 Salary Cash STI T1 (25%) T2 (25%) T3 (25%) T4 (25%) Performance Period 1 July 2013 – 30 June 2020 Performance Period 1 July 2014 – 30 June 2021 Performance Period 1 July 2015 – 30 June 2022 Performance Period 1 July 2016 – 30 June 2023 ● Vesting Date: • T1 - 1 September 2020 • T2 - 1 September 2021 • T3 - 1 September 2022 • T4 - 1 September 2023 ● Date Paid ● Date Granted: 1 September 2019 2.2.3 Executive KMP Pay-Mix Our pay-mix continues to shift towards higher levels of performance based pay, specifically the LTI opportunity. The graphs below show each of the components of our remuneration framework as a percentage of Total Target Reward for the 2019 and 2020 financial years. For Executive KMP this calculation is a weighted average 2 . Reward changes in both 2019 and 2020 are included in section 6 of this Report. 2 Note the 2020 pay mix only details those Executive KMP reported in 2019 that are Executive KMP as of 1 July 2020. CEO and Managing Director ● Fixed 18% ● Performance – STI 21% ● Alignment– LTI 61% ● Fixed 16% ● Performance – STI 19% ● Alignment– LTI 65% ● Fixed 28% ● Performance – STI 23% ● Alignment– LTI 49% ● Fixed 26% ● Performance – STI 21% ● Alignment– LTI 53% Executive KMP 2019 2020 2019 2020 CSL Limited Annual Report 2019 63