CSL Ltd Annual Report 2019

6. 2019 and 2020 Executive Key Management Personnel Remuneration 6.1 2019 CEO Remuneration Outcome In 2019, the Board resolved that our CEO, Mr Paul Perreault, while driving market leading performance, would again receive no increase to his Fixed Reward, which remains at US$1,751,000, and no increase to his STI percentage which is set at 120% of his Fixed Reward for target performance and capped at 180% for outstanding performance. As part of the LTI program, Mr Perreault was granted Performance Share Units (PSUs) representing 350% of Fixed Reward in October 2018, subject to both time and performance hurdles over the next four years. This was an increase in LTI target from 310% and was reflective of strong performance and leadership, it also better aligns the CEO towards the market median of our global pharmaceutical/biotechnology peer group. Mr Perreault’s target reward for 2019 is displayed below. 2019 CEO Total Target Reward – US$ 0% 20% 40% 60% 80% 100% ● 2019 Total Fixed Reward ● 2019 Short Term Incentive Target ● 2019 Long Term Incentive Target 1,751,000 2,101,200 6,128,500 The 2019 STI outcome for Mr Perreault was 94% of target based on the two key measures of an above target NPAT performance outcome and a below target CFO outcome, resulting in a cash payment of US$1,979,386 (to be paid in September 2019). Before awarding the STI based on the two financial measures, the Board also took into consideration performance across strategy, key project delivery, people and leadership outcomes to ensure an overall appropriate outcome. This did not result in any adjustment. 6.2 2019 CEO Realised Remuneration Below we have disclosed the CEO ‘realised’ remuneration in the graph with a full view of all Executive KMP ‘realised’ remuneration detailed in section 6.6, Table 13. This is a voluntary disclosure which the Board believes is simple and affords a transparent view of what the CEO’s actual take- home pay was in 2019. Further details related to how each of the below elements is determined is provided in section 6.6. These outcomes are aligned with the CEO’s and CSL’s performance during 2019, as well as being aligned to CSL’s longer term performance. 2019 CEO Realised Remuneration 0% 20% 30% 50% 70% 90% 10% 40% 60% 80% 100% ● 2019 Total Fixed Reward ● Total STI Received ● Total LTI Received 1,819,480 3,181,136 18,260,857 Mr Perreault’s total ‘realised’ remuneration for 2019 was US$23,261,473 and this is a 215% increase from the prior year. Driving this increase was the vesting of LTI awards made under our legacy plans – the 2015 Option and Performance Right and 2016 Executive Deferred Incentive Plan awards (granted 1 October 2014 and 1 October 2015 respectively with further details in section 4.6). As you will have experienced as shareholders, there has been a significant increase in the CSL share price over this period (Options had an exercise price of A$73.93 (set at grant) and the share price at vesting was A$216.67) leading to increased reward outcomes for the CEO and Executive KMP. Given the long term nature of CSL’s legacy remuneration plans, we will continue to see their impact on ‘realised’ remuneration of our Executive KMP until 2021. 6.3 2020 CEO Remuneration Targets As a high performing CEO based in the United States, the Board wants to ensure Mr Perreault is rewarded accordingly and is paid in line with our global pharmaceutical/ biotechnology sector peers. As advised in our 2018 Remuneration Report, to ensure our CEO has market appropriate incentives for a global role and remains aligned with the interests of our shareholders, we will again increase his LTI target, which is both time and performance hurdled. Mr Perreault’s LTI target will increase to 400% (this is also the maximum opportunity). The Board has determined that there will be a continued focus on the variable long term component of Mr Perreault’s reward package and that there will be no change to Fixed Reward or STI target opportunity – keeping this flat as has been the case since 2016. These changes are supported by market data when reviewing Mr Perreault’s total target reward against our global pharmaceutical/biotechnology peer group and positions Mr Perreault around the median. CEO Total Target Reward 2019 and 2020 – US$ 0 4,000,000 8,000,000 12,000,000 ● 2020 ● 2019 Total Target Reward Long Term Incentive Target Short Term Incentive Target Total Fixed Reward 10,856,200 9,980,700 7,004,000 6,128,500 2,101,200 2,101,200 1,751,000 1,751,000 In addition to the two CSL Group financial measures under the STI plan, in 2020, the CEO will have further KPIs set to measure performance and determine STI reward outcomes. Measures will include People and Culture, Strategy and Innovation and weighting will be 70% financial and 30% non-financial. CSL Limited Annual Report 2019 78 Directors' Report