CSL Ltd Annual Report 2020

18. Remuneration Report Dear Shareholder, On behalf of the Board, I am pleased to present CSL’s Remuneration Report (Report) for the year ended 30 June 2020. This Report contains detailed information regarding CSL’s Key Management Personnel (KMP) for 2020. CSL plays a critical role in the global community – providing live-saving therapies to people with serious disease, and vaccines that protect public health. The Board is proud of the entire CSL team for delivering on this critical role. Delivering on our Promise in 2020 Led by our Chief Executive Officer and Managing Director (CEO), Mr Paul Perreault, the leadership team has delivered an outstanding year, exceeding targets set in many areas. The team has also responded to the COVID-19 pandemic by prioritising staff, donors and patients and supporting global efforts to fight COVID-19. In 2020 we have delivered: • An increase to Net Profit after Tax (NPAT) of 17.1% on a constant currency basis; • An 8.9% increase in Revenue on a constant currency basis; • Growth in Earnings per Share on a constant currency basis of 17%; • Return on Invested Capital (ROIC) of 21.6%; • The opening of 40 new plasma collection centres globally – taking the total to 227; • The building of a growth pipeline of newmedicines through investment in R&D; • Progression in our diversity strategy with 57% female representation; and • Employee engagement results above the global external norm. CSL’s Response to COVID-19 and the Impact on Remuneration As outlined earlier in this Annual Report, CSL has contributed swiftly and strongly to the global response to COVID-19 by participating in the search for and development of potential therapies, vaccines and treatments in partnership with others. The company helped staff work from home, implemented safe protocols for staff and donors, and offered staff caregiver leave of absence and allowances to help balance work with home responsibilities. Payments to staff and donors at our plasma collection centres were increased in some areas to address the additional requirements of COVID-19. CSL has not accepted any government workforce support packages. Our teams have delivered strongly on financial and non- financial targets and as a result, the pandemic has not materially impacted financial performance of CSL in 2020. However, in assessing outcomes for 2020, the Board did consider the impact of COVID-19 to ensure an appropriate balance between remuneration delivered to our executives and alignment with performance. Following this review, the Board exercised its discretion and the financial metric outcomes for the Short Term Incentive (STI) component of remuneration, NPAT and Cash Flow fromOperations (CFO), were adjusted downward from the actual outcomes achieved. The Board chose not to apply the ‘Leading and Managing’ modifier to STI outcomes which allows for recognition of extraordinary contribution in exceptional circumstances or significant leadership failure. In setting targets for 2021, the hurdle for the maximum performance payment outcome for CFO has been extended. Competition for talent in the pharmaceutical/biotechnology industry has increased as the world focusses on health care. The Board will continue to review the competitiveness of our remuneration framework as we focus on balancing the delivery of long term sustainable business performance with the need to attract and retain outstanding executives. 2020 Key Management Personnel Changes In 2020, following changes to the structure of our leadership team, KMP were reviewed to include those leaders with authority and responsibility for planning, directing and controlling the activities of CSL. As a result we are reporting a smaller KMP group this year as opposed to all executives who report to the CEO. The remuneration framework described is the same for all of the senior executives reporting to the CEO. In 2021, Professor Andrew Cuthbertson will transition into an executive advisory role, supporting the CEO in strategic global projects. Professor Cuthbertson remains an Executive Director. We will also farewell our Chief Financial Officer, Mr David Lamont, and thank him for his outstanding contribution to CSL. 2020 CEO Remuneration Outcomes We congratulate our CEO, who was named by the Harvard Business Review as one of the top 100 CEOs in the world and was also named The Australian Financial Review 2019 Business Person of the Year and the Australian Herald Sun’s Business Daily CEO of the Year 2019. In 2020, Mr Perreault had no changes to his fixed reward nor to his STI target, which stayed flat at US$1,751,000 and 120% of fixed reward respectively. He received an increase to his long term incentive (LTI) opportunity at target, now set at 400% of fixed reward (an increase from 350% in the prior year). The increase to the LTI target drives focus on long term performance delivery and rewards will only be earned when performance hurdles are met. Following above target performance in 2020, Mr Perreault will receive a STI cash payment of US$2,477,746. The STI outcome for Mr Perreault was 118% of target, based on the two financial measures of ‘above target’ performance on both NPAT and CFO and between ‘threshold’ and ‘target’ performance on three individual non-financial measures. Details of the outcomes can be found in sections 5 and 7.1 of the Report. During the year Mr Perreault had LTI vesting of US$23,923,845 based on the CSL share price at the date of vesting. Of this amount, US$18,592,836 relates to the increase in the CSL share price since the date of grant of each award. Awards were granted annually over the period 1 October 2015 to 1 September 2018. Refer to section 5.3.3 and table 6 of the Report for detailed information. In 2021, there will be the final vesting of legacy programs with the vesting of Options and Performance Rights granted in October 2016. Thereafter, these legacy plans will cease. CSL Limited Annual Report 2020 68 Directors’ Report