CSL Ltd Annual Report 2020

For awards granted in 2020 (on 1 September 2019 to Mr Lamont and Dr McKenzie and on 23 October 2019 to Mr Perreault and Professor Cuthbertson), the Board introduced an annual threshold of ROIC performance that must be achieved before vesting can occur – the measure is the Investment Hurdle Rate (IHR). The IHR is the minimum return we require on our investments to ensure we are making sound investment decisions and appropriately manage risk and cover our cost of capital. This was added as a gateway condition of the LTI target to ensure that the ROIC is delivering an appropriate return each financial year as well as over the seven year rolling average period and aligns with shareholder outcomes and expectations. If the ROIC outcome for a year is below the IHR, no vesting will occur in that year. The key features of the program for 2020 LTI awards are detailed as follows. Feature Description Summary A conditional ‘right’ to a CSL share (i.e. full value instrument) or at the Board’s discretion, a cash equivalent payment. No price is payable by the Executive KMP on grant or vesting of rights. Shares are automatically allocated (or cash automatically paid) without the need for exercise by an Executive KMP Security Performance Share Unit (PSU) Grant Methodology To determine the number of PSUs issued, a five day weighted average share price is used. The LTI opportunity for each Executive KMP is divided by the calculated face value to determine the number of securities granted Performance Period Seven year rolling average: Tranche 1 – 1 July 2013 to 30 June 2020; Tranche 2 – 1 July 2014 to 30 June 2021 Tranche 3 – 1 July 2015 to 30 June 2022; and Tranche 4 – 1 July 2016 to 30 June 2023 Gateway Performance Measure No vesting will occur unless an Investment Hurdle Rate (IHR) is achieved. The IHR is the minimum return CSL requires on its investments to ensure it is making sound investment decisions and appropriately managing risk and covering its cost base Performance Measure Return on Invested Capital Performance Target Threshold – 22.0% Target – 25.0% Executive KMP LTI Targets (target opportunity set as a percentage of Fixed Reward) • Mr Perreault – 400% • Dr McKenzie – 315% • Professor Cuthbertson – 200% • Mr Lamont – 135% Vesting Schedule Below Threshold 0% earned Between Threshold and Target 50% of target opportunity earned on achievement of threshold level performance, increasing on a straight-line basis to 100% of target opportunity earned on achievement of target level performance Target 100% of target opportunity earned Maximum Outcome capped at 100% Vesting Date Subject to performance, 25% of the award vests annually over four years: Tranche 1 – 1 September 2020; Tranche 2 – 1 September 2021; Tranche 3 – 1 September 2022; and Tranche 4 – 1 September 2023 Retesting No retest of any tranche Cessation of Employment A ‘good leaver’ (such as retirement) may retain a pro-rated number of PSUs based on time elapsed since grant date, subject to original terms and conditions including test date. If an Executive KMP is not a ‘good leaver’, all unvested awards will be forfeited Change of Control In the event of a change of control, the Board, in its absolute discretion, may determine that some or all of the awards vest having regard to the performance of CSL during the vesting period to the date of the change of control event. Vesting may occur at the date of the change of control event or an earlier vesting date as determined by the Board Dividends and Voting Rights No dividends or dividend equivalents are paid on unvested awards. Executive KMP are only eligible for dividends once shares have been allocated following vesting of any PSUs. PSUs do not carry any voting rights prior to vesting and allocation of shares CSL Limited Annual Report 2020 75