CSL Ltd Annual Report 2020

8. Non-Executive Director Remuneration 8.1 NED fee policy Feature Description Strategic objective CSL’s NED fee arrangements are designed to appropriately compensate suitably qualified directors, with appropriate experience and expertise, for their Board responsibilities and contribution to Board committees. In the 2020 year, the Board had four Committees for which fees were payable Maximum aggregate fees approved by shareholders The current maximum aggregate fee pool of A$4,000,000 was approved by shareholders on 12 October 2016 and has applied from this date. Actual NED fees paid during the 2020 year (including superannuation contributions, NED Rights Plan sacrifice amounts and Committee fees) is within this agreed limit, and totalled A$2,594,787. NEDs may be reimbursed for reasonable expenses incurred by them in the course of discharging their duties and this reimbursement is not included within this limit Remuneration reviews The Board reviews NED fees on an annual basis in line with general industry practice. Fees are set with reference to the responsibilities and time commitments expected of NEDs along with consideration to the level of fees paid to NEDs of comparable Australian companies Independence To ensure independence and impartiality is maintained, NEDs do not receive any performance related remuneration NED Equity The NEDs participate in the NED Rights Plan – introduced to enable NEDs to build up meaningful levels of equity more quickly. Under the plan, NEDs sacrifice at least 20% of their pre-tax base fee in return for a grant of Rights, each Right entitling a NED to acquire one CSL share at no cost. The number of Rights granted is equivalent to the fee sacrificed divided by the prevailing market price of CSL shares at that time. Rights are allocated in two tranches and vesting occurs following the disclosure of half year and full year financial results following the grant of Rights. For Australian based NEDs, shares are allocated at vesting of the Rights and for overseas based NEDs, shares are allocated at the end of the nominated restriction period. At the end of a nominated restriction period, of three to fifteen years, the NED is able to access their shares. No price is payable on vesting and exercise of rights. Shares are automatically allocated without the need for exercise by a NED. As this is a salary sacrifice plan, no performance conditions apply to the Rights. The shares are purchased on-market. Additional shares may be purchased by NEDs on-market at prevailing share prices in accordance with CSL’s Securities Dealing Policy Shareholding Requirement NEDs must hold CSL shares equal to 100% of their Board base fee within five years from the date of appointment to their role Post-Employment Benefits Superannuation contributions are made in accordance with legislation and are included in the reported base fee and are not additional to the base fee. NEDs are not entitled to any compensation on cessation of appointment Contracts NEDs are appointed under a letter of appointment and are subject to ordinary election and rotation requirements as stipulated in the ASX Listing Rules and CSL Limited’s constitution 8.2 NED fees in 2020 The following table provides details of current Board and Committee fees from 1 July 2019. As a truly global business, our NED fee structure allows us to attract and recruit globally experienced directors. In 2020, after reviewing both ASX12 and ASX25 comparative Board fees, the Board has determined to increase Board and Committee fees by 2.8% from 1 July 2020. These increases ensure market competitive fees and allow us to attract and retain high quality NEDs. Fees remain within the existing aggregate fee pool approved by shareholders in 2016. The Board considers that sufficient headroom remains within the existing fee pool. Committee fees are not payable to the Chairman or to members of the Securities & Market Disclosure Committee. Table 14: NED Fees 2020 and 2021 2020 Fees 2021 Fees Board Chairman Fee A$798,000 A$820,350 Board NED Base Fee A$232,050 A$238,550 Committee Fees Committee Chair Committee Member Committee Chair Committee Member Audit & Risk Management A$65,800 A$32,400 A$67,650 A$33,300 Corporate Governance & Nomination A$28,500 A$14,300 A$29,300 A$14,700 Human Resources & Remuneration A$55,000 A$28,500 A$56,550 A$29,300 Innovation & Development A$55,000 A$28,500 A$56,550 A$29,300 A travel allowance of A$15,000 per annum is in place for those NEDs who reside outside of Australia and travel to and from Australia to attend Board and Committee meetings. Where no travel is undertaken in a quarter, no allowance is paid. CSL Limited Annual Report 2020 88 Directors’ Report