CSL Ltd Annual Report 2021

10.1 HRRC Activities During 2021, the HRRC met formally on nine occasions involving the following activities: • Review of the executive remuneration framework; • Review and consideration of investor feedback received across the year; • Appointment of external remuneration advisers; • Review of senior executive appointments and remuneration arrangements; • Review of STI and LTI arrangements, and reward outcomes for senior executives; • Review of the CSL diversity objectives and report, and gender pay review and progress against diversity objectives; • Review of talent and succession planning for senior executives; • Review of long term remuneration strategy and global trends in remuneration; • Review of NED remuneration; • Adopted a formal Protocol for Engagement of and Interaction with Remuneration Consultants; and • Review of the HRRC Charter and HRRC performance. Full responsibilities of the HRRC are outlined in its Charter (reviewed annually). The Charter is available at http://www.csl.com.au/about/governance.htm 10.2 Remuneration Determination The Board has discretion across each element of Executive KMP reward and considers business performance, individual performance and shareholder experience before setting and approving reward outcomes. Remuneration Recommendations – Reviewed on an annual basis, the CEOmakes a recommendation to the HRRC for Executive KMP, with the HRRC recommending to the Board for the CEO, any change to fixed reward and STI and LTI targets for the year ahead. Recommendations take into consideration market conditions, position in market within the global pharmaceutical/biotechnology peer group, individual performance, role responsibilities and internal relativity. Remuneration is reviewed in the context of Total Reward. There is a higher proportion of Total Reward in the form of performance related variable pay. STI Outcomes – A formal review of Executive KMP progress against KPIs is conducted twice annually by the CEO and annually by the Board for the CEO. Regular performance conversations are held during the year. Following the full year performance review, the CEOmakes recommendations in respect of Executive KMP to the HRRC. The HRRC and the Board assess individual performance against KPIs at the end of the financial year, and approve the actual STI payments to be made. The Board determines the outcomes for the CEO, based on recommendations from the HRRC, who are informed by the Chairs of the Board and HRRC. The Board believes this is the most appropriate method of measurement. LTI Outcomes – The HRRC assess performance against the hurdle measures set at grant by the Board. Following this, the HRRC undertakes a review to ensure the remuneration outcomes are aligned with overall business performance and the shareholder experience and then submits outcomes to the Board for approval. The Board believes this is the most appropriate method of measurement. Board Discretion – Prior to approving all remuneration outcomes, the Board assesses the quality of the outcomes and considers whether there are any circumstances warranting application of the Malus and Clawback Policy. It also considers the ‘Leading and Managing’ modifier and 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. The Board’s assessment is informed by the review undertaken by the HRRC in conjunction with the 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 and reduce vesting outcomes, which includes reducing to zero. In 2021, after reviewing the outcome for the two CSL Group Financial measures of NPAT and CFO, and considering the impact of COVID-19, the Board has not exercised any discretion over these two outcomes. New Hires and Internal Promotions – The Remuneration Framework as set out in section 3.2 applies 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 in section 3.2.5. In 2021, commencement benefits were provided to Ms Linton. As a well-respected global leader with extensive strategic and financial experience as CFO who brings significant experience and leadership capabilities that will continue to drive CSL’s sustainable growth, the Board approved the grants to compensate Ms Linton for remuneration foregone from Bupa. Awards details are disclosed in sections 6.4.3 and 7 of this Report. CSL Limited Annual Report 2020/21 102 Directors’ Report