CSL Ltd Annual Report 2021

2021 CEO Remuneration Outcomes In 2021, Mr Perreault had no increase to any component of reward, his fixed reward remained at US$1,751,000, and his STI target was held at 120% of fixed reward and the LTI target at 400%. Mr Perreault will receive a STI payment of US$1,807,032. The outcome is 86% of Mr Perreault’s target reflecting target performance on NPAT, a maximum CFO outcome and an individual performance outcome that was below target. Details of these outcomes can be found in section 6 of the Report. Following another strong year of LTI outcomes, Mr Perreault received vesting of awards granted annually over the period October 2016 to September 2019 of US$41,686,616 (based on the market value of the award at the date of vesting). Further detail can be found in sections 6.4 and 8.2. The 2021 ‘realised’ remuneration for Mr Perreault was US$45,360,031 and was a 61% increase on 2020 (full detail is provided in section 8.2, Table 13). This outcome was driven by the vesting of legacy LTI awards and the significant increase in share price since the date of grant of each award. From the total vesting value of US$41,686,616, US$32,975,340 is share price growth over the vesting period – a 79% increase. There are no further legacy LTI plans outstanding. 2021 CEO Realised Remuneration 0% 20% 40% 60% 80% 100% ● Total Fixed Reward Received ● Total STI Received ● LTI Received – Options (2017) ● LTI Received – Rights (2017) ● LTI Received – Performance Share Units (2018) ● LTI Received – Performance Share Units (2019) ● LTI Received – Performance Share Units (2020) Remuneration in 2022 For 2022, the Board has determined that Mr Perreault will receive a market increase to fixed reward of 3% and no change to his STI and LTI target opportunity. This is the first increase to Mr Perreault’s fixed reward since September 2015. While Mr Perreault’s total direct compensation is below the median of our global pharmaceutical/biotechnology peer group, the Board feels that given reward outcomes for Mr Perreault in 2021 and the changes being made to the executive remuneration framework in 2022 which will see Mr Perreault’s maximum STI opportunity increase from 180% to 240% of fixed reward, no further adjustment is appropriate at this time. For our remaining Executive KMP, in 2022 a merit increase to fixed reward will be applied to Dr McKenzie and Ms Linton. There will be no change to STI and LTI target opportunities however, the maximum opportunity will increase to 200% of STI target opportunity for both. Professor Cuthbertson will retire from his current position in October 2021 and will not receive an annual reward review. Following benchmarking to ASX12 and ASX25 Non-Executive Director (NED) remuneration, there will be an average increase of 4.2% for Board and Committee Chair roles and an average 2.8% increase for member fees in 2022. Remuneration Framework Changes for 2022 Our current executive remuneration framework has been in place since 2017 and has effectively incentivised and rewarded executives and provided meaningful levels of equity in the hands of executives more quickly than before. As communicated in our 2020 Remuneration Report, over the course of the 2021 financial year, we have undertaken a review of the framework with the aim of ensuring a fit for purpose design, alignment to our Total Reward Principles and responding to feedback from our investors. Competing for talent in a global market, it is critical that we have a framework that attracts and retains high quality talent to deliver on our strategy and deliver results. I thank shareholders and proxy advisors for their feedback on our executive remuneration framework provided during the year. In response to this feedback, effective 1 July 2021 the following changes will be implemented: • Maximum STI: Increase of the maximum STI payout to 200% of STI target opportunity – driving our pay for performance philosophy and incentivising for outperformance, and aligning to our global pharmaceutical/biotechnology peers; • LTI Performance Measures: Introduction of a second LTI measure of EPS growth – aligned to shareholder experience, a second measure will ensure focus on long term sustainable earnings growth and is aligned to market practice and investor expectations; • LTI Vesting Period: Removal of vesting of awards at years one and two to a single point, three year vest. Responding to investor feedback, this also aligns with the approach taken by our global pharmaceutical/biotechnology peers; • ESG Measures in Remuneration: While certain ESG measures are already included in the individual key performance indicators for Executive KMP, in the year commencing 1 July 2022 we will introduce a CSL global ESG measure for which all executives will be held accountable. In addition to the CSL financial measures of NPAT and CFO, this will ensure collective focus and accountability on our long term sustainability and global footprint; and • Mental Health: CSL will secure access to quality and affordable coverage for mental health conditions for employees and their dependents. Further detail on the changes is provided in section 4 of this Report. Competition for talent in the pharmaceutical/biotechnology industry continues to increase and the Board will continue to review the competitiveness of our remuneration framework. Thank you to my fellow committee members and thank you for supporting CSL and the patients we serve around the world. Dr Megan Clark AC Chair Human Resources and Remuneration Committee CSL Limited Annual Report 2020/21 75