CSL Ltd Annual Report 2021

3.2.1 2021 Remuneration Framework Elements for Executive KMP Fixed Reward (FR) Short Term Incentive (STI) Long Term Incentive (LTI) Purpose Attract, retain and engage key talent to deliver our CSL strategy Reward performance against annual Key Performance Indicators (KPIs) – maintaining a focus on underlying value creation within the business operations is critical to CSL’s success and sustainability Alignment to longer term performance and strategy of CSL, building economic alignment between Executive KMP and shareholders over the long term Structure Cash – salary and superannuation/pension Cash Performance Share Units 2 Approach Reviewed annually Determined based on the scope, complexity and responsibilities of the role, experience and performance Reviewed through both an internal and external relativity lens Peer group – global pharmaceutical/ biotechnology peers or a general industry view depending on role (desired positioning at the median) Paid annually Maximum payout is 150% of an Executive KMP’s target STI opportunity (i.e. STI target multiplied by 150%) Outcomes based on business (60%) and individual performance measures (40%) Granted annually with vesting in instalments over a four year period – 25% each year Performance measure is Return on Invested Capital – measured on a seven year rolling return in the year the award vests Peer Group The global pharmaceutical/biotechnology industry peer group serves as a primary reference group for remuneration benchmarking, created such that CSL falls in the middle of the group with respect to market capitalisation and revenue. The group represents global industry peers and is updated annually. The peer group in 2021 included: AbbVie Inc.; Alexion Pharmaceuticals, Inc.; Allergan plc; Amgen Inc.; AstraZeneca PLC; Bausch Health Companies Inc.; Bayer Aktiengesellschaft; Biogen Inc.; Bristol-Myers Squibb Company; Eli Lilly and Company; GlaxoSmithKline plc; Gilead Sciences Inc.; Grifols, S.A.; Merck Kommanditgesellschaft auf Aktien; Novo Nordisk A/S; Regeneron Pharmaceuticals, Inc.; UCB SA and Vertex Pharmaceuticals Incorporated. For the 2022 year, BioMarin Pharmaceutical Inc. and Takeda Pharmaceutical Company Limited have been added In addition, two general industry reference groups representing Australia and North America also help us appropriately reward senior talent and may be used as a primary, or hybrid, data set for certain Executive KMP dependent on role and location Risk Management Before determining remuneration outcomes and vesting, we assess alignment with risk management outcomes to hold executives accountable for effective risk management – both financial and non-financial. In addition, all variable reward is subject to the Malus and Clawback Policy and the Board has full discretion over the outcome of any variable reward payment and vesting The Board has the discretion to apply a ‘Leading and Managing’ modifier to STI and LTI outcomes – formally recognising the importance of CSL’s culture including leadership behaviours, values, diversity objectives and management of risk. The modifier allows for the Board to adjust in exceptional circumstances +20%/-50% of annual STI earned, and/or LTI opportunity granted. The modifier is also available to adjust for risk management outcomes under our formal risk/consequence management framework. The Board has a discretion in all circumstances, including a significant risk management failure, to reduce further, including to zero Malus and Clawback Executive KMP STI and LTI arrangements are subject to malus and clawback provisions that enable the Board to adjust both vested and unvested awards as appropriate. The circumstances include material misstatement or omission in financial statement, fraud, dishonesty, risk management outcomes or other serious misconduct Shareholding Requirement Executive KMP must hold CSL shares equal to 100% of FR (300% for the CEO) within five years from the date of appointment to their role Benefits We also provide market competitive benefits to attract and retain key talent. Benefits may include, but are not limited to, accident, disability and death insurance, health insurance, car parking and participation in local benefit programs 2 O ur legacy LTI plans (Options and Performance Rights) are reported for the final time in 2021 – no further awards are outstanding. See section 11 for more details on key plan characteristics. CSL Limited Annual Report 2020/21 79