CSL Ltd Annual Report 2021

3.2.4 Short Term Incentive (STI) Rewarding performance over an annual period, the STI program is designed to drive business performance and the creation of shareholder value. The KPIs on which Executive KMP are assessed and rewarded are challenging and not just duties expected in the normal course of their role. The key features of the program for cash awards for the year ended 30 June 2021 (to be paid in September 2021) are detailed below. Feature Description Performance Period Annual aligned with the financial year – 1 July 2020 to 30 June 2021 Performance Measures Each Executive KMP has a maximum of six KPIs. The KPIs are made up of two critical financial measures of CSL business strength, shared by all participants – Net Profit after Tax (NPAT) and Cash Flow fromOperations (CFO), plus up to four individual business building KPIs. Hurdles are set at threshold, target and maximum levels of performance and there is real difference between under achieve/achieve/over achieve targets and measures, so that a challenging but meaningful incentive is provided The performance measures are chosen to ensure Executive KMP are focused on the achievement of the CSL strategy, delivery of business results and ensuring CSL’s success and sustainability Financial Individual Financial growth is the foundation of long term sustainability and evidences our competitive advantage, whilst pursuing profitable growth, and aligns employee and shareholder objectives. The financial performance measures are NPAT measured at constant currency and CFOmeasured at the reported rate Individual performance hurdles align with strategic priorities, encourage appropriate decision making, and balance performance in non-financial priorities. The individual performance measures are based on individual responsibilities and categories include divisional performance, achievement of strategic objectives and improvement in operations, risk management, compliance, people, health and safety and quality Performance Measure Weighting The weighting of the measures is NPAT 35%, CFO 25% and Individual 40% Executive KMP STI Targets Set as a percentage of Fixed Reward, target opportunity in 2021 was: • Mr Perreault – 120% • Ms Linton – 85% • Dr McKenzie – 100% Vesting 50% earned on threshold level performance, increasing on a straight line basis with 100% earned at target level performance and 150% on achievement of maximum level performance (capped at 150%). The STI Outcome percentages are then multiplied by the KPI weighting and individual STI opportunity (as disclosed in Table 3 in section 6.2) to determine the payment amount Cessation of Employment A ‘qualified leaver’ (such as someone who retires) may receive a pro-rata payment paid in the ordinary course based on the portion of the Performance Period worked, subject to Performance Measures being met. If the Executive KMP is not a ‘qualified leaver’, no payment will be made 3.2.5 Long Term Incentive (LTI) Our current LTI plan was designed to align our executives’ equity interests with those of our shareholders by rewarding sustainable Return on Invested Capital (ROIC) outcomes over the longer term – ensuring a focus on the long term growth of the organisation and delivering returns to our shareholders. The instalment vesting of awards over a four year period will only deliver reward where CSL performance has been strong over the longer term. When our target performance is achieved, we want our executives’ LTI to vest – we set targets that require excellent outcomes for shareholders both absolutely and relative to the performance of our global peers. The LTI plan also rewards and assists us in retaining our talent. The key features of the program for 2021 LTI awards, granted 1 September 2020, are as follows. CSL Limited Annual Report 2020/21 81