CSL Ltd Annual Report 2021

Feature Description Summary A conditional ‘right’ to a CSL share (i.e. full value instrument) or at the Board’s discretion in exceptional circumstances, a cash equivalent payment. No price is payable by the Executive KMP on grant or vesting of rights. Shares are automatically allocated (or cash automatically paid) without the need for exercise by an Executive KMP Security Performance Share Unit (PSU) Grant Methodology To determine the number of PSUs issued, a five day volume weighted average share price is used. The LTI opportunity for each Executive KMP is divided by the calculated face value to determine the number of securities granted Performance Period Seven year rolling average: Tranche 1 – 1 July 2014 to 30 June 2021; Tranche 2 – 1 July 2015 to 30 June 2022; Tranche 3 – 1 July 2016 to 30 June 2023; and Tranche 4 – 1 July 2017 to 30 June 2024 Gateway Performance Measure No vesting will occur unless an Investment Hurdle Rate (IHR) is achieved in the year of testing. The IHR is the minimum return CSL requires on its investments to ensure it is making sound investment decisions and appropriately managing risk and covering its cost base Performance Measure Return on Invested Capital Performance Target Threshold – 20.0% Target – 23.0% Executive KMP LTI Targets 3 • Mr Perreault – 400% of fixed reward • Dr McKenzie – 350% of fixed reward Vesting Schedule 50% earned on threshold level performance, increasing on a straight line basis with 100% earned at target level performance (capped at 100%) Vesting Date Subject to performance, 25% of the award is eligible for vesting annually over four years: Tranche 1 – 1 September 2021; Tranche 2 – 1 September 2022; Tranche 3 – 1 September 2023; and Tranche 4 – 1 September 2024 Retesting No retest of any tranche Cessation of Employment A ‘qualified leaver’ (such as someone who retires) may retain a pro-rated number of PSUs based on time elapsed since grant date. Retained PSUs will remain subject to original terms and conditions including satisfaction of performance conditions at the test date. If an Executive KMP is not a ‘qualified leaver’, all unvested awards will be forfeited Change of Control In the event of a change of control, the Board, in its absolute discretion, may determine that some or all of the awards vest having regard to the performance of CSL during the vesting period to the date of the change of control event. Vesting may occur at the date of the change of control event or an earlier vesting date as determined by the Board Dividends and Voting Rights No dividends or dividend equivalents are paid on unvested awards. Executive KMP are only eligible for dividends once shares have been allocated following vesting of any PSUs. PSUs do not carry any voting rights prior to vesting and allocation of shares 3.2.6 Leading and Managing Modifier 3 Ms Linton did not receive an annual LTI grant in 2021 however, a commencement benefit was granted and further detail can be found in section 6.4.3. The Board, based on recommendations from the CEO for Executive KMP, and the Human Resources and Remuneration Committee (HRRC) for the CEO, has the discretion to apply a ‘Leading and Managing’ modifier to both the STI and LTI opportunity – allowing for recognition of extraordinary contribution in exceptional circumstances or significant leadership failure across culture and diversity. Applied to the overall STI outcome or LTI target opportunity, there can be an increase of up to 20% or a decrease of up to 50% applied. In 2021, themodifier was not used as the CEO and the Board determined that all Executive KMP had met expectations in the leadership of their respective business units and outcomes delivered, and consistently modelled the CSL Values. Below sets out an illustrative example of how the modifier is used on STI outcomes. KPI outcomes assessed by the Board Proposed STI outcome determined Modifier applied in exceptional circumstances Final STI outcome determined In addition to consideration during the determination of KPI outcomes, the modifier is also utilised for the assessment of the management of risk – both financial and non-financial. In consultation with the Audit and Risk Management Committee (ARMC), the HRRC use a principles approach to ensure alignment between remuneration outcomes and performance. This enables management to bring awareness to behaviours that encourage unacceptable levels of risk and discourage those behaviours, promotes behaviours that encourage acceptable levels of risk and enables the Board to recognise and appropriately address both acceptable and unacceptable behaviours. In the event of a significant risk management failure, the Board has the discretion to adjust further than the 50% downwards outcome, including to zero. CSL Limited Annual Report 2020/21 82 Directors’ Report