Notes to the Financial Statements Note 18: Detailed Information – People Costs continued (b) Share-based payments Long Term Incentives A face value equity allocation methodology, being a volume weighted average share price based on the market price of a CSL share at the time of grant, is used to determine the number of units granted to a participant under each of the shared based payment plans, which are as follows: • The Executive Performance and Alignment Plan (“EPA”) grants Performance Share Units (“PSU”) to qualifying executives. Vesting is subject to continuing employment, satisfactory performance and the achievement of absolute return measures. The return measures include EPS growth and a seven-year rolling average Return on Invested Capital (“ROIC”). • The Retain and Grow Plan (“RGP”) grants Restricted Share Units (“RSU”) to qualifying employees, participation in the RGP plan is broader than in the EPA plan. Vesting is subject to continuing employment and satisfactory performance. EPA and RGP grants made prior to 1 September 2021 will vest in equal tranches on the first, second, third and fourth anniversaries of the grant. EPA grants made from 1 September 2021 will vest on the third anniversary. RGP grants made from 1 September 2021 will vest in equal tranches on the first, second and third anniversaries of the grant. For RGP commencement benefit awards, vesting dates will vary. There have been no changes to the terms of grant of any existing instruments. The fair value of the awards granted is estimated at the date of grant using an adjusted form of the Black-Scholes model, considering the terms and conditions upon which the PSUs and RSUs were granted. There is no exercise price payable on PSUs and RSUs. The following grants were issued during the year ended 30 June 2022: Date of grant PSUs RSUs 1 September 2021 183,972 512,003 1 March 2022 – 27,107 The relevant tranche of PSUs will exercise upon vesting on 1 September 2024. The relevant tranche of RSUs will exercise upon vesting between September 2021 and March 2025. The Non-Executive Directors Plan The Non-Executive Directors (“NED”) pay a minimum of 20% of their pre-tax base fee in return for a grant of Rights, each Right entitling a NED to acquire one CSL share at no cost (shares purchased on market). There is a nominated restriction period, of three to fifteen years, after which the NED will have access to their shares. On 26 August 2021 and 4 October 2021, 2,449 Rights were granted under the NED vesting on 21 February 2022 and 22 August 2022. Global Employee Share Plan The Global Employee Share Plan (“GESP”) allows employees to make contributions from after tax salary up to a maximum of A$6,000 per six month contribution period. The employees receive the shares at a 15% discount to the applicable market rate, as quoted on the ASX on the first day or the last day of the six-month contribution period, whichever is lower. Recognition and measurement The fair value of awards granted are recognised as employee benefit expense with a corresponding increase in equity. Fair value is independently measured at grant date and recognised over the period during which the employees become unconditionally entitled to the award. Fair value is independently determined using a combination of the Binomial and Black-Scholes valuation methodologies, including Monte Carlo simulation, considering the terms and conditions on which the awards were granted. The fair value of the awards granted excludes the impact of any non-market vesting conditions, which are included in assumptions about the number of awards that are expected to vest. At each reporting date, the number of awards that are expected to vest is revised. The employee benefit expense recognised each period considers the most recent estimate of the number of awards that are expected to vest. No expense is recognised for awards that do not ultimately vest, except where the vesting is conditional upon amarket condition and that market condition is not met. The Group does not have any awards with amarket condition as at 30 June 2022. CSL Limited Annual Report 2021/22 134
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