Directors’ Report 3.2.4 Short Term Incentive (STI) Rewarding performance over an annual period, the STI program is designed to drive business performance and create sustainable shareholder value. The KPIs on which Executive KMP are assessed and rewarded are deliberately challenging and over and above the normal expectations of their role. The key features of the STI program for the year ended 30 June 2023 (to be paid in September 2023) are detailed below. Feature Description Performance Period Annual award aligned with the financial year – 1 July 2022 to 30 June 2023 Award Cash Performance Measures Each Executive KMP has a maximum of seven KPIs. The KPIs are made up of two financial measures, common to all participants – Net Profit after Tax and before Amortisation (NPATA) and Cash Flow fromOperations (CFO), a sustainability measure, plus up to four individual business building KPIs. Hurdles are set at threshold, target and maximum levels of performance with a significant difference between each performance level to ensure a challenging but meaningful incentive is provided for target performance. The performance measures are chosen to ensure Executive KMP are focused on the achievement of the CSL strategy, delivery of business results and CSL’s success and sustainability Financial Sustainability Individual Profitable financial growth is the foundation of CSL’s long-term sustainability. It evidences our competitive advantage, and aligns employee and shareholder objectives. The financial performance measures are NPATA measured at constant currency and CFO measured at the reported rate Ensuring a global shared focus on our long-term sustainability and global footprint consistent with our CSL purpose and values, from 1 July 2022 a CSL Group sustainability metric has been applied to the STI component of variable reward. Objectives include establishing a robust programgovernance process, undertaking global initiatives that reduce CO2 emissions, incorporating sustainable design up front in our new facilities, and engaging our supply partners to achieve a low emissions supply chain Individual performance hurdles align with strategic priorities, encourage appropriate decision making, and balance performance in financial and non-financial priorities. The individual performance measures are based on individual responsibilities and categories including business unit performance, achievement of strategic objectives and improvement in operations, risk management, compliance, people, health and safety, ESG and quality Performance Measure Weighting The weighting of the measures for Dr McKenzie and Mr Perreault are NPATA 35%, CFO 25%, Sustainability 5% and Individual 35%. For Ms Linton, the weighting of the measures are NPATA 30%, CFO 30%, Sustainability 5% and Individual 35% Executive KMP STI Targets Set as a percentage of FR, target opportunity in 2023 was: • Dr McKenzie – 100% for the period 1 July 2022 to 5 March 2023 and 120% for the period 6 March 2023 to 30 June 2023 (an increase was applied on Dr McKenzie’s appointment to the CEO role) • Ms Linton – 100% • Mr Perreault – 120% Vesting 50% earned on threshold level performance, increasing on a straight line basis with 100% earned at target level performance and 200% on achievement of maximum level performance (capped at 200%). The STI Outcome percentages are then multiplied by the KPI weighting and individual STI opportunity (as disclosed in Table 4 in section 5.3) to determine the payment amount Cessation of Employment A ‘qualified leaver’ (for example someone who retires or is made redundant) 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 unless the Board determines otherwise Malus and Clawback STI arrangements are subject to malus and clawback provisions that enable the Board to adjust outcomes as appropriate. The circumstances include material misstatement or omission in financial statements, fraud, dishonesty, adverse risk management outcomes, violation of any material law or regulation, material violation of CSL’s Code of Conduct or any other policy governing the conduct of employees or any other serious and wilful misconduct. See section 9 for further details on CSL’s Malus and Clawback Policy CSL Limited Annual Report 2022/23 92
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