Dear Fellow Shareholder, On behalf of the Board of Directors, I am pleased to present CSL’s Remuneration Report (Report) for the financial year ended 30 June 2024 (2024). This Report contains detailed information regarding the remuneration of CSL’s Key Management Personnel (KMP) for 2024 as well as changes to our Executive Remuneration Framework. Bringing people and science together Throughout the Annual Report you can read about our operational and financial highlights for the year. These accomplishments are testament to the dedication of our colleagues around the world. It is a great privilege to serve a company full of people who spend each day making a meaningful difference to society. In essence, companies like CSL bring people and science together to solve complex challenges. The investment required in terms of time and capital is significant. It also requires passion, motivation and deep technical expertise from our people. This section of the Directors’ Report is focused on the people side of this equation. It is vital that we attract and retain the right talent to CSL if it is to continue its track record of growth in the future. Updating our framework Each year we engage with numerous stakeholders on our Executive Remuneration Framework. It is then subject to a vote at our Annual General Meeting (AGM). The Remuneration Report received the required support at last year’s AGM, however your Board noted that an increased number of shareholders voted against it, relative to previous years. While investor feedback is always a priority for us, this year we have increased our level of engagement. Accordingly, we have made changes to the Executive Remuneration Framework in 2024 and I cover these further below. KMP changes in 2024 In January 2024, we welcomed Ms Samantha Lewis to the Board as a Non-Executive Director (NED). We farewelled Mr Bruce Brook in October 2023 following four terms as a NED. As disclosed in the 2023 Remuneration Report, Mr Andrew Schmeltz, EVP CSL Behring, become Executive KMP on 1 September 2024. Outcomes 2024 The outcomes for 2024 are as follows: 2024 CEO Remuneration Outcomes At 1 September 2023, Dr Paul McKenzie, CSL’s Chief Executive Officer and Managing Director (CEO), received a 3.5% increase to his salary, no change to his short-term incentive (STI) target opportunity of 120% and maximum opportunity of 240% of salary, and no change to his long-term incentive (LTI) target opportunity of 425% of salary. Fixed Reward inclusive of salary, superannuation and non-monetary benefits was US$1,958,635. A STI outcome of US$2,325,645 (54% of maximum opportunity) was awarded, with the Board noting the focus by Dr McKenzie on improving the fundamentals of the plasma business, advancing our future pipeline, building a high performance team, integration of CSL Vifor and the focus on cost and capital discipline. Partial vesting of his LTI tested at 30 June 2024 will occur in September 2024, and has a face value of US$1,602,960 based on the 30 June 2024 CSL share price. For transparency, the 2024 “realised” or “take home pay” for Dr McKenzie was US$5,887,240. As discussed in section 5, this outcome reflects the performance of CSL and Dr McKenzie over the period earned. More detail on realised remuneration is included in section 2.2 of the Report. Board Adjustments Applied to LTI As disclosed in the 2023 Report, the Board determined at the time of the Vifor Pharma acquisition that performance targets for on-foot LTI awards would not be recalculated for the acquisition however, the Board would consider CSL Vifor’s performance when determining LTI vesting outcomes. Accordingly, the Board has assessed CSL Vifor’s performance since the acquisition against a range of factors, including overall contribution to CSL financial outcomes, performance against the acquisition model, and shareholder experience. It has been determined that for five current and former executives, a 20% reduction will be applied to LTI awards vesting in September 2024. This has been done to align executive outcomes with the shareholder experience. An estimated vesting outcome value is included in section 2.2 and more detail on the awards is included in section 5.2. The Board and management team continue to have confidence in CSL Vifor. The business has experienced several near term challenges. As the Board Chair has mentioned, we were prepared for some of these but others were unexpected. This is disappointing, but the Board is confident that CSL has the right plans in place to deliver growth from CSL Vifor over the long-term. Remuneration Framework Changes This year we have enhanced transparency over the threshold, target and maximum financial STI hurdles in this Report, along with enhanced disclosures regarding individual KPIs and outcomes for Executive KMP. Our Return on Invested Capital (ROIC) and Earnings per Share growth (EPSg) LTI measures remained the same. ROIC is a measure of capital allocation and therefore a key indicator of the management team’s ability to create value for the business. For awards granted from 1 September 2023, the ROIC performance period changed from seven years (four-year look back/three-year forward look) to a three-year forward looking performance period in response to investor feedback. The ROIC gateway performance measure, which was previously introduced to address concerns about the impact of the four-year look back, does not apply to the new three-year forward-looking measure. The approach for LTI target setting was reviewed to generate targets that continue to be stretching and aligned with CSL’s longer-term performance trajectory. Directors’ Report Remuneration Report 77
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