3.5 Long Term Incentive CSL’s LTI design is intended to focus on the sustainable long-term growth of the organisation, delivering returns to CSL shareholders and aligning executives’ equity interests with those of shareholders. The key features of CSL’s LTI program for 2024 awards, granted 1 September 2023, are as follows. Feature Description Performance Period Three years from 1 July 2023 to 30 June 2026 Delivery PSU, being a conditional ‘right’ to a CSL share. No price is payable by the Executive KMP on grant or vesting of rights. Shares are allocated on vesting without the need for exercise by an Executive KMP Performance Measures and Weightings – Three-year average ROIC (70%) – Three-year EPS growth (30%) These performance measures and the targets below, are chosen as the Board believes these two financial metrics drive the success of the organisation and drive shareholder value given the capital intensive nature of CSL’s businesses Calculation – ROIC: Reported EBIT×(1−Effective Tax Rate)/(Average Equity + Average Net Debt) where Net debt equals cash, less interest-bearing liabilities and Average Equity and Average Net Debt is the average of the opening position on 1 July and closing position on 30 June of the respective financial year – EPS: CSL reported net profit after tax in USD/Weighted average number of shares on issue Approach to Performance Target Setting When determining performance targets the Board considers a range of factors including: – CSL’s strategy; – Budget and forecast financial performance; – Historical financial performance; and – External factors including market guidance, analysts’ consensus and any other relevant market disclosures. Performance Targets and Vesting Schedule ROIC CSL’s ROIC Performance Vesting Outcome Below 10.2% 0% Equal to 10.2% 50% Greater than 10.2% and up to 12.8% Straight-line vesting between 50% and 100% At or above 12.8% 100% EPS growth CSL’s EPS Performance Vesting Outcome Below 15.6% 0% Equal to 15.6% 50% Greater than 15.6% and up to 17.3% Straight-line vesting between 50% and 100% At or above 17.3% 100% Vesting Date 1 September 2026 Grant Methodology – To determine the number of PSUs issued, a five day volume weighted average share price preceding the grant date is used (allocation price10) – The LTI opportunity for each Executive KMP is divided by the allocation price to determine the number of securities granted Retesting No retest Dividends and Voting Rights – No dividends or dividend equivalent payments are paid on unvested PSUs. 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 10. For Dr McKenzie the allocation price was the price determined for the grant made on 1 September 2023, not at the date of Dr McKenzie’s grant following the 2023 AGM. 85
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