Topic CSL’s Response LTI ROIC performance threshold was perceived as not sufficiently challenging The Board believes the LTI measures of ROIC and EPS continue to be aligned with shareholder interests and are appropriate measures of CSL’s long-term performance. Recognising the shareholder concerns around threshold payout, we have reduced the quantum payable for the ROIC threshold from 50% to 33%. During the year, significant focus was placed on ensuring a more robust process was undertaken in LTI target setting, including: ‒ C onsidering market guidance when determining LTI targets – in addition to CSL’s budget, forecast and historical financial performance. ‒ O btaining additional scenario modeling, including the impact of different market and internal conditions on company performance and remuneration outcomes. The Board believes the ROIC and EPS targets for the FY26 LTI award (which will be granted towards the end of calendar year 2025 and will be included in the 2025 Notice of AGM) are appropriate and aligns executive reward with the shareholder experience. We note: ‒ CSL uses statutory reporting for LTI measures. ‒ A one -year holding lock after vesting further aligns executive and shareholder experience. LTI Board discretion on LTI award outcomes CSL acknowledges the concerns raised regarding the quantum of the downward adjustment applied to the former CEO’s LTI award vesting following the acquisition of Vifor Pharma in 2022. The Board is committed to ongoing vigilance when exercising discretion following major corporate events. We note: ‒ U nder CSL’s governance framework, joint meetings across the Audit and Risk Management Committee and the Human Resources and Remuneration Committee are undertaken, to review how all significant risks have been managed and ask whether any downward discretion to remuneration is required. STI Use of NPATA rather than NPAT as a STI measure CSL continues to believe NPATA is the right measure for the business at this time. However, recognising there are different views on this matter we have increased reporting and transparency of the reconciliation of NPATA to NPAT. We note: ‒ T he Board gave careful consideration to the relative merits of NPATA and NPAT and will continue to use NPATA for the CSL STI plan at this time, primarily because it reflects underlying performance, is more readily influenced by Management in any given year and is consistent with the approach of global peers. ‒ N PATA continues to be the metric used to measure and drive business performance, as well as setting guidance. ‒ N PAT continues to be used in determining LTI outcomes. ‒ W e report both NPATA and NPAT, including any adjustments made (which are set out in note 1 to the Financial Statements). Additional disclosure of the target setting process is set out in section 3.4 below. At the 2024 AGM, shareholders asked questions on the following topics, and CSL’s response is included. Topic CSL’s Response Quantum of CEO reward is too high and potential increase to LTI ‒ C SL needs to attract, engage and retain executive talent. The executive remuneration framework needs to provide flexibility to address talent challenges in various markets and allows CSL to compete with other large global pharmaceutical companies. ‒ W hen determining increases to reward, the Board considers the individual’s experience, performance and internal and external relativities. ‒ T he majority of the CEO’s reward is variable (STI and LTI) and at risk – creating strong alignment between reward and shareholder outcomes and is aligned to CSL’s pay for performance philosophy and focus on driving growth and long-term sustainable performance. ‒ A t 30 June 2025, Dr McKenzie sits around 70% of the global pharmaceutical/biotechnology peer group TDC median, driven by his lower target LTI quantum. No change to the CEO’s LTI opportunity (as a percentage of FR) will be made in 2026. How are NED fees structured and how much are they paid? ‒ C SL’s NEDs are paid fees for their Board responsibilities and contribution to Board committees. NED fees are set at a level to appropriately compensate suitably qualified directors, with the requisite experience and expertise. ‒ NEDs do not receive any performance related remuneration. ‒ T he Board monitors the practice of global Australian listed companies and those listed in European and US markets to ensure a competitive structure and fee arrangement is in place. ‒ S ection 8 of the Report provides the detail on NED fee arrangements, and in 2026 there will be no increase to NED fees. 67 CSL Limited Annual Report 2024/25
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