Commonwealth Bank - Royal Commission

Commonwealth Bank /

ACN 123 123 124

COMMONWEALTH BANK OFAUSTRALIA GROUP

Group Remuneration Policy

Executive Remuneration and Governance, Human Resources

CBA.0517.0174.2000

Commonwealth Bank of Australia Group Remuneration Policy

DOCUMENT CONTROL TABLE

Amendment description / review details

1.0 16/03/2010 Policy created, with final edits from B. Chapman and J.Linklater made under delegation from the Board at theirFebruary 2010 meeting.

2.0 03/11/2010 Annual review, including updates to People & RemunerationCommittee Charter and Remuneration Delegations.

3.0 14/06/2011 Updates to Group Remuneration Policy, People &Remuneration Committee Charter in relation to remunerationregulatory reform in the UK and Malta, and RemunerationDelegations.

4.0 1/12/2011 Annual review, including updates to People & RemunerationCommittee Charter and Remuneration Delegations.

5.0 1/03/2012 Review to include Bankwest in Remuneration Policy

6.0 28/06/2012 Updates to Group Remuneration Policy, the RemunerationCommittee Charter and Remuneration Delegations.

7.0 29/11/2012 Annual Review of Group Remuneration Policy, theRemuneration Committee Charter and RemunerationDelegations.

8.0 13/05/2013 Incorporation of new requirements of updates to APRAPrudential Standard CPS 510 regarding regulated Subsidiariesand the introduction of SPS 510 on Regulated SuperannuationEntities.

9.0 15/7/2013 Updated to reflect changes to the Approval DelegationsFramework.


11.0 10/06/2014 Updates to Group Remuneration Policy, RemunerationCommittee Charter and European remuneration SupplementPolicy in relation to remuneration regulatory reform in the UKand Malta.


13.0 09/06/2015 Updates to the Group Remuneration Policy to incorporatechanges to the application of STI deferral.


CBA.0517.0174.2001


15.0 13/02/2017 Annual Review of the Group Remuneration Policy (Policy)including incorporating the Terminations Payments and GlobalVariations Policy Supplements into the Policy document,deletion of the Regulated Sub-Entity Supplement Policysupported by enhancements to the Remuneration Committeeand Subsidiary board Charters, updates to comply with thelatest UCITS directive and PRA requirements relating to buyouts for material risk takers and retention awards, theintroduction of a simplified policy limit for non-standardpayments on termination of 1 x annual Fixed Remuneration,and the addition of EGM P&R delegation to approveremuneration for non-EGM reports to GEs on behalf of theCEO.

16.0 5/6/2017 As per version 15.0 with the following additional amendments:

Updates relating to the governance requirements for allvariable remuneration plans in response to the initiatives setout in the ABA report. Reviewed proposals relating to theupdated remuneration provisions of CPS510. The Policy hasbeen updated to reflect extended Policy applicationrequirements (section 3), include a summary of CFS GAMremuneration arrangements (section 5.3) and detail theapproved change to the way the Group expresses deferralrequirements for those with Significant Variable Remuneration(section 5.6). The FY18 Executive Remuneration frameworkchanges and remuneration principles, consistent with thoseapproved by the Committee for executives, applicable to thebroader employee population (sections 4 and 5.3).

17.0 11/12/2017 Minor amendments to address a number of compliancerequirements including the incorporation of Aussie Home Loans(Aussie) into the Policy and European legislative updates.

18.0 7/05/2018 Update to address the Bank’s remuneration obligations underthe Banking Executive Accountability Regime.Updates toincorporate the Performance management framework and thelink to remuneration. A clearer description on performance andrisk management and the link to Variable Remunerationoutcomes (section 5.8). Updates to the RemunerationDelegations Framework to note the role of the RemunerationCommittee in reviewing material changes to the PerformanceManagement Framework and Superannuation Plans.

CBA.0517.0174.2002


APPROVAL

1Version Date Approving body or person

1.0 08/02/2010 People & Remuneration CommitteeBoard of Directors



4.0 12/12/201113/12/2011

People & Remuneration CommitteeBoard of Directors

5.0 12/03/201213/03/2012

People & Remuneration CommitteeBoard of Directors

6.0 16/07/201217/07/2012

Remuneration CommitteeBoard of Directors

7.0 10/12/201211/12/2012


8.0 13/05/201314/05/2013


9.0 15/07/2013 Remuneration CommitteeBoard of Directors

10.0 9/12/201310/12/2013


11.0 10/06/201411/06/2014


12.0 08/12/201409/12/2014


13.0 09/06/201510/06/2015


14.0 07/12/201508/12/2015


15.0 13/02/201714/02/2017

Not approved: Directors requested that considerationof changes be deferred to mid-2017

16.0 4/06/20176/06/2017




1 Also subject to Subsidiary board approval.

CBA.0517.0174.2003


Table of Contents

1. KEY TERMS USED IN THIS GROUP REMUNERATION POLICY2. CONTEXT AND PURPOSE OF THE GROUP REMUNERATION POLICY3. APPLICATION OF THIS POLICY4. OUR REMUNERATION PRINCIPLES5. OUR REMUNERATION FRAMEWORK6. TERMINATION PAYMENTS7. GOVERNANCE AND REVIEW OF THIS POLICY8. REMUNERATION APPROVAL DELEGATION FRAMEWORK9. RELATED GROUP DOCUMENTS10. CONTACT

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APPENDIX 1 - GLOBAL VARIATIONS 27

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1. KEY TERMS USED IN THIS GROUP REMUNERATION POLICY

Accountable PersonHas the meaning given in the Banking Act.APRAThe Australian Prudential Regulation Authority.APRA Regulated SubsidiaryA Subsidiary within the Group subject to APRA’s prudential regulation.Annual Variable RemunerationSTVR and LTVR awarded in relation to the Performance Year. For employees whoparticipate in STVR plans with payment cycles that are biannual, quarterly ormonthly, the value of these awards is annualised.Banking ActBanking Act 1959 (Cth).

Base RemunerationCash salary (including any salary sacrifice items) paid regularly that is not contingentupon performance conditions, excluding employer superannuation or pensionequivalent.BoardThe Board of Directors of CBA.CBACommonwealth Bank of Australia ACN 123 123 124.CEOChief Executive Officer of CBA.Commonwealth Bank Group SuperThe Group’s default employee superannuation fund in Australia.Control PersonnelEmployees within the Group whose primary role is Risk Management, Compliance,Audit, Actuarial or Finance control.Corporations ActCorporations Act 2001 (Cth), as amended from time to time.Deferred Variable Remuneration

Any Variable Remuneration payment which is not paid upon allocation, but is delayedto a later date and subject to Vesting Conditions.

Fixed RemunerationConsists of Base Remuneration plus employer contributions to superannuation orpension benefits.Global Regulated EntityAn entity within the Group subject to remuneration governance requirements underthe jurisdiction in which it operates. The local regulator may determine to adjust orexclude certain prudential requirements. Global Regulated Entities are subject tochange from time to time.

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GroupCBA and its Subsidiaries.HedgingActivity that attempts to reduce the risk of adverse price movements in equity basedremuneration.Individuals with Significant Variable RemunerationEGMs, GMs (or equivalent) and any employees within the Group whose AnnualVariable Remuneration is equal to or greater than AUD150,000 per annum.Job FamilyA group of roles with similar responsibility, knowledge and/or skill requirements forwhich the Group establishes a remuneration range. Examples include branchmanagers, relationship executives, customer service representatives, accounting andmarketing job families.

Key Performance Indicators (KPIs)Quantitative and qualitative measures, agreed at the start of the Performance Year,to communicate expected performance outcomes at the Group, business unit and/orteam and individual level.Long-Term Variable Remuneration (LTVR)Remuneration that may vest subject to the achievement of set performance hurdlesand/or requirements over a period of up to four years.Non-Executive Director (NED)A member of the board of directors (including Subsidiary boards) who is not anemployee of the Group.Performance YearThe Performance Year aligns to the Group’s financial year from 1 July to 30 June.Prudential StandardsDetermined by APRA, these are a form of subordinate legislation relating to theenforcement of the prudential framework in Australia that must be complied with byregulated institutions including those standards relevant to remuneration such as: (i)Prudential Standard CPS 510 (governance); (ii) Prudential Standard SPS 510(governance) for RSE Licensees; and (iii) Prudential Standard CPS 520 (fit andproper).Remuneration ArrangementsInclude performance measures and targets, remuneration mix, remunerationcomponents (such as Fixed Remuneration, STVR, LTVR and other cash or equitybenefits), termination payments, the timing of payments and the eligibility to receivepayments. All forms of remuneration are captured regardless of where, or fromwhom, the remuneration is sourced.Responsible PersonsAs defined in paragraph 5.4 of this Policy.Retention PaymentsPre-determined future payments that are awarded at a defined future date to keyemployees to encourage continued employment.RSE

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Registrable Superannuation Entity.Salary SacrificeAn Australian Remuneration Arrangement that enables employees to use BaseRemuneration on a pre-tax basis to receive certain benefits.Short-Term Variable Remuneration (STVR)A Remuneration Arrangement that is granted with reference to the Group’s, businessunit and/or team and the individual’s performance over one financial year or aspecified/defined period within the year (e.g. quarterly).STVR Potential

The maximum STVR award that an employee may earn.STVR Target

The STVR opportunity that an employee may earn when all KPIs are achieved in theordinary course of business.Sign-on AwardsAwards offered to new employees usually to compensate for the loss of DeferredVariable Remuneration awarded by their previous employer that will not vest as adirect result of terminating their previous employment to join the Group. Awards canbe made in the form of cash or equity.Specified Term ContractAn employment contract with a specified fixed or maximum term.SubsidiaryAs defined in the Corporations Act 2001 (Cth).Total Potential Remuneration (TPR)The aggregate of Fixed Remuneration, STVR Potential and the maximum award forany LTVR.Total Target RemunerationThe aggregate of Fixed Remuneration and Annual Variable Remuneration that anemployee may receive if target performance objectives for the Group, team andindividual are achievedVariable Remuneration (VR)Remuneration that is conditional on the achievement of objectives within a definedperiod (or otherwise). May include, but is not limited to:

• STVR and LTVR;• Sign-on Awards;• Retention Payments;• any other performance-based remuneration; and• any other remuneration of an Accountable Person determined by APRA under

the Banking Act to be variable remuneration.

Vesting ConditionsThe criteria which must be realised in order to receive deferred STVR and LTVR.Interpretation

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To the extent of any inconsistency between this Policy and the RemunerationCommittee Charter, the charter will prevail.

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2. CONTEXT AND PURPOSE OF THE GROUP REMUNERATION POLICY

The Group Remuneration Policy (Policy) sets out:

• the remuneration principles that guide the design of our remunerationframework;

• the remuneration framework that delivers on our remuneration principles; and

• the policies used to manage remuneration within the remuneration framework,the Group’s performance and risk management framework and the Group'slegal and regulatory obligations.

2.1

The Board has determined that the Group’s remuneration principles, frameworks andpolicies will:

2.2

• meet high standards of governance and all applicable regulatory and legalrequirements and guidelines;

• align with the Group’s vision, values, and strategy;

• be mindful of the interests of the Group’s stakeholders including shareholders,employees, customers and the community2;

• be communicated to relevant stakeholders in a way that is clear and easy tounderstand;

• support avoiding conflicts of interest; and

• encourage behaviour that supports the long-term financial soundness and theperformance and risk management framework of the Group.

This Policy is subject to change from time to time and does not form part of anemployee’s contract of employment or any industrial instrument that applies to anemployee.

2.3

2 Includes protecting the interests and meeting the reasonable expectations of RSE Licensee beneficiaries. Forany Undertakings for the Collective Investment of T ransferable Securities (UCITS) management companieswithin the Group, this policy is also aligned with the interests of the UCITS management company, the UCITSthat it manages and of its investors.

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3. APPLICATION OF THIS POLICY

The Policy applies to the Group, other than Group Subsidiaries incorporated in NewZealand, South Africa and Indonesia, which have their own remuneration policies.The exemption for these entities does not apply to the Group's remunerationobligations in respect of Accountable Persons (see section 5.4) and, other than thoseentities incorporated in Indonesia, does not apply to the treatment of TerminationPayments (see section 6).This Policy (subject to 3.1 above) applies to employees on individual agreementsand collective agreements, contractors and all directors of CBA and its Subsidiaries3.

The entities referred to in section 3.1 as exempt from the Policy may establish theirown remuneration policies to reflect local legal or regulatory requirements, facilitaterelationships with local regulators or streamline communication for employees.Other than the Group’s Indonesian entities, whose regulator requires independentgovernance by their respective boards, any such alternative policies mustsubstantively align with the requirements and intent of this Policy.Specific provisions are detailed in this Policy for the following persons, as requiredunder the Banking Act and APRA’s Prudential Standard CPS 510 ‘Governance’ (asapplicable):

3.1

3.2

3.3

3.4

• Accountable Persons;

• Responsible Persons;

• Control Personnel; and

• Individuals with Significant Variable Remuneration.

Where additional remuneration-related regulatory requirements are in place for theGlobal Regulated Entities (and individuals employed by those entities), they aresummarised in the Global Variations Appendix.Prior approval by the Board or its authorised delegate is mandatory for any proposeddeviation from this Policy.

3.5

3.6

3 The Group Remuneration Policy applies to Aussie Home Loans (Aussie). Its application to Aussie'sindependent contractor mortgage brokers and franchises is currently being considered.

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4. OUR REMUNERATION PRINCIPLES

The Group’s remuneration principles have been designed to support a remunerationframework that aligns with the Group’s vision, values and strategy, is appropriate tochanging market conditions and complies with legal and regulatory requirements.The principles that support sound remuneration practices include:

Shareholder value creation is delivered through a strong focus onappropriately stretching short-term goals that build to long-term performance.

There is a clear link between both the upside and downside outcomesexperienced by all Group stakeholders through truly variable remunerationand equity ownership, supported by setting clear performance and riskaccountabilities.

Remuneration reflects the broader employee value proposition and is marketcompetitive to attract and retain high calibre talent, without putting undueupward pressure on the market.

The Group’s values-based and sound risk management culture stronglyinfluences all employee remuneration elements and outcomes.

Remuneration supports the risk management framework, promotingindividual and collective accountability for sound risk management, enablingappropriate downward adjustments to remuneration outcomes (including tozero), while also providing potential upside for sound risk management.

Remuneration Arrangements are fit for purpose, reflecting both themeasurable value of performance and the non-financial drivers of longer-termvalue creation.

Remuneration motivates and rewards sustainable outperformance beyondday-to-day role accountabilities and discourages poor performance throughreward consequences.

Our remuneration approach is simple, transparent and stable.

4.1

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5. OUR REMUNERATION FRAMEWORK

5.1 Our Approach to PaySetting Remuneration Levels

5.1.1 The overall remuneration structure is designed to attract, retain and motivate high calibredirectors and employees who can deliver on the Group’s strategy.

5.1.2 When setting and reviewing remuneration for all employees of the Group, consideration is givento:

• the responsibilities of the role, and individual competencies and experience required;

• internal relativities; and

• external competitiveness.5.1.3 The Group recognises that gender pay equity gaps can exist and is committed to taking active

steps to identify and eliminate/rectify any identified gaps.Internal Relativities

5.1.4 The Group has adopted a disciplined approach to managing internal relativities, to ensure thatrewards are distributed in a fair and consistent manner, without causing undue upwardpressure.

EGM (or equivalent) and above roles are benchmarked against internal relativities inaddition to market relativities.

Market and internal relativities for GM (or equivalent) and below roles are managedthrough an internal Job Family framework applicable across the Group.

The Group recognises that some unique roles may not have market benchmarks andthese are managed appropriately.

Market Positioning

5.1.5 When setting remuneration levels, the Group also considers the market for similar roles at peerorganisations. To support this, the Group participates in a range of remuneration surveys.

5.1.6 The Group’s goal is to always remain competitive within the context of the broader employeevalue proposition and market conditions. It takes a segmented approach to settingremuneration levels based on relevant criteria, including availability of talent and capability,competitor practices and market pressures, and talent strategy.

5.1.7 The Group also aims to avoid adding pressure to the market. This is particularly important forthe most senior roles, given the small size of the market for these types of roles in Australia.

5.1.8 The Group sets a conservative position for Fixed Remuneration with the target range set at±15% (for Executive Manager level and below) and at ±20% (for GM level roles) of the marketmedian. For EGMs and above, Fixed Remuneration is set in line with individual benchmarks.

5.1.9 In general, Total Potential Remuneration levels are set to provide the opportunity for the bestperformers to be remunerated in line with the upper quartile of the market. Total TargetRemuneration is designed to provide market competitive outcomes, while enabling AnnualVariable Remuneration outcomes to be differentiated in line with performance.

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Annual Remuneration Review5.1.10 Funding for annual remuneration increases is reviewed and approved by the Remuneration

Committee prior to the annual remuneration review. The Remuneration Committee considers arange of factors, including an analysis of market remuneration movements, marketcompetitiveness and the Group’s capacity to pay. The Remuneration Committee also monitorsremuneration costs and practices to ensure that they are in line with this Policy and do notplace the Group in financial difficulty.

5.1.11 The funding calculation for annual discretionary STVR awards is based on the Group’sprofitability, as determined by two performance indicators:

• Net Profit After Tax (NPAT); and

• Profit After Capital Charge (PACC), which is a risk adjusted profit measure.5.1.12 The Board will determine the final amount of the Group’s discretionary STVR pool on the

recommendation of the Remuneration Committee, having regard to other performance, risk andfinancial factors.

5.1.13 Any discretionary STVR pool will be allocated by the Executive Committee to each businessunit and/or team, having regard to relevant performance, risk and financial factors.

5.2 Fixed RemunerationBase Remuneration5.2.1 Base Remuneration is reviewed annually for most employees, within parameters set by the

Remuneration Committee. The remuneration review takes into account any change in thescope of the role performed by the individual, changes required to meet the principles of thisPolicy, internal equity and market competitiveness.

Superannuation/Pension Arrangements5.2.2 The Group provides superannuation or pension arrangements in some jurisdictions in which it

operates. These arrangements are designed to comply with all local jurisdiction requirements.Our superannuation or pension arrangements will be reasonable and should not put stress onthe Group’s financial soundness.

5.2.3 Most employees in Australia receive employer superannuation contributions in anaccumulation-style superannuation plan and the Group’s default superannuation fund isCommonwealth Bank Group Super. Employees may select another complying superannuationfund (if payroll administration requirements are reasonable).

5.2.4 For Australian employees, accumulation employer superannuation contributions comply withthe Superannuation Guarantee (SG) contribution minimum up to the quarterly ‘maximumcontributions base’ specified under the SG legislation.

5.2.5 Some longer serving employees have legacy superannuation, defined benefit or pensionarrangements.

5.2.6 Upon leaving the Group, it is not intended that any discretionary superannuation or pensioncontributions be paid to an employee, except in exceptional circumstances.

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5.3 Variable Remuneration5.3.1 Variable Remuneration4, including the measures used to assess outcomes, is underpinned by the

remuneration principles outlined in this Policy. Additional principles apply to STVR plans as set outbelow. All STVR plans must:• adhere to the governance requirements set out in section 8 and the Variable Remuneration

Design Guidelines5;

• comply with the regulatory requirements in the jurisdiction in which they operate;

• not contravene the remuneration requirements outlined in the Group’s Enterprise Agreements;

• include management discretion and oversight to reduce (including to zero) any VariableRemuneration outcome (both to cash received in relation to the current Performance Year andDeferred Variable Remuneration), with consideration given to behaviours and outcomes relatingto risk misconduct, including mis-selling;

• be governed with appropriate (e.g. commensurate with the level of risk) and effective (e.g.consistent, comprehensive, impactful) internal controls and oversight;

• be designed in such a way as to balance the needs of all stakeholders (customers, shareholders,employees, regulators and the Group);

• include behavioural gate-openers that align to Group Values and demonstrate ethical behaviour.Customer front-line staff must not have financial or cross-sell gate-openers;

• recognise a balance between the achievement of performance outcomes and the way in whichthe outcomes are achieved (e.g. balanced scorecard);

• exclude design features that could increase inappropriate risk taking;

• ensure that customer front-line staff are not rewarded solely on the sale of product (i.e. 100%commission-based product payments);

• apply a reasonable weighting on financial measures;

• have a total aggregate cap and, where applicable, a cap on individual payments;

• have an appropriate ratio of Annual Variable Remuneration to Fixed Remuneration; and

• be simple to communicate, understand and administer.

4 All Group and Business Unit specific recognition and promotional programs/campaigns must adhere to these principles.The Group Variable Remuneration Design Guidelines provide further detail on the design of VR plans (including the governance

process for formula-guided VR plans) and requirements for all new and amended VR plans.5

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5.3.2 The Group offers various forms of Variable Remuneration, depending on role and seniority. The most common arrangements aresummarised in the table below:

TYPE OF VARIABLE STVRREMUNERATION DEFERRAL

THRESHOLD

DEFERRED STVR VESTING LTVR VESTING CONDITIONSLEVEL DEFERRALARRANGEMENT6 CONDITIONS

Nil (applies fromAUD 1)

50% of STVRaward isdeferred intoCBA restrictedshares.The awardvests in equaltranches: 1and 2 yearsafter thecompletion of

• AnnualdiscretionarySTVR award.Executives mayreceive 0% to150% of theirSTVR T arget.

• LTVR award7,grantedannually.

CEO &GroupExecutives

• Vesting of deferred STVR awards iscontingent upon:■ the employee remaining

employed by the Groupthroughout the vesting period,except in the case of terminationof good leavers where awardsremain on foot8;

■ realisation of original expectedperformance outcomes;

■ a review of any risk andcompliance issues associatedwith any individual (see section5.8); and

■ at vesting, the release of thedeferred award not placingundue financial hardship on theGroup.

The vesting value of LTVRawards will be contingent upon:

■ the employee remainingemployed by the Groupthroughout the vestingperiod, except in the case oftermination of good leaverswhere awards remain onfoot;

■ performance against hurdlesapproved by the Board andcommunicated toparticipants;

thePerformanceYear in whichthey wereearned.LTVR awardsare deferredinto CBAperformancerights for a 4year period.

■ a review of any risk andcompliance issuesassociated with anyindividual (see section 5.8);and

■ the vesting of the deferredaward not having an adverse

6 Deferral arrangements for Accountable Persons may vary from that stated where necessary for the Group to ensure compliance with its remuneration obligations under theBanking Act (see section 5.4). Generally, this would result in a greater proportion of variable remuneration being deferred for the required period and / or the deferral periodbeing extended. For all employees who have left the Group and are still eligible to receive a pro-rated STVR award, deferral will still apply. Deferral will be made in the form ofcash.7 In the form of award rights that, if vested, entitles the employee to receive a fully paid CBA ordinary share or cash equivalent, determined at the discretion of the Board.

Deferred STVR and LTVR awards will generally remain on foot for good leavers in any of the following circumstances: retirement, ill health separation, redundancy or death.In the case of a resignation, deferred STVR and LTVR awards will be forfeited.8

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TYPE OF VARIABLE STVRREMUNERATION DEFERRAL

THRESHOLD

DEFERRED STVR VESTING LTVR VESTING CONDITIONSLEVEL DEFERRALARRANGEMENT6 CONDITIONS

impact on the financialsoundness of the Group.

TYPE OF VARIABLE REMUNERATION DEFERRALARRANGEMENTS6STVR

DEFERRALTHRESHOLD

DEFERRED STVR VESTINGCONDITIONS9

LEVEL

Nil (applies fromAUD 1)

• Annual discretionary STVR award.Executives may receive outcomes up totheir individual STVR Potential.

• 1/3 of total STVR awarddeferred into CBA restrictedshares (or cash settled rightsfor employees based outsideof Australia). . Deferredawards vest in three equal

Vesting Conditions for STVRawards are as per those detailedon the previous page for theCEO and Group Executives.

ExecutiveGeneralManagers(EGM)10 &GeneralManagers (GM) 11

9 Deferred STVR awards into CBA restricted shares and rights are governed by the individual offer and Employee Equity Plan rules.Deferral arrangements for EGM Accountable Persons may vary from that stated where necessary for the Group to ensure compliance with its remuneration obligations under

the Banking Act (see section 5.4)Excludes the EGM and GMs in CFS GAM whose arrangements are separately described.

10

11

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tranches; one, two and threeyears after the completion ofthe Performance Year inwhich they were earned.

• For offshore jurisdictions withrestrictions on equity awards,1/3 of the STVR award willbe deferred in cash includinginterest calculated from thestart of the deferral period tothe payment date12. Deferredawards will vest in threeequal tranches; one, two andthree years after thecompletion of thePerformance Year in whichthey were earned12.

Applies from AUD150,000 annually

• Annual discretionary STVR award• Performance Related Pay (PRP) -

employees on the CBA Group EnterpriseAgreement and some other associatedcollective agreements may be eligible forPRP as part of the annual remunerationreview process.

• Business Unit specific performance-based remuneration awards forspecialist roles that may be subject toformula-guided Variable Remunerationplans. Individual payments arecontingent upon threshold performanceoutcomes against a range of KPIs,demonstrating the behaviours in line withthe Group’s values and riskmanagement. Detailed plan rulesarticulate how each of these awardsoperate.

Employees belowGM level13,14

(i.e. ExecutiveManagers andbelow)

TYPE OFPERFORMANCE

DEFERRED STVR VESTING LTVR VESTING CONDITIONSCONDITIONS15

VR DEFERRAL DEFERRALTHRESHOLD ARRANGEMENTS

LEVEL

PAY

Nil (applies fromAUD1)

• Vesting Conditions forSTVR awards are as perthose detailed on page 10for the CEO and GroupExecutives.

• DiscretionarySTVR award; or

• Formula guidedSTVR award; and

• LTVR award

• At least 1/3 of AnnualVariable Remunerationdeferred for at least 3 yearsinto the instrumentapplicable to the relevantplan(s).

EGM andGMs in

• The vesting value of LTVRawards will be subject to:

■ performance of theindividual, team,business unit or funds

CFSGAM16

13 Excludes CFS GAM whose arrangements are separately described.Commonwealth Financial Planners and employees in Colonial First State Global Asset Management are subject to transition deferral arrangements with alignment to the

Group standard to be achieved by 1 July 2019.Extended restriction periods or alternative deferral instruments required under local regulation may be in place as detailed in the Global Variations appendix.Deferred STVR awards into CBA restricted shares and rights and performance units are governed by the individual offer and Employee Equity Plan rules.Participants may also include key CGS GAM leadership team employees at Head Of level.

14

12

1516

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invested, as relevant,and as communicated toparticipants17;

■ the employee remainingemployed by the Groupthroughout the vestingperiod, except in thecase of termination ofgood leavers; and

■ a review of any risk andcompliance issuesassociated with anyindividual (see section5.8); and

■ at vesting, the release ofthe deferred award notplacing undue financialhardship on the Group18.

Applies fromAUD 150,000annually

AnnualdiscretionarySTVR award; orFormula guidedSTVR award; andLTVR award

• At least 1/3 of AnnualVariable Remunerationdeferred for at least 3 yearsinto the instrumentapplicable to the relevantplan.

Employeesbelow GMlevel inCFS GAM14

Applies fromAUD 150,000annually

The vesting value of the annualLTVR award is subject to:

■ A risk review to identifyany operational riskissues that wouldwarrant a reduction orforfeiture of the award;

■ realisation of originalexpected performanceoutcomes; and

■ the employee remainingemployed throughoutthe vesting period.

1/3 of Annual VariableRemuneration deferred for 3years into cash.The total value of the LTVRcomponent of AnnualVariable Remuneration isdeferred for 3 years.

Not applicable. No deferralapplied to STVR componentof Annual VariableRemuneration.

AnnualdiscretionarySTVR award; andAnnual LTVRaward

Employeesin Aussie

17 Excludes LTVR for dealers whose awards are subject to a time restricted holding lock but not a performance hurdle.For the First State Stewart Asia and Stewart Investors partnerships this assessment is made on allocation before awards are restricted in Trust.18

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5.3.3 Employees on casual and short-term contract arrangements are generally not eligible to receiveVariable Remuneration19.

For employees eligible to participate in the discretionary STVR arrangements, the decision to makeany STVR payment remains at the sole discretion of the Group at all times. The Group also retainssole discretion to amend the discretionary STVR arrangements at any time and without notice.Where applicable, the STVR and LTVR arrangements described above are also governed by therelevant plan rules. These plan rules provide full details of the practical application of the awards,and may change from time to time (see section 9). All Variable Remuneration arrangements aresubject to the remuneration approval delegations framework outlined in section 8 of this Policy.Business Unit-specific STVR awards may apply to specialist roles. Awards are contingent uponperformance outcomes against a range of KPIs, demonstrating the behaviours in line with theGroup’s values and risk management. Detailed plan rules articulate how each of these awardsoperate.An effectiveness review of the Group’s Annual Variable Remuneration plans will be conducted on aregular basis and the review outcomes reported to the Remuneration Committee. The purpose ofeffectiveness reviews is to ensure that the Annual Variable Remuneration plans remain fit forpurpose and adhere to the Variable Remuneration principles set out in section 5.3.1 of this Policy.

5.3.4

5.3.5

5.3.6

5.3.7

19 In some cases employees on short-term arrangements (including employees on casual and Specified Term Contracts) may beeligible to receive Variable Remuneration (determined at the discretion of the business). In these circumstances, the Policy willapply.

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5.4 Accountable Persons5.4.1 In accordance with the Banking Act, the Group will ensure that the minimum portion of

Variable Remuneration of an Accountable Person, as detailed below, will be deferred for atleast four years:

• For the CEO - the lesser of 60 per cent of Variable Remuneration for the financial year or40 per cent of total remuneration for the financial year;

• For other Accountable Persons - the lesser of 40 per cent of Variable Remuneration for thefinancial year or 20 per cent of total remuneration for the financial year.

5.4.2 If an Accountable Person fails to comply with his or her accountability obligations under theBanking Act, their Variable Remuneration will be reduced by an amount that is proportionateto the failure.

5.4.3 This section 5.4, and associated references in this Policy to the treatment of VariableRemuneration of Accountable Persons, apply to the Variable Remuneration of an AccountablePerson where the decision granting the Variable Remuneration was made on or after 1January 2019 (or 1 January 2020 for certain EGMs who hold Accountable Persons roles).

5.5 Responsible Persons

In accordance with APRA’s Prudential Standard CPS 510 ‘Governance’, RemunerationArrangements and outcomes for each Responsible Person and any other persons determinedby the Board will be reviewed and approved by the Board (or the Board of the relevant APRARegulated Subsidiary), upon the recommendation of the Remuneration Committee.Responsible Persons for the purpose of this Policy include all the roles listed in the Group’s Fitand Proper Policy20, with the exception of the roles listed below:

• NEDs (excluding NEDs of RSE Licensees21);

• CBA’s Auditor;

• Appointed Auditors for APRA Regulated Subsidiaries;

• Commonwealth Insurance Limited’s Reviewing Actuary;• Chief Executive Officer ASB22;

• Chief Financial Officer ASB; and

• Chief Risk Officer ASB.

Control Personnel

In accordance with APRA Prudential Standard CPS 510, the remuneration and performancestructure for individuals in Control functions must not compromise the independence of theseroles in carrying out their function.All Control Personnel should report ultimately to a support unit Group Executive, or where theydo no, a person who is, or reports ultimately to a support unit Group Executive must undertaketheir performance assessment and determine their remuneration.

5.6

20 Commonwealth Bank Officers’ Superannuation Corporation (CBOSC) Responsible Persons are defined separately in theCBOSC Fit and Proper Policy. The CBOSC Appointed Actuary is excluded from the remuneration governance requirementsnoted in 5.4, as outlined in APRA’s prudential standard.21 In accordance with paragraph 27 of APRA’s Prudential Standard SPS 510, NEDs of RSE Licensees are covered underthis Policy. Under CPS 510, NED includes a director who is not a member of a regulated institution’s management and mayinclude senior managers of a related entity.22 Responsible Persons in ASB are covered separately under their own Remuneration Policy.

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For all Control Personnel:

• KPIs must not compromise the independence of the individuals in these roles incarrying out their function;

• Financial KPIs may be linked to the Group’s performance, but not to the business unitperformance they advise/review;

• Non-financial KPIs may be linked to individual, team or business unit performanceprovided they are not related to areas where the employee performs a control function.Internal customer feedback may only be included as a KPI for Control Personnel whereit is balanced by KPIs that measure effective risk management and governancemeasures; and

• The ratio of Annual Variable Remuneration to Fixed Remuneration should beappropriate.

Individuals with Significant Variable RemunerationIndividuals with Significant Variable Remuneration are required to defer at least one-third oftheir Annual Variable Remuneration (STVR and LTVR combined) with a portion of thatdeferred for at least three years.These individuals include:

• EGMs and GMs (or equivalent); and

• Employees who receive Annual Variable Remuneration (STVR and LTVR combined)greater than AUD 150,00023.

Non-Executive DirectorsRemuneration for NEDs consists of fees, including statutory superannuation, to recognise theircontribution to the Board and/or Subsidiary board and their associated committees.CBA NEDs are required to hold 5,000 or more CBA shares. For those CBA NEDs who havenot reached this threshold, 20% of their after-tax base fees will be used to purchase CBAshares until a holding of 5,000 shares has been reached. The Board and RemunerationCommittee review CBA NED fee levels, taking into account changing workloads and marketpractice.Subsidiary board NED fees are set in accordance with the Subsidiary NED Fee Framework,which provides guidelines for consistently setting fees across the Group’s AustralianSubsidiary boards. The framework is reviewed and approved by the Remuneration Committee.In keeping with their strategic roles, NEDs do not receive any performance-basedremuneration, and no benefits on termination.Subsidiary board executive directors do not receive any fees in relation to their roles onSubsidiary boards in addition to the normal remuneration they receive as an employee of theGroup. Executive directors may be entitled to reimbursement of certain expenses inaccordance with the relevant Subsidiary constitution.

5.7

5.8

5.8.1

5.8.2

5.8.3

5.8.4

5.8.5

23 Commonwealth Financial Planners and employees in CFS GAM are subject to transition deferral arrangements with fullalignment to the Group standard to be achieved by 1 July 2019.

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5.9 Performance and Risk Management and the Link to Variable RemunerationPerformance and managing risk5.9.1 The Group actively manages risks associated with delivering and measuring short-term and

long-term performance. All our activities are to be carefully managed within the Group’s riskappetite, and individual Variable Remuneration outcomes are reviewed and may be reduced inlight of any associated performance and risk outcomes, including down to zero.

5.9.2 Performance and risk management is built into our remuneration framework by:

• Ensuring that all employees have a values assessment included in their individualperformance review to indicate how well they have demonstrated the Values. Thisassessment ensures that STVR outcomes are based on both what was achieved(KPIs) and how it was achieved (Values), with STVR adjustments for risk outcomesapplied where required.

• Ensuring that all employees have a standalone risk assessment included in theirindividual performance reviews to indicate whether they have Fully Met, Partially Met orNot Met the risk management requirements for their role. A risk assessment outcomeless than Fully Met results in Variable Remuneration outcome reductions.

• Using Executive Risk Scorecards to underpin the risk assessment process for theCEO, Group Executives and EGMs. Executive Risk Scorecards aggregate inputs fromvarious assessments across the risk management framework. This includes Line 2 riskreview and challenge in addition to self-assessment and manager assessment.

• Applying PACC, a key risk performance measure that impacts STVR outcomes for theCEO and Group Executives and employees on the discretionary STVR plan. PACC is arisk-adjusted measure which takes into account the profit achieved, and also reflectsthe risk to capital that was taken to achieve it.

• Managing risk through the mandatory deferral of the necessary proportion of VariableRemuneration of Accountable Persons and a substantial portion of the STVR awards ofthe CEO, Group Executives, EGMs, GMs (or equivalent roles in each case) andindividuals with Significant Variable Remuneration. This deferral also serves as animportant retention mechanism which helps the Group manage the risk of losing keytalent.

• Setting the following risk and remuneration governance practices:

- The Group and Business Unit Risk & Remuneration Committees (RRRC) areresponsible for reviewing accountability and consequences for risk mattersacross the Group and Business Unit respectively. The Group RRRC is amanagement committee that oversees the Business Unit RRRCs and acts asan advisory body to the Group Chief Risk Officer. It’s scope includes material,systemic and cross-Business Unit risk matters and all risk matters for EGMs.The Business Unit RRRCs consider accountability and consequences for riskmatters up to General Manager level given that the Business Unit RRRC has abetter understanding of individual circumstances.

- For the CEO, Group Executives and any other employees whose activities maymaterially impact the financial soundness of the Group, the Board considers riskmatters based on a recommendation by the Board’s Risk Committee, whendetermining Variable Remuneration outcomes.

• Without limiting the circumstances in which Variable Remuneration can or will bereduced to meet the Group's obligations under the Banking Act, Variable Remunerationawards may (a) not vest, (b) not be paid or (c) be reduced (including to zero), at the

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discretion of the Remuneration Committee or the Board where such payment orvesting:

• would not be sustainable according to the financial situation of the business unitor the Group as a whole; and/or;

• could not be justified according to the performance (current and prior) of theindividual concerned; and/or;

• could not be justified according to the performance (current and prior) of thebusiness unit, function or the Group as a whole; and/or

• may breach relevant legal, regulatory or market obligations or the ASX ListingRules.

This includes where a significant unexpected or unintended consequence has occurredin respect of financial and/or non-financial performance outcomes.

Hedging is ProhibitedEmployees are prohibited from Hedging, or otherwise limiting, their economic exposure toequity price risk in relation to unvested equity-linked remuneration issued under any Groupequity arrangement. Full details of Hedging restrictions are included in the Group SecuritiesTrading Policy (see section 9).The Group Securities Trading Policy is a critical part of the risk management framework of theGroup. It is each employee’s responsibility to review, understand and comply with the GroupSecurities Trading Policy. Compliance with this policy is regularly monitored, and a breach of itwill result in disciplinary action which may include reducing the deferred award zero and/ortermination of employment.The Hedging prohibitions do not prevent an employee from Hedging currency risk related tounvested securities issued or acquired under any applicable Group equity arrangements thatare valued in Australian dollars but delivered in a jurisdiction outside Australia.Persons who receive awards under the Group Leadership Reward Plan are subject toadditional dealing prohibitions and should consult the relevant plan rules and the MandatoryShareholding Policy accordingly.Other Remuneration Arrangements

Sign-on Awards and Retention PaymentsOne-off payments (e.g. Sign-on Awards and Retention Payments) are non-standardcomponents of total remuneration. Requests for such awards and payments to employeesbelow Group Executive level require a business case that must be approved as set out in theremuneration delegations in section 8.

5.10.2 Sign-on Awards, usually intended to compensate for Deferred Variable Remuneration forgoneupon joining the Group, should be of equal or lesser value than the Deferred VariableRemuneration forgone (evidence of forfeiture should be provided).Retention Payments, usually intended to encourage individuals who are identified as businesscritical to continue employment with the Group, must be subject to deferral arrangements andperformance criteria.

5.10.4 Sign-on Awards and Retention Payments will not be included in the definition of AnnualVariable Remuneration for the purposes of calculating the portion of an individual’s total awardto be deferred, except for Accountable Persons (where Variable Remuneration will be definedas required under the Banking Act) or where otherwise outlined (see Appendix 1).

5.9.3

5.9.4

5.9.5

5.9.6

5.10

5.10.1

5.10.3

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Access to Remuneration Information5.10.5 Access to remuneration information is restricted to those groups of employees who manage or

report on remuneration as part of their role. Access is monitored, and reviewed annually.Foreign Exchange5.10.6 All currency amounts in this Policy are in Australian Dollars unless otherwise indicated. Where

a foreign exchange conversion is required, the rate to be used will be determined by the EGMPerformance and Reward24.

24Exchange rates to be used are available from the Global Mobility and/or Performance and Reward team.

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6. TERMINATION PAYMENTS6.1 Termination payments are strictly limited.6.2 A consistent Group termination payment limit applies to all employees covered by this Policy,

as well as all directors of CBA and its Subsidiaries.Types of Termination Payments

6.3 Where an employee resigns, the employee is entitled to receive their final salary and leaveentitlements. Any current Performance Year STVR, previously deferred STVR which isunvested and LTVR which is unvested is forfeited.

6.4 Where an employee is retrenched or retires:6.4.1 For employees whose employment is covered by the Commonwealth Bank Group Enterprise

Agreement (EA) and who are eligible to participate in the Performance Related Pay Scheme(PRP), they may be eligible to receive a pro-rated PRP payment for the current PerformanceYear;

6.4.2 For employees who have entered into an Individual Arrangement / Agreement (ascontemplated by the EA) or who are employed on a common law contract, any determinationas to whether an STVR payment will be made (for the performance period in which theiremployment ended) will only be made following the end of that performance period. Ifawarded, any STVR payment will be pro-rated for the period worked in the relevantperformance period and paid at the same time as other employees (not at the terminationdate). Any STVR payment paid at any other time will be subject to additional approvals as setout in section 6.10 below. Deferral provisions will continue to apply to any pro-rated STVRpayment as outlined in section 5.3.2.

6.5 Where any employee leaves the Group by way of mutual separation:6.5.1 any determination as to whether an STVR payment will be made (for the performance period

in which their employment ended) will only be made following the end of that performanceperiod. If awarded, any STVR payment will be pro-rated for the period worked in the relevantperformance period and paid at the same time as other employees (not at the terminationdate). Any STVR payment paid at any other time will be subject to additional approvals as setout in section 6.10 below. Deferral provisions will continue to apply to any pro-rated STVRpayment as outlined in section 5.3.2.

6.6 Unvested deferred STVR and LTVR, Retention Payments and Sign-on Awards will remain onfoot for good leavers in the case of retirement, ill health separation, redundancy or death andwill vest subject to Vesting Conditions other than ongoing employment, at the same time as foremployees (not at the termination date) and in accordance with any remuneration obligationsof the Group under the Banking Act in the case of a good leaver who is an AccountablePerson immediately prior to the termination date.Termination Payment Limit

6.7 A statutory limit applies to the termination benefits (including termination payments) providedto directors and some employees. In addition, the Group has determined to limit terminationpayments to all employees as set out in the following paragraph.

6.8 For all employees, the total of any termination payments (other than as set out in the tablebelow) should not exceed 1 x annual Fixed Remuneration at the time of termination. Wherethere are additional legislative or regulatory requirements for the Global Regulated Entities,those local requirements must also be met.

6.9 The Group’s limit applies to the types of payment in the table below marked with a (X). That is,the total of any of those proposed payments should not exceed the limit. However, types ofpayment marked with a (X) fall outside the limit. Where the statutory limit applies to anindividual, that limit must be considered in addition to this table.

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MutualSeparationTermination Payments Resignation Redundancy Retirement

Accrued but unpaid Annual Leave X X X X

Accrued but unpaid Long ServiceLeave X X X X

X X XPayment in lieu of notice

25Severance (for genuine redundancy) n/a X n/a n/a

Total annual STVR determined at theend of Performance Year and paid innormal time

n/a X X X

Total annual STVR determined and X X Xn/apaid on termination (if approved)Unvested deferred STVR and LTVR,retention awards or Sign-on Awardsfrom previous years remaining on footand subject to plan rules

n/a X X X

Outplacement / Career TransitionServices

X Xn/a n/a

26 X X X XOther additional payments

Approvals6.10 As a minimum, MoR approval is always required for all termination payments as outlined in

section 8.Any STVR payment paid outside of the normal course of business (i.e. following the end of theperformance period) is subject to approval by the relevant BU EGM HR and EGM P&R.Where the total of any termination payments considered under the termination payment limit(see clause 6.8) exceeds 1 x annual Fixed Remuneration, EGM P&R and/or RemunerationCommittee approval, as relevant, is required.Additional Legal Services approval is required for any individual who has served as a directorof a Group Subsidiary at any time in the three years prior to their exit.Additional Remuneration Committee and relevant Board approval is required for any individualwho is a Responsible Person of the Group and/or of any APRA Regulated Subsidiary.For individuals employed in jurisdictions outside of Australia, local legislative requirementsmust also be considered. Additional EGM P&R approval is required for any type of terminationpayment that are not specifically covered or contemplated in this Policy.The Group will not make a termination payment to an employee if such a payment requiresthe approval of CBA shareholders or causes any member of the Group to breach theCorporations Act, ASX Listing Rules or any other applicable legislative or regulatoryrequirements, guidelines or policies. Any such termination payments will be reduced to a level,including to zero, that does not require shareholder approval to be obtained and whichcomplies with all applicable legislative and regulatory requirements, guidelines or policies.

6.11

6.12

6.13

6.14

6.15

6.16

25 Severance is a payment that may be made to an employee on redundancy to compensate for the termination of their role.For employees to whom the statutory limit applies, purely additional benefits (which do not otherwise fall within one of the

specific types of allowable benefits) cannot be given.26

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7. GOVERNANCE AND REVIEW OF THIS POLICYThe Board is responsible for approving the remuneration policy that will apply to the Group asrequired under APRA Prudential Standard CPS 510 ‘Governance’.The Remuneration Committee is responsible for reviewing this Policy, usually on an annualbasis, and recommending any changes to the Board for approval. This review will include anassessment of:

• the application and effectiveness of this Policy;

• compliance with relevant legislation or regulatory requirements;

• compliance by the Group with its policies; and

• the relevance of this Policy in changing market conditions.Compliance with this Policy is monitored throughout the year and reported to theRemuneration Committee on a quarterly basis. Where required or requested, such monitoringand compliance reviews may be provided to the relevant regulator.Under the relevant legislation or regulation, the relevant risk management and/or compliancefunction will have input into the review of this Policy.The Remuneration Committee assists the Board and certain Subsidiary boards to fulfil theirresponsibilities to shareholders in relation to people and remuneration. Its responsibilities areset out in the Remuneration Committee Charter.

This Policy will be provided to APRA or the relevant regulator on request. This Policy formspart of the Group’s risk management framework as required under relevant APRA Prudentialor Global Regulatory Standards.

7.1

7.2

7.3

7.4

7.5

7.6

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CBA.0517.0174.2027

Commonwealth Bank of Australia Group Remuneration Policy8. REMUNERATION APPROVAL DELEGATION FRAMEWORK

The following framework sets out the levels of authority delegated by the Board to certain roles within CBA management to makeremuneration decisions, in addition to approval of all Remuneration Arrangements by the Manager-One-Removed (MoR)1. MoR approvalis required for all individual Remuneration Arrangements (with the exception of KPIs).

Role/Remunerationitem Approval2,3Parameter Consultation

1. Roles requiringBoard approvalin RC Charter

(a) All remuneration including TPR, Sign-on and any otherpayments or benefits.

RemunerationCommittee Board

2. Roles requiringSubsidiaryboard approvalin RC Charter

(a) All remuneration including TPR, Sign-on and any otherpayments or benefits.

RemunerationCommittee4 Subsidiary board

Head of BU Rem/Exec Rem and

EGM BU HR(a) Proposed Base Remuneration and/or TPR is above the

benchmark range by up to 20% or by less than AUD 50,000 BU EGM3. Other roles

BaseRemunerationand TPR

(b) Proposed Base Remuneration and/or TPR is up to 50% andmore than AUD 50,000 above the benchmark range5 GE BU + GE HREGM P&R via

Head of BU Rem/Exec Rem(c) Proposed Base Remuneration and/or TPR is more than 50%

and more than AUD 50,000 above the benchmark range5CEO

(a) Proposed award is 50% or more of Base Remuneration andless than AUD 500K BU EGM4. Other roles

Sign-onawards,retentionawards and anyother nonstandard award

Head of BU Rem/Exec Rem andEGM BU HR6(b) Proposed award is 50% or more of Base Remuneration and

neither (a) or (c) apply GE BU

EGM P&R + GE(c) Proposed award is 100% or more of Base Remuneration andgreater than AUD 1M CEOBU6

EGM P&RGE HRGE BU

(a) New and/or materially amended7 Variable Remunerationarrangements not covered by (b) or (c)

Head of BU Rem/Exec Rem

(b) New or materially amended7 arrangements where the VariableRemuneration plan:

• distributes equity;• applies to a significant population (as determined by the EGM

P&R);• provides for individual payments that are uncapped and/or

could be greater than AuD 1M;• provides for aggregate annual payouts that could exceed AUD

5M; or• varies from the requirements in this Policy or Group Variable

Remuneration Plan Design Guidelines

5. VariableRemunerationPlans

RemunerationCommittee8 Board8

(c) Materially amended7 Variable Remuneration plans under (b),where aggregate spend increase is less than 10%.

Head of BU Rem/Exec Rem

EGM P&RGE HR

6. PerformanceManagementFramework &EmployeeSuperannuation/PensionBenefits

Head of GroupPerformance &

Reward(a) Non-material amendments to the Performance Management

framework and/or the employee Superannuation Plans EGM P&R

EGM P&RRemuneration

Committee(b) New or material7 amendments to the Performance management

framework and/or Employee Superannuation/Pension benefitsBoard

Global MobilityRelationship

Manager(a) Total cost of policy exception is less than AUD 1,000 and within

the Group's values n/a

Global MobilityRelationshipManager andHead of BU

Rem

(b) Total cost of exception is more than AUD 1,000 and less than50% above the total assignment costs9 under the Group'sGlobal Mobility Policy

7. Other rolesexpatriateassignments

EGM HR of thehost BU

Global MobilityRelationshipManager and

Head of BU Rem

(c) Total cost of exception is more than 50% above the totalassignment costs9 under the Group's Global Mobility Policy GE BU

1. For non-EGM direct reports to GEs with proposed Base Remuneration and TPR within the benchmark range, the EGM P&R is the MoR.2. Approval shown is required in addition to MoR approval, if MoR is less senior than approver shown.3. EGM and above arrangements must be reviewed by Executive Remuneration when initiated and before approval. Additional approvals may be required for Responsible Persons and

employees on expatriate assignment.

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CBA.0517.0174.2028

Commonwealth Bank of Australia Group Remuneration Policy4. This may be the Remuneration Committee of the Subsidiary board or the main Board Remuneration Committee where responsibilities are delegated.5. The benchmark range means both the ranges for Base Remuneration and Total Potential Remuneration for the role, in line with the applicable Job Family framework or individual market

benchmark.6. Performance and Reward is consulted and is required to endorse any such awards. Where any such award is considered in jurisdictions outside of Australia consultation with the relevant

Risk and Compliance team is recommended.7. Materiality is to be determined by the EGM P&R. Materiality may include changes to the performance management framework, including the components of assessment, rating scales, and

the consequences of ratings outcomes, the introduction of new key performance measures as linked to strategy, change in share rates or thresholds. Materiality for superannuation/pensionbenefits may include changes to employer contribution rate above the minimum legislative requirements. .

8. CEO has approval delegation for CFSGAM profit share plans similar to the equities profit share plans approved in 2010.9. Standard cost projection includes all allowances/benefits and is inclusive of mandatory, recommended and optional items. For further detail of all costs that form part of the standard cost

projection, please refer to Head of Global Assignments and Benefits.

KEY TERMSCEO Chief Executive Officer Head of

BU RemGE BU

Head of Business Unit Remuneration

Exec RemEGM P&R

EGM BUEGM BUHR

Executive Remuneration & Governance TeamExecutive General Manager Performance & RewardExecutive General Manager Business Unit (or equivalent)Executive General Manager Business Unit HumanResourcesGroup Executive Human Resources

Group Executive of Business UnitManager One Removed (for administrative direct reports to GEs, the GE HR is the MoR)

Remuneration CommitteeTotal Potential Remuneration (comprising Fixed Remuneration, STVR potential and LTVR target if applicable)

MoRRC

TPR

GE HR

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CBA.0517.0174.2029


9. RELATED GROUP DOCUMENTS

Remuneration Committee Charter(access via the internet at: www.commbank.com.au/about-us/shareholders/corporate-profile/corporate-governance/)

Group Variable Remuneration Plan Design Guidelines(available from Group Performance & Reward)Group Leadership Reward Plan (GLRP)(available from Employee Share Plan team)

Group Employee Rights Plan (GERP), Employee Share Plan (ESP), Group RightsPlan (GRP) and Employee Share Performance Unit Plan (ESPUP) rules(access via HR Intranet > Pay & Leave > Pay>Employee Share Plans)

Bankwest HR Policies(available from Bankwest Human Resources)Group Securities Trading Policy(access via intranet: Group Services > Group Corporate Affairs > Group Governance > Policies andProcedures)

Group and Business Unit Risk Appetite Statements(access via intranet: Risk Management > Frameworks & Policies > Risk management framework > Riskappetite)

Commonwealth Bank of Australia Remuneration Reports(access via the internet at: www.commbank.com.au/about-us/shareholders/financial-information/annual-reports/)

Balance Sheet Foreign Exchange Rate Policy(available from Global Mobility team)Global Mobility Policy

(available from Global Mobility team)

10. CONTACT10.1 If you have questions in relation to this policy, please refer them to:

Executive Remuneration & Governance [email protected]

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CBA.0517.0174.2030

http://www.commbank.com.au/about-us/shareholders/corporate-profile/corporate-governance/

http://www.commbank.com.au/about-us/shareholders/corporate-profile/corporate-governance/

http://commnet2.cba/businessunits/risk/Main/Pages/default.aspx

http://commnet2.cba/businessunits/risk/Main/frameworks-policies/Pages/default.aspx

http://commnet2.cba/businessunits/risk/Main/frameworks-policies/risk-framework/Pages/default.aspx

http://www.commbank.com.au/about-us/shareholders/financial-information/annual-reports/

http://www.commbank.com.au/about-us/shareholders/financial-information/annual-reports/

mailto:[email protected]


APPENDIX 1 - GLOBAL VARIATIONS TO THE GROUP REMUNERATION POLICY

1. KEY TERMS

The following key terms are used in this Appendix in addition to those defined in the Group Remuneration Policy (Policy).AIFM Remuneration CodeRemuneration Code for Alternative Investment Fund Managers.BIPRU Remuneration CodeRemuneration Code for BIPRU Firms

Financial Conduct Authority (FCA)The financial regulatory body in the United Kingdom.HKMAHong Kong Monetary Authority.

Identified EmployeesIn line with the relevant European remuneration regulations, Identified Employees includes all employees whose professional activities have amaterial impact on the risk profile of the European entity or fund (UCITS or AIF) which the entity manages. For the purposes of this policy,European remuneration regulations that categorise these individuals as "code staff” or “identified staff’ will be referred to as IdentifiedEmployees.Key Personnel

As defined in the HKMA Supervisory Policy Manual, including employees whose duties or activities in the course of their employment involvethe assumption of material risk or the taking on of material exposure on behalf of the Authorised Institution.Material Risk TakerPlease refer to Identified Employee.Prudential Regulation Authority (PRA)The authority responsible for the prudential regulation and supervision of financial institutions in the United Kingdom.

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ProportionalityAn applicable regulatory requirement to comply with local regulations in a way and to the extent that is appropriate to the size, internal organisationand the nature, and the scope and complexity of the relevant entity’s activities when establishing and applying the total remuneration policies forIdentified Employees.Relevant PersonsPersons who, for the purposes of MiFID II, have an impact on the service provided and/or corporate behaviour of the MiFID firms within theGroup.Remuneration Assurance Committee (RAC)The RAC is a management body that has responsibility in relation to remuneration arrangements within the relevant European entity andsupports the Remuneration Committee in delivering against their respective responsibilities under the European remuneration regulations, asmay be applicable from time to time.Remuneration CodeA set of standards issued by a regulatory body on remuneration.Senior ManagersAs defined under the PRA’s Senior Manager Regime and includes employees who are responsible for oversight of the strategy or activities ofthe entity, or those employees who are responsible for oversight of strategy or activities of the entity’s material business lines. For the purposesof this policy, all Senior Managers are Identified Employees.Undertakings for the Collective Investment of Transferable Securities (UCITS)A regulatory framework that unifies the requirements of mutual funds and other investment vehicles throughout the different countries of theEuropean Union.UCITS Remuneration CodeRemuneration Code for managers of UCITS.

Where other key terms are used in this appendix, the definition prescribed in the Policy will apply.

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PURPOSE2.

This Appendix outlines a summary of the additional remuneration principles required under applicable regulatory standards for some of theGroup’s global operations. It applies to all employees who are employed by, seconded to, or oversee the operations in each such jurisdiction.

GLOBAL REGULATORY STANDARDREMUNERATION PRINCIPLE 27European Regulation Hong Kong Monetary Authority

(HKMA) Supervisory Policy Manual____________ (CG-5)____________

1. Categories ofEmployees

Employees captured under the HKMASupervisory Policy Manual (CG-5)including:• Senior Managers• Key Personnel• Groups of employees whose activities

in aggregate may expose theAuthorised Institution (AI) to material

• Identified Employees. As specified by the AIFMDRemuneration Code, the UCITS Remuneration Code and theBIPRU Remuneration Code, including:• Directors• Senior management• Control functions• Risk takers

risk• Identified Employees are exempted from the remunerationprinciples listed below in sections (4) and (6), if they meet thefollowing criteria :

Employee’s Variable Remuneration is no more than 33%of Total Remuneration; andEmployee’s Total Remuneration is no more thanGBP500, 000.

Risk Control Employees

27 This includes Remuneration Codes/Guidance as outlined by the PRA/FCA and European Banking Authority, including principles adopted by the Malta Financial ServicesAuthority.

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• All employees as defined under ‘Categories of Employee’ are identified and reviewed by the relevantRisk/Compliance function.

2. Guaranteed VariableRemuneration(including sign-onawards and retentionawards)

• Guaranteed Variable Remuneration must not be awarded unless it:i. is exceptional;

ii. occurs only in the context of hiring new employees; andiii. are awarded only in the first year of service.

If, in any exceptional case, it isconsidered absolutely necessary tooffer a Sign-on Award, any suchaward should:. itself be subject to deferral and

pre-defined vesting conditions byreference to the Authorised

• Where a sign on award is provided to an individual employedby the CBA London Branch who was deemed a Material RiskTaker by their previous employer, the sign on award willretain existing malus and clawback clauses from the previousemployer (including an assessment of the individual’sperformance and risk assessment).

Institutions future performance;andin the case of senior managementand Key Personnel be approvedby the Board (or theRemuneration Committee withthe necessary delegatedauthority); and;have its rationale and justificationrecorded and retained in writing.

iii.

• Retention Payments may not be provided unless the entitiesare undergoing a major restructuring and a good case can bemade for retention of key employees on prudential grounds.

• A retention payment may beconsidered only in circumstanceswhere the retention of the employeeis reasonably considered necessary

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to bring a winding-down or sale to asuccessful conclusion, and in suchcircumstances should be limited to a

• All Retention Payments must be appropriately aligned to riskprior to payment.

• Any Retention Payments need to be notified to the regulator.• Where de minimis does not apply, guidance must also be

received from the regulator prior to payment.time period considered reasonablynecessary to complete the winding-down or sale.

3. Variable Remuneration • The level of Variable Remuneration paid to employees will berestricted so that it will not limit the ability of the relevantEuropean entity to strengthen its capital base (whereapplicable), including forward-looking capital planningmeasures, and will take into account current and future risks.

• As per the principles set out in theGroup Remuneration Policy

• The measurement of performance used in relation to VariableRemuneration will consider:

i. current and future risks, and take into account the costand quantity of the capital or liquidity required; and

ii. consider the timing and likelihood of each relevantEuropean entity receiving future revenues incorporatedinto current earnings.

• The application of any reduction to Variable Remuneration(including those amounts already paid) will include where anIdentified Employee:

o participated in or was responsible for conductwhich resulted in significant loss to the Group;and/or

o failed to meet appropriate standards of fitness____________and propriety.____________________________

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• The measurement of performance used in relation toVariable Remuneration for Relevant Persons will beassessed by reference to a balanced mix of quantitativeand qualitative criteria.__________________________

4. Instruments of VariableRemuneration

• For AIFM Remuneration Code, UCITS RemunerationCodes and BIPRU Remuneration Code IdentifiedEmployees (subject to applicable exemptions) asubstantial proportion (generally 50%) of annual VariableRemuneration referable to the UCITS/AIFMD activitieswill, as relevant, be in units or shares of the AIF/UCITSconcerned, or equivalent ownership interests, or share-linked instruments or equivalent non-cash instruments asrequired by applicable law and regulation. .


• For Identified Employees in CBA London Branch 50% ofany Variable Remuneration component will consist ofCBA shares or share-linked instruments and will besubject the relevant retention period under the Europeanremuneration regulation. The remaining 50% portion canbe paid cash.

• For all other employees please refer to the Policy.5. Remuneration Mix • Identified Employees must have the appropriate mix of Fixed

and Variable Remuneration.• As per the principles set out in the

Group Remuneration Policy• Variable Remuneration must not exceed 100% of the Fixed

Remuneration for Identified Employees in CommbankEurope (Malta) and CBA London Branch (subject to beingProportionality level two as defined by the regulator)._____

6. Deferral Identified Employees will have a portion of their VariableRemuneration deferred as applicable under the relevant


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European remuneration regulation, subject to the relevantproportionality rules28, with a minimum requirement that for allemployees deferral is as per the Policy.__________________

7. Hedging Identified Employees are required to submit a declaration ofcompliance with the Group’s policy prohibiting personal hedgingstrategies or remuneration or liability insurance to the relevantRisk/Compliance function by 30 June each year.____________


8. Best Interests of Clients Relevant Persons must be remunerated in a way which isconsistent with promoting good conduct as well as effective riskmanagement and encourages Relevant Persons to operate withintegrity and in the best interests of clients._________________


The Remuneration Committee will act as the Remuneration Committee29 for these entities.9. RemunerationCommittee andGovernance

The Remuneration Committee is responsible for approving the remuneration of:i. Senior managers in risk and compliance functions (European Regulation); andii. Senior Managers and Key Personnel (HKMA) including any guaranteed remuneration and/or Sign-

on Awards.• The Remuneration Committee is responsible for reviewing

the remuneration pay mix of Identified Employees andmaking recommendations to the Board regarding approval ofthat pay mix.


• Where an RAC has been established:i. it is responsible for making remuneration-related

recommendations to the Remuneration Committee,including in relation to determining Identified Employees.The role and responsibilities of each RAC are set out in

______ their respective Terms of Reference.________________


28 Further details of the remuneration rules, including the application of any required deferral to Variable Remuneration for Identified Employees are outlined in the GlobalRemuneration Guidelines which are available upon request.29 Under HKMA Supervisory Policy Manual (CG-5) this is delegated by the Board to the Remuneration Committee.

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ii. The business is required to submit an assurance ofcompliance with this appendix, and the GroupRemuneration Policy, at least annually to theirrespective RACs.

Additional guidance on the practical application and process management of each remuneration principle is outlined in the GlobalRemuneration Guidelines30.

30 Management have the discretion to alter or change the Global Remuneration Guidelines from time to time. The Global Remuneration Guidelines will be managed by therelevant Human Resources team.

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Commonwealth Bank - Royal Commission