Group's Staff Remuneration Policies 22-23

REGULATORY ENVIRONMENT

Global Regulationv

Multinational Regulation

Applies to: Listed Companies

March

-

Implementation Date 3 September 2018

Banks, Banking Groups, Investment Firms (in Italy this includes brokers or SIM)

Banks, Banking Groups and Investment Firms

CRD IV January 2014

CRD V December 2020 2 July 2021

Bank of Italy Supervisory Instructions

Regulation in Italy

TUF updated by Dlgs 49/2019 on 10 June 2019

Regolamento Emittenti 11 December 2020

Circular n. 285, 37° Update 24 November 2021

Regulations UE 2021/923 on criteria for MRTs identification 9 June 2021

Alternative Investment Management companies

Società di gestione di investimenti “armonizzati”

ESMA Guidelines on Remuneration Policies under the UCITS Directive and AIFMD 31 March 2016 (1 January 2017)

Investment Firms Insurance Companies

Non EU: Domestic Regulation

Other Regulations

3 March 2022 1 January 2016

Some countries have drafted guidelines based on FSB principles (USA, Australia, Switzerland, Russia, etc.).

Bank of Italy Regulation 5 December 2019

In line with CRD V, update of Bank of Italy Circ. 285 foresees for SGR included in Banking groups the prevalence of sector regulation (vs Banking regulation)

EBA Guidelines on remuneration policies and practices related to the sale and provision of retail banking products and services (18 January 2018)

Bank of Italy: Regulations on transparency of operations and banking and financial services proper conduct in relations between intermediaries and clients (19 March 2019)

ESMA Guidelines MiFID II (Institutions providing investment services: Banks, Asset Managers, Brokers, etc.) June 2013

MiFID II January 2018

Under consultation IVASS regulation no. 38 of 3 July 2018

Other countries, especially non EU member states, have not issued any regulation.

Commission Implementing Regulation (EU) 2022/365 of 3 March 2022 amending Implementing Regulation (EU) 2018/1624

EIOPA Opinion on the supervision of remuneration principles in the insurance and reinsurance sector

7 April 2020

Financial Stability Board: Principles and Implementation Standards for Sound Compensation Practices

Guidance

the FSB Principles and Standards on Sound Compensation Practices

use of compensation tools to address misconduct risk

Directives

Regulation Shareholders’ Rights Directive 2 CRD IV CRR CRD V – CRR II EBA Guidelines AIFMD ESMA Guidelines UCITS V ESMA Guidelines IFD – IFR Solvency II

REGULATORY ENVIRONMENT

MEDIOBANCA’S GOVERNING BODIES DEVOTE PARTICULAR ATTENTION TO STAFF AND REMUNERATION

POLICIES, ALSO IN THE LIGHT OF THE NEW DOCUMENTS PUBLISHED BY THE SUPERVISORY AUTHORITIES.

These include, in particular:

The European Capital Requirements Directive (CRD V), adopted by the individual European Union countries, which updates the previous CRD IV.

The new regulatory Technical Standards to identify risk takers published by EU on 9 June 2021 and based on EBA RTS of 18 June 2020 effective from January 2021;

The document issued by the European Banking Authority (EBA) on 2 July 2021 and effective from 31 December 2021 containing the new guidelines on remuneration formulated pursuant to CRD V, and providing guidance for standardized implementation of the regulations at European level.

“Instructions on remuneration and incentive policies and practices in banks and banking groups” issued by the Bank of Italy on 24 November 2021 (the “Instructions”), which implement the European regulatory framework and are the new benchmark regulations, incorporating and building on the principles and standards agreed internationally, as part of measures designed to ensure the stability and proper functioning of the banking and financial system.

Some Group companies (notably MB SGR, Cairn and RAM) are also subject to the AIFMD/UCITS regulations.

Other relevant documents are EBA/Bank of Italy regulations about retail banking product and transparency of operations and upcoming ESG documents and guidelines. As listed company Mediobanca needs to be compliant to Regolamento Emittenti, SRD II and Italian Corporate Gover nance Code.

The Mediobanca Group remunerations policies are the result of ongoing alignment versus the supervisory authorities via the Joint Supervisory Team, with whom the key aspects have been gradually shared in the course of time with reference in particular to the performance metrics and models adopted.

REGULATORY ENVIRONMENT

The fundamental points of the regulations provide that:

Variable remuneration is calculated based on performance indicators which factor in risk (otherwise referred to as risk-adjusted metrics)

For Group staff members identified as Material Risk Takers, at least 40% of the variable remuneration payable to them must be paid over a period of at least four years (or 60% over five years for senior management staff), and at least 50% must be paid in the form of shares (this applies both to the upfront and deferred components)

The variable component may not exceed 200% of the beneficiary’s fixed salary, unless otherwise provided by the Articles of Association and approved by shareholders in annual general meeting. Exceptions are put in place for Asset Management Sector (in Mediobanca Group cap of 500%). According new CRD V regulation, firms in a Banking Group regulated by specific sectorial rules (Asset Management, Investment firm) are subject to them; entities without specific regulation (Fintech, Advisory/M&A) are fully subject to banking Group rules/CRD.

Variable remuneration payable to members of the control units must be limited and related exclusively to the achievement of general sustainability objectives

Provision must be made for malus and clawback mechanisms to reflect performances delivered over time and/or individual conduct

The treatment of remuneration for staff members who cease to work for the Mediobanca Group is negotiated and agreed in accordance with the criteria set by the shareholders in annual general meeting

REMUNERATION PRINCIPLES AND GOVERNANCE

COMPETITIVENESS

Attract and retain talent. Guarantee adequate pay mix.

TRANSPARENCY AND SUSTAINABILITY

RISK-ADJUSTED

Gateways linked to Risk Appetite Framework, Bonus Pools calculated based on Economic Profit/ROAC/risk adjusted metrics. Malus conditions applied. Claw back in the event of damages on MB’s capital base, profitability, financial results and/or reputation.

VALUE MERIT & PERFORMANCE

Variable compensation strongly related to results.

NO “PAY FOR FAILURE”

Significant equity component. Variable remuneration deferral (performance conditions, malus and claw back clauses).

GOVERNANCE & COMPLIANCE

Structure of remuneration in line with the Italian law and market practices.

SHORT-TERM REMUNERATION

Targets set at the beginning of the FY (budget targets and quantitative KPIs). Non-financial and qualitative criteria applied to foster l/t value creation. Cap applied to mitigate risk appetite.

Mandatory deferral policy.

LONG-TERM APPROACH

Performance targets to ensure a solid capital base, adequate liquidity ratios, profitable results and appropriate risk management. Total variable compensation vesting over no less than 4Y, 5Y for senior executives.

SEVERANCE

No golden parachutes for directors in the event of voluntary or involuntary termination. Severance for Executives and MRT population: max 24 months of remuneration capped at €5m.

REMUNERATION PRINCIPLES AND GOVERNANCE

ANNUAL GENERAL MEETING

Shareholders in general meeting, within the terms set by the regulations in force at the time, approve the remuneration and incentivization policies and compensation schemes based on financial instruments for Group directors, staff and collaborators, and set the criteria for establishing compensation to be agreed in the event of a beneficiary leaving the company or office, including the limits on annual fixed salary and the maximum amounts payable as a result of the policies’ application.

BOARD OF DIRECTORS

The Board of Directors compiles the staff remuneration and incentivization policy, reviews it at least once a year and is responsible for ensuring it is applied correctly in practice .The Board also approves the results of the Material Risk-Takers identification process, including any exclusions; ensures that these systems are consistent with the Bank’s overall choices in terms of risk-taking, strategies, long-term objectives, corporate governance structure and internal controls system; and ensures that the remuneration and incentivization systems are able to guarantee compliance with the legal, regulatory and statutory provisions.

REMUNERATION COMMITTEE

Composition: 5 non-executive members, all independent. Consultative role regarding General Manager, Executive Directors and staff remuneration and retention policies. Activities include:

Reviews and assesses remuneration proposals and guidelines put forward by the CEO.

Serves in an advisory capacity for decisions regarding the criteria to be used for compensation payable to all identified staff, with focus on senior MRTs Regularly reviews (through benchmarks & market practice analysis, regulatory framework and Bank of Italy recommendations) the adequacy, congruity, adherence and application of remunerations policies.

Verifies performance achievements involving all relevant company units in devising and checking the remuneration and incentive policies and practices.

Aligned with the Risks Committee

CHIEF EXECUTIVE OFFICER

The CEO presents the proposed Group staff remuneration and incentivization policies to the governing bodies, is responsible for staff management, and after consulting with the General Manager, determines the variable remuneration based on the criteria established by the Board of Directors and then distributes it.

INTERNAL GOVERNANCE PROCESS

VARIOUS PARTIES ARE INVOLVED IN THE PROCESS OF DRAWING UP MEDIOBANCA STAFF REMUNERATION POLICIES.

In particular:

Group HR directs and guides the entire process, with the support of the governing bodies, control units and other teams responsible for verifying the Group’s earnings and financial data.

The Planning, Accounting and Financial Reporting unit provides the data for verifying that the gateways have been met and determining the performances of the business lines based on the results achieved.

The Risk Management unit helps in setting the metrics to be used to calculate the risk-adjusted company performance, in validating the results, and in checking that these are consistent with the Risk Appetite Framework.

The Compliance unit carries out an annual assessment of the remuneration policies compliance with the applicable regulatory framework in order to prevent any legal or reputational risks. Along with the other control units, it is also responsible for verifying compliance breaches which are material for the purposes of performance evaluation and the award of variable remuneration. The Compliance unit is also involved in the processes of reviewing, adapting and managing the remuneration systems to ensure they are in line with current regulations.

The Group Audit unit certifies that the staff remuneration and incentive policy adopted by the Bank complies with regulations. It also carries out annual controls on data and process, and brings any irregularities to the attention of the competent bodies so that the appropriate corrective measures can be adopted.

COMPONENTS OF REMUNERATION

FIXED SALARY VARIABLE REMUNERATION

Reflects technical, professional and managerial capabilities, and the related responsibilities.

Adapted to the market environment.

Mediobanca avoids excessive reliance on the variable component of remuneration, while at the same time being careful not to make the overall package unduly rigid (balanced pay mix).

BENEFITS

Functions as a recognition and reward for targets set and results achieved.

Calculated based on risk-adjusted indicators and with guidelines of a KPI Bluebook for senior MRTs

An important motivational tool.

Paid partly upfront and partly in subsequent years, subject to performance conditions being met, as well as a malus condition and clawbacks.

Paid partly in cash and partly through equity instruments.

Subject to a cap of 200% of fixed remuneration with the exception of asset management companies of the Group (500%).

An integral part of the compensation package for Mediobanca’s staff, in line with market practices.

Principally consist of pension, insurance, healthcare schemes and company welfare/flexible benefit schemes.

May be differentiated according to professional groups and geographical areas, but do not involve individual discretionary assessments.

MEDIOBANCA REMUNERATION FRAMEWORK

When they are met, these conditions trigger the activation of the bonus pool for Material Risk Takers and its disbursement. The following indicators (“gateways”) must be satisfied.

Capital adequacy and liquidity requirements, based on the risk measures adopted in the Risk Appetite Framework (CET 1 ratio, Leverage ratio, AFR/ ECAP, Liquidity Coverage Ratio, Net Stable Funding Ratio). The Risk Appetite Framework is approved by the Board of Directors. It identifies the risks the Bank is willing to assume and sets the objectives and limits for each risk in nor mal and stressed conditions, identifying the operational measures needed to bring the risk back within the set target.

Operating profit at Group level.

At the proposal of the Chief Executive Officer and subject to approval of the Remunerations Committee, the Board of Directors may – exceptionally and for retention purposes – authorise disbursement of a bonus pool on an individual basis, even if the gateways are not met.

MEDIOBANCA REMUNERATION FRAMEWORK

Total variable remuneration is determined on the basis of the risk-adjusted earnings performance of the divisions by which staff are employed (Economic Profit and/or ROAC and/or other risk-adjusted metrics) and by other secondary quantitative and qualitative objectives.

The annual variable remuneration component for CEO and General Manager is included in the aggregate bonus pool and reflects the achievement of the quantitative and qualitative targets assigned in individual scorecards approved by the Board of Directors. In general terms, if the financial objectives are met, the amount of the bonus payable to the them may be between 50% and 150% of their gross annual salary. This amount may be adjusted by the BoD according to whether or not the non financial objectives are also met up to a maximum cap of 160%.

The Board of Director has approved a long term incentive plan for CEO and GM related to achievement of the strategic plan’s objectives in a range from 20% to 40% of the value of annual fixed remuneration for each year of the strategic plan’s.

For staff employed at units which perform staffing and support duties and at the control units, both for Mediobanca S.p.A. and the Group companies, the variable remuneration is determined based on the general economic sustainability with only a limited correlation to the earnings results, i.e. fundamentally on the basis of qualitative considerations, to strengthen the guarantees of their role remaining independent.

REMUNERATION POLICY NEUTRALITY AND ESG OBJECTIVES

REMUNERATION POLICY NEUTRALITY

The Remuneration Policy reflects gender neutrality principles to ensure equal treatment regardless of gender and any other form of diversity, basing evaluation and remuneration criteria exclusively on professional ability. The Group is committed to offering remuneration in line with the market, which reflects each employee’s role, capabilities contribution to company performance objectively measured, and professional experience, thus guaranteeing that the principle of equal opportunities is applied in practice.

The Mediobanca Group pursues the appropriate balance between genders at all levels of the company, focusing in particular on senior and management positions where the gender gap is most felt. Each announcement for selection processes encourages all candidates in possession of the requisite qualifications and/or experience to apply. The same principle underpins the assessment process for internal opportunities arising within each individual Group company (transfers between organizational units) or within the Group (intra-Group transfers).

In its regular review of the policies in force, the Board of Directors, with Remuneration Committee’s support and with the CSR Committee’s involvement, analyses the gender neutrality of the Remunerations Policy, examining the gender pay gap in particular and its development over time.

ESG OBJECTIVES

As part of the performance evaluation process in connection with the remuneration and incentivization policy, the Mediobanca Group devotes special and increasing attention to the achievement of environmental, social and governance (ESG) objectives. These are structured according to individual scope of responsibility, and taking account the incentivization systems applied to the individuals and/or divisions concerned.

Given pre-established ESG objectives are included in the individual 2019-2023 Long Term Incentive Plan for the Mediobanca CEO and Group General Manager and for the CEO of Compass/CheBanca!. Financial ESG and sustainability criteria are also included in the annual scorecards (Short Term Incentives) for the Chief Executive Officer and Group General Manager of Mediobanca, to be assessed over the one-year time horizon for the performance. Their weighting is up to 10% of the quantitative component, and they refer to the annual ESG targets contained in the Strategic Plan for the Group’s principal businesses, with financial KPIs related.

The CEO’s and Group General Managers’ annual scorecards also include non-financial ESG and CSR objectives, the impact of which on the financial component ranges from a 5% decrease to a 7.5% increase for each objective identified.

The short-term incentive scheme for other senior figures also includes, both individually and as part of the scorecards used to define the divisional bonus pools, and where appropriate to the scope under consideration, the presence of quantitative, measurable ESG indicators with weightings of up to 10%. The rest of the Group staff are assigned a Group objective (with a weighting of between 5% and 10% of the total) to evaluate the performance delivered in terms of the adoption of socially responsible behaviour on a management basis, with reference in particular to protection of the environment, corporate diversity, and defence of human and social rights.

WHOLESALE BANKING DIVISION

The variable remuneration for the Wholesale Banking division consists of a share of the Economic Profit booked and generated by the division itself during the reference financial year (the “top down” pool). Economic Profit (EP) is defined as the pre-tax profit earned by the division, minus the cost (not booked) of regulatory capital required in order to perform its business: in other words, it measures the extra profit generated once capital has been remunerated.

This amount is then compared with the sum of the bonus pools resulting from the scorecards assigned to the individual business units (the “bottom up” pool) which also use Economic Profit or other risk adjusted metrics depending on the nature of the business and activity as their primary metric along with other secondary quantitative metrics (which include cross-selling activities and reference to budget objectives) and qualitative metrics (management of the business/team and compliance issues). A cap is set. Scorecards may be fine-tuned to ensure that overall sustainability is maintained.

The aggregate bonus pool thus reflects a balance between the need to reward the value created by the individual products/business units and the need to ensure overall financial sustainability vis-à-vis profits generated.

WB DIVISION BONUS POOL (“TOP DOWN”)

PRIVATE BANKING DIVISION

PRIVATE BANKING: SINGLE DIVISION SCORECARD WITH ALLOCATION TO UNITS AND INDIVIDUALS BASED ON MANAGEMENT REPORTING WHICH

The bonus pool for the Private Banking division too is established by applying a payout to the ex ante results (Economic Profit), consistent with a performance assessment based mostly on fee-related driver.

To determine the bonus pool secondary quantitative metrics (e.g. intercompany cross selling, conversion of liquidity/AUA into more remunerative asset forms, operational risk assessment) and qualitative metrics (e.g. management of resources and compliance with internal and external regulations) are also applied.

The division and its bankers are thus incentivized to offer their clients high-quality investments and at the same time to preserve and increase the assets entrusted to them, while guaranteeing growing AUM and a stable revenue base for the Bank itself.

PRIVATE BANKING

CONSUMER FINANCE AND WEALTH MANAGEMENT/ AFFLUENT & PREMIER

Mediobanca co-ordinates the activities of the principal Group companies, respecting the specific characteristics of the sectors in which they operate and their respective organizational structures. In particular it presides of the process of defining their identified staff, issues guidelines to be adopted, and contributes to the preparation of the Remuneration policies approved annually by the individual banks in the Banking Group in accordance with the Group policies.

At the Group companies too, a variable remuneration component is paid to identified staff in accordance and compliance with the risk profile set in the respective Risk Appetite Framework. The variable component for Identified Staff at Compass and CheBanca! is established on the basis of individual scorecards (MBO) based on risk-adjusted earnings performance indicators (i.e. the Economic Profit metric) and non-financial/qualitative criteria. For headquarters units the decision is made primarily on the basis of qualitative criteria.

COMPASS

The incentivization system is based on the assignment of commercial and credit objectives at branch level rather than for individual staf members.

The performance criteria for the commercial network are balanced between targets based on volumes and quality of risk taken, with caps set both at branch and individual level.

CHEBANCA!

The system is based on commercial business objectives being set at both individual and team level. No incentives are based on individual products.

The weightings for each of the two components and the relevant target bonus are based on the recipient’s role, with a cap set in both relative (percentage) and absolute terms.

Payment of the bonus is subject to deferral, to application of malus conditions and clawback in the event of damages to capital, earnings, financial results and/or reputational issues, in the same way as the remunerations policy of Mediobanca S.p.A.

HOW THE INCENTIVE PLAN WORKS

The annual cycle of the individual performance evaluation process.

Individual awards

Awards to individual staff are made on the basis of an overall evaluation of the individual’s qualitative and quantitative performance. The annual bonus is allocated to individual beneficiaries through a shared and recorded annual performance evaluation process based on merit and professional quality, with particular attention to issues of compliance.

July/August

The Performance Evaluation process consists of three phases:

Objective Planning Mid Year Feedback Year End Review

End Review

Objective Planning

Mid Year Feedback

HOW THE INCENTIVE PLAN WORKS

THE ALLOCATION OF THE INDIVIDUAL VARIABLE COMPONENT IS THE RESULT OF VARIOUS DECISIONMAKING STEPS

The annual bonus is allocated to the individual beneficiaries through a process that must be recorded and repeatable.

1) At the start of the year, senior staff allocate professional, managerial, personal and company objectives in line with corporate strategies and targets. The objectives are duly weighted and clearly set out and are designed to be both achievable and challenging within a set time frame.

2) the senior staff then evaluate each staff member on the basis of the objectives set. Ongoing feedback throughout the year also allows the line manager and staff to agree on the expected performance, ensuring that each staff member has the right characteristics to ensure achievement of objectives, with an opportunity to objectively discuss individual performance.

3) at the end of the year, the Chief Executive Officer and senior management decide on awarding the individual bonuses, based on the bonus pool set following the per formance evaluation for the Group and for the individual business units. The individual bonuses are based on an evaluation that is discretionary, but traceable and guided through the performance evaluation process, based on merit and professional skills.

4) A “Continuous Feedback” tool, enables constructive feedback to be given immediately on specific activities performed or projects.

HOW THE INCENTIVE PLAN WORKS

THE PAYMENT OF THE VARIABLE COMPONENT OF THE REMUNERATION IS ESTABLISHED BASED ON THE FOLLOWING STRUCTURE

1) A substantial proportion of the variable component is deferred in time and disbursed in the form of equity instruments, in order to link incentives to long-term value creation and to verify the continuity of the company’s results.

2) the upfront component and the deferred variable remuneration are paid 50% in cash and 50% in equity instruments.

3) After the vesting period, the equity instruments are subject to a further retention holding period of one year.

4) Particular emphasis is given to proper individual conduct (compliance breach) in observance of the provisions of the Code of Ethics, the Organisational Model, and Business Conduct Policy, and in general with the principles established by regulations, operational procedures and processes, particularly those considered to be most relevant in terms of reputational risk.

5) A clawback mechanism has been instituted for cases of conduct which have caused the Bank losses, for instances of fraud and wilful misconduct.

6) Staff members are not allowed to use hedging or insurance strategies on their remuneration or other aspects which could alter or otherwise distort the risk alignment effects inherent in the compensation mechanisms, especially if they refer to the variable component paid in the form of financial instruments.

Payment Time Frame (Cash Flow)

Since the results are evaluated over a multi-year time frame, part of the bonuses awarded is deferred over time.

The deferral currently varies from 4 to 5 years.

Ex-Post Adjustment (Malus – Compliance breach)

This is the verification of the performance conditions, aimed at guaranteeing the sustainability of the results achieved, also at the business unit level, maintaining the Company’s solidity and liquidity, and ensuring appropriate conduct by the individual.

REMUNERATION SYSTEM FOR FINANCIAL ADVISORS

Financial Advisors are professional figures linked to the company by an agency contract which allows them, without representing the company, to promote and sell financial products/services on an independent and exclusive basis, and to provide advice to clients acquired and/or assigned, with all the diligence required in order to achieve the company’s objectives.

By virtue of the independent nature of the employment relationship, the FAs’ remuneration is wholly variable, but conventionally it tends to be described as consisting of recurring and non-recurring compensation components.

Recurring compensation

(equivalent to fixed remuneration component under normal employment contract)

The remuneration component which is distinct from the “non-recurring” component, and represents the most stable and ordinary part of the compensation. It mostly consists of different types of commissions: linked to sale, maintenance or management. Such commissions are not in themselves incentivizing in nature.

Non-recurring compensation

(equivalent to variable remuneration component under normal employment contract)

The remuneration component which is incentivizing in nature (linked, for example, to the increase in volumes of net deposits, beating certain product benchmarks, launch of new products, LTI schemes over long-term horizons, etc.).

At 30 June 2022 CheBanca! has a network of 516 FAs.

MATERIAL RISK TAKERS POPULATION

The criteria used to identify staff with a material impact on Mediobanca Group’s risk profile (material risk takers or “identified staff”) are those published by EU in June 2021.

Qualitative, linked to the role held within the company organisation (including non-executive directors), material business units, control and staff functions.

Quantitative, based on total overall remuneration received in the previous financial year.

Mediobanca regularly analyses its organisational structure via a documented process to identify staff that have an impact on its risk profile. Based on the criteria established by the current regulations, the Group has 98 identified staff as of July 2022 (the figure increases to 110 if non-executive directors are included).

The identified staff (“material risk takers”) comprises of the Directors of Mediobanca, Executives of the Group, senior management and heads of material business units within the Parent Company and its subsidiaries, other staff with managerial responsibilities in material business units, and staff with a total remuneration above €750,000 (or above €500,000 and the average of the TC of Directors both executive and non-executive and senior management). In addition to the staff involved in business operations, the population includes the heads and senior figures of the control functions as well as staff and support areas.

PERFORMANCE SHARES

The performance share scheme provides for the assignment, under certain conditions, of Mediobanca shares free-of-charge to be allocated at the end of the vesting and/or holding periods.

Equity instrument

Used as a component of the variable remuneration

Free-of-charge assignment of shares to the employee (partly upfront, partly deferred) subject to the achievement of set performance objectives referring to a specific period of time, with the possibility of holding periods.

The shares are made available after a holding and/or vesting period provided the beneficiary is still an employee of the Group and the performance conditions have been met.

In connection with the equity instruments to be used as components of staff remuneration, Mediobanca has adopted a performance share scheme, which was approved by shareholders at a general meeting held on 28 October 2022.

The scheme involves the award of shares to employees. The shares are allocated at the end of a vesting period of at least three years – except for the amount envisaged for the upfront portion – provided the beneficiary is still an employee of the Group and the performance conditions have been met regarding the sustainability of the results achieved, also at the business unit level, with the maintenance of the Company’s solidity and liquidity, and appropriate conduct by the individual.

The performance shares allocated as the deferred equity portion, after verification of the satisfaction of the performance conditions for the year of reference, are subject to an additional annual holding period prior to their actual allocation. Also the performance shares awarded upfront are subject to a one year holding period prior to their actual allocation.

For staff employed in the asset management area, the deferral involves fund stock units or cash instruments linked to them.

DEFERRAL MECHANISM

IN ORDER TO TIE THE INCENTIVES FOR IDENTIFIED STAFF TO LONG-TERM VALUE CREATION, PART OF THE VARIABLE REMUNERATION IS DEFERRED OVER TIME THROUGH THE DEFERRAL MECHANISM

The deferral mechanism is based on the following rules:

The deferral period is actually set at four years (five years for senior management)

The deferral amounts are differentiated based on the impact on risks of the categories identified and amount of variable remuneration

The equity part of the deferred remuneration has a holding period of 1 year after verification of the performance conditions, before the shares actually become available. The upfront equity part has also a holding period of 1 year

Mediobanca also defers 30% over a three-year time period, entirely in cash and subject to a malus condition, to all staff not included in the scope of identified staff who receive variable remuneration equal to or above €100,000.

T

20% equity upfront 25% equity upfront

13% cash deferred

11% equity deferred 11% equity deferred

Senior management with variable < € 404.000 11% cash deferred

9% equity deferred

Others Material Risk Takers with variable ≥ € 404.000 20% equity upfront

15% equity deferred 5% cash deferred

15% equity deferred

5% cash deferred

10% equity deferred

11% equity deferred 14% cash deferred 9% equity deferred 11% cash deferred

Others Material Risk Takers with variable < € 404.000 30% equity upfront

Senior management with variable ≥ € 404.000 20% cash upfront 25% cash upfront 20% cash upfront 30% cash upfront

10% equity deferred 5% cash deferred

10% equity deferred 5% cash deferred

20% cash deferred 10% cash deferred

SEVERANCE AND GOLDEN PARACHUTES

There are no provisions for compensation for directors upon termination of their office.

As provided by the regulations, the Articles of Association and the Remuneration Policy, the shareholders in ordinary general meeting are responsible to determine the compensation awarded in the event of early termination of employment relationships or early termination of the office, including the limits in terms of annual fixed remuneration entitlements and the maximum amount resulting from their application.

The regulations also establish that the compensation agreed in view of or upon early termination of the employment relationship or early termination of the office must be linked to the performance achieved and the risks assumed by the person and the Bank.

Amounts agreed and/or paid as severance under the terms of an agreement between the Bank and staff in order to settle a dispute which has already arisen (or at least is feared with good reason) are therefore determined on the basis of the formula defined in the Remuneration policy.

1. Severance 4. Malus condition

Maximum of 24 monthly payments at full pay, included non-compete. For Group MRT also notice included.

3. Means of payment2. Maximum amount

For identified staff included in clusters 2 and 3 the methods and timescales provided for in making severance payments follow payment’s method of variable remuneration. For the remaining clusters, forms of deferral and risk adjustment can be applied by the most appropriate methods.

Court-proven fraud and/or wilful misconduct to the detriment of the Bank with individual liability of the employee concerned.

Diversity, Equity,

MB

EVALUATION TIMEFRAME

BENEFICIARIES

STI/LTI PAY MIX

OTHER FEATURES

RULES

… AS WELL AS NON-FINANCIAL IN ORDER TO SPEED UP THE EVOLUTION OF ESG CULTURE WITHIN THE GROUP

The BoD may adjust the variable LTI component by a percentage that ranges from -10% to +15% (without prejudice to the annual 40% cap in relation to achievement of the financial objectives) according to the achievement of the non-financial/qualitative objectives.

The non-financial/qualitative objectives have equal weighting, to be assessed individually.

KPI

Average hours training up 25%

AM: 100% of new investments selected using ESG and financial criteria 700m to be invested in outstanding Italian SMEs 30% increase in ESG products in clients’ portfolios

Corporate Social Responsibility Targets (Global Goals SDG UN)

4m per annum earmarked for projects with positive social/environmental impact

Customer satisfaction: CheBanca! CSI in core segments @73, NPS @25 Compass: CSI @85, NPS @55

Energy: 92% from renewable resources, CO2 emissions to be cut by 15%; hybrid cars @90% of MB fleet CheBanca! green mortgages up 50%

Relative performance

Total shareholder return

MB stock relative performance vs Total Shareholder Return index (TSR: assumes dividends are reinvested) for 26 leading European banks (Euro Stoxx Banks – code SX7GT STX), of which Mediobanca is part

Assessment criteria

-5% / +7.5% quantitative financial results

-5% /+7.5% quantitative financial results

FY22 MAIN BONUS POOLS STABLE ON RESULTS

of pay for performance:

Overall bonus pools of the Group’s main entities (closing as of June 30, 2022) slightly increasing in absolute terms (from €103 mln to about €107) consistent with improved divisional performance, according to the specific type of

mix

Bonus pool/revenue indicators

previous year

for performance

in

Group

CIB: WHOLESALE BANKING (€m)

over

Variable FY 2022 component assigned to Group

(approx. € 30 mln) affects CET1 by approx. 4 bps as already last year (€29.2/4 bps in 2021 mln vs. €21.3/3 bps in 2020)

(€m)

MB COORD. WM/MAAM

GROUP PAY MIX AND VARIABLE/FIXED

RATIO