Gefran S p A : REPORT ON REMUNERATION POLICY AND ON THE COMPENSATION PAID OF GEFRAN S.P.A.

Report on Remuneration Policy and on the compensation paid

of Gefran S.p.A.

Pursuant to Article 123-ter of the TUF and art. 84-quater of the Consob Issuers' Regulation

www.gefran.com

Approved by the Board of Directors on 09 March 2023

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SUMMARY .................................................................................................................................. 2

INTRODUCTION ......................................................................................................................... 3

A. REFERENCE REGULATORY FRAMEWORK ........................................................................................... 3

B. PURPOSE OF THE REPORT ................................................................................................................ 3

C. EXECUTIVE SUMMARY ...................................................................................................................... 5

DESCRIPTION OF THE CHANGES COMPARED TO THE 2022 REPORT ............................................................. 5

SECTION I - REMUNERATION POLICY FOR 2023 ................................................................. 6

• A. PARTIES INVOLVED IN THE PROCESS OF PREPARING, ADOPTING AND IMPLEMENTING THE POLICY ......... 6

• B. EXCEPTIONAL CIRCUMSTANCES PERMITTING TEMPORARY EXCEPTIONS TO REMUNERATION POLICY .... 10

• C. AIMS, PRINCIPLES AND TOOLS OF THE REMUNERATION POLICY ......................................................... 11

• D. SUSTAINABILITY ............................................................................................................................. 12

• E. OUTCOME OF VOTING AT THE SHAREHOLDERS' MEETING ................................................................. 12

• F. GENERAL TERMS OF THE POLICY .................................................................................................... 13

  • (i) Structure of the remuneration package .................................................................................. 13

  • (ii) Fixed component of remuneration .......................................................................................... 13

  • (iii) Variable Components of remuneration and una tantum ......................................................... 14

• G. SHORT TO MEDIUM-TERM VARIABLE COMPONENT (MBO) ................................................................. 14

  • (i) Criteria underlying the determination and disbursement ........................................................ 14

  • (ii) malus and clawback mechanisms .......................................................................................... 16

  • (iii) MBO for the year 2023 ........................................................................................................... 17

• H. MEDIUM TO LONG-TERM VARIABLE COMPONENT (LTI) ...................................................................... 19

  (i)criteria underlying the determination and disbursement ......................................................... 19

• I. BENEFITS AND WELFARE ............................................................................................................... 19

• J. INDEMNITY FOR RESIGNATION, DISMISSAL OR TERMINATION OF EMPLOYMENT .................................... 20

• K. NON-COMPETITION AGREEMENTS ................................................................................................... 21

INDIVIDUAL REMUNERATION POLICIES ............................................................................. 22

• L. DIRECTORS' REMUNERATION .......................................................................................................... 22

• M. REMUNERATION OF DIRECTORS WITHOUT SPECIAL DUTIES ............................................................... 22

• N. REMUNERATION OF DIRECTORS WITH SPECIAL DUTIES ..................................................................... 23

• O. REMUNERATION OF THE BOARD OF STATUTORY AUDITORS ............................................................. 24

• P. REMUNERATION OF GENERAL MANAGERS AND EXECUTIVES WITH STRATEGIC RESPONSIBILITIES ....... 25

SECTION II - REPORT ON COMPENSATION PAID FOR 2022 ............................................. 26

• A. 2022 BUSINESS RESULTS ............................................................................................................... 26

• B. 2022 REMUNERATION .................................................................................................................... 26

• C. REMUNERATION OF THE BOARD OF DIRECTORS .............................................................................. 26

  • (i) Remuneration of Directors without special duties .................................................................. 26

  • (ii) Remuneration of Directors with special duties ....................................................................... 27

• D. REMUNERATION OF THE CHIEF EXECUTIVE OFFICER ....................................................................... 28

  • (i) Remuneration of the Chief Executive Officer ......................................................................... 28

  • (ii) Remuneration of the General Manager .................................................................................. 28

• E. REMUNERATION OF THE BOARD OF STATUTORY AUDITORS ............................................................. 28

• F. REMUNERATION OF EXECUTIVES WITH STRATEGIC RESPONSIBILITIES ............................................... 28

A. Reference regulatory framework

This Report on Remuneration Policy and on the compensation paid (the "Report"), approved by the Board of Directors on 09 March 2023, is divided into two sections:

- Section I: Remuneration policy for the year 2023 ("2023 Policy") and

- Section II: Report on compensation paid for 2022 (the "2022 Report").

This Report was prepared pursuant to Article 123-ter of the Consolidated Law on Finance ("TUF" - as amended by Art. 3 of Legislative Decree No. 49 of 2019, which implemented in Italian legislation the so-called Shareholders' Rights Directive II - EU Directive 828/2017) and Article 84-quater and of 7-bis of Annex 3A of the CONSOB Regulation No. 11971 of 14 May 1999 (as amended by the CONSOB Resolution No. 21623 of 10 December 2020, hereinafter the "Issuers' Regulation"). In the draft of the Report it also takes into account the provisions of the Corporate Governance Code of listed companies, to which Gefran S.p.A. ("Gefran" or "the Company") adhered with a resolution passed by the Board of Directors on 16 December 2020.

Moreover, the Report has been adopted pursuant to article 13, paragraph 3, letter b) of CONSOB Regulation 17221/2010 and article 13 of the Regulation governing transactions with related parties, approved by the Company's Board of Directors on 24 June 2021.

The Report is made available to the public at the company's registered office, on the authorized storage system(www.1info.it) and on the Company's website atwww.gefran.com.

The 2023 Policy, submitted to binding vote at the Shareholders' Meeting to be called for the approval of the financial statements as at 31 December 2022, pursuant to article 123-ter, paragraphs 3-bis and 3-ter of the TUF, defines the principles and guidelines determining the remuneration of directors, directors with special duties, general managers and executives with strategic responsibilities for 2023.

B. Purpose of the report

In particular, the 2023 Policy governs the remuneration system for the Gefran Group, with reference to the Parent Company Gefran S.p.A. and its Italian and foreign subsidiaries; it finds its basis in the values, principles and key points that have guided the Gefran Group since its origin, and will continue to guide it, through Gefran Way with the objective of constant growth: integrity, balance, meritocracy, engagement and creation of value. The objective is to create and apply a body of remuneration procedures that is effective, efficient and functional, proportionate to the needs of its different entities.

For this purpose, also in the light of the recommendations of the Corporate Governance Code, promoted bythe Corporate Governance Committee,the 2023 Policy was prepared to concretely determine the remuneration or compensation system in order to align the interests of management with those of shareholders, pursuing the goal of promoting Gefran's sustainable success over the medium-long term, in accordance with the principles of (i) meritocracy and internal equity, in terms of consistency between remuneration and responsibility, competence, capacity and position held; (ii) competitiveness, in terms of remuneration balanced with the reference markets, for more details, reference should be made to next paragraph C of Section I of this Report.

The 2022 Report, submitted to an advisory and non-binding vote of the Shareholders'

Meeting pursuant to article 123-ter, paragraph 6 of the Consolidated Law on Finance, provides nominatively for Directors, Statutory Auditors and General Manager and, in aggregate form, for other Managers with Strategic Responsibilities:

• (i) an adequate, clear and understandable presentation of each of the items of remuneration pertaining to 2022 for the people in the positions listed above, including the conditions applicable in the event of resignation from the post or termination of employment, in order to demonstrate its compliance with the Policy;

• (ii) an analytical indication of the compensation paid by the Company and its subsidiaries in the year 2022, for any reason and in any form, reporting any components of the aforesaid remuneration that relate to activities carried out in years prior to the financial year in question, and also showing any fees to be paid in one or more subsequent years for work carried out in 2022, specifying the estimated value of components not objectively quantifiable during the year 2022;

• (iii) an illustration of how the Company has considered the vote expressed by the Shareholders' Meeting on 28 April 2022.

C. Executive summary

In line with best practices and in accordance with the recommendation contained in the letter from the Chairman of the Corporate Governance Committee to the Chairmen of the administrative bodies of listed companies on 25 January 2023, this section contains an executive summary of the main elements of the Report and Policy.

Fixed Remuneration:

Variable Remuneration:

Fixed/variable remuneration ratio of the Chief Executive Officer: 37% (it was 34% in 2022)

Description of the changes compared to the 2022 Report

The main changes in this Report compared to the 2022 Report are as follows:

• - Redefinition of the structure of paragraphs with a view to synthesis and clarity of presentation

• - Insertion of summary

• - Insertion of executive summary (introduction - paragraphC)

• - Addition of paragraph on sustainability (Section I - paragraph D)

• - Evidence of the outcome of the votes at the last shareholders' meeting (Section I - paragraph E)

• - Update of list of executives with strategic responsibilities (Section I - paragraph 0)

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