Aquafil

Remuneration Information • Mar 28, 2023

Remuneration Policy and Report

2022

Aquafil S.p.A. Remuneration Policy and Report

in accordance with Article 123-ter of the CFA and 84-quater of the Consob Issuers' Regulation

Issuer: Aquafil S.p.A. Website: www.aquafil.com Approved by the Board of Directors on March 16, 2023

Contents

• Letter of the Chairperson of the Appointments and Remuneration Committee
• Executive Summary
• Introduction
• 1.1 Regulatory references
• 1.2 Purpose and content
• 1.3 Preparation and structure

SECTION I

• 1. Governance Compliance Management procedures 2. Remuneration Policy 2.1 Purposes and principles of the Remuneration Policy 2.2 Main changes introduced compared to 2022 2.3 Description of the Remuneration Policy 2.4 Short-term variable component 2.5 Long-term variable component
• 2.6 Waiver procedure

SECTION II

23	Part 1
23	1. Implementation of the 2022 Remuneration Policy
23	1.1 Fixed remuneration
23	1.2 Short-term variable component
24	1.3 Indemnity termination of office/employment and Non-Competition Agreements
24	1.4 Application of ex post correction mechanisms
24	1.5 Waivers applied to the Remuneration Policy in 2022
25	Part 2

Letter of the Chairperson of the Appointments and Remuneration Committee

Dear shareholders,

as Chairperson of the Appointments and Remuneration Committee and together with my colleagues Margherita Zambon and Ilaria Dalla Riva, I am pleased to submit for your attention Aquafil's Remuneration Policy and Report.

2022 was a very busy year for our committee. We worked hard to ensure the effective introduction of the Group's new Remuneration Policy, which represents a significant change from past versions.

Following an in-depth analysis of market practices, the Company deemed it appropriate to review the operation of the short-term incentive system and to introduce a long-term incentive system, in the interests of constantly improving its management practices to attract, motivate and retain the human capital needed to ensure the Group's sustainable success. Compared to the previous incentive structure, the long-term view has taken a more central role through the provision of a monetary Long-Term Incentive. This is partly linked to Aquafil's Total Shareholder Return and sustainability performance.

Francesco Profumo Chairperson of the Appointments and Remuneration Committee

A key aspect of the work carried out in 2022 was the integration of sustainability goals into remuneration policies, in line with corporate strategy. Focus on ESG principles is

considered essential to sustainable value creation at Aquafil. Reflecting the Company's commitment to these issues, the addition of specific KPIs to incentive plans for senior management has been consolidated. In line with the recommendations of the Chairperson of the Corporate Governance Committee, disclosure on the ESG parameters used has also been improved to clarify to what extent they can be measured.

In view of the renewal of the Board of Directors, the Committee also reflected on the analysis of listed company practice regarding the compensation paid to top bodies. A benchmarking activity was carried out in this area with the support of a specialist. Considering the results of this activity, the Chief Executive Officer's compensation package was reviewed, resulting in a reduction in fixed compensation and therefore an increase in the weighting of the variable components.

Finally, I am pleased to highlight the importance that the Committee attaches to clearly and comprehensively communicating the key principles of the Remuneration Policy, the systems and processes that govern it, and its fundamental characteristics. Our goal is to ensure that each of our shareholders has the information and tools they need to exercise their rights on an informed basis.

Together with my colleagues - to whom I express my heartfelt thanks for providing their expertise and professionalism to the Committee - I hope that the continued improvement in the content of our Policy and the quality of the disclosure in the Report will bear witness to the Committee's commitment, and hope, too, that it will meet with the broadest support at the Shareholders' Meeting.

EXECUTIVE SUMMARY

Remuneration component	Purpose Award conditions					Amounts / Values %
Fixed Remuneration	Takes account of the extent and strategic importance of the role, its distinctive characteristics and the strategic skills held	Salary level based on positioning in relation to market benchmark analysis			The fixed remuneration of the Chief Executive Officer (CEO) is Euro 1,250,000
Short-Term Variable Compensation (STI)	Designed to encourage management to work towards the achievement of annual targets that maximise the Aquafil Group's value, in line with shareholders' interests.	KPI: • EBITDA (weighting 55%) • NFP/EBITDA (weighting 20%) • ESG (weighting 25%) Cap: there is a cap on the pay-out equal to 125% of the target incentive Clawback clause		CEO: • Target: 22% of Fixed Remuneration Executive Directors: • Target: 50% of Fixed Remuneration SE: • Target: ranging between 40% and 50% of Fixed Remuneration
Long-Term Variable Remuneration - 2023-2027 LTI Plan	Encourages alignment between shareholder interests and sustainability of value creation in the medium to long term	Instrument: monetary Frequency of allocation: annual (rolling plan) Performance period: three years KPI: • TSR (weighting 30%) • ESG (weighting 25%) • EBITDA (weighting 25%) • NFP/EBITDA (weighting 20%) Deferment 50% of the bonus for a period of one year Cap: there is a cap on the pay-out equal to 125% of the target incentive Clawback clause			CEO: • Target: 22% of Fixed Remuneration Executive Directors: • Target: 50% of Fixed Remuneration SE: • If participating in the plan, target: 50% of Fixed Remuneration
Benefits	Combines compensation packages for improved alignment with market standards	Provision of goods and/or services in line with market practice and applicable regulations			Company car - insurance policies at least equal to those guaranteed to Company executives for Industrial Executives		by the National Collective Bargaining Agreements
	Fixed remuneration	2023	2024	2025	2026	2027	2028
Timeframe for remuneration components	Benefits STI System LTI System
Pay mix	15% 15% 70% CEO "target" pay mix		25% 25% 50% Directors "target" pay mix		LTI STI	Fixed remuneration

INTRODUCTION

1.1 Regulatory references

This Report was prepared by Aquafil in accordance with Article 123-ter of the CFA, Article 84-quater of the Issuers' Regulation, in addition to, on the basis of self-regulation, the Corporate Governance Code, which Aquafil complies with.

Furthermore, Legislative Decree No. 49 of 2019 introduced and implemented into Italian law the principles and provisions included in the Shareholder Rights Directive II, approved in 2017. Certain amendments were introduced to Article 123-ter of the CFA through this decree, among which, the binding vote of the Shareholders' Meeting on the first section of the report relating to the remuneration policy, and the non-binding vote on the second section of the report concerning compensation paid.

In preparing this report, account was taken of the indications expressed on the subject of remuneration policy by Consob, most recently with Resolution No. 21623 of December 10, 2020, which amended the Issuers' Regulation in implementation of the CFA. In addition, the principles expressed in Article 5 of the Corporate Governance Code for Listed Companies 2020 edition ("2020 Code") (with the specifications indicated below), in addition to the recommendations suggested by the Corporate Governance Committee, were adopted as general reference guidelines on remuneration policies.

1.2 Purpose and content

The annual remuneration report provides information aimed at increasing the knowledge and awareness of shareholders, investors and the market in general, as well as Consob, on the remuneration policies adopted by the Company, and on the amounts and composition of the remuneration paid to the beneficiaries.

Pursuant to Article 123-ter of the CFA, the Report comprises two sections.

Section I describes:

• A. the Remuneration Policy adopted by the Company in 2023 for (i) Members of the Company's Board of Directors, distinguishing between Executive and Non-Executive Directors; (ii) Members of the Board of Statutory Auditors; and (iii) Senior Executives of the Group;
• B. the procedures utilised for the preparation and adoption of the Remuneration Policy, in addition to the boards and parties responsible for the Policy's correct implementation.

Section II of the Report provides, with reference to FY 2022:

• i. adequate and detailed information on the remuneration of Directors, with reference to fixed and variable monetary items, in addition to any other forms of remuneration, non-monetary benefits, and any other indemnity or form of compensation agreed in relation to early termination or natural termination without renewal of the office held;
• ii. detailed information on the remuneration of Statutory Auditors;
• iii. aggregate information on the remuneration of Senior Executives, with reference to fixed and variable monetary items, in addition to any other forms of remuneration, non-monetary benefits, and any other indemnity or form of compensation agreed in relation to early termination or natural termination without renewal of the office held.

1.3 Preparation and structure

The Remuneration Policy was prepared by the Company and approved by the Board of Directors on March 16, 2023, upon the recommendation of the Appointments and Remuneration Committee and after consultation with the Board of Statutory Auditors.

This Report is sent to Borsa Italiana and is made available to the public at Aquafil's registered office (Via Linfano 9, Arco) and on the Company's website www.aquafil.com, in the Corporate Governance section, at least twenty-one days before the Shareholders' Meeting called to approve the annual financial statements at December 31, 2022.

This Report is structured according to the guidelines set out in Article 84-quater of the Issuers' Regulation and in compliance with Annex 3, Schedule 7-bis and Schedule 7-ter referred to therein.

A relative table, as per Article 84-quater, paragraph 4 of the Issuers' Regulation, presents holdings in the Company or its subsidiaries by these parties (and by parties related to them).

SECTION I

The Remuneration Policy defines the principles and guidelines adopted by Aquafil for the remuneration of the members of the Board of Directors and Senior Executives.

The Company highlights that the remuneration policy in this Section I is proposed for the year 2023 only.

1. GOVERNANCE – COMPLIANCE – MANAGEMENT PROCEDURES

The principal parties and bodies involved in the preparation and approval of the Remuneration Policy are the Shareholders' Meeting, the Board of Directors, the Appointments and Remuneration Committee and the Board of Statutory Auditors.

The Board of Directors and the Appointments and Remuneration Committee are also responsible for the correct implementation of the Remuneration Policy and oversee its correct implementation.

A brief description of the duties, which in accordance with the applicable regulation and the By-Laws are required of these Boards with regards to the remuneration of the Directors, is provided below.

SHAREHOLDERS' MEETING

The Shareholders' Meeting:

• (i) establishes the total remuneration of the members of the Board of Directors in accordance with Article 2364, paragraph 1, no. 3) of the Civil Code, also in accordance with Article 2389, paragraph 3 of the Civil Code and Article 15 of the By-Laws;
• (ii) resolves, with a binding vote, as regards Section I of the Report, in accordance with Article 123-ter, paragraph 3-ter of the CFA;
• (iii) resolves, with a non-binding vote, as regards Section II of the Report, in accordance with Article 123-ter, paragraph 6 of the CFA;
• (iv) establishes any share-based remuneration plans or other financial instruments for Directors, employees or collaborators, including Senior Executives, where existing, in accordance with Article 114-bis of the CFA.

BOARD OF DIRECTORS

The Board of Directors:

• (i) establishes internally an Appointments and Remuneration Committee;
• (ii) establishes the remuneration of the Executive Directors on the proposal of the Appointments and Remuneration Committee, with prior opinion from the Board of Statutory Auditors, in accordance with Article 2389, paragraph 3 of the Civil Code and breaks down the fixed annual remuneration for execution of office, established in totality by the Shareholders' Meeting;
• (iii) defines and reviews, on the proposal of the Appointments and Remuneration Committee, the Remuneration Policy;
• (iv) approves the Report in accordance with Articles 123-ter of the CFA and 84-quater of the Issuers' Regulation;
• (v) prepares any remuneration plans based on shares or other financial instruments for Directors, employees and collaborators, including Senior Executives, where existing, submitting such for the approval of the Shareholders' Meeting in accordance with Article 114-bis of the CFA and oversees their implementation.

APPOINTMENTS AND REMUNERATION COMMITTEE

The Appointments and Remuneration Committee is an advisory and proposing body that — in its capacity as remuneration committee — has the task of assisting the Board of Directors through investigative functions in the assessments and decisions concerning the remuneration policy of Directors and Senior Executives. In particular:

• (i) periodically assesses the suitability, overall consistency and real application of the remuneration policy for Directors and Senior Executives. In the latter regard, it makes use of information provided by the Chief Executive Officers; formulates proposals to the Board of Directors on this matter, also with reference to the Board of Directors of the subsidiaries; and
• (ii) presents proposals or expresses opinions to the Board of Directors on the remuneration of Executive Directors and other Senior Directors, as well as establishing the performance targets related to the variable component of this remuneration; assesses the possibility of establishing long-term incentive plans for Executive Directors and Senior Executives; monitors the application of the decisions adopted by the Board verifying, in particular, the achievement of the performance targets.

The Appointments and Remuneration Committee consists of three Non-Executive Directors, all of whom independent, appointed by Board of Directors' motion of June 18, 2020, namely:

• Francesco Profumo (Chairperson);
• Margherita Zambon;
• Ilaria Dalla Riva.

Upon appointment and, most recently, on February 15, 2023, the Board of Directors positively assessed that all members of the Committee met the requirements of adequate knowledge and expertise in financial matters and, in particular, that the Chairperson met the requirement of experience in remuneration policies.

The new Board of Directors to be elected by the Shareholders' Meeting of April 27, 2023 will appoint the Company's Appointments and Remuneration Committee for the period 2023-2025.

The composition, duties and operating procedures of the Appointments and Remuneration Committee are governed by the Corporate Governance Code and specific regulations, approved by the Board of Directors and most recently updated on March 11, 2021.

Meetings of the Appointments and Remuneration Committee are attended by the Chairperson of the Board of Statutory and/or the Statutory Auditors and, on invitation, by representatives of company departments and independent experts and/or other parties, whose participation is considered beneficial for the discussion of the matters at issue.

Where considered necessary or beneficial for the execution of its duties, the Appointments and Remuneration Committee may utilise external remuneration policy consultants. In 2022, the Appointments and Remuneration Committee met five times, in addition to four meetings in the first quarter of 2023. The attendance of Committee members is reported in the Corporate Governance and Ownership Structure Report, available on the company website www.aquafil.com.

The Chairperson of the Board of Statutory Auditors and/or the Statutory Auditors, the Human Resources Executive Director, the Legal Department Director in addition to consultants supporting the Company on specific projects reviewed by the Committee, attended the Appointments and Remuneration Committee meetings, on its invitation. Executive Directors and/or Senior Executives did not participate in Committee discussions that concerned decisions relating to their compensation or that placed them in situations of conflict of interest.

APPOINTMENTS AND REMUNERATION COMMITTEE BUSINESS CYCLE 2022

BOARD OF STATUTORY AUDITORS

The Board of Statutory Auditors expresses an opinion upon the remuneration proposals of the Executive Directors, in accordance with Article 2389, paragraph 3 of the Civil Code, verifying the consistency of such with the Remuneration Policy adopted by the Company.

INDEPENDENT AUDIT FIRM

The independent audit firm of Aquafil verifies that the Directors have prepared the second section of the Report, as required by Article 123-ter, paragraph 8-bis of the CFA.

INDEPENDENT EXPERTS

In 2022, the Company opted to enlist the support of the consulting firm The European House - Ambrosetti to conduct salary benchmarking analysis for specific roles, and to prepare this Report.

2. REMUNERATION POLICY

2.1 Purposes and principles of the Remuneration Policy

Aquafil's Remuneration Policy is based on the following key principles and is defined according to the following criteria:

• this policy seeks to attract, retain and motivate individuals of high professional standing, with particular regard to key positions for the development and management of the business, through a remuneration structure which recognises the value of the individual and their contribution to company growth. In determining the Company's Remuneration Policy, the working conditions of its employees were considered;
• the contribution to the Company's strategy and sustainability: remuneration recognizes the achievement of performance targets, mainly in terms of economic-financial indicators and set and measurable targets. To reinforce the progress towards generating shared value, the Group has aligned its Remuneration Policy with its sustainability strategy, including the main objectives of the Sustainability Plan within the short-term (STI) and long-term (LTI) variable incentive system;
• the alignment of the interests of company and Group management with the pursuit of the objective to create value for Aquafil shareholders over the medium/long-term. In this regard, a long-term incentive system linked in part to Total Shareholder Return performance over a three-year time period was introduced. Alignment with shareholder interests is further strengthened by an appropriate balance between the fixed and variable components.

In line with the above principles, the Company shall present this document for the approval of the Shareholders' Meeting of April 27, 2023.

2.2 Main changes introduced compared to 2022

Considering the voting results of the 2022 Shareholders' Meeting and greater alignment with market best practices, the main changes introduced in the 2023 Remuneration Policy and Report are summarised below:

CHANGES TO THE AQUAFIL REMUNERATION POLICY AND REPORT

CONTENTS OF THE REMUNERATION POLICY

Review of CEO's remuneration package: reduction of the fixed component and increased weighting for the variable component

Revision of the operation of the short-term variable incentive (STI) system to strengthen the link with sustainability performance

Introduction of a new long-term incentive plan (2023-2025 LTI), with parameters linked to value creation, economic-financial aspects, and a sustainability goal

Revisione della procedura di deroga alla Politica di Remunerazione

COMMUNICATION ELEMENTS OF THE REPORT

Inclusion of the Remuneration Policy executive summary

Greater clarity regarding the incentive strategy of the variable component and the link between remuneration and performance

More details regarding ESG parameters, linked to the Group's business strategy

Improved disclosure in the first part of Section II of the Report

2.3 Description of the Remuneration Policy

The Remuneration Policy provides that the fixed and variable components are established on the basis of principles and processes according to the beneficiary category.

In this regard, on March 16, 2023, the Board of Directors of the Company, on the proposal of the Appointments and Remuneration Committee, identified — in light of the positions and respective roles held within the Group — the Senior Executives.

The Company in any case considered it appropriate to create a remuneration system based on the Executive/managerial responsibilities of the parties concerned and therefore independently set the criteria for determining the remuneration of: Directors, Executive Directors, Board of Statutory Auditors, and Senior Executives.

DIRECTORS

All Directors receive a fixed remuneration which appropriately compensates the work and commitment they provide to the Company.

The Shareholders' Meeting held on June 18, 2020, with regard to the definition of the remuneration due to the Directors, resolved to set the Board of Directors' emolument at a total of Euro 430,000 per year, to be distributed among its members in compliance with the motions to be taken by the Board of Directors, subject to any further remuneration due to the Directors holding specific offices to be established by the Board of Directors pursuant to Article 2389, paragraph 3, of the Civil Code.

In fulfilment of the foregoing and as a breakdown of the total emolument awarded by the Shareholders' Meeting, the Board of Directors meeting held on June 18, 2020 for the mandate 2020-2022, determined the following remuneration:

REMUNERATION OF DIRECTORS - 2020-2022 mandate

Member of the BoD € 40,000	Appointments and		Control, Risks and		Lead Independent Director:
	Remuneration Committee:		Sustainability Committee:		Chairperson	€ 15,000
	Chairperson	€ 15,000	Chairperson	€ 15,000	Member	€ 10,000
	Member	€ 10,000	Member	€ 10,000

The Shareholders' Meeting convened to approve the 2022 financial statements will appoint the new Board of Directors for a three-year term and determine the total remuneration for the new Board of Directors. On the basis of the appropriate proposal approved by the Shareholders' Meeting, the new Board of Directors will therefore be called upon to determine the allocation of total remuneration, enacting the applicable legislative and statutory provisions and in accordance with that decided by the Shareholders' Meeting on April 27, 2023.

Non-Executive Directors (whether or not Independent Directors) are paid a fixed annual fee for the office outlined above, which is determined on an individual basis by the Board of Directors in view of the total amount determined by the Shareholders' Meeting, pursuant to Article 2389 of the Civil Code.

The remuneration of these Directors is not based on any financial results or specific objectives of the Company and is commensurate with the commitment required, also in relation to participation on internal Board committees, for which specific remuneration is allocated.

Executive Directors – Chief Executive Officer and other Executive Directors

The remuneration of Executive Directors is adequately balanced in order to ensure consistency between short-term development objectives, while taking into account the values of sustainability that drive operations, aimed at creating value for shareholders in the long term.

A benchmark analysis was carried out to define the Chief Executive Officer's remuneration package, using a panel of 10 companies comparable to Aquafil in terms of capitalisation, share structure, business type and international perspective. The companies on the panel are: Aeffe, Biesse, Carel Industries, Cir, Datalogic, Elica, Emak, Intercos, Piovan, Saes Getters.

CEO TARGET REMUNERATION PACKAGE

STI (target bonus) LTI (target bonus)	€ 275,000 € 275,000	Company car and insurance policy for medical expenses, death, permanent
Total variable (target)	€ 550,000	disability and injury at least equal to the policies guaranteed by National
Total	€ 1,800,000	Collective Bargaining Agreements for company directors.

Fixed remuneration STI LTI 70% 15% 15%

Specifically, the Chief Executive Officer's (CEO) remuneration structure is made up of:

• a fixed component: this component takes account of the extent and strategic importance of the role, its subjective distinctive characteristics and the strategic skills assigned to the role. Taking into account the benchmark analyses and the prior opinions of the Appointments and Remuneration Committee and the Board of Statutory Auditors, the CEO's total fixed remuneration was reduced from Euro 1,353,000 to Euro 1,250,000;
• a short-term variable component: the purpose of this component is to encourage management to work towards the achievement of annual targets that maximise the Aquafil Group's value, in line with shareholders' interests. The target bonus is determined as a percentage of fixed remuneration and is set at 22%. The maximum bonus is 125% of the target bonus. For the description of the short-term variable component reference should be made to Paragraph 2.4;

• a long-term variable component: The Chief Executive Officer was included among the beneficiaries of the Company's long-term monetary incentive plan (2023-2027 LTI Plan). This component is designed to incentivise management to work toward achieving medium- to long-term goals. The target bonus is determined as a percentage of fixed remuneration and is set at 22%. The maximum bonus is 125% of the target bonus.

For the description of the long-term variable component reference should be made to Paragraph 2.5. Overall, the weighting for variable compensation has been increased in order to align the interests of the Chief Executive Officer with those of all shareholders, strengthening the link with the Pay for Performance principle;

• fringe benefits: fringe benefits concern the supply of goods and/or services assigned in accordance with market practice and as per applicable legislation. In particular, Aquafil's Chief Executive Officer is the beneficiary of a company car and of insurance policies for the reimbursement of medical expenses, death, permanent disability and accident at least of the same level as those guaranteed to the Company's Executives under the National Collective Bargaining Agreements for Industrial Executives policy.

The remuneration structure for the Chief Executive Officer and other Executive Directors consists of:

• a fixed component: this component takes account of the extent and strategic importance of the role, its subjective distinctive characteristics and the strategic skills assigned to the role. The amount is sufficient to remunerate the service also in the case of the partial reaching of the performance targets upon which the variable remuneration component is based. More specifically, the fixed component is calculated according to the size of the business managed, the various areas of responsibility covered, Aquafil Group's complex corporate structure, including internationally, also taking account of market practice for similar positions at industrial sector companies. As regards the Chief Executive Officer - also being an Executive of the Company - we underline that in compliance with the prior opinion of the Appointments and Remuneration Committee and that of the Board of Statutory Auditors, the Board of Directors approved conferment of the additional fee of Euro 50,000 annually for the period 2020-2022, initially on June 29, 2021, and later on December 21, 2021. The new Board of Directors will then be required to pass a motion regarding the Chief Executive Officer's remuneration for the period 2023-2025;
• a short-term variable component: encourages management to work towards the achievement of annual targets that maximise the Aquafil Group's value, in line with shareholders' interests. The target bonus is determined as a percentage of fixed remuneration and is set at 50%. The maximum bonus is 125% of the target bonus.

For the description of the short-term variable component reference should be made to Paragraph 2.4;

• a long-term variable component: The Chief Executive Officer and the other Executive Directors were included among the beneficiaries of the Company's long-term monetary incentive plan (2023-2027 LTI Plan). This component is designed to incentivise management to work toward achieving medium- to long-term goals. The target bonus is determined as a percentage of fixed remuneration and is set at 50%. The maximum bonus is 125% of the target bonus.
• For the description of the long-term variable component reference should be made to Paragraph 2.5;
• fringe benefits: fringe benefits concern the supply of goods and/or services assigned in accordance with market practice and as per applicable legislation. In particular, Executive Directors do not benefit from fringe benefits for that role, but rather as Senior Executives of the Company, with the provision of a company car and insurance policies for the reimbursement of medical expenses, death, permanent invalidity and accident at least of the same level as those guaranteed to the Company's Executives under the National Collective Bargaining Agreements for Industrial Executives policy.

BOARD OF STATUTORY AUDITORS

All the members of the Board of Statutory Auditors receive a fixed fee which appropriately compensates the work and commitment provided by the Statutory Auditors to the Company, and commensurate with the commitment required, the importance of the role covered as well as the size and sector of the Company.

As regards the definition of the remuneration due to the Board of Statutory Auditors, the Shareholders' Meeting of April 28, 2021, resolved to grant the Board - which will remain in office until the approval of the financial statements for the year ending December 31, 2023 - a total remuneration of Euro 140,000.00 (one hundred and forty thousand), of which Euro 60,000.00 (sixty thousand) for the Chairperson of the Board of Statutory Auditors and Euro 40,000.00 (forty thousand) for each of the two Statutory Auditors.

SENIOR EXECUTIVES

The remuneration of Senior Executives is structured so as to focus management on company results and the creation of value.

The remuneration of Senior Executives is composed of:

• a fixed component: this component takes into account the breadth and strategic relevance of the role played and the distinctive subjective characteristics and strategic skills of the beneficiary, in addition to market practice for comparable positions. The amount is sufficient to remunerate the service also in the case of the non-reaching of the performance targets upon which the variable remuneration component is based;
• a short-term variable component: encourages management to work towards the achievement of annual targets that maximise the Aquafil Group's value, in line with shareholders' interests. The weighting of the short-term variable component ranges between 40% and 50% of fixed remuneration, depending on the strategic importance of the role. The maximum bonus is 125% of the target bonus. For the description of the short-term variable component reference should be made to Paragraph 2.4;
• a long-term variable component: for details regarding the 2023-2027 LTI Plan, please see Section 2.5. For those participating, the target bonus is determined as a percentage of fixed remuneration and is set at 50%. The maximum bonus is 125% of the target bonus;
• fringe benefits: fringe benefits concern the supply of goods and/or services assigned in accordance with market practice and as per applicable legislation.

2.4 Short-term variable component

The purpose of the short-term variable component is to encourage management to work towards the achievement of annual targets that maximise the Aquafil Group's value, in line with shareholders' interests.

BENEFICIARIES

The Board of Directors has identified as beneficiaries of the short-term variable component the Chief Executive Officer, the Senior Executive Director, the other Executive Directors, the Senior Executives and other figures with strategic importance for the Group.

CALCULATION METHOD

The system provides for the assignment of performance targets that are structured as a percentage of the target incentive amount assigned:

Objectives	Weighting
EBITDA	55%
NFP/EBITDA	20%
ESG target	25%
Total	100%

As for the parameter "ESG targets," reference is made to two sustainability targets (weighting 12.5% each), whose indicators are the same for all beneficiaries of the STI system and which ensure a direct link between the short-term incentive system and the Company's sustainability strategy. Sustainability goals refer to two strategic areas for the Group: proportion of Econyl®-branded product revenues to fibre revenues; and collection of post-consumer waste to create new recycled materials.

For EBITDA and ESG targets, a minimum, target and maximum achievement level are defined:

• Below the minimum level, the portion of the bonus linked to the relevant parameters does not accrue
• At the minimum level, 50% of the relative bonus accrues
• At the target level, 100% of the relative bonus accrues
• At the maximum level, 125% of the relative bonus accrues
• Intermediate levels use a linear interpolation mechanism.

The STI incentive strategy for the EBITDA performance target is set out below:

For the ratio of NFP to EBITDA, the threshold level is the same as the target level. For this parameter, Aquafil does not consider it permissible to reward a result below the targets set out in the Budget:

• Below the 100% target level, the portion of the bonus linked to the relevant parameter does not accrue;
• At the target level (100%), 100% of the relative bonus accrues;
• At the maximum level (110%), 125% of the relative bonus accrues;
• Intermediate levels use a linear interpolation mechanism.

The bonus will be paid in full following approval of the consolidated financial statements for the year to which the short-term variable component relates.

Maximum amount of the Individual Component

The short-term variable component may never exceed a cap equal to 125% of the target bonus.

Other provisions

The annual incentive plan includes a clawback clause which permits the recovery in the 5 years subsequent to issue of amounts issued on the basis of manifestly erroneous or false data. There are also mechanisms in place to deal with good/bad leavers.

2.5 Long-term variable component

Considering the prior opinion of the Appointments and Remuneration Committee and that of the Board of Statutory Auditors, the Board of Directors has approved the introduction of a long-term incentive system (2023-2027 LTI Plan).

As a change from the incentive system implemented last year, which consisted of an immediate component (70%) and two deferred components (15% after one year and 15% after two years, subject to performance conditions) for the pursuit of medium-term goals, the Board has opted to introduce a three-year incentive system that is more effective in orientating conduct in the long term and in retaining key Group resources. In terms of targets, Aquafil's new LTI Plan seeks to create maximum alignment between the interests of the beneficiaries and the pursuit of the overriding objective of sustainable value creation for shareholders in the medium/long term.

The 2023-2027 LTI Plan is a rolling monetary plan based around three cycles, each lasting three years (first cycle 2023-2025, second cycle 2024-2026, third cycle 2025-2027). For beneficiaries, after the three-year vesting there is an additional one-year deferral period relating to 50% of the accrued bonus.

BENEFICIARIES

The Board of Directors has identified as beneficiaries of the long-term variable component the Chief Executive Officer, the Senior Executive Director, the other Executive Directors, and other figures with strategic importance for the Group.

CALCULATION METHOD

The system provides for the assignment of performance targets that are structured as a percentage of the target incentive amount assigned:

Obiettivi	Peso
TSR Assoluto	30%
ESG Risk Rating	25%
EBITDA cumulato triennale	25%
PFN/EBITDA	20%
Totale	100%

As regards the Total Shareholder Return (TSR) parameter, the bonus accrues on the basis of the performance of Aquafil's TSR at the end of the vesting period relative to a predefined scale of values between minimum, target, and maximum:

• Below the minimum level, the portion of the bonus linked to the TSR does not accrue;
• At the minimum level, 50% of the relative bonus accrues;
• At the target level, 100% of the relative bonus accrues;
• At the maximum level, 125% of the relative bonus accrues;
• Intermediate levels use a linear interpolation mechanism.

The ESG Sustainability Risk Rating target contained in the LTI Plan refers to Aquafil's ranking on the risk rating scale in the ESG arena according to Sustainalytics. The target considers the degree of improvement achieved in the rating.

The LTI incentive strategy for the cumulative three-year EBITDA performance target is set out below:

For the target NFP to EBITDA ratio, as in the short-term system, the incentive strategy provides that the threshold level should be equal to the target level, as it does not consider it permissible to reward a result below the targets defined under the three-year plan:

• Below the 100% target level, the portion of the bonus linked to the parameter does not accrue;
• At the target level (100%), 100% of the relative bonus accrues;
• At the maximum level (110%), 125% of the relative bonus accrues;
• Intermediate levels use a linear interpolation mechanism.

Maximum amount of the Individual Component

The long-term variable component may never exceed a cap equal to 125% of the target bonus.

Other provisions

The long-term incentive plan includes a clawback clause which permits, for five years following the issue of the bonus, the recovery of amounts issued on the basis of manifestly erroneous or false data. This clause will apply to bonuses paid to Executive Directors and Senior Executives included in the cycles of the incentive system beginning with bonuses earned during 2023. There are also mechanisms in place to deal with good/bad leavers.

2.6 Waiver procedure

As provided for in Article 123-ter, paragraph 3-bis of the CFA, and Article 84-quater of the Issuers' Regulation, in exceptional cases, the Board of Directors may deem it necessary to temporarily waive elements of this Policy in order to pursue long-term interests, to ensure the sustainability of the company as a whole, or to ensure its ability to stay in the market. These exceptional circumstances refer to certain situations that can be traced back to the following: attraction and retention of strategic figures and recognition for individual or collective results that are particularly significant and positive for the Company.

In the event that the prerequisites are met, the temporary waiver of the 2023 Policy must be approved by the Board of Directors, upon the proposal of the Appointments and Remuneration Committee, having consulted the Board of Statutory Auditors, in compliance with current laws and regulations.

The elements that the Company may decide to waive under the above exceptional and temporary circumstances relate to the variable components of remuneration.

PART 1

1. Implementation of the 2022 remuneration policy

The remuneration policy that the Company implemented in 2022 for Directors and Senior Executives in particular was consistent and in accordance with the 2022 Remuneration Policy approved by the Board of Directors on March 15, 2022 and in relation to which the Shareholders' Meeting held on April 28, 2022 passed a favourable motion.

In implementing the Remuneration Policy 2022, the Appointments and Remuneration Committee took into account the vote and opinions expressed by shareholders at the Shareholders' Meeting on April 28, 2022 on Section II of the Remuneration Policy and Report, which received favourable votes representing 96.9% of the voting rights present at the Shareholders' Meeting.

1.1 Fixed remuneration

Table 1 provides details of remuneration paid in 2022 to individuals who held the positions of members of the governing and supervisory bodies and Senior Executives as a whole.

1.2 Short-term variable component

On March 16, 2023, upon the proposal of the Appointments and Remuneration Committee and having consulted the Board of Statutory Auditors, the Board of Directors determined that an overall bonus level of 149% of the target value of the short-term incentive system (STI 2022) had been achieved.

Please note that the amounts accrued under STI 2022 are issued according to the following methods and mechanisms, in accordance with the 2022 Policy:

• a) for 70% (seventy per cent) ("Immediate Component") after the approval of the Consolidated Financial Statements for the year to which the short-term variable component relates (i.e., for 2022, after the approval of the Consolidated Financial Statements as of December 31, 2022);
• b) for 15% (fifteen per cent) ("First Deferred Component") after the approval of the Consolidated Financial Statements of the year following that to which the short-term variable component refers (i.e. for 2022, after the approval of the Consolidated Financial Statements as at December 31, 2023), while specifying that the Deferred Component is subject to adjustment having regard to: (i) the share price compared to a panel of listed companies based on the Total Shareholders Return (TSR); and (ii) the achievement of a set number of sustainability targets;
• c) for 15% (fifteen per cent) ("Second Deferred Component") after the approval of the Consolidated Financial Statements of the year following that to which the short-term variable component refers (i.e. for 2022, after the approval of the Consolidated Financial Statements as at December 31, 2024), while specifying that the Deferred Component is subject to adjustment having regard to: (i) the share price compared to a panel of listed companies based on the Total Shareholders Return (TSR); and (ii) the achievement of a set number of sustainability targets.

The deferred portion related to the 2021 Incentive Plan was also issued during the year, as shown in Table 3B below.

The 2022 remuneration component mix is as follows:

As regards the variable component, the methods of issue are consistent with those described above. Please refer to Tables 1 and 3B below for more details.

1.3 Indemnity termination of office/employment and Non-Competition Agreements

Mr. Adriano Vivaldi resigned as Director on 31/12/2021 and, following the conclusion of his employment on 31/8/2022, he was paid a compensation of Euro 500,000 as a Non-Competition Agreement. As such, taking into account that he did not hold the position of Director or Senior Executive in 2022, this compensation is not shown in Table 1.

1.4 Application of ex post correction mechanisms

We note the absence during the year of the prerequisites for the application of ex post restitution mechanisms regarding the variable component (the clawback clause) under the 2022 incentive plan

1.5 Waivers applied to the Remuneration Policy in 2022

We note that there were no instances of waivers from the 2022 Policy for Directors, Senior Executives or members of the Board of Statutory Auditors.

Table comparing changes in the past five fiscal years between the annual change in total remuneration of Board and Board of Statutory Auditors members, company performance, and average gross annual employee remuneration

The breakdown below gives information comparing the annual change, for the last three years: (i) in the Company's results, (ii) in the remuneration of each of the individuals for whom the information in this section of the Report is provided by name, and (iii) in the average remuneration of Aquafil's employees.

		2020 vs. 2021	2021 vs. 2022
Performance	EBITDA	23.5%	28.0%
Giulio Bonazzi	Chairperson & Chief Executive Officer	27,4%	14,8%
Franco Rossi	Executive Director	76,5%	18,9%
Stefano Giovanni Loro	Executive Director from 01/07/2021	100,0%	14,5%
Attilio Annoni	Executive Director from 01/01/2022	n/a	100,0%
Simona Heidempergher	Director	0,0%	0,0%
Francesco Profumo	Director	0,0%	0,0%
Ilaria Maria dalla Riva	Executive Director from 18/06/2020	86,7%	0,0%
Margherita Elena Maria Zambon	Director	0,0%	0,0%
Silvana Bonazzi	Director	0,0%	0,0%
Stefano Poggi Longostrevi	Chairperson of the Board of Statutory Auditors	20,0%	0,0%
Bettina Solimando	Statutory Auditor	14,3%	0,0%
Beatrice Bompieri	Statutory Auditor from 28/04/2021	100,0%	0,0%
Average employee remuneration		4,7%	3,7%

The calculation of remuneration considers fixed remuneration and the short-term variable component paid out for the year.

PART 2

The table below reports:

• the detailed remuneration of Directors, Statutory Auditors and Senior Executives, including those who ceased to hold office during the year, accrued in 2022 for any reason and in any form with regard to the Company, its subsidiaries and associates as at December 31, 2022;
• amounts and fees which comprise the remuneration of the Statutory Auditors;
• amounts and fees comprising the remuneration of Senior Executives, with reference to fixed and variable monetary items, in addition to any other forms of remuneration, non-monetary benefits, and any other indemnity or form of compensation agreed in relation to early termination or natural termination without renewal of the office held.

TABLE 1 - REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS, GENERAL MANAGERS AND SENIOR EXECUTIVES

Name	Office	Period of office	Concl. of office
Giulio Bonazzi	Chairperson of the Board of Directors Chief Executive Officer	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Franco Rossi	Executive Director	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Simona Heidempergher	Director Chairperson, Control, Risks and Sustainability Committee Lead Independent Director	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Francesco Profumo	Director Chairperson, Appointments and Remuneration Committee Member, Control, Risks and Sustainability Committee	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Margherita Elena Maria Zambon	Director Member, Appointments and Remuneration Committee	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Ilaria Maria dalla Riva	Director Member, Control, Risks and Sustainability Committee Member, Appointments and Remuneration Committee	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Silvana Bonazzi	Director	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Stefano Giovanni Loro	Executive Director	01.01.2022-31.12.2022	2022 Accounts
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Attilio Annoni Remuneration from Company preparing the	Executive Director	01.01.2022-31.12.2022	2022 Accounts
accounts
Remuneration from subsidiaries and associates
Total
Total remuneration of Directors in office at December 31, 2022

Period of office Concl. of office	Fixed	Committee	Variable remuneration	Non-monetary	Other	Total Fair Value	Benefits on
	remuneration	remuneration	Bonuses and Profit sharing	benefits	remuneration remuneration	of equity	conclusion
			other incentives			remuneration	of office
	1,210,000 (1)		626,120 (3)			1,836,120
	143,000 (2)					143,000
	1,353,000		626,120			1,979,120
2022 Accounts			31,248
	40,000 (4)					40,000
	284,819 (5)		281,600 (3)	12,292		578,711
2022 Accounts	324,819		281,600	12,292		618,711
	40,000 (4)	25,000 (6)				65,000
						0
	40,000	25,000	-			65,000
2022 Accounts	40,000	25,000
	40,000 (4)	25,000 (7)				65,000
						0
	40,000	25,000	-			65,000
	40,000 (4)	10,000 (9)				50,000
						0
	40,000	10,000	-			50,000
2022 Accounts	40,000	20,000
	40,000 (4)	20,000 (8)				60,000
						0
2022 Accounts	40,000	20,000	-			60,000
			31,248
	40,000 (4)					40,000
						0
	40,000					40,000
2022 Accounts
	312,878 (10)		313,060 (3)	10,185		636,123
	50,000 (11)					50,000
	362,878	-	313,060	10,185		686,123
2022 Accounts	538,426 (12)		617,600 (3)	9,899		1,165,925
	538,426	-	617,600	9,899		1,165,925

Name	Office	Period of office	Concl. of office
Stefano Poggi Longostrevi	Chairperson of the Board of Statutory Auditors	01.01.2022-31.12.2022	Bilancio 2023
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
Bettina Solimando	Statutory Auditor	01.01.2022 - 31.12.2022	Bilancio 2023
Remuneration from Company preparing the
accounts
Remuneration from subsidiaries and associates
Total
Beatrice Bompieri	Statutory Auditor	01.01.2022 - 31.12.2022	Bilancio 2023
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates
Total
11 other Senior Executives		01.01.2022 - 31.12.2022	Bilancio 2023
Remuneration from Company preparing the
accounts (7)
Remuneration from subsidiaries and associates (4)
Total

(1) Compensation for the role of Chairperson of the Board of Directors and Chief Executive Officer.

(2) Compensation for the position held at Tessilquattro.

(3) The amount shown is for 2022 and is also included for the portion of the bonus subject to deferral, as indicated in Annex 3 of the Issuers' Regulation (updated with amendments made by Resolution No. 21623 of December 10, 2020). This value is the sum of the amounts shown in Table 3B, columns 2A, 2B and 4.

(4) Compensation for the office of Director.

(5) Gross Annual Remuneration for the role of General Manager of AquafilUSA.

(6) Compensation for the position of Chairperson of the Control, Risks and Sustainability Committee Euro 15,000 and compensation for the position of Lead Independent Director Euro 10,000.

(7) Compensation for the position of Chairperson of the Appointments and Remuneration Committee Euro 15,000 and attendance fees for participation in the Control, Risks and Sustainability Committee Euro 10,000.

(8) Attendance fees for participation in the Control, Risks and Sustainability Committee Euro 10,000 and attendance fees for participation in the Appointments and Remuneration Committee Euro 10,000.

(9) Attendance fees for participation in the Appointments and Remuneration Committee Euro 10,000.

(10) The amount includes compensation for the offices of: Director for Euro 40,000, Gross Annual Remuneration for the role of General Manager at BCF EMEA and APAC Euro 272,878.

(11) Compensation for the position held at Tessilquattro S.p.A.

(12) The amount includes compensation for the offices of: Director for Euro 90,000, Gross Annual Remuneration for position as COO Euro 634,026.

(13) Compensation for role as Chairperson of the Board of Statutory Auditors.

(14) Attendance fees for participation on the Board of Statutory Auditors.

(15) Gross Annual Remuneration for the position held.

Fixed	Committee	Variable remuneration		Non-monetary	Other	Total	Fair Value	Benefits on
remuneration	remuneration	Bonuses and	Profit sharing	benefits	remuneration	remuneration	of equity	conclusion
		other incentives					remuneration	of office
60,000 (14)						60,000
60,000	-	-		-		60,000
40,000 (15)						40,000
40,000	-	-		-		40,000
40,000 (15)						40,000
40,000	-	-		-		40,000
1,291,618 (16)		846,120 (3)		60,130		2,197,868
828,842		497,272		8,327		1,334,430
2,120,460		1,343,392		68,457		3,532,298

TABLE 3B - MONETARY INCENTIVE PLANS FOR MEMBERS OF THE BOARD OF DIRECTORS, GENERAL MANAGERS AND SENIOR EXECUTIVES

Subject
Name	Office held	Plan
Giulio Bonazzi	Presidente del CdA e Amministratore Delegato
Remuneration from Company preparing the accounts		2022 short-term incentive plan
		2021 short-term incentive plan
Remuneration from subsidiaries and associates
Total
Franco Rossi	Amministratore Esecutivo
Remuneration from Company preparing the accounts
Remuneration from subsidiaries and associates		2022 short-term incentive plan
		2021 short-term incentive plan
Total
Stefano Loro	Amministratore Esecutivo
Remuneration from Company preparing the accounts		2022 short-term incentive plan
		2021 short-term incentive plan
Remuneration from subsidiaries and associates
Total
Attilio Annoni	Amministratore Esecutivo
Remuneration from Company preparing the accounts		2022 short-term incentive plan
		2021 short-term incentive plan
Remuneration from subsidiaries and associates
Total
Adriano Vivaldi	Amministratore Esecutivo
Remuneration from Company preparing the accounts		2022 short-term incentive plan
		2021 short-term incentive plan
Remuneration from subsidiaries and associates
Total
Other Senior Executives (11)
Remuneration from Company preparing the accounts (7)		2022 short-term incentive plan
		2021 short-term incentive plan
Remuneration from subsidiaries and associates (4)		2022 short-term incentive plan
		2021 short-term incentive plan
Total

Overall total 2,097,320 898,851 12,366 618,661 185,600

(1) Left office on August 31, 2022. Settled deferred quota, pro rata for the 8 months of 2022.

The sum of the amounts in columns 3A, 3B and 3C corresponds to the sum of columns 2B and 3C in the previous year.

	Bonus for the year			Prior year bonuses
Disbursable/Disbursed	Deferred	Period of deferment	No longer issuable	Issuable/Issued	Still deferred	Other bonuses
(in Euro)	(in Euro)			(in Euro)	(in Euro)
438,284	187,836	2 anni
		1 anno		74,238
438,284	187,836			74,238
197,120	84,480	2 anni
		1 anno		37,119
197,120	84,480			37,119
219,142	93,918	2 anni
		1 anno		37,119
219,142	93,918			37,119
302,400	129,600	2anni				185,600
		1 anno
302,400	129,600					185,600
		1 anno	12,366	173,230 (1)
0	0		12,366	173,230
592,284	253,836	2 anni
		1 anno		59,391
348,090	149,182	2 anni
		1 anno		237,563
940,374	403,018			296,954
2,097,320	898,851		12,366	618,661		185,600

SCHEDULE 7-TER - INFORMATION ON HOLDINGS OF THE BOARD OF DIRECTORS AND STATUTORY AUDITORS, GENERAL MANAGERS AND SENIOR EXECUTIVES

Name	Office	Investee company	Shares held at the end of the previous year	Shares acquired	Shares sold Shares held at the end of the reporting year
Directors
Giulio Bonazzi	Chairperson of the BoD and CEO	Aquafil S.p.A.	29,803,036	67,689	29,870,725
Franco Rossi	Executive Director	Aquafil S.p.A.	179,012		179,012
Stefano Giovanni Loro	Executive Director	Aquafil S.p.A.	5,500		5,500
Senior Executives
[1]		Aquafil S.p.A.	62,005		62,005

Arco, March 16, 2023

Aquafil S.p.A.

On behalf of the Board of Directors

Mr. Giulio Bonazzi Chairperson

Aquafil S.p.A.

Via Linfano, 9 38062 Arco (Tn) T +39 0464 581111 F +39 0464 532267

www.aquafil.com info@aquafil.com