2018 COMPENSATION POLICY

FINECO. SIMPLIFYING BANKING.

FinecoBank S.p.A - Member of UniCredit

LETTER FROM THE CHAIRMAN 3 OF THE REMUNERATION COMMITTEE SECTION I – EXECUTIVE SUMMARY 5 SECTION II – COMPENSATION POLICY 12 1. Introduction 14 2. Governance 15 3. Fundamentals 18 4. Compensation Structure 24 SECTION III – ANNUAL COMPENSATION REPORT 30 1. Introduction 32 2. Governance & Compliance 33 3. Continuous Monitoring of Market Trends and Practices 37 4. Compensation paid to Members of the Administrative 38 and Auditing Bodies, to General Managers and to other Executives with strategic responsibilities 5. FinecoBank Compensation Systems 40

Compensation Data 68

Letter from the Chairman of the remuneration committee

Dear Shareholders,

as Chairman of the Remuneration Committee, I am pleased to present you the FinecoBank Compensation Policy for 2018.

The document is divided into three sections: an "Executive Summary", which summarizes the features of the new Remuneration Policy and the main results achieved in 2017; the "Compensation Policy", which describes the key principles of our approach to the remuneration and incentive systems for Employees and Financial Advisors in 2018; finally, the "Annual Remuneration Report", which provides detailed information on FinecoBank remuneration practices and the results of the processes implemented in 2017.

Also this year, in support of our efforts to ensure maximum clarity in remuneration practices, we propose a clear, complete and immediately accessible policy. Our values are based on the concept of transparency, as an element that can protect and strengthen our reputation and create value in the long term, in the interest of all the Bank's stakeholders.

For Fineco, 2017 was once again a year of great results, with record figures, confirming the sustainability of our growth and a welldiversified business model that received the solid contribution from all areas of the Bank.

This approach is reflected in the trust that our customers continue to put in this model and in the ability of our professionals to face new challenges positively.

The Remuneration Committee was renewed in April 2017, picking up the inheritance left by the previous Committee, which we thank for the excellent work done and the commitment to define a remuneration policy in line with the principles and mission of FinecoBank.

In continuity with last year, we have worked to consolidate and continuously improve remuneration policies, involving the main corporate bodies and functions from time to time. Our model of remuneration governance aims to guarantee adequate control of all the Bank's remuneration processes, ensuring that decisions, after receiving all the relevant information, are taken independently and promptly, in order to avoid conflicts of interest.

In order to better respond to its tasks, the Remuneration Committee took part in each phase of the remuneration processes, including the design of the incentive plans, with the goal of guaranteeing an architecture that suits the Bank's remuneration strategy, in line with applicable regulations and consistent with the best market practices.

The goal of our remuneration policy is to attract, motivate and retain the best resources, rewarding merit and talent and guaranteeing a solid process of performance assessment, avoiding excessive risktaking.

This year, with the aim of retaining key resources, and at the same time motivating and encouraging them towards our long-term goals for the three-year period 2018-2020, specific Long-Term Incentive Plans have been defined.

These Plans represent the main innovation introduced in the 2018 Compensation Policy compared to the 2017 Compensation Policy, which we were proudly and widely appreciated for by you Shareholders and the market in general.

On behalf of the Remuneration Committee, I would also like to thank you Shareholders for the constant willingness to discuss and share each need and point of view, and for the time you will spend reading our 2018 Policy, trusting in your appreciation.

Sincerely,

GIANMARCO MONTANARI

Chairman of the Remuneration Committee

SECTION I-
EXECUTIVE
SUMMARY

Executive Summary

Our Compensation Policy

The implementation of the principles set in our Compensation Policy provides the framework for the design of reward programs across the Bank.

FinecoBank compensation approach, coherent with the regulations, the best market practices and with the approach of the Holding UniCredit S.p.A, guarantees the link to the performance, the market framework, the alignment with business strategy and the long-term shareholders' interest.

The key principles of our Compensation Policy (Section II) reflect the most recent regulations in terms of remuneration and incentive policies and practices, in order to build, year-by-year – in the interest of all stakeholders – remuneration systems aligned with long-term strategies and goals. These are linked with company results and adequately adjusted in order to take into account all risks consistent with capital and liquidity levels needed to support all the activities, and to avoid distorted incentives that could lead to a breach of law or to excessive risk taking.

Elements of our 2018 compensation approach and key results of 2017:

Key elements of 2018 Compensation Policy	Description
1. Key principles • Clear and transparent governance • Compliance with regulatory requirements and principles of good professional conduct • Continuous monitoring of market trends and practices • Sustainable pay for sustainable performance • Motivation and retention of all staff, with particular focus on talents and mission-critical resources	Details – Section II • The key principles of our Compensation Policy ensure a correct definition of competitive compensation levels, internal equity and transparency • Compensation Policy is aligned to the national and international regulatory requirements. Full compliance of compensation policies and processes is assured through involvement of Company Control Functions: such as Compliance and Risk Management, that also guarantee the coherence with the Risk Appetite Framework, in line with sector regulations1
2. Compensation Benchmarking • Update of the peer group for compensation benchmarking, performed by the independent advisor of the Remuneration Committee	Details – Section III paragraph 3 • With specific reference to Identified Staff population of FinecoBank, the Remuneration Committee identifies, supported by the independent external advisor, the peer group, considering our main Italian and European peers on which compensation benchmarking analysis are performed
3. Identified Staff definition • Application of qualitative and quantitative criteria which are common at European level defined by EBA Regulatory Technical Standards	Details – Section III paragraph 5.1 • As per Bank of Italy request, also for 2018 the identification of the Identified Staff has followed a structured assessment process both at Group and local level, involving Compliance and Risk Management functions of FinecoBank. The self-evaluation brought to a total number of Identified Staff for 2018 equal to 16 employees and 7 Financial Advisors
4. Ratio between variable and fixed remuneration • In compliance with the regulatory requirements, the 2:1 ratio represents the maximum limit to the ratio between variable and fixed components of the remuneration for all employees belonging to business functions, including Identified Staff	Details – Section II paragraph 3.1 • In compliance with applicable regulations, the adoption of a maximum ratio between variable and fixed remuneration of 2:1 has not changed for the employees belonging to the business functions. For the rest of the employees, a maximum ratio between the components of remuneration equal to 1:1 is usually adopted, except for the Identified staff of the Company Control Functions2 , for which it is provided that the variable remuneration could not exceed 1/3 of the fixed remuneration and that incentive mechanisms are consistent with the assigned tasks as well as independent of results from areas under their control
	• With reference to applicable regulations, regarding the Financial Advisors belonging to Identified Staff, the 2:1 ratio will be adopted between the non recurring and the recurring component of the remuneration
	• The adoption of a ratio of 2:1 between variable and fixed compensation don't have any implication on bank's capacity to continue to respect all prudential rules, in particular capital requirements
	• This approach allows FinecoBank to maintain a strong link between pay and performance, as well as to avoid the rigidity of the cost structure derived from a possible increase of fixed costs and to guarantee the alignment with multi-year performance, avoiding the decrease of deferred compensation
5. Incentive system linked to the annual performance for the employees belonging to Identified Staff	Details – Section III paragraph 5.3 • Bonus pool whose size is linked to the Bank profitability;
• The FinecoBank 2018 Incentive System, that confirms the "bonus pool" approach, provides for a strong link between remuneration, risk and sustainable profitability	• Entry and malus conditions: defined on the basis of performance indicators in terms of profitability, capital and liquidity defined at both Group and local level
• Such system provides for an overall performance assessment both at individual level and at Group and local level	• Risk adjustment on the basis of indicators coherent with Fineco's Risk Appetite Framework
	• Bonus allocation: incentives are allocated taking into consideration the available bonus pool and the individual performance evaluation based on specific performance indicators
	• Pay-out: individual bonuses composed of 50% cash and 50% shares; pay-out over a multi-year period, ensuring alignment with shareholders' interests; each payment is subject to malus and claw-back conditions, as well as to compliance assessment of individual behaviours

2 Meaning Risk Management, Compliance and Human Resources functions. Human Resources function is considered Company Control Function, as far as remuneration and incentive policies and practices are concerned, pursuant to Bank of Italy Circular nr. 285 of 17 December 2013. Audit function is outsourced in Holding.

¹ i.e. Capital Requirement Directive IV (CRD IV); EBA Regulatory Technical Standards (RTS); Bank of Italy "Disposizioni di vigilanza per le Banche", 7th update to the Circular n. 285 of 17th December 2013.

Executive Summary (Continued)

Elements of our 2018 compensation approach and key results of 2017: (Continued)

	Key elements of 2018 Compensation Policy	Description
NEW	6. 2018-2020 share based Long Term Incentive Plan for Employees • A new share-based Long Term Incentive Plan for the three years performance period 2018-2020, has been defined, to incentive, motivate and retain selected Employees.	Details – Section III paragraph 5.4 • Performance goals at Bank level set at 2020 considering specific targets and thresholds for EVA (Economic Value Added), C/I (Cost/Income Ratio) and CoR (Cost of Risk on commercial loans) indicators.
	•The Plan provides performance goals set at 2020, in terms of Value Creation, Industrial sustainability and Risk, and the payment of a bonus in shares in installments, in a multi-year period.	• Entry and malus conditions: defined on the basis of performance indicators in terms of profitability, capital and liquidity defined at both Group and local level
		• Risk adjustment on the basis of indicators coherent with Fineco's Risk Appetite Framework
		• Individual bonus payment in Fineco shares, in installments, in a multi year period, subject to malus and claw-back condition and to compliance assessment of individual behaviours
	7. Share Ownership Guidelines • Share ownership guidelines are confirmedfor the Chief Executive Officer and the other Executives with strategic responsibilities in order to align the Top Management and the Shareholders interests	Details – Section II paragraph 3.5 • The Chief Executive Officer and the other Executives with strategic responsibility, should ensure appropriate levels of personal investment in FinecoBank shares (equal to 100% of fixed remuneration for the Chief Executive Officer and to 50% for the other Executives with strategic responsibility)
	8. Termination payments • Severance pay-outs take into consideration long-term performance, in terms of shareholder added-value, do not reward failures or abuses and shall not exceed in general 24 months of total compensation (including the indemnity in lieu of notice)	Details – Section II paragraph 3.3 • the Termination Payments Policy (also "Severance Policy") – approved by the 2017 Annual General Meeting - is defined according to the regulatory requirements issued by Bank of Italy in the Circular no. 285 of 17th December 2013, 7th update. The document defines criteria, limits and authorization processes for severance payments
	9. Performance measurement • Review of the "KPI (Key Performance Indicators), Bluebook", that supports manager and incumbent to define the Performance Screen that refers to the annual Incentive System for the employees Identified Staff	Details – Section III paragraph 5.3.1 • The KPI Bluebook supports the definition of Performance Screens providing a set of performance indicators and guidelines. The categories of the main indicators of financial and non-financial Group performance, annually defined within the KPI Bluebook, are certified with the involvement of Group functions Human Resources, Finance, Risk Management, Compliance, Group Sustainability, Group Stakeholder and Service Intelligence and Audit, which reflect the Bank's core operating profitability and risk profile. Also this year the KPI Bluebook has been structured and clustered on the basis of the different Group's business
	10. Incentive system linked to the annual performance for the Financial Advisors belonging to Identified Staff	Details – Section III paragraph 5.5 • Bonus pool whose size is linked to the Bank profitability;
	• The provisions of FinecoBank Compensation Policy also apply to the members of the Financial Advisors Network, in line with the Advisors specific remuneration	• Entry and malus conditions: defined on the basis of performance indicators in terms of profitability, capital and liquidity defined at Group and local level
	• In line with the incentive model provided for the employees Identified Staff, the 2018 PFA Incentive System provides for a strong link between remuneration,	• Risk adjustment on the basis of indicators coherent with Fineco's Risk Appetite Framework
	risk and sustainable profitability • Such system provides for an overall performance assessment both at individual level and at Group and local level	• Bonus allocation: incentives are allocated taking into consideration the available bonus pool and the individual performance evaluation based on specific performance indicators
		• Pay-out: individual bonuses composed of 50% cash and 50% shares; pay out over a multi-year period, ensuring alignment with shareholders' interests; each payment is subject to malus and claw-back conditions, as well as to compliance assessment of individual behaviours.
NEW	11. 2018-2020 Long Term Incentive Plan for Financial Advisors Identified Staff • A new Long Term Incentive Plan for the three years performance period 2018-	Details – Section III paragraph 5.6 • Individual performance goals defined on the basis of commercial targets cumulated within the three-years performance period
	2020, has been defined, to incentive, motivate and retain selected Financial Advisors. • The Plan aims at rewarding the extra performance in relation to commercial	• Entry and malus conditions: defined on the basis of performance indicators in terms of profitability, capital and liquidity defined at individual, Bank and both Group level
	goals and provides the payment of a bonus in cash and shares in installments, in a multi-year period.	• Risk adjustment on the basis of indicators coherent with Fineco's Risk Appetite Framework
		• Individual bonus payment in cash and Fineco shares, in installments, in a multi-year period. Each payment is subject to malus and claw-back condition and to compliance assessment of individual behaviours

3 PFA – Personal Financial Advisors.

Our compensation disclosure

The Annual Compensation Report (Section III) - issued pursuant to art. 123-ter of Legislative Decree 58/1998 (Consolidated Text of Finance" - "TUF") - provides the description of our compensation practices and the implementation outcomes of FinecoBank Incentive Systems, as well as remuneration data, with a focus on the Identified Staff, defined in line with regulatory requirements.

Full disclosure on compensation payout amounts, deferrals and ratio between variable and fixed components of remuneration for the Identified staff is provided in the Annual Compensation Report (Section III - paragraph 6.1), including data regarding Directors, General Managers and other Executives with strategic responsibility.

Data pursuant sect. 84-quarter Consob Issuers Regulation Nr. 11971, Compensation report – Section II, as well as the information on incentive systems under 114-bis of legislative decree 58/1998 ("Consolidated Text of Finance" – "TUF") are included in this document as well as in the annexes of the 2018 FinecoBank Compensation Policy.

Chief Executive Officer and General Manager variable and fixed compensation data

2017 Performance evaluation of the Chief Executive Officer and General Manager's individual goals resulted excellent ("Exceeds Expectations"), on the basis of elements reported in section III – paragraph 5.2.1 and evaluated by the Remuneration Committee and the Board of Directors of February 5th and 6th, 2018.

In 2017, also considering the excellent business results – the incidence of the short and long term variable remuneration on fixed remuneration for the CEO and General Manager has been equal to 200%.

Here is detailed the remuneration structure of the FinecoBank CEO and General Manager for 2017.

Executive Summary (Continued)

Our compensation disclosure (Continued)

Looking forward to 2018, the goals for the Chief Executive Offi cer and General Manager defi ned and approved by the Board of Directors are: Looking forward to 2018, the goals for the Chief Executive Officer and General Manager defined and approved by the Board of Directors are:

#	GOAL NAME	PERIMETER	REFERENCE TARGET	LINK TO 5 FUNDAMENTALS		RISK CORRELATION SUSTAINABILITY GOAL
1	ROAC	FinecoBank	vs. budget	Execution & Discipline	❸
$\overline{2}$	EVA	FinecoBank	vs budget	Risk Management	解
з	Operating Costs	FinecoBank	vs. budget Operating costs as reported in reclassified P&L, i.e.: Staff expenses + Other Administrative Expenses (direct + indirect) - Expenses Recovery + Depreciations.	Execution & Discipline
4	Net new clients	FinecoBank	vs. previous years	Customers First		❸
5	Net sales of Guided Products	FinecoBank	vs budget	Execution & Discipline
6	New Business EL %	FinecoBank	vs. target	Risk Management	❸
7	Sustain value through People	FinecoBank	vs. qualitative assessment based on: . Y/Y delta on Pay for Performance metrics on variable and fix pay · Y/Y delta on Gender Pay Gap / Gender Balance dashboard / Gender Diversity Initiatives · Succession Planning / Building up a sustainable Talent Management Support • Retention rate or voluntary turnover	People Development
8	Tone from the top on conduct and compliance culture	FinecoBank	vs. qualitative assessment based on: · Scope, kind and numbers of documented initiatives - pre- committed with EMC, aimed at promoting staff integrity / customer protection / trustworthiness . The overall status of findings or proceedings in place (internal or external) considering the trend, type, severity and the timely completion of the related remediation actions	Risk Management

SECTION II – COMPENSATION POLICY

SECTION II – COMPENSATION POLICY
1. Introduction	14
2. Governance	15
2.1 Role of the Remuneration Committee
2.2 Market benchmark
2.3 Definition of the FinecoBank Compensation Policy
2.4 Role of Compliance function
2.5 Role of Risk Management function
2.6 Role of Audit function
3. Fundamentals	18
3.1 Ratio between variable and fixed compensation
3.2 Sustainability of the variable compensation
3.2.1 Definition of performance targets
3.2.2 Performance appraisal
3.2.3 Payment of the variable compensation
3.3 Termination payments
3.4 Non-standard compensation
3.5 Share ownership guidelines
3.6 Compliance drivers
4. 2018 Compensation Structure	24
4.1 Employees
4.1.1 Fixed compensation
4.1.2 Variable compensation
4.1.3 Benefit
4.2 Financial Advisors
4.2.1 Recurring remuneration
4.2.2 Non-recurring remuneration
4.3 Non Executives members of Administrative
and Auditing Bodies

1. Introduction

Our set of values is based on integrity as a condition to transform profit into value for our stakeholders.

By upholding the standards of sustainability behaviours and values which drive our mission, our compensation strategy represents a key enabler to enhance and protect our reputation and to create long-term value for all stakeholders.

Also through appropriate compensation mechanism, we aim to create a work environment which is comprehensive of any form of diversity and which foster and unlock individual potential, to attract, retain and motivate highly qualified employees, capable of creating a competitive advantage and to reward those who reflect our standards of consistently ethical behaviour in conducting sustainable business.

Relying on our governance model, our Compensation Policy sets the framework for a common and coherent design, implementation and monitoring of compensation practices across our Company that reinforce sound risk management policies and our long-term business strategy. In so doing, we most effectively meet the specific and evolving needs of our different businesses and populations, and ensure that business and people strategies are always appropriately aligned with our remuneration approach.

To ensure the competitiveness and effectiveness of remuneration as well as transparency and internal equity, the key principles of our Compensation Policy were confirmed:

Clear and transparent governance, through efficient corporate and organizational governance structures, as well as clear and rigorous systems and governance rules.
Compliance with regulatory requirements and principles of good professional conduct, by protecting and enhancing our company reputation, as well as avoiding or managing conflicts of interest between roles within the Bank or towards customers.
Continuous monitoring of national and international market trends and practices, aimed at sound formulation of competitive compensation ensuring transparency and internal equity.
Sustainable pay for sustainable performance, by maintaining consistency between remuneration and performance, and between rewards and value creation, as well as enhancing both the actual result achieved and the way by which they are achieved.
Motivation and retention of all staff, with particular focus on talents and key players, to attract, motivate and retain the best resources capable of achieving our company mission according to Bank's values.

2. Governance

Our compensation governance model aims to assure clearness and reliability in the governance processes related to remuneration through a right control of Company's remuneration practices by ensuring that decisions are made in an independent, informed and timely manner at appropriate levels, avoiding conflicts of interest and guaranteeing appropriate disclosure in full respect of the general principles defined by Regulators.

2.1 Role of the Remuneration Committee

The Board of Directors established a Delegation of Powers system to appropriately regulate effective decision-making processes throughout the organization.

In particular, the Remuneration Committee is vested with the role of providing advice and opinions to the Board of Directors with regard to FinecoBank Remuneration Strategy, also with the support of Risk and Compliance functions, as well as of an independent external advisor, if required and needed.

The main topics discussed by the Committee are also submitted to the attention of the Board of Statutory Auditors, in advance over their submission to the Board of Directors. The Remuneration Committee, consists of 3 non-executive members4 .

2.2 Market benchmark

With specific reference to Identified Staff, an independent external advisor supports the Remuneration Committee on the definition of a list of selected competitors that represent our peer group with regards to whom compensation benchmarking analysis is performed, considering our main national and European competitors in terms of market capitalization, total assets, business scope and dimension, to assure a competitive alignment with the market of reference.

The results of this analysis will be at FinecoBank Remuneration Committee's disposal, in order to support the formulation of opinions to the Bodies of the Bank responsible for taking such decisions.

On the basis of constant benchmarking, we aim at adopting a competitive compensation structure for effective retention and motivation of our critical resources, as well as payments consistent with long-term value for stakeholders.

FinecoBank salary and compensation structures defined on the basis of business or market-specific benchmarking must, in any case, be fully aligned with the general principles of the Group Compensation Policy, with particular reference to the pillars of compliance and sustainability.

4 For details on composition and activities of the Remuneration Committee, please refer to the specific section of the Annual Compensation Report.

2. Governance (Continued)

2.3 Definition of FinecoBank Compensation Policy

The FinecoBank Compensation Policy, as drawn up by the Human Resources function, with the involvement of Risk Management, Finance and Network Controls, Monitoring and Service Department functions for all related aspects, is validated by the Compliance and Risk Management functions for all compliance-related aspects, before being submitted to the Remuneration Committee. On annual basis the Compensation Policy, as proposed by the Remuneration Committee, is submitted to the Board of Directors for approval and then presented to the Shareholders' Meeting for approval, in line with the regulatory requirements.

The principles of FinecoBank Compensation Policy, coherently with the Group's ones, are applicable to the entire organization and includes:

all categories of employees, considering that the Group Compensation Policy, with specific reference to Identified Staff defined according to the regulatory requirements of the European Banking Authority (EBA), provides for a centralized, and homogeneous compensation and incentive system guidelines defined at Group level;
members of the Company's Financial Advisors' Network, in line with the specific pay conditions applicable to them.

2.4 Role of Compliance function

Compliance function operates in close co-ordination with the Human Resources function, in order to support the design and the definition of compensation policy and processes and to evaluate them for the profiles in scope. In this framework, Compliance function verifies the consistency with "the goal of complying with regulations, articles of association and any other code of ethics or other standards of conduct applicable to the bank, so that legal and reputational risks mostly embedded in the relationship with customers are duly contained" (ref. Bank of Italy, 285 Circular).

In particular, Compliance function, evaluates, for all aspects that fall within its perimeter, the FinecoBank Compensation Policy and – referring to applicable regulations – the incentive systems for Bank staff as drawn up by Human Resources function for the employees and by Network PFA Department / Network Controls, Monitoring and Service Department for the Financial Advisors, providing input – as far as it is concerned – for the design of compliant incentive systems. Furthermore, Compliance function, for all aspects that fall within its perimeter, is involved in the process for the identification of Bank's risk takers.

In accordance with the regulatory framework and our governance, the guidelines for the definition of the incentive systems for non-Identified Staff population are arranged, in collaboration with Compliance function:

by Human Resources function for the employees
by Network PFA Department / Network Controls, Monitoring and Service Department for the Financial Advisors

2.5 Role of Risk Management function

FinecoBank ensures consistency between remuneration and accountable and sustainable risk assumption. This policy is ensured through rigorous governance processes based on informed decisions taken by Corporate Bodies. Compensation plans include the risk adjustment appetite defined through the evaluation of the consistency with the results achieved and the FinecoBank Risk Appetite Framework, which is consistent with Group Risk Appetite Framework.

The Risk Management function is constantly involved in the definition of the remuneration policy, the incentive system and compensation processes as well as in the identification of objectives, in the performance appraisal and in the identification of Bank's Identified Staff. This involvement implies explicit link between the Bank incentive mechanisms, selected metrics of the Risk Appetite Framework, the validation of performance and pay, so that the incentives are consistent with the risk assumption identified and approved by the Board of Directors.

2.6 Role of Audit Function

Within the remuneration governance process, the Audit function5 yearly verifies the implementation of Fineco policies and practices and carries out controls on data and processes. The function provides a final judgement on the activity performed, informing the competent Bodies on the possible findings, in order to adopt the corrective measures.

3. Fundamentals

3.1 Ratio between variable and fixed remuneration

Compensation levels and ratio between fix and variable component of overall remuneration for Identified Staff are managed and monitored based on our business strategy and also aligned with FinecoBank relative performance over time.
In compliance with applicable regulations, the adoption of a maximum ratio between variable and fixed remuneration of 2:16 has not changed for the employees belonging to the business functions.
For the rest of the employees, a maximum ratio between the components of remuneration equal to 1:1 is usually adopted, except for the Identified Staff of the Company Control Functions7 , for which it is provided that the variable remuneration could not exceed 1/3 of the fixed remuneration and that incentive mechanisms are consistent with the assigned tasks as well as independent of results from areas under their control.
With reference to applicable regulations, regarding the Financial Advisors belonging to Identified Staff, the 2:1 ratio will be adopted between the non-recurring and the recurring component of the remuneration.
The adoption of a ratio of 2:1 between variable and fixed compensation doesn't have any implication on bank's capacity to continue to respect all prudential rules, in particular capital requirements.

3.2 Sustainability of the variable compensation

Performance is evaluated in terms of risk-adjusted profitability and provide for risk-weighted systems and mechanisms.
Incentive systems must not in any way induce risk-taking behaviours in excess of strategic risk appetite; in particular they should be coherent to the Risk Appetite Framework ("RAF").

3.2.1 Definition of performance targets

Consider the customer as the central focus of our mission, placing customer satisfaction in the forefront of all incentive systems, at all levels, both internally and externally;
design forward-looking incentive plans which balance internal key value driver achievement with external measures of value creation relative to the market;
consider performance on basis of annual achievements and on their impact over time;
include elements reflecting the impact of individual's / business units' performance on the overall value creation of related business groups and organization as a whole;
individual performance appraisal cannot be based only on financial criteria, but should be also based on non-financial criteria8 , considering the specificity of the various roles;
consider also performance indicators such as risk management, adherence with Company values or other behaviours;
it is crucial to avoid in the individual performance screens, measures linked to economic results for Company Control Functions (Risk Management ⁹ , Compliance and Human Resources10);
the approach for Company Control Functions is also recommended where possible conflicts may arise due to the function's activities. In particular, this is the case of functions (if any) performing control activities pursuant to internal / external regulations such as some structures that perform accounting / tax activities11;

⁶ As approved by the Fineco Shareholders Meeting on June 5th 2014.

⁷ Meaning Risk Management, Compliance and Human Resources functions. Human Resources function is considered Company Control Function, as far as remuneration and incentive policies and practices are concerned,

pursuant to Bank of Italy Circular nr. 285 of 17 December 2013. Audit function is outsourced in Holding.

⁸ As provided by the CRDIV art 94, 1 a). financial criteria includes performance indicators reported in the annual financial report and in particular linked with the profit and loss report, the balance sheet and relevant components or indicators.

⁹ Where CRO roles cover both Underwriting and Risk Management functions, goals assigned must not represent a source of conflict of interest between Risk Management and Underwriting activities.

¹⁰ Human Resources function is considered Company Control Function only pursuant to Bank of Italy Circular nr. 285 of 17 December 2013.

¹¹ Where CFO roles cover also Financial Statements preparation, possible economic measures have to be chosen in a conflict-avoidance perspective.

assure independence between front and back office functions in order to guarantee the effectiveness of cross-checks and avoid conflict of interest, with a particular focus on trading activities, as well as ensuring the appropriate independence levels for the functions performing control activities;
set an appropriate mix between short and long-term variable compensation, coherently with the Company strategy, as relevant on the basis of market and business specifics, and in line with long-term interests of the Bank.

3.2.2 Performance appraisal

Base performance evaluation upon profitability, financial strength and other drivers of sustainable business with particular reference to risk, cost of capital and efficiency;
design flexible incentive systems such as to manage pay-out levels in consideration of Group and FinecoBank performance results and individual achievements, adopting a meritocratic approach to selective performance-based reward;
design incentive systems to set minimum performance thresholds below which zero bonus will be paid. With regard to the Company Control Functions and in order to maintain the adequate independence level and provide a maximum threshold for the progressive reduction of the bonus pool, which can be phased out to zero only in presence of an exceptionally negative situation12 within an approval process including a governance step in the Board of Directors;
guarantee that evaluations and appraisals linked to compensation are, as far as possible, available for the scrutiny of independent checks and controls;
assess all incentive systems, programs and plans against in order to avoid the risk that our Company reputation may be jeopardized.

3.2.3 Payment of the variable compensation

Defer, as foreseen by regulatory requirements, performance-based incentive pay-out to coincide with the risk timeframe of such performance by subjecting the pay-out of any deferred component of performance-based compensation to the actual sustainable performance demonstrated and maintained over the deferral timeframe, so that the variable remuneration takes into account the time trend of the risks assumed by the Bank (e.g. malus mechanisms);
consider claw-back actions as legally enforceable on any performance-based incentive paid out on the basis of a pretext subsequently proven to be erroneous;
include clauses for zero bonus in circumstances of non-compliant behaviour or qualified disciplinary action, subjecting pay-out to the absence of any proceeding undertaken by the company for irregular activities or misconduct of the employee with particular reference to risk underwriting, sales processes of banking and financial products and services, internal code of conduct or values breach;
Employees are required to undertake not to use personal hedging strategies or remuneration and liability-related insurance to undermine the risk alignment effects embedded in their remuneration arrangements. Such obligation is also reported in the detailed rules of Incentive Systems.

Focus on compliance breach, individual Malus and Claw-Back

Fineco reserves the right to activate malus and claw-back mechanisms, meaning respectively the reduction/cancelation and the return of any form of variable compensation.

The malus mechanisms, (i.e. the reduction/cancelation of all or part of the variable remuneration) can be activated with reference to the variable remuneration to be paid or awarded but not already paid, related to the performance period in which the compliance "violation" is referable. In case the variable pay affected is not enough to ensure an adequate malus application, the reduction can be referred also to other components of variable remuneration.

The claw-back mechanisms, (i.e. the restitution of all or part of the variable remuneration) can be activated with reference to the overall variable remuneration already paid, awarded for the performance period to which the "violation" is referable, without prejudice to more restrictive local laws or provisions.

12 E.g. Common Equity Tier 1 Ratio Transitional dropping under the minimum regulatory requirement, in a persistent "recession" scenario.

3. Fundamentals (Continued)

3.2 Sustainability of the variable compensation (Continued)

The claw-back mechanisms can be activated for a period up to 4 years after the payment of each tranche, also after the termination of the employment relationship and/or of the role and take into account of the legal, pension and tax aspects and the time limits provided by law and practices locally applicable.

The claw-back mechanisms can be activated, in the case of verification of behaviours adopted in the reference period for which the variable remuneration has been awarded (performance period), in which the employee for which the employee13:

contributed with fraudulent behaviour or gross negligence to incurring significant financial losses, or by his conduct had a negative impact on the risk profile or on other regulatory requirements at Group or Bank level;
engaged in misconduct and/or fails to take expected actions which contributed to significant reputational harm to the Group or the Bank, or which were subject to disciplinary measures by the Authority;
is the subject of disciplinary measures and initiatives envisaged in respect of fraudulent behaviour or characterized by gross negligence during the reference period;
infringed the requirements set out by articles 26 TUB and 53 TUB, where applicable, or the obligations regarding remuneration and incentives.

Moreover, the malus mechanisms are activated to take into account the performance adjusted for the risks actually taken and the liquidity and capital conditions of the bank.

Currently some activities are in place in order to further standardize the compliance breach management and the related impacts on remuneration.

3.3 Termination payments

According to the regulatory requirements issued by Bank of Italy in "Disposizioni di vigilanza per le banche" (Circolare no. 285 of December 17th, 2013, 7th update of November 18th, 2014), a specific policy ("Termination Payments Policy") on payments to be agreed in case of early termination of a contract (so called severance) has been approved in 2017 by the Shareholders' Meeting, updating the document previously approved in 2015.
Generally speaking, the calculation of any severance pay-outs prescribed or suggested by the specific market of reference takes into consideration the long-term performance in terms of shareholder added-value, as well as any local legal requirements, collective / individual contractual provisions, and any individual circumstances, including the reason for termination.
According to the Severance Policy, it is provided that the maximum limit of termination payments inclusive of the indemnity in lieu of notice is equal to 24 months of total compensation14, calculated considering the average of the incentives actually received in the 3 years preceding the termination, after the application of the malus and claw-back clauses. In any cases, the termination payments do not exceeds the limits foreseen by the laws and collective labour agreements.
As a rule, discretionary pension benefits are not granted and, in any case, even if they may be provided in the context of local practices and/or, exceptionally, within individual agreements, they are paid consistently with the specific and applicable laws and regulations.
The individual contracts must not contain clauses envisaging the payment of indemnities, or the right to keep post-retirement benefits, in the event of resignations or dismissal / revocation without just cause or if the employment relationship is terminated following a public purchase offer. In case of early termination of the mandate, the ordinary law provisions would therefore apply.

13 Employees and Personal Financial Advisors.

14 In any case, the amount of payments in addition to the indemnity in lieu of notice does not exceed 18 months of total compensation.

3.4 Non-standard compensation

Non-standard compensation are those compensation elements not usually provided under our Compensation Policy and are considered exceptions (for instance welcome bonus, guaranteed bonus, special award, retention bonus).
These awards are limited only to specific situations related to hiring phases, launch of special projects, achievement of extraordinary results, high risk of leaving for critical / strategic people / roles.
Moreover, these awards must in any case be in accordance with regulations time to time in force (e.g. cap on the ratio between variable and fix remuneration, technical features fixed by regulation where applicable for bonus pay-out) and subject to Group and FinecoBank governance processes, periodically monitored and disclosed and must be subject to malus conditions and claw-back actions, as legally enforceable.

3.5 Share ownership guidelines

Share ownership guidelines set minimum levels for company share ownership by covered Executives, aiming to align managerial interests to those of shareholders by assuring appropriate levels of personal investment in FinecoBank shares over time. As part of our total compensation approach, we offer equity incentives that provide for opportunities of share ownership, in compliancy with the applicable laws.

The ownership of shares by our Company leaders is a meaningful and visible way to show our investors, clients and employees that we believe in our Company.

FinecoBank's Board of Directors approved in 2017 specific share ownership guidelines, as shown in the following table, for the Chief Executive Officer and General Manager and for the other Executives with strategic responsibilities, in order to reinforce the alignment between managerial and shareholders' interests.

Population	Share ownership
CEO/General Manager	1 x annual fixed pay
Executives with strategic responsibilities	0,5 x annual fixed pay

The established levels described in the above table, should be reached, as a rule, within 5 years from first appointment in the covered role and they should be maintained for the entire duration of the role covered.

The established levels should be reached through a linear pro-rata approach during the 5-year period, providing for a minimum portion every year.

Involved Executives are also expected to refrain from entering into schemes or arrangements that specifically protect the unvested value of equity granted under incentive plans ("hedging").

Any violation of the share ownership guidelines and any form of hedging, shall be considered in breach of compliance rules with such consequences as provided for under enforceable rules, provisions and procedures.

3. Fundamentals (Continued)

3.6 Compliance Drivers

TO SUPPORT THE DESIGN OF REMUNERATION AND INCENTIVE SYSTEMSTHE FOLLOWING "COMPLIANCE DRIVERS" WERE DEFINED:
• maintenance of an adequate ratio between economic and non-economic goals, depending on the role (in general, at least one goal should be non-economic)	• qualitative measures must be accompanied by an ex-ante indication of objective parameters to be considered in the evaluation, the descriptions of expected performance and the person in charge for the evaluation
• non-economic quantitative measures should be related to an area for which the employee perceives a direct link between her/his performance and the trend of the indicator	• among the non-financial goals (quantitative and qualitative), include, where relevant, goals related to Risk as well as to Compliance (e.g. credit quality, operational risks, application of MIFID principles, products sale quality, respect of the customer, Anti Money Laundering requirements fulfillment)
• set and communicate ex-ante clear and pre-defined parameters as drivers of individual performance	• avoidance of incentives with excessively short timeframes (e.g. less than three months)
• promotion of a customer-centric approach which places customer needs and satisfaction at the forefront and which will not constitute an incentive to sell unsuitable products to clients	• take into account, even in remuneration systems of the external networks (Financial Advisors), the principles of fairness in relation with customers, management of legal and reputational risks, protection and loyalty of customers, compliance with the provisions of law, regulatory requirements, and applicable self-regulations
• create incentives that are appropriate in avoiding potential conflicts of interest with customers, considering fairness in dealing with customers and the endorsement of appropriate business conduct	• economic goals must be avoided for Company Control Functions15 and individual goals set for employees in these functions shall reflect primarily the performance of their own function and be independent of results of monitored areas, in order to avoid conflict of interest
• define – for personnel providing investment services and activities – incentives that are not only based on financial parameters, but also take into account the qualitative aspects of the performance; this in order to avoid potential conflicts of interest in the relationship with customers16	• the approach for Company Control Functions17 is also recommended where possible conflicts may arise due to function's activities. This is the case in particular of functions of the Company (if any) performing control activities pursuant to internal/ external regulations
• avoidance of incentives on a single product / financial instrument or specific categories of financial instruments, as well as single banking product	• for the purpose of granting incentive, take also into account any disciplinary sanctions and/or sanctions by regulatory authorities imposed on the resource. In the presence of these measures, the possible allocation of the incentive will require a written explanation, which will make possible a case-by-case verification of the managerial decisions
• for Commercial Network Roles, goals shall be defined including drivers on quality / riskiness / sustainability of the products sold, in line with client risk profiles. Particular attention shall be paid to the provision of non-economics goals for customer facing roles selling products covered by MiFID Directive; for those roles, incentives must be set in order to avoid potential conflict of interest with customers	• all rewarding system communication and reporting phases shall clearly indicate that the final evaluation of the employee achievements will also rely, according to local requirements on qualitative criteria such as: - compliance to external (i.e. laws / regulations) and internal rules (i.e. policies) - mandatory training completion - existence of disciplinary procedures officially activated and/or disciplinary sanctions actually applied
• maintenance of adequate balance of fixed and variable compensation elements also with due regard to the role and the nature of the business performed. The fix portion is maintained sufficiently high in order to allow the variable part to decrease, and in some extreme cases to drop down to zero	• the entire evaluation process must be conveniently put in writing and documented
• in case of individual performance evaluation systems are fully or partially focused on a managerial discretional approach, the evaluation parameters should be defined ex-ante, should be clear and documented to the manager at the beginning of the evaluation period. Such parameters should reflect all applicable regulation requirements18. The results of managerial discretional evaluation should be formalized for the adequate and predefined monitoring process by the proper functions

Within network roles incentive systems, particular attention is put on all commercial initiatives that involve the Personal Financial Advisor network19.

15 Company Control Functions meaning Risk Management, Compliance and Human Resources. Human Resources is considered Company Control Function only pursuant to the Bank of Italy Circ. 285. Where CRO covers both Underwriting and Risk Management activities, the goas assigned shall not be source of conflict of interests between Underwriting and Risk Management. Audit function is outsourced in UniCredit S.p.A..

16 For instance – ESMA Guidelines on remuneration policies and practices – MiFID;

– ESMA Technical Advise on MiFID II (Final Report 2014/1569);

– MiFiD II Directive provisions for remuneration/incentives of relevant subjects.

17 For instance, functions covering accounting and tax functions. Where CFO covers the financial statement related activities, the financial measures should be set in the perspective of avoiding conflict of interests. 18 Also in line with the regulation references reported in the note above.

19 As described in paragraph 4.2.2.

Such initiatives may be organized after the evaluation and authorization of the competent Company's Bodies. They represent business actions aimed at providing guidance to the sales network towards the achievement of the period's commercial targets (also intermediate) and with a direct impact on the budget and related incentive systems.

Among the distinctive features of the initiatives, there is the expectation of an award - in cash or non-monetary reward. The initiatives can also have the function to accelerate the achievement of certain objectives of the incentive system. The grant of awards related to the initiatives will be subordinated to behaviours compliant with the external and internal regulations.

Under no circumstances may the system of remuneration and evaluation of the sales network employees constitute an incentive to sell products unsuitable to the financial needs of the clients.

In particular the following "compliance drivers" have been defined:

setting-up of the incentive mechanisms using criteria which are consistent with the best interest of the client and which avoid in any case conditions of potential conflicts of interest with customers, and coherently with relevant regulatory provisions (e.g. MiFID);
ensuring consistency between an initiative's objectives with the objectives set when defining the budget and when assigning targets to the sales network;
avoidance of initiatives on a single product / financial instrument, or on a single Banking product;
inclusion of clauses for zero bonus payment in case of relevant non-compliant behaviour or qualified disciplinary actions;
avoidance of initiatives which not being grounded an objective and customer interests related basis may directly or indirectly lead to breaching the rules of conduct regarding clients;
avoidance of initiatives lacking a clear indication of the targets and of the maximum level of incentive to be granted for achieving those targets;
avoidance in general of initiatives that link incentives not only to the targets assigned to specific roles / structures but also to higher hierarchical levels or to the budget of the higher territorial structure.

4. 2018 Compensation Structure

4.1 Employees

Within the framework provided by the "FinecoBank Compensation Policy", FinecoBank is committed to ensure fair treatment in terms of compensation and benefits regardless of age, race, culture, gender, disability, sexual orientation, religion, political belief and marital status.

Our total compensation approach provides for a balanced package of fix and variable, monetary and non-monetary elements, each designed to impact in a specific manner the motivation and retention of employees.

In line with the applicable regulations, particular attention is paid to avoid incentive elements in variable compensation which may induce behaviours not aligned with the company's sustainable business results and risk appetite.

As policy target, fix compensation for Identified Staff considers as a reference the market median, with individual positioning being defined on the basis of specific performance, potential and people strategy decisions.

With particular reference to Identified Staff – within the governance defined according to the applicable laws and regulations - the Board of Directors, upon proposal of the Remuneration Committee, establishes the compensation structure for top positions, defining the mix of fix and variable compensation elements, consistently with market trends and internal analyses performed.

Moreover, the Board of Directors annually approves the criteria and features of Identified Staff incentive plans, ensuring the appropriate balance of variable reward opportunities within the pay-mix structure.

TYPE OF REMUNERATION	PURPOSES	FEATURES
4.1.1 FIXED COMPENSATION
The fixed salary remunerates the role covered and the scope of responsibilities, reflecting the experience and skills required for each position, as well as the level of excellence demonstrated and the overall quality of the contribution to business results	Fixed salary is appropriately defined for the specific business in which an individual works and for the talent, skills and competencies that the individual brings to the Bank. The relevance of fixed compensation weight is sufficient to reward the activity rendered even if the variable part of the remuneration package is not paid due to non-achievement of performance goals such as to reduce the risk of excessively risk-oriented behaviours, to discourage initiatives focused on short term results and to allow a flexible bonus approach.	Specific pay-mix guidelines for the weight of fix versus variable compensation are defined with respect to each target of employee population. With particular reference to Identified Staff, the Remuneration Committee proposes to the Board of Directors: • the criteria and guidelines to perform market benchmarking analysis for each position in terms of compensation levels and pay-mix structure, including the definition of a specific peer group at local level and the identification of an external consultant to provide "executive compensation" services; • the positioning in terms of compensation, in line with relevant market's competitive levels, defining operational guidelines to perform individual compensation reviews as necessary.
4.1.2 VARIABLE COMPENSATION
The variable compensation includes payments depending on performance, independently from how it is measured (profitability goals, volumes, etc.) or on other parameters (e.g. length of service)	Variable compensation aims to remunerate achievements by directly linking pay to performance outcomes in the short, medium and long-term, and risk adjusted. To strengthen the alignment of shareholders' interest and the interests of management and employees, performance measurement reflects the actual results of the Company overall, the business unit of reference and the individual. As such, variable compensation constitutes a mechanism of meritocratic differentiation and selectivity.	• Adequate range and managerial flexibility in performance-based pay-outs are an inherent characteristic of well-managed, accountable and sustainable variable compensation, which may be awarded via mechanisms differing by time horizon and typology of reward. • Incentives remunerate the achievement of performance objectives, both quantitative and qualitative, by providing for a variable bonus payment. • An appropriately balanced performance-based compensation element is encouraged for all employee categories as a key driver of motivation and alignment with organizational goals, and is set as a policy requirement for all business roles. • The systems features, including performance measures and pay mechanisms, must avoid an excessive short-term focus by reflecting the principles of this policy, focusing on parameters linked to profitability and sound risk management, in order to guarantee sustainable performance in the medium and long-term. • The Identified Staff contracts provide only the "eligibility" to the variable compensation. The amounts related to the variable compensation and all the technical details of the pay-out (instruments, pay-out structure, timing) are included in a specific communication not included in the Identified Staff contract and are managed in strict coherence with the governance and the rules of the delegation of authorities. • More details on the design of remuneration and incentive systems, with particular reference to Control Functions, are reported in the section "Compliance Drivers". (follows to next page)

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stages of their lives

TYPE OF REMUNERATION	PURPOSES	FEATURES
		• Pay-out is based on a "bonus pool" approach providing for a comprehensive performance measurement at individual and at Group and local level.
	Aim to attract, motivate and retain strategic resources and maintain full alignment with national and international regulatory requirements and with best market's practices.	• Reward is directly linked to performance, which is evaluated on the basis of results achieved and on the alignment with our leadership model and values.
		• The Executive Development Plan (EDP) as the Group-wide framework for Identified Staff performance management is a cornerstone of fair and coherent appraisal across the organization.
Incentive Systems linked to yearly performance		• For the remaining employees – within the bonus pool logic as described above - annual incentives are determined on a discretionary basis according to the individual performance appraisal (e.g. Performance Management) that foresees a yearly, written, and documented process for the goals setting, self-assessment, managerial assessment and the definition of an individual development plan.
(Short Term Incentives or STI)		• Where foreseen by regulations, the pay-out is phased to coincide with an appropriate risk time horizon. The design features of incentive plans for Identified Staff are aligned with shareholder interests and long-term, firm-wide profitability, providing for an appropriate allocation of a performance related incentive in cash and in shares, upfront and deferred.
		• Each year, detailed information about our compensation governance, key figures and the features of our incentive systems, is fully disclosed in the Annual Compensation Report.
		• The individuals' behaviours (compliance with internal and external rules and regulations, absence of disciplinary actions and completion of mandatory training) are also evaluation elements to assign individual incentives.
Long-term Incentive plans (Long Term Incentive or LTI)	The aim of these plans is to strengthen the link between variable pay and long term results and to further align the interests of Management to those of Shareholders.	For 2018-2020 three years performance period, a share based Long Term Incentive Plan for selected Employees considered "key roles", has been approved by Fineco Board of Directors. The plan is based on Bank's goals with targets set at 2020, in terms of value creation, business sustainability and risk, coherently with the long term Fineco goals. The Plan provides entry and malus conditions set at Bank and Group level, a claw back condition and a specific risk adjustment. The Plan provides for the payment of a bonus in Fineco shares, in a multi-year period. For the Plan details, please refer to the specific section of the Annual Compensation Report.
4.1.3 BENEFIT
Benefits include welfare benefits that are supplementary to social security plans and are intended to provide substantial guarantees for the well-being of staff and their family members during their active career as well as their retirement. In addition, special terms and conditions of access to various FinecoBank and UniCredit Banking products and other services may be offered to employees in order to support them during different	Benefits aim to reflect internal equity and overall coherence of our remuneration systems, catering to the needs of different categories as appropriate and relevant.	• In coherence with Group governance framework and Global Job Model20, benefits are aligned against general common criteria for each employee category, while benefits plans are established on the basis of FinecoBank practices.

20 The Global Job Model is a system that allows to descript and evaluate all the roles in the Group as well as to manage persons and processes in a linear and consistent way.

4. 2018 Compensation Structure (Continued)

4.2 Financial Advisors

Financial Advisors are tied to the Company by an agency agreement, under which the Advisor is engaged on a permanent basis (without representation) to provide independent services, exclusively for the Bank, for the promotion and placement of financial instruments and Banking / financial services in Italy, as well as insurance and welfare products or any other products indicated in the contract. Advisors are also responsible for diligently monitoring the assistance to the existing and/or allocated customers in order to fulfil the Company's objectives.

In accordance with existing regulations, contractual relationships with customers acquired by the Financial Advisor, and any other that is subsequently allocated, are conducted exclusively between the customer and the Bank. FinecoBank's Network of Financial Advisors is composed by:

Financial Advisors
Group Managers
Area Managers

The Group Managers and the Area Managers are Financial Advisors with the accessory assignment to coordinate other Financial Advisors.

In particular, Area Managers are responsible for coordinating Advisors in their geographic area, for growing the business and for reaching the targets set by Commercial Department, and are supported - for the purposes of coordination activity - by Group Managers.

The Commercial Department uses Company's internal structures, to provide support to the network. Their tasks are to control the local activities and provide support for commercial activity.

As mentioned in the preamble, the provisions of this Compensation Policy also apply to the members of the Financial Advisors' Network, in line with the Advisors' specific remuneration.

Financial Advisors are freelancers and their remuneration is entirely variable. The regulatory requirements, in order to adapt the same employees' rules on compensation structure, based on a fixed and on a variable component, established for Financial Advisors a distinction between a "recurring" and a "non-recurring" pay component.

TYPE OF REMUNERATION	PURPOSES	FEATURES
4.2.1 RECURRING REMUNERATION
This is the most stable and ordinary part of the total remuneration, equivalent to the fixed salary of employees	Recurring remuneration is sufficient to reward the activity rendered even if the variable part of the remuneration package is not paid due to non achievement of performance goals such as to reduce the risk of excessively risk-oriented behaviours, to discourage initiatives focused on short-term results and to allow a flexible bonus approach.	• Sales commission, in other words the payment to the Financial Advisor of a percentage of the sales charge, paid by the customer at the time of purchase of investment instruments. It is paid on an individual basis or as a supplement if the Advisor has been given coordination tasks. • Management and maintenance commission, in other words the Financial Advisor monthly remuneration for assistance provided to customers during the contract, commensurate with the average value of the investments and the type of product, paid on an individual basis or as a supplement if the Advisor has coordination tasks.

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TYPE OF REMUNERATION	PURPOSES	FEATURES
4.2.2 NON-RECURRING REMUNERATION
Incentive Systems linked to short term performance. This is the incentive element, in other words it is tied to reach certain goals, equivalent to the variable compensation of employees	Aims at motivating, retaining and rewarding Financial Advisors and Managers of the Network, in full alignment with the regulatory requirements.	• Pay-out is based on a "bonus pool" approach providing for a comprehensive performance measurement at individual and at Group and local level. • Reward is directly linked to performance, which is evaluated on the basis of results achieved. • For the Financial Advisors belonging to Identified Staff, a dedicated incentive system ("PFA Incentive System" 21) was defined, whose pay-out, as foreseen by regulations, is phased to coincide with an appropriate risk time horizon. The design features of the plan is aligned with shareholder interests and long-term, firm-wide profitability of the Bank, providing for an appropriate allocation of a performance related incentive in cash and in shares, upfront and deferred. • For all the Financial Advisors not belonging to Identified Staff, specific incentive systems were defined, as, for example, "Incentive Plans for PFA-Area Managers-Group Managers", and specific retention initiatives such as the "Additional Future Program". This plan, in particular, is dedicated to selected PFA and network Managers not Identified Staff and provides the accrual of annual awards (subject to the achievement of specific performance conditions and the compliance of individual behaviours) in specific insurance policies. The release of those awards is provided at the reach of the retirement age. • All the incentive systems provide for ex-ante ("entry conditions") and ex-post (malus on any deferred components) adjustment mechanisms and claw-back clauses. • The individual behaviours (compliance with internal and external rules and regulations and absence of disciplinary actions) are also evaluation elements to assign individual incentives.
Long-term incentive plans	The long term Incentive Plans aim at retaining and rewarding selected Financial Advisors and Network Managers towards commercial Network goals for the 2018-2020 performance period.	Within a wider long-term incentive and retention program for the Financial Advisors network in 2018-2020 three years performance period, the following Plans have been approved by the Board of Directors: 1) A long term Incentive Plan with bonuses in cash and Fineco shares for Financial Advisors that will be qualified as Identified Staff in the performance year 2020. The Plan is based on commercial goals with cumulated target in the three years 2018-2020, coherently with the long term goals of Fineco Network. The Plan provides specific entry conditions at individual, Bank and Group level, a claw-back condition ahd a risk adjustment mechanism. At last, the Plan provides tht payment of a bonus in cash and Fineco shares, in a multi-year period, as provided by law. The Plan details are described in the specific section of the Annual Compensation Report. 2) A Long Term cash-based Incentive plan for selected Financial advisors not belonging to Identified Staff population. The Plan is based on the same logics of the LTI Plan described above, including – for the purpose of bonus provision – a further permanence duty after the payment of at least 36 months.

4. 2018 Compensation Structure (Continued)

4.3 Non Executives members of Administrative and Auditing Bodies

For non-executives members of Board of Directors and for the members of the Board of Statutory Auditors, in line with the regulatory provisions, stock option based or more in general, instrument based incentives are avoided. The remuneration of said subjects is fixed, and determined on the basis of the relevance of the role, of possible additional duties, and of the requested efforts for carrying out the assigned tasks and is not linked to economic results.

As provided by Bank of Italy provisions on remuneration policies and practices, the Board of Directors' Chairman remuneration is not higher than the fixed one provided for the Chief Executive Officer.

SECTION III – ANNUAL COMPENSATION REPORT

SECTION III – ANNUAL COMPENSATION REPORT
1. Introduction	32
2. Governance & Compliance	33
2.1 Remuneration Committee
2.2 The Role of the Company Control Functions: Compliance, Risk Management and Audit
3. Continuous Monitoring of Markets Trends and Practices	37
4. Compensation paid to Members of the Administrative and Auditing Bodies, to General Managers and to other Executives with strategic responsibilities	38
5. Compensation Systems	40
5.1 Target population
5.2 Implementation and Outcomes of 2017 Incentive Systems
5.2.1 2017 Incentive System for employees belonging to Identified Staff
5.2.2 2017 Incentive System for Financial Advisors belonging to Identified Staff
5.2.3 Share based plan "2015-2017 PFA Plan" for Financial Advisors
5.3 2018 Incentive System for employees belonging to Identified Staff
5.3.1 Comprehensive Performance Measurement
5.4 2018-2020 share based Long Term Incentive Plan (LTI) for Employees
5.5 2018 Incentive System for Financial Advisors belonging to Identified Staff
5.5.1 Comprehensive Performance Measurement
5.6.2018-2020 Long Term Incentive Plan for Financial Advisors Identified Staff
6. Compensation Data	68

6.1 2017 Compensation Outcomes
6.2 2017 Compensation Policy
6.3 Benefits Data

1. Introduction

The Annual Compensation Report (hereinafter, the "Annual Report") discloses all relevant FinecoBank compensation-related information and methodologies with the aim to increasing Stakeholders' awareness of our compensation policies, practices and outcomes, demonstrating their coherence with business strategy and performance, responsible remuneration and sound risk management.

The Report provides ex-post information on 2017 outcomes, as well as ex-ante disclosure for 2018 approach, covering our Identified Staff population (both employees and Financial Advisors) and Corporate Bodies' members.

Remuneration solutions implemented in 2017 provided for:

compliance of incentive strategies with all relevant regulations, including deferred pay-outs and incentives based on financial instruments;
comprehensive performance measurement to foster sound behaviours aligned with different types of risk.

Over the year 2017 we constantly kept abreast of ongoing changes in national and international regulations. (see for instance, the ongoing procedure for the implementation at national level of the "Guidelines on sound remuneration policy"22).

The Annual Report, a unique document providing complete and comprehensive information on compensation, includes details referring to Members of Administrative and Auditing bodies, General Manager and Executives with strategic responsibilities.

Data pursuant section 84-quater approved with resolution of the Italian National Commission for Listed Companies (Consob) no.11971, dated May 14th 1999 (as subsequently modified), providing the rules for Issuers (so called "Issuers Regulation"), as well as the information on incentive systems pursuant to section 114-bis of the Legislative Decree issued on February 24th n. 58 (the Consolidated Text on Finance –"TUF"), and to the provisions of the Issuers Regulation on information that have to be communicated to the market on compensation plans based on financial instruments, are included in this document, further to be included in the Annexes to the 2018 FinecoBank Compensation Policy.

To this regard, is highlighted that the aforementioned information are provided also pursuant to the Report on Corporate Governance and Ownership Structures, issued pursuant to art. 123-bis of TUF.

22 Guidelines on sound remuneration policies under Article 74(3) and 75(2) of Directive 2013/36/EU and disclosures under Article 450 of Regulation (EU) No 575/2013.

2. Governance & Compliance

2.1 Remuneration Committee

The Remuneration Committee, established by the Board of Directors' resolution on April 11th, 2017, performs a strategic role in supporting Board of Directors' oversight of FinecoBank Compensation Policy and plans design.

According to the internal provisions approved by the Board of Directors, ruling the functioning and competencies of corporate bodies and related information flows (hereinafter the "Corporate Governance Rules"), this Committee is composed by 3 non-executive members, Mr. Gianmarco Montanari, Ms. Elena Biffi and Mr. Enrico Cotta Ramusino.

As provided by law, at least a Committee Member has adequate knowledge and experience in finance or accounting topics.

The FinecoBank Board of Directors verified the Directors independence requirements pursuant to art. 148 TUF and art. 3 of the Corporate Governance Code. Pursuant to this, with reference to the Remuneration Committee members:

Mr. Gianmarco Montanari and MS Elena Biffi resulted Independent Directors pursuant to art. 148 TUF and art. 3 of Corporate Governance Code;
Mr. Enrico Cotta Ramusino resulted independent pursuant to art. 148 TUF.

The Committee meetings held in 201723 have been coordinated by the Chairman Mr Gianmarco Montanari.

In performing its duties and if important and suitable, also availing itself with the support of an external consultant, The Remuneration and Committee:

(i) presents proposals or issues opinion to the Board for the definition of a general remuneration policy for the CEO, the General Manager, and other Managers with Strategic Responsibilities and the identified staff, also with reference to the identification process, so that the Board is also able to prepare the Report on Remuneration to be presented to the Shareholders' Meeting on an annual basis and to periodically assess the suitability, overall consistency and effective application of the general remuneration policy approved by the Board;
(ii) presents proposals or issues opinion to the Board relating to the overall remuneration of the CEO, the General Manager, and other Managers with Strategic Responsibilities, and the identified staff and for determining criteria for the remuneration of the Company's senior management, including the relevant performance targets related to the variable component of the remuneration;
(iii) monitors the implementation of the decisions adopted by the Board and specifically verifies that the performance targets are actually achieved;
(iv) examines any share-based or cash incentive plans for employees and financial advisors of the Company and strategic staff development policies;
(v) directly supervises the correct application of the remuneration rules related to the persons in charge of the Company's control functions, in close liaison with the Board of Statutory Auditors;
(vi) cooperates with the other Committees, in particular with the Risk and Related Parties Committee, which, with reference to the remuneration and incentive policies, examines whether the incentives provided by the remuneration system take into account the risks, share capital and liquidity, provided that this does not affect the tasks assigned to the Remuneration Committee, with which adequate coordination must be ensured;
(vii) ensures the involvement of the relevant business functions in the process of drawing up and monitoring remuneration and incentive policies and practices;
(viii) provides an adequate reporting on the activities carried out by the Corporate Bodies, including the Shareholders' Meeting .

In 2017 the Remuneration Committee met 11 times24. The meetings had an average duration of two hours. From the beginning of 2018 and until the approval of the present 2018 Compensation Policy, 3 meetings of the Committee have been held this year. Minutes are taken of each meeting and placed on record by the Secretary designated by Committee itself.

From the approval of "Corporate Goverance Rules", the Chairman of the Committee provided time by time the information on the Committee meetings to the subsequent Board meeting.

From December 2014 on the Committee, by means of its budget assigned for the year (amounting to 30.000€ for 2017), has started a collaboration with an external advisor - whose independence has been previously verified - who is invited to the Committee's meeting when required.

23 From January 1st to April 10th 2017 the tasks of the Remuneration Committee have been performed by the Remuneration and Appointments Committee, whose Chairman was Mr Gianluigi Bertolli. 24 Of which 5 as Remuneration and Appointments Committee and 6 as Remuneration Committee.

2. Governance & Compliance (Continued)

2.1 Remuneration Committee (Continued)

The Committee may, when it deems it appropriate, invite other individuals from within the Company to attend the meetings, in relation to the corporate functions and organizations concerned by the issues at hand, including members of other committees within the Board of Directors, or external parties. The Committee shall meet when convened by its Chairman, whenever he/she deems necessary, or upon the request of one of its members. In any case the Committee has always been able to access the information and the Company Functions necessary to perform its activities.

In 2017 the Head of Human Resources has been always invited to Committee's meetings. The Chairman has also invited the Head of Legal & Corporate Affairs to introduce Coporate Governance topics (see for instance the results of the Board of Directors' self-evaluation process25) and the Head of Network Controls, Monitoring and Service Department for topics related to PFA network (see for instance the Incentive Systems and related rules for the PFA population). In addition to the aforementioned Functions, the Chairman invited - to specific Committee's meetings and for topics in the respective competence perimeters – the CRO, CFO and Compliance Officer of FinecoBank. In particular the CRO and CFO participated in the meetings regarding the 2017 Incentive Systems evaluation while the Compliance Officer has been invited, among the others, to participate in the discussions related to the Identified Staff definition.

The Chairman has also invited the Internal Audit 26 function to the meeting related to the annual audit performed on FinecoBank remuneration policies and practices.

During 2017 the key activities of the Remuneration Committee included:

MAIN COMMITTE'S ACTIVITIES IN 2017
January	• 2017 Identified Staff definition and 2017 Incentive System for Employees Identified Staff
(as Remuneration	• 2017 Incentive System for PFAs Identified Staff;
and Appointments Committee)	• New Contest "Qualità".
February	• Bonus Pool 2016 and execution of 2016 and previous Incentive Systems for Employees Identified Staff;
(as Remuneration	• 2017 Performance goals for Employees Identified Staff
and Appointments Committee)	• Share based plans "2014-2017 Multi-year Plan Top Management" and "2014 Plan Key People" execution and update of the Rules of "2014- 2017 Multi-year Plan Top Management"
	• Identification of Financial Advisors Identified Staff 2017
	• Bonus Pool 2016 and execution of 2016 and previous Incentive Systems for Financial Advisors Identified Staff
	• Stock Granting Plan "2014 Plan PFA" execution and update on KPIs status of "2015-2017 Plan PFA"
	• Execution of "2016 Incentive Plans" and "Additional Future Program" for Network PFAs and Manager and update of the Rules of "Additional Future Program" dedicated to Financial Advisors and Network Managers
	• 2017 Incentive System for Financial Advisors and Network Managers and related Rules
	• Directors requirements verification
March	• 2017 Compensation Policy
(as Remuneration	• 2017 Severance Policy
and Appointments Committee)	• Rules of 2017 Incentive System for Employees Identified Staff
	• Rules of 2017 Incentive System for Financial Advisors Identified Staff
	• Report on Corporate Governance and Ownership Structures - for the section related to the Directors remuneration
	• Appointment of FinecoBank Chief Audit Executive
	• Salary Review proposal for Identified
	• New Contest "Qualità" prorogation.
	• List of candidates for the role of FinecoBank Director
May	• New edition of "Contest Qualità
(as Remuneration
Committee)
June (as Remuneration	• CRO Dashboard calculation methodology for Bonus Pool 2017 determination
Committee	• Salary review for the Head of Information Security and Fraud Management
	• Share Ownership Guidelines Rules
July (as Remuneration	• New edition of "Contest Qualità"
Committee)

25 Submitted to Remuneration and Appointments Committee, in place until April 2017.

26 Internal Audit function is outsourced in UniCredit and works based on a specific service contract.

The main topics discussed by the Committee are also submitted to the attention of the Board of Statutory Auditors, in advance over their submission to the Board of Directors.

Moreover, at least a member of the Board of Statutory Auditors, attended to the meetings of the Committee in 2017.

We highlight that the Directors do not participate in the Committee meetings in which are made the proposals to the Board concerning their remuneration.

The following table summarizes the composition of the Committee in 2017 (both as Remuneration and Appointment Committee and as Remuneration Committee) and, in addition to the information on the independency of the members, provides details regarding their attendance to the meetings that have been called during the year.

NAME	NON EXECUTIVE	INDIP. CODE	INDIP. TUF	% (*)	(**)
Gianmarco Montanari	X	X	X	100% since April 11 2017, i.e. from the appointment	C
				100% since April 11 2017,
Elena Biffi	X	X	X	i.e. from the appointment 100% since April 11 2017,	M
Enrico Cotta Ramusino	X		X	i.e. from the appointment ------------- Members terminated during the exercise -------------	M
Gianluigi Bertolli	X	X	X	100% until April 11 2017, date of termination	C
Mariangela Grosoli	X	X	X	80% until April 11 2017, date of termination	M
Girolamo Ielo	X	X	X	100% until April 11 2017, date of termination	M
N. Committe's meetings: 11

(*) in this column is indicated the percentage of participation of the directors in the Committee's meetings (n. of presences/n. of meetings held during the actual period in which the director was in charge, in the Exercise).

(**) In this column is reported the qualification of the director in the Committee ("C" Chairman; "M" member).

2.2 The Role of Company Control Functions: Compliance, Risk Management and Audit

Key contributions in 2017 of FinecoBank Compliance function, for all aspects that fall within its perimeter, included:

validation of the 2017 Compensation Policy submitted to the Board of Directors for subsequent approval of the Shareholders' Meeting on April 11th, 2017;
validation of the 2017 Incentive System for employees of FinecoBank belonging to Identified Staff;
validation of the 2017 Incentive System for Financial Advisors of FinecoBank belonging to Identified Staff;
preparation in collaboration with the Human Resources function and distribution of FinecoBank guidelines for the development and management of incentive systems for the population not belonging to Identified Staff (ref. FinecoBank Internal Regulation 10/2017);
participation in specific initiatives of Human Resources function (e.g.: review of definition of Identified Staff for the application of Incentive System).

In 2018, the Compliance function will continue to operate in close co-ordination with the Human Resources function to support not only in the validation but also in the design and definition of compensation policy and processes.

The link between compensation and risk has been maintained in 2017 with the involvement of the Risk Management function in compensation design and the definition of an explicit framework to base remuneration within an overarching FinecoBank Risk Appetite Framework, which is consistent with Group Risk Appetite Framework, so that incentives to take risk are appropriately constrained by incentives to manage risk. In particular, the Board of Directors and Remuneration Committee draw upon the input of involved functions to define the link between profitability, risk and reward within FinecoBank incentive systems.

2. Governance & Compliance (Continued)

2.2 The Role of Company Control Functions: Compliance, Risk Management and Audit (Continued)

Internal Audit Report on the 2017 FinecoBank remuneration policies and practices

Internal Audit performed the annual audit on the Bank variable remuneration system, aimed at verifying the design, implementation and effects of the remuneration process, as well as its compliance with relevant regulatory requirements and Bank compensation policy.

The audit verified the payment and deferral phase of previous year incentive system, the bonus pool definition and distribution process and the procedures to respect the variable/fixed remuneration caps defined by the Bank remuneration rules.

The audit scope included also the Identified Staff definition process, with the aim to check its compliance with the requirements provided for by Delegated Regulation (EU) No 604/2014.

Furthermore, a follow up of the previous audit recommendations was performed.

Main audit results were presented to the Remuneration Committee on 28th February 2018.

The audit tests have been performed on a sample of population including the following groups within FinecoBank compensation policy: 1. all the Identified Staff;

1. a sample of 177 employees non-Identified Staff (the so called "below executives"), selected considering the roles to whom a bonus higher than € 5.000 has been granted in 2017 (16% ca of the overall population as on 31/12/2017);
1. Corporate Bodies members;
1. Bank's Financial Advisors, with specific focus on categories of "non recurring" remuneration named "bonus on net sales" and "additional future program", equal to the 65% ca of 2017 total incentives.

The Internal Audit "good" evaluation was based on the overall correct application of the 2017 "bonus pool" approach and Bank Remuneration Committee/Board of Directors relevant decisions.

With regard to the Personal Financial Advisors Network, the process provided the inclusion in the Identified Staff category of the Financial Advisors with a total remuneration, recurring and non-recurring, higher than Euro 750.000, as well as of the Managers coordinating Financial Advisors managing assets equal or higher than 5% of overall network assets, on the basis of quantitative criteria defined in the EU Regulation and of a qualitative criteria based on business risk (reduction of Bank's profitability as a consequence of Advisors leaving and the subsequent loss of customers' portfolios).

The Bank evaluation performed with the aim of excluding from the Identified Staff category roles with total compensation between Euro 500.000 and 750.000, subject to communication to ECB, is consistent with the internal accounting figures and with the risk profiles of Personal Financial Advisors activities.

In alignment with the audit results, further enhancements of the compensation process are going to be implemented for the next year.

3. Continuous Monitoring of Market Trends and Practices

Key highlights of the Compensation Policy defined this year with the support of external benchmarking and trends analysis provided by the independent external advisor to the Remuneration Committee include:

the definition of Compensation Policy for the Identified Staff, both employees and Financial Advisors, with particular reference to the design of the 2018 incentive systems
the pay recommendations based on specific benchmarking analysis versus our defined peer group to inform any decision.

The peer group used to benchmark compensation policy and practice with particular reference to employees Identified Staff has been defined by the Remuneration Committee upon proposal of the independent external advisor on the basis of criteria including: comparability of size, complexity and business model, presence in customer, talent and capital markets, risk and legal-social-economic environment.

The main peer group is subject to annual review to assure its continuing relevance. For 2017 it has been defined a national peer group that includes:

Generali Group and Banca Generali
Mediolanum Group
BNL
BPER
Credem
Banco BPM
Mediobanca Group (CheBanca and Banca Esperia)
Monte Paschi di Siena
Intesa SanPaolo
UBI Banca
Carige
Banca Finint Group
Banco Posta
Banca Iccrea Group

In addition to what mentioned above, for the Chief Executive Officer and General Manager and for the Executives with strategic responsibilities it will be realized a benchmark also with European market, based on a sample of European Banks.

4. Compensation paid to Members of the Administrative and Auditing Bodies, to General Managers and to other Executives with strategic responsibilities with strategic responsibilities

position and the time required for the performance of the tasks assigned.

The remuneration for members of the administrative and auditing Bodies of FinecoBank is represented only by a fi x component, determined on the basis of the importance of the position and the time required for the performance of the tasks assigned. This policy applies to non-Executive Directors and to the Supervisory Body members that are not employees of FinecoBank or other Legal Entities of UniCredit Group, as well as to

This policy applies to non-Executive Directors and to the Supervisory Body members that are not employees of FinecoBank or other Legal Entities of UniCredit Group, as well as to Statutory Auditors. The compensation paid to non-Executive Directors, to the Supervisory Body members and to the Statutory Auditors is not linked to the economic results achieved by FinecoBank and

The compensation paid to non-Executive Directors, to the Supervisory Body members and to the Statutory Auditors is not linked to the economic results achieved by FinecoBank and none of them take part in any incentive plans based on stock options or, generally, based on fi nancial instruments. none of them take part in any incentive plans based on stock options or, generally, based on financial instruments. 1

BENEFICIARY	REMUNERATION COMPONENT	APPROVED BY	AMOUNT (€)	REMARKS
Non-Executive Directors	Only fixed compensation	Shareholders' Meeting and Board of Directors of April 11th, 2017	Compensation for each year of activity: $\bullet \in 330.000$ for the Board of Directors ¹ $\bullet \in 50,000$ for Board Committees $\bullet \in 20,000$ and $\in 15,000$ for the Chairman and member of the Supervisory Board ² $\bullet \in 300$ as attendance fee for partecipating to each meeting of $3$ : - Board of Directors - Board Committees
		Board of Directors of April 11th. 2017, persuant to sect. 2389 of the Civil Code par. 3 and Articles of Association, heard the opinion of Statutory Auditors	$\bullet$ $\in$ 200.000 for each year of activity, split between: - Board Chairman - Board Vice Chairman	The compensation is determined on the basis of the importance of the position and the time required for the performance of the tasks assigned
Statutory Auditors	Only fixed compensation	Shareholders' Meeting of April 11th 2017	Compensation for each year of activity ⁴ : ■ € 50,000 for the Chairman of Board of Statutory Auditors $\bullet \in 40.000$ for each Standing Auditor ■ € 300 as attendance fee for partecipating to each meeting of the Board of Directors ³
Executives with strategic responsabilities ⁵	Fixed and variable compensation	Board of Directors	2017 Compensation level: ■ $\in$ 850,000 fixed + $\in$ 850,000 variable for the CEO and GM ■ € 1.647.976 fixed + € 1.487.976 bonuses for the other 5 Executives with strategic responsabilities	Fixed and variable remuneration components of the CEO/GM and of the other Executives with strategic responsibilities are balanced. through the ex-ante definition of the maximum ratio between variable andfixed remuneration component.

Further details on compensation of Executives with strategic responsibilities

For 2017, according to our Compensation Policy, in line with regulatory provisions, it has been defi ned ex-ante the maximum ratio between variable and fi x component of the compensation both for the Chief Executive Offi cer and General Manager (the sole executive director sitting on the Board of Directors and employee of the Company) and for the other Executives with strategic responsibilities. Further details on compensation of Executives with strategic responsibilities For 2017, according to our Compensation Policy, in line with regulatory provisions, it has been defined ex-ante the maximum ratio between variable and fix component of the

The balance between variable and fi xed components has been defi ned considering also the Company's strategic goals, risk management policies and other elements infl uencing fi rm's business. compensation both for the Chief Executive Officer and General Manager (the sole

With reference to the above table, for Executives with strategic responsibilities it is specifi ed that:

the fi x component is defi ned taking into opportune consideration market information and in such a way to be suffi cient to reward the activity rendered even if the variable part of the remuneration package were not paid due to non-achievement of performance goals;
in line with the latest regulatory requirements, the Chief Executive Offi cer and General Manager as well as the Executives with strategic responsibilities – have a balanced part of their remuneration linked to the overall profi tability of FinecoBank and the Group, weighted by risk and cost of capital, as well as sustainability goals (based on capital and liquidity ratios) of FinecoBank and the Group.

The variable compensation considers the achievement of specifi c goals which are previously approved by the Board of Directors upon proposal of the Remuneration and Committee and having informed the Board of the Statutory Auditors.

In particular, ex-ante defined specific metrics that reflect categories of our FinecoBank Risk Appetite Framework, which is consistent with Group Risk Appetite Framework, align the remuneration of the Chief Executive Officer and General Manager and of the others Executives with strategic responsibilities to sustainable performance and value creation for the shareholders in a medium / long term perspective. Specific individual goals are set out taking into consideration the market practices and the role assigned within the Bank, through the systematic use of specific indicators aimed at strengthening the sustainability of business, such as, for example, risk and financial sustainability indicators and profitability measures27. • More information regarding our performance management and evaluation are provided further in chapter 5.3.1

It is also foreseen the deferral in cash and shares of minimum 60% of the incentive. All the instalments are subject to the application of malus and/or claw-back conditions, if legally enforceable. 2017 Incentive System provides for 50% of the annual incentive to be deferred and paid in the five following years through the granting of Fineco shares. The number of such shares is set at the beginning of the deferral period, thus creating a link between the evolution of the share price and the actual value of the incentive.

• More information regarding the 2017 incentive plan implementation and outcomes are provided further in chapter 5.2.

The Chief Executive Officer and General Manager, on top of 2017 Incentive System, benefits also from:

"2013 Group Incentive System Executive Vice President & Above" (hereinafter also "Group Incentive System 2013")
"2014 Incentive System" (hereinafter also "Group Incentive System 2014")
"2015 Incentive System" (hereinafter also "Group Incentive System 2015")
"2016 Incentive System" (hereinafter also "Group Incentive System 2015")
"2014-2017 Multi-year Plan Top Management"
More information regarding the plans above mentioned are provided further in chapters 6 and in the Annexes.

The measure and duration of the deferral are aligned with the provisions set by regulators and are consistent with the characteristics of the business and with the Company's risk profiles.

For the Heads of the Company Control Functions the goals, pursuant to the provisions of Bank of Italy, are established by the Board of Directors in line with the tasks assigned to them and avoiding, unless good reasons exist, goals connected to the Bank's performance.

Indemnities to directors in the event of resignations, dismissal or termination of employment following a public purchase offer (as per section 123/bis, paragraph 1, letter i), of TUF):

None of the Directors have contracts containing clauses envisaging the payment of indemnities, or the right to keep post-retirement benefits, in the event of resignations or dismissal / revocation without just cause or if the employment relationship is terminated following a public purchase offer. In case of early termination of the mandate, the ordinary law provisions would therefore apply.

The individual employment, as Executive, of the Chief Executive Officer and General Manager, Mr. Alessandro Foti, is today governed - also with regards to the event of resignations, dismissal / revocation or termination - by the ordinary provisions of the law and National Labor Agreement for Banking Industry Executives. In such context, the annual remuneration used to define the possible indemnity due in the above mentioned instances would include the fix remuneration, any other continuative compensation and the average of the variable pay (inclusive of the components paid in equity - such as for example free shares, restricted shares, performance shares - with the only exclusion of the valorisation of the stock options potentially assigned within long-term incentive plans) received in the last three years prior to the termination. The actual amount of such indemnity – in terms of months of compensation considered – is then bound to vary depending on the events which led to the termination and on the relationship's duration and is anyway subjected to provisions of the "Severance Policy" of FinecoBank approved by Shareholders' Meeting.

Non-executive Directors do not receive, within incentive plans, stock options or others equities. For the Chief Executive Officer and General Manager no specific provisions are provided with reference to the right to keep, in case of termination, the options received and the plans' provisions apply.

For none of the Directors currently in office, provisions exist regarding the establishment of advisory contracts for a term following the termination of the directorship, nor the right to keep post retirement perks. No agreements exist either providing compensation for noncompetition undertakings.

27 Since the CFO - included in the Executives with Strategic Responsibilities - cover also the activities related to the Finacial Statements – the individual goals are defined in coherence with the assigned tasks.

FinecoBank, starting from 2014 conducted, in alignment with specific regulation, the annual self-evaluation process to define Identified Staff population, both employees and Financial Advisors, to whom, according to regulators, specific remuneration rules apply 5. Compensation Systems

European Banking Authority Regulatory Technical Standard (RTS)28, followed a structured 5.1 Target population

FinecoBank, starting from 2014 conducted, in alignment with specifi c regulation, the annual self-evaluation process to defi ne Identifi ed Staff population, both employees and Financial Advisors, to whom, according to regulators, specifi c remuneration rules apply. provided by the Group functions Human Resources with the contribution of Risk Management and Compliance, to guarantee a unique and common approach at Group

and formalized assessment process both at Group and local level, based on the guidelines

The identifi cation of 2018 Identifi ed Staff, pursuant to the European criteria foreseen in the European Banking Authority Regulatory Technical Standard (RTS) 28, followed a structured and formalized assessment process both at Group and local level, based on the guidelines provided by the Group functions Human Resources with the contribution of Risk Management and Compliance, to guarantee a unique and common approach at Group level. The recognition of subjects with significant impact on risk, further to be finalized to the definition of Bank's Identified Staff, is subject to the consolidation activity performed By the Holding Company, for the definition of Group Identified Staff.

The recognition of subjects with signifi cant impact on risk, further to be fi nalized to the defi nition of Bank's Identifi ed Staff, is subject to the consolidation activity performed By the Holding Company, for the defi nition of Group Identifi ed Staff. This is valid, in particular for the Employees, while the PFAs are not included in the consolidation perimeter, as considered Identified Staff just at a Bank level29.

This is valid, in particular for the Employees, while the PFAs are not included in the consolidation perimeter, as considered Identifi ed Staff just at a Bank level29. As every year, the assessment performed took into account the role, the decision-making power, the effective responsibilities of the employees and of the Financial Advisors and, in

As every year, the assessment performed took into account the role, the decision-making power, the effective responsibilities of the employees and of the Financial Advisors and, in addition, the total compensation level. addition, the total compensation level.

The result of the assessment process, submitted to Internal Audit scrutiny and documented into FinecoBank Compensation Policy, brought to the identifi cation of a total number of 16 employees and 7 Financial Advisors for 201830.

Regarding the employees, as a result of the analysis and as approved by the Board of Directors upon Remuneration Committee proposal, the following categories of employees have been defi ned for 2018 as Identifi ed Staff: Chief Executive Offi cer and General Manager, Executives with strategic responsibilities, executive positions in Company Control Functions (Compliance, Risk Management and Human Resources) and other positions that are responsible at local level for strategic decisions which may have a relevant impact on the Bank's risk profi le. The result of the assessment process, submitted to Internal Audit scrutiny and documented into FinecoBank Compensation Policy, brought to the identification of a total number of 16 employees and 7 Financial Advisors for 201830.

Regarding the Financial Advisors, FinecoBank has applied a qualitative criteria to select those belonging to Identifi ed Staff, on the basis of their impact on business risk (represented by the risk that the Bank's profi tability decreases consequently to the exit of Advisors from the Network and the related loss of customers and assets), the only type of risk that the Bank considers attributable to PFA, due to the absence of power of attorney they have to assume any other kind of risks. ²⁸ European Banking Authority (EBA) Regulatory Technical Standards on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile under Article 94 (2) of Directive 2013/36/EU. ²⁹ The qualification of Group Identified Staff or local Identified Staff does not prejudice the application of all the criteria defined by the regulation for the Identified Staff remuneration.

• Compensation data and vehicles used for the target population in 2017 are disclosed in chapter 6 and in the Annexes.

²⁸ European Banking Authority (EBA) Regulatory Technical Standards on criteria to identify categories of staff whose professional activities have a material impact on an institution's risk profile under Article 94 (2) of Directive 2013/36/EU.

²⁹ The qualification of Group Identified Staff or local Identified Staff does not prejudice the application of all the criteria defined by the regulation for the Identified Staff remuneration.

³⁰ Identified Staff data refers to the population at the date of February 2018, providing for an ex-ante definition, in line with regulatory requirements.

As a result of the analysis and as approved by the Board of Directors upon Remuneration Committee proposal, the following categories of employees have been identifi ed for 2018 as Identifi ed Staff:

for the single PFA the criteria above mentioned has been applied selecting those Advisors who have a total yearly compensation higher/equal to Euro 750,000;
for PFA who have a managerial role have been selected Managers that coordinate Advisors with a total asset higher/equal to 5% of the total asset of the PFA Network.

Pursuant to the regulatory requirement and the process defi ned at EU level31 the exclusion from Identifi ed Staff of 17 PFA whose total remuneration in 2017 is equal or exceeds € 500.000 is submitted to the European Central Bank and to Bank of Italy.

5.2 Implementation and Outcomes of 2017 Incentive Systems

5.2.1 2017 Incentive System for employees belonging to Identified Staff

The 2017 Incentive System, approved by FinecoBank Board of Directors on January 9th, 2017, provides - in total continuity with 2016 System - for a "bonus pool" approach which directly links bonuses with Company results at Group and local level, ensuring the link between profi tability, risk and reward.

The System, implemented within the framework of our policy and governance, provides for the allocation of a performance related bonus in cash and/or free ordinary shares over maximum 6 years.

Bonus pool sizing

The bonus pool dimension is related to the actual profi tability measure multiplied for the percentage of the bonus pool funding rate defi ned in the budgeting phase.

This calculation determines the so called "theoretical bonus pool" that, during the year of performance, has been adjusted based on the effective performance trend.

2017 Entry conditions at Group and local level

In order to align to regulatory requirements, specifi c indicators measuring annual profi tability, solidity and liquidity results had been defi ned both local and Group level as Entry Conditions. In particular, metrics and thresholds for 2017 Incentive System as defi ned within the Entry Conditions that confi rm, reduce or cancel upfront and deferred pay-outs are:

GROUP LEVEL	LOCAL LEVEL
Net Operating Profit adjusted ≥ 0 and	Net Operating Profit adjusted ≥ 0 and
Net Profit ≥ 0 and	Net Profit ≥ 0 and
Common Equity Tier 1 ratio transitional ≥ 10,25% and	Common Equity Tier 1 ratio transitional ≥ 10,25% and
Liquidity Coverage Ratio ≥ 100% and	Liquidity Coverage Ratio ≥ 100%
Net Stable Funding Ratio ≥ 100%

Net Operating Profi t adjusted to measure the profi tability, is the NOP excluding income from buy-back of own debt and from the fair value accounting of own liabilities.
Net Profi t to measure profi tability considering the results stated in the balance sheet excluding any extraordinary item as considered appropriate by the Board of Directors upon Remuneration Committee proposal.
Common Equity Tier 1 Ratio Transitional to measure the bank's solidity in terms of highest quality common equity introduced by Basel 3, consistent with regulatory limits and conservation buffers.

5. Compensation Systems (Continued)

5.2 Implementation and Outcomes of 2017 Incentive Systems (Continued)

Liquidity Coverage Ratio: guarantees the maintenance of an adequate level of "high quality liquid assets" non binding in appropriate amount to cover the "net cash outfl ows" within 30 calendar days in a high stress scenario defi ned by the Authorities.
Net Stable Funding Ratio: represents the ratio between the available amount of stable funding and the required amount of stable funding

According to the actual results, verifi ed and approved by the Board of Directors of FinecoBank on February 6th, 2018, the relevant entry conditions have been achieved both at Group and local level, confi rming the theoretical32 FinecoBank bonus pool.

Bonus Pool Risk Adjustment

Once the entry conditions have been verifi ed, the effective bonus pool for FinecoBank's employees was confi rmed, also in light of the overall assessment of the performance of the s.c. "CRO dashboard"33, carried out by the Fineco CRO on the basis of a specifi c methodology defi ned at Group level and approved by the Fineco Board of Directors in July 2017. Bonus Pool Risk Adjustment Once the entry conditions have been verified, the effective bonus pool for FinecoBank's employees was confirmed, also in light of the overall assessment of the performance of the s.c. "CRO dashboard"³³, carried out by the Fineco CRO on the basis of a specific Bonus Pool Risk Adjustment Once the entry conditions have been verified, the effective bonus pool for FinecoBank's employees was confirmed, also in light of the overall assessment of the performance of the

This method provides a quarterly monitoring of the progress of the indicators included in the Dashboard and an annual assessment. methodology defined at Group level and approved by the Fineco Board of Directors in July s.c. "CRO dashboard"³³, carried out by the Fineco CRO on the basis of a specific

Evaluation and pay-out for Identified Staff This method provides a quarterly monitoring of the progress of the indicators included in 2017.

In line with FinecoBank governance, 2017 evaluations and pay-outs for Chief Executive Offi cer and General Manager, Deputy General Managers, other Executives with strategic responsibilities and other Identifi ed Staff have been approved by the Board of Directors, based on the positive opinion of Remuneration Committee. the Dashboard and an annual assessment. Evaluation and pay-out for Identified Staff This method provides a quarterly monitoring of the progress of the indicators included in the Dashboard and an annual assessment.

The Board of Directors of FinecoBank on February 6th, 2018, has approved the allocation of a total number of shares equal to 142.290 to be assigned in 2020, 2021, 2022 and 2023. Officer and General Manager, Deputy General Managers, other Executives with strategic responsibilities and other Identified Staff have been approved by the Board of Directors, In line with FinecoBank governance, 2017 evaluations and pay-outs for Chief Executive Officer and General Manager, Deputy General Managers, other Executives with strategic

On the same date, the Board of Directors also approved the implementation - in 2018 - of the Incentive Systems 2014, 2015, 2016 and the "2014-2017 Multi-year Plan Top Management Plan"34. The Board of Directors of FinecoBank on February 6th, 2018, has approved the allocation of a total number of shares equal to 142.290 to be assigned in 2020, 2021, 2022 and 2023. responsibilities and other Identified Staff have been approved by the Board of Directors, based on the positive opinion of Remuneration Committee.

Focus on the performance evaluation of the CEO and General Manager On the same date, the Board of Directors also approved the implementation - in 2018 - of a total number of shares equal to 142.290 to be assigned in 2020, 2021, 2022 and 2023.

The Board of Directors, upon positive opinion of Remuneration Committee, assessed the 2017 performance of FinecoBank CEO and General Manager as Exceeds Expectations. Below the details of the individual scorecard assessment. the Incentive Systems 2014, 2015, 2016 and the "2014-2017 Multi-year Plan Top Management Plan"³⁴. On the same date, the Board of Directors also approved the implementation - in 2018 - of the Incentive Systems 2014, 2015, 2016 and the "2014-2017 Multi-year Plan Top

33 The CRO Dashboard 2017 is a set of indicators selected among the Risk Appetite Framework KPIs, plus a single indicator on operational risks; the threshold values have been approved by the Board of Directors at the beginning of the year (January 2017).

³³ The CRO Dashboard 2017 is a set of indicators selected among the Risk Appetite Framework KPIs, plus a single indicator

³² Calculated applying the funding rate percentage to the profitability results.

³⁴ The data relating to the assignments are included in the information reported in chapter 6 of the Annual Compensation Report and in the Annexes.

GOAL	RESULT	ASSESSMENT Below exceeds Greatly Excee Ĕ
ROAC vs. budget	Bdg: 53,7% - Result ACT: 62,6%
EVA vs. budget	Bdg: 162.423 k€ - Result: 193.901 k€
Operating Costs vs. budget	Bdg: -241.205 k€ - Result -233.100 k€
Net New Clients vs target	Target IN 103.593 OUT -38.559 NET 65.034 STOCK EOP 1.184.231 Result IN 114.509 OUT -30.744 NET 83.765 STOCK EOP 1.199.828
Net Sales of Guided Products vs. budget	Bdg 4.500.000 k€ - Result: 4.559.314 k€
New business EL vs. budget	Bdg 0,38% - Result 0,27%
Sustain value through people Qualitative assessment based on: - Y/Y delta on Pay for Performance metrics on variable and fix pav Y/Y delta on Gender Pay Gap / Gender Balance dashboard/Gender Diversity Initiatives/Succession Planning/Building up a sustainable Talent Management Support People Engagement Index	Outstanding results have been achieved in terms of: pay for performance: fully consistent in 2017 gender pay gap: no gap in 2017 Furthermore, Succession Plan presented to FinecoBank Board on 5/12/2017, shows full coverage of managerial positions. In addition several initiatives have been put in place in order to: · improve Executives capability to respond and communicate Gender Balance issues · ensure for all development\Training initiatives equal opportunity and exposure for all Female · ensure for all nomination for the managerial position balanced shortlist in terms of gender People Engagement Index results remain excellent 81% (previous year result 83%)
Tone from the top on Compliance Culture Qualitative assessment based on: - Scope, kind and numbers of documented initiatives-pre-committed with CEO Office/ Country's CEO, aimed at promoting staff integrity / customer protection/trustworthines: - The overall status of findings or proceedings in place (internal or external) considering the trend, type, severity and the timely completion of the related remediation actions	Several initiatives and ad hoc communication on compliance culture within the Bank as well as on staff integrity and behavioral expectations Overall 2017 finding # decreasing from 2016 by 33% with no major findings open

The Board of Directors, upon positive opinion of Remuneration Committee, assessed the

Considering the performance assessment and the results of the KPIs in the Entry Conditions, the Board of Directors approved for the CEO and General Manager a bonus amounting to Euro 850.00035.

5.2.2 2017 Incentive System for Financial Advisors belonging to Identified Staff

The 2017 Incentive System PFA, approved by FinecoBank Board of Directors on January 9h 2017, takes into consideration all the national and international regulatory requirements for the sales networks incentives and directly links bonuses with the objectives of growth in the medium and long term, in a general framework of overall sustainability. In the same way as for the Employees, the 2017 PFA System is based on a Bonus Pool approach which directly links bonuses with Company results at Group and local level, ensuring the link between profi tability, risk and reward.

35 For the picture presenting the total remuneration package of CEO and General Manager, see the Executive Summary section.

5. Compensation Systems (Continued)

5.2 Implementation and Outcomes of 2017 Incentive Systems (Continued)

The System, implemented within the framework of our policy and governance, provides for the allocation of a performance related bonus in cash and/or shares over 5 years.

Bonus pool sizing

The bonus pool dimension is related to the actual profi tability measure multiplied for the percentage of the bonus pool funding rate defi ned in the budgeting phase.

This calculation determines the so called "theoretical bonus pool", that, during the year of performance, has been adjusted based on the effective performance trend.

2017 Entry conditions at Group and local level

In order to align to regulatory requirements, specifi c indicators measuring annual profi tability, solidity and liquidity results had been set both local and Group level as Entry Conditions. In particular, metrics36 and thresholds for 2017 PFA Incentive System as defi ned within the Entry Conditions that confi rm, reduce or cancel upfront and deferred pay-outs are:

GROUP LEVEL	LOCAL LEVEL
	Net Operating Profit adjusted ≥ 0 and
	Net Profit ≥ 0 and
Common Equity Tier 1 ratio transitional ≥ 10,25% and	Common Equity Tier 1 ratio transitional ≥ 10,25% and
According to the actual results, verified and approved by the Board of Directors of Liquidity Coverage Ratio ≥ 100% and	Liquidity Coverage Ratio ≥ 100%
FinecoBank on February 6th 2018, the relevant entry conditions have been achieved both at Net Stable Funding Ratio ≥ 100% local and Group level, confirming the theoretical37 FinecoBank PFA bonus pool.	According to the actual results, verified and approved by the Board of Directors of

According to the actual results, verifi ed and approved by the Board of Directors of FinecoBank on February 6th 2018, the relevant entry conditions have been achieved both at local and Group level, confi rming the theoretical37 FinecoBank PFA bonus pool. local and Group level, confirming the theoretical37 FinecoBank PFA bonus pool.

Bonus Pool Risk Adjustment .

Once the entry conditions have been verifi ed, the effective bonus pool for FinecoBank's Financial Advisors was confi rmed, also in light of the overall assessment of the performance of the s.c. "CRO dashboard"38, carried out by the Fineco CRO on the basis of a specifi c methodology defi ned at Group level and approved by the Fineco Board of Directors in July 2017. Bonus Pool Risk Adjustment Bonus Pool Risk Adjustment

Evaluation and pay-out for Identified Staff Financial Advisors was confirmed, also in light of the overall assessment of the Once the entry conditions have been verified, the effective bonus pool for FinecoBank's Financial Advisors was confirmed, also in light of the overall assessment of the

In line with FinecoBank governance, 2017 evaluations and pay-outs for PFA Identifi ed Staff have been approved by the Board of Directors, based on the positive opinion of Remuneration Committee. performance of the s.c. "CRO dashboard"³⁸, carried out by the Fineco CRO on the basis of a specific methodology defined at Group level and approved by the Fineco Board of performance of the s.c. "CRO dashboard"³⁸, carried out by the Fineco CRO on the basis of a specific methodology defined at Group level and approved by the Fineco Board of

36 For the KPIs definition see chapter 5.2.1

Remuneration Committee.

³⁷ Calculated applying the funding rate percentage to the profitability results Evaluation and pay-out for Identified Staff

³⁸ The CRO Dashboard 2017 is a set of indicators selected among the Risk Appetite Framework KPIs, plus a single indicator on operational risks; the threshold values have been approved by the Board of Directors at the beginning of the year (January 2017). The assessment methodology is the one used for Employees. In line with FinecoBank governance, 2017 evaluations and pay-outs for PFA Identified Staff Evaluation and pay-out for Identified Staff

The Board of Directors of FinecoBank on February 6th, 2018, has approved the allocation of a total number of shares equal to 27.644 to be assigned in 2020, 2021 and 2022.

On the same date, the Board of Directors also approved the implementation - in 2018 - of the 2015 and 2016 Incentive Systems39.

5.2.3 Share-based Plan "2015 - 2017 PFA Plan" for Financial Advisors

In 2014, on the occasion of the request for admission to the listing on the Italian Stock Exchange by the Company and subject to the successful outcome, the FinecoBank Shareholders' Meeting approved the "2015-2017 Plan PFA", which provides for the allocation in 2018 of a number of Fineco shares to be assigned in three tranches in 2018, 2019 and 2020 respectively, once verified:

the entry conditions valid from year to year (in 2017 Net Profit ≥ 0 and Common Equity Tier 1 ≥ 10.25%);
the individual compliance and the existence of the agency relationship;
the results of the performance of the beneficiaries in terms of Net Sales and Net Sales of Guided Products40 cumulated in the three-years of performance (2015-2017).

Evaluation and pay-out for Identified Staff

In line with the governance of FinecoBank, and based on the conditions listed above, the valuations and payments referred to the Plan have been approved by the Board of Directors on February 6th 2018, upon positive opinion of the Remuneration Committee41.

5.3 2018 Incentive System for employees belonging to Identified Staff

As in the past years, the 2018 Incentive System, as approved by the Board of Directors of FinecoBank on January 10th, 2018, is based on a "bonus pool" approach which takes into consideration the national and international regulatory requirements and directly links bonuses with Company results at Group and local level, ensuring the link between profitability, risk and reward.

In particular, the system provides for:

allocation of a variable incentive defined on the basis of the determined bonus pool, of the individual performance appraisal and of the internal benchmarking on similar roles as well as compliant with the ratio between fixed and variable remuneration approved by the Shareholder's Meeting;
definition of a balanced structure of "upfront" (following the moment of performance evaluation) and "deferred" payments, in cash and/or in shares42, to be paid over a period of up to maximum 6 years;
distributions of share payments which take into account the applicable regulatory requirements regarding the application of share retention periods. In fact the payment structure defined requires a retention period on shares (of 2 years for upfront shares and of 1 year for deferred shares);
risk adjusted measures in order to guarantee long-term sustainability, regarding Company financial position and to ensure compliance with regulations;
a malus clause (Zero Factor) which applies in case specific thresholds (profitability, capital and liquidity) are not met at both Group and FinecoBank level. In particular, the bonus pool of 2018 will be zeroed, while previous systems deferrals could be reduced from 50% to 100% of their value, based on final effective results.

³⁹ The data relating to the assignments are included in the information reported in chapter 6 of the Annual Compensation Report and in the Annexes.

⁴⁰ Guided products refer to high added value products and developed services, considering the different customers risk profiles

⁴¹ The data relating to the assignments are included in the information reported in chapter 6 of the Annual Compensation Report and in the Annexes.

⁴² The Company reserves the right to assign instruments other than the free ordinary shares of FinecoBank, if this is required by law.

5. Compensation Systems (Continued)

5.3 2018 Incentive System for employees belonging to Identified Staff (Continued)

The bonus pool process includes the following steps: The bonus pool process includes the following steps:

* Risk Appetite Framework

BUDGET

Bonus pool process starts with the defi nition of the "funding rate" during budgeting phase. The funding rate for FinecoBank is a percentage of the Net Operating Profi t (net of Provisions for Risk and Charges, corresponding to Profi t Before Tax) considering: historical data analysis, expected profi tability, business strategy and previous year pool. The bonus pool is submitted for approval to the Board of Directors of FinecoBank. BUDGET - Bonus pool process starts with the definition of the "funding rate" during budgeting

ACCRUALS phase. The funding rate for FinecoBank is a percentage of the Net Operating Profit (net

During the year of performance, quarterly accruals are based on the actual results; of Provisions for Risk and Charges, corresponding to Profit Before Tax) considering:
on a quarterly basis bonus pool is adjusted applying the % of funding rate fi xed during budgeting phase that set by the end of the year the maximum theoretical bonus pool. historical data analysis, expected profitability, business strategy and previous year pool. The bonus pool is submitted for approval to the Board of Directors of FinecoBank.

THEORETICAL BONUS POOL, ENTRY CONDITIONS VERIFICATION AND RISK ADJUSTMENT

Consistency with FinecoBank performance and sustainability is ensured through specifi c "Entry Conditions" set at both Group and local level; ACCRUALS
application of a Zero Factor/malus clause in case specifi c profi tability, liquidity and capital thresholds are not reached at Group and local level;
the distribution is risk adjusted in order to guarantee sustainability with respect to FinecoBank Risk Appetite Framework; - During the year of performance, quarterly accruals are based on the actual results;
the bonus pool is proposed by FinecoBank on the basis of the year forecast risk-adjusted both at Group and local level. - on a quarterly basis bonus pool is adjusted applying the % of funding rate fixed during

The Entry Conditions are the mechanism that determines the possible application of Zero Factor on the basis of performance indicators in terms of profi tability, capital and liquidity defi ned at both Group and local level. The entry conditions defi ned for 2018 – working also as malus conditions for the previous incentive systems deferrals - are reported in the following table as malus conditions for the previous incentive systems deferrals - are reported in the following table

defined at both Group and local level. The entry conditions defined for 2018 – working also

Group level	Local level
Net Operating Profit adjusted $\geq 0$ and	Net Operating Profit adjusted $\geq 0$ and
Net Profit $\geq 0$ and	Net Profit $\geq 0$ and
Common Equity Tier 1 Ratio Transitional>10,43%* and	Common Equity Tier 1 Ratio Transitional>10,43% ^** and
Liquidity Coverage Ratio > 101%* and	Liquidity Coverage Ratio > 101%** and
Net Stable Funding Ratio > 101%*	Net Stable Funding Ratio >101%**

In particular, the indicators (or the relative thresholds) that have been modifi ed or added compared to the 2017 System are highlighted. In particular, the indicators (or the relative thresholds) that have been modified or added

In this regard, we highlight the addition - at Fineco level - of a liquidity indicator (Net Stable Funding Ratio) mirroring the one used at Group level. compared to the 2017 System are highlighted.

It should also be noted that the thresholds for the capital and liquidity indicators have been changed in a more restrictive sense, increased compared to last year. Funding Ratio) mirroring the one used at Group level. It should also be noted that the thresholds for the capital and liquidity indicators have been

D. In case the Entry Conditions are met both at Group and Local Level, the bonus pool can be 5. Compensation Systems (Continued)

A. In case the Entry Conditions are not met both at Group and Local level, a Zero Factor is award the extra performance, considering – also in this case – the multiplier effect and the 5.3 2018 Incentive System for employees belonging to Identified Staff (Continued)

minimum pool ("floor") for retention purposes

The Entry Conditions matrix and related effects on Fineco Bonus Pool follows the same logics provided in 2017, as shown below: rest of population a portion of pool could be kept for retention purposes or to guarantee the discretion of Remuneration Committee and Board.

In the "matrix" logic, in the hypotheses described in the boxes A and B (Entry Conditions not met at Group Level) the bonus for the CEO and General Manager of FinecoBank is zeroed. defined methodology.

To activate the "multiplier" the CRO dashboard assessment is confi rmed, pursuant to the defi ned methodology. The CRO dashboard (defined in coherence with the FinecoBank and Group Risk Appetite Framework) includes KPIs taken from FinecoBank Risk Appetite Framework (plus one

The CRO dashboard (defi ned in coherence with the FinecoBank and Group Risk Appetite Framework) includes KPIs taken from FinecoBank Risk Appetite Framework (plus one indicator related to operational risk), measured with reference to the respective relevant thresholds (limit, trigger and target). Here below a sample of the content of the dashboard. In the "matrix" logic, in the hypotheses described in the boxes A and B (Entry Conditions indicator related to operational risk), measured with reference to the respective relevant thresholds (limit, trigger and target). Here below a sample of the content of the dashboard.

not met at Group Level) the bonus for the CEO and General Manager of FinecoBank is

defined methodology.		To activate the "multiplier" the CRO dashboard assessment is confirmed, pursuant to the

		The CRO dashboard (defined in coherence with the FinecoBank and Group Risk Appetite Framework) includes KPIs taken from FinecoBank Risk Appetite Framework (plus one
thresholds (limit,	trigger and	indicator related to operational risk), measured with reference to the respective relevant target). Here below a sample of the content of the dashboard.

The "multiplier" effect deriving from the evaluation of overall CRO dashboard outcome made by the FinecoBank CRO – and verifi ed by the FinecoBank Remuneration Committee and by the FinecoBank Board – applies to the bonus pool in the cases described in the boxes D and B. The dashboard evaluation is carried out pursuant to a methodology defi ned at Group level by the Risk Management function and approved by the FinecoBank Boardo of Directors La valutazione della Dashboard avviene secondo una metodologia definita a livello di Gruppo dalla funzione Risk Management ed approvata dal Consiglio di Amministrazione di Fineco. I range di correzione del bonus pool derivante dall'assessment della CRO Dashboard non

dal Consiglio di Amministrazione - si applica al bonus pool nei casi del quadrante D e B.

The bonus pool corrections ranges deriving from the CRO Dashboard assessment are not modifi ed compared to the 2017 Incentive System, as follows. vengono modificati rispetto al Sistema Incentivante 2017, come rappresentato di seguito.

As provided in the 2017 System, a further range of discretion up to +20% is in the faculty of Remuneration Committee and Board of Directors, while no limits to downward discretionally the bonus pool with respect to theoretical value is foreseen. discrezionalità, sino a +20%, che viene lasciata alla facoltà del Comitato Remunerazione e del Consiglio di Amministrazione, mentre non è previsto nessun limite alla possibilità di

In any case, as requested by regulations as per Bank of Italy provisions, the fi nal evaluation of sustainable performance parameters and the alignment between risk and remuneration will be assessed by Remuneration Committee and defi ned under the governance and accountability of the Board of Directors. riduzione del bonus pool rispetto al valore teorico. In ogni caso, come richiesto dalla normativa ai sensi delle disposizioni di Banca d'Italia, la

The Board of Directors does not take into account, when deciding bonus, balance sheet extraordinary items which do not impact operational performance, regulatory capital and liquidity (e.g. goodwill impairment, extraordinary contributions to deposit guarantee schemes, etc.). remunerazione saranno esaminati dal Comitato Remunerazione e definiti sotto la responsabilità e la governance del Consiglio di Amministrazione.

Moreover, following potential changes in current regulations and/or in relation to potential extraordinary and/or unpredictable contingencies which can impact the Group, the Company or the market in which it operates, the Board of Directors, having heard the opinion of Remuneration Committee, maintains the right to amend the system and relevant rules. Il Consiglio di Amministrazione non tiene conto per la determinazione del bonus di "voci straordinarie" del bilancio che non hanno impatto sulla performance operativa, sul capitale

INDIVIDUAL BONUS ALLOCATION

Individual bonus will be allocated to benefi ciaries considering bonus pool, the individual performance appraisal, the internal benchmarking analysis on similar roles and the maximum ratio between variable and fi x compensation as approved by Shareholder's Meeting; 58
individual performance appraisal is based on 2018 performance screen: a minimum of 5 and maximum 8 goals of which 4-6 selected from the catalogue of main key performance indicators ("KPI Bluebook") and linked to the 5 Fundamentals43 of Group Competency Model44. Goals selected from the KPI Bluebook refl ect the Bank and Group strategy and have a weight of 70% on the individual performance screen. In the individual performance screen can be provided up to 2 further "individual" goals", linked to the individual specifi c activity. The "individual" goals weigh 30% of the performance screen. Competencies and behaviours considered as relevant can be taken into account by the manager for the overall performance appraisal;

• Further details in chapter 5.3.1.

the goals appraisal system is based on a 5 values scale with a descriptive outcome (from "Below Expectations" to "Greatly Exceeds Expectations").

43 See also chapter 5.3.1.

⁴⁴ Group Competency Model represents the framework in which the Executives are assessed within the Executive Development Plan process. The 5 Fundamental are: Customers First, Execution & Discipline, Cooperation and Synergies, Risk management, People Development.

chapter 5.3.1.

- the goals appraisal system is based on a 5 values scale with a descriptive outcome (from "Below Expectations" to "Greatly Exceeds Expectations"). 5. Compensation Systems (Continued)

5.3 2018 Incentive System for employees belonging to Identified Staff (Continued)

For the purposes of bonus individual allocation, the 2018 Incentive System provides also a preliminary check on the completion – by the System benefi ciaries – of the Compliance mandatory trainings.

BONUS PAYOUT For the purposes of bonus individual allocation, the 2018 Incentive System provides also a

As approved by the Board of Directors of January 10th, 2018, with reference to pay-out structure, the Identifi ed Staff population will be differentiated into two clusters, using a combined approach of banding and compensation: preliminary check on the completion – by the System beneficiaries – of the Compliance mandatory trainings.
CEO/GM and other roles provided by law: 5 years deferral scheme
Other identifi ed Staff: 3 years deferral scheme.
The pay-out of incentives will be done through upfront and deferred instalments, in cash or in Fineco ordinary shares, up to a maximum 6-year period: BONUS PAYOUT
in 2019 the fi rst instalment (1st tranche) of the total incentive will be paid in cash in absence of any individual values /compliance breach45; - As approved by the Board of Directors of January 10th, 2018, with reference to pay-out
over the period 2020-2024 the remaining part of the overall incentive will be paid in cash and/or Fineco ordinary shares; each further tranche will be subject to the application of the Zero Factor for the year of allocation and in absence of any individual / values compliance breach; structure, the Identified Staff population will be differentiated into two clusters, using a combined approach of banding and compensation: CEO/GM and other roles provided by law: 5 years deferral scheme Other identified Staff: 3 years deferral scheme.
all the instalments are subject to the application of claw-back conditions;

45 Considering also the seriousness of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local authorities).

over the period 2020-2024 the remaining part of the overall incentive will be paid in

all the instalments are subject to the application of claw-back conditions; - all the instalments are subject to the application of claw-back conditions;
in coherence with 2017, a minimum threshold46 will be introduced, below which no deferral mechanisms will be apply;
the number of shares to be allocated in the respective instalments shall be defi ned in 2019, on the basis of the arithmetic mean of the offi cial closing market price of Fineco ordinary shares during the month preceding the Board resolution that evaluates 2018 performance achievements; - in coherence with 2017, a minimum threshold⁴⁶ will be introduced, below which no deferral mechanisms will be apply;
free Fineco ordinary shares that will be allocated will be freely transferable;
the payment structure has been defi ned in line with Bank of Italy provisions requiring a share retention period for upfront and deferred shares. In particular, the implementation of the share retention periods may be carried out in line with the fi scal framework, either via the allocation of restricted shares or the promise of shares that shall subsequently be allocated at the end of the intended retention period; - the number of shares to be allocated in the respective instalments shall be defined in 2019, on the basis of the arithmetic mean of the official closing market price of Fineco ordinary shares during the month preceding the Board resolution that evaluates 2018
the 2018 Incentive System provides for an expected impact on FinecoBank share capital of approximately 0,08%, assuming that all free shares for employees have been distributed. The current overall dilution for all other outstanding FinecoBank equity-based plans both for Employees and Financial Advisors equals 1,14%; performance achievements; - free Fineco ordinary shares that will be allocated will be freely transferable;
the benefi ciaries cannot activate programs or agreements that specifi cally protect the value of unavailable fi nancial instruments assigned within the incentive plans. Any form of coverage will be considered a violation of compliance rules and imply the consequences set out in the regulations, rules and procedures. - the payment structure has been defined in line with Bank of Italy provisions requiring a share retention period for upfront and deferred shares. In particular, the implementation

5.3.1 Comprehensive Performance Measurement of the share retention periods may be carried out in line with the fiscal framework, either via the allocation of restricted shares or the promise of shares that shall subsequently

The 2018 Incentive System, described in the chapter 5.3, is supported by an annual performance measurement framework assuring coherence, consistency and clarity of performance objectives with business strategy, and encouraging and rewarding desired behaviours and risk orientation. Our performance management process ensures that to all Identifi ed Staff are assigned at the beginning of the year their own individuals goals and includes a rigorous review of their goals achievements. be allocated at the end of the intended retention period; - the 2018 Incentive System provides for an expected impact on FinecoBank share capital of approximately 0,08%, assuming that all free shares for employees have been

A specifi c process is performed annually at Group level with the involvement of key relevant functions (Human Resources, Finance, Risk Management, Compliance, Group Sustainability, Audit, Group Stakeholder and Service Intelligence) to review the so-called KPI Bluebook. ⁴⁵ Considering also the seriousness of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local authorities). ⁴⁶ Equal to Euro 75.000 that will be paid in cash.

The KPI Bluebook serves as the framework for the defi nition of performance goals coherent, high quality based, aligned to business strategy, compliant with regulatory requirements and consistent with our corporate values and Group Competency model. Therefore it supports the employees and their managers in the defi nition of individual Performance Screen. 57

KPI Bluebook includes a list of indicators certifi ed at Group level, as well as specifi c guidelines related to:

the selection of goals based on yearly priorities and customizable goals for Business/Division
the use among the KPIs selected from the KPI Bluebook of risk-adjusted goal (e.g. select at least one KPI belonging to "Risk category" or related to risk management / risk-adjusted profi tability)
the use among the KPIs selected from the KPI Bluebook of sustainability objectives ( e.g. at least half of the goals should be related to sustainability)
the defi nition of the target of reference, in case objectives not included in certifi ed list are selected (e.g. use clear and pre-defi ned parameters for future evaluation of performance)
the selection of goals for the Company Control Functions, in order to ensure their independence (e.g. avoid KPI linked to economic measure).

46 Equal to Euro 75.000 that will be paid in cash.

5. Compensation Systems (Continued)

5.3 2018 Incentive System for employees belonging to Identified Staff (Continued)

The KPI Bluebook maps 11 categories of drivers that include a list of goals (KPI Dashboard):

The 11 categories represent fi nancial and non-fi nancial performance and are mapped into the different clusters of business of the Group (Asset Gathering included) to help identifying the most relevant standardized KPIs (all certifi ed by relevant Group functions) for each role assigned, with specifi c focus on risk-adjusted, sustainability-driven metrics and economic measures. For each KPI included in the catalogue a link to one of the "5 fundamentals" of the Group Competency Model47 (as shown above) is pre-set, conferring a specifi c qualitative connotation to the goal itself.

2018 Chief Executive Officer and General Manager Performance Screen The 11 categories represent financial and non-financial performance and are mapped into

2018 KPIs defi ned and approved by FinecoBank Board of Directors as the core drivers of performance for FinecoBank Chief Executive Offi cer and General Manager include goals related to Bank profi tability, with particular focus on risk, consistency with Risk Appetite Framework and sustainability. In continuity with 2017, also for 2018 a specifi c KPI has been provided, with reference to "Tone from the top" related to integrity towards conduct principles and spread of compliance culture among the organization. the different clusters of business of the Group (Asset Gathering included) to help identifying the most relevant standardized KPIs (all certified by relevant Group functions) for each role assigned, with specific focus on risk-adjusted, sustainability-driven metrics and economic measures. For each KPI included in the catalogue a link to one of the "5

47 Group Competency Model represents the framework in which the Executives are assessed within the Executive Development Plan process. The 5 Fundamental are: Customers First, Execution & Discipline, Cooperation and Synergies, Risk management, People Development.

$\sharp$	GOAL NAME	PERIMETER	LINK TO 5 REFERENCE TARGET FUNDAMENTALS		RISK CORRELATION SUSTAINABILITY GOAL
1	ROAC	FinecoBank	vs. budget	Execution & Discipline	ၜ
$\overline{2}$	EVA	FinecoBank	vs budget	Risk Management	ALLOT
3	Operating Costs	FinecoBank	vs. budget Operating costs as reported in reclassified P&L, i.e.: Staff expenses + Other Administrative Expenses (direct + indirect) - Expenses Recovery + Depreciations.	Execution & Discipline
4	Net new clients	FinecoBank	vs. previous years	Customers First	❸
5	Net sales of Guided Products	FinecoBank	vs budget	Execution & Discipline
6	New Business EL %	FinecoBank	vs. target	Risk Management
7	Sustain value through People	FinecoBank	vs. qualitative assessment based on: • Y/Y delta on Pay for Performance metrics on variable and fix pay · Y/Y delta on Gender Pay Gap / Gender Balance dashboard / Gender Diversity Initiatives · Succession Planning / Building up a sustainable Talent Management Support • Retention rate or voluntary turnover	People Development
8	Tone from the top on conduct and compliance culture	FinecoBank	vs. qualitative assessment based on: · Scope, kind and numbers of documented initiatives - pre- committed with EMC, aimed at promoting staff integrity / customer protection / trustworthiness . The overall status of findings or proceedings in place (internal or external) considering the trend, type, severity and the timely completion of the related remediation actions	Risk Management

For the other Identifi ed Staff of FinecoBank KPIs that include profi tability and risk management are refl ected also in their Performance Screens, with differences given by the relevant activities. It is understood in any case the rule pursuant to which no economic goals must be provided for the Company Control Functions. Per il resto del Personale più rilevante di FinecoBank, gli indicatori che rappresentano la

5. Compensation Systems (Continued)

5.4 2018-2020 share based Long Term Incentive Plan (LTI) for Employees

With the aim of rewarding, motivating and retaining selected Bank Employees, in line with the 2020 objectives of Fineco in terms of value creation, sustainability and risk, a long-term equity plan has been defi ned, also in order to align the long-term interests of the Bank's Management with the long-term value creation for shareholders.

The benefi ciaries of the Plan are selected Employees with "key roles" within the organization (about 65 resources, including Managers with Strategic Responsibilities). - specific individual compliance and claw-back conditions;

The Heads of the Company Control Functions (CRO, Head of Compliance, Head of Human Resources) are excluded from the Benefi ciaries of the Plan. evaluated according to the methodology defined by Group Risk Management;

The structure of the Plan, described below in detail, provides for:

performance goals at Bank level such as the EVA, the Cost/Income and the Cost of Risk on commercial loans; - a payment structure over a multi-year period defined according to the categories of
Entry and malus conditions of profi tability, capital and liquidity defi ned at FinecoBank and Group level; beneficiaries, in line with the regulatory provisions.
specifi c individual compliance and claw-back conditions;
a risk adjustment linked to the annual assessment of the CRO Dashboard, evaluated according to the methodology defi ned by Group Risk Management; PERFORMANCE GOALS
individual bonuses defi ned taking into account the roles of the benefi ciaries;
a payment structure over a multi-year period defi ned according to the categories of benefi ciaries, in line with the regulatory provisions. The performance targets, as defined above, will be assessed in relation to specific

PERFORMANCE GOALS targets and will have a specific percentage weight on the total bonus and their valuation

The performance targets, as defi ned above, will be assessed in relation to specifi c targets and will have a specifi c percentage weight on the total bonus and their valuation (with the exception of the Cost of Risk for which an "on-off" threshold is envisaged) will be based on on progressive thresholds, which will correspond to increasing percentages of bonuses from 0 to 100% with a linear progression48, as shown below. (with the exception of the Cost of Risk for which an "on-off" threshold is envisaged) will be based on on progressive thresholds, which will correspond to increasing percentages of bonuses from 0 to 100% with a linear progression48, as shown below.

	KPI	PERIMETER	WEIGHT	TARGET	ASSESSMENT CRITERIA
					Threshold	Payout
					$\geq$ 200 M $\in$	100%
VALUE CREATION	EVA	FINECO	50%	2020	$180 M - 200 M$ €	$0 - 100%$
					≤ 180 M€	0%
					,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
INDUSTRIAL	COST/ INCOME	FINECO	35%	2020	$\leq 39\%$	100%
SUSTAINABILITY	RATIO				$42\% - 39\%$	$0 - 100%$
					$\geq 42\%$	0%

RISK	$CoR*$	FINECO	15%	2020	$\leq 40$ bps	100%

ENTRY CONDITIONS AND MALUS

In order to comply with current regulations, are defi ned ENTRY CONDITIONS AND MALUS

appropriate Fineco and Group Entry Conditions that will be measured within the performance period of the Plan and may confi rm, reduce or cancel the individual bonus as detailed below, and In order to comply with current regulations, are defined
appropriate Fineco and Group malus conditions measured during the deferral period, which may confi rm, reduce or cancel the deferred shares, as detailed below - appropriate Fineco and Group Entry Conditions that will be measured within the

48 For example, with EVA at 12/31/2020 equal to 190 million, the payment of the corresponding bonus portion would be equal to 50% of what is expected in case of EVA equal to 200 million. - appropriate Fineco and Group malus conditions measured during the deferral In full compliance with the regulations in force, and for the purposes set out above, specifi c Group and Fineco indicators have been identifi ed to measure profi tability, capital strength and liquidity.

The indicators of capital and liquidity (Common Equity Tier 1 Ratio Fully Loaded⁴⁹, Liquidity

The indicators of capital and liquidity (Common Equity Tier 1 Ratio Fully Loaded49, Liquidity Coverage Ratio and Net Stable Funding Ratio) will be calculated annually, while a "cumulative" assessment of profi tability indicators is envisaged.

	Performance	Deferral
	Entry Conditions	Malus
Fineco Group		Group	Fineco
Σ 2018-2020 NOP Adj > 0	Σ 2018-2020 NOP Adj > 0	$Σ$ NOP Adj > 0	$Σ$ NOP Adj > 0
$\Sigma$ 2018-2020 NP > 0	$\Sigma$ 2018-2020 NP > 0	$\Sigma NP > 0$	$\Sigma NP > 0$
CET 1 Ratio Fully loaded > $10.4\%$ *	CET 1 Ratio Fully loaded > $10.4\%$ **	CET 1 Ratio Fully loaded > $10,4\%$ *	CET 1 Ratio Fully loaded > $10.4\%$ **
$LCR > 101\%$ *	$LCR > 101\%$ **	$LCR > 101\%$ *	$LCR > 101\%$ **
$NSFR > 101\%$ *	$NSFR > 101\%$ **	NSFR > 101%*	NSFR > 101%**

Each payment related to the Plan is subject to the preliminary compliance check of

The bonus payment is subject to claw-back50.

Each payment related to the Plan is subject to the preliminary compliance check of individual behaviors. RISK ADJUSTMENT

The bonus payment is subject to claw-back50. For the purposes of the appropriate Plan correction for the Bank's Risk, the results of the

RISK ADJUSTMENT annual CRO Dashboard assessments for the purposes of short-term incentive systems will

For the purposes of the appropriate Plan correction for the Bank's Risk, the results of the annual CRO Dashboard assessments for the purposes of short-term incentive systems will be taken into consideration for each year of the Plan's performance. The presence of several 'neutral' annual assessments51 or negative assessments will result in a proportional reduction of individual bonuses, as shown below be taken into consideration for each year of the Plan's performance. The presence of several 'neutral' annual assessments51 or negative assessments will result in a proportional reduction of individual bonuses, as shown below

49 It's the Class 1 Capital of the Institution expressed in percentage of the overall amount of the risk exposure. It's the CET1 requirement recommended by ECB in its communication on variable remuneration. 50 See par. 3.2, section II

requirement recommended by ECB in its communication on variable remuneration.

51 See paragraphs 5.3 and 5.5

Maximum bonuses have been defined on the basis of the categories of beneficiaries of the 5. Compensation Systems (Continued)

the FinecoBank Compensation Policy. Individual bonuses - in particular - confirm compliance with the maximum limits for the 5.4 2018-2020 share based Long Term Incentive Plan (LTI) for Employees (Continued)

Plan. The amounts were established in line with the applicable regulatory provisions and

BONUS PAYMENT variable remuneration envisaged for the Plan Beneficiaries, also taking into account the

Maximum bonuses have been defi ned on the basis of the categories of benefi ciaries of the Plan. The amounts were established in line with the applicable regulatory provisions and the FinecoBank Compensation Policy. short-term variable remuneration attributable in each year of performance. Within the aforementioned limits, it is planned, in detail:

Individual bonuses - in particular - confi rm compliance with the maximum limits for the variable remuneration envisaged for the Plan Benefi ciaries, also taking into account the short-term variable remuneration attributable in each year of performance. - for the Chief Executive Officer and General Manager, a maximum percentage impact of the bonus relating to the Plan equal to 50% of the maximum variable

Within the aforementioned limits, it is planned, in detail: remuneration attributable in each year of performance;

for the Chief Executive Offi cer and General Manager, a maximum percentage impact of the bonus relating to the Plan equal to 50% of the maximum variable remuneration attributable in each year of performance; - for the other Executives with Strategic Responsibilities, a maximum percentage of the bonus of the Plan equal to 30% of the maximum variable remuneration
for the other Executives with Strategic Responsibilities, a maximum percentage of the bonus of the Plan equal to 30% of the maximum variable remuneration attributable in each year of performance. attributable in each year of performance.

For the other Benefi ciaries the target bonus is defi ned individually, always in compliance with the maximum limits set by the regulations and FinecoBank Compensation Policy. with the maximum limits set by the regulations and FinecoBank Compensation Policy. As mentioned, the bonuses will be paid entirely in Fineco free ordinary shares52, according

As mentioned, the bonuses will be paid entirely in Fineco free ordinary shares52, according to the payment schemes shown below. to the payment schemes shown below.

For the Benefi ciaries of the Plan included in Identifi ed Staff holding periods on the shares are provided, equal to two years for the upfront shares, assigned after the end of the performance period, and one year for deferred shares. For the Beneficiaries of the Plan included in Identified Staff holding periods on the shares are

For the other Benefi ciaries the assignments of the shares and their availability are concomitant during the deferral period. provided, equal to two years for the upfront shares, assigned after the end of the performance

The evaluation of the results and the conditions for the individual assignment of the shares will be carried out by the Board of Directors, upon the proposal of the Remuneration Committee, according to the established governance53. period, and one year for deferred shares. For the other Beneficiaries the assignments of the shares and their availability are concomitant

53 It is provided the possibility for the Remuneration Committee and the Board of Directors to increase bonuses up to 20% (within the maximum bonuses provided by the Plan) or to reduce the bonuses without limits, considering indicators as the Total Shareholders Return (absolute and relative) or other indicators, as the market context and trends on remuneration, or events with reputational impacts. The correction "in positive" does not apply in case of non-achievement of Group entry conditions, as described in this paragraph. ⁵² The Bank reserves the possibility to assign different instruments from the FinecoBank ordinary shares, where requested by law.

⁵² The Bank reserves the possibility to assign different instruments from the FinecoBank ordinary shares, where requested by law.

The maximum number of shares to be allocated in the respective instalments – at the conditions stated above - shall be defi ned in 2018, on the basis of the arithmetic mean of the offi cial closing market price of Fineco ordinary shares during the month preceding the Board resolution that will execute the Shareholders Meeting resolution related to the Plan.

The Plan provides for an expected impact on FinecoBank share capital of approximately 0,3%, assuming that all free shares for employees have been distributed. The current overall dilution for all other outstanding FinecoBank equity-based plans both for Employees and Financial Advisors equals 1,14%.

The benefi ciaries cannot activate programs or agreements that specifi cally protect the value of unavailable fi nancial instruments assigned within the incentive plans. Any form of coverage will be considered a violation of compliance rules and imply the consequences set out in the regulations, rules and procedures.

5. Compensation Systems (Continued)

5.5 2018 Incentive System for Financial Advisors belonging to Identified Staff

Given the differences in the forms of remuneration and in the modalities of its generation (see paragraph 4.2, Section II), also for the PFA population in FinecoBank, mirroring what is designed for the Employees, is provided a specifi c Incentive System based on a bonus pool approach, which takes into account the national and international regulatory requirements and directly links bonuses with Company results at Group and local level, ensuring the link between profi tability, risk and reward.

In particular, the 2018 System for PFA Identifi ed Staff – as approved by the Board on January 10th 2018 - provides for: upfront shares and of 1 year for deferred shares);

allocation of a variable incentive defi ned on the basis of the determined bonus pool, of the individual performance appraisal as well as compliant with the ratio between fi xed and variable remuneration approved by the Shareholder's Meeting; - risk adjusted measures in order to guarantee long-term sustainability, regarding
defi nition of a balanced structure of "upfront" (following the moment of performance evaluation) and "deferred" payments, in cash and/or in shares, to be paid over a period of up to maximum 5 years; Company financial position and to ensure compliance with regulations; - a malus clause (Zero Factor) which applies in case specific thresholds (profitability,
distribution of share54 payments which take into account the applicable regulatory requirements regarding the application of share retention periods. In fact the payment structure defi ned requires a retention period on shares (of 2 years for upfront shares and of 1 year for deferred shares); capital and liquidity) are not met at both Group and local level. In particular, the bonus pool of 2018 will be zeroed, while previous systems deferrals could be reduced from 50% to 100% of their value, based on final effective results
risk adjusted measures in order to guarantee long-term sustainability, regarding Company fi nancial position and to ensure compliance with regulations;
a malus clause (Zero Factor) which applies in case specifi c thresholds (profi tability, capital and liquidity) are not met at both Group and local level. In particular, the bonus pool of 2018 will be zeroed, while previous systems deferrals could be reduced from 50% to 100% of their value, based on fi nal effective results In coherence with what previously described for the Employees, also for the PFA the process of bonus pool definition includes the following steps:

In coherence with what previously described for the Employees, also for the PFA the process of bonus pool defi nition includes the following steps:

54 Unlike what happens in the Incentive System for Employees, the FinecoBank shares used for the purposes of payments to the PFA, are not generated by a free capital increase, but are purchased directly on the market, pursuant to section 2357 of Italian Civil Code. phase. The funding rate for FinecoBank is a percentage of the Net Operating Profit (net of Provisions for Risk and Charges, corresponding to Profit Before Tax) considering:

BUDGET pool.

Bonus pool process starts with the defi nition of the "funding rate" during budgeting phase. The funding rate for FinecoBank is a percentage of the Net Operating Profi t (net of Provisions for Risk and Charges, corresponding to Profi t Before Tax) considering: historical data analysis, expected profi tability, business strategy and previous year pool. The bonus pool is submitted for approval to the Board of Directors of FinecoBank. THEORETICAL BONUS POOL, ENTRY CONDITIONS VERIFICATION AND RISK ADJUSTMENT

during budgeting phase that set by the end of the year the maximum theoretical bonus

ACCRUALS specific "Entry Conditions" set at both Group and local level;

During the year of performance, quarterly accruals are based on the actual results; - application of a malus clause in case specific profitability, liquidity and capital
on a quarterly basis the bonus pool is adjusted applying the % of funding rate fi xed during budgeting phase that set by the end of the year the maximum theoretical bonus pool. thresholds are not reached at Group and local level; - the distribution is risk adjusted in order to guarantee sustainability with respect to

THEORETICAL BONUS POOL, ENTRY CONDITIONS VERIFICATION AND RISK ADJUSTMENT FinecoBank Risk Appetite Framework;

Consistency with FinecoBank performance and sustainability is ensured through specifi c "Entry Conditions" set at both Group and local level; - the bonus pool is proposed by FinecoBank on the basis of the year forecast – risk-
application of a malus clause in case specifi c profi tability, liquidity and capital thresholds are not reached at Group and local level; adjusted – both at Group and local level.
the distribution is risk adjusted in order to guarantee sustainability with respect to FinecoBank Risk Appetite Framework; The Entry Conditions are the mechanism that determines the possible application of the
the bonus pool is proposed by FinecoBank on the basis of the year forecast risk-adjusted both at Group and local level. Zero Factor on the basis of performance indicators in terms of capital and liquidity defined

The Entry Conditions are the mechanism that determines the possible application of the Zero Factor on the basis of performance indicators in terms of capital and liquidity defi ned at both Group and local level (at local level is considered also the profi tability). The entry conditions provided for 2018 – working also as malus conditions for the deferrals of previous years incentive systems - are reported in the following table. at both Group and local level (at local level is considered also the profitability). The entry conditions provided for 2018 – working also as malus conditions for the deferrals of previous years incentive systems - are reported in the following table

Group level	Local level
	Net Operating Profit adjusted $\geq$ 0 and
	Net Profit $\geq 0$ and
Common Equity Tier 1 Ratio	Common Equity Tier 1 Ratio
Transitional > $10.43\%$ * and	Transitional > $10,43\%$ ** and
Liquidity Coverage Ratio >	Liquidity Coverage Ratio >
$101\%$ * and	$101\%$ ** and
Net Stable Funding Ratio	Net Stable Funding Ratio
>101%*	$>101\%$ **

In this regard, we highlight the addition - at Fineco level - of a liquidity indicator (Net Stable Funding Ratio) mirroring the one used at Group level. In this regard, we highlight the addition - at Fineco level - of a liquidity indicator (Net Stable

5. Compensation Systems (Continued)

5.5 2018 Incentive System for Financial Advisors belonging to Identified Staff (Continued)

It should also be noted that the thresholds for the capital and liquidity indicators have been changed in a more restrictive sense, increased compared to last year.

The Entry Conditions matrix and related effects on Fineco Bonus Pool follows the same logics provided in 2017, as shown below. A. In case the Entry Conditions are not met both

rest of population a portion of pool could be kept for retention purposes or to guarantee the competition on the market B. In case the Entry Conditions are not met at Group Level, it is possible to have a pool at local level, if results are achieved, considering also the multiplier effect and the discretion of Remuneration Committee and Board. A. In case the Entry Conditions are not met both at Group and Local level, a Zero Factor is determined for the Identified Staff, while for the rest of population a portion of pool could be kept for retention purposes or to guarantee the competition on the market. B. In case the Entry Conditions are not met at Group Level, it is possible to have a pool at local level, if results are achieved, considering also the multiplier effect and the discretion of Remuneration Committee and Board.

determined for the Identified Staff, while for the

C. In case the Entry Conditions are not met at Local Level, but are met at Group Level, a C. In case the Entry Conditions are not met at Local Level, but are met at Group Level, a minimum pool ("floor") for retention purposes can be set up.
minimum pool ("floor") for retention purposes can be set up. D. In case the Entry Conditions are met both at Group and Local Level, the bonus pool can be confirmed or increased, with the possibility to D. In case the Entry Conditions are met both at Group and Local Level, the bonus pool can be confirmed or increased, with the possibility to award the extra performance, considering –also in this case – the multiplier effect and the discretion of Remuneration Committee and Board.

award the extra performance, considering –

In continuity with the 2017 System, in case the pool is in the box "B" the starting percentage of bonus pool is higher than the one provided for the Employee's System55. also in this case – the multiplier effect and the

To activate the "multiplier" the CRO dashboard assessment is confi rmed, pursuant to the defi ned methodology.

The "multiplier" effect deriving from the evaluation of overall CRO dashboard outcome made by the FinecoBank CRO – and verifi ed by the FinecoBank Remuneration Committee and by the FinecoBank Board – applies to the bonus pool in the cases described in the boxes D and B. The dashboard evaluation is carried out pursuant to a methodology defi ned at Group level by the Risk Management function and approved by the FinecoBank Board of Directors, as for the Employees System. percentage of bonus pool is higher than the one provided for the Employee's System⁵⁵ To activate the "multiplier" the CRO dashboard assessment is confirmed, pursuant to the defined methodology. The CRO dashboard (defined in coherence with the FinecoBank and Group Risk Appetite

The bonus pool corrections ranges deriving from the CRO Dashboard assessment are not modifi ed compared to the 2017 Incentive System, as follows. Framework) includes KPIs taken from FinecoBank Risk Appetite Framework (plus one indicator related to operational risk), measured with reference to the respective relevant

In any case, as requested by regulations as per Bank of Italy provisions, the final

55 The choice is due to the necessity of retention for Financial Advisors (tied to FinecoBank by an agency agreement) and consequently to safeguard a Company asset. 56 See paragraph 5.3. ⁵⁵ The choice is due to the necessity of retention for Financial Advisors (tied to FinecoBank by an agency agreement) and Remuneration Committee and Board of Directors, while no limits to downward discretionally the bonus pool with respect to theoretical value is foreseen.

As provided in the 2017 System, a further range of discretion up to +20% is in the faculty of Remuneration Committee and Board of Directors, while no limits to downward discretionally the bonus pool with respect to theoretical value is foreseen. Company or the market in which it operates, the Board of Directors, having heard the opinion of Remuneration Committee, maintains the right to amend the system and relevant

liquidity (e.g. goodwill impairment, extraordinary contributions to deposit guarantee

Moreover, following potential changes in current regulations and/or in relation to potential

The Board of Directors does not take into account, when deciding bonus, balance sheet extraordinary items which do not impact operational performance, regulatory capital and liquidity (e.g. goodwill impairment, extraordinary contributions to deposit guarantee schemes, etc.). BONUS PAYOUT For the Financial Advisors included in the Identified Staff, a payout mechanism with a 3

Moreover, following potential changes in current regulations and/or in relation to potential extraordinary and/or unpredictable contingencies which can impact the Group, the Company or the market in which it operates, the Board of Directors, having heard the opinion of Remuneration Committee, maintains the right to amend the system and relevant rules. years deferral is provided. The possible 2018 bonus will be paid up to a maximum 5 years period. In particular: in 2019 will be paid in cash the 1st tranche of the overall bonus, in absence of any

BONUS PAYOUT individual values /compliance breach 57;

For the Financial Advisors included in the Identifi ed Staff, a payout mechanism with a 3 years deferral is provided. The possible 2018 bonus will be paid up to a maximum 5 years period. In particular: in the period 2020–2023 the remaining part of the overall incentive will be paid in cash and/or Fineco ordinary shares; each further tranche will be subject to the

in 2019 will be paid in cash the 1st tranche of the overall bonus, in absence of any individual values /compliance breach57; application of the Zero Factor for the year of allocation and in absence of any
in the period 2020–2023 the remaining part of the overall incentive will be paid in cash and/or Fineco ordinary shares; each further tranche will be subject to the application of the Zero Factor for the year of allocation and in absence of any individual / values compliance breach; individual / values compliance breach;

2018	2019	2020	2021	2022	2023
PERFORMANCE YEAR	30% UPFRONT CASH	10% DEFERRED CASH	30% UPFRONT SHARES	10% DEFERRED CASH 10% DEFERRED SHARES	10% DEFERRED SHARES

all the instalments are subject to the application of claw-back conditions, as legally enforceable;
in coherence with 2017, a minimum threshold58 will be introduced, below which no deferral mechanisms will be apply; ⁵⁷ Considering also the seriousness of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local
the number of shares to be allocated in the respective instalments shall be defi ned in 2019, on the basis of the arithmetic mean of the offi cial closing market price of Fineco ordinary shares during the month after the Board resolution that verifi es the 2018 performance achievements; authorities).
free Fineco ordinary shares that will be allocated will be freely transferable;
the 2018 Incentive System provides for an expected impact on FinecoBank share capital of approximately 0,05%, assuming that all free shares for Financial Advisors have been assigned. The current overall dilution for all other outstanding FinecoBank equity-based plans both for Employees and Financial Advisors equals 1,14%. However, the 2018 PFA Incentive System does not have a proper dilution impact as the FinecoBank shares awarded are purchased on the market and are not generated through a free capital increase.

57 Considering also the seriousness of any internal/external findings (e.g. Audit, Bank of Italy, Consob and/or analogous local authorities). 58 Equal to Euro 75.000 that will be paid in cash.

5. Compensation Systems (Continued)

5.5 2018 Incentive System for Financial Advisors belonging to Identified Staff (Continued)

5.5.1 Comprehensive performance measurement

Taking into account the specificities of the PFA business, and in continuity with the previous years Incentive Plans in terms of business objectives, for the purposes of the 2018 Incentive System for PFA59 the performance assessment of Financial Advisors included in the Identified Staff will be based on the following indicators:

total net sales goal (difference between the invested and disinvested assets by FinecoBank customers);
net sales of asset under management goal;
development activities (for instance planned and structured meeting with customers);
percentage of achievement of the overall group goal by the managed Financial Advisors and percentage of sales in Guided Products60 in comparison with the group overall goal61;
percentage of achievement of individual net sales goal and percentage of net sales of asset under management in comparison with the individual goal62;
value generated by the requalification of assets in liquidity and asset under custody in Guided Products.

59 Always taking into account the individual compliance condition, as described above

60 Guided products refer to high added value products and developed services, considering the different customers risk profiles

61 For the Financial Advisors with managerial positions with more than 5 PFA coordinated

62 For PFAs and Financial Advisors with managerial position and less than 5 PFA coordinated

5.6 2018 - 2020 Long Term Incentive Plan (LTI) for Financial Advisors Identified Staff

With the aim of rewarding, motivating and retaining selected Financial Advisors and Network Managers63, in line with the commercial goals of the three-year period 2018 - 2020 and with the aim of creating value for Shareholders, a long-term plan has been defi ned. in cash and Fineco shares.

The Plan is dedicated to Financial Advisors who will be qualifi ed as Identifi ed Staff in the year 2020. At the moment, 15 benefi ciaries are estimated64.

The Plan - whose characteristics are described below in detail - provides:

three-year performance targets (2018-2020) linked to Total Net Sales (NS), Net Sales of Guided Products (NSGP) and, for PFAs and Group Managers, also to the ratio between Guided Products (GP) as at December 31st 2020, on Total Financial Asset (TFA) as at December 31st 2019;
entry conditions based on individual FinecoBank and Group performance;
malus conditions of capital, liquidity and profi tability at FinecoBank lavel and of Group capital and liquidity;
specifi c individual compliance and claw-back conditions;
a risk adjustment linked to the annual evaluation of the CRO Dashboard, assessed according to the methodology defi ned at Group level.
a balanced structure of "upfront" and "deferred" payments, in the form of cash and/or shares (which will be purchased on the market).

PERFORMANCE GOALS

Performance goals are defi ned on the basis of increasing targets as a percentage of the cumulative budget for the three-year period of the Plan, in terms of Total Net Sales (NS) and Net Sales of Guided Products (NSGP). Through the evaluation system, as described below, the Plan aims at rewarding the extra performance towards the defi ned goals.

Performance indicators work in a general "matrix" logic with different specifi cities, depending on the target population (PFA / Group Manager and Area Manager) as shown below.

For Group Manager and PFA population, increasing bonuses are expected up to a theoretical maximum when 250% of the cumulated budgets in terms of Total Net Sales and Net Sales of Guided Products are reached65.

63 Group Managers and Area Managers (Financial Advisors with accessory assignment of other PFAs coordination)

64 Identified pursuant to the regulation in place at the time

65 Group Manager that at December 31st 2020 have reached the personal targets as described in the matrix, in order to access the bonus shall have also achieved the goal of 100% of Total Net Sales and Net Sales of Guide Products in the period of the coordinated PFAs.

5. Compensation Systems (Continued)

For the purposes of determining the final maximum bonus a "multiplier" is also provided based on the ratio between Guided Products and Total Financial Asset, as shown below 5.6 2018 - 2020 Long Term Incentive Plan (LTI) for Financial Advisors Identified Staff (Continued)

For the purposes of determining the fi nal maximum bonus a "multiplier" is also provided based on the ratio between Guided Products and Total Financial Asset, as shown below For the purposes of determining the final maximum bonus a "multiplier" is also provided based on the ratio between Guided Products and Total Financial Asset, as shown below

For the Area Managers the performance evaluation follows the same logics with targets "vs budget" measured in a different way, as shown below. Differently from Group Manager and PFAs, in facts, the further multiplier is not provided66. For the Area Managers the performance evaluation follows the same logics with targets "vs budget" measured in a different way, as shown below. Differently from Group Manager and PFAs, in facts, the further multiplier is not provided⁶⁶

MALUS AND ENTRY CONDITIONS

For the purposes of the Plan, specifi c entry conditions are defi ned at individual, Bank and Group level as detailed below.

Individual and Bank entry conditions achievement of the over-performance in terms of Total Net Sales and Net Sales of Guided Products. .

In order to access the bonus, is provided at individual level the achievement of specifi c thresholds in terms of Net Sales of Asset under Management67, namely: ⁶⁶ The multiplier is not provided for Area Manager in consideration of the scope of the role and considering challenging the achievement of the over-performance in terms of Total Net Sales and Net Sales of Guided Products. . 71

Net Sales of Asset under Management >150% of individual target for PFAs e Group Managers with individual portfolios
Net Sales of Asset under Management >100% of group target for Area Managers and Group Managers with group portfolio.

In addition to the above individual conditions, in order to access the bonus, it is provided at Bank level the achievement of a EVA threshold equal or higher than € 180 Mio.

Entry and Malus conditions at Bank and Group level

In order to comply with regulatory provisions, are defi ned:

specifi c "Entry Conditions" at Fineco and Group level that will be measured within the Plan performance years and can confi rm, reduce or cancel the individual bonuses pursuant to what is detailed below, and
specifi c Fineco and Group Malus conditions measured within the deferral period that can confi rm, reduce or cancel the deferred portions, pursuant to what is detailed below.

66 The multiplier is not provided for Area Manager in consideration of the scope of the role and considering challenging the achievement of the over-performance in terms of Total Net Sales and Net Sales of Guided Products. 67 Measured at 31/12/2020 as "cumulated" within the Plan performance years

For these purposes, specifi c Group and Fineco capital and liquidity indicators and Fineco profi tability indicators have been defi ned. Capital and liquidity indicators (Common Equity Tier 1 Ratio Fully Loaded, Liquidity Coverage Ratio and Net Stable Funding Ratio) will be assessed yearly, while is provided a "cumulated" assessment of the profi tability indicators (Net Operating Profi t Adjusted and Net Profi t). Below is shown the functioning mechanism of entry and malus conditions provided by the Plan.

	The conditions must all be met for the purpose of awarding the maximum bonus (including
deferrals).
	The verification - in every year of performance of the Plan and in each year of bonus

assignment - of the persistence of the agency relationship remains valid

Each payment related to the Plan is subject to prior verification of the compliance of the

behavior at individual level.

The bonus payment is subject to claw - back68.

The conditions must all be met for the purpose of awarding the maximum bonus (including deferrals).

The verifi cation - in every year of performance of the Plan and in each year of bonus assignment - of the persistence of the agency relationship remains valid. The conditions must all be met for the purpose of awarding the maximum bonus (including deferrals). RISK ADJUSTMENT

Each payment related to the Plan is subject to prior verifi cation of the compliance of the behavior at individual level. The bonus payment is subject to claw - back68. The verification - in every year of performance of the Plan and in each year of bonus assignment - of the persistence of the agency relationship remains valid For the purposes of the appropriate Plan correction for the Bank's Risk, the results of the

RISK ADJUSTMENT behavior at individual level. annual CRO Dashboard assessments for the purposes of short-term incentive systems⁶⁹

For the purposes of the appropriate Plan correction for the Bank's Risk, the results of the annual CRO Dashboard assessments for the purposes of short-term incentive systems69 will be taken into consideration for each year of the Plan's performance. The presence of several 'neutral' annual assessments or negative assessments will result in a proportional reduction of individual bonuses, as shown below. The bonus payment is subject to claw - back68. will be taken into consideration for each year of the Plan's performance. The presence of several 'neutral' annual assessments or negative assessments will result in a proportional reduction of individual bonuses, as shown below

68 See paragraph 3.2. 69 See paragraphs 5.3 and 5.5 ⁶⁸ See paragraph 3.2. ⁶⁹ See paragraphs 5.3 and 5.5

BONUS PAYMENT A maximum bonus target of equal amount has been defined for all the participants of the 5. Compensation Systems (Continued)

plan, in line with the provisions of the applicable regulatory provisions and the FinecoBank Compensation Policy. 5.6 2018 - 2020 Long Term Incentive Plan (LTI) for Financial Advisors Identified Staff (Continued)

BONUS PAYMENT variable remuneration envisaged for the Plan Beneficiaries, also taking into account the

A maximum bonus target of equal amount has been defi ned for all the participants of the plan, in line with the provisions of the applicable regulatory provisions and the FinecoBank Compensation Policy. short-term variable remuneration attributable to each year of performance.

Individual bonuses - in particular - confirm compliance with the maximum limits for the

The bonuses will be paid 40% in cash and 60% in Fineco shares, according to the payment scheme shown below

2018 - 2020	2021	2022	2023	2024	2025
PERFORMANCE	20%	20%	20%	20%	20%
	UPFRONT	DEFERRED	UPFRONT	DEFERRED	DEFERRED
	CASH	CASH	SHARES	SHARES	SHARES

In 2021 the fi rst installment of the total incentive will be paid in cash once verifi ed the compliance at the individual level with rules and principles of conduct and behavior, considering the severity of any internal / external inspections (ie Audit, Consob and / or similar local authorities);
in 2022-2025 the remaining amount of the total incentive will be paid in several installments in cash and shares; each individual tranche will be subject to the application of the Zero Factor relating to the year of competence and to the verifi cation of compliance by each benefi ciary with rules and the principles of conduct and behavior. - In 2021 the first installment of the total incentive will be paid in cash once verified the compliance at the individual level with rules and principles of conduct and behavior, considering the severity of any internal / external inspections (ie Audit, Consob and / or

As per regulations, there are periods of unavailability on the shares assigned equal to two years for the shares allocated upfront and one year for deferred shares. similar local authorities);

The evaluation of the results and the conditions for the individual awarding of bonuses will be carried out by the Board of Directors, upon the proposal of the Remuneration Committee, according to the established governance70. - in 2022-2025 the remaining amount of the total incentive will be paid in several installments in cash and shares; each individual tranche will be subject to the application of

The Board of Directors does not take into account, when deciding bonus, balance sheet extraordinary items which do not impact operational performance, regulatory capital and liquidity (e.g. goodwill impairment, extraordinary contributions to deposit guarantee schemes, etc.). each beneficiary with rules and the principles of conduct and behavior.

The maximum number of shares to be assigned with the third, fourth and fi fth tranches of the bonus shall be defi ned in 2021, on the basis of the arithmetic mean of the offi cial closing market price of Fineco ordinary shares during the month after the Board resolution that verifi es the performance achievements in 2020. years for the shares allocated upfront and one year for deferred shares. The evaluation of the results and the conditions for the individual awarding of bonuses will

⁷⁰ It is possible for the Remuneration Committee and the Board of Directors to increase bonuses up to 20% (within the maximum bonus provided by the Plan) or to correct them in negative without limits, in the presence of extraordinary conditions and taking into account elements such as for example behaviors with significant reputational impact. The 'positive' correction does not apply if the Group entry conditions are not reached, as described in this paragraph. that verifies the performance achievements in 2020.

The Plan provides for an expected impact on FinecoBank share capital of approximately 0,08%, assuming that all free shares for Financial Advisors have been assigned. The current overall dilution for all other outstanding FinecoBank equity-based plans both for Employees and Financial Advisors equals 1,14%. However, the Plan does not have a proper dilution impact as the FinecoBank shares awarded are purchased on the market and are not generated through a free capital increase.

6. Compensation Data 6. Compensation Data

6.1 2017 Compensation Outcomes 6.1 2017 Compensation Outcomes

Employees Employees

Euro/ 000
Population as of 31/12/2017				2017 Short Term Variable				Deferred variable from previous exercises***				Variable paid in 2017
	No.	Fix		Upfront		Deferred	Vested in 2017		Unvested		from previous exercises ***
			€	Shares	€	Shares	€	Shares	€	Shares	€	Shares
Chief Executive Officer and General Manager (CEO) *	1	850		- 170	255	425		56 2.371		282 4.041	395	1.425
Non-executives Directors**	13	707	-	-	-	-	-	-	-	-	-	-
Executives with strategic resposibilities	5	1.648		- 298	446	744		98 4.120		493 7.004	552	2.310
Other Identified staff	8	1.404		- 394	116	210	14	271	147	385	428	359

* 10 % of the amount has been paid by UniCredit S.p.A.

** Including members of the BoD whose office ended in 2017, members appointed and confirmed by the BoD on 11/04/2017 and members employees of Unicredit Group. The fix amount of members employees of Unicredit Group has been defined In compliance with the in force policy "Policy in materia di struttura, composizione e remunerazione degli Organi Sociali delle Società di Gruppo".

*** The shares amounts related to UniCredit Group Incentive System Plans are expressed with convertion rate and after Capital increase resolved on March, 13th 2017

Euro/ 000

				2017 Short Term Variable			Deferred variable from previous exercises**				Variable paid in 2017 from
Population as of 31/12/2017		Fix	Upfront		Deferred		Vested in 2017		Unvested		previous exercises **
			€	Shares	€	Shares	€	Shares	€	Shares	€	Shares
Identified Staff belonging to business functions *	5	2.178	436	-	653	1.089	144	6.059	722	10.295	888	3.485
Identified Staff belonging to support functions	6	1.140	226	-	164	290	24	520	118	949	324	479
Identified Staff belonging to control functions	3	583	200	-	-	-		183	82	187	163	129

* 10 % of the amount of the CEO has been paid by UniCredit S.p.A.

** The shares amounts related to UniCredit Group Incentive System Plans are expressed with convertion rate and after Capital increase resolved on March, 13th 2017

The vested component refers to cash and equity awards to which the right matured in 2017 as the performance conditions were achieved: - vested cash payments refer to 2016 Group Incentive System; The vested component refers to cash and equity awards to which the right matured in 2017 as

vested equity payments refer to 2013, 2014,2015 Group Incentive System and to "2014-2017 Multi-year Plan Top Management". the performance conditions were achieved:

The unvested component refer to cash and equity awards for which the right did not matured in 2017 and for which any potential future gain has not been yet realized and remains subject to future performance: - vested cash payments refer to 2016 Group Incentive System; - vested equity payments refer to 2013, 2014,2015 Group Incentive System and to "2014-

unvested cash payments refer to 2015 and 2016 Group Incentive System; 2017 Multi-year Plan Top Management".
unvested equity payments refer to 2014,2015, 2016 and "2014-2017 Multi-year Plan Top Management".

The value of the shares shown as 2017 short term variable and deferred variable from previous exercises is calculated considering: The unvested component refer to cash and equity awards for which the right did not matured in

for 2014, 2015, 2016, 2017 Group Incentive System and for "2014-2017 Multi-year Plan Top Management", the arithmetic mean of the offi cial closing prices of Fineco ordinary shares from January 5th to February 5th, 2018; 2017 and for which any potential future gain has not been yet realized and remains subject to future performance:
for 2014 and 2013 Group Incentive System based on UniCredit shares, the arithmetic mean of the offi cial closing prices of UniCredit ordinary shares from January 23th to February 23th, 2018. - unvested cash payments refer to 2015 and 2016 Group Incentive System;

Variable paid in 2017 from previous exercises includes pay-outs based on demonstrated multi-year performance achievements related to Group Incentive Systems plans based on Fineco and UniCredit shares, to the "2014-2017 Multi-year Plan Top Management" and to the "2014 Plan Key People". All stock options granted under existing Group LTI plans represent zero gain for the beneficiaries as long as the entry conditions will not allow the exercise. The Chief Executive Officer and General Manager and 3 Executives with strategic

Variable paid in 2017 from previous exercises includes pay-outs based on demonstrated

mean of the official closing prices of UniCredit ordinary shares from January 23th to

All stock options granted under existing Group LTI plans represent zero gain for the benefi ciaries as long as the entry conditions will not allow the exercise. responsibilities for 2017 have been rewarded with more than 1 mln Euros. In the end, it is underlined that in 2017 any non standard71 remuneration has been paid for the

The Chief Executive Offi cer and General Manager and 3 Executives with strategic responsibilities for 2017 have been rewarded with more than 1 mln Euros. Identified Staff. It is underlined that in 2017 no Severance72 has been paid to or agreed with Identified Staff.

In the end, it is underlined that in 2017 any non standard71 remuneration has been paid for the Identifi ed Staff.

It is underlined that in 2017 no Severance72 has been paid to or agreed with Identifi ed Staff.

Financial Advisors

the "2014 Plan Key People".

Euro/ 000
Population as of 31/12/2017	No.	Fix*	Deferred variable from 2017 Short Term Variable previous exercises
			Upfront Deferred			Vested in 2017		Unvested		**
			€	Shares	€	Shares	€	Shares ***	€	Shares

* Recurring remuneration

** Non-recurring remuneration

*** Phantom Share

The vested component refers to cash, equity and phantom shares awards to which the right matured in 2017 as the performance conditions were achieved. In particular: The vested component refers to cash, equity and phantom shares awards to which the right

Personal Financial Advisors belonging to Identified Staff 7 4.608 0 311 107 268 34 355 97 656 344 124

vested cash payments refer to "2016 Group Incentive System PFA" for Financial Advisors and Managers of the Network; matured in 2017 as the performance conditions were achieved. In particular:
vested equity and phantom share payments refer to "2015 Group Incentive System PFA" and "2015-2017 Plan PFA" for Financial Advisors and Managers of the Network. - vested cash payments refer to "2016 Group Incentive System PFA" for Financial Advisors

The unvested component refer to cash, equity and to Phantom shares to which the right did not matured in 2017 and for which any potential future gain has not been yet realized and remains subject to future performance. In particular: - vested equity and phantom share payments refer to "2015 Group Incentive System PFA" and "2015-2017 Plan PFA" for Financial Advisors and Managers of the Network.

the unvested cash payment refer to "2015 Group Incentive System PFA" and to "2016 Group Incentive System PFA" for Financial Advisors and Managers of the Network.
the unvested phantom shares refer to "2015 Group Incentive System PFA" for Financial Advisors and Managers of the Network The unvested component refer to cash, equity and to Phantom shares to which the right did not
the unvested equity refer to "2016 Group Incentive System PFA" and to "2015-2017 Plan PFA" for Financial Advisors and Managers of the Network. matured in 2017 and for which any potential future gain has not been yet realized and remains subject to future performance. In particular:

The value of the shares / Phantom shares shown as 2017 short term variable and deferred variable from previous exercises is calculated considering the arithmetic mean of the offi cial closing prices of Fineco ordinary shares from January 5th to February 5th, 2018. 71 See paragraph 3.4 72 See paragraph 3.3

Variable paid in 2017 from previous exercises includes pay-outs based on actual performance achievements related to "2014 Plan PFA", to "2015 Group Incentive System PFA", to "2016 Group Incentive System PFA" and to the "2014 Contest" plan for Financial Advisors and Managers of the Network. ⁷⁷

71 See paragraph 3.4. 72 See paragraph 3.3. *** € Shares

Variable paid in 2017 from previous exercises

6. Compensation Data (Continued)

employee population demonstrates in particular how: - remuneration of the non-Executive Directors, as approved by the Shareholders' 6.2 2017 Compensation Policy

Total compensation policy for non-Executive Directors, Identifi ed Staff and for the overall employee population demonstrates in particular how: Meeting, does not include variable performance-related pay; - Identified Staff are offered opportunities for variable compensation in line with their

remuneration of the non-Executive Directors, as approved by the Shareholders' Meeting, does not include variable performance-related pay; - Identifi ed Staff are offered opportunities for variable compensation in line with their strategic role, regulatory requirements and our pay for performance culture; strategic role, regulatory requirements and our pay for performance culture; - the general employee population is offered a balanced pay-mix in line with the role,

Total compensation policy for non-Executive Directors, Identified Staff and for the overall

the general employee population is offered a balanced pay-mix in line with the role, scope and business or market context of reference. scope and business or market context of reference.

	COMPENSATION PAY-MIX
	FIX AND OTHER NON - PERFORMANCE RELATED PAY	VARIABLE PERFORMANCE - RELATED PAY
NON-EXECUTIVE DIRECTORS
Chairman and Vice Chairman	100%	0%
Directors	100%	0%
Statutory Auditors	100%	0%
OVERALL EMPLOYEE POPULATION
Business areas	77%	23%
Support function	92%	8%
Overall Company	89%	11%

6.3. Benefits Data

Our employees enjoy welfare, healthcare and life balance benefits that supplement social security plans and minimum contractual requirements. These benefits are intended to provide substantial guarantees for the well-being of staff and their family members during their active careers as well as in retirement.

In Italy, among the complementary pension plans, there are both defined performance funds (whose performances, which come to fruition once the retirement requirements are reached, are known in advance as they are set by the fund statute) and defined contribution plans (whose performances depend on the results of the asset management).

Complementary pension plans can also be classified as external or internal pension funds, where external funds are legally autonomous from the Group, while internal funds are accounting items entered into UniCredit S.p.A.'s balance sheet, whose creditor counterparts are the employees enrolled (both active and retired).

Both these categories are closed and, as such, they do not allow new subscriptions. The only exception is represented by the individual capitalization section of the "Fondo Pensione per il Personale delle Aziende del Gruppo UniCredit". Within this section subscribers can distribute their contribution – depending on their own risk appetite – among four investment lines (Insurance, Short, Medium and Long Term) characterized by different risk / yield ratios. In addition, always in this section, the enrolled employees may open complementary pension plan positions in favour of their family members dependent for tax purposes.

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4321_def-14a_2018-03-09_1ea9bb0e-e76e-4455-8bf9-4c3498c2ca29.pdf

2018 COMPENSATION POLICY

Contents

Letter from the Chairman of the remuneration committee

Dear Shareholders,

GIANMARCO MONTANARI

Executive Summary

Our Compensation Policy

Elements of our 2018 compensation approach and key results of 2017:

Executive Summary (Continued)

Elements of our 2018 compensation approach and key results of 2017: (Continued)

Our compensation disclosure

Chief Executive Officer and General Manager variable and fixed compensation data

Executive Summary (Continued)

Our compensation disclosure (Continued)

SECTION II – COMPENSATION POLICY

Contents

1. Introduction

2. Governance

2.1 Role of the Remuneration Committee

2.2 Market benchmark

2. Governance (Continued)

2.3 Definition of FinecoBank Compensation Policy

2.4 Role of Compliance function

2.5 Role of Risk Management function

2.6 Role of Audit Function

3. Fundamentals

3.1 Ratio between variable and fixed remuneration

3.2 Sustainability of the variable compensation

3.2.1 Definition of performance targets

3.2.2 Performance appraisal

3.2.3 Payment of the variable compensation

Focus on compliance breach, individual Malus and Claw-Back

3. Fundamentals (Continued)

3.2 Sustainability of the variable compensation (Continued)

3.3 Termination payments

3.4 Non-standard compensation

3.5 Share ownership guidelines

3. Fundamentals (Continued)

3.6 Compliance Drivers

4. 2018 Compensation Structure

4.1 Employees

4. 2018 Compensation Structure (Continued)

4.2 Financial Advisors

(continued to previous page)

4. 2018 Compensation Structure (Continued)

4.3 Non Executives members of Administrative and Auditing Bodies

SECTION III – ANNUAL COMPENSATION REPORT

Contents

1. Introduction

2. Governance & Compliance

2.1 Remuneration Committee

2. Governance & Compliance (Continued)

2.1 Remuneration Committee (Continued)

2.2 The Role of Company Control Functions: Compliance, Risk Management and Audit

2. Governance & Compliance (Continued)

2.2 The Role of Company Control Functions: Compliance, Risk Management and Audit (Continued)

Internal Audit Report on the 2017 FinecoBank remuneration policies and practices

3. Continuous Monitoring of Market Trends and Practices

4. Compensation paid to Members of the Administrative and Auditing Bodies, to General Managers and to other Executives with strategic responsibilities with strategic responsibilities

Further details on compensation of Executives with strategic responsibilities

Indemnities to directors in the event of resignations, dismissal or termination of employment following a public purchase offer (as per section 123/bis, paragraph 1, letter i), of TUF):

FinecoBank, starting from 2014 conducted, in alignment with specific regulation, the annual self-evaluation process to define Identified Staff population, both employees and Financial Advisors, to whom, according to regulators, specific remuneration rules apply 5. Compensation Systems

European Banking Authority Regulatory Technical Standard (RTS)28, followed a structured 5.1 Target population

5.2 Implementation and Outcomes of 2017 Incentive Systems

5.2.1 2017 Incentive System for employees belonging to Identified Staff

Bonus pool sizing

2017 Entry conditions at Group and local level

5. Compensation Systems (Continued)

5.2 Implementation and Outcomes of 2017 Incentive Systems (Continued)

Bonus Pool Risk Adjustment

Evaluation and pay-out for Identified Staff This method provides a quarterly monitoring of the progress of the indicators included in 2017.

Focus on the performance evaluation of the CEO and General Manager On the same date, the Board of Directors also approved the implementation - in 2018 - of a total number of shares equal to 142.290 to be assigned in 2020, 2021, 2022 and 2023.

5.2.2 2017 Incentive System for Financial Advisors belonging to Identified Staff

5. Compensation Systems (Continued)

5.2 Implementation and Outcomes of 2017 Incentive Systems (Continued)

Bonus pool sizing

2017 Entry conditions at Group and local level

RISK ADJUSTMENT behavior at individual level. annual CRO Dashboard assessments for the purposes of short-term incentive systems⁶⁹