Remuneration Policy and Report

Pursuant to Article 123-ter of the CFA

ELICA S.p.A.

https://corporate.elica.com/it#governance

Approved by the Board of Directors on March 14, 2024

LETTER OF THE CHAIRPERSON OF THE APPOINTMENTS AND REMUNERATION COMMITTEE 4
INTRODUCTION 6
EXECUTIVE SUMMARY 7
Elica business strategy and key results 7
Elica's Remuneration Policy 8
Summary 10
SECTION I: REMUNERATION POLICY 12
1. GOVERNANCE OF THE REMUNERATION PROCESS 12
1.1 Bodies and parties involved 12
1.2 Appointments and Remuneration Committee 12
1.3 Board of Directors 14
1.4 Shareholders' Meeting 14
1.5 Appointment of independent experts 15
1.6 Process for defining and approving the Policy 15
1.7 Process for temporary exceptions to the Policy 16
2. PURPOSE, PRINCIPLES AND TOOLS OF THE REMUNERATION POLICY 16
2.1 Purpose of the Policy 16
2.2 Content and addressees of the Policy 17
2.3 Remuneration of Directors not holding special offices 17
2.4 Chairperson of the Board of Directors 18
Pay mix 18
Fixed remuneration 19
Short-term variable incentive: MBO 19
Non-monetary benefits 20
Indemnity in the case of dismissal or termination of employment 21
Non-competition agreements 21
2.5 Chief Executive Officer 21
Pay mix 21
Fixed remuneration 22
Short-term variable incentive: MBO 22
Long-term variable incentive: 2024-2026 Monetary Plan 23
Non-monetary benefits 24
Indemnity in the case of dismissal or termination of employment 24
Non-competition agreements 24
2.6 Senior Executives 25
Pay mix 25
Fixed remuneration 26
Short-term variable incentive: MBO 26
Long-term variable incentive: Monetary plan 26
Non-monetary benefits 26

Indemnity in the case of dismissal or termination of employment 27
Non-competition agreements 27
Other provisions 27
2.7 Remuneration of the members of the Control Board 27
SECTION II: fees paid 28
Introduction 28
SECTION I 28
Fixed remuneration 28
Directors not holding special offices 28
Chairperson of the Board of Directors 28
Chief Executive Officer 28
Senior Executives 28
Short-term variable incentive 2023 29
Chairperson of the Board of Directors and Chief Executive Officer 29
Annual Monetary Incentive Targets 29
Senior Executives 29
Long-term variable incentive - 2016-2022 Phantom Stock and Co-investment Plan; 2019-2025 Phantom Stock and Co-investment Plan; 2021- 2023 Monetary LTI Plan 29
Chairperson of the Board of Directors 29
Chief Executive Officer 30
Senior Executives 30
Non-monetary benefits 30
Termination of office or employment 31
Senior Executives 31
Exceptions to the Remuneration Policy 31
Variable component ex-post correction mechanisms 31
Annual change in remuneration - Pay ratio 31
Vote cast by Shareholders' Meeting 2023 32
SECTION II 33
TABLE 1 Remuneration of the Board of Directors, Board of Statutory Auditors, and Senior Executives 33
TABLE 3A Financial instrument-based incentive plans, other than stock options, in favour of members of the Board of Directors and Senior Executives 35
TABLE 3B Monetary incentive plans for members of the Board of Directors and Senior Executives 36
Schedule 7-ter Table 1 - Shareholdings of the Board of Directors and Statutory Auditors 37
Schedule 7-ter Table 2 - Shareholdings of Senior Executives 38
GLOSSARY 39

LETTER OF THE CHAIRPERSON OF THE APPOINTMENTS AND REMUNERATION COMMITTEE

Dear shareholders,

As Chairperson of the Appointments and Remuneration Committee (the "Committee"), I am pleased to submit for your attention Elica's 2024 Remuneration Policy and Report.

The Committee - which in 2023 comprised Directors Angelo Catapano, Monica Nicolini, Liliana Fratini Passi and Susanna Zucchelli, in addition to the undersigned - has drafted and submitted to the Board of Directors a Remuneration Policy which is designed to strengthen the alignment between the interests of Stakeholders and those of Management. It also seeks to support the continuous improvement in individual and company performance and the consequent creation of value over the medium to long term, in line with the indications of the Corporate Governance Code for listed companies.

The year's financial results were in line with expectations despite a sharply contracting market. The Company continued to perform well despite the challenges presented by an unstable macroeconomic environment that has been hit hard by inflation over the past two years and geopolitical tensions. Adjusted EBITDA stood at a 10.2% margin on revenues, remaining stable from the previous year. Adjusted EBIT was Euro 24.3 million, with a 5.1% margin on revenues, thus maintaining significant strength despite the lower revenues caused by reduced demand. The Company also expanded its direct presence in American distribution by acquiring Canadian distributor AG International, further strengthening its position in the American market. Elica will present its new product proposals for the cooking world at the upcoming EuroCucina / FTK 2024 event, confirming its ongoing commitment to offering innovative, quality solutions and continuing to expand its range.

These results confirm the strength of a cohesive team of men and women who have been clear about their goals and taken all the necessary measures to achieve them.

The company's strategy to enhance the value of its human resources is based on a people strategy that ensures the company has the necessary response tools to develop rapid solutions to increasingly complex problems, while simultaneously ensuring the growth and enhancement of all employees.

The Company's mission as regards People focuses on its ability to attract staff who fit Elica's corporate culture, promoting internal growth, recognising merit and improving motivation. To achieve these goals, during the year the Company introduced policies and actions that are consistent with these strategic pillars, by strengthening and simplifying the present performance measurement and rewarding policies.

Despite the challenging economic environment, which also necessitated the use of temporary flexibility solutions, the Company continued to invest in employee growth. 2023 saw the introduction of a new Performance Development system focused on behavioural drivers linked to current and future challenges for Elica. The system seeks to encourage selfdevelopment by promoting greater management accountability for employee growth and by strengthening the processes for succession planning, which are always monitored by the Company. A major training plan involving all company employees, both at headquarters and in the production plants, was also carried out in 2023, focusing on innovation and reskilling.

This important shift in the Company's people management systems over the past three years, along with the need to be more effective and quicker in responding to ongoing market challenges, led to a review of internal reward systems. This involved simplifying processes and systems and adopting more flexible and agile tools, which bring together long-term professional growth and short-term specific rewards in the event of extraordinary performance. An annual incentive system ("MBO") has therefore been designed which is consistent with the general principles that underpin the entire Policy. The main focus of the system is to orientate the work of all management towards strategic objectives, stimulating the achievement of excellent performance through the payment of a higher bonus in the event of overperformance. All incentives are, however, at all times linked to a Group threshold gate that guarantees sustainability.

The 2024 Remuneration Policy will continue to focus strongly on Stakeholder objectives that are in line with strategic goals and corporate values, but will also continue to be attentive to promoting a culture of equality and performance incentives. As part of its role, the Committee devoted a significant portion of its work in 2023 to the means of identifying, verifying and enacting the remuneration policy, making an unwavering commitment to continuous improvement through comparison with market best practices and within the framework of total adherence to current regulatory reference points.

In addition to optimising the systems that determine the variable component of management remuneration ("MBO") particular attention was paid to establishing sustainability-linked remuneration proposals also for the Company's Executive Directors.

In 2023, the Committee also worked on developing a long-term incentive plan (2024-2026) for the Chief Executive Officer, top management, and certain employees in key roles. The objective of this plan is to engage and motivate the team to achieve the targets of a particularly challenging three-year plan.

As it has always done, the Committee firmly believes that this document is an essential tool for clear and transparent communication of the Remuneration Policy to the market and investors, highlighting the role of the Policy in pursuing business strategy.

This report, prepared in accordance with Article 123-ter of Legislative Decree No. 58/1998, as amended, regarding transparency in the remuneration of Directors of listed companies, was adopted by the Board of Directors, which approved its contents on March 14, 2024. In compliance with the changes introduced by Legislative Decree No. 49 of May 10, 2019, the first section of this Report, which outlines the Remuneration Policy, will be submitted to the Shareholders' Meeting for a binding vote, while the second section on remuneration paid in 2023 will be submitted to the same Shareholders' Meeting for an advisory vote.

Confident that this Report reflects the Committee's commitment to the pursuit of increasingly clear, transparent, and effective communication of the Remuneration Policy and Report to all Stakeholders, I thank you for your endorsement and support of these policies.

Elio Cosimo Catania

Chairperson of the Appointments and Remuneration Committee

INTRODUCTION

This Remuneration Policy and Report ("Report"), approved by the Board of Directors on March 14, 2024 on the proposal of the Appointments and Remuneration Committee, prepared pursuant to Article 123-ter of the CFA (Legislative Decree No. 58 of February 24, 1998, as amended), is divided into the following sections:

SECTION I outlines the Policy adopted for members of the Governing Bodies and Senior Executives in 2024, describing its general philosophy, the bodies involved, and the procedures used to adopt and enact it; In compliance with Legislative Decree No. 49 of May 10, 2019, Section I of the Report is subject to a binding vote at the Shareholders' Meeting called to approve the Financial Statements at December 31, 2023.
SECTION II sets out the remuneration paid in 2023 by name for Directors, Statutory Auditors, the Chief Executive Officer, and cumulatively for the other Senior Executives. In compliance with the provisions of Legislative Decree No. 49 of May 10, 2019, Section II of the Report is submitted to the advisory vote of the Shareholders' Meeting called to approve the 2023 Financial Statements.

The Policy described in Section I was prepared in line with the recommendations on remuneration set out in the Corporate Governance Code for listed companies, which Elica has adopted.

In this 2024 report, the Company has continued its mission to improve the quality of information provided to investors and the market in terms of transparency in the description of the Remuneration Policy and its application.

The two sections of the Remuneration Policy and Report are preceded by a paragraph in which some background information useful for reading the Remuneration Policy in relation to the Company's strategy is presented to the market and investors. This introductory section also presents an easy-to-read summary of the main elements of the Policy.

Finally, the second section of the Report includes an introduction that describes the application of the Policy for 2023.

This Report is made available to the public at Elica's registered office at Via Ermanno Casoli 2, Fabriano 60044, and on the Company's website (https://corporate.elica.com/it#governance)

EXECUTIVE SUMMARY

Elica business strategy and key results

The three-year period 2021-2023 was a highly significant time for Elica, as the Company set itself apart as the key player in a Turnaround Project. During the period, Elica undertook a series of initiatives to improve margins and competitiveness in a complex global environment featuring a significant contraction in demand and high levels of inflation.

Thanks to a robust team, rapid execution and clarity of vision, Elica not only managed to protect its margins, but also launched major initiatives in the fields of products, distribution and communication. These initiatives are the foundation on which Elica will build its future developments.

Specifically, Elica's future priorities can be summarised as follows:

Focus on sales, extending the Cooking Elica Brand range and strengthening the Motors BU, in terms of the technical and commercial development of products for the energy transition.
Efficient cost management without compromising initiatives that generate a return in medium- to long-term growth.
Maintaining a sound financial position.
Focus on creating long-term value for shareholders.

Against this backdrop, Elica's Remuneration Policy, as a fundamental tool in pursuing medium-/long-term strategic objectives, pays particular attention to both short and medium-long-term incentive plans and is based on a strong alignment of the performance indicators with the pillars of the strategy.

Performance Indicators	GROWTH	PROFITABILITY	CASH GENERATION	SUSTAINABILITY
Adjusted EBIT (MBO System and LTI Plan)		Chairperson, CEO and Senior Executives target
Free Cash Flow (MBO System and LTI Plan)			Chairperson (MBO only), CEO and Senior Executives target
Strategic Projects (MBO System)	Senior Executives target	Senior Executives target	Senior Executives target
Sustainability target (MBO System)				Chairperson, CEO and Senior Executives target

Elica's Remuneration Policy

Elica's Remuneration Policy is defined in accordance with the corporate governance model adopted by the Company and in line with the recommendations of the Corporate Governance Code. There have been no changes to the architecture of the previous years' plans.

PURPOSE OF THE POLICY	PRINCIPLES OF THE POLICY	ELEMENTS OF REMUNERATION
Value creation	Incentive plans are defined with the aim of aligning the interests of management with corporate strategies, by clearly linking the Policy with business results Use of incentive plans designed to ensure the alignment of interests between management and shareholders	Short-Term incentive Long-Term incentive
Financial robustness	Incentive plans developed over a time frame consistent with the Company's risk profile and with the expectations of key stakeholders in order to ensure sustainable value creation in the medium to long term	Long-Term incentive
Attractiveness and Motivation	Remuneration levels and Policy architecture defined to attract, retain and motivate personnel with skills required for the achievement of the Company's strategic objectives	Fixed remuneration Non-monetary benefits
Performance recognition	Remuneration systems geared toward recognising merit, through a clear link between the results achieved and behaviours enacted to achieve short and medium-long term results	Short-Term incentive Long-Term incentive
Sustainability (ESG)	Incentive targets related to sustainability issues in Environmental, Social & Governance, designed to generate value aligning the interests of the Company and all its stakeholders	Short-Term incentive

The table below shows the results of voting on the Remuneration Report in the past 5 years (voter %):

Summary

A summary of the 2024 Remuneration Policy is presented below. This is without prejudice to the prerogatives of the next Shareholders' Meeting to approve the 2023 Financial Statements, on April 24, 2024, and of the new Board of Directors (which will take office with the same Shareholders' Meeting), to determine remuneration pursuant to Article 2389 paragraph 1 and paragraph 3 of the Civil Code.

Role	Purpose	Criteria and parameters	Quantitative references
Fixed remuneration
Chairperson Chief Executive Officer		Verification of salary positioning relative to market salary levels based on assigned role and responsibilities	• Remuneration as per Article 2389, paragraph 3, Civil Code: Euro 541,000
			• Gross Annual Remuneration: Euro 503,370
			• Remuneration as per Article 2389, paragraph 3, Civil Code: Euro 390,000
			• Gross Annual Remuneration: Euro 110,000
Directors, Chairpersons of Committees	Attract, retain and motivate highly skilled personnel		• Remuneration as per Article 2389, paragraph 1, Civil Code: Euro 50,000
Directors, members of Committees			• Remuneration as per Article 2389, paragraph 1, Civil Code: Euro 43,000
Directors and Lead Independent Director			• Remuneration as per Article 2389, paragraph 1, Civil Code: Euro 44,000
Senior Executives			Fixed remuneration is related to the role held and the responsibilities assigned to it
		Short-term incentive plan
Chairperson	Promote achievement of annual targets and performance enhancement	Targets: • Adjusted EBIT (weighting 80%) • Free cash flow (weighting 20%). (Targets also act as gates) • Multiplier based on a sustainability goal: +/-10% Pay-out curve: 45÷143, with a minimum performance level below which no award is provided. Plan subject to malus and clawback.	Gross value awarded at target (achievement of 100% of targets): Euro 100,000
Chief Executive Officer			Gross value awarded at target (achievement of 100% of targets): Euro 250,000 (equal to 62.5% of fixed remuneration net of non-competition components)
Senior Executives		Targets: • Group targets (also act as a gate) o Adjusted EBIT o Free Cash Flow • Division targets • Individual targets • Multiplier based on a sustainability goal: +/-10% Pay-out curve: 11÷213, with a minimum performance level below which no award is provided. Plan subject to malus and clawback.	Gross value awarded at target (achievement of 100% of targets): up to a maximum of 50% of fixed remuneration and commensurate with role
		Long-term incentive plan

Chairperson	Promote sustainable value creation in the medium/long term	On March 14, 2024, the Board of Directors approved the following Plan for the Chief Executive Officer and the Senior Executives Plan type: Monetary plan Vesting period: 3 years Performance target calculated as a weighted average of the following indicators: • Adjusted EBIT • Free Cash Flow Plan subject to malus and clawback.	• Not applicable
Chief Executive Officer			• Target: 117% of fixed remuneration
Senior Executives			• Target: in a range from 50% to 117% of fixed remuneration
Non-monetary benefits
Chairperson, Chief Executive Officer and Senior Executives.	Supplementation of remuneration package	Benefits provided for by the relevant national collective bargaining agreements (CCNL) and by company policies	Supplementary pension, supplementary medical insurance, residential property, mixed-use car.
Termination of office and/or employment relationship
Chairperson			Not applicable
Chief Executive Officer	Management retention tool	Benefits in the case of an early conclusion of mandate or employment without just cause	12 months' gross pay
Senior Executives			Benefit required by law, by national collective bargaining agreements and by individual agreements

SECTION I: REMUNERATION POLICY

1. GOVERNANCE OF THE REMUNERATION PROCESS

1.1 Bodies and parties involved

The Policy is defined following a formalised process described in the following paragraphs, which involves the Shareholders' Meeting, the Board of Directors, the Appointments and Remuneration Committee and the Human Resources Department.

Specifically, the scopes of responsibility are:

PARTY TO BE REMUNERATED	DECISION-MAKING BODY	PROPOSING BODY	SUPPORTING DEPARTMENTS	CONSULTING COMPANIES
Chairperson	Shareholders' Meeting Board of Directors	Appointments and Remuneration Committee	Human Resources department
Chief Executive Officer	Shareholders' Meeting Board of Directors	Appointments and Remuneration Committee	Human Resources department
Directors	· Shareholders' Meeting	Board of Directors
Senior Executives	Chairperson & Chief Executive Officer	Appointments and Remuneration Committee	Human Resources department	Mercer

In defining the Remuneration Policy for Senior Executives, Elica was supported by the consulting firm Mercer Italia.

1.2 Appointments and Remuneration Committee

The Appointments and Remuneration Committee was established by the Board of Directors, which defined its duties and powers, in line with the provisions contained in the Corporate Governance Code, which Elica S.p.A. has adopted. The Committee consists of Independent Directors to ensure that the remuneration policies of the Chairperson, Chief Executive Officer, Directors vested with specific offices and Senior Executives, in addition to those of the Non-Executive Directors, are formulated by a body free of conflicts of interest.

The table below outlines the composition and activities of the Appointments and Remuneration Committee in 2023:

NAME	COMMITTEE ROLE	OFFICE	COMMITTEE ACTIVITIES
Elio Cosimo Catania	Chairperson	Independent Non-Executive Director
Angelo Catapano	Member	Independent Non-Executive Director
Monica Nicolini	Member	Independent Non-Executive Director	4 meetings held in 2023 Average meeting duration of 1 hour
Liliana Fratini Passi	Member	Independent Non-Executive Director
Susanna Zucchelli	Member	Independent Non-Executive Director

The Chairperson of the Board of Statutory Auditors and the Statutory Auditors also attend the meetings of the Appointments and Remuneration Committee. Also attending by invitation are the Head of Human Resources and, on specific Agenda items, the Chief Financial Officer and other managers.

In 2023, among other matters, the Appointments and Remuneration Committee:

made proposals to the Board regarding remuneration of the Company's Executive Directors and proposals for the definition of management performance targets linked to the variable component of remuneration, broken down by business divisions; specifically:
- ̵ it assessed and proposed to the Board the structure of the 2024 short-term variable remuneration system for Executive Directors and Top Management, and evaluated the structure of the short-term variable remuneration system for company management;
- ̵ it assessed and proposed to the Board the structure of the long-term incentive plan (2024-2026) for the Chief Executive Officer, top management, and certain employees in key roles;
proposed the overall remuneration framework as presented to the Board and then to the Shareholders' Meeting;
proposed to the Board the Remuneration Policy and Report (including, among other things, a description of how the Committee exercises its functions), to be submitted to the Shareholders' Meeting;
periodically monitored and verified the correct application of the remuneration policy adopted;
monitored the application of the decisions adopted by the Board, verifying, in particular, the effective achievement of the performance targets;
assessed that the size and composition of the Board and Committees were suitable for the purpose of carrying out the functions assigned to them;
made proposals to the Board on how and when to carry out the annual Board of Directors assessment, which was carried out in view of the renewal of the Board's mandate by an independent third party;
assessed the validity of the policy for diversity in the composition of corporate bodies and the Committee Regulation, last amended in February 2021;
oversaw and monitored the effectiveness of the provisions of the Executive Director succession plan and reported to the Board on the matter;
through its Chairperson, reported to the Board of Directors at the first appropriate meeting.

No Director attended the Committee meetings at which proposals were made to the Board of Directors regarding his or her own compensation and decisions regarding the compensation of Committee members were made with the abstention of those involved.

The Committee had access to the information and departments required to adequately carry out its duties. Therefore, as the Committee made use of the resources, the means and the structure of the Company, specific financial resources were not provided for.

We note that the work of the Remuneration Committee was carried out as part of a continuous and structured process designed to establish the new Remuneration Policy and related compensation instruments, and to prepare the Remuneration Policy and Report.

For more information on the functions assigned to the Appointments and Remuneration Committee in 2023, see Section "7.2. Appointments and Remuneration Committee" and "Table 3" of the 2023 Corporate Governance and Ownership Structure Report, published at the same time as this Report.

In 2024 and until the date of approval of this Report, two meetings of the Committee were held on February 8 and March 7. These covered, among other matters, the periodic assessment of the remuneration policies enacted in 2023, the creation of proposals for Remuneration Policies for both Executive Directors and Senior Executives (short- and long-term), and a review of this Report for subsequent approval by the Board of Directors.

1.3 Board of Directors

As of the date of this Report, the Board of Directors of Elica S.p.A. consists of seven Directors, as listed below. For more details on the role played by the Board of Directors, please refer to the Company's By-Laws, which are available at https://corporate.elica.com/it#governance, and to the 2023 Corporate Governance and Ownership Structure Report, published at the same time as this Report.

1.4 Shareholders' Meeting

The duties of the Shareholders' Meeting, as per the By-Laws, and with respect to the matters of interest within the scope of this Report, are:

appointing and dismissing Directors;
appointing Statutory Auditors and the Chairperson of the Board of Statutory Auditors;
establishing the remuneration of the Directors and Statutory Auditors;
commenting on the Report itself, with a binding vote on Section I and an advisory vote on Section II.

In line with the provisions of current regulations, the Shareholders' Meeting held on April 27, 2023 approved the remuneration policy pursuant to Article 123-ter, paragraph 3-bis of Legislative Decree No. 58/1998, with votes in favour totalling 98.40%. It also voted in favour of Section II, in accordance with paragraph 6 of Article 123-ter of Legislative Decree No. 58/1998, with votes in favour totalling 99.02%.

1.5 Appointment of independent experts

Elica S.p.A. decided to use independent third-party expert consultants in a support function for the evaluation of positions and the definition of remuneration policies (Mercer Italia).

1.6 Process for defining and approving the Policy

The "Remuneration Policy" is submitted to the Board of Directors for approval by the Appointments and Remuneration Committee. In drafting the policy, the Appointments and Remuneration Committee involves the Human Resources Department - with the aim of gathering market data in terms of practices, policies and benchmarking, in order to better develop the policy - and, where necessary, also independent experts in the field.

On the proposal of the Appointments and Remuneration Committee, the Board of Directors defines and adopts the "Remuneration Policy" in its form and internal regulatory sources and, specifically, the content summarised in the paragraphs relating to the remuneration policy for members of the Board of Directors and the incentive plans. In accordance with the By-Laws, the Board of Directors also takes into consideration the opinion of the Board of Statutory Auditors regarding the policy on the remuneration of Directors vested with specific offices. After examining and approving the Policy, the Board of Directors submits this to the binding vote of the Shareholders' Meeting, making it available at least 21 days before the date of the Shareholders' Meeting through the publication of the Remuneration Policy and Report.

The full text of the Remuneration Policy and Report was reviewed in advance by the Appointments and Remuneration Committee and then approved by the Board of Directors on March 14, 2024.

We note that the Related Party Transactions Policy does not apply to Shareholders' Meeting motions pursuant to Article 2389, paragraph 1 of the Civil Code, relating to remuneration paid to the members of the Board of Directors and the Executive Committee (where established) and motions concerning the remuneration of Directors vested with specific offices within the overall amounts previously determined by the Shareholders' Meeting in accordance with Article 2389, paragraph 3 of the Civil Code, nor to Shareholders' Meeting motions as per Article 2402 of the Civil Code concerning Board of Statutory Auditor remuneration. This policy is also not applicable to motions, other than those submitted to the Shareholders' Meeting in accordance with Article 2389, first paragraph of the Civil Code and Article 2402 of the Civil Code, concerning the remuneration of Directors vested with specific offices, in addition to other Senior Executives, on the condition that:

I. Elica has adopted a remuneration policy, which is subject to a binding vote of the Shareholders' Meeting;
II. in the drawing up of the remuneration policy a committee exclusively made up of Non-Executive Directors, the majority of whom independent, was involved;

III. the remuneration awarded to each Director or Senior Executive is set in accordance with this Policy and quantified according to criteria that do not involve discretionary assessments.

1.7 Process for temporary exceptions to the Policy

In compliance with the provisions of Legislative Decree No. 49 of May 10, 2019, the Company has a process in place for temporary exceptions to the Remuneration Policy if exceptional circumstances arise where an exception to the Policy is necessary in the furtherance of the long-term interests and sustainability of the Company as a whole, or to ensure the Company's ability to compete in the marketplace.

The Appointments and Remuneration Committee, supported by the Human Resources Department, is the board entrusted with the task of verifying the presence of such exceptional situations and formulating proposals for temporary exceptions to the Policy to the Board of Directors, which has been identified as the board entrusted with the approval of such temporary exceptions.

Exceptions may relate to:

changes in the ratio of fixed remuneration to variable remuneration;
changes in performance targets and their weightings with regard to MBO and LTI plans.

As regards these exceptions, the opinion of the Related Party Transactions Committee must be obtained, following the relevant procedure set out by the Company.

Any exceptions approved, which may relate to the aforementioned elements of the Policy, will be disclosed through the subsequent Remuneration Policy and Report, accompanied by the reasons that prompted the Company to make such an exception.

2. PURPOSE, PRINCIPLES AND TOOLS OF THE REMUNERATION POLICY

2.1 Purpose of the Policy

Elica's Remuneration Policy was defined in accordance with the governance model adopted by the Company and considering the recommendations of the Corporate Governance Code.

Elica's Remuneration Policy is based on the following principles:

Value creation	Incentive plans are defined with the aim of aligning the interests of management with corporate strategies, by clearly linking the Policy with business results
Financial	Incentive plans developed over a time frame consistent with the Company's risk profile and with the expectations of
robustness	key stakeholders in order to ensure sustainable value creation in the medium to long term
Attractiveness and	Remuneration levels and Policy architecture defined to attract, retain and motivate personnel with skills required for
motivation	the achievement of the Company's strategic objectives
Performance	Remuneration systems geared toward recognising merit, through a clear link between the results achieved and
recognition	behaviours enacted to achieve short and medium-long term results
Sustainability	Incentive targets related to sustainability issues in Environmental, Social & Governance, designed to generate value
(ESG)	aligning the interests of the Company and all its stakeholders.

2.2 Content and addressees of the Policy

The key elements of remuneration for Directors and Senior Executives are defined below, in line with the purposes and principles described:

POLICY CONTENT	CHAIRPERSON	CHIEF EXECUTIVE OFFICER	NON-EXECUTIVE DIRECTORS	SENIOR EXECUTIVES
Fixed remuneration	Remuneration (pursuant to Article 2389, Civil Code) Gross Annual Remuneration	Remuneration (pursuant to Article 2389, Civil Code) Gross Annual Remuneration	Remuneration (pursuant to Article 2389, paragraph 1, Civil Code) for participation in the Board	Gross Annual Remuneration
Short-term variable incentive	Annual incentive system (MBO) Malus and clawback	Annual incentive system (MBO) Malus and clawback	and Committees	Annual incentive system (MBO) Malus and clawback
Long-term variable incentive		Monetary plan Malus and clawback		Monetary plan Malus and clawback
Non-monetary benefits	Benefits under national collective bargaining agreements and company practices	Benefits under national collective bargaining agreements and company practices	Directors and Officers Policy	Benefits under national collective bargaining agreements and company policies
Post-employment benefits		Post-employment benefits

2.3 Remuneration of Directors not holding special offices

On April 29, 2021, the Elica S.p.A. Board of Directors approved the award of the Board of Directors remuneration approved by the Shareholders' Meeting on the same date, for a total annual amount of Euro 230,000, plus VAT where due, statutory contribution charges and reimbursement of documented expenses incurred in execution of the role (remuneration pursuant to Article 2389, paragraph 1 of the Civil Code), to apply for the entire term of office until the approval of the financial statements for the year ended December 31, 2023.

The remuneration was divided as follows:

OFFICE	FEE
Director - Member of Committees	€ 43,000
Director - Chairperson of Committees	€ 50,000
Director and Lead Independent Director	€ 44,000

The Shareholders' Meeting on April 24, 2024 will be called to approve the remuneration due to the members of the Board of Directors pursuant to Article 2389 paragraph 1 Civil Code.

The new Board of Directors appointed by the Shareholders' Meeting on April 24, 2024 will then be responsible for allocating the remuneration for Directors not holding special offices.

In line with the recommendations of the Corporate Governance Code, the Remuneration of Directors not holding special offices does not include a variable component linked to the Company or the Group's financial performance.

However, such remuneration is deemed sufficient to attract, retain and motivate Directors with the professional qualities required to successfully manage the Company.

The Non-Executive Directors are not beneficiaries of share-based payments.

Directors shall also be entitled to reimbursement of documented expenses incurred by reason of their office.

A D&O (Directors & Officers) Liability insurance policy is also provided for third-party liability of corporate bodies in the performance of their duties; among other things, this policy covers any legal expenses. The corresponding renewal for the full term of the Board of Directors was last approved at the Shareholders' Meeting on April 29, 2021. This topic will once again be brought to the Shareholders' Meeting's attention at the next renewal of the Board on April 24, 2024.

2.4 Chairperson of the Board of Directors

Pay mix

The remuneration package provided for the Chairperson of the Board of Directors includes a fixed component - arising from the role of Executive Director and employee - and a short-term variable component.

The Shareholders' Meeting on April 24, 2024 will be called to approve the remuneration due to the members of the Board of Directors pursuant to Article 2389 paragraph 1 Civil Code.

The new Board of Directors appointed by the Shareholders' Meeting on April 24, 2024 will then be responsible for approving the fixed remuneration due to the Chairperson of the Board of Directors, as remuneration pursuant to Article 2389, paragraph 3 of the Civil Code.

The Executive Chairperson's pay mix is as follows:

Fixed remuneration

The Fixed Remuneration of the Chairperson of the Board of Directors, approved by the Board of Directors with the approval of the Board of Statutory Auditors, consists of the following elements:

The total Fixed Remuneration paid to the Chairperson of the Board of Directors is Euro 1,044,370. We note that the Chairperson of the Board of Directors waived the remuneration pursuant to Article 2389, paragraph 1 of the Civil Code.

Short-term variable incentive: MBO

The annual incentive system (MBO), designed in line with the general principles on which the entire Policy is based, and mainly enables the pursuit of the following objectives:

aligning management objectives with business strategies, directing management actions toward strategic objectives in harmony with business priorities;
stimulating the achievement of excellent performance, through the recognition of a higher premium in the event of overperformance.
management and monitoring of performance in the short term through annual evaluation of beneficiary performance on an annual basis;

The MBO system for the Chairperson of the Board of Directors, in substantial continuity with the policy approved last year and in line with the nature of the position, provides exclusively for Group targets of an economic-financial nature and a multiplier based on sustainability goals. Specifically, the MBO system provides for:

Gates: thresholds for access to the annual incentive system, calculated on the weighted average of the two performance targets. Failure to achieve the gate performance level means that no bonus is awarded;
Target sheets: a calculation mechanism for the target bonus based on the achievement level of performance targets;
Multipliers: a corrective mechanism that modifies final payout by a factor of +/-10% depending on the achievement of the sustainability performance target (on/off trigger mechanism).

The Chairperson's MBO system includes the following performance targets as defined by the Board of Directors at its meeting on February 13, 2024:

For incentive purposes, the actual vesting level of the award is calculated according to the following payout curve, to which a +/-10% adjustment factor should then be applied based on the achievement of the sustainability target:

The Board of Directors confirmed a target MBO award of Euro 100,000 for its Chairperson.

The plan is subject to malus and clawback clauses, whereby the Company has the right to demand, within three years of the completion of the plan and regardless of whether the employment relationship is ongoing or has ended, the return - in whole or in part - of any sums allocated under the Plan (or to withhold components not yet disbursed), where these have been received on the basis of data which was later found to be erroneous or falsified, or in the event that the Beneficiary has been responsible for wilful or culpable conduct, without which the award conditions would not have been achieved.

Non-monetary benefits

The Chairperson of the Board of Directors receives the benefits provided by company policies (insurance coverage, mixeduse car).

Indemnity in the case of dismissal or termination of employment

There are currently no agreements in place between the Company and the Chairperson of the Board of Directors that govern treatment in the event of termination of office or termination of employment except, in each case, as required by law.

Non-competition agreements

At the date of this report, there are no non-competition agreements between Elica and the Chairperson of the Board of Directors that provide for the payment of consideration in relation to the obligation arising from the agreement.

2.5 Chief Executive Officer