FinecoBank

Remuneration Information • Mar 28, 2022

2022 Remuneration policy and 2021 remuneration report

1 FinecoBank S.p.A. – Public

Side presentation

March, 2022

. KEY PRINCIPLES AND GOVERNANCE

MAIN CONTENTS – FOCUS ON NEW FEATURES

2022 SHORT TERM INCENTIVE SYSTEMS

2021-2023 LTI IMPLEMENTATION OF SHORT AND LONG TERM INCENTIVE SYSTEMS

Key principles and Governance

Continuous monitoring of national and international market trends and practices, aimed at sound formulation of competitive compensation ensuring transparency and internal equity and 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.

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.

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.

Remuneration system and ESG Strategy

SHORT-TERM INCENTIVE SYSTEM

The 2022 Scorecard of the CEO and General Manager and that of the Identified Staff, depending on the specificity of the role, include sustainable goals related to the capacity of generating medium-long term value for all the stakeholders. In particular, the goal "Stakeholder Value" declines ESG targets that are included and represented in the FinecoBank Group ESG Goals Plan, in alignment with the Group 2020-2023 Multi Year Plan

2021-2023 LTI

In the 2021-2023 LTI Plan for employees, among the performance objectives considered, in line with the Multi Year Plan, ESG parameters relating to customer satisfaction, employee engagement and the extension of the ESG rating to all new funds were introduced in line with the Multi Year Plan.

GENDER NEUTRALITY IN THE REMUNERATION SYSTEM

The FinecoBank Group is committed to ensuring that the Compensation Policy is gender neutral, thus concurring to pursue equal opportunities in terms of professional development and remuneration. For this purpose, the Board of Directors with the support of the Remuneration Committee oversees the Gender Pay Gap, which is monitored according to the methodological indications provided for by the new regulatory framework. Furthermore, the Management is empowered with reference to the gender-neutral application of the remuneration systems. In fact, since 2017, the Identified Staff individual scorecards include the Gender Pay Gap parameter as one of the elements for their performance evaluation. The Multi Year Plan 2020-2023 also confirms, among the strategic directives, objectives in terms of Diversity and Equal Opportunity.

Introduction and structure

The Remuneration policy and report for 2022 defines the reference principles for defining the remuneration systems. Fineco's approach to remuneration, in coherence with regulatory provisions and market practice, guarantees the link with performance, market environment, business strategies and shareholders' long-term interests.

• The document consists of an Executive Summary that summarizes the key elements of the 2022 remuneration approach and provides the main results for the year 2021. It also highlights variable and fixed compensation data for the CEO and General Manager, and the goals set for 2022, all in order to support the understanding of the key information of the document. Given the market practice, this year, and like every year, the summary follows the Letter from the Chairman of the Remuneration Committee to the shareholders.
• Two separated sections follow as provided by art. 123-ter. A separate vote will be hold on each section:
• o Section I 2022 Remuneration policy (binding vote)
• o Section II 2021 Remuneration report (advisory nonbinding vote)
• Data required pursuant to article 450 of the Regulation (EU) no. 575/2013 and in compliance with art. 114-bis TUF are contained in in the apposite Annexes to document.

Main features - 2022 (vs 2021)

	CONFIRMED	NEW	NOTES
Maximum variable/fixed pay ratio: For employees belonging to business functions, the ratio is 2:1. For the Identified staff of the Company Control Functions, the variable remuneration cannot exceed 1/3 of the fixed remuneration. For the Head of Human Resources and the Manager in charge of preparing financial statements, the fixed remuneration is predominant on the total compensation. The 2:1 ratio also applies to Personal Financial Advisors (PFA) Identified Staff.
Full disclosure of the market peer group, used for trends analysis and benchmarking.
Share Ownership Guidelines for Executives with strategic responsibility.
Full description of 2022 short term Incentive Systems for Employees and PFA Identified Staff as well of the 2021-2023 LTI Plan and of the implementation in 2022 of the 2021 and prior years' short term Incentive Systems.			• The threshold, which was equal to € 75,000, was adjusted in application of the new regulatory provisions, according to which no deferral is applied in the presence of an annual variable remuneration equal to or less than € 50,000 and equal to or less than one third of the total annual remuneration.
Compensation strategy aligned with the sustainable principles set out in FinecoBank Group Strategic Plan 2020-2023. Specific section focused on gender neutrality of the Remuneration Policy, which incorporates the new regulatory provisions in terms of governance and methodology for calculating the gender pay gap.			• Inclusion of ESG targets also in long term incentive plans. • Continuous monitoring of Gender Pay Gap, as confirmation of the Group Remuneration policy's gender neutrality.
2021-2023 Long Term Incentive Plan, aimed at incintivizing, motivating and retaining selected employees of the Group			The Plan provides goals in line with 2021- 2023 FInecoBank targets in terms of Value Creation, Industrial Sustainability, Risk and Stakeholder Value.
The Report incorporates the provisions introduced by Circular no. 285 of 2013 and the new EU Delegated Regulation 923/2021, with reference to the identification of personnel whose activities have a significant impact on the Group's risk profile.

2022 short term Incentive Systems

2022 short term Incentive Systems

• In continuity with 2021, specific Incentive Systems for Employees and Financial Advisors Identified Staff have been put in place in 2022
• The 2021 Incentive Systems follow the Bonus Pool logic, providing entry and malus conditions linked to profitability, capital and liquidity indicators
• The Systems provide for a specific risk adjustment mechanism
• Bonus is paid in cash and FinecoBank shares, over a multi-year period

Payment scheme for Employees Identified Staff

The deferral schemes introduced following Bank of Italy provisions are based on the corresponding population cluster, as well as on the variable compensation amount.

• For the CEO and GM and other roles provided by law (i.e. Executives responding to the CEO) with a 'significant' amount of total variable pay (>435,000 €)*, the 2022 Incentive System is confirmed without changes from the 2021, with the deferral of 60% of the short-term variable remuneration and a greater quota in shares rather than cash.
• For the other roles provided by law (i.e. Executives responding to the CEO) with no "significant" amount of total variable remuneration, in continuity with 2021, 50% of the bonus will be deferred with a greater quota in shares rather than cash.
• For other identified staff with no "significant" amount of total variable remuneration, the deferral quota remains 40% of the bonus (60% upfront), with a 50/50 mix of shares and cash.
• A 1-year retention period still applies to both upfront and deferred shares

CEO and GM and other roles provided by law with a 'significant' amount of total variable pay	PAYOUT		Upfront	N+1	N+2	N+3	N+4	N+5	Total
		Cash	20%		12%			12%	44%
		Shares		20%		12%	12%	12%	56%
Other roles provided by law with no "significant" amount of total variable remuneration	PAYOUT		Upfront	N+1	N+2	N+3	N+4	N+5	Total
		Cash	25%		10%			10%	45%
		Shares		25%		10%	10%	10%	55%
Other identified staff with no "significant" amount of total variable remuneration	PAYOUT		Upfront	N+1	N+2	N+3	N+4		Total
		Cash	30%			10%	10%		50%
		Shares		30%	10%	10%			50%

* Equal to 25% of the total remuneration of the Italian High Earners according to the EBA report (Benchmarking and High Eaners Report). The threshold has been defined for the three-year period 2022-2024.

Payment scheme for PFA Identified Staff

• For Identified Staff with a significant amount (>435.000 €), a stricter payout scheme is provided with 60% of the bonus being deferred
• For other Identified Staff with no significant amount of total variable remuneration, a stricter payout scheme is provided with 40% of the bonus being deferred
• A 50/50 mix of cash and shares (unchanged from 2021)

	PAYOUT		Upfront	N+1	N+2	N+3	N+4	Total
Identified Staff with a significant amount of variable remuneration		Cash	20%	5%	5%	10%	10%	50%
		Shares		20%	15%	15%		50%
Other Identified Staff with no significant amount of variable remuneration	PAYOUT		Upfront	N+1	N+2	N+3	N+4	Total
		Cash	30%			10%	10%	50%
		Shares		30%	10%	10%		50%

2022 CEO and GM Scorecard

With the aim of rewarding, retaining and motivating selected Bank Employees in the long term, in line with FinecoBank Group 2020-2023 Strategic Plan, a share/based long-term incentive plan has been defined. The Plan sets goals linked to the 2021-2023 targets in terms of value creation, industrial sustainability, risk and stakeholder value, also in order to align the long-term interests of the Bank's Management with the long-term value creation for shareholders.

					ASSESSMENT CRITERIA
	GOALS	KPIs	WEIGHT	TARGET	Threshold	Payout
	VALUE CREATION	ROAC	35%	Average 2021-2023	≥ 38%	100%
					33% - 38%	0% - 100%
					≤ 33%	0%
	50%		15%	Sum 2021-2023	≥ 13 bn	100%
		Net Sales Asset Under Management			11 bn - 13 bn	0% - 100%
					≤ 11 bn	0%
	INDUSTRIAL SUSTAINABILITY			Average	≤ 37,5%	100%
	20%	Cost Income Ratio	20%	2021-2023	40% - 37,5% ≥ 40%	0% - 100% 0%
	RISK	Cost of Risk	15%	Average 2021-2023	≤ 18 bps	100%
	15%				18 - 22 bps	0% - 100%
					≥ 22 bps	0%
		Customer satisfaction	5%	Average 2021-2023	≥ 90 pt	100%
	STAKEHOLDER VALUE				85 pt - 90 pt	0% - 100%
					≤ 85 pt	0%
			5% 5%	Average 2021-2023 EOY 2023	≥ 76%	100%
		People engagement ESG rating for all new funds*			75% - 71%	0% - 100%
	15%				≤ 71%	0%
					100%	100%
					80% - 100%	0% - 100%
					≤ 80%	0%

* Excluding UK representing for Fineco a new opening market

In light of the benchmarking analysis' results carried out with the support of the External Advisor, with regards to the materiality matrix and Fineco sustainability goals as intended in the strategic plan, specific ESG parameters have been identified within the macro-goal Stakeholder Value:

CUSTOMER SATISFACTION

Customer Satisfaction monitors the strength of the relationship with our customers, defined by performance and preference.

PEOPLE ENGAGEMENT

People Engagement is based on the monitoring of the employees involvement with respect to business strategy and positioning, and it will be measured through the People Survey results, which reflects the engagement level and the alignment with respect to the company strategy.

ESG RATING FOR ALL NEW FUNDS

The goal focuses on the introduction of an ESG rating for all new funds, measuring environmental, social and governance risks from a financial point of view, compared with a peers' benchmark.

Implementation of short term incentive systems

Implementation of 2021 Incentive Systems

According to the schemes provided by the 2021 Incentive System, the Bonus Pool for Employees and Financial Advisors has been defined in consideration:

• the results in the "entry conditions matrix" and
• the CRO evaluation (CRO dashboard) of the Bank's results

The achievement of all the Entry Conditions, and the subsequent Bonus Pool confirmation, is the prerequisite for the payment of the annual instalments of bonuses related to previous years' incentive systems.

* The CRO Dashboard assessment used for PFA's Incentive Systems provide a correction range of 125% (instead of 120%) in correspondence of ++ sign.

CEO and GM 2021 performance evaluation

Focus on CEO and GM compensation

The term vesting refers to the performance period of the 2021-2023 LTI Plan

• According to the overall performance assessment showed in the previous slide (resulting in Exceeds Expectations) and of the overall business results achieved by the Company, the Chief Executive Officer was awarded a short-term variable bonus for the performance year 2021 equal to € 1,000,000, corresponding to the maximum amount that he can perceive given the applicable 2:1 ratio between variable and fixed remuneration.
• For the purpose of applying this ratio, it should be noted that the Chief Executive Officer received a fixed remuneration of € 1,000,000 and that an annual proquota of € 1,000,000 relating to the long-term variable remuneration (LTI 2021-2023) is also included as variable remuneration, in line with the applicable legislation.
• The € 1,000,000 bonus linked to the short-term incentive system awarded for the 2021 performance will be delivered in cash and in shares, with an upfront portion equal to 40% and a deferred portion equal to 60%, which considers the period of unavailability of the shares both upfront and deferred, as required by law

CRO Dashboard assessment mechanism - STI

• FinecoBank Incentive Systems are 'risk adjusted', in coherence with the Bank's Risk Appetite Framework.
• For the purposes of Short Term Incentive Systems, FinecoBank implements this principle through the use of the so called 'CRO Dashboard'
• The CRO dashboard (defined in coherence with Fineco Risk Appetite Framework) includes KPIs taken from the Risk Appetite Framework, measured with reference to the respective relevant thresholds (Risk Appetite, Risk Tolerance and Risk Capacity). Here below a sample of the content of the dashboard for 2022:

	SAMPLE
DIMENSION	2022
	KPIs	Risk Appetite	Risk Tolerance	Risk Capacity
	CET1 Ratio (%)	$-$ %	$-$ %	$-$ %
Capital	MREL-LRE	$-$ %	$-$ %	$-$ %
Liquidity	LCR(%)		$-$ %	$-$ %
	NSFR (%)		$-$ %	$-$ %
Credit	EL stock (%)	$-$ %	$-$ %	$-$ %
	Coverage on Impaired (%)	$-$ %	$-$ %	$-$ %
Interest Rate Risk on Banking Book	EV Sensitivity (%)		$-$ %	$-$ %
Risk & Return	ROAC (%)	$-$ %	$-$ %	$-$ %
Operational Risk	Operational Risk Losses / Revenues	$-$ %	$-$ %	$-$ %

* The CRO Dashboard assessment used for PFA's Incentive Systems provide a correction range of 125% (instead of 120%) in correspondence of ++ sign

Entry Conditions and Risk adjustment - 21-23 LTI

CRO DB ASSESSMENT	0 negative assessments	1 negative assessment	2 negative assessments	3 negative assessments
% BONUS	100%	75%	50%	0%

GRAZIE