Terna — Remuneration Information 2024

Apr 24, 2024

2024 Report on the Remuneration Policy and Remuneration Paid

Milan, 19 March 2024

TERNA S.P.A. AND THE TERNA GROUP

Report on the Remuneration Policy 2024 and Remuneration Paid 2023: Terna S.p.A. and the Terna Group

Traditional management and control model

This is a translation of the original Italian text. For any difference in the meaning between the original Italian text and its translation, the Italian text prevails.

Issuer: "Terna - Rete Elettrica Nazionale Società per Azioni" (in abbreviated form Terna S.p.A.) Website: www.terna.it Annual reporting period to which the Report refers: 2023 Report approval date: 19 March 2024

Terna is investing in Italy's development

We guarantee energy security and balance electricity supply and demand 24 hours a day, ensuring that the system is reliable, efficient and accessible to all.

We invest and innovate every day in the development of an electricity grid capable of integrating the energy produced from renewable sources, improving links between the different areas of the country and strengthening cross-border interconnections, applying a sustainable approach that takes into account the needs of the communities and people we work with.

We are behind the energy you use every day

We are responsible for guaranteeing the continuity of power supply, essential in making sure that electricity reaches Italian homes and businesses at all times.

We provide everyone with equal access to electricity and are working to provide clean energy for future generations.

MISSION

We care about the future of energy

We are committed to building a future powered by clean energy, enabling new forms of consumption and production increasingly based on renewable sources. This will allow us to achieve the goal of delivering an energy transition that is fair and inclusive, whilst also lowering costs.

Thanks to our overall vision of the electricity system and new digital technologies, we are leading the country's drive to get to net zero by 2050, in line with European climate goals. VISION

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Letter from the Chairman of the Remuneration Committee

Dear Shareholders,

as Chairman of the Remuneration Committee, it is my pleasure to present the Report on the Remuneration Policy for 2024 and Remuneration Paid in 2023, drawn up according to art. 123-ter of the Consolidated Law on Finance and approved by the Board of Directors on 19 March 2024.

The Report not only sets out to provide clear, exhaustive and transparent information to shareholders and all stakeholders on Terna's Remuneration Policy for 2024 and remuneration paid to the Company's Directors, Statutory Auditors and Key Management Personnel in 2023, but to also highlight the role of remuneration in supporting the Company's growth plans.

As a strategic enabler, Terna is playing a central role in Italy's energy transition. It is committed to ensuring achievement of ambitious environmental goals, boosting the competitiveness of our industries and providing citizens with access to affordable electricity. The pace of the transition, dictated by international agreements, unrelenting, requiring very significant levels of investment and a commitment to achieving a series of challenging objectives. To realise these objectives that Terna must meet, the Company needs to leverage its highly-skilled human capital and its advanced STEM (Science, Technology, Engineering, Mathematics) expertise. The labour market is currently undergoing a "war for talent" and demand for STEM specialists far outstrips supply, above all in Italy. In this context, it is essential to ensure that human resource policies are fully aligned to support Terna's strategic goals.

In addition to considerations around pay, to attract and motivate the best people a business needs to focus on its leadership framework and values system, providing an inclusive and collaborative workplace, respecting all its stakeholders and adopting a merit-based approach. In a forward-looking Company such as Terna, these principles are essential, as, it seems to us, the Company is fully aware. Empowerment, accountability and pay for performance are now a part of the Company's DNA and we have no reason to doubt that this is also reflected in areas of operation that are not visible to the Committee.

Whilst continuing with the tried and tested approach adopted in previous years, the Remuneration Committee has sought to take advantage of new opportunities for improvement, making use, where appropriate, of independent advisors. The driving force behind continuous improvement is the ongoing search and adoption of best practices, without ignoring the obvious fact that existing agreements must be adhered to.

We have also conducted a thorough benchmarking analysis to identify potential new initiatives, in line with the strategic elements described above. Very briefly (details are provided in the following sections), these were the key areas on which we focused our efforts in order to draw up the proposals put forward by the Remuneration Committee and later approved by the Board of Directors:

• remuneration of the Chairman, Chief Executive Officer and General Manager, non-executive Directors and Statutory Auditors: no change;
• remuneration of Key Management Personnel: given that the average positioning is below the first quartile, it was decided to leave the fixed component unchanged, whilst giving the CEO/GM leeway to increase:

1.the percentage of gross annual pay consisting of short-term incentives at target up to a maximum of 60% (compared with the current maximum of 50%);

2.the percentage of gross annual pay consisting of long-term incentives at target up to a maximum of 80% (compared with the current maximum of 60%).

• short-term incentives/MBO: for certain KPIs, more challenging targets have been set to achieve the highest score;
• long-term incentives: without revolutionising the existing scheme, new metrics have been introduced to facilitate objective quantification and measure the performance of key variables, such as the level of debt; the weighting criteria have also been revised;
• one-off bonuses: further restrictions on their use have been introduced and they are thus only allowed in relation to:
  • 1. major extraordinary transactions with a significant impact;
  • 1. entry and retention bonuses, in exceptional cases where it is deemed essential to attract /retain strategic personnel to deliver on the Company's ambitious growth plans.
• severance payments for management: without affecting existing rights, for newly appointed managers (promoted from within or hired from outside the Company), LTI plans are excluded from the computation of severance pay.

The content of this letter reflects the contributions of all the Directors who make up the Remuneration Committee - Angelica Donati, Professor Gian Luca Gregori, Simona Signoracci and Anna Chiara Svelto – whom I wish to personally thank for their extraordinary commitment and always attentive and constructive approach.

Dear Shareholders, the Remuneration Committee and all the Directors are here to serve the Company to ensure that it operates with a view to creating value and exceeding the highest expectations of investors and all its stakeholders. Any encouragement you can give with the aim of improving the Company's performance and governance will be greatly appreciated.

Yours sincerely, Enrico Tommaso Cucchiani

Chairman of the Remuneration Committee

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Introduction

This Report summarises the principles and guidelines followed by Terna S.p.A. (hereinafter, for the sake of brevity, also "Terna" the "Company" or the "Group") in designing and reviewing the remuneration policy and its implementation, with particular reference to members of the Management and Oversight Bodies, the General Manager and Key Management Personnel ("KMP").

The document is divided into two sections:

• Section I Report on the remuneration policy for 2024 describing the policy adopted by Terna for 2024 in respect of the remuneration of Directors, the General Manager, Key Management Personnel and members of Oversight Bodies, specifying the overall purposes pursued, the bodies involved and the procedures used in its adoption and implementation, as well as for the application of temporary exemptions;
• Section II Report on remuneration paid in 2023 setting out details of the remuneration paid in 2023, by name in the case of Directors, Statutory Auditors and the General Manager and, in aggregate form, in the case of Key Management Personnel.

This Report was prepared in compliance with the current statutory requirements1 and is consistent with the regulations established by the CONSOB2 .

The Policy described in Section I was also prepared in line with the recommendations on the subject of remuneration in the Corporate Governance Code for listed companies (the "Corporate Governance Code"), in its latest version. As described in the Report on Corporate Governance and Ownership Structures, please note that Terna formally signed up to the new edition of the Code at the Board of Directors meeting of 27 January 2021.

On 19 March 2024, Terna's Board of Directors, on the recommendation of the Remuneration Committee, approved Sections I and II of this Report. Section I, containing the "Report on the remuneration policy", is subject to a binding vote at the Annual General Meeting, whilst Section II, containing the "Report on remuneration paid" and providing detailed information on pay in 2022, is subject to a non-binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023.

¹ Art. 123-ter of Legislative Decree 58 of 24 February 1998 (the "Consolidated Law on Finance" or "CLF", as amended by Legislative Decree 49 of 10 May 2019), which states that "at least twenty-one days before the date of the Annual General Meeting of shareholders [...], listed companies must provide the public with a report on the company's remuneration policy and remuneration paid, filing such report at their registered offices, on their websites and using the other methods established in CONSOB Regulations". The same art. 123-ter, paragraph 3-bis of the CLF states that "companies shall put their remuneration policy to a shareholder vote [...] at least every three years or when changes are made to the policy". Paragraph 3-ter states that "the result of the vote required by paragraph 3-bis is binding" (with reference to Section I of this document), adding that "if the Annual General Meeting fails to approve the remuneration policy put to a vote in accordance with paragraph 3-bis, the company shall continue to pay remuneration in compliance with the most recent remuneration policy approved by shareholders or, failing that, may continue to pay remuneration in compliance with current practices"

² Art. 84-quater of the Regulations for Issuers, first added with resolution 18049 of 23 December 2011 and then amended by resolutions 18214 of 9 May 2012 and 21623 of 10 December 2020. In this regard, it should be noted that this Report incorporates the amendments most recently made to the Regulations for Issuers on 11 December 2020.

The current Board of Directors was elected by the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023 and will remain in office for three years until the Annual General Meeting called to approve the financial statements for the year ended 31 December 2025.

The pay of Directors with delegated powers and the fees payable to non-executive Directors for their participation in Board Committees, as reported in Section I of this Report, were set by the current Board of Directors, which has in any event continued to follow a broadly similar approach to the previous Board.

The text of this Report will be made available to the public at the Company's head office and in the Governance section of the Company's website www.terna.it, within the twenty-first day preceding the date of the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023, as required by the legislation in force.

The Information Circulars related to existing equity-based remuneration plans can be found in the Governance section of the Company's website.

EXECUTIVE SUMMARY

Executive Summary

A summary of the Remuneration Policy for 2024, drawn up in accordance with decisions taken by the Board of Directors in office for the period 2023-2025, is provided below, The Policy is broadly aligned with the Remuneration Policy applied during the previous Board's term of office.

	FIXED REMUNERATION	SHORT-TERM INCENTIVE SCHEME (MBO)	LONG-TERM INCENTIVE SCHEME (LTI)
	Remunerates the skills, the experience and the contribution required by the role.	To incentivise the achievement of the annual operating and financial performance targets set in the budget, and further non-financial annual targets.	To ensure the long-term alignment of management actions with shareholders' interests and achievement of the Strategic Plan objectives.
		Amount
CHAIRMAN	€238,000 gross per year, of which: • €50,000 pursuant to para. 1, art. 2389 of the Italian Civil Code; • €188,000 pursuant to para. 3, art. 2389 of the Italian Civil Code	--	--
		Conditions for implementation
	Defined using market benchmarks in relation to companies comparable on the basis of predefined criteria.	--	--
		Amount
CHIEF EXECUTIVE	235,000 gross per year, of which • €35,000 pursuant to para. 1, art. 2389 of the Italian Civil Code; • €200,000 pursuant to para. 3, art. 2389 of the Italian Civil Code	€50,000 gross on achieving the minimum level of performance (an objective with a weighting of 25% ON) €200,000 gross on achieving the maximum level (all objectives ON).	--
OFFICER	Conditions for implementation
	Targets for 2024: Determined using market • Weighting 50%: Terna Group - Net profit for 2024 benchmarks in relation to • Weighting 25%: Output-based incentives - DSM companies comparable on the • Weighting 25%: Output-based incentives - interzonal basis of predefined criteria Clawback provisions apply.
	Amount
	€850,000 gross per year.	€300,000 gross if the score of all of the targets meets the target (100%); €450,000 gross if the score for all the targets is at maximum level (150%)	Award of Performance Shares equal to 123.6% of gross annual pay (GAP), based on the total amount for the three-year period of the Performance Share Plan 2024-2028, if the weighted average of the scores for the individual objectives are at target (100%) and if the value of Terna's shares is equal to the value at the grant date.
	Conditions for implementation
GENERAL MANAGER	Determined using market benchmarks in relation to companies comparable on the basis of predefined criteria.	• Weighting 25%: EBITDA 2024 – the Terna Group • Weighting 20%: Regulated Investment • Weighting 10%: Assets entering service • Weighting 20%: Quality of service; • Weighting 20%: Occupational safety indicator (SI) Terna Group personnel belonging to the electricity sector • Weighting 5%: Injuries to contractors' personnel in Italy	Performance Share Plan 2024-2028 objectives: • FFO / Average Net Debt over the 3-year period (weighting 30%) • Cumulative EBITDA over the 3-year period (weighting 20%) • Relative TSR: Terna's ranking in the relevant peer group (weighting 20%) • Overgeneration (weighting 30%) Clawback provisions apply.
		Clawback provisions apply.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

	FIXED REMUNERATION	SHORT-TERM INCENTIVE SCHEME (MBO)	LONG-TERM INCENTIVE SCHEME (LTI)
	Remunerates the skills, the experience and the contribution required by the role.	To incentivise the achievement of the annual operating and financial performance targets set in the budget, and further non-financial annual targets.	To ensure the long-term alignment of management actions with shareholders' interests and achievement of the Strategic Plan objectives.
		Amount
KEY MANAGEMENT PERSONNEL	Fixed remuneration is linked to the role held and the responsibilities assigned and the manager's experience and strategic.	Incentives equal to up to 60% of gross annual pay (GAP) for results at target (100%) and up to 90% for results at the maximum level (150%).	Award of Performance Shares up to 80% of gross annual pay (GAP), based on the total amount for the 3-year term of the Performance Share Plan 2024- 2028 if the weighted average of the scores for the individual objectives are at target (100%) and if the value of Terna's shares is equal to the value at the grant date.
	Conditions for implementation
	Defined using market benchmarks in relation to companies comparable on the basis of predefined criteria	The annual incentive is linked to: • achievement of the Performance Gate (budgeted EBITDA range); • the Group's objectives (weighting 40%); • objectives shared across several departments (weighting 20%); • individual objectives linked to the organisational role held (weighting 30%); • qualitative objectives linked to management expertise (weighting 10%). Clawback provisions apply.	Performance Share Plan 2024-2028 objectives: • FFO / Average Net Debt over the 3-year period (weighting 30%) • Cumulative EBITDA over the 3-year period (weighting 20%) • Relative TSR: Terna's ranking in the relevant peer group (weighting 20%) • Overgeneration (weighting 30%) Clawback provisions apply.

	BENEFITS	SEVERANCE
	Complete remuneration packages and primarily regard aspects relating to welfare and pensions.	A severance payment designed to protect the Company's interests by preventing potential disputes.
		Description
CHAIRMAN	• Insurance policy for occupational and non-occupational accidents related to the position.	A severance payment on completing the term of office, equal to 1/12 of remuneration paid for each year in office.
	Conditions for implementation
		On completion of the term of office.
	Description	Description
	• Insurance policy for occupational and non-occupational accidents related to the position.	In line with the Board of Directors' resolution of 9 May 2023, except in the event of dismissal for disciplinary reasons and resignations without just cause, on termination of the employment relationship linked to the
	• Supplementary pension; • Supplementary health insurance;	end of the term of office, the following applies (i) as General Manager, a severance payment equal to 24 months' pay; (ii) as Chief Executive
CHIEF	• Life, permanent disability and accident insurance;	Officer, a termination payment due at the end of the term in office
EXECUTIVE OFFICER	• Company car for personal use.	equal to 1/12 of total pay (fixed remuneration plus short-term variable incentives) for each year in office as CEO.
	Conditions for implementation	Conditions for implementation
	Defined in accordance with the provisions of the relevant National Collective Employment Contract, and the company policies and practices applicable to all Terna's management.	At Terna, the CEO's position as a Director and the General Manager's employment relationship are connected, so that, unless renewed, when one is terminated so is the other fiduciary relationship.
	Description
KEY MANAGEMENT PERSONNEL	• Supplementary pension; • Supplementary health insurance; • Life, permanent disability and accident insurance; • Company car for personal use.	Except in the event of dismissal for disciplinary reasons with just cause or resignations for reasons other than just cause, in the event of early termination of the employment relationship by the Company, a severance payment may be due within the limits set by this Policy.
	Conditions for implementation
	Defined in accordance with the provisions of the relevant National Collective Employment Contract, and the company policies and practices applicable to all Terna's management.	Early termination of the employment relationship by the Company.

Section I: Report on the remuneration policy for 2024

Table of contents

1. Summary of the main changes in this Report	13
2. Engagement process and remuneration policies 2.1 Outcome of shareholder votes and feedback 2.2 The Terna Group's Total Shareholder Return and operating performance 2.3 Remuneration benchmarking 2.4 Pay mix	14 14 17 18 19
3. Governance of the remuneration process 3.1 Corporate bodies and parties involved 3.2 Policy approval process 3.3 Independent experts and other parties involved	20 20 28 29
4. Remuneration policy 4.1 Content, purposes and links with the Group's strategy 4.2 Guidelines 4.3 Implementation 4.4 Elements of the remuneration policy 4.5 Remuneration of members of the Board of Directors 4.5.1 Remuneration of Directors without delegated powers 4.5.2 Remuneration of Directors with delegated powers 4.6 Remuneration of members of the Board of Statutory Auditors 4.7 Remuneration of Key Management Personnel	30 30 35 35 35 35 36 37 47 47
5. Detailed index of topics (CONSOB Resolution 18049 and subsequent revisions, Section I)	52
6. Detailed index in accordance with Recommendation 27 of art. 5 of the Corporate Governance Code (January 2020 edition)	53

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

1. Summary of the main changes in this Report

The guidelines for the Remuneration Policy for 2024 were defined in substantial continuity and consolidation with the policy of the previous year, which incorporated all the mandatory regulatory requirements in force contained in the SHRD II and in the Regulations for Issuers, and are produced in line with the resolutions of the Board of Directors for the 2023-2025 term of office.

In light of the recommendations contained in the letter from the Chair of the Italian Committee for Corporate Governance, the requests of proxy advisors and best market practices, certain changes have been made to this Report, with a view to providing greater disclosure for all stakeholders

Changes for 2024

• variable remuneration for Key Management Personnel:
  • 1. percentage for short-term incentives at target: up to a maximum of 60%;
  • 1. percentage for long-term incentives at target: up to a maximum of 80%.
• short-term incentive plans (STI)/MBO: for certain KPIs, the targets have been made more challenging;
• long-term incentive plans (LTI): new metrics have been introduced to measure the performance of certain key variables, such as the level of debt, and make more room for ESG indicators closely linked to the energy transition, partly with the aim of reducing double-dipping between the short and long term;
• one-off bonuses, entry bonuses and retention bonuses: further restrictions have been introduced and such bonuses are thus only permitted in relation to major transactions with a significant impact and cases in which they are deemed essential to attract/retain strategic personnel to deliver on the Company's ambitious growth plans;
• severance payments for management: without affecting existing rights, for newly appointed managers (promoted from within or hired from outside the Company), LTI plans are excluded from the computation of severance pay;
• a revised peer group used for pay benchmarking purposes.

2. Engagement process and remuneration policies

2.1 Outcome of shareholder votes and feedback

Terna gives great importance to dialogue and continuous interaction during the year with the main beneficiaries and users of its Remuneration Policy, in order to ensure constant improvement in the adoption of best market practices and to incorporate suggestions received above all from shareholders and proxy advisors.

Terna's actions towards its shareholders, investors and key stakeholders are based on a structured and consistent communication process pursued continuously during the year. This process involves the main departments in question, specifically People Organization & Change, Corporate Affairs and Corporate Governance, Investor Relations and Corporate Development and Sustainability, along with support from an independent consultant.

To this end, Terna has continued to engage with shareholders, holding a series of meetings with the main institutional investors and proxy advisors in the period between February and March 2024. This was done to expand on the views expressed by these parties on key aspects of the Report on the Remuneration Policy and Remuneration Paid submitted to the Annual General Meeting of 9 May 2023.

This dialogue provided the departments responsible for Terna's remuneration policies and the Remuneration Committee with precious feedback on the views of shareholders and, more generally, on those of the market regarding the nature of the Remuneration Policy adopted by Terna. During the year, an analysis of common market practices was carried out with the assistance of a specialist consulting firm, focusing on the information provided to the market in remuneration reports and the main characteristics of the remuneration systems adopted by companies comparable to Terna.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

This feedback, together with the results of the activities carried out in the year and the outcome of votes on remuneration resolutions at the Annual General Meeting in 2023, as well as the voting policies adopted by key investors and proxy advisors, was taken into account when defining the Remuneration Policy for 2024. The Policy contains the following elements:

FEEDBACK	TERNA'S REMUNERATION POLICY
Remuneration policy for executive Directors
Pay opportunities for executive Directors must be defined in line with peers and mainstream market practices and must not be excessive.	Pay opportunities for the Chief Executive Officer and General Manager are periodically reviewed, using market benchmarking carried out by the Remuneration Committee with the support of an external advisor, to ensure alignment with best market practices.
Any exceptions to the Remuneration Policy must place limitations on the various elements they consist of. Their use by the Board of Directors to adjust incentive plans or award discretionary one-off bonuses must be appropriately explained.	The option of applying exceptions granted to the Board of Directors on the recommendation of the Remuneration Committee, in compliance with the Procedure for Related Party Transactions, has been illustrated in the Report on the Policy for 2024. Any use of this option must be subsequently disclosed in Section II of the Remuneration Report.
Performance based pay
Short- and long-term remuneration must be capped and payout opportunities must be disclosed.	The Remuenration Policy indicates the range of payout opportunities in the incentive schemes for the Terna Group's Chief Executive Officer and General Manager and for Key Management Personnel.
There must be a clear link between the Company's performance and the variable incentives. The financial and non-financial criteria, including those relating to ESG matters, are significant when they recognise effective performance in line with the Company's strategy and objectives. There must not be major discrepancies between the Company's financial and non-financial results and the payouts effectively awarded.	The Remuneration Policy defines performance targets for incentive schemes made up of financial and ESG indicators closely linked with the Company's strategy. Section II of the Remuneration Report includes a description of the Company's performance and the links with the outcomes of incentive schemes.
The Corporate Governance Committee recommends that attention is paid to the measurability and clarity of the ESG metrics used in remuneration policies and to the quality of the criteria used.	The Remuneration Policy sets ESG performance targets for the LTI plans closely linked to the Company's strategy (e.g., the Overgeneration KPI).
Other elements
The Company must disclose the average pay of employees to permit a comparison with Directors' pay.	Information on the average remuneration of employees, including contextual information on the sample used, is provided in Section II of the Remuneration Report.

Following publication of this Report, Terna is also available to continue this process of engagement with stakeholders, organising a new series of meetings with any interested key investors and proxy advisors, with the aim of helping them to fully understand all aspects of the Remuneration Policy for 2024.

Full disclosure regarding the remuneration of Directors and management is also provided in the constantly updated "Remuneration" page in the "Governance" section of the Company's website.

The outcomes of shareholder votes on Remuneration Reports between 2019 and 2023 are shown below. In evaluating the difference in the percentage of votes for the Report between 2022 (93.07%) and 2023 (87.29%), the increase in votes against (from 6.93% to 12.70%) should be considered within the context of a slight increase in the quorum for voting, which rose from 69.80% to 71.15% of the share capital.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

2.2 The Terna Group's Total Shareholder Return and operating performance

Trends in the Terna Group's Total Shareholder Return (TSR) are shown below, with reference to its peers and the European sector benchmark index (DJ Stoxx Utilities) for the 2021-2023 period.

Over the three years from 2021 to 2023, Terna delivered a TSR of 37%, whilst the DJ Stoxx Utilities index recorded a TSR of 17.4%.

In the same period, Terna's shareholders enjoyed a return on their investment ahead of the average delivered by the peer group3 selected for the purposes of the LTI Plan, which stands at 22.4%.

Performance of the total shareholder return between january 2021 and December 2023

Operating performance of the Terna Group 2021 – 2023

				(€/m)
	2021*	2022*	2023*	Δ 2023 VS 2021
Revenue	2,604.8	2,964.5	3,186.7	22.3%
EBITDA	1,854.8	2,059.2	2,168.6	16.9%
EBIT	1,200.4	1,333.5	1,362.3	13.5%
Net profit	789.4	857.0	885.4	12.2%

* In compliance with the requirements of IFRS 5, the overall results for the 2023, 2022 and 2021 attributable to the South American subsidiaries involved in the potential sale of the Group's Latin American assets have been classified in "Profit/(Loss) from assets held for sale" in the Group's reclassified income statement

³ The "peer average" is related to: Snam, Redeia, Enagas, National Grid, United Utilities and Severn Trent. Source: Bloomberg.

2.3 Remuneration benchmarking Chief Executive Officer and General Manager

Given that the pay package for the Chief Executive Officer - General Manager has remained unchanged, it was analysed by an independent advisor (Mercer), who conducted a benchmarking analysis using a group of peers in the energy sector consisting of 12 companies (7 Italian and 5 European). The analysis confirmed that the remuneration in question is at a suitable level.

A list of the companies included in the peer group for benchmarking the remuneration of the Chief Executive Officer and General Manager is shown below:

A2A	Italgas
Acea	National Grid
Enagas	Redeia (Red Electrica)
Enel	Severn Trent
Hera	Snam
Iren	United Utilities Group

Key Management Personnel

In the case of Key Management Personnel, the Remuneration Committee also periodically conducts a comparative assessment of overall remuneration for similar roles with the assistance of a specialist consulting firm. Specifically, Terna bases its assessment on the total remuneration for similar roles in a peer group of 35 major Italian and European companies, both listed and unlisted, deemed comparable to Terna in terms of sector, business model and market capitalisation.

The choice of peer group was carried out in order to obtain the best possible match with the characteristics of the Energy sector in Europe, without affecting the option of periodically revising the identified peer group.

A list of the companies4 included in the peer group for benchmarking the remuneration of Key Management Personnel is shown below:

Acea	Eni	Orano
Mundys	ESB	Orsted
Axpo	Ferrari	Plenitude
BP	Ferrovie dello Stato	Poste Italiane
Brembo	Fortum	RED Electrica de España
Centrica	Gransolar	Saipem
CNH Industrial	Hitachi ABB Power Grids	Snam
DCC	Italgas	Solarpack
Drax Power Group	Iveco Group	Suez
EDF	Maire Tecnimont	Veolia Environnement
Enagas	McPhy	Vodafone Group Services
ENGIE	National Grid

The latest benchmarking exercise shows that the total remuneration of Key Management Personnel is between the first quartile and the market median.

⁴ Changes were made to the selected peer group compared with 2023 to better reflect the labour market in the Energy sector, adding further businesses in the sector to the peer group.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

2.4 Pay mix Chief Executive Officer and General Manager

With reference to the Chief Executive Officer and General Manager, the pay mix is a representation of the remuneration components in the various possible performance scenarios, which are broadly in line with the 2023-2025 term of office.

			Pay mix in the event of underperformance with respect to the objectives linked to variable remuneration 18.6%		35.5%
	18.6%			35.5%
	19.0%
19.6%		47.6%
	19.6%	19.0% Pay mix in the event of outperformance with respect to the objectives linked to variable remuneration	Pay mix in the event of performance at target linked to variable remuneration Pay mix in the event of performance at target linked to variable remuneration 47.6%		Pay mix in the event performance in line with the minimum target linked to variable remuneration Pay mix in the event performance in line with the minimum target linked to variable remuneration 39.9% 39.9% Pay mix in the event of outperformance with respect to the objectives linked to variable remuneration

Fixed remuneration Long-term incentive plan (LTI) Fixed remuneration

Short-term incentive plan (MBO) Short-term incentive plan (MBO)

Fixed remuneration: Emoluments pursuant to Art. 2389 para. 1 and para. 3 + Gross Annual Pay (GAP). Long-term incentive plan: referring to the potential bonus awardable under the three-year plan. Long-term incentive plan (LTI) Fixed remuneration: Emoluments pursuant to Art. 2389 para. 1 and para. 3 + Gross Annual Pay (GAP).

Long-term incentive plan: referring to the potential bonus awardable under the three-year plan.

100% Key Management Personnel

100%
Pay mix in the event of underperformance with respect to the objectives linked to variable remuneration
Pay mix in the event of underperformance with respect to the objectives linked to variable remuneration 54.9%		21.3%	23.8%
54.9%		21.3%	23.8%
Pay mix in the event performance in line with the minimum target linked to variable remuneration
Pay mix in the event performance in line with the minimum target linked to variable remuneration 49.3%		23.9%	26.8%
49.3%		23.9%	26.8%
Pay mix in the event of performance at target linked to variable remuneration Pay mix in the event of performance at target linked to variable remuneration
39.3% 39.3%	28.7% 28.7%		32.0% 32.0%
Pay mix in the event of outperformance with respect to the objectives linked to variable remuneration
Pay mix in the event of outperformance with respect to the objectives linked to variable remuneration Fixed remuneration
Fixed remuneration Long-term incentive plan (LTI) Long-term incentive plan (LTI) Fixed remuneration: Gross Annual Pay (GAP).	Short-term incentive plan (MBO) Short-term incentive plan (MBO)
Long-term incentive plan: this refers to the potential bonus under a three-year Plan. Fixed remuneration: Gross Annual Pay (GAP). Long-term incentive plan: this refers to the potential bonus under a three-year Plan.

It should be noted that for both the Chief Executive Officer and General Manager and for KMP, in all possible performance scenarios, the relative weighting of the long-term incentive is greater than the weighting of the short-term incentive.

3. Governance

of the remuneration process

3.1 Corporate bodies and parties involved

The Remuneration Policy for the members of Terna's Board of Directors is defined in compliance with statutory requirements and the Articles of Association, according to which:

• the Annual General Meeting of shareholders determines the remuneration payable to the Chair and members of the Board of Directors at the time of their election and through their term of office;

• the Board of Directors determines the remuneration of Directors with delegated powers in compliance with the Articles of Association and the fees for participation in Board Committees, in consultation with the Board of Statutory Auditors.

In accordance with Terna's governance model, the Board of Directors is also responsible for setting the objectives and approving the corporate results for the performance-related plans to which determination of the variable remuneration of the Chief Executive Officer and General Manager is connected, in addition to defining the general criteria for the remuneration of Key Management Personnel.

In line with the recommendations contained in the Corporate Governance Code, the Board of Directors is supported, with regard to matters relating to remuneration, by a Remuneration Committee whose members are independent, nonexecutive Directors and who are tasked with giving assessments, making recommendations and providing advice on such matters. The following table shows a summary of the related advisory and decision-making bodies and support providers for each person covered by the Policy.

Subject to be remunerated	Proposal-making body	Decision-making body	Support structures	Independent advisor
Chair	• Shareholders • Remuneration Committee	• Annual General Meeting • Board of Directors
Chief Executive Officer	• Shareholders • Remuneration Committee	• Annual General Meeting • Board of Directors	People
Directors	• Shareholders	• Annual General Meeting	Organization	Independent advisor
Board of Statutory Auditors	• Shareholders	• Annual General Meeting	and Change
General Manager	• Remuneration Committee	• Board of Directors
Key Management Personnel	• Remuneration Committee	• Chief Executive Officer

Bodies and persons involved

Annual General Meeting

In accordance with statutory requirements and the Articles of Association - limited to matters pertaining to this Report the Annual General Meeting ("AGM") is responsible for:

• electing and terminating Directors and the Chair of the Board of Directors, electing Statutory Auditors and alternates and the Chair of the Board of Statutory Auditors;
• determining the remuneration of the Directors and Statutory Auditors;
• approving equity-based or performance-related incentive plans linked to the performance of the Company's shares;
• expressing an opinion on the Report on the remuneration policy and remuneration paid, with a binding vote on Section I and a non-binding vote on Section II.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

Board of Directors

Terna's Board of Directors (term of office 2023-2025) was elected by the Annual General Meeting of 9 May 2023 and consists of 13 Directors.

On 14 October 2021, the number of members of each Board Committee was increased from three to four. In addition, on 9 May 2023, at the time of re-election of the Board of Directors, it was decided to increase the number of members of the Committees – with the exception of the Related Party Transactions Committee – from four to five. The increased number of Committee members means that the size of Committees is more in proportion with the size of the Board of Directors. The inclusion of additional expertise reinforces and encourages the emphasis on constructive dialogue that will benefit the entire Board of Directors in its efforts to achieve the challenging objectives in the Industrial Plan.

The composition of the Board of Directors in office for the period 2023-2025 is shown below:

DIRECTORS WITH DELEGATED POWERS

IGOR DE BIASIO

CHAIR Board of Directors

CHAIR

Nominations, Governance and Scenarios Committee

GIUSEPPINA DI FOGGIA

CHIEF EXECUTIVE OFFICER AND GENERAL MANAGER Board of Directors

DIRECTORS WITHOUT DELEGATED POWERS

FRANCESCO RENATO MELE

DIRECTOR Board of Directors

MEMBER Audit, Risk and Sustainability Committee

KARINA AUDREY LITVACK

DIRECTOR Board of Directors

MEMBER Nominations, Governance and Scenarios Committee

MEMBER Audit, Risk and Sustainability Committee

ANGELICA KRYSTLE DONATI

DIRECTOR Board of Directors

MEMBER Remuneration Committee

MEMBER

Related Party Transactions Committee

MARCO GIORGINO

DIRECTOR Board of Directors CHAIR Audit, Risk and Sustainability Committee

MEMBER Related Party Transactions Committee

ANNA CHIARA SVELTO

DIRECTOR Board of Directors

MEMBER Remuneration Committee

CHAIR Related Party Transactions Committee

CORRADINI D'ARIENZO

Board of Directors MEMBER Nominations, Governance and Scenarios Committee

The composition of the Remuneration Committee is dealt with in the following paragraph.

DIRECTOR

ENRICO TOMMASO CUCCHIANI

DIRECTOR Board of Directors

CHAIR Remuneration Committee

MEMBER Audit, Risk and Sustainability Committee

SIMONA SIGNORACCI DIRECTOR

Board of Directors MEMBER Remuneration

Committee MEMBER Nominations, Governance and Scenarios Committee

GIAN LUCA GREGORI

DIRECTOR Board of Directors

MEMBER Remuneration Committee

MEMBER Related Party Transactions Committee

JEAN-MICHEL AUBERTIN

DIRECTOR Board of Directors

MEMBER Nominations, Governance and Scenarios Committee

MEMBER Audit, Risk and Sustainability Committee

QINJING SHEN

DIRECTOR Board of Directors

Section II: Report on remuneration paid in 2023

In accordance with statutory requirements and the Articles of Association, the Board of Directors is vested with the following responsibilities with regard to the Remuneration Policy:

• determining the remuneration of Directors with delegated powers in compliance with the Articles of Association, in consultation with Board of Statutory Auditors;
• setting the objectives and approving the corporate results for the performance-related plans to which determination of the variable remuneration of Directors with delegated powers is connected;
• approving the general criteria for the remuneration of Key Management Personnel;
• approving the Report on the Remuneration Policy and Remuneration Paid, to be put to a vote at the Annual General Meeting, which is binding in the case of Section I and non-binding in the case of Section II.

The Board may also delegate its authority to an Executive Committee consisting of a number of Board members or one or more of its members, including the Chair, determining the content, limits and procedures for exercising the delegated authority in compliance with art. 2381 of the Italian Civil Code and determining the related fees in consultation with the Board of Statutory Auditors.

All persons (including the Chief Executive Officer and General Manager) abstain during discussion of or voting on their own remuneration.

The commitment actually required of the Directors and members of the Oversight Body is highlighted below, also in response to the recommendation of the Chairman of the Corporate Governance Committee and in order to better represent the adequacy of the amounts paid. The Board of Directors held 14 meetings in 2023. All the meetings were attended by all members of the Committee (94.22%) and the average duration was approximately 4 hours and 10 minutes.

With reference to the Board Committees in 2023, the number of meetings, attendance and duration are shown in the following table:

Remuneration Committee

Composition

Terna's Remuneration Committee was set up in 2004. At the date of approval of this Report, it is made up entirely of non-executive, independent Directors - in compliance with art. 147-ter, paragraph 3 of the CLF and art. 3 of the Corporate Governance Code. One member (Anna Chiara Svelto) is a Director elected from the slate submitted by a group of shareholders consisting of asset management companies and other institutional investors (holding a total of 30,264,515 shares and representing 1.51% of TERNA S.p.A.'s share capital), which obtained the highest number of votes with 53.64% of the share capital. Moreover, in line with the Corporate Governance Code, at least one member of the Committee has suitable knowledge and experience in financial matters or remuneration policies, as assessed by the Board of Directors at the time of appointment.

Composition of the Remuneration Committee (at the date of approval of this Report):

NAME	ROLE
Enrico Tommaso Cucchiani	Chairman
Angelica Krystle Donati	Member
Gian Luca Gregori	Member
Simona Signoracci	Member
Anna Chiara Svelto	Member

Objectives, functions and activities

The Committee aims to ensure that the remuneration policies of Directors and Key Management Personnel are designed in such a way as to avoid conflicts of interest, taking into account the Company's mission and to comply with the provisions of the Corporate Governance Code, in particular, as regards to the contribution made by the remuneration policy to the company's strategy, the pursuit of long-term interests and the sustainability of the Company. To this end, the Committee has assessment, consultative and advisory functions. The authority to determine the remuneration of Directors with delegated powers remains, in any case, with the Board of Directors, after consultation with the Board of Statutory Auditors (in compliance with Article 2389, paragraph 3 of the Italian Civil Code), in compliance with the Remuneration Policy adopted by the Company and approved by the Annual General Meeting.

The Chairman of the Committee, with the assistance of the Secretary of the Committee and in coordination with the Company Secretariat, may from time to time invite the Chair of the Board of Directors to the meetings of the Committee, with reference to the individual items on the agenda, the Chief Executive Officer, the members of the Audit, Risk and Sustainability Committee and other members of the Board of Directors, as well as, after informing the Chief Executive Officer, other members of Terna's organisation or other persons whose presence may be helpful to the Committee in carrying out its duties.

It should be noted that all persons (including the Chief Executive Officer and General Manager) do not take part in the meetings of the Committee in which proposals relating to their remuneration are designed, except in the case of proposals that concern the details of the members of the Committees.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

Role of the Remuneration Committee

To periodically assess the adequacy and overall coherence of the remuneration policy for Directors, members of the Board of Statutory Auditors and Key Management Personnel.

To submit proposals or express opinions to the Board of Directors on the remuneration of executive Directors and other Directors with delegated powers, and to determine the performance objectives linked to the variable component of their remuneration, which also include indicators relating to ESG factors identified in agreement with the Audit, Risk and Sustainability Committee.

To monitor effective application of the remuneration policy and verify the effective achievement of performance targets.

To draw up and submit to the Board of Directors and monitor the application of short- and long-term incentive schemes (including equity-based plans) aimed at Terna's executive Directors and/or key management personnel and/or other senior managers of the Company and/or the Group. Such schemes are intended as a means for attracting, retaining and motivating personnel with suitable experience and expertise, by fostering loyalty and ensuring a constant focus on the creation of value over time.

To assist the Board of Directors in drawing up the remuneration policy for Directors, members of the Board of Statutory Auditors and the key management personnel and in any subsequent amendments, verify, among other things, how, in determining this policy, the pay and working conditions of its employees and/or Group employees were taken into account.

To assist the Board of Directors in preparing the report on the remuneration policy and on remuneration paid pursuant to art. 123-ter of the CLF.

To verify the independence of any external consultants that the Company uses for the purpose of drawing up the remuneration policy, or any subsequent amendments to it, and carry out any additional tasks assigned to it by the Board of Directors.

To propose to the Board of Directors, subject to the favourable opinion of the Related Party Transactions Committee, temporary exceptions to the remuneration policy, in accordance with the provisions of art. 123-ter, paragraph 3-bis of the CLF.

Information on the Committee's activities during the year is also included in the Report on Corporate Governance and Ownership Structures, published by the Company together with the Annual Report prepared pursuant to article 154-ter of the Consolidated Law on Finance and available on the Company's website (in the section Governance-Corporate Governance System).

The Committee's activities were carried out within a complex and ongoing process leading, amongst other things, to definition of the new Remuneration Policy and the related compensation tools, and the preparation of this Report.

It should be noted that, in 2023, the Remuneration Committee held 11 meetings in total, all regularly attended by members (91.48%), and the average duration was approximately 84 minutes.

In 2023, the Committee dealt with the following matters, among other things:

• preparation of the proposed Remuneration Policy for 2023, described in the Report on the Remuneration Policy and Remuneration Paid, as approved by the Board of Directors, submitted to a binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2022 in accordance with article 123-ter, paragraphs 3-bis and 3-ter of the CLF;
• support for the Board of Directors in preparing Section II of the Report on the Remuneration Policy and Remuneration Paid, as approved by the Board of Directors and submitted, pursuant to art. 123-ter, paragraph 6 of the CLF, to a non-binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2022;
• examination of the objectives for 2023 to which the variable remuneration of the Chief Executive Officer, in his/her role as both a Director and as a manager employed by the Company, and Key Management Personnel is linked;
• assessment of achievement of the results for 2022 in respect of payment of the annual variable remuneration due to the then Chief Executive Officer, in his role as both a Director and as a manager employed by the Company, and to Key Management Personnel;
• assessment of achievement of the objectives linked to payments under Performance Share Plan 2020-2023;
• approval of details of the structure of the Performance Share Plan 2023-2027 and the related Information Circular, examination of elements involved in implementation of the Plan and approval of the terms and conditions and the instruments to be awarded;
• examination and approval of a one-off bonus payable to certain of the Company's Key Management Personnel in implementation of certain provisions of the Report on the Remuneration Policy for 2022;
• discussion for the planning of activities in 2024.

Below is a summary of activities carried out by the Committee in the first few months of 2024:

• examination of the results of the remuneration benchmarking, carried out by a leading consulting firm, in relation to the Chief Executive Officer and General Manager, and other members of the Board of Directors;
• preparation of the proposed Remuneration Policy for 2024, described in the Report on the Remuneration Policy and Remuneration Paid, as approved by the Board of Directors, which will be submitted to a binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023 in accordance with article 123-ter, paragraphs 3-bis and 3-ter of the CLF;
• support for the Board of Directors in preparing the Section II of the Report on the Remuneration Policy and Remuneration Paid, as approved by the Board of Directors and to be submitted, pursuant to art. 123-ter, paragraph 6 of the CLF, to a non-binding vote at the Annual General Meeting called to approve the financial statements for the year ended 31 December 2023;

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

• examination of the objectives for 2024 to which the variable remuneration of the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and Key Management Personnel is linked;
• assessment of achievement of the results for 2023 in respect of payment of the annual variable remuneration due to the Chief Executive Officer, in her role as both a Director and as a manager employed by the Company, and to Key Management Personnel;
• assessment of achievement of the objectives for payments under the Performance Share Plan 2021-2025;
• approval of details of the structure of the Performance Share Plan 2024-2028 and the related Information Circular.

THE REMUNERATION COMMITTEE'S CYCLE OF ACTIVITY

Board of Statutory Auditors

With regard to remuneration, the Board of Statutory Auditors expresses the opinions required by the regulations in force with reference, in particular, to the remuneration of Directors with delegated powers pursuant to Article 2389 of the Italian Civil Code, verifying their coherence with the Company's remuneration policy. The Board of Statutory Auditors regularly participates in the meetings of the Remuneration Committee, and is made up of the following three statutory auditors:

• Mario Matteo Busso Chairman
• Lorenzo Pozza Auditor
• Antonella Tomei Auditor

In 2023, the Board of Statutory Auditors met 26 times, with 98% participation and an average duration of 2 hours and 4 minutes, and participated in all the meetings of the Board of Directors. Furthermore, through its members, the Board participated in all the meetings of the Remuneration Committee (11 meetings), the Audit, Risk and Sustainability Committee, until 9 May 2023 the Audit, Risk, Corporate Governance and Sustainability Committee (16 meetings), the Nominations, Governance and Scenarios Committee, until 9 May 2023 the Nominations Committee (12 meetings) and the Related Party Transactions Committee (13 meetings).

3.2 Policy approval process

In line with the related statutory and regulatory requirements in force and the recommendations in the Corporate Governance Code, the decision-making process leading to implementation of the Remuneration Policy and responsibility for its correct application may be broken down into the following steps involving a number of parties:

• 1. the Remuneration Committee prepares the Company's Remuneration Policy for Directors (including the General Manager), Key Management Personnel and the Board of Statutory Auditors, working closely with the People Organization and Change department and basing its analyses on the information and the work of the departments needed in order to carry out its role;
• 1. the Remuneration Committee may avail itself of the support of independent experts in such matters;
• 1. the Remuneration Committee submits the Policy for approval by the Board of Directors, which adopts the content thereof in relation to the Remuneration Policy for Directors (including the General Manager) and Key Management Personnel and long-term incentive plans. Furthermore, with reference to the determination of remuneration for the Chief Executive Officer and Directors holding special office, the Board hears the opinion of the Statutory Board of Auditors;
• 1. the Board of Directors, having examined and approved the Policy, puts it to the vote at the Annual General Meeting, which holds a binding vote on Section I and a non-binding vote on Section II5 .

Should the Annual General Meeting not approve the Remuneration Policy following the vote held in accordance with paragraph 3-bis, Terna may continue to pay remuneration on the basis of the most recent Remuneration Policy approved by Annual General Meeting or, failing this, will continue to pay remuneration in line with current practice. In this case, Terna will put a new Remuneration Policy to a shareholder vote at the latest on the occasion of the next General Meeting of shareholders provided for in article 2364, paragraph 2 of the Italian Civil Code, or of the General Meeting of shareholders provided for in article 2364-bis, paragraph 2 of the Code.

In exceptional circumstances, Terna may temporarily derogate from its remuneration policies, as permitted by art.123 ter, paragraph 3-bis of the CLF and art. 84-quater, paragraph 2-bis, letter c) of the Regulations for Issuers. Exceptional circumstances shall be understood to mean situations in which derogation from the Remuneration Policy is necessary in order to pursue the long-term interests and sustainability of the Company as a whole or to ensure its ability to compete in the market.

⁵ It should be noted that the Procedure for Related Party Transactions, adopted by the Board of Directors on 12 November 2010, as subsequently amended (lastly by the Board of Directors on 16 December 2020) excludes the following from the scope of the Procedure: shareholder resolutions pursuant to article 2389, paragraph one of the Italian Civil Code, regarding the remuneration of members of the Board of Directors and the Executive Committee and resolutions on the remuneration for Directors with delegated powers falling within the total amount previously approved by Annual General Meeting in accordance with article 2389, paragraph three of the Italian Civil Code, and shareholder resolutions pursuant to article 2402 of the Italian Civil Code regarding the remuneration of members of the Board of Statutory Auditors. Furthermore, resolutions on the following matters are excluded from the scope of the Procedure for Related Party Transactions:

¹⁾ equity-based plans approved by Annual General Meeting of Terna's shareholders in accordance with article 114-bis of the CLF, and the related executive actions;

²⁾ deliberations regarding the remuneration of Directors with delegated powers and Key Management Personnel, computed on an individual basis, provided that i) the Company has adopted a remuneration policy; ii) the process of drawing up the remuneration policy involved a committee consisting solely of non-executive directors, a majority of whom are independent, corresponding with, where established, the Remuneration Committee; iii) the remuneration awarded is determined in accordance with this policy and quantified on the basis of criteria that do not involve discretionary judgements.

Section II: Report on remuneration paid in 2023

These exceptional circumstances may include, but are not limited to, the following:

• a need to operate retention policies in favour of personnel considered strategic for the Group;
• the implementation of policies designed to attract people capable of making a contribution to the growth and development of the business;
• the recognition of individual and/or collective performances considered important and highly positive for the Group;
• discontinuity in the organisation of the business, both linked to extraordinary operations, such as mergers and disposals, including of companies/business units, and linked to significant changes in the composition of senior management;
• external changes of a socio-economic nature or the occurrence of extraordinary and unforeseeable events that by changing the relevant market scenario – could have a significant impact on the Group's results.

Should such exceptional circumstances occur, the Board of Directors, on the recommendation of the Remuneration Committee and, where envisaged, having previously activated the Procedure for Related Transactions adopted by the Company, may approve specific temporary derogations from the Remuneration Policy described in this Report. In line with best market practices and aimed at adequately responding to the requests of proxy advisors, the possible exemptions were reviewed and the exemption measures were outlined. Exemptions to this Policy are possible when necessary to the pursuit of the long-term interests and sustainability of the Company as a whole or to ensure its ability to compete in the market, and in particular with regard to:

• the fixed component of remuneration, in cases when, for example, it becomes necessary to replace, due to unforeseen events, the Chief Executive Officer/General Manager or Key Management Personnel, and to rapidly negotiate a remuneration package, without limiting the possibility of attracting managers with the most appropriate professional expertise to manage the Company and in any case guarantee the preservation of the same levels of sustainable success and market positioning;
• the short-term variable component, with reference to the level of achievement of the objectives, the criteria used to assess the achievement of the performance objectives, the introduction of any deferred payment systems, and the expost correction mechanisms of the variable component (malus and clawback), if there have been significant changes in the scope of the Company's business, such as the sale of a company/branch of business or the acquisition of a significant business;
• the long-term variable component, with reference to the level of achievement of the objectives, the criteria used to assess the achievement of the performance objectives, the reshaping of clauses for the retention of financial instruments in the portfolio after their allocation, and the ex-post correction mechanisms of the variable component (malus and clawback), if there have been significant changes in the scope of the Company's business, such as the sale of a company/branch of business or the acquisition of a significant business;
• the provision, payment and/or amount of severance indemnity.

3.3 Independent experts and other parties involved

Terna has opted to avail itself of the support provided by the consulting firm, Willis Towers Watson, and other leading consulting firms to provide assistance with regard to the conduct of specific surveys of remuneration practices and to assist in preparing this Report.

The People Organization and Change department draws up the guidelines, accompanied by all the technical aspects required in order to prepare the Remuneration Policy. This department also acts as an internal technical body supporting the Remuneration Committee, for which it prepares the material for use by the Committee.

The Administration, Finance and Control department contributes to identification and achievement of the operating and financial objectives underlying short- and long-term incentive schemes.

The Heads of other departments are also consulted when defining objectives pertaining to projects or specific issues. People Organization and Change, External Relations, Government Affairs and Sustainability, Legal and Corporate Affairs and Administration, Finance and Control departments support the process of preparing this Report, which is subsequently submitted to the Remuneration Committee.

4. Remuneration policy

4.1 Content, purposes and links with the Group's strategy

The Policy described in this Report focuses exclusively on the pay of members of management bodies, the General Manager, Key Management Personnel and the members of oversight bodies.

Purposes of the policy and links with the group's strategy

The Policy described in this Report, of annual duration, has the following purposes:

Attract, retain and motivate personnel with the professional skills required in order to successfully manage the Company

Facilitate alignment of the interests of management with pursuit of the priority goal of creating shareholder value through the use of short- and long-term variable components of pay

Support delivery of the objectives included in the Company's Industrial Plan

The key aspects of the Group strategic vision are:

• Regulated Activities: an acceleration of investment in infrastructure and digitalisation and the reinforcement of core activities in Italy through the direct involvement of territories and dialogue with all stakeholders and local communities, confirming the role of the Terna Group as a driver of the energy transition and enabler of an increasingly complex, sustainable and innovative electricity system.
• Non-regulated Activities: Terna will continue to pursue new business opportunities thanks to the development of innovative and digital technologies in line with the Group's institutional role in the energy transition. Specifically, these activities include:
  • Equipment, covering both transformers, thanks to the consolidation of Tamini, and underground cables, through the distinctive skills acquired with the Brugg Cables Group, to respond to increasing demand in both sectors and strengthening the supply chain;
  • Connectivity services, also through partnerships, with telecommunications operators and electricity distributors, through fibre optic infrastructure housing and hosting services and the installation of telecommunications devices at existing offices of the Terna Group;
  • Energy Solutions, energy efficiency services for industrial clients and construction, revamping and O&M services for photovoltaic plants, in this case using the skills acquired through the LT Group along with innovative data collection and analysis technologies.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

• International Activities: along with the ongoing process designed to extract value from the South American assets, Terna will continue with the strategic assessment of opportunities in geopolitically stable markets with attractive growth potential, where the Terna Group will be able to offer its experience and make the most of the expertise acquired through the planning and management of infrastructure.

The value creation process and the business model

Terna's process for creating value over time is shaped by a form of governance that targets sustainable success through the definition of a solid medium- to long-term strategy, based on the 2023 Development Plan and the 2024- 2028 Industrial Plan, with the aim of delivering an energy and digital transition that takes into account the impact on society (a just transition). The other key elements that will contribute to fully achieving this strategic goal are the correct allocation of resources, which Terna manages by focusing its investment on the efficiency and resilience of the national transmission grid (NTG) and the assessment and management of the financial and ESG risks connected with the business and the related potential opportunities.

The capitals represent the key resources at Terna's disposal to create and preserve value over time through their continual combination and interaction, both within the Company and with the outside world, including in the latter the legitimate needs and expectations of stakeholders. The capitals thus play a key role in the value creation process, representing, at one and the same time, inputs that can be measured from one year to another (on the left side of the infographic), outputs representing the results in terms of the organisation's products, services, by-products and waste (at the centre of the infographic) and outcomes, representing their ability to grow or change or to contribute to the achievement of the objectives set by the Company in its strategic plans (on the right).

Value creation process over time

The value creation process over time takes inspiration from the United Nations Sustainable Development Goals, forming the heart of the 2030 Agenda. These provide Terna with a series of benchmark values, with SDGs 7 (Affordable and clean energy), 9 (Industry, innovation and infrastructure) and 13 (Climate action) fully aligned with the Company's mission and strategic objective of achieving a just transition. SDG 17 (Partnership for the goals), meanwhile, provides further impetus for accelerating delivery of this objective.

The SDGs also summarise the coherency of Terna's value creation process with the aim of delivering sustainable success, the operating results of which are measured through specific indicators.

TERNA'S BENCHMARK SDGs

Ensure access to affordable, reliable, sustainable and modern energy for all.

Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation.

Take urgent action to combat climate change and its impacts.

Strengthen the means of implementation and revitalise the global partnership for sustainable development.

Terna's Remuneration Policy for 2024 aims to guide the Group's management towards its strategic objectives while fully complying with the value creation model.

In particular, with reference to the indicators selected for incentive schemes, the Remuneration Policy is geared towards achievement of ESG goals, as shown in the table below:

With regard to the process used to select these indicators, the short-term incentive scheme involves the deployment of objectives to be cascaded down through the organisation as follows:

• for the Chief Executive Officer and General Manager, the principal drivers of the Industrial Plan have been selected and shaped into annual objectives;
• Key Management Personnel have been assigned a number of the objectives set for the Chief Executive Officer and General Manager in the form of Group objectives for all beneficiaries; the other objectives assigned to the Chief Executive Officer and General Manager or, in any event deriving from the Industrial Plan, have been assigned to Key Management Personnel based on their area of responsibility. In addition, where the achievement of particularly important strategic objectives requires the joint involvement of several areas of the Company, objectives have been assigned to Key Management Personnel across various departments;
• all the other beneficiaries have been similarly assigned Group objectives linked to the principal drivers of the Industrial Plan, with the other objectives cascaded down on the basis of the area of responsibility assigned, either individually or across departments, in order to ensure the maximum contribution of everyone to deliver of the overall strategy.

Section II: Report on remuneration paid in 2023

For 2024, the following objectives set in relation to short-term incentives have been confirmed:

• in terms of operating performance, the Group's EBITDA;
• in terms of Regulated Activities, "Capital Expenditure", "Assets Entering Service" and "Service Quality", as defined by ARERA, in order to support the major commitment to the National Transmission Grid (NTG) in terms of both capital expenditure and service to the community;
• with regard to human resources and ESG issues in general, the Terna Group's occupational safety and injuries to contractors' personnel, to ensure Terna's continued focus on issues relating to sustainability.

Furthermore, in 2024 two objectives have been set for the CEO, in keeping with the proposal put forward for 2023, given their strategic importance:

• Incentives output DSM
• Incentives output Interzonal

These objectives were selected in line with the Group's strategy with a view to ensuring that the performance achieved to date continues to be met in future years.

Further information is provided in paragraph 4.7 "Remuneration of Key Management Personnel – short-term variable component (MBO)".

Medium/long-term objectives are set for the long-term incentive scheme so as to ensure the sustainability of the business and align Terna's management with the Company's risk profile, as communicated to shareholders and stakeholders in the Industrial Plan.

In particular, for the new 2024-2028 long-term incentive plan, it was decided to:

• within the scope of operating performance:
  • reduce EBITDA from 30% to 20% and replace Regulated Investment with a new indicator, FFO / Net Debt (a 30% weighting), to ensure the Group's financial sustainability.
• within the scope of sustainability performance:
• remove the indicator relating to inclusion in sustainability indexes to increase the weighting assigned to an ESG goal closer to Terna's business (Overgeneration, up from 15% to 30%, with a view to pursuing the targets relating to the energy transition).
• within the scope of the market performance:
  • retain the Total Shareholder Return and its relative weighting (20%) to ensure the best possible alignment between management's interests and those of shareholders.

Further confirmation of the close link between the Company's medium/long-term strategic vision and the Remuneration Policy is provided by the fact the Chief Executive Officer and General Manager, as well as Key Management Personnel, the weighting assigned to long-term incentives is greater that the weighting assigned to short-term incentives in relation to overall remuneration.

FOCUS

Working conditions and pay of employees

The Company annually monitors working conditions and pay in order to promote a Remuneration policy that is consistent for employees as a whole. The most significant HR initiatives included:

• the active commitment to obtain UNI PdR 125 2022 gender equality certification as further proof of the Group's focus on DE&I policies; this initiative is a key part of the strategy adopted by Terna and confirms its position as one of the world's most inclusive companies with a strong commitment to achieving gender equality. This is demonstrated by the inclusion of our company in the Standard & Poor's Gender Equality & Inclusion index, the new international ranking launched in August 2021 that measures the performance of listed companies in terms of gender equality and inclusion. This commitment translates to the adoption of a company "Diversity, Equity & Inclusion" policy which, together with the Group's Code of Ethics, commits the Company to pursuing gender inclusion and equality, and to promoting talent and female leadership with specific projects;
• the distribution of the value created by our community of people through the renewal of the agreement with trade unions on the performance bonus and opportunities linked to forms of corporate welfare;
• as part of the WellbeingInAction project, development of a new initiative designed to identify the wellbeing needs of "deskless" operational personnel working at infrastructure units and shift personnel who work in control rooms and in remote operation for Dispatching and at Avvenia and devise appropriate solutions; work took place on the training offer for wellbeing on the Academy platform and a new hands-on experiential laboratory focusing on Personal Energy was launched. Wellbeing is one of the challenges in Terna's Leadership Framework;
• last year, the Terna Academy consolidated its key role in the Group's training, expanding both the range of topics included in the training offer and the vertical nature and degree of specialisation of the training programmes. This resulted in a significant increase in the total number of hours of training, deriving also from the introduction of innovative digital learning methods. These advances enabled the Company to delve further into the three core verticals: Energy Transition, New Ways of Working and Sustainability. Finally, the Terna Academy not only boosted opportunities for flexible forms of training, but also provided a high standard of technical and specialist training in compliance and HSE, in line with the commitment to pass on the Group's distinctive competencies and develop the skills of Terna's employees;
• constant feedback mechanisms at all levels of the workforce, including the Employee Net Promoter System (e-NPS), with an average participation rate of 82% of those eligible, monitoring the engagement rate by measuring the degree of satisfaction felt by employees with regards to working for Terna and within its organisational structure. The survey also analyses the ability to put into practice some fundamental aspects such as, for example, cooperation, mutual trust and a sense of belonging. This system was extended in 2023 to include people at Tamini and Brugg Cables;
• the consolidation of initiatives to support the expansion of the Welfare package and its availability throughout the Company. A wellness platform is available to improve people's physical wellbeing, and there is another platform focusing on care-giving. At the same time, work is taking place on special agreements with service providers, with the involvement of the Group's employees. In addition, following changes in legislation and tax, the platform used to convert and use performance bonuses was adjusted to enable employees to make greater use of fringe benefits. In early 2024, a new tax-related project, aimed at all employees, is being launched and will provide free help in completing tax returns.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

4.2 Guidelines

In defining the Policy, the Board took into consideration the principles and criteria set out in the Corporate Governance Code and, in particular, verified that the performance objectives, to which payment of the variable components are linked, are predetermined, subject to a maximum limit, measurable and to a significant extent linked to long-term performance and consistent with the Company's strategic objectives and aimed at promoting its sustainable success, while also including non-financial measures (e.g. sustainability indicators).

4.3 Implementation

In implementation of the above principles, it should be noted that:

• the remuneration of Directors without delegated powers is aligned with their expertise, professionalism and commitment required in order to perform the tasks assigned to them and is linked to their participation in Board Committees, with differences between the amount paid to Chairs as opposed to the members of each Committee;
• the pay of the Chairman of the Board of Directors consists of fixed pay in keeping with the role held;
• the pay of the Chief Executive Officer and, if appointed, the General Manager6 , is designed to ensure a balance that is appropriate and consistent with the Company's strategic objectives and risk management policy, bearing in mind the nature of the business and the sector in which Terna operates, whilst ensuring that the variable component represents a significant part of the overall remuneration package.

In implementation of art. 5, Recommendation 27(f) of the Corporate Governance Code, a severance payment is also provided for in the event termination of the Chief Executive Officer's directorship and her employment as General Manager in the event of termination of the employment relationship, unless in specific cases.

4.4 Elements of the remuneration policy

Within the scope of the role of the Annual General Meeting in re-electing the Board of Directors tasked with defining the relevant remuneration and the decisions to be taken by the new Board of Directors, Terna's Remuneration Policy for 2024 consists of the following key elements:

• a fixed component of remuneration;
• a short-term variable component;
• a long-term variable component;
• benefits;
• severance payments.

A detailed description of each element of the Policy, based on the specific characteristics of each beneficiary, is provided below.

4.5 Remuneration of members of the Board of Directors

This section sets out the key aspects of the Guidelines to the Remuneration Policy for the following groups of people identified according to internal rules:

• Directors without delegated powers;
• Directors with delegated powers.

The Guidelines for the Remuneration Policy for 2024 have maintained continuity with the previous year.

6 The Policy is applied to Key Management Personnel in the same way as it is applied to the role of General Manager.

4.5.1 Remuneration of Directors without delegated powers

Remuneration established by the Annual General Meeting

The annual remuneration of Directors with delegated powers consists solely of the fixed component, considered sufficient to attract, retain and motivate Directors endowed with the professional qualities required to successfully manage the Company. This component is linked to the commitment required for each of them. For the 2023-2025 term of office, this remuneration, as determined by the Annual General Meeting of 9 May 2023, based on the recommendations put forward by shareholders, is €35,000 gross per year, in continuity with the previous term of office.

No variable component tied to the operating performance of the Company and the Group is provided for. Directors without delegated powers do not participate in the incentive plan and there is no distinction in terms of remuneration between independent and non-independent Directors.

These Directors are also entitled to reimbursement for expenses incurred while carrying out their duties in addition to insurance cover for civil liability towards third parties; they have the right, finally, to an insurance policy for occupational accidents related to the position.

Fee for participating in Board Committees

Additional fees payable to the members of Board Committees are determined by the Board of Directors, in consultation with the Board of Statutory Auditors.

For the 2023-2025 term of office, the annual fee payable to Directors for participation in Board Committees was determined by the Board of Directors on 9 May 2023, in consultation with the Board of Statutory Auditors, elected by the Annual General Meeting held on 9 May 2023 In continuity with the previous Board, the fees are as follows:

Remuneration Committee		Nominations, Governance and Scenarios Committee
Chair	€ 50.000	Chair	€ 50.000
Member	€ 40.000	Member	€ 40.000
Related Party Transactions Committee		Audit, Risk and Sustainability Committee
Coordinator	€ 50.000	Chair	€ 60.000

Member € 40.000 Member € 40.000

Section II: Report on remuneration paid in 2023

4.5.2 Remuneration of Directors with delegated powers

Chairman of the Board of Directors

In continuity with the previous term of office, for the 2023-2025 term of office, the total remuneration for the role of Chairman of the Board of Directors, as determined by the Annual General Meeting and the Board of Directors on 9 May 2023, consists solely of the fixed component, broken down as follows:

* Annual pay approved by the Annual General Meeting held on 9 May 2023 (and in accordance with article 24.1 of Terna's Articles of Association). ** A fixed annual amount approved by the Board of Directors on 9 May 2023, as proposed by the Remuneration Committee after consultation with the Board of Statutory Auditors.

The Chairman of the Board of Directors will thus receive fixed remuneration of €238,000 for the 2023-2025 term of office.

Generally, in the case of other Directors with delegated powers and with whom the Company does not have an employment relationship, the Company does not provide severance payments or compensation of an extraordinary nature on termination of the term in office, with the exception of the Chair, who is due a payment on completing their term in office equal to 1/12 of total annual remuneration for each year in office.

Chief Executive Officer and General Manager

At Terna, the Chief Executive Officer's position as a Director and the General Manager's employment relationship are connected, so that when one is terminated so is the other.

The General Manager's employment relationship is governed by the existing National Collective Employment Contract for manufacturing and service companies. In addition to the forms of remuneration described below, the policy applied to the General Manager is the same as that applied to management personnel in general, in addition to those listed below.

Fixed component of remuneration

Fixed component of remuneration - Chief Executive Officer

In continuity with the previous term of office, for the 2023-2025 term of office, total fixed remuneration for the role of Chief Executive Officer breaks down as follows:

* Annual pay approved by the Annual General Meeting held on 9 May 2023 (and in accordance with article 24.1 of Terna's Articles of Association). ** A fixed annual amount approved by the Board of Directors on 9 May 2023, as proposed by the Remuneration Committee after consultation with the Board of Statutory Auditors.

Fixed component of remuneration - General Manager

In continuity with the previous term of office, the General Manager's total fixed remuneration for the 2023-2025 term of office consists of a gross annual fixed component (gross annual pay or GAP), approved by the Board of Directors on 9 May 2023, totalling €850,000.

In total, therefore, the CEO and GM will receive total gross annual fixed remuneration of €1,085,000 for the 2023-2025 term of office.

FOCUS

CEO and GM PAY RATIO

In order to monitor the ratio between the pay of the Chief Executive Officer and General Manager and the remuneration of the Group's entire workforce, we have again in 2024 calculated the ratio between the gross annual fixed remuneration of the Chief Executive Officer and General Manager and the median fixed remuneration of the Terna Groups Italian workforce, which results in a ratio of 24.

The pay ratio has remained generally stable since 2016: from 2016 to 2021 the ratio was 26 and in 2022 and 2023 it was 25, confirming the fact that the pay structure continues to appropriately reward the level of expertise, experience and contribution required for the various roles.

Short-term variable component (MBO)

The short-term incentive (MBO) plan allows for the assessment of the annual contribution of each beneficiary to the performance of Terna and directs management actions towards strategic objectives in line with business priorities. The Board of Directors, following the proposal of the Remuneration Committee, defines the MBO objectives for Directors with delegated powers and for the General Manager, with the abstention of the Chief Executive Officer and General Manager when it applies to his/her interests.

The short-term incentive scheme does not provide for deferral mechanisms. This choice was made in full awareness and upon taking into consideration the following elements:

• the risk profile of the company and reference sector;
• the presence of a long-term incentive scheme and its relative weight compared to the fixed component and shortterm variable component;
• the use of a rolling long-term incentive scheme that takes the form of annual awards, with a three-year vesting period and a two-year lock-up period;
• the existence of clawback provisions.

Finally, it should be noted that, in recent years, the objectives underlying the short- and long-term incentive schemes for both the Chief Executive Officer and General Manager and Key Management Personnel have become ever more demanding in order to support delivery of the increasingly challenging strategic plans, above all in terms of the objectives linked to investment, operating and financial performance and workplace safety. This approach has been confirmed for 2024, a particularly challenging year in view of macroeconomic and geopolitical developments.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

In line with previous years, the short- and long-term variable incentive schemes established in the Remuneration Policy for 2024 also reflect the challenging nature of strategic objectives.

Short-term variable component (MBO) - Chief Executive Officer

The short-term incentives foreseen for the Chief Executive Officer, for the powers delegated to them, are determined by the Board of Directors, with the abstention of the Chief Executive Officer and General Manager, based on the recommendation from the Remuneration Committee and in consultation with the Board of Statutory Auditors.

Access to the incentive is subject to achievement of pre-defined corporate objectives of particular significance for the Company, proposed ex-ante by the Committee, approved by the Board of Directors and measured ex-post by the same Committee on an on/off basis.

The annual value of the incentive, approved by the Board of Directors, is €50,000 gross on achievement of the minimum level of performance (an objective with a weighting of 25% ON) and €200,000 gross on achievement of the maximum level (all objectives ON). No sum is payable if no target is achieved.

The table below shows the targets defined for the year 2024:

2024 MBO objectives - chief executive officer

GOALS	WEIGHT	SCORE CURVE
Terna Group - 2024 Net Profit	50% 25%	ON/OFF (vs 2024 Profit in the 2024 Budget)
Incentives output - DSM: performance in 2024, measured with internal calculation tools in accordance with the methodology provided for in Resolution 597/21 on the measurement of volumes procured for services in 2024 less than or equal to 7.8 TWh		ON/OFF
Incentives output - Interzonal: maintenance in 2024 of the transmission capacity made available from 1 January 2023 (+527 MW in total) to confirm the incentive pursuant to ARERA Resolution 23/2022	25%	ON/OFF

The first of the objectives assigned to the Chief Executive Officer measures the value of Net Profit in the Budget for 2024.

The second objective measures the performance in 2024 in relation to the measurement of the volumes procured for the relevant services, using internal calculation tools in accordance with the methodology provided for in Resolution 597/21. This target is considered achieved when the figure is below or equal to 7.8 TWh.

The final objective is to maintain the transmission capacity available from 1 January 2023 (+527 MW, in addition to the 1,450 MW made available from 2021) throughout the year, in order to avoid the residual risk of a clawback on the incentive pursuant to ARERA Resolution 23/2022; the TIQ.TRA (567/19) allows the regulator to reduce the bonus in cases where the ratio between the average transmission capacity made available for the day-ahead market and the peak winter transmission capacity is significantly lower than historical ratios, in one or more of the three years following commissioning of the investment that made the additional transmission capacity available, except for reasons unrelated to the transmission system operator, where duly documented.

Short-term variable component (MBO) - General Manager

The payment of short-term incentives (MBO) to the General Manager is subject to verifying the achievement of the performance targets assigned annually, defined by the Board of Directors, on the recommendation of the Remuneration Committee, with the Chief Executive Officer and General Manager abstaining from the process when it applies to his/ her interests.

For 2024, the targets assigned to the General Manager are shown in the table below, with the related score ranges.

MBO objectives for 2024 - General Manager

TARGETS		WEIGHTING SCORE CURVE
		Change vs budget	Score
		> - €42m	0%
		= - €42m (Minimum)	80%
	25%	Budget (Target)	100%
		≥ €42m (Maximum)	150%
EBITDA 2024 – the Terna Group Regulated assets entering service - sector Injuries to contractors' personnel in		Linear interpolation is applied in the case of intermediate figures
		Change vs budget	Score
	20%	> - €41m	0%
Regulated investment - Terna Group*		= - €41m (Minimum)	80%
		Budget (Target)	100%
		≥ €70m (Maximum)	150%
		Linear interpolation is applied in the case of intermediate figures
		Change vs budget	Score
		> - €25m	0%
		= - €25m (Minimum)	80%
Terna Group*	10%	Budget (Target)	100%
		≥ €25m (Maximum)	150%
		Linear interpolation is applied in the case of intermediate figures
		MWh	Score
Service Quality (Regulated Energy Not Supplied, RENS)	20%	Target 2024 ARERA** + 300 MWh	0%
		Target 2024 ARERA +5% (Minimum)	80%
		Target 2024 ARERA (Target)	100%
		Target 2024 ARERA -10% (Maximum)	150%
		Linear interpolation is applied in the case of intermediate figures
			Score
		SI > 1.6	0%
Workplace safety (SI) Terna Group personnel working in the electricity	20%	SI = 1.6 (Minimum)	80%
		SI = 1 (Target)	100%
		SI ≤ 0.65 (Maximum)	150%
		Linear interpolation is applied in the case of intermediate figures
			Score
		Growth rate in IR 2024 vs 2023 > Growth rate in IR 2023 vs 2022	0%
	5%	Growth rate in IR 2024 vs 2023 = Growth rate in IR 2023 vs 2022 (Minimum)	80%
Italy (injury rate or IR)		Growth rate in IR 2024 vs 2023 = -25% Growth rate in IR 2023 vs 2022 (Target)	100%
		Growth rate in IR 2024 vs 2023 ≤ -50% Growth rate in IR 2023 vs 2022 (Maximum)	150%
		Linear interpolation is applied in the case of intermediate figures

* Net of financial expenses and IFRS 16.

** ARERA is the Regulatory Authority for Energy Networks and the Environment (Autorita di Regolazione per Energia Reti e Ambiente).

The first of the objectives assigned to the General Manager measures the value of EBITDA in the Budget for 2024.

The second objective assigned to the General Manager measures the value of Investment in the Budget for 2024 for all the Terna Group's regulated activities.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

The third objective measures "Assets entering service" in the Budget for 2024, indicating the value of assets ready to enter service as part of the grid and as operating assets in the relevant period for all the Terna Group's regulated activities.

The "Service Quality" objective refers to the Group's operating performance by measuring, in MWh, the quantity of energy not supplied (RENS, Regulated Energy Not Supplied). As a result, the lower the figure for this indicator, the higher the score, up to a maximum of (150%).

The "Workplace safety" objective is represented by the safety indicator (SI), calculated as the weighted average of the Injury Rate and the Lost Day Rate and assessed by comparing the performance during the year with the average performance of the last three years.

The final objective assigned to the General Manager regards the rate of growth in the injury rate for contractors' personnel operating at Terna's sites (in Italy).

The amount of the incentive actually disbursed varies according to the level of achievement of the targets assigned to the single objectives, as illustrated here below:

Average of scores for individual targets

On the whole, therefore, for 2024, the CEO and GM will receive short-term variable remuneration amounting, at target, to €500,000 gross per year and, in the case of outperformance, to €650,000 gross per year.

If the average of the scores of the single targets is less than 80%, nothing is due. In the event of outperformance, it is not possible to attain a higher bonus than the maximum set (150%).

Long-term variable component (LTI)

In order to contribute to the achievement of the long-term strategic objectives, the Company uses a long-term incentive scheme aimed at:

• ensuring that management's interests are aligned with the creation of long-term value for shareholders, by introducing a financial incentive into the remuneration structure of beneficiaries linked to the achievement of challenging multi-year performance objectives for the company, directly connected with share price performance and also with non-financial indicators;
• rewarding long-term performance through rolling, annual awards linked to strategic objectives;
• creating loyalty among the beneficiaries over the period of the Plan by making the economic incentive set out in the Plan linked to the employment relationship with the Group for the period of validity of the Plan.

In continuity with the approach used in previous years, for 2024, Terna has adopted a new rolling long-term equitybased incentive scheme. Specifically, in 2024 the Company will operate the Performance Share Plan 2024-2028 (the "Performance Share Plan 2024-2028").

This Plan, described in detail in the specific Information Circular prepared in accordance with art. 114-bis of the CLF and art. 84-bis of the Regulations for Issuers, marks a further step in the ongoing process of improving Terna's remuneration policy, with a view to more closely aligning the interests of management with those of shareholders, also reflected in the extended duration of the new Plan.

Key aspects of the Performance Share Plan 2024-2028 are described below.

Long-term incentive plan based on Performance Shares for 2024-2028

The Performance Share Plan 2024-2028 is intended for the General Manager (who also holds the position of Chief Executive Officer), Key Management Personnel and other managers selected from the Terna Group's senior and middle managers, be they Executives or Middle Managers, and provides for the use of Terna S.p.A.'s ordinary shares (Performance Shares) and rolling annual awards, with a three-year vesting period (2024-2026) and a two-year lockup period.

The Plan envisages the grant of the right to receive free of charge a given number of Terna S.p.A.'s ordinary shares at the end of a vesting period and on the achievement of the performance objectives to which the Plan is linked. In this way, the interests of management are systematically linked to those of shareholders.

The performance indicators which determine the number of Performance Shares to be attributed at the end of the vesting period are:

• Three-year cumulative EBITDA and FFO / Average Net Debt over the three years reflecting the operating performance achieved;
• Relative TSR versus a peer group, reflecting the level of share price performance delivered;
• Overgeneration, involving reduced use of modulated production from generation using non-programmable renewable sources, requested by Terna to meet security requirements for the National Electricity System.

Section II: Report on remuneration paid in 2023

Details of the individual objectives and the related score ranges are provided below:

Long-term incentive plan based on Performance Shares for 2024-2028

TARGETS	WEIGHTING	SCORE RANGE
		Change vs cumulative EBITDA over three-year period 2024-2026 in 2024-2028 Plan	Score
Cumulative EBITDA over the three-year period	20%	< Target - €126m	0%
		Target - €126m	80%
		Target: EBITDA 2024-2026 Plan	100%
		≥ Target + €126m	150%
		Linear interpolation is applied in the case of intermediate figures
	30%	FFO / Average Net Debt 2024-2026	Score
		< 10%	0%
FFO / Average Net Debt over the		10%	80%
three-year period		11%	100%
		≥ 11.5%	150%
		Linear interpolation is applied in the case of intermediate figures
		Ranking in peer group	Score
	20%	7th, 6th or 5th place	0%
Relative Total Shareholder Return 2024-20267 Terna's ranking in the relevant peer group8		4th place	80%
		3rd place	100%
		1st or 2nd place	150%
		If, despite ranking in 1st or 2nd place, Terna's TSR is negative in the reference period, the overperformance will not be recognised and the associated score will, therefore, be 85% (the "negative TSR threshold")
Overgeneration involving reduced	30%	Change on adjusted reduction rate in the reference period	Score
use of modulated production from generation using non programmable renewable sources, requested by Terna to meet security requirements for the National		> 0 GWh: for meeting target (564 GWh)	0%
		0 GWh: for meeting target (564 GWh)	80%
		-28 GWh: saving of 5% versus target (536 GWh)	100%
		-56 GWh: saving of 10% versus target (508 GWh)	150%
Electricity System		Linear interpolation is applied in the case of intermediate figures

The overall performance is measured as the weighted average of the scores achieved for each of the four Plan targets, according to the respective performance curves presented above. For the incentive scheme to be activated and, therefore, for the right to the award of Performance Shares to be attained, an overall performance of at least 80% must be achieved, below which nothing is due. In the event of outperformance, it is not possible to attain a higher bonus than the maximum set (150%).

Assessment of achievement of the Plan objectives will be conducted by the Board of Directors in order to determine the number of Performance Shares to be awarded on the basis of the indications of the Remuneration Committee, during approval of the financial statements for the year ended 31 December 2026.

⁷ Terna's TSR and that of its peers is calculated over a period of three years, using the average of closing share prices in 2023 and the same average for 2026. The source of the data for TSR is Bloomberg.

⁸ The companies in the peer group (Snam, Red Electrica, Enagas, National Grid, Severn Trent and United Utilities) are all major listed European utilities. They are part of the regulated utilities sub-sector and therefore implement a business model that, although related to different sectors, presents elements of uniformity and comparability with Terna's. The selection of the peer group was therefore guided towards the identification of stocks that reflect the characteristics of Terna's stock, with reference to the business cycle as well as with reference to external elements that may affect their performance, so much so that at the time of drafting this Report, the same stocks were examined by financial analysts for the purposes of evaluating and comparing them with Terna's stock. Equities that are subject to extraordinary operations that entail their delisting or a significant reduction in the floating capital, will be replaced (up to a maximum of two) by the following stock, listed in order: Elia, REN.

At the end of the vesting period, an additional number of Performance Shares may be awarded (the dividend equivalent). These additional Shares correspond with the value of any dividends not received on the Shares effectively awarded, with the aim of achieving an increased alignment between the interests of management and those of investors.

The final Bonus under the Plan thus depends on:

• the number of Shares awarded (based on the Terna Group's performance);
• the value of the Shares, based on the share price performance.

At the end of the vesting period, 30% of the Shares awarded, including those awarded as dividend equivalents, will be subject to a further lock-up period of two years, which will end in 2028. During this period, the Shares are nontransferable (meaning that they may not be transferred and/or sold for a period of 24 months).

The following chart shows the timing of the Performance Share Plan 2024-2028:

New LTI Plan: Performance Share Plan 2024-2028 - General Manager

The General Manager's variable remuneration linked to the Performance Share Plan 2024-2028 involves the grant of the right to a given number of Shares corresponding with a percentage of the General Manager's Gross Annual Pay (overall amounts over the three years). This amount varies in relation to the achievement of different levels of performance (Minimum, Target and Maximum), as shown below:

At the end of the vesting period, an additional number of Shares is awarded as dividend equivalents, corresponding with the value of any dividends not received on the Shares effectively awarded.

The final bonus payable to the General Manager under the Plan thus depends on:

• the number of Shares awarded (based on the Terna Group's performance);
• the value of the Shares, based on the share price performance.

Section II: Report on remuneration paid in 2023

At the end of the vesting period, 30% of the Shares awarded, including those awarded as dividend equivalents, will be subject to a further lock-up period of two years. During this period, the Shares are non-transferable (meaning that they may not be transferred and/or sold for a period of 24 months).

In the event of termination of the relationship prior to award of the Shares for reasons other than the following:

• dismissal for disciplinary reasons;
• resignation without just cause;
• termination of the directorship for just cause;
• resignation of the director without just cause;

and, therefore, also in the event of termination of the relationship by mutual consent, the right to the award of a portion of the Shares on a prorated basis will be maintained (for the beneficiary or their heirs or successors), based on an assessment of the performance achieved at the date of termination.

Other long-term incentive plans

It should be noted that Terna currently has rolling equity-based incentive plans in place awarded annually. These are the Performance Share Plans for 2022-2026 and 2023-2027.

These share plans make it possible to reward long-term, sustainable growth in shareholder value and more closely align the Company's remuneration with market practices, the recommendations in the Corporate Governance Code and the objectives in the Industrial Plan.

Details of the Long-term Performance Plans for 2022-2026 and 2023-2027 are provided in the Remuneration Reports for 2022 and 2023 and the related Information Circulars, all of which are available on the Company's website.

FOCUS

Clawback and Malus Provisions

The variable portion of the remuneration paid to the Chief Executive Officer and General Manager is subject to clawback provisions, requiring the repayment of any amounts already paid within the statute of limitations envisaged by current legislation and whether or not the relationship is still in place or has been terminated. Malus provisions also apply, giving the Company the right to withhold any part of the incentive subject to deferral, where applicable, if there is evidence that payment of the bonus was made on the basis of information that is manifestly inaccurate or misleading, in the event of serious and intentional breaches of the law, the Code of Ethics or company regulations, in the event of fraudulent conduct or gross negligence on the part of the beneficiary to the detriment of the Company or one of the Group Companies. The application of these provisions is nevertheless without prejudice to any other action permitted by the law in order to protect the interests of the Company.

Benefits

As is the case with the Group's management personnel and in keeping with the Policy implemented in previous years, the General Manager's benefits package has been determined in accordance with the terms of the related National Collective Employment Contract and of the company policies and practices applicable to management personnel in general:

• contributions to a supplementary pension fund;
• enrolment in a supplementary medical insurance scheme;
• life and permanent disability insurance;
• a company car for personal use;
• occupational and non-occupational accident insurance.

Non-competition agreements

Terna has not currently entered into non-competition agreements with Directors and the General Manager, involving payment of a fixed amount or a proportion of fixed remuneration based on the duration and scope of the restrictions resulting from the agreement. However, Terna reserves the right to assess the potential introduction of specific provisions in this regard, within the limits set by company policy, which makes reference to the disbursement of one year's pay under agreements with a duration of one year.

Severance

In line with market practices and in order to protect the Company's interests by preventing potential disputes, on termination, the Chief Executive Officer and General Manager has the right to receive termination and severance payments.

It should be noted that, at Terna, the Chief Executive Officer's position as a Director and the General Manager's employment relationship are connected, so that, unless renewed, when one is terminated so is the other fiduciary relationship.

In line with the Board of Directors' resolution of 9 May 2023 and the individual agreements subsequently entered into, except in the event of dismissal for disciplinary reasons and resignations without just cause, on termination of the employment relationship linked to the end of the term of office, the following applies: (i) as General Manager, an all-inclusive severance payment equal to 24 months' pay (being fixed and short- and long-term variable remuneration calculated in accordance with the Policy), in addition to a payment in lieu of notice (fixed and short- and long-term variable remuneration calculated in accordance with the Policy) pursuant to art. 2121 of the Italian Civil Code; (ii) as Chief Executive Officer, a termination payment due at the end of the term in office (TFM) equal to 1/12 of remuneration as CEO (fixed and short-term variable remuneration) paid for each year in office. These severance payments are not linked to performance.

It should be noted that, under the same conditions, the Chief Executive Officer and General Manager retains the rights awarded under the incentive schemes and that, in the event of termination prior to the end of their term of office, the rights will be calculated on a prorated basis. In any event, bonuses are awarded when the plans mature.

Section II: Report on remuneration paid in 2023

4.6 Remuneration of members of the Board of Statutory Auditors

This section describes key aspects of the Remuneration Policy for members of the Board of Statutory Auditors.

The annual remuneration of members of the Board of Statutory Auditors consists solely of a fixed component. This component is determined on the basis of the commitment required in order to carry out their duties.

For the 2023-2025 term of office, the Board of Statutory Auditors received the following remuneration, set by the Annual General Meeting of 9 May 2023:

Board of Statutory Auditors (remuneration for the 2023-2025 term of office)

Chairman of the Board of Statutory Auditors	€ 55,000
Standing Auditor	€ 45,000

4.7 Remuneration of Key Management Personnel

Key Management Personnel (KMP) refers to persons who, directly or indirectly, have the power and responsibility for the planning, direction and control of the Company's operations. At the date of this Report, Key Management Personnel, as reflected in the Group's new organisational structure, hold the following positions:

• Chief Financial Officer;
• Head of Corporate Affairs;
• Head of Innovation & Market Solutions;
• Major Projects and International Development Director;
• Head of the National Transmission Grid;
• People Organization and Change Director;
• Head of Grid Development and Dispatching Strategies.

The list of Key Management Personnel has been drawn up by interpreting article 152-sexies, paragraph 1(c) of the Regulations for Issuers in its widest sense, in order to ensure maximum transparency of the information provided to shareholders on transactions carried out by the Company's Key Management Personnel, albeit within their specific areas of responsibility.

In drawing up the Remuneration Policy for Key Management Personnel, account was taken of the need to link a portion of their remuneration to the achievement of specific performance objectives, including some of a non-financial nature, linked to the Group's sustainable success (principle XV in the Corporate Governance Code now in force) and in line with the overall remuneration policy drawn up by the Board of Directors.

Recommendations 27 and 28 in the Corporate Governance Code also apply, where compatible, to determination of the remuneration for Key Management Personnel.

The employment relationship with Key Management Personnel is governed by the existing National Collective Employment Contract for manufacturing and service companies. In addition to the forms of remuneration described below, the policy applied to the Key Management Personnel is the same as that applied to management personnel in general.

The remuneration of Key Management Personnel consists of the following elements:

• Gross Annual Pay (GAP), determined on the basis of the role held, the responsibilities assigned and the strategic nature of the manager;
• short-term incentives (MBO), with access subject to the achievement of predetermined business objectives, which at target represent up to 60% of Gross Annual Pay (GAP);
• long-term incentives, with access subject to the achievement of predetermined multi-year objectives, and which, in terms of the total amount payable at target over the three-year duration of the Plan, is equal to a pre-established percentage of up to 80% of Gross Annual Pay (GAP);
• benefits granted under the applicable National Collective Employment Contract and company policies and practices;
• severance payments in the event of early termination by the Company, determined in line with best market practices, as described in more detail in the paragraph, "Severance".

Short-term variable component (MBO)

The short-term incentive scheme (MBO) rewards the annual contribution of each beneficiary to Terna's performance and aligns management actions with strategic objectives in line with business priorities.

MBO objectives for Key Management Personnel are set by the Chief Executive Officer, in line with the Remuneration Policy and with the general criteria set by the Remuneration Committee.

Access to the MBO scheme is subject to a performance gate (budgeted EBITDA range) and is structured according to the following format:

Performance gate: Budgeted EBITDA range
	Weighting		Weighting		Weighting		Weighting
Group objectives	40%	Cross-cutting objectives	20%	Individual objectives	30%	Qualitative objective	10%
Objectives common to all beneficiaries		Objectives common to several departments based on particular business priorities or initiatives		Specific objectives tied to the role		Assessed on the basis of management behaviours in the Leadership Framework

Payment of the short-term incentive (MBO) to Key Management Personnel follows the Remuneration Committee's assessment, with the support of the People Organization and Change department, of achievement of the performance objectives assigned annually.

Section II: Report on remuneration paid in 2023

The amount of the incentive actually disbursed varies according to the level of achievement of targets linked to the single objectives (and therefore related to the scores achieved by each KPI) which are specific to each role:

* The percentages of GAP shown in the graph refer to the maximum bonus obtainable for each level of overall achievement of the objectives.

If the weighted average score for the individual objectives is below 80%, nothing is due. In the event of overperformance, the bonus is capped at the maximum attainable level (150%).

The short-term incentive scheme is not subject to deferral mechanisms. This decision was taken in view of the following elements:

• the Company's risk profile and the sector in which it operates;
• the presence of a long-term incentive scheme and its relative weighting with respect to the fixed component and the short-term variable component;
• the use of a rolling long-term incentive scheme that takes the form of annual awards, with a three-year vesting period and a two-year lock-up period;
• the existence of clawback provisions.

The Company may recognize extraordinary bonuses - also by providing retention mechanisms and alignment with the interests of shareholders - in order to remunerate the value created for the shareholders in the context of transactions and projects of an extraordinary nature or with reference to transactions of an extraordinary nature and with a significant impact on the business, subject to the approval of the Board of Directors and at the proposal of the Remuneration Committee, having consulted the Board of Statutory Auditors, without prejudice to the controls on transactions with related parties pursuant to the Procedure for Related Party Transactions, where applicable. This provision can also be extended to the Chief Executive Officer and General Manager.

Long-term variable component (LTI)

In line with the terms applicable to the General Manager, Key Management Personnel may also participate in the longterm Performance Share Plan 2024-2028.

The new Performance Share Plan 2024-2028 for Key Management Personnel involves the same performance objectives as assigned to the General Manager, with the same weightings and the same score curves, as well as the same vesting and lock-up periods and settlement procedures.

The above description of the Plan for the General Manager also applies in its entirety to Key Management Personnel, with the exception of the bonus achievable and aspects relating to payment in the event of early termination of the relationship, which are governed by the specific provisions described below.

A summary of the characteristics and bonuses achievable at target for KMP is provided below:

INSTRUMENT	PERFORMANCE SHARE
Vesting period	2024-2028
	30%	FFO / Average Net Debt over the three-year period
Objectives	20%	Cumulative EBITDA over the three-year period
	20%	Relative TSR
	30%	Overgeneration
Achievable bonus	grant date.	Percentages of the incentive to be converted into Performance Shares of up to 80% of Gross Annual Pay (GAP), based on the total amount over the three-years covered by the LTI Plan, if the weighted average of the scores for the individual objectives is at target (100%) and based on the value of Terna's shares with respect to the

In the event of termination of the relationship with KMP prior to award of the Shares for reasons other than the following:

• dismissal for disciplinary reasons;

• resignation without just cause;

and, therefore, also in the event of termination of the relationship by mutual consent, the right to the award of a portion of the Shares on a prorated basis will be maintained (for the beneficiary or their heirs or successors), based on an assessment of the performance achieved at the date of termination.

FOCUS

Clawback and Malus Provisions

The variable portion of the remuneration paid to the Key Management Personnel is also subject to clawback provisions, requiring the repayment of any amounts already paid within the statute of limitations envisaged by current legislation and whether or not the relationship is still in place or has been terminated. Malus provisions also apply, giving the Company the right to withhold any part of the incentive subject to deferral, where applicable, if there is evidence that payment of the bonus was made on the basis of information that is manifestly inaccurate or misleading, in the event of serious and intentional breaches of the law, the Code of Ethics or company regulations, in the event of fraudulent conduct or gross negligence on the part of the beneficiary to the detriment of the Company or one of the Group Companies. The application of these provisions is nevertheless without prejudice to any other action permitted by the law in order to protect the interests of the Company.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

Signing bonuses and one-off bonuses

Signing bonuses are payable, in exceptional circumstances, to newly hired Key Management Personnel on entry to the company. This is done solely in order to attract very senior management personnel with areas of expertise that are critical for the business.

Key Management Personnel may also be eligible for a one-off bonus for the purpose of retention.

The maximum amount in either case, considered individually, may not exceed the target variable remuneration set by the Policy.

Benefits

In keeping with the Policy implemented, the benefits package for Key Management Personnel has been determined in accordance with the terms of the related National Collective Employment Contract and of the company policies and practices applicable to management personnel in general:

• contributions to a supplementary pension fund (FONDENEL);
• enrolment in a supplementary medical insurance scheme (ASEM);
• life and permanent disability insurance;
• a company car for personal use;
• occupational and non-occupational accident insurance.

Non-competition agreements

Where the termination of the relationship with Key Management Personnel in possession of particularly important expertise and skills may expose the Company to risk, the Company may apply non-competition agreements. The related payment must remain within the limits set by company policy, which makes reference to the disbursement of one year's pay under agreements with a duration of one year.

Severance

In the event of early termination of the employment relationship by the Company, payments may be made in the form of early retirement incentives on the basis of ex-ante agreements or as agreed on termination, taking into account the degree of responsibility assigned and the service provided.

In particular, newly appointed managers9 (promoted from within or hired from outside the Company), other than in cases of dismissal for disciplinary reasons for just cause or resignation of the manager for reasons other than just cause, may receive a severance payment amounting to up to 24 months' pay (being fixed and short-term variable remuneration calculated in accordance with the Policy), in addition to a payment in lieu of notice (fixed and short-term variable remuneration calculated in accordance with the Policy) pursuant to art. 2121 of the Italian Civil Code. These severance payments are not linked to performance.

It should be noted that, under the same conditions, the manager retains the rights awarded under the incentive schemes and that, in the event of termination prior to the end of their term of office, the rights will be calculated on a prorated basis and awarded on the basis of the assessment of performance at the end of the vesting period. In any event, bonuses are awarded when the plans mature.

⁹ The terms established in the Remuneration Policy for 2023 continue to apply to managers in service during the period in which the Policy was effective.

5. Detailed index

of topics (CONSOB Resolution 18049 and subsequent revisions, Section I)

In order to aid the reader, a detailed index of topics is provided below, with references to the paragraphs that contain information on the individual items referred to in CONSOB Resolution 18049, revised, Section I.

CONSOB RESOLUTION	DISCLOSURE REQUIRED	REFERENCES
A	Bodies or persons involved in the preparation and approval of the remuneration policy, specifying their respective roles, as well as the bodies or individuals responsible for the correct implementation of this policy;	Paragraph 3 (pages 20 to 29)
B	the potential establishment of a remuneration committee or other relevant committee, describing its composition (with distinction between non-executive and independent directors), its responsibilities and operating procedures, and any further measures designed to avoid or handle conflicts of interest;	Paragraph 3.1 (pages 24 to 27)
C	how the company has taken into account the compensation and working conditions of its employees in drawing up the remuneration policy;	Paragraph 4.1 (page 34)
D	the names of any independent experts that contributed to the formulation of the remuneration policy;	Paragraph 3.3 (page 29)
E	the purposes of the remuneration policy, its underlying principles, duration and, in the event of revision, a description of the changes to the remuneration policy with respect to the last policy submitted for approval by the Annual General Meeting and how this revision takes into account the votes held and opinions expressed during such meeting or subsequently;	Paragraph 1 (page 13), Paragraph 2 (pages 14 and 15), Paragraph 4.1 (pages 30 to 33)
F	a description of the policies regarding fixed and variable components of remuneration, particularly with regard to their relative proportion within overall remuneration, distinguishing between short- and medium/long-term variable components;	Executive summary (pages 8 to 9), Paragraph 2.4 (page 19), Paragraph 4.5 (pages 35 to 46), Paragraph 4.6 (page 47) and Paragraph 4.7 (pages 47 to 51)
G	the policy adopted with respect to benefits in kind;	Executive summary (page 9), Paragraph 4.5.2 (page 46) and Paragraph 4.7 (page 51)
H	a description of the financial and non-financial performance objectives, including any criteria relating to corporate social responsibility, on the basis of which the variable components are awarded, distinguishing between short- and medium/long-term variable components, and information on the link between changes in results and the change in remuneration;	Executive summary (pages 8 to 9), Paragraph 4.5.2 (pages 37 to 45) and Paragraph 4.7 (pages 47 to 50)
I	the criteria used to evaluate performance objectives forming the basis of the grant of shares, options, other financial instruments or other variable components of remuneration, specifying the measure of the variable component to be awarded on the basis of the level of achievement of the objectives;	Executive summary (pages 8 to 9), Paragraph 4.5.2 (pages 42 to 44) and Paragraph 4.7 (page 50)
J	Information designed to show the contribution made by the remuneration policy, and in particular the variable components of remuneration, to the company's strategy, the pursuit of its long-term interests and its sustainability;	Paragraph 4.1. (pages 30 and 33), Paragraph 4.5.2 (pages 38 to 45) and Paragraph 4.7 (pages 48 to 50)
K	the vesting period, any deferral mechanisms, with indications of the periods of deferral and the criteria used to determine these periods and ex-post correction mechanisms for the variable component (malus or clawback provisions);	Paragraph 4.5.2 (pages 38 to 45) and Paragraph 4.7 (pages 48 to 50)
L	information on the use of provisions requiring the retention of financial instruments after their purchase, with an indication of the retention period and the criteria used to determine these periods;	Paragraph 4.5.2 (pages 42 to 44) and Paragraph 4.7 (pages 49 to 50)
M	the policy on compensation envisaged in case of termination of office or termination of employment (and the related details);	Executive summary (page 9), Paragraph 4.5.2 (page 46) and Paragraph 4.7 (page 51)
N	information on any insurance, social security or pension plans, other than the obligatory schemes;	Executive summary (page 9), Paragraph 4.5.2 (page 46) and Paragraph 4.7 (page 51)
O (i)	the remuneration policy possibly implemented with reference to the independent directors;	The Company does not use specific remuneration policies for independent directors.
O (ii)	the remuneration policy possibly implemented with reference to participation in committees;	Paragraph 4.5.1 (page 36)
O (iii)	if present, the remuneration policy for directors with delegated powers (chair, deputy chair, etc.);	Executive summary (pages 8 to 9) and Paragraph 4.5.2 (page 37)
P	if the remuneration policy was drawn up on the basis of the remuneration policies of other companies and, if so, the criteria used in choosing such companies and which companies were used;	In drawing up its policy, the Company has not made reference to the remuneration policies of other companies. Remuneration has, however, been benchmarked against a peer group Paragraph 2.3 (page 18).
Q	elements of the remuneration policy to which, under exceptional circumstances, exemptions apply and, with prejudice to the requirements of Regulation 17221 of 12 March 2010, any other procedural conditions on the basis of which the exemption may be applied.	Paragraph 3.2 (pages 28 and 29).

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

6. Detailed index

in accordance with Recommendation 27 of art. 5 of the Corporate Governance Code (January 2020 edition)

In order to aid the reader, a detailed index of topics is provided below, with references to the paragraphs that contain information on the individual items referred to in recommendation 27 in art. 5 of the Corporate Governance Code.

The remuneration policy for executive Directors and senior management defines:

POINT	DISCLOSURE REQUIRED	REFERENCES
a)	a balance between the fixed and variable components that is appropriate and consistent with the company's strategic objectives and risk management policy, bearing in mind the nature of the business and the sector in which Terna operates, whilst ensuring that the variable component represents a significant part of the overall remuneration package;	Paragraph 2.4 (page 19) and Paragraph 4.1 (pages 30 to 33)
b)	any caps on variable components;	Executive summary (pages 8 to 9), Paragraph 2.4 (page 19), Paragraph 4.5.2 (pages 38 to 45) and Paragraph 4.7 (pages 48 to 50)
c)	performance objectives, to which payment of the variable components are linked, predetermined, measurable and to a significant extent linked to long-term performance. These are consistent with the company's strategic objectives and aim to drive sustainable success, including, where material, non-financial measures;	Executive summary (pages 8 to 9), Paragraph 4.5.2 (pages 38 to 45) and Paragraph 4.7 (pages 48 to 50)
d)	an appropriate deferral period – with respect to the vesting condition – for a significant part of the variable component, in line with the nature of the business and the risk profile;	Paragraph 4.5.2 (pages 43 to 44) and Paragraph 4.7 (page 50)
e)	contract provisions are used to enable the company to request the return, in whole or in part, of the variable components of remuneration paid (or to withhold sums that have been deferred), that were calculated on the basis of information that later turned out to be manifestly inaccurate or under other circumstances that may be identified by the company;	Paragraph 4.5.2 (page 45) and Paragraph 4.7 (page 50)
f)	clear and pre-established rules governing severance payments made on termination of the directorship is determined in such a way that its total amount does not exceed a certain amount or a certain number of years of remuneration. This indemnity is not paid if the termination of the relationship is due to the achievement of objectively inadequate results.	Executive summary (page 9) and Paragraph 4.5.2 (page 46)

Section II: Report on remuneration paid in 2023

Contents

Introduction 57 Part one 58 1. The Company's performance in 2023 58 2. Outcome of shareholder votes and feedback 59 3. Ratio of fixed to variable remuneration paid 59 4. Fixed remuneration 60 5. Variable remuneration 61 6. Fees paid for participation in Board Committees 63 7. Benefit 63 8. Severance 64 9. Annual change in remuneration paid and in the Company's performance 64

Part two	66
Table 1	66
Table 3A	74
Table 3B	76
Form 7-ter - TABLE 1	76

Glossary 78

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

Introduction

This section is divided into two parts covering the following aspects:

• Part one: the different elements that make up remuneration (including severance and termination payments), indicating consistency with the related remuneration policy;
• Part two: table showing the remuneration paid to members of management and oversight bodies, the General Manager and information on shareholdings in the Company held by such persons and the remuneration paid to Key Management Personnel.

This section is put to a non-binding vote by the Annual General Meeting, as required by Art. 123-ter of Legislative Decree 58 of 24 February 1998 (the "Consolidated Law on Finance" or CLF, as amended by Legislative Decree 49 of 10 May 2019), which states in paragraph 6: "Without prejudice to the provisions [...] the annual general meeting called [...] shall vote for or against section two of the report provided for in paragraph 4. The result of the vote is not binding".

In addition, the Independent Auditors engaged to audit the accounts verifies that this Section of the Report has been prepared by the Directors, as required by Art.123-ter of the CLF (as amended by the Legislative Decree of 10 May 2019).

The remuneration paid to the members of management and oversight bodies and to the General Manager is described by name; the remuneration paid to Key Management Personnel10 is, in contrast, reported in aggregate form.

Implementation of the Policy, to the extent verified by the Remuneration Committee when conducting the periodic assessment required by the Corporate Governance Code, has remained in line with the general principles established in Board of Directors' resolutions. Detailed information on each component of remuneration, including severance or termination payments, is provided in Section I.

The separate components of remuneration are in keeping with the Policy approved by the Board of Directors in 2023 and put to a binding vote by the Annual General Meeting held on 9 May 2023, in accordance with art. 123-ter, paragraph 6 of the CLF, which voted in favour of the Policy.

¹⁰ In accordance with CONSOB Resolution 18049, KMP who during the year did not receive remuneration that was higher in value than the total pay received by the members of management and oversight bodies or by the General Manager.

Part one

1. The Company's performance in 2023

2023 continued to be marked by continual upheaval. Despite the resulting economic and financial tensions, Terna recorded an exceptional performance, confirming the solidity of the business and showing further proof of the organisation's ability to react and adapt to unforeseen circumstances.

In particular, the Group recorded an improvement in net profit of €28 million compared with last year and of €109 million in EBITDA. The Group's capital expenditure amounted to €2,290 million, an increase of €533 million. Finally, assets entering service amounted to €2,043 million, an increase of €435 million.

Despite the negative impact on financial markets of the ongoing geopolitical tensions, inflationary pressures and the energy crisis, as at 31 December 2023 Terna's Total Shareholder Return was positive at 14.13%.

Furthermore, Terna guaranteed an excellent level of service, also in terms of regulated energy not supplied, with a final balance of 507 MWh against a Target set by ARERA of 763 MWh. With regard to output-based incentives, ARERA resolution 367 of 3 August 2023 set a reward of €796 million for activity carried out in 2022 in order to reduce dispatching costs (DSM incentives). In addition, ARERA resolution 473 of 17 October 2023 set the reward for increasing interzonal transport capacity in 2022 and for capex efficiencies in relation to this work at a total of €36 million with reference to the period 2021-2023 (interzonal incentives). In addition, ARERA resolution 26 of 3 February 2023 awarded Terna a bonus of €150 million for the progress made in resolving grid constraints due to voltage regulation within market areas and improving conditions for essential service provision between 2019 and 2021 (intrazonal incentives).

Occupational health and safety has always represented a key priority for Terna; in fact, the injury rate among Terna employees in 2023 is below the figure for the previous year and significantly below the average injury rate for the threeyear period 2020-2022 period, with a safety indicator of 0.56; the number of injuries to contractors' personnel was higher than the average for the three-year period 2020-2022, bringing the indicator to zero.

Finally, in terms of ESG indices, in 2023 Terna was once again listed on:

• the Bloomberg GEI, the international index that measures corporate performance on gender equality issues and the quality and transparency of public reporting;
• the Dow Jones Sustainability Index World, confirming itself in the leading group which only includes 8 electric utilities worldwide and in the top decile among the companies evaluated by Standard & Poor's through the Corporate Sustainability Assessment;
• the MIB® ESG, Italy's blue-chip index focusing on ESG best practices and based on the score issued by the rating agency Moody's ESG;
• the STOXX Global ESG Leaders, indices based on the scores issued by the rating agency Sustainalytics, which selects the best-performing securities in terms of ESG among those in the STOXX® Global index.

Please refer to the Integrated Report for the year ended 31 December 2023 for a description of the main factors that characterised operations in 2023.

Outcome of votes on remuneration paid (2020-2023)

Section II: Report on remuneration paid in 2023

2. Outcome of shareholder votes and feedback

As required by art. 123-ter of the CLF (as amended by the Legislative Decree of 10 May 2019), the Annual General Meeting of 18 May 2020 was invited for the first time to hold an advisory vote on Section II of the Report on the Remuneration Policy and Remuneration Paid. The following chart shows the outcome of the non-binding votes on Section II of the Report on the Remuneration Policy and Remuneration Paid, from 2020 to 2023.

The outcome of this vote and feedback from investors and proxy advisors on the remuneration paid in 2022 was analysed by Terna in 2023, together with observations received on Section I of the Report. Terna thus took the views and opinions expressed into account in preparing this Report on the Remuneration Policy and Remuneration Paid, without prejudice to existing contractual commitments and the labour law restrictions of the Italian Civil Code.

3. Ratio of fixed to variable remuneration paid

In compliance with the requirements introduced in the revised Regulations for Issuers, this paragraph provides details of the ratio of fixed to variable remuneration paid to the Chief Executive Officer and General Manager in office from 9 May 2023 in 2023. Specifically, the computation took into account the fixed remuneration shown in column 1 of Table 1 and the variable non-equity remuneration shown in column 3 of the same table.

Actual pay mix 2023 – Chief Executive Officer and General Manager in office from 9 May 2023

52.9%					47.1%
0.0%	10.0%	20.0%	30.0%	40.0%	50.0%	60.0%	70.0%	80.0%	90.0%	100.0%
	Fixed remuneration			Variable remuneration

The following paragraphs include a detailed description of the single components of pay taken into account.

It should be noted that there are no variable components of pay linked to the Company's or the Group's financial performance in the case of other members of the Board of Directors and the Board of Statutory Auditors.

4. Fixed remuneration

Non-executive Directors

Non-executive Directors were paid a prorated amount of the fixed remuneration established by the Annual General Meeting of 18 May 2020 (€35,000 per year for each Director) for those in office from 1 January 2023 to 9 May 2023 and a prorated amount of the fixed remuneration established by the Annual General Meeting of 9 May 2023 (€35,000 per year for each Director) for those in office from 9 May 2023 to 31 December 2023.

Chair

The Chairwoman in office until 9 May 2023 was paid – on a prorated basis – the fixed remuneration approved by the Annual General Meeting of 18 May 2020 (€50,000 per year) and by the Board of Directors on 18 May 2020 (€188,000 per year). As a result, the outgoing Chairwoman received a total amount for the year in the form of fixed remuneration, calculated on a prorated basis, of €85,202.

The current Chairman, elected by the Board of Directors on 9 May 2023, was paid – on a prorated basis – the fixed remuneration approved by the Annual General Meeting of 9 May 2023 (€50,000 per year) and by the Board of Directors on 9 May 2023 (€188,000 per year). As a result, the Chairman currently in office received a total amount for the year in the form of fixed remuneration, calculated on a prorated basis, of €186,148.

Chief Executive Officer and General Manager

The Chief Executive Officer and General Manager in office until 9 May 2023 was paid:

• the fixed remuneration payable on a prorated basis as a Director of the Company under the resolution passed by the Annual General Meeting of 18 May 2020 (€35,000 per year);
• the fixed remuneration payable on a prorated basis under the Board of Directors' resolution of 18 May 2020 in recognition of the powers and authority granted to him (€200,000 per year);
• the fixed component of remuneration payable on a prorated basis for his role as General Manager (€850,000 per year).

As a result, the Chief Executive Officer and General Manager in office until 9 May 2023 was paid – on a prorated basis – total fixed remuneration of €387,580.

The current Chief Executive Officer and General Manager, elected by the Board of Directors on 9 May 2023, was paid:

• the fixed remuneration payable on a prorated basis as a Director of the Company under the resolution passed by the Annual General Meeting of 9 May 2023 (€35,000 per year);
• the fixed remuneration payable on a prorated basis under the Board of Directors' resolution of 9 May 2023 in recognition of the powers and authority granted to her (€200,000 per year);
• the fixed component of remuneration payable on a prorated basis for her role as General Manager (€850,000 per year).

As a result, the Chief Executive Officer and General Manager in office from 9 May 2023 was paid – on a prorated basis – total fixed remuneration of €703,469.

Amounts relating to fixed remuneration are specified in the respective item in Table 1.

Key Management Personnel

In 2023, Key Management Personnel were paid fixed remuneration, including the impact of annual changes to the Remuneration Policy, totalling €2,128,797.

Table 1 shows the fixed remuneration paid in aggregate form. This remuneration includes any fees due to the relevant person in return for membership of the boards of directors of Terna's subsidiaries and/or investees, which are either waived or passed on to Terna.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

5. Variable remuneration Variable short-term incentives

Chief Executive Officer and General Manager

In 2023, the Chief Executive Officer and General Manager received the short-term incentive remuneration (MBO), following achievement of the performance objectives set for the two roles. The amount received was based on the results reported in the financial statements for the year ended 31 December 2023, which will be submitted for approval by the Annual General Meeting that will approve Section I of this Report11.

The Chief Executive Officer and General Manager will receive the following annual variable remuneration provided for in 2023:

• €200,000 gross as Chief Executive Officer. In this regard, it should be noted that the MBO bonus payable to the Chief Executive Officer is of the on/off type and that all the objectives assigned were achieved;
• €427,500 gross as General Manager, based on an overall level of achievement of the objectives assigned of 142.5%.

The Chief Executive Officer and General Manager in office until 9 May 2023 did not receive any amount, having waived his right to the related short-term variable remuneration.

The degree of achievement of each objective assigned is shown below:

MBO OBECTIVES FOR 2023 – CHIEF EXECUTIVE OFFICE IN OFFICE

OBJECTIVES	WEIGHTING	TARGET	ACTUAL	SCORE
Net profit for 2023 – the Terna Group	50%	€860.02m	€885.39m	ON
Output-based incentives - DSM: performance for 2023, measured using internal calculation tools compliant with the method in resolution 597/21, to measure volumes procured for services in 2023 below or equal to 8.4 TWh	25%	8.4 TWh	< 8.4 TWh	ON
Output-based incentives - interzonal: retention for 2023 of the restrictions on transmission made available from 1 January 2021 (+1450 MW in total) to confirm the incentive introduced by ARERA resolution 23/2022.	25%	> 1,450 MW	> 1,450 MW	ON

MBO OBECTIVES FOR 2023 – GENERAL MANAGER

OBJECTIVES	WEIGHTING	TARGET	ACTUAL	SCORE
EBITDA 2023 – the Terna Group	25%	€2,122.88m	€2,168.59m	150.00%
Regulated investment – the Terna Group	20%	€2,058.97m	€2,171.92m	150.00%
Assets entering service – the Terna Group	10%	€1,405.36m	€1,896.09m	150.00%
Quality of service (Regulated Energy Not Supplied, RENS)	20%	763 MWh	507 MWh	150.00%
Workplace safety (SI) Terna Group personnel working in the electricity sector	20%	1	0.56	150.00%
Injuries to contractors' personnel in Italy	5%	34 injuries	41	0%
			WEIGHTED AVERAGE SCORE	142.50%

The amounts relating to variable remuneration are specified in Tables 1 and 3B.

The total short-term variable remuneration payable for the 2023 performance period is equal to €627,500 gross for the CEO and GM.

¹¹ Remuneration paid in application of the principles indicated in the remuneration policy put to an advisory, non-binding vote at the Annual General Meeting held on 9 May 2023.

Key Management Personnel

Key Management Personnel received total annual variable remuneration, based on the results reported in the financial statements for the year ended 31 December 2023, amounting to €1,038,158. Overall average achievement of the objectives assigned was approximately 139.56%.

Tables 1, 3A and 3B show aggregate figures for variable remuneration paid on a prorated basis for the period for the various positions held, considering all the persons qualifying as Key Management Personnel for at least a part of the year in 2023.

Long-term variable incentives

With regard to Terna's policies, the long-term variable incentive plans are as follows:

In 2023, the Performance Share Plan 2021-2025 was concluded. This Plan was described in the Policy for 2021 and published in the Remuneration Report for 2021.Based on the assessment conducted by the Remuneration Committee and the resulting recommendation, on 19 March 2024 the Board of Directors confirmed the degree to which the cycle's three performance objectives had been achieved, as described below:

OBJECTIVES	WEIGHTING	TARGET	ACTUAL	SCORE
Cumulative EBITDA over the three years to 2023 compared with cumulative EBITDA over the three years of the Industrial Plan	50%	€5,721m	€6,082.6m	150.00%
Total Shareholder Return 2021-2023 Terna's ranking in the benchmark peer group	30%	3rd place	1st place	150.00%
Dow Jones Sustainability Index (DJSI) Terna's annual ranking in the years 2021-2022-2023	20%	Inclusion in all three years and positioning among the top 7 companies in at least one year out of 3	• 2021: 9th decile; inclusion equal 2nd place with Iberdrola. • 2022: 9th decile; inclusion: 1st place. • 2023: 9th decile; inclusion: 2nd place.	150.00%
			WEIGHTED AVERAGE SCORE	150.00%

Based on the above, the overall level of achievement of the Performance Share Plan 2021-2025 was 150%. At the meeting of 19 March 2024, the Board of Directors determined the number of shares to be allotted, including the amount awarded as a dividend equivalent:

• on a prorated basis for the General Manager in office until 9 May 2023: €217,345. It should be noted that the outgoing General Manager has retained the rights vested as a result of his participation in long-term incentive schemes;
• a total of €300,585 for Key Management Personnel on aggregate and, if necessary, on a prorated basis.

These shares are partially (30%) subject to the restrictions resulting from the two-year lock-up period, as provided for in the Information Circular for the Performance Share Plan 2021-2025.

It should also be noted that, in the light of the description provided in Section I of the Remuneration Reports for 2022 and 2023, respectively, during 2022 and 2023, grants were made under the Performance Share Plan 2022-2026 and the Performance Share Plan 2023-2027. Information on these Plans is provided in Table 3A.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

6. Fees for participating in Board Committees

The fees paid for membership of Board Committees are reported below.

For details on amounts paid to Directors and for participating in Committees, refer to Table 1.

Chairs of the Nominations Committee, the Remuneration Committee and the Related Party Transactions Committee

The Chairs of the Nominations Committee, the Remuneration Committee and the Related Party Transactions Committee in office until 9 May 2023 received gross remuneration of €50,000 per year (in addition to pay received in their capacity as Directors – €35,000 per year gross), calculated on a prorated basis for the period in which they were in office.

Chairs of the Nominations, Governance and Scenarios Committee, the Remuneration Committee and the Related Party Transactions Committee

The Chairs of the Nominations, Governance and Scenarios Committee, the Remuneration Committee and the Related Party Transactions Committee in office from 9 May 2023 received gross remuneration of €50,000 per year (in addition to pay received in their capacity as Directors – €35,000 per year gross), calculated on a prorated basis for the period in which they were in office.

Chair of the Audit, Risk, Corporate Governance and Sustainability Committee

The Chair of the Audit, Risk, Corporate Governance and Sustainability Committee in office until 9 May 2023 received gross remuneration of €60,000 per year (in addition to pay received in their capacity as Director – €35,000 annual gross), calculated on a prorated basis for the period in which they were in office.

Chair of the Audit, Risk, Corporate Governance and Sustainability Committee

The Chair of the Audit, Risk and Sustainability Committee in office from 9 May 2023 received gross remuneration of €60,000 per year (in addition to pay received in their capacity as Director – €35,000 annual gross), calculated on a prorated basis for the period in which they were in office.

Committee members

Members of all the Committees, other than the related Chairs, received a gross sum of €40,000 per year (in addition to pay received in their capacity as Director – €35,000 per year), calculated on a prorated basis for the period in which they were in office.

7. Benefits

In line with the Policy, the Chairman, the Chief Executive Officer, in her position as General Manager, and Key Management Personnel received benefits in 2023. The value of these benefits is shown in Table 1. These amounts were paid on a prorated basis for the period the various positions were held, considering all the persons qualifying as Key Management Personnel for at least a part of the year in 2023.

8. Severance

In 2023, severance payments were made to the outgoing Chief Executive Officer and General Manager in office until 9 May 2023 and to Key Management Personnel. The value of these payments is shown in Table 1.

With regard to the Chief Executive Officer and General Manager in office until 9 May 2023, Stefano Antonio Donnarumma, following the shareholders decision not to re-elect him as a Director and the termination of his employment as General Manager, which began on 19 May 2020, the arrangements applicable at the time of his election in 2020 were applied.

Thus, in relation to the terms and conditions approved by the Board of Directors on 18 May 2020 and described in the Reports on the Remuneration Policies for 2021, 2022 and 2023, approved by shareholders following a binding vote at the Annual General Meetings held on 30 April 2021, 29 April 2022 and 9 May 2023, the Company proceeded to pay Mr Donnarumma a termination payment, as Chief Executive Officer, of €108,750.00 gross and a severance payment, as General Manager, of €4,563,250.00 gross.

These sums were paid in addition to other termination benefits and amounts due in relation to the rights vested as a result of participation in long-term incentive schemes, as also reported in the Company's Remuneration Report.

These payments were determined in line with the applicable legislation and contractual provisions, and in conformity and accordance with the content of the Remuneration Policy adopted by Terna (including clawback provisions) with the involvement of the Remuneration Committee, and described in the Remuneration Report prepared pursuant to art. 123-ter of the CLF. This policy was approved by the Board of Directors on 22 March 2023 and voted in favour of after a binding vote at the Annual General Meeting held on 9 May 2023.

The above amounts were paid in May 2023. No non-competition agreement following termination was provided for and no payment was therefore made for this reason.

With regard to Key Management Personnel, severance payments of €3,702,689 were made on the basis of:

• the Framework Agreement governing the Terna Group's management personnel, entered into on 28 May 2021 and 26 June 2023 by Terna, Federmanager and the Union Representative representing management personnel within the Terna Group in compliance with art.4, paragraphs 1-7-ter of Law 92/2012, as amended;
• the remuneration policy for Key Management Personnel.

9. Annual change in remuneration paid and in the Company's performance

In line with the requirements of the revised Regulations for Issuers published by the CONSOB and the remuneration paid and described in this Section of the Report, this paragraph provides an annual comparison between 2020, 2021, 2022 and 2023 of:

• the total remuneration paid to members of the Board of Directors and the Board of Statutory Auditors, as shown in "Total" column (6) in Table 1.

In this regard, the table below shows total remuneration paid - prorated on the basis of the period in office - to all persons who have held the position of Director or Statutory Auditor, even if for only a fraction of the year, during 2020, 2021, 2022 and 2023. The change in remuneration between 2021-2020, 2022-2021 and 2023-2022 is only shown for persons receiving pay in both years;

• the Company's results, in terms of EBITDA and Total Shareholder Return;
• total average remuneration for the Company's employees, based on the average full-time workforce, excluding the Chief Executive Officer and General Manager, calculated as the sum of gross annual pay, short-term variable remuneration for the year, benefits and any further compensation (e.g., overtime pay).

Section II: Report on remuneration paid in 2023

Remuneration of the Board of Directors and the Board of Statutory Auditors (in €)

NAME AND SURNAME	POSITION	2020	2021	2022	2023	Δ 2023-2022
Igor De Biasio	Chairman of the Board of Directors				186,780.2 €
Valentina Bosetti	Chairwoman of the Board of Directors	148,624.2 €	238,907.9 € 238,907.9 €		85,552.0 €	-64.2%
Catia Bastioli	Chief Executive Officer and General Manager	91,734.9 €
Giuseppina Di Foggia	Chief Executive Officer and General Manager				1,368,049.3 €
	Stefano Antonio Donnarumma Chief Executive Officer and General Manager		1,203,775.7 € 1,723,651.3 €1,770,743.5 €		407,451.3 €	-77.0%
Luigi Ferraris	Chief Executive Officer and General Manager	526,348.9 €
Jean-Michel Aubertin	Director	46,723.8 €		83,659.1 € 115,178.2 €	115,686.9 €	0.4%
Litwack Karina Audrey	Director				74,450.9 €
Donati Angelica Krystle	Director				74,450.9 €
Antonella Baldino	Director	21,804.5 €	35,054.2 €	35,054.2 €	12,550.1 €	-64.2%
Paolo Calcagnini	Director	13,451.1 €
Valentina Canalini	Director	21,804.5 €	35,054.2 €	35,054.2 €	12,550.1 €	-64.2%
Ernesto Carbone	Director	46,723.8 €		83,768.9 € 115,178.2 €	7,359.2 €	-93.6%
D'Arienzo Regina Corradini	Director				48,555.0 €
Fabio Corsico	Director	125,913.4 €	125,193.7 € 125,193.7 €		44,821.7 €	-64.2%
Alessandra Faella	Director	46,723.8 €		83,659.1 € 115,178.2 €	41,236.0 €	-64.2%
Giuseppe Ferri	Director	46,723.8 €		83,768.9 € 115,178.2 €	41,236.0 €	-64.2%
Paola Giannotti	Director	135,986.5 €	135,209.2 € 135,209.2 €		48,407.5 €	-64.2%
Marco Giorgino	Director	121,732.1 €	125,193.7 € 125,193.7 €		132,220.7 €	5.6%
Gregori Gian Luca	Director				74,450.9 €
Yunpeng He	Director	50,400.9 €	35,054.2 €	2,497.0 €
Gabriella Porcelli	Director	141,264.6 €	125,193.7 € 125,193.7 €		44,821.7 €	-64.2%
Mele Francesco Renato	Director				48,555.0 €
Simona Signoracci	Director				74,450.9 €
Qinjing Shen	Director			32,709.3 €	35,209.1 €	7.6%
Anna Chiara Svelto	Director				80,924.9 €
Cucchiani Enrico Tommaso	Director				80,924.9 €
Elena Vasco	Director	48,039.7 €
Matteo Mario Busso	Standing Auditor	34,245.9 €	55,085.2 €	55,085.2 €	75,122.1 €	36.4%
Raffaella Fantini	Standing Auditor	28,019.4 €	45,069.7 €	45,069.7 €	16,135.8 €	-64.2%
Lorenzo Pozza	Standing Auditor				29,133.0 €
Riccardo Schioppo	Standing Auditor	21,137.5 €
Vincenzo Simone	Standing Auditor	45,205.2 €	45,069.7 €	45,069.7 €	16,135.8 €	-64.2%
Antonella Tomei	Standing Auditor				29,133.0 €
M. Alessandra Zunino de Pignier Standing Auditor		17,294.3 €

The changes are due to the term in office and/or participation in Board Committees and not to any change in the applicable Remuneration Policy. Details of the individual components of remuneration are provided in the tables and notes in Section II of the Reports for 2021, 2022 and 2023.

Terna Group performance

INDICATOR	2019	2020*	2021*	2022*	2023*	Δ 2023-2022
EBITDA	€1,741.2m	€1,811.0m	€1,854.8m	€2,059.2m	€2,168.6m	5.3%
Total Shareholder Return	25.13%	9.36%	18.78%	1.03%	14.13%	13.1 pp

* In compliance with the requirements of IFRS 5, the overall results for the 2023, 2022, 2021 and 2020 financial years attributable to the South American subsidiaries involved in the sale of the Group's Latin American assets have been classified in "Profit/(Loss) from assets held for sale" in the Group's reclassified income statement.

Average remuneration of employees

SCOPE	2020 (€)	2021 (€)	2022 (€)	2023 (€)	Δ 2023-2022
Employees in the electricity sector (average)	50,158	52,212	52,607	56,648	7.68%

Part two

Table 1 - Remuneration paid to members of management and oversight bodies, General Managers and Key Management Personnel

A	B	C	D	1	2
NAME AND SURNAME	POSITION	PERIOD IN OFFICE	EXPIRY OF TERM OF OFFICE (APPROVAL OF FINANCIAL STATEMENTS FOR)	FIXED PAY	FEES FOR PARTICIPATION IN BOARD COMMITTEES
Igor De Biasio	Chairman of the Board of Directors	09/05/2023-31/12/2023	2025
				32,317.35 €
	(I) Remuneration from the company preparing the financial statements			121,513.24 €
					32,317.35 €
(II) Remuneration from subsidiaries and associates
(III) Total				153,830.59 €	32,317.35 €
Valentina Bosetti	Chairwoman of the Board of Directors	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			17,899.54 €
				67,302.28 €
(II) Remuneration from subsidiaries and associates
(III) Total				85,201.83 €
Giuseppina Di Foggia	Chief Executive Officer and General Manager	09/05/2023-31/12/2023	2025
				22,622.15 €
	(I) Remuneration from the company preparing the financial statements			129,269.41 €
				551,577.92 €
(II) Remuneration from subsidiaries and associates
(III) Total				703,469.47 €
Stefano Antonio Donnarumma	Chief Executive Officer and General Manager	01/01/2023-09/05/2023	2022
				12,529.68 €
	(I) Remuneration from the company preparing the financial statements			71,598.17 €
				303,451.67 €
(II) Remuneration from subsidiaries and associates
(III) Total				387,579.53 €
Jean-Michel Aubertin	Director	01/01/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			35,151.83 €	80,347.03 €
(II) Remuneration from subsidiaries and associates
(III) Total				35,151.83 €	80,347.03 €
Antonella Baldino	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €
(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €
Valentina Canalini	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €
(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €

Executive
Summary

Section II: Report on remuneration paid in 2023

3		4	5	6	7	8
	VARIABLE NON-EQUITY PAYMENTS	BENEFITS	OTHER		FAIR VALUE OF	SEVERANCE OR
BONUSES AND OTHER INCENTIVES	PROFIT-SHARING	IN KIND	REMUNERATION	TOTAL	EQUITY-BASED PAYMENTS	TERMINATION PAYMENTS
				32,317.35 €
				121,513.24 €
		632.23 €		32,949.58 €
		632.23 €		186,780.17 €
				17,899.54 €
		350.17 €		67,652.45 €
		350.17 €		85,552.00 €
				22,622.15 €
200,000.00 €				329,269.41 €
427,500.00 €		37,079.81 €		1,016,157.73 €	481,893.78 €
627,500.00 €		37,079.81 €		1,368,049.28 €	481,893.78 €
				12,529.68 €
				71,598.17 €		108,750.00 €
		19,871.81 €		323,323.48 €		4,563,250.00 €
		19,871.81 €		407,451.34 €		4,672,000.00 €
		188.08 €		115,686.94 €
		188.08 €		115,686.94 €
		20.40 €		12,550.08 €
		20.40 €		12,550.08 €
		20.40 €		12,550.08 €
		20.40 €		12,550.08 €

SEVERANCE OR TERMINATION

A	B	C	D	1	2
NAME AND SURNAME	POSITION	PERIOD IN OFFICE	EXPIRY OF TERM OF OFFICE (APPROVAL OF FINANCIAL STATEMENTS FOR)	FIXED PAY	FEES FOR PARTICIPATION IN BOARD COMMITTEES
Ernesto Carbone	Director	01/01/2023-23/01/2023	2022
	(I) Remuneration from the company preparing the financial statements			2,236.11 €	5,111.11 €
	(II) Remuneration from subsidiaries and associates
(III) Total				2,236.11 €	5,111.11 €
Fabio Corsico	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €	32,219.18 €
	(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €	32,219.18 €
Regina Corradini D'Arienzo Director		09/05/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			22,622.15 €	25,853.88 €
	(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	25,853.88 €
Enrico Tommaso Cucchiani Director		09/05/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			22,622.15 €	58,171.23 €
	(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	58,171.23 €
Angelica Kristle Donati	Director	09/05/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			22,622.15 €	51,707.76 €
	(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	51,707.76 €
Alessandra Faella	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €	28,639.27 €
	(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €	28,639.27 €
Giuseppe Ferri	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €	28,639.27 €
	(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €	28,639.27 €
Paola Giannotti	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €	35,799.09 €
	(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €	35,799.09 €
Marco Giorgino	Director	01/01/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			35,151.83 €	96,853.88 €
	(II) Remuneration from subsidiaries and associates
(III) Total				35,151.83 €	96,853.88 €
Gian Luca Gregori	Director	09/05/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			22,622.15 €	51,707.76 €
	(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	51,707.76 €
Litwack Karina Audrey	Director	09/05/2023-31/12/2023	2025
	(I) Remuneration from the company preparing the financial statements			22,622.15 €	51,707.76 €
	(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	51,707.76 €
Gabriella Porcelli	Director	01/01/2023-09/05/2023	2022
	(I) Remuneration from the company preparing the financial statements			12,529.68 €	32,219.18 €
	(II) Remuneration from subsidiaries and associates
(III) Total				12,529.68 €	32,219.18 €

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

	3		4	5	6	7	8
	VARIABLE NON-EQUITY PAYMENTS					FAIR VALUE OF	SEVERANCE OR
	BONUSES AND OTHER INCENTIVES	PROFIT-SHARING	BENEFITS IN KIND	OTHER REMUNERATION	TOTAL	EQUITY-BASED PAYMENTS	TERMINATION PAYMENTS
			11.96 €		7,359.19 €
			11.96 €		7,359.19 €
			72.87 €		44,821.73 €
			72.87 €		44,821.73 €
			78.94 €		48,554.97 €
			78.94 €		48,554.97 €
			131.56 €		80,924.94 €
			131.56 €		80,924.94 €
			121.04 €		74,450.95 €
			121.04 €		74,450.95 €
			67.04 €		41,235.99 €
			67.04 €		41,235.99 €
			67.04 €		41,235.99 €
			67.04 €		41,235.99 €
			78.70 €		48,407.47 €
			78.70 €		48,407.47 €
			214.96 €		132,220.67 €
			214.96 €		132,220.67 €
			121.04 €		74,450.95 €
			121.04 €		74,450.95 €
			121.04 €		74,450.95 €
			121.04 €		74,450.95 €
			72.87 €		44,821.73 €
			72.87 €		44,821.73 €

A	B	C	D	1	2
NAME AND SURNAME	POSITION	PERIOD IN OFFICE	EXPIRY OF TERM OF OFFICE (APPROVAL OF FINANCIAL STATEMENTS FOR)	FIXED PAY	FEES FOR PARTICIPATION IN BOARD COMMITTEES
Francesco Renato Mele	Director	09/05/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				22,622.15 €	25,853.88 €
(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	25,853.88 €
QinJing Shen	Director	01/01/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				35,151.83 €
(II) Remuneration from subsidiaries and associates
(III) Total				35,151.83 €
Simona Signoracci	Director	09/05/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				22,622.15 €	51,707.76 €
(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	51,707.76 €
Anna Chiara Svelto	Director	09/05/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				22,622.15 €	58,171.23 €
(II) Remuneration from subsidiaries and associates
(III) Total				22,622.15 €	58,171.23 €
Matteo Mario Busso	Standing Auditor	01/01/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				55,000.00 €
(II) Remuneration from subsidiaries and associates				20,000.00 €
(III) Total				75,000.00 €
Raffaella Fantini	Standing Auditor	01/01/2023-09/05/2023	2022
(I) Remuneration from the company preparing the financial statements				16,109.59 €
(II) Remuneration from subsidiaries and associates
(III) Total				16,109.59 €
Lorenzo Pozza	Standing Auditor	09/05/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				29,085.62 €
(II) Remuneration from subsidiaries and associates
(III) Total				29,085.62 €
Vincenzo Simone	Standing Auditor	01/01/2023-09/05/2023	2022
(I) Remuneration from the company preparing the financial statements				16,109.59 €
(II) Remuneration from subsidiaries and associates
(III) Total				16,109.59 €
Antonella Tomei	Standing Auditor	09/05/2023-31/12/2023	2025
(I) Remuneration from the company preparing the financial statements				29,085.62 €
(II) Remuneration from subsidiaries and associates
(III) Total				29,085.62 €
Key Management Personnel (11)
(I) Remuneration from the company preparing the financial statements				2,128,796.98 €
(II) Remuneration from subsidiaries and associates
(III) Total				2,128,796.98 €

Section I: Report on the remuneration policy for 2024

Executive Summary

Section II: Report on remuneration paid in 2023

	3	4	5	6	7	8
FEES FOR PARTICIPATION IN BOARD	VARIABLE NON-EQUITY PAYMENTS BONUSES AND PROFIT-SHARING	BENEFITS IN KIND	OTHER REMUNERATION	TOTAL	FAIR VALUE OF EQUITY-BASED PAYMENTS	SEVERANCE OR TERMINATION PAYMENTS
COMMITTEES	OTHER INCENTIVES
25,853.88 €		78.94 €		48,554.97 €
25,853.88 €		78.94 €		48,554.97 €
		57.24 €		35,209.07 €
		57.24 €		35,209.07 €
51,707.76 €		121.04 €		74,450.95 €
51,707.76 €
		121.04 €		74,450.95 €
58,171.23 €		131.56 €		80,924.94 €
		131.56 €		80,924.94 €
		89.56 €		55,089.56 €
		32.57 € 122.13 €		20,032.57 € 75,122.13 €
		26.23 €		16,135.82 €
		26.23 €		16,135.82 €
		47.36 €		29,132.98 €
		47.36 €		29,132.98 €
		26.23 €		16,135.82 €
		26.23 €		16,135.82 €
		47.36 €		29,132.98 €
		47.36 €		29,132.98 €
	1,038,158.00 €	185,375.38 €		3,352,330.36 €	487,847.92 €	3,702,689.13 €
	1,038,158.00 €	185,375.38 €		3,352,330.36 €	487,847.92 €	3,702,689.13 €

Notes Table 1

Igor De Biasio	Col. 1	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Chairman (€50,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 3, art. 2389 of the Italian Civil Code for the position of Chairman (€188,000). The amount includes:
	Col. 2	- the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, of gross remuneration payable for the position of Chair of the Nominations, Governance and Scenarios Committee (€50,000).
Valentina Bosetti	Col. 1	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Chairwoman (€50,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 3, art. 2389 of the Italian Civil Code for the position of Chairman (€188,000).
Giuseppina Di Foggia	Col. 1	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 3, art. 2389 of the Italian Civil Code for the position of Chief Executive Officer (€200,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross annual pay (€850,000) for the position of General Manager.
	Col. 3	The amount includes: - gross amount due under the MBO scheme for 2023, relating to the position of Chief Executive Officer (€200,000); - gross amount due under the MBO scheme for 2023, relating to the position of General Manager (€427,500).
Stefano Antonio Donnarumma	Col. 1	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 3, art. 2389 of the Italian Civil Code for the position of Chief Executive Officer (€200,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross annual pay (€850,000) for the position of General Manager.
	Col. 8	of which: €108,750 gross as termination payment, €4,563,250 gross as severance payment. Mr Donnarumma will also receive the amount due in relation to the rights vested under long-term incentive plans, in line with the policy described in the Company's Report on the Remuneration Policy.
	Col. 1	This amount corresponds with the fixed gross annual remuneration payable pursuant to para. 1 of art. 2389 of the Italian Civil Code for the position of Director (€35,000) terminated and then re-elected in 2023.
Jean-Michel Aubertin	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Nominations Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Audit, Risk and Sustainability Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Nominations, Governance and Scenarios Committee (€40,000).
Antonella Baldino	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000). This amount was not paid in 2023.
Valentina Canalini	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 23 January 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 23 January 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Ernesto Carbone	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 23 January 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000); - the prorated amount payable, for the period from 1 January 2023 to 23 January 2023, as gross remuneration due as a member of the Nominations Committee (€40,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Fabio Corsico	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as Chair of the Remuneration Committee (€50,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Nominations Committee (€40,000).
Regina Corradini	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000). This amount was not paid in 2023.
D'Arienzo	Col. 2	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Nominations, Governance and Scenarios Committee (€40,000). This amount was not paid in 2023.
	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Enrico Tommaso Cucchiani	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Audit, Risk and Sustainability Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as Chair of the Remuneration Committee (€50,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Angelica Kristle Donati	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Alessandra Faella	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Audit, Risk, Corporate Governance and Sustainability Committee (€40,000).

Section II: Report on remuneration paid in 2023

	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000). This amount was not paid in 2023.
Giuseppe Ferri	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Audit, Risk, Corporate Governance and Sustainability Committee (€40,000). - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000). These amounts were paid in part in 2023.
	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Paola Giannotti	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as Chair of the Audit, Risk, Corporate Governance and Sustainability Committee (€60,000). - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000). These amounts were paid in part in 2023.
	Col. 1	This amount corresponds with the fixed gross annual remuneration payable pursuant to para. 1 of art. 2389 of the Italian Civil Code for the position of Director (€35,000) terminated and then re-elected in 2023.
Marco Giorgino	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Audit, Risk, Corporate Governance and Sustainability Committee (€40,000); - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as Chair of the Related Party Transactions Committee (€50.000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as Chair of the Audit, Risk and Sustainability Committee (€60.000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Gian Luca Gregori	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Related Party Transactions Committee (€40,000).
Karina Audrey Litwack	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Nominations, Governance and Scenarios Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Audit, Risk and Sustainability Committee (€40,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Gabriella Porcelli	Col. 2	The amount includes: - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as Chair of the Nominations Committee (€50,000). - the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as gross remuneration due as a member of the Remuneration Committee (€40,000). These amounts were paid in part in 2023.
Mele Francesco	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000). This amount is passed on to Cassa Depositi e Prestiti S.p.A This amount was not paid in 2023.
Renato	Col. 2	The prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Audit, Risk and Sustainability Committee (€40,000). To be paid to Cassa Depositi e Prestiti S.p.A. This amount was not paid in 2023.
QinJing Shen	Col. 1	This amount corresponds with the fixed gross annual remuneration payable pursuant to para. 1 of art. 2389 of the Italian Civil Code for the position of Director (€35,000) terminated and then re-elected in 2023, to be paid to State Grid. This amount was not paid in 2023.
	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Simona Signoracci	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as a member of the Nominations, Governance and Scenarios Committee (€40,000).
	Col. 1	This amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual pay pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Director (€35,000).
Anna Chiara Svelto	Col. 2	The amount includes: - the prorated amount payable, for the period from 9 May 2023 to 31 December, as gross remuneration due as a member of the Remuneration Committee (€40,000); - the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as gross remuneration due as Chair of the Related Party Transactions Committee (€50,000).
Matteo Mario Busso	Col. 1	The amount includes: - the amount payable as fixed gross annual remuneration payable pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Chair of the Board of Statutory Auditors (€55,000). This amount was not paid in 2023. - compensation as sole statutory auditor of Terna Plus S.r.l This amount was not paid in 2023.
Raffaella Fantini	Col. 1	The amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual remuneration payable pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Statutory Auditor (€45,000).
Lorenzo Pozza	Col. 1	The amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual remuneration payable pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Statutory Auditor (€45,000). This amount was not paid in 2023.
Vincenzo Simone	Col. 1	The amount represents the prorated amount payable, for the period from 1 January 2023 to 9 May 2023, as fixed gross annual remuneration payable pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Statutory Auditor (€45,000).
Antonella Tomei	Col. 1	The amount represents the prorated amount payable, for the period from 9 May 2023 to 31 December 2023, as fixed gross annual remuneration payable pursuant to para. 1, art. 2389 of the Italian Civil Code for the position of Statutory Auditor (€45,000). This amount was not paid in 2023.
	Col. 3	The amount includes total gross remuneration due under the MBO scheme for 2023 (€1,038,158) Reference to:
Key Management Personnel	Col. 8	- the Framework Agreement governing the Terna Group's management personnel in compliance with art.4, paragraphs 1-7-ter of Law 92/2012, as amended; - Severance payments in line with the remuneration policy for 2023 in relation to Key Management Personnel.

FINANCIAL INSTRUMENTS ATTRIBUTABLE TO THE YEAR

Table 3A

Equity-based incentive plans, other than share options, for members of the Board of Directors, General Managers and other Key Management Personnel

				FINANCIAL INSTRUMENTS AWARDED IN PREVIOUS YEARS THAT DID NOT VEST DURING THE YEAR
A	B	1	2	3
NAME AND SURNAME	POSITION	PLAN	NUMBER AND TYPE OF FINANCIAL INSTRUMENTS	VESTING PERIOD
Stefano Antonio Donnarumma	Chief Executive Officer and General Manager
		Cycle Performance Share Plan 2021- 2025 (AGM of 30 April 2021)
		Cycle Performance Share Plan 2022- 2026 (AGM of 29 April 2022)	199,987	3 years
(II) Remuneration from subsidiaries and associates
(III) Total
Giuseppina Di Foggia	Chief Executive Officer and General Manager
		Cycle Performance Share Plan 2022- 2026 (AGM of 29 April 2022)	133,325	3 years
		Cycle Performance Share Plan 2023- 2027 (AGM of 9 May 2023)
(II) Remuneration from subsidiaries and associates
(III) Total
Key Management Personnel (11)
		Cycle Performance Share Plan 2021- 2025 (AGM of 30 April 2021)
		Cycle Performance Share Plan 2022- 2026 (AGM of 29 April 2022)	242,988	3 years
		Cycle Performance Share Plan 2023- 2027 (AGM of 9 May 2023)
(II) Remuneration from subsidiaries and associates
(III) Total

Section II: Report

Executive
Summary

Section I: Report on the remuneration policy for 2024

on remuneration paid in 2023

FINANCIAL FINANCIAL INSTRUMENTS INSTRUMENTS AWARDED IN PREVIOUS FINANCIAL INSTRUMENTS GRANTED DURING THE YEAR VESTING DURING YEARS THAT DID NOT VEST THE YEAR AND NOT DURING THE YEAR AWARDED		FINANCIAL INSTRUMENTS VESTING DURING THE YEAR AND AWARDABLE	FINANCIAL INSTRUMENTS ATTRIBUTABLE TO THE YEAR
B 1 2 3 4 5 6 7 8 9	10	11	12
NUMBER NUMBER NUMBER AND TYPE AND TYPE OF VESTING AND TYPE OF FAIR VALUE AT VESTING GRANT MARKET PRICE ON NAME AND SURNAME POSITION PLAN OF FINANCIAL FINANCIAL PERIOD FINANCIAL GRANT DATE PERIOD DATE GRANT DATE INSTRUMENTS INSTRUMENTS INSTRUMENTS	NUMBER AND TYPE OF FINANCIAL INSTRUMENTS	VALUE AT GRANT DATE	FAIR VALUE
Chief Executive Officer and Stefano Antonio Donnarumma General Manager
Cycle Performance Share Plan 2021- 2025 (AGM of 30 April 2021)	217,345	7.42**
Cycle Performance Share Plan 2022- 199,987 3 years 2026 (AGM of 29 April 2022)
(II) Remuneration from subsidiaries and associates (III) Total
Chief Executive Officer and Giuseppina Di Foggia General Manager
Cycle Performance Share Plan 2022- 133,325 3 years 2026 (AGM of 29 April 2022)
Cycle Performance Share Plan 2023- 132,987 1,445,681.33 3 years 14/06/23 7.9* 2027 (AGM of 9 May 2023)			481,893.78
(II) Remuneration from subsidiaries and associates (III) Total 1,445,681.33			481,893.8
Key Management Personnel (11)
Cycle Performance Share Plan 2021- 2025 (AGM of 30 April 2021)	300,585	7.42**
Cycle Performance Share Plan 2022- 242,988 3 years 2026 (AGM of 29 April 2022)
Cycle Performance Share Plan 2023- 134,630 1,463,543.75 3 years 14/06/23 7.9* 2027 (AGM of 9 May 2023)			487,847.92
(II) Remuneration from subsidiaries and associates (III) Total 1,463,543.75			487,847.9

* The market price at the grant date: based on the Volume Weighted Average Price (VWAP) registered in the 22 working days prior to the Grant Date for the shares.

** Price calculated on the basis of the Volume Weighted Average Price (VWAP) registered in the 22 working days prior to the date of the Board of Directors' meeting that determined the number of shares to award.

Table 3B

Cash-settled incentive plans for members of the Board of Directors, General Managers and other Key Management Personnel

A	B	1	2			3			4
NAME AND SURNAME	POSITION	PLAN	BONUS FOR THE YEAR			BONUS FOR PREVIOUS YEARS
			(A)	(B)	(C)	(A)	(B)	(C)	OTHER BONUSES
			PAYABLE/PAID (€)	DEFERRED	DEFERRAL PERIOD	NO LONGER PAYABLE	PAYABLE/ PAID	STILL DEFERRED
Giuseppina Di Foggia	Chief Executive Officer and General Manager
(I) Remuneration from the company preparing the financial statements		MBO 2023 (AD)	200,000 €
		MBO 2023 (DG)	427,500 €
associates	(II) Remuneration from subsidiaries and
(III) Total			€ 627,500.00
	Dirigenti con Responsabilità Strategiche (8)
(I) Remuneration from the company preparing the financial statements		MBO 2023	€ 1,038,158.00
associates	(II) Remuneration from subsidiaries and
(III) Total			€ 1,038,158.00

FORM 7-ter

Interests of members of management and oversight bodies, General Managers and Key Management Personnel

Shares held by Directors, Auditors, General Managers and Key Management Personnel

In accordance with art. 84-quater, paragraph 4 of CONSOB Resolution 11971/99, the following tables provide a list of shares in Terna and its subsidiaries held by Directors, Statutory Auditors, General Managers (table 1) and Key Management Personnel (table 2), and by spouses who are not legally separated and minor children, either directly or through subsidiaries, trust companies or proxies, as recorded in the shareholder register, notifications received and other information obtained by such members of management and oversight bodies, General Managers and Key Management Personnel. The list includes all persons holding the positions of Director, Statutory Auditor, General Manager and Key Management Personnel in 2023.

The number of shares is reported by name for members of the management and oversight bodies and general managers and, on an aggregate basis, for other key management personnel.

Section I: Report on the remuneration policy for 2024 Section II: Report on remuneration paid in 2023

Table 112

NAME AND SURNAME	POSITION	INVESTEE COMPANY13	NUMBER OF SHARES HELD AT THE END OF THE PREVIOUS YEAR (2022)	NUMBER OF SHARES PURCHASED (IN 2023)	NUMBER OF SHARES SOLD (IN 2023)	NUMBER OF SHARES HELD AT END OF YEAR 2023	TITLE14
Bosetti Valentina	Chairwoman of the Board of Directors	TERNA S.p.A.	0	0	0	0
Donnarumma Stefano Antonio	CEO and General Manager	-	0	281,20015 237,449		43,751	ownership
Aubertin Jean-Michel	Director	-	0	0	0	0
Baldino Antonella	Director	-	0	0	0	0
Canalini Valentina	Director	-	0	0	0	0
Carbone Ernesto16	Director	-	0	0	0	0
Corsico Fabio	Director	-	0	0	0	0
Faella Alessandra	Director	-	0	0	0	0
Ferri Giuseppe	Director	-	0	0	0	0
Giannotti Paola	Director	-	0	0	0	0
Giorgino Marco	Director	-	0	0	0	0
Shen Qinjing	Director	-	0	0	0	0
Porcelli Gabriella	Director	-	0	0	0	0
Busso Matteo Mario	Chairman of the Board of Statutory Auditors	-	0	0	0	0
Fantini Raffaella	Standing Auditor	-	0	0	0	0
Simone Vincenzo	Standing Auditor	-	0	0	0	0
Massimiliano Ghizzi	Alternate Auditor	-	0	0	0	0
Barbara Zanardi	Alternate Auditor	-	0	0	0	0
Maria Assunta Damiano	Alternate Auditor	-	0	0	0	0
Igor De Biasio	Chairman of the Board of Directors	-	0	0	0	0
Giuseppina Di Foggia	CEO and General Manager	-	0	0	0	0
Francesco Renato Mele	Director	-	0	0	0	0
Regina Corradini D'Arienzo	Director	-	0	0	0	0
Angelica Krystle Donati	Director	-	0	0	0	0
Enrico Tommaso Cucchiani	Director	-	0	0	0	0
Gian Luca Gregori	Director	-	0	0	0	0
Simona Signoracci	Director	-	0	0	0	0
Karina Audrey Litvack	Director	-	0	0	0	0
Anna Chiara Svelto	Director	-	0	0	0	0
Lorenzo Pozza	Standing Auditor	-	0	0	0	0
Antonella Tomei	Standing Auditor	-	0	0	0	0
Lucrezia Iuliano	Alternate Auditor	-	0	0	0	0
Antonello Lillo	Alternate Auditor	-	0	0	0	0

Table 217

NUMBER OF KEY MANAGEMENT PERSONNEL	INVESTEE COMPANY18	NUMBER OF SHARES HELD AT THE END OF THE PREVIOUS YEAR (2022)	NUMBER OF SHARES PURCHASED (IN 2023)	NUMBER OF SHARES SOLD (IN 2023)	NUMBER OF SHARES HELD AT END OF YEAR 2023	TITLE19
11	-	0	425,30820	129,41221	303,191	ownership

¹² The information regarding Bosetti Valentina, Donnarumma Stefano Antonio, Baldino Antonella, Canalini Valentina, Corsico Fabio, Faella Alessandra, Ferri Giuseppe, Giannotti Paola, Carbone Ernesto, Shen Qinjing, Porcelli Gabriella, Fantini Raffaella, Simone Vincenzo, Massimiliano Ghizzi, Maria Assunta Damiano relates to the period until 9 May 2023. The information regarding the other persons relates to the period after 9 May. As a result, the Company is not aware of share purchases and sales completed after the end of the term of office. 13 TERNA S.p.A. and its subsidiaries.

14 In this column - added to Form 7-ter of Annex 3A provided for in art. 84-quater, paragraph 4 of CONSOB Resolution 11971/99 - shows if the shares are held under ownership or a pledge, are held in usufruct, have been deposited, lent or borrowed, etc.

15 Grant free of charge on 9 May 2023 following the conclusion of the Vesting period, as provided for under the "Performance Share Plan 2020- 2023" approved by the Annual General Meeting of shareholders on 18 May 2020.

¹⁶ On 23 January 2023, the Director, Ernesto Carbone, resigned with immediate effect, following his appointment, by Parliament in joint session, as a member of the Consiglio Superior della Magistratura. As a result, the Company is not aware of share purchases and sales completed after the end of the term of office.

¹⁷ Following the changes in the management team in 2023, the scope of Key Management Personnel also changed. As a result, the number of shares notified by previous and current KMP in 2023 was initially 425,308 and then, again in aggregate form, 303,191. The Company is not aware of share purchases and sales completed after the end of the term of office.

18 TERNA S.p.A. and its subsidiaries.

¹⁹ In this column - added to Form 7-ter of Annex 3A provided for in art. 84-quater, paragraph 4 of CONSOB Resolution 11971/99 - shows if the shares are held under ownership or a pledge, are held in usufruct, have been deposited, lent or borrowed, etc.

²⁰ 425,308: including 117,332 purchased in compliance with the One-off Bonus for 2023 and 307,976 resulting from the grant free of charge of Terna's ordinary shares on 1 June 2023 following the conclusion of the Vesting Period, as provided for under the "Performance Share Plan 2020-2023" approved by the Annual General Meeting of shareholders on 18 May 2020.

21 Sale for the purposes of sell to cover with regard to the grant free of charge under the "Performance Share Plan 2020-2023".

Glossary

Annual General Meeting ("AGM"): the collective body that deliberates on matters relating to the Company. All the holders of voting rights are represented (either directly or by proxies) at the meeting. The AGM has the powers conferred on it by law and the Company's Articles of Association: the most important of these are the power to approve the financial statements and to elect and terminate Directors and members of the Board of Statutory Auditors and its Chair. With regard to the Remuneration Policy, the AGM expresses a binding opinion on Section I and a non-binding opinion on Section II of the Remuneration Report.

Audit, Risk and Sustainability Committee (until 9 May 2023, called the Audit, Risk, Corporate Governance and Sustainability Committee): this is a Board Committee set up on the basis of art. 6 of the Corporate Governance Code. From 9 May 2023, it consists of five non-executive Directors, of whom four are independent and one nonindependent, and the Committee's Chair is an independent Director. A description of the functions of the Audit, Risk and Sustainability Committee is provided in the Report on Corporate Governance and Ownership Structures.

Board of Directors: this is the collective body responsible for management of the Company. Terna S.p.A.'s Board of Directors consists of 13 Directors. It is the body with the authority for, among other things, approving the Remuneration Policy recommended by the Remuneration Committee.

Board of Statutory Auditors: the Company's oversight body, which has the role of overseeing compliance with the law, the Company's Articles of Association and with correct corporate governance principles, also verifying the adequacy of the organisational structure and administrative and accounting systems adopted by the Company and their functionality. It expresses a mandatory, albeit non-binding, opinion on the definition of the Remuneration Policy for Directors with delegated powers, which must be taken into account in the decisions taken by the Board of Directors.

Clawback provisions: these are contract provisions enabling the Company to request the return of all or a part of the variable components of remuneration paid on the basis of information that was subsequently revealed to be inaccurate or misleading or in the event of fraud or gross negligence on the part of the beneficiary, or where there have been breaches of the related laws or regulations (company rules, statutory and regulatory requirements, etc.), without which the related performance objectives would not have been met.

Consolidated Law on Finance ("CLF"): the "Consolidated Law on Finance" or Legislative Decree 58 of 24 February 1998 (as amended).

Corporate Governance Code: Borsa Italiana's new Corporate Governance Code for Listed Companies, published in January 2020 and in effect from the first reporting period beginning after 31 December 2020, and to which Terna adheres. The document contains a series of principles and recommendations setting out the objectives of good corporate governance for companies listed on the screen-based trading system (Mercato Telematico Azionario) managed by Borsa Italiana. Application of the Code is voluntary and is described in the Report on Corporate Governance and Ownership Structures.

Directors with delegated powers: the Chair of the Board of Directors and the Chief Executive Officer.

Directors without delegated powers: all Directors except for the Chair of the Board of Directors and the Chief Executive Officer.

Section II: Report on remuneration paid in 2023

Dow Jones Sustainability Index (or DJSI or Index): the sustainability index published annually by S&P Global, consisting of listed companies considered the best in terms of sustainability performance; in this document, reference is specifically made to the "World" Index.

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortisation (gross operating profit) is an indicator of operating performance; it is calculated on the basis of profit before taxation, net financial income/(expenses), depreciation, amortisation and impairment losses, as reported in the annual financial statements.

Entry level: the minimum level for performance indicators, below which the incentive plans will not pay any bonus.

Executive Directors: the chief executive officers of the Company or strategically important subsidiaries, including the chairs of these companies if granted executive powers or when they have a specific role in defining business strategies. Executive Directors also include Directors holding managerial positions in the Company or a strategically important subsidiary, or in the parent company when the position also relates to Terna. Finally, Directors who sit on the Executive Committee are also classified as Executive, when they have not been nominated as a Chief Executive Officer or when membership of the executive Committee, given the frequency of meetings and the matters decided on, effectively means there is systematic involvement of its members in the day-to-day running of Terna.

Gate: the performance threshold, below which no bonus is due.

Gross Annual Pay ("GAP"): this refers to gross annual pay, relating solely to the fixed elements of remuneration payable under an employment contract, excluding any benefits linked to employment and any one-off payments, reimbursements of expenses and any incentive or variable component even if defined as guaranteed and/or paid as a one-off or on a continuous, repeated or deferred basis, termination benefits and any other payment provided for in law or in the applicable collective employment contract.

Key Management Personnel (KMP): these managers have the direct or indirect authority and responsibility for planning, managing and overseeing the Company's operations. A definition of "Key Management Personnel" is provided in Annex 1 to the CONSOB Regulation on Related Party Transactions, last amended by resolution 22144 of 22 December 2021.

Key Performance Indicator (KPI): this is an indicator designed to measure performance and the achievement of predetermined objectives.

Lock-up period: the period of one year from the end of the vesting period, during which the shares awarded are nontransferable.

Long-term Incentive (LTI) Plan: this is the long-term incentive plan that awards beneficiaries a bonus linked to the achievement of predetermined multi-year objectives at company level.

Management by Objectives (MBO): this short-term form of incentive grants beneficiaries the right to receive an annual cash bonus, based on predetermined objectives agreed with each of the Plan beneficiaries.

Net Profit: this is an indicator of operating performance; it is calculated on the basis of the difference between revenue and operating costs after depreciation, amortisation and impairment losses, net financial income/(expenses) and taxation.

Nominations, Governance and Scenarios Committee (until 9 May 2023, called the Nominations Committee): this is a Board Committee set up on the basis of art. 4 of the Corporate Governance Code. From 9 May 2023, it consists of five non-executive Directors, of whom four are independent and one non-independent, and the Committee's Chair is an independent Director. A description of the functions of the Nominations, Governance and Scenarios Committee is provided in the Report on Corporate Governance and Ownership Structures.

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REPORT ON THE REMUNERATION POLICY FOR 2024 AND REMUNERATION PAID IN 2023

Overperformance: the maximum level of achievement of the objective granting the right to receive a predetermined

Objective at target: the level of achievement of the objective granting the right to receive 100% of the incentive.

Performance Share: this Share represents the shares in Terna S.p.A. awarded as a bonus as part of the long-term incentive plans linked to specific performance objectives.

Regulation on Related Party Transactions: CONSOB Regulation 17221 of 10 March 2010, as amended, setting out rules designed to ensure the transparency and substantive and procedural fairness of related party transactions carried out directly by the Company or through subsidiaries.

Regulations for Issuers: the CONSOB Regulations for Issuers 11971 of 14 May 1999, as amended, containing regulations applicable to the issuers of financial instruments.

Related Party Transactions Committee: the Committee is made up of 3 independent Directors with the roles and responsibilities provided for in CONSOB Regulation 17221/2010, as amended. A description of the functions of the Related Party Transactions Committee is provided in the Report on Corporate Governance and Ownership Structures.

Remuneration Committee: this is a Board Committee set up on the basis of art. 5 of the Corporate Governance Code. Its members are non-executive Directors, the majority of whom independent, and the Committee's Chair is an independent Director. A description of the functions of the Remuneration Committee is provided in the Report on Corporate Governance and Ownership Structures.

Shareholder: a person or entity holding shares in the Company.

maximum percentage of the incentive, above 100%.

Stakeholder: a person or entity with an interest in the Company and its business.

Total Shareholder Return ("TSR"): the total return on an equity investment, calculated as the sum of:

i) the capital gain: the change in the share price (difference between the price at the end and at the beginning of the relevant period) as a percentage of the price at the beginning of the period;

ii) reinvested dividends: the ratio between dividends per share paid out during the period and the share price at the beginning of the period. Dividends are deemed to have been reinvested in the shares. The source used for TSR is Bloomberg.

Vesting (vesting period): this is the period between the grant of rights under an incentive scheme and the date on which the beneficiary acquires unconditional title to the underlying shares or cash payment.

All pictures are the property of Terna.

www.terna.it

Mercurio GP Milan

Strategic advisory Creative concept Graphic design Layout Editing

www.mercuriogp.eu

Password Language Services S.r.l. Rome Translation