PERFORMANCE EVALUATION AND COMPENSATION POLICIES

In an effort to develop professional skills, the Company applies a structured employee performance management system based on quantitative and qualitative targets, supported by specifically designed information tools.

With regard to the white-collar population, at the beginning of each year managers assign and discuss measurable and challenging goals (professional, economic, and personal development) with each resource and make an accurate assessment of organizational conduct in order to align the person's performance with the Company's strategic priorities and the targets of the functions they belong to. Interim feedback throughout the year allows managers to assess progress with respect to the goals set at the beginning of the year and to consider assigning new targets in response to contingent priorities. Indeed, there is provision for the development of individual evaluations that can be compared and used for resource planning and development, so as to give timely feedback to employees and create a constructive dialog between manager and employee. In 2022 the Performance Management process involved 22% of the employees.

The Human Resources function is responsible for and guarantor of the entire process. Based on the performance achieved and in accordance with Company guidelines, it coordinates the structured compensation and reward policies in each country, ensuring the proper application of the process. Compensation policy looks at equity in its three dimensions: internal, individual, and external. Internal equity is defined as the relationship between the salaries of people performing similar jobs but with different job seniority and degree of role coverage. Individual equity concerns the person's wage level in relation to skills and responsibilities, while external equity concerns the distribution of wages with respect to the market, industry, and geographical area. The compensation system consists of annual incentive programs (MBOs) and a structured annual salary review (initiated in October) unique to all Group locations. Remuneration policies are complementary to the benefits provided by national collective bargaining and related supplementary contracts. Also in 2022, the Company gave out Company Awards, celebrating projects and people who distinguished themselves in making key contributions to achieving the Company's goals. Therefore, in December awards were handed out to the best projects and the people who managed them from among all the employees in the world who best embodied the Company's values.

During 2022, aware of the impact of inflationary pressures on the daily lives of employees' families, the Company also decided to allocate a bonus of one million euros to employees in all locations around the world through the provision of benefits or monetary sums according to the specific characteristics of the various countries.

The Ratio Between Wages

The gender differential of average salaries for important sites 16 shows substantially aligned values in EMEA and a more significant gap in the United States. In all areas, the lowest differentials are in the Worker category.

16 - Important sites are defined as locations whose total number of employees (in descending order) covers a percentage of total employees greater than 80%.

Over the years and with the stabilization associated with the new scope consolidated in 2022, there was a significant reduction in the ratio of total pay and increments.

A - When calculating total annual remuneration, gross annual remuneration, allowances, fringe benefits, and individual target achievement awards are considered. Values expressed in €k.

B - The population of employees as of December 31, 2022 was considered for the calculation of the maximum total annual salary and the corresponding percentage increase. Note that the numerator did not include the person receiving the highest salary, including all employees as reported in the 2-7 disclosure. In fact, the salaries of members of corporate bodies were not considered.