Centrale del Latte d'Italia S p A : Directors' report on remuneration

Centrale del Latte d'Italia S.p.A.

Centrale del Latte d'Italia S.p.A.

Report on the remuneration policy and on the

remuneration paid pursuant to art. 123-ter of

the Consolidated Law on Finance

Report on the remuneration policy and the compensation paid

Centrale del Latte d'Italia S.p.A.

REPORT ON THE REMUNERATION POLICY AND THE COMPENSATION PAID 2023

SECTION I

This section explains the policy of Centrale del Latte d'Italia S.p.A. (hereinafter referred to as "CLI" or the "Company") regarding the remuneration of the members of the Board of Directors, the Management Control Committee, the General Manager and the Executives with strategic responsibilities, taking into account the one-tier governance system and the further amendments to the articles of association that will be submitted for the approval of the Shareholders' Meeting of the Company as detailed below, functional to the pursuit of the sustainable success of the Company itself, taking into account the need to dispose of, retain and motivate people with the expertise and professional skills required by the role held in CLI. The policy establishes the criteria based on which remuneration is determined and is the result of a clear, transparent process in which the Shareholders' Meeting, Board of Directors, Management Control Committee and Remuneration and Appointments Committee play a central role. Should the aforementioned amendments to the articles of association not be approved, the references to the so-called"one-tier" system and the Management Control Committee shall be replaced by those to the so-called "traditional" system and the Board of Statutory Auditors.

If the amendments to the articles of association are approved by the Shareholders' Meeting, the Company will be administered by a Board of Directors composed of a maximum number of fifteen members as resolved by the Shareholders' Meeting at the time of the appointment (if such amendments are not approved, by a maximum number of fourteen members). The Board in office, appointed by the shareholders' meeting of 27 April 2023, is composed of seven members. Directors are elected on the basis of slates of candidates. If the aforementioned amendments to the articles of association are approved, the Shareholders' Meeting will be called upon to appoint a new Board of Directors.

Note also that since Section II relates to the 2023 financial year, it continues to refer to the traditional governance structure (Board of Directors and Board of Statutory Auditors, bodies that will remain in office until the new governance system is effective and therefore until the registration of the resolution of the Extraordinary Shareholders' Meeting referred to above with the Company Register).

At the end of 2023:

• The Board of Directors, which will remain in office until the approval of the financial statements as at 31 December 2025 (except in the event of the approval of the aforementioned amendments to the articles of association, which will require a renewal of the

entire body), is composed as follows:

Angelo Mastrolia	Chairman of the Board of Directors
Giuseppe Mastrolia	Deputy Chairman of the Board of Directors
Stefano Cometto	Chief Executive Officer
Benedetta Mastrolia	Non-executive director
Edoardo Pozzoli	Non-executive director
Valeria Bruni Giordani	Independent non-executive director
Anna Claudia Pellicelli	Independent non-executive director

• the Board of Statutory Auditors, which will remain in office until the approval of the financial statements as at 31 December 2023 (except in the event of approval of the aforementioned amendments to the articles of association, which - once they become

effective - will result in the dissolution of the entire body), is composed as follows:

Deborah Sassorossi	Chair of the Board of Statutory Auditors
Ester Sammartino	Standing Auditor
Giovanni Rayneri	Standing Auditor

With regard to the three-year period 2023-2025, the policy on remuneration and the compensation paid is consistent with the policy adopted in the previous three-year period, based on the achievement of the economic, financial and strategic objectives as detailed in paragraph h) below, with the exception of the changes described below resulting from the submission of the introduction of the one-tier system to the Shareholders' Meeting for approval.

Report on the remuneration policy and the compensation paid

Centrale del Latte d'Italia S.p.A.

1. The bodies or subjects involved in the preparation and approval of the Remuneration Policy, specifying their respective roles, as well as the bodies or subjects responsible for the correct implementation of this policy.

The Ordinary Shareholders' Meeting (i) at the time of appointment determines the remuneration of the members of the Board of Directors and the members of the Management Control Committee; (ii) resolves with binding effect on Section I of the Report on Remuneration (hereinafter the "Report") on remuneration policy and (iii) expresses its non-binding vote on Section II of the Report which provides a representation of each of the items that make up the remuneration and a detailed illustration of the remuneration paid during the year. The Board of Directors (i) constitutes the Appointments and Remuneration Committee (hereinafter the "Committee"), which has at least one member with adequate knowledge and experience in financial matters or remuneration policies, whose competence is verified at the time of his/her appointment (ii) based on a proposal from the Committee prepares the remuneration policy, employing a transparent procedure, and (iii) ensures that the remuneration paid and accrued is consistent with the principles and criteria defined in the remuneration policy, in light of the results achieved and other circumstances relevant to its implementation, and (iv) approves this Report, pursuant to art. 123-ter of the TUF.

The Management Control Committee formulates the opinions required by law, and in particular expresses its opinion on the proposals for remuneration of Directors with special responsibilities, pursuant to art. 2389, paragraph 3 of the Italian Civil Code, verifying the consistency of these proposals with the Remuneration Policy.

For the Appointments and Remuneration Committee, see paragraph b) below.

b) Possible intervention of a remuneration or other competent Committee, describing its composition, its powers and its operating procedures.

The Board of Directors set up an internal Appointments and Remuneration Committee, composed of:

Anna Claudia Pellicelli	Independent non-executive director
Valeria Bruni Giordani	Independent non-executive director
Benedetta Mastrolia	Non-executive director

The Appointments and Remuneration Committee (i) submits to the Board of Directors proposals for the remuneration of the Chairman, Deputy Chairman, Chief Executing Officer and Directors holding particular positions, which are functional to the pursuit of the sustainable success of the Company, taking into account the need to hire, retain and motivate persons having the expertise and professionalism required by the role covered; (ii) monitors the concrete application of the remuneration policy by verifying in particular that performance targets have been achieved; and (iii) periodically evaluates the application of the decisions taken by the Board of Directors and the criteria adopted for the remuneration of executives with strategic responsibilities, supervising their application on the basis of the information provided by the Chief Executing Officers and making general recommendations to the Board of Directors.

c) Remuneration and working conditions of Company employees

In determining the Remuneration Policy, account was taken of the remuneration and working conditions of the Company's employees, and specifically of the criterion for defining the economic package, based on:

1. Professional specialisation
2. The organisational role held
3. Their responsibilities

Among other things, the Remuneration Policy aims to determine the compensation of members of corporate bodies and Executives with Strategic Responsibilities in a harmonious manner, consistent with the working conditions of employees, avoiding generating situations of unjustified imbalance.

1. Names of any independent experts involved in preparing the remuneration policy. There were no independent experts involved in determining the Remuneration Policy.
2. Purposes pursued by the remuneration policy, the underlying principles and any changes in the remuneration policy with respect to

the previous financial year.

The Remuneration Policy aims to retain and motivate people with diverse professional skills and experiences who can guarantee useful contributions to the growth and control of the Company's business.

The Remuneration Policy illustrated in this Report seeks to:

1. Establish the methods for determining the remuneration of Directors - and in particular Executive Directors - and Executives with
   Report on the remuneration policy and the compensation paid

Centrale del Latte d'Italia S.p.A.

strategic responsibilities, in compliance with applicable regulations and in accordance with national and international best practices, also reflected in the principles of the Corporate Governance Code.

1. Identify in particular the persons and/or bodies involved in the implementation thereof, which - according to their respective competences - propose, deliberate and/or determine the remuneration of Directors and Executives with strategic responsibilities, express opinions on the matter, or are called upon to verify the correct implementation of what has been resolved or determined by the competent bodies.
2. Ensure greater transparency on remuneration for investors, both current and potential.

The Remuneration Policy was prepared by employing a clear, transparent process based on the following principles:

1. The balancing of the fixed and variable remuneration components according to the strategic objectives, the sustainable success of the Company and the risk management policy, also taking into account the sector it operates in and the characteristics of the business actually carried out.
2. The consistency of the overall remuneration with the applicable market benchmarks for similar positions or for roles of a similar level of responsibility and complexity.
3. Performance objectives - or the economic results and any other specific objectives that the disbursement of the variable component is linked to - as detailed below are measurable and linked to the purpose of creating value for the Shareholders over a medium- to long-term horizon.
4. The fixed component of the remuneration is sufficient to remunerate the performance of Executive Directors and Executives with strategic responsibilities in the event of failure to meet the objectives set for earning the variable component.

Among other things, the Remuneration Policy pursues an alignment between the interests of Managing Directors and Executives with strategic responsibilities, and at the same time the sustainable success of the Company and the achievement of the priority objective of creating value for Shareholders over a medium- to long-term horizon. This also through the adoption of incentive forms of remuneration linked to corporate performance objectives, both quantitative linked to financial indicators and qualitative linked to corporate sustainability objectives.

More specifically, the Company's sustainable success affects the following sectors:

1. Obtaining the certification of the occupational health and safety management system pursuant to Italian Legislative Decree no. 81/2008 in order to ensure a safe environment for employees and reduce the possibility of injuries at work.
2. Environmental impact of the Company's operations. Attention to the way waste and scrap are managed: in the former case reuse is favoured, according to the principles of the circular economy, while in the latter case the aim is to maintain a high level of recycling rather than disposal.
3. Reducing CO2 emissions: the company constantly measures its emissions with the aim of reducing them as much as possible, in line with EU policies.
4. Attention to the practices adopted in the management of the supply chain, aiming to respect and protect human rights.

This Policy is a continuation of that of the previous year, also in consideration of the favourable vote (100% of the voting capital) expressed by the Shareholders' Meeting, except for the changes described in this Section I with respect to the Shareholders' Meeting's possible approval of the introduction of the one-tier system (including the specification that the Shareholders' Meeting, if it approves the introduction of such system, will have to resolve on the remuneration due to the members of the renewed Board of Directors, including the remuneration of the members of the Control Management Committee). Note that this revision was not indicated by the shareholders either at the time of the original approval of the Policy or subsequently. For an examination of the reasons behind the Board of Directors' proposal, see the relevant report published on the Company's website.

1. Description of the policies on fixed and variable components of remuneration, with particular regard to the indication of the relative weight in the overall remuneration and distinguishing between short- and medium-to-long-term variable components.

The fixed component of the remuneration of the members of the Board of Directors was determined by the Shareholders' Meeting of 27 April 2023, which resolved to allocate a gross annual remuneration of Euro 60,000.00 to the Chair, Euro 30,000.00 each to the Deputy Chair and the Chief Executive Officer, and Euro 15,000.00 to the other members. If the Shareholders' Meeting convened for 29 April 2024 approves the introduction of the one-tier system, it will be called upon to determine the remuneration of the members of the Board of Directors (including the remuneration due to the members of the Management Control Committee).

The fixed component of Executives with strategic responsibilities consists of the fixed annual gross remuneration envisaged in their individual signed contracts, in accordance with the applicable collective agreements.

The remuneration of Independent Directors is determined only to a fixed extent, being neither linked to economic results nor to specific

Report on the remuneration policy and the compensation paid

Centrale del Latte d'Italia S.p.A.

Company objectives.

The variable component of the remuneration referred to in letter h) below of the Chairman of the Board of Directors, the Deputy Chairman of the Board of Directors, the Chief Executive Officer, non-executive Directors and the Financial Reporting Officer - in his/her capacity as Executive with strategic responsibilities - is defined by the Board of Directors based on a proposal of the Remuneration and Appointments Committee and is paid according to the achievement of particular performance objectives, which must be achieved over the three-year period of reference.

The consolidated performance targets established for the 2023-2025 period - identical for all the recipients of the variable component - relate to economic (Production Value and EBITDA), equity (amount of Shareholders' Equity) and strategic parameters. Qualitative performance targets related to environmental and social sustainability are also envisaged, as detailed in h) below.

On the proposal of the Remuneration and Appointments Committee, the Board of Directors approved the parameters for defining the actual amount of monetary bonuses to be paid.

g) Policy with regard to non-monetary benefits.

With regard to non-monetary benefits, the Remuneration Policy is based on maintaining average market standards.

These benefits consist of a life/injury insurance policy in favour of the Directors and Executives, as well as the assignment of a company car and cell phone to the CEO and Executives with strategic responsibilities.

h) With reference to variable components, a description of the performance targets, on the basis of which short- and medium-to-long- term variable components are assigned, distinguishing between the term, and information on the link between the change in results and the change in remuneration.

The Chairman, Deputy Chairman, Chief Executive Officer, non-executive (and non-independent) Directors and Executive with strategic responsibilities receive a variable component up to a maximum of 50% of their individual annual fixed remuneration and linked to the achievement of the three-year quantitative objectives approved by the Board of Directors on 17 March 2023, based on the business plan prepared also for the purpose of the impairment test procedure. Specifically:

a. Turnover in the years 2023, 2024 and 2025 (equal to 20% of the maximum payable variable component):

1. <95% of the target

no bonus

1. 95-100%of the target 50% of the bonus
2. 100-105%of the target 100% of the bonus

4. >105% of the target 110% of the bonus

b. EBITDA for the years 2023, 2024 and 2025 (equal to 25% of the maximum payable variable component):

1. <95% of the target

no bonus

1. 95-100%of the target 50% of the bonus
2. 100-105%of the target 100% of the bonus

4. >105% of the target 110% of the bonus

1. Consolidated NFP / EBITDA ratio excluding financial debt related to any technological investments for the years 2023-2025 (equal to
   25% of the maximum payable variable component):

1. <95% of the target

no bonus

1. 95-100%of the target 50% of the bonus
2. 100-105%of the target 100% of the bonus

4. >105% of the target 110% of the bonus

The bonus for the achievement of each of the above objectives shall be paid as follows:

• 50% in the year following the achievement of the target (e.g. target reached in 2023, the first 50% of the bonus shall be paid in 2024);
• 50% at the end of the three-year period (e.g. target reached in 2023, the remaining 50% of the bonus shall be paid in 2026).

In the event of an interrupted mandate:

• due to death or permanent disability, the bonuses earned will be paid to the beneficiaries immediately after the event;
• in other cases of early termination of the mandate, the bonuses not paid up to that time shall not be paid, except for termination resulting from the possible approval of the one-tier system by the Shareholders' Meeting.

Report on the remuneration policy and the compensation paid

a. Turnover (20%) b. EBITDA (25%)

c. Consolidated NFP/ EBITDA ratio excluding financial debt related to any equity investments and net of any disposals (25%)

a. Maintenance of ISO 14001 certification (10%)

b. Reduction of the ratio of CO2 emissions to turnover (10%)

c. Maintenance of the female-to-malegender ratio in line with the industry benchmark (10%)

Centrale del Latte d'Italia S.p.A.

Specifically, for the Chair of the Board of Directors and the Directors with delegated powers additional performance targets may be defined each year.

Recalling what was mentioned under letter e), on the proposal of the Remuneration and Appointments Committee the Company also identified qualitative performance targets related to environmental and social sustainability, which the Company aims to achieve in the years 2023-2025, namely:

1. Maintenance of the ISO 14001 - Environmental Management System certification.
2. Reduction of the ratio of CO2 emissions to turnover.
3. Maintenance of the female-to-male gender ratio in line with the industry benchmark.

More specifically, the achievement of the aforementioned qualitative performance objectives represents 15% each of the maximum payable variable component.

Financial performance goals 70%

Non-financial performance goals 30%

1. The criteria used to assess the reaching of performance objectives for the allocation of shares, options, other financial instruments or other variable components of remuneration.

For the criteria for assessing performance objectives, refer to point h).

Once again, with the support of the Appointments and Remuneration Committee, the Board of Directors evaluates the achievement of the defined objectives.

1. Information to highlight the contribution of the Remuneration Policy, and in particular the Policy on variable components, to the

business strategy, the pursuit of long-term company interests and sustainability. See the discussion in paragraphs e) and f) above.

1. Vesting period, any deferred payment systems, with an indication of the deferral periods and the criteria used to determine these periods and, if applicable, ex-post adjustment mechanisms for the variable component.

Not applicable.

1. Information on any provisions for holding securities in the portfolio after their acquisition, indicating the retention periods and the criteria used to determine these periods.

There are no clauses requiring holding securities because there are no incentive plans linked to securities.

m) Policy relating to the remuneration envisaged in the event of termination of office or the employment relationship, specifying which circumstances determine the onset of the right and the possible connection between such remuneration and the Company's performance.

There are no compensation policies in the event of termination of office or the employment relationship.

n) Information on the presence of any insurance, social security or pension arrangements other than those required by law.

As already indicated in letter g) above, the Company has taken out a cumulative insurance policy against accidents and for the legal protection of all Directors and Executives.

Report on the remuneration policy and the compensation paid

Centrale del Latte d'Italia S.p.A.

1. Remuneration policies concerning: (i) independent directors, (ii) participation in committees and (iii) the performance of special duties (chair, vice-chair, etc.).

The right to the remuneration accrues upon appointment. Each of the independent Directors is only paid the fixed component equal to Euro 15,000.00 gross per year, on a monthly basis, in addition to reimbursement of expenses incurred during the performance of their duties and without prejudice to the additional remuneration for the members of the Management Control Committee. If the Shareholders' Meeting convened for 29 April 2024 approves the introduction of the one-tier system, it will be called upon to determine the remuneration of the members of the Board of Directors (including the remuneration due to the members of the Management Control Committee).

This remuneration also includes remuneration for participation in the individual internal Committees of the Company.

For the offices of Chairman, Deputy Chairman and Chief Executive Officer, payment of the fixed component is envisaged as per letter f), resolved by the Shareholders' Meeting on 27 April 2023, and the variable component as per letter h). If the Shareholders' Meeting convened for 29 April 2024 approves the introduction of the one-tier system, it will be called upon to determine the remuneration of the members of the Board of Directors (including the remuneration due to the members of the Management Control Committee).

1. Whether the remuneration policy has been defined using the remuneration policies of other companies as a reference and, if so, the criteria used to choose those companies.

The Company's Remuneration Policy was defined without using remuneration policies adopted by other companies as a reference.

1. Remuneration of the members of the control body

When appointing the Board of Directors, the Ordinary Shareholders' Meeting establishes a specific additional remuneration for the members of the Management Control Committee determined in each case as a fixed and equal amount, but with a specific increase for the Chair.

Moreover, the expenses incurred by the members of the Management Control Committee in the performance of their duties are reimbursed by the Company.

The same persons may be granted additional remuneration as members of the Supervisory Board.

1. Exceptions for exceptional circumstances.

The Company does not intend to make any exceptions to the Remuneration Policy in exceptional circumstances.

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Centrale del Latte d'Italia S.p.A.

SECTION II

PART I

1.1 Remuneration items

Below is an adequate representation of each item that makes up the remuneration of those who hold the position of member of the Board of Directors, the Board of Statutory Auditors or Executive with strategic responsibilities.

Board of Directors

1. Chairman of the Board of Directors:

• Fixed annual component of Euro 60,000.00, approved by the Shareholders' Meeting on 27 April 2023 for the entire duration of the mandate.
• Variable component as detailed in Section I - letter h) above.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

1. Deputy Chairman of the Board of Directors:

• Fixed annual component of Euro 30,000.00, approved by the Shareholders' Meeting on 27 April 2023 for the entire duration of the mandate.
• Variable component as detailed in Section I - letter h) above.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

1. Chief Executive Officer:

• Fixed annual component of Euro 30,000.00, approved by the Shareholders' Meeting on 27 April 2023 for the entire duration of the mandate.
• Variable component as detailed in Section I - letter h) above.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

1. Non-executivedirectors:

• Fixed annual component of Euro 15,000.00, approved by the Shareholders' Meeting on 27 April 2023 for the entire duration of the mandate.
• Variable component as detailed in Section I - letter h) above.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

1. Independent Directors:

• Fixed annual component of Euro 15,000.00, approved by the Shareholders' Meeting on 27 April 2023 for the entire duration of the mandate.
• No variable component.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

Board of Statutory Auditors

1. Chair of the Board of Statutory Auditors

• Fixed annual component of Euro 16,000.00, approved by the Shareholders' Meeting on 29 April 2021 for the entire duration of the mandate.
• There is no variable component.
• Non-monetarybenefits: cumulative insurance policy for legal protection.

1. Standing Auditors

• Fixed annual component of Euro 12,000.00, approved by the Shareholders' Meeting on 29 April 2021 for the entire duration of the mandate.
• There is no variable component.

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Centrale del Latte d'Italia S.p.A.

• Non-monetarybenefits: cumulative insurance policy for legal protection.

Executives with strategic responsibilities

• the fixed component consists of the fixed annual gross remuneration envisaged in their individual signed contracts, in accordance with the applicable collective agreements.
• Variable component as detailed in Section I - letter h) above.
• Non-monetarybenefits: cumulative insurance policy for legal protection.
• There is no provision for an end-of-service indemnity.

1.2 Agreements providing for compensation in the event of early termination of the relationship

There are no agreements that envisage remuneration in the event of early termination of the relationship.

1.3 Exceptions applied to the policy

No exceptions to the Remuneration Policy were applied in 2023.

1.4 Application of ex-post adjustment mechanisms (clawbacks and/or penalties)

No ex-post adjustment mechanisms for the variable component were applied during the year 2023.

1.5 Change in remuneration and comparison information

The comparison between the annual variable component is shown below:

1. the total remuneration of each of the parties for whom the information referred to in this section of the Report is provided by name:

	2023	2022	2021
Angelo Mastrolia (*)	0.0%	0.0%	49%
Giuseppe Mastrolia (*)	0.0%	0.0%	49%
Stefano Cometto (*)	33.4%	75%	50%
Benedetta Mastrolia (*)	16.7%	0.0%	50%
Edoardo Pozzoli	-86.0%	-30%	48.7%
Valeria Bruni Giordani (*)	25.0%	0.0%	50%
Anna Claudia Pellicelli (**)	25.0%	0.0%	-
Deborah Sassorossi	0.0%	0.0%	0.0%
Ester Sammartino	0.0%	0.0%	-
Giovanni Rayneri	0.0%	0.0%	0.0%

(*) Date of assumption of office 29 April 2020 (**) Date of assumption of office 16 July 2020

ii) of the Company's results (annual % change)

	2023	2022	2021(*)
Value of production	8.32%	7.8%	59.3%
Operating profit/(loss)	225.1%	-47.5%	34.3%
Shareholders' equity	4.6%	0.86%	6.8%

1. The change takes into account the Milk&Dairy business unit, which was leased by the parent company Newlat Food S.p.A. from 1 January 2021.

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Centrale del Latte d'Italia S.p.A.

1. the average annual gross remuneration, based on full-time staffers, of employees other than those whose remuneration is represented by name in this section of the Report

	2023	2022	2021(*)
Change	1.3%	-2.7%	40.3%

1. The change takes into account the Milk&Dairy business unit, which was leased by the parent company Newlat Food S.p.A. from 1 January 2021.

The average annual gross remuneration was calculated by dividing the total remuneration (used to calculate contributions) by the number of employees averaged over the months of actual work.

1.6 Vote cast by the shareholders on this section II of the previous year

The Shareholders' Meeting held on 27 April 2023 resolved unanimously in favour of the content of Section II of the Report on Remuneration Policy and Compensation Paid for the Year 2022.

PART II

Table 1 is annexed as envisaged in schedule no. 7-bis of the Issuers' Regulation.

PART III

Pursuant to the fourth paragraph of article 84-quater of the Issuers' Regulation, attached to this Report are the Company or subsidiary shares held by Directors and Statutory Auditors, as well as by spouses who are not legally separated and minor children, directly or through subsidiaries, trust companies or third parties resulting from the shareholders' register, communications received or other information acquired by the Directors and Statutory Auditors themselves (Table 2 as envisaged in Schedule 7-ter of the Issuers' Regulation).

Turin, 18 March 2024

Chairman of the Board of Directors

Angelo Mastrolia

Report on the remuneration policy and the compensation paid