Recordati : 22 March 2024 - Directors' Report on item 2 on the agenda – Report on the remuneration policy and the remuneration paid

This is an English courtesy translation of the original documentation prepared in Italian language

DIRECTORS' REPORTS ON THE PROPOSALS ON THE AGENDA OF THE ORDINARY GENERAL MEETING OF THE SHAREHOLDERS

(22nd APRIL 2024 SINGLE CALL)

Report on item 2 on the agenda

Report on the remuneration policy and the remuneration paid pursuant to article 123-ter, paragraphs 3- bis and 6, of Legislative Decree no. 58 of 24th February 1998:

1. binding resolution on the first section regarding the remuneration policy;
2. non-bindingresolution on the second section on the remuneration paid for 2023.

To Our Shareholders,

In compliance with article 123-ter of Legislative Decree No. 58/1998 (hereinafter TUF) and article 84- quater of the Regulation issued by Consob with resolution No. 11971 of 14th May 1999 and subsequent amendments (hereinafter the "Issuer's Regulations"), the Report on the remuneration policy and the remuration paid (hereinafter the "Remuneration Report") is given below, approved by the Board of Directors on 19th March 2024, on the proposal of the Remuneration and Nominations Committee.

The Shareholders are invited to adopt:

1. a binding vote regarding the Remuneration Policy included in Section I of the Remuneration Report pursuant to art. 123-ter, paragraph 3-ter, of Legislative Decree No. 58/1998;
2. a non-binding vote on the section on the remuneration paid for 2023 (Section II of the Remuneration Report), as provided for by art. 123-ter, paragraph 6, of Legislative Decree No. 58/1998.

The result of the vote will be disclosed to the public in accordance with Art. 125-quater, paragraph 2

of TUF.

The Remuneration Report may also be consulted on the company website at www.recordati.comin the Governance section.

*

Milan, 19th March 2024

For the Board of Directors

The Chief Executive Officer

Robert Koremans

1

Report on the Remuneration Policy and the remuneration paid

in accordance with articles 123-ter of the Italian Consolidated Law on Finance and 84-quater of the Consob Issuers' Regulations

Approved by the Board of Directors on 19th March 2024

Issuer: Recordati Industria Chimica e Farmaceutica S.p.A.

Website: www.recordati.com

Financial year to which the Report refers: 2023

Contents

Letter from the Chair of the Committee for the Remuneration and the Nominations	5
Introduction	6
Executive Summary	8
2024 New Features	11
Section I: 2024 Remuneration Policy Report	12
1.	Engagement and remuneration policies	13
1.1	Voting results and investor feedback	13
1.2	Engagement activities carried out by Recordati	14
1.3	Pay mix of the Chief Executive Officer and Key Management Personnel	14
2.	Governance of the remuneration process	15
2.1	Bodies and persons involved	15
2.1.1	Shareholders' Meeting	15
2.1.2	Board of Directors	15
2.1.3 Remuneration and Nominations Committee	17
2.1.4	Other intra-board Committees	19
2.2	Policy approval process	19
2.3	Independent experts and other persons involved	20
2.4	Derogation procedure in exceptional circumstances	20
3.	The Company's Remuneration Policy	21
3.1	Purposes of the Policy and its link with corporate strategy	21
3.1.1	Recordati's Sustainability Plan	23
3.1.2 Compensation and working conditions of employees	24
3.2	Principles and criteria underlying the Policy	24
3.3	Implementation of the 2024 Remuneration Policy	24
3.4	Remuneration of the Board of Directors and of the Board of Statutory Auditors	24
3.4.1 Remuneration of the Board of Directors	25
3.4.2 Remuneration of the Board of Statutory Auditors	25
3.5	Remuneration of the Chair of the Board of Directors	25

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3.6	Remuneration of the Chief Executive Officer and of Executive Directors	26
3.6.1	Market references and peer groups	27
3.6.2	Fixed component of remuneration	27
3.6.3	Short-term variable component (Group STI)	28
3.6.4	Long-term variable component (LTI)	32
3.7	Remuneration of Key Management Personnel	33
3.7.1	Fixed component of remuneration	34
3.7.2	Short-term variable component (STI)	34
3.7.3	Long-term variable component (LTI)	36
3.8	Further information on remuneration	36
3.8.1	Other Compensation Items	36
3.8.2	Non-monetary benefits	37
3.8.3	Severance indemnity	37
3.8.4	Additional insurance, social security and pension coverage	37
Section II: Report on the remuneration paid for 2023	38
Introduction	39
Part I	40
1.	Results of votes	40
2.	Activities of the Remuneration and Nominations Committee	41
3.	Fixed remuneration	42
4.	Variable remuneration	42

5. Remuneration for participation in board committees and for members of the Board of Statutory

Auditors	45
6. Non-monetary benefits	45

7. Information on the consequences of termination of employment or management relationship 45

7.1	Annual variations in remuneration paid and corporate performance	45
Part II	.............................................................................................................................................................	47
Table 1 - Remuneration paid to Directors, Statutory Auditors, General Managers and other Key
Management Personnel	47
Table 2 - Stock Options assigned to Directors, General Managers and other Key Management
Personnel members	52
Table 3A - Incentive plans based on financial instruments, other than stock options, in favour of
Directors and other Key Management Personnel	53
Table 3B - Monetary incentive plans for Directors, General Managers and other Key Management
Personnel	54

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Table 4 - Shares held by Directors, Statutory Auditors, General Managers and other Key
Management Personnel	55

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Letter from the Chair

of the Committee for the Remuneration and the Nominations

Dear Shareholders,

Together with the other members of the Remuneration and Nominations Committee, I hereby present to you the Report on the 2024 Remuneration Policy and compensation paid for 2023, structured as required by article 123-ter of the Consolidated Law on Finance and approved by the Board of Directors on March 19th, 2024.

In 2023, the global economy experienced a mix of recovery and challenges due to ongoing geopolitical tensions, supply chain disruptions and inflationary pressures. The pharmaceutical industry saw continued advancements in research and development, particularly in areas such as personalized medicine and gene therapy. Drug pricing debates, intellectual property rights, and regulatory challenges also remained key issues within the industry. Despite these difficulties, the Company was able to achieve outstanding results, thanks to the extraordinary commitment of its employees.

In this context, we believe that the remuneration policy is well structured to sustain results by guiding Company behaviours and appropriately rewarding the contribution of our people.

The work of the Committee has been enriched by in-depth analysis of the vote implemented at the last Shareholders' Meeting as well as engagement sessions with shareholders and proxy advisors. Following this analysis, we have made some improvements to the Policy to further align the interests of Shareholders and Stakeholders. In addition, the Policy, acting in full compliance with the Italian and European reference legislation, continues to incorporate market best practices.

During 2023, in particular, the Remuneration and Nominations Committee has:

• reviewed and adopted more relevant and sustainable peer groups (for compensation benchmarking purposes) for the Chairman of the Board, Board members, CEO, and key management personnel.
• reviewed the pay mix for our CEO, CFO and other Key Management Personnel and adjusted their short- term incentive element to further enhance pay for performance, as proposed .

Continuous improvement is a Recordati value which also impacts our behaviour. To further aligning to the current legislation and improving the transparency and usability of this Policy, Recordati has decided:

• To explain further how the Policy intends to increase the pursuit of long-term interests, with increasing attention to sustainability issues and connection with Recordati's new Sustainability Plan.
• To continue providing transparency and valuable information to the market, describing the market references and the peer groups used in carrying out the analyses on the competitiveness of the remuneration packages.

I would like to take this opportunity to express my gratitude to the members of the Remuneration and Nominations Committee and the Board of Statutory Auditors for providing their valuable contribution and expert opinions as well as to the corporate structures that have consistently and effectively supported us in the course of our work.

I trust that as Shareholders you will find in this document comprehensive and useful information.

Best regards,

Joanna Le Couilliard

Chair of the Remuneration and Nominations Committee

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Introduction

This Report on the Remuneration Policy and the remuneration paid (hereinafter the 'Report') has been prepared by Recordati S.p.A. (hereinafter 'Recordati' or the 'Company') in compliance with the provisions of article 123-ter of Italian Legislative Decree no. 58 of 24th February 1998 (hereinafter 'Consolidated Law on Finance') - as amended by Italian Legislative Decree no. 49 of 10th May 20191 - and of article 84-quater of the Consob Issuers' Regulations issued by Consob with resolution no. 11971 of 1999, as subsequently amended (hereinafter the 'Issuers' Regulations'), and on a voluntary basis in accordance with the 2020 Corporate Governance Code for Listed Companies (hereinafter the 'Corporate Governance Code'), to which Recordati adheres in the manner specified, with regard to remuneration issues, in this Report.

In accordance with the requirements of article 123-ter of the Consolidated Law on Finance, the Report consists of two sections.

Section I illustrates the Remuneration Policy adopted by the Company for the 2024 financial year (hereinafter the 'Remuneration Policy'), with reference to the following persons:

1. Members of the Company's Board of Directors, distinguishing between executive and non-executive Directors;
2. General Managers of the Company;
3. Other Key Management Personnel. It should be noted that article 65, paragraph 1-quater, of the Issuers' Regulation and the Regulations for Related Party Transactions approved by the Board of Directors of Recordati on 24th November 2010 (and further confirmed on June 17th 2021) in compliance with Consob regulations on related party transactions approved with Resolution no. 17221 of 12th March 2010 as subsequently amended (hereinafter the 'Related Party Transaction Procedure'), recalling the international accounting standards, define key management personnel as those persons having authority over and responsibility for planning, directing and controlling of the activities of the Company, directly or indirectly, including the Directors (executive and non-executive) of the Company itself;
4. Members of the Board of Statutory Auditors.

Section I of the Report also illustrates the general purposes and procedures used to formulate and adopt the Remuneration Policy as well as the bodies and persons responsible for the proper implementation of such Policy.

The Remuneration Policy for 2024 was approved by Company's Board of Directors on March 19th, 2024, on the proposal of the Remuneration and Nominations Committee and provides the definition of remuneration consistent with the complexity of each role and the commitment required, in line with market benchmarks.

Section II of the Report provides information, with reference to the 2023 financial year, on each of the items that compose the remuneration of the persons indicated above in points i) to iv), including the members of the Board of Statutory Auditors, as well as the details, in an appropriate table, of the remuneration paid to those persons for any reason and in any form by the Company or its subsidiaries during the 2023 financial year, in addition to remuneration not yet paid on the date of the approval of the Report but relating to the 2023 financial year. In accordance with the provisions of the Issuers' Regulations, information is also provided on the annual variations in the remuneration of the persons whose remuneration is provided on an individual basis, the Company's performance and the average remuneration of employees starting from 2019.

In light of article 123-ter of the Consolidated Law on Finance by Italian Legislative Decree no. 49 of 10th May 2019, Section I, i.e. the 'Report on Remuneration Policy', is subject to a binding vote by the Shareholders' Meeting called to approve the Financial Statements for the financial year ended as at 31st December 2023, while Section II, i.e. the 'Report on remuneration paid', which provides detailed information on the remuneration for the 2023 Financial Year, is subject to a consultative vote by the same Shareholders' Meeting.

The text of this Report is disclosed to the market by the twenty-first day prior to the date of the Shareholders'

• Article 123-ter of Italian Legislative Decree no. 58 of 24th February 1998, (the 'Consolidated Law on Finance' updated on the basis of Italian Legislative Decree no. 49 of 10th May 2019) provides, in paragraph 3-bis, that 'companies shall submit the remuneration policy [...] to a shareholder vote, in any case at least every three years or at the time of making amendments to this Policy'. Paragraph 3-ter also states that 'the resolution provided for by paragraph 3-bis is binding' (i.e. on Section 1 of this document) adding 'if the shareholders' meeting does not approve the Remuneration Policy subject to a vote pursuant to paragraph 3-bis the company shall continue to pay remuneration compliant with the Remuneration Policy most recently approved by the shareholders' meeting or, in the absence of this, may continue to pay remuneration compliant with existing practice.' Finally, paragraph 6 provides for '[...] the shareholders' meeting [...] resolves in favour or against the second section of the report established by paragraph 4. The resolution is not binding'.

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Meeting called to approve the 2023 Financial Statements, in accordance with current regulations, and can be viewed in the Governance section of the Company's website www.recordati.com.

The Information Documents relating to the existing remuneration plans based on financial instruments can be found in the Governance section of the Company's website (https://recordati.com/governance-remuneration/).

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Executive Summary

The main elements of the 2024 Remuneration Policy of Recordati are set out below.

Recordati's Remuneration Policy aims at attracting, retaining and motivating managers with the professional requirements and experiences needed to manage and develop the Group successfully, ensuring that the interests of the management and those of the shareholders and the other stakeholders are aligned and promoting the constant creation of sustainable value in the medium- and long-term.

The Remuneration Policy is also defined in coherence with the corporate strategy, providing that each of the remuneration components offered to the management responds to precise goals for the pursuit of the strategic vision of the Group.

This consistency is ensured by the objectives of the short-term and long-term incentive schemes, which are designed to focus the management on the following objectives:

Purpose of the	Economic and financial	Value creation for	Growth through strategic	Environmental, Social
Policy and link
results	shareholders	acquisitions	and Governance (ESG)
with corporate
strategy
	In the field of sustainability, Recordati also adopted a Sustainability Plan, focused on five priority areas:
	Patient care	People care	Environmental	Responsible sourcing
	protection

Ethics and integrity

The Company's Remuneration Policy promotes the achievement of all the milestones of the ESG roadmap through direct ESG- related objectives as well as other strategic objectives which support the ESG agenda such as pipeline development and M&A initiatives to help meet unmet patient needs as well as implementation of Industrial Operations' project to improve efficiency.

Purposes

To enhance the skills, experiences

and support required for the assigned role.

Fixed component

Modes of operation				Components
The fixed remuneration is defined in such a	The following table summarizes the fixed remuneration
way as to be consistent with	the	provided for the Chair and the CEO:
characteristics,	responsibilities	and	any
delegation of	powers associated	with	the		Director's
role.					Fixed Rem.	Total
				Fee
				Chair	60,000 €	240,000 €	300,000 €
				CEO	60,000 €	940,000 €	1,000,000 €
				The Chair, the CEO and the Group CFO receive
				remuneration as Directors. Other Executive Directors2
				have waived any remuneration for the position as
				Director.
				Other Non-Executive Directors: 60,000 €.
				Key	Management Personnel: gross	annual
				remuneration defined in line with the role and areas of
				responsibility.

• These directors are identified as Executive Directors in accordance with the provisions of the Corporate Governance Code as they hold managerial positions (which also concern the Company) in the parent companies and/or companies of the CVC Group, but they are not entrusted with individual delegation of powers in Recordati.

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Short-term variable component (Group STI)

Incentivize management - in line with the culture of performance that characterizes Recordati - to pursue expected objectives by creating a strong correlation between remuneration and performance achieved during the year.

The payment of the annual variable remuneration, identified in the Group STI scheme, is directly linked to the achievement of performance objectives, assigned to each beneficiary in line with the role held.

For the beneficiaries of the Group STI system, in addition to corporate objectives, indicators linked to the specific nature of the role covered and the areas of responsibility are provided.

The Group STI system is based on a circuit breaker which determines the activation of the system itself. If the Group EBITDA result is lower than 95% of the target result, no bonus will be paid out.

The following table summarizes the KPIs for the current CEO:

CEO KPIs
KPI	Weight
Economic-Financial KPIs	60%
Group EBITDA	30%
Group Net Revenues	20%
Group Adjusted Net Income	10%
Strategic KPI	40%
Strategic KPI linked to the signing of	15%
M&A/Licensing transactions
Progressing with industrial operations
performance improvement through the	7.5%
specific project relating to such operations

Driving pipeline development projects	12.5%
according to planned milestones
Strategic objective linked to the ESG	5%
initiatives for 2024 defined by the ESG Plan

Long-term variable component (Performance Share)

To promote the creation of value for Shareholders and Stakeholders by also fostering the loyalty and engagement of resources.

2023-2025 Performance Share Plan

The plan provides for the assignment to beneficiaries of the right to receive a certain number of shares of the Company free of charge, at the end of a certain time period (vesting period) and upon achievement of the performance conditions.

The decision to adopt a rolling plan resulted will allow an easier alignment in terms of motivation and retention.

In addition, a 24-month lockup period following the vesting date is envisaged for the CEO and the Key Management Personnel.

The following table summarizes the Group STI opportunity in % of the total fixed remuneration for the CEO and other key management personnel (including the CFO).

Minimum Target Maximum

CEO

40%

80%

120%

Key

management 30% 60% 90% personnel

Chair and other Directors: are not included in the beneficiaries of the Plan.

Chair and other directors: are not included in the beneficiaries of the Plans.

CEO and key management personnel (including the CFO):

• Performance Share Plan: number of rightsgranted in line with the position held and based on best market practices.

	Minimum	Target	Maximum
CEO	60%	120%	210%
Key
management	45%	90%	157.5%
personnel

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