Tubacex S A : BOD-remuneration policy-proposal-for-2024-2026

DIRECTORS' REMUNERATION POLICY

TUBACEX, S.A.

THE DIRECTORS' REMUNERATION POLICY OF TUBACEX, S.A.

INTRODUCTION

This document contains the Directors' Remuneration Policy of Tubacex, S.A., (hereinafter referred to as "Tubacex" or the "Company"), which will be submitted for the approval of the General Shareholders' Meeting held in 2023 as a separate item on the agenda, (hereinafter referred to as the "Policy"), and that will replace the current Directors' Remuneration Policy approved by the General Shareholders' Meeting held on 24 June 2021. This Policy will come into force on the date it is approved by the General Shareholders' Meeting and will remain valid until 31 December 2026, notwithstanding the adaptations or updates that, if any, could be made by the Board of Directors pursuant to the provisions therein and the modifications that could be approved by the General Shareholders' Meeting of Tubacex from time to time.

The Policy, along with the date and result of the votes, will be accessible on Tubacex' website free of charge from the time of its approval and at least while it remains in force.

The Policy contains the following sections:

1. PRINCIPLES OF THE REMUNERATION POLICY
2. SUMMARY OF THE MAIN CHANGES
3. REMUNERATION OF THE EXECUTIVE DIRECTORS
4. REMUNERATION OF THE DIRECTORS IN THEIR POSITIONS AS SUCH
5. PROCESS FOR DETERMINING, REVIEWING, AND IMPLEMENTING THE REMUNERATION POLICY
6. ACTION TAKEN TO ALIGN THE REMUNERATION POLICY TO THE COMPANY'S TARGETS, VALUES AND LONG-TERM INTERESTS
7. TERM

THE DIRECTORS' REMUNERATION POLICY OF TUBACEX, S.A.

1. PRINCIPLES OF THE REMUNERATION POLICY

The general principles on which the Remuneration Policy is based are the following, classified depending on their application to the different types of directors:

	PRINCIPLES	Executive	Non-Executive
	Directors	Directors
	PROPORCIONALITY AND MODERATION, so that the
	remuneration level determined from time to time is in	●	●
	accordance with the Company's situation and in line with
	market practice.
	SUITABILITY, so that the members of Board of Directors, in	●	●
	their respective roles, are sufficiently remunerated for their
	required responsibility and dedication.
	ALIGNMENT WITH THE LONG-TERM INTERESTS, so that
	the Board of Directors' remuneration is compatible with the	●
	corporate strategy and conflicts of interest are prevented at all
	times.
	BALANCE BETWEEN FIXED AND VARIABLE
	COMPONENTS, so that the variable remuneration does not
	reach a significant proportion over the fixed remuneration,	●
	hence avoiding excessive risks being undertaken. The
	variable remuneration is not guaranteed and is sufficiently
	flexible so that there is a possibility that this component is not
	paid.
	COMPETITIVENESS, with the aim of the remuneration being	●	●
	sufficiently attractive so that directors with great worth and a
	high professional level will join the Company.
	FULL TRANSPARENCY, by means of issuing the Annual
	Remuneration Report and confirming to the General	●	●
	Shareholders' Meeting on an annual basis that the applicable
	remuneration policy continues to be coherent and suitable for
	the Company.

THE DIRECTORS' REMUNERATION POLICY OF TUBACEX, S.A.

The principles listed above ensure that a Policy is designed in line with Tubacex' long-term strategy and its stakeholders' interests and hence fulfils the best good governance practices:

WHAT WE DO

• A part of the remuneration is linked to the Company's results ("pay for performance").
• Short-TermVariable Remuneration:
• • The weight of the financial targets to which it is linked implies at least 80%.
  • The weight of the non-financial targets implies a maximum of 20%.
  • Targets linked to ESG are included.
• Long-TermVariable Remuneration:
• • The minimum performance period is 3 years.
  • It is mainly received in shares or share-based instruments.
  • There is an obligation to retain the shares for a period of up to 3 years, linked to the requirement to permanently hold shares.
  • Value creation, economic-financial and ESG targets are included.
• Up to 100% of the total Variable Remuneration will be subject to clauses for remuneration reduction ("malus") or reimbursement of remuneration already paid ("claw back").
• The Board of Directors and the Appointment and Remuneration Committee, (hereinafter referred to as the "ARC"), are supported by external consultants for considering and interpreting the market remuneration information, as an additional item to be taken into account in the decision- making process.

WHAT WE DO NOT DO

• There are no contracts with guaranteed salary increases.
• There is no guaranteed variable remuneration.
• Hedging, pledging, short selling and derivatives on shares received are prohibited during the holding period.
• No loans or advance payments are granted.
• The non-executive directors do not take part in any variable remuneration systems.
• There are no pension commitments undertaken with the non-executive directors.

THE DIRECTORS' REMUNERATION POLICY OF TUBACEX, S.A.

2. SUMMARY OF THE MAIN CHANGES

In 2023 Tubacex carried out a process to examine the Remuneration Policy in force at such time in order to propose a new one. The following internal and external factors were taken into account, in addition to the results obtained in the votes on the annual directors' remuneration reports in the previous years:

Internal factors

External factors

• The results obtained in the previous financial years.
• Short- and long-term strategic priorities.
• Alignment with the design of the remuneration system of the executive team and all the employees.
• Increase in the number of committees and greater dedication of the directors.

• General corporate governance recommendations at a national and international level.
• Market practices in comparable sectors and companies and market trends in general terms.
• Recommendations received in the engagement process with the institutional shareholders and proxy advisors.

Even though this new Policy is a continuation of the policy in force, approved by the General Shareholders' Meeting held on 24 June 2021 with 93.47% of the votes in favour, it does include some modifications that are summarised below:

Remuneration policy applicable to the Chief Executive Director:

• An increase of 6% in the Fixed Remuneration. The following factors were taken into account in order to determine this amount:
• • The increase made to managers and executives (approximately 270 employees) whose remuneration is not regulated by sector or company collective bargaining agreements, the updating of the Fixed Remuneration is exactly the same as the one applied to this group.
  • The changes taking place in the Consumer Price Index in Spain.
  • The positioning of the Chief Executive Director's remuneration regarding comparable companies. In this respect, a multi-sector group was taken into consideration mainly consisting of companies with headquarters in Spain but operating at an international level, essentially related to the industrial sector, which were comparable in terms of size by their revenues, market capitalisation, volume of assets and number of employees.
• Environmental, social or governance (ESG) targets were included in the variable remuneration, linked to our sustainability strategy.
• "Ex-post"adjustments to the Variable Remuneration were included by means of clauses for remuneration reduction ("malus") or reimbursement of remuneration already paid ("clawback").
• A requirement was imposed to hold the shares that, if any, are received for a certain period of time.