Corporación Financiera Alba S A : Annual Report on Remuneration of Directors in 2022

ANNUAL REPORT ON DIRECTOR REMUNERATION OF LISTED COMPANIES

ISSUER IDENTIFICATION DETAILS

Year-end date:

TAX ID (CIF):

31/12/2022

A-28060903

Company Name:

CORPORACION FINANCIERA ALBA, S.A.

Registered Office:

CASTELLO, 77, 5ª PLANTA MADRID

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ANNUAL REPORT ON DIRECTOR REMUNERATION

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A. REMUNERATION POLICY OF THE COMPANY FOR THE CURRENT FINANCIAL YEAR

A.1.1 Explain the current director remuneration policy applicable to the year in progress. To the extent that it is relevant, certain information

may be included in relation to the remuneration policy approved by the General Shareholders' Meeting, provided that these references

are clear, specific and concrete.

Such specific determinations for the current year as the board may have made in accordance with the contracts signed with the executive

directors and with the remuneration policy approved by the General Shareholders' Meeting must be described, as regards directors'

remuneration both in their capacity as such and for executive functions carried out.

In any case, the following aspects must be reported, as a minimum:

1. Description of the procedures and company bodies involved in determining, approving and applying the remuneration policy and its terms and conditions.
2. Indicate and, where applicable, explain whether comparable companies have been taken into account in order to establish the company's remuneration policy.
3. Information on whether any external advisors took part in this process and, if so, their identity.
4. Procedures set forth in the current remuneration policy for directors in order to apply temporary exceptions to the policy, conditions under which those exceptions can be used and components that may be subject to exceptions according to the policy.

The current Remuneration Policy was approved by the General Meeting of 20 June 2022, in accordance with Law 5/2021, in order to adapt it to the new requirements of Article 529(r) of the Corporate Enterprises Act.

In accordance with that outlined in articles 529r and concordant provisions of the Corporate Enterprises Act, for the calculation and approval of the Remuneration Policy of the Board of Directors of the Company, the Appointments and Remuneration Committee approves the corresponding report on the Remuneration Policy and submits the Proposed Remuneration Policy to the Board of Directors, which is submitted for approval to the General Shareholders' Meeting. It is the responsibility of the Appointments and Remuneration Committee, as provided for in its Rules and Regulations, to verify the compliance with the Remuneration Policy.

To this end, the principles underpinning the Remuneration Policy are:

• Balance and moderation.
• Alignment with generally accepted remuneration practices.
• Generally monitoring the recommendations on good corporate governance relating to the remuneration of the Directors.
• Compatibility with (i) adequate and effective risk management, not providing incentives to take risks that are based on the level of risk tolerated, and (ii) the Group's long-term business strategy, goals, values and interests, avoiding potential conflicts of interest.
• Being subject to the decisions taken by the General Shareholders' Meeting.
• Non-discrimination,recognising equal pay for services of equal value.

The Remunerations Policy distinguishes the remuneration of the Directors in their capacity as such and the remuneration of the Directors for their performance of executive functions.

The remuneration of Directors as such is based on the following principles:

• Sufficiency to compensate for their dedication, skill and responsibility, but without this being so high as to compromise their independence.
• Relationship with the effective dedication.
• Connection with the responsibility and the development of their functions by the various Directors.
• Absence of variable components.
• Incentive by nature, but in measures that do not affect their independence.
• To take into account, as reference, market criteria, focusing on the remuneration foreseen for Directors of listed companies with which a comparison can be established.
  In relation to the members of the Board of Directors in their position of such, the Remuneration Policy calculates their remuneration within the system put forth by statutory regulations and includes the maximum amount of annual remuneration to satisfy the group of them in their capacity of Directors.
  With regard to the remuneration of executive directors, if appointed, it is based on the following principles:
• To reward the performance of their functions with a comprehensive offer of cash and non-cash elements that meet the variety of

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needs and expectations in a professional environment, and that serve as a tool for the communication of organizational and business objectives.

• To align performance with the objectives of the group at different time lines, encouraging the sustainability of results.
• To recognise the capacity for creating value, as well as personal abilities and characteristics.
• To promote a culture of commitment of the group's objectives, taking into account that it is essential to have the contribution of both the individual and the team.
• To evaluate professional development and the results of activities using standardised criteria.
• To provide equitable and competitive remuneration, bearing in mind the responsibilities of the position and a flexible approach to the market, in order to attract and retain the best professionals.
  -Variable remuneration may comprise two components: one with an annual vesting period and one with a multi-year vesting period.
• To review the systems and remuneration updates so that, the necessary adjustments can be introduced, where appropriate, addressing the results and the capacity for motivation.
  There are currently no Directors who perform executive functions (Executive Directors). The Remuneration Policy establishes the amount of annual fixed remuneration, the parameters for setting the variable components and the main terms and conditions of their contracts, if they are appointed. Any remuneration received by the Directors for the exercise or termination of their position and for the performance of executive functions must be consistent with the applicable Remuneration Policy at each time, except for remunerations expressly approved by the General Shareholders' Meeting.
  In 2022, when the current Remuneration Policy was approved, a comparison was made of the remuneration of the Directors of other listed companies, with this being one of the principles on which the Directors' remuneration in their capacity as such is based. An external advisor, J&A Garrigues, S.L.P., also assisted in the review of the Remuneration Policy.
  The current Remuneration Policy provides for the possibility of the Board applying temporary exceptions to the Policy for executive Directors, subject to a report from the Appointments and Remuneration Committee, which may be assisted by an external expert. Temporary exceptions to the Remuneration Policy are limited to exceptional situations where the non-application of the Remuneration Policy is necessary to serve the long-term interests and sustainability of the Company as a whole, or to ensure its viability. The remuneration components that may be exempted are those foreseen for Executive Directors. The maximum period of application will be 24 months. No temporary exemptions are foreseen during 2023.

A.1.2 Relative importance of variable remuneration items vis-à-vis fixed remuneration (remuneration mix) and the criteria and objectives taken into consideration in their determination and to ensure an appropriate balance between the fixed and variable components of the remuneration. In particular, indicate the actions taken by the company in relation to the remuneration system to reduce exposure to excessive risks and to align it with the long-term objectives, values and interests of the company, which will include, as the case may be, mention of the measures taken to ensure that the long-term results of the company are taken into account in the remuneration policy, the measures adopted in relation to those categories of personnel whose professional activities have a material impact on the risk profile of the company and measures in place to avoid conflicts of interest.

Furthermore, indicate whether the company has established any period for the accrual or vesting of certain variable remuneration items, in cash, shares or other financial instruments, any deferral period in the payment of amounts or delivery of accrued and vested financial instruments, or whether any clause has been agreed reducing the deferred remuneration not yet vested or obliging

the director to return remuneration received, when such remuneration has been based on figures that have since been clearly shown to be inaccurate.

In 2022 there were no Executive Directors, the only ones for whom variable remuneration is provided for in the Remuneration Policy of the Board of Directors, so there is no information that can be provided regarding the relative importance of variable remuneration compared to fixed remuneration.

The Remuneration Policy anticipates that the remuneration of the Directors must save a reasonable proportion with the importance of the company, the financial position it has at any time and the comparable business market standards, to be driven by promoting the long-term profitability and sustainability of the company, incorporating the necessary precautions to prevent excessive risk taking and unfavourable results.

Fees for Directors in their capacity as such, as well as those established for their participation in the committees of the Board, are established in moderate amounts, especially if compared with those established for other listed companies.

Executive Directors, if appointed during the term of the current Remuneration Policy, may be beneficiaries of annual and multi-year variable remuneration plans, through the award of share options and/or delivery of shares. Once these plans have been approved by the General Meeting, the Board of Directors shall, at the recommendation of the Appointments and Remuneration Committee, establish the criteria for the award of variable remuneration, indicating the financial and non-financial performance criteria, the methods to be applied to determine to what extent the criteria will have been met and how the variable remuneration contributes to the corporate strategy and to the long-term interests and sustainability of the company.

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To reduce exposure to excessive risks, the Board of Directors has agreed that investment and divestiture decisions are taken collectively, by the Board of Directors itself, if they exceed the two hundred million euros, or by the Investment Committee, when operations exceed the limits set by the Managing directors, who will make these decisions jointly only for amounts under twenty-five or ten million euros, depending on the investment concerned.

Thus, no Executive Director can take decisions that may involve a risk to the Company. There are no plans for there to be any Executive Board Members in 2023.

In order to address the company's long-term performance, the annual variable remuneration system follows an annual accrual basis, with remuneration paid in two tranches, a first payment at the beginning of the year following the year in which targets are measured, and a second payment over a period of between five and eight years. The deferred portion is linked to the performance of the Company's net asset value per share during the deferral period.

In the case of multi-year variable remuneration, the agreement establishing the multi-year variable remuneration plan shall set out the specific duration of the plan.

The current Remuneration Policy establishes a clawback clause for variable remuneration paid within the three years following the date on which the Company paid the variable remuneration, in the event of exceptional circumstances occurring that could affect the Company's results or derive from inappropriate conduct. Exceptional circumstances are considered to be, by way of example, (i) that the variable remuneration is paid on the basis of data whose inaccuracy is accredited after the time it is paid (for example, on the basis of any qualifications included in the external auditor's report that reduce the results), (ii) that the Director has acted fraudulently, or (iii) that the Director has caused serious harm to the Company through fault or gross negligence, for which the Company shall be entitled to claim the return of the corresponding components of the variable remuneration from the Director.

A.1.3 Amount and nature of fixed components that are due to be accrued during the year by directors in their capacity as such.

According to the Remuneration Policy in force, the remuneration of the Directors acting as such is as follows:

• The remuneration of all members of members of the Board of Directors in their capacity as such is 100,000 euros per year. Similarly, the following additional remuneration is established.

For the Chairman, 550,000 euros per year.

For the Vice-Chairpersons, 450,000 euros per year.

For the members of the Audit and Compliance Committee, 25,000 euros per year and for its Chairman, 35,000 euros per year. For the members of the Appointments and Remuneration Committee, 15,000 euros per year and for its Chairman, 25,000 euros per year.

For the members of the Investment Committee, 30,000 euros per year and for its Chairman, 50,000 euros per year.

There is an additional remuneration of 15,000 euros per year with the same accrual system as the annual remuneration, for the participation in any Committee other than those mentioned above, that may be established.

The amounts indicated are fixed, not depending on the number of meetings held throughout the year. In the event that any membership of the Board of Directors does not extend throughout the year, the amounts will be prorated by quarters.

The annual amount of the fixed remuneration expected to be accrued for the Directors in their capacity as such for the 2023 is 2,805,000 euros.

A.1.4 Amount and nature of fixed components that are due to be accrued during the year for the performance of senior management functions of executive directors.

During this financial year, there are no executive Board Members sat on the Board of Directors, nor is it expected to appoint any during the year, therefore, no amounts will be paid under this heading

A.1.5 Amount and nature of any component of remuneration in kind that will accrue during the year, including, but not limited to, insurance premiums paid in favour of the director.

During this financial year, there are no executive Board Members sat on the Board of Directors, nor is it expected to appoint any during the year, therefore, no remuneration in kind will be accrued given that the Remuneration Policy only provides such for Executive Board Members.

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A.1.6 Amount and nature of variable components, differentiating between those established in the short and long terms.

Financial and non-financial, including social, environmental and climate change parameters selected to determine variable remuneration for the current year, explaining the extent to which these parameters are related to performance, both of the director and of the company, and to its risk profile, and the methodology, necessary period and techniques envisaged to be able to determine the effective degree of compliance, at the end of the year, with the parameters used in the design of the variable remuneration, explaining the criteria and factors applied in regard to the time required and methods of verifying that the performance or any other conditions linked to the accrual and vesting of each component of variable remuneration have effectively been met.

Indicate the range, in monetary terms, of the different variable components according to the degree of fulfilment of the objectives and parameters established, and whether any maximum monetary amounts exist in absolute terms.

In the current financial year, the Company does not have any executive directors on its Board, and there are no plans to appoint any during the year.

However, the Remuneration Policy does provide that in the event that executive Directors are appointed, they may be beneficiaries of two

types of variable remuneration at the Company's discretion:

1) Annual variable remuneration.

This is a variable remuneration which will take into account parameters linked to the performance of the net asset value, total shareholder return and/or value creation (which could include, by way of example, the execution of the international strategy, the monitoring of existing investments, the analysis and execution of investments and divestments, and corporate governance). The annual

variable remuneration for each executive Director will represent a maximum of up to 100% of their annual fixed remuneration, and will

depend on the degree of the executive Director's contribution to the achievement of the objectives.

In accordance with the Remuneration Policy of the Board, the maximum amount of the Variable Remuneration for all the Directors discharging executive functions is 3,000,000 euros. If the number of executive directors exceeds three, the limit would be increased proportionally.

There are no plans to appoint executive directors in 2023 and therefore there will be no annual variable remuneration for executive directors.

Non-financial parameters are taken into account in the annual variable remuneration, considering that corporate governance, environmental and social issues are set out in Alba's Corporate Governance, Sustainability and Investment Policies, and in the Code of Ethics and Conduct, as guiding principles for its activities.

Given the characteristics of the annual variable remuneration, and the manner in which investment and divestment decisions are taken in the Company, as detailed in section A.1.2 above, it cannot be said that an executive Director has a certain risk profile or generates a particular risk.

2) Multi-year variable remuneration.

The multi-year variable remuneration shall refer to the difference between the "initial" ("initial NAV") and "final" ("final NAV") net asset value per share of the Company, where: the "initial NAV" of each share shall be the average net asset value per share of Corporación Financiera Alba, S.A. during a number of trading sessions prior to the "initial day" of the plan, which shall be the day that is fixed in the plan implementation agreement; and the "final NAV" shall be the average net asset value per share of Corporación Financiera Alba, S.A. during a number of trading sessions prior to the "final day" of the plan, which shall be the day on which the number of years established in the plan elapses since the "initial day" of the plan. Such plans may be realised, if the Company so chooses, by way of cash payments, the granting of stock options and/or shares.

At present, the multi-year variable remuneration plans in force that affect Directors (2020 and 2021, adopted in accordance with the Remuneration Policy prior to the one currently in force) are expected to be settled in cash, although, at the Company's discretion, they may be settled by payment in shares valued at the closing price on the day prior to the day on which they are transferred to the Directors.

The multi-year variable remuneration does not take into account non-financial parameters.

In accordance with the Board's Remuneration Policy, the maximum amount of the multi-year Variable Remuneration of all Directors who, where applicable, perform executive functions shall be 3,000,000 euros.

Given the characteristics of the multi-year variable remuneration systems, and how investment and divestment decisions at the Company are made, it cannot be said that Executive Directors have a certain risk profile or that they generate a particular risk.

In the multi-year variable remuneration plans referred to in detail in Section B.7 of this Report (referred to in 2020 and 2021), the monetary ranges for the different Plans will be as follows:

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