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Expert Corporate Governance Service (ECGS)
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Mediobanca - AGM 28 October 2019

In item 2.a, shareholders are called to a binding vote on the compensation policy
adopted by Mediobanca for the executive Directors and other executives with strategic
responsibilities. The Bank has announced that a long-term incentive plan will be
approved after the presentation of the 2019-2023 Strategic Plan, on November 12th. The
incentive will depend on a 5-year performance period and capped at the equivalent of
200% of executive Directors' base salary (or 40% on an average annual basis). The
performance conditions will be disclosed at the presentation of the Strategic Plan. The
aggregate executive variable remuneration is capped at 200% of the base salary on an
average annual basis. We welcome the introduction of a long-term incentive plan and, in
our opinion, the variable remuneration is effectively structured to align the interests of
executives with the creation of value in the long term. The quality of disclosure is good,
but the definition of non-financial KPIs is still vague and might be improved. We also
have concerns over the possibility to pay a bonus to the non-executive Chairman, and
we find as excessive the base salary of the CEO (€ 1'900'000), which is used to define
the amount of the variable remuneration. Therefore, we recommend opposition.
Due to our concerns over the CEO's base salary, we also recommend that shareholders
oppose the proposal to set the maximum variable remuneration up to a maximum of
200% of the fixed remuneration (item 2.b).

Underlying
Mediobanca

Mediobanca Banca Di Credito Finanzario's core businesses are lending and investment banking. Co. helps its clients by providing them with advisory services in addition to medium-term bank credit. Co. is the parent company of the Mediobanca Banking Group, which has operations in consumer credit, retail banking, leasing, and private banking. Co.'s business divisions are comprised of: Corporate and Investment Banking, which comprises Wholesale Banking and Private Banking; Principal Investing, which brings together all equity investments in associates (IAS28) and available for sale assets; and Retail and Consumer Banking, which comprises consumer credit and retail banking activities.

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