Incentive system

Enel’s remuneration policy for 2023, which was adopted by the Board of Directors acting on a proposal of the Nomination and Compensation Committee and approved by the Shareholders’ Meeting of May 10, 2023, was formulated on the basis of (i) the recommendations of the Italian Corporate Governance Code published on January 31, 2020; (ii) national and international best practice; (iii) the guidance provided by the favorable vote of the Shareholders’ Meeting of May 19, 2022 on the remuneration policy for 2022; (iv) the results of the engagement activity on corporate governance issues pursued by the Company between January and February 2023 with the leading proxy advisors and some Enel’s relevant institutional investors; (v) the findings of the benchmark analysis of the remuneration of the Chairman of the Board of Directors, the Chief Executive Officer/General Manager and the non executive directors of Enel for 2022, which was performed by the independent consultant Mercer. 
This policy is intended to (i) foster Enel’s sustainable success, which takes the form of creating longterm value for the benefit of shareholders, taking due consideration of the interests of other key stakeholders, so as to incentivize the achievement of strategic objectives; (ii) attract, retain and motivate personnel with the professional skills and experience required by the sensitive managerial duties entrusted to them, taking into account the remuneration and working conditions of the employees of the Company and the Enel Group; and (iii) promote the corporate mission and values.
The 2023 remuneration policy adopted for the Chief Executive Officer/General Manager and key management personnel envisages:

• a fixed component;
• a short-term variable component (MBO) that will be paid out on the basis of achievement of specific performance objectives. Namely:
  -for the CEO/General Manager, annual objectives have been set for the following components of the 2023 MBO mechanism:consolidated net ordinary profit;
• consolidated net ordinary profit;
• funds from operations/consolidated net financial debt;
  
• commercial complaints received at the Group level, accompanied by the following gate objectives: (i) System Average Interruption Duration Index - SAIDI; (ii) commercial complaints on the free commodity market in Italy;
  
• workplace injury frequency rate, accompanied by a gate objective represented by fatal injuries;
  - for key management personnel, the respective MBOs identify objective and specific annual goals connected with the Strategic Plan. They are determined jointly by the Administration, Finance and Control Function and the People and Organization Function;
  
• a long-term variable component linked to participation in specific long-term incentive plans. In particular, for 2023 this component is linked to participation in the 2023 Long-Term Incentive Plan for the management of Enel SpA and/or its subsidiaries pursuant to Article 2359 of the Italian Civil Code (2023 LTI Plan), which establishes three-year performance targets for the following:
  - Enel’s average TSR (Total Shareholder Return) compared with the average TSR for the EURO STOXX Utilities - EMU index for the 2023-2025 period;
  - ROIC (Return on Invested Capital) - WACC (Weighted Average Cost of Capital), cumulative for 2023-2025;
  - intensity of Scope 1 and Scope 3 GHG emissions related to the Group’s Integrated Power operations (gCO2_eq/kWh) in 2025, accompanied by a gate objective represented by the intensity of Scope 1 GHG emissions related to the Group’s power generation (gCo2_eq /kWh) in 2025; 
  - percentage of women in top management succession plans at the end of 2025.
  
  The 2023 LTI Plan establishes that any bonus accrued is represented by an equity component, which can be supplemented - depending on the level of achievement of the various targets – by a cash component. More specifically, of the total incentive vested, the 2023 LTI Plan establishes that: (i) for the CEO/General Manager of Enel, the incentive shall be paid entirely in Enel shares up to 150% of the base value; (ii) for managers reporting directly to the CEO/ General Manager of Enel, including key management personnel, the incentive shall be paid entirely in Enel shares up to 100% of the base value; and (iii) for beneficiaries other than those specified under (i) and (ii), the incentive shall be paid entirely in Enel shares up to 65% of the base value. The 2023 LTI Plan provides that the shares to be disbursed pursuant to the latter provisions shall be purchased previously by Enel and/or its subsidiaries. In addition, the disbursement of a significant portion of long-term variable remuneration (70% of the total) is deferred to the second year following the three-year performance period covered by the 2023 LTI Plan. 
  For more information on the remuneration policy for 2023, please see Enel’s “Report on the remuneration policy for 2023 and compensation paid in 2022”, which is available on the Company’s website (www.enel.com).