Bezeq Israel Telecommunication : Additional amendments to compensation policy, April 28, 2022

Bezeq – The Israel Telecommunication Corp. Ltd.

Compensation Policy for Officers

January 2022

Contents

Page

1. Definitions 3

2. Purpose of the doc 4

3. Policy goal and concerns in figuring out the coverage 4

4. Officers 5

5. Parameters for reviewing the compensation situations 5

6. Entities concerned in establishing the coverage 6

7. Structure of the Company’s compensation – common 6

7.1 The mounted part 6

7.1.1 Base wage 6

7.1.2 Benefits and fringe advantages 7

7.1.3 Severance pay and retirement situations 7

7.2

The variable part 8

7.2.1 Performance-linked bonus (grant) 8

7.2.2 Equity-based compensation 13

7.2.3 Special bonuses 14

7.3 Ratio of the mounted part to the variable parts 16

8. Additional phrases of workplace and employment 16

8.1 Insurance 16

8.2 Indemnification 17

8.3 Exemption 17

9. Directors’ charges 17

10. Present preparations 18

11. Rules of management, reporting and correction of irregularities 18

1.

Definitions

Stock Options

–Options exercisable into abnormal shares of the Company together with, inter alia, choices whose train is conditional on the achievement of sure targets;

Bezeq

Bezeq International

Advance Notice

– – –

Bezeq Israel Telecommunication Corp. Ltd.

Bezeq International Ltd.

Notice given to an worker by the Company prior to his dismissal, and see given to the Company by an worker prior to his resignation from the Company, in accordance with the provisions of the Advance Notice for Dismissal and Resignation Law, 2001 and/or in accordance with the worker’s employment settlement.

The CompanySignificant subsidiaries

The Law or the Companies Law

The CEOsThe VPs

The Group

Compensation Committeesure

The Compensation Policy or the Policy

–Bezeq or every of the fabric subsidiaries, because the case could also be.

– –

Pelephone, Bezeq International, sure and all different firms managed by Bezeq the place the compensation committee and Bezeq’s board of administrators decided that it’s a vital subsidiary of the group.

The Companies Law, 1999.

–The CEO of Bezeq, CEOs of the fabric subsidiaries and Senior Group Managers.

–

Any Officer at Bezeq, as outlined within the Companies Law, who just isn’t a director and never a CEO.

– –

Bezeq along with its vital subsidiaries.

A committee of the Board of Directors of Bezeq which meets the situations prescribed in Section 118A of the Companies Law regarding a compensation committee.

– –

D.B.S. Satellite Services (1998) Ltd.

Compensation coverage for Officers of Bezeq in accordance with the provisions and necessities of part 267A of the Companies Law.

The Officers

–

The Officers who’re topic to the Compensation Policy pursuant to the provisions of part 4.1 of this doc.

The Officers of Bezeq

Pelephone

Adjusted free money movementTerms of workplace and employment

– – –

The CEO of Bezeq and the VPs.

Pelephone Communications Ltd.

Calculated as money from working actions much less money for the acquisition/sale of mounted and intangible property (web), and web of funds in respect of leases;

–

As this time period is outlined within the Companies Law, as could also be revised from time to time. At the date of approval of the compensation coverage in accordance to this doc, the language of the Law is: the phrases of workplace or employment of an officer, together with the grant of an exemption, insurance coverage, enterprise to indemnify or indemnification below a allow to indemnify, termination bonus, and any bonus, different cost,

Stock Options

• – Options exercisable into abnormal shares of the Company together with, inter alia, choices whose train is conditional on the achievement of sure targets;

  or enterprise to make such cost, that are given on

  account of the stated workplace or employment.

  Regulations for compensation of exterior administrators

• – The Companies (Rules Concerning Compensation and Expenses for an External Director) Regulations, 2000.

  EBITDA

• – Earnings earlier than curiosity, taxes, depreciation and amortization, as outlined within the chapter “Description of the Company’s Business” within the annual periodic stories of the Company.

  Adjusted EBITDA

• – Calculated as EBITDA web of bills / different working revenue (web)/ losses /revenue from lower / improve in worth (together with losses from continued depreciation) and results of making use of IFRS 16 “Leases” and web of bills relating to share-based funds.

• 2. Purpose of the doc

  2.1

  The objective of this doc is to outline and element the compensation coverage for the Officers within the Group who’re topic to this Policy as described in part 4.1 under. The Policy addresses the scope and composition of the compensation, and the way by which it’s decided in accordance with the provisions of part 267A of the Companies Law and below any legislation. The Policy relates to the general compensation for the Company’s officers for his or her work (within the framework of an employment settlement) and/or the providers they render (within the framework of a administration settlement) to the Company and/or the Group, because the case could also be.

  2.2

  It is emphasised that this Policy doesn’t grant the Officers any proper to obtain any compensation as specified on this Compensation Policy by advantage of the adoption of this Compensation Policy. The compensation to which the Officers at the moment serving within the Group or officers who serve in it sooner or later might be entitled, might be based mostly on the precise situations outlined for them individually and permitted by the competent organs, topic to the provisions of any legislation as could also be from time to time.

  This Policy shouldn’t be seen as exhausting all of the provisions of the legislation or the definitions in it. This Policy doesn’t represent another to or derogate from the provisions laid down by current statutes and rules.

  2.3

• This Compensation Policy will come into drive on January 1, 20191.

• 3. Objective of the Policy and concerns in its willpower

  The targets of the Compensation Policy are as follows:

  •  To assist advance the targets of the Company and the Group, work plans, and the coverage of the Company in a long-term perspective, and to guarantee that there’s a correlation between the targets of the Company and the Group and the targets of administration, and the compensation paid to the Officers.

1

In accordance with the final assembly’s approval dated February 6, 2020, the modification to part 8.2 concerning the cumulative quantity of indemnity to officers is efficient as of June 30, 2019. In addition, amendments to part 7.2.1.6.3 relating to targets and weights outlined for the Company’s CEO and relating to the thresmaintain standards for the cost of a bonus conditional on the efficiency of the Company’s CEO and the CEO of the fabric subsidiaries are efficient as of December 16, 2019 in respect of 2020 (and thereafter). In addition, amendments to part 1 “definitions” of adjusted free money movement”, “EBITDA”, and “adjusted EBITDA” and footnote 6 within the definition of “FFO” are efficient as of January 1, 2020.

•  To create a worthy array of compensation for the Officers, considering, inter alia, the scale of the Group or the Company, the character of their enterprise exercise, their threat administration coverage, and the targets which it aspires to obtain from time to time.

•  To allow the Company and the Group to recruit and retain senior managers with the power to lead them to long-term enterprise success, to attain their targets and to confront the challenges they face.

•  To present the Officers with a way of partnership with the Company’s enterprise outcomes, all with out deviating from the danger administration coverage of the Group and of the Company.

•  To create an applicable stability between the assorted compensation parts – mounted and variable, short-term versus long-term, and many others.

• 4. The Officers

  4.1 4.2

  The Officers referred to within the Compensation Policy are the CEOs2 and the VPs at Bezeq.

  The Compensation Policy additionally addresses the phrases of workplace of administrators of Bezeq (Section 9), which for the needs of this doc are usually not included within the definition of “Officers”.

• 5. Parameters for reviewing the compensation situations

  Following are common parameters which can be doubtless to be taken into consideration when reviewing the compensation situations of the Officers:

  •  The {qualifications}, abilities, experience, skilled expertise and achievements of the officer.

  •  The place, diploma of accountability, and former wage agreements signed with the Officer.

  •  The Officer’s contribution to the efficiency, revenue and stability of the Company and/or the Group, because the case could also be.

  •  The diploma of accountability imposed on the Officer in respect of his place within the Company and/or the Group, because the case could also be.

  •  The Company’s and/or the Group’s want to retain the Officer in view of his abilities, information and/or particular experience.

  •  The measurement of the Group and/or the Company and the scope and nature of their exercise.

  •  The market situations, competitors and regulatory surroundings by which the Company and/or the Group operates.

  •  The reasonability of the compensation mechanisms and scope of the quantities in relation to accepted situations out there for officers serving in comparable positions in comparable firms.

  •  Review of the ratio of the mounted part to the variable parts based mostly on the definitions prescribed as a part of the Policy.

    •  Review of the ratio between the price of the phrases of workplace and employment of the Officer to the price of wage/compensation common of the opposite workers of the Group and/or of the related firm (together with non permanent placement employees who’re employed within the Group or the related firm), and specifically the ratio to the typical value of the wage/compensation and to the price of the median wage/compensation of such employees and the impact of the gaps between them on work relations within the Group and/or the Company, because the case could also be. On this matter, “non permanent placement employees who’re employed within the Group or the related

2 It is clarified that topic to any legislation, within the occasion of a merger of Bezeq with a fabric subsidiary or a merger of fabric subsidiaries, ought to that happen, then the provisions of the Compensation Policy will proceed to apply to the CEO of the fabric subsidiary, and for the aim of the Compensation Policy he’ll proceed to be thought-about CEO of a fabric subsidiary even when his title within the Group is totally different.

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