Bezeq Israel Telecommunication : Special general meeting, additional amendments to the compensation policy, January 18, 2021

Bezeq - The Israel Telecommunication Corp. Ltd.

Compensation Policy for Officers

January 2021

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			Contents
				Page
1.	Definitions		3
2.	Purpose of the document	4
3.	Policy objective and considerations in determining the policy	4
4.	Officers			5
5.	Parameters for reviewing the compensation conditions	5
6.	Entities involved in establishing the policy	6
7.	Structure of the Company's compensation - general	6
	7.1	The fixed component	6
		7.1.1	Base salary	6
		7.1.2 Benefits and fringe benefits	7
		7.1.3 Severance pay and retirement conditions	7
	7.2	The variable component	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 fixed component to the variable components	16
8.	Additional terms of office and employment	16
	8.1	Insurance	16
	8.2	Indemnification	17
	8.3	Exemption	17
9.	Directors' fees		17
10.	Present arrangements	18
11.	Rules of control, reporting and correction of irregularities	18

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1.	Definitions
	Stock Options
	-	Options exercisable into ordinary shares of the Company
			including, inter alia, options whose exercise is conditional on
			the achievement of certain goals;
	Bezeq	-	Bezeq Israel Telecommunication Corp. Ltd.
	Bezeq International	-	Bezeq International Ltd.
	Advance Notice	-	Notice given to an employee by the Company prior to his
			dismissal, and notice given to the Company by an employee
			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
			employee's employment agreement.
	The Company	-	Bezeq or each of the material subsidiaries, as the case may
			be.
	Significant subsidiaries	-	Pelephone, Bezeq International, yes and all other
	The Law or the Companies	-	companies controlled by Bezeq where the compensation
	committee and Bezeq's board of directors determined that it
	Law
		is a significant subsidiary of the group.
			The Companies Law, 1999.
	The CEOs	-	The CEO of Bezeq, CEOs of the material subsidiaries and
			Senior Group Managers.
	The VPs	-	Any Officer at Bezeq, as defined in the Companies Law,
			who is not a director and not a CEO.
	The Group	-	Bezeq together with its significant subsidiaries.
	Compensation Committee	-	A committee of the Board of Directors of Bezeq which meets
			the conditions prescribed in Section 118A of the Companies
			Law concerning a compensation committee.
	yes	-	D.B.S. Satellite Services (1998) Ltd.
	The Compensation Policy	-	Compensation policy for Officers of Bezeq in accordance
	or the Policy		with the provisions and requirements of section 267A of the
			Companies Law.
	The Officers	-	The Officers who are subject to the Compensation Policy
			pursuant to the provisions of section 4.1 of this document.
	The Officers of Bezeq	-	The CEO of Bezeq and the VPs.
	Pelephone	-	Pelephone Communications Ltd.
	Adjusted free cash flow	-	Calculated as cash from operating activities less cash for
			the purchase/sale of fixed and intangible assets (net), and
			net of payments in respect of leases;
	Terms of office and	-	As this term is defined in the Companies Law, as may be
	employment		revised from time to time. At the date of approval of the
			compensation policy according to this document, the
			language of the Law is: the terms of office or employment of

an officer, including the grant of an exemption, insurance, undertaking to indemnify or indemnification under a permit to indemnify, termination bonus, and any bonus, other

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		payment, or undertaking to make such payment, which are
		given on account of the said office or employment.
Regulations for	-	The Companies (Rules Concerning Compensation and
compensation of external		Expenses for an External Director) Regulations, 2000.
directors
EBITDA	-	Earnings before interest, taxes, depreciation and
		amortization, as defined in the chapter "Description of the
		Company's Business" in the annual periodic reports of the
		Company.
	-	Calculated as EBITDA net of expenses / other operating
Adjusted EBITDA		income (net)/ losses /profit from decrease / increase in value
	(including losses from continued depreciation) and effects of
		applying IFRS 16 "Leases"	and net of expenses relating to
		share-based payments.

2. Purpose of the document

1. The purpose of this document is to define and detail the compensation policy for the Officers in the Group who are subject to this Policy as described in section 4.1 below. The Policy addresses the scope and composition of the compensation, and the manner in which it is determined in accordance with the provisions of section 267A of the Companies Law and under any law. The Policy relates to the overall compensation for the Company's officers for their work (in the framework of an employment agreement) and/or the services they render (in the framework of a management agreement) to the Company and/or the Group, as the case may be.
2. It is emphasized that this Policy does not grant the Officers any right to receive any compensation as specified in this Compensation Policy by virtue of the adoption of this Compensation Policy. The compensation to which the Officers currently serving in the Group or officers who serve in it in the future will be entitled, will be based on the specific conditions defined for them individually and approved by the competent organs, subject to the provisions of any law as may be from time to time.
   This Policy should not be seen as exhausting all the provisions of the law or the definitions in it. This Policy does not constitute an alternative to or derogate from the provisions laid down by existing statutes and regulations.
3. This Compensation Policy will come into force on January 1, 20191.

3. Objective of the Policy and considerations in its determinationThe objectives of the Compensation Policy are as follows:

• To help advance the goals of the Company and the Group, work plans, and the policy of the Company in a long-term perspective, and to ensure that there is a correlation between the goals of the Company and the Group and the goals of management, and the compensation paid to the Officers.
• To create a worthy array of compensation for the Officers, taking into account, inter alia, the size of the Group or the Company, the nature of their business activity, their risk management policy, and the goals which it aspires to achieve from time to time.

1 In accordance with the general meeting's approval dated February 6, 2020, the amendment to section 8.2 regarding the cumulative amount of indemnity to officers is effective as of June 30, 2019. In addition, amendments to section 7.2.1.6.3 relating to goals and weights defined for the Company's CEO and relating to the threshold criteria for the payment of a bonus conditional on the performance of the Company's CEO and the CEO of the material subsidiaries are effective as of December 16, 2019 in respect of 2020 (and thereafter). In addition, amendments to section 1 "definitions" of adjusted free cash flow", "EBITDA", and "adjusted EBITDA" and footnote 6 in the definition of "FFO" are effective as of January 1, 2020.

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