Chesnara : Proposed 2023 Short-Term Incentive Scheme Rules

DRAFT 2: 11 April 2023

Rules of the Chesnara 2023 Short-Term Incentive Scheme for approval at the Annual General Meeting of Chesnara plc to be held on 16 May 2023.

Chesnara plc

The Chesnara 2023

Short-Term Incentive

Scheme

Approved by shareholders: [●] 2023

Adopted by the Remuneration Committee: [●] 2023

Rules of the Chesnara 2023 Short-Term Incentive Scheme for approval at the Annual General Meeting of Chesnara plc to be held on 16 May 2023.

THE CHESNARA 2023 SHORT-TERM INCENTIVE SCHEME

Table of Contents

1	Interpretation	1
Part A: Cash Awards	7
2	Making of Cash Awards	7
3	Retention of Cash Awards on cessation of Relevant Employment	9
4	Performance Target	9
5	Testing of Performance Target and Vesting of Cash Awards	10
Part B: Deferred Share Awards	12
6	Making of Deferred Share Awards	12
7	Scheme limits	13
8	Awards to be nil-cost	14
9	Vesting of Awards (and exercise of Options)	14
10	Retention of Deferred Share Awards on cessation of Relevant Employment	16
11	Takeover and other corporate events	17
12	Exchange of Deferred Share Awards	19
Part C: General	20
13	Malus and clawback	20
14	Lapse of Awards	22
15	Adjustment of Awards on Reorganisation	22
16	Accounting for Award Tax Liability	22
17	Issue and listing of Scheme Shares	23
18	Relationship of Scheme to contract of employment	23
19	Administration of Scheme	24
20	Amendment of Scheme	25
21	Notices	26
22	Governing law and jurisdiction	27

DRAFT 1: 6 April 2023

Rules of the Chesnara 2023 Short-Term Incentive Scheme for approval at the Annual General Meeting of Chesnara plc to be held on 16 May 2023.

THE CHESNARA 2023 SHORT-TERM INCENTIVE SCHEME

1Interpretation

1.1 Definitions

In this Scheme, unless the context otherwise requires, the following words and expressions have the following meanings:

Acting In Concert has the meaning given to that expression in The City Code on Takeovers and Mergers as amended from time to time;

Assessment Error means the discovery of an error in the assessment of the extent to which a Performance Target applicable to a Cash Award has been satisfied;

Award means:

1. a Cash Award; or
2. a Deferred Share Award made under the Scheme;

Award Date means:

1. in respect a Cash Award, the date on which the Cash Award is made in accordance with Rule 2.3; or
2. in respect a Deferred Share Award, the date on which the Deferred Share Award is made in accordance with Rule 6.1;

Award Dividend Period means:

1. in relation to an Option, the period from the Award Date until the date on which the Option is exercised by the Award Holder; and
2. in relation to a Conditional Share Award, the Vesting Period;

Award Dividends means, in respect of a Deferred Share Award:

1. the dividends (not including any associated tax credit) that would have been paid during the Award Dividend Period on the number of Scheme Shares in respect of which the Deferred Share Award Vests which shall, if the Grantor so determines, exclude the value of all or any part of any special dividend or dividend in specie; and
2. if the Grantor so determines and is set out in the Deferred Share Award Certificate, a cash sum equal to an amount of interest, calculated at such rate and on such basis as determined by the Grantor, on the amount of any such dividend from the relevant dividend payment date until the end of the Award Dividend Period;

Award Holder means an individual to whom an Award has been made or, if that person has died and where the context requires, their legal personal representatives;

1

DRAFT 1: 6 April 2023

Rules of the Chesnara 2023 Short-Term Incentive Scheme for approval at the Annual General Meeting of Chesnara plc to be held on 16 May 2023.

THE CHESNARA 2023 SHORT-TERM INCENTIVE SCHEME

Award Holder's Employer means such Group Member as is an Award Holder's employer or, if they have ceased to be employed within the Group, was their employer or such other Group Member, or such other person as, under the PAYE Regulations or, as the case may be, the NI Regulations, or any other statutory or regulatory enactment (whether in the United Kingdom or otherwise) is obliged to account for any Award Tax Liability;

Award Tax Liability means, in relation to an Award Holder, any liability of the Award Holder's Employer or of any other person (apart from the Award Holder) to account to HMRC or other tax authority for any amount of, or representing, income tax or employee NICs or any equivalent charge in the nature of tax or social security contributions (whether under the laws of the United Kingdom or otherwise) which may arise on or in connection with the making, vesting, exercise or release of, or the acquisition of Scheme Shares or of any interest in Scheme Shares pursuant to, an Award or any cash payment made under this Scheme or otherwise in relation to an Award including any liability arising under Part 7A ITEPA 2003;

Cash Award means a right to receive a cash amount subject to the satisfaction of a Performance Target of which a proportion may be deferred into a Deferred Share Award;

Cash Award Certificate means a statement in a form determined by the Company setting out the details of a Cash Award as set out in Rule 2.4;

Committee means the remuneration committee of the board of directors of the Company or such other committee, comprising a majority of non-executive directors of the Company, to which the board of directors delegates responsibility for overseeing the operation of this Scheme or, following a change of Control of the Company, those persons who comprised the remuneration committee or such other committee of the board of directors immediately before such change of Control;

Company means Chesnara plc incorporated in England and Wales under company number 04947166;

Compulsory Deferral Percentage means a proportion of a Cash Award which, subject to any minimum amount of the Cash Award becoming capable of Vesting which is specified in the Cash Award Certificate, must be deferred into a Deferred Share Award;

Conditional Share Award means a conditional right under the Scheme to acquire Scheme Shares;

Control has the meaning given to it by section 995 of ITA 2007;

Dealing Day means any day on which the London Stock Exchange is open for business;

Dealing Restrictions means restrictions on dealings imposed by statute, order or regulation or Government directive, or any other code or guidance on share dealing adopted by the Company or with which the Company seeks to comply;

Directors' Remuneration Policy has the meaning given to it by section 422A(6) of the Companies Act 2006;

Deferred Share Award means an Option or a Conditional Share Award made under the Scheme;

Deferred Share Award Certificate means a statement in a form determined by the Company setting out details of a Deferred Share Award as set out in Rule 6.2;

2

DRAFT 1: 6 April 2023

Rules of the Chesnara 2023 Short-Term Incentive Scheme for approval at the Annual General Meeting of Chesnara plc to be held on 16 May 2023.

THE CHESNARA 2023 SHORT-TERM INCENTIVE SCHEME

Eligible Employee means an individual who at the Award Date is a director or employee of a Group Member;

Employees' Share Scheme has the meaning set out in section 1166 of the Companies Act 2006;

Employer's NIC means employer's secondary class 1 National Insurance contributions liability or any local equivalent;

Exercise Period means, in respect of an Option, the period set by the Committee on the Award Date during which an Option may be exercised, which may not extend past the tenth anniversary of the Award Date;

Failure of Risk Management means any material failure of risk management of the Company, a Group Member or a business unit of the Group;

Financial Conduct Authority means the "competent authority" as that expression is defined in Part VI of the Financial Services and Markets Act 2000;

Gain means the Market Value of a Scheme Share on the date of exercise of an Option, multiplied by the number of Scheme Shares in respect of which the Option is being exercised;

Good Reason means:

1. injury or disability (evidenced to the satisfaction of the Committee);
2. redundancy (within the meaning of the Employment Rights Act 1996);
3. retirement with the consent of the Committee;
4. death;
5. the fact that the Award Holder's Relevant Employment relates to a business or part of a business which is transferred to a person or Company which is not a Group Member;
6. the fact that the company with which the Award Holder has Relevant Employment is no longer a Group Member; or
7. any other circumstances if the Committee determines in any particular case;

Grantor means:

1. in relation to a Deferred Share Award made by the Company, the Committee; and
2. in relation to a Deferred Share Award made by the Trustees, the Trustees;

Group means the Company and its Subsidiaries from time to time and Group Member shall be interpreted accordingly;

HMRC means HM Revenue and Customs;

Insolvency or Corporate Failure means the Company, or any Group Member or business of the Group becomes insolvent or otherwise suffers a corporate failure so that the value of Scheme Shares is materially reduced provided that the Committee determines following an appropriate review of accountability that the Award Holder should be held responsible (in whole or part) for that insolvency or corporate failure;

ITA 2007 means the Income Tax Act 2007;

ITEPA 2003 means the Income Tax (Earnings and Pensions) Act 2003;

3