Remuneration Policy for the Directors of Telefónica, S.A.

The main focus of Telefónica’s remunerative strategy is to attract, retain and motivate professionals of the Company, enabling it to achieve its strategic objectives within the highly
competitive and globalized setting in which it performs its business, by applying the most appropriate measures and practices for such purpose.

Principles of the remuneration policy

The main focus of Telefónica’s remunerative strategy is to attract, retain and motivate professionals of the Company, enabling it to achieve its strategic objectives within the highly
competitive and globalized setting in which it performs its business, by applying the most appropriate measures and practices for such purpose.

Based on the foregoing, the following are the principles of the Policy:

• Value Creation: The Policy is consistent with Telefónica’s commitment to growth, efficiency and sustainable long-term value creation for its stakeholders.
• Pay for performance: A significant part of the total remuneration for the Executive Directors is variable and receiving it is subject to achieving financial, business, value creation and nonfinancial objectives, including ESG objectives that are predetermined, specific, quantifiable and aligned with the Company’s corporate plan.
• Flexibility: The variable remuneration is not guaranteed and is sufficiently flexible so that there is a possibility of not paying this component.
• Competitiveness: In order to ensure the Company has the best professionals on board, the remuneration package must be competitive, both in its structure and its overall amount, with respect to other comparable companies at an international level.
• Good Governance: When determining the remuneration for the Directors, the Company takes into consideration the developments taking place in regulations, best practices and national and international recommendations and trends related to the remuneration of Directors of companies listed on the stock market.
• ‘Fair Pay’: Fair remuneration is provided for professional value, skills, experience, responsibility undertaken and results achieved. The Remuneration Policy for the Executive Directors is aligned with the policy for the other employees and shares the same principles and criteria for action and incorporating the components included in the remuneration package for Telefónica’s management group. The Policy is consistent with Telefónica’s inclusive culture, which includes a commitment to diversity and inclusion management as a key element in connecting talent and growth as a company.
• Suitability: The amounts are sufficient to remunerate the qualifications, time spent and responsibility of the Directors, guaranteeing their required loyalty and allegiance to the Company, without compromising the independence of the Non-Executive Directors.
• Transparency: The level of transparency in relation to remuneration is in line with the best corporate governance practices in order to create trust among all stakeholders, including shareholders and investors.

The aforementioned principles are expressed in a remuneration policy that fulfills the best practices in good governance, in accordance with Telefónica’s long-term strategy and the interests of its stakeholders.

This Policy will replace the Directors’ Remuneration Policy approved by the General Shareholders’ Meeting held on April 23, 2021

You can read the full document in the link below: