About base salaries Base salaries are set in February of each year and any changes go into effect on March 1. Each named executive’s salary depends on several considerations, including qualifications, experience in the role, performance, career progression, salaries paid for comparable roles at peer companies and salaries of comparable roles within Manulife. We benchmark salaries at least once a year against comparable roles at peer companies. About our annual incentive Our annual incentive rewards named executives for achieving company objectives and individual performance goals each year. The annual incentive for a named executive is more heavily influenced by overall company results, while the emphasis at less senior levels in the organization is more on segment, business unit or functional goals, with some links to global results to foster collaboration and a business owner mentality. Performance measures and weightings are: • recommended by senior management and reviewed and approved by the board • linked to our strategy with targets that are consistent with our board-approved plan • stress and back tested to make sure potential performance is aligned with award outcomes and does not encourage inappropriate risk-taking. How we calculate the award for named executives Each named executive has a target annual incentive equal to a percentage of their base salary and can range from zero to a maximum of 2.5 times target. Their actual annual incentive award depends on both the company performance score, which can range from 0% to 200%, and individual performance. We assess individual performance against goals that are tied to a named executive’s annual business plan, and their contribution to Manulife as a whole, including their impact on our risk culture and their behaviour as a reflection of our values. The annual incentive award is calculated as follows: Base salary Annual Company Adjustment Annual incentive performance for individual incentive target score performance award % of base salary Range: 0% -200% Linking to our ESG strategy As part of our ESG strategy, Manulife sets board-approved enterprise goals for ESG-related measures that are key to our business strategy and that factor into annual incentives for named executives in two ways: • The strategic focus component of the company performance score is based in part on an assessment of performance against goals linked to diversity, equity and inclusion, climate action, employee engagement and customer satisfaction • The individual performance goals for each named executive also include goals linked to diversity, equity and inclusion, climate action, employee engagement and leadership accountability, as well as risk goals related to cybersecurity and ethical business conduct (see the named executive profiles starting on page 67). We review the ESG-related goals every year to make sure executive compensation continues to support Manulife’s ESG priorities and ensure leadership accountability to drive positive change. 54 Manulife Financial Corporation