Your Shares: LTIP Rewarding you when we achieve our targets

No. Your Shares: LTIP is a discretionary reward – the Rolls-Royce Board has flexibility to decide when and to whom the reward is given, as well as the amount. Being issued an award in one year doesn't guarantee that you'll be issued future awards.

No. Shares awarded will only unlock after three years if we deliver on Group performance targets. During this time, the better Rolls-Royce performs, the more of your award will unlock.

Your personal performance can also impact the number of shares which will unlock – see section 4 for more details.

The number of shares you get will be based on a percentage of your salary, divided by the Rolls-Royce share price. We use the average closing share price over the three days before the shares are awarded. What percentage of salary used is based on your Level:

You can view all awards in your Equiniti share account. You'll need to access your portal here if you are outside of the Rolls-Royce IT network or if the single-sign on doesn't work in your location. You'll need your account number and password to log in. Once logged in, go to 'My Investments' > 'Executive Awards' > 'View Portfolio Breakdown' > 'Awards'.

We'll notify you by email once the award has been made. This email will direct you to your Equiniti portal where you will be able to see your award letter (along with any Group performance targets) and your award certificate. The award will be added to your portfolio under 'My Investments' > 'Executive Awards' > 'View Portfolio Breakdown' > 'Awards'.

No. Your Shares: LTIP awards are not pensionable or used in other reward calculations.

No. Any award is for you. If any shares unlock and you keep them, you may choose to transfer them at this stage.

Rolls-Royce pays all these associated set-up and administrative costs, as well as the costs for Equiniti's Share Account and Nominee services.

Yes. When you receive an award, you need to log into your Equiniti share account and accept the award, including all the terms and conditions. If you don't do this by the deadline – which will be confirmed in your award letter – the award will be revoked, and you will lose the right to receive any shares.

! This step is important as you are required to expressly agree to the terms & conditions of your award – including Malus and Clawback (for more details, see the 'Malus and Clawback Policy' under the 'Resources' section).

Each year you will be given a performance rating according to our five-point rating scale:

• Check Exceptional Performance
• Check Excellent Performance
• Check Strong Performance
• Check Working towards strong performance
• Cross Performance not as expected

The release of any award is dependent on the extent to which you deliver an acceptable level of performance. Once the three-year performance period ends, you'll have three year-end performance ratings. You'll keep your full award if none of your ratings are 'performance not as expected'. For each 'performance not as expected' rating, your award will be reduced by one-third.

No. Your Shares: LTIP is intended to reward future performance.

Yes. Each year, you'll receive a performance rating based on our five-point rating scale. Once the three-year performance period ends, you'll have three year-end performance ratings. You'll keep your full award if none of your ratings are 'performance not as expected'. For each 'performance not as expected' rating, your award will be reduced by one-third.

Our performance metrics are mainly financial in nature. They each measure different aspects of the Group's financial performance and, collectively, they can provide insights into our financial health, profitability, and long-term sustainability.

For each metric, we set performance targets each year, as these are critical to achieving our strategic goals and delivering to our shareholders.

What metrics we use are decided prior to each award being made. To view the metrics of all active awards, see the 'Group performance' section.

The percentage weighting that applies to each metric varies according to Level. Details are provided in award letters, which are communicated via email.

For each award we make, targets are set for each of our metrics.

Details about Group targets related to your specific award will be provided in your award letter. This is held on your Equiniti share account on your Executive dashboard under Documents > Grant letters.

The targets will also align with those disclosed to shareholders in our Annual Report in relation to those set for the CEO and CFO.

Our set metrics and Threshold and Maximum targets against these are assessed at the end of the three-year period. The number of shares will then be adjusted according to how we have performed. If we meet the 'Threshold Target', 20% of our award will unlock, and if we meet our 'Maximum Target', 100% of our award will unlock. If our performance falls between the two targets, awards will unlock on a sliding scale, a percentage between 20% and 100%. Each metric is independent of the others.

The number of shares that will unlock may also be impacted by your personal performance.

Each of our performance metrics is vital to our long-term success. However, we recognise that different role Levels have varying impacts on each metric.

For example, the Return on Capital metric is more influenced by capital allocation decisions taken at Executive Level, so it only applies to them. Meanwhile, Free Cash Flow is affected by all Levels of leaders.

As a result, metrics maybe weighted differently depending on your Leadership Level. This means that each metric contributes differently to how many shares will unlock at the end of the three-year performance period. Achieving the metric with the highest weighting for your Level will have a bigger impact on the number of shares that unlock than the lowest weighted metric – but to unlock 100% of your shares, all metric targets must be met.

How many shares that unlock is directly influenced by our cumulative performance over the three-year performance period. The better Rolls-Royce does, the better our award outcome.

The performance metrics will generally be reported on when we provide shareholder updates at year end and mid-year results. In addition, to ensure you keep up to date on how we are performing against our company targets, we deliver online presentations regularly to leaders which includes progress of all active LTIP awards. We'll email you and invite you to these sessions.

No. While your shares are locked you won't be able to vote or receive shareholder distributions/dividends. Once your shares have unlocked you will be a shareholder and have full shareholder rights.

Yes. The value of your award is based on the share price when the award is made, which determines how many shares you receive. The number of shares you initially receive is determined by a percentage of your salary and the share price when the award is made. The value of those shares will fluctuate over the three-year period as the market value of Rolls-Royce shares changes. If our performance improves, so should the value of your shares. The final financial impact will ultimately depend on the share price when you sell them.

The administration and operation may change during its lifetime, which can potentially include adjustments to performance metrics and targets attached to the Award. However, this is uncommon and only occurs should material unforeseen circumstances arise. Any changes must be in line with the Plan Rules. If this happens, we will inform you at the relevant time.

Awards may also be cancelled or reduced if certain conditions are triggered, such as a significant downturn in Group performance, misconduct by an employee, or financial restatements. This action is called Malus and more details can be found in our 'Malus and Clawback Policy' which can be found under the 'Resources' section.

If you leave before the three-year period from the award date comes to an end you will usually forfeit your award. However, if you leave because of redundancy, ill health, retirement or the business your work for is sold you may get some of your award, reflecting the time you were employed throughout this three-year period while the shares are locked. This portion of your award will unlock at the end of the three-year period and remains subject to Group performance targets being met.

You need to log in to your Equiniti share account to view your award. It will take up to six weeks following you leaving date for adjustments to be made. Ensure you keep your contact details updated, so we can communicate any changes and award outcomes.

Once you leave the Company, to update your email address, please contact: equinitipremier1@equiniti.com

You may get some of your award, reflecting the time you were employed throughout this three-year period while the shares are locked. This portion of your award will unlock at the end of the three-year period and remains subject to Group performance targets being met.

When LTIP shares unlock then where applicable we will sell enough shares to cover the estimated amount of tax and social security as well as any dealing fees.

A contract note will be issued to your home address to confirm the details of the transaction, and the balance of shares will then be transferred to your Equiniti Global Nominee account.

You can retain your shares within the Global Nominee until the latest of the following dates:

1. two years after the end of your employment; or
2. 60 days after the unlocking of your final LTIP shares; or
3. 60 days after the end of any Holding Period Requirement.

At the end of this period you will need to either sell your shares or transfer them to a personal brokerage account. Equiniti will write to you to let you know your options and any action that you need to take at the appropriate time.

Ensure your contact details are kept up to date in your Equiniti share account.

Any awards will be pro-rated to reflect your employment during the relevant three-year period. They remain subject to meeting Group performance targets – if/when shares unlock, they will automatically be released to your estate, subject to probate.

During the three-year performance period, Rolls-Royce may go through a corporate event, such as a takeover. Other types of events may also have a material effect on our share price. If this happens, the Remuneration Committee of Rolls-Royce (Holdings) Plc will make an appropriate decision at that time and communicate in writing to explain how it will impact your award.

Our Reward Team oversees Your Shares: LTIP and has appointed specialist Share Plan Administrators to administer it on our behalf. They provide you with the tools you need – giving you access to your own online account to see your shares and, once they unlock, manage them. We're working with Equiniti Limited ('Equiniti').

When you receive an LTIP award for the first time we will create an Equiniti account for you. If you already have an Equiniti account your shares will be added to your existing account.

You can view and monitor all your shares in your Equiniti share account. You'll be able to see how many shares you have, their estimated current value and, if your shares are locked, how long you need to wait until they unlock, subject to performance targets being met.

You can view all awards in your Equiniti share account. You'll need access your portal here if you are outside of the Rolls-Royce IT network. You'll need your account number and password to log in. Once logged in, go to 'My Investments' > 'Executive Awards' > 'View Portfolio Breakdown' > 'Awards'.

You'll receive updates and notifications from Equiniti by email or through their portal. To make sure you get these updates, keep your contact details up to date on your share account. This is particularly important if you don't have a Rolls-Royce work email and use a personal email address.

No, you can only manage shares acquired from Rolls-Royce share plans in your account.

In 2022, we changed share plan administrator from Computershare (the EquatePlus platform), to Equiniti Limited. You can still access your historical Computershare account via single-sign on to view award details for 2020 and earlier years. This is helpful to see the 'base/purchase price' of an award for tax purposes to calculate any capital gains.

You can access your EquatePlus account here if the single sign-on does not work in your location or if you are outside the Rolls-Royce IT network. You'll need your account number and password to log in. If you do not know your EquatePlus account number or password, please follow the instructions on the screen.

In very rare circumstances we may reduce or cancel your award before any shares unlock – 'Malus'. We may apply Malus for a number of reasons, including but not limited to:

• The determination of a cash or share award had been made in error or on inaccurate or misleading information
• An individual has caused reputational damage to Rolls-Royce
• Evidence comes to light of material misconduct by an individual.

Please refer to our 'Malus and Clawback Policy' under the 'Resources' section for more details and for a complete list of the Malus triggers.

Awards typically unlock three years from the award date – this is also known as the 'vesting date'. Awards will only unlock if performance conditions are met, you are still employed on the date that the shares unlock, and your personal performance is in line with policy (see section 4).

In short, Group performance, personal performance and continued employment.

If all your three year-end performance ratings are above 'performance not as expected' on our five-point rating scale, then you're potentially eligible for all your shares to unlock. Then comes Group performance – if our set targets against our key metrics are met anywhere between the Threshold and Maximum target levels, then a percentage between 20% and 100% of our award will unlock on a sliding scale.

Once the assessment is complete, we'll communicate the outcome to you.

In most countries the value of your unlocked shares will be subject to tax and social security. Where applicable we will sell enough shares to cover this estimated amount and any dealing fees, but you will need to decide and tell us what you'd like to do with the remaining shares. We will write to you shortly before the award is due to be unlocked to explain that you can:

• Sell to cover taxes: Sell enough shares to cover estimated tax, social security, and fees, then transfer the remaining shares to your Equiniti Global Nominee account.
• Sell all shares: Sell all available shares, with tax, social security, and fees deducted. The net proceeds will be paid to your nominated bank account.

Please note that you will be charged a commission of 0.2% (with a minimum fee of £35) for the sale of any shares, including those sold to cover your tax and social security liability, if applicable. If you're transferring your funds to a bank account outside of the UK there will be a charge of £25.

The options you have will only be made available to you shortly before the award is due to unlock.

Submit your instruction via your Equiniti share account, under 'My Investments' > 'Executive Awards' > 'Available Instructions' and then click on 'Elect Awards'. The deadline to do this will be included in you communication at the time. If no action is taken, the default option is that we'll sell to cover taxes.

You'll find more details about tax in the Employee Tax Sheet under the 'Resources' section.

If you don't make a choice by the deadline set out in the communications you receive, the default option will apply.

On the date that the shares unlock (or the following business day if the unlocking date falls on a weekend or UK public holiday), sufficient shares will be sold to cover your estimated tax and social security liabilities, plus any commission and dealing fees. If there are a very large number of shares to be sold to complete the trade then the sale process may take more than one business day.

The settlement date of the remaining shares will be three business days after the unlocking date, and the balance of the shares will then be transferred to your Equiniti Global Nominee account within five business days from the settlement date.

On the date that the shares unlock (or the following business day if the unlocking date falls on a weekend or UK public holiday), sufficient shares will be sold to cover your estimated tax and social security liabilities, plus any commission and dealing fees. If there are a very large number of shares to be sold to complete the trade then the sale process may take more than one business day.

The settlement date of the remaining shares will be three business days after the unlocking date, and the balance of the shares will then be transferred to your Equiniti Global Nominee account within five business days from the settlement date.

On the date that the shares unlock (or the following business day if the unlocking date falls on a weekend or UK public holiday), all of your shares will be sold. If there are a very large number of shares to be sold to complete the trade then the sale process may take more than one business day.

Your trade will settle three business days after the shares are sold. Some of the funds will be retained to settle your estimated tax and social security liabilities, plus any dealing fees. Please then allow 3-5 business days for UK payments, or 7-10 business days for overseas payments for the remaining proceeds to reach your account.

Usually you don't need to request permission to deal before submitting this instruction. Any approval required will be requested and managed on your behalf as part of the process.

We'll let you know if you personally need to request clearance to deal.

If you wish to trade any shares in future, please note that clearance to deal requirements may apply. If you have any queries regarding clearance to deal, please contact GovernanceTeam@rolls-royce.com.

As a listed company which trades shares on a public stock exchange, we are required to maintain Insider Lists. These identify individuals who have access to inside, non-public information about Rolls-Royce – and if it were, may have an impact on our share price.

You must never deal or encourage someone else to trade Rolls-Royce shares on the basis of inside information. Using inside information about the Rolls-Royce may give an unfair advantage, and making an investment in these circumstances would be a criminal offence. This means there may be periods where you'll be restricted from trading.

More details are available in our Share Dealing Policy under the 'Resources' section.

Yes, once your award is unlocked and any withholding tax is settled, you can transfer some or all your remaining shares into a different brokerage account at any time, subject to an administration fee.

The process is two way – you need to instruct Equiniti to transfer the shares. Equiniti will then contact the broker that you want to transfer the shares to, and they must be ready to receive them. To do this you'll need to complete the relevant Share Transfer Request Form, which is available on the Equiniti Portal, and send it by email (using the email address that Equiniti hold for you in your account) to gsppqueries@equiniti.com. You'll need to include:

• Number of shares to transfer
• Confirmation of name on your brokerage account (this must be in your name)
• Confirmation of your home and email addresses
• Details of the bank/broker/custodian to which you want to transfer your shares, including:
  • Their full name and address
  • Their CREST participant ID and member account
  • Their contact email address and phone number
  • Your account number with the bank/broker/custodian

Upon receipt of the required details, Equiniti will initiate the transfer and will confirm to you when the shares have been accepted by the bank/broker/custodian.

Yes. If you sell your shares the costs are taken from the sale amount, meaning you'll receive the value of the shares you've sold, minus any costs. If you transfer your shares you'll pay a transaction fee. Details of these fees will be made available to you before your shares unlock and before you instruct any transaction.

Any fees associated with the sale or transfer of shares are payable to Equiniti. Rolls-Royce does not take any fees from colleagues in connection with these.

In very rare circumstances we may recover shares or profits from any sale after shares have unlocked – 'Clawback'. We may apply clawback for a number of reasons, including but not limited to:

• The Company's financial results were materially misstated and such misstatement resulted in cash or share awards unlocking to a greater extent than would have been the case had the misstatement not occurred
• The determination of a cash or share award had been made in error or on inaccurate or misleading information
• An individual has caused reputational damage to Rolls-Royce
• Evidence comes to light of material misconduct by an individual.

Please refer to our 'Malus and Clawback Policy' under the 'Resources' section for more details and a complete list of situations when Clawback may apply.

Typically, there is no income tax or social security to pay when an award is made.

You'll usually may have to pay tax and social security at this stage depending on your country of residence and their tax requirements. You'll find more details about tax in the Employee Tax Sheet under the 'Resources' section.

Please remember that neither Rolls-Royce nor Equiniti are allowed to give you financial advice, so if you need any advice on your tax position or any local requirements, you should seek independent regulated professional advice.

In countries where we have a legal obligation to withhold tax and/or social security, your local payroll team will advise an estimated tax and social security rate. We will sell enough shares to cover the estimated with holdings and process through payroll. In most instances this will ensure that the majority of tax and social security obligations are met. However, there may be some small adjustments required as part of your annual tax return process.

We are only able to 'sell to cover' an estimated tax and social security contribution value and it's your responsibility to understand if any additional taxes are due.

However, in some countries, the entire process needs to be managed through an individual's tax return. Please be aware this is a personal responsibility, and the value of your unlocked shares may impact your tax bracket/scale/band.

You'll find more details about tax and filing requirements in the Employee Tax Sheet under the 'Resources' section.

Possibly, yes – this depends on your country of residence. You'll find more details about tax reporting requirements in the Employee Tax Sheet under the 'Resources' section.

If you keep Rolls-Royce shares and sell them in the future for a higher market price, making a profit, you may need to pay tax on any gain you make. You'll find more details about tax in the Employee Tax Sheet under the 'Resources' section.

Please remember that neither Rolls-Royce nor Equiniti are allowed to give you financial advice, so if you need any advice on your tax position or any local requirements, you should seek independent regulated professional advice.