Corporate Governance Report

The Board has drawn up the following report corresponding to the application of the principles set out in the Code of Corporate Governance for the fiscal year ended December 31, 2021, under the CNV Rules (Section 1, Title I, Chapter I of Part IV), by the text restated in 2013, as amended by CNV General Res. No. 797/19.

A. The Board of Directors’ functions: principles i through v – practices 1 through 5

Principles

i. The Company must be led by a professional and qualified Board of Directors, which will be in charge of laying the necessary foundations to guarantee the Company’s sustainable success. The Board is the guardian of the Company and the interests of all its shareholders.

ii. The Board will be responsible for establishing and promoting the corporate culture and values. In its actions, the Board should ensure compliance with the highest standards of ethics and integrity based on the Company’s best interests.

iii. The Board will be responsible for pursuing a strategy inspired by the Company’s vision and mission and aligned with its values and culture. The Board will constructively engage with the management to ensure the proper development, execution, monitoring and modification of the Company’s strategy.

iv. The Board will exercise permanent control and supervision over the Company’s management, ensuring that it takes measures towards implementing the strategy and the business plan approved by the Board.

v. The Board will have the necessary mechanisms and policies to exercise its and each of its members’ duties efficiently and effectively.

1. The Board of Directors generates an ethical working culture and sets out the Company’s vision, mission and values.
By the end of 2021, the Company’s Board approved the update to the Code of Conduct, which sets out Pampa’s vision, mission and values⁽¹⁾ and the conduct expected from the Company members, both in their daily activities and in decisions having long-term effects. This update contemplated the best practices in documents of this nature, simplifying the language and incorporating new or expanding some existing topics. In 2020, Pampa’s Board of Directors approved an update of the policy against fraud, corruption, and other anomalies, which reaffirms transparency and ethics as essential behaviors to lead the Company’s business and achieve sustainable growth. In this sense, this Policy prohibits fraud, corruption in any form or acts of misconduct within the Company, complementing the principles and values defined in our Code of Conduct. Based on what has been previously explained, the Company applies the recommended practice.
2. The Board of Directors sets the Company’s general strategy and approves the management’s strategic plan. In doing so, the Board takes into consideration environmental, social and corporate governance factors. The Board of Directors oversees its implementation using key performance indicators and considers the Company’s best interests and all its shareholders.
Regarding the Board of Directors, the Company applies the practice considering several indexes, factors, risks and projections analyzed by the management. Also, different environmental, social, health and safety aspects are disclosed in the Annual Sustainability Report. In line with Pampa’s strategy, it approves an annual budget that will guide each sector’s actions in the following fiscal year. To such effect, the Executive Financial Department oversees devising and enforcing the strategy and its budget. In this line, in January 2022, the Company’s Board approved the issuance of Pampa’s first ‘Green Bond’⁽²⁾ to use the proceeds to finance the expansion of PEPE III wind farm. This bond reflects the Board and the Company’s commitment to finance projects with a positive impact on the environment and to diversify the country’s energy generation matrix. Moreover, it is an example of how the Board leverages several factors guiding its decisions to comply with the Company’s general strategy.
3. The Board oversees the management and ensures that it develops, implements and maintains a proper internal control system with clear reporting lines.
The Company uses the Integrated Internal Control Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘COSO Report’) to evaluate the effectiveness of internal controls that mitigate the risks threatening the reliability of accounting and financial information. In this sense, the Board approved the Company’s organizational chart establishing the following reporting lines: An internal control team responsible for developing controls to be implemented in the different areas of the organization; An Internal Audit team to evaluate the design and execution of the defined controls; The appointment of process owners and leaders to account for the effectiveness and update of defined controls; and Periodic presentations to the Audit Committee, CEO and CFO about improvements and process assessments’ results. Pampa also has an Audit Committee (consisting exclusively of independent directors) which supervises internal control systems. Additionally, the Company applies the recommended practice since, at least quarterly, a management report is submitted to the Board detailing relevant events and analyzing the main management indicators during the period, allowing the Board to learn about the obtained results and assess the Company’s performance. Moreover, the Board is in daily contact with the Company’s management. During the Board’s meetings, members of the different departments are invited to raise queries regarding specific topics to be addressed, aiming to guarantee the Board’s monitoring and follow-up of the fiscal year’s goals. Pampa understands that the interaction between the Board of Directors and the management (including the Board’s members exercising executive functions) enriches control over the Company’s administration and the level of understanding of its performance. All the Board of Directors members’ preparation and professional credentials allow for an open and sincere discussion on management. Lastly, and as detailed in the different Practices set out in this Corporate Governance Report, Pampa has various initiatives in place to guarantee a proper internal control environment, such as the implementation of an Integrity Program (Practice 23), a Code of Conduct (Practices 1, 22 and 23), a Policy against Fraud, Corruption and other Irregularities (Practices 1 and 23), a whistleblower channel for reporting suspected misconduct (Practice 23), several Corporate Governance policies described throughout the Company’s 2021 Annual Report and this Corporate Governance Report, and the corporate risk management (Practice 17), among others.
4. The Board of Directors designs the corporate governance structure and practices, appoints the responsible person for their implementation, monitors their efficiency, and suggests changes if necessary.
In line with best practices, the Board approves the various corporate governance policies applicable throughout the Company. As described in Practice 1 in Appendix I to this Annual Report, it monitors to adjust them to the Company’s reality. In this sense, the Board has approved and/or updated the following policies: Against Fraud, Corruption and Other Irregularities, Best Security Trading Practices, Related-Party Transactions, Material Information Disclosure, Compensation, Nomination, Dividends and Integrated Management. On the other hand, it periodically monitors the Company’s Integrity Program. Moreover, the Board analyzes whether specific committees are needed for the application of different policies. If it considers that a particular committee is not necessary, the Board delegates its application, monitoring and reviewing the area it feels competent to such effect. In the way detailed, the Company applies the recommended practice.
5. The Board’s members have enough time to exercise their duties professionally and efficiently. The Board and its Committees have clear and formalized rules for their operation and organization, which are disclosed on the Company’s website.
The Board’s members devote the time and efforts necessary to monitor issues submitted for their approval, tracking and monitoring. The Board and its Committees receive prior information on the topics submitted for their consideration to allow for an efficient decision-making process. Moreover, certain Directors serve executive functions in the Company, enabling them to have daily contact in its administration. Regarding the Board’s members professionalism as established in our Nomination Policy, the Company evaluates the nominees before the Shareholders’ Meeting considering, among other aspects, their independence, diversity, age, skills, experience, knowledge of the Company’s business and industry, and possible incompatibilities to guarantee the Board’s diversity. Moreover, the Board and its Committees (the Audit, Compensation, and Nomination Committees) have their respective internal rules governing their functioning, which are available on our website. These rules mainly describe matters concerning the directors’ powers and responsibilities and the holding of meetings. In the way described, the Company applies the recommended practice.

B. Board of Directors’ Chair and Corporate Secretary’s Office: principles vi through viii – practices 6 through 10

Principles

vi. The Board’s Chair oversees ensuring actual compliance with the Board’s duties and leading its members. It should generate a positive working dynamic and promote constructive engagement by its members and ensure that the members have the elements and information necessary for decision-making. This also applies to the Chairs of each of the Committees regarding their functions.

vii. The Board’s Chair will lead processes and establish structures seeking the Board’s members commitment, objectivity and competence, and the best possible performance of the body as a whole and its evolution according to the Company’s needs.

viii. The Board’s Chair will ensure that the entire Board of Directors is engaged in and responsible for the General Manager’s succession.

6. The Board of Directors’ Chair is responsible for the proper organization of Board meetings, prepares the agenda ensuring collaboration by the other members, and guarantees that they receive the necessary materials with enough time to participate in meetings in an efficient and well-informed manner. Each Committee’s Chair has the same responsibilities for their meetings.
The Company applies the recommended practice as it has a Board of Directors’ corporate secretary under the Board of Directors’ Rules and Regulations published on our website, schedules and coordinates meetings of the Board and its different Committees within its scope. These meetings are convened pursuant to the provisions of each of the applicable regulations, attaching the necessary documentation so that directors may analyze in advance the topics to be addressed, and always under the appropriate supervision of the Board’s Chair and the respective Committees⁽³⁾.
7. The Board of Directors’ Chair ensures the board’s proper internal functioning by implementing formal annual assessment processes.
Since 2008, Pampa’s Board of Directors has implemented a self-assessment questionnaire to explore and assess its performance and management annually. From that date, every director completed this self-assessment on an annual basis and submitted it to the Legal Affairs Executive Department, responsible for analyzing results and, if necessary, suggesting actions aiming to improve the body’s functioning. This allows for the evaluation of the Board’s proper internal functioning, thus applying the recommended practice.
8. The Chair generates a positive and constructive work environment for all the Board members and ensures they receive ongoing training to stay permanently updated and enabled to exercise their duties properly.
The Company applies this practice as described below. The Chair leads the Board of Directors’ meetings, ensuring its orderly progress, facilitating its proper development, and coordinating the body’s correct functioning through the Board’s corporate secretary. In the Chair’s absence, meetings are presided by the Vice-chair or by any other Board member if both are absent. Meetings are convened within the terms established in such bodies’ regulations to guarantee that the Board members have access to the information and enough time to analyze it. Furthermore, directors serving executive functions in the Company are in permanent contact with its different areas and daily management, allowing them to get a comprehensive vision of the business and stay updated on issues affecting it. Moreover, the Board is in daily contact with the Company’s management; during the Board’s meetings, members of the different departments are invited so that they may raise queries regarding the specific topics to be addressed, aiming to guarantee the Board’s monitoring and follow-up of the goals set for the fiscal year. Regarding independent directors who are members of the Audit Committee, this update is also received within this body’s scope. The Company implemented a continuous training process for the Company’s Board members in different areas to properly exercise their duties. In this sense, during the fiscal year 2021, all Board members received training on the Company’s general information, our main assets and corporate governance policies, as well as on sustainability matters and the Company’s current cybersecurity actions. This process will be further developed in the fiscal year 2022.
9. The Corporate Secretary’s Office supports the Board’s Chair in its administration and assists in communications among shareholders, the Board and the management.
Pampa applies the recommended practice as it has a Board of Directors’ corporate secretary within the scope of the Legal Affairs Executive Department, which main duties are as follows: (i) coordinating the agendas for the Board’s meetings jointly with the Board’s Chair and other members, as well as with the management, so that the Board may address the necessary issues for proper corporate development; (ii) coordinating the advance preparation and submittal of the required information to the Board’s meetings; (iii) coordinating the drawing up, circulation and approval of the minutes of meetings; (iv) ensuring communication among the Board’s members, the management and their counselors; (v) filing the documentation of the Board’s meetings; (vi) conducting the above-mentioned functions for the rest of the Company Committees created within the scope of the Board; (vii) coordinating Shareholders’ Meetings, the shareholders’ registry and the participation of directors in the meetings; (viii) preparing, updating and sending the onboarding program for the new Board members; and (ix) performing all administrative procedures associated with the Board of Directors, the Committees, and the Shareholders’ Meeting. Thus, the Board’s Chair may supervise these functions without losing focus on its primary role.
10. The Board’s Chair ensures participation by all its members in developing and approving a succession plan for the Company’s General Manager.
Even though there is no specific plan regulating its succession line, the Company applies this practice and the corresponding principles since the Board of Directors has considered the Company’s organizational structure and appointed both its CEO and CFO. To such effect, it takes into consideration the candidates’ personal and professional qualifications. Moreover, the role of the Board’s Chair is different from that of the CEO. In this sense, the Board’s Chair, jointly with the Human Resources Department, defines, based on the Company’s mission, vision and values, the characteristics required by the CEO’s successor, without currently considering it necessary to establish a succession plan.

C. Composition, nomination and succession of the Board of Directors: principles ix through x - practices 11 through 14

Principles

ix. The Board of Directors should have adequate independence and diversity levels allowing it to make decisions in the Company’s best interests, avoiding group thinking and the decision-making by dominant individuals or groups.

x. The Board of Directors should guarantee that the Company has formal procedures in place for the proposal and nomination of candidates to hold positions within the Board under a succession plan.

11. The Board of Directors has at least two members with an independent status according to the current criteria established by the CNV.
The Company applies the recommended practice since, as of the issuance of the 2021 Annual Report, the Board of Directors has four independent directors and one independent alternate director. Moreover, as mentioned in Practice 3 in this Corporate Governance Report, the Audit Committee consists exclusively of independent members, exceeding the local regulations’ requirements, which only provide for most members.
12. The Company has a Nomination Committee consisting of at least three members and presided over by an independent director. If chairing the Nomination Committee, the Board’s Chair will refrain from participating in the discussions for their own successor’s appointment.
In 2018, Pampa’s Board of Directors approved its Nomination Policy, under which a Nomination Committee was created to assist Pampa’s Board and Shareholders’ Meeting in the process for the nomination and appointment of Board members. The Nomination Committee reports to Pampa’s Board and comprises three regular members and an equal or smaller number of alternate members. The Chair is independent according to the CNV rules. Therefore, the Company applies the recommended practice.
13. Through the Nomination Committee, the Board of Directors develops a succession plan for its members, guiding the candidates’ pre-screening process for filling vacancies. It considers the non-binding recommendations made by its members, General Manager and shareholders.
The Board approved the Nomination Policy mentioned in the previous practice, which sets the general guidelines regarding independence, incompatibilities and diversity within the Board’s members. The policy created a Committee responsible for describing the identification and evaluation process of nominees and assisting the Board and shareholders so that they may have all the necessary elements to select nominees in the Shareholders’ Meeting, in compliance with the applicable legal provisions and, especially, section 12 of Pampa’s Bylaws. The latter sets out the selection method of directors, who are elected upon candidate lists, thus guaranteeing enhanced transparency in the process. Moreover, this Committee performs a prior and non-binding assessment of the candidates the Board has deemed fit to cover vacant positions. The Committee considers factors such as independence, diversity, age, skills, experience, among others, to evaluate their suitability for the job based on objective criteria and within an equal opportunity framework. As of this date, the Company’s Board is composed of members having quite diverse professions: degree in economics and business administration, financial advisors, engineers, lawyers, among others. Moreover, there are three female directors on the Board (two regular and one alternate). Finally, all directors receive the same compensation for their duties in the Board. In this sense, diversity and a culture of inclusion are guaranteed, strengthening analysis, discussion and decision-making processes, and paying equality for its members. In the way described, the Company applies the recommended practice.
14. The Board of Directors implements an onboarding program for its newly elected members.
The Company applies the recommended practice since the Board of Directors, through its corporate secretary office, provides the Board’s new members with an onboarding program. This program includes a general overview of the Company, its main bodies and corporate governance practices. It is supplemented by the Code of Conduct, the main policies they should know, and the documentation and information necessary to perform their duties. Moreover, they are included in the Board’s distribution list together with the other board members to have access to the essential documentation before their first participation in a Board meeting. Finally, upon the members’ request, meetings are coordinated with the different departments’ leaders to dispel all their doubts and get acquainted with the Company’s business. On the other hand, Pampa’s managers are available to provide answers on and supplement all the information the directors may require, all of this within the framework of permanent interaction set out in Practice 8 in Appendix I to this Annual Report.

D. Compensation: principle xi – practices 15 through 16

Principle

xi. The Board should generate incentives through compensation schemes to align the management —led by the General Manager— and the Board itself with the Company’s long-term interests so that all directors may comply with their obligations towards shareholders on an equitable basis.

15. The Company has a Compensation Committee consisting of at least three members, independent or non-executive.
Within the framework of its Compensation Policy, in 2018, the Company’s Board of Directors created a Compensation Committee assisting it and/or the Shareholders’ Meeting regarding remunerations of the Board of Directors and the preparation and monitoring of policies and/or compensation plans and/or benefits for the Board of Directors’ members. Moreover, this policy establishes that the remuneration of the Board’s members will be in line with those received by directors of domestic peers. The Compensation Committee reports to Pampa’s Board of Directors. It comprises three regular members and an equal or smaller number of alternate members, who may not serve executive functions at Pampa. Currently, all its members are independent. In the way described, the Company applies the recommended practice.
16. Through the Compensation Committee, the Board of Directors establishes a compensation policy for the General Manager and the Board of Directors’ members.
Pampa applies this practice since it has a Compensation Policy, approved in 2018. Under this policy, the Compensation Committee renders its prior opinion so that directors’ compensation is in line with that received by domestic peers’ directors and under the limitations set forth by the applicable laws and the CNV rules. Within the approved policy’s framework, both the Board of Directors and the Shareholders’ Meeting should be informed of the opinion rendered by this committee. Pampa’s policy on compensation and benefits seeks to ensure external competitiveness and maintain in-house equality. Different surveys are used to adjust our benefit packages and wage structure to those offered in the market. Regarding the Company’s main officers (including the CEO and the Company’s key staff), in 2017, the Board approved a variable compensation plan, seeking to align their performance with the Company’s strategic plans and establish a clear and direct link between the creation of value for shareholders and the covered employees’ compensation.

E. Control environment: principles xii through xvi – practices 17 through 21

Principles

xii. The Board of Directors should ensure a controlled environment consisting of internal controls developed by the management; the internal audit, risk management and regulatory compliance areas, and external audit establishing the necessary defense lines to guarantee integrity in the Company’s operations and financial reports.

xiii. The Board should ensure a comprehensive risk management system allowing the management and the Board to direct the Company towards its strategic goals efficiently.

xiv. The Board should ensure a person or department (according to the business’s size and complexity, the nature of its operations and the risks it faces) responsible for the Company’s internal audit. This audit, conducted for evaluating and auditing the Company’s internal controls, corporate governance processes, and risk management, should be independent, objective, and have clearly defined reporting lines.

xv. The Board’s Audit Committee will be made up of qualified and highly-experienced members and should exercise its functions transparently and independently.

xvi. The Board should establish appropriate procedures to ensure the external auditors’ independent and effective performance.

17. The Board of Directors determines the Company’s appetite for risk and supervises and guarantees the existence of a comprehensive risk management system identifying, assessing, and making decisions on the course of action, and monitoring the risks faced by the Company, including, but not limited to, environmental and social risks, as well as those inherent in the business in the short and long term.
Pampa implemented a risk management methodology as a useful working tool to identify the principal risks affecting Pampa. To such effects, Pampa’s Board of Directors approved the ‘Risk Management Handbook’, which was later updated and restated as the ‘Risk Management Policy’. The most relevant aspect of this policy is establishing responsibilities, functions, and methods for detecting and assessing risks arising from the Company’s activities, which may affect its business or operations. Based on this policy’s guidelines, the administration department updates Pampa’s risk map following the administered businesses. This Policy sets out responsibilities and methodologies for determining business risks, with the Audit Committee’s assistance, which is responsible for supervising its application. The critical business risk factors taken into consideration by Pampa include, among others: Strategic risks, including economic, regulatory and political risks; Corporate governance risks, including the fraud risk; Process risks, including, but not limited to, those associated with natural disasters, social issues, human resources, IT and operational risks; and Reporting risks. The Policy also provides that the administration department will be responsible for: (i) including in its annual programs all the necessary tests for detecting risk indicators and signals; (ii) monitoring the effectiveness of the process as a whole, and safeguarding compliance with and oversight of this policy; (iii) informing the Senior Management and the Audit Committee of the risk management process; and (iv) following up on the implementation of action plans to ensure that corrective measures are taken once a risk is detected. Moreover, the administration department helps the Board keep the risk matrix updated, identify and evaluate risks, follow up with the derived action plans, if needed, and keep the management and the Audit Committee informed of this process. The Company discloses its financial risk management in its Financial Statements, making a distinction by type of risks and describing the strategies or actions implemented to mitigate them for each of them. Moreover, in preparation for the 20-F Form to be submitted before the SEC, a description is made of the risk factors the Company is exposed to. In the way described, Pampa applies this practice.
18. The Board monitors and reviews the independent internal audit’s effectiveness and guarantees the resources for implementing an annual risk-based audit plan and a direct reporting line to the Audit Committee.
Pampa applies the recommended practice since the Internal Audit Department reports functionally to the Audit Committee and administratively to the CEO. At the beginning of each fiscal year, the Internal Audit area submits its proposed annual audit plan to the Audit Committee for its evaluation and approval, including the necessary resources for its implementation. Quarterly and to monitor its advancement, the Internal Audit Department submits a progress report to the Committee, which contains a summary of the completed tasks and the main findings. On an annual basis, the Audit Committee evaluates the independence level and performance of the Internal Audit in issues within its authority and discloses its assessment in its annual report. As a member of the Institute of Internal Auditors, the Company uses the standards it considers reasonable and/or applicable without expressly adhering to them.
19. The internal auditor or the members of the Internal Audit department are independent and highly qualified.
The Company applies the recommended practice since, as mentioned in Practice 18 in this Corporate Governance Report, the Internal Audit Department reports directly to the Audit Committee, which evaluates its independence annually. The Internal Audit Department comprises highly-skilled staff, not only on account of their education and training but also their experience in the area. Pampa’s Internal Audit Department has rules regulating its activities aligned with the best practices available and the most relevant standards issued by The Institute of Internal Auditors. This Corporate Governance Report was last updated in the fiscal year 2020 and approved by the Audit Committee.
20. The Board of Directors has an Audit Committee in place which acts based on its rules. The Committee is mainly composed of and is chaired by independent directors and does not include the General Manager. Most of its members have professional experience in financial and accounting areas.
Pampa applies the recommended practice since it has an Audit Committee in place that acts based on its regulations, establishing its functions and main operating rules. As mentioned in Practice 3 in this Corporate Governance Report, the Audit Committee consists exclusively of independent members, thus exceeding the local regulations’ requirements, providing that only most members should have such status. Its duties include, among others: (i) expressing its opinion on any proposal by the Board to designate external auditors and ensuring their independence, reviewing the plans submitted by external and internal auditors, assessing their performance, and issuing an opinion on the presentation and disclosure of the annual FS; (ii) supervising the operation of the internal control and risk management system; (iii) rendering its opinion on related-party transactions for a relevant amount under the legal regulations in force, disclosing such opinion to the market; (iv) expressing its opinion on the compensation proposals submitted by the Board; (v) rendering its opinion on the conditions for the issuance of shares or convertible securities in the case of a capital increase; and (vi) checking compliance with the applicable standards of conduct. The Board of Directors seeks to ensure that most Audit Committee members have professional expertise in financial and/or accounting areas. This is one of the issues to assess when nominating new members to the Board of Directors and should be considered by the Nomination Committee on issuing its prior opinion. Moreover, the Audit Committee should appoint one of its members as a financial expert as required by Title 407 of the Sarbanes-Oxley Law.
21. With the Audit Committee’s view, the Board of Directors approves a policy for selecting and monitoring external auditors establishing the indicators to consider when submitting to the Shareholders’ Meeting a recommendation on the re-election or substitution of the external auditor.
Upon the presentation and publication of Pampa’s annual FS, the Audit Committee conducts an annual assessment of the external auditors’ independence, planning and performance, considering different objective indicators, and issues an informed opinion according to Section 18, Title V, Chapter III of CNV Rules (restated in 2013) and the Audit Committee’s rules. Besides, throughout the fiscal year, it holds meetings with the external auditors, at least quarterly, to review the Company’s interim FS and when deemed necessary. Moreover, Pampa has an external auditor services’ pre-approval policy, which standardizes an internal process allowing the Audit Committee to grant prior approval to hire an external auditor to render any authorized service to the Company or any of its subsidiaries. In the way described, the Company applies this practice.

F. Ethics, integrity and compliance: principles xvii through xviii – practices 22 through 24

Principles

xvii. The Board should design and establish appropriate structures and practices to promote a culture of ethics, integrity and regulatory compliance which prevents, spots and addresses serious personal or corporate misconduct.

xviii. The Board will ensure the establishment of formal mechanisms to prevent or, failing that, deal with conflicts of interest that may arise in the Company’s administration and management. It should have standard procedures in place seeking to ensure that related-party transactions are conducted in pursuance of the best interests of the Company, as well as fair treatment to all its shareholders.

22. The Board of Directors approves a Code of Ethics and Conduct reflecting ethical and integrity values and principles and the Company’s culture. The Code of Ethics and Conduct is informed to and binding on all the Company’s directors, managers and employees.
Pampa has a Code of Conduct in place, reviewed and updated during the fiscal year 2021, and approved by the Board at the end of the same year. This Code constitutes our guide to making honest decisions in our daily activities and defines how we pursue our challenges. Moreover, it sets the basic principles to ensure a service of excellence for our customers and build relationships with our suppliers, teammates, shareholders, authorities, intermediate organizations, and the community. This new version of the Code will enter into effect in the first quarter of 2022. The Code of Conduct, which will be available on the Company’s website, will have to be expressly accepted by all the Company employees and Pampa’s Board and Supervisory Committee members. Therefore, the Company applies this recommended practice.
23. The Board establishes and periodically reviews an Ethics and Integrity Program based on risks, dimension and financial capacity. The plan is visibly and unequivocally supported by the management with the appointment of an in-house officer responsible for the development, coordination, supervision and periodical assessment of the program’s effectiveness. The program provides for (i) periodic training for directors, managers and employees on ethics, integrity and compliance issues; (ii) internal channels for reporting anomalies, which are open to third parties and adequately communicated; (iii) a policy against retaliation protecting individuals who report a complaint; and an internal investigation system which respects the rights of the individuals under investigation and imposes effective sanctions for violations to the Code of Ethics and Conduct; (iv) policies on integrity in bidding processes; (v) mechanisms for the Program’s periodic risk analysis, monitoring and assessment; and (vi) procedures ensuring the integrity and background of third parties and business associates (including the due diligence for the verification of irregularities, illegal acts or the existence of vulnerabilities in corporate transformation and acquisition processes), including suppliers, distributors, service providers, agents and brokers.
Pampa applies the practice as it has an Integrity Program bringing together and unifying a set of internal proceedings, mechanisms and actions for integrity, supervision and control aimed at preventing, detecting and correcting irregularities and illegal acts. The Program’s design comprises both the mandatory and optional requirements set out in Section 22 and 23 of Law No. 27,401 and other applicable regulations. The Board has defined that Pampa’s Internal Audit Department will be internally responsible for the Program, including its development, coordination, and supervision. Among the available mechanisms there is the Ethics Hotline, an exclusive channel to report any suspected misconduct or breach of the Code of Conduct on a strictly confidential basis. This tool is available through different channels (toll-free telephone number or chat, e-mail, or website) and is managed by a third-party provider to ensure higher transparency and information integrity. Additionally, the Company has policies and procedures to prescribe how received complaints should be analyzed and dealt with. The channel’s responsibility rests with the Audit Committee, which delegates its administration to the Internal Audit Department. At least quarterly, the Internal Audit Department reports the received cases and the adopted decisions to the Audit Committee. The Committee supervises the channel’s operations and the resolution of complaints in issues within its authority. Moreover, Pampa has new or updated regulations supporting the Program, including: the Policy against Fraud, Corruption and Other Irregularities, updated in 2020, which reaffirms transparency and ethics as necessary behaviors to lead the Company’s businesses and achieve sustainable growth; the new Conflicts of Interest Policy, approved in 2021, which defines what Pampa considers a conflict of interest and describes the steps to take if a member of the Company is involved in this kind of situation; and the new Gifts, Entertainment and Travel Policy, also approved in 2021, which includes definitions, describes when it is acceptable to give and/or receive them, establishes cap values and the applicable procedure if an exception is required. The Code of Conduct and the provisions associated to the Program include clauses related to the obligation to report any actual or suspected violation of laws and/or regulations, as well as the prohibition of retaliation against any employee or third party for filing a report legitimately and in good faith or for refusing to participate in acts of corruption. In the fiscal year 2021, the Company performed awareness-raising actions associated with the Ethics Hotline. Additionally, an e-learning course was published when launching the Gifts, Entertainment and Travel Policy.
24. The Board ensures the existence of formal mechanisms to prevent and address conflicts of interest. In related-party transactions, the Board approves a policy that establishes each corporate body’s role and defines how to identify, manage, and disclose transactions that are detrimental to the company or only to certain investors.
The Code of Conduct’s guidelines provide that all individuals within its scope should avoid conflicts of interest. There is a conflict of interest whenever personal interests interfere or appear to interfere (either directly or indirectly) with responsibilities to Pampa, conditioning (or appearing to condition) the objectivity of each member’s decisions. These guidelines are developed in the Conflicts of Interest Policy, approved in 2021, which defines what Pampa considers as a conflict of interest and describes the steps to take if a Company member is involved in this kind of situation, in order to guarantee compliance with the law and with our Code of Conduct and Policy against Fraud, Corruption and Other Irregularities. Pampa also has a Policy on Related-Party Transactions Approval, updated in 2021, whereby all transactions (i) deemed high-value transactions, that is, with a value equal to or higher than 1% of Pampa’s Shareholders Equity; (ii) made with individuals and/or legal entities which, under Section 72 of the CMA, are considered related parties, should be subject to a specific prior authorization and control procedure carried out under the coordination of Pampa’s Legal Affairs Executive Department, with the participation of both the Board and the Audit Committee (as applicable). This Policy strictly follows the guidelines set out in the laws and regulations in force in this matter (Section 72 of the CMA). Additionally, Pampa presents itemized information on any contract executed with related parties in its annual and interim FS. In compliance with the regulations in force, all high-value transactions conducted by Pampa with related parties are submitted to the Audit Committee’s review and promptly reported under the caption ‘relevant event’ to both the CNV and the markets where the Company is listed. Finally, the Audit Committee is responsible for providing the market with complete information on transactions where there may be a conflict of interest with members of corporate bodies or controlling shareholders and rendering a well-founded opinion on related-party transactions in the cases provided by law. The Audit Committee is also responsible for disclosing them in compliance with law whenever there is or maybe an alleged conflict of interest within Pampa. Moreover, every time the Board has to address an issue where a director may have a personal interest, that director is prevented from voting. In the way described, the Company applies this practice.

G. Shareholder and stakeholder participation: principles xix through xxii – practices 25 through 29

Principles

xix. The Company should give equal treatment to all its shareholders. It should guarantee equal access to non-confidential information relevant to decision-making at the Company’s Shareholders’ Meetings.

xx. The Company should promote active involvement by all shareholders based on appropriate information, especially regarding the Board’s composition.

xxi. The Company should have a transparent Dividend Distribution Policy aligned with the strategy.

xxii. The Company should take into consideration the interests of its stakeholders.

25. The Company’s website discloses financial and non-financial information, providing timely and equal access to all investors. The website has a specialized area to address investors’ inquiries.
Pampa applies the recommended practice as it has a website with a dedicated ‘Investors’ section for its shareholders and general investment community, which includes all types of relevant information (FS, filings before regulatory authorities including the SEC and the NYSE, relevant events, corporate governance policies, among others). The Investor Relations and Sustainability Department permanently updates the site. This specific section on the website operates as a channel for inquiries, which are received and managed by the specialized area in charge of shareholder and investor relations. Additionally, the Company has a presence in social media (Facebook, Instagram, Twitter and LinkedIn) through which it not only publishes relevant information but also interacts with its followers. In the way described, the Company applies the practice.
26. The Board should ensure a process to identify and classify its stakeholders and a communication channel for them.
At Pampa Energía, we believe that proximity, transparency and cooperation are fundamental pillars to build and strengthen long-term relationships with our internal or external stakeholders. Following the guidelines offered by AA1000SES – Accountability and the materiality assessment under the Global Reporting Initiative (GRI) standards, we have identified the main stakeholders based on accountability, influence, proximity, dependence and representation. The Company lists its main stakeholders in the Sustainability Report,published annually and available on our website, and the communication channels where the dialog is maintained: Employees: work environment survey, information-sharing meetings with the founding shareholders, internal website (intranet), institutional website www.pampaenergia.com, Nexo – Human Resources internal communication channel, ethics hotline, Sustainability Report, Kaizala internal messaging network, Microsoft Teams messaging network and social media. Government: accountability under regulations in force, Annual Report and Financial Statements, Corporate Governance Report, meetings with government officers, institutional website, ethics hotline, Sustainability Report and social media. Community: Social Responsibility Committee, ethics hotline, Sustainability Report, institutional website, meetings and surveys to participants in social investment programs and social media. Investors: Annual Report and Financial Statements, Corporate Governance Report, 20-F Form, reports requested by the CNV and the SEC, quarterly earnings releases, earnings videoconferences, ethics hotline, Sustainability Report, investor website – ri.pampaenergia.com and social media. Suppliers: meetings with suppliers, ethics hotline, institutional and supplier website, Sustainability Report, SAP ARIBA platform and social media. Customers: institutional website, customer service channel, product and service satisfaction survey, after-sales follow-up, ethics hotline, Sustainability Report and social media. Corporate Associations: ethics hotline, industry meetings, institutional website and social media. Media: institutional website, Annual Report and Financial Statements, ethics hotline and social media Unions: meetings with union representatives, ethics hotline, institutional website, Sustainability Report and social media. However, as our operations have a broad geographical scope and a high complexity, decentralization is also a characteristic of our process to identify and dialog with key players. In this sense, to attain the maximum positive social impact in local communities, each asset maps its target audiences, needs and actions to attain a positive social impact on local communities. Following the Strategic Map and Balanced Scorecard methodology, a process was developed to define the priority stakeholders for operations; map the relevant topics; set objectives for relationship building and intervention priorities; and implement concrete action plans on stakeholders. The project covered all the generation business assets located in Buenos Aires, Bahía Blanca, Mendoza, Neuquén and Salta. In this way, we strengthen our sustainable management model by involving the assets’ employees making decisions at the local level, deriving higher efficiency in implementing actions to have a higher impact on the business and the community. Moreover, during 2021 the process for identifying the material topics to be included in the Sustainability Report was reviewed. To develop a materiality matrix, we considered more than 500 answers and 300 comments and opinions from our stakeholders. The Investor Relations and Sustainability Department referred all material topics and the main comments and opinions to the Company’s Board of Directors. In the way described, the Company applies the practice.
27. Before a Shareholders’ Meeting, the Board submits —through a formal communication channel— a ‘provisional information package’ allowing shareholders to make non-binding comments and share dissenting opinions on the Board’s recommendations. The latter will expressly give its opinion on the received comments as it deems necessary.
When calling for a meeting, the Board formulates proposals regarding each item in the agenda, except that there may be a possible conflict of interest, where it will refrain from submitting a proposal. Any information supporting the topics to be addressed in the Shareholders’ Meetings is placed at the disposal of all shareholders well in advance to perform their analysis and vote accordingly. Both the shareholders and the general investment community may make the inquiries they deem necessary through the formal channel mentioned in Practice 25 in this Corporate Governance Report. This allows shareholders to attend the Meeting with information on the topics discussed, which is precise and received well in advance. It is worth highlighting that Pampa provides the necessary means to keep a permanent and fluid dialog with its shareholders, and not only at the time of calling for a Shareholders’ Meeting. In this sense, shareholders have at their disposal: (i) the communication channel described in Practice 25 in this Corporate Governance Report; (ii) the Investor Relations Department, which receives and manages shareholders’ concerns; (iii) throughout the fiscal year, videoconferences are organized after each quarter’s closing to discuss the quarterly results and allow for interaction with the management; and (iv) the attendance of management and Board members to the Shareholders’ Meeting, with the possibility to raise questions not only on each item of the agenda, but also on the Company’s management once the treatment of all formal items has concluded. In the way described, the Company applies the practice.
28. The Company’s Bylaws contemplate that shareholders may receive the information packages for Shareholders’ Meetings through electronic means and participate in Shareholders’ Meetings virtually, allowing for the simultaneous transmission of sound, images and words, ensuring compliance with the principle of equal treatment to participants.
The Company places the proposals mentioned in the previous item at the disposal of shareholders and investors not only through the communication channels set by the regulatory bodies (ByMA, CNV, SEC) but also on the Company’s website, ri.pampaenergia.com. Moreover, as previously mentioned, shareholders have the means to keep a permanent and fluid dialog with the Company throughout the year. Besides, on its Shareholders’ Meeting held on February 17, 2021, the Company approved an amendment to Section 30 of its Bylaws to allow for the holding of Shareholders’ Meetings virtually with the simultaneous transmission of sound, images and words. This amendment was introduced following the positive experience with remote Shareholders’ Meetings held in 2020 during CNV General Res No. 830/20. Based on what has been previously explained, the Company applies the recommended practice.
29. The Dividend Distribution Policy is aligned with the strategy and clearly establishes the criteria, frequency and conditions under which dividends will be distributed.
The Company applies the recommended practice since Pampa’s Board approved its Dividend Policy in 2018. This Policy sets out the guidelines for a proper balance between distributed amounts and Pampa’s investment plans. Said policy aimed to establish a clear, transparent and consistent practice, allowing shareholders to make informed decisions, in line with the Company’s Bylaws and the applicable legal and regulatory framework in force. Based on this policy, the Board of Directors assesses the possibility to pay dividends to Pampa’s shareholders on a prudential basis within each fiscal year, thoroughly evaluating the economic circumstances prevailing at the time.

Notes

⁽¹⁾ For further information, see Practices 22 and 23 in this Corporate Governance Report.

⁽²⁾ For further information, see Section 7.1 of the 2021 Annual Report.

⁽³⁾ For further information, see Practice 9 in this Corporate Governance Report.

Glossary of Terms

Term	Definition	Term	Definition
Board of Directors/The Board	Board of Directors/The Board	FS	Financial Statements
Bylaws	Pampa Energía’s Bylaws	Government / National Administration / Federal Government	Federal Government of the Republic of Argentina
ByMA	Bolsas y Mercados Argentinos (Buenos Aires Stock Exchange)	Pampa / the Company / the Group / the Issuer	Pampa Energía S.A. and its subsidiaries
CEO	Chief Executive Officer	QHSE	Quality, Health, Safety and Environment
CFO	Chief Financial Officer	Res.	Resolution(s)
CMA	Capital Markets Act No. 26,831	SEC	Security and Exchange Commission
CNV	Comisión Nacional de Valores (National Securities and Exchange Commission)	Sect.	Section(s)
Code	Pampa’s Code of Corporate Governance