DIRTT ENVIRONMENTAL SOLUTIONS LTD

We provide short-term cash incentives to our NEOs through the VPP. The 2024 VPP was constructed so that an NEO’s variable pay is tied to company-wide performance, placing the emphasis on company-wide results and team work. The annual variable pay potential for each NEO represents a meaningful amount of additional compensation to act as a strong incentive to achieve our financial goals, while being fiscally prudent. For 2024, opportunities under the VPP ranged from 0% to 150% of base salary actually paid during the calendar year.

The Board-approved metrics under the 2024 VPP were based on financial targets but also take into account individual and team performance. For eligible NEOs, the applicable financial measures were Revenue, and an internally calculated Adjusted Free Cashflow as a percentage of Revenue. Adjusted Free Cashflow is an internal measure calculated by taking GAAP cashflow from operations less capital expenditures and after adjusting for non-operational or on time cash impacts (for example, government subsidies, costs related to the Shareholder Rights Plan, the Debenture Repurchase (as defined below), asset sales, and severance payments). As used herein, “Revenue” means the Company’s total revenue from all sources determined in accordance with GAAP, as reported in the Company’s publicly filed financial statements for the 2024 fiscal year.

Under the terms of the VPP, for participants to earn threshold, target, or maximum amounts under the financial targets, the following performance levels for Company Revenue and Adjusted Free Cashflow as a percentage of Revenue had to be achieved:

If the actual results fell between the threshold and target performance goals or between the target and maximum performance goals,

then the Corporate Governance and Compensation Committee may use judgment to determine the amount of the bonuses earned by participants under the VPP. Each metric has a 50% weighting.

For 2024, we reported revenue of $174.3 million in our publicly filed financial statements for the 2024 fiscal year which was below the threshold and thus provided a 0% payout. The Adjusted Free Cashflow as a percentage of Revenue for 2024 was 9% which rendered a 40% payout. The weighted average of these two metrics was a 20% VPP payout.

The Board assessed each NEO’s performance against their respective strategic/team objectives. Each NEO was eligible for a VPP payout of between 50% and 100% of the Company’s achieved percentage. Based on the progress made by the Company during 2024, the Corporate Governance and Compensation Committee assessed achievement of the targets as 75% for two of the NEOs. The CEO was awarded nil VPP, as he did not achieve his personal revenue targets. The Board-approved VPP payout was as follows, which amounts are reported in the Non-equity Incentive Plan Compensation column of the Summary Compensation Table, above: