ORLEN ORLEN Group 2017
Integrated Report

Remuneration Policy

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The remuneration policy in place at PKN ORLEN supports the achievement of the Company’s goals, including in particular the long-term increase of value for shareholders and stability of functioning of the company.

Remuneration for Members of the Management Board at PKN ORLEN is determined by the Supervisory Board taking into account the resolution of the General Meeting in relation to the Act on the principles of determining remuneration of managing persons in certain companies and the recommendations of the Nomination and Remuneration Committee. The main components of the Management Board Members remuneration system include:

  • Monthly fixed-base pay.
  • Annual bonus dependent on the accomplishment level of quantitative and qualitative targets and the implementation of possible separate objectives to be determined.
  • Severance pay for dismissal from the Management Board Member function.
  • Compensation for non-competition.

All elements of the remuneration are governed by an agreement between the Member of the Management Board and the Company.

Benefits for directors reporting to the Management Board at PKN ORLEN may include a company car, coverage of the costs of investment insurance premiums, right to use extra medical service for the directors and their family members, including preventive health care, sports activities and rehabilitation, co-financing of rent if the director is renting a flat, coverage of the costs of moving house during the employment period, possibility of enjoying the benefits described in the Rules of the Company Social Benefits Fund, and the right to participate in the Employee Pension Scheme in accordance with the rules in force at the Company.

General terms and conditions of the annual bonuses.
In 2017,  the rules for awarding bonuses for PKN ORLEN Members of the Management Board (as well as Management Board Members of ORLEN Group companies) were adjusted to the requirements resulting from the Act on the principles of determining remuneration of managing persons in certain companies as of 9 June 2016. Members of the Management Board are entitled to an annual bonus on the principles established in the contract, which includes the Bonus System Regulations for the Management Board. The level of annual bonus depends on the performance of individual tasks (qualitative and quantitative), established by the Supervisory Board for the individual Members of the Management Board. The Supervisory Board, based on the general catalogue of Managerial Objectives established by PKN ORLEN General Meeting, appoints each year from four to ten individual bonus tasks that are recorded in Goals Charter of the Board Member. The Supervisory Board may also appoint for a particular year separate objective or objectives conditioning the possibility of receiving a bonus for this year.

Assessment of the performance of individual bonus tasks (quantitative and qualitative) by particular Member of the Management Board and separate objectives is made each year by the Supervisory Board on the President of the Management Board’s recommendation, which contains assessment of individually performed bonus tasks of all Members of the Management Board, the Management Board’s recommendation regarding the implementation of separate objective/objectives, reports on the performance of individual bonus tasks by members of the Management Board, PKN ORLEN’s financial statements and other documents the investigation of which the Supervisory Board deems appropriate. The Supervisory Board adopts a resolution to grant or not the Management Board Member of the annual bonus for the financial year, and its amount, by 30 April of the following year. The resolution is the basis for a payment of the annual bonus if the Company's consolidated financial statements for the financial year will be approved by the General Meeting.

For 2017, the Supervisory Board has set for all Members of the Management Board the following seven quantitative objectives:

  • EBIT reported of the Concern.
  • EBITDA LIFO of the Concern.
  • Maintenance CAPEX of the Concern + general and personnel costs of the Concern.
  • Development CAPEX of the Concern.
  • Stock exchange ratio(TSR PKN ORLEN relative to the market).
  • The Concern’s debt ratio (financial gearing).
  • Accident rate (the Concern’s TRR).

And attributed to them relevant bonus thresholds. The Supervisory Board for each of the Members of the Management Board also established quality objectives associated with supervised by them unit.

Additionally, the Supervisory Board is accordance with the resolutions of PKN ORLEN General Meeting – determined the following separate objectives conditioning the possibility of receiving the annual bonus for 2017:

  • Implementation of the principles of remunerating Members of the Management and Supervisory Bodies in all companies belonging to the Capital Group in accordance with the provisions of the Act on the principles of determining remuneration of managing persons in certain companies until 30 June 2017,
  • Determining the composition of the Supervisory Boards in all companies belonging to the Capital Group in such a manner that their members hold required qualifications of members of Supervisory Boards, confirmed by a positive result of the examination for candidates for Members of Supervisory Boards or hold qualifications exempting them from the obligation to pass the examination in particular: hold a PhD degree in economic sciences or law, or are entered into the list of legal counsels, attorneys, expert auditors or investment advisers until 31 December 2017,
  • Realization of duties mentioned in Articles 17-20, Article 22 and Article 23 of the Act as of 16 December 2016 on the state asset management (Journal of Law 2016 item 2259), in the Company’s subsidiaries defined in Art. 4 point 3 of Act as of 16 February 2007 on protection of the competition and consumers (Journal of Law 2017 item 229) until 31 December 2017.

Rules for awarding bonuses for key management personnel (including Members of the Management Board).

The regulations applicable to PKN ORLEN Management Board, directors reporting directly to the Management Board of PKN ORLEN and other key positions have certain common features. Persons covered by the above-mentioned systems are remunerated for the implementation of individual goals set at the beginning of the bonus period by the Supervisory Board for the Management Board and the Management Board for the key executive personnel.
The bonus systems are consistent with the Company's Values and promote cooperation between particular employees and motivate them to achieve the best possible results for the PKN ORLEN.
The targets set are qualitative and quantitative, and are settled for after end of the year for which they were set, based on the principles adopted in the applicable Bonus System Regulations. Regulations also gives the possibility to highlight employees who have a significant contribution to the achieved results.

Remuneration of the Members of the Management Board and the Supervisory Board of the Company due to sit on the Management or Supervisory Boards of subsidiaries, jointly controlled entities and associates.

Members of the PKN ORLEN’s Management Board in 2017, who were acting as the Management or Supervisory Boards Members of subsidiaries, jointly controlled entities and associates of the ORLEN Group did not receive any remuneration, with the exception of Unipetrol a.s. wherein the payments were transferred to ORLEN’s Foundation “DAR SERCA”. As at 31 December 2017, thee members of the Management Board of PKN ORLEN sat on the Supervisory Board of Unipetrol a.s.

The agreements with the Members about non-competition and termination on appeal from the position held.

The agreements of the Management Boards Members of PKN ORLEN and ORLEN Group companies in 2017 were adjusted to the requirements resulting from the Act on the principles of determining remuneration of managing persons in certain companies as of 9 June 2016.

In accordance with applicable agreements, Members of PKN ORLEN’s Management Board are required for a period of 6 months from the date of termination  of the contract, to refrain from competitive activities. During this period, the Management Board members are entitled to receive a salary in the amount  of  50% of six-month basic salary, paid in 6 equal monthly instalments. Provisions of agreements regarding non-competition clause after termination of Management Board Member function come into force not until 6 months of holding function of Management Board Member.

In addition, the agreements provide for the payment of compensation in case of termination by the Company for reasons other than a breach of primary, essential obligations, under the condition of holding the position of the Management Board Member for a period of at least 12 months. Salary in this case amounts to three basic monthly remuneration.

The same rules regarding non-competition and severance payments apply to Management Board Members of ORLEN Group companies.

Directors directly subordinated to PKN ORLEN Management Board are normally required to refrain from competitive activities for a period of 6 months from the date of termination of the agreement. During this period they receive a salary equal to 50% of six-month basic salary, payable in 6 equal monthly instalments. The severance for termination of contract by the Employer is typically six basic monthly remuneration.

Remuneration of management and supervisory bodies.

Remuneration paid to the Copmany's Management Board Memebers fulfilling their function in 2017 and 2016 [PLN thousand]

Item 2017 2016
Remuneration of Members of the Company's Management Board, including:    
– remuneration and other benefits 6,572 8,430
Wojciech Jasiński 1,226 1,715
Mirosław Kochalski 1,127 1,368
Sławomir Jędrzejczyk1 796 1,586
Piotr Chełmiński2 676 1,351
Zbigniew Leszczyński 943 1,049
Krystian Pater 1,012 1,226
Wiesław Protasewicz3 396 -
Maria Sosnowska3 396 -
Marek Podstawa4 - 135
– bonus for prior year 7,740 5,040
Wojciech Jasiński 1,560 -
Mirosław Kochalski 1,303 -
Sławomir Jędrzejczyk1 1,500 1,500
Piotr Chełmiński2 1,260 1,260
Zbigniew Leszczyński 977 -
Krystian Pater 1,140 1,140
Marek Podstawa - 1,140
Total: 14,312 13,470

1Remuneration for holding the position of Vice-President of the Management Board for the period to 30 June 2017.
2Remuneration for holding the position of Member of the Management Board for the period to 30 June 2017.
3Remuneration for holding the position of Member of the Management Board for the period sine 1 July 2017.
4Remuneration for holding the position of Member of the Management Board for the period to 8 February 2016.

Bonuses potentially due to Management Board Members in function in the given year to be paid following year [PLN thousand]

Item 2017 2016
Wojciech Jasiński 1,177 1,560
Mirosław Kochalski1 1,117 1,303
Sławomir Jędrzejczyk2 750 1,500
Piotr Chełmiński2 630 1,260
Zbigniew Leszczyński1 936 977
Krystian Pater 966 1,140
Wiesław Protasewicz3 396 -
Maria Sosnowska3 396 -
Marek Podstawa4 - 113
Total 6,368 7,853

1) Bonus potentially due for holding position for the period since 8 February 2016.
2) Bonus potentially due for holding position for the period to 30 June 2017.
3) Bonus potentially due for holding position for the period since 1 July 2017.
4) Bonus potentially due for holding position for the period to 8 February 2016..

Remuneration and other benefits paid and due to former Management Board Members [PLN thousand]

Item 2017 2016
Sławomir Jędrzejczyk1 750 -
Piotr Chełmiński1 630 -
Dariusz Krawiec2 - 3,160
Marek Podstawa3 113 1,140
Total: 1,493 4,300

1In 2017 non-competition compensation paid.
2In 2016 the bonus for 2015 and non-competition compensation paid.
3In 2017 the bonus due for year 2016; in 2016 severance and non-competition compensation paid.

Remuneration of the Company’s Management and Supervisory Board Members for holding functions in the Management or Supervisory Boards of subsidiaries, companies under joint control or associated companies [PLN thousand].

Members of PKN ORLEN Management Board who in 2016 and 2015 were acting as the Management and the Supervisory Boards of the subsidiaries, jointly controlled entities belonging and associate of the ORLEN Group did not receive any remuneration, except for Unipetrol a.s., wherein the payments were transferred to the ORLEN’s DAR SERCA Foundation.

Remuneration of the Members of the Supervisory Board of PKN ORLEN [PLN thousand].

Item 2017 2016
Remuneration of the Company’s Supervisory Board members, including:    
Angelina Sarota 124 220
Adam Ambrozik1 - 13
Cezary Banasiński1 - 13
Mateusz Bochacik2 112 157
Grzegorz Borowiec1 - 13
Adrian Dworzyński2 110 157
Artur Gabor3 74 170
Wojciech Kryński4 53 -
Agnieszka Krzętowska2 114 161
Radosław Kwaśnicki 111 171
Cezary Możeński1 - 13
Remigiusz Nowakowski5 - 120
Leszek Pawłowicz1 - 13
Izabela Felczak-Poturnicka4 53 -
Wiesław Protasewicz6 57 98
Arkadiusz Siwko7 - 59
Total: 808 1,378

1For the period of holding position to 29 January 2016.
2For the period of holding position since 29 January 2016.
3For the period of holding position to 31 August 2017.
4For the period of holding position since 30 June 2017.
5For the period of holding position to 14 September 2016.
6For the period of holding position since 3 June 2016 until 28 June 2017.
7
For the period of holding position since 29 January until 3 June 2016.

Remuneration of key executive personnel of the ORLEN Group.

Remuneration of key executive personnel of the ORLEN Group [PLN thousand].

Item 2017 2016
Remuneration and other benefits of members of key executive personnel:    
- other key executive personnel of the Company 41,479 44,403
- key executive personnel of the subsidiaries of the ORLEN Group 164,729 165,524
Total: 206,208 209,927


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