Executive remuneration system

On September 9, 2016, the Act of June 9, 2016 on the principles of determining the amount of remuneration for persons managing certain companies – so called new Public Sector Salary Cap Act – came into force.

The new Public Sector Salary Cap Act determines, inter alia, principles for determining remuneration in companies with a stake of the State Treasury (for example PGE), in particular determines the way in which the remuneration of the members of the Management Board and Supervisory Board is set (rules for determining remuneration of the Management Board and Supervisory Board are adopted by the General Meeting and the Supervisory Board adopts resolutions on specific conditions of the management board remuneration).The act also determines select provisions of management services agreements executed with management board members. On December 14, 2016, the Company’s Extraordinary General Meeting, convened at the request of the Minister of Energy representing the State Treasury, adopted resolution 4 on determining the rules for remuneration for members of the Management Board of PGE S.A., subsequently changed through resolution 37 of the Company’s Ordinary General Meeting of June 27, 2017. According to this resolution, remuneration for Management Board members consists of a fixed component in the form of a monthly base salary, and a variable component constituting supplementary pay for the Company’s financial year, depended on progress in achieving management objectives.

In accordance with the Act of October 16, 2019 amending the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system and public companies, as well as certain other acts, on June 26, 2020 the Ordinary General Meeting adopted resolution no. 9 on the adoption of “The Remuneration Policy for Members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.”. The adopted Remuneration Policy maintains the solutions adopted in resolution no. 37 of the Ordinary General Meeting of June 27, 2017 and providing for the division of remuneration of members of the Management Board into a fixed part constituting the basic monthly remuneration and a variable part depending on the achievement of management objectives for a given year, as well as additional cash or non-cash benefits.

The total remuneration achieved by the Management Board members in 2020 amounted to PLN 10.54 million (according to PIT11). In cost perspective (including provisions), in 2020 the remuneration of all persons who acted as Management Board members of PGE S.A., amounted to PLN 7.20 million (the lower total remuneration figure results from the reversal of provision for the variable remuneration for 2018 and 2019 paid in 2020 and the creation of a provision for variable remuneration for 2020).

Remuneration and benefits received in 2020 by the Members of the Management Board of PGE S.A. from PGE S.A.

The amounts of remuneration of the Supervisory Board Members of PGE S.A. were determined by the resolution no. 5 of the Extraordinary General Meeting of December 14, 2016 concerning the principles of determining the amount of remuneration for members of the Supervisory Board of PGE S.A., pursuant to which the monthly remuneration of members of the Supervisory Board was set as a product of the average remuneration in the business sector exclusive of profit-based bonuses in the fourth quarter of the previous year as announced by the President of the Central Statistical Office of Poland and the following factor: 1.7 (for the chairperson of the Supervisory Board), 1.5 (for the other members of the Supervisory Board).

In accordance with the Act of October 16, 2019 amending the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system and public companies, as well as certain other acts, on June 26, 2020 the Ordinary General Meeting adopted resolution no. 9 on the adoption of “The Remuneration Policy for Members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.”. The adopted Remuneration Policy maintains the solutions adopted in resolution no. 37 of the Ordinary General Meeting of December 14, 2016 and determining that remuneration of members of the Supervisory Board will depend on the average monthly remuneration in the enterprise sector without payments of rewards from profit in the fourth quarter of the previous year, as announced by the President of the Central Statistical Office.

Total remuneration earned in 2020 by the members of the Supervisory Board in PGE S.A. amounted to PLN 684 thousand (according to PIT11). In cost perspective (including provisions), the remuneration of all persons who acted as Supervisory Board members amounted to PLN 760 thousand in 2020.

Remuneration received by the Supervisory Board Members of PGE S.A. who in 2020 performed their functions in PGE S.A.

Pursuant to the requirement of Art. 90d section 1 of the Act of July 29, 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies, the Ordinary General Meeting of PGE S.A. on June 26, 2020, adopted the „Remuneration Policy for Members of the Management Board and Supervisory Board of PGE Polska Grupa Energetyczna S.A.”.

In addition, in accordance with the requirements of the above-mentioned Act, the Supervisory Board of the company prepares, and the General Meeting of the company gives an opinion on the remuneration report. The first such report was prepared for the years 2019-2020. It was assessed by a certified auditor and presented to the Annual General Meeting of PGE in 2021. On June 29, 2021 the Ordinary General Meeting of the company in the resolution no. 7 provided a positive opinion on “The report on the remuneration of the Members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A. for the years 2019-2020”.

The full content of the Remuneration Policy and the above mentioned report along with the Independent auditor’s report regarding the assessment of the remuneration report for 2019-2020 are available on the company’s website