The remuneration policy in place at PKN ORLEN supports the achievement of the Company’s goals, including in particular a long-term increase of its shareholder value and stability of operations.
Remuneration policy (CODE OF BEST PRACTICE Section 6)
Remuneration for members of the Management Board at PKN ORLEN is determined by the Supervisory Board taking into account the relevant resolution of the General Meeting, in connection with the Act on the Rules of Remunerating Persons Who Direct Certain Companies, and recommendations of its Nomination and Remuneration Committee. The main components of the Management Board members’ remuneration system include:
- monthly base salary (fixed remuneration),
- variable remuneration based on performance against management objectives,
- severance pay for contract termination by the Company,
- non-compete compensation.
The Supervisory Board set the following six quantitative targets for all members of the Management Board for 2021:
- LIFO EBITDA of the Group;
- Net debt/EBITDA of the Group;
- Group’s growth CAPEX, including development expenditure,
- Group’s maintenance CAPEX,
- Group’s general and personnel costs,
- Stock performance ratio: TSR of PKN ORLEN relative to the market;
- Accident rate: TRR of the Group and its external contractors;
and assigned relevant bonus thresholds to these targets. The Supervisory Board also set two qualitative targets for each member of the Management Board, associated with the Group’s key challenges in a given year.
Additionally, in accordance with the resolutions of the PKN ORLEN General Meeting, the Supervisory Board set the following separate objectives, which must be met as a precondition to qualify for variable remuneration for 2021:
- compliance with the principles of remuneration for members of management and supervisory bodies in line with the Act across all Group companies,
- discharge of the obligations referred to in Art. 17-20, Art. 22 and Art. 23 of the Act on State Property Management of December 16th 2016 in the Company’s subsidiaries within the meaning of Art. 4.3 of the Act on Competition and Consumer Protection of February 16th 2007.
Rules for awarding bonuses to key management personnel (including members of the Management Board)
The regulations on bonuses applicable to the PKN ORLEN Management Board, directors reporting directly to the Management Board, and other key positions within the Group have certain common features. Persons covered by these schemes are remunerated for their performance against individual targets set at the beginning of a bonus period by the Supervisory Board for the Management Board members and by the Management Board for key executive personnel. The bonus systems are consistent with the Company’s Values, promote cooperation between particular employees, and motivate them to achieve the best possible results for the ORLEN Group. The targets are both qualitative and quantitative, and their performance is assessed after the end of the year for which they were assigned.
Remuneration of members of the Management Board and the Supervisory Board for serving on the Management or Supervisory Boards of subsidiaries, jointly controlled entities and associates. Members of the PKN ORLEN Management Board who in 2021 served on the Management or Supervisory Boards of subsidiaries, jointly controlled entities and associates of the ORLEN Group did not receive any remuneration for such service.