Remuneration policy

Remuneration policy

The remuneration for members of the ORLEN Management Board is established by the Supervisory Board, drawing from a resolution of the General Meeting in adherence to the Act on Rules of Remunerating Persons Managing Certain Companies. This process also takes into account recommendations from the Nomination and Remuneration Committee, as well as ORLEN's Executive Compensation Policy, which was adopted by Resolution no. 29 of the General Meeting held on June 5th 2020. The implementation of this policy is mandated by the Act of July 29th 2005, concerning Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading, and Public Companies.

Process to determine remuneration

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 remuneration policy in place at ORLEN supports the achievement of the Company’s goals, including in particular a long-term increase of its shareholder value and stability of operations.

The Supervisory Board set the following quantitative targets for all members of the Management Board for 2022:

• EBITDA + inventory valuation." data-popup>LIFO-based EBITDA of the ORLEN Group,
• Net debt/EBITDA of the ORLEN Group,
• Development CAPEX of the ORLEN Group, excluding Olefins III,
• CAPEX of Projects: Development of olefins production at the Płock Plant (Olefin III Complex) and Essential Infrastructure at the Płock Plant – Olefins III,
• Maintenance CAPEX of the ORLEN Group,
• General and personnel costs of the ORLEN Group,
• Stock performance ratio: TSR of ORLEN relative to the market,
• Accident rate: TRR of the ORLEN Group with external contractors and assigned them corresponding bonus thresholds.

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 ORLEN General Meeting, the Supervisory Board set the following separate objectives, which must be met as a precondition to qualify for variable remuneration for 2022:

• compliance with the principles of remuneration for members of management and supervisory bodies of all Group companies, in line with the Act on Rules of Remunerating Persons Managing Certain Companies of June 16th 2016,
• 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 within the Company’s subsidiaries within the meaning of Art. 4.3 of the Act on Competition and Consumer Protection of February 16th 2007.

Once a year, the Supervisory Board performs a comprehensive remuneration review and prepares an annual remuneration report which is submitted to the General Meeting for opinion and then published.

The compensation policy is devised by the Management Board, which then submits it to the Supervisory Board for review and potential amendments. The Supervisory Board then submits its version of the draft policy to the General Meeting. The final version of the policy is adopted by the General Meeting. The current wording of the Executive Compensation Policy was determined by the General Meeting on June 5th 2020 in accordance with the Act of July 29th 2005 on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies. A resolution on the Policy is adopted at least every four years. Any significant changes to this Compensation Policy must be adopted by the General Meeting through a resolution.