Corporate governance

The Bank sets the place, date and form of the General Shareholders’ Meetings taking into account the need to allow as many shareholders as possible to participate. The Bank did not organize any General Shareholders’ Meetings using means of electronic communication (e-meeting) in 2022. As a result of adopting all principles contained in Best Practice 2021, as well as the waiver of the exemption of §8(4c) of the PFSA “Corporate Governance Principles for Supervised Institutions”, the Bank allows the possibility of organizing e-meetings if it is expected by the shareholders. The Bank is able to provide the necessary technical infrastructure.

Irrespective of the above, in order to ensure maximum transparency of the decision-making process, the General Shareholders’ Meetings are broadcast in real time and they are open to media representatives.

The principle that all draft resolutions presented to the General Shareholders’ Meeting by the Management Board or by the shareholders must contain a justification is applied and effectively enforced.

On 7 June 2021, the Annual General Shareholders’ Meeting adopted all principles contained in Good Practices 2021, including the principle that draft resolutions must be presented not later than 3 days before the date of the meeting and that the candidates to the Supervisory Board must make the necessary statements. The General Shareholders’ Meetings organized after 1 July 2021 were held in respect of these principles, apart from the one incidental breach of principle described above.

As a rule, the Management Board and Supervisory Board members participate in the General Shareholders’ Meetings. In 2022 their participation took different forms – either of the physical presence at the place of the meeting or of real time bilateral communication with the use of electronic means. These bodies were represented by persons capable of discussing the matters on the agenda and providing informed responses to any questions asked during the meeting. The Management Board presented the financial results and other relevant information contained in the financial statements and discussed significant events relating to the previous financial year, comparing the presented data to the preceding years.

In 2022 the General Shareholders’ Meetings did not make any decisions to issue shares with or without pre-emptive rights. However, the Bank does not identify any rationale for not applying the principles of Best Practice 2021 regarding such decisions.

In accordance with the Bank’s dividend policy adopted in 2022, the Bank intends to distribute dividends in the long term in a stable manner, in compliance with the policy of prudent management of the Bank and the Bank’s Group. At the present stage, the Bank does not identify any reasons not to apply Best Practice 2021 with respect to limiting the possibility of retaining the total profit earned in a given year at the Bank.

The Bank’s overriding aim regarding information activities is to guarantee high standards of communication with the participants of the capital market, which are a sign of respect for the principles of universal and equal access to information. To achieve this aim, the Bank pursues its information policy in a manner that ensures proper, reliable and complete access to information about the Bank for all investors, with no preferences as regards any of them. The above rules have been formally adopted by the Bank in the “Principles of information policy of PKO Bank Polski S.A. regarding communication with investors and clients”, available on the Bank’s website Information disclosure policy.

The Bank communicates with the investors directly, by organizing online performance meetings, by participating in a wide range of investor conferences and bilateral meetings, and through its activity on the corporate website, which has a dedicated investor relations section. The website contains key information on the Bank and the securities issued, including the information on the Bank’s strategy, financial statements, presentations, key financial data in a format that allows its direct use, contact details and other information which is usually published by companies, in accordance with the relevant recommendations.

The investor relations section at Corporate Governance contains information on corporate governance principles, basic corporate documents, policies and reports, as well as information on the application of Best Practice 2021 and the PFSA’s “Corporate Governance Principles for Supervised Institutions”.

In view of the adoption of the Strategy for 2023-2025, and in order to ensure proper communication with stakeholders, the Bank has published information about the Strategy’s assumptions, measurable goals, including in particular long-term goals, and measures planned for its implementation on its website. This information is available in the investor relations section at Strategy of PKO Bank Polski S.A. 2023-2025.

The ESG area is one of the pillars of PKO Bank Polski S.A.’s strategy for 2023-2025. The Bank’s ESG strategy includes a set of metrics in three areas of sustainability: environmental, social and corporate governance. (Information on the ESG targets included in the 2023-2025 Strategy is available on the Bank’s website: Strategy of PKO Bank Polski S.A. 2023-2025.

For more information on ESG factors in the Bank’s operations, please go to: ESG at PKO Bank Polski Group.

In order to ensure that investors have access to the most up-to-date financial information possible, the Bank publishes financial statements as soon as possible for the organization.

Such publications are accompanied by meetings with the shareholders, analysts and representatives of the media, at which the Management Board presents and comments on the adopted strategy and its execution, the Bank’s and its Group’s financial results, and the most important events affecting the Bank’s operations, results and prospects for the future.

The meetings can be held in person, online or in a hybrid form. In the case of remote meetings, the Bank ensures that they are interactive, i.e. that bilateral communication is possible, so that questions can be asked and answered.

Video recordings of the meetings with the media and analysts are published on the Bank’s website at: Video and teleconferences.

In addition to the regular meetings associated with the publication of results, dialogue with shareholders is carried out on an ongoing basis. The investors’ questions are answered immediately after their receipt, not later than within 14 days. If more time is required due to special circumstances, the investor is notified in advance about the planned date of providing the response. The Bank does not limit the group of persons entitled to information to the shareholders. When answering questions, the Bank assesses the possibility of providing a response to a specific question taking into account the need to protect company secrets or a potential conflict with the applicable laws. It also evaluates the importance of the question in order to provide explanations within an appropriate time and at the appropriate level of detail.

The Bank also has recommended internal regulations in place concerning the provision of explanations and rectification of false, inaccurate or detrimental media reports.

Members of the Management Board and Supervisory Board are appointed in a manner allowing for the selection of persons having high qualifications, skills and experience that are adequate to their position and ensuring that the Management Board and Supervisory Board members (both individually and collectively) will issue independent opinions and decisions in all areas of the Bank’s operations.

The above is reflected in the following policies in place at the Bank:

• The policy concerning the assessment of suitability of the candidates for members and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A. (adopted by the General Shareholders’ Meeting);
• The policy concerning the suitability of the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies (adopted by the Supervisory Board of the Bank).

The diversity policy of the composition of the Management Board and Supervisory Board is a part of the suitability policy.

The diversity policy defines diversity objectives and criteria and is designed to ensure that members of the Management Board and Supervisory Board are appropriately selected to obtain a broad range of competences, knowledge and skills that are adequate for the position and, at the same time, to ensure diversity in terms of age and gender. The competent authorities that select candidates for specific positions take into account the result of suitability assessment and aim at achieving a balance between genders or at least 30% representation of the less numerous gender. The aforementioned suitability policies also specify deadlines and methods for monitoring the achievement of diversity objectives.

In accordance with the Bank’s Articles of Association, if the number of Supervisory Board members drops below five, the General Shareholders’ Meeting must be convened to appoint an appropriate number of members.

The Bank’s Supervisory Board, as part of succession management, makes decisions regarding the selection of new members of the Bank’s Management Board keeping in mind the objective to ensure continuity in decision making with regard to the area of the Bank’s operations supervised by a given member of the Management Board, the need to ensure execution of the Bank’s strategic objectives, the principle of diversity of the Management Board composition and the collective suitability of the Management Board.

Having regard to the statements made by the members of the Supervisory Board, as at 31 December 2022 the Supervisory Board was mostly composed of independent members. The Chair of the Supervisory Board does not combine his function with managing the work of the audit committee of the Supervisory Board. More information on the Supervisory Board is provided in section 11.2.8.

In accordance with the rules, the Supervisory Board members voting against a resolution may express a dissenting opinion (which shall be recorded in the minutes). The Supervisory Board votes on resolutions by open ballot. Voting by secret ballot is ordered when personal issues are discussed or at the request of at least one Supervisory Board member.

Members of the Supervisory Board devote the necessary amount of time for the performance of their duties. The turnout is very high and any absences are justified.

The Supervisory Board may use the services of external advisors, experts or consultants at the Bank’s cost.

Since the Bank has adopted all principles contained in Best Practice 2021, the Supervisory Board annual reports contain all elements required by Best Practice 2021.

Serving on the Bank’s Management Board is the main area of activity for the members of this body, who do not take any other professional activity if devoting their time to such activity would make it impossible for them to serve on the Management Board diligently.

Appointment of a Management Board member to the supervisory body of a company which does not belong to the Bank’s Group requires the approval of the Supervisory Board.

PKO Bank Polski S.A. has a management system in place, comprising an internal control system and a risk management system. The Management Board is responsible for the design and implementation of these systems. These systems are designed to suit the size of the Bank as well as the nature and scale of its business. The Bank has separate units within its structure responsible for carrying out tasks in the aforementioned systems.

The internal control system supports the management of the Bank by ensuring the effectiveness and efficiency of the Bank’s operations, the reliability of financial reporting, compliance with the Bank’s risk management principles and compliance of the Bank’s operations with generally applicable laws, the Bank’s internal regulations, supervisory recommendations and market standards adopted by the Bank. The internal control system is arranged at the Bank on three independent levels:

The internal control system at PKO Bank Polski S.A. comprises:

• the control function which ensures compliance with controls relating, in particular, to risk management at the Bank; this function covers all of the Bank’s units, and the organizational positions in these units responsible for the performance of tasks allocated to a particular function.
• the compliance function – the Compliance Department (CD), which is an organizationally separate, independent unit with a key role in compliance and compliance risk management,
• the internal audit function – the Internal Audit Department (IAD), which is an independent and objective unit performing assurance and advisory activities to assess the adequacy and effectiveness of the risk management system and the internal control system.

The Bank appoints an internal auditor to head the internal audit function (IAD), who acts in accordance with the law, the supervisory regulations of the PFSA, as well as good practices and the International Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors. The heads of IAD and CD report directly to the President of the Management Board and are appointed with the prior approval of the Supervisory Board. The IAD activities are subject to an independent external evaluation at least once in five years.

The Supervisory Board evaluates the internal control system and its components on an annual basis based on the information and reports provided by the Management Board, the Audit Committee of the Supervisory Board, the IAD and the CD, as well as the findings of the auditor and those resulting from the supervisory activities of authorized institutions. The Supervisory Board is supported in such activities by the Audit Committee of the Supervisory Board.

Other entities of the Bank’s Group have internal control systems adapted to the specific nature of their activities. The manner of functioning of internal control systems depends on the business entity’s size and scope of its operations.

The risk management process consists of the following main components: the risk management strategy adopted by the Management Board and approved by the Supervisory Board, the processes for managing the specific types of identified risk, and regular reviews of the aforementioned strategy and processes. The heads of the structures responsible for the management of other risks report to the Management Board member supervising the Risk Management Area.

The Bank has adopted the principles for the management, identification and disclosure of conflicts of interest or potential conflicts of interest and taking actions to control such conflicts, minimize their occurrence and mitigate their adverse effect on the Bank’s operations and its relations with the customers and other entities.

These principles regulate e.g. the responsibilities of the members of the Bank’s bodies with respect to reporting potential and actual conflicts of interest and limiting the involvement of persons who have a potential conflict of interest in the matters to which such conflict of interest relates. In accordance with the rules and regulations of the Management Board and the Supervisory Board, their members have the right to express dissenting opinions, which are recorded in the minutes of the Management or Supervisory Board meeting.

The principles of conflict management also apply to preventing preference of some shareholders over the others – all transactions and agreements must be concluded on an arm’s length basis, in compliance with the generally applicable laws and the Bank’s internal regulations.

[2-20] Guided by prudent and stable risk, capital and liquidity management and with particular concern for the long-term prosperity of PKO Bank Polski S.A. and the interests of its shareholders, and having regard to external regulations in the area of remuneration, the Bank has introduced adequate internal regulations governing, inter alia, the remuneration principles for persons holding managerial positions, including members of the Bank’s bodies. The remuneration rules put in place are designed to support the implementation of the Bank’s strategy and long-term interests and to contribute to sound and effective risk management.

The Bank has a remuneration policy for members of the Supervisory Board and the Management Board adopted by the Annual General Shareholders’ Meeting in 2020.

According to this policy, the total remuneration of a member of the Bank’s Management Board consists of a fixed part and a variable part. The variable remuneration depends on the level of achievement of management objectives such as: achieving the net financial result of the Bank and the Bank’s Group, achieving the indicated economic and financial indicators (including the customer satisfaction indicator), implementing the strategy of the Bank and the Bank’s Group and maintaining the market position of the Bank. The Supervisory Board defines objectives for the individual Management Board members, which should also include such criteria as acting in the public interest, taking part in environmental protection and preventing potential adverse social effects of the Bank’s operations. The total fixed and variable remuneration of each member of the Bank’s Management Board is in line with the principle of gender neutrality.

PKO Bank Polski S.A. also adopts rules on the remuneration of employees whose activities have a significant impact on the Bank’s risk profile (Material Risk Takers; hereinafter: MRT). The variable remuneration of MRTs is directly linked to the Bank’s financial situation and the growth of its value, with the reservation that the managers of the internal audit unit, compliance unit, legal unit and the organizational units responsible for second level risk management and HR matters receive variable remuneration for the achievement of the objectives resulting from their functions, and their remuneration shall not depend on the financial performance of the areas of the Bank’s operations controlled by them.

The variable remuneration of employees whose activities have a significant impact on the Bank’s risk profile depends on the level of achievement of their bonus targets, which, depending on their individual responsibilities, may include e.g. customer satisfaction ratio or the level of execution of the Bank’s strategy.

The payment of variable remuneration to both members of the Bank’s Management Board and other MRTs is preceded each time by an assessment of the Bank’s economic position, as well as a long-term evaluation of these individuals in terms of the proper performance of their duties.

The maximum ratio of the average total annual gross remuneration of the Bank’s Management Board members to the average total annual gross remuneration of other employees of the Bank was set at 1:22.

The level of remuneration of members of the Bank’s authorities and MRTs is adequate to the scope of tasks entrusted to particular persons. The work in committees of the Bank’s Supervisory Board is taken into account in the remuneration of the members of these committees. The amount of remuneration of the Supervisory Board members does not depend on the Bank’s short-term results.

In addition to matters stipulated in generally binding legal regulations, the competences of the General Shareholders’ Meeting include passing resolutions on:

• appointing and dismissing members of the Supervisory Board;
• approving the Rules of the Supervisory Board;
• purchasing shares of the Bank for the purpose of their redemption and determining consideration for the shares redeemed;
• establishing and releasing special funds created from net profit;
• disposal of real estate, share in real estate or perpetual usufruct right by the Bank if the value of the real estate or the right being subject to such an act exceeds 25% of the share capital; such consent is not required if the real estate, share in real estate or perpetual usufruct right has been purchased within the framework of enforcement, bankruptcy or restructuring proceedings, or based on another agreement with the Bank’s debtor;
• issuance of convertible bonds, bonds with a pre-emptive right or subscription warrants;
• laying down the principles for remuneration of members of the Management Board and Supervisory Board;
• approval of: financial statements (of the Bank and the Bank’s Group), Directors’ Reports (on the operations of the Bank’s Group, including Bank) and reports on the activities of the Supervisory Board;
• approving the proper discharge of duties by members of the Management Board and the Supervisory Board;
• profit distribution or offset of loss;
• determining the dividend day and the date of dividend payment;
• disposal and leasing out of the enterprise or an organized part thereof and creation of a limited property right thereon,
• amendments to the Bank’s Articles of Association;
• increase or decrease in the Bank’s share capital.

Unless the Commercial Companies Code provides otherwise, the General Shareholders’ Meeting is valid irrespective of the number of shares represented.

In accordance with the Bank’s Articles and within the scope specified in the Rules of the Supervisory Board, the Supervisory Board should express an opinion on matters placed on the agenda of the General Shareholders’ Meeting, and the shareholders should be given enough time to understand that opinion.

Resolutions of the General Shareholders’ Meeting shall be passed by an absolute majority of votes unless generally binding legal provisions or provisions of the Bank’s Articles of Association provide otherwise.

In accordance with the Bank’s Articles:

• removing a matter from the agenda or desisting from further consideration of a matter placed on the agenda at the request of shareholders shall require a resolution of the General Shareholders’ Meeting passed by a threequarter majority of the votes after obtaining the consent of all shareholders present at the General Shareholders’ Meeting who requested that the matter be placed on the agenda;
• resolutions of the General Shareholders’ Meeting on share preferences and issues concerning the Bank’s merger by transfer of all of its assets to another company, its liquidation, decrease of the share capital by redeeming a part of the shares without a simultaneous share capital increase or changing the scope of the Bank’s activities resulting in the discontinuation of its banking activities require a 90% majority of the votes cast.

The General Shareholders’ Meeting may adjourn sessions by a majority of two-thirds of the votes. Such adjournment may not exceed a total of thirty days.

The General Shareholders’ Meeting passes resolutions in an open vote, with the reservation that a secret ballot shall be ordered in respect of:

• elections of members of the Bank’s authorities;
• motions to bring members of the authorities or liquidators of PKO Bank Polski S.A. to justice;
• personnel matters;
• at the request of at least one shareholder present or represented at the General Shareholders’ Meeting;
• in other situations, specified in generally binding legal regulations.

The General Shareholders’ Meeting is convened by announcement published on the Bank’s website and in the manner specified for the disclosure of current information by public companies. An announcement, including the materials presented to the shareholders, is available on the Bank’s website in the section “Investor relations” at General meeting from the date of convening the General Shareholders’ Meeting.

The General Shareholders’ Meetings are held in the registered office of PKO Bank Polski S.A. or in another location in Poland, which is indicated in the announcement on convening the meeting. The meetings are broadcast online in real time. Representatives of the media are allowed to participate in the General Shareholders’ Meetings.

The General Shareholders’ Meetings may be recorded with the use of devices recording sound or sound and image. Personal data is processed in compliance with the principles defined in the announcement on convening the General Meeting. The recordings of the General Shareholders’ Meetings are published by the Bank on its website in the section “Investor relations” at Video and teleconferences.

The most important rights of the shareholders of PKO Bank Polski S.A. include:

• participation in profit recognized in the Bank’s financial statements (audited by a registered auditor) and earmarked by the General Shareholders’ Meeting for payment to the shareholders;
• the possibility of participation in the General Shareholders’ Meeting, including the right to vote, put forward motions, make objections and ask questions.

Shareholders representing at least half of the share capital or the total number of votes at the Bank can convene the Extraordinary General Shareholders’ Meeting

A shareholder or shareholders representing at least one-twentieth of the total number of votes or the total number of shares may request that the Extraordinary General Shareholders’ Meeting be convened and certain matters be placed on its agenda. They also may, before the date of the General Shareholders’ Meeting, submit to the Bank in writing or via electronic means of communication draft resolutions on matters placed on the agenda or matters which are planned to be placed on the agenda.

Additionally, during the General Shareholders’ Meeting the shareholders have the right to present draft resolutions or propose amendments or supplements to draft resolutions included in the agenda of the General Shareholders’ Meeting.

Each shareholder’s right to vote is limited to 10% of the total number of votes existing at the Bank on the day on which the General Shareholders’ Meeting is held. The exemptions from this limitation and its principles are described in § 10 of the Bank’s Articles.

The right to participate in the General Shareholders’ Meeting is granted to the persons who were shareholders of the Bank sixteen days before the date of the GSM.

Pledgees and users with voting rights have the right to participate in the General Shareholders’ Meeting if the limited property right established in their favour is registered in the securities account on the date of registering participation in the General Shareholders’ Meeting.

Shareholders may participate in the General Shareholders’ Meeting and exercise their voting rights in person (or, in the case of shareholders who are not natural persons, through a person authorized to make statements of intent on their behalf) or by proxy.

A power of attorney to participate in the General Shareholders’ Meeting and exercise voting rights must be given in writing or in an electronic form.

A Member of the Management Board, a member of the Supervisory Board, a liquidator and an employee of PKO Bank Polski S.A. or a member of the governing bodies or an employee of a company or cooperative which is a subsidiary of the Bank may act as the shareholders’ proxies at the General Shareholders’ Meeting of PKO Bank Polski S.A.

A shareholder may not, either personally or by proxy, or as a proxy of another person, vote on resolutions concerning his/her liability to PKO Bank Polski S.A. on whatever account, including the acknowledgement of the fulfilment of his/her duties, exemption from any duty towards PKO Bank Polski S.A., or any dispute between him/her and PKO Bank Polski S.A.

Shareholders shall have the right to ask questions, through the Chairman of the General Shareholders’ Meeting, to the members of the Management Board and Supervisory Board and the key registered auditor of PKO Bank Polski S.A. If it is necessary for assessing a matter placed on the agenda of the General Shareholders’ Meeting, the Management Board (subject to statutory exceptions) shall be obliged to present information about the Bank to the shareholder on request. In justified cases, the Management Board may provide information in writing within two weeks of the end of the General Shareholders’ Meeting.

The questions asked at the Annual General Shareholders’ Meeting on 12 May 2022 and the answers to these questions are published on the website in the section “Investor relations” at Report No. 13/2022 – Answers to shareholders’ questions raised at the Annual General Meeting on 12 May 2022.

[2-9] The Supervisory Board of PKO Bank Polski S.A. consists of 5 to 13 members appointed for a three-year joint term of office.

The number of Supervisory Board members is set by the Eligible Shareholder (as defined below), also in the case of putting forward a motion for electing the Supervisory Board by voting in separate groups.

The State Treasury, as the Eligible Shareholder, pursuant to § 11(1) of the Bank’s Articles of Association, set the number of members of the Supervisory Board at 11.

[2-10] A shareholder having the right to exercise the biggest number of votes arising from the shares in the Bank’s share capital at the General Shareholders’ Meeting electing the Supervisory Board members, hereinafter called “the Eligible Shareholder”, shall present the candidates for the number of Supervisory Board members determined in accordance with the formula described below. The candidates for the other seats on the Supervisory Board may be presented by all shareholders, including the Eligible Shareholder.

The number of seats on the Supervisory Board reserved for the candidates presented by the Eligible Shareholder shall be calculated in accordance with the following formula:

N = 13*S, where:

N – is the number of seats on the Supervisory Board reserved for candidates presented by the Eligible Shareholder. If N is not a whole number, the number of seats on the Supervisory Board is equal to N rounded up to the nearest whole number; at the same time, the total number of seats on the Supervisory Board reserved for the candidates presented by the Eligible Shareholder must not exceed 8 (eight);

S – is the share of the Eligible Shareholder in the share capital of the Bank, calculated as the quotient of the number of shares from which the Eligible Shareholder may vote at the General Shareholders’ Meeting electing the Supervisory Board members and all shares in the Bank’s share capital outstanding as at the date of the General Shareholders’ Meeting. .

If the General Shareholders’ Meeting appoints a smaller number of Supervisory Board members than the number resulting from the above formula, the Eligible Shareholder shall have the right to present and put to the subsequent votes at the same General Shareholders’ Meeting a number of candidates not bigger than twice the difference between the number of Supervisory Board members calculated in accordance with that formula and the number of members appointed from among the candidates previously presented by the Eligible Shareholder.

Members of the Supervisory Board shall be appointed and dismissed by the General Shareholders’ Meeting. The process of their selection shall ensure the appointment of competent persons and guarantee their suitability and proper performance of their obligations. The Supervisory Board members shall be selected taking into account the requirements of the individual and collective suitability assessment described in the “Policy for the suitability assessment of candidates for members and members of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski S.A.” (the “Supervisory Board Suitability Policy”) and taking into account the principle of diversity in the composition of the Supervisory Board.

The suitability assessment of the candidates and members of the Supervisory Board is performed taking into account in the first place the requirements of Article 22aa of the Banking Law.

The General Shareholders’ Meeting performs the suitability assessment of the individual Supervisory Board members and the collective assessment of the whole Supervisory Board each time a new Supervisory Board member is appointed and once a year as part of the periodical assessment. The General Shareholders’ Meeting may also perform an additional suitability assessment in other, justified situations, which affect the requirements addressed to the Supervisory Board or its individual members. Such additional assessments shall be initiated by the Bank.

The suitability criteria set out in the Supervisory Board Suitability Policy include an assessment of their qualifications, understood as knowledge, experience and skills in terms of their suitability for their functions and duties assigned, as well as in terms of the principles for supervising the Bank’s activities, and potential conflicts of interest that may be related to their functions and duties assigned, and an assessment of their reputation

In addition, the assessment criteria include, among others, an assessment of the integrity and ethicality of conduct, the ability to form independent judgement and the ability to devote sufficient time to the responsibilities assigned.

Following the annual review of the policy, the May 2022 General Meeting adopted amendments to the Supervisory Board Suitability Policy.

The most important amendments concerned highlighting:

• the need for the Bank’s Supervisory Board to be competent to perform its supervisory function with regard to aspects of money laundering or terrorist financing risks and ESG risks;
• the relevance of ongoing monitoring of situations that could potentially and materially affect the previous assessment of the individual suitability of a Supervisory Board member or the collective suitability of the Bank’s Supervisory Board;

and clarifying the expected minimum involvement of a member of the Bank’s Supervisory Board in the performance of his or her duties, including the possibility to perform duties at an increased level during periods requiring increased activity, including, inter alia, those resulting from restructuring, institutional transfers, acquisitions, mergers, takeovers or crisis situations.

The amendments introduced were related to the revision of the Guidelines of the European Banking Authority and the European Securities and Markets Authority on the assessment of the suitability of members of the management body and key function holders.

At the same time, the General Meeting, taking into account the revised principles of the Supervisory Board Suitability Policy, conducted a periodic assessment of the suitability of the Bank’s Supervisory Board, confirming the individual suitability of the Supervisory Board members and the collective suitability of the entire body.

[2-11] The Chair and Deputy Chair of the Supervisory Board shall be appointed by Eligible Shareholder from among the appointed Supervisory Board members, also if the Supervisory Board has been elected by voting in separate groups.

The current term of office of the Supervisory Board commenced on 26 August 2020.

The following changes in the composition of the Supervisory Board of the Bank took place in 2022:

• Grzegorz Chłopek resigned from the Supervisory Board with effect from 17 October 2022;
• The Extraordinary General Shareholders’ Meeting of the Bank appointed Robert Pietryszyn to the Supervisory Board as of 18 October 2022.

The Extraordinary General Shareholders’ Meeting of the Bank confirmed the individual suitability of the new Supervisory Board member in connection with his election to the Supervisory Board and the entire body (collective suitability), taking into account the changes in its composition.

Pursuant to section 2.3 of “Best Practice for WSE Listed Companies 2021”, at least two Supervisory Board members satisfy the independence criteria referred to in the Act on registered auditors, audit firms and public oversight of 11 May 2017 and have no real and significant relationships with any shareholder holding at least 5% of the total number of votes.

Due to adopting the aforementioned principle by the Bank, as part of the assessment of individual suitability, each Supervisory Board member made a declaration of compliance or non-compliance with such independence criteria. According to these declarations, as at 31 December 2022: eight Supervisory Board members (i.e. Mariusz Andrzejewski, Andrzej Kisielewicz, Rafał Kos, Maciej Łopiński, Tomasz Kuczur, Robert Pietryszyn, Bogdan Szafrański, Agnieszka Winnik–Kalemba) satisfy the independence criteria set out in the Best Practice 2021, and three Supervisory Board members (i.e. Wojciech Jasiński, Dominik Kaczmarski, Krzysztof Michalski) do not satisfy the independence criteria.

As at 31 December 2022, the Supervisory Board consisted of 11 persons.

The Supervisory Board functions based on generally applicable legal regulations, the Articles of Association and the Rules passed by the Supervisory Board and approved by the General Shareholders’ Meeting. Meetings of the Supervisory Board are held at least once a quarter.

On 12 May 2022, the Annual General Shareholders’ Meeting of PKO Bank Polski S.A. approved the Rules of Procedure of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna adopted by the Supervisory Board. The Rules introduced an amendment to implement Recommendations 9.2 and 9.3 of Recommendation Z of the PFSA, concerning the possibility for members of the Supervisory Board to review and submit comments or dissenting opinions to the minutes of the Supervisory Board meeting before signing them, whereby comments not taken into account and dissenting opinions should be recorded in the minutes with an indication of the reasons for not taking them into account.

The Supervisory Board performs its duties collectively.

The Supervisory Board passes resolutions by an absolute majority of votes, in the presence of at least half of the members, including the Chair or Deputy Chair, except for resolutions specified in the Bank’s Articles, which require (apart from the quorum indicated) a qualified majority of 2/3 of the votes. The members of the Supervisory Board to whom the given voted matter relates do not participate in the vote.

The work of the Supervisory Board is managed by the Chair, and in his/her absence – by the Deputy Chair. The Chair represents the Supervisory Board before the other authorities of PKO Bank Polski S.A., regulatory authorities and other persons.

Meetings of the Supervisory Board are convened by the Chair or, in his/her absence, by the Deputy Chair on his/her own initiative or at the request of a member of the Supervisory Board or at the request of the Management Board.

Meetings of the Supervisory Board may be convened with the possibility of participation (and passing of resolutions) via remote communication channels, in accordance with the “Rules for participation in a meeting of the Supervisory Board of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna by means of direct remote communication” adopted by the Supervisory Board (the Rules of e-meetings).

With the exception of matters specified in the Bank’s Articles of Association, the Supervisory Board may also pass resolutions outside the meeting in writing (by circulation) or using means of direct remote communication, in particular e-mail.

In 2022 the Supervisory Board held 18 meetings and passed 196 resolutions.

The participation of the Supervisory Board members in the meetings in 2022 is presented in the following table.

All absences were considered justified by resolutions of the Supervisory Board.

The Supervisory Board exercises continuous supervision over the Bank’s activities in all areas of its operations.

In addition to other powers and duties stipulated by generally applicable legal regulations and the provisions of the Articles of Association of PKO Bank Polski S.A., the competences of the Supervisory Board include passing resolutions pertaining, in particular to:

• approving the following documents adopted by the Management Board: strategies, policies, rules and regulations, including: the Bank’s strategy, the risk management strategy, the Bank management strategy, the dividend policy, the remuneration policy, the policy for internal capital assessment and capital management, and review of strategies and procedures for internal capital assessment and capital management, the compliance policy of the Bank, internal control rules, regulations of the Management Board, regulations for the management of special funds created from net profit, organizational rules of the Bank, compliance and internal audit unit regulations;
• approving the annual financial plan adopted by the Management Board;
• approving the overall risk tolerance level determined by the Management Board;
• appointing an audit firm to conduct the audit or review of the Bank’s financial statements and the consolidated financial statements of the Bank’s Group;
• passing the Rules:
  • of the Supervisory Board;
  • for granting loans, advances, bank guarantees and warranties to members of the Management Board and Supervisory Board, persons holding managerial positions in the Bank and to entities related to these persons by capital or organizational links;
• appointing and dismissing, by secret ballot, the President of the Management Board, the Vice-Presidents and the members of the Management Board;
• suspending, for important reasons, individual or all members of the Management Board and delegating members of the Supervisory Board, for a period of no more than three months, to temporarily perform the duties of members of the Management Board who have been dismissed, have resigned or are unable to perform their duties for other reasons;
• giving its prior consent for actions fulfilling statutory criteria, including, among other things, disposal of fixed assets (intangible assets, property, plant and equipment, long-term investments), taking up, the purchase or sale of shares in another company, subscription or purchase of bonds convertible to shares, concluding a material agreement by PKO Bank Polski S.A. with a shareholder holding at least 5% of the total number of votes in the Bank or with a related entity, concluding a contract for legal services, marketing services, public relations and social communication services or management consultancy services, donation agreements or similar agreements, debt release agreements and other similar agreements whose value exceeds the amount indicated in the Bank’s Articles;
• applying to the Polish Financial Supervision Authority for consent for the appointment of the President of the Management Board and a Management Board member supervising the management of risk material to the Bank’s activities, and for entrusting the function of Management Board member supervising the management of risk material to the Bank’s activities to a current Management Board member who has not supervised the management of this risk to date;
• evaluation of the functioning of the Bank’s remuneration policy and presentation of a relevant report to the Annual General Shareholders’ Meeting;
• opinion on the application of the “Principles of corporate governance for supervised institutions” by the Bank;
• granting approval for opening or closing a foreign branch.

The Supervisory Board also presents an annual report on the activities of the Supervisory Board to the General Meeting, which includes, among other things, an assessment of the Directors’ Report on the activities (of the Bank’s Group, including the Bank) and the financial statements (of the Bank and the Bank’s Group) for the previous year in terms of their conformity with the books, documents and facts, and an assessment of the Management Board’s proposals for the distribution of profit or coverage of loss.

In order to fulfil its duties, the Supervisory Board may, in particular, examine all documents of the Bank, review the Bank’s assets and request the Bank to prepare or submit any information, documents, reports or explanations concerning the Bank (in particular its activities or assets) and information, reports or explanations concerning its subsidiaries or related companies. The Management Board may not restrict the members of the Supervisory Board from accessing information, documents, reports or explanations requested by them.

The Supervisory Board may use the services of external advisors, experts or consultants at the Bank’s cost.

In the performance of their duties, members of the Supervisory Board should exercise the diligence required by the professional nature of their activities and maintain their loyalty to the Bank.

The amended provisions of the Commercial Companies Code introduced, as of 13 October 2022, the exclusion of civil liability of supervisory board members for damage caused to the company, as long as these persons acted in a loyal manner towards the company and within the limits of reasonable economic risk.

• Monitoring the financial reporting process, including the review of interim and annual financial statements (separate and consolidated).
• Monitoring the adequacy, effectiveness and efficiency of the internal control system, including with respect to financial reporting.
• Monitoring the effectiveness of the risk management system with respect to financial reporting, in particular by analyzing information received from the Risk Committee.
• Monitoring the audit activities, in particular performance of the audit by the audit firm, taking into account all conclusions and findings of the Audit Oversight Commission, which is referred to in the Act on registered auditors, resulting from inspections carried out in the audit firm.
• Controlling and monitoring the independence of the registered auditor and the audit firm carrying out the audit of the financial statements, in particular when the audit firm also provides services other than audit to the Bank’s Group.
• Informing the Supervisory Board of the audit results and explaining how the audit contributed to the fairness of the Bank’s financial reporting and explaining the role of the Committee in the audit process.
• Assessing the independence of the registered auditor and consenting to the provision of permissible services other than audit to the Bank and the Bank’s Group by the audit firm’s related entities or a member of the audit firm’s network, in accordance with the policy.
• Developing a policy for selecting the audit firm to conduct an audit and providing the Supervisory Board with recommendations as to adopting the policy.
• Developing a policy for the provision of services other than audit by the audit firm performing the audit, its related entities and a member of the audit firm’s network, and providing the Supervisory Board with recommendations as to adopting the policy.
• Developing a procedure for selecting an audit firm to conduct an audit and providing the Supervisory Board with recommendations as to adopting the procedure.
• Providing the Supervisory Board with recommendations as to the appointment of the audit firm to conduct the audit.
• Submitting recommendations aimed at ensuring the fairness of the Bank’s financial reporting to the Supervisory Board.
• Submitting recommendations to the Supervisory Board with regard to the statement concerning the audit firm conducting the audit of the annual financial statements of the Bank and consolidated financial statements of the Bank’s Group
• Developing the rules for the process of disclosing and exchanging data and information between the PFSA, the audit firm, the key registered auditor and the Bank, and recommending their adoption to the Supervisory Board.
• Presenting to the Supervisory Board, at least once a year, issues that may have a significant impact on the financial performance of future periods or the position of the Bank and the Bank’s Group.

Grzegorz Chłopek was also a member of the Audit Committee until 17 October 2022 (date of resignation).

In 2022, as part of the suitability assessments of members of the Supervisory Board carried out (interim in May and related to the change in the composition of the Supervisory Board – in October), it was assessed whether the candidate and members of the Supervisory Board meet the requirements necessary to serve on the Audit Committee of the Supervisory Board.

According to the aforementioned assessments, the members of the Audit Committee jointly meet the conditions of independence and qualifications in accordance with the Act on statutory auditors, audit firms and public oversight of 11 May 2017.

As at 31 December 2022:

• Chair of the Audit Committee Agnieszka Winnik-Kalemba and Mariusz Andrzejewski, Rafał Kos and Bogdan Szafrański are independent, i.e. the majority of the Audit Committee members, are independent;
• The following members have the most adequate knowledge and experience in the scope of the Audit Committee’s activity, including competences in accounting and auditing of financial statements:
  • Mariusz Andrzejewski – competences confirmed by a PhD. in economics and qualifications of a registered auditor; member of Polish and international accounting and bookkeeping associations; additionally, skills resulting from professional experience related to performing management and supervisory functions and working as a registered auditor;
  • Dominik Kaczmarski – competences resulting from knowledge and skills gained within the educational programme connected with the title of tax advisor and with applying for the title of Chartered Financial Analyst, completed MBA Finance & Technology studies and professional experience in tax reviews and calculations for banks and in the process of auditing financial statements (in the area of their tax components);
  • Bogdan Szafrański – knowledge and skills gained within the educational programme at the University of California Irvine (UCI), where he completed MBA studies at the Merage School of Business in the area of finance, as well as resulting from his experience as a lecturer in the Faculty of Finance and Banking of the Lazarski University in Warsaw (mainly in the area of financial and management accounting);
• all members of the Audit Committee collectively have knowledge and skills in the area of banking resulting from, among other things, their education, professional experience and functions performed (as more fully described in the biographical notes in this chapter).

There were 12 Audit Committee meetings in 2022.

The main purpose of the Policy for selecting the audit firm to audit the financial statements of the Bank and the Bank’s Group (hereinafter: the Selection Policy) and the Policy for the provision of permissible services other than audit to the Bank and the Bank’s Group companies by the audit firm performing the audit, its related entities or members of its network (hereinafter: the Policy for providing the services), approved by the Supervisory Board after the recommendation of Audit Committee, is to ensure the compliance of the audit firm selection process and the provision of services by this firm to the Bank and the Group with the applicable laws and recommendation L of the Polish Financial Supervision Authority, in particular in terms of ensuring the audit firm’s independence and objectivity and satisfaction of the requirements concerning mandatory rotation and cooling off periods.

The Selection Policy defines the following principles of mandatory rotation and cooling off periods with respect to the audit firm and the key registered auditor.

• The maximum period of uninterrupted performance of statutory audit engagements by the same audit firm, an audit firm related to that firm or any member of a network operating in the European Union of which these audit firms are members is 10 audited financial years. This period may be extended (with PFSA’s approval) by two years, to a maximum of 12 audited financial years, if more than one audit firm is engaged in the joint audit formula, provided that the statutory audit results in the preparation of a joint audit report.
• An agreement for audit of the financial statements shall be concluded for a period not shorter than 2 financial years and not longer than 3 financial years, with an option of extending it for the following audited period of at least two financial years.
• After the end of the maximum period of uninterrupted performance of engagements referred to in item 1, the audit firm may perform a statutory audit again not earlier than 4 years after the end of the previous audit of the financial statements of the Bank and the Bank’s Group.
• A key registered auditor must not perform a statutory audit of the financial statements for a period longer than 5 audited financial years.

A key registered auditor may perform a statutory audit of the financial statements again not earlier than three years after the end of the last statutory audit of the financial statements of the Bank and the Bank’s Group.

In accordance with the Selection Policy, the Supervisory Board conducts the proceedings for signing an agreement for the audit of the financial statements of the Bank and the Bank’s Group in the form of an open tender. Having completed the selection procedure organized by the Bank, the Audit Committee provides to the Supervisory Board a recommendation concerning the audit firm selection. Unless it is recommended to renew the audit engagement, the recommendation presents at least two audit firms to be selected from and an indication of the preferred one (with a justification). The Supervisory Board selects the audit firm based on the Audit Committee’s recommendation. Clear and unbiased criteria are applied in the selection of the audit firm on the basis of the proposals submitted.

The Audit Committee recommendations for the selection of the audit firm to audit the financial statements for the years 2020-2021 and 2022-2023 satisfied the applicable requirements and were prepared based on the selection procedures organized by the Bank, which satisfied the applicable criteria.

In accordance with the Policy for providing the services, the provision of permissible services other than audit by the audit firm performing the audit, its related entities or members of its network to the Bank requires approval of the Audit Committee of the Supervisory Board of the Bank. The approval of the Audit Committee of the Supervisory Board is also required in the case of permissible services other than audit provided to a company of the Bank’s Group (on the request of such company). The company requesting such approval must present the approval of its Audit Committee or its Supervisory Board.

In 2022, the audit firm PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. provided permissible non-audit services to the Bank. Before concluding the agreement on providing permissible non-audit services, the Supervisory Board Audit Committee conducted evaluation of the independence of the audit firm and approved providing such services.

[2-20] Expressing opinions and monitoring the remuneration rules set out in the Remuneration Policy adopted by the Bank on an ongoing basis and supporting the Bank’s authorities in developing and implementing this policy.

In particular, the Committee is responsible for the performance of the following tasks:

• expressing opinions on the general rules for remunerating persons whose professional activities have a material impact on the Bank’s risk profile to be approved by the Supervisory Board;
• conducting periodical reviews of the Remuneration Policy and presenting their results to the Supervisory Board;
• presenting to the Supervisory Board proposals of principles for hiring and remunerating members of the Management Board;
• presenting or giving an opinion on the remuneration decisions to be taken by the Supervisory Board – in particular on the remuneration of members of the Management Board, including severance payments for members of the Management Board;
• assessing the MbO targets set for and pursued by the members of the Management Board, their value and importance, and providing an opinion to the Supervisory Board in this regard;
• assessing tools and systems adopted to guarantee that the remuneration system in the Bank’s Group properly accounts for all types of risk, liquidity and equity levels and that the Remuneration Policy complies with the proper and effective risk management principles, supports such management and is consistent with the business strategy, goals, corporate culture and values, and the long-term interests of the Bank’s Group;
• overseeing the fixed remuneration of heads of units performing independent control functions, including the compliance, internal audit and risk management units;
• providing opinions and monitoring variable remuneration components of leaders of the compliance, internal audit and risk management units;
• presenting opinions to the Supervisory Board on the settlement of MbO targets for members of the Management Board for a given assessment period approved by the Supervisory Board;
• reviewing the report of the internal audit function’s review of the implementation of the remuneration policy;
• preparing a draft report on the evaluation of the functioning of the Remuneration Policy in the Bank, which is presented by the Supervisory Board to the General Shareholders’ Meeting.

Additionally, the Committee’s tasks include:

• expressing opinions on the diversity policy relating to the composition of the Management Board;
• assessing the suitability of and recommending to the Supervisory Board candidates for the Management Board, including taking into account the necessary knowledge, competence and experience of the Management Board as a whole necessary to manage the Bank and taking into account diversity in the composition of the Management Board;
• recommending the scope of duties for the candidate to the Management Board specified by the Supervisory Board, as well as defining the requirements concerning the knowledge and competences and the expected involvement in terms of the amount of time necessary to perform the function of a Management Board member;
• recommending to the Supervisory Board the target representation of the gender which is under-represented in the Management Board;
• periodically (at least once a year) assessing the structure, size, composition and effectiveness of the functioning of the Management Board and recommending respective changes to the Supervisory Board;
• periodically (at least once a year) assessing the suitability, including assessing the knowledge, competences and experience of the Management Board as a whole and of its individual members, and informing the Management Board of the results of the assessment;
• periodically assessing the Management Board’s policy in respect of the selection and appointment of persons to managerial positions at the Bank having a significant impact on the Bank’s risk profile and submitting respective recommendations to the Management Board;
• giving an opinion on, including an annual review of the suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies and recommending amendments to this policy to the Supervisory Board;
• giving an opinion on policy on assessing the suitability of candidates for members and members of the Bank’s Supervisory Board as part of its review by the Supervisory Board.

There were 10 meetings of the Nominations and Remuneration Committee in 2022.

• Evaluating the overall current and future readiness of the Bank to take risks, taking into account the risk profile of the Bank Group, including, in particular, the strategic tolerance limits adopted by the Management Board on particular risks for the Bank and the Bank’s Group.
• Expressing opinions on the Bank’s operational risk management strategy adopted by the Management Board and information on the implementation of this strategy submitted by the Management Board, as well as other periodic reports on risk management and capital adequacy, taking into account the annual assessment of the adequacy and effectiveness of the risk management system, information on the implementation of the risk management strategy, a review of scenarios, including stress scenarios (to determine the response of the Bank’s risk profile to external and internal events) and findings from stress tests.
• Expressing opinions on the approval policy for new products adopted by the Management Board and recommending its approval to the Supervisory Board.
• Expressing opinions on the disclosure policy adopted by the Management Board and recommending its approval to the Supervisory Board.
• Expressing opinions on other resolutions of the Management Board in respect of risk management and capital adequacy which are subject to approval by the Supervisory Board.
• Supporting the Supervisory Board in overseeing the implementation of the Bank’s risk management strategy.
• Reviewing whether the prices of assets and liabilities offered to customers fully envision the Bank’s business model and its strategy in terms of risk and suggesting corrective actions to the Management Board.
• Assessing the risks associated with the financial products and services offered.
• Expressing opinions on solutions for reducing business risk with the use of the Bank’s property insurance and civil liability insurance for members of the Bank’s authorities and proxies.
• Ongoing monitoring of the risk management system and providing the Supervisory Board with information on the results of this monitoring.
• Expressing opinions on the information on the risk management strategy and risk management system disclosed by the Bank to the general public.
• Carrying out an annual review of the remuneration policy for employees of the Bank and the Bank’s Group, and in particular evaluating whether incentives arising from this policy and remuneration practice take into account risk, capital and liquidity, as well as the probability and time perspective of generating profits by a company of the Group, as well as approving the report on this review, submitted for information to the Supervisory Board.
• Ongoing monitoring of the implementation of risk management strategy and making recommendations to the Supervisory Board on necessary adjustments to the risk strategy resulting, inter alia, from changes in the Bank’s business model, market events or recommendations made by the Risk Management unit.
• Advising on the selection of advisors, experts and external consultants in the event that the Supervisory Board wishes to use their services.
• Evaluating recommendations of external and internal auditors and follow-up in the form of appropriate implementation of the respective measures.
• Cooperating with the Nominations and Remuneration Committee in connection with the Committee’s opinions on the suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies to maintain this policy in line with effective and sound risk management.
• Performing other tasks specified by the Supervisory Board with regard to risk management at the Bank.

Grzegorz Chłopek was also a member of the Risk Committee until 17 October 2022 (date of resignation).

There were 9 meetings of the Risk Committee in 2022.

• Expressing opinions on the Bank’s strategy adopted by the Management Board, the approval of which is the competence of the Supervisory Board.
• Supporting the Supervisory Board in overseeing the implementation of the strategy, in particular by analyzing periodic information on the implementation thereof presented by the Management Board.
• Expressing opinions on strategic activities of the Bank, which require the prior consent of the Supervisory Board, in particular on their compliance with the binding strategy of the Bank.
• Performing other tasks specified by the Supervisory Board with regard to the implementation of the strategic goals and key projects of the Bank.

There were 9 meetings of the Strategy Committee in 2022.

In 2022, composition of the Bank’s Management Board changed as follows:

• On 26 January 2022, the Polish Financial Supervision Authority approved the appointment of Iwona Duda as President of the Bank’s Management Board and thus Iwona Duda took up the position of President of the Bank’s Management Board on 26 January 2022 (until 25 January 2022, Iwona Duda was Vice President of the Bank’s Management Board and headed the Management Board);
• The Bank’s Supervisory Board appointed Maciej Brzozowski as Vice-President of the Management Board with effect from 25 March 2022;
• Ms Iwona Duda resigned as President of the Bank’s Management Board as well as from the Bank’s Management Board itself as of the end of 9 August 2022;
• The Bank’s Supervisory Board appointed Paweł Gruza to the position of Vice-President of the Bank’s Management Board as of 10 August 2022; at the same time, the Bank’s Supervisory Board appointed Paweł Gruza to the position of President of the Bank’s Management Board subject to and as of the date of the approval by the Polish Financial Supervision Authority, and entrusted Paweł Gruza with heading the work of the Bank’s Management Board until the approval by the Polish Financial Supervision Authority;
• On 15 December 2022, the Supervisory Board of the Bank:
  • dismissed Bartosz Drabikowski, who oversaw the Finance and Accounting Area, from the Management Board,
  • appointed Andrzej Kopyrski as Vice-President of the Management Board as of 1 January 2023.

On 15 December 2022, the Supervisory Board approved amendments to the Bank’s Organizational Rules regarding changes to the areas of operation and the related division of competences of the members of the Management Board, as a result of which:

• on 15 December 2022, Maciej Brzozowski took over the supervision of the Strategic Client and Investment Banking Area and, until 31 December 2022, the supervision of the Business and Enterprise Banking and Corporate Client Area (he previously supervised the Analysis, Corporate and Business Banking and Wealthy Client Area),
• On 15 December 2022, Marcin Eckert took over the supervision of the Finance and Accounting Area (he previously supervised the Corporate and Investment Banking Area),
• On 1 January 2023, Andrzej Kopyrski assumed oversight of the Business and Enterprise Banking and Corporate Client Area.

In connection with the annual process of periodic assessment of the suitability of the Bank’s Management Board members and the Bank’s Management Board as a whole, changes in the composition of the Management Board and the related changes in the division of powers within the Bank’s Management Board, in 2022 the Nominations and Remuneration Committee of the Supervisory Board performed:

• preliminary suitability assessments – associated with the appointment of new Management Board members (March, August and December);
• periodical suitability assessments – associated with a suitability assessment of the existing members who remained on the Management Board taking into account the changes in the internal division of responsibilities within the Bank’s Management Board (December);
• collective suitability assessments (periodical and additional) of the Management Board – taking into account the changes in the composition of the Management Board and in the internal division of powers (March, August and December).

The suitability assessments were performed in accordance with the “Suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies”, respectively:

• on the previous basis (in respect of assessments performed before 29 September 2022),
• under the revised basis (in respect of assessments performed as of 29 September 2022).

As a result of the above assessments, the Nominations and Remuneration Committee of the Supervisory Board confirmed the individual suitability of the members appointed in 2022 and existing members of the Bank’s Management Board and the collective suitability of the Management Board. The above suitability assessments were approved by the Supervisory Board.

As at 31 December 2022, the Bank’s Management Board consisted of 8 people.

Composition of the Management Board as at 31 December 2022.

In addition, we present information on Andrzej Kopyrski, who oversees the Corporate and Business Banking and Corporate Client Area from 1 January 2023.

The Management Board of the Bank operates on the basis of generally applicable laws, the Bank’s Articles and the Rules of the Management Board adopted by the Management Board and approved by the Supervisory Board.

The Management Board manages the Bank’s affairs and represents the Bank. The Bank informs the Supervisory Board of all significant issues concerning the Bank’s operations.

The Management Board performs its activities at the Management Board meetings. The Management Board meetings are organized on an as needed basis, not less frequently than once a week.

The President of the Management Board manages the work of the Management Board, i.e. convenes the Management Board meetings and presides over them and presents the Management Board’s position to other bodies of the Bank and third parties.

The Management Board makes decisions in the form of resolutions at meetings or outside meetings by circulation (in writing). The Management Board may make decisions with the use of the means of direct remote communication, including in particular e-mail.

Resolutions of the Management Board are required with respect to all matters exceeding the scope of the Bank’s ordinary business. Resolutions concerning risk management may be passed in the absence of the Management Board member in charge of material risk in the Bank’s operations in exceptional cases only. If the vote of the Management Board member in charge of the material risk in the Bank’s operations on a resolution concerning risk management is different from the vote of a majority of the Management Board members or from the preliminary proposal included in the draft resolution, such member should provide a written explanation of his/her decision. The Management Board shall be obliged to notify the Supervisory Board of this fact immediately and provide it with a written explanation of the reasons behind the votes of the Management Board and the Management Board member in charge of the material risk in the Bank’s operations.

Resolutions of the Management Board are passed by an absolute majority of votes. In the event of an equal number of votes, the President of the Management Board has the casting vote.

The Management Board’s working procedures and matters that require a Management Board resolution are specified in the Rules of the Management Board.

In 2022, the Bank’s Management Board held 54 meetings and passed 618 resolutions.

Declarations on behalf of the Bank may be made by:

• the President of the Management Board acting independently;
• two members of the Management Board acting jointly or one member of the Management Board acting jointly with a proxy;
• two proxies acting jointly;
• attorneys acting independently or jointly, within the framework of the power of attorney granted.

As at 31 December 2022, there were five proxies at the Bank. In 2022, four proxies were revoked and five joint proxies were granted with the authority to act with a member of the Management Board or with a second proxy.

The competences of the Management Board include all matters related to managing the affairs of PKO Bank Polski S.A. that do not fall within the competences of the General Shareholders’ Meeting or the Supervisory Board in accordance with the provisions of the generally applicable law or the Bank’s Articles.

In accordance with the Management Board Rules, the competences of the Bank’s Management Board include in particular:

• defining the Bank’s strategy and the Bank management strategy, taking into account the risk of the operations and the principles of prudent and stable management of the Bank;
• defining the risk management strategy and the overall risk tolerance level;
• establishment and liquidation of the Bank’s standing committees and defining their characteristics;
• establishing, transforming and liquidating the Bank’s entities in Poland and abroad;
• defining the Rules for managing special funds created from net profit, the Bank’s Organizational Rules and the Management Board Rules;
• appointing proxies and defining the rules for appointing attorneys at the Bank;
• defining the principles for the functioning of the management system, including in particular: the principles for the functioning of the internal control system, the principles for management of specific risks, the compliance risk management policy assumptions, the principles of the information policy with respect to capital adequacy, the principles for capital adequacy and equity management concerning the processes of internal capital estimation, capital planning and dividend policy;
• defining the annual financial plan for the Bank and the Bank’s Group;
• defining the principles for the identification of business models and performing tests of contractual cash flow characteristics;
• defining accounting policies;
• adopting annual and interim financial statements of the Bank, consolidated financial statements of the Bank’s Group and quarterly reports of the Bank’s Group;
• defining bancassurance policies;
• defining the remuneration policy, which is also applicable to the Bank’s subsidiaries;
• defining bank products and other banking and financial services;
• defining the principles of the Bank’s participation in companies and other organizations;
• making decisions on the payment of interim dividend to the shareholders.

Decisions on the acquisition of the Bank’s shares for the purposes of their redemption and determining the value of remuneration for shares redeemed, and on increasing or reducing the Bank’s share capital are not within the competences of the Management Board – they are taken by the General Shareholders’ Meeting.

Members of the Management Board supervise the areas of activities allocated to them and make decisions on matters of ordinary management within the areas supervised by them.

As at the end of 2022, the internal division of responsibilities within the Bank’s Management Board is as follows:

• [2-12] The President of the Management Board (the Vice-President of the Management Board in charge of the work of the Management Board awaiting the approval of the Polish Financial Supervision Authority for his appointment as President of the Management Board) is in particular in charge of matters related to supervision of the operation of the Bank’s bodies, supervision of the operation of the Bank’s standing committees, internal audit, security, compliance risk, conduct risk, reputation risk, legal services, communication and promotion, macroeconomic analyses, strategy, human resources management and coordination of ESG activities;
• The Vice-President of the Management Board in charge of the Business and Enterprise Banking and Corporate Client Area is responsible in particular for matters relating to institutional banking, the development of product offerings for companies and enterprises, the development of credit products for corporate and public sector clients and the sale of products and services to institutional, corporate and enterprise clients;
• The Vice-President of the Management Board in charge of the Strategic Client and Investment Banking Area is responsible in particular for matters relating to the development of transactional and treasury product offerings for corporate market clients, investment product offerings for the Bank’s clients, product sales and service to strategic corporate clients and private banking and investment banking clients, as well as matters relating to the Bank’s own activities in the financial market;
• The Vice-President of the Management Board in charge of the Finance and Accounting Area is responsible in particular for the following matters: financial planning and controlling, accounting and financial reporting, taxation and corporate governance;
• The Vice-President of the Management Board in charge of the Administration Area is responsible in particular for the Bank’s property management and procurement matters;
• The Vice-President of the Management Board in charge of the Retail Market and International Banking Area is responsible in particular for matters relating to the development of the product offering for private individuals, including the design of the insurance banking product offering, the sale of products and services to private individuals and companies and the Bank’s activities abroad;
• The Vice-President of the Management Board in charge of the Operations Area is responsible in particular for matters relating to the handling of operations, the exercise of the customer advocacy function, the provision of fiduciary services, customer service via means of remote communication (contact centre), product administration and cash management;
• The Vice-President of the Management Board in charge of the Technology Area is responsible in particular for telecommunications and IT matters;
• The Vice-President of the Management Board in charge of the Risk Management Area is responsible in particular for the management of all risks relating to the Bank’s activities, excluding compliance risk, conduct risk and reputation risk, as well as matters relating to the restructuring and recovery of the Bank’s receivables

The Bank’s organizational chart, including the areas of responsibility of individual members of the Management Board, is published on the Bank’s website in the Investor Relations section at Corporate governance principles.

In the performance of their duties, members of the Management Board should exercise the diligence required by the professional nature of their activities and maintain their loyalty to the Bank.

The amended provisions of the Commercial Companies Code introduced, as of 13 October 2022, the exclusion of civil liability of management board members for damage caused to the company, as long as these persons acted in a loyal manner towards the company and within the limits of reasonable economic risk.

Purpose

Managing assets and liabilities by influencing the structure of the balance sheet of PKO Bank Polski S.A. and its off-balance sheet items in a manner conducive to achieving the optimum financial result.

Tasks

Supporting the Management Board in the following activities of the Bank and its Group:

• shaping the structure of the Bank’s balance sheet;
• capital adequacy management;
• managing profitability, taking into account the specific nature of the individual areas of activity and the respective risks;
• managing financial risk, including market and liquidity risks, business risk, and credit risk (settlement and pre-settlement risk) of the transaction on the wholesale market.

Purpose

Setting strategic directions and tasks with respect to banking risk in the context of the Bank’s strategy, the macroeconomic situation and the regulatory environment, analyzing periodic reports related to banking risks and developing appropriate guidance based thereon, as well as preparing the banking risk management strategy and its periodic reviews

Tasks

Monitoring the integrity, adequacy and effectiveness of the banking risk management system, capital adequacy and allocation of internal capital to individual business lines and implementing the risk management policy pursued as part of the Bank’s Strategy.

Analyzing and evaluating the utilization of strategic risk limits set in the Banking Risk Management Strategy.

Expressing opinions on periodic risk reports submitted for approval to the Supervisory Board and taking into account information from these reports when issuing opinions.

Purpose

Management of credit risk occurring when taking lending decisions or decisions concerning liabilities managed by responsible units of the Bank, as well as management of the risk of incurring losses as a result of taking wrong business decisions on the basis of the credit risk models.

Tasks

Making decisions on the segregation of duties to make credit or sales decisions and claims management decisions.

Making lending decisions concerning the biggest matters of the Bank’s Customers, as well as issuing recommendations for the Bank’s Management Board in lending matters.

Making decisions in matters concerning restructured receivables.

Setting industry limits, limits concerning appetite for portfolio credit risk and exposure concentration risk.

Making decisions concerning the implementation of credit risk models and anti-fraud models in lending processes, in particular with respect to scoring or rating.

Making decisions on the implementation of a model for determining allowances for expected credit losses on financial assets.

Accepting reports on the monitoring or review of models and loan portfolio quality, in which credit risk models are used.

Accepting monthly and quarterly credit risk reports.

Purpose

Effective management of operational risk to improve the safety of the Bank’s operations

Tasks

Determining the directions of operational risk management development.

Supervising the functioning of operational risk management, including the tasks concerning continuity of the Bank’s operations.

Coordination of operational risk management.

Determining measures to be taken in the event of an emergency which exposes the Bank to reputational risk and results in operating losses.

Purpose

Ensuring the effective transformation of the Bank in line with its development directions, including ensuring the consistency of business objectives and maximization of the business value of changes in the Bank (e.g. within formations and projects).

Tasks

Operational management of the Bank’s Strategy implementation.

Performing key roles in the New Management Model (NMM) in accordance with the Bank’s internal regulations concerning the New Model of Work and the New Management Model.

Making decisions on the implementation of and changes to projects, as well as decisions pertaining to material costs and other operating costs.

Allocation of funds for urgent purchases resulting from the business continuity plan in the event of a crisis.

Overseeing projects and development initiatives, particularly work progress, project budgets, financial and non-financial benefits.

Initiating activities enhancing the Bank’s effectiveness.

Managing the annual financial limit for the implementation of projects; and development initiatives. Solving disputes within the area of competences of the Committee, on lower decision-making levels.

Purpose

Oversight of the strategic planning process and management of the Bank’s strategy.

Tasks

Managing the activities relating to strategy development and implementation.

Making key decisions necessary to ensure the implementation of the strategy

Solving potential disputes arising during the implementation of the strategy.

Purpose

Development of the IT architecture ensuring the implementation of the Bank’s Strategy.

Tasks

Development of key assumptions of the IT architecture of the Bank (principles).

Periodic evaluation of the IT architecture functioning at the Bank.

Development of a target architecture model

Initiating activities aimed at implementing the target architecture model.

Purpose

Increasing the effectiveness of supervision and control over the IT system safety at PKO Bank Polski S.A. (SIB).

Tasks

Issuing recommendations on the SIB safety, in particular related to:

• coordination and monitoring of work related to the SIB safety;
• setting the directions of the activities of the Bank with respect to SIB safety;
• specifying actions, which should be taken in the event of emergency situations which put the Bank’s image at risk and cause operating or financial losses in the area of SIB safety;
• monitoring the risk related to SIB safety.

Purpose

Setting strategic directions of the activities relating to data quality management and data architecture at the Bank in the context of the Data Management System (DMS), oversight of its functioning and assessment of its effectiveness and the activities undertaken by the individual organizational units of the Bank.

Tasks

Taking decisions on data management in the Bank, including in particular decisions pertaining to:

• DMS development directions;
• determining the conditions for non-compliance with data quality requirements, in particular in cases justified by the continuity of the Bank’s operations.

Making recommendations to the Bank’s units on data management, in particular with regard to:

• activities carried out by the Bank’s units;
• introducing new or changing existing data management solutions;
• preparing drafts of new internal regulations or amendments to existing regulations of the Bank;
• prioritization of activities within the DMS and prioritisation of action plans.

Making recommendations to the Bank’s Management Board on data management, in particular:

• on the strategic directions of the development of the DMS;
• the adoption of Management Board resolutions that affect data quality.

The diversity policy for the members of the Bank’s Management and Supervisory Boards is an important part of the Bank’s suitability assessment policies, i.e.:

• The suitability policy concerning the Management Board members and key officers of the Bank and suitability assessment at the Bank’s Group companies;
• The policy on assessing the suitability of candidates for members and members of the Bank’s Supervisory Board.

The provisions implemented by the Bank set the directions for selecting, appointing and planning succession, including staff resources and suitability assessment of the Management Board members and key officers of the Bank. These persons are assessed in terms of their competences, knowledge and skills, experience adequate to the position and reputation understood as sufficiently unblemished opinion, honesty and ethical behaviour. Based on the regulations implemented, the General Shareholders’ Meeting makes decisions on the selection and suitability assessment of the candidates and members of the Bank’s Supervisory Board, the Supervisory Board makes decisions on the selection and suitability assessment of the Management Board members, and the Management Board members make decisions on the selection and suitability assessment of the MRT (Material Risk Takers). The Bank’s Supervisory Board monitors the effectiveness of the policy applied and, if appropriate, makes changes taking into account the recommendations of the Nominations and Remuneration Committee.

In 2022, the contents of the above-mentioned policies were amended in line with changes resulting from the new Guidelines of the European Banking Authority and the European Securities and Markets Authority “on the assessment of the suitability of members of the management body and key function holders” as regards, among other things:

• emphasizing the relevance of the competences of the members of the bodies with regard to the management of money laundering and terrorist financing risks, ESG risks and the management of the impact of ESG factors on the Bank’s activities;
• ongoing monitoring of situations that may affect the suitability of members of the bodies;
• clarifying the expected minimum level of commitment of members of the bodies to their duties.

• The policies for assessing the suitability of candidates and members of the Bank’s Management Board and candidates and members of the Bank’s Supervisory Board include the Bank’s/General Shareholders’ Meeting’s commitment to take into account the principles of diversity in selecting candidates for members of the aforementioned bodies.
• The principle of diversity in selecting the Bank’s Supervisory Board and Management Board members is based on objective substantive criteria in terms of education, skills and professional experience. The additional criteria which support diversity in the composition of these bodies are age and gender.
• The policies contain the commitment to monitor the effectiveness of their application, including in terms of diversity objectives.
• The suitability assessment policy contains an obligation for the Bank’s subsidiaries to introduce regulations regarding the principles of suitability – respective regulations are in place in the Group entities.

• The application of the diversity policy is aimed at ensuring appropriate selection of the Management Board and Supervisory Board members in order to obtain a wide range of competences, knowledge and skills adequate to a particular position and ensure that the Management Board and Supervisory Board members (both individually and collectively) issue top quality, independent opinions and decisions in all areas of the Bank’s operations.
• In their selection of members of the Bank’s bodies, the General Shareholders’ Meeting and the Supervisory Board of the Bank try to achieve gender balance in the composition of the Bank’s Supervisory Board and Management Board, respectively, or at least to achieve a minimum representation of the less numerous gender at 30%, taking into account the results of the suitability assessments.
• The diversity targets relating to the composition of the Supervisory Board and the Management Board of the Bank relating to gender and age are considered in the selection of members of these bodies only to the extent that it does not have an adverse effect on their functioning and suitability.