Benefits for the Supervisory Board and the Management Board

Benefits for managers and principles for remunerating members of the Management Board of PKO Bank Polski S.A.

GRI: 2-19

The system for remunerating Members of the Bank’s Management Board is regulated by:

Remuneration Policy for members of the Supervisory Board and the Management Board of the Bank, approved by the resolution No. 35/2020 of the General Shareholders’ Meeting of the Bank dated 26 August 2020;
Remuneration Policy for employees of the Bank and the PKO BP S.A. Group, approved by resolution No 195/2022 of the Bank’s Supervisory Board dated 30 December 2022;
Principles of employment and remuneration of members of the Bank’s Management Board, approved by Resolution No 196/2022 of the Bank’s Supervisory Board of 30 December 2022.

In accordance with these Principles, Members of the Bank’s Management Board are entitled to:

fixed remuneration in the amount specified in the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies, and as at 31 December 2022 amounting to, with respect to the President of the Management Board: 15 (fifteen) fold, and with respect to the other Members of the Bank’s Management Board: 14.5 (fourteen and a half) fold of the average monthly remuneration in the corporate sector, without profit sharing schemes in the fourth quarter of the preceding year, as announced by the President of the Central Statistical Office,
variable remuneration – additional remuneration awarded and paid after the performance appraisal period, in particular: bonuses, awards for special professional achievements, severance pay (excluding fixed remuneration and benefits awarded based on the applicable legal regulations).

Benefits for members of the Management Board of Bank received and due from PKO Bank Polski S.A.

	Fixed remuneration paid in 2022	Variable remuneration for 2017-2021 paid in 2022		Other benefits*	Total remuneration paid and benefits provided in 2022
	Fixed remuneration paid in 2022	Benefits paid in cash	Share-based payments settled in cash	Other benefits*	Total remuneration paid and benefits provided in 2022
Paweł Gruza	425	–	–	–	425
Maciej Brzozowski	832	–	–	–	832
Marcin Eckert	1,074	131	–	–	1 205
Wojciech Iwanicki	1,074	54	–	19	1,147
Maks Kraczkowski	1,074	354	563	70	2,061
Mieczysław Król	1,074	366	613	72	2,125
Artur Kurcweil	1,074	72	–	31	1,177
Piotr Mazur	1,074	380	646	74	2,174
Iwona Duda	670	48	–	407	1,125
Bartosz Drabikowski	1,028	127	139	45	1,339
Management Board of the Bank	9,399	1,532	1,961	718	13,610
Members of the Management Board, who ceased to perform their functions in previous years	–	2,051	3,510	1,211	6,772
Total	9,399	3,583	5,471	1,929	20,382

* Payments to the Employee Pension Programme (PPE) and compensation for abiding by the non-competition clause – in 2022

	Fixed remuneration paid in 2021	Variable remuneration for 2016-2020 paid in 2021		Other benefits*	Total remuneration paid and benefits provided in 2021
	Fixed remuneration paid in 2021	Benefits paid in cash	Share-based payments settled in cash	Other benefits*	Total remuneration paid and benefits provided in 2021
Paweł Gruza	–	–	–	–	–
Maciej Brzozowski	–	–	–	–	–
Marcin Eckert	438	–	–	–	438
Wojciech Iwanicki	179	–	–	–	179
Maks Kraczkowski	760	313	476	54	1,603
Mieczysław Król	760	346	479	55	1,640
Artur Kurcweil	240	–	–	–	240
Piotr Mazur	784	364	559	60	1,767

Iwona Duda	162	–	–	–	162
Bartosz Drabikowski	423	81	239	26	769
Management Board of the Bank	3,746	1,104	1,753	195	6,798
Members of the Management Board, who ceased to perform their functions in previous years	2,910	1,945	2,668	1,503	9,026
Total	6,656	3,049	4,421	1,698	15,824

* Payments to the Employee Pension Programme (PPE) and compensation for abiding by the non-competition clause.

	Variable remuneration payable as at 31.12.2022 – share-based payments settled in cash	Variable remuneration granted for 2018-2021, approved and not approved for payment		Total amount of variable remuneration payable and potentially payable
		Variable remuneration in cash	Amount of cash to be converted into a financial instrument
Paweł Gruza	–	–	–	–
Maciej Brzozowski	–	–	–	–
Marcin Eckert	–	88	219	438
Wojciech Iwanicki	–	36	90	179
Maks Kraczkowski	29	291	670	1,603
Mieczysław Król	38	316	697	1,640
Artur Kurcweil	–	48	120	240
Piotr Mazur	40	332	728	1,767
Iwona Duda	–	32	81	162
Bartosz Drabikowski	–	85	212	769
Management Board of the Bank	107	1,228	2,817	6,798
Members of the Management Board, who ceased to perform their functions in previous years	232	1,850	3,864	9,026
Total	339	3,078	6,681	15,824

None of the members of the Bank’s Management Board (according to its composition as at 31 December 2022) received remuneration from entities affiliated with PKO Bank Polski S.A., understood as subsidiaries, joint ventures and associates, in 2022.

Variable remuneration components for members of the Management Board and key Managers who have a material impact on the Bank’s risk profile

[2-19] PKO Bank Polski S.A. strives to ensure the validity of the rules for determining variable components of remuneration. This is performed in accordance with the requirements of CRD V and the Commission Delegated Regulation (EU) 2021/923 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards setting out the criteria to define managerial responsibility, control functions, material business units and a significant impact on a material business unit’s risk profile, and setting out criteria for identifying staff members or categories of staff whose professional activities have an impact on the institution’s risk profile that is comparably as material as that of staff members or categories of staff referred to in Article 92(3) of that Directive.

Variable remuneration components are awarded primarily based on bonus targets set within the framework of the Management by Objectives (MbO) programme.

The purpose of the targets set is to guarantee that the risk related to the activities of the Bank is taken into account. Risk is reflected both by determining the appropriate risk-sensitive criteria for assessing the effectiveness of work, and reducing or withdrawing the variable remuneration component in the case of deteriorated financial results, loss or deterioration in other ratios.

Variable remuneration components for the particular assessment period (calendar year) are awarded after settling bonus targets, in accordance with the table below:

Amount of variable remuneration (gross)	Non-deferred variable remuneration 50% cash / 50% phantom shares	Deferred variable remuneration 50% cash / 50% phantom shares
Up to PLN 700,000 (inclusive)	60% of the basic variable remuneration	40% of the basic variable remuneration
Up to PLN 700,000 (inclusive)	in the first year following the assessment period	in equal instalments over the next years after the first year following the assessment period
Over PLN 700,000	PLN 420,000 plus 40% of the amount exceeding PLN 700,000	PLN 280,000 plus 60% of the amount exceeding PLN 700,000

The deferral period for which the phantom shares are awarded equals 5 years.

Each of the components of accrued variable remuneration may be reduced as a result of:

breach of the obligations arising from the contract;
lack of compliance with the legal regulations or Customer service standards;
improper performance of professional duties;
attitude towards other employees breaching social coexistence rules.

The bonus amount:

for the Management Board Member (MBM) can be adjusted (decreased or increased) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note (a set of key management indicators specified for a given calendar year);
for an MRT (Material Risk Taker), who is not a Member of the Management Board, it can be adjusted (increased) by a certain ratio, depending on the results achieved by the Bank, specified in the Bank’s Annual Note.

The Bank’s Supervisory Board or the Management Board respectively may apply a malus solution reducing the amount of the variable remuneration component due in subsequent settlement periods.

This is possible in the case of:

a significant deterioration in the Bank’s results;
a significant adverse change in equity;

MRT breaching the law or making serious errors;
adjustment of the achievement and degree of achievement of the results or targets of MRT;
deterioration in the performance of the areas supervised or managed by the aforementioned persons;
granting the variable remuneration component based on incorrect or misleading information or MRT fraud..

The remuneration policy for members of the Bank’s Supervisory Board and Management Board does not provide for an obligation to pay back awarded and already paid out variable remuneration. The policy empowers the Supervisory Board to adopt additional provisions, inter alia, regarding the Bank demanding the return of the variable remuneration (clawback). In 2022, no such demand occurred.

MRTs (except Members of the Bank’s Management Board) may benefit from health care services financed by the Bank and the social benefits fund. MRTs (including Members of the Bank’s Management Board) can avail themselves of PPEs.

In the case of severance pay related to dismissal (other than resulting from generally applicable laws), the amount reflects the performance assessment for the last three years of employment. The Bank’s internal regulations stipulate the maximum amount of severance pay.

A Member of the Management Board shall be entitled to severance pay subject to fulfilling the function of Member of the Bank’s Management Board for at least twelve months before termination of the aforementioned contract. An MRT can receive the severance pay subject to being employed as an MRT for at least twelve months before termination of the employment contract.

Members of the Management Board and certain MRTs are additionally subject to non-competition agreements. These agreements provide for payment of compensation equivalent of up to 100% of the basic salary arising from the contract for refraining from employment in a competitive firm after termination of employment with the Bank, for no more than six months.

In December 2022, the Bank amended the Rules for Employment and Remuneration of Members of the Bank’s Management Board (approved by Resolution No 196/2022 of the Supervisory Board) consisting of:

extending the actual deferral period of the variable remuneration, starting with the remuneration for 2021, as well as extending the actual retention period of the instrument by moving the payment date from 2 January to 1 July,
the introduction of a provision on the application of the above Principles to a limited extent, as provided for in Article 9ca (1b) of the Banking Law,
determining 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 at 1:22.
implementing gender neutrality principles with regard to the compensation of members of the Bank’s Management Board,
adding provisions on environmental and social responsibility goals and provisions clarifying severance pay.

In May 2022 the Bank’s Management Board passed a resolution on disbursements of variable remuneration awarded to the Bank’s MRTs in 2022. In June 2022 the Bank’s Supervisory Board passed a resolution on approving the amount of variable remuneration to be paid to the Members of the Bank’s Management Board. Its provisions were amended by the aforementioned resolution of the Supervisory Board No 196/2022, postponing the date of payment of remuneration in the instrument. The resolutions of the Management Board and the Supervisory Board with respect to variable remuneration for 2020 maintained limits of the amounts payable in respect of the deferred portion of the remuneration of 21% due to the financial results achieved compared to the long-term development plans. In connection with the circumstances related to the COVID-19 epidemic, in particular the extraordinary business restrictions, and the possible economic consequences of the situation and their expected impact on the banking sector, in 2022 the change in proportion and date of payment of variable remuneration for the years 2017-2019 introduced in 2020 was upheld.

Changes in the proportion and dates of payment of variable remuneration.

Description	Amount arising from internal regulations			Amount arising from extraordinary resolutions adopted in 2022, i.e.:
Proportion between non-deferred and deferred variable remuneration for 2019	Non-deferred 60%*			Non-deferred 40%*
	Deferred 40%*			Deferred 60%
Proportion between variable remuneration for 2019 in cash / in the form of instruments	Cash 50%			Cash 40%
	Instrument 50%			Instrument 60%
Date of payment of deferred variable remuneration with reference to outstanding instalments for the years 2017-2019	MBM	Cash	1 July	MBM	Cash	1 July (unchanged)
		Instrument	2 January		Instrument	1 July
	MRT	Cash	30 April	MRT	Cash	31 May
		Instrument	15 November		Instrument	31 May of the following year

* In accordance with internal regulations, up to the amount of PLN 700,000 the proportion is 60% to 40%, and above this amount 40% to 60%

Information on non-financial remuneration components due to individual members of the Bank’s Management board and key managers

Since 1 July 2017, the principles for employment and remuneration of Members of the Bank’s Management Board have been adapted to the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies (Journal of Laws of 2016, item 1202 as amended). Following the change, Members of the Management Board are not entitled to non-financial remuneration components.

Principles for remunerating members of the Supervisory Board of PKO Bank Polski S.A.

[2-19] Monthly remuneration for the members of the Bank’s Supervisory Board is determined by the Remuneration Policy for Members of the Bank’s Supervisory Board and Management Board. Monthly remuneration of members of the Supervisory Board is determined as a product of the base salary referred to in Article 1(3)(11) of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies and the following multiplier:

for the Chairman of the Supervisory Board – 2.75;
for the Deputy Chairman of the Supervisory Board – 2.5;
for the Secretary of the Supervisory Board – 2.25;
for the remaining Members of the Supervisory Board – 2.

The remuneration shall be increased by 10% if a Member of the Supervisory Board sits on at least one standing committee of the Supervisory Board.

In addition to their remuneration, Members of the Supervisory Board shall be entitled to reimbursement for the costs incurred in connection with their function. This comprises in particular travel costs from the place of residence to the location of the Supervisory Board’s meeting and back, costs of accommodation and food.

	Fixed remuneration paid in 2022	Fixed remuneration paid in 2021
Mariusz Andrzejewski	163	116
Grzegorz Chłopek	143	116
Grażyna Ciurzyńska*	–	68
Zbigniew Hajłasz	–	123
Marcin Izdebski	–	75
Wojciech Jasiński	204	130
Dominik Kaczmarski	183	63
Andrzej Kisielewicz	163	116
Rafał Kos	163	116
Tomasz Kuczur	163	16
Maciej Łopiński	204	70
Krzysztof Michalski	163	116
Robert Pietryszyn	19	–
Piotr Sadownik	–	100
Bogdan Szafrański	163	16
Agnieszka Winnik-Kalemba	163	56
Total	1,894	1,297

* Other benefits not included in fixed remuneration: use of a company car for private purposes by the member of Supervisory Board in 2021 in the amount of PLN 7 thousand.

Agreements concluded between the Bank and managers

In 2022, every Member of the Bank’s Management Board has concluded a management agreement with the Bank. The agreements lay down, among other things, the remuneration terms and competition ban.

Liabilities due to pensions for former supervisors and managers

In 2022, there were no liabilities arising from pensions and benefits of a similar nature for former members of management, supervisory or administrative bodies and no liabilities incurred in connection with those pensions (in accordance with the provisions of § 70 clause 7 point 18 of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information submitted by issuers of securities and the conditions for recognizing as equivalent the information required by the law of a non-member country (Journal of Laws of 2018, item 757 as amended).