Benefits for the Supervisory Board
and the Management Board

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

1. 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;
2. Remuneration Policy for employees of the Bank and the PKO BP S.A. Group, approved by resolution No. 28/2021 of the Bank’s Supervisory Board dated 18 March 2021;
3. Principles of employment and remuneration of Members of the Bank’s Management Board, adopted by the Bank’s Supervisory Board in 2017 and amended by the resolutions of the Bank’s Supervisory Board dated 18 March 2021 (No. 29/2021) and 16 December 2021 (No. 179/2021); the principles implement the provisions of the Act of 9 June 2016 on the terms of setting the remuneration of managers of certain companies.

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 2021 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 Polish Statistics,
• 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).

The Bank updates the rules for determining the variable components of remuneration on an ongoing basis. This is performed in accordance with the requirements of CRD IV and the Commission Delegated Regulation (EU) No 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile.

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.

The deferral period for which the phantom shares are awarded equals 5 calendar 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, deferred in subsequent settlement periods. This is possible when:

• 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 the years 2020-2021, no such demand occurred.

Material Risk Takers (except Members of the Bank’s Management Board) may benefit from health care services financed by the Bank and the social benefits fund. Material Risk Takers (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.

1. making the provisions relating to the manner of calculating a “fair rate” used in determining disbursements of deferred variable remuneration in cash more precise
2. replacing the Finalty index with the Customer satisfaction index, each time selected by the Supervisory Board in setting the governance objectives.

Making the provisions relating to the “fair rate” more precise referred also to those of the Bank’s employees whose actions have a material impact on the Bank’s risk profile – Material Risk Takers.

In May 2021 the Bank’s Management Board passed a resolution on disbursements of variable remuneration awarded to the Bank’s Material Risk Takers in 2021. In June 2021 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. The resolutions of the Management Board and the Supervisory Board with respect to variable remuneration for 2020 introduced limits of the amounts payable in respect of the non-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 2021 the change in proportion and date of payment of variable remuneration for the years 2016–2019 introduced in 2020 was upheld.

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.

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.

In 2021, 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.

In 2021, 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).