11. Composition and activities of the Issuer’s management, supervisory and administrative bodies or of their committees; changes in their composition during the last financial year
11.1. Activities of management bodies – Management Board
11.1.1. Composition of the Management Board
As at January 1st 2012, the Issuer’s Management Board was composed of:
- Marek Karabuła – Vice-President, Oil Mining, acting President of the Management Board until completion of the qualification procedure to select a new President,
- Radosław Dudziński – Vice-President, Strategy,
- Sławomir Hinc – Vice-President, Finance,
- Mirosław Szkałuba – Vice-President, Trade.
On December 19th 2011, Mr Michał Szubski, President of the Management Board of PGNiG S.A., resigned from his position for compelling personal reasons. The Supervisory Board of PGNiG S.A. accepted his resignation with effect from the reporting date, i.e. December 31st 2011.
At its meeting held on March 7th 2012, the Supervisory Board of PGNiG S.A. appointed Ms Grażyna Piotrowska-Oliwa to the position of President of the PGNiG Management Board, with effect as of March 19th 2012, for the joint term of office expiring on March 13th 2014.
On May 11th 2012, Mr Marek Karabuła resigned from his position as Member of the Management Board with immediate effect.
As at December 31st 2012, the Issuer’s Management Board was composed of:
- Ms Grażyna Piotrowska-Oliwa – President of the Management Board;
- Radosław Dudziński – Vice-President, Trade;
- Sławomir Hinc – Vice-President, Finance;
- Mirosław Szkałuba – Vice-President, Procurement and IT.
On January 22nd 2013, Mr Sławomir Hinc tendered his resignation from his position as a PGNiG Management Board Member, with effect from March 31st 2013.
11.1.2. Rules governing the operation of the Management Board
The manner of operation of the Management Board is defined in its Rules of Procedure, adopted by the Management Board and approved by the Supervisory Board.
The Rules of Procedure for the Management Board are available on the Issuer’s website at www.pgnig.pl in the „Corporate Governance” section.
The Management Board is composed of two to seven members. The number of the Management Board members is determined by the Supervisory Board, being the body authorised to appoint individual Management Board members or the entire Management Board. Management Board members are appointed for a joint term of three years. As long as the State Treasury remains a shareholder of the Issuer and the Issuer’s annual average headcount exceeds 500, the Supervisory Board appoints as a Management Board member one person elected by the employees, to serve for the Management Board’s term of office.
The Management Board manages the affairs of the Issuer and represents the Issuer in or out of court. The powers and responsibilities of the Management Board include all the matters connected with managing the Issuer’s affairs other than those which the law or the Issuer’s Articles of Association reserve for the General Meeting or the Supervisory Board. The Management Board is headed by the President of the Management Board.
The responsibilities of the Management Board include, in particular:
- Preparation of annual business plans, including investment plans, the strategy for the Company and the PGNiG Group, and long-term strategic plans and their submission to the Supervisory Board for approval;
- Submission to the minister competent for matters pertaining to the State Treasury and the minister competent for economy, each time at their request, detailed reports on performance of projects undertaken with a view to ensuring the country’s energy security;
- Preparation of quarterly economic and financial reviews of the Issuer and the distribution system operators, in the form defined by the minister competent for matters pertaining to the State Treasury, and their submission to the minister competent for matters pertaining to the State Treasury and the minister competent for economy by the end of the first month following the end of each quarter.
The Management Board submits to the Supervisory Board for assessment the following documents: financial statements for the preceding financial year, along with the auditor’s opinion, Directors’ Report on the Issuer’s operations in the preceding financial year, and the proposal for distribution of profit or coverage of loss for that financial year. These documents should be submitted without the Management Board being called upon to do so, early enough so that the Supervisory Board is able to assess them before they are presented to the General Meeting.
Declarations of will may be made on behalf of the Issuer by two Management Board members acting jointly or one Management Board member acting jointly with a commercial proxy. Any issues which fall beyond the scope of the day-to-day management of the Issuer’s affairs require adoption of a resolution.
In particular, the Management Board adopts resolutions regarding the following issues:
- Adoption of the Management Board’s rules of procedure;
- Adoption of organisational rules for the Company’s business;
- Establishment and closing of branches;
- Appointment of a commercial proxy;
- Division of powers between the Management Board members, provided, however, that a relevant resolution of the Management Board must be approved by the Supervisory Board;
- Contracting and extending loans and contracting credit facilities, except where the Articles of Association require the Supervisory Board’s approval of or opinion on the transaction;
- Adoption of annual business plans, including investment plans, with the reservation that the plans must be approved by the Supervisory Board (wording of amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Adoption of the strategy for the Company and the PGNiG Group and long-term strategic plans, with the reservation that the plans must be approved by the Supervisory Board (introduced under the amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Assuming contingent liabilities, including extension by the Issuer of guarantees and sureties, as well as issuance of promissory notes, except where the Articles of Association require the Supervisory Board’s approval or opinion;
- Acquisition or disposal of non-current assets, including real estate, perpetual usufruct right to property or interest in real estate, with a value equal to or higher than the złoty equivalent of EUR 50,000, except where the Articles of Association require the Supervisory Board’s approval or a resolution of the General Meeting;
- Issues to be considered by the Supervisory Board or the General Meeting upon the Management Board’s request;
- Approval of detailed reports on the performance of projects undertaken with a view to ensuring the country’s energy security which are submitted to the minister competent for matters pertaining to the State Treasury and the minister competent for the economy, each time at their request;
- Formation of another company with a share capital not exceeding the złoty equivalent of EUR 2,000,000, or subscription for, acquisition of or disposal of shares in another company with a value not exceeding the złoty equivalent of EUR 2,000,000, including definition of the terms and procedures for such disposal; if a transaction does not require approval by the General Meeting (introduced under the amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012).
- Making donations, releasing debtors from their debt obligations and entering into other agreements outside the scope of the Issuer’s business as specified in its Articles of Association;
- Conclusion of contracts for sale of natural gas, crude oil, natural gasoline and other oil and gas derivatives, with a value exceeding 20% of the Issuer’s share capital, provided that in the case of sale contracts with a value exceeding the PLN equivalent of EUR 100,000,000, the Supervisory Board’s opinion must be sought, except where the Articles of Association require the Supervisory Board’s approval;
- Entering into legal transactions, other than those listed in items 1–13, if their value exceeds the złoty equivalent of EUR 420,000.
In those matters which do not require adoption of a Management Board resolution, each Management Board member attends to the responsibilities assigned to him/her on an individual basis. During Management Board meetings, each Management Board member has the duty to brief the other Management Board members on his/her material decisions and results of supervisory work, in particular with respect to supervision over the Issuer’s business units, in accordance with the division of powers between the Management Board members.
Management Board meetings are held as needed. Each Management Board member may submit a request to the President of the Management Board (or the person replacing the President) to call a Management Board meeting in connection with matters requiring an urgent decision by the Management Board or for the purpose of presenting information on matters of significance to the Issuer. The Chairperson of the Supervisory Board is also entitled to request that a Management Board meeting be called, by providing the President of the Management Board with a written agenda of such a meeting. In addition, the Chairperson of the Supervisory Board has the right to demand of the President of the Management Board that certain items be placed on the agenda of a Management Board meeting.
In accordance with the amended Articles of Association of PGNiG S.A. (registered in the Register of Entrepreneurs on December 31st 2012), in justified cases votes may be cast by written ballot or by using means of remote communication, with the minutes of such voting to be approved at the next meeting of the Management Board.
Under the amended Articles of Association of PGNiG S.A., the rules and amounts of remuneration for Management Board members are defined by the Supervisory Board, unless applicable mandatory laws state otherwise (before the amendments, the rules and amounts of remuneration for Management Board members were defined by the General Meeting, pursuant to the Act on Remunerating Persons Managing Certain Legal Entities of March 3rd 2000 (Dz.U. No. 26, item 306, as amended).
11.2. Activities of supervisory bodies – Supervisory Board
11.2.1. Composition of the Supervisory Board
As at January 1st 2012, PGNiG S.A.’s Supervisory Board was composed of:
- Stanisław Rychlicki – Chairman of the Supervisory Board,
- Marcin Moryń – Deputy Chairman of the Supervisory Board,
- Mieczysław Kawecki – Secretary of the Supervisory Board,
- Grzegorz Banaszek – Member of the Supervisory Board,
- Agnieszka Chmielarz – Member of the Supervisory Board,
- Mieczysław Puławski – Member of the Supervisory Board,
- Jolanta Siergiej – Member of the Supervisory Board.
On January 5th 2012, Prof. Stanisław Rychlicki, Chairman of the Supervisory Board of PGNiG S.A., tendered his resignation from the position for compelling personal reasons, with effect from January 10th 2012.
On January 12th 2012, the Extraordinary General Meeting of PGNiG removed from the Supervisory Board, with effect from January 12th 2012:
- Mr Grzegorz Banaszek.
At the same time, the Extraordinary General Meeting of PGNiG held on January 12th 2012 appointed to the Supervisory Board of PGNiG:
- Mr Józef Głowacki,
- and Mr Wojciech Chmielewski.
On January 12th 2012, by virtue of the Minister of State Treasury’s decision, pursuant to Par. 35.1 of PGNiG S.A.’s Articles of Association, the following person was appointed to the Supervisory Board of PGNiG S.A.:
- Mr Janusz Pilitowski.
On January 13th 2012, the PGNiG Supervisory Board appointed Mr Wojciech Chmielewski as its Chairman.
The Extraordinary General Meeting of PGNiG S.A. held on March 19th 2012 appointed to the Supervisory Board, with effect as of March 19th 2012:
- Ms Ewa Sibrecht-Ośka.
As at December 31st 2012, the Supervisory Board consisted of nine members:
- Wojciech Chmielewski – Chairman of the Supervisory Board,
- Marcin Moryń – Deputy Chairman of the Supervisory Board,
- Mieczysław Kawecki – Secretary of the Supervisory Board,
- Agnieszka Chmielarz – Member of the Supervisory Board,
- Józef Głowacki – Member of the Supervisory Board,
- Janusz Pilitowski – Member of the Supervisory Board,
- Mieczysław Puławski – Member of the Supervisory Board,
- Ewa Sibrecht-Ośka – Member of the Supervisory Board,
- Jolanta Siergiej – Member of the Supervisory Board.
The term of office of PGNiG S.A.’s Supervisory Board expires on April 30th 2014.
11.2.2. Rules governing the operation of the Supervisory Board
The Supervisory Board operates in accordance with the rules set out in the Commercial Companies Code, the Articles of Association and the Rules of Procedure for the Supervisory Board. The Rules of Procedure for the Supervisory Board have been adopted by a Supervisory Board resolution and are available (in polish only) on the Issuer’s website at www.pgnig.pl in the „Corporate Governance” section.
The Issuer’s Supervisory Board is composed of five to nine members appointed by the General Meeting. One Supervisory Board member must meet the independence criteria specified in the Articles of Association. As long as the State Treasury remains a shareholder of the Issuer, the State Treasury, represented by the minister competent for matters pertaining to the State Treasury, acting in this respect in agreement with the minister competent for economy, has the right to appoint and remove one member of the Supervisory Board. If the Supervisory Board is composed of up to six members, two members are appointed from among the candidates elected by the Issuer’s employees. If the Supervisory Board is composed of seven to nine members, three members are appointed from among the candidates elected by the Issuer’s employees.
The Supervisory Board members are appointed for a joint term of office lasting three years.
The Supervisory Board exercises ongoing supervision over the Issuer’s activities in all areas of its operations, and presents its opinions on all matters submitted by the Management Board for consideration to the General Meeting. The powers and responsibilities of the Supervisory Board include, in particular:
- Assessment of the Directors’ Report on the Issuer’s operations and of the financial statements for the preceding financial year, with respect to their consistency with the accounting books, the supporting documentation, and with the actual state of affairs;
- Assessment of the Management Board’s proposals concerning distribution of profit or coverage of loss;
- Submission to the General Meeting of written reports on results of the activities referred to in items 1 and 2;
- Assessment of the consolidated financial statements with respect to their consistency with the accounting books, the supporting documentation, and with the actual state of affairs, assessment of the Directors’ Report on the Group’s operations, and reporting to the General Meeting on the results of these assessments;
- Appointment of an auditor to audit the financial statements;
- Approval of annual business plans, including investment plans (wording of amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Approval of the strategy for the Company and the PGNiG Group and of long-term strategic plans (introduced under the amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Adoption of detailed rules governing the Supervisory Board’s operation;
- Approval of the consolidated text of the Articles of Association, drawn up by the Issuer’s Management Board;
- Approval of the Rules of Procedure for the Management Board;
- Approval of the organisational rules for the Issuer’s enterprise;
- Approval of the Management Board’s resolution on division of powers between the Management Board members;
- Issue of opinions on all matters submitted by the Management Board for consideration to the General Meeting;
- Issue of opinions on detailed reports concerning the performance of projects undertaken with a view to ensuring the country’s energy security, submitted by the Management Board to the minister competent for matters pertaining to the State Treasury and the minister competent for economy;
- Issue of opinions on the requests to be submitted to shareholder State Treasury, represented by the minister competent for matters pertaining to the State Treasury, to approve 1) any changes to material provisions of the existing trade agreements for import of natural gas to Poland, as well as the execution of such agreements, 2) any strategic investment projects or the Issuer’s involvement in investment projects which, permanently or temporarily, impair the economic efficiency of the Issuer’s business but which are necessary to ensure Poland’s energy security;
- Granting approval to the Management Board for:
a) Acquisition of non-current assets with a value falling between the złoty equivalent of EUR 500,000 and EUR 2,000,000, except where the transaction has been provided for in any annual business plans, including investment plans, long-term strategic plans and investment plans relating to development of the transmission system, previously approved by the Supervisory Board;
b) Disposal of non-current assets with a value falling between the złoty equivalent of EUR 500,000 and EUR 1,000,000, except where the transaction has been provided for in any of the plans referred to in a) above, approved by the Supervisory Board;
c) assumption of other liabilities whose value exceeds 20% of the Company’s share capital, except where the liability has been provided for in any plans approved by the Supervisory Board and referred to in Par. 33.1.6, or when it arises from execution or amendment of an agreement for the provision of gaseous fuel transmission or distribution services to the Company (wording of amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012),
d) Execution of an agreement of the type discussed in Art. 19b of the Act on Commercialisation and Privatisation, dated August 30th 1996; - Appointment and removal of Management Board members;
- Definition of rules and amounts of remuneration for Management Board members, unless applicable mandatory provisions of law state otherwise (wording of amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Suspension of Management Board members from their duties – on material grounds, and by an absolute majority of the votes;
- Delegation of Supervisory Board members to temporarily replace Management Board members who are unable to perform their duties;
- Carrying out the qualification procedure referred to in Art. 19a of the Act on Commercialisation and Privatisation;
- Granting permission for establishing and closing foreign branches of the Issuer;
- Granting permission to Management Board members to accept positions on governing bodies of other companies, where such permission is required by law;
- Granting permission for the Company to form another company with a share capital exceeding the złoty equivalent of EUR 2,000,000, or to subscribe for, acquire or dispose of shares in another company with a value exceeding the złoty equivalent of EUR 2,000,000, including definition of the terms and procedures for such disposal; if a transaction requires approval by the General Meeting, the Supervisory Board shall only issue an opinion concerning the proposal (wording of amended Articles of Association of PGNiG S.A. registered in the Register of Entrepreneurs on December 31st 2012);
- Monitoring the Issuer’s debt level;
- Issue of opinions on Management Board’s recommendations concerning appointment or removal of the Issuer’s representatives in the management or supervisory boards of System Gazociągów Tranzytowych EuRoPol GAZ S.A. and submission of such recommendations for acceptance to shareholder State Treasury, represented by the minister competent for matters pertaining to the State Treasury;
- Issue of opinions on the manner of the exercise of voting rights by the Issuer’s representative at the General Meeting of System Gazociągów Tranzytowych EuRoPol GAZ S.A.;;
- Approval of the manner of the exercise of voting rights by the Issuer’s representative at the general meetings of distribution companies with respect to approval of such companies’ annual budgets;
- Approval of the manner of the exercise of voting rights by the Issuer’s representative at the general meetings of distribution companies with respect to approval of such companies’ long-term strategic business plans;
- Approval of the manner of the exercise of voting rights by the Issuer’s representative at the general meetings of distribution companies with respect to:
a) amendments to a company’s articles of association;
b) increase or reduction of a company’s share capital;
c) merger, transformation or demerger of a company;
d) sale of a company shares;
e) sale and lease of a company’s business or its organized part, or creation of proprietary interests therein;
f) dissolution and liquidation of a company; - Approval of the manner of the exercise of voting rights by the Issuer’s representative at the general meetings of companies in which the Issuer holds at least 50% of the shares, subject to the provisions of item 29) above, with respect to:
a) amendments to a company’s articles of association;
b) increase or reduction of a company’s share capital;
c) merger, transformation or demerger of a company;
d) sale of a company shares;
e) sale and lease of a company’s business or its organized part, or creation of proprietary interests therein;
f) dissolution and liquidation of a company;
g) establishing pledges or other encumbrances on a company shares;
h) obligating shareholders to make additional contributions to equity;
i) issue of bonds/notes. - Issue of opinions on the Management Board’s proposals concerning assumption of liabilities with a value exceeding the złoty equivalent of EUR 100,000,000.
Supervisory Board meetings are convened by the Chairperson or Vice-Chairperson of the Supervisory Board any time when the Issuer’s interest so requires, but not less frequently than once every two months. Supervisory Board meetings are also convened at the request of a Supervisory Board member, or at the request of the Management Board. The Supervisory Board may express its opinions exclusively in the form of resolutions. The Supervisory Board may adopt resolutions if at least half of all its members are present at a meeting, and all the members have been invited to participate. The Supervisory Board may only adopt resolutions on matters included in the agenda, which however can be amended if all members are present at a meeting and no member objects to the agenda being amended. The Supervisory Board adopts resolutions in an open vote by an absolute majority of the votes. A secret vote is ordered at the request of a Supervisory Board member or when the issue put to a vote concerns personnel matters. Members of the Management Board may be invited to participate in Supervisory Board meetings. In order to be valid, a resolution of the Supervisory Board concerning appointment of the auditor requires a favourable vote from a member of the Supervisory Board who meets the independence criteria defined in the Issuer’s Articles of Association. Save as specified in the Rules of Procedure for the Supervisory Board, the Supervisory Board may adopt resolutions by written ballot or with the use of means of remote communication. Adoption of a resolution using any of these methods must be justified, and a draft resolution must be made available to all Supervisory Board members beforehand.
The Chairperson of the Supervisory Board is entitled to request that a Management Board meeting be called, by providing the President of the Management Board with a written agenda of such a meeting. The Chairperson of the Supervisory Board may request of the President of the Management Board that certain items be placed on the agenda of a Management Board meeting. The Management Board must submit the following documents to the Supervisory Board for assessment: financial statements for the preceding financial year, along with the auditor’s opinion, Directors’ Report on the Issuer’s operations in the preceding financial year, and the proposal for distribution of profit or coverage of loss for that financial year. These documents should be submitted without the Management Board being called upon to do so, early enough so that the Supervisory Board is able to assess them before they are presented to the General Meeting.
The Supervisory Board or its members delegated to perform certain supervisory functions independently are authorised to supervise all areas of the Issuer’s business and in particular to examine all Issuer’s documents, demand that the Management Board and the Issuer’s employees produce reports and explanations, or to review the Issuer’s assets.
The Supervisory Board may appoint standing or ad hoc committees (established as needed), to act as the Supervisory Board’s collegiate advisory and opinion-giving bodies. The Supervisory Board has also the right to seek opinions from legal counsels and to engage experts in relevant fields to provide their opinions on matters within the Supervisory Board’s scope of competence.
The amount of remuneration to be received by the Supervisory Board members is set by the General Meeting pursuant to the Act on Remuneration of Persons Managing Certain Legal Entities, dated March 3rd 2000 (Dz.U. No. 26, item 306, as amended).
For important reasons, the Supervisory Board may delegate is individual members to perform certain supervisory functions independently for a specified term. A Supervisory Board member so delegated must report to the Supervisory Board in writing on all actions taken.
11.3. Committees
In 2012, there was one committee operating at the Company – the Audit Committee. The Audit Committee is composed of three members of the Issuer’s Supervisory Board.
In the period from January 1st to December 31st 2012, the Audit Committee held five meetings and adopted three resolutions. In that period, the Committee did not adopt resolutions by written ballot or using means of remote communication. Four meetings of the Audit Committee were meetings with the auditor, one meeting was devoted to an assessment of the Company’s internal audit system, made by the Audit Committee in collaboration with the Internal Audit and Control Department. At these four meetings, the Audit Committee reviewed and assessed the Company’s financial reporting system.
11.3.1. Composition of the Audit Committee
As at January 1st 2012, the Audit Committee was composed of:
- Mieczysław Puławski – Chairman of the Audit Committee,
- Grzegorz Banaszek – Deputy Chairman of the Audit Committee,
- Jolanta Siergiej – Member of the Audit Committee.
On January 12th 2012, the Extraordinary General Meeting of PGNiG removed from the Supervisory Board, with effect from January 12th 2012:
- Mr Grzegorz Banaszek.
On January 13th 2012, Mr Janusz Pilitowski was delegated by the Issuer’s Supervisory Board to serve as member of the Audit Committee.
As at December 31st 2012, the Audit Committee was composed of:
- Mieczysław Puławski – Chairman of the Audit Committee,
- Janusz Pilitowski – Member of the Audit Committee;
- Jolanta Siergiej – Member of the Audit Committee.
11.3.2. Rules of Operation of the Audit Committee
The Audit Committee operates within the Supervisory Board structures as a standing committee, advising the Supervisory Board on matters for which the Board is responsible.
The Audit Committee is composed of at least three members of the Supervisory Board, including at least one independent member appointed by the General Meeting under Par. 36.1 of the Articles of Association, qualified in accounting and finance. The members of the Audit Committee are appointed by the Supervisory Board.
Meetings of the Audit Committee are held as needed, but at least once every quarter, and are convened by the Chairperson of the Committee. The Chairperson of the Audit Committee may invite to a meeting other members of the Supervisory Board, members of the Issuer’s Management Board, the Issuer’s employees, as well as other persons whose participation in a given meeting is considered important from the point of view of performance by the Committee of its role. The Audit Committee may adopt resolutions if at least a half of its members are present at a meeting and all the members have been properly invited. The Committee may adopt its resolutions by written ballot or using means of remote communication. Resolutions of the Audit Committee are adopted by a simple majority of votes cast. In the event of a tied vote, the Chairperson of the Audit Committee has the casting vote.
Every six months, the Audit Committee submits reports on its activities to the Supervisory Board. Each such report is made available to the Issuer’s shareholders at the next General Meeting.
The responsibilities of the Audit Committee include, in particular:
- Monitoring the financial reporting process;
- Monitoring the financial information presented by the Issuer for its reliability;
- Monitoring the internal control, internal audit and risk management systems for their effectiveness;
- Monitoring the process of audit/review of financial statements by external auditors;
- Giving recommendations to the Supervisory Board concerning the selection, appointment, re-appointment and removal of an auditor of financial statements, as well as the terms and conditions of the auditor’s engagement;
- Monitoring the independence and objectivity of the auditor of financial statements;
- Control of the nature and scope of services not related to audit or review of financial statements, contracted from the auditor of financial statements;
- Reviewing the effectiveness of the external audit process and monitoring the response of the members of the Management Board and the Issuer’s employees to the external auditor’s recommendations;
- Examining the reasons for termination of the agreement with an auditor of financial statements.
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