Adopted code of corporate governance
In 2021, PGNiG complied with the set of corporate governance standards laid down in the ‘Best Practice for GPW Listed Companies 2016’ (the ‘2016 Code of Best Practice’), adopted by the WSE Supervisory Board in its Resolution No. 26/1413/2015 of October 13th 2015 and – since their coming into force in July 2021 – in the ‘Best Practice for GPW Listed Companies 2021’ adopted by the WSE Supervisory Board in its Resolution No. 13/1834/2021 of March 29th 2021 (the ‘2021 Code of Best Practice’).
The amended texts of both Codes are available on the Warsaw Stock Exchange’s corporate governance website at www.gpw.pl/dobre-praktyki and on the Company’s website at: www.pgnig.pl/pgnig/lad-korporacyjny/dobre-praktyki
In accordance with the 2016 Code of Best Practice, PGNiG:
- ensures proper communication with investors and analysts by pursuing a transparent and effective information policy. To this end, it offers easy and equal access to information by using various communication tools – in this respect, the Company does not comply with principle I.Z.1.15 only;
- is managed by the management board, whose members act in the interest of PGNiG and are responsible for its activities. It is the management board’s responsibility to lead the company, to be involved in setting and achieving its strategic goals, and to ensure that the Company is efficient and safe.
- is supervised by an effective and competent supervisory board. Members of the supervisory board act in the interest of PGNiG and are guided in their conduct by the independence of their opinions and judgments. In particular, the supervisory board gives its opinion on the company’s strategy and verifies the work of the management board with respect to achieving the set strategic objectives, and monitors the company’s results – in this respect, the Company has only departed from principle II.Z.7;
- maintains effective internal control, risk management and compliance systems, and exercises an effective internal audit function appropriate to the size of the company and the type and scale of its operations;
- encourages shareholder engagement with the company. The general meeting respects the rights of shareholders and seeks to adopt resolutions without infringing on the legitimate interests of particular groups of shareholders – in this respect, the company does not comply with recommendation IV. R.2 only;
- has clear procedures in place to prevent conflicts of interest and entering into transactions with related parties where a conflict of interest may arise. The procedures provide for ways to identify, reveal and manage such situations;
- has a remuneration policy in place to determine the form, structure, and method of determining the remuneration of members of the company’s governing bodies and key managers – in this respect, the company does not comply with recommendation IV.R.4 only.
In accordance with the 2021 Code of Best Practice, PGNiG:
- engages in efficient communication with capital market participants, using various tools and forms of communication, with the corporate website being the primary tool; provides information on the Company’s financial results from interim and full-year reports as soon as possible after the end of each reporting period; announces at least preliminary estimated financial results, organises regular performance meetings with investors, promptly responds to inquiries;
- is managed by the governing bodies composed of persons having appropriate qualifications, skills and experience; sufficient number of members of the supervisory board meetsthe independence criteria; the Company’s internal regulations governing the decision-making process and functioning of the management board and supervisory board are consistent with best corporate governance practices;
- maintains effective internal control, risk management, and compliance systems and functions;
- engages shareholders in the Company’s affairs by enabling them, in an appropriate manner, to attend general meetings held at appropriate times and venues;
- has developed clear procedures to prevent conflicts of interest and entering into transactions with related parties where a conflict of interest may arise;
- ensures the stability of management staff, among other things, by applying a transparent, equitable, coherent and non-discriminatory remuneration policy.
Information on non-compliance with corporate governance principles
Since the adoption of the 2016 Code of Best Practice at the organisation, PGNiG has gradually reduced the scope of non-compliance with the detailed rules laid down in the document. In 2016, the Company did not apply four principles and two recommendations. In 2021, the Company did not apply two principles from the list below and two recommendations of the 2016 Code of Best Practice. Reasons for the non-compliance are presented below.
Reasons for non-compliance with the principles and recommendations of the 2016 Code of Best Practice
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Disclosure Policy and Investor Communication I.Z.1.15 |
Content of the principle:
A company should operate a corporate website and publish on it, in a legible form and in a separate section, in addition to information required under the legislation: information about the company’s diversity policy applicable to the company’s governing bodies and key managers; the description should cover the following elements of the diversity policy: gender, education, age, professional experience, and specify the goals of the diversity policy and its implementation in the reporting period; where the company has not drafted and Reason for non-compliance: The key criteria taken into account in the process of recruitment and selection of candidates for positions in the Company’s key governing bodies are mainly professional experience and education. The Company has not developed a diversity policy for its key managers. |
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Management and Supervisory Board II.Z.7 |
Content of the principle:
Annex I to the Commission Recommendation referred to in principle II.Z.4 applies to the tasks and the operation of the committees of the supervisory board. Where the functions of the audit committee are performed by the supervisory board, the foregoing should apply accordingly. Reason for non-compliance: An Audit Committee operates as a standing committee of the Supervisory Board. Pursuant to the Best Practice for WSE Listed Companies, the Issuer should apply the rules laid down in Annex I to Commission Recommendation of February 15th 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board. The Issuer has implemented all the requirements to ensure that the Audit Committee participates in the oversight of the Issuer’s activities except: the rule laid down in section 4.3.2 of Annex I, pursuant to which the management should inform the audit committee of the methods used to account for significant and unusual transactions where the accounting treatment may be open to different approaches; Given the way in which the Audit Committee currently operates, the Issuer does not consider it necessary to introduce very detailed regulations specifying the operation of the Committee, including the implementation of the recommendation specified in section 4.3.2. Annex I to the European Commission Recommendation The Issuer will take appropriate steps in the future, if justified by the actual manner of operation of the Audit Committee. |
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General Meeting and shareholder relations IV.R.2; |
Content of the recommendation:
If justified by the structure of shareholders or expectations of shareholders notified to the company, and if the company is in a position to provide the technical infrastructure necessary for a general meeting to proceed efficiently using electronic communication means, the company should enable its shareholders to participate in a general meeting using such means, in particular through:
Reason for non-compliance: The Company decided not to apply the recommendation as the current shareholding structure and the high shareholder representation at the General Meeting do not indicate any need to enable its shareholders to participate in the General Meeting using electronic means of communication. The Company does not rule out introducing such a possibility in the future. |
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Remuneration VI.R.4. |
Content of the recommendation:
The remuneration levels of members of the management board and the supervisory board and key managers should be sufficient to attract, retain and motivate persons with skills necessary for proper management and supervision of the company. Remuneration should be adequate to the scope of tasks delegated to individuals, taking into account additional functions, for instance on supervisory board committees. Reason for non-compliance: The Company follows recommendation VI.R.4 on the remuneration levels of the Management Board members and key managers. The recommendation cannot be implemented by the Company with respect to members of its Supervisory Board, as their remuneration is regulated by generally applicable laws, namely the Act on Rules for Remunerating Persons Managing Certain Companies of June 9th 2016 (Dz.U. of 2017, item 2190). |
Following the adoption of the 2021 Code of Best Practice and extension of the scope of application to new areas, in 2021 PGNiG did not comply with 13 principles.
Reasons for non-compliance with the principles and recommendations of the 2021 Code of Best Practice
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Disclosure Policy and Investor 1.3.1 |
Content of the principle:
Companies integrate ESG factors in their business strategy, including in particular: environmental factors, including measures and risks relating to climate change and sustainable development; Reason for non-compliance: The PGNiG Group’s business strategy was published in 2017 and will continue to be implemented as adopted until 2022. Given the current uncertainty in the energy market regulation area, which may significantly affect the PGNiG Group’s future business prospects, the work on the business strategy revision has been suspended. The current business strategy does not address separately environmental elements, including climate metrics and risks and sustainability aspects. These are provided for in a document supplementing the business strategy, i.e. the PGNiG Group’s Sustainable Development Strategy for 2017– 2022, albeit to a lesser extent than specified in principle 1.3.1. The Company is aware of the importance of sustainability in its day-to-day operations and will address the elements referred to in principle 1.3.1 in its updated or new strategy and the ESG policy, the work on which is currently in the planning phase. |
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Disclosure Policy and Investor 1.3.2 |
Content of the principle:
Companies integrate ESG factors in their business strategy, including in particular: social and employee factors, including among others actions taken and planned to ensure equal treatment of women and men, decent working conditions, respect for employees’ rights, dialogue with local communities, customer relations. Reason for non-compliance: The PGNiG Group’s business strategy was published in 2017 and will continue to be implemented as adopted until 2022. The strategy does not separately address social and employee elements. These are addressed in a document supplementing the business strategy, i.e. the PGNiG Group’s Sustainable Development Strategy for 2017–2022, albeit to a lesser extent than specified in principle 1.3.2. |
| Disclosure Policy and Investor Communication1.4.1 |
Content of the principle:
To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. The information on the ESG elements of the strategy should, among other things, explain how the decision-making processes of the company and its group members integrate climate change, including the resulting risks. Reason for non-compliance: The PGNiG Group’s business strategy was published in 2017 and will continue to be implemented as adopted until 2022. Given the significant uncertainty in the energy market regulation area, which may significantly affect the PGNiG Group’s future business prospects, the work on the business strategy revision has been suspended. The current business strategy does not address climate change and climate risks. These are addressed in a document supplementing the business strategy, i.e. the PGNiG Group’s Sustainable Development Strategy for 2017–2022, albeit to a lesser extent than specified in principle 1.4.1. The Company is aware of the importance of sustainability in its day-to-day operations and will address the elements referred to in principle 1.4.1 in its updated or new strategy and the ESG policy, the work on which is currently in the planning phase. |
| Disclosure Policy and Investor Communication1.4.2 |
Content of the principle:
To ensure quality communications with stakeholders, as a part of the business strategy, companies publish on their website information concerning the framework of the strategy, measurable goals, including in particular long-term goals, planned activities and their status, defined by measures, both financial and non-financial. The information on the ESG elements of the strategy should, among other things, present the equal pay index for employees, defined as the percentage difference between the average monthly pay (including bonuses, awards and other benefits) of women and men in the last year, and present information about actions taken to eliminate any pay gaps, including a presentation of related risks and the time horizon of the equality target. Reason for non-compliance: The PGNiG Group’s business strategy was published in 2017 and will continue to be implemented as adopted until 2022. Given the significant uncertainty in the energy market regulation area, which may significantly affect the PGNiG Group’s future business prospects, the work on the business strategy revision has been suspended. The current business strategy does not address the issue of pay inequality, if any, or the related risks, and does not provide for the objective of achieving pay equality for women and men. The Company will seek to address the issues referred to in principle 1.4.2 in its updated or new strategy and the ESG policy, the work on which is currently in the planning phase. |
| Disclosure Policy and Investor Communication1.5 |
Content of the recommendation:
Companies disclose at least on an annual basis the amounts expensed by the company and its group in support of culture, sports, charities, the media, social organisations, trade unions, etc. If the company or its group pay such expenses in the reporting year, the disclosure presents a list of such expenses. Reason for non-compliance: The Company discloses its expenses on entertainment, legal, marketing, public relations and social communication services as well as management consultancy related to PGNiG S.A. management. In addition, the PGNiG Group’s Non-Financial Report presents the scope of sponsorship and charitable activities in the context of the Group. The presentation of this information differs from what is |
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Management Board and 2.1 |
Content of the recommendation:
Companies should have in place a diversity policy applicable to the management board and the supervisory board, approved by the supervisory board or the general meeting. The diversity policy defines diversity goals and criteria, among others including gender, education, expertise, age, professional experience, and specifies the target dates and the monitoring systems for such goals. With Reason for non-compliance: The Company has no diversity policy approved by the Supervisory Board or the General Meeting that would define the diversity requirements for the Company’s governing bodies in terms of gender, education, expertise or professional experience. The key criteria taken into account in the process of recruitment and selection of candidates for positions in the Company’s key governing bodies are mainly professional experience and education. In addition, the Company’s Articles of Association provide for the appointment of representatives of the Group employees to the Supervisory Board and the Management Board following a vote held among the employees. |
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Management Board and 2.2 |
Content of the recommendation:
Decisions to elect members of the management board or the supervisory board of companies should ensure that the composition of those bodies is diverse by appointing persons ensuring diversity, among others in order to achieve the target minimum participation of the minority group of at least 30%, in line with the goals of the established diversity policy referred to in principle 2.1. Reason for non-compliance: The key criteria taken into account in the process of recruitment and selection of candidates for positions in the Company’s key governing bodies are mainly professional experience and education. In addition, the Company’s Articles of Association provide for the appointment of representatives of the Group employees to the Supervisory Board and the Management Board following a vote held among the employees. |
| Management Board and Supervisory Board2.11.5 |
Content of the recommendation:
In addition to its responsibilities laid down in the legislation, the supervisory board prepares and presents an annual report to the annual general meeting once per year. The report referred to above shall at least include an assessment of the rationality of expenses referred to in principle 1.5. Reason for non-compliance: In the report on its activities in each financial year, the Supervisory Board presents an assessment of the reasonableness of the Group companies’ sponsorship, charitable giving and similar policies. However, the scope of this assessment is lesser than proposed in principle 1.5. |
| Management Board and Supervisory Board2.11.6 |
Content of the recommendation:
In addition to its responsibilities laid down in the legislation, the supervisory board prepares an annual report and presents it to the annual general meeting once per year. The report referred to above shall include at least: information regarding the degree of implementation of the diversity policy applicable to the management board and the supervisory board, including the achievement of goals referred to in principle 2.1. Reason for non-compliance: The Company has no diversity policy adopted by the Supervisory Board or the General Meeting that would define the diversity requirements for the Company’s governing bodies in terms of gender, education, expertise or professional experience. The key criteria taken into account in the process of recruitment and selection of candidates for positions in the Company’s key governing bodies are mainly professional experience and education. In addition, the Company’s Articles of Association provide for the appointment of representatives of the Group employees to the Supervisory Board and the Management Board following a vote held among the employees. |
| General Meeting and shareholder relations4.1 |
Content of the recommendation:
Companies should enable their shareholders to participate in a general meeting by means of electronic communication (e-meeting) if justified by the expectations of shareholders notified to the company, provided that the company is in a position to provide the technical infrastructure necessary for such general meeting to proceed. Reason for non-compliance: Based on the current shareholding structure of the Company and the high shareholder representation at the General Meetings, there is no need to enable the shareholders to participate in the General Meetings using electronic means of communication. To date, no proposals or requests have been received from the shareholders indicating the need to hold the General Meeting in electronic form. The Company does not rule out that such a possibility may be introduced in the future. |
| General Meeting and shareholder relations4.8 |
Content of the recommendation:
Draft resolutions of the general meeting on matters put on the agenda of the general meeting should be tabled by shareholders no later than three days before the general meeting. Reason for non-compliance: The Company does not limit its shareholders’ ability to put forward draft resolutions on matters placed on the General Meeting agenda within a period shorter than specified in principle 4.8. |
| General Meeting and shareholder relations4.9.1 |
Content of the recommendation:
If the general meeting is to appoint members of the supervisory board or members of the supervisory board for a new term of office: candidates for members of the supervisory board should be nominated with a notice necessary for shareholders present at the general meeting to make an informed decision and in any case no later than three days before the general meeting; the names of candidates and all related documents should be immediately published on the company’s website. Reason for non-compliance: The Company does not limit its shareholders’ ability to put forward candidates for Supervisory Board members within a period shorter than specified in principle 4.9.1. |
| General Meeting and shareholder relations4.11 |
Content of the recommendation:
Members of the management board and members of the supervisory board participate in a general meeting, at the location of the meeting or via means of bilateral real-time electronic communication, as necessary to speak on matters discussed by the general meeting and answer questions asked at the general meeting. The management board presents to participants of an annual general meeting the financial results of the company and other relevant information, including non-financial information, contained in the financial statements to be approved by the general meeting. The management board presents key events of the last financial year, compares presented data with previous years, and presents the degree of implementation of the plans for the last year. Reason for non-compliance: The Company’s Management Board provides information on the Company’s operations, financial performance and progress in the implementation of the strategy objectives on an ongoing basis. The Company holds meetings and conference calls with investors and shareholders, as well as press conferences for the media in connection with the publication of its periodic reports and occurrence of events material to the Company’s operations. The Company applies principle 4.6. of the Best Practices for WSE Listed Companies 2021 in a way that ensures that the shareholders are provided with comprehensive information on the matters discussed at the General Meeting. Answers to questions asked by the shareholders are provided by the Company in the form of current reports, in accordance with the applicable laws. |
