The Supervisory Board of Grupa LOTOS

The Supervisory Board of Grupa LOTOS

Responsibilities

The Supervisory Board supervises the activities of Grupa LOTOS in all fields on a continuous basis. The Supervisory Board fulfils its duties collectively. The Supervisory Board may delegate its members to perform defined functions on their own and establish permanent or ad-hoc committees supervising particular zones of the Company’s activity. Permanent Supervisory Board committees are: the Audit Committee, the Strategy and Development Committee, and the Organisation and Management Committee.
The Supervisory Board is appointed by the General Shareholders Meeting. Principles for the operation of the Supervisory Board are set out by the Statute of Grupa LOTOS and By-laws of the Supervisory Board. These documents are publicly available on the web site of Grupa LOTOS.

Statute of Grupa LOTOS

Regulations of General Shareholders Meeting of Grupa LOTOS

By-laws of the Supervisory Board of Grupa LOTOS

Membership

Pursuant to the Statute of Grupa LOTOS, the Supervisory Board is composed of six to nine members, including a Chairman, a Vice-Chairman and a Secretary. The number of Supervisory Board members is determined by shareholders at the General Shareholders Meeting. The Supervisory Board is appointed and dismissed by shareholders at the General Shareholders Meeting by the absolute majority of votes cast by secret ballot from among an unlimited number of candidates. Notwithstanding the above, as long as the State Treasury is the Company’s shareholder, it has the right to appoint and dismiss one Supervisory Board member. The Chairman of the Supervisory Board is appointed by shareholders at the General Shareholders Meeting. The term of the Supervisory Board is joint and lasts three years.

Wiesław Skwarko

Wiesław Skwarko
Chairman of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS on 30 June 2008 as the Chairman of the Supervisory Board. He administers and manages the Supervisory Board’s work and represents the Supervisory Board in relations with other authorities of the Company and other persons. At the same time, he is the Chairman of the Strategy and Development Committee of the Supervisory Board. Since 19 March 2009, he is also a member of the Audit Committee of the Supervisory Board.

Pursuant to the Supervisory Board’s decision of 12 August 2008, he supervises the 10+ Programme, i.e. in particular he:

  • monitors work progress and adherence to the schedule;
  • supervises the implementation of the raw material acquisition strategy;
  • supervises the implementation of the sales strategy for products manufactured under the project;
  • supervises the consistency of logistic activities.

Graduate of the Faculty of Foreign Trade at the Warsaw School of Economics (SGH).
In 1987-1994, Assistant Professor at the Warsaw School of Economics. From 1990 to 1999, Partner of Access Sp. z o.o., afterwards a member of the Management Board of Rothschild Polska Sp. z o.o. In 2005-2006, head of the Privatisation Office at Nafta Polska S.A. From 2006, Director for Financial Strategies and Capital Development at CTL Maczki Bór in Sosnowiec, and subsequently at CTL Logistics S.A. in Warsaw. In 2008-2009, member of the Management Board of Nafta Polska S.A., and since 1 January 2010, the liquidator of Nafta Polska S.A. under liquidation. Chairman of the Supervisory Board of ZAK S.A.

Leszek Starosta

Leszek Starosta
Vice-chairman of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS on 30 June 2008. Since 12 August 2008, Vice-Chairman of the Supervisory Board. As the Vice-Chairman, he is authorised to exercise all rights of the Chairman of the Supervisory Board as arising from the Company’s Statute and the By-laws of the Supervisory Board, if authorised thereto by the Chairman or in the case of the Chairman’s absence. He is also the Chairman of the Organisation and Management Committee and a member of the Strategy and Development Committee of the Supervisory Board.
Pursuant to the Supervisory Board’s decision of 12 August 2008, he individually supervises the investment project of Grupa LOTOS, i.e. the 10+ Programme, including in particular contract procedures and compliance with the investment law.

Graduate of the Faculty of Law and Administration at Poznań University. Associate Professor, PhD in Law, Dean of the Faculty of Law and Pro-Rector for Development of the Academy of International Economic and Political Relations in Gdynia, Director of the Institute for European Studies in Gdynia. In the years 1991-2000, consultant to the Management Board of Rafineria Gdańska S.A., in the years 1995-1998, adviser to and consultant of the President of the Management Board of Petrochemia Płock S.A. Author of over 20 studies and analyses related to the crude oil and fuel sectors, prepared for central authorities of public administration. In 1998-2007, member and Vice-Chairman of the Supervisory Board of Prokom Software S.A. Attorney, member of the Chamber of Attorneys in Gdańsk, Vice-President of the Polish Employers’ Association, arbitrator at the Arbitration Court for Sport at the Polish Olympic Committee.

Oskar Pawłowski

Oskar Pawłowski
Secretary of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS on 11 February 2010. Since 2 March 2010, Secretary of the Supervisory Board. As the Secretary, he organises and evidences the operation of the Supervisory Board and takes care of its organisational and technical service. Since 2 March 2010, member of the Organisation and Management Committee and the Audit Committee of the Supervisory Board.
Graduate of the Faculty of Law and Administration at Poznań University and British and EU Law at Cambridge University. In 2006, completed legal counsel training held by the District Chamber of Legal Counsels in Poznań and was entered in the list of legal counsels. Currently, Managing Partner at the Oskar Pawłowski i Wspólnicy Sp.k. law firm, formerly a lawyer at, among others, D. Janczak i Wspólnicy Sp.k./Domański Zakrzewski Palinka Sp.k. law firm – Ernst & Young Law Alliance – Grupa Energetyczna, and Prawna Głowacki, Grynhoff, Hałaziński s.j. law firm. He specialises in the regulatory environment of the energy sector and legal services for transactions in real estate and investment processes. He has extensive experience in the field of company law, mergers and acquisitions. The author of the following publications: ”The Rights of Electricity Consumers and the Methods of Protecting Them” (Rynek Energii, 2/2009), ”Legal Due Diligence of Real Estate” (Inwestor, 1/2010).

Małgorzata Hirszel

Małgorzata Hirszel
member of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS in accordance with §11.2 of the Company’s Statute on 1 July 2008. Member of the Strategy and Development Committee and the Organisation and Management Committee of the Supervisory Board.

Graduate of the Faculty of Law and Administration at the University of Warsaw and Post-Graduate Course at the Faculty of Journalism and Political Science of the University of Warsaw (specialisation: European Studies). PhD candidate of the Polish Academy of Science, the Institute of Legal Science. Since 2000, member of the Prime Minister Chancellery; where until 2002 she worked as a Chief Specialist/Legal Advisor of the Head of the Polish Cabinet to later become the Legal Advisor of the Vice-president of the Council of Ministers and the Legal Advisor of the President of the Council of Ministers at the Department of Economics and Social Issues (then transformed into the Council of Ministers Committee Department). From 2002 to 2006, acted as Deputy Director of the Department of Economic Issues. Then, acted as Director of the Programme Department of KPRM. Since 2007, the Head of the Council of Ministers Committee Department and Secretary of the Fixed Committee of the Council of Ministers. She passed an examination for candidates for supervisory board members in State Treasury companies in 2002.

Michał Rumiński

Michał Rumiński
member of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS on 11 February 2010. Since 2 March 2010, member of the Strategy and Development Committee and the Organisation and Management Committee of the Supervisory Board.

MBA graduate of the University of Chicago, Booth School of Business, Economics at Warsaw School of Economics, and Law at the University of Warsaw. Since 2007, he has cooperated with MCI Euroventures (investment fund), holding the following positions: Investment Partner, member of the Management Board of ABC Data Holding S.A., President of the Management Board, and Managing Partner of Cleantech Venture Partners, and member of the Supervisory Board of Grupa Lew Sp. z o.o. In 2000-2007, worked for KBC Group; in 2004, served as Corporate Finance Director at the investment bank, KBC Securities N.V. The author of “The 1997 Currency Crisis vs. Restructuring of Financial and Enterprise Sectors in South Korea” (National Bank of Poland, 2004) and “Free Flow of Capital in the European Community” (INFOR, 2000).

Rafał Wardziński

Rafał Wardziński
member of the Supervisory Board

Appointed to the Supervisory Board of Grupa LOTOS on 11 February 2010. Since 2 March 2010, member of the Strategy and Development Committee of the Supervisory Board.

Graduated from MA. studies at the University of Szczecin, European Integration Faculty, and supplementary studies in Law at the University of Liege (Belgium), scholarship holder of the European Commission. In 2003–2004, worked with the European Integration Department of the Marshal’s Office of the Zachodniopomorskie Voivodship. From 2004 to 2007, parliamentary adviser at the Committee of Industry, Research and Energy of the European Parliament in Brussels. In 2007–2008, Director of the Regional Office of the Zachodniopomorskie Voivodship in Brussels. Since 2008, employed at the Ministry of the State Treasury, at present as Deputy Director of the Corporate Supervision and Privatisation Department I, in charge of supervision over gas and oil enterprises. Former Chairman of the Supervisory Board of PERN ”Przyjaźń” and member of the Supervisory Board of Kopalnia i Zakłady Chemiczne Siarki ”Siarkopol” S.A. At present, member of the Supervisory Board of Operator Gazociągów Przesyłowych GAZ–SYSTEM S.A.

In 2009 and in the first quarter of 2010, the Supervisory Board of Grupa LOTOS of the 7th term was composed of:

As at 1 January 2009:

  • Wiesław Skwarko, Chairman
  • Leszek Starosta, Vice-chairman
  • Mariusz Obszyński, Secretary
  • Radosław Barszcz, Member
  • Piotr Chajderowski, Member
  • Małgorzata Hirszel, Member
  • Jan Stefanowicz, Member.

 

On 10 March 2009, Piotr Chajderowski resigned from the Supervisory Board. On 27 April 2009, Shareholders at the General Shareholders Meeting of Grupa LOTOS resolved to appoint Ireneusz Fąfara as a member of the Supervisory Board of the 7th term.

As at 31 December 2009:

  • Wiesław Skwarko, Chairman
  • Leszek Starosta,Vice-chairman
  • Mariusz Obszyński, Secretary
  • Radosław Barszcz, Member
  • Małgorzata Hirszel, Member
  • Jan Stefanowicz, Member
  • Ireneusz Fąfara, Member.

 

On 11 February 2010, shareholders at the Extraordinary Shareholders Meeting of Grupa LOTOS dismissed Mariusz Obszyński, Radosław Barszcz and Jan Stefanowicz from the Supervisory Board and then appointed Oskar Pawłowski, Michał Rumiński and Rafał Wardziński as members of the Company’s Supervisory Board of the 7th term. Justyfing their decision, shareholders stated that changes in the composition of the Supervisory Board were to strengthen the Supervisory Board’s supervision over the Company’s activities.

On 29 March 2010, Ireneusz Fąfara resigned from the Supervisory Board of the Company.

As at 31 March 2010:

  • Wiesław Skwarko, Chairman
  • Leszek Starosta, Vice-chairman
  • Oskar Pawłowski, Secretary
  • Małgorzata Hirszel, Member
  • Michał Rumiński, Member
  • Rafał Wardziński, Member.

Permanent Committees

Strategy and Development Committee

The Strategy and Development Committee gives opinions and presents the Supervisory Board with recommendations on planned investments which have a significant impact on the Company’s assets.

In 2009 and in the first quarter of 2010, the Strategy and Development Committee was composed of the following members:

From 1 January to 31 December 2009:

  • Wiesław Skwarko, Chairman
  • Radosław Barszcz
  • Leszek Starosta
  • Jan Stefanowicz
  • Małgorzata Hirszel


Since, on 11 February 2010, shareholders at the General Shareholders Meeting changed the composition of the Supervisory Board, at their first meeting, the Supervisory Board supplemented the Strategy and Development Committee by appointing Rafał Wardziński and Michał Rumiński as Committee members.

From 2 March 2010:

  • Wiesław Skwarko, Chairman
  • Rafał Wardziński
  • Leszek Starosta
  • Michał Rumiński
  • Małgorzata Hirszel

 

Organisation and Management Committee

The Organisation and Management Committee presents the Supervisory Board with opinions and recommendations on management structures, including organisational solutions, the remuneration system and selection of personnel, to enable the achievement of the Company’s strategic goals.

In 2009 and in the first quarter of 2010, the Organisation and Management Committee was composed of the following members:

From 1 January to 31 December 2009:

  • Leszek Starosta, Chairman
  • Małgorzata Hirszel
  • Mariusz Obszyński

 

Since, on 11 February 2010, shareholders at the General Shareholders Meeting changed the composition of the Supervisory Board, at their first meeting, the Supervisory Board supplemented the Organisation and Management Committee by appointing Michał Rumiński and Oskar Pawłowski as Committee members.

From 2 March 2010:

  • Leszek Starosta, Chairman
  • Małgorzata Hirszel
  • Michał Rumiński
  • Oskar Pawłowski

 

Audit Committee

The Audit Committee advises the Supervisory Board on the adequate implementation of budget and financial reporting rules, internal control, and cooperation with the Company’s auditors.

In 2009 and in the first quarter of 2010, the Audit Committee was composed of the following members:

From 1 January to 10 March 2009:

  • Jan Stefanowicz, Chairman
  • Mariusz Obszyński
  • Piotr Chajderowski


Since, on 10 March 2009, Piotr Chajderowski filed his resignation from the Supervisory Board, on 19 March 2009, the Supervisory Board decided to supplement the Audit Committee by appointing Wiesław Skwarko and Radosław Barszcz as new Committee members.

From 19 March to 7 May 2009:

  • Jan Stefanowicz, Chairman
  • Mariusz Obszyński
  • Wiesław Skwarko
  • Radosław Barszcz


On 7 May 2009, the Supervisory Board decided to expand the Audit Committee with Ireneusz Fąfara, appointed to the Supervisory Board by shareholders at the General Shareholders Meeting on 27 April 2009.

From 7 May to 31 December 2009:

  • Jan Stefanowicz, Chairman
  • Mariusz Obszyński
  • Wiesław Skwarko
  • Radosław Barszcz
  • Ireneusz Fąfara

 

Since, on 11 February 2010, shareholders at the General Shareholders Meeting changed the composition of the Supervisory Board, at their first meeting, the Supervisory Board supplemented the Audit Committee by appointing Oskar Pawłowski and Rafał Wardziński as Committee members.

From 2 March 2010:

  • Ireneusz Fąfara, Chairman (till 29 March 2010)
  • Wiesław Skwarko
  • Oskar Pawłowski
  • Rafał Wardziński

Remuneration

Remuneration rules for Supervisory Board members are defined by shareholders at the General Shareholders Meeting.

In accordance with the statement of the Management Board of Grupa LOTOS on corporate governance at the Company, the Supervisory Board members’ remuneration should be defined on the basis of transparent procedures and rules. Remuneration should be fair, but it should neither constitute an important item of the Company’s expenses nor substantially influence the Company’s performance. It should be reasonably related to the remuneration of Management Board members.

Remuneration payable to Supervisory Board members is subject to limitations and rules set out in the Act on remunerating persons managing certain legal entities of 3 March 2000 (Journal of Laws No 26 of 2000, item 306, as amended). Pursuant to that Act, in 2000, shareholders, at the Extraordinary Shareholders Meeting, defined the following rules for remunerating Supervisory Board members:

  • Supervisory Board members are entitled to a monthly pay amounting to one average monthly salary in the sector of enterprises without awards payable from profit in the fourth quarter of a previous year, as published by the President of the Polish Statistical Office;
  • remuneration is payable regardless of the frequency of meetings; however, it does not cover months in which a Supervisory Board member is absent for unexcused reasons at any meeting;
  • remuneration is calculated proportionally to the number of days in which a Supervisory Board member’s function is performed in the event that such a Supervisory Board member has been appointed or dismissed in the course of a calendar month;
  • the Company reimburses expenses borne in relation to the performance of the functions of Supervisory Board Members, as well as calculates and deducts income tax charges in accordance with the individual income tax act.

 

Remuneration of Supervisory Board members in 2009
Supervisory Board member Amount [PLN]
Wiesław Skwarko (*)
Leszek Starosta 39,621
Mariusz Obszyński 39,621
Radosław Barszcz 39,621
Piotr Chajderowski 10,813
Małgorzata Hirszel 39,621
Jan Stefanowicz 39,621
Ireneusz Fąfara 23,681

(*) Wiesław Skwarko waived (till further notice) his remuneration for membership to the Supervisory Board of Grupa LOTOS and does not obtain any financial benefits.

None of the Supervisory Board members holds shares of Grupa LOTOS.

Independence

Rule No 6, Section 3 of ”Best Practices for Companies Listed on the Warsaw Stock Exchange” sets out that: “At least two members of the Supervisory Board should meet the criteria of independence from the company and entities substantially related to the company. Criteria of independence of Supervisory Board members are governed by Appendix 2 to the European Commission’s Recommendation of 15 February 2005 on the role of non-executive directors or directors being members of supervisory boards of stock exchange companies and supervisory board commissions. Notwithstanding the provisions of art. b) of the Appendix, a person being an employee of a company, a subsidiary or an associate may not be considered as meeting the criteria of independence referred therein. In addition, any actual and significant relation with a shareholder having a right to exercise 5% and more of the total number of rights of vote at the General Shareholders Meeting is considered as a relation excluding the independence of a Supervisory Board member within the meaning of this rule.”

The above rule is not applied by the Company because Grupa LOTOS does not have any information on the independence of Supervisory Board members. The Company will start applying that rule after obtaining relevant information on the appointment or acknowledgement of at least two Supervisory Board members as independent members in accordance with Appendix 2 to the European Commission’s Recommendation of 15 February 2005.

Conflict of interests policy

Art. 387 of the Commercial Companies Code sets out that a management board member, a proxy, a liquidator, the head of a branch or a division, as well as a chief accountant, a legal adviser or attorney employed by the company should not perform functions of a supervisory board member on a parallel basis. In addition, members of the Supervisory Board of Grupa LOTOS have to submit, as of being appointed as Supervisory Board members, their statements confirming that they do not perform any competitive activities in relation to the Company and are not shareholders of a competitive partnership or a personal company or members of authorities of a capital company or members of authorities of any other competitive legal entity.

Sustainable development engagements

In 2009, the Supervisory Board held 13 meetings, adopted 53 resolutions, including one resolution adopted in writing. The Supervisory Board analysed Grupa LOTOS’ key areas and issues, including, without limitation, the evaluation of the Company’s performance, opportunities and risks relating to sustainable development. Major issues in this area include:

  • the progress of the 10+ Programme;
  • exploration and extraction;
  • oil supply;
  • the performance of the Anti-Crisis Package;
  • restructuring of Rafinerie Południowe;
  • the Company’s sponsoring activities in the light of new regulations;
  • financing social projects by Grupa LOTOS.