The Management Board of Grupa LOTOS

The Management Board of Grupa LOTOS

Responsibilities

The Management Board represents Grupa LOTOS and runs all the corporate businesses of Grupa LOTOS. This does not concern any issues that are reserved for the competences of the Shareholders’ Meeting or the Supervisory Board or that exceed the scope of the regular management for individual Members. The Management Board of Grupa LOTOS operates pursuant to the Statute of Grupa LOTOS and the Regulations of the Management Board. Documents listed are available on the website of Grupa LOTOS.

Regulations of the Management Board of Grupa LOTOS

In 2009, the Management Board held 57 meetings and passed 155 resolutions (including the Management Board of 6th term – 31 meetings and 83 resolutions and of the 7th term – 26 meetings and 72 resolutions).

Membership

According to the Statute of Grupa LOTOS, its Management Board comprises from three to seven Members, including the President and the Vice-Presidents. The number of Members of Management Board is determined with the resolution of the Supervisory Board. The Management Board is appointed by the Supervisory Board. The Supervisory Board appoints the President of the Board and afterwards, upon the President’s motion, the Vice-Presidents and other Members of the Board. The common term of office for the Management Board continues for three years.

 

Paweł Olechnowicz

Paweł Olechnowicz
President of the Board, Chief Executive Officer

Mr Olechnowicz has served as President of the Board of Grupa LOTOS since 12 March 2002. He manages and is responsible for all operations of Grupa LOTOS. He is also serving as Vice-President for Exploration and Production.
Mr Olechnowicz graduated from Cracow University of Technology (the Faculty of Technology and Mechanisation of Foundry Engineering), completed a post-graduate course in Organization, Economics and Industrial Management at Gdańsk University of Technology and the MBA INSEAD and attended many specialist courses in management, both in Poland and abroad. He started his professional career in 1977 in Zakłady Mechaniczne 'Zamech' in Elbląg (since 1990 ABB Zamech Sp. z o.o.). In 1990-1996, he was President of the Management Board and Director General of ABB Zamech Ltd. Subsequently, for two years, Mr Olechnowicz worked at the headquarters of ABB Ltd Zurich in Switzerland as Vice-President for Central and Eastern Europe. In 1999-2000, Mr Olechnowicz was Vice-President and Deputy Director General of ZML Kęty S.A., and from 2001, managed his own consulting company: Paweł Olechnowicz-Consulting. He is President of the Polish Academic-Economic Forum.

Marek Paweł Sokołowski

Marek Paweł Sokołowski
Vice-President of the Board, Chief Operation Officer

Mr Sokołowski has served as Vice-President of the Board of Grupa LOTOS since 19 April 2002. He manages, coordinates and supervises all issues of the Production Division, the Technical Division, the Technology Development Division and the Refinery Development Division, which is implementing the 10+ Programme and he bears all the related responsibilities.
Mr Sokołowski graduated from Gdańsk University of Technology (the Faculty of Electrical Engineering), completed a post-graduate course in Industrial Investments and attended a number of specialist management courses in Poland and abroad. Mr Sokołowski has worked at Rafineria Gdańska S.A. (currently Grupa LOTOS S.A.) since 1973. In 1990, Mr Sokołowski became Technical Director and a Management Board member. For three consecutive terms in office, he was in charge of plant engineering at the refinery and execution of investment projects. Throughout 1996-2000, he managed the development and modernization plan of the Gdańsk refinery – PRT. Since mid-2000, he worked as Chief of Technical Services and attorney of Grupa LOTOS. During his service as Vice-President of the Board, he executed a wide programme of operating segment restructuring. In the consecutive years, he worked on the 10+ Programme and the organization of its implementation.

Mariusz Machajewski

Mariusz Machajewski
Vice-President of the Board, Chief Financial Officer

Mr Machajewski has been Vice-President of the Board at Grupa LOTOS since 19 June 2006. He manages and bears the responsibility for all economic, financial and accounting issues of Grupa LOTOS.
Mr Machajewski is a graduate of the Faculty of Economics at the University of Gdańsk. Moreover, he attended a number of specialist training courses in management and economics in Poland and abroad. In 1994-1997, he worked at Stocznia Gdynia S.A. (Gdynia Shipyard). In 1997, he joined Rafineria Gdańska S.A. (currently Grupa LOTOS), and in 1999, he was placed in charge of managing Grupa LOTOS's controlling functions. Since mid-2002, he has held the position of Economic-Finance Director. In the period from April 2005 to June 2006, he also served as Grupa LOTOS's attorney.

Maciej Szozda

Maciej Szozda
Vice-President of the Board, Chief Commercial Officer

Mr Szozda has served as Vice-President of the Board at Grupa LOTOS since 1 July 2009. He is in charge of the entire trading segment of the LOTOS Group and bears all the responsibilities in this regard.
Mr Szozda graduated from the Faculty of Trade at the Warsaw School of Economics. Since 1980, he has worked for PHZ Labimex. In 1983-1984 he was Managing Director at KWM Engineering. Next until 1986 he worked in the USA as the contract manager. In 1986 he commenced to work as the director at Przedsiębiorstwo Zagraniczne Ipaco, and in 1987–1989 he was export manager at Sinexim Gmbh in Western Berlin. After 1989 he was self-employed, e.g. in Easey Garments UK Ltd. (Easy Jeans) as Representative for Poland and CIS countries. In 2002 he joined PKN Orlen S.A., serving as Retail Network Planning and Development Office Director, Retail Network Development – Europe Office Director and executive director for retail. From October 2008 to February 2009 he was a member of the Supervisory Board of Orlen Deutschland AG. From 2007 to March 2009 he was a member of the Management Board and after that the President of the Management Board of a company from the PKN Orlen S.A. Capital Group – AB VENTUS NAFTA with its registered office in Vilnius.
Positions and functions of the Management Board members of Grupa LOTOS in the LOTOS Group
31 December 2009
Paweł Olechnowicz Chairman of the Supervisory Board Przedsiębiorstwo Poszukiwań i Eksploatacji Złóż Ropy i Gazu Petrobaltic S.A.
Chairman of the Board of Directors LOTOS Exploration and Production Norge AS
Marek Sokołowski Chairman of the Supervisory Board LOTOS Czechowice S.A.
Mariusz Machajewski Chairman of the Supervisory Board LOTOS Paliwa Sp. z o.o.
Maciej Szozda Chairman of the Supervisory Board LOTOS Paliwa Sp. z o.o.

In 2009 and in Q1 2010 the Management Board of Grupa LOTOS comprised:

From 1 January 2009 to the end of the 6th term:

  1. Paweł Olechnowicz – President of the Board, Chief Executive Officer,
  2. Mariusz Machajewski – Vice-President of the Board, Chief Financial Officer,
  3. Marek Sokołowski – Vice-President of the Board, Chief Operation Officer.

In the qualification proceedings for the positions of a Member of the Management Board of Grupa LOTOS of the 7th joint term, the Supervisory Board selected 4 members. On 25 June 2009 the Supervisory Board adopted a resolution to appoint the following Management Board of Grupa LOTOS for the joint 7th term:

  • Paweł Olechnowicz – President of the Board, Chief Executive Officer,
  • Mariusz Machajewski – Vice-President of the Board, Chief Financial Officer,
  • Marek Sokołowski – Vice-President of the Board, Chief Operation Officer,
  • Maciej Szozda – Vice-President of the Board, Chief Commercial Officer.

 

As the President of the Board did not submit a motion presenting a candidate for the position of the Vice-President for development, exploration and production, the supplementation of the Board’s composition may be decided upon the Supervisory Board at a later stage, and thus the proceedings were not closed. Therefore, until the day of drawing up this Report, according to the decision of the Supervisory Board, President of the Board of Grupa LOTOS is in charge of the abovementioned areas until the appointment of a new member of the Management Board.

As of 31 December 2009 and 31 March 2010 the Management Board of Grupa LOTOS comprised:

  • Paweł Olechnowicz – President of the Board, Chief Executive Officer,
  • Mariusz Machajewski – Vice-President of the Board, Chief Financial Officer,
  • Marek Sokołowski –Vice-President of the Board, Chief Operation Officer,
  • Maciej Szozda –Vice-President of the Board, Chief Commercial Officer.

Remuneration

In 2000 the Shareholders’ Meeting was entitled to determine the remunerations of the Members of the Management Board. It adopted a resolution in this regard during the Extraordinary Shareholders’ Meeting in August 2000, by determining the rules of remuneration and employment for the Members of the Management Board. These rules applied until mid-2009. According to the adopted regulations:

  • Members of the Management Board were entitled exclusively to a monthly remuneration amounting to:
    • President of the Management Board – not exceeding 4-times the average monthly remuneration in the sector of enterprises without a profit share in the fourth quarter of the preceding year as announced by the President of the Main Statistical Office. The value of the monthly remuneration of the President of the Management Board was determined in a separate resolution of the Shareholders’ Meeting,
    • Vice-President of the Management Board – not exceeding 3.9-times the average monthly remuneration in the sector of enterprises without a profit share in the fourth quarter of the preceding year as announced by the President of the Main Statistical Office. The value of the monthly remuneration of the Vice-President of the Management  Board was determined in a separate resolution of the Shareholders’ Meeting,
    • Member of the Management Board – not exceeding 3.9-times the average monthly remuneration in the sector of enterprises without a profit share in the fourth quarter of the preceding year as announced by the President of the Main Statistical Office. The value of the monthly remuneration of a Member of the Management Board was determined in a separate resolution of the Shareholders’ Meeting,
  • Should Grupa LOTOS be classified as an entity of special importance for the State, the above-mentioned value of the remuneration shall be increased by 50% according to the procedure specified in Article 9 of the Act on remunerating persons managing certain legal entities.
  • The amounts of remuneration, irrespective of the basis of the employment relation or the type of job contracts, encompassed all elements of remuneration resulting from the rules of labour law.
  • In the event of a dismissal from a position or dissolving of a job agreement for reasons other than the violation of basic employee obligations, the President, the Vice-President and the Members of the Management Board might be granted severance pay amounting to not more than three-times the monthly remuneration.

 

The Ordinary Shareholders’ Meeting held on 30 June 2009 amended the By-Laws of Grupa LOTOS within the division of competences between the Shareholders’ Meeting and the Supervisory Board, by transferring the determination of remunerations for the Management Board Members, the value of the monthly remuneration for a Member of the Management Board and the value of the annual bonus for the President of the Management Board from the competences of the Shareholders’ Meeting to the Supervisory Board. Such changes were aimed at making the provisions of the By-Laws more flexible, to meet the general provisions given in Article 378(1) of the Code of Commercial Companies, according to which the Supervisory Board determines the remuneration of the Management Board, ‘unless special rules of law provide for otherwise’, by referring to the provisions of the Act of 3 March 2000 on the remuneration of persons managing certain legal entities (Journal of Laws from 2000, No. 26, Item 306 with subsequent amendments).

The motion of the Supervisory Board that was put to vote at the Shareholders’ Meeting, transferring the competences from the Shareholders’ Meeting to the Supervisory Board in the above-mentioned question was justified and was not contradictory with the rules of the so-called ‘chimney act’ that applies to Grupa LOTOS, as the Shareholders consented during the Meeting to the increase of the authorised capital of Grupa LOTOS by making contributions in kind comprising stakes held in Petrobaltic, LOTOS Czechowice and LOTOS Jasło owned by the Treasury. According to the decision, the authorised capital of Grupa LOTOS was increased from PLN 113,700,000.00 to PLN 129,873,362.00. Grupa LOTOS issued 16,173,362 new ordinary bearer shares of the C series, which were offered to the Treasury within private subscription, without the preemptive rights of the other shareholders. On the other hand, the Treasury transferred to Grupa LOTOS 2,801,400 shares of Petrobaltic, 375,000 shares of LOTOS Czechowice and 300,000 shares of LOTOS Jasło. As a result of the abovementioned transactions, upon the registration of the increased authorised capital by the Court, i.e. on 17 July 2009, the ownership structure changed. The share of the shareholder – Nafta Polska S.A. fell from 51.91% to 45.45%, and thus Grupa LOTOS ceased to be subject to the so-called ‘chimney act’.

However, on 22 July 2009 the Treasury acquired another major stake in Grupa LOTOS under the agreement concluded on 16 July 2009 between Nafta Polska and the Ministry of the Treasury. Within the execution of the agreement, Nafta Polska transferred to the Treasury 59,025,000 shares of Grupa LOTOS, and holds no more shares of Grupa LOTOS, while the Treasury holds 63.97% shares in the authorised capital of Grupa LOTOS.

In a consequence, Grupa LOTOS is again subject to provisions of the so-called ‘chimney act’. According to the law in question,  the remuneration of President of the Management Board is determined by the Shareholders’ Meeting upon the motion of the Supervisory Board. On the other hand, all issues related to the remuneration policy for other members of the Management Board remain within the competences of the Supervisory Board.

As the share of the Treasury exceeds 50% in the authorised capital of Grupa LOTOS (50% number of shares), provisions of Article 8(4) of the Act apply to Grupa LOTOS.

Therefore, the Supervisory Board, acting within its competences under Article 14(2)(1) of the By-Laws of Grupa LOTOS and pursuant to the Act of 3 March 2000, determined the value of remuneration for the Vice-Presidents of the Board on 13 November 2009 at 6-timex value of the monthly remuneration in the sector of enterprises without a profit share in the fourth quarter of the preceding year as announced by President of the Main Statistical Office and submitted to the Shareholders’ Meeting to determine the value of the monthly remuneration of the President of the Management Board on the same level.

The Shareholders’ Meeting, having examined the motion of the Supervisory Board submitted in the Resolution No. 63/VII/2009 of 13 November 2009, determined the following rules of remuneration concerning President of the Management Board:

  • President of the Management Board is entitled to a monthly remuneration not exceeding 6-times the average monthly remuneration in the sector of enterprises without a profit share in the fourth quarter of the preceding year as announced by the President of the Main Statistical Office,
  • shall Grupa LOTOS be classified among the entities of special importance for the State, in compliance with Article 9 of the Act of 3 March 2000 on remuneration of persons managing certain legal entities, the Shareholders’ Meeting has authorised the Supervisory Board to increase the above-mentioned monthly remuneration of President of the Management Board by 50% in compliance with the provisions of the above-mentioned Act.

Moreover, the Shareholders’ Meeting repealed the resolution of the Shareholders’ Meeting of 18 August 2000 that governed the remunerations due to the Members of the Management Board.

According to individual employment agreements, members of the Management Board of Grupa LOTOS are entitled to the following additional benefits:

  • costs of life insurance policy (including monthly insurance premiums),
  • above-standard medical care provided by a private healthcare centre, both in Poland and abroad, for a member of the Management Board and his family.

Moreover, President of the Board and Vice-President of the Board (CCO) are entitled to additional benefits, namely accomodation in the TriCity (covering additional costs of rent and utilities), which they do not use.

Moreover, according to the Act of 3 March 2000 on the remuneration of persons managing certain legal entities (Journal of Laws from 2000, No. 26, Item 306 with subsequent amendments) and the Regulation by the Minister of the Treasury of 12 March 2001 on the detailed rules and mode of granting annual bonuses to persons managing certain legal entities (Journal of Laws from 2001, No. 22, Item 259), members of the Management Board may receive an annual bonus. The bonus may be granted if the Company:

  • has improved its financial results,
  • has strengthened its market or sectoral position,
  • has effectively implemented a restructuring or development plan,
  • has not exceeded the maximum annual index of increasing an average monthly remuneration, and
  • pays all its public and legal liabilities in a timely manner.

A bonus may be granted once all financial statements are approved. A Member of the Management Board is entitled to a bonus if he/she worked in this position for the entire financial year and did not violate his/her obligations in this period, the job contract was not terminated by his/her fault and the management agreement was not terminated and he/she was not dismissed for reasons that are the basis for the termination of the job contract without notice. According to the regulations, the maximum bonus equals 3-times the average monthly remuneration in the preceding year. The decision to grant the annual bonus to President of the Management Board is taken by the Shareholders’ Meeting upon the motion of the Supervisory Board, while for other members of the Management Board by the Supervisory Board.

According to the declaration of the Management Board of Grupa LOTOS on the compliance with the corporate governance, the remuneration of members of the Management Board should be determined in compliance with transparent procedures and rules, taking into account its motivating nature, and to stimulate further effective management of Grupa LOTOS. The remuneration should correspond to the size of the enterprise and be reasonably correlated to its financial results. It should be also related to the scope of responsibilities resulting from the function and take account of remunerations of members of the Management Board in similar companies in a comparable market.

Value of remuneration of members of the Management Board of Grupa LOTOS in 2009
Member of the Management Board Amount [in PLN]
Paweł Olechnowicz 199,862
Marek Sokołowski 196,565
Mariusz Machajewski 197,625
Maciej Szozda 118,947

Marek Sokołowski, Vice-President of the Board, holds 8,638 shares of Grupa LOTOS. Other members of the Management Board do not own any shares of Grupa LOTOS.

Conflict of interests policy

To avoid the conflict of interests, Grupa LOTOS follows the provisions of the Code of Commercial Companies, the Regulations of the Management Board and the ‘Best Practices for Companies Listed on the Warsaw Stock Exchange’. According to the Regulations of the Management Board and in relation to Article 377 of the Code, in case of any conflicts of interests of Grupa LOTOS with the personal interests of a member of the Management Board or any persons they are related to, a member of Management Board should refrain from participating in resolving such issues. Moreover, according to the ‘Best Practices for Companies Listed on the Warsaw Stock Exchange’, a member of the Management Board should advise the Management Board of the existing conflict of interests or its potential occurrence and refrain from participating in the discussion and voting on a resolution that concerns this issue. According to the Regulations of the Management Board, accepting positions by the members of the Management Board in supervising or managing authorities of other entities requires consent of the Supervisory Board. Furthermore, the provisions of the Code apply, which ban members of the Management Board from being a member of the Supervisory Board at the same time. This provisions concerns also other persons who are directly subordinate to a member of the Management Board.