Remuneration of the managing and supervising persons

The method of determining, calculating and paying remuneration to the members of Grupa KĘTY S.A. governing and supervising bodies has been regulated in the Remuneration Policy of the Grupa KĘTY S.A. Management Board and Supervisory Board Members, adopted by resolution of the AGM No. 19/20 dated 20 August 2020, and amended by resolution of the AGM No. 18/2022 dated 25 May 2022, which may be found on the corporate website.

The solutions assumed in the Policy shall contribute to the execution of the business strategy as well as maintaining the long-term interest and stability of the Company and the Capital Group, specifically by ensuring:

• complete engagement in the fulfilment of functions at the Company;
• incentives to perform the assumed strategy and business plans, with balanced and responsible risk bearing;
• interest in the Capital Group and long-term binding to the Group of high-level specialists;
• the value of remuneration which is adequate to the financial and business results of the Capital Group, including the Company, as well as the level of responsibility;
• attitudes which exclude assumption of excessive risk when fulfilling the functions entrusted within the Company;
• transparency of the remuneration system and lack of discrimination.

The performance of the function of a Member of the Company Management Board takes place through the conclusion of an employment contract and appointment by resolution of the Company Supervisory Board. Management Board Members may be additionally employed based on an employment contract or appointed to act at the Management Board of the Capital Group companies, including within the managed and supervised Operating Segment.

Fixed remuneration is granted in consideration of the analyses of the solutions applied on the market, depending on the financial results generated by the Capital Group and the growth rate of the Company quotations at the Warsaw Stock Exchange.

The Management Board Members may also participate in long-term incentive plans (share options) in reference to the Company shares, the performance of which depends on the generation of both adequate financial results by the Capital Group and the level of the Company share prices compared to the quoting of indexes on the Warsaw Stock Exchange.
In certain cases, the Company Supervisory Board may decide to grant a Management Board Member a discretionary award for the relevant year, at the maximum value of their double fixed gross monthly remuneration.

The Remuneration Policy also provides that Management Board Members may receive specific in-kind benefits.

Competition ban agreements are signed with the Members of the Management Board employed by the Company based on an employment contract – on mandatory basis during the term of the employment relationship, without any possibility to terminate the agreement, and depending on the decision of the Supervisory Board – also after the termination of the employment relationship. The competition ban after the termination of the employment relationship may be binding for the period of 12 to 15 months, counting from the termination date of the employment relationship with the Company, whereas the monthly instalment of the indemnity is 25% or more of the average monthly remuneration paid out in the last year of the employment contract term, up to 50% of the basic remuneration, however, it may not be lower in any case than 25% of the remuneration obtained by the employee before the employment relationship termination.

There are no agreements between Grupa KĘTY S.A. and the Management Board Members which would provide for any compensation in the case of their resignation or dismissal from their positions for no important reason or where their dismissal would be related to the Company’s merger by acquisition, except for the conditions included in the terms of notice or non-competition agreements.

The table below presents the value of remuneration paid to the Management Board Members in 2021 and 2022.

The variable remuneration of the Management Board Members paid out in 2022 (for the year 2021) comprised: as regards the President of the Management Board/General Director and Management Board Member/Financial Director – annual incentive depending on the value of fixed remuneration and EBITDA growth rate (profit on operating activities plus depreciation) and net profit growth rate generated by the Capital Group in the respective reporting year compared to budget assumptions for that year, whereas the bonus depended on attaining at least 90% of budget assumptions. As regards the Management Board Members supervising the particular operating segments, the variable remuneration depended on both the parameters described above for the Capital Group, and the parameters of the supervised operating segment in equal parts.

A part of the Management Board Members incentive depended on non-financial objectives with regard to GHG emissions reduction, performance of projects for local communities and reduction of the Total Recordable Incident Rate (TRIR).

Within the 12 months ended 31 December 2022, a provision was established for the potential incentives for the Management Board Members in reference to 2022, to be paid out in 2023, in the total amount of PLN 8,912,000.

In accordance with the information provided as at the balance-sheet date, the persons managing the Company held 236,484 ordinary bearer shares of Grupa KĘTY S.A., including: Dariusz Mańko 164,363 shares, Rafał Warpechowski 0 shares, Piotr Wysocki 51,373 shares, Tomasz Grela 21,748 shares. The nominal value of one share is PLN 2.5.

In addition, within the incentive plan adopted at the General Meeting on 20 August 2020, the Management Board Members held the right to acquire:

• 30,000 N series bonds with the pre-emptive right to take up I series ordinary bearer shares, and in that number: Dariusz Mańko – 9,000 bonds, Rafał Warpechowski – 7,000 bonds, Piotr Wysocki – 7,000 bonds, and Tomasz Grela – 7,000 bonds, providing that the plan conditions are fulfilled. The fulfilment will be verified upon the approval of financial statements for 2022 by the Annual General Meeting;
• 30,000 O series bonds with the pre-emptive right to take up I series ordinary bearer shares, and in that number: Dariusz Mańko – 9,000 bonds, Rafał Warpechowski – 7,000 bonds, Piotr Wysocki – 7,000 bonds, and Tomasz Grela – 7,000 bonds, providing that the plan conditions are fulfilled. The fulfilment will be verified upon the approval of financial statements for 2023 by the Annual General Meeting;
• 30,000 P series bonds with the pre-emptive right to take up I series ordinary bearer shares, and in that number: Dariusz Mańko – 9,000 bonds, Rafał Warpechowski – 7,000 bonds, Piotr Wysocki – 7,000 bonds, and Tomasz Grela – 7,000 bonds, providing that the plan conditions are fulfilled. The fulfilment will be verified upon the approval of financial statements for 2024 by the Annual General Meeting.

In the year covered with the report, the Management Board Members acquired the right to take up P series bonds with the pre-emptive right to take up I series shares in the number identified above.

In the year covered with the report, the Management Board Members did not acquire bonds with pre-emptive right to take up shares, nor took up shares within the incentive plan.

The Management Board Members do not possess shares or interest in the Company subsidiaries or affiliates.

The Supervisory Board Members of Grupa KĘTY S.A. do not hold Grupa KĘTY S.A. shares are not eligible to participate in incentive plans related to the Company shares.

The Supervisory Board Members do not possess shares or interest in the Company subsidiaries or affiliates.

None of the Capital Group companies has commitments related to retirement payments or other payment of similar nature regarding the current or former members of the managing and supervising bodies.