PZU’s collection of corporate governace rules

PZU’s corporate governance is a set of fundamental principles, practices and processes on the management of and control over the Company. It lays out the rules for the operation of and co-operation between statutory bodies, and shapes their relationship with shareholders, clients and other stakeholders.

Corporate governance rules applied at PZU arise from the provisions of the law (in particular the Code of Commercial Companies and Partnerships, the Insurance and Reinsurance Activity Act, and the regulations governing the capital market), as well as the rules set forth especially in the documents specified below.

PZU complies with the rules laid out in “Best Practices of WSE-Listed Companies” since its shares were listed for trading on the regulated market. The document entitled “Best Practices of WSE-Listed Companies 2021” (WSE BP 2021) adopted by the Supervisory Board of the Warsaw Stock Exchange (WSE) on 29 March 2021 has been in effect since 1 July 2021. It is a collection of corporate governance rules and rules of conduct that affect how public companies interact with their market environment. The text is available on the website of:

Corporate Governance Rules for Regulated Institutions, issued on 22 July 2014 by the Polish Financial Supervision Authority (KNF), define the internal and external relations of regulated institutions, including their relations with shareholders and customers, their organization, the functioning of internal oversight and key internal systems and functions as well as the governing bodies and the rules for their cooperation. The document is available on the website of:

PZU has also developed its own code defining the principal ethical standards governing the Company’s behavior in relations with its stakeholders. The Best Practices of the PZU Group are a set of standards followed by all members of the PZU Group. The values and principles described in the document relate to such issues as conflict of interest, handling sensitive information, corruption and gift policy, reporting ethical problems, rules of cooperation with business partners, and disclosures. The obligation of abiding by the enacted standards pertains to all PZU Group employees, regardless of seniority or position. The Best Practices of the PZU Group are available at PZU’s website: https://www.pzu.pl/grupa-pzu/o-nas/ kultura-compliance-pzu/dobre-praktyki-pzu.

The set of principles expressed in the Best Insurance Practices adopted on 8 June 2009 by the General Assembly of the Polish Chamber of Insurance (PIU) (as amended) also informs how PZU conducts its business operations and shapes relations with its stakeholders. This document defines the rules of corporate social responsibility in respect to relations between insurance and customers, insurance intermediaries, the regulatory authority and the Financial Ombudsman, the media and in public securities trading. By applying the Best Insurance Practices, PZU conducts regular efforts to develop insurance awareness in the public at large. The consolidated text of the document is available on the website of:

Application of corporate governance rules

In the view of European Commission Recommendation of 9 April 2014 on the quality of corporate governance reporting (2014/208/EU), here are details concerning the application of corporate governance relating to topics of most importance for shareholders.

Application of corporate governance rules contained in Best Practices of WSE-Listed Companies

On 30 June 2022, PZU published its Statement on PZU’s compliance with WSE BP 2021 (available on the Company’s website: https://www.pzu.pl/_fileserver/item/1531690). PZU applies all rules laid down in the Best Practices of WSE-Listed Companies 2021, apart from Practice 2.1, 2.2 & 4.1. The year 2024 saw an incidental violation of Practice 4.9.1. PZU monitors the degree and manner of compliance with the rules laid down in WSE BP 2021 and, if necessary, takes steps on an as-needed basis to ensure compliance therewith to the fullest extent and in an unquestionable manner.

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Chapter Material aspects of application of Best Practices of WSE-Listed Companies 2021 at PZU
Chapter 1.
Information policy and communications with investors
  • PZU sees to it that there is due communications with stakeholders by having a clear and reliable information policy. The Rules of PZU’s Information Policy towards Capital Market Players are available on the Company’s website: https://www.pzu.pl/_fileserver/item/1543244;
  • PZU maintains a corporate website at: http://www.pzu.pl, which features all disclosures required by the law and indicated in WSE BP 2021. Under Investor Relations http://www.pzu.pl/ri, which is available in Polish and English, the following is published, in particular:
    • business strategy with measurable financial and non-financial objectives, and the ESG strategy as its integral part that includes environmental issues, climate change risks and indicators, sustainable development, social and labor issues (available at: https://www.pzu.pl/_fileserver/item/1529174);
    • presentations including a discussion of quarterly financial results, the market environment, and progress on business and ESG strategies;
    • recordings and transcriptions of result conferences, shareholder meetings and other key corporate events;
    • statements of selected financial data;
    • aggregate recommendations of analysts with an average target price of shares, as well as the consensus for quarterly and annual projected consolidated results;
    • calendars for financial report publication, performance meetings, chats and participation in investor conferences.
  • PZU presents a description of its ESG activities, including how climate is accounted for in its decision-making processes, an equal pay index, and a statement of expenses incurred by the PZU Group to support culture, sport, physical activity, social organizations and foundations, charities, media, and trade unions. This information can be found in the integrated online annual report, the Management Board’s report on the Company’s activity and the report on non-financial information. All documents are available on the PZU website, in Polish and English.
  • Every quarter, PZU organizes result conferences for investors and analysts involving representatives of the Management Board and chat sessions for retail investors held by the CFO. The meetings are to discuss financial results, the degree to which the strategy is implemented, and the most important events affecting the PZU Group’s operations.
  • PZU representatives regularly contact investors (both institutional and retail) and analysts, allowing them to ask questions and obtain clarifications pertaining to matters of their interest. Contact occurs both within electronic communication channels and through in-person meetings during investor conferences organized by Polish and foreign brokerage houses as well as on-site meetings.
  • PZU endeavors to respond to investors’ questions immediately, and with respect to e-mail questions – within three working days.
Chapter 2.
Management Board and Supervisory Board
  • Supervisory Board Members and Management Board Members are subject to periodic suitability assessments. Supervisory Board Members are assessed by the Shareholder Meeting, and Management Board Members – by the Supervisory Board. The assessment includes verification process based on the criteria of competence, guarantee (of reputation and reliability), independent judgment (including no conflict of interest) and sufficient time dedication to the position of the Supervisory Board Member or the Management Board Member, as the case may be. All Members of the Management Board and of the Supervisory Board had the relevant competencies, skills and experience, as described later in the statement, and a positive suitability assessment.
  • Members of the PZU Management Board and of the PZU Supervisory Board strove to apply the rules relating to them to the fullest possible extent, which included:
    • in 2023, functions on the PZU Management Board were the main area of the professional activity of PZU Management Board Members;
    • a consent from the PZU Supervisory Board is required for PZU Management Board Members to hold positions in corporate bodies outside of the PZU Group;
    • the PZU Supervisory Board Members dedicated sufficient time to perform their duties, with the majority of Members attending all PZU Supervisory Board meetings in 2023;
    • the PZU Supervisory Board Chair did not combine this function with that of Chair of the Audit Committee operating within the PZU Supervisory Board;
  • As at the end of 2023, 8 out of 9 PZU Supervisory Board Members (including the Chair of the Audit Committee and all of its Members) met the independence criteria laid down in the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision and had no actual and material relations with any shareholder holding at least 5% of the total vote in the Company;
  • As at the date of signing of the Activity Report, i.e. 20 March 2024, 9 out of 10 Supervisory Board Members (including 3 out of 4 Audit Committee Members, i.e. the Chair and two Members) met the independence criteria laid down in the Act of 11 May 2017 on Statutory Auditors, Audit Firms and Public Supervision. All Supervisory Board Members have submitted declarations that they have actual and material relations with any shareholder holding at least 5% of the total vote in the Company.
  • PZU sets aside administrative and financial resources required to ensure the efficient operation of the Company’s Supervisory Board.
  • As regards Principles 2.1 WSE BP & 2.2 WSE BP, PZU employs a diversity policy towards members of PZU governing bodies, adopted by the PZU Supervisory Board and Shareholder Meeting, which specifies the diversity targets and criteria in such areas as gender, education, specialist knowledge, age, and professional experience, and lays out the timeline and method for monitoring the achievement of those targets. In line with the policy, the Shareholder Meeting and Supervisory Board, in selecting the members of the Supervisory Board and the Management Board, respectively, strive for gender parity in PZU governing bodies, with the minimum gender minority participation at 30%. At the end of 2023, the gender diversity condition for the minority share of no less than 30% was not satisfied in the PZU Supervisory Board. This condition, was fulfilled in the case of PZU’s Management Board. As of the date of signing the management report, the the gender diversity condition for the minority share of no less than 30% was not fulfilled in the case of the PZU Management Board, however it was met in the case of the PZU Supervisory Board. PZU points to the following issues:
    • as regards qualifications and requirements for those occupying positions in management and supervisory bodies, PZU in particular takes into account the statutory criteria for education and professional experience adequate to the functions discharged on such positions in the entity conducting insurance activity;
    • in shaping the membership of the Company’s corporate bodies, PZU applies the diversity policy while also maintaining an objective approach and being guided by substantive criteria;
    • the diversity targets and criteria in such areas as education, specialist knowledge and professional experience, as well as the timeline and method for monitoring the achievement of those targets are laid out in the Suitability Assessment Rules of the Supervisory Board and Audit Committee as well as of the PZU Management Board, adopted by the virtue of resolutions of the PZU Shareholder Meeting and Supervisory Board, respectively.
  • The Supervisory Board effectively supervises PZU’s operations, verifies the work of the Management Board in implementing the strategic goals as established, and monitors the performance of PZU and the PZU Group. The Management Board provides the Supervisory Board with access to information on matters concerning PZU. Each year, the Supervisory Board prepares and provides the Shareholder Meeting with an annual report on its activities containing all elements specified under Principle 2.11 WSE BP, including an assessment of the company’s position, an assessment of the internal control, risk management and compliance systems, an assessment of the compensation policy functioning, an assessment of how PZU complies with its disclosure obligations, an assessment of the reasonableness of expenses incurred by PZU and the PZU Group to support culture, sport, charities, media, social organizations and trade unions, an assessment of the implementation of key sustainable development commitments, and an assessment of the implementation level of the diversity policy with respect to the Management Board and the Supervisory Board.
Chapter 3.
Internal systems and functions
  • PZU maintains effective internal control, risk management and compliance systems, as well as an effective internal audit function:
    • the PZU Group’s internal control system has been developed at the level of the leading entity (i.e., PZU) and is applicable to all members of the PZU Group, in consideration of their distinct nature, proportionality and adequacy;
    • in order to ensure the proper quality and continuous improvement of the internal audit function, internal (on an annual basis) and external (not less than once every five years) assessments of the PZU’s internal audit activities are conducted. A thirdparty assessment of the internal audit function at PZU conducted by PwC Advisory and an analysis of coordination of the Group’s internal audit run by the Internal Audit Department demonstrated general compliance with the International Standards for the Professional Practice of Internal Auditing and the Code of Ethics developed by the IIA;
    • PZU exercises supervision over the entire PZU Group’s risk management system. This supervision is based on mutual cooperation agreements entered into with the subsidiaries and the information provided thereunder. PZU manages risk at the PZU Group level on an aggregate basis, especially with respect to capital requirements. In addition, PZU, as a leading entity, manages risk concentration on the level of the whole financial conglomerate. PZU makes efforts aimed at ensuring adequate and uniform standards of compliance solutions in all subsidiaries and monitors compliance risk throughout the entire Group.
  • Within the PZU structure, there are separate units responsible for performing the tasks of each system and function – the Internal Audit Department, the Compliance Department, the Risk Department and the Actuarial Department:
    • The Managing Director on Audit, who heads the Internal Audit Department, reports functionally to the Audit Committee of the PZU Supervisory Board and organizationally directly to the CEO of PZU. Appointment and dismissal of a person to head the Internal Audit Department requires the opinion of the Audit Committee of the PZU Supervisory Board. The person managing internal audit may directly contact the Supervisory Board and Audit Committee Chairperson, and in particular immediately provide the Audit Committee with material information with respect to material irregularities found;
    • The Managing Director on Regulations, who supervises the Compliance Department, organizationally reports directly to the CEO of PZU. Appointment and dismissal of a person to head the Compliance Department requires the opinion of the Audit Committee of the PZU Supervisory Board. The Managing Director on Regulations, as well as the Director of the Compliance Department, have direct access to the PZU Management Board Members and PZU Supervisory Board Members to whom the compliance function report;
    • The Director of the Risk Department organizationally directly reports to a PZU Management Board Member;
    • The actuarial function is supervised at PZU by the Company’s Chief Actuary, who is also the Director for Underwriting Risk in the Actuarial Department at PZU. The Company’s Chief Actuary reports to the PZU Board Member supervising the Actuarial Office and submits an annual Actuarial Function Activity Report to the PZU Management Board.
  • The annual activity report concerning the Internal Audit Department, featuring, among others, an assessment of the internal control, compliance and risk management systems, is adopted by the virtue of the resolution of the PZU Management Board. The report is presented to the Audit Committee of the PZU Supervisory Board. The assessment presented in the report is discussed by the PZU Audit Committee Chair at the meeting of the PZU Supervisory Board.
  • The PZU Supervisory Board monitors the efficiency of the internal control, risk management system and compliance function, along with the efficiency of the internal audit function based on, among others, the interim reports it receives; it also carries out an annual assessment concerning the efficiency of those systems and functions and includes relevant disclosures in its annual report.
  • The compensation of persons responsible for risk management and compliance and of the Head of the Internal Audit Department depends on the completion of the assigned tasks, regardless of PZU’s financial performance.
Chapter 4.
Shareholder Meeting and relations with shareholders
  • On 29 June 2022, the PZU Shareholder Meeting adopted a resolution on the adoption of WSE BP 2021 in which it declared that, acting within its powers, it will be guided by WSE BP 2021 to the extent that it is addressed towards the Shareholder Meeting and shareholders, taking into account the generally applicable provisions of the law and PZU’s Articles of Association.
  • In determining the time and place for the Shareholder Meeting, PZU ensures that as many shareholders as possible may take part – Shareholder Meetings take place in Warsaw, at the PZU’s registered office. Media representatives may be present at a PZU Shareholder Meeting;
  • PZU does not allow shareholders to participate in the shareholder meeting using means of electronic communication (Principle 4.1). PZU believes that there are many technical and legal factors that may affect the proper course of the shareholder meeting if an e-Shareholder Meeting is introduced. The legal doubts pertain to the ability to identify shareholders and check the legitimacy of participants in the shareholder meeting. The risk of the occurrence of technical difficulties, e.g. with the internet connection or possible external interference in the IT systems may disrupt the work of the shareholder meeting and evince doubts concerning the efficacy of the resolutions adopted during its course.
  • PZU live-streams Shareholder Meetings and information concerning the planned broadcast is published in advance on the Company’s website.
  • After the Shareholder Meeting concludes its session, the recording is published on the PZU’s website under the Investor Relations section (https://www.pzu.pl/en/investor-relations/shares-and-bonds/shareholders-meetings);
  • Members of the Management Board and of the Supervisory Board take part in the Shareholding Meeting, in a composition allowing them to give substantive answers to questions asked during the Meeting. The Management Board presents the participants of the Shareholder Meeting with the Company’s financial results and other material information, including non-financial information, and answers shareholders’ questions;
  • PZU endeavors to ensure that draft resolutions be submitted no later than three days before the shareholder meeting. The PZU Management Board appends justifications to its draft resolutions on matters and decisions which do not pertain to the business of the meeting, unless such justifications arise from the documentation presented to the Shareholder Meeting. Draft resolutions submitted by shareholders should also be submitted with justifications. PZU publishes draft resolutions with justifications on the PZU website under the Investor Relations section on the day of the Shareholding Meeting announcement (https://www.pzu.pl/en/investor-relations/shares-and-bonds/shareholders-meetings);
  • In 2024, Principle 4.9.1 was incidentally violated. The principle states that where the shareholder meeting deliberates on the appointment of a person to the supervisory board or the appointment of a supervisory board for a new term, candidates for the board shall be put forward within a timeframe allowing the shareholders present at the shareholder meeting to make a decision with due consideration, but no later than three days prior to the shareholder meeting; candidate submissions, together with the complete documents concerning them, shall be immediately published at the Company’s website. Seeing that some candidates for the PZU Supervisory Board were put forward by a Company’s shareholder on 14 February 2024 (i.e., one day before the PZU Extraordinary Shareholder Meeting), there has been an incidental violation of Principle 4.9.1. PZU published a current report on the submission of candidates for the PZU Supervisory Board by a shareholder and posted complete materials on the submitted candidates on its website as soon as they were received.
  • PZU pays out the dividend to its shareholders regularly in line with PZU’s dividend policy and KNF’s position. The amount of the dividend proposed by the PZU Management Board is no less than 50% of the PZU Group’s consolidated financial result. Since 2010, i.e. Since its first listing at WSE, PZU has been paying out the dividend every year, except for 2020, when KNF and EIOPA recommended that insurers temporarily suspend the payment of dividend.
Chapter 5.
Conflict of interest and related party transactions
  • PZU has internal regulations (in particular, rules for managing conflicts of interest, principles of ethics applicable to members of corporate bodies, PZU Group Best Practices) on the management of a conflict of interest and conclusion of transactions with related parties in the event that a conflict of interest may arise, which guarantee compliance with the principles found in Chapter 5 WSE BP 2021. These regulations also apply to all PZU Group companies, appropriately to the profile and scale of their operations.
  • No PZU shareholder is treated preferentially in relation to other shareholders with respect to transactions with related parties. PZU has regulations concerning transfer pricing. As a general rule, for each transaction between related parties, an analysis is prepared to confirm that the transaction was concluded at arm’s length.
  • According to PZU’s Articles of Association, if the value of a transaction with a related party exceeds 5% of total assets, the PZU Supervisory Board is obliged to decide whether to approve the transaction.
  • In order to reduce the risk of conflict of interest, in accordance with the principles of ethics applicable to members of corporate bodies, Members of the PZU Management Board and of the PZU Supervisory Board are obliged to:
    • avoid activities that may give rise to conflicts of interest,
    • take necessary measures to identify conflicts of interest,
    • obtain approval (from the Management Board or the Supervisory Board or the Shareholder Meeting, as appropriate) for membership on the supervisory or management boards of public companies other than PZU Group companies, and entities whose operations may potentially be deemed as competitive,
    • strive to eliminate or reduce the negative impact of conflicts of interest on the operation of the PZU Group company and its relations with the remaining PZU Group companies, clients and other external entities,
    • inform (the Management Board or the Supervisory Board or the Shareholder Meeting, as appropriate) of a conflict of interest or the possibility of a conflict of interest, and to refrain from taking part in discussions and voting on a matter in which a conflict of interest has arisen;
    • to inform the compliance unit of the possibility of a conflict of interest and the measures taken;
  • Potential conflicts of interest involving Management Board or Supervisory Board Members are analyzed within the framework of suitability assessment before these persons are appointed to those bodies, and within cyclical suitability reassessments. An annual analysis of additional actions taken by members of corporate bodies is also carried out.
Chapter 6.
Remunerations
  • PZU has a remuneration policy for PZU Management Board Members and PZU Supervisory Board Members, adopted by the PZU Shareholder Meeting. The objectives of the compensation policy are as follows:
    • supporting the implementation of the PZU Group’s strategy,
    • matching the level and structure of compensation to the PZU’s risk profile,
    • ensuring proper financial management and its long-term stability,
    • pursuing a bonus policy that is flexible and adapted to the PZU’s business position, by linking the variable compensation system of the company’s managers to the achievement of the management targets as determined and ensuring that this variable compensation is in proper proportion with fixed compensation,
    • prevent conflicts of interest.
  • The compensation of Management Board Members is composed of a fixed and a variable portion. Variable compensation for a given financial year depends on the achievement of management targets selected by the Supervisory Board from a list, including the improvement of economic and financial indicators, and actions of social interest, including those which make the Company contribute to environmental protection.
  • Compensation of Supervisory Board Members does not depend on PZU’s performance. They receive a fixed monthly compensation (regardless of the number of meetings), which is the product of the average monthly compensation in the corporate sector without distributions of bonuses from profit in Q4 of the previous year and the following multiplier of 2.75 The chairpersons of committees operating within the Supervisory Board receive compensation increased by 9%.
  • Compensation rules do not provide for remuneration in the form of management options.

Application of Corporate Governance Rules for Regulated Institutions

The PZU Management Board and Supervisory Board adopted resolutions (respectively, UZ/375/2014 of 17 December 2014 and URN/49/2014 of 19 December 2014), whereby they adopted standards arising from the Corporate Governance Rules for Regulated Institutions (CGR) to the broadest possible extent while giving consideration to the rule of proportionality and the rule “comply or explain.”

In its resolution no. 36/2015 of 30 June 2015, the PZU Ordinary Shareholder Meeting declared that, acting within its powers, it will be guided by CGR in the wording adopted by KNF on 22 July 2014, subject to rules from which it derogated, i.e., rules under § 10(2), § 12(1), and § 28(4).

The statement on compliance with the Corporate Governance Rules for Regulated Institutions, taking into account the rules partially complied with and those which do not apply to PZU due to the nature of its operations is available on the PZU’s website: https://www.pzu.pl/grupapzu/spolki/pzu-sa/zasady-ladu-korporacyjnego.

PZU monitors the degree and manner of compliance with CGR and, if necessary, takes steps on an as-needed basis to ensure compliance therewith to the fullest extent.

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Chapter Material aspects concerning the application of Corporate Governance Rules for Regulated Institutions
Chapter 1.
Organization and organizational structure
  • PZU has relevant internal rules and regulations concerning its organization and organizational structure. PZU’s organization enables the achievement of long-term strategic objectives and independent monitoring of operational and strategic risks. The strategic objectives are laid down in the PZU Group Strategy adopted by the Management Board and approved by the PZU Supervisory Board.
  • The PZU organizational structure is commensurate with the scale of operations, the extent of realized functions and the scale and complexity of risks, and it effectively supports the achievement of the Company’s strategic objectives as well as immediate business and operating goals. For the organizational structure, please consult Investor Relations in PZU’s website (https://www.pzu.pl/en/investor-relations/about-the-group/group-structure). Within the PZU organizational structure, key functions are separated, there is an established scope of competence for each PZU Board Member and PZU Group Director, and there is a clear division of tasks and responsibilities among the various units. PZU headquarters is a support center for the PZU Management Board in managing the Company’s operations and coordinating activities within the PZU Group (headquarters provides, among other things, corporate governance function and supervision, strategy, internal audit, risk, compliance, legal services, security, AML, client experience management and communication, sustainable development, administration, procurement, real estate, actuarial services, reinsurance); specialized units carry out operational activities in the following areas: claims and benefits, assistance, customer service, insurance operations, insurance accounting and collection, analysis and reporting of employee operations, while organizational units in the field structure, including PZU Branches, are responsible for insurance sales and customer service;
  • PZU has detailed emergency and crisis management methods, including the PZU Group’s Corrective Measures Plan (a document applicable to the PZU Group’s significant companies, particularly the banks operating within the Group) and the Business Continuity Plan. Also, the Crisis Management Team has been functioning at PZU since 2022; the team oversees the operation of the business continuity management system and is responsible for managing a crisis situation.
  • The Compliance Department and the Legal Department at PZU monitor the law and the recommendations of the supervisory authorities, ensuring that PZU’s activities comply with the law and supervisors’ requirements. Irregularities at PZU may be reported anonymously. The Whistleblowing Procedure ensures confidentiality, discretion and personal data protection for whistleblowers. An employee who reports a potential irregularity in good faith is not at risk of any sanctions; nor does he or she incur any consequences pertaining to his or her employment relationship due to that report. The Management Board provides the Supervisory Board with quarterly risk reports, which include information on compliance risk management and serious fraud, as well as with quarterly internal audit reports.
Chapter 2.
Relations with shareholders of a regulated institution
  • PZU operates with the interests of all stakeholders in mind. No shareholder is privileged in access to information. To this end, PZU adheres to the provisions included in (among others) the Rules of PZU’s Information Policy towards Capital Market Players and Correspondence Procedure in the Area of Investor Relations, Best Practices of the PZU Group, Rules for Managing Conflicts of Interest, and Principles of Ethics Applicable to Members of Corporate Bodies.
  • PZU ensures that shareholders have equal access to information, including such featured on shareholder meetings. All disclosures are published, among other places, under Polish and English-language Investor Relations in PZU’s website. The Investors Relations has a separate tab dedicated only to Shareholding Meetings, where draft resolutions with justifications are posted each time a Shareholder Meeting is announced.
  • Shareholders have an impact on the PZU’s operations by passing resolutions at the PZU Shareholder Meeting. One share of PZU gives the right to one vote at the Shareholder Meeting. However, PZU’s Articles of Association limit the voting rights of shareholders in such a way that no shareholder other than the State Treasury may exercise more than 10% of the total number of votes existing in PZU at the Shareholder Meeting;
  • PZU’s Articles of Association clearly define the competencies of the Management Board, Supervisory Board and Shareholder Meeting, ensuring the separation of ownership and management functions. As at the end of 2023, 8 out of 9 Supervisory Board Members met the criterion of independence; and as at the date of signing the Activity Report (i.e. 20 March 2024) – 9 out of 10.
  • PZU does not allow active electronic participation in Shareholder Meetings due to reasons presented with respect to the application of Principle 4.1 WSE BP 2021. PZU shareholders may watch online livestreams of the Shareholder Meeting.
  • In the view of certain capital and personal links, PZU pays particular attention to the relationships and transactions within the PZU Tax Group and with related parties. For this purpose, it applies relevant policies and procedures. All transactions are performed in compliance with legal and tax requirements, in a transparent manner, meeting market standards and with documentation of transfer pricing to confirm that the prices used in transactions with related parties reflect the arm’s length principle.
  • Decisions concerning the payout of dividend are taken in line with the Capital and Dividend Policy of the PZU Group and the recommendations of KNF. In line with the policy, PZU endeavors to maximize the rate of return on equity for the parent company’s shareholders, in particular by maintaining the level of security and retaining capital resources for strategic growth objectives through organic growth and acquisitions.
Chapter 3.
Management
  • The Management Board is a managing body at PZU and is collegial in nature. At the end of 2023, it was composed of 8 persons. Management Board Members meet legal criteria (including those in the Insurance and Reinsurance Activity Act and Act on the Management of State Property), regulatory requirements, WSE BP 2021, and CGR. Management Board Members have the adequate level of knowledge, experience and skills to head the PZU business and their competencies complement each other allowing for a collegial level of management. The Supervisory Board assesses and reassesses the suitability of candidates for and members of PZU Management Board – individually and jointly. Verification is based on the criteria of competence, guarantee (of reputation and reliability), independent judgment (including no conflict of interest) and sufficient time dedication to the position of the Management Board Member. The individual suitability assessments of PZU Management Board Members conducted in 2023 confirmed that all Members of the Management Board had adequate knowledge and skills and meet all the suitability criteria necessary to hold their positions.
  • The Management Board is the sole body authorized to manage PZU’s operations and the sole to be responsible for it. The Management Board acts in the interest of PZU, in accordance with the Management Board’s Rules and Regulations, guided by law, recommendations of supervisory authorities, and internal regulations, having the safety of the Company in its mind.
  • The President of the Management Board directs the work of the Management Board. The Management Board Members are jointly responsible for the decisions which are reserved for their remit, regardless of the internal division of responsibility for the respective areas of operations. The PZU Management Board Members exercise oversight with respect to processes within their areas. The scopes of the areas supervised by individual Management Board Members are clearly and unambiguously defined in the Order of the President of the PZU Management Board on organizational oversight performed in the Company by PZU Management Board Members.
  • Management Board Members are not involved in social or profit-making activity which could lead to a conflict of interest with respect to PZU’s operations, or adversely affect their reputation as a Management Board Member. The rules for identifying, managing and preventing conflicts of interest and the rules for excluding a member of the managing body in the event of a conflict of interest or the possibility of a conflict of interest are laid down in the Management Board’s Rules and Regulations and the Code of Ethics for Members of Management Boards of PZU Group Companies.
Chapter 4.
Supervising body
  • The Supervisory Board is a supervising body at PZU. Members of the Supervisory Board meet legal criteria (including those in the Insurance and Reinsurance Activity Act and Act on the Management of State Property), regulatory requirements, WSE BP 2021, and CGR. Supervisory Board Members have the adequate level of knowledge, experience and skills to supervise the PZU business and their competencies complement each other allowing for a collegial level of oversight. The Shareholder Meeting assesses and reassesses the suitability of candidates for and members of the Supervisory Board – individually and jointly. Verification is based on the criteria of competence, guarantee (of reputation and reliability), independent judgment (including no conflict of interest) and sufficient time dedication to the position of the Supervisory Board Member. In 2023 and as at the date of signing the Activity Report, i.e. 20 March 2024, all Members of the Supervisory Board and the Supervisory Board as a body had a positive suitability assessment.
  • The Supervisory Board permanently and continually supervises PZU’s operations in all areas and may undertake necessary supervisory action in an ongoing manner. The competences of the Supervisory Board are regulated by the Articles of Association and the Rules and Regulations of the Supervisory Board. The Supervisory Board and respective Members thereof are guided by objective assessment and judgment, and among others may avail themselves of the services of experts and advisory companies.
  • The Chair of the Supervisory Board directs the work of the Supervisory Board. At the end of 2023, it was composed of 9 persons. 8 Members of the Supervisory Board met the independence criteria laid out in the Statutory Auditor Act (including all Members of the Audit Committee). As at the date of signing the Activity Report, i.e. 20 March 2024, the Supervisory Board consisted of 10 persons. 9 Members of the Supervisory Board met the independence criteria laid out in the Statutory Auditor Act (including 3 out of 4 Members of the Audit Committee, i.e. the Chair and two Members).
  • The Audit Committee of the Supervisory Board, in accordance with its Rules and Regulations, monitors the performance of auditing activities at PZU based on the principles and schedule agreed upon in advance with the auditor, in particular the performance of the audit by the audit firm, taking into account any conclusions and findings of the Polish Audit Supervision Agency. A statutory auditor provides the Supervisory Board with their opinion on the conduct of the audit of the statements. In 2023, the Audit Committee assessed the PZU’s financial statements and the PZU Group’s consolidated financial statements for the year ended 31 December 2022, and the Management Board report on the activity of the PZU Group and PZU in 2022, with the report on non-financial information;
  • Supervisory Board Members exercise their functions actively, as testified to by the number of and high attendance rate at sessions of the Supervisory Board and separately held sessions of the Supervisory Board Committees in 2023. The competences, qualifications, and professional experience of the Management Board Members and their guarantee of due oversight ensure the due performance of the Supervisory Board’s duties.
  • Supervisory Board Members are not involved in social or profit-making activity which could lead to a conflict of interest with respect to PZU’s operations, or adversely affect their reputation as a Supervisory Board Member. The rules for identifying, managing and preventing conflicts of interest concerning PZU Supervisory Board Members have been set out in the Code of Ethics for PZU Supervisory Board Members.
  • The PZU Supervisory Board assesses compliance with CGR, and the statement in this regard is included in the PZU Supervisory Board’s annual report, made available at (https://www.pzu.pl/grupa-pzu/spolki/pzu-sa/zasady-ladu-korporacyjnego).
Chapter 5. Compensation policy
  • The rules governing the compensation for Management Board and Supervisory Board Members are laid out in the Compensation Policy for PZU Management Board and Supervisory Board Members, adopted by the Shareholder Meeting in the Resolution 36/2020 of 26 May 2020. On 7 June 2023, by the Resolution 65/2023, the Ordinary Shareholder Meeting of PZU introduced a provision in the Policy stating that the Policy also aims to ensure that sustainability requirements are properly integrated into the risk management process at the PZU Group level.
  • The compensation rules for PZU employees are regulated by the PZU Compensation Policy adopted by the PZU Management Board in 2016. The Policy was updated in 2022, in particular, to clarify how the Policy incorporates ESG risks included in the risk management system.
  • The Supervisory Board prepared the Report on the Compensation Policy at PZU, which is a part of the Supervisory Board’s Report for 2022, and presented it to the Ordinary Shareholder Meeting on 7 June 2023. The Supervisory Board assessed that the Company had properly carried out the adopted Policy with all compensation rules dedicated to the various groups of people forming the Company. The Shareholder Meeting reviewed and then approved the PZU Supervisory Board’s Report for 2022.
  • The Compensation Policy is not an incentive to take excessive risk within PZU’s operations. The rules governing variable compensation aim to support proper and efficient risk management, discourage excessive risk-taking, and assist in the implementation of the PZU Group’s Strategy.
  • The variable compensation of the Management Board Members and Group Directors for a given financial year depends on the level of achievement of the management objectives set by the Supervisory Board. In 2023, these included the improvement of economic and financial indicators (financial result, ROE); level of implementation of key measures of the PZU Group Strategy; and taking actions of social interests, including those which make the Company contribute to environmental protection. 40% of the variable compensation is deferred for three consecutive years. A Management Board Member may acquire the right to 1/3 of the deferred compensation provided that during this period no circumstances arise that prove that the conditions for payment of a given portion of variable compensation have not been satisfied. In 2023, the Supervisory Board set the Management Board’s objectives for 2023, settled the objectives for 2022, and decided to pay the Non-Deferred Variable Compensation for 2022 and the Deferred Variable Compensation for 2019-2021.
  • Wynagrodzenia członków Zarządu oraz osób pełniących kluczowe funkcje są finansowane i wypłacane ze środków PZU.
  • The compensation of the Management Board Members and persons exercising key positions is financed and paid out from PZU funds.
Chapter 6. Information policy
  • PZU has a transparent information policy that takes into account the needs of investors and clients. The PZU website has a dedicated Investor Relations section aimed at capital market players. Communication with investors is carried out on the basis of the Rules of PZU’s Information Policy towards Capital Market Players. The document, which is published on the PZU’s website, includes the scope, manner and timing of information dissemination, the principles and tools used in communication with capital market players, and incorporates regulations applicable to the status of a public company. The product section of the website presents, in a simple and accessible way, information on the main features of the products, as well as the General Terms and Conditions of Insurance and information supporting clients in their contact with PZU, including contact details and complaint handling rules.
  • Since 2014, PZU has published integrated interactive Annual Reports. They describe the most important events, achievements and plans of the PZU Group, and include tools for a multifaceted analysis of financial results, corporate events and macroeconomic data. The reports include interactive infographics, animations and video clips, which offer a succinct presentation of the PZU Group’s activities.
  • PZU provides investors with equal access to information, among other things: it ensures proper execution of information obligations obligatory for listed companies, all materials after being sent to the WSE via the ESPI system are published immediately in Polish and English on the website in the Investor Relations section.
  • In addition to periodic reports required by law, PZU prepares quarterly performance presentations, which are published on the Investor Relations section of the website, along with financial data in Excel format and recordings of result conferences. PZU also posts recordings of shareholder meetings and other important corporate events.
  • PZU’s information policy with respect to capital market players specifies deadlines for responding to questions submitted by e-mail and telephone – PZU makes efforts to respond promptly, in the case of questions submitted by e-mail within a maximum of 3 working days.
Chapter 7.
Promotional activities and client relations
  • PZU has internal regulations which cover, among other things, issues related to ensuring compliance of marketing activities with the law, in particular with the laws on competition and consumer protection and on combating unfair competition. PZU also applies the internal PZU Code of Ethics in Advertising, which is a collection of additional standards, independent of the law and the guidelines of the Financial Supervision Commission.
  • The Marketing Department uses the practice of verification of planned marketing messages prior to their publication in terms of their transparency, authenticity and accuracy of information contained therein with other PZU entities. The marketing activities are particularly consulted with the Legal Department and the Compliance Department (for compliance risk, including compliance with the law – risk of misleading the consumer, use of messages infringing the addressees’ interests) and pertinent departments responsible for a given product (consistency of the message with the facts – risk of misleading consumers).
  • PZU and PZU Życie apply the “Principles regarding the product management system” defining the key requirements and activities to be performed at each stage of the product life cycle to ensure that the developed and distributed products meet the needs and requirements of the target client groups. Before they are offered to clients, all of the Group’s services and products are carefully reviewed by experts, including relevant legal and compliance departments, for compliance with regulations and requirements to protect clients’ interests and current case law on consumer rights.
  • Before a product is sold, a client is given a so-called Product Information Document, a short document about the product that allows the client to quickly learn about the terms of the product. The information on the PZU’s website is similarly structured, with the main features of the product presented in a simple way.
  • PZU endeavors to make communication with clients simple and understandable. The Plain Language Department designs content, changes documents and communications for clients (including marketing materials, insurance terms and conditions, and responses to complaints). It makes sure that the content is linguistically correct, well-designed and understandable; that is useful and does not raise any doubts.
  • The process and rules for handling complaints, including issues of timeliness and quality of processing of client requests, are defined in PZU’s internal regulations. The rules for handling complaints are available on the PZU website (https://www.pzu.pl/kontakt-i-pomoc/skargi-reklamacje/jak-rozpatrujemy-skargi-reklamacje);
  • Since 2017, PZU has had a Client Ombudsman, who, among other things, participates in mediations before the Financial Ombudsman and the KNF, and conducts individual meetings and negotiations with customers on disputes. In addition, a Health Ombudsman position was established in 2020; the Health Ombudsman, among other things, conducts individual meetings and negotiations with clients on health insurance disputes.
Chapter 8.
Key internal systems and functions
  • PZU has an internal control system in place, adjusted to the scale of its operations and its organizational structure. Its purpose is to ensure the effectiveness and efficiency of operations, reliability of reporting, in particular financial reporting, compliance of the Company’s operations with the applicable laws, internal regulations and standards of conduct, and adherence to risk management rules.
  • A Compliance Department has been separated at PZU in terms of organization and competence, which performs tasks in ensuring compliance of the insurance company’s activities with the law and internal regulations.
  • An effective internal audit function operates at PZU, which involves a regular and orderly assessment of the adequacy and effectiveness of the internal control system and other components of the management system.
  • PZU ensures the objectivity and independence of the internal audit and compliance functions. The Managing Director on Audit, who heads the Internal Audit Department, reports functionally to the Audit Committee of the PZU Supervisory Board and organizationally directly to the CEO of PZU. Appointment and dismissal of a person to head the Internal Audit Department requires the opinion of the Audit Committee of the PZU Supervisory Board. The Managing Director on Regulations, who supervises the Compliance Department, organizationally reports directly to the CEO of PZU. Appointment and dismissal of a person to head the Compliance Department requires the opinion of the Audit Committee of the PZU Supervisory Board. Managing Director on Audit, Managing Director on Regulations and Director of the Compliance Department attend all meetings of the Audit Committee of the PZU Supervisory Board and the PZU Management Board, and have the opportunity to report and communicate directly with Members of the Management Board and the Supervisory Board of PZU.
  • PZU has an adequate and effective risk management system. The Management Board is responsible for organizing and ensuring the operation of this system. The risk management process also involves committees operating at PZU, which make decisions on limiting the level of individual risks to the framework set by the risk appetite.
  • The Audit Committee of the PZU Supervisory Board supervises and monitors the effectiveness of the internal control, internal audit and risk management systems at PZU within the framework of the decisions set forth in the PZU’s Articles of Association and the Rules and Regulations of the PZU Supervisory Board.
Chapter 9. Exercise of rights from assets acquired at the client’s risk
  • PZU does not offer products that involve asset management at the client’s risk
XLS

Rule Justification for partial application
Chapter 2.
The rule laid down in § 8 section 4 of the Corporate Governance Rules reading as follows: “The supervised institution, when justified by the number of shareholders, should strive to facilitate the participation of all shareholders in the meeting of the constituent body of the supervised institution, including by providing opportunities for electronic active participation in meetings of the constituent body.”		 PZU shareholders can watch (in real time online) the broadcast of the General Meeting. PZU, however, has not decided to introduce a so-called e-Shareholder Meeting. PZU believes that there are many technical and legal factors that may affect the proper course of the Shareholder Meeting. The legal doubts pertain to the ability to identify shareholders and check the legitimacy of participants in the shareholder meeting. The risk of the occurrence of technical difficulties, e.g. with the internet connection or possible external interference in the IT systems may disrupt the work of the Shareholder Meeting and evince doubts concerning the effectiveness of the resolutions adopted during its course. The appearance of these risks may affect the proper application of this rule to a full extent.
Chapter 4.
The rule laid down in § 21 section 2 of the Corporate Governance Rules reading as follows: “In the composition of the supervising body, there should be a separate function of a chairperson who directs the work of the supervising body. The election of the chairperson of the supervising body should be based on experience and leadership skills, taking into account the criterion of independence.”		 In accordance with the Commercial Companies Code and the Articles of Association of PZU, the function of Chairperson was separated in the composition of the PZU Supervisory Board. The composition of the PZU Supervisory Board, including the function of Chairperson, is shaped in accordance with the independence criteria indicated in the Act of 11 May 2017 on auditors, audit firms and public supervision. The election of the Chairperson of the Supervisory Board is made on the basis of the criterion of their knowledge, experience and skills, which confirm the competence necessary for the proper performance of supervisory duties. The application of the independence criterion in the case of the chairperson, according to the KNF Office’s explanation of the rule in question, may raise questions about potential conflicts with the law on shareholder rights.
Chapter 8.
The rule laid down in § 49 section 3 of the Corporate Governance Rules reading as follows: “In a regulated institution, the appointment and removal of the head of the internal audit function and the head of the compliance function shall be made with the approval of the supervising body or the Audit Committee.”		 PZU applies the rules set forth in § 14 of the Corporate Governance Rules in full, which means that PZU’s Management Board is the only body authorized and responsible for managing the company’s operations. In addition, according to labor law, labor law activities are performed by the managing body. In view of the above, a solution has been adopted in PZU, which stipulates that the appointment and dismissal of the Head of the Internal Audit Department requires the opinion of the Audit Committee of the Supervisory Board. The Head of the Compliance Department is appointed and dismissed in the same way. The PZU Management Board consults with the Audit Committee of the PZU Supervisory Board on these decisions.
XLS

Rule Justification for waiving the rule
Chapter 2.
The rule laid down in § 10 section 2 of the Corporate Governance Rules reading as follows: “The implementation of personal rights or other special rights for shareholders of the regulated institution should be justified and serve the accomplishment of the regulated institution’s material operating goals. The possession of such rights by shareholders should be reflected in the wording of the primary governing document of the regulated institution.”		 According to the substantiation presented by the shareholder (State Treasury) along with the draft resolution of the OSM, the waiving of this rule is due to the unfinished process of the company’s privatization by the State Treasury. In practice, in accordance with the generally applicable law, including the Commercial Companies Code, all shareholder rights are reflected in the Articles of Association and are always justified – an example is § 20 section 7 of the Articles of Association, which grants the State Treasury the right to appoint and remove one member of the Supervisory Board. Leaving such a power to the State Treasury was justified during the period of the company’s privatization, with the Articles of Association stating that this power will expire when the Treasury ceases to be a shareholder of the company.
Chapter 2.
The rule laid down in § 12 section 1 of the Corporate Governance Rules reading as follows: “Shareholders are responsible for recapitalizing without delay a regulated institution in a situation in which it is necessary to maintain the regulated institution’s equity at the level required by the legal regulations or oversight regulations as well as when the security of the regulated institution so requires.”		 According to the substantiation presented by the shareholder along with the draft resolution of the OSM, the waiving of this rule is due to the unfinished process of the company’s privatization by the State Treasury; The decision to apply this rule should be made by the company’s shareholders, taking into account the provisions of generally applicable law, in particular Article 301 §§ 4 and 5 of the Commercial Companies Code, according to which shareholders are only obliged to provide the services specified in the Articles of Association and are not liable for the company’s obligations.
Chapter 5.
The rule laid down in § 28 section 4 of the Corporate Governance Rules reading as follows: “The decisionmaking body assesses whether the implemented compensation policy fosters the regulated institution’s development and operating security.”		 According to the justification provided by a shareholder with the draft resolution, the waiver of the rule is dictated by the overly broad subjective scope of the remuneration policy subject to review by the constituent body. The remuneration policy for persons in key positions who are not members of the supervising and management bodies is subject to the evaluation of their employer or principal, which is the company represented by the Management Board and controlled by the Supervisory Board. Notwithstanding the above, in accordance with Article 90g of the Act of 29 July 2005 on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organized Trading and Public Companies, the Supervisory Board is required to prepare an annual report on the remuneration of members of the Management Board and the Supervisory Board, and the General Meeting shall adopt a resolution to give its opinion on the report. The Compensation Policy for members of the PZU Management and Supervisory Boards, adopted by the General Meeting Resolution No. 36/2020 of 26 May 2020, is reviewed by the Management Board once a year, and a report determining the status of the Policy’s implementation and recommendations for changes to the Policy, if necessary, is presented to the Supervisory Board. In addition, a commitment to adopt a General Meeting resolution on the Policy at least every four years was introduced.
XLS

Rule Justification
Chapter 2.
The rule laid down in § 11 section 3 of the Corporate Governance Rules reading as follows: “In the event that the decision-making body makes a decision concerning a transaction with a related party, all shareholders should have access to all information required to assess the conditions on which it is implemented and its impact on a regulated institution’s standing.”		 At PZU, the Shareholder Meeting does not make decisions on transactions with related parties;
Chapter 8.
The rule laid down in § 49 section 4 of the Corporate Governance Rules reading as follows: “In a regulated institution in which there is no audit or compliance cell, the rights ensuing from sections 1-3 are vested in the persons responsible for performing these functions.”		 There are departments in PZU that are competent for: internal audit, compliance.
Chapter 8.
The rule laid down in § 52 section 2 of the Corporate Governance Rules reading as follows: “In a regulated institution in which there is no audit or compliance cell or no cell responsible for this area has been designated, the information referred to in section 1 shall be conveyed by the persons responsible for performing these functions.”		 There are departments in PZU that are competent for: internal audit, compliance.
Chapter 9.
Exercise of rights from assets acquired at the client’s risk
 		PZU does not offer products that involve asset management at the client’s risk.

Best Practices of the PZU Group

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Ethical values

The PZU Group’s fundamental ethical standards are set out in the “Best Practices of the PZU Group”. Their aim is to develop the company’s consistent organizational culture in all key aspects of its operation. They define behaviors and conduct towards all stakeholders based on respect and trust.

At the same time, this document serves as the common denominator of corporate culture in all of the Group’s entities. Thanks to the consistent compliance of our fundamental principles, all our activities and processes are carried out based on coherent assumptions, thus ensuring a high operating standard throughout the Group. The “Best Practices of the PZU Group” have been adopted as a uniform model of the standards observed by all PZU Group entities, except for the Alior Group and the Pekao Group, which have adopted the “Code of Conduct in Alior Bank” and the “Code of Conduct in the Pekao Group”, respectively

The Best Practices of the PZU Group sets out norms and standards of conduct in relations with employees, clients, contractors and local communities.

  • contacts with clients are based on trust,
  • we inform clients about the PZU Group offering honestly and reliably,
  • we protect everyone’s personal data, in particular the data of our clients, employees, business partners and users of our websites,
  • we care about security and protect electronic devices provided to us by the PZU Group,
  • we protect all resources, including information, that are the intellectual property of the PZU Group,
  • we base decisions to cooperate with suppliers only on objective criteria of price, quality, technical parameters and suitability,
  • we comply with the law when entering into contracts, in particular with the principles of fair competition and consumer protection,
  • we act in such a way that our brand is not accused of trademark infringement,
  • it is the duty of each of us to act responsibly and avoid situations that would result in a conflict of interest understood as a conflict of self-interest with the interest of the PZU Group,
  • we do not tolerate corruption. We act ethically and in accordance with the law when performing our business tasks and cooperating with our business partners. We do not give or accept impermissible presents or benefits in relations with business partners, their employees and agents or other third parties,
  • prevention and sponsorship activities may only be carried out in accordance with applicable laws and the rules set forth in the PZU Group’s internal regulations,
  • employees may not use the name of the PZU Group in any projects or initiatives of a political nature. It is forbidden to support candidates and political parties with funds that are owned by the PZU Group.

Ethical culture

PZU Group’s ethical culture is developed in observance of the highest standards and in line with the needs of the Group’s entities, consequently taking account of the scale, character and type of their operation and local laws.

The PZU Group furthers its ethical culture by creating systemic solutions at the level of PZU. As the parent company, PZU sets and develops standards of conduct, and then recommends their proliferation to other Group companies (save for the banks that have their own codes of conduct in place). These solutions are implemented in the various companies in keeping with the principle of relevance and suitability. Companies report compliance risk to PZU, taking into account respect to legally protected secrets.

PZU Group companies follow principles of ethics applicable to members of corporate bodies, i.e. “Principles of Ethics for Members of Management Boards of PZU Group Companies”, “Principles of Ethics for Members of the Supervisory Board of PZU SA”, “Principles of ethics of supervisory board members in PZU Group companies who are not employees of a PZU Group company and who are not bound to a PZU Group company by some other contract of a similar nature”, and “Principles of ethics of supervisory board members in PZU Group companies who are employees of a PZU Group company or who are bound to a PZU Group company by some other contract of a similar nature”.

  • ensure that the members of the corporate bodies discharge their functions properly in compliance with the highest standards of conduct;
  • prevent the occurrence of a conflict of interest, in particular by counteracting the use of the position held to reap private gains;
  • specify the ethical standards, values and attitudes by which members should be guided.

Ethical culture is of the utmost importance also in terms of investment practices. TFI PZU abides by the Code of Best Practices of Institutional Investors prepared and approved by the Chamber of Fund and Asset Management. For TFI PZU, the Code provides a great deal of support in defining the rules, moral and ethical standards and due diligence levels in the company’s relationships with other institutional investors, clients and issuers of financial instruments. The adoption of this code also confirms the application of best investment practices in TFI PZU.

In 2014, the Management Boards of TFI PZU and PTE PZU adopted a resolution to apply the “Corporate Governance Rules for Regulated Institutions” issued by the Polish Financial Supervision Authority (KNF), whereby the Boards declared its readiness and wish to follow these rules to the objectively broadest possible extent, taking into account the principle of proportionality resulting from the scale, nature of business and specific characteristics of TFI PZU and PTE PZU, respectively. TFI PZU and PTE PZU make available on their websites information on the application or waiver of certain rules.

Alior Bank follows the “Compliance Policy”, which sets out fundamental principles for ensuring compliance of operations of Alior Bank and all bank employees and entities cooperating with the bank, internal regulations and market standards, and whenever it stems from the law and relevant regulations of other bodies, by way of managing compliance risk and the control function. The actions of Alior Bank as a public trust institution are based on the principles described in the “Code of Conduct in Alior Bank”.

In Bank Pekao, there is the “Code of Conduct in the Pekao Group” that contains the most significant rules of conduct applicable to all individuals bound with Bank Pekao or any other member of the Bank Pekao Group by an employment relationship or another legal relationship of a similar nature, including members of the statutory bodies of the Bank or other Pekao Group companies. The rules apply to contacts with stakeholders: clients, business partners, representatives of local communities, the business environment and colleagues.

Ethics in the compliance risk management system

Ethics are also a part of compliance risk management on the following bases:

Practiced by the Management Board which is responsible, among other things, for setting the strategy and adopting policies related to compliance risk management and promulgating the adherence to standards of conduct in PZU, and by the Compliance Department which coordinates the compliance risk management process;

By the managers of various cells and organizational units in PZU in the area subject to their oversight.

The compliance risk management system in the PZU Group is based on the best market standards and proprietary solutions, while using a number of agreements between PZU entities and group policies. It is an integrated set of values, standards, tools, including procedures and regulations, supported by adequate communication with, and education of, employees. Individual companies in the PZU Group have a range of separate policies, procedures and practices in this area.

  • values and rules of conduct, including the “Best Practices of the PZU Group”, “Code of Conduct in Alior Bank” and the “Code of Conduct in the Pekao Group”;
  • procedures, policies and organizational arrangements;
  • a system of reporting irregularities and potential malpractice (whistleblowing system);
  • educational and communication activities addressed to employees and suppliers.

Remunerations

  • 2-18
  • 2-19
  • 2-20

The compensation policy implemented by PZU supports attainment of short-term and longterm goals specified in the PZU Group strategy both in term of achieving financial objectives and the Company’s contribution to sustainable development.

PZU practices applied to compensation help recruit, motivate and retain Management Board and Supervisory Board Members and key managers, including PZU Group Directors.

Policy of compensation of supervisory and management bodies

Regulations

Regulations on the compensation policy for members of the Supervisory Board and the Management Board are contained in:

  • Policy for Compensating PZU Management Board and Supervisory Board Members adopted on 26 May 2020 under a resolution of the Shareholder Meeting. On 7 June 2023, the Ordinary Shareholder Meeting of PZU amended the Compensation Policy for Members of the PZU Management Board and Supervisory Board by introducing a provision stating that the policy also aims to ensure that the requirements of sustainable development are properly taken into account in the risk management process at the PZU Group level, in particular on the basis of the principles set forth in the company’s relevant internal regulations;
  • Resolutions of the PZU Extraordinary General Meeting of 8 February 2017 on the rules for setting the compensation of the Supervisory Board and Management Board Members.

Determination process

The Shareholder Meeting of PZU decides by way of resolutions on the policy of compensating PZU Supervisory Board and PZU Management Board members.

The PZU Supervisory Board takes into account recommendations of the Nomination and Compensation Committee to determine the compensation rules, and compensations of the PZU Management Board members, including its President. The compensation is related to the implementation of objectives determined under the PZU Group strategy, thereby it contributes to the attainment of the Company’s long-term goals.

The PZU Management Board determines the rules of compensating PZU Group Directors who are at the same time members of the PZU Życie Management Board as well as the policy for compensating senior management and other employees. The compensation policy comprises, in particular:

  • rules of determining and awarding compensation components for various employee groups;
  • special solutions pertaining to compensating employees whose work materially impacts the Company’s risk profile (“Authorized Persons”), in line with the requirements of the delegated regulation “Solvency II”.

Compensation of Supervisory Board Members

The monthly compensation of Supervisory Board members is fixed and determined as the product of the base amount referred to in Article 1(3)(11) of the Act of 9 June 2016 on the Rules for Setting the Compensation of Persons Managing Some Companies (i.e. average monthly compensation in the corporate sector without distributions of bonuses from profit in Q4 of the previous year, announced by the President of Statistics Poland (GUS)), and the following multiplier of 2.75.

The monthly compensation set this way is increased for:

  • the Supervisory Board President – by 10%;
  • the Supervisory Board Deputy President – by 9%;
  • the Supervisory Board Secretary – by 8%;
  • the chairs of committees at the Supervisory Board – by 9%;

Additional compensation due for holding the role of the chair, deputy chair or secretary of the Supervisory Board and chairs of committees do not add up.

The table below shows compensation or non-cash benefits paid or transferred in 2023 and 2022 to the current and former Supervisory Board Members.

Remunerations and other short-term employee benefits paid to the Supervisory Board by PZU and PZU subsidiaries 1 January – 31 December 2022 (PLN 000s) 1 January – 31 December 2023 (PLN 000s)
Robert Jastrzębski 224 252
Paweł Górecki 224 250
Agata Górnicka 205 236
Marcin Chludziński 205 230
Marcin Kubicza n/a 142
Krzysztof Opolski 224 250
Radosław Sierpiński 2411 2452
Józef Wierzbowski 205 230
Maciej Zaborowski 205 230
Elżbieta Mączyńska-Ziemacka 205 161
Robert Śnitko 224 109
Piotr Wachowiak 68 100
Paweł Mucha 151 n/a
Total 2,381 2,435
1) Including PLN 36 thousand for serving as a member of the Scientific Council at PZU Zdrowie SA.
2) Including PLN 15 thousand for serving as a member of the Scientific Council at PZU Zdrowie SA.

Compensation of Members of the Management Board and the PZU Group Directors in PZU or PZU Życie, who are at the same time, respectively, Members of the Management Board in PZU Życie or PZU (Manager)

The compensation of Management Board Members is composed of a fixed part, i.e. monthly base compensation, and a variable part:

  • fixed compensation is within the range of seven times to fifteen times the basis of assessment (i.e. average monthly compensation in the corporate sector without distributions of bonuses from profit in Q4 of the previous year, announced by the President of Statistics Poland (GUS)), referred to in Article 1(3) (11) of the Act of 9 June 2016 on the Rules for Setting the Compensation of Persons Managing Certain Companies. The amount of fixed compensation is set by the Supervisory Board;
  • the variable part of compensation depends on the attainment of management objectives, determined every year by the Supervisory Board, and may not exceed 100 % of the annual fixed compensation from the previous year for the calculations of the due variable compensation are made. The amount of 40% of variable compensation is granted as deferred variable compensation. Deferred variable compensation is paid for the period of three consecutive years. With expiration of 12, 24 and 36 months from the date it was granted, a Management Board member may acquire the right to 1/3 of the portion of deferred variable compensation for a given financial year, provided that during this period no circumstances arise that prove that the conditions for payment of a given portion of variable compensation have not been satisfied.

In 2023, the management objectives on the achievement of which a portion of the variable compensation depends included:

  • improvement of economic and financial indicators, such as the PZU Group financial result attributable to the parent company, return on equity (ROE);
  • taking measures which account for social interests, including those which allow the Company to contribute to environmental protection;
  • increase in the PZU Group value determined as the level of implementation of key measures of the PZU Group Strategy, presenting the value of PZU Group, for instance the net financial result of the banking segment attributable to the PZU Group, operating margin of group insurance and individually continued insurance.

The variable compensation is due when:

  • the Supervisory Board determines that all conditions for granting the variable compensation have been satisfied;
  • the Shareholder Meeting approves the PZU Activity Report and the financial statements for the previous financial year;
  • the Shareholder Meeting grants discharge for the completion of obligations.

The Company has the right to a claim for reimbursement (either in full or in the relevant part) of the variable compensation paid if, after its payment, it is shown that (either in full or in the relevant part, respectively) it was granted to a Management Board member on the basis of data that proved untrue.

In the event that an agreement with a Management Board member is dissolved or terminated for reasons other than violation of the basic obligations, the Management Board member may also be awarded severance pay of not more than three times the fixed compensation, provided that the member held their function for at least 12 months prior to agreement termination. The severance pay is not due to a Management Board member in the event that after agreement termination that person continues to perform or assumes the function of Management Board Member of a company within the PZU Group.

The Supervisory Board may also award by way of agreement with a Management Board member the right to the same benefits as those due to employees, in particular, supplementary retirement and disability or early retirement plans.

The compensation of PZU Group Directors is set by the Management Boards. The compensation rules regulate the Management Services Provision Agreements and the resolutions of the Management Board in connection with the Act of 9 June 2016 on the Rules for Shaping the Compensation of Persons Managing Some Companies.

The total compensation due to PZU Group Directors is composed of the fixed compensation and variable compensation, in accordance with the same rules as those described for PZU Management Board members.

The Management Services Provision Agreements entered into with Management Board Members and PZU Group Directors regulate their term of notice and issues related to refraining from engaging in competitive activity to the PZU’s during their term of validity after their termination in consideration for damages. There is no provision for compensation in the event of resignation or dismissal of PZU Group Directors from their position without good cause.

The table below shows compensation or non-cash benefits paid or transferred in 2023 or 2022 to the current and former PZU Supervisory Board Members and PZU Group Directors in PZU.

Compensation and other short-term employee benefits paid by PZU 1 January – 31 December 2022 (PLN 000s) 1 January – 31 December 2023 (PLN 000s)
including part of variable compensation for 2017-2021 including part of variable compensation for 2019-2022
Management Board: 15,462 7,084 17,413 7,761
Beata Kozłowska-Chyła 1,823 712 2,148 905
Ernest Bejda 1,744 670 2,059 858
Małgorzata Kot 1,701 626 2,015 814
Krzysztof Kozłowski 1,317 243 1,900 698
Tomasz Kulik 2,036 962 2,211 1,010
Piotr Nowak 731 – 1,640 438
Maciej Rapkiewicz 2,036 962 2,211 1,010
Małgorzata Sadurska 2,050  976 2,211   1,010
Aleksandra Agatowska 38 38 38 38
Adam Brzozowski 154 154 154 154
Marcin Eckert 466 466 268 268
Elżbieta Häuser – Schöneich 154 154 154 154
Roger Hodgkiss 179 179 40 40
Paweł Surówka 316 316 140 140
Krzysztof Szypuła 717 626 224 224

 

Compensation and other short-term employee benefits paid by PZU 1 January – 31 December 2022 (PLN 000s) 1 January – 31 December 2023 (PLN 000s)
including part of variable compensation for 2017-2021 including part of variable compensation for 2019-2022
High-level managers (PZU Group Directors), including: 3,288 1,286 5,654 1,716
Aleksandra Agatowska 799 354 896 399
Andrzej Jaworski 308 – 665 185
Bartłomiej Litwińczuk 804 375 884 404
Dorota Macieja 804 375 884 404
Sylwia Matusiak n/a n/a 7501 –
Małgorzata Skibińska n/a n/a 4952 –
Dominik Witek n/a n/a 4323   –
Małgorzata Kot 20 20 20 20
Krzysztof Szypuła 391 – 5594 235
Roman Pałac 103 103 56 56
Tomasz Karusewicz 59 59 13 13

 

1) Including annual bonus, compensation for holiday leave and special award for the position of Managing Director for Marketing, Sponsorship and Prevention held in 2022.
2) Including fixed compensation and annual bonus for the position of Managing Director for Product Development and Maintenance held until 31 January 2023.
3)Including fixed compensation, annual bonus and compensation for holiday leave for the position of Director of the Office of Medical Services held until 6 June 2023.
4) Including a non-competition fee of PLN 216 thousand and a severance pay of PLN 108 thousand.

Compensation and other short-term employee benefits paid by other PZU Group entities 1 January – 31 December 2022 (PLN 000s) 1 January – 31 December 2023 (PLN 000s)
including part of variable compensation for 2017-2021 including part of variable compensation for 2019-2022
Management Board, of which: 27 27 27 27
Małgorzata Kot 27 27 27 27
High-level managers (PZU Group Directors), including: 4 897  1 892 7 927 2 523
Aleksandra Agatowska 1 194 527 1 338 593
Andrzej Jaworski 462 – 998 277
Bartłomiej Litwińczuk 1 203 558 1 320 599
Dorota Macieja 1 203 558 1 320 599
Sylwia Matusiak nd. nd. 8411 –
Małgorzata Skibińska nd. nd. 4952 –
Dominik Witek nd.  nd. 4323   –
Krzysztof Szypuła 586 – 8394 352
Roman Pałac 157 157 83 83
Tomasz Karusewicz 92 92 20 20
1) Including annual bonus, compensation for holiday leave for the position of Managing Director for Marketing, Sponsorship and Prevention held in 2022.
2) Including fixed compensation and annual bonus for the position of Managing Director for Product Development and Maintenance held until 31 January 2023.
3) Including fixed compensation, annual bonus and compensation for holiday leave for the position of Director of the Office of Medical Services held until 6 June 2023.
4) Including a non-competition fee of PLN 325 thousand and a severance pay of PLN 162 thousand.

Total estimated value of non-cash benefits granted by PZU and PZU’s subsidiaries 1 January – 31 December 2022 (PLN 000s) 1 January – 31 December 2023 (PLN 000s)
Management Board, of which: 1,785 2,043
Beata Kozłowska-Chyła 265 276
Ernest Bejda 193 233
Małgorzata Kot 224 270
Krzysztof Kozłowski 189 233
Tomasz Kulik 273 238
Piotr Nowak 110 231
Maciej Rapkiewicz 211 243
Małgorzata Sadurska 312 319
Krzysztof Szypuła 8 n/a
High-level managers (PZU Group Directors), including: 942 1,549
Aleksandra Agatowska 270 322
Andrzej Jaworski 74 233
Bartłomiej Litwińczuk 238 281
Dorota Macieja 200 219
Sylwia Matusiak n/a 195
Małgorzata Skibińska n/a 105
Dominik Witek n/a 135
Krzysztof Szypuła 160 591

 

1) Benefits financed by PZU under the termination agreement for management services

In 2023, PZU Management Board Members were paid part of the benefits for 2019-2022 under the variable compensation system. The payout of the remaining part of the bonus for 2020-2023 may be made in subsequent periods. For these benefits, the PZU Group has a liability with the total amount of PLN 23,971 thousand as at 31 December 2023 (including the employer’s burdens, as at 31 December 2022: PLN 19,948 thousand).

In 2023 and in 2022, the PZU Group companies did not grant any loans or similar benefits to PZU Management Board Members and PZU Group Directors.

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