New Incentive Scheme at PKN ORLEN

The new scheme is one of the undertakings which is designed to support PKN ORLEN’s Value Creation Strategy and corporate culture. It is aimed at building a transparent and objective remuneration model. The MBO scheme is based on best international practice.

In the scheme, bonuses will be determined by the degree of execution of assignments. Both the senior management and key staff will be motivated to achieve their set objectives, which are derived from the strategic and financial plans. The objectives are first approved by the Supervisory Board for Management Board members, and then cascaded down to individual managers. This will guarantee the coherence of the entire management structure, which is a new element across the company. The new system includes an SVA parameter - a solidarity goal - which refers to all managers including the Management Board.

The bonus rate will be determined mainly by such measures as operating profit or improvements to the cost base. It will not depend upon an individual’s decision but will be translated directly from the extent of the realized goals as set out in the financial plan accepted by the Supervisory Board. The Board will also assess on an annual basis the degree of strategy implementation.

PKN ORLEN wishes to emphasize that the MBO will not cause any rise in payments for Management Board members but is instead meant to increase the efficiency of resources paid out for bonuses. It is also intended to improve the efficiency of such spending across the company.

The MBO is due to be implemented on 1st July 2005. It will cover around 200 senior managerial staff within PKN ORLEN and the ORLEN Group.