PKN ORLEN, in accordance with its mission, operates in conformity with the principles of corporate governance. As a public company, whose securities are listed on the Warsaw Stock Exchange, the Company complies with the good practices adopted by the Warsaw Stock Exchange’s Board.
In 2007, ORLEN complied with all the principles of corporate governance included in the code “Good Practices in Public Companies 2005”, except for one principle, no. 20, concerning the number of independent members of the Supervisory Board, whose application failed to meet with the approval of the Company’s shareholders[1].
Since 7 February 2008, pursuant to a decision of the General Meeting of Shareholders, the Company has been complying with good practice regarding the number of independent members of the Supervisory Board. As on 12 March 2008, six out of the eight members of the Supervisory Board met the ndependence criteria defi ned in the Comapny’s Statute.
Last year was the fi nal one in which the “Good Practices in Public Companies 2005” were effective on the Warsaw Stock Exchange. In 2007, the Warsaw Stock Exchange undertook actions aimed at updating the principles of corporate governance adopted in 2005. PKN ORLEN took an active part in public consultations regarding the amendment of the good practices. On 4 July 2007, the Supervisory Board of the Warsaw Stock Exchange adopted new principles of corporate governance entitled “Good Practices of companies Listed on the WSE”. On 1 January 2008, this document superseded the code of good practices previously binding on the Polish capital market and constituted an amended collection of principles for proper conduct of public companies.
Despite the principles of the new code being significantly different in terms of its merits from the principles of good practices in force until the end of 2007, the Company’s activities in 2007 complied not only with the previous code, but also, to a large extent, with the new “Good Practices of Companies Listed on the WSE”.
The amended code of good practices, inter alia, extended the catalogue of the principles for corporate governance by implementing actions using IT technologies in contacts with shareholders, investors and other representatives of the capital market. PKN ORLEN pays particular attention to actions facilitating the communication between the Company and its external environment. For Shareholders not able to participate in person in the General Meeting of Shareholders, internet transmission is organised.
In the framework of the Company’s Supervisory Board, the following four committees operate: Audit Committee, Corporate Governance Committee, Strategy & Development Committee and Appointment and Remuneration Committee. As on 12 March 2008, at least half of the members of the Supervisory Board’s Committees were independent members.
The Company’s professionalism in respect of investor relations has been demonstrated by the fact that participants in the capital market recognised PKN ORLEN as the best stock exchange-listed company in the area of investor relations in Poland in 2007. The title “Best Investor Relations in Poland 2007” is awarded every year by the global IR Magazine, on the basis of a survey carried out among participants in the global capital market.
The importance the Company attaches to communications addressed to participants in the capital market is demonstrated by the fact that in 2007 ORLEN, already for the second time in succession, won the competition for the Best Annual Report (The Best Annual Report 2006) according to the International Accounting Standards organised by the Accounting and Tax Institute in cooperation with the Wall Street Journal Polska.
Undertaking the challenge of implementing the best principles of corporate governance, in 2007 the Company’s risks were identified and assessed. The Company’s current strategy is aimed at the implementation throughout the organisation of a modern process for integrated corporate risk management, which will allow an effective response to the risks connected with its operations. As a result of the works carried out so far, the Company’s risk register and map was developed and the key risks were analysed in detail.
Within the Company operates an Audit Office, whose task is to conduct independent and objective assessments of the risk management system and internal control system and analysing business processes.
In the framework of the implemented objectives and tasks, the Audit Offi ce provides recommendations for the implementation of solutions and standards intended to mitigate risks related to the achievement of the Company’s objectives, improve the effectiveness of the internal control system and increase the capacity of business processes. Furthermore, the Audit Offi ce monitors the implementation of its recommendations and those of the auditor of the Company’s fi nancial statements.
Twice a year, the Audit Offi ce prepares a report for the Management Board and the Audit Committee, including a summary of conclusions from the completed audit tasks and information on the degree to which the recommendations are implemented.
The consequent and effective implementation of the principles of corporate governance resulted in the Company not only strengthening its position, but also having become one of the strongest and most valuable companies, and one of the most highly rated by Polish investors.
[1] However, for 11 months, i.e. until 11 November 2007, the day when Mr. Jerzy Woźnicki resigned from the post of Member of the Supervisory Board, the Group complied with the principle of good practice concerning the number of independent Members of the Supervisory Board.
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