PGE Polska Grupa Energetyczna S A : Motion and opinion of the Supervisory Board regarding adoption of the remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.

Enclosure no. 16 to official minutes no. 8/XI/2020 of the meeting of the Supervisory Board of the 11th term of office of the company PGE Polska Grupa Energetyczna S.A.

Warsaw, 26 May 2020

RESOLUTION NO. 258/XI/2020 of the Supervisory Board of the company PGE Polska Grupa Energetyczna S.A.

of 26 May 2020

concerning the presentation of an opinion on the motion of the Management Board of PGE Polska

Grupa Energetyczna S.A. to be submitted to the General Meeting of PGE Polska Grupa Energetyczna S.A. and concerning the adoption of "The remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A."

In connection with the motion of the Management Board of PGE Polska Grupa Energetyczna S.A. of 21 May 2020 (resolution no. 322/50/2020 of the Management Board of PGE Polska Grupa Energetyczna S.A. adopted on 20 May 2020), acting pursuant to § 18 clause 1 item 15 of the Statutes of PGE Polska Grupa Energetyczna S.A., the Supervisory Board of PGE Polska Grupa Energetyczna S.A. decides as follows:

§ 1.

The Supervisory Board gives its positive opinion on the motion of the Management Board of PGE Polska Grupa Energetyczna S.A. to be submitted to the General Meeting of PGE Polska Grupa Energetyczna S.A. and concerning the adoption of "The remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A.".

§ 2.

The resolution becomes effective as at the time of its adoption.

The resolution has been voted on in an open ballot.

8 members of the Supervisory Board have participated in the ballot.

The resolution has been adopted as follows: 8 votes for the resolution, 0 votes against the resolution, 0 abstaining votes.

Chairperson of the Supervisory Board

of the company PGE Polska Grupa Energetyczna S.A.

Anna Kowalik

Members of the Supervisory Board:

Janina Goss	……………………………………………………… .
Tomasz Hapunowicz	……………………………………………………… .
Grzegorz Kuczyński	……………………………………………………… .
Mieczysław Sawaryn	……………………………………………………… ..
Jerzy Sawicki	……………………………………………………… ..
Artur Składanek	…………………………………………………………
Radosław Winiarski	……………………………………………………… .

RESOLUTION NO. 258/XI/2020 of the Supervisory Board of the company PGE Polska Grupa Energetyczna S.A. of 26 May 2020 concerning the presentation of an opinion on the motion of the Management Board of PGE Polska Grupa Energetyczna S.A. to be submitted to the General Meeting of PGE Polska Grupa Energetyczna S.A. and concerning the adoption of "The remuneration policy for the members of the Management Board and the Supervisory Board of PGE Polska Grupa Energetyczna S.A."

The Remuneration Policy

for the Members of the Management Board and Supervisory Board of PGE Polska Grupa Energetyczna S.A.

Preamble

The remuneration policy for the Members of the Company's Management Board and Supervisory Board specifies the basis and principles of determining, calculating and paying remuneration to Members of the Management Board and Supervisory Board. The solutions adopted in the Policy should contribute to the implementation of the Company's business strategy, the pursuit of its long-term interests, and its stability.

The legal basis for drawing up the Policy is the provisions of the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system, and public companies of 29 July 2005.

§1

Definitions

The terms defined below have the following meanings in the Policy:

• 1. "Capital Group" - the Company and its Subsidiaries;

• 2. "KSH" - the Commercial Companies Code of 15 September 2000;

• 3."Policy" - this document adopted pursuant to Article 90d clause 1 of the Public Offering Act and pursuant to Article 2 of the Remuneration Act;

• 4. "Supervisory Board" - the Supervisory Board of the Company;

• 5. "Company" - PGE Polska Grupa Energetyczna S.A.;

• 6. "Subsidiary" - a company that is an entity subordinate to the Company within the meaning of Article

  4 clause 15 of the Public Offering Act;

• 7. "Public Offering Act" - the Act on public offering, conditions governing the introduction of financial instruments to an organized trading system, and public companies of 29 July 2005;

• 8. "Remuneration Act" - the Act on the principles determining the amount of remuneration for people managing certain companies of 9 June 2016;

• 9. "General Meeting" - the General Meeting of the Company;

• 10. "Management Board" - the Management Board of the Company.

  §2

  Components of Remuneration for Management Board Members

• 1. The total remuneration of a Member of the Management Board consists of a fixed part constituting a basic monthly remuneration expressed as a fixed amount ("Fixed Remuneration") and a variable part constituting a supplementary remuneration for the Company's financial year ("Variable Remuneration").

• 2. The provisions of clause 1 above do not exclude the possibility of granting a Member of the Management Board other cash or non-cash benefits permitted under the Remuneration Act, including those specified in § 8 section 1 of the Policy.

• 3. Only the Fixed Remuneration constitutes an obligatory part of the remuneration payable to Members of the Management Board.

§3

Fixed Remuneration of Management Board Members

The amount of the monthly Fixed Remuneration of a Member of the Management Board is determined each time by the Supervisory Board within the amount range resulting from the Remuneration Act, with the proviso that the Fixed Remuneration of a Member of the Management Board will be determined within the amount range of from 7 to 15 times the assessment basis referred to in Article 4 of the Remuneration Act, taking into account the applicable detailed legal regulations determining its amount.

§4

Variable Remuneration (Variable Components of Remuneration)

• 1. The Variable Remuneration of a Member of the Management Board depends on the degree to which Managerial Objectives have been achieved and may not exceed 100% of the Fixed Remuneration received by a Member of the Management Board in the financial year for which the Variable Remuneration is to be granted.

• 2. The catalogue of general Managerial Objectives includes in particular the following:

  • a) the achievement of EBITDA for the PGE Capital Group at the level specified in the approved material and financial plan for a given financial year;

  • b) compliance with the covenants under credit agreements - (net debt/EBITDA);

  • c) the achievement of the required availability index for the selected power generation units of the Capital Group;

  • d) the implementation of particular strategic investment projects and programmes;

  • e) the adjustment of the Capital Group to the structural changes of the sector by way of implementing strategic programmes and projects other than those referred to in letter d above;

  • f) the effective utilization of the potential of innovation;

  • g) the development of a systemic approach to communication within the PGE Capital Group with respect to projects.

• 3. In each financial year, additional Managerial Objectives are established whose achievement determines the possibility of achieving the Variable Remuneration. Such additional Managerial Objectives include in particular the following:

  • a) the development and application of the principles of establishing remuneration for members of management and supervisory bodies in subsidiaries in accordance with the principles specified in the Remuneration Act;

  • b) the fulfilment of the obligations referred to in Articles 17-20, Article 22, and Article 23, taking into account Article 18a and Article 23a of the State Property Management Act of 16 December 2016.

• 4. The Supervisory Board is authorized to determine detailed Managerial Objectives, their respective weights, as well as objective and measurable criteria of their accomplishment and settlement (KPI - key performance indicators), subject to the following conditions:

  • a) a given Member of the Management Board is entitled to the Variable Remuneration after the approval of the Management Board's report on the Company's activities and the Company's financial statements for a given financial year and after the acknowledgement of their discharge of duties in a given financial year by the General Meeting;

  • b) the payment of a part of the Variable Remuneration may be delayed for up to 36 months depending on the fulfilment of conditions, by a specified deadline, in accordance with the established Managerial Objectives; then such a part of the Variable Remuneration may be paid in full or in part at the end of a settlement period;

  • c) the Variable Remuneration is calculated on a pro rata basis. Proportionality depends on the number of days on which a Member of the Management Board has provided their services in a given financial year;

  • d) the Supervisory Board ascertains the fulfilment of the conditions for the granting of the Variable Remuneration by particular Members of the Management Board for whom Managerial Objectives have been established for a given financial year and who have performed their functions in the year under assessment, determining the due amount on the basis of financial statements checked by certified auditors as well as other documents, depending on the

established Managerial Objectives. Issues related to the recovery of the Variable Remuneration are regulated by the binding provisions of the law.

• 5. The expiry of the mandate of a Member of the Management Board undergoing assessment with respect to the achievement of the Managerial Objectives does not result in the loss of the right to receive the Variable Remuneration under the conditions specified in clauses 1-4 above, provided that such a Member of the Management Board has performed their functions for a period longer than 3 (three) months in the financial year under assessment.

• 6. The criteria for awarding the Variable Remuneration defined above in terms of general Managerial Objectives also apply (at a detailed level determined by the Supervisory Board) to taking into account social interests, the Company's and the Capital Group's contributing to environmental protection and taking actions aimed at preventing and eliminating negative social effects of the Company's and the Capital Group's operations by modernizing the Company and the Capital Group.

  The criteria specified in Managerial Objectives are to contribute to the achievement of the objectives set out in Article 90d clause 2 of the Public Offering Act by linking the remuneration to the execution of management processes involving the implementation of the business strategy of the Company and the Capital Group.

  §5

  Mutual Proportions of Remuneration Components

• 1. The proportion of the Variable Remuneration to the Fixed Remuneration is specified in § 4 clause 1 above.

• 2. However, under no circumstances may the Variable Remuneration be higher than the amount specified in the Remuneration Act.

  §6

  Agreements with Management Board Members, Their Terms, and Severance Benefits

• 1. With a Member of the Management Board, the Company enters into an agreement for the provision of managerial services for the duration of appointment ("Agreement"). A Member of the Management Board is obliged to provide such services in person. The Agreement is entered into within the scope of business activities conducted by a Member of the Management Board.

• 2. The content of the Agreement is determined by the Supervisory Board pursuant to the provisions of the Policy and taking into account the relevant legal regulation in force on the date of the execution of the Agreement.

• 3. The Agreement obliges a Member of the Management Board to notify the Company of any intention to perform functions in the governing bodies of any other commercial company or to acquire shares in such a company and to obtain the consent of the Supervisory Body for such actions; the Agreement may provide for a prohibition against performing functions in the governing body of any other commercial company or it may impose other restrictions concerning additional activities of a Member of the Management Board.

• 4. A Member of the Management Board must not receive remuneration for performing the function of a member of a governing body in companies subsidiary to the Company within the capital group, within the meaning of Article 4 clause 14 of the Competition and Consumer Protection Act of 16

  February 2007.

• 5. The Supervisory Board is authorized to determine prohibitions and restrictions referred to in clauses 3 and 4 above, reporting obligations relating to compliance with such prohibitions and restrictions, as well as sanctions for any improper fulfilment of such obligations.

• 6. In the event of the expiry of the mandate, in particular in consequence of the death, dismissal or resignation of a Member of the Management Board, the Agreement will terminate on the last day of a Member's performing the function without any necessity of additional activities.

• 7. Either Party has the right to terminate the Agreement with immediate effect in the event of the other

  Party's material breach of the provisions of the Agreement.