Corporate governance and corporate governance rules

RULES OF PROCEDURE OF THE MANAGEMENT BOARD

The Management Board operates on the basis of the CCC, JSW’s Articles of Association, the Management Board Bylaws, the JSW Organizational Bylaws, internal regulations and other provisions of the law. The Management Board Bylaws are adopted by the Management Board and approved by a Supervisory Board resolution. They define the core duties of the Management Board, the composition of the Management Board and powers of the Management Board Members, describe issues related to handling the Company’s matters, providing information and rules for organizing Management Board meetings as well as issues related to non-competition of Management Board Members and conflict of interest. The Management Board handles the Company’s matters and represents it, sets its strategic directions and determines its targets and objectives as well as makes decisions in all matters not restricted for the Company’s other corporate bodies.

Management Board Members perform their responsibilities in accordance with the function specified by the Supervisory Board in the resolution on appointment to the Management Board. They supervise the Company’s overall operations and exercise direct supervision over the work of reporting organizational units belonging to the Division of the given Management Board Member, in accordance with the binding organizational chart of the Management Board Office available on the Company’s website. The Management Board oversees the work of each of the Company’s plants through the Plant Directors, the Management Board Office and the Management Board Representatives. Two Management Board Members acting jointly or one Management Board Member acting with a commercial proxy are authorized to make declarations of will and affix signatures on behalf of JSW. The Management Board grants Powers of Attorney to manage the Company’s matters related to the operations of the relevant Plant/Office and specific Powers of Attorney to natural persons. Fulfilling their duties, Management Board Members are guided by principles found in DPSN 2021.

Meetings of the Management Board are held at the Company’s head office. In justified cases, they may be held outside the head office. The President of the Management Board convenes Management Board meetings on their own initiative or upon request of one of the Management Board members at any time, also upon request of the Supervisory Board Chairperson. During the absence of the President of the Management Board, meetings are convened by the Management Board Member named by the President and if such a Member is not named, then the meetings are convened by the Vice-President of the Management Board for Technical and Operational Matters.

The Management Board may adopt resolutions if all Management Board Members have been duly notified of the Management Board meeting, i.e. each of the Management Board Members has been notified of the date and place of the meeting and the agenda at least one day before the meeting date and by the same day has received planned topics to be discussed and draft resolutions and decisions. In urgent matters, the Management Board may adopt resolutions without observing the procedure specified in the Management Board Bylaws.

Management Board Members may participate in a meeting personally and/or via means of direct remote communication, including means of electronic communication, in line with the Management Board Bylaws.

The Management Board may review motions and/or adopt resolutions at meetings (when all its members participating in the meeting are present at the place of the meeting or when all or some of its members participate in the meeting using means of direct remote communication) and outside of meetings (by following a written procedure or via means of direct remote communication using telecommunication devices or any other means that allow for identification of a Management Board Member).

The Management Board is also permitted to vote, review motions and adopt resolutions according to the following procedures:

• written ballot, consisting in written casting of the vote by each Management Board Member, including through another Management Board Member, by affixing signature under the draft motion / resolution, specifying a vote “for” the decision, “against” the decision or stating “abstaining” from voting. If this is not specified, the vote shall be deemed not cast,
• via means of direct remote communication (e.g. using electronic mail, teleconference, videoconference or dedicated IT system).

The Management Board reviews motions and adopts resolutions via means of direct remote communication in such a way that each of the Management Board Members participating in the ballot casts his or her vote sending a message by electronic mail / telephone/teleconference/videoconference or via a dedicated IT system, specifying whether he or she votes “for” the decision, “against” the decision or “abstains” from voting. If this is not specified, the vote shall be deemed not cast,

The decision on ordering a ballot following the procedures specified above is made by the President of the Management Board and, in his or her absence, by the Management Board Member convening the meeting, specifying at the same time the deadline for casting the votes. The date of review of a motion/adoption of a resolution following the above procedures is deemed to be the date of casting the last vote by a Management Board Member. If a Management Board Member does not take a stance by the set deadline, he or she shall be deemed not participating in the ballot.

Motions to the Management Board and draft resolutions to be adopted following the procedures specified above are delivered to all Management Board Members in hardcopy and/or via means of direct remote communication, while specifying the deadline for casting votes.

Management Board meetings are minuted. The Management Board votes in an open ballot, and its resolutions are adopted by an absolute majority of votes, where at least three Management Board Members attend the meeting. In the event of a tie vote, the President of the Management Board shall have the casting vote (except for voting on appointment of a commercial proxy, where unanimity of the Management Board Members is required). Whenever an “against” vote is cast and/or a dissenting opinion is submitted for the minutes by a Management Board Member, the minutes are immediately handed over to the Supervisory Board.

The Management Board Bylaws also allow the Management Board Members to sign documents with a qualified signature and provide for the possibility to vote using a dedicated IT system and define the basic duties of the Management Board.

RULES FOR APPOINTING AND DISMISSING MANAGEMENT BOARD MEMBERS

The Management Board consists of three to seven Members who are appointed for a joint 3-year term of office. The mandate of a Management Board member appointed before the end of the term of office of the Management Board expires simultaneously with the expiry of the mandates of the remaining Management Board members. In accordance with the amended Commercial Company Code, a term of office is counted in full financial years. Management Board Members are appointed and dismissed by the Supervisory Board following a qualification procedure (except for the Management Board Member appointed by JSW employees).

Powers of and requirements for Management Board Members follow, among others, from the Commercial Company Code, the Act on the Rules for Managing State Property, the Articles of Association and from announcement about recruitment procedures accepted by the Supervisory Board, and with reference to a Management Board Member elected by employees – from the Bylaws for electing and dismissing JSW S.A. Management Board Members by employees adopted by the Supervisory Board. A person appointed Vice-President of the Management Board for Technical and Operational Matters must additionally have qualifications for Head of Mine Operations at a mine extracting hard coal.

The Supervisory Board conducts a recruitment procedure in the event of occurrence of circumstances justifying appointment of a Management Board member. By initiating a recruitment procedure for the position of a Management Board Member, the Supervisory Board defines, by way of a resolution, the detailed rules and the method followed during the procedure, including in particular: the position subject to the procedure, the date and place where recruitment submissions are received, the date and place where interviews are held, the range of subjects discussed during the interview, the requirements and the method of evaluating the candidate. An announcement about a recruitment procedure is published on the Company’s website and in the Public Information Bulletin of the authority providing services to the competent Minister exercising the rights attached to the State Treasury’s shares, i.e. the Ministry of State Assets. The Supervisory Board shall inform the shareholders about the outcome of the recruitment procedure at the nearest Shareholder Meeting and make the recruitment procedure report available to them.

A Management Board Member submits his/her resignation to another Management Board Member or a commercial proxy with a copy to the Supervisory Board and the State Treasury – represented by the competent Minister exercising the rights attached to the State Treasury’s shares as long as the State Treasury remains a shareholder of the Company.

Management Board Member selected by JSW employees

If the average annual headcount in the Company exceeds 500 employees one Management Board member shall be elected by the Company employees, in accordance with the election bylaws adopted by the Supervisory Board. Results of the election are binding for the body authorized to appoint the Management Board, i.e. the Supervisory Board. No election of the employees’ representative to the Management Board of the Company does not constitute an obstacle for the Management Board to issue valid resolutions. Upon request of at least 15% of all the Company employees, a ballot shall be held to dismiss the Management Board member elected by employees. Such dismissal, death or other important reasons that decrease the number of Management Board Members by the Member elected by the Company’s employees shall require supplementary election. The Supervisory Board shall call supplementary elections within three weeks after it obtains information about the occurrence of a circumstance justifying the holding of supplementary elections. The supplementary election should be held within one month after it is called by the Supervisory Board.

The Supervisory Board shall call an election of the Management Board member to be elected by the employees for the next term within two months from the elapse of the last full year of the Management Board’s term of office. Such election should be held within two months after they are called by the Supervisory Board.

The election referred to above shall be held in a secret ballot as a direct and universal election by the Election Commission appointed by Supervisory Board from among Company employees. The Commission may not comprise a candidate to become a Management Board Member or a previous Management Board Member elected by employees.

Composition of the JSW Management Board

Table. COMPOSITION OF THE JSW MANAGEMENT BOARD

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CHANGES TO THE JSW MANAGEMENT BOARD IN 2022

• On 10 May 2022, as a result of completed recruitment proceedings, the JSW Supervisory Board adopted resolutions to appoint the following persons to the JSW Management Board in the 11th term of office as of the date of holding the JSW Ordinary Shareholder Meeting approving the Financial Statements of Jastrzębska Spółka Węglowa S.A. for the financial year ended 31 December 2021 and the Management Board report on the activity of Jastrzębska Spółka Węglowa S.A. and the Jastrzębska Spółka Węglowa S.A. Group in the financial year ended 31 December 2021 e. as of 1 July 2022:
  
  • Tomasza Cudnego as the President of the Management Board,
  • Sebastiana Bartosa as the Vice-President of the Management Board for Sales,
  • Roberta Ostrowskiego as the Vice-President of the Management Board for Financial Matters,
  • Edwarda Paździorko as the Vice-President of the Management Board for Technical and Operational Matters.
• On 10 May 2022, as a result of the elections carried out by JSW employees to select a Member of the JSW Management Board in the 11th term of office, the JSW Supervisory Board adopted a resolution to appoint Mr. Artur Wojtków to the position of Vice-President of the Management Board for Employment and Social Policy as of the date of holding the JSW Ordinary Shareholder Meeting approving the Financial Statements of Jastrzębska Spółka Węglowa S.A. for the financial year ended 31 December 2021 and the Management Board report on the activity of Jastrzębska Spółka Węglowa S.A. and the Jastrzębska Spółka Węglowa S.A. Group in the financial year ended 31 December 2021 e. as of 1 July 2022.
• On 31 May 2022, the JSW Supervisory Board entrusted Mr. Tomasz Cudny with the duties of Vice-President of the Management Board for Development from the date of commencement of the new 11th term of office of the JSW Management Board, i.e. from 1 July 2022, to the date of appointment of the Vice-President of the Management Board for Development.
• On 14 December 2022, the JSW Supervisory Board adopted a resolution to appoint Mr. Wojciech Kałuża as of 15 December 2022 to the position of Vice-President of the Management Board for Development for the 11th term of office.

Table. COMPOSITION OF THE JSW MANAGEMENT BOARD ON THE DATE OF PREPARATION AND PUBLICATION OF THIS REPORT

COMPENSATION SYSTEM FOR MANAGEMENT BOARD MEMBERS IN JSW

The rules governing the shaping of the compensation of Management Board members have been adopted by the JSW Shareholder Meeting and Supervisory Board in compliance with the regulations laid down in the Act of 9 June 2016 on the Rules for Shaping the Compensation of Persons Managing Certain Companies. and are consistent with the “Compensation Policy for the Management Board and Supervisory Board of Jastrzębska Spółka Węglowa S.A.” adopted by the Shareholder Meeting. Management contracts were concluded with Management Board Members providing for an obligation to act personally, regardless of whether they act within the framework of their own business activity. With the Management Board Members, no separate agreements were signed that would provide for compensation in the event of expiration of the Manager’s mandate.

The total remuneration for the Management Board Member is composed of the fixed part, constituting the monthly base salary –Fixed Compensation and variable part, constituting variable Remuneration for the Company’s financial year – Variable Compensation.

The amount of the monthly Fixed Compensation of Management Board Members has been set by the Supervisory Board, subject to the following provisions of the Shareholder Meeting resolution:

• Fixed Compensation of the President of the Management Board will be set within the range from 7 to 15 times the base amount referred to in Article 1 Section 3 Item 11 of the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies of 9 June 2016;
• Fixed Compensation of the remaining Management Board Members will be set within the range from 7 to 12 times the base amount referred to in Article 1 Section 3 Item 11 of the aforementioned Act.

In accordance with the decision made by the Supervisory Board, for rendering management services and discharging other obligations ensuing from the contract, the Manager is entitled to the Total Compensation consisting of the following:

• monthly base compensation (Fixed Compensation) per calendar month:
  
  • President of the Management Board – PLN 60,000.00,
  • every other Management Board Member – PLN 50,000.00.

The Fixed Compensation includes also compensation for the transfer of property rights to the copy or medium of the work and economic copyright to the work in the fields of use specified in the contract, granting all permits and authorizations to the extent stipulated in the contract and use by the Company of an invention, utility model or industrial design created by the Manager,

• supplementary compensation for the relevant financial year (Variable Compensation) contingent on the degree of achievement of the management objectives, which must not exceed 100% of the annual Fixed Compensation of the Manager in the previous financial year, for which the Variable Compensation is calculated.

A Management Board Member may not receive any compensation for serving as a member of any corporate body of the Company’s subsidiary within the Group within the meaning of Article 4(14) of the Competition and Consumer Protection Act of 16 February 2007.

The Fixed Compensation or Variable Compensation will be paid by the Company after deduction of the Manager’s public dues payable by the Company from the amount of the Fixed or Variable Compensation. If the applicable provisions of law require that, despite the fact that the Manager does not run his/her own business activity, the Fixed Compensation, the Variable Compensation or benefits payable by virtue of severance pay or non-competition clauses are subject to VAT at the applicable rate, such VAT will be added on top the amount in question. The above will be also applicable with regard to other benefits payable by the Company to the Manager pursuant to the contract. If it becomes mandatory for the Manager to pay VAT for any past periods (in connection with the benefits referred to in this Section), the Company undertakes to pay to the Manager the amount equivalent to such tax arrears with interest as well as other payments due to the relevant bodies in connection with such arrears.

The Fixed Compensation for a given month is paid within 7 days from the date of delivery to the Company of a correctly issued bill to be delivered to JSW by the Manager within 7 days upon end of the calendar month of performance of services, by transfer to a bank account indicated by the Manager.

The Variable Compensation depends on the level of achievement of the management objectives and must not exceed PLN 480,000.00 per financial year, i.e. no more than PLN 40,000.00 in each month of the financial year. The Manager will also be entitled to the Variable Compensation if he/she performs the contract for a period of less than one full financial year but at least for 3 months in the relevant financial year.

The total annual Total Compensation of the Manager (i.e. the sum of the annual Fixed Compensation and the Variable Compensation for the given financial year) must not exceed the product of the amount of PLN 100,000.00 for the President of the Management Board and PLN 90,000.00 for Vice-Presidents of the Management Board and the number of calendar months for which the Manager performed his/her duties. In case of calendar months in which the Manager did not perform his/her duties during a full calendar month, the aforementioned amount is adjusted on a pro rata basis to the number of days of performance of duties in the relevant month.

The statutory Management Objectives are laid down in Article 4(7) of the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies, and their accomplishment is the precondition that must be fulfilled to enable payment of the Variable Compensation for the respective financial year. Other than the statutory Management Objectives, general and additional Management Objectives are established by a resolution of the Shareholder Meeting.

The Company’s Supervisory Board establishes (by way of a resolution) detailed Management Objectives for the respective financial year and defines the weights for such objectives along with objective and measurable criteria of their accomplishment and settlement (KPIs) while giving consideration to the following:

1. Variable Compensation is payable to the respective Management Board Member after the Management Board activity reports and the financial statements for the preceding financial year are approved and the Management Board Member is granted a discharge on the performance of his duties by the Shareholder Meeting.
2. Payment of a portion of the Variable Compensation may be deferred for a period provided for in a resolution of the Shareholder Meeting, depending on the fulfillment of conditions by the specified deadline in accordance with the established Management Objectives. Then such portion of the Variable Compensation may be disbursed in full or in part at the end of the settlement period.
3. The Variable Compensation is calculated on a pro rata basis. Such pro rata calculation depends on the number of days of the provision of services by the Management Board Member in the respective financial year.
4. Satisfaction of the conditions for the Variable Compensation of individual Management Board Members for whom Management Objectives were set for the given financial year and who discharged a function in the financial year being assessed, is ascertained by the Supervisory Board by determining the amount due, on the basis of financial statements reviewed by an audit firm and other documents depending on the Objectives set.

The Supervisory Board each time adopts clear, comprehensive and diversified criteria for the adoption of weights for each of the Management Objectives in the Variable Compensation as well as objective and measurable criteria for their accomplishment and settlement, both in relation of the Company’s financial and non-financial performance. When establishing the detailed Management Objectives for the respective financial year, the Supervisory Board, taking into consideration the Company’s line of business, each time and to the greatest possible extent takes into account the public interest, the Company’s contribution to environmental protection and the taking of actions aimed at preventing and counteracting the adverse social effects of the Company’s business.

The Variable Compensation is paid subject to the accomplishment of the Management Objectives by the respective Manager, which is assessed by the Supervisory Board while giving consideration to the weights of these Objectives and the objective and measurable criteria of their accomplishment and settlement (KPIs). The Variable Compensation, provided that it is due, will be paid within 7 days from the date of delivery to the Company of a correctly issued bill by transfer to a bank account indicated by the Manager.

The Parent Company will be entitled to put forward a claim for reimbursement of the Variable Compensation paid if, following such disbursement, it becomes apparent that the Variable Compensation was granted to the Manager on the basis of data that subsequently turned out to be untrue.

In the case when the resolution of the Supervisory Board that defines the Management Objectives for the given year is not passed, the Management Objectives for such year are not set, and the Manager is not entitled to any Variable Compensation. Furthermore, in the cases laid down in the contract JSW may charge the Manager with a contractual penalty.

Management Board Members have the duty to obtain the Supervisory Board’s consent to assume, as planned, the function in corporate bodies of another commercial company, to perform work or provide services for other entities pursuant to an employment contract, mandate agreement or another legal relationship.

In 2022, in connection with the change in the term of office of the Management Board, the Supervisory Board adopted a resolution on the rules for defining the compensation of Management Board Members. The rules set by the Supervisory Board for defining the compensation of Members of the Management Board of the 11th term of office have not changed with respect to the rules in effect for the 10th term.

Table. MANAGEMENT BOARD COMPENSATION FOR 2022 (PLN)

* This item includes only the cost of compensation based on management contracts.
** This item includes variable compensation for 2022 which will be paid on condition that the Managers meet the Management Objectives in accordance with a resolution of the Supervisory Board, after The Management Board Report on the Activity of Jastrzębska Spółka Węglowa S.A. and the Jastrzębska Spółka Węglowa S.A. Group for the financial year ended 31 December 2022 and the Financial Statements of Jastrzębska Spółka Węglowa S.A. for the financial year ended 31 December 2022 are approved and the Management Board Members are granted a discharge on the performance of their duties by the Shareholder Meeting. As of the date of approval of this report by the Management Board, the Supervisory Board of JSW has not adopted a resolution regarding the estimated values of variable compensation for 2022. This information will be disclosed in the Report on compensations of JSW Management Board and Supervisory Board Members for the financial year ended 31 December 2022.
** * This item includes other benefits, such as: coverage (reimbursement) of costs incurred in connection with the use of the residential apartment (§ 4 sec. 1 item 5 of the management contract) and coverage of the costs of individual English lessons (Supervisory Board Resolution no. 506/X/2021 of 27 September 2021.

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Table. MANAGEMENT BOARD COMPENSATION FOR 2021 (PLN)

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With a statement of expenses being submitted, the variable compensation for 2020 (charged to costs of 2020) granted by the decision of the Supervisory Board was also paid in 2022:

• to Mr. Radosław Załoziński in the amount of PLN 30,000.00,
• to Mr. Artur Dyczko in the amount of PLN 30,000.00.

Zgodnie z obowiązującą od 31 sierpnia 2020 roku Polityką Wynagrodzeń Zarządu i Rady Nadzorczej Jastrzębskiej Spółki Węglowej S.A. Członek Zarządu nie może pobierać wynagrodzenia z tytułu pełnienia funkcji członka organu w podmiotach zależnych od Spółki w ramach Grupy.

COMPENSATION SYSTEM FOR MEMBERS OF THE MANAGEMENT BOARDS OF GROUP COMPANIES

The rules governing the determination of compensations of the Management Board Members of JSW subsidiaries have been adopted by way of resolutions of the General Meeting or Shareholder Meeting of the respective company, and then resolutions of the relevant Supervisory Board. The total compensation of the Management Board Members consists of a fixed component constituting his or her monthly base salary and a variable component constituting additional compensation for the Company’s financial year. The variable portion depends on the level of achievement of the management objectives. The Management Board Members of the subsidiaries of JSW executed contracts for provision of management services.

Since 7 December 2021, the Compensation Policy for Corporate Bodies of JSW’s Subsidiaries has been in force in the Group, which updates prior regulations pertaining to the compensation of the corporate bodies of JSW’s subsidiaries. This update was associated with implementing different regulations pertaining to JSW’s key employees (a distinct Compensation Policy for JSW’s Management has been adopted in this respect) from the regulations pertaining to the compensation of the corporate bodies of JSW’s subsidiaries. The JSW Management Board’s control over the compensation paid to members of the subsidiaries’ corporate bodies has been extended in addition to specifying hitherto solutions in greater detail.

NON-COMPETITION OBLIGATION WITH RESPECT TO MANAGERS IN THE PARENT COMPANY

The non-compete clause during the contract term has been defined in the management contract and the Manager is not entitled to any additional compensation for refraining from competitive activity during the contract term. The management contracts signed with the Management Board Members also include provisions prohibiting competition after the contract termination.

The Manager additionally undertakes, after the contract is terminated, if he has discharged the function for a period of at least 6 months from the date of the Manager’s appointment to the Company’s Management Board, not to conduct any competitive activity as defined in the contract over the period of 6 months from the date he/she ceases to perform his/her function. The Manager is entitled to compensation for complying with the non-compete ban after the function ends, in the total amount equal to 6 times 50% of the monthly Fixed Compensation. The compensation will be payable in 6 equal monthly installments, by the 10th day of the following month. The compensation payment is conditional upon a written representation of the Manager confirming compliance with the non-compete clause after the function ended, delivered to the Company in writing by the 5th day of the month following the month for which the compensation is due.

A management contract may be terminated, after the function ends, in the part concerning the non-compete clause at any time by virtue of an agreement of the Parties. The agreement must be executed in writing, otherwise being null and void, and must define the notice period which may not be longer than 3 months or be later than the end of the non-compete obligation after the function ends. In such a case, the entitlement to compensation expires on the day the contract is terminated in the relevant scope. The contract may be also terminated in the part concerning the non-compete clause with immediate effect at any time upon the Company’s notice in the event of a documented violation of the no-compete clause by the Manager after his/her function ends. The contract termination notice must be in writing, otherwise being null and void, and the right to receive compensation expires on the date the notice of termination of the non-compete clause after the function ends is delivered to the Manager, with immediate effect.

In the event of expiry of the non-compete clause after expiry of the function and in the event of termination of the contract, on the terms laid down in the contract, the monthly installment of the compensation for such month will be decreased to the amount following from division of the monthly installment amount by 30 days and multiplying it by the number of days on which the non-compete clause applied after expiry of the function in such month.

The non-competition obligation after the function ends does not apply if, before the end of the term of the non-compete ban, the Manager undertakes to perform a function in a company mentioned in Article 1 Section 3 Item 7 of the Act of 9 June 2016 on the Rules for Shaping the Compensation of Persons Managing Certain Companies, or in the Company’s subsidiary in the Group within the meaning of Article 4 Item 14 of the Act of 16 February 2007 on Competition and Consumer Protection, or undertakes to work or provide services to such company pursuant to an employment contract, mandate contract, work product contract or otherwise. In such a case, the entitlement to compensation expires on the day the Manager takes up the function, undertakes to work or provide services for the benefit of such company.

If the non-compete clause is breached after expiry of the function during its term (subject to a reservation that the taking up of a function as referred to above is not considered a breach of the non-compete clause, provided that the Company is informed thereof in advance), the ban ceases to apply and the Company may demand the Manager to pay a contractual penalty in the amount of 100% of the total amount of compensation within 14 days of receipt of the Company’s demand to the bank account specified by the Company. The payment of contractual penalty shall not preclude the Company’s right to pursue damages in excess of the contractual penalty on general terms. The execution of a non-competition agreement after the termination of the contract for the provision of management services is unacceptable.

NON-COMPETITION OBLIGATION WITH RESPECT TO MANAGERS IN THE GROUP COMPANIES

The non-compete clause applicable during the term of provision of management services by a Management Board Member of a subsidiary of the Group is established in the contract for the provision of management services. The Management Board Members are not entitled to any additional compensation for refraining from competitive activity. The management contracts signed with the Management Board Members also include provisions prohibiting competition after the contract termination. This prohibition prevails under the condition the Management Board Member has discharged the function for a period of at least 6 months from the date of the Management Board Member’s appointment to the Company’s Management Board over the period of 4 months from the date he/she ceases to perform his/her function. The Management Board Member is entitled to compensation for complying with the non-competition ban after the function ends. The non-compete clauses in the contracts for the provision of management services are compliant with the regulations laid down in the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies of 9 June 2016 and the resolutions of the General Meetings/Shareholder Meetings of the Group companies on the rules governing the determination of remunerations of the Management Board Members.

NON-FINANCIAL COMPENSATION COMPONENTS DUE TO THE PARENT COMPANY’S MANAGEMENT BOARD MEMBERS

The non-financial compensation components due to Management Board Members comprise:

• providing the Management Board Member, at the Company’s expense, with technical equipment and resources such as: office space together with equipment, laptop with wireless Internet access and other necessary equipment, means of communication, including mobile phone, car to be used by the Manager for private purposes on the rules set separately by the Supervisory Board, however if the Manager uses a dwelling on the rules following from the contract, then if, on the days when services are performed in the Company’s seat, the Manager drives to the place of residence and back in a vehicle provided by the Company, then the Manager will be charged a fee of PLN 400 per ride (to the place of residence or back), dwelling, provided that the Manager has a place of residence that is more than 100 km away from the Company (in such case the Company will cover the costs associated with the use of the dwelling up to PLN 2,500.00 per calendar month net, i.e. without the VAT),
• covering or reimbursing costs related to the provision of services by Management Board Members, including those provided outside the Company’s premises, necessary for the proper performance of services, in particular, such as the costs of travel and accommodation,
• covering or reimbursing, with the Supervisory Board’s consent, other costs related to the provision of services to the extent resulting from the contract for the provision of management services,
• covering or reimbursing expenses incurred and necessary for the proper provision of services in accordance with a standard appropriate to the function discharged, after they have been properly documented and their incurrence has been justified, including by demonstrating the connection with and need for the proper provision of services,
• covering or reimbursing costs of the Manager’ individual training associated with the subject matter of the contract and the Manager’s contractual obligations up to PLN 20,000 per calendar year of the term of the contract.

During the term of the contract, the Manager may use other benefits, in particular those provided by the Company for the Company’s management staff, provided that the Supervisory Board, by way of a resolution, establishes the rules for granting or using such benefits by the Manager.

During the term of the management contract the Supervisory Board allows the possibility of using the assigned company cars for the Managers’ private purposes on the rules laid down in the contract. The use of the company car for private purposes is paid for. The compensation referred to above is not charged if the Manager, by the deadline for submission of the bill for the provision of management services for a given month, submits a statement that the company car was not used for private purposes during that month.

The Supervisory Board granted each Management Board Member the right to be insured against liability for the function discharged. In each financial year, a Management Board Member is entitled to a paid break in the provision of management services.

RULES OF PROCEDURE OF THE SUPERVISORY BOARD

The Supervisory Board exercises permanent supervision over the Company’s activity and performs its duties as a collective body, however it may delegate its Members to carry out specific supervisory and controlling activities individually. Supervisory Board Members exercise their rights and perform their duties in person. Meetings of the Supervisory Board are held in the Company’s head office or in another place specified in the notice convening the meeting. The Supervisory Board Chairperson convenes Supervisory Board meetings and presides over them, and if the Chairperson is unable to convene a meeting, then his/her Deputy Chairperson or the person named by the Chairperson shall do so. The first meeting of a newly elected Supervisory Board shall be convened and opened by the President of the Management Board. The Supervisory Board will hold meetings at least once every two months. The Supervisory Board Chairperson shall be obligated to convene a Supervisory Board meeting at the written request of a Supervisory Board Member or at the written request of the Company’s Management Board. The meeting should be held within two weeks after the submission of the request.

The Supervisory Board adopts resolutions by an absolute majority of votes present at the meeting, in the presence of at least half the number of the Supervisory Board Members, provided that all Supervisory Board Members have been invited to attend the meeting. An absolute majority of votes means more than one half of the votes cast. In the event of a tie vote, the Supervisory Board Chairperson’s vote shall prevail. A Supervisory Board Member absent from a meeting may cast his or her vote in writing through another Supervisory Board Member present at the meeting. Voting in writing cannot apply to matters introduced to the agenda during a Supervisory Board meeting.

The notice on convening the Supervisory Board meeting together with the planned agenda and information materials pertaining to matters covered by the agenda are delivered to Supervisory Board Members at least 7 days before the date of the meeting. In justified cases, documents may continue be sent out gradually later. The Chairperson may also shorten the time limit for the delivery of a notice on convening a Supervisory Board meeting to 2 days, at the same time specifying the acceptable delivery method. The notice is deemed effective if delivered to the Supervisory Board Member electronically to the e-mail address and the telephone number specified as the correspondence address. The agenda of a convened meeting may be expanded only with the consent of all Supervisory Board Members, and an item may be removed from the agenda of a convened meeting with the consent of an ordinary majority of Supervisory Board Members.

The Chairperson may also order a break in the meeting of the Supervisory Board and change the place of the meeting, in which case the Company will be required to ensure that the meeting may continue in the new place. Supervisory Board meetings can be attended by Management Board Members, the Company’s employees and other persons whose participation in the meeting is justified, invited by the Chairperson or the Supervisory Board.

The Supervisory Board may adopt resolutions at meetings and outside of meetings by following a written procedure or via means of direct remote communication.

The Supervisory Board may adopt resolutions by following a written procedure or via means of direct remote communication also in matters for which the Articles of Association of the Company provide for a secret ballot unless any Supervisory Board Member raises an objection. A resolution shall be valid if all Supervisory Board Members have been notified of the content of the draft resolution, at least half of the Supervisory Board members participate in adopting the resolution and no Supervisory Board member has requested that the resolution be adopted at the next meeting of the Supervisory Board. In line with the Supervisory Board Bylaws, the Supervisory Board Members may also participate in the meeting via teleconference or videoconference as provided for in the Supervisory Board Bylaws.

Motions to the Supervisory Board and draft resolutions to be adopted following the written (by circulation) procedure or via means of direct remote communication are delivered to all Supervisory Board Members via means of direct remote communication, specifying the deadline for casting the votes.

Supervisory Board resolutions are adopted in an open ballot and are minuted. Secret ballots are ordered in personnel matters or upon request of at least one of the persons eligible to vote.

Pursuant to § 26 of the Company’s Articles of Association, a Shareholder Meeting resolution is required to determine Supervisory Board's salary.

At the request of the Management Board, the Supervisory Board shall permit a Management Board Member to hold positions in corporate authorities of companies in which the Company has an ownership interest and to collect remuneration for such work.

In 2022, the Supervisory Board held 12 meetings and adopted 197 resolutions (including 23 resolutions via means of direct remote communication).

Information on the attendance of Supervisory Board Members at the meetings and on adopted resolutions on excused absence.

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The Supervisory Board passed no resolution regarding unexcused absences. The remaining meetings were attended by all the Supervisory Board Members.

Appointing and dismissing the JSW’s Supervisory Board Members 

According to the Articles of Association, the Supervisory Board consists of at least six Members. The Shareholder Meeting shall specify the number of Supervisory Board Members. The Shareholder Meeting determined the number of Supervisory Board Members to be 12. If Supervisory Board Members are elected by way of separate group voting, the number of Supervisory Board Members is set by the Shareholder Meeting in gremio; however, in such a situation the Supervisory Board may consist of at least five Members. The mandate of a Supervisory Board member appointed before the end of the term of office of the Supervisory Board shall expire simultaneously with the expiration of the mandates of the remaining Supervisory Board members. The Supervisory Board selects (from among its members) and dismisses in a secret ballot the Chairman, the Deputy Chairman and the Secretary of the Supervisory Board.

Supervisory Board Members exercise their rights and perform their duties in person and are appointed for a joint term of office which lasts 4 years. In accordance with the amended Commercial Company Code, a term of office is counted in full financial years. The mandate of a Supervisory Board Member appointed before the end of the term of office of the Supervisory Board shall expire simultaneously with the expiration of the mandates of the remaining Supervisory Board Members.

The Shareholder Meeting appoints and dismisses Supervisory Board Members, with the exception of the situations described in the Articles of Association and those described below. A Supervisory Board Member shall submit resignation in writing to the Management Board at the Company’s address.

Since the date of introduction of JSW’s shares to trade on a regulated market, in the period during which the State Treasury, including subsidiaries of the State Treasury, holds JSW’s shares carrying voting rights of at least 34% of the total number of votes in the Company plus one vote, the State Treasury has been entitled to appoint and to dismiss Supervisory Board Members of a number equal to half the total number of Supervisory Board members set by the Shareholder Meeting (in the event this number is fractional, it shall be rounded down to a whole number) plus one. With the Supervisory Board having a determined composition of 12 members, one Supervisory Board Member may be appointed or dismissed in a vote from which the State Treasury is excluded. However, the State Treasury retains the voting right in the event of electing Supervisory Board Members by voting in separate groups and in the event of the votes referred to in Article 385 § 6 of the Commercial Company Code as well as in the event of votes on appointing or dismissing the Supervisory Board Members elected by employees and in the event the Supervisory Board is unable to act because the number of its members is lower than that required by the Articles of Association and the shareholders present at the Shareholder Meeting, other than the State Treasury, fail to supplement the composition of the Supervisory Board with respect to those Supervisory Board Members which are to be elected by the Shareholder Meeting. Supervisory Board Members are appointed and dismissed by the State Treasury by way of a written statement delivered to the Company.

Supervisory Board Members elected by JSW employees

According to the Articles of Association, JSW employees and employees of all its subsidiaries have the right to elect to the Supervisory Board: two Members in a Supervisory Board composed of up to six Members, three Members in a Supervisory Board composed of between seven and ten Members and four Members in a Supervisory Board composed of eleven or more Members (in 2022, the composition of the Supervisory Board was set at 12 persons, which means four representatives of employees in the Supervisory Board). The results of elections are binding on the Shareholder Meeting. The Supervisory Board shall call an election of Supervisory Board Members elected by the Company employees and the employees of all its subsidiaries for the next term of office within two months after the elapse of their last full financial year of office. The Supervisory Board shall adopt election bylaws which shall include a detailed procedure for electing and dismissing Supervisory Board Members elected by employees and for holding the supplementary election. The election shall be held in a secret ballot as a direct and universal election by the Election Commission appointed by the Supervisory Board from among the Company employees and the employees of all its subsidiaries. Supervisory Board Members elected by the employees or candidates for Supervisory Board Members may not be appointed to the Commission. At the written request of at least 15% of all JSW employees and the employees of all its subsidiaries, a vote shall be held in the matter of dismissing a Supervisory Board Member elected by the employees. The rules of voting are set forth in the rules adopted by the Supervisory Board. Such a dismissal, death or any other important reason that decreases the number of Supervisory Board Members elected by Employees shall require supplementary elections. The Supervisory Board shall call a supplementary election within three weeks after the Supervisory Board is notified of the occurrence of a circumstance justifying the holding of an election. The election should be held within one month after it is convened by the Supervisory Board. In the event the number of Supervisory Board Members falls below the required minimum specified in § 15 section 4 of the Articles of Association, the Management Board shall call a supplementary election and appoint an Election Commission. Until the composition of the Supervisory Board is supplemented, the Supervisory Board shall act in its then current composition.

At least one Member of a Supervisory Board consisting of up to twelve Members or at least two Supervisory Board Members consisting of thirteen or more Members should satisfy the requirements of independence for a Supervisory Board Member within the meaning of the Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (2005/162/EC), in consideration of additional requirements arising out of the 2021 Code of Best Practice for WSE Listed Companies.

A candidate to be an independent Supervisory Board Member shall submit to the Company, before his or her appointment to the Supervisory Board, a written representation on satisfying the prerequisites for independence. If a situation arises causing failure to satisfy the prerequisites for independence, the relevant Supervisory Board Member shall promptly inform the Company about this fact. Information about the then current number of independent Supervisory Board Members shall be made public by the Company.

In a situation of failing to satisfy the requirements referred to in the Articles of Association regarding the independence of the Supervisory Board Members, the Company’s Management Board shall be obligated to convene a Shareholder Meeting immediately and place an item in the Shareholder Meeting agenda concerning changes in the Supervisory Board composition. Until the moment of making changes to the Supervisory Board composition, aiming at adjusting the number of independent Supervisory Board Members to the requirements prescribed in the articles of association, the Supervisory Board shall act in the previous composition.

No Supervisory Board Member may perform any activities contradicting his or her duties or potentially leading to a suspicion of partiality or pursuit of self-interest.

COMPOSITION OF THE SUPERVISORY BOARD

Table. COMPOSITION OF THE JSW SUPERVISORY BOARD

CHANGES IN THE COMPOSITION OF THE JSW SUPERVISORY BOARD IN 2022

• On 1 July 2022, the Minister of State Assets, by means of a statement submitted to JSW, pursuant to §15 sec. 13 of JSW's Articles of Association, appointed the following persons to the JSW Supervisory Board for the 11th term of office, effective 1 July 2022: Halina Buk, Alojzy Nowak, Jolanta Górska, Stanisław Prusek and Michał Rospędek.
• On 1 July 2022, the Ordinary Shareholder Meeting of JSW appointed the following persons to the JSW Supervisory Board for the 11th term of office, elected by Group employees, effective 1 July 2022: Robert Kudelski, Robert Łazarczyk, Paweł Nieradzik and Arkadiusz Wypych.
• On 20 July 2022, the JSW Supervisory Board elected the following persons for the presidium of the JSW Supervisory Board of the 11th term of office: Ms. Halina Buk - Chairperson, Mr. Michał Rospędek - Deputy Chairperson and Mr. Robert Kudelski - Secretary.

Composition of the JSW Supervisory Board

Table. COMPOSITION OF THE SUPERVISORY BOARD OF THE 11TH TERM OF OFFICE AT THE TIME OF PREPARING THIS REPORT

SUPERVISORY BOARD COMMITTEES

At the Supervisory Board, three committees operate, performing auxiliary roles for the Supervisory Board with regard to preparing assessments, opinions and other actions aiming to working out decisions to be made by the Supervisory Board. The committees operate in accordance with the Bylaws adopted by the Supervisory Board. The Supervisory Board elects from amongst its members the audit committee and may also elect other committees. A Supervisory Board member may participate in more than one committee.

AUDIT COMMITTEE

The Audit Committee is an advisory and opinion-making body vis-à-vis the Supervisory Board. It is appointed to support the Supervisory Board in exercising financial oversight and to provide the Board with reliable information and opinions that allow it to efficiently make correct decisions in the area of financial reporting, internal control and risk management, audit and selection of the audit firm to carry out the audits. The Committee operates in accordance with the Committee Bylaws adopted by the Supervisory Board. The scope of the Committee’s operation covers opinion-giving and analytical activities with regard to information provided by the Management Board to support the Supervisory Board in the performance of its control and supervisory duties defined by the articles of association in the areas of financial reporting, internal control and risk management. The Committee also oversees the financial statements auditing process and presents to the Supervisory Board its recommendations regarding the approval of the audited annual financial statements.

The Audit Committee is composed of at least three members. At least one Audit Committee member holds expertise and skills in accounting or audit of financial statements. Most of the Members of the Audit Committee, including its Chairperson, satisfy the requirements set forth in Article 129 section 3 of the Act of 11 May 2017 on Statutory Auditors, Auditing Firms and Public Supervision. Audit Committee members have expertise and skills in the industry in which JSW operates. This condition is considered fulfilled if at least one Member of the Audit Committee has expertise and skills in the industry or if various Members have expertise and skills in specific areas of the industry.

As at 31 December 2022, the independence criterion within the meaning of Article 129 section 3 of the Act of 11 May 2017 on Statutory Auditors, Auditing Firms and Public Supervision is satisfied by the following Audit Committee Members: Jolanta Górska, Halina Buk and Paweł Nieradzik.

The Audit Committee Member who holds expertise and skills in accounting or audit of financial statements is Halina Buk.

As at 31 December 2022, the Audit Committee Members who have expertise and skills in the industry in which JSW operates are: Paweł Nieradzik, Robert Kudelski and Stanisław Prusek.

The competencies and experience of the Audit Committee Members, as well as how they acquired their knowledge and skills in financial reporting and the industry, are set forth in the biographical notes of each Supervisory Board Member.

Committee meetings should be held as needed, but no less frequently than once per quarter, before publication of the Company’s financial statements, on the dates set by the Committee Chairperson.

BASIC TASKS OF THE AUDIT COMMITTEE:

• monitoring: process of financial reporting, effectiveness of internal control systems, risk management systems and internal audit, also in the area of financial reporting, performance of financial audit activities, in particular audits conducted by an audit firm, taking into account all conclusions and findings resulting from inspections performed in the audit firm,
• inspecting and monitoring the independence of the statutory auditor and the audit firm,
• providing information to the JSW Supervisory Board or supervisory or control body about the outcome of the audit and explanation of how the audit contributed to the integrity of financial reporting in the Company and what the role of the Audit Committee was in that process,
• making assessments of the independence of the statutory auditor and giving consent to the auditor’s provision of permitted services,
• preparing a policy governing the selection of an audit firm to perform the audit,
• preparation of a policy governing the provision of permitted non-audit services by the audit firm performing the audit, by its related parties and by a member of the audit firm’s chain,
• development of the procedure for selecting an audit firm by JSW,
• presentation to the Supervisory Board or another supervisory or control body or the body referred to in Article 66 Section 4 of the Accounting Act of 29 September 1994 of recommendations on the appointment of statutory auditors or audit firms.

The committee submits its findings, stances and recommendations worked out in connection with discharging its functions with due notice to enable the Supervisory Board to immediately take pertinent actions. The committee submits annual written reports on its activity to the Supervisory Board.

Table. COMPOSITION OF AND CHANGES TO THE AUDIT COMMITTEE

*  The independence criterion within the meaning of Article 129 section 3 of the Act of 11 May 2017 on Statutory Auditors, Auditing Firms and Public Supervision,
** On 20 July 2022, the first meeting of the Supervisory Board of the 11th term of office was held, at which the JSW Supervisory Board adopted resolutions, among other things, on the election of Jolanta Górska as the Chairperson of the Audit Committee and the appointment of Halina Buk, Paweł Nieradzik, Robert Kudelski and Stanisław Prusek as Committee members.

In 2022, the JSW Supervisory Board Audit Committee held 6 meetings. In 4 meetings, all the Members of the Audit Committee participated. Paweł Bieszczad, Robert Kudelski and Stanisław Prusek, in turn, were absent in one meeting of the Audit Committee. The Committee passed no resolution regarding unexcused absences.

Regardless of where and how the meetings were held, the Committee had free access to the Company’s personnel and documents. It had its own calendar of meetings, which means that it did not meet only on the occasion of Supervisory Board meetings. The following persons participated in the meetings as required: other Supervisory Board Members who are not Members of the Audit Committee, the Management Board Members, the statutory auditor auditing the Company's financial statements, the Company's Chief Accountant, the Director of the Audit and Control Department, the Management Board Representative for the Integrated Management System and Risk Management, and other employees of the Company.

In 2022, the Committee adopted 25 resolutions altogether. All the meetings of the Audit Committee were minuted.

IMPORTANT ISSUES HANDLED BY THE AUDIT COMMITTEE IN 2022

• reviewing results of JSW and the Group and cooperation with the statutory auditor with regard to auditing of the financial statements of JSW and the Group,
• introducing amendments and adopting a consolidated version of the document entitled Policy and procedure for selection of the audit firm and policy governing the provision of permitted non-audit services by the audit firm, by its related parties and by a member of the audit firm’s chain,
• carrying out activities in the proceedings for selecting an audit firm to audit the financial statements for 2023-2024,
• giving consent to commission the audit firm to provide the service involving the conduct of agreed procedures to verify that the Financial Ratios defined in the documentation of the Financing Agreements as at 31 December 2021 were calculated correctly,
• giving consent to commission the audit firm to provide the assurance service involving assessment of the annual report on compensation of JSW’s Management Board and Supervisory Board Members prepared as at 31 December 2021,
• reviewing the content of the recommendations arising out of the letter of the Office of the Polish Financial Supervision Authority concerning the development of effective and efficient solutions regarding audit firms auditing the Issuer’s financial statements,
• discussing and recommending to the Supervisory Board a positive assessment of the financial statements, the Management Board's report on the Company's and the Group's activity and the Company’s report on payments to the public administration and the Management Board's motions on the distribution of net profit and accounting for Other comprehensive income, and a positive assessment of the consolidated financial statements of the Group and adoption of reports on the results of the conducted assessment,
• discussing and recommending to the Supervisory Board the adoption of the Report on the activity of the Jastrzębska Spółka Węglowa S.A. Supervisory Board as the Company’s corporate body for the financial year ended 31 December 2021,
• discussing and recommending to the Supervisory Board a positive opinion on the Report on entertainment expenditures, expenditures for legal services, marketing services, public relations and social communication services and management consulting services of Jastrzębska Spółka Węglowa S.A. for the financial year ended 31 December 2021,
• giving a positive opinion on the Report on the performance of the Audit Plan, assessment of internal control system, risk management system, compliance and internal audit function at Jastrzębska Spółka Węglowa S.A. for 2021” and recommending that the Supervisory Board approve the said report,
• giving a positive opinion on the Strategic Audit Plan of Jastrzębska Spółka Węglowa S.A. for 2023-2025 and recommending that the Supervisory Board approve the said plan,
• giving a positive opinion on the "Audit Plan of Jastrzębska Spółka Węglowa S.A. for 2023" and recommending that the Supervisory Board approve the said plan,
• giving an opinion on the final reports on the completed audit tasks,
• reviewing information on results of conducted audit tasks,
• reviewing information on the risks associated with conducted business and the ways to manage those risks,

NOMINATION AND COMPENSATION COMMITTEE

The Committee is an advisory and opinion-giving body in respect of the Supervisory Board and has been formed for the purpose of presenting opinions and proposals to the Supervisory Board on how to shape the governance structure of JSW, including issues related to organizational solutions, the compensation system and the selection of managers with the qualifications needed to build the success of the Group. At least one Committee member should satisfy the criteria set for the independent Supervisory Board member referred to in §16 Section 2 of JSW’s Articles of Association.

During selection of the Committee members the Supervisory Board takes into account the competences, knowledge and experience of the candidates regarding the matters subject to the Committee’s scope of activity. Committee meetings should be held as needed, at least two times per year, on the dates set by the Committee Chairperson.

KEY COMPETENCES OF THE NOMINATION AND COMPENSATION COMMITTEE:

• handling matters connected with the appointment procedure for the positions of Management Board Members, including the performance of tasks following from the Regulations for conducting the appointment procedure for the positions of Management Board Members; preparing and presenting to the Supervisory Board draft versions of advertisements in the appointment procedure and questions/problems for candidates during interviews,
• handling matters connected with the appointment and dismissal of a Management Board Member by the employees, including issuing an opinion on the Regulations and presenting the Supervisory Board with relevant recommendations,
• handling matters connected with the appointment and dismissal of Supervisory Board Members by the employees, including issuing an opinion on the Regulations and presenting the Supervisory Board with relevant recommendations,
• preparing draft versions of contracts and other model documents in connection with appointments of Management Board Members for discharging their functions and overseeing the performance of the contractual obligations taken by the parties,
• monitoring and performing periodical analyses of the compensation system, providing an opinion on thee the compensation policy for JSW and the Management Boards and Supervisory Boards of other companies of the Group and presenting recommendations for the Supervisory Board,
• overseeing the implementation of the Management Board’s compensation system, recommending a list of Management Objectives for the Management Board Members (KPI), analyzing the Management Board Report on the performance of Management Objectives and presenting the Supervisory Board with relevant recommendations,
• overseeing the proper implementation of additional benefits for the Management Board stemming from their management contracts.

The Committee submits to the Supervisory Board a proposal for a stance on all matters related to the Company’s operations that have been brought to the Supervisory Board’s attention and with respect to which the provision of advice and the performance of consultative activities lie within the powers of the Committee.

The Committee submits to the Supervisory Board the adopted findings, stances and recommendations worked out in connection with discharging its functions with due notice to enable the Supervisory Board to immediately take pertinent actions. The Committee submits annual written reports on its activity to the Supervisory Board

Table. COMPOSITION OF THE NOMINATION AND COMPENSATION COMMITTEE AND CHANGES TO IT

*The independence criterion within the meaning of Article 129 section 3 of the Act of 11 May 2017 on Statutory Auditors, Auditing Firms and Public Supervision,
** On 20 July 2022, the first meeting of the Supervisory Board of the 11th term of office was held, at which the Supervisory Board adopted resolutions, among others, to appoint Alojzy Nowak as the Committee Chairperson and to appoint Jolanta Górska, Robert Kudelski, Michał Rospędek and Arkadiusz Wypych as Committee Members.

In 2022, the Nomination and Compensation Committee held 9 meetings. In 8 meetings, all the Members of the Committee participated, while Michał Rospędek was absent at 1 meeting. The Committee passed no resolution regarding unexcused absences.

In 2022, the Committee adopted 14 resolutions altogether. All the meetings of the Nomination and Compensation Committee were minuted.

Regardless of where and how the meetings were held, the Committee had free access to the Company’s personnel and documents. It had its own calendar of meetings, which means that it did not meet only on the occasion of Supervisory Board meetings. The following persons participated in the meetings as required: other Supervisory Board Members who are not Committee Members, the Management Board Members, the statutory auditor auditing the report on compensations of JSW Management and Supervisory Board Members, as well as the Company's employees.

IMPORTANT ISSUES HANDLED BY THE NOMINATION AND COMPENSATION COMMITTEE IN 2022

• taking actions leading to recommending to the Supervisory Board amendments to the Rules for conducting recruitment procedure for the positions of Management Board Members,
• in connection with the expiring term of office of the Management Board and the Supervisory Board, discussing matters concerning:
  
  • the election of a JSW Management Board Member by Employees and the election of JSW Supervisory Board Members by employees of the Company and employees of all of its subsidiaries, and presenting the Supervisory Board with recommendations in this regard,
  • recruitment procedures for the positions of JSW Management Board Members; inter alia it determined and submitted to the Supervisory Board draft announcements on the recruitment procedures and the content of issues/questions asked to candidates during interviews,
• discussing matters connected with the contracts executed with the Management Board Members, including compensation issues,
• holding discussions about the compensation policy at JSW, the rules in force and presenting the Supervisory Board with recommendations in this regard,
• reviewing the Management Board's report on the execution of the Management Objectives for 2021,
• discussing issues concerning supplementary compensation and the Management Objectives of the JSW Management Board Members for 2022, as a result of which the Committee recommended to the Supervisory Board a catalog of Management Objectives for 2022 for the Management Board Members, together with specification of their weights and the criteria for their implementation and accounting for them,
• reviewing results and key findings of the assurance work done by the statutory auditor to assess the Report on compensations of Jastrzębska Spółka Węglowa S.A. Management Board and Supervisory Board Members for the financial year ended 31 December 2021,
• reviewed the written Report of the independent statutory auditor on the assurance service pertaining to evaluation of the compensation report,
• recommending that the Supervisory Board should approve the Report on compensations of Jastrzębska Spółka Węglowa S.A. Management Board and Supervisory Board Members for the financial year ended 31 December 2021 and submit it to the Ordinary Shareholder Meeting.

The Chairperson of the Committee, under the authorization of the Supervisory Board Chairperson, conducted interviews with candidates for the positions of Management Board Members.

STRATEGY AND DEVELOPMENT COMMITTEE

The Committee is an advisory and opinion-making body for the Supervisory Board and is formed with the purpose of presenting the Supervisory Board with motions, recommendations, opinions and the Company’s development and operating strategy. Committee meetings should be held as needed, but no less frequently than two times per year, on the dates set by the Committee Chairperson.

BASIC TASKS OF THE STRATEGY AND DEVELOPMENT COMMITTEE:

• evaluation of the Company’s business strategy and presentation of the evaluation results to the Supervisory Board,
• recommendation of the scope and dates for the JSW Management Board to submit technical and economic annual and long-term strategic plans to the Supervisory Board,
• evaluation of the impact of strategic investments, planned and undertaken, on parent company’s assets,
• monitoring of the fulfillment of strategic investment tasks,
• evaluation of actions related to the management of JSW’s material assets,
• issuing opinions on strategic documents submitted to the Supervisory Board by the JSW Management Board.

The Committee is authorized to review all of JSW’s activity significant from the perspective of the Committee’s duties and demand from the JSW Management Board and employees any and all information, reports and explanations required to perform the Committee’s duties. The Management Board of the Parent Company is obligated to inform the Committee on an ongoing basis about all planned and taken actions and changes in the law and regulatory environment pertaining to the Committee’s tasks.

Table. COMPOSITION OF THE STRATEGY AND DEVELOPMENT COMMITTEE AND CHANGES TO IT

*On 20 July 2022, the first meeting of the Supervisory Board of the 11th term of office was held, at which the Supervisory Board adopted resolutions, among others, to appoint Stanisław Prusek as the Committee Chairperson and to appoint Robert Łazarczyk, Alojzy Nowak, Michał Rospędek and Arkadiusz Wypych as Committee Members.

In 2022, the JSW Supervisory Board Strategy and Development Committee held 3 meetings. At one of the meetings, all Committee Members were present. Tadeusz Kubiczek and Alojzy Nowak, in turn, did not participate in one of the meetings each. The Committee passed no resolution regarding unexcused absences. In the analyzed period of 2022, the Committee adopted 6 resolutions. All the meetings of the Strategy and Development Committee were minuted.

Regardless of where the meetings were held, the Committee had free access to the Company’s personnel and documents. It had its own calendar of meetings, which means that it did not meet only on the occasion of Supervisory Board meetings. The following persons also participated in the Committee meetings as required: other Supervisory Board Members who are not Committee Members, the Management Board Members, as well as the Company's employees.

MPORTANT ISSUES HANDLED BY THE STRATEGY AND DEVELOPMENT COMMITTEE IN 2022

• reviewing and assessing key assumptions of the JSW S.A. Strategy including the JSW Group’s Subsidiaries for 2022-2030,
• giving a favorable opinion on the JSW S.A. Strategy including the JSW Group’s Subsidiaries for 2022-2030 and recommending that the Supervisory Board should approve the said document,
• analyzing and evaluating the Technical and Economic Plan of JSW and JSW Group for 2022 and presenting recommendations in this respect to the Supervisory Board,
• monitoring the implementation of the Technical and Economic Plan of JSW and JSW Group in 2022,
• reviewing information submitted by the Management Board on the preparation and adoption of the Investment Strategy of the Group,
• reviewing the Group’s strategic investment projects regarding, among others, the merger of KWK Borynia-Zofiówka with KWK Jastrzębie-Bzie and the establishment of KWK Borynia-Zofiówka-Bzie,
• giving a favorable opinion on the concept of merger of KWK Borynia-Zofiówka with KWK Jastrzębie-Bzie and the establishment of KWK Borynia-Zofiówka-Bzie and recommending that the Supervisory Board should issue a favorable opinion on amendments to the Organizational Bylaws of Jastrzębska Spółka Węglowa S.A.

COMPENSATION OF JSW SUPERVISORY BOARD MEMBERS

The rules governing the determination of compensation of the Supervisory Board Members have been adopted by way of a decision made by the JSW Shareholder Meeting, in compliance with the regulations laid down in the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies and are consistent with the “Compensation Policy for the JSW Management Board and Supervisory Board” adopted by the Shareholder Meeting.

The Company does not enter into a separate contract with Supervisory Board Members for discharging the function of a Supervisory Board Member. The legal relationship between Supervisory Board Members and the Company shall be established on the terms set forth in the Articles of Association, including by way of an appointment by the Shareholder Meeting (appointment and dismissal of Supervisory Board Members by the State Treasury takes place by way of a notice submitted to the Company). The legal relationship is terminated as a result of the expiration of the mandate (including due to death) or by dismissal or resignation submitted to another Management Board Member or to a commercial proxy with a copy to the Supervisory Board and the State Treasury – represented by the competent Minister exercising the rights attached to the State Treasury’s shares as long as the State Treasury remains a shareholder of the Company.

The monthly compensation of Supervisory Board Members is set as the product of the base amount referred to in Article 1 Section 3 Item 11 of the Act on the Rules for Shaping the Compensation of Persons Managing Certain Companies of 9 June 2016 and the following multiplier: for the Supervisory Board Chairman – 1.7, and for other Supervisory Board Members – 1.5.

In 2022, Supervisory Board Members were entitled to receive compensation regardless of the number of meetings convened. Supervisory Board Members were not entitled to any compensation for the month in which they did not attend any of the correctly convened meetings and their absence was not excused. The Supervisory Board decided by way of a resolution whether the absence of a Supervisory Board Member at a meeting was justified or not. Supervisory Board Members were entitled to reimbursement of expenses incurred in connection with the participation in the works of the Supervisory Board and its committees. In addition to the compensation referred to above, Supervisory Board Members do not receive any additional components of compensation, such as bonuses or other cash benefits.

Supervisory Board Members are not entitled to any severance pay when they cease to discharge their functions. The Shareholder Meeting did not grant Supervisory Board Members additional compensation for discharging functions in the Supervisory Board or Committees established by the Supervisory Board.

Table. COMPENSATION FOR THE SUPERVISORY BOARD IN 2022 (PLN)

*The item also includes contributions for participation in the Employee Pension Plan paid to elected Supervisory Board members arising from the employment relationship with JSW.

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Table. COMPENSATION FOR THE SUPERVISORY BOARD IN 2021 (PLN)

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POWERS OF THE SHAREHOLDER MEETING

MATTERS REQUIRING RESOLUTIONS BY THE SHAREHOLDER MEETING:

• examining and approving the Company’s Management Board activity report and the financial statements for the previous financial year and granting a discharge to the members of the Company’s governing bodies on the performance of their duties,
• distributing profits or covering losses,
• changing the Company’s line of business,
• amending the Company’s Articles of Association,
• increasing or decreasing the share capital,
• authorizing the Management Board to purchase the Company’s treasury stock for retirement and specifying the manner and conditions for retiring stock,
• merging, splitting up or transforming the Company,
• dissolving or liquidating the Company,
• appointing or dismissing Supervisory Board Members,
• setting remuneration for Supervisory Board Members,
• allowing the Company to enter into a loan agreement, a surety agreement or another similar agreement with a Management Board member, a Supervisory Board member, a commercial proxy or a liquidator or in favor of any such person,
• allowing a subsidiary to enter into a loan agreement, a surety agreement or another similar agreement with a Management Board member, a Supervisory Board member, a commercial proxy or a liquidator or in favor of any such person,
• issuing bonds,
• selling or leasing an enterprise or an organized part thereof and establishing a limited right in rem thereon,
• making decisions on claims to remedy damages incurred during the establishment of the Company or in its management or oversight,
• establishing or dissolving the Company’s capitals and funds,
• issuing an opinion on a report on compensations of JSW’s Management Board Members and Supervisory Board Members.

The purchase or sale of a real property or a right of perpetual usufruct or of a share in a real property or in a right of perpetual usufruct shall not require consent of the Shareholder Meeting.

IMPORTANT DECISONS MADE BY THE SHAREHOLDER MEETING IN 2022

• zconsent to free-of-charge disposal of non-current assets of a designated part of JSW’s enterprise in the form of “Jastrzębie III” mining area of KWK Jastrzębie-Bzie to SRK, based on the procedure prescribed by the Act of 7 September 2007 on the Functioning of the Hard Coal Mining Industry,
• consent to acquisition by JSW series D Investment Certificates and subsequent series issued by the JSW Stabilization FIZ for a total target amount of up to PLN 5.0 billion,
• approval of financial statements, consolidated financial statements and Management Board reports on the activity of the Company and the Group, as well as approval of the report on the Company’s payments to the public administration and a favorable opinion on the report on compensation of the JSW Management Board Members and Supervisory Board Members,
• distribution of JSW’s net profit and accounting for “Other comprehensive income” for the financial year ended 31 December 2021.
• granting a discharge to Management Board Members and Supervisory Board Members on the performance of their duties.

SHAREHOLDER RIGHTS AND HOW THEY ARE EXERCISED

JSW Shareholder rights include:

Request to convene a Shareholder Meeting – shareholders representing at least half of the share capital or at least half of all the votes in JSW may have the right, among others, to file a request to convene an Extraordinary Shareholder Meeting. The Management Board convenes the Shareholder Meeting also upon request from Shareholders representing at least one-twentieth of the share capital.

Request to place specified items on the agenda – – a shareholder or shareholders representing at least one-twentieth of the share capital may request that the specified items be placed on the agenda of the closest Shareholder Meeting. The request should be submitted to the Management Board no later than 21 days before the set date of a Shareholder Meeting. The request should contain a justification or draft resolution pertaining to the proposed item on the agenda. The Management Board is obligated to announce changes to the agenda made upon request of the shareholders immediately, but no later than 18 days before the set date of a Shareholder Meeting. Announcement of changes is done following the same procedure as for convening a Shareholder Meeting.

Election of the Chairperson – pursuant to § 8 sections 8.3 and 8.4 of the Rules and Regulations of the Shareholder Meeting, a Shareholder Meeting participant may submit one candidate for Shareholder Meeting Chairperson. Election is carried out with participation of the candidates who gave their consent for being candidates.

Submission of draft resolutions:

• before the date of a Shareholder Meeting – a shareholder or shareholders representing at least one-twentieth of the share capital may submit to the Company, before the date of a Shareholder Meeting (i.e. until a Shareholder Meeting is opened) draft resolutions concerning the items included in the agenda of the Shareholder Meeting or items which will be included in the agenda. The Company publishes draft resolutions on its website immediately,
• during a Shareholder Meeting – every Shareholder may submit draft resolutions on matters included in the agenda.

In accordance with Rule 4.8 of the Code of Best Practice for WSE Listed Companies 2021, the Management Board of the Company recommends that draft resolutions concerning the items entered in the agenda of the Shareholder Meeting or items to be entered in the agenda be submitted no later than 3 days before the date of Shareholder Meeting.

Draft resolutions and motions submitted to a Shareholder Meeting should be prepared in writing. Draft resolutions and motions resulting in changes in draft resolutions should be justified in a manner enabling the shareholders to make reasonably informed decisions. Technical resolutions which are typical resolutions adopted during a Shareholder Meeting do not require justification.

Request a copy of motions concerning items included in the agenda–a shareholder has the right to request copies of motions concerning items included in the agenda within one week prior to the date of holding a Shareholder Meeting.

Participation in a Shareholder Meeting and exercising voting right –a shareholder may participate in the Shareholder Meeting and exercise voting rights in person, through a proxy or through a person authorized to submit declarations of will on its behalf. A proxy may represent more than one shareholder. Persons who are entitled to take part in a Shareholder Meeting are JSW shareholders holding the Company’s shares on their securities accounts 16 days before the date of the Shareholder Meeting. Pledgees and users holding the voting right have the right to participate in a Shareholder Meeting provided that the limited right in rem established in their favor has been registered on the securities account on the date of registering their participation in the Shareholder Meeting.

Shareholders as well as pledgees and users holding the voting right, in order to participate in a Shareholder Meeting, should request the entity keeping the securities account to issue a name-specific certificate on the right to participate in the Shareholder Meeting no earlier than after the date of announcement of convening the Shareholder Meeting and no later than 16 days before the date of the Shareholder Meeting.

During a Shareholder Meeting the shareholder has the right to vote in a different manner under each share held. Votes are cast in an open ballot. Secret balloting is ordered for elections, dismissals, in personal matters and on the motions to charge the members of governing bodies or liquidators with accountability. Secret balloting should be also ordered at the request of at least one shareholder in attendance.

A shareholder may vote as a proxy when adopting resolutions concerning him/her, as mentioned in Article 413 §1 of the Commercial Company Code, i.e. on matters related to his/her responsibility to the Company for any reason, including granting a discharge, releasing from an obligation toward the Company and a dispute between him/her and the Company. Voting on technical matters may only pertain to the things related to conducting a Shareholder Meeting. Resolutions that may affect how shareholders exercise their rights are not subject to a vote under this procedure.

Viewing the list of shareholders –shareholders may view the list of persons authorized to participate in the Shareholder Meeting which will be displayed in the Company Management Board Office for 3 business days preceding the date of the Shareholder Meeting and may demand a copy of the list against the cost of preparing such a list. Moreover, each shareholder may request the list of authorized shareholders to be sent to it free of charge by e-mail, specifying the address to which the list should be sent.

Election of the Election Committee – pursuant to § 10 section 10.7 and § 11 of the Rules and Regulations of the Shareholder Meeting upon request of shareholders representing at least one-tenth of the share capital represented at a Shareholder Meeting, the Attendance List should be checked by a committee elected for this purpose and composed of at least three people. The persons filing such motion will have the right to elect one Member of that committee, and this committee may have maximum three members.

Election of Supervisory Board Members –upon a motion of Company shareholders representing at least one-fifth of the Company’s share capital, the Supervisory Board should be elected by the closest Shareholder Meeting by voting in separate groups.