Corporate governance

Composition of the Management and Supervisory Boards, changes thereof in the last financial year and functioning of the management and supervisory bodies of the Company and their committees

Composition of the Management Board

As at 31 December 2014, the Management Board of Budimex SA was composed of the following persons:

• Dariusz Jacek Blocher - President of the Management Board, General Director,
• Fernando Luis Pascual Larragoiti - Vice-President of the Management Board,
• Andrzej Artur Czynczyk - Board Member, Chief HR Officer,
• Jacek Daniewski - Board Member, Chief Legal and Organisational Officer,
• Henryk Urbański - Board Member, Chief Real Estate Officer,
• Marcin Węgłowski - Board Member, Chief Financial Officer.

Changes in the composition of the Management Board in 2014:

• Ignacio Botella Rodriguez resigned from the position of Vice-President of the Management Board as of 24 April 2014,
• By resolution No 229 of 24 April 2014, the Supervisory Board appointed Fernando Luis Pascual Larragoiti to the position of the Vice-President of the Management Board.

As at 31 December 2014, joint authorisations to represent the Company together with a member of the Management Board of Budimex SA were granted to the following persons:

• Artur Popko,
• Radosław Górski,
• Andrzej Goławski.

Changes in authorised legal representatives in 2014:

• on 26 March 2014, joint authorisations granted to Jaime Rontome Perez and Jose Emilio Pont Perez were recalled,
• on 19 September 2014, joint authorisations to represent the Company together with a member of the Management Board were granted to: Artur Popko, Radosław Górski and Andrzej Goławski.

During the year 2014, policies concerning the appointment or removal of members of managing bodies as well as the rights of members of these bodies, including the right to take decisions on share issuance or redemption, as provided in the Articles of Association, did not change.

Composition of the Supervisory Board and its committees

As at 31 December 2014, the Supervisory Board of Budimex SA was composed of the following persons:

• Marek Michałowski - President of the Supervisory Board,
• Alejandro de la Joya Ruiz de Velasco - Vice-President of the Supervisory Board,
• Igor Adam Chalupec - Secretary of the Supervisory Board,
• Marzenna Anna Weresa - Supervisory Board Member,
• Ignacio Clopes Estela - Supervisory Board Member,
• Javier Galindo Hernandez - Supervisory Board Member,
• Jose Carlos Garrido-Lestache Rodriguez - Supervisory Board Member,
• Piotr Kamiński - Supervisory Board Member,
• Janusz Dedo - Supervisory Board Member.

Changes in the composition (and structure) of the Supervisory Board in 2014:

• resignation from membership in the Supervisory Board and function of the Secretary submitted by Tomasz Sielicki, effective as of 7 January 2014,
• supplementing the composition of the Supervisory Board by co-opting Janusz Dedo to replace Tomasz Sielicki — resolution No 218 of the Supervisory Board of 29 January 2014. Supplementing of the Supervisory Board’s composition was approved by the General Meeting of Shareholders on 24 April 2014,
• appointment of the existing member of the Board, Maciej Stańczuk, to perform the function of the Secretary of the Board — resolution No 219 of the Supervisory Board of 29 January 2014,
• resignation from membership in the Supervisory Board and function of the Secretary submitted by Maciej Stańczuk, effective as of 7 February 2014,
• appointment of the existing member of the Board, Igor Chalupec, to perform the function of the Secretary of the Board — resolution No 220 of the Supervisory Board of 12 March 2014,
• appointment of Ignacio Clopes Estela to the Supervisory Board by the General Meeting of Shareholders of Budimex SA, effective as of 1 May 2014.

As at 31 December 2014, the Audit Committee was composed of the following persons:

• Marzenna Weresa — President,
• Javier Galindo Hernandez — Member,
• Jose Carlos Garrido - Lestache Rodriguez — Member.

The composition of the Audit Committee did not change in 2014.

As regards the independence of an Audit Committee member, provisions of the following apply: Article 56 section 3 item 1, 3 and 5 of the Act on Statutory Auditors and their Self-Governance, Audit Firms Authorized to Audit Financial Statements and Public Oversight, dated 7 May 2009, and criteria of independence with regard to the company and entities materially related to the company, within the meaning of the Best Practices of WSE Listed Companies (Policy 6 Section III Best Practices for Supervisory Board Members).

The status of independence of a Supervisory Board member is determined by the Company in accordance with the criteria defined in the Procedure for Integrated Management System No 05-05 relating to obtaining information from Supervisory Board members and publication of this information, based on representations filed by Board members and based on Article 56 section 3 item 1, 3 and 5 of the Act on Statutory Auditors and their Self-Governance, Audit Firms Authorized to Audit Financial Statements and Public Oversight, dated 7 May 2009.

The Investment Committee was composed of the following persons:

• Piotr Kamiński — President,
• Alejandro de la Joya Ruiz de Velasco — Member,
• Javier Galindo Hernandez — Member.

Changes in the composition of the Investment Committee in 2014:

• resignation from the function performed submitted by Maciej Stańczuk, effective as of 7 February 2014,
• appointment of Piotr Kamiński to the Investment Committee by resolution No 221 of the Supervisory Board of 12 March 2014. After the above supplementing of composition, the Investment Committee was established by way of electing Piotr Kamiński the President of the Committee.

The Remuneration Committee was composed of the following persons:

• Marek Michałowski — President,
• Igor Chalupec — Member,
• Alejandro de la Joya Ruiz de Velasco — Member.

The composition of the Remuneration Committee did not change in 2014.

Operation of the Management Board

Centrum ICE w KrakowieThe Management Board operates based on the provisions of the Company’s Articles of Association, By-laws of the Management Board and other binding regulations, including the Code of Commercial Companies. The Management Board is composed of one or more members. The Management Board conducts the Company affairs and formally represents the Company.

The President of the Management Board is appointed and removed by the Supervisory Board. The President of the Management Board is, at the same time, the Company’s General Director. The Supervisory Board, at the request of the President of the Management Board, appoints vice-presidents and other members of the Management Board for a 3-year joint term of office.

The functioning of the Management Board is managed by the President of the Management Board. The detailed manner of Management Board functioning has been defined in the By-laws of the Management Board approved by the Supervisory Board.

Resolutions of the Management Board may be adopted with an absolute majority of votes. In the event of an equal number of votes, the casting vote is that of the President of the Management Board.

The persons authorised to make representations or sign documents on behalf of the Company are:

• President of the Management Board – individual representation
• two Members of the Management Board acting together or one Board Member acting together with an authorised commercial representative.

Representations filed with the Company or submissions of documents are considered valid if addressed to one Board Member, or authorised legal representative of the Company.

Operation of the Supervisory Board

The Supervisory Board operates on the basis of the Articles of Association, By-laws of the Supervisory Board of Budimex SA and other legal regulations, including the Code of Commercial Companies. The organisation and operation of the Supervisory Board is defined in the By-laws of the Supervisory Board.

The Supervisory Board adopts resolutions provided that at least half of Board Members are present at the meeting and all its members were invited to the meeting. The Supervisory Board adopts resolutions with an absolute majority of votes. In the case of an equal number of votes, the casting vote is that of the President of the Supervisory Board. It is allowed that resolutions of the Supervisory Board are taken in writing or using means of direct communication. Resolutions of the Supervisory Board are valid and effective if all Board members were informed about the content of the draft resolution. Supervisory Board members may participate in taking resolutions by voting in writing by proxy i.e. through another member of the Supervisory Board, in all matters listed on the agenda of the Supervisory Board meeting, except for matters that were added to the agenda during the course of the Supervisory Board’s Meeting.

In performing its duties, the Supervisory Board is authorised to review all documents of the Company or to request reports and explanations from the Management Board or employees of the Company; it may also verify the company’s assets, books of account, registers and documents. The Supervisory Board is also entitled to order, for its own use, appropriate expert research in matters of its supervision and control.

The Supervisory Board supervises all aspects of the Company’s operations in an ongoing manner. Included in the scope of duties of the Supervisory Board are, in particular, the following:

• Powiśle Park w Warszawieassessment of the directors’ report on the company’s activities and evaluation of the financial statements for the previous year,
• evaluation of profit appropriation or loss absorption proposals made by the Management Board,
• recommending the acknowledgement of the fulfilment of duties by members of the Management Board to the General Meeting of Shareholders,
• presenting annual written reports on the results of the assessment referred to above to the General Meeting of Shareholders,
• suspending, for valid reasons, individual or all Management Board members and delegating Supervisory Board members for a period lasting no more than 3 months to temporarily perform the duties of those Management Board members who were removed, resigned or could not perform their duties for other reasons,
• approval of the By-laws of the Management Board of the Company,
• concluding agreements with Management Board members, determining remuneration of the President of the Management Board and of other Board members, determining policies for granting management bonuses, exercising rights towards Management Board members resulting from work relations; with the proviso that such agreements are signed by the President of the Supervisory Board on behalf of the Supervisory Board,
• appointment of a new certified auditor from the list of certified auditors maintained by the National Council of Certified Auditors to audit the financial statements of the Company,
• approval of the agreement between the Company’s Management Board and the underwriter to take up the Company’s shares,
• granting approval to a Board member to deal with competitive business or to participate in a competing company,
• granting approval to excluding or limiting by the Management Board a pre-emptive right to newly issued shares,
• granting approval to the method of determining share issue price proposed by the Management Board or to issue of shares for an in-kind (non-monetary) contribution,
• granting approval for the purchase or disposal of property, perpetual usufruct right or share in property, machines and equipment and/ or disposal or acquisition of securities or other asset items if the unit price on acquisition or disposal exceeds one fifth of the Company’s share capital; if the value of the transactions referred to in this point does not exceed the amount stated above, the decision is made independently by the Management Board.

In accordance with par. 12, section 3 of the By-laws of the Supervisory Board, the Supervisory Board may establish committees or appoint teams from among its members, or delegate a Board member to such bodies. As stated above, the following three committees operate as part of the Supervisory Board: Audit Committee, Investment Committee and Remuneration Committee.

Tasks of the Audit Committee

Stadion Miejski w LublinieThe role of the Audit Committee is to: recommend to the Supervisory Board an entity authorised to serve as a certified auditor and to audit the financial statements of the Company and the consolidated financial statements of the Group for the previous year, monitor the process of preparation of the financial statements of the Company and the consolidated financial statements of the Group for the previous year, perform detailed reviews of the results of those audits at each audit stage, monitor the financial audit process, monitor the effectiveness of the internal control, internal audit and risk management systems, forward to the Supervisory Board conclusions and recommendations relating to the audit and assessment of the financial statements of the Company and of the consolidated financial statements of the Group for the previous year, to assess the Management Board’s proposal concerning profit appropriation or loss absorption, forward to the Supervisory Board conclusions and recommendations concerning acknowledgement of the fulfilment of duties by the Chief Financial Officer, monitor the independence of the certified auditor and the entity authorized to audit financial statements, in this case – the independence of services referred to in article 48 par. 2 of the Act on Statutory Auditors and Their Self-Governance, Audit Firms Authorized to Audit Financial Statements and Public Oversight, dated 7 May 2009, perform other tasks commissioned by the Supervisory Board depending on the current situation at the Company, and submit interim and annual reports on its activities to the Supervisory Board.

Tasks of the Investment Committee

The role of the Investment Committee is to provide opinions or approve decisions material for the Company from the point of view of the value of operations relating to: making investments or de-investments in non-financial assets, company incorporation or dissolution, making investments or de-investments or issuing financial assets, the Budimex Group company mergers, divisions or transformations, carrying out financial operations, establishing special purpose vehicles (SPVs) to perform works or to render services based on the terms and conditions other than those prevailing in the consortium agreements concluded by the Budimex Group, preliminary agreements and non-binding initial offers, development projects and significant contracts with related entities.

The Investment Committee operates based on the procedure authorised by the Supervisory Board. The Supervisory Board is informed at its subsequent meetings about matters on which the Investment Committee was to provide opinions during the period in between the Supervisory Board’s meetings.

Tasks of the Remuneration Committee

The tasks of the Remuneration Committee comprise:

• submitting for approval by the Supervisory Board proposals concerning remunerating Management Board Members, especially in the form of fixed remuneration, performance-based remuneration, retirement benefit scheme and retirement benefit and long-term incentive programs, together with recommendations concerning objectives and assessment criteria for appropriate adjustment of remuneration of Management Board Members to long-term shareholder interests and the Company’s objectives defined by the Supervisory Board; providing the Supervisory Board with proposals concerning remuneration of individual Management Board Members and ensuring that the remuneration proposed is consistent with the remuneration regulations adopted by the Company and assessment of work performance of individual Board Members; providing the Supervisory Board with proposals concerning the appropriate form of employment contracts for individual Board Members; providing the Supervisory Board with proposals concerning bonus ratios, their weight for Board members based on the budget for the given year; offering assistance to the Supervisory Board in supervising the process under which the Company fulfils binding regulations in the area of remuneration disclosure requirements (in particular in the area of remuneration of members of the Management Board); monitoring the level and structure of remuneration of Management Board members based on independent payroll reports, market ratios and submitting to the Supervisory Board appropriate underlying analyses and conclusions; providing opinions on the appointment and removal of members of Supervisory Boards at Budimex SA subsidiary companies, except for SPVs.
• approving, at the request of the Management Board, the bonus ratio for employees of the Budimex SA head office to be used in calculation of previous year bonus and the percentage ratio for salary/wage increase in the current year;
• preparation of annual report on activities of the Remuneration Committee.