Governance and Ethics

Governance Structure and PTT Board of Directors^GRI2-9

PTT has set a governance structure with PTT directors appointed by PTT shareholders to establish PTT way of business conduct. PTT directors, who oversee five specifics, significant, areas need careful consideration, will be divided into five sub-committee, which are the Audit Committee, Nominating Committee, Renumeration Committee, Corporate Governance & Sustainability Committee, and Enterprise Risk Management Committee. Working closely with the Board is the PTT Management who is responsible for overall day-to-day business operation, led by PTT President& CEO as the highest-level executive of the company.

PTT Board of Directors are responsible for setting company strategic directions, visions, policies, and important business directions, such as, the approval of annual business plan and budget, and renumeration, and risk management, covering the economic, social, and governance factors, which shall have impacts on the business of the company. The Board also directs the performance of the management through the review of the management performance report on both finance and non-finance which shall be viewed quarterly at the PTT Board meeting. The Board will also track the management performance through the meeting of the sub-committees, to carefully screen some important issues, drive the company to conduct its business according to the strategies and directions effectively and efficiently, enhance the competitive-edge, and govern the company to conduct it business with ethics, good governance, transparency, traceability, and fair treatment to all its stakeholders while creating reasonable profits for its shareholders.

PTT management have authorities and responsibilities to strictly follow the plans and budget as approved by the PTT Board in performing their business conduct with integrity and ethics, and to keep the interests of the company and the shareholders as their most important agenda. The management exercise their authorities through the PTT management committee (PTTMC) and have other 52 sub-committees to help screen and manage internal businesses of the company to achieve most efficiency.

PTT Board of Directors^{GRI2-9, GRI2-11}

The structure of the PTT Board is a One-Tier System which is the system that consists of the Board of Directors of not less than five directors but not exceed 15 directors. At the present, there are 10 independent directors and three non-executive directors. To this end, PTT has fixed that the Chairman of the Board must not be PTT executive and not the same person as the President and CEO of PTT, which has been the practice of PTT since 2001 as the company has adhered to the transparent and traceable way of conduct.

PTT Board of Directors are knowledgeable, have expertise and experiences, that could greatly enhance the benefits of PTT. They must be able to dedicate their full time in performing their duties according to their responsibilities. The Board is appointed by the shareholders to direct the business conduct of PTT, then to appoint the management to responsible for day-to-day operations. The Board will also appoint the specific committees to be responsible for specific matters, to select certified auditor, and to appoint the company secretary to be responsible for organizing the Board meeting, and the compliance with the law ruling company business conducts and practices. Details on the policies and guiding principles relating to the Board can be found in the 56-1 One report. Disclosure of biographies and directors’ present and past positions are present in the annual registration statement/annual report 2022 (56-1 One Report) and at www.pttplc.com

PTT Board of Directors

PTT has scheduled meetings of the PTT Board of Directors in advance throughout the year. In 2022, the meeting was scheduled once a month on the third Thursday of the month. And announced the schedule of the 2022 Board of Directors Meeting to the directors at the PTT Board of Directors Meeting No. 10/2021 on October 14, 2021.

Nomination of the PTT Board of Directors^GRI2-10

The members of the Board will be nominated by the Nominating Committee. Currently, PTT Board has consisted of three non-executive directors who has knowledge and experience in energy industry, (according to GICS Level 1, Industry Experience). However, PTT has always ascertained the diversification of the PTT Board. They are different not only in qualifications and experiences, as well as professional expertise necessary for the PTT’s business operations on energy industry business, laws and legal, accounting and finance, but also have diverse social backgrounds, race, gender, religion, believes, and cultures. The Nominating Committee has set a target for recruiting at least 2 female directors. In 2022, there were one female director which was Mrs. Premrutai Vinaiphat, who resigned on November 1, 2022. The average tenure of board member is 2.5 years.

Last year 2022, the number of the Board who attended the Board meeting was at 98% exceeding the set target of the Board meeting participants at 80%.

PTT Board of Directors’ Roles and Responsibilities on Sustainability^GRI2-12

The Governance Structure on Sustainability^GRI2-9

PTT has set the governance structure to drive the business growth towards the sustainability by establishing a clear structure and scope of responsibilities from the top level at the Board, top management, and executives, down to the departments inside the organization, to reinforce, support, and follow up and review some important issues and overall impacts relating to sustainability, in order to achieve the company’s goals with effectiveness and efficiency as the picture shown below.

• The Structure on Sustainability at the level of the Executive Vice President, Sustainability Management, under the Senior Executive Vice President, Corporate Strategy and Sustainability, which is directly in charge of sustainability management, setting the policy and strategy, and the drive for actions within the company.
• PTT Board of Directors and PTT MC consists of

  - Governance Risk and Compliance Management Committee (GRCMC) is responsible for overall company’s practices on sustainability and consideration of some details before submitting the draft of sustainability guideline to the Corporate Governance and Sustainability Committee (CGSC) who is assigned by the PTT Board to govern the company to conduct its business relating to sustainability.
  - PTT Group Sustainability Management Committee (GSMC) will scrutinize, reinforce, and drive the business of the PTT Group towards sustainability to align within the same direction.

In governing and managing some significant issues or impacts relating to sustainability of PTT, the PTT Board, as well as the committees under the structure on sustainability, have crucial roles in providing advice or consult, as well as must follow up the company’s performance and approve the business directions relating to a sustainable growth of the company as follows:

• Approve the establishment, the vision revision, strategic framework, and business plans of the company 
• Approve the policies relating to the determination of the company to conduct the business with responsibility such as the policies on sustainability management, good corporate governance, the declaration of human rights, as well as other related specific policies 
• Approve strategic directions, management process, and sustainability management master plan
• Approve the identification and assessment of the important issues relating to sustainability, which have or might have impacts on the economy, the environment, or to the stakeholders, as well as to the human rights policy of the company
• Provide advice or consult, as well as to support and create relationship with related stakeholders such as government agencies, networks, and alliances, relating to the management of the important issues or impacts on corporate sustainability
• Follow up on the progress or review the performance results on corporate sustainability management to reach the targeted efficiency on a quarterly basis.
  
  

Directors’ Development^{GRI 2-9, GRI 2-17}

PTT Board of Directors and top executives have realized the importance of joining the training or seminar sessions relating to the development and competency build-up of the directors regularly, (referring to the detail of the training courses listed under the topic number 8 of the Report on Key Performance of Good Corporate Governance under the Directors’ Development topic, in the annual registration statement/annual report 2022 (56-1 One Report.) More than 90% of the Board members have training records with the Thai Institute of Directors (IOD), as well as with other leading organizations, institutes, and other related seminars and conferences. Besides, PTT has organized In-house Briefings by inviting experts from leading consulting companies and internal units within the company and the PTT Group to present information useful for the company’s business on a regular basis. Together with this, the company also organize operation site visits within and outside the PTT Group for the Board to have views which can be beneficial for the business of the company to grow sustainably.

In 2022, the PTT Board joined training sessions and seminars as follows:

• In-house briefing on hydrogen-related technology and business
• In-house briefing on laws related to PTT’s gas business
• NBI Think Tank lecture: “Geopolitics: New World Order and Investment Strategies of Thailand and PTT Group”
• In-house briefing on Update on Risk Insider Trading
• Knowledge-sharing: rejuvenating DNA by genetic stability molecule (RED-Gems)

In addition, PTT Board participated in other corporate activities such as PTT and PTT Group operation site visits, both domestically and aboard, and the GSM Shipper Control Center visit of the Audit Committee. 

Performance Appraisal and Renumeration^{GRI 2-18, GRI 2-19, GRI 2-20, GRI 2-21}

PTT Board of Directors’ Performance Appraisal^GRI2-18

PTT has set an annual performance appraisal of the Board of Directors according to the PTT good corporate governance. In 2022, PTT awarded PricewaterhouseCoopers: PwC to review and improve all the five assessment forms of the PTT Board of Directors to ascertain that appraisal of the Board’s annual performance is effective, updated, and compliant with good governance principles set by the SEC, SET, and SEPO, as well as other principles and guidelines. 

There are five appraisal forms for the Board of Directors consisting of 1) the entire Board of Directors appraisal form, 2) individual self-appraisal form, 3) individual appraisal form (assessed by other directors,) 4) sub-committee appraisal form (directors appraise the performance of their own respective sub-committees,) and 5) the Chairman of the Board and Ad-hoc Director appraisal form (appraised by all directors.) Details of the appraisal can be found in the 56-1 One Report for the year 2022 under the topic number 8 of the Report on Key Performance of Good Corporate Governance under the Board of Directors’ performance appraisal subject.

The data collected from these appraisals will be used by the directors in reviewing their performance, as well as the problems and challenges occurred during the past year, to improve the performance of the Board. Disclosures of appraisal results can be found in the annual registration statement/annual report 2022 (56-1 One Report.) Moreover, in 2022, the Board used key performance indicators (KPIs) of the Board of Directors as a part of the performance evaluation which shall determine their renumeration.

PTT Board of Directors are also appraised by the independent auditors. They are appraised every year by the State Enterprise Policy Office (SEPO), the Ministry of Finance, and every two years, or as specified by the Thai Institute of Directors (IOD). PTT has formulated fair and reasonable director renumeration policy, which is reviewed by the Renumeration Committee based on the appropriateness, responsibilities, the company’s financial status and performance, according to the Performance Agreement (PA) of the state enterprise system, and to the benchmark with its industry peers.

PTT Board of Directors Renumeration Policy^GRI2-19

PTT has set a fair and reasonable Board of Directors remuneration policy, by which the Remuneration Committee is responsible for the revision of the policy. The Remuneration Committee has adhered to the principal guidelines to set the remuneration for the PTT Board and the committees in charge of specific issues. In 2022, there were some important factors the Committee considered in setting the remuneration policy, which were, practices of other leading, listed companies, nationally and internationally, in the same industry, practices of other listed state-owned companies, the good corporate governance, performance results, business size, scope of responsibilities of the Board, as well as the overall economic growth trend. The Board’s remuneration involves monthly allowances, meeting allowances, and bonuses. Directors who are appointed to be members of sub-committees will receive additional remuneration according to their larger scope of duties. To this, the 2022 remuneration of the PTT Board was approved by the shareholders at the 2022 Annual General Shareholders’ meeting held on April 8, 2022, as follows:

1) Monthly allowances and meeting allowances consisted of,

• Monthly allowances: 30,000 Baht per person, which the Chairman received two times more than other directors,
• Meeting allowances: 60,000 Baht per person, which only participating directors would receive, and the Chairman received 25% more than other directors. The meeting allowances were limited to be paid only once a month, except for a reasonable case that the meeting allowance could be paid more than once but not exceeding 15 times per year.

2) Remuneration and meeting allowances of the sub-committees appointed by the PTT Board remained unchanged, as follows:

2.1 Audit Committee

• Monthly allowances: 15,000 Baht per person, unchanged from previous year, which Chairman of the Audit Committee received the same amount as other committee members
• Meeting allowances: 45,000 Baht per person, which only participating members would receive and Chairman of the Committee received 25% more than other members, while the Committee’s secretary received monthly allowances of 7,500 Baht (same as the previous year).

2.2 Other Committees which were Nominating Committee, Renumeration Committee, Corporate Governance & Sustainability Committee, Enterprise Risk Management Committee, and other sub-committees, which may be appointed by the Board deem it appropriate and necessary in the future, would be paid the same amount of remuneration, as follows:

• Monthly allowance: none (remain unchanged)
• Meeting allowances: 30,000 Baht per person, which only participating members would receive, and Chairman of the Committee received 25% more than other members,
• Other benefits: none (remain unchanged)

3) Bonuses Paid for the PTT Board of Directors in 2022

Bonuses paid for the PTT Board in 2022 were determined by the company’s performance and net profit in 2022, which was equal to 0.05% of the net profit. The amount paid to each director would be calculated according to the tenure of each director, or within the total budget of 60,000,000 Baht for the whole Board, which the Chairman of the Board was paid 25% (same as previous year) more than other directors.

Disclosures of each directors’ remuneration in 2022 was present in the topic number 8 of the Report on Key Performance of Good Corporate Governance under the PTT Board of Directors Renumeration Policy, in the annual registration statement/annual report 2022 (56-1 One Report).

PTT President & CEO Remuneration Policy^GRI2-19

PTT President & CEO’s performance is assessed, and the remuneration is set by the PTT’s Renumeration Committee, which shall reflect the performance (Performance Management) of the President & CEO. The policy will also align with the principal guidelines and practices of other leading companies in the same industry under the clear, transparent, and fair, criteria. The salary increases and bonus paid to PTT President & CEO will be in line with his KPIs’ scores and performance results at the present (short-term), and according to the company’s long-term strategies, which proves his vision and ability to create value addition and competitive edge of the company in the long run. Criteria for PTT President & CEO remuneration policy and an appropriate remuneration shall be presented to the PTT Board for consideration and approval. Key factors for consideration consist of 1) State Enterprise Assessment Model: SE-AM, 2) performance results according to the visions previously presented to the PTT Board, 3) management ability and leadership, and 4) 360-degree assessment.

Top Executives Remuneration Policy^GRI2-19

Top executives’ remuneration policy follows the guiding principle set by the PTT Board which shall link with the performance of PTT referring to the Performance Agreement (PA), set by the Ministry of Finance. PTT President & CEO and PTT executives at all levels set the result target and the key performance indicators (KPIs) annually. KPIs are formed to reflect their performance objectives and results, and long-term strategic objectives covering aspects according to the Balanced Scorecard consisting of finance, customers, business processes, learning and growth, products, and personnel. These aspects are applied as guidelines for business conduct and performance assessment of the President & CEO and executives at all levels.

PTT top executives referring to the definition of the SEC are the President & CEO, COO, Upstream Petroleum and Gas Business Group, COO, Downstream Petroleum Business Group, Chief New Business and Infrastructure Officer, and CFO. PTT top executive positions do not include executives who are seconded out to work for companies which PTT held shares or executives seconded in to work for PTT. These executives will receive remuneration from PTT, as follows:

Fixed and Variable Incomes According to Performance
PTT pays for employee salary once a month. Employees earn their salary based on their salary structure which aligns with their job weighs and levels. Salary structure of each job level is set to comply with the scope of responsibilities of executives and employee at each level. PTT benchmark salary structure with its industry peers to ascertain an appropriate salary structure. To this, PTT will increase the salary for their employees according to their performance every year.

PTT pays annual bonuses as a motive for their executives and employees once a year. PTT will present the employee bonus payment policy to the Board for consideration and approval. The factors which the Board consider are PTT performance of that year, and outcomes of the overall performance of PTT, benchmarked with companies in Oil & Gas business and other state-owned companies. Executives and employees who act as team leads or heads will receive variable bonuses reflecting their KPIs results. These are the motives that PTT uses to achieve the goals of the company.

PTT complies with Clawback Provision, referring to the Section 85 of the Public Company Limited Act, B.E. 2535 (1992), and Section 89/7, and 281/2 Securities and Exchange Act, B.E. 2535 (1992), additional revision B.E. 2551 (2008). The Acts have stipulated that the executives shall perform their duties with full responsibilities, while strictly complying with the laws and corporate rules, and abiding by the Board’s and shareholders’ resolutions. In case that executives fail to perform their duties and involve in misconducts, the company can command them to return their bonusses and compensations. They may also be subject to the civil penalties and/or criminal punishments.

Retirement Benefits
PTT pays retirement benefit for their employees in form of money benefit paid when they are retired with the rates referring to the announcement of Labor Relations Committee (LRC.) Moreover, PTT has supported for their executives and employees to set financial retirement plans, therefore, PTT Provident Funds is formed so that executives and employee can have adequate savings when retire. Also, to support employees and their families in terms of health and medication after retirement, PTT executives and employees can use the PTT Medical Center free of charge.

PTT Board of Directors Remuneration Process and Performance Results^{GRI 2-20, GRI 2-21}

Remuneration of each PTT Board member is disclosed and presented in the report while remuneration of top executives is disclosed in the total amount paid for their performance. Payment amount is reviewed by the auditors and the Audit Committee for transparency and traceability.

PTT President & CEO Remuneration Process and Performance Results^{GRI 2-20, GRI 2-21}

The Board of Directors has stipulated that the president & CEO of PTT shall submit the annual performance review to the Remuneration Committee for reviewing. The board then determines the remuneration of the president & CEO basing on the results of this review; financial and non-financial performances. However, these results are considered as undisclosed information. The criteria were defined to cover challenging targets in accordance with the company’s short-term and long-term strategies, both, including environmental, social and community responsibility and governance (ESG). PTT, as  the state enterprise and the listed company, is quite independent in conducting its business efficiently under Thai Government, by Ministry of Finance, and has been enforced to use State Enterprise Assessment Model (SE-AM), stipulated by State Enterprise Policy Office which was governed by Ministry of Finance, for monitoring and evaluating the company performance. Therefore, the president & CEO compensation assessment shall be applied by 4 criteria: SE-AM KPIs (30%), Performance according to the company vision which the president & CEO presented to the PTT Board of Directors (30%), Leadership and management abilities (30%) and 360-degree evaluations (10%)

The financial return metric relevant for the CEO’s Compensation is Return on Invested Capital (ROIC)

In addition, the CEO's vision also emphasizes the 4R strategy which includes Resilience, Reenergize, Reimagination, and Reform, especially Reimagination which focuses on expanding the business to cope with the changes that will occur as the next normal, including the energy business which still has potential for growth such as the LNG business, the electricity business, and accelerating the development and expansion of new business models beyond the hydrocarbon business, both in the Future Energy business group and beyond the energy business.

The Remuneration Committee reviews the financial performance of PTT Group by comparing PTT Group’ ROIC with its peers in the same industry. The result of ROIC performance assessment is aligned with the CEO's compensation. This ensures that the compensation structure of PTT is suitable and competitive.

Total Remuneration Paid to the President & CEO in 2022

PTT Top Executive Remuneration Process and Performance Results^{GRI 2-20, GRI 2-21}

In 2022, the deployment of corporate KPIs to the executives and employees considered the company’s business impacts on the economy, environment, and society. The KPI objectives would drive the efficiency of PTT’s business operation through the value addition of the products and services of PTT while reducing the green house gas emissions and supporting for a sustainable development of the PTT Group.

The remuneration of PTT executives and employees was set to align with both short-term and long-term performance of the company which was reviewed under the performance management process. This process was a continued and systematic process aiming to reinforce the performance of the company to achieve its business goals and to comply with the SE-EM, while focusing on the alignment of the performance result at corporate level, department level, and individual level, to be in the same direction, responding to PTT’s strategies to drive PTT to achieve its goals according to the business plan.

The evaluation of PTT executives and employees’ performance takes place once a year. KPIs are used to evaluate performance results of an individual which will reflect in their yearly renumeration. There are two levels of KPI which are Corporate and Functional. KPIs of each employee is set according to the Balanced Scorecard aspects, which are finance, customers, business processes, and learning and growth. PTT has added two more aspects which are products, and personnel, to be in line with the company’s short-term, current results, and long-term PTT’s strategies set to achieve the targets of a sustainable growth.

The evaluation and the setting of the top executive remuneration processes (senior executive vice president and above) is determined by the President & CEO, who shall inform the Remuneration Committee the finalized policy, so that the Committee shall follow up their performance results every six months.

Executive Remuneration

PTT Management is responsible for the day-to-day operations of the company by having the President & CEO as the highest-level executive responsible for running the company according to plan and budget approved by the PTT Board which shall be performed with business ethics and integrity while keeping in mind the utmost benefits of the company and the shareholders. The management exercise their authorities through PTTMC and other 50 committees at managerial level to run the company’s internal businesses to efficiently achieve the set targets. The consideration of the executive remuneration is done according to the policy and principles set by the PTT Board. The consideration criteria involve PTT performance according to the SE-AM KPIs, set by the SEPO, a government agency under the Ministry of Finance, corporate KPIs, which covers the aspects of environmental impacts, society, and corporate governance. The management at all levels will set the KPIs and objective targets at the PTT Group level in each year as the business direction and the guideline for performance appraisal. In 2022, KPIs which linked with important issues on sustainability were Eco-efficiency (GHG emission,) Safety Management Effectiveness, Human Capital Index, and Non-Compliance.

PTT Executives