Impact, Risks, and Opportunities

PTT recognizes the critical importance of maintaining a governance structure as the foundation for sustainable business operations. The Company emphasizes conducting its business with transparency while considering the broader impact on all stakeholders. At the same time, PTT focuses on enhancing the capabilities of its Board of Directors and executive team to maximize benefits for the environment, society, and the economy. A sound governance framework positively influences investor confidence, strengthens the Company’s image, and opens up opportunities for international growth. On the other hand, an inadequate governance structure may lead to negative consequences, including increased legal risks, potential lawsuits, or fines due to non-compliance, which could harm the Company’s reputation and, in the worst case, disrupt business operations.

Objectives / Targets

PTT’s management and operations are aligned with its vision: “TOGETHER FOR SUSTAINABLE THAILAND, SUSTAINABLE WORLD”. The Company is committed to complying with all relevant laws, regulations, and guidelines, ensuring adherence to best practices in corporate governance for state-owned enterprises, as outlined by the State Enterprise Policy Office (SEPO). This approach is designed to foster an efficient, effective management system that promotes fairness, transparency, and credibility among all stakeholders.

Management Approach 

Governance Structure and the Board of Directors^GRI2-9

PTT has established a comprehensive organizational governance structure, led by the PTT Board of Directors, which is appointed by the shareholders to oversee the Company's operational direction. The Board is supported by five specialized committees, each focused on critical areas to ensure effective decision-making. These include the Audit Committee, the Nomination Committee, the Remuneration Committee, the Corporate Governance and Sustainability Committee, and the Enterprise Risk Management Committee. Additionally, the management team is responsible for the day-to-day operations and overall administration of the Company, with the Chief Executive Officer and President serving as the highest executive authority.

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

PTT’s Board of Directors operates under a one-tier governance structure, consisting of no fewer than five and no more than 15 members. As of now, the Board comprises 12 independent directors and 2 non-executive directors. PTT has established a policy that the Chairperson of the Board must not be an executive of the Company and must be a separate individual from the Chief Executive Officer and President. This practice has been in place since 2001 to ensure transparency and accountability in the Company’s operations.

Qualifications of PTT Directors

The PTT Board is composed of individuals with the knowledge, expertise, and experience necessary to effectively contribute to the Company’s success. The directors are fully dedicated to their responsibilities, committing significant time and effort to fulfill their duties. The Board is appointed by shareholders to oversee the Company’s strategic direction and operations. Detailed information regarding the Board’s policies, practices, and the biographies and roles of all Board members is disclosed in the Annual Information Disclosure/Annual Report 2024 (Form 56-1 One Report) and is available on the PTT website under the Board of Directors section.

Qualifications of Independent Directors

PTT ensures that at least half of the Board members are independent directors. In addition, independent directors are not allowed to serve for more than nine consecutive years. PTT has established the qualifications for independent directors in compliance with the regulations of the Stock Exchange of Thailand, which can be found in the attached guide.

Board Recruitment and Selection Process^GRI2-10

To ensure transparency, the Nomination Committee is tasked with establishing the criteria for the recruitment and selection of individuals who are deemed suitable to be nominated as new directors when vacancies arise (due to resignation or the completion of a term). These nominees are then presented to the PTT Board or the shareholders' meeting for formal appointment. The selection process carefully considers the Board’s composition, the knowledge, independence, qualifications, and experience that would bring value to PTT, in accordance with the Company’s Board Skill Matrix. Additionally, the Director Pool maintained by the Ministry of Finance and the Thai Institute of Directors Association (IOD) is consulted. Nominees must also be free of any conflicts of interest with PTT. Furthermore, the qualifications of the prospective director must be aligned with the Company’s overall business strategy.

The recruitment and selection process is based on the following criteria:

• Commitment to Board Diversity: PTT is dedicated to fostering diversity within its Board of Directors, recognizing the value of differences in society, ethnicity, gender, religion, beliefs, and culture. The Nomination Committee has established a goal to ensure the inclusion of at least two female directors, thereby promoting a diverse and balanced composition of the Board.
• Consideration of Industry-Specific Knowledge and Experience (Industry Experience as per GICS Level 1): PTT carefully evaluates the qualifications of potential directors based on their expertise and experience in areas critical to the Company’s operations. This includes individuals with strong backgrounds in the energy/petroleum sector, as well as proficiency in law/legal matters, accounting/ finance.

Recruitment and Appointment Process for Management Positions 

As PTT is a state-owned enterprise, the recruitment and appointment of management-level positions, including the Chief Executive Officer and President, must comply with the State Enterprise Board and Staff Qualifications Act. This ensures that candidates meet the specified qualifications and are free from disqualifying factors as outlined by law.

For the appointment of the Chief Executive Officer and President, the Nomination Committee has established a set of essential leadership competencies required for the role. The committee places a strong emphasis on diversity within the management team, considering factors such as social background, ethnicity, gender, religion, beliefs, and culture. Currently, PTT’s senior executives includes four female executives, representing 25% of the total senior executives team. Additionally, the Nomination Committee has implemented a Succession Plan to ensure a continuous pipeline of qualified candidates for leadership roles, preparing for the replacement of senior executives who will be retiring in the next 3-5 years.

Roles and Responsibilities of PTT's Board of Directors and Management Levels^GRI2-12

At the Board level, the PTT Board of Directors holds the authority and responsibility to ensure the Company’s operations comply with the law, its objectives, corporate bylaws, resolutions passed by shareholders, and established policies or strategies. For example:

• Approving annual business plans and budgets.
• Appointing the executive team to oversee business operations, as well as establishing specialized committees to handle specific tasks. This also includes the appointment of the Company’s auditor and the corporate secretary, who is responsible for organizing and managing Board meetings.
• Determining compensation.
• Managing risks by evaluating risk factors across economic, social, and governance aspects that may impact business operations.
• Monitoring management activities through quarterly reports that cover both financial and non-financial performance metrics. These reports are discussed at regular Board meetings.
• Working closely with specialized committees to carefully review and evaluate critical matters, ensuring they are executed efficiently and in alignment with the Company’s strategies and policies.
• Board Meeting Attendance: PTT has established a participation rate of 80% for its board members. The Company has officially set the board meeting schedule for the entire year in advance. In 2024, meetings were held once a month, on the third Thursday of each month. Additionally, the 2025 board meeting schedule was shared with the board members during the 11/2024 special board meeting, held on November 5, 2024.
• Board Membership Limits:
  1. Board members may hold positions in state-owned enterprises and/or entities in which state-owned enterprises are shareholders, but this must not exceed three such positions.
  2. Board members may serve on the boards of up to three publicly listed companies on the Stock Exchange of Thailand, provided there is no conflict with the limit above. In total, a Board member may hold no more than five directorships across all entities.

For more details, please refer to the section Authority, Duties, and Responsibilities of the Board on PTT’s website. The Management is entrusted with the authority to run the Company in strict compliance with the approved business plans and budgets set by the Board. Management is expected to act with integrity, transparency, and in the best interests of the Company and its shareholders. Management exercises its authority through the PTT Management Committee (PTTMC) and is supported by 61 additional management committees, each tasked with handling specific internal matters to ensure optimal operational efficiency.

Roles and Responsibilities of the Board and Management in Sustainability^{GRI2-9,2-12,2-13,2-14}

PTT has established a robust governance structure designed to steer the Company toward sustainability. This structure clearly defines the roles and responsibilities of the Board of Directors, the management team, and internal departments, ensuring effective promotion, support, monitoring, and review of sustainability issues and their impacts. The goal is to achieve sustainability objectives with efficiency and effectiveness, as outlined below:

• Board Level: The PTT Board of Directors has entrusted the Corporate Governance and Sustainability Committee (CGSC) with key responsibilities aimed at guiding the Company toward sustainability. This committee plays a critical role in offering advice, consulting, and overseeing the implementation of sustainability initiatives. The committee’s specific duties include:
  
  • Approval and review of the Company’s vision, strategic frameworks, and business plans.
  • Endorsement of policies that demonstrate PTT’s commitment to responsible business practices, including sustainability management policies, corporate governance frameworks, human rights statements, and other relevant policies.
  • Approval of strategic directions and management processes related to sustainability.
  • Identification and assessment of material sustainability issues that could impact the economy, the environment, stakeholders, and human rights.
  • Oversight of business units: monitoring the operations of each business unit to ensure effective management of sustainability issues, including associated risks and opportunities.
  • Supervision of subsidiaries to ensure subsidiary companies are effectively managing sustainability issues and communicating their efforts, including managing related risks and opportunities.
  • Engagement with stakeholders to provide guidance and support to strengthen relationships with key stakeholders, such as government agencies and collaborative networks, to address and mitigate sustainability impacts.
  • Quarterly monitoring, tracking progress, and reviewing the performance and effectiveness of sustainability management activities on a quarterly basis.

• Management Level: Overseeing the overall sustainability strategy, evaluating, driving, and supporting the PTT Group's sustainable business operations to ensure alignment across the organization. Additionally, reviewing details before presenting them to the Governance and Sustainability Oversight Committee, which consists of two main subcommittees:

  • Governance Risk and Compliance Management Committee (GRCMC)
  • PTT Group Sustainability Strategy and Management Committee (GSMC)

• Organizational Structure Level: Reporting to the Senior Executive Vice President of Corporate Sustainability, under the Chief New Business and Sustainability Officer, with two key functions: 
  • Executive Vice President of Sustainability Strategy and Management: Responsible for defining and driving policies, strategies, directions, master plans, and initiatives, ensuring their execution throughout the organization and the PTT Group.
  • Executive Vice President of Carbon Reduction Technology and Business: Responsible for researching and developing businesses related to Carbon Capture and Storage (CCS) and hydrogen, collaborating with the PTT Group and its various partners.

Development of Knowledge and Capabilities of the Board^GRI2-17 

At PTT, both the Board of Directors and senior executives recognize the importance of continuous learning and development to enhance their knowledge and capabilities in fulfilling their governance roles. Regular participation in relevant training programs and seminars is a key component of this ongoing development. The details of such training can be found in Section 8 of the Corporate Governance Report, specifically under the "Board Development" section of the Annual Information Statement/Annual Report 2024 (Form 56-1 One Report). Over 90% of PTT’s board members have completed training courses with the Thailand Institute of Directors (IOD), as well as other prestigious organizations and institutions. Additionally, they actively participate in seminars covering a range of topics relevant to governance and business management. The board also engages in study trips to other organizations to gain valuable perspectives that can be applied to PTT’s operations, ensuring the Company’s sustainable growth.

Moreover, PTT board members are involved in various company activities, including visiting PTT's operations and subsidiaries both in Thailand and internationally, engaging with international subsidiaries like PTT International Trading USA Inc. (PTTT USA) and PTTGC America Corporation (GCA Corp of the Audit Committee).

Performance Evaluation of the Board of Directors^GRI2-17 

PTT conducts an annual performance evaluation of its Board of Directors in line with its corporate governance principles. This evaluation process includes five distinct assessment forms, detailed in Section 8 of the Form 56-1 One Report. The evaluation process encompasses the following areas: 

• Board Performance Evaluation
• Individual Board Member Evaluation (Self-Assessment
• Individual Board Member Evaluation (Peer Evaluation)
• Committee-Specific Evaluation (Evaluation of the performance of individual committees by their respective members)
• Chairperson Performance Evaluation – This includes an assessment of the Board Chairperson's performance, satisfaction with committee work, and the effectiveness of the individual committee chairs (evaluated by all directors).

The Board can utilize the data from this evaluation form to review the performance, challenges, and obstacles of the past year, with the goal of enhancing the effectiveness of the PTT Board of Directors. The results of this evaluation are disclosed in the Annual Information Disclosure/Annual Report 2024 (Form 56-1 One Report). Furthermore, since 2017, the Board has been using key performance indicators (KPIs) to measure its performance, which also serves as a basis for determining directors' compensation.

Performance evalution for the Board of Director

The PTT Board undergoes regular performance evaluations by independent evaluators. These include the State Enterprise Policy Office, Ministry of Finance, on an annual basis, and the Thai Institute of Directors (IOD) every two years (or as determined by the IOD).

Director Remuneration Policies^{GRI2-19, GRI2-20} 

PTT has established a fair and reasonable compensation policy for its Board of Directors. The Compensation Committee is responsible for reviewing and ensuring that Board members' compensation is appropriate, taking into account factors such as their responsibilities, the Company's financial status, PTT's performance under the Performance Agreement (PA) system, and benchmarking against other companies in the same industry. The Board's compensation package consists of a monthly salary, meeting fees, and bonuses. Board members assigned to additional committees or special tasks receive additional compensation to reflect their increased responsibilities. The Board compensation for 2025 was approved by shareholders at the Annual General Meeting on April 11, 2025. The approved compensation package is as follows:

1) Monthly Remuneration and Meeting Allowance for the PTT Board of Directors:

• Monthly remuneration: 30,000 baht per director. The Chairperson receives twice the monthly remuneration of a regular director.
• Meeting Allowance: 60,000 baht per meeting for attending members. The Chairperson receives a 25% higher fee than the regular directors. The meeting allowance is limited to one per month, but in exceptional cases, additional meetings may be compensated, provided the total does not exceed 15 times per year.

2) Compensation and meeting fees for special committees appointed by the PTT Board of Directors remain at the same rate as follows:

2.1 Audit Committee

• Monthly remuneration: 15,000 baht, the same as the previous rate, with the chairman receiving the same amount as the other directors. 
• Meeting allowance: 45,000 baht per session, paid only to attending directors, with the chairman receiving 25% more than other directors. The secretary receives a monthly compensation of 7,500 baht (unchanged).

2.2 For other committees, including the Nomination Committee, Remuneration Committee, Corporate Governance and Sustainability Committee, Enterprise Risk Management Committee, and any other subcommittees that may be appointed by the Board of Directors as deemed necessary and appropriate in the future, the remuneration shall remain unchanged as follows:

• No monthly remuneration, as previously.
• Meeting allowance of 30,000 baht per meeting, payable only to directors who attend meetings. The Chairperson of the board will receive 25% more than other directors.
• No other forms of remuneration.

3) Bonus for PTT Board of Directors for 2024
The remuneration in the form of a bonus for the Board members for the year 2024 will be based on PTT’s performance or net profit, with the bonus set at 0.05% of PTT’s net profit for 2024. The bonus will be calculated according to the length of service during the year, with the total amount not exceeding 60,000,000 Baht for the entire board. The Chairperson of the board will receive 25% more than the other directors (payment will follow the previous policy).

This remuneration will be disclosed individually in the 2024 Annual Report, under Section 8, titled “Report on Key Corporate Governance Activities,” detailing the payment of remuneration to the PTT Board of Directors in the Annual Information Disclosure/Annual Report 2024 (Form 56-1 One Report).

Chief Executive Officer and President Remuneration Policies^RI2-19

For the performance evaluation of the Chief Executive Officer and President, the PTT Remuneration Committee will determine their compensation to reflect performance, taking into account industry standards and best practices for leading businesses. This process will adhere to clear, transparent, and fair guidelines. The annual salary increases and special compensation will be aligned with the results of KPI evaluations and current performance (short-term), as well as long-term performance in line with PTT’s strategy. This approach ensures that the compensation structure reflects the long-term vision of PTT and contributes to the Company’s value creation and organizational capacity. The performance evaluation will consider the following factors: 

• Factor 1: Performance based on the State Enterprise Assessment Model (SE-AM)
• Factor 2: Performance in alignment with the vision presented to the PTT Board
• Factor 3: Leadership and management abilities
• Factor 4: 360-degree evaluation

The performance indicators for driving PTT’s business toward sustainability include the ability to manage investment plans in line with strategic business goals focused on sustainability, successful initiatives for improving eco-efficiency, continuous contributions to community, social, and environmental development, and achievements in PTT’s New Business initiatives, with a focus on transitioning to low-carbon business models.

The process of determining the total compensation for the PTT Chief Executive Officer and President and performance results^GRI2-20

The Board of Directors has appointed the Chief Executive Officer and President to present their annual performance evaluation to the Remuneration Committee for review. The Committee will then determine their remuneration based on both financial and non-financial performance. The evaluation criteria will cover challenging goals aligned with both short-term and long-term corporate strategies, including environmental, social, and community responsibilities (ESG). As a state-owned enterprise and publicly listed company, PTT operates independently but effectively under the governance of the Thai government and is evaluated based on the State Enterprise Assessment Model (SE-AM) as defined by the State Enterprise Policy Committee, under the supervision of the Ministry of Finance, which monitors and assesses the performance of state enterprises. The performance evaluation for determining the remuneration of the Chief Executive Officer and President will be based on four key criteria: SE-AM KPIs (20%), performance based on the vision presented to the PTT Board by the Chief Executive Officer and President (40%), management and leadership capabilities (30%), and 360-degree evaluation (10%)

The Financial Performance Indicator Linked to the CEO’s Remuneration is the Return on Invested Capital (ROIC).

The Remuneration Committee will review PTT Group’s financial performance by comparing the ROIC with that of competitors in the same industry. The evaluation results based on ROIC will directly correlate with the CEO’s remuneration to ensure that PTT’s compensation structure remains competitive and appropriate. 

Clawback Provision for Executive Benefits and Profits

The Company’s clawback policy for executive bonuses, including for the Chief Executive Officer and President, adheres to Section 85 of the Public Limited Companies Act B.E. 2535, B.E. 2535 (A.D. 1992), as well as Sections 89/7 and 281/2 of the Securities and Exchange Act, B.E. 2535 (A.D. 1992), which were amended in 2008. These regulations mandate that executives must fulfill their responsibilities with due diligence and in compliance with the law, the Company’s objectives, its regulations, and the resolutions passed at shareholder meetings. If an executive fails to meet these standards, engages in negligence, fraud, or unethical conduct, the Company reserves the right to recover any benefits or profits received (Clawback) from the executive. This decision will be based on the executive’s performance not meeting the Company’s criteria, and the executive may be held accountable both civilly and criminally.

Executives Remuneration Policies ^GRI2-19

The remuneration for all executives, including the Chief Operating Officer (COO) and the Senior Executive Vice President, is governed by the policy and guidelines established by the PTT Board of Directors. This remuneration is directly linked to PTT’s performance, as assessed through the State Enterprise Performance Agreement (PA) set by the Ministry of Finance. The Chief Executive Officer and President and other executives collaboratively define Key Performance Indicators (KPIs) annually, aligned with the Company’s operational objectives for that year, as well as the long-term strategic business goals. These KPIs encompass the perspectives of the Balanced Scorecard, including: financial performance, customer satisfaction, internal processes, learning and development, product performance, and human resources. These indicators guide the Company’s operations and form the basis for evaluating the performance of the Chief Executive Officer and President and other executives.

As defined by the SEC, PTT has five executives in the following positions:
1. Chief Executive Officer (CEO) and President
2. Chief Operating Officer (COO) of the Upstream Petroleum and Natural Gas Business Group
3. Chief Operating Officer (COO) of the Downstream Petroleum Business Group
4. Chief Operating Officer (COO) of the New Business and Infrastructure Group
5. Chief Financial Officer (CFO)

This does not include executives assigned to subsidiaries where PTT holds shares, nor executives from such subsidiaries seconded to PTT.

The process of determining the compensation for senior executives and performance results^GRI2-20

For 2024, PTT’s KPIs, which are cascaded down to executives and employees, address the Company’s impact on the economy, environment, and society. These KPIs aim to enhance operational efficiency by adding value to PTT’s products and services while reducing greenhouse gas emissions, thus promoting sustainable development across the PTT Group.

Compensation for executives and employees is aligned with PTT’s performance, both in the short and long term, through Performance Management. This continuous, systematic process ensures that the Company meets its business goals while adhering to the State Enterprise Quality Assessment criteria. It links organizational, departmental, and individual performance targets to PTT’s strategic direction, driving results that align with the Company’s business plan.

Individual Performance Metrics

The performance of executives at all levels is assessed annually based on individual performance. Key Performance Indicators (KPIs) are used to manage, evaluate, and determine executive compensation.

In 2024, PTT’s organizational performance metrics, which address its impact on the economy, environment, and society, are aimed at driving operational efficiency through the creation of added value in PTT’s products and services while reducing greenhouse gas emissions. These efforts contribute to the Group’s sustainable development. The performance indicators are categorized as follows:

1. Corporate-level KPIs These KPIs cover key aspects of environmental, social, and governance (ESG) performance. Management sets these KPIs and annual targets for the entire PTT Group to guide business operations and evaluate performance. In 2024, 55% of the KPIs focus on sustainability issues, including:
   
   1. PTT New Business (Low-carbon business)
   2. Greenhouse Gas (GHG) Emissions
   3. Safety Management Effectiveness
   4. Employee Engagement Score
   5. Non-Compliance
2. Business/Operational/Individual-level KPIs (Functional KPIs) These KPIs are derived from the corporate-level KPIs and are aligned with the Company’s strategy and business plan. They integrate sustainability considerations across all business operations.

Components of Executive Compensation at All Levels^GRI2-19

Fixed and Variable Compensation

PTT compensates its executives, starting from the Chief Operating Officer (COO) and Deputy Group Managing Directors, with a monthly salary. This salary is determined according to a structured pay scale that reflects the responsibilities and job levels of each position. The salary structure is designed to align with each role’s responsibilities and is regularly benchmarked against comparable companies in the industry to ensure competitiveness. Additionally, salary increases are based on individual performance assessments, specifically KPIs, conducted annually.

PTT also offers incentive-based compensation in the form of an annual bonus for all executives. The bonus is subject to approval by the PTT Board of Directors, with consideration given to factors such as the Company’s overall performance, the achievement of key goals during the year, inflation rates, and compensation data from peer companies in the Oil & Gas sector. For executives and employees at the managerial level or above, a variable bonus is determined based on the achievement of individual KPIs, which are aligned with the Balanced Scorecard perspectives. This structure ensures that executives and employees are incentivized to meet the Company’s strategic goals.

Post-Retirement Benefits

In addition to compensation received during employment, PTT offers post-retirement benefits to its executives, starting from the Chief Operating Officer (COO) and Deputy Group Managing Directors, as well as employees who retire according to the guidelines set by the State Enterprise Labor Relations Committee (SERC). PTT has established a provident fund to help ensure that employees have sufficient savings for retirement and to provide financial support for post-retirement healthcare. After retirement, PTT provides retirees and their families with access to medical services at PTT healthcare facilities, at no cost to the employee.

Performance

Composition of PTT's Board of Directors as of December 31, 2024

1. Board Structure
2. Diversity in Gender, Age, Ethnicity, Nationality, and Beliefs
3. Average Tenure of PTT's Board of Directors
4. Board Meeting Attendance
5. Board Positions in Other Listed Companies

The PTT Board has established guidelines for directors holding positions in state-owned enterprises and/or other legal entities to ensure that they are able to dedicate sufficient time and attention to their responsibilities at PTT. This is important because a director’s effectiveness may be compromised if they hold too many positions. According to PTT’s criteria, directors are permitted to hold positions in state enterprises and/or other legal entities under the following conditions:
(1) Directors may serve on the boards of up to 3 state-owned enterprises and/or legal entities where the state holds shares.
(2) Directors may serve on the boards of up to 3 companies listed on the Stock Exchange of Thailand. However, this must not conflict with the criteria in (1). In total, directors may hold no more than 5 directorships across both categories (1) and (2) (as outlined in the Corporate Governance, Ethical Standards and Code of Business Ethics Handbook).

6. Board Skill Matrix

The total compensation of the Chief Executive Officer and President of PTT for 2024 (Unit: Baht)