Competitive compensation

Our job grading system is based on the HAY Methodology. By extending the system to our subsidiary companies in 2010, about 75 percent of MOL Group employee positions (excluding INA) were graded. HAY enabled the company to manage a single, logical, transparent and consistent system that ensures the adequate treatment of our employees based on the nature of their work and their position within the company. Moreover, the results of the grading process provided the basis for a fair compensation system.

Compensation packages – based on HAY grades and performance appraisals – are aimed at the top 25% of the local market but also take into consideration the financial resources and special needs/situation of local companies.

Range of ratios of corporate minimum wage compared to local minimum wage at significant (more than 100 employees) operating locations in 2010 (%)

As defined in our group-level guideline, all employees are entitled to compensation based on common principles regardless of gender, type of contract, citizenship or any other criteria. Corporate aspects are defined in Collective Bargaining Agreements (CA), and individual ones through labour contracts. According to CAs, compensation elements and social services may be provided at a higher level than relevant laws require (e.g. through shift allowances, supplements or other special benefits) and may also permit the rewarding of cases of extraordinary performance and/or loyalty of employees.

The compensation system is dependent upon performance. Taking their annual performance into consideration, employees receive an annual bonus. The managerial compensation system consists of short- and long-term incentive elements such as bonuses, a complex long-term incentive linked to the MOL stock price, and the company’s performance/results. (See more: Performance management)

Our fringe benefit system, amounting to 20-40 percent of the annual compensation package, is subject to national tax, health and pension requirements. The system ensures the flexible choice of social (e.g. health care services/payments, child-and/or pension care, insurance, etc.) and other non-social (e.g. Internet, etc.) fringe benefits according to individual needs.

Social and pension funds have a long history in Hungary and also throughout the region. In Hungary, employees are obliged to pay 9.5 % of their gross salaries into the state budget or into a private pension fund, while the employer contributes an additional 24% of the employee’s gross salary to the state budget in order to finance the state pension.

Employees may choose a voluntary pension fund and are allowed by law to use some part or the whole of their fringe benefits (provided by the company) for this purpose in addition to their social and/or pension schemes. Companies do not provide tailor-made long term pension schemes for their employees.

The above practice is standard not only in Hungary but mostly in the Central-Eastern-European region (e.g. in Slovakia an employee pays 4% of the gross salary while the employer pays 14% of gross salary into the state budget; these rates are 15.5% and 8.85% in Slovenia, 10.5% and 20.8% in Romania, 20% and 17.2% in Croatia, 9.19% and 23.81% in Italy, 6% and 26% in Russia, and depending on the employee’s gross salary, 13-20% and 5% in Pakistan) therefore there is no real need or demand for the Western or American types of social and pension schemes.

The exact structure and further benefits (if there are any) of corporate pension schemes depend on national legislation and are defined in CAs.