Management and Operation

BOARD OF DIRECTORS

MOL’s Board of Directors acts as the highest managing body of the Company and as such has collective responsibility for all corporate operations.

The Board’s key activities are focused on achieving increasing shareholder value with also considerating other stakeholders’ interest; improving efficiency and profitability and ensuring transparency in corporate activities and sustainable operation. It also aims to ensure appropriate risk management, environmental protection and conditions for safety at work.

Given that MOL and its subsidiaries effectively operate as a single economic unit, the Board is also responsible for enforcing its aims and policies and for promoting the MOL culture throughout the entire Group.

The principles, policies and goals take account of the Board’s specific and unique relationship with MOL’s shareholders, the executive management and the Company. The composition of the Board reflects this with the majority (seven of ten members) made up of non-executive directors. At present, 6 members of the Board of Directors qualify as independent on the basis of its own set of criteria (based on NYSE and EU recommendations) and the declaration of the directors.

The members of the Board of Directors and their independence status in 2017 (professional CVs of the members are available on the Company’s website):

Name Status Mandate
Zsolt Hernádi, Chairman-CEO non-independent Elected by the Annual General Meeting to be member of the Board of Directors from 24 February, 1999
Dr. Sándor Csányi, Deputy Chairman independent Elected by the Annual General Meeting to be member of the Board of Directors from 20 October, 2000
József Molnár non-independent Elected by the Annual General Meeting to be member of the Board of Directors from 12 October, 2007
Zsigmond Járai independent Elected by the Annual General Meeting to be member of the Board of Directors from 29 April, 2010
Dr. László Parragh independent Elected by the Annual General Meeting to be member of the Board of Directors from 29 April, 2010
Dr. Martin Roman independent Elected by the Annual General Meeting to be member of the Board of Directors from 29 April, 2010
Dr. Oszkár Világi non-independent Elected by the Annual General Meeting to be member of the Board of Directors from 1 May, 2011
Dr. Anthony Radev non-independent Elected by the Annual General Meeting to be member of the Board of Directors from 30 April, 2014
Dr. Anwar al-Kharusi independent Elected by the Annual General Meeting to be member of the Board of Directors from 30 April, 2014
Dr. János Martonyi independent Elected by the Annual General Meeting to be member of the Board of Directors from 1 July, 2014

 

Operation of the Board of Directors

The Board acts and adopts resolutions as a collective body.

The Board adopted a set of rules (Charter) to govern its own activities in 1991, when the Company was founded; these rules were updated in April, 2015 to ensure continued adherence to best practice standards.

The Charter covers:

  • scope of the authority and responsibilities of the Board,
  • scope of the committees operated by the Board,
  • the scope of the information required by the Board and the frequency of reports,
  • main responsibilities of the Chairman and the Deputy Chairman,
  • order and preparation of Board meetings and the permanent items of the agenda, and
  • decision-making mechanism and the manner in which the implementation of resolutions is monitored,
  • rules on conflict of interest.

Members of the Board of Directors shall sign an Annual Declaration on Conflict of Interest in accordance with the form approved by the Board of Directors simultaneously assuming their membership, and in every calendar year 30 days prior to the date of the annual general meeting which is to be submitted to the Corporate Governance and Remuneration Committee. If any conflict of interest specified in the Charter of the Board of Directors occurs with respect to the member of the Board of Directors, such member shall report in Ad hoc Declaration on Conflict of Interest to the Corporate Governance and Remuneration Committee.

The Board of Directors prepares a formal evaluation of its own and its committees’ performance on a yearly basis and it continuously reviews its own activity.

Report of the Board of Directors on its 2017 activities

In 2017, the Board of Directors held 6 meetings with an average attendance rate of 93%. Attendance to the Board of Directors meetings during 2017 is set out in the table below:

  Number of Meetings Attendance Ratio
TOTAL 6 93%
Zsolt HERNÁDI 5 83%
Dr. Sándor CSÁNYI 6 100%
József MOLNÁR 6 100%
Zsigmond JÁRAI 5 83%
Dr. László PARRAGH 4 66%*
Dr. Martin ROMAN 6 100%
Dr. Oszkár VILÁGI 6 100%
Dr. Anthony RADEV 6 100%
Dr. Anwar AL-KHARUSI 6 100%
Dr. János MARTONYI 6 100%

*Mr. Parragh did not attend the BoD meeting on the 16 of February, as he had to attend a business meeting with the leaders of Eurochambers, furthermore did not attend he meeting on the 7th of September as he had to attend a business event at the Hungarian Chamber of Commerce and Industry.

 

Alongside regular agenda items, such as reports by the committees’ chairmen on the activities pursued since the last Board meeting, the Board of Directors received updates on key strategic issues as well as an overview of capital market developments and individually evaluated the performance of each of the company’s business units.

The Board of Directors respectively paid attention to the follow-up of the industry macro trends, the treatment of the challenges driven by the external environment, the financial, operational and efficiency improvement challenges regarding INA and the strategy update process.

Committees of the Board of Directors

The Board operates its committees to increase the efficiency of the Board’s operations and to provide the appropriate professional background for decision-making. The committees are preparatory, advisory, opinion-forming and proposal-preparing bodies of the Board of Directors and have prior opinion-forming rights, as set out by MOL Group’s List of Decision-making Authorities, in certain questions belonging to the competency of the Board of Directors and in those which are delegated to the competency of respective executive members of the Board of Directors, as the executive management of the Company.

The responsibilities and the rules of procedure of the committees are determined by the Board of Directors.

The Chairman of the Board of Directors may also request the committees to perform certain tasks.

The members and chairmen of the committees are elected by the Board of Directors. The majority of committee members is non-executive and independent.

The Board allocates responsibilities to the various committees as follows:

a. Corporate Governance and Remuneration Committee:

Members and dates of appointment to the committee (professional CVs of members are available on the Company’s website):

  • Dr. Sándor Csányi - chairman, 17 November, 2000
  • Zsolt Hernádi, 8 September, 2000
  • Dr. Martin Roman, 4 June, 2010
  • Dr. Anthony Radev, 30 May, 2014
  • Dr. János Martonyi, 1 July, 2014

The Chairman of the Board of Directors is a permanent member of the Corporate Governance and Remuneration Committee.

Responsibilities:

  • Analysis and evaluation of the activities of the Board of Directors,
  • issues related to Board/Supervisory Board membership,
  • promoting the relationship between shareholders and the Board,
  • procedural, ethical and regulatory issues,
  • reviewing corporate processes, procedures, organisational solutions and compensation and incentive systems and making recommendations on the implementation of best practices.

Report of the Corporate Governance and Remuneration Committee on its 2017 activities

In 2017 the Corporate Governance and Remuneration Committee held 5 meetings with a 96% average attendance rate. Attendance to the committee meetings during 2017 is set out in the table below:

  Number of Meetings Attendance Ratio
TOTAL 5 96%
Dr. Sándor CSÁNYI 5 100%
Zsolt HERNÁDI 4 80%
Dr. Martin ROMAN 5 100%
Dr. Anthony RADEV 5 100%
Dr. János MARTONYI 5 100%

 

In addition to the issues of corporate governance, remuneration and the composition of the management, the Committee discussed a number of key strategic and results-related topics prior to their presentation to the Board of Directors for discussion.

b. Finance and Risk Management Committee:

Members and dates of appointment to the committee (professional CVs of members are available on the Company’s website):

  • Zsigmond Járai – chairman, 4 June, 2010
  • Dr. László Parragh, 20 February, 2014
  • Dr. Anthony Radev, 30 May, 2014
  • Dr. Anwar al-Kharusi, 30 May, 2014

The Chairman of the Board of Directors, the Chairman of the Supervisory Board and the Chairman of the Audit Committee are a permanent invitees to the meetings of the Finance and Risk Management Committee.

Responsibilities:

  • Review of financial and related reports,
  • monitoring the efficiency of the internal audit system,
  • review of the scope and results of the planning and audit,
  • monitoring of the risk management system,
  • monitoring the liquidity position of the Company, the financial and operational risks and the management thereof, review of the operation of Enterprise Risk Management (ERM) system,
  • ensuring the independence and objectivity of the external auditor.

Report of the Finance and Risk Management Committee on its 2017 activities

In 2017, the Finance and Risk Management Committee held 5 meetings with an 85% average attendance rate. Attendance to the committee meetings during 2017 is set out in the table below:

  Number of Meetings Attendance Ratio
TOTAL 5 85%
Zsigmond JÁRAI 4 80%
Dr. László PARRAGH 5 100%
Dr. Anthony RADEV 3 60%*
Dr. Anwar AL-KHARUSI 5 100%

* Mr. Radev could not attend the FRC meetings on the 16th of March as he had to attend a business trip and on the 3rd of August as he had to attend a private trip.

 

In addition to the regular items on the agenda, including the audit of all public financial reports, providing assistance to the auditor’s work and the regular monitoring of the internal audit, the committee reviewed the major risk factors of the Company, considering the changed international financial situation and the status reports on risk management actions attached to these factors.

c. Sustainable Development Committee:

Members and dates of appointment (professional backgrounds of members are available on Company website):

  • Dr. László Parragh – Chairman, 30 May, 2014
  • József Molnár, 5 September, 2013 (interim Chairman between 20 February and 30 May, 2014)
  • Dr. Anwar al-Kharusi, 30 May, 2014
  • Dr. János Martonyi, 1 July, 2014

The Chairman of the Board of Directors, the Chairman and Deputy Chairman of the Supervisory Board are permanent invitees to the meetings of the Sustainable Development Committee.

Responsibilities:

  • To review, evaluate and comment for the Board of Directors on all proposals related to sustainable development (SD),
  • to monitor the development and implementation of all SD related policies (e.g. HSE, Code of Ethics, etc.) and discuss ethical issues,
  • to supervise the progress on the strategic focus areas of SD in MOL Group,
  • to request and discuss reports from business divisions and subsidiaries about their SD performance,
  • to review sustainability related data and information of external reports.

Report of the Sustainable Development Committee on its 2017 activities

In 2017, the Sustainable Development Committee held 4 meetings with a 94% attendance rate. Attendance to the committee meetings during 2017 is set out in the table below:

  Number of Meetings Attendance Ratio
TOTAL 4 94%
József MOLNÁR 4 100%
Dr. László PARRAGH 3 75%
Dr. Anwar AL-KHARUSI 4 100%
Dr. János MARTONYI 4 100%

The Committee evaluated the accomplishment of the sustainatility related actions taken in 2017 with focus on the ones included in MOL Group’s Sustainability Plan for 2016-2020. The Committee formed opinion on the annual Sustainable Development Report and on thematic reports submitted by selected business units. External evaluations made about MOL Group’s sustainability performance were also reviewed with highlighted attention on the fact that the company remained a component ofthe Dow Jones Sustainability Index.

EXECUTIVE BOARD

Relationship with the Board of Directors and MOL Group organisations

The governance of the Company is carried out in line with standardised corporate governance principles and practice, and, within its framework, the Board of Directors will meet its liabilities for the integrated corporate governance by defining the responsibilities and accountabilities of the Executive Board (“EB”), established by the Board of Directors and securing the corporate operative activities, operating and organisational procedures, as well as standardised system for target-setting, reporting and audit (performance control system and business control system).

A consistent document prescribes the distribution of decision-making authorities between the Board of Directors and the company’s organisations, defining the key control points required for the efficient development and operation of MOL Group’s processes.

Control and management of MOL Group will be implemented through business and functional organisations. The EB will be responsible for harmonising their activities.

The EB is a forum for decision preparation that has the role to provide a direct link between the Board of Directors and the Company’s work organization and at the same time to examine and oversee the matters submitted to the Board of Directors. The EB renders preliminary opinions on certain proposals submitted to the Board of Directors and is also responsible for the oversight of the execution of the Board of Directors’ resolutions. The EB is the highest decision-making forum regarding such matters, which fall within its competence based on the internal regulations, but do not fall within the exclusive competence of the Board of Directors based on law and Articles of Association.

Each EB member has one vote, the EB takes its resolutions by simple majority. The Chairman-CEO, or Group CEO or Group CFO (each independently “entitled EB member”), may refer a proposal submitted to EB, to the Board of Directors for a final decision as follows: if an entitled EB member disagrees (i.e. casts „NO” vote) with a proposal adopted by a majority decision of EB members, or, alternatively, disagrees with the „NO” votes casted by the majority of EB members, may request the Chairman-CEO to refer the proposal for a final decision to the Board of Directors.

Members of fhe EB in 2017:

Name Position
Zsolt Hernádi Chairman-CEO (C-CEO)
József Molnár Group Chief Executive Officer (GCEO)
Zoltán Áldott* Executive Vice President, President of the Management Board, INA d.d.
Sándor Fasimon** Executive Vice President, MOL Hungary (COO)
Ferenc Horváth Executive Vice President, Group Downstream
József Simola Group Chief Financial Officer (GCFO)
Dr. Oszkár Világi Executive Vice President, Innovative Businesses and Services; C-CEO, Slovnaft a.s.
Dr. Berislav Gašo Executive Vice President, Group Exploration and Production

From 15th February, 2018, Péter Ratatics, Executive Vice President, Consumer Services has been appointed as member of the EB. MOL Group also announced on 7 June 2018, that Mr. Péter Ratatics was appointed as MOL Hungary Chief Operating Officer (COO), while he also retains his previous position.

* Mr. Áldott’s position as a member of MOL’s Executive Board was terminated on 12th April 2018, as he was elected to be a member of MOL’s Supervisory Board by the Annual General meeting. Chairman of the Supervisory Board of MOL since 25 June 2018.

** Mr. Fasimon was MOL Hungary COO between 2012 and 2018. He is president of the Management Board of INA d.d. since 1st July, 2018.

In 2017, the Executive Board held 23 meetings and discussed 9 issues on a meeting on average.