The Board of Directors is responsible for making decisions on remuneration and incentives for Group management and key personnel based on proposals by its Personnel and Remuneration Committee. The Committee, assisted by Company experts, drafts proposals to be put before the Board covering salary increases for senior management, the various elements involved in determining remuneration levels, performance targets, and any possible changes in the Company’s remuneration principles that are considered necessary. The Committee makes use of data on comparative salaries paid by other companies and outside specialists where appropriate. The remuneration paid to senior management is discussed by the Board of Directors thoroughly once a year and at other times where appropriate. The Committee reviews the Company’s remuneration principles every two years, unless there are appropriate grounds for more urgent consideration.
Principles guide our performance
During the year, the Board reaffirmed, on the basis of the Committee’s recommendations, the guiding principles for performance and reward which were introduced at the beginning of 2014. These underpin remuneration programs across the Group and are founded on the two platforms of “fairness” and “pay for performance.”
We aim to recognise and reward high performance and responsible behaviour in support of the attainment of the Group’s strategic targets and the long-term sustainability of the business. Underpinning our Group remuneration philosophy are the following four guiding principles:
- Ensure the execution of our strategy – We aim to chart a clear path forward by executing our corporate strategy and sharing our business objectives.
- Drive performance and value based behaviour – We aim to drive individual, team and business results by rewarding excellence, development and value based behaviours.
- Encourage individual and team accountability – We promote clear targets and a focus on continuous performance improvement. We make this possible by maintaining an ongoing dialogue with our personnel and welcoming their feedback.
- Be fair and transparent – We run performance and total rewards processes ethically and with integrity, and support this with clear communication.
Remuneration principles for the Neste Executive Board and senior management based on the preparations of Personnel and Remuneration Committee, the Board takes into account the following objectives in determining the remuneration for the Executive Board and senior managers:
- Remuneration should be sufficient to attract and retain senior management with the requisite skills and experience to ensure that we meet our strategic goals, but at the same time make financial sense from the Company’s point of view so as not to jeopardize its competitive cost structure.
- To operate effectively in a global context, remuneration should be fair and competitive within the international markets the Company operates. Salaries and other components of pay should be based on local market conditions and be sufficient to attract key management talent.
- Remuneration should maintain appropriate proportions of fixed and performance-related pay, to help to drive performance over the short and longer term, to maintain a flexible cost base, and to avoid creating incentives for excessive risk-taking.
- Remuneration should also to guide and encourage for the achievement of challenging strategic, operational and financial targets.
- Senior management interests should align with those of the Company and its broad base of domestic and international stakeholders.
- The senior management remuneration policy should be consistent with the global remuneration applied to Neste Oil employees worldwide.
- Neste will always endeavour to treat senior managers and personnel equally and impartially, regardless of their gender, national origin, age, religion, political opinion, or other similar factors.
Remuneration is set according to the “grandfather principle” whereby the pay of any individual is subject to the approval of a manager’s manager. No individual may decide matters relating to their own remuneration.