The Board of Directors is responsible for deciding the terms of employment and remuneration of the Company’s President & CEO, together with the remuneration principles observed in respect of senior management. The Personnel and Remuneration Committee is responsible for making proposals in this area and for monitoring and evaluating the performance of the President & CEO and top managers.
The terms of service contract of President & CEO Matti Lievonen
|Salary and fringe benefits||A basic salary, including fringe benefits, of EUR 55,039 per month as of 1 January 2012.|
|Short-term incentive program (STI)||An annual performance bonus equivalent to a maximum of 40% of the President & CEO’s annual salary including fringe benefits. The Board sets targets and earning criteria annually.|
|Long-term share-based incentive program (LTI)||The CEO comes within the scope of the long-term incentive plans approved in 2009, 2012 and 2015. The maximum share reward payable under the program approved in 2009 and started in 2010 may not exceed a person’s annual gross salary of the year in question during any earning year. The combined maximum amount of performance-based incentives in the program approved in 2012 and started in 2013 is 120% of a person’s fixed annual salary, and the maximum amount payable annually under the short-term incentive program is 40% of a person’s fixed salary. The combined maximum amount of performance-based incentives in the program approved in 2015 and started in 2016 is 120% of a person’s fixed annual salary, and the maximum amount payable annually under the short-term incentive program is 40% of a person’s fixed salary.|
The retirement age of the President & CEO is 60 years. He has a defined benefit plan and his pension is calculated as 60% of the average annual monthly salary paid in accordance with the Finnish national pension system during the 10 years preceding retirement.
The pension is insured by an insurance company, and insurance contributions paid during 2016 totaled EUR 957,062.
|Termination||Both parties have a six-month period of notice. Should the Company terminate the CEO’s employment, the Company is required to pay six month’s salary and a separate severance sum equivalent to 18 month’s salary.|
Agreements and pension arrangements for the other members of Neste Executive Board
Neste Executive Board members are paid a basic salary and are entitled to fringe benefits. In addition, they can receive annual short-term performance-based remuneration equivalent to a maximum 40% of their annual salary including fringe benefits. Their director agreements specify a typical termination period of six months and possibly six months of severance pay.
The members of the Neste Executive Board come within the scope of the Finnish national pension and supplementary pension system. Pensionable age is 60, 62, 63 or according to the Finnish pension legislation. Under the terms of the oldest defined benefit plans, pensions can be a maximum of 60% of a person’s pensionable salary. Pensions are calculated on the basis of the average annual monthly salary paid in accordance with the Finnish national pension system during the 10 years preceding retirement. Neste's Board of Directors has outlined that newer supplementary pension plans agreed after 1 January 2009 take the form of defined contribution plans. Director agreements agreed after 1 January 2009 specify a retirement age of 62, director agreements agreed after 1 July 2012 a retirement age of 63 and director agreements agreed after 1 January 2016 retirement age according to the Finnish pension legislation. Insurance contributions of supplementary pension totaled EUR 487,153 in 2016.
Both defined benefit and contribution plans are insured by a pension company.