Neste Corporation’s Board of Directors decided on 14 December 2015 to establish a new long-term share-based incentive plan (Performance Share Plan) for the Group’s senior management and nominated key personnel. The aim of the plan is to align the objectives of the shareholders and the key personnel in order to increase the value of the Company in the long-term, to retain the key personnel in the Company, and to offer them a competitive and fair reward plan based on earning and accumulating the Company’s shares.
The LTI program consists of three performance share plans, PSP 2016-2018, PSP 2017-2019 and PSP 2018-2020 each with a three-year performance period. PSP 2016-2018 has a 36-month lock-up period commencing from a performance period’s reward payment. PSP 2017-2019 and PSP 2018-2020 have a 12-month lock-up period. The Board of Directors decide on the earning criteria and targets to be applied, the maximum level of incentive payable as well as the participants for each earning period. The earning criteria for the 2016–2018 and 2017-2019 earning periods are the Group’s cumulative comparable free cash flow and the Company share’s relative Total Shareholder Return TSR).The rewards to be paid on the basis of the performance periods 2016-2018 and 2017-2019 correspond to the value of an approximate maximum total of 273,000 and 191,000 respectively, Neste Corporation shares (including also the proportion to be paid in cash). Approximately 100 key persons, including the members of the Neste Executive Board (the NEB), belong to the target groups of the PSP 2016-2018 and 2017-2019.
Any possible payments will be made partly in Company shares and partly in cash in 2010, 2020, and 2021. The cash proportion is intended to cover taxes and tax-related costs arising from the reward to a key person. The shares paid as reward may not be transferred during the lock-up period. As a rule, no reward will be paid, if a key person´s employment or service ends before the reward payment. If a key person’s employment or service ends before the end of a lock-up period, the key person must, as a rule, return the shares paid as reward back to the Company.
The combined amount of rewards to be paid under the LTI and the annual short-term incentive plan may not exceed 120 per cent of the key person’s gross annual fixed salary in any year.
The key persons must hold all shares given as reward on the basis of the entire LTI also after the lock-up periods, until the NEB member’s shareholding in the Company in total equals the value of such member’s gross annual fixed salary, and other key person’s shareholding in the Company in total equals half of the value of such key person’s gross annual fixed salary. Such number of shares must be held as long as the key person holds a position as a NEB member or as long as other key person’s employment in a Group Company continues.
Alexander Corporate Finance assisted Neste Corporation's Board of Directors in drawing up the plan.