Remuneration of the Executive Committee

The remuneration of the members of the Executive Committee is reviewed annually by the People and Remuneration Committee and any changes are approved by the Board of Directors. The Personnel and Remuneration Committee reviews market benchmark data from Finnish and, where necessary, international industrial companies of a similar size and complexity to Neste when setting total remuneration packages for the members of the ExCo. Other factors considered include each individual’s role and experience, as well as Company and personal performance.

Long-term incentives

Executive Committee members are entitled to long-term incentive to drive long-term sustainable growth and align the interests of executives with shareholders.

Neste applies a share ownership policy to the members of the Neste Executive Board. According to this policy each member of the Neste Executive Board is expected to retain in his/her ownership at least half of the shares received under the share-based incentive programs of the company until the value of his/her share ownership in Neste corresponds to at least his/her annual gross base salary.

LTI 2022: Performance Share Plan (PSP)

Based on the attainment of three-year share price performance targets for Neste, incl. PSP 2022-2024, PSP 2023-2025 and PSP 2024-2026. Awards vest in one tranche after three years, partly in shares and partly in cash. The cash element will cover taxes and other tax-like costs. 

The award for ExCo members may vary between 0–120% of annual fixed salary, based on performance and share price appreciation. If Neste share price more than doubles during the three-year performance period, the value which exceeds the two times share price increase will not be paid to the participant. LTI 2022 is targeted to selected key employees of Neste, including the CEO and the other ExCo members.

LTI 2022: Restricted Share Plan (RSP) 

The Restricted Share Plan consists of annually commencing individual restricted share plans, which will be paid to the participants in shares of Neste. If Neste share price more than doubles during the three-year performance period, the value which exceeds the two times share price increase will not be paid to the participant.

A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of the individual participant with Neste continues until the payment date of the reward. The Restricted Share Plan serves as a complementary long-term retention tool for individually selected key employees. Nominations for the Restricted Share Plan are approved by the Board of Directors on an individual basis.

LTI 2019: Performance Share Plan (PSP)

Based on the attainment of three-year share price performance targets for Neste, incl. PSP 2019-2021, PSP 2020-2022 and PSP 2021-2023. Awards vest in one tranche after three years, partly in shares and partly in cash. The cash element will cover taxes and other tax-like costs. 

The award for ExCo members may vary between 0–100% of annual fixed salary, based on performance and share price appreciation. In PSP 2019-2021 should the amount of total incentive awarded to executives (STI + LTI) exceed 120% of annual salary, the excess amount of LTI shares vesting in one year will be cut to maintain this limit. In PSP 2020-2022 and PSP 2021-2023, if Neste share price more than doubles during the three-year performance period, the value which exceeds the two times share price increase will not be paid to the participant. LTI 2019 is targeted to selected key employees of Neste, including the CEO and the other ExCo members.

LTI 2019: Restricted Share Plan (RSP) 

The Restricted Share Plan consists of annually commencing individual restricted share plans, each with a three-year retention period after which the share rewards granted within the plan will be paid to the participants in shares of Neste. A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of the individual participant with Neste continues until the payment date of the reward. The Restricted Share Plan serves as a complementary long-term retention tool for individually selected key employees. Nominations for the Restricted Share Plan are approved by the Board of Directors on individual basis.

Short-term incentives

The purpose of the short-term incentive plan is to reward and incentivize improvements in short-term financial and operational performance and support the delivery of the business strategy. The maximum short-term incentive for the Executive Committee members is 60 percent of annual base salary. STI is based on the achievement of annual financial and non-financial measures: For ExCo members with Business Unit responsibility short-term incentive is a combination of group financial and safety measures (Group comparable EBITDA, Free Cash Flow, Comparable ROACE, TRIF and PSER) and Business Unit specific strategic, financial and safety targets. For ExCo members with Function responsibility short-term incentive is based on Group comparable EBITDA, Free Cash Flow, Adjusted ROACE, TRIF, PSER and specific strategic targets of the Function in question.

Other remuneration elements

Pension

For those who have started before 1 January 2009: a defined benefit (DB) plan based on a retirement age of 60 (up to 60% of retirement salary). Retirement salary for DB schemes is calculated based on the average monthly salary and related statutory pension insurance contributions over the ten years prior to retirement. For those who have started after 1 January 2009 but before 31 August 2018, a defined contribution (DC) pension scheme (based on retirement age of 62, 63 or as prescribed under Finnish pension legislation). DC pension allocation is 16% of annual fixed base salary. 

New additional pension schemes are no longer made for those who have started after 31 August 2018 unless the local pension system or strong market practice locally requires so.

Other benefits

The ExCo members have company car benefit or car allowance depending on the location, mobile phone benefit in Finland, private accident-, life- and disability insurance, business travel, directors’ and officers’ liability insurances. The ExCo members may participate in the sickness fund (in Finland).

Service contracts and loss of office payments

ExCo members are entitled for 6 months’ severance payments. Change of control terms are the same as for termination.

Remuneration in 2022

Remuneration paid to the members of Executive Committee (EUR)

Fixed annual salary (Includes vacation pay and taxable benefits)

3,002,248

Short-term incentive payment

(based on financial year 2020)

826,406

Long-term incentive payment

1,960,587

Supplementary pension contributions

415,956

TOTAL

6,205,197

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