New share-based long-term incentive schemes for the management and selected key employees of Neste Corporation
Neste Corporation Stock Exchange Release 11 December 2018 at 5.30 pm. (EET)
The Board of Directors of Neste Corporation has decided on the establishment of new share-based long-term incentive schemes for selected members of the Company’s management and selected key employees. The decision includes a Performance Share Plan (also “PSP”) as the main structure and a Restricted Share Plan (also “RSP”) as a complementary structure for specific situations.
The objectives of the share-based long-term incentive schemes are to align the interests of Neste’ management and key employees with those of the Company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit management to achieving Neste’ strategic targets and to retain Neste’ key employees.
Performance Share Plan
The Performance Share Plan consists of three annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share reward. The three plans commence in the years 2019, 2020 and 2021.
The commencement of each individual plan is, however, subject to a separate Board approval.
The first plan (PSP 2019‒2021) commences effective as of the beginning of 2019 and the potential share reward thereunder will be paid in the spring 2022 provided that the performance target set by the Board of Directors is achieved. The potential reward will be paid in shares of Neste.
The performance target based on which the potential share reward under PSP 2019‒2021 will be paid is the relative total shareholder return of the Company’s share.
Eligible to participate in PSP 2019‒2021 will be approximately 130 individuals, including the members of the Neste Executive Board.
If all the performance targets set for PSP 2019‒2021 plan are fully achieved, the aggregate maximum number of shares to be paid based on this first plan is approximately 127,000 shares. This number of shares represents a gross earning, from which the applicable payroll tax is withheld and the remaining net value is paid to the participants in shares. The aggregate gross value of the plan, estimated based on the average share price of the last trading day preceding the date hereof, is approximately EUR 8.7 million.
The combined amount of variable compensation paid to an individual participant any given year, including the long-term incentive scheme and the annual short-term incentive scheme, may not exceed 120% of the individual’s annual gross base salary.
If the individual’s employment with Neste terminates before the payment date of the share reward, the individual is not, as a main rule, entitled to any reward based on the plan.
Restricted Share Plan
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.
The commencement of each individual plan is subject to a separate Board approval.
The purpose of the Restricted Share Plan is to serve as a complementary long-term retention tool for individually selected key employees of Neste in specific situations.
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 first plan (RSP 2019‒2021) within the Restricted Share Plan structure commences effective as of the beginning of 2019 and the potential share reward thereunder will be paid in the spring 2022.
The aggregate maximum number of shares to be paid based on RSP 2019‒2021 is approximately 13,000 shares. This number of shares represents a gross earning, from which the applicable payroll tax is withheld and the remaining net value is paid to the participants in shares. The aggregate maximum gross value of the plan, estimated based on the average share price of the last trading day preceding the date hereof, is approximately EUR 0.9 million.
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.
The Board of Directors anticipates that no new shares will be issued based on the share-based incentive scheme and that the scheme will, therefore, have no dilutive effect on the registered number of the Company's shares.
The Board of Directors
Hannele Jakosuo-Jansson, Senior Vice President, Human Resources and Safety, Tel. +358 10 458 4688
Matti Kähkönen, Chair of the Board (Contacts through Executive Assistant Anna Borovikova, tel. +358 10 458 4295)
Neste in brief
Neste (NESTE, Nasdaq Helsinki) creates sustainable solutions for transport, business, and consumer needs. Our wide range of renewable products enable our customers to reduce climate emissions. We are the world's largest producer of renewable diesel refined from waste and residues, introducing renewable solutions also to the aviation and plastics industries. We are also a technologically advanced refiner of high-quality oil products. We want to be a reliable partner with widely valued expertise, research, and sustainable operations. In 2017, Neste's revenue stood at EUR 13.2 billion. In 2018, Neste placed 2nd on the Global 100 list of the most sustainable companies in the world. Read more: neste.com