Remuneration and shareholdings

Remuneration

Neste Oil’s Board of Directors is responsible for making decisions on compensation and incentive arrangements for Group management and key personnel based on proposals made by its Personnel and Remuneration Committee. The Company follows remuneration principles for senior management approved by the Board, recommendations made by the Ownership Steering Department of the Prime Minister’s Office, and the 2010 Corporate Governance Code covering Finnish listed companies. The Remuneration Statement required by the latter Code can be consulted at http://nesteoil.com/.

Short-term incentives

The Company may pay annual short-term incentives to senior managers and other personnel in addition to their salary and fringe benefits. The criteria for any short-term incentives are based on individuals’ success in reaching their personal targets and on the Company’s financial performance and success in reaching its goals. The bonus paid to senior managers may not exceed 40% of their annual salary.

Incentive plan for key personnel

The Board of Directors decided on 16 December 2009 to establish a new share-based incentive plan for the Group’s key personnel – to align the objectives of Neste Oil’s owners and key personnel through such things as increasing the value of the Company and committing key personnel to the Company by offering them a competitive reward plan based on owning Company shares. The Board is responsible for annually selecting the members of Neste Oil’s senior management entitled to participate in this plan (LTI scheme). Currently, 77 members of Neste Oil’s management come within the scope of the plan, which complies with the recommendations of the Ownership Steering Department of the Prime Minister’s Office.

The plan includes three three-year earning periods beginning in 2010, 2011, and 2012. The Board of Directors will decide the earnings criteria and targets to be met, as well as the maximum level of the reward payable, for each earning period in the December preceding each earning period. The earnings criteria for the 2010–2012, 2011–2013, and 2012–2014 periods are sales volumes at Renewable Fuels and the total shareholder return on Neste Oil’s stock in relation to the Dow Jones Nordic Return Index.

Any possible payments will be made partly in Company shares and partly in cash in 2013, 2014, 2015, and 2016. The maximum sum payable may not exceed the annual gross salary of the year in question during any earning year. The proportion to be paid in cash will cover taxes and any tax-related costs.

The plan prohibits the transfer of shares for a period of three years from the end of the earning period, i.e. the length of the plan is six years for each share allocation. Following this, key personnel must retain 50% of any shares received on the basis of the plan until the total value of the shares held corresponds to their annual gross salary. This obligation shall be valid for the duration of a person’s employment or service with the Group.

At the time of the allocation the maximum rewards as amount of shares (including the proportion to be paid in cash) were:

• approx. 809,000 Neste Oil Corporation shares (earning period 2010–2012),
• approx. 842,000 Neste Oil Corporation shares (earning period 2011–2013), and
• approx. 1,093,000 Neste Oil Corporation shares (earning period 2012–2014).