Remuneration principles for senior management
The Board of Directors is responsible for making decisions on remuneration and incentives for Group management and key personnel based on proposals by its Personnel and Remuneration Committee. The Committee, assisted by Company experts, drafts proposals to be put before the Board covering salary increases for senior management, the various elements involved in determining remuneration levels, performance targets, and any possible changes in the Company’s remuneration principles that are considered necessary. The Committee makes use of data on comparative salaries in other companies and outside specialists where appropriate. The remuneration paid to senior management is discussed by the Board once a year and at other times where appropriate. The Committee reviews the Company’s remuneration principles twice a year, unless there are appropriate grounds for more urgent consideration.
The intention of the remuneration principles followed in respect of senior management is to:
- align the remuneration provided to managers with Neste Oil’s strategic objectives, operational business targets, and core values
- encourage and motivate senior management to achieve better performance
- reward individuals based on achieved targets and excellent performance
- attract and retain top talent
- underline the shared interests of owners and key personnel, and
- increase the value of the Company and shareholder value.
The principles guiding remuneration are as follows:
- Remuneration shall be fair and competitive, but not market-leading, and shall be based on individual and collective performance and the Company’s financial performance
- Neste Oil treats senior managers and key personnel equally and impartially, regardless of their gender, national origin, age, religion, political opinion, or other similar factors
- Remuneration shall be appropriate and based on the needs and requirements of Neste Oil
- Remuneration shall support the essential foundations of Neste Oil’s business and its strategic agenda, with an emphasis on performance and sustainable long-term performance potential
- The Company’s largest shareholder, the Finnish State, provides guidelines related to remuneration at Neste Oil, and these are reviewed and taken into account by the Board of Directors
- The remuneration principles covering senior management should align the interests of shareholders, the Company, and senior managers
- These principles cover senior managers and specific key personnel working for Neste Oil.
The two key components of senior managers’ remuneration are:
1. A base salary benchmarked internationally against peer companies operating in the same labor markets and, in Finland, primarily against listed companies and secondarily industrial companies. This ensures that managers have a competitive base salary on the local market.
2. A short-term incentive program that rewards managers on the basis of the annual performance of their unit, organization, and the Company as a whole. This is tied to the financial and strategic performance goals approved by the Board of Directors and approved individual performance goals that are set annually as part of the performance management process by managers and their superiors.
In addition, overall remuneration includes the following components:
- a long-term, share-based incentive program that is discretionary in nature and restricted to a limited number of participant by the Board of Directors
- other benefits benchmarked against local peers
- recognition awards made under separate Neste Oil guidelines
- intangibles linked to Neste Oil’s concept of wellbeing at work, including challenging responsibilities, career opportunities, personal development, management development, an inspiring workplace, and a positive balance between work and leisure time.
The remuneration principles and incentive programs covering senior management have been developed to secure Neste Oil’s competitiveness in the oil industry as a company that is a pioneer in the industry and has set itself the goal of becoming the world’s leading producer of renewable fuels.
The remuneration system detailed above is intended to ensure that Neste Oil can recruit and retain capable managers and key personnel and motivate them to work for Neste Oil’s success and help the Company achieve its strategic goals. Neste Oil’s remuneration policy for senior management is intended to promote the Company’s long-term financial success and support managers in their work in line with the Company’s interests and those of shareholders.