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 paid by other companies and outside specialists where appropriate. The remuneration paid to senior management is discussed by the Board of Directors thoroughly once a year and at other times where appropriate. The Committee reviews the Company’s remuneration principles every two years, unless there are appropriate grounds for more urgent consideration.
The remuneration principles and incentive programs covering senior management have been developed to secure Neste Oil’s competitiveness. Neste Oil is a pioneer in the industry and has set itself the goal of becoming the preferred partner in cleaner traffic fuel solutions.
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 excellent performance, both as individuals and as team members
- reward individuals based on achieving challenging targets and outstanding operational and financial performance
- attract and retain key personnel
- 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
- 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 both individual and team level, with an emphasis on performance and sustainable long-term performance
- The Company’s largest shareholder, the Finnish State, provides guidelines related to remuneration at listed companies partly owned by the state, and these guidelines are taken into account by Neste Oil's Board of Directors in accordance with the interest of the Company and all of its shareholders
- 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:
- 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.
- 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 (includes a supplementary pension for NEB members)
- 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.
In all remuneration decisions concerning senior management and employees, Neste Oil adopts the 'Grandfather Principle'. This means that decisions of remuneration must always be approved by superior's superior.