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Long-term incentive plan (2010)

The Board of Directors decided on 16 December 2009 to establish a share-based incentive plan for the Group’s key personnel – to align the objectives of Neste Oil’s owners and key personnel through things such as increasing the value of the Company and committing key personnel to the Company by offering them a competitive reward plan based on owning Neste Oil 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, approx. 70 members of Neste Oil’s key personnel come within the scope of the plan.

The plan includes three three-year earning periods beginning in 2010, 2011, and 2012. The Board of Directors has decided 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.

Incentives from the first earning period were paid in 2013, and any other possible payments in 2014 and 2015, will be made partly in Company shares and partly in cash. 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.

The criteria for the 2010–2012 earning period were partially met in respect of sales volume in the Renewable Fuels business. The total shareholder return on Neste Oil´s stock in relation to the Dow Jones Nordic Return index failed to reach the threshold level, however. As a result, the equivalent value of around 130,000 shares of the 809,000 shares originally allocated was paid out as a reward for the 2010–2012 earning period in 2013. A total of 63,526 shares after tax were transferred. The share price at the time of the transfer was EUR 10.9977. For the rewards made to the President & CEO and senior management, see the table.

The criteria for the 2011–2013 earning period were met virtually completely in respect of sales volumes in the Renewable Fuels business. The total shareholder return on Neste Oil’s stock in relation to the Dow Jones Nordic Return index was around 6%-points better than the difference in percentage yields. As a result, the equivalent value of a maximum of 420,000 shares of the 842,000 shares originally allocated will be paid out as a reward for the 2011–2013 earning period in 2014. President & CEO Matti Lievonen has been paid a reward equivalent to a maximum of 51,680 shares of the total maximum of 80,000 shares allocated to him in December 2010. Payment was made partly in Company shares and partly in cash. Due to this arrangement, the amount of shares allocated will be less than half of the reward’s total amount of shares.

At the time of allocation, the maximum reward of the remaining earning period (2012–2014) in terms of number of shares (including the proportion to be paid in cash) is approximately 1,093,000 Neste Oil Corporation shares.