The Board of Directors is responsible for deciding the terms of employment and remuneration of the Company’s President & CEO, together with the remuneration principles observed in respect of senior management. The Personnel and Remuneration Committee is responsible for making proposals in this area and for monitoring and evaluating the performance of the President & CEO and senior managers.
President & CEO
The salary and fringe benefits paid to the President & CEO in 2013 totaled EUR 55,039 a month, as in 2012. In addition to these payments, the President & CEO can receive an annual short-term performance-related incentive, which may not exceed 40% of his annual salary and fringe benefits. The criteria for this short-term incentive are based on the President & CEO’s success in achieving his personal targets and on the Company’s financial performance and success in achieving the corporate targets that the Board of Directors have set for the time in question.
The main performance indicators used for the President & CEO in 2012 were comparable EBIT and EPS (earning per share). In 2013, they were comparable EBIT, ROACE% (return on average capital employed, after-tax), and TRIF (Total Recordable Incident Frequency) and availability of all refineries. In 2014, the main performance indicators used for the President & CEO will be comparable EBIT, ROACE%, and TRIF. The President & CEO also comes within the scope of long-term incentive plans approved in 2009 and 2012. The maximum share reward payable under the program approved in 2009 and started in 2010 may not exceed a person’s annual gross salary of the year in question during any earning year. The combined maximum amount of performance-based incentives in the program approved in 2012 and started in 2013 is 120% of a person’s fixed annual salary, and the maximum amount payable annually under the short-term incentive program is 40% of a person’s fixed salary.
The Company may terminate the President & CEO’s employment by giving a six-month period of notice, and the President & CEO may resign with the same period of notice. Should the Company decide to give notice of termination, the President & CEO shall be entitled to his salary during the six-month period of notice, together with a severance payment equivalent to 18 months’ salary.
The retirement age of the President & CEO is 60 years, and his pension is based on a defined benefit plan. The pension paid is 60% of his retirement salary, equivalent to an average monthly salary calculated on the basis of statutory pension insurance contributions made over the previous 10 years. The pension is insured by an insurance company, and insurance contributions of supplementary pension paid during 2013 totaled EUR 525,143.
Agreements and pension arrangements for the other members of the Neste Executive Board
Neste Executive Board members are paid a basic salary and are entitled to fringe benefits. In addition, they can receive annual short-term performance-based remuneration equivalent to a maximum 40% of their annual salary including fringe benefits. Their director agreements specify a typical termination period of six months and possibly six months of severance pay.
The members of the Neste Executive Board come within the scope of the Finnish national pension and supplementary pension system. Pensionable age is 60, 62, or 63. Under the terms of the oldest defined benefit plans, pensions can be a maximum of 60% of a person’s pensionable salary. Pensions are calculated on the basis of the average annual monthly salary paid in accordance with the Finnish national pension system during the 10 years preceding retirement. Neste Oil's Board of Directors has outlined that newer supplementary pension plans agreed after 1 January 2009 take the form of defined contribution plans. Director agreements agreed after 1 January 2009 specify a retirement age of 62 and director agreements agreed after 1 July 2012 a retirement age of 63. Insurance contributions of supplementary pension totaled EUR 523,799 in 2013.
Both defined benefit and contribution plans are insured by a pension company.
|Salaries and remuneration paid to
the President & CEO and NEB members, EUR
benefits for 2013
|Salaries, benefits and incentives total for 2013||Salaries, benefits and incentives total for 2012|
|President & CEO||700,067.28||143,651.79||843,719.07||861,810.26|
|Other NEB members*)||1,810,604.07||323,930.80||2,134,534.87||2,175,847.84|
|*) Includes also Mr Piri's salary before Mr Mäki-Kala's appointment|
|Shareholdings and share incentives of the Neste Executive Board
as of 31 December 2013, pcs
|Name||Born||Position||NEB member since||2013||2012||Change||Distributed shares from the LTI arrangement, 2010–2012**||Distributed shares from the LTI arrangement, 2011–2012***|
|Matti Lievonen||1958||President & CEO||2008||27,912||17,000||10,912||10,912||51,680 (25,064)|
|Matti Lehmus||1974||EVP, Oil Products and Renewables||2009||9,655||6,010||3,645||3,645||17,559 (8,164)|
|Sakari Toivola||1953||EVP, Oil Retail||2007||5,124||1,400||3,724||3,724||15,528 (7,298)|
|Simo Honkanen||1958||SVP, Sustainability & HSEQ||2009||5,962||3,222||2,704||2,704||12,684 (5,834)|
|Tuomas Hyyryläinen||1977||SVP, Strategy||2012||–||–||–||–||–|
|Hannele Jakosuo-Jansson||1966||SVP, Human Resources||2006||6,544||3,869||2,657||2,657||15,080 (6,786)|
|Osmo Kammonen||1959||SVP, Communications, Marketing &
|Lars Peter Lindfors||1964||SVP, Technology||2009||4,310||3,450||860||2,910||15,195 (7,521)|
|Jyrki Mäki-Kala *)||1961||CFO||2013||7,500||–||7,500||–||–|
|Ilkka Poranen||1960||SVP, Production & Logistics||2009||8,705||5,942||5,942||2,763||14,127 (6,639)|
|*) Member of the Neste Executive Board since 6 May 2013.|
|**) This column refers to the net number of shares distributed under the long-term share-based incentive plan that began in 2010.|
|***) This column refers to the total number of shares approved for reward under the long-term share-based incentive plan that began in 2011. The net number of shares after taxes and other statutory payments is given in brackets. The maximum incentive payable for any earning period under the terms of the plan cannot exceed a participant’s annual fixed gross salary in any given year. Shares will be distributed in spring 2014 and will be covered by a restriction period and a share ownership requirement.|