The share-based long-term incentive scheme of the management and key employees of Neste Corporation
Neste Corporation, Stock Exchange Release, 10 February 2022 at 9.10 a.m. (EET)
The Board of Directors of Neste Corporation has decided on the continuation of the share-based long-term incentive scheme targeted to the management and selected key employees of Neste. The decision includes a Performance Share Plan (also “PSP”) as the main structure and a Restricted Share Plan (also “RSP”) as a complementary structure for specific situations.
The objectives of the share-based long-term incentive scheme are to align the interests of Neste’ management and key employees with those of the Company’s shareholders and, thus, to promote shareholder value creation in the long term, to commit management to achieving Neste’s strategic targets and to retain its key employees.
Performance Share Plan
The Performance Share Plan consists of three annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share reward. The three plans commence as of the beginning of the years 2022, 2023 and 2024.
The commencement of each individual plan is, however, subject to a separate Board approval in each case.
The plan PSP 2022‒2024 commences effective as of the beginning of 2022 and the potential share reward thereunder will be paid during H1 2025. The payment of the reward is conditional on the achievement of the performance targets the Board of Directors has set for the plan. The potential reward will be paid in listed shares of Neste Corporation.
The performance targets based on which the potential share reward under PSP 2022‒2024 will be paid are the Relative Total Shareholder Return relative to the STOXX Europe 600 index and Combined Greenhouse Gas Impact.
Eligible to participate in PSP 2022‒2024 are approximately 150 individuals, including the members of Neste Executive Committee.
If all the performance targets set for PSP 2022‒2024 plan are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 410,000 shares (referring to gross earning, from which the applicable payroll tax is withheld, and the remaining net value is paid to the participants in shares).
The estimated aggregate gross value of this plan, based on the current value of the share of Neste, is approximately EUR 16.1 million. The materialised value of the plan may deviate from this estimate as a result of share price development and the degree to which the performance targets set for the plan are achieved.
If the individual’s employment with Neste terminates before the payment date of the share reward, the individual is, as a main rule, not entitled to any reward based on the plan.
Restricted Share Plan
The Restricted Share Plan consists of annually commencing individual restricted share plans, each comprising a restriction period with an overall length of three years. The company may during the plan period grant fixed share rewards to individually selected key employees. The rewards are paid at the latest after the end of the restriction period during H1 of the fourth year of the individual plan. The rewards are paid in listed shares of Neste Corporation.
The purpose of the Restricted Share Plan is to serve as a complementary long-term retention tool for individually selected key employees of Neste for individual retention and recognition and in other specific situations.
The commencement of each individual plan is subject to a separate Board approval.
The plan RSP 2022‒2024 within the Restricted Share Plan scheme commences effective as of the beginning of 2022 and the potential share reward thereunder will be paid during H1 2025 at the latest.
A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment or service of the individual with Neste continues until the payment date of the reward.
The aggregate maximum number of shares to be paid based on RSP 2022‒2024 is approximately 123,500 shares (referring to gross earning, from which the applicable payroll tax is withheld, and the remaining net value is paid to the participants in shares).
The estimated aggregate gross value of this plan, based on the current value of the share of Neste, is approximately EUR 4.9 million. The materialised value of the plan may deviate from this estimate as a result of share price development and the amount of share grants made based on the plan.
Other terms
The amount of rewards payable to participants based on Neste’s long-term incentive scheme is limited by a share price development-based pay cap, the level of which the Board of Directors sets. The level of the pay cap in the ongoing plans is two times the share price which prevailed at the beginning of the plan period. If Neste share price more than doubles during the plan, the exceeding value of the payable rewards will not be paid to the plan participants.
Neste applies a share ownership policy to the members of the Neste Executive Board. According to this policy each member of the Neste Executive Board is expected to retain in his/her ownership at least half of the shares received under the share-based incentive programs of the company until the value of his/her share ownership in Neste corresponds to at least his/her annual gross base salary.
The Board of Directors anticipates that no new shares will be issued based on the share-based incentive scheme and that the scheme will, therefore, have no dilutive effect on the registered number of the Company's shares.
Neste Corporation
The Board of Directors
For more information:
Matti Kähkönen, Chair of the Board of Directors, Neste
Please contact Neste's media service, tel. +358 50 458 5076 / media@neste.com (open on weekdays from 8.30 a.m. to 4.00 p.m. EET)
Neste in brief
Neste (NESTE, Nasdaq Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. We refine waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. We are the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. We aim at helping customers to reduce greenhouse gas emissions with our renewable and circular solutions by at least 20 million tons annually by 2030. As a technologically advanced refiner of high-quality oil products with a commitment to reach carbon-neutral production by 2035, we are also introducing renewable and recycled raw materials such as waste plastic as refinery raw materials. We have consistently been included in the Dow Jones Sustainability Indices and the Global 100 list of the world’s most sustainable companies. In 2020, Neste's revenue stood at EUR 11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products. Read more: neste.com