The deadline for delivering counterproposals pursuant to Temporary Act expired at 4.00 pm EET on 12 February 2021. The company did not receive any counterproposals to be considered at the AGM.
Proposals of the Shareholders’ Nomination Board to Neste’s Annual General Meeting
The Shareholders' Nomination Board, established by Neste Corporation's Annual General Meeting (AGM) on 4 April 2013, proposes to the AGM to be held on 30 March 2021 that Mr. Matti Kähkönen shall be re-elected as the Chair of the Board of Directors. In addition, the current members of the Board, Ms. Sonat Burman-Olsson, Mr. Nick Elmslie, Ms. Martina Flöel, Mr. Jean-Baptiste Renard, Mr. Jari Rosendal, Ms. Johanna Söderström and Mr. Marco Wirén are proposed to be re-elected for a further term of office. The Nomination Board proposes that Mr. Wirén shall be re-elected as the Vice Chair of the Board.
Further, subject to the approval of the AGM of a proposal for amending the Articles of Association to the effect that the maximum number of Board members is increased from eight to ten, the Nomination Board proposes that the Board of Directors shall have nine members and that Mr. John Abbott shall be elected as a new member. The Nomination Board has simultaneously requested the Board of Directors to propose to the AGM that the Articles of Association are amended as set out above.
A brief presentation of the proposed new member is attached to this release. All of those concerned have given their consent to serving on the Board and are considered to be independent of the company and its major shareholders.
“According to the assessment by the Nomination Board, the proposed Board of Directors has versatile knowledge and experience in leading and developing international business in line with requirements stemming from Neste’s strategy. We propose to increase the number of Board members in order to be able to benefit from the experience of the current Board composition in the exceptional circumstances relating to the COVID-19 pandemic and, at the same time, satisfy the long-term and consistent target of renewing the Board composition”, says Mr. Kimmo Viertola, Chair of the Nomination Board.
The Nomination Board shall, according to its Charter, decide unanimously on its proposals to the AGM. The Nomination Board did not reach unanimity concerning the Board remuneration to be paid for the next term of office, nor did it, consequently, make any proposal concerning Board remuneration. The Chair of the Nomination Board has notified the Nomination Board and the Company that the State of Finland will, at the AGM, propose that the Board remuneration shall not be increased for the next term of office due to the prevailing exceptional circumstances.
The remuneration currently paid to the Board of Directors is as follows:
- Chair: EUR 67,900 per annum
- Vice Chair: EUR 49,600 per annum
- Member: EUR 35,700 per annum
- Chair of Audit Committee: EUR 49,600 per annum if he or she does not simultaneously act as Chair or Vice Chair of the Board.
In addition to the annual fee, members of the Board of Directors receive a meeting fee of EUR 600 for each meeting held in the member's home country and EUR 1,200 for each meeting held in another country, plus compensation for expenses pertaining to the company's travel guidelines. The meeting fee for telephone meetings is paid according to the fee payable for meetings held in each member's home country.
The Nomination Board has in a stock exchange release of 31 January 2020 considered that the Board remuneration has fallen significantly below the market level and that a step-by-step plan, supported by the major shareholders, to increase Board remuneration must be developed. As of 2022, it has been decided to start a program for the Board remuneration in order to increase it to the market level by 2026. The support for the program of Neste’s largest shareholder, the State of Finland, is based on the guidelines of the State ownership policy according to which “when the compensation payable for board service is determined, account should be taken, inter alia, of the company’s role in society, the market situation, the requirements imposed by the global aspects of board service and the need to increase shareholder value as well as the common interests of all shareholders”.
The Nomination Board supports the long-term increase of the Board remuneration in order to reach the market level as well as that the proposals are annually brought to the AGM in accordance with the Charter of the Nomination Board.
The Shareholders' Nomination Board was appointed on 14 September 2020. In accordance with a decision made by the AGM, the Nomination Board consists of representatives of the company's three largest shareholders, as of the first weekday in September: Director General Kimmo Viertola of the Ownership Steering Department in the Prime Minister’s Office of Finland, as the Chair of the Nomination Board as well as Deputy CEO, Investments Reima Rytsölä of Varma Mutual Pension Insurance Company, Director General Outi Antila of The Social Insurance Institution of Finland and Matti Kähkönen, the Chair of Neste's Board of Directors.
The Nomination Board was unanimous in its proposals for the Board's composition and the number of members in the Board. As the Chair of the Board of Directors, Matti Kähkönen did not take part in the decision-making on the Nomination Board's proposal relating to the Chair of the Board or the Board remuneration.
Relevant information on all those proposed for Board service can be found at www.neste.com.
Shareholders’ Nomination Board
Proposals of the Board of Directors to Neste’s Annual General Meeting
Use of the profit shown in the Balance Sheet and deciding on the payment of dividend
The Board of Directors proposes to the AGM that a dividend of EUR 0.80 per share be paid on the basis of the approved balance sheet for 2020. The dividend shall be paid in two instalments.
The first instalment of dividend, EUR 0.40 per share, will be paid to a shareholder registered in the shareholders' register of the Company maintained by Euroclear Finland Ltd on the record date for the first dividend instalment, which shall be Thursday, 1 April 2021. The Board proposes to the AGM that the first dividend instalment would be paid on Monday, 12 April 2021.
The second instalment of dividend, EUR 0.40 per share, will be paid to a shareholder registered in the shareholders' register of the Company maintained by Euroclear Finland Ltd on the record date for the second dividend instalment, which shall be Tuesday, 5 October 2021. The Board proposes to the AGM that the second dividend instalment would be paid on Tuesday, 12 October 2021.
The Board of Directors is authorized to set a new dividend record date and payment date for the second instalment of the dividend, in case the rules and regulations on the Finnish book-entry system would be changed, or otherwise so require.
The Board of Directors proposes that the Remuneration Report for the Company’s governing bodies for 2020 be approved. The resolution is advisory in accordance with the Finnish Companies Act.
The Remuneration Report is available on the Company’s web site www.neste.com/agm on 9th March, 2021 at the latest.
Deciding the remuneration of the Auditor
The Board proposes, on the recommendation of the Audit Committee, to the AGM that the Auditor's fee shall be paid as invoiced and approved by the Company.
Election of the Auditor
The Board proposes, on the recommendation of the Audit Committee, that the AGM would elect KPMG Oy Ab, Authorized Public Accountants, as the Company's Auditor. KPMG Oy Ab has announced that it will appoint Mrs. Virpi Halonen, Authorized Public Accountant, as the principally responsible auditor. The Auditor's term of office shall end at the closure of the next AGM.
The recommendation of the Board’s Audit Committee is based on the competitive procurement process of the Company’s audit. As a result of the competitive procurement process, the Company received offers from three authorized public accountant organizations all of which were interviewed by the Audit Committee. According to the evaluation of the Audit Committee, out of the tenderers KPMG Oy Ab best fulfils the selection criteria that had been determined in advance in the invitation to tender.
Authorizing the Board of Directors to decide the buyback of Company shares
The Board proposes that the AGM should authorize the Board to purchase Company shares ('Buyback authorization') under the following terms:
Under this buyback authorization, the Board shall be authorized to decide the purchase of and/or take as security a maximum of 23,000,000 Company shares using the Company's unrestricted equity. The number of shares shall be equivalent to approximately 2.99% of the Company's total shares.
Shares may be purchased in one or more lots. The purchase price shall be at least the lowest price paid for Company shares in regulated trading at the time of purchase and no more than the highest price paid for Company shares in regulated trading at the time of purchase. In connection with the buyback of Company shares, derivative, share lending, or other agreements that are normal within the framework of capital markets may take place in accordance with legislative and regulatory requirements and at a price determined by the market. The authorization shall allow the Board to decide to purchase shares otherwise than in proportion to shareholders' current holdings (directed buyback).
Shares so purchased can be used as consideration in possible acquisitions or in other arrangements that are part of the Company's business, to finance investments, as part of the Company's incentive program, or be retained, conveyed, or cancelled by the Company.
The Board of Directors shall decide the other terms related to the buyback of Company shares. The buyback authorization shall remain in force for eighteen (18) months from the decision taken by the AGM. The authorization is proposed to revoke the buyback authorization granted to the Board of Directors by the AGM on 18 May 2020.
Amendments to the Articles of Association
The Board of Directors has received a request from the Shareholders’ Nomination Board that the Board of Directors would propose to the AGM that the Articles of Association would be amended to the effect that the maximum number of Board members is increased from eight to ten. In addition, the Board of Directors has considered that there is a need for updating certain provisions of the Articles of Association to reflect changes in legislation and market practices. On the abovementioned grounds, the Board of Directors proposes that the AGM would resolve to amend the Company’s Articles of Association as follows:
Article 4 concerning the Board of Directors would be amended so that the maximum number of the members of the Board of Directors would be increased from current eight (8) to ten (10) members. Following the amendment and as Article 4 would otherwise remain unchanged, the first paragraph of Article 4 would in its entirety read as follows:
”The Company has a Board of Directors, consisting of at least five (5) and no more than ten (10) members.”
Article 9 concerning the Auditors would be amended so that it would correspond to the terminology in the existing legislation on auditing as regards wording. Following the amendment and as Article 9 would otherwise remain unchanged, the first paragraph of Article 9 would in its entirety read as follows:
“One Authorized Public Accountants Organization shall be elected as the Company’s auditor. The auditor shall designate an Authorized Public Accountant having principal responsibility.”
The last sentence of the first paragraph of Article 10 concerning the notice to the General Meeting of Shareholders would be amended so that information about the time and location of the General Meeting as well as the address of the Company’s web site may be published in one or more newspapers if the Board of Directors so decides. As a result of the proposed amendment, it would not be necessary to publish the abovementioned information in one or more newspapers (nor within the same period of time with the AGM notice), but the power of decision in the matter would be vested in the Board of Directors.
Following the amendment and as Article 10 would otherwise remain unchanged, the first paragraph of Article 10 would in its entirety read as follows:
”Notices convening a General Meeting of Shareholders are issued by the Board of Directors. Notices shall be delivered by publishing them on the Company's website no earlier than two (2) months and no later than three (3) weeks prior to a meeting and at least nine (9) days prior to the record date set for the meeting. In addition, the Company may, if the Board of Directors decides so, publish details on the date and time and location of the meeting, together with the address of the Company's website, in one or more newspapers.”
Due to changes in legislation, the second paragraph of Article 11 concerning Annual General Meeting of Shareholders would be amended so that, in addition to the matters to be resolved on in the Annual General Meeting of Shareholders in accordance with the second paragraph of Article 11 of the current Articles of Association, the Annual General Meeting shall, if necessary, resolve on approval of the remuneration policy (a new subsection 6 of the amended second paragraph of Article 11) and approval of the remuneration report (a new subsection 7 of the amended second paragraph of Article 11). Further, following the abovementioned amendments, the numbering of the current subsections 6–9 of the second paragraph of Article 11 would be amended so that these subsections would be subsections 8–11 of the second paragraph of Article 11 going forward. Following the amendments and as Article 11 would otherwise remain unchanged, the second paragraph of Article 11 would in its entirety read as follows:
”The following shall be presented at the Annual General Meeting of Shareholders:
1. the Financial Statements, which also include the Consolidated Financial Statements, and the Review by the Board of Directors;
2. The Auditor’s Report;
The following matters resolved:
3. the adoption of the Financial Statements, including also the adoption of the Consolidated Financial Statements;
4. the distribution of the profit shown in the Balance Sheet;
5. discharging the members of the Board of Directors, and the President and CEO from liability;
6. if necessary, the approval of the Remuneration Policy;
7. the approval of the Remuneration Report;
8. the remuneration to be paid to the members of the Board of Directors, and the auditor;
9. the number of members of the Board of Directors;
And the following persons elected:
10. the Chairman, Vice Chairman, and the members of the Board of Directors; and
11. the Auditor.”
Board of Directors