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About Nokia - Corporate governance
- Compensation
April 2009
- Board of Directors
- Group Executive Board
- Equity based compensation programs
- Share ownership
- Stock ownership guidelines for executive management
- Insiders' trading in securities
Board of Directors
The following table sets forth the annual remuneration of the members of the Board of Directors based on their positions on the Board and its committees, including the remuneration paid to the President and CEO for his duties as the member of the Board of Directors only, as resolved by the respective Annual General Meetings, in 2009, 2008 and 2007.
| Position, EUR | 20091 | 2008 | 2007 |
| Chairman | 440 000 | 440 000 | 375 000 |
| Vice chairman | 150 000 | 150 000 | 150 000 |
| Member | 130 000 | 130 000 | 130 000 |
| Chairman of Audit Committee | 25 000 | 25 000 | 25 000 |
| Member of Audit Committee | 10 000 | 10 000 | 10 000 |
| Chairman of Personnel Committee | 25 000 | 25 000 | 25 000 |
| Total | 1 840 000 | 1 710 000 | 1 775 000 |
1 The Annual General Meeting held on April 23, 2009 resolved that the annual remuneration payable to the Board members elected at the same meeting for the term until the close of the Annual General Meeting in 2010 will be unchanged from 2008. The increase in the total annual remuneration of the Board in 2009 compared to 2008 is due to an increase in the total number of the Board members from ten to eleven.
Non-executive members of the Board of Directors do not receive stock options, performance shares, restricted shares or other variable compensation for their duties as Board members. In addition, no meeting fees are payable. However, it is Nokia policy that a significant portion of director remuneration is paid in the form of Nokia shares, and in alignment therewith, OK approximately 40% of the annual remuneration payable to the members of Board of Directors has been paid in Nokia shares purchased from the market.The President and CEO receives variable compensation for his executive duties, but not for his duties as a member of the Board of Directors, see “Actual Executive Compensation for 2008”.
When preparing the Board of Directors’ remuneration proposal, it is the policy of the Corporate Governance and Nomination Committee of the Board to review and compare the remuneration levels and their criteria paid in other global companies with net sales and business complexity comparable to that of Nokia. The Committee’s aim is to ensure that Nokia has an efficient Board of world-class professionals representing an appropriate and diverse mix of skills and experience. A competitive Board remuneration contributes to Nokia’s achievement of this target.
The remuneration of the Board of Directors is resolved annually by Nokia’s Annual General Meeting by a simple majority of the shareholders’ votes represented at the meeting, upon proposal by the Corporate Governance and Nomination Committee of the Board. The remuneration is resolved for the period from the respective Annual General Meeting until the next Annual General Meeting.
Remuneration of the Board of Directors in 2008
For the year ended December 31, 2008, the aggregate renumeration paid to the members of the Board of Directors for their services as the members of the Board and its committees was EUR 1 710 000.The following table sets forth the total annual remuneration paid to the members of the Board of Directors in 2008, as resolved by the shareholders at the Annual General Meeting on May 8, 2008.
| Year | Fees Earned or Paid in Cash (EUR) 1 | Total (EUR) | |
| Jorma Ollila Chairman3 | 2008 | 440 000 | 440 000 |
| Marjorie Scardino Vice Chairman4 | 2008 | 150 000 | 150 000 |
| Georg Ehrnrooth5 | 2008 | 155 000 | 155 000 |
| Lalita E. Gupte6 | 2008 | 140 000 | 140 000 |
| Bengt Holmström | 2008 | 130 000 | 130 000 |
| Olli-Pekka Kallasvuo7 | 2008 | 130 000 | 130 000 |
| Henning Kagermann | 2008 | 130 000 | 130 000 |
| Per Karlsson8 | 2008 | 155 000 | 155 000 |
| Risto Siilasmaa9 | 2008 | 140 000 | 140 000 |
| Keijo Sulila10 | 2008 | 140 000 | 140 000 |
1Approximately 60% of each Board member’s annual remuneration is paid in cash and the remaining 40% in Nokia shares purchased from the market.
2 Not applicable to any non-executive member of the Board of Directors.
3 The 2008 fee of Mr. Ollila was paid for his services as Chairman of the Board.
4 The 2008 fee of Ms. Scardino was paid for her services as Vice Chairman of the Board.
5 The 2008 fee paid to Mr. Ehrnrooth amounted to a total of EUR 155 000, consisting of a fee of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the Audit Committee.
6 The 2008 fee paid to Ms. Gupte amounted to a total of EUR 140 000, consisting of a fee of EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee.
7 This table includes remuneration paid to Mr. Kallasvuo, President and CEO, for his services as a member of the Board only. For the compensation paid for his services as the President and CEO.
8 The 2008 fee paid to Mr. Karlsson amounted to a total of EUR 155 000, consisting of a fee of EUR 130 000 for services as a member of the Board and EUR 25 000 for services as Chairman of the Personnel Committee.
9 The 2008 fee paid to Mr. Siilasmaa amounted to a total of EUR 140 000, consisting of a fee of EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee.
10 The 2008 fee paid to Mr. Suila amounted to a total of EUR 140 000, consisting of a fee of EUR 130 000 for services as a member of the Board and EUR 10 000 for services as a member of the Audit Committee.
Executive Compensation Philosophy, Programs and Decision-making Process
Our executive compensation philosophy and programs have been developed to enable Nokia to effectively compete in an extremely complex and rapidly evolving mobile communications industry. Nokia is a leading company in its industry and conduct business globally. Nokia’s executive compensation programs have been designed to attract, retain and motivate talented executive officers that drive Nokia’s success and industry leadership worldwide.
Our compensation program for executive officers includes:
- competitive base pay rates; and
- short- and long-term incentives that are intended to result in competitive total compensation package.
The objectives of Nokia’s executive compensation programs are to:
- attract and retain outstanding executive talent;
- deliver a significant amount of performance-¬related variable compensation for the achievement of both short- and long-term stretch goals;
- appropriately balance rewards between both Nokia’s and an individual’s performance; and
- align the interests of the executive officers with those of the shareholders through long-term incentives in the form of equity-based awards.
The competitiveness of Nokia’s executive compensation levels and practices is one of several key factors the Personnel Committee of the Board (the “Personnel Committee”) considers in its determination of compensation for Nokia executives. The Personnel Committee compares, on an annual basis, Nokia’s compensation practices, base salaries and total compensation, including short- and long-term incentives against those of other relevant companies with the same or similar revenue size, global reach and complexity that we believe we compete against for executive talent. The relevant companies include high technology telecommunications companies, Internet services companies, and companies from other industries that are headquartered in Europe and the United States.
The Personnel Committee retains and uses external consultants, Mercer Human Resources, to obtain benchmark data and information on current market trends. Mercer Human Resources works directly for the Chairman of the Personnel Committee and meets annually with the Personnel Committee, without management present, to provide an assessment of the competitiveness and appropriateness of Nokia’s executive pay levels and programs. Management provides the consultant with information with regard to Nokia’s programs and compensation levels for their preparation in meeting with the Committee. The consultant of Mercer Human Resources that works for the Personnel Committee is independent of Nokia and does not have any other business relationships with Nokia.
The Personnel Committee reviews the executive officers’ compensation on an annual basis and from time to time during the year, when special needs arise. Without management present, the Committee reviews and recommends to the Board the corporate goals and objectives relevant to the compensation of the President and CEO, evaluates the performance of the President and CEO in light of those goals and objectives, and proposes to the Board the compensation level of the President and CEO, which is confirmed by the independent members of the Board. Management’s role is to provide any information requested by the Personnel Committee to assist in their deliberations.
In addition, upon recommendation of the President and CEO, the Personnel Committee approves all compensation for all the members of the Group Executive Board (excluding that of the President and CEO of Nokia and Simon Beresford-Wylie, Chief Executive Officer of Nokia Siemens Networks) and other direct reports to the President and CEO, including long-term equity incentives and goals and objectives relevant to compensation. The Personnel Committee also reviews the results of the evaluation of the performance of the Group Executive Board members (excluding the President and CEO and Mr. Beresford-Wylie) and other direct reports to the President and CEO and approves their incentive compensation based on such evaluation. Mr. Beresford-Wylie’s compensation as CEO of Nokia Siemens Networks is evaluated and approved by the Board of Directors of Nokia Siemens Networks. The Personnel Committee is apprised annually on actions taken with respect to Mr. Beresford-Wylie’s compensation.
The Personnel Committee considers the following factors, among others, in its review when determining the compensation of Nokia’s executive officers:
- The compensation levels for similar positions (in terms of scope of position, revenues, number of employees, global responsibility and reporting relationships) in relevant comparison companies;
- The performance demonstrated by the executive officer during the last year
- The size and impact of the role on Nokia’s overall performance and strategic direction;
- The internal comparison to the compensation levels of the other executive officers of Nokia; and
- Past experience and tenure in role.
The above factors are assessed by the Personnel Committee in totality.
The compensation for Mr. Beresford-Wylie is determined by the Board of Directors of Nokia Siemens Networks based on the same factors as for the other members of the Group Executive Board of Nokia and determined in a similar process.
Components of Executive Compensation
Our compensation program for executive officers includes annual cash compensation in the form of a base salary, short-term cash incentives and long-term equity-based incentive awards in the form of performance shares, stock options and restricted shares.
Annual Cash Compensation
Base salaries are targeted at globally competitive market levels.
Short-term cash incentives are tied directly to performance and represent a significant portion of an executive officer’s total annual cash compensation. The short-term cash incentive opportunity is expressed as a percentage of the executive officer’s annual base salary. These award opportunities and measurement criteria are presented in the table below.
Measurement criteria for the short-term cash incentive plan include those financial objectives that are considered important measures of Nokia’s success in driving increased shareholder value. Financial objectives are established which are based on a number of factors and are intended to be stretch targets that, when achieved, Nokia believes, will result in performance that will exceed that of Nokia’s key competitors in the high technology, telecommunications and Internet services industries. The target setting, as well as the weighting of each measure, also requires the Personnel Committee’s approval. The following table reflects the measurement criteria that are established for the President and CEO and members of the Group Executive Board and the relative weighting of each objective for the year 2008.
Incentive as a % of Annual Base Salary in 2008
| Position | Minimum performance, % | Target performance, % | Maximum performance, % | Measurement criteria |
| President and CEO | 0 | 100 | 225 | (a) Financial Objectives (includes targets for net sales, operating profit and operating cash flow) |
| 0 | 25 | 37.5 | (c) Total Shareholder Return 1 (comparison made with key competitors in the high technology, telecommunications and Internet services industries over one, three and five year periods) | |
| 0 | 25 | 37.5 | (d) Strategic Objectives | |
| Total | 0 | 150 | 300 | |
| Group executive board | 0 | 75 | 168.75 | (a) Financial Objectives (includes targets for net sales, operating profit and operating cash flow); and |
| (b) Individual Strategic Objectives (as described below) | ||||
| 0 | 25 | 37.5 | (c) Total Shareholder Return 1, 2 | |
| Total | 0 | 100 | 206.25 |
1 Total shareholder return reflects the change in Nokia’s share price during a respective time period added with the value of dividends per share paid during the said period, divided by Nokia’s share price at the beginning of the period. The calculation is the same also for each company in the said peer group.
2 Only some members of the Group Executive Board are eligible for the additional 25% total shareholder return element.
The incentive payout is based on performance relative to targets set for each measurement criteria listed in the table above: (a) a comparison of Nokia’s actual performance to pre-established targets for net sales, operating profit and operating cash flow and (b) a comparison of each executive officer’s individual performance to his/her predefined individual strategic objectives and targets. Individual strategic objectives include market share, quality, technology innovation, new product revenue, customer retention rates, environmental achievements and other objectives of key strategic importance which require a discretionary assessment of performance by the Personnel Committee.
When determining the final incentive pay-out, the Personnel Committee determines an overall score for each executive based on the degree to which (a) Nokia’s financial objectives have been achieved together with (b) qualitative scores assigned to the individual strategic objectives. The final incentive payout is determined by multiplying each executive’s eligible salary by: (i) his/her incentive target percent; and (ii) the score resulting from the above-mentioned factors (a) and (b). The resulting score for each executive is then multiplied by an “affordability factor,” which is determined based on overall sales, profitability and cash flow of Nokia. The Personnel Committee may apply discretion when evaluating actual results against targets and the resulting incentive payouts. In certain exceptional situations, the actual short-term cash incentive awarded to the executive officer could be zero. The maximum payout is only possible with maximum performance on all measures.
The portion of the short-term cash incentives that is tied to (a) Nokia’s financial objectives and (b) individual strategic objectives and targets is paid twice each year based on the performance for each of Nokia’s short-term plans that end on June 30 and December 31 of each year. Another portion of the short-term cash incentives is paid annually at the end of the year, based on the Personnel Committee’s assessment of (c) Nokia’s total shareholder return compared to key competitors in the high technology and telecommunications industries and relevant market indices over one-, three- and five-year periods. In the case of the President and CEO, the annual incentive award is also partly based on his performance compared against (d) strategic leadership objectives, including entry into new markets and services and executive development.
Instead of Nokia’s short-term cash incentive plan, Simon Beresford-Wylie participates in a short-term cash incentive plan sponsored by Nokia Siemens Networks, which is similar to Nokia’s plan.
Fore more information on the actual cash compensation paid in 2007 to Nokia’s executive officers, see “Actual Executive Compensation for 2007”.
Long-term equity-based incentives
Long-term equity-based incentive awards in the form of performance shares, stock options and restricted shares are used to align executive officers interests with shareholders’ interests, reward performance and encourage retention. These awards are determined on the basis of the factors discussed above in “Executive Compensation Philosophy and Decision-making Process”, including a comparison of the executive officer’s overall compensation with that of other executives in the relevant market and the impact on the competitiveness of the executive’s compensation package in that market. Performance shares are Nokia’s main vehicle for long-term equity-based incentives and reward the achievement of both Nokia’s long-term financial results and an increase in share price. Performance shares vest as shares, if at least one of the pre-determined threshold performance levels, tied to Nokia’s financial performance, is achieved by the end of the performance period and their value increases with Nokia’s share price. Stock options are granted to fewer employees that are in more senior and executive positions. Stock options create value for the executive officer, once vested, if the Nokia share price is higher than the exercise price of the stock option established at grant, thereby aligning the interests of the executives with those of the shareholders. Restricted shares are used primarily for retention purposes and they vest fully after the close of a pre-determined restriction period. These equity-based incentive awards are generally forfeited, if the executive leaves Nokia prior to vesting.Instead of the long-term equity-based incentive plans of Nokia, Simon Beresford-Wylie participates in a long-term cash incentive plan sponsored by Nokia Siemens Networks. The long-term cash incentive plan of Nokia Siemens Networks is designed to align the interests of Nokia Siemens Networks executives with increased shareholder value of Nokia Siemens Networks and, ultimately, with increased shareholder value for that of its owners, including Nokia and its shareholders. The plan provides Nokia Siemens Networks executives an opportunity to earn cash incentives based on the achievement of pre-determined financial goals, including net sales and operating margin. These long-term cash incentive awards of Nokia Siemens Networks are generally forfeited if the executive leaves employment prior to the end of the plan period.
Information on the actual equity-based incentives granted to the members of Nokia’s Group Executive Board is included in “Share Ownership”.
| Aggregate cash compensation to the Group Executive Board for 2008 | ||||||
| Year | Number of members, December 31, 2008 | Base salaries EUR | Cash incentive payments 1 2 EUR | |||
| 2008 | 12 | 6 146 393 | 2 713 174 | |||
1 Includes base salary and cash incentives for the 2008 calendar year paid or payable by Nokia for the respective fiscal year. The cash incentives are paid as a percentage of annual base salary based on Nokia’s short-term cash incentives.
2 Excluding any gains realized upon exercise of stock options, which are described in “Share Ownership.”
| Long-term equity-based incentives granted in 20081 | ||||||
| Group Executive Board | Total | Total number of participants | ||||
| Performance shares at threshold 2 | 173 500 | 2 463 033 | 6 300 | |||
| Stock options | 347 000 | 3 767 163 | 3 500 | |||
| Restricted shares | 230 000 | 1 746 500 | 300 | |||
1 The equity-based incentive grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting. The settlement is conditional upon performance and service conditions, as determined in the relevant plan rules. For a description of Nokia’s equity plans, see Note 22 “Share-based payment” to Nokia’s consolidated financial statements for year 2007.
2 At maximum performance, the settlement amounts to four times the number of performance shares originally granted at threshold.
| Summary Compensation Table 2008 | |||||||||
| Name and principal position 1 | Year** | Salary EUR | Bonus2 EUR | Stock awards3 EUR | Option awards3 EUR | Non-equity deferred incentive plan compen-sation EUR | Change in pension value and non-qualified compen-sation earnings EUR | All other compen-sation EUR | Total EUR |
| Olli-Pekka Kallasvuo President and CEO | 2008 | 1 144 800 | 721 733 | 644 805 | 641 565 | * | 469 0604, 5 | 175 1647 | 3 797 126 |
| 2007 | 1 037 619 | 2 348 877 | 4 112 581 | 693 141 | * | 956 333 | 183 603 | 9 332 153 | |
| 2006 | 898 413 | 664 227 | 1 529 732 | 578 465 | * | 1 496 883 | 38 960 | 5 206 680 | |
| Richard Simonson EVP and Chief Financial Officer | 20088 | 630 263 | 293 477 | 204 952 | 204 045 | 106 6329 | 1 439 369 | ||
| 20078 | 488 422 | 827 333 | 1 576 376 | 234 310 | * | 46 699 | 3 173 141 | ||
| 20068 | 460 070 | 292 673 | 958 993 | 194 119 | * | 84 652 | 1 990 507 | ||
| Simon Beresford-Wylie CEO Nokia Siemens Networks | 2008 | 600 000 | 462 871 | 221 407 | 74 500 | * | 108 6584 | 728 77810 | 2 196 215 |
| Anssi Vanjoki EVP, Head of Markets | 2008 | 615 143 | 260 314 | 208 880 | 204 343 | * | 6 | 33 55211 | 1 322 232 |
| 2007 | 556 381 | 900 499 | 1 602 605 | 239 829 | * | 18 521 | 49 244 | 3 367 078 | |
| 2006 | 505 343 | 353 674 | 938 582 | 222 213 | * | 215 143 | 29 394 | 2 264 349 | |
| Mary McDowell EVP, Chief Development Officer | 2008 8 | 493 798 | 196 138 | 203 123 | 197 726 | * | 33 46212 | 1 124 247 | |
| 2007 8 | 444 139 | 769 773 | 1 551 482 | 396 169 | * | 32 463 | 3 194 027 | ||
| 2006 8 | 466 676 | 249 625 | 786 783 | 213 412 | * | 45 806 | 1 762 302 | ||
1 The positions set forth in this table are the current positions of the named executives. Mr. Kallasvuo was President and COO until June 1, 2006. Until December 31, 2007, Mr. Vanjoki served as Executive Vice President and General Manager of Multimedia; Ms. McDowell, Executive Vice President and General Manager of Enterprise Solutions. Mr. Beresford-Wylie served as Executive Vice President and General Manager Networks until April 1, 2007.
2 Bonus payments are part of Nokia’s short-term cash incentives. The amount consists of the bonus awarded and paid or payable by Nokia for the respective fiscal year and in the case of Mr. Beresford-Wylie payable by Nokia Siemens Networks on the basis of Nokia Siemens Networks’ short-term cash incentive program.
3 Amounts shown represent share-based compensation expense recognized in the respective fiscal year for all outstanding equity grants in accordance with IFRS 2, Share-based payment.
4 The change in pension value represents the proportionate change in the liability related to the individual executive. These executives are covered by the Finnish State employees’ pension act (“TyEL”) that provides for a retirement benefit based on years of service and earnings according to the prescribed statutory system. The TyEL system is a partly funded and a partly pooled “pay as you go” system. Effective March 1, 2008, Nokia transferred its TyEL pension liability and assets to an external Finnish insurance company and no longer carries the liability on its financial statements. The figures shown represent only the change in liability for the funded portion. The method used to derive the actuarial IFRS valuation is based upon salary information at the respective year-end. Actuarial assumptions including salary increases and inflation have been determined to arrive at the valuation at the respective year-end.
5 The change in pension value for Mr. Kallasvuo includes EUR 4 811 for the proportionate change in the liability related to the individual under the funded part of the Finnish TyEL pension (see footnote 4 above). In addition, it includes EUR 464 249 for the change in liability in the early retirement benefit at the age of 60 provided under his service contract. Nokia still carries the liability on its books for the early retirement benefit.
6 Mr. Vanjoki’s proportionate change in the liability related to the individual under the funded part of the Finnish TyEL pension (see footnote 4 above) was negative.
7 All other compensation for Mr. Kallasvuo in 2008 includes: EUR 130 000 for his services as member of the Board or Directors, see “—Board of Directors—Remuneration of the Board of Directors in 2008” above; EUR 20 645 for car allowance, EUR 10 000 for financial counseling, EUR 11 103 for taxable benefit for premiums paid under supplemental medical and disability insurance, EUR 3 416 for driver and for mobile phone.
8 Salaries, benefits and perquisites of Ms. McDowell and Mr. Simonson are paid and denominated in USD. Amounts were converted to euro using year-end 2008 USD/EUR exchange rate of 1.40. For year 2007 disclosure, amounts were converted to euro using year-end 2007 USD/EUR exchange rate of 1.47.
9All other compensation for Mr. Simonson in 2008 includes: EUR 64 405 company contributions to the Restoration & Deferral plan, EUR 11 083 company contributions to the 401(k) plan, EUR 12 156 for car allowance, EUR 11 621 for financial counseling, EUR 7 365 imputed income under the Employee Stock Purchase Plan.
10 All other compensation for Mr. Beresford-Wylie in 2008 includes: EUR 600 000 for a special one-time bonus for the successful retention and integration of Nokia Siemens Networks, EUR 105 158 provided as a benefit under Nokia Siemens Networks relocation policy, EUR 13 380 for car allowance, EUR 10 000 for financial counseling, and the remainder for mobile phone.
11 All other compensation for Mr. Vanjoki in 2008 includes: EUR 22 200 for car allowance, EUR 10 000 for financial counseling, EUR 1 112 taxable benefit for premiums paid under supplemental medical and disability insurance and the remainder for mobile phone.
12 All other compensation for Ms. McDowell in 2008 includes: EUR 12 156 for car allowance, EUR 11 438 for financial counseling and EUR 9 868 company contributions to the 401(k) plan.
* None of the named executive officers participated in a formulated, non-discretionary, incentive plan. Annual incentive payments are included under the “Bonus” column.
| Equity grants in 20081 | ||||||||||
| Option awards | Stock awards | |||||||||
| Name and principal position | Year | Grant date | Number of shares underlying options | Grant price (EUR) | Grant date fair value 2 (EUR) | Performance shares at threshold (number) | Performance shares at maximum (number) | Restricted shares (number) | Grant date fair value 3 (EUR) | |
| Olli-Pekka Kallasvuo President and CEO | 2008 | May 9 | 115 000 | 19.16 | 548 153 | 57 500 | 230 000 | 75 000 | 2 470 858 | |
| Richard Simonson EVP and Chief Financial Officer | 2008 | May 9 | 32 000 | 19.16 | 152 529 | 16 000 | 64 000 | 22 000 | 699 952 | |
| Simon Beresford-Wylie4 CEO, Nokia Siemens Networks | 2008 | |||||||||
| Anssi Vanjoki EVP, Head of Markets | 2008 | May 9 | 32 000 | 19.16 | 152 529 | 16 000 | 64 000 | 22 000 | 699 952 | |
| Mary McDowell EVP, Chief Development Officer | 2008 | May 9 | 28 000 | 19.16 | 133 463 | 14 000 | 56 000 | 20 000 | 620 690 | |
1 Including all grants made during 2008. Awards were made under the Nokia Stock Option Plan 2007, the Nokia Performance Share Plan 2008 and the Nokia Restricted Share Plan 2008, respectively.
2 The fair values of stock options equal the estimated fair value on the grant date, calculated using the Black-Scholes model. The stock option exercise price is EUR 19.16. NASDAQ OMX Helsinki closing market price at the grant date was EUR 18.69.
3 The fair value of performance shares and restricted shares equals the estimated fair value on grant date. The estimated fair value is based on the grant date market price of the Nokia share less the present value of dividends expected to be paid during the vesting period. The value of performance shares is presented on the basis of a number of shares which is two times the number at threshold.
4 Mr. Beresford-Wylie does not participate in the equity plans of Nokia. Mr. Beresford-Wylie participates in a long-term cash incentive plan sponsored by Nokia Siemens Networks. His target incentive covering 2008-2010 is EUR 1.5 million.
For information with respect to the Nokia shares and equity awards held by the members of the Group Executive Board, please see “Share Ownership”.
Pension arrangements for the members of the Group Executive BoardThe members of the Group Executive Board participated in the local retirement programs applicable to employees in the country where they reside. Executives in Finland participate in the Finnish TyEL pension system, which provides for a retirement benefit based on years of service and earnings according to a prescribed statutory system. Under the Finnish TyEL pension system, base pay, incentives and other taxable fringe benefits are included in the definition of earnings, although gains realized from equity are not. The Finnish TyEL pension scheme provides for early retirement benefits at age 62 with a reduction in the amount of retirement benefits. Standard retirement benefits are available from age 63 to 68, according to an increasing scale.
Executives in the United States participate in Nokia’s Retirement Savings and Investment Plan. Under this 401(k) plan, participants elect to make voluntary pre-tax contributions that are 100% matched by Nokia up to 8% of eligible earnings. 25% of the employer match vests for the participants for each year of their employment. Participants earning in excess of the Internal Revenue Service (IRS) eligible earning limits may participate in the Nokia Restoration and Deferral Plan which allows employees to defer up to 50% of their salary and 100% of their bonus into this non-qualified plan. Contributions to the Restoration and Deferral Plan in excess of IRS deferral limits will be matched 100% up to 8% of eligible earnings less contributions made to the 401(k) plan.
Olli-Pekka Kallasvuo can, as part of his service contract, retire at the age of 60 with full retirement benefits should he be employed by Nokia at the time. The full retirement benefit is calculated as if Mr. Kallasvuo had continued his service with Nokia through the retirement age of 65.
Simon Beresford-Wylie participates in the Nokia International Employee Benefit Plan (NIEBP). The NIEBP is a defined contribution retirement arrangement provided to some Nokia employees on international assignments. The contributions to NIEBP are funded two-thirds by Nokia and one-third by the employee. Because Mr. Beresford-Wylie also participates in the Finnish TyEL system, the company contribution to NIEBP is 1.3% of annual earnings.
Hallstein Moerk, following his arrangement with a previous employer, has also in his current position at Nokia a retirement benefit of 65% of his pensionable salary beginning at the age of 62. Early retirement is possible at the age of 55 with reduced benefits.
Service contracts
Olli-Pekka Kallasvuo’s service contract covers his current position as President and CEO and Chairman of the Group Executive Board. As at December 31, 2008, Mr. Kallasvuo’s annual total gross base salary, which is subject to an annual review by the Board of Directors and confirmation by the independent members of the Board, is EUR 1 176 000. His incentive targets under the Nokia short-term cash incentive plan are 150% of annual gross base salary. In case of termination by Nokia for reasons other than cause, including a change of control, Mr. Kallasvuo is entitled to a severance payment of up to 18 months of compensation (both annual total gross base salary and target incentive). In case of termination by Mr. Kallasvuo, the notice period is six months and he is entitled to a payment for such notice period (both annual total gross base salary and target incentive for six months). Mr. Kallasvuo is subject to a 12-month non-competition obligation after termination of the contract. Unless the contract is terminated for cause, Mr. Kallasvuo may be entitled to compensation during the non-competition period or a part of it. Such compensation amounts to the annual total gross base salary and target incentive for the respective period during which no severance payment is paid.
Equity-Based Compensation Programs
General
During the year ended December 31, 2008, Nokia sponsored three global stock option plans, five global performance share plans and four global restricted share plans. Both executives and employees participate in these plans. In 2004, Nokia introduced performance shares as the main element to the company’s broad-based equity compensation program to further emphasize the performance element in employees’ long-term incentives. Thereafter, the number of stock options granted has been significantly reduced. The rationale for using both performance shares and stock options for employees in higher job grades is to build an optimal and balanced combination of long-term equity-based incentives. The equity-based compensation programs intend to align the potential value received by participants directly with the performance of Nokia. Since 2003, Nokia also have granted restricted shares to a small selected number of employees each year.
The equity-based incentive grants are generally conditioned upon continued employment with Nokia, as well as the fulfillment of performance and other conditions, as determined in the relevant plan rules.
The broad-based equity compensation program for 2008, which was approved by the Board of Directors, followed the structure of the program in 2007. The participant group for the 2008 equity-based incentive program continued to be broad, with a wide number of employees in many levels of the organization eligible to participate. As at December 31, 2008, the aggregate number of participants in all of Nokia’s equity-based programs was approximately 22 000 compared with approximately 18 000 compared with approximately 22 000 as at December 31, 2007 reflecting changes in our grant guidelines.
The employees of Nokia Siemens Networks have not participated in any new Nokia equity-based incentive plans since the formation of Nokia Siemens Networks on April 1, 2007.
For a more detailed description of all of Nokia’s equity-based incentive plans, see Note 22 “Share-based payment” to Nokia’s consolidated financial statements for year 2008.
Performance Shares
We have granted performance shares under the global 2004, 2005, 2006, 2007 and 2008 plans, each of which, including its terms and conditions, has been approved by the Board of Directors.
The 2004 and 2005 Performance Share Plans have a four-year performance period and a two-year interim measurement period. The 2006, 2007 and 2008 Performance Share Plans have a three-year performance period with no interim measurement period. The below table summarizes the relevant periods and settlements under the plans.
| Performance share plan | Performance period | Interim measurement period | 1st (interim) settlement | 2nd (final) settlement |
| 2004 | 2004–2007 | 2004-2005 | 2006 | 2008 |
| 2005 | 2005–2008 | 2005-2006 | 2007 | 2009 |
| 2006 | 2006–2008 | N/A | N/A | 2009 |
| 2007 | 2007–2009 | N/A | N/A | 2010 |
| 2008 | 2008–2010 | N/A | N/A | 2011 |
Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights, associated with the performance shares. The performance share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting.
Performance share grants are approved by the CEO at the end of the respective calendar quarter on the basis of an authorization given by the Board of Directors. Approvals for performance share grants to the CEO are made by the independent members of the Board of Directors. Approvals for performance share grants to the other Group Executive Board members and other direct reports of the CEO are made by the Personnel Committee.
Stock Options
Nokia’s global stock option plans in effect for 2008, including their terms and conditions, were approved by the Annual General Meetings in the year when each plan was launched, i.e., in 2003, 2005 and 2007.
Each stock option entitles the holder to subscribe for one new Nokia share. The stock options are non-transferable. All of the stock options have a vesting schedule with a 25% vesting one year after grant, and quarterly vesting thereafter. The stock options granted under the plans generally have a term of five years.
The exercise price of the stock options are determined at the time of their grant on a quarterly basis. The exercise prices are determined in accordance with a pre-agreed schedule after the release of Nokia’s periodic financial results and are based on the trade volume weighted average price of a Nokia share on NASDAQ OMX Helsinki during the trading days of the first whole week of the second month of the respective calendar quarter (i.e., February, May, August or November). Exercise prices are determined on a one-week weighted average to mitigate any short-term fluctuations in Nokia’s share price. The determination of exercise price is defined in the terms and conditions of the stock option plan, which are approved by the shareholders at the respective Annual General Meeting. The Board of Directors does not have the right to amend the above-described determination of the exercise price. [tämä kappale puuttuu]
Stock option grants are approved by the CEO at the time of stock option pricing on the basis of an authorization given by the Board of Directors. Approvals for stock option grants to the CEO are made by the independent members of the Board of Directors. Approvals for stock option grants to the other Group Executive Board members and for other direct reports of the CEO are made by the Personnel Committee.
Restricted Shares
Since 2003, Nokia has granted restricted shares to recruit, retain, reward and motivate selected high potential employees, who are critical to the future success of Nokia. It is Nokia’s philosophy that restricted shares will be used only for key management positions and other critical resources. The outstanding global restricted share plans, including their terms and conditions, have been approved by the Board of Directors.
All of Nokia’s restricted share plans have a restriction period of three years after grant. Once the shares vest, they are transferred and delivered to the participants. The restricted share grants are generally forfeited if the employment relationship terminates with Nokia prior to vesting. Until the Nokia shares are delivered, the participants do not have any shareholder rights, such as voting or dividend rights, associated with the restricted shares. Restricted share grants are approved by the CEO at the end of the respective calendar quarter on the basis of an authorization given by the Board of Directors. Approvals of restricted share grants to the CEO are confirmed by the independent directors of the Board subject to the requirements of Finnish law. Approvals for restricted share grants to the other Group Executive Board members and other direct reports of the CEO are made by the Personnel Committee.
Other equity plans for employees
In addition to Nokia’s global equity plans described above, Nokia has equity plans for Nokia-acquired businesses or employees in the United States and Canada under which participants can receive Nokia ADSs or ordinary shares. These equity plans do not result in an increase in the share capital of Nokia.
In connection with our July 10, 2008 acquisition of NAVTEQ, we assumed NAVTEQ’s 2001 Stock Incentive Plan (“NAVTEQ Plan”). All unvested NAVTEQ restricted stock units under the NAVTEQ Plan were converted to an equivalent number of restricted stock units entitling their holders to Nokia shares. The maximum number of Nokia shares to be delivered to NAVTEQ employees during the years 2008—2012 in connection with the NAVTEQ restricted stock units that were converted into Nokia restricted stock units upon closing of the acquisition is approximately 3 million. We do not intend to make further awards under the NAVTEQ Plan.
We have also an Employee Share Purchase Plan in the United States, which permits all full-time Nokia employees located in the United States to acquire Nokia ADSs at a 15% discount. The purchase of the ADSs is funded through monthly payroll deductions from the salary of the participants, and the ADSs are purchased on a monthly basis. As at December 31, 2008, a total of 11 700 044 ADSs had been purchased under this plan since its inception, and there were a total of approximately 1 000 participants.
For more information on these plans, see Note 22 “Share-based payment” to Nokia’s consolidated financial statements for year 2008.
Equity-based compensation program 2009
The Board of Directors announced the proposed scope and design for the Equity Program 2009 on January 22, 2009. The main equity instrument continues to be performance shares. In addition, stock options will be used on a limited basis for senior managers, and restricted shares will be used for a small number of high potential and critical employees. These equity-based incentive awards are generally forfeited if the employee leaves Nokia prior to vesting.
Performance shares
The Performance Share Plan 2009 approved by the Board of Directors will cover a performance period of three years (2009–2011) with no interim measurement period. No performance shares will vest unless Nokia’s performance reaches at least one of the threshold levels measured by two independent, pre-defined performance criteria:
(1) Average Annual Net Sales Growth: -5% (threshold) and 10% (maximum) during the performance period 2009-2011, and
(2) EPS (diluted, non-IFRS): EUR 1.01 (threshold) and EUR 1.53 (maximum) at the end of the performance period in 2011.
Average Annual Net Sales Growth is calculated as an average of the net sales growth rates for the years 2009 through 2011. EPS is the diluted, non-IFRS earnings per share in 2011. Both the EPS and Average Annual Net Sales Growth criteria are equally weighted and performance under each of the two performance criteria is calculated independent of each other.
Achievement of the maximum performance for both criteria would result in the vesting of a maximum of 18 million Nokia shares. Performance exceeding the maximum criteria does not increase the number of performance shares that will vest. Achievement of the threshold performance for both criteria will result in the vesting of approximately 4.5 million shares. If only one of the threshold levels of performance is achieved, only approximately 2.25 million of the performance shares will vest. If none of the threshold levels is achieved, then none of the performance shares will vest. For performance between the threshold and maximum performance levels, the vesting follows a linear scale. If the required performance levels are achieved, the vesting will occur December 31, 2011. Until the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting or dividend rights associated with these performance shares.
Stock options
The stock options to be granted in 2009 are out of the Stock Option Plan 2007 approved by the Annual General Meeting in 2007. For more information on Stock Option Plan 2007, see “Equity Based Compensation Programs”.
Restricted shares
The restricted shares to be granted under the Restricted Share Plan 2009 will have a three-year restriction period. The restricted shares will vest and the payable Nokia shares will be delivered mainly in 2012, subject to fulfillment of the service period criteria. Participants will not have any shareholder rights or voting rights during the restriction period, until the Nokia shares are transferred and delivered to plan participants at the end of the restriction period.
Maximum planned grants in 2009
The maximum number of planned grants under the 2009 Equity Program (i.e., performance shares, stock options and restricted shares) in 2009 are set forth in the table below.
| Plan type | Maximum number of planned grants under the 2009 equityprogram in 2009 |
| Stock options | 7 million |
| Restricted shares | 5 million |
| Performance shares at threshold 1 | 4.5 million |
1 The maximum number of shares to be delivered at maximum performance is four times the number at threshold, i.e., a total of 18 million Nokia shares.
As at December 31, 2007, the total dilutive effect of Nokia’s stock options, performance shares and restricted shares outstanding, assuming full dilution, was approximately 2.3% in the aggregate. The potential maximum effect of the proposed equity program 2008 would be approximately another 0.6%.
Share ownership
General
The following section describes the ownership or potential ownership interest in the company of the members of Nokia’s Board of Directors and the Group Executive Board, either through share ownership or through holding of equity based incentives, which may lead to share ownership in the future.
In line with the Company policy, approximately 40% of the remuneration paid to the Board of Directors has been paid in Nokia shares purchased from the market. Non-executive members of the Board of Directors do not receive stock options, performance shares, restricted shares or other variable compensation.
For a description of Nokia’s equity-based compensation programs for employees and executives, see “Equity-Based Compensation Programs”.
Share ownership of the Board of Directors
At December 31, 2008, the members of our Board of Directors held the aggregate of 1 235 024 shares and ADSs in Nokia (not including stock options or other equity awards that are deemed as being beneficially owned under applicable SEC rules), which represented 0.03% of our outstanding share capital and total voting rights excluding shares held by Nokia Group at that date.
The following table sets forth the number of shares and ADSs held by members of the Board of Directors as at December 31, 2008.
| Shares 1 | ADSs | |
| Jorma Ollila 2 | | — |
| Marjorie Scardino | — | |
| Georg Ehrnrooth 3 | | — |
| Lalita D. Gupte | — | |
| Bengt Holmström | | — |
| Henning Kagermann | | — |
| Olli-Pekka Kallasvuo 4 | 223 024 | — |
| Per Karlsson 3 | 22 889 | — |
| Risto Siilasmaa | | — |
| Keijo Suila | 8 619 | — |
1 The number of shares includes not only shares acquired as compensation for services rendered as a member of the Board of Directors, but also shares acquired by any other means.
2 For Mr. Ollila, this table includes his share ownership only. Mr. Ollila was entitled to retain all vested and unvested stock options, performance shares and restricted shares granted to him in respect of his services as the CEO of Nokia prior to June 1, 2006 as approved by the Board of Directors. Therefore, in addition to the above-presented share ownership, Mr. Ollila held, as at December 31, 2008, a total of 1 700 000 stock options, 200 000 performance shares (at threshold), and 100 000 restricted shares. The information relating to stock options held by Mr. Ollila as at December 31, 2008 is represented in the table below.
| Number of stock options | Total intrinsic value of stock options, December 31, 2006 | |||||||
| Stock option category | Expiration date | Exercise price per share EUR | Exercisable | Unexercisable | Exercisable | Unexercisable | ||
| Jorma Ollila | | December 31, 2008 | 14.95 | 600 000 | — | 6 942 000 | — | |
| 2004 2Q | December 31, 2009 | 11.79 | 325 000 | 75 000 | 4 787 250 | 1 104 750 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 225 000 | 175 000 | 3 089 250 | 2 402 750 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 125 000 | 275 000 | 1 062 500 | 2 337 500 | ||
The number of stock options in the above table equals the number of underlying shares represented by the option entitlement. Stock options vest over four years: 25% after one year and 6.25% each quarter thereafter. The intrinsic value of the stock options in the above table is based on the difference between the exercise price of the options and the closing market price of Nokia shares on NASDAQ OMX Helsinki as at December 31, 2008 of EUR 11.10.
3 Mr. Ehrnrooth’s and Mr. Karlsson’s holdings include both shares held personally and shares held through a company.
4 For Mr. Kallasvuo, this table includes his share ownership only. Mr. Kallasvuo’s holdings of long-term equity-based incentives are outlined under “Stock Option Ownership of the Group Executive Board” and “Performance Shares and Restricted Shares”.
Share Ownership of the Group Executive Board
The following table sets forth the share ownership, as well as potential ownership interest through holding of equity-based incentives, of the members of the Group Executive Board as at December 31, 2008. For up-to-date information about the share ownership of the members of the Group Executive Board, see www.nokia.com/A4126363 .
| Shares | Shares Receivable Through Stock Options3 | Shares Receivable Through Performance Shares at | Shares Receivable Through Performance Shares at | Shares Receivable Through Restricted Shares | |
| Number of Equity Instruments Held by Group Executive Board | 917 451 | 2 951 337 | 743 100 | 2 650 342 | 964 500 |
| % of the Share Capital 1 | 0.0248 | 0.0798 | 0.0201 | 0.0717 | 0.0261 |
| % of the Total Outstanding Equity Incentives (per Instrument) 2 | — | 12.769 | 8.644 | 7.886 | 11.982 |
1 The percentage is calculated in relation to the outstanding share capital and total voting rights of the company, excluding shares held by Nokia Group.
2 The percentage is calculated in relation to the total outstanding equity incentives per instrument, i.e., stock options, performance shares and restricted shares, as applicable.
3 Includes unexercised 2003 2Q Stock Options which expired December 31, 2008.
4 Due to the interim payout, the participants have already received the threshold number of shares under the 2005 performance share plan. Therefore, the shares receivable at threshold under the 2005 performance share plan equals to zero.
5 Due to the interim payout (at threshold) in 2007 and based on the actual level of the performance criteria for the performance period, the number of Nokia shares deliverable under the performance share plan 2005 equals 2.12 times the number of performance shares at threshold. The number of Nokia shares deliverable under the performance share plan 2006 equals 1.98 times the number of performance shares at threshold, based on the actual level of performance criteria for the relevant performance period. At maximum performance under the performance share plans 2007 and 2008, the number of Nokia shares deliverable equals four times the number of performance shares at threshold.
The following table sets forth the number of shares and ADSs in Nokia (not including stock options or other equity awards that are deemed as being beneficially owned under the applicable SEC rules) held by members of the Group Executive Board as at December 31, 2008.
| Shares | ADSs | |
| Olli-Pekka Kallasvuo | | — |
| Robert Andersson | 47 244 | — |
| Simon Beresford-Wylie | | — |
| Timo Ihamuotila | 41 445 | — |
| Mary McDowell | | 5 000 |
| Hallstein Moerk | | 4 315 |
| Tero Ojanperä | 33 665 | — |
| Niklas Savander | 45 523 | — |
| Richard Simonson | | 28 196 |
| Veli Sundbäck | 148 047 | — |
| Anssi Vanjoki | 74 262 | — |
| Kai Öistämö | 28 560 | — |
Stock Option Ownership of the Group Executive Board
The following table provides certain information relating to stock options held by members of the Group Executive Board as at December 31, 2008. These stock options were issued pursuant to Nokia Stock Option Plans 2003, 2005 and 2007. For a description of Nokia’s stock option plans, please see Note 22 to Nokia’s consolidated financial statements for year 2008.
| Number of stock options 1 |
Total Intrinsic Value of Stock Options, December 31, 2008 |
|||||||
| Stock Option Category | Expiration Date | Exercise Price per Share (EUR) | Exercisable | Unexercisable | Exercisable3 | Unexercisable | ||
| Olli Pekka Kallasvuo | 2003 2Q | December 31, 2008 | 14.95 | 120 000 | 0 | 0 | 0 | |
| 2004 2Q | December 31, 2009 | 11.79 | 60 000 | 0 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 48 750 | 11 250 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 14.48 | 68 750 | 31 250 | 0 | 0 | ||
| 2006 4Q | December 31, 2011 | 18.02 | 168 750 | 131 250 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 50 000 | 110 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 115 000 | 0 | 0 | ||
| Robert Andersson | 2004 2Q | December 31, 2009 | 11.79 | 10 400 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 9 750- | 2 250 | 0 | 0 | ||
| 2005 4Q | December 31, 2010 | 14.48 | 19 250 | 8 750 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 20 000 | 35 000 | 0 | 0 | ||
| 2007 4Q | December 31, 2012 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 20 000 | 0 | 0 | ||
| Simon Beresford-Wylie 4 | 2003 2Q | December 31, 2008 | 14.95 | 13 000 | 0 | 0 | 0 | |
| 2004 2Q | December 31, 2009 | 11.79 | 10 000 | 0 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 42 750 | 11 250 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 56 250 | 43 750 | 0 | 0 | ||
| Timo Ihamuotila | 2004 2Q | December 31, 2009 | 11.79 | 1 500 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 3 600 | 2 700 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 3 600 | 6 300 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 18.02 | 0 | 20 000 | 0 | 0 | ||
| Mary McDowell | 2004 2Q | December 31, 2009 | 11.79 | 50 000 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 48 750 | 11 250 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 56 250 | 43 750 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 17 187 | 37 813 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 28 000 | 0 | 0 | ||
| Hallstein Moerk | 2004 2Q | December 31, 2009 | 11.79 | 5 625 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 10 000 | 7 500 | 0 | 0 | ||
| 2006 2Q | December 31, 2009 | 18.02 | 33 750 | 26250 | 0 | 0 | ||
| 2007 2Q | December 31, 2010 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2011 | 19.16 | 0 | 20 000 | 0 | 0 | ||
| Tero Ojanperä | 2003 2Q | December 31, 2008 | 14.95 | 8 000 | 0 | 0 | 0 | |
| 2004 2Q | December 31, 2009 | 11.79 | 10 000 | 0 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 32 500 | 7 500 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 33 750 | 26 250 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 20 000 | 0 | 0 | ||
| Niklas Savander | 2004 2Q | December 31, 2009 | 11.79 | 2 560 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 4 375 | 2 625 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 18 750 | 26 250 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 28 000 | 0 | 0 | ||
| Richard Simonson | 2004 2Q | December 31, 2009 | 11.79 | 50 000 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 48 750 | 11 250 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 56 250 | 43 750 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 17 187 | 37 813 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 32 000 | 0 | 0 | ||
| Veli Sundbäck | 2003 2Q | December 31, 2008 | 14.95 | 50 000 | 0 | 0 | 0 | |
| 2004 2Q | December 31, 2009 | 11.79 | 30 000 | 0 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 32 500 | 7 500 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 33 750 | 26 250 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 10 000 | 22 000 | 0 | 0 | ||
| Anssi Vanjoki | 2004 2Q | December 31, 2009 | 11.79 | 11 250 | 0 | 0 | 0 | |
| 2005 2Q | December 31, 2010 | 12.79 | 15 000 | 11 250 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 25 000 | 43 750 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 17 187 | 37 813 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 32 000 | 0 | 0 | ||
| Kai Öistämö | 2003 2Q | December 31, 2008 | 14.95 | 727 | 0 | 0 | 0 | |
| 2004 2Q | December 31, 2009 | 11.79 | 3 125 | 0 | 0 | 0 | ||
| 2005 2Q | December 31, 2010 | 12.79 | 4 800 | 2 400 | 0 | 0 | ||
| 2005 4Q | December 31, 2010 | 14.48 | 10 500 | 8 750 | 0 | 0 | ||
| 2006 2Q | December 31, 2011 | 18.02 | 56 250 | 43 750 | 0 | 0 | ||
| 2007 2Q | December 31, 2012 | 18.39 | 17 187 | 37 813 | 0 | 0 | ||
| 2008 2Q | December 31, 2013 | 19.16 | 0 | 32 000 | 0 | 0 | ||
| Stock options held by the members of the Group Executive Board on December 31, 2008, Total | 1 577 310 | 1 374 027 | 0 | 0 | ||||
| All outstanding stock option plans (global plans), Total | 12 244 569 | 10 868 649 | 66 760 | 4 851 | ||||
1
Number of stock options equals the number of underlying shares represented by the option entitlement. Stock options vest over four years: 25% after one year and 6.25% each quarter thereafter.
2
The intrinsic value of the stock options is based on the difference between the exercise price of the options and the closing market price of Nokia shares on NASDAQ OMX Helsinki as at December 31, 2008 of EUR 11.10.
3
For gains realized upon exercise of stock options for the members of the Group Executive Board, see the table in “Stock Option Exercises and Settlement of Shares”.
4
From April 1, 2007, Mr. Beresford-Wylie has participated in a long-term cash incentive plan sponsored by Nokia Siemens Networks instead of the long-term equity-based plans of Nokia.
Performance shares and restricted shares
The following table provides certain information relating to performance shares and restricted shares held by members of the Group Executive Board as at December 31, 2008. These entitlements were granted pursuant to Nokia’s performance share plans 2005, 2006, 2007 and 2008 and restricted share plans 2005, 2006, 2007 adn 2008. For a description of Nokia’s performance share and restricted share plans, please see Note 22 to the consolidated financial statements for year 2008.
| Performance shares | Restricted shares | |||||||
| Plan name1 | Number of Performance Shares at Threshold 2 | Number of Performance Shares at Maximum2 | Intrinsic Value Performance December 31,20083 (EUR) | Plan Name4 | Number of Restricted Shares | Intrinsic Value December 31, 20085 (EUR) | ||
| Olli Pekka Kallasvuo | 2005 | | 31 800 | 352 980 | 2005 | 35 000 | 388 500 | |
| 2006 | | 148 500 | 1 648 350 | 2006 | 100 000 | 1 110 000 | ||
| 2007 | 80 000 | 320 000 | 0 | 2007 | 100 000 | 1 110 000 | ||
| 2008 | 57 500 | 230 000 | 0 | 2008 | 75 000 | 832 500 | ||
| Robert Andersson | 2005 | 3000 | 6360 | 70 596 | 2005 | | ||
| 2006 | 20 000 | 39 600 | 439 560 | 2006 | | 222 000 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| 2008 | 10 000 | 40 000 | 0 | 2008 | 7 000 | 77 700 | ||
| Simon Beresford-Wylie | 2005 | | | 352 980 | 2005 | |||
| 2006 | | | 549 450 | 2006 | | 277 500 | ||
| Timo Ihamuotila | 2005 | 3 600 | 7 632 | 84 715 | 2005 | | ||
| 2006 | | 7 128 | 79 121 | 2006 | | 49 950 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| 2008 | 10 000 | 40 000 | 0 | 2008 | 14 000 | 155 400 | ||
| Mary McDowell | 2005 | 15 000 | | 352 980 | 2005 | | ||
| 2006 | 25 000 | | 549 450 | 2006 | | 277 500 | ||
| 2007 | 27 500 | 110 000 | 0 | 2007 | 35 000 | 388 500 | ||
| 2008 | 14 000 | 56 000 | 0 | 2008 | 20 000 | 222 000 | ||
| Hallstein Moerk | 2005 | 10 000 | | 235 320 | 2005 | | ||
| 2006 | 15 000 | | 329 670 | 2006 | | 166 500 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| 2008 | 10 000 | 40 000 | 0 | 2008 | 14 000 | 155 400 | ||
| Tero Ojanperä | 2005 | 10 000 | 21 200 | 235 320 | 2005 | | ||
| 2006 | | 29 700 | 329 670 | 2006 | | 166 500 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| 2008 | 10 000 | 40 000 | 0 | 2008 | 14 000 | 155 400 | ||
| Niklas Savander | 2005 | | | 82 362 | 2005 | | ||
| 2006 | 15 000 | | 329 670 | 2006 | | 166 500 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| 2008 | 14 000 | 56 000 | 0 | 2008 | 20 000 | 222 000 | ||
| Richard Simonson | 2005 | | | 352 980 | 2005 | | ||
| 2006 | 25 000 | | 549 450 | 2006 | 25 000 | 277 500 | ||
| 2007 | 27 500 | 110 000 | 0 | 2007 | 35 000 | 388 500 | ||
| 2008 | 16 000 | 64 000 | 0 | 2008 | 22 000 | 244 200 | ||
| Veli Sundbäck | 2005 | | | 235 320 | 2005 | | ||
| 2006 | | | 329 670 | 2006 | | 166 500 | ||
| 2007 | 16 000 | 64 000 | 0 | 2007 | 25 000 | 277 500 | ||
| Anssi Vanjoki | 2005 | | | 352 980 | 2005 | | ||
| 2006 | | | 1 193 400 | 2005 | | 928 200 | ||
| 2007 | 27 500 | 100 000 | 2 184 262 | 2006 | 25 000 | 663 000 | ||
| 2008 | 16 000 | 110 000 | 2 258 950 | 2007 | 35 000 | 928 200 | ||
| Kai Öistämö | 2005 | 3 200 | | 75 302 | 2005 | | ||
| 2006 | | | 549 450 | 2006 | | 277 500 | ||
| 2007 | 27 500 | 110 000 | 0 | 2007 | 35 000 | 388 500 | ||
| 2008 | 16 000 | 64 000 | 0 | 2008 | 22 000 | 244 200 | ||
| Performance shares and restricted shares held by the Group Executive Board, Total 6 | 861 400 | 2 650 324 | 9 016 796 | 964 500 | 10 705 950 | |||
| All outstanding performance shares and restricted shares (Global plans), Total | 8 596 496 | 33 607 752 | 176 418 521 | 8 049 397 | 89 348 307 | |||
1 The performance period for the 2005 plan is 2005-2008, with one interim measurement period for fiscal years 2005-2006. The performance period for the 2006 plan is 2006-2008, 2007 plan 2007-2009 and 2008 plan 2008-2010, respectively.
2 The threshold number will vest as Nokia shares should the pre-determined threshold performance levels of Nokia be met. Under the 2005 performance share plan, the participants have already received the threshold number of Nokia shares in connection with the interim payout. The maximum number of Nokia shares will vest should the pre-determined maximum performance levels be met. The maximum number of performance shares equals four times the number at threshold. The number of Nokia shares deliverable under the performance share plan 2005 equals 2.12 times the number of performance shares at threshold due to the interim payout (at threshold) in 2007 and based on the actual level of the performance criteria for the performance period. Under the performance share plan 2006 the maximum number of Nokia shares deliverable equals 1.98 times the number of performance shares at threshold.
3 The intrinsic value is based on the closing market price of a Nokia share on NASDAQ OMX Helsinki as at December 31, 2008 of EUR 11.10. For performance share plans 2007 and 2008, the value of performance shares is presented on the basis of Nokia’s estimation of the number of shares expected to vest. For performance share plans 2005 and 2006, the value of performance shares is presented on the basis of actual number of shares to vest.
4 Under the restricted share plans 2005, 2006, 2007 and 2008, awards have been granted quarterly. For the major part of the awards made under these plans, the restriction period ended for the 2005 plan on October 1, 2008; and will end for the 2006 plan on October 1, 2009; for the 2007 plan, on October 1, 2010; and for the 2008 plan, on October 1, 2011.
5 The intrinsic value is based on the closing market price of a Nokia share on NASDAQ OMX Helsinki as at December 31, 2008 of EUR 11.10.
6 From April 1, 2007, Mr. Beresford-Wylie has participated in a long-term cash incentive plan sponsored by Nokia Siemens Networks instead of the long-term equity-based plans of Nokia.
Stock option exercises and settlement of shares
The following table provides certain information relating to stock option exercises and share deliveries upon settlement during the year 2008 for Nokia’s Group Executive Board members.
| Stock Option Awards 1 | Performance Shares Awards 2 | Restricted Shares Awards 3 | |||||
| Name | Year | Number of Shares Acquired on Exercise | Value Realized on Exercise (EUR) | Number of Shares Delivered on Vesting | Value Realized on Vesting(EUR) | Number of Shares Delivered on Vesting | Value Realized on Vesting (EUR) |
| Olli Pekka Kallasvuo | 2008 | 0 | 0 | 35 850 | 648 885 | 35 000 | 434 700 |
| Robert Anderson | 2008 | 0 | 0 | 6 214 | 112 473 | 28 000 | 347 760 |
| Simon Beresford-Wylie | 2008 | 0 | 0 | 5 975 | 108 148 | 35 000 | 434 700 |
| Timo Ihamuotila | 2008 | 0 | 0 | 4 780 | 86 518 | 25 000 | 310 500 |
| Mary McDowell | 2008 | 70 000 | 679 000 | 29 875 | 540 738 | 35 000 | 434 700 |
| Hallstein Moerk | 2008 | 0 | 0 | 17 925 | 324 443 | 25 000 | 310 500 |
| Tero Ojanperä | 2008 | 8 000 | 55 120 | 5 975 | 108 148 | 25 000 | 310 500 |
| Niklas Savander | 2008 | 0 | 0 | 6 118 | 110 736 | 25 000 | 310 500 |
| Richard Simonson | 2008 | 11 500 | 110 170 | 29 875 | 540 738 | 35 000 | 434 700 |
| Veli Sundbäck | 2008 | 0 | 0 | 17 925 | 324 443 | 25 000 | 310 500 |
| Anssi Vanjoki | 2008 | 0 | 0 | 35 850 | 648 885 | 35 000 | 434 700 |
| Kai Öistämö | 2008 | 0 | 0 | 5 975 | 108 148 | 25 000 | 310 500 |
1 Value realized on exercise is based on the difference between the Nokia share price and exercise price of options (non-transferable stock options).
2 Represents the final payout in gross shares for the 2004 performance share grant. Value is based on the market price of the Nokia share on NASDAQ OMX Helsinki as at June 2, 2008 of EUR 18.10.
3 Delivery of Nokia shares vested from the 2005 restricted share grant to all members of the Group Executive Board. Value is based on the market price of the Nokia share on NASDAQ OMX Helsinki on October 22, 2008 of EUR 12.42.
One of the goals of Nokia’s long-term equity-based incentive program is to focus executives on building value for shareholders. In addition to granting the stock options, performance shares and restricted shares, Nokia also encourages stock ownership by Nokia’s top executives. Since January 2001, Nokia has had stock ownership commitment guidelines with minimum recommendations tied to annual base salaries. For the President and CEO, the recommended minimum investment in Nokia shares corresponds to three times his annual base salary, for Simon Beresford-Wylie, Chief Executive Officer of Nokia Siemens Networks, one time his annual base salary and for the other members of the Group Executive Board, two times the member’s annual base salary, respectively. To meet this requirement, all members are expected to retain 50% of any after-tax gains from equity programs in shares until the minimum investment level is met.
Insider trading in securities
The Board of Directors has established and regularly updates a policy in respect of insiders’ trading in Nokia securities. The members of the Board and the Group Executive Board are considered as primary insiders. Under the policy, the holdings of Nokia securities by the primary insiders are public information, which is available in the Finnish Central Securities Depositary and on Nokia’s website. Both primary insiders and secondary insiders (as defined in the policy) are subject to a number of trading restrictions and rules, including, among other things, prohibitions on trading in Nokia securities during the three-week “closed-window” period immediately preceding the release of Nokia’s quarterly results and the four-week “closed-window” period immediately preceding the release of Nokia’s annual results. In addition, Nokia may set trading restrictions based on participation in projects. Nokia updates its insider trading policy from time to time and monitors Nokia’s insiders’ compliance with the policy on a regular basis. Nokia’s insider policy is in line with the NASDAQ OMX Helsinki Guidelines for Insiders and also sets requirements beyond those guidelines.