Nokia 2003 Annual Report Download - page 78

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companies include both high technology and telecommunications firms that are headquartered in
Europe and the United States. The Committee has access to, and uses outside independent consultants.
Compensation of the Chief Executive Officer and President
Subject to Board approval, the Committee establishes performance objectives and evaluates the
performance of the Chief Executive Officer. The Committee reviews the compensation of the Chief
Executive Officer. The review is made consistent with the principles and programs described
previously. The Committee makes recommendations to the Board of Directors for approval.
The Chief Executive Officer establishes performance objectives and evaluates the performance of the
President, and makes compensation recommendations to the Personnel Committee. The Committee
reviews the Chief Executive Officer’s recommendations for the President, and makes recommendations
to the Board of Directors for approval.
Changes in Compensation Programs
In recognition of Nokia’s share price and executive retention needs, in July 2003 the Committee
recommended to the Board of Directors a grant of Restricted Shares to 28 key executives, including
one member of the 2003 Group Executive Board, for a total of 452 250 shares. These Restricted Shares
vest in October 2006.
The granting of Restricted Shares complements our equity programs and is subject to the approval of
the Board of Directors. It is the Committee’s philosophy that Restricted Shares will be used only for key
management positions and other critical resources. In the future, grants of Restricted Shares will be
expanded to a broader population of our executives, key management positions and critical resources.
2004 Equity Program
Throughout 2003, the Committee worked closely with management to develop a new equity-based
long-term incentive program for both executives and the broader population of eligible employees. The
review of the existing stock option plan was initiated to introduce a stronger element of performance
in our equity compensation plans.
The key objectives of the 2004 Equity Program are:
• To introduce a stronger element of performance in the long term incentives,
• To align the potential value received by participants with the expense to the company and the
performance of the company,
• To enhance employee motivation,
• To reflect trends in the competitive labor market.
The 2004 Equity Program will use a combination of Stock Options, Performance Shares, and on a
limited basis Restricted Shares. A full description of the 2004 Equity Program is in ‘‘Item 6.E Share
Ownership—Nokia’s Equity Based Compensation Program 2004.’’
Group Executive Board
For the year ended December 31, 2003, Nokia had a Group Executive Board consisting of 10
members. Three new members have been appointed to serve on the Group Executive Board as
from January 1, 2004. The aggregate compensation, excluding gains realized upon the exercise of
stock options, of the 10 members of the Group Executive Board for 2003, including Mr. Jorma Ollila,
was approximately EUR 10.9 million. Of this amount, approximately EUR 5.4 million was paid
pursuant to bonus arrangements for the 2003 calendar year. The bonuses of the members of the
Group Executive Board are paid as a percentage of annual base salary based on Nokia’s
Short-Term Incentive Plan, which is described above in ‘‘Report of the Personnel Committee of the
Board.’’
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