Nokia 2004 Annual Report Download - page 89

pre-established financial targets for net revenue, operating profit and net working capital efficiency
measures. In addition, Mr. Ollila is eligible for a discretionary annual bonus based on his performance
against strategic leadership objectives and the company’s total shareholder return compared to key
comparators from the high technology and telecommunications industry.
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. The President’s short-term incentive bonus payments are
mainly based on the performance of the company against pre-established financial targets for net
revenue, operating profit and net working capital efficiency measures. In addition, Mr. Ala-Pietila is
eligible for a discretionary annual bonus based on the company’s total shareholder return compared
to key comparators from the high technology and telecommunications industry.
Granting of Restricted Shares
In recognition of Nokia’s executive retention needs, Restricted Shares were granted to Group Executive
Board members and an additional 166 key executives, for a total of 1 910 680 shares in 2004. These
Restricted Shares vest in 2007. The granting of Restricted Shares complements our equity programs
and is subject to the approval of the Board of Directors for the Chief Executive Officer and President
and the approval of the Personnel Committee for all other Group Executive Board members. The Chief
Executive Officer approves grants of Restricted Shares made to all other managers and employees
within a framework approved by the Personnel Committee, and reviews these with the Personnel
Committee. It is the Committee’s philosophy that Restricted Shares will be used only for key
management positions and other critical resources.
Group Executive Board
For the year ended December 31, 2004, Nokia had a Group Executive Board consisting of
13 members. Of the Group Executive Board members, Dr. Matti Alahuhta, Ms. Sari Baldauf and
Dr. J. T. Bergqvist ceased employment with us and resigned as members of the Group Executive
Board with effect from December 31, 2004 for Dr. Matti Alahuhta, and January 31, 2005 for Ms. Sari
Baldauf and Dr. J. T. Bergqvist.
The aggregate compensation, excluding gains realized upon the exercise of stock options, and also
excluding grants of Performance Share Units and restricted shares, of the 13 members of the
Group Executive Board for 2004, including Mr. Jorma Ollila, was approximately EUR 13.6 million. Of
this amount, approximately EUR 6.0 million was paid pursuant to bonus arrangements for the
2004 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.’’
Subject to the requirements of Finnish law, the independent directors of the Board will confirm
the compensation and the employment conditions of Messrs. Jorma Ollila and Pekka Ala-Pietil¨ a
upon the recommendation of the Personnel Committee. The compensation and employment
conditions of the other members of the Group Executive Board are approved by the Personnel
Committee, pursuant to its charter.
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