Nokia 2005 Annual Report Download - page 93
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three and five year period. In the case of the CEO, the annual incentive award is also partly
based on his performance compared against strategic leadership objectives.
Incentive as a % of Annual Base Salary
Minimum Target Maximum
Position Performance Performance Performance Measurement criteria
Chairman and CEO 0 100% 225% Financial Objectives
(Includes targets for net
sales, operating profit and
net working capital
measures)
0 25% 37.50% Total Shareholder Return
(comparison made with key
comparators in the high
technology and
telecommunications
industries over a one, three
and five year period)
0 25% 37.50% Strategic Objectives
Total 0 150% 300%
President and COO 0 100% 225% Financial & Strategic
Objectives
0 25% 37.50% Total Shareholder Return
Total 0 125% 262.5%
Group Executive Board 0 75% 168.75% Financial & Strategic
Objectives
0 25% 37.50% Total Shareholder Return(1)
Total 0 100% 206.25%
(1) Only some of the Group Executive Board Members are eligible for the additional 25%
total Shareholder Return element.
More information on the actual cash compensation paid in 2005 to our executive officers is in the
‘‘Summary Compensation Table 2005’’ on page 94.
Long-term equity-based incentives
•Long-term equity-based incentive awards in the form of stock options, performance shares
and restricted shares are used to align the executives’ interests with shareholders’ interests,
reward performance, and encourage retention. These awards are determined on the basis of
several factors, including a comparison of that executive’s overall compensation with the
relevant market. Stock options will only have value for the executive if the share price is
higher than the exercise price of the option established at grant, before the term of the
option expires. This aligns the interests of the executives with those of the shareholders. In
addition, performance shares only vest as shares when the pre-determined threshold
performance level, tied to the company’s financial performance, is achieved by the end of
the performance period. Restricted shares, used primarily for retention reasons, are vested
91