Nokia 2005 Annual Report Download - page 99

For a more detailed description of all of our equity-based incentive plans, see Note 24 ‘‘Share-
based payment’’ to the consolidated financial statements included in Item 18 of this annual report
on Form 20-F.
Performance Shares
We have granted performance shares under the 2004 and 2005 plans, which have been approved
by the Board of Directors. The performance shares represent a commitment by the company to
deliver Nokia shares to employees at a future point in time, subject to the company’s fulfillment of
pre-defined performance criteria. No performance shares will vest unless the company
performance reaches at least one of the threshold levels measured by two independent,
pre-defined performance criteria: the company’s average annual net sales growth and earnings
per share (‘‘EPS’’) growth (basic) for the four year performance period of the plan. For the 2004
plan the performance period consists of the fiscal years 2004 through 2007, with an interim
payout possible after 2005, and for the 2005 plan the years 2005 through 2008, with an interim
payout possible after 2006.
For both the 2004 and 2005 plans, if the required performance level is achieved, the first payout
will take place after a two-year interim measurement period. The second and final payout, if any,
will be after the close of the four-year performance period.
Stock Options
Nokia’s outstanding global stock option plans have been approved by the Annual General Meetings
in the year when the plan was launched, i.e. in 2001, 2003 and 2005.
Each stock option entitles the holder to subscribe for one new Nokia share with a par value of
EUR 0.06. Under the 2001 stock option plan the stock options are transferable by the participants.
Under the 2003 and 2005 plans the stock options are non-transferable. All of the stock options
have a quarterly staggered vesting schedule, which has been Nokia’s policy since 2001. The
subcategories of stock options under the plans have a life of approximately five years.
The exercise prices are determined at the time of the grant, on a quarterly basis equaling the
trade volume weighted average price of the Nokia share on the Helsinki Stock Exchange during
the trading days of the first whole week of the second month (i.e. February, May, August or
November) of the respective calendar quarter.
Restricted Shares
Since 2003 we have granted restricted shares to recruit, retain, reward and motivate selected high
potential employees, who are critical to the future success of Nokia. It is the Personnel Committee’s
philosophy that restricted shares will be used only for key management positions and other
critical resources. The 2003, 2004 and 2005 restricted share plans have been approved by the
Board of Directors.
All of our restricted share plans have a restriction period of three years after grant. As the shares
vest, they will be transferred and delivered to the recipients. Until the shares are transferred and
delivered, the recipients will not have any shareholder rights, such as voting or dividend rights
associated with these restricted shares.
Other Equity Plans for Employees
In addition to our global stock option plans described above, we have minor stock option plans for
Nokia employees in the U.S. and Canada which do not result in an increase of the share capital of
Nokia Corporation under which option holders receive Nokia ADSs. Also we have an Employee
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