Nokia 2006 Annual Report Download - page 93

(1) Including all grants made during 2006. Stock option grants were made under the Nokia Stock
Option Plan 2005, performance share grants under the Nokia Performance Share Plan 2006 and
restricted share grants under the Nokia Restricted Share Plan 2006.
(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 18.02. The Helsinki Stock Exchange
closing market price at grant date was EUR 17.97.
(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.
Pension Arrangements for the Members of the Group Executive Board
The members of the Group Executive Board in 2006 participate in the local retirement programs
applicable to employees in the country where they reside. Executives in Finland participate in the
Finnish TEL pension system, which provides for a retirement benefit based on years of service and
earnings according to a prescribed statutory system. Under the Finnish TEL 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 TEL 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.
Effective July 1, 2006, 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. Prior to July 1, 2006
participants could elect to make voluntary pretax contributions that were 100% matched by Nokia
up to 6% of eligible earnings with an additional annual discretionary contribution of up to 2% of
eligible earnings made by Nokia. For participants earning in excess of the eligible earning limit,
Nokia offers an additional Restoration and Deferral Plan. This plan allows employees to defer up to
50% of their salary and 100% of their bonus into a nonqualified plan. Prior to July 1, 2006, Nokia
also made annual discretionary contributions to this nonqualified plan of up to 2% of the earnings
above 401(k) eligibility limits. Effective July 1, 2006, these 2% discretionary contributions were
eliminated. The last contributions were made in 2006 based on 2005 earnings.
OlliPekka Kallasvuo can, as part of his service contract, retire at the age of 60 with full retirement
benefit 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 statutory retirement age of 65.
Jorma Ollila’s service contract ended as of June 1, 2006, after which he is not eligible to receive any
additional retirement benefits from Nokia.
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 TEL 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
Jorma Ollila’s service contract, which covered his position as CEO, ended as of June 1, 2006 without
any severance or other payments from Nokia. Following the termination of his service contract, he is
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