Nokia 2006 Annual Report Download - page 95

growth target for the performance period of the plan and earnings per share (‘‘EPS’’) target at the
end of the performance period. The 2004 and 2005 plans have a fouryear performance period,
including a possibility for an interim payout, and the 2006 plan has a threeyear performance period
without any interim payout. For the 2004 plan, the performance period consists of the fiscal years
2004 through 2007, with an interim payout made in 2006. For the 2005 plan the performance
period consists of the fiscal years 2005 through 2008, with a possibility for an interim payout in
2007. The second and final payout, if any, under both the 2004 and 2005 plans, will be after the
close of the respective fouryear performance periods. In the 2004 and 2005 plans average annual
net sales growth and separate EPS threshold and maximum levels have been determined for the
interim measurement period and for the full performance period. For the 2006 plan, the performance
period consists of the fiscal years 2006 through 2008, with no interim measurement period. The
final payout, if any, will be made in 2009 after the close of the threeyear performance period. Until
the Nokia shares are transferred and delivered, the recipients will not have any shareholder rights,
such as voting or dividend rights, associated with the performance shares.
Performance share grants are approved by the CEO at the end of the respective calendar quarter on
the basis of an authorization given by the Board of Directors. Approvals for performance share grants
to the CEO are made by the Board of Directors, and for the Group Executive Board members and
other direct reports of the CEO by the Personnel Committee of the Board.
Stock Options
Nokia’s outstanding global stock option plans were approved by the Annual General Meetings in the
year when each plan was launched, i.e., in 2001, 2003 and 2005.
Each stock option entitles the holder to subscribe for one new Nokia share. 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 vesting schedule with a 25%
vesting one year after grant, and quarterly vesting thereafter. The stock options granted under the
plans generally have a term of five years.
The exercise price of the grant is determined at the time of grant on a quarterly basis. The exercise
prices are determined in accordance with a preagreed schedule after the release of Nokia’s periodic
financial results and are based on the trade volume weighted average price of a Nokia share on the
Helsinki Stock Exchange during the trading days of the first whole week of the second month of the
respective calendar quarter (i.e., February, May, August or November). Exercise prices are determined
on a oneweek weighted average to mitigate any short term fluctuations in Nokia’s share price. The
determination of exercise price is defined in the terms and conditions of the stock option plan,
which are approved by the shareholders at the respective Annual General Meeting. The Board of
Directors does not have right to amend the abovedescribed determination of exercise price.
Stock option grants are approved by the CEO at the time of stock option pricing on the basis of an
authorization given by the Board of Directors. Approvals for stock option grants to the CEO are made
by the Board of Directors, and the Group Executive Board members and other for direct reports of
the CEO by the Personnel Committee of the Board.
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 Nokia’s philosophy that
restricted shares will be used only for key management positions and other critical resources. The
2003, 2004, 2005 and 2006 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. Once the shares
vest, they will be transferred and delivered to the recipients. Until the Nokia shares are transferred
and delivered, the recipients will not have any shareholder rights, such as voting or dividend rights,
associated with the restricted shares. Restricted share grants are approved by the CEO at the end of
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