Nokia 2006 Annual Report Download - page 97

between the threshold and maximum performance levels, the vesting follows a linear scale. If the
required performance levels are achieved, the vesting will take place in 2010. Until the Nokia shares
are transferred and delivered, the recipients will not have any shareholder rights, such as voting or
dividend rights associated with these performance shares.
Stock Option Plan 2007
The Board of Directors will make a proposal for Stock Option Plan 2007 to be approved by the
shareholders at the Annual General Meeting on May 3, 2007. The stock option grants in 2007 are
expected to be made primarily out of the Stock Option Plan 2007, which is proposed to be a four
year plan amounting to a maximum of 20 million stock options to be granted from 2007 to 2010.
Each stock option would entitle the option holder to subscribe for one Nokia share. The exercise
price of the stock options would be determined at the time of grant on a quarterly basis and would
be based on the trade volume weighted average price of a Nokia share on the Helsinki Stock
Exchange for the first whole week of the second month of the calendar quarter (i.e. February, May,
August or November). The stock options would have a vesting schedule with a 25% vesting one year
after grant and quarterly vesting thereafter. The subcategories of stock options expected to be issued
under the plan would generally have a term of five years, with the last of the subcategories expiring
as of December 31, 2015. The determination of exercise price is defined in the terms and conditions
of the stock option plan to be presented for shareholders’ approval at the Annual General Meeting.
The Board of Directors would not have right to amend the above described determination of exercise
price.
Restricted Share Plan 2007
The restricted shares to be granted under the Restricted Share Plan 2007 will have a threeyear
restriction period. The restricted shares will vest and the payable Nokia shares be delivered mainly in
2010, subject to fulfillment of the service period criteria. Recipients will not have any shareholder
rights or voting rights during the restriction period, until the Nokia shares are transferred and
delivered to plan participants at the end of the restriction period.
Maximum Planned Grants
The maximum number of planned grants under the 2007 Equity Program (i.e., performance shares,
stock options and restricted shares) are set forth in the table below. The planned amounts for 2007
are less than the total amounts approved and disclosed in 2006.
Maximum Number of Planned Grants under
Plan type the 2007 Equity Program in 2007
Stock Options ******************************************* 5 million
Restricted Shares **************************************** 4 million
Performance Shares at Threshold(1) ************************ 3 million
(1) The maximum number of shares to be delivered at maximum performance is four times the
number originally granted (at threshold), i.e. a total of 12 million Nokia shares.
As of December 31, 2006, the total dilutive effect of Nokia’s stock options, performance shares and
restricted shares outstanding, assuming full dilution, was approximately 3.4% in the aggregate. The
potential maximum effect of the proposed equity program 2007, would be approximately another
0.8%.
96