Nokia 2006 Annual Report Download - page 98

6.C Board Practices
The Board of Directors
The operations of the company are managed under the direction of the Board of Directors, within
the framework set by the Finnish Companies Act and our articles of association and the
complementary Corporate Governance Guidelines and related charters adopted by the Board.
The Board represents and is accountable to the shareholders of the company. The Board’s
responsibilities are active, not passive, and include the responsibility regularly to evaluate the
strategic direction of the company, management policies and the effectiveness with which
management implements its policies. The Board’s responsibilities further include overseeing the
structure and composition of the company’s top management and monitoring legal compliance and
the management of risks related to the company’s operations. In doing so the Board may set annual
ranges and/or individual limits for capital expenditures, investments and divestitures and financial
commitments not to be exceeded without Board approval.
The Board has the responsibility for appointing and discharging the Chief Executive Officer and the
other members of the Group Executive Board. The Chief Executive Officer also acts as President, and
his rights and responsibilities include those allotted to the President under Finnish law. Subject to
the requirements of Finnish law, the independent directors of the Board confirm the compensation
and the employment conditions of the Chief Executive Officer upon the recommendation of the
Personnel Committee. The compensation and employment conditions of the other members of the
Group Executive Board are approved by the Personnel Committee upon the recommendation of the
Chief Executive Officer.
The basic responsibility of the members of the Board is to act in good faith and with due care so as
to exercise their business judgment on an informed basis in what they reasonably and honestly
believe to be the best interests of the company and its shareholders. In discharging that obligation,
the directors must inform themselves of all relevant information reasonably available to them.
Pursuant to the articles of association, Nokia Corporation has a Board of Directors composed of a
minimum of seven and a maximum of 10 members. The members of the Board are elected for a
term of one year at each Annual General Meeting, which convenes each year by May 15. The Annual
General Meeting held on March 30, 2006 elected 10 members to the Board of Directors. Due to the
accidental death of one member, Edouard Michelin, Nokia announced on May 29, 2006 that the
Board of Directors thereafter consisted of the remaining nine members. On January 25, 2007, the
Nokia Board announced that it would propose to the Annual General Meeting convening on May 3,
2007 that the articles of association be amended to allow a minimum of seven and a maximum of
12 members of the Board of Directors, and that the Annual General Meeting would convene each
year by June 30.
The Chairman of the Board, Mr. Ollila, was also Nokia’s CEO until June 1, 2006. The other members of
the Board are all nonexecutive and independent as defined under Finnish rules and regulations. In
January 2007, the Board determined that seven members of the Board are independent, as defined
in the New York Stock Exchange’s corporate governance listing standards, as amended in November
2004. In addition to the Chairman, Bengt Holmstr¨om was determined not to be independent under
the NYSE standards due to a family relationship with an executive officer of a Nokia supplier of
whose consolidated gross revenue from Nokia accounts for an amount that exceeds the limit
provided in the NYSE listing standards, but that is less than 10%. The Board convened 13 times
during 2006. Seven of the meetings were held through technical equipment. The average ratio of
attendance at the meetings was 98%. The nonexecutive directors meet twice a year, or more often
as they deem appropriate. Such sessions were, until June 1, 2006 presided over by the Vice Chairman
of the Board or, in his absence, the most senior nonexecutive member of the Board. As from June 1,
2006, these sessions were chaired by the nonexecutive Chairman of the Board or, in his absence,
the nonexecutive Vice Chairman of the Board. In addition, the independent directors meet
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