Nokia 2007 Annual Report Download - page 109

forfeited if the employment relationship terminates with Nokia prior to vesting. Until the Nokia
shares are delivered, the participants do 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 the respective calendar quarter on the basis of an authorization given by the Board of
Directors. Approvals of restricted share grants to the CEO are made by the independent members of
the Board of Directors. Approvals for restricted share grants to the other Group Executive Board
members and other direct reports of the CEO are made by the Personnel Committee.
Other Equity Plans for Employees
In addition to our global equity plans described above, we have equity plans for Nokiaacquired
businesses or employees in the United States and Canada under which participants can receive Nokia
ADSs or ordinary shares. These equity plans do not result in an increase in the share capital of Nokia.
We have also an Employee Share Purchase Plan in the United States, which permits all fulltime Nokia
employees located in the United States to acquire Nokia ADSs at a 15% discount. The purchase of the
ADSs is funded through monthly payroll deductions from the salary of the participants, and the ADSs
are purchased on a monthly basis. As at December 31, 2007, a total of 11 339 333 ADSs had been
purchased under this plan since its inception, and there were a total of approximately 600
participants.
For more information on these plans, see Note 22 to our consolidated financial statements included
in Item 18 of this annual report.
EquityBased Compensation Program 2008
The Board of Directors announced the proposed scope and design for the Equity Program 2008 on
January 24, 2008. The main equity instrument will be performance shares. In addition, stock options
will be used on a limited basis for senior managers, and restricted shares will be used for a small
number of high potential and critical employees. These equitybased incentive awards are generally
forfeited, if the employee leaves Nokia prior to vesting.
Performance Shares
The Performance Share Plan 2008 approved by the Board of Directors will cover a performance period
of three years (20082010) with no interim measurement period. No performance shares will vest
unless Nokia’s performance reaches at least one of the threshold levels measured by two
independent, predefined performance criteria:
(1)
Average Annual Net Sales Growth : 4% (threshold) and 16% (maximum) during the performance
period 20082010, and
(2)
EPS (diluted, excluding special items) : EUR 1.72 (threshold) and EUR 2.76 (maximum) at the end of
the performance period in 2010.
Average Annual Net Sales Growth is calculated as an average of the net sales growth rates for the
years 2007 through 2010. EPS is the diluted earnings per share in 2010 excluding special items. Both
the EPS and Average Annual Net Sales Growth criteria are equally weighted and performance under
each of the two performance criteria is calculated independent of each other.
Achievement of the maximum performance for both criteria would result in the vesting of a
maximum of 12 million Nokia shares. Performance exceeding the maximum criteria does not increase
the number of performance shares that will vest. Achievement of the threshold performance for both
criteria will result in the vesting of approximately 3 million shares. If only one of the threshold levels
of performance is achieved, only approximately 1.5 million of the performance shares will vest. If
none of the threshold levels is achieved, then none of the performance shares will vest. For
performance 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
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