Nokia 2007 Annual Report Download - page 191

22. Sharebased payment (Continued)
performance share plans, stock option plans and restricted share plans. Both executives and
employees participate in these programs.
The equitybased incentive grants are generally forfeited, if the employment relationship with the
Group terminates, and they are conditioned upon the fulfillment of such performance, service and
other conditions, as determined in the relevant plan rules.
Sharebased compensation expense for all equitybased incentive awards amounted to EUR 228
million in 2007 (EUR 196 million in 2006 and EUR 95 million in 2005).
Stock options
Nokia’s global stock option plans in effect for 2007, including their terms and conditions, were
approved by the Annual General Meeting in the year when each plan was launched, i.e. in 2001, 2003,
2005 and 2007.
Each stock option entitles the holder to subscribe for one new Nokia share. Under the 2001 stock
option plan, the stock options were transferable by the participants. Under the 2003, 2005 and 2007
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 stock options is determined at the time of grant on a quarterly basis. The
exercise prices are determined in accordance with a preagreed schedule quarterly 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 the
exercise price.
The stock option exercises are settled with newly issued Nokia shares which entitle the holder to a
dividend for the financial year in which the subscription occurs. Other shareholder rights commence
on the date on which the shares subscribed for are registered with the Finnish Trade Register.
Pursuant to the stock options issued, an aggregate maximum number of 34 673 312 new Nokia
shares may be subscribed for, representing 0.9% of the total number of votes at December 31, 2007.
During 2007 the exercise of 57 269 338 options resulted in the issuance of 57 269 338 new shares.
The exercises during 2007 resulted in an increase of the share capital of the parent company of
EUR 193 905 by the Annual General Meeting on May 3, 2007. After that date, the exercises of stock
options have no longer resulted in an increase of the share capital as thereafter all share subscription
prices are recorded in the fund for invested nonrestricted equity as resolved by the Annual General
Meeting.
There were no stock options or convertible bonds outstanding as of December 31, 2007, which upon
exercise would result in an increase of the share capital of the parent company.
F48
Notes to the Consolidated Financial Statements (Continued)