Nokia 2009 Annual Report Download - page 126

companies in high technology, telecommunications and Internet services industries, as well as
companies from other industries that are headquartered in Europe and the United States. The peer
group is determined by the Personnel Committee and reviewed for appropriateness from time to time
as deemed necessary due to such factors as changes in the business environment or industry.
The Personnel Committee retains and uses an external consultant from Mercer Human Resources to
obtain benchmark data and information on current market trends. The consultant works directly for
the Chairman of the Personnel Committee and meets annually with the Personnel Committee, without
management present, to provide an assessment of the competitiveness and appropriateness of
Nokia’s executive pay levels and programs. Management provides the consultant with information
regarding Nokia’s programs and compensation levels in preparation for meeting with the Committee.
The consultant of Mercer Human Resources that works for the Personnel Committee is independent of
Nokia and does not have any other business relationships with Nokia.
The Personnel Committee reviews the executive officers’ compensation on an annual basis, and from
time to time during the year when special needs arise. Without management present, the Personnel
Committee reviews and recommends to the Board the corporate goals and objectives relevant to the
compensation of the President and CEO, evaluates the performance of the President and CEO in light
of those goals and objectives, and proposes to the Board the compensation level of the President and
CEO, which is confirmed by the independent members of the Board. Management’s role is to provide
any information requested by the Personnel Committee to assist in their deliberations.
In addition, upon recommendation of the President and CEO, the Personnel Committee approves all
compensation for all the members of the Group Executive Board (excluding that of the President and
CEO of Nokia) and other direct reports to the President and CEO, including longterm equity incentives
and goals and objectives relevant to compensation. The Personnel Committee also reviews the results
of the evaluation of the performance of the Group Executive Board members (excluding the President
and CEO) and other direct reports to the President and CEO and approves their incentive compensation
based on such evaluation.
The Personnel Committee considers the following factors, among others, in its review when
determining the compensation of Nokia’s executive officers:
• the compensation levels for similar positions (in terms of scope of position, revenues, number
of employees, global responsibility and reporting relationships) in relevant comparison
companies;
• the performance demonstrated by the executive officer during the last year;
• the size and impact of the particular officer’s role on Nokia’s overall performance and strategic
direction;
• the internal comparison to the compensation levels of the other executive officers of
Nokia; and
• past experience and tenure in role.
The above factors are assessed by the Personnel Committee in totality.
Nokia’s management performed an internal risk assessment of Nokia’s compensation policies and
practices for its employees in 2009. The internal risk assessment concluded that there are no risks
arising from Nokia’s compensation policies and practices that are reasonably likely to have a material
adverse effect on Nokia. The findings of the analysis were reported to the Personnel Committee.
Components of Executive Compensation
Our compensation program for executive officers includes annual cash compensation in the form of a
base salary, shortterm cash incentives and longterm equitybased incentive awards in the form of
performance shares, stock options and restricted shares.
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