Nokia 2009 Annual Report Download - page 137

EquityBased Compensation Program 2010
The Board of Directors approved the scope and design of the Nokia Equity Program 2010 on
January 28, 2010. The main equity instrument continues to 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 2010 approved by the Board of Directors will cover a performance period
of three years (20102012). 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 : 0% (threshold) and 13.5% (maximum) during the performance
period 20102012, and
(2)
EPS (diluted, nonIFRS) : EUR 0.82 (threshold) and EUR 1.44 (maximum) at the end of the
performance period in 2012.
Average Annual Net Sales Growth is calculated as an average of the net sales growth rates for the
years 2010 through 2012. EPS is the diluted, nonIFRS earnings per share in 2012. 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 17 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 4.25 million shares. If only one of the threshold
levels of performance is achieved, only approximately 2.13 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 occur December 31, 2012. Until
the Nokia shares are delivered, the participants will not have any shareholder rights, such as voting
or dividend rights associated with these performance shares.
Stock Options
The stock options to be granted in 2010 are out of the Stock Option Plan 2007 approved by the
Annual General Meeting in 2007. For more information on Stock Option Plan 2007 see “EquityBased
Compensation Programs—Stock Options” above.
Restricted Shares
The restricted shares to be granted under the Restricted Share Plan 2010 will have a threeyear
restriction period (20102012). The restricted shares will vest and the payable Nokia shares be
delivered in 2013 and early 2014, subject to fulfillment of the service period criteria. Participants will
not have any shareholder rights or voting rights during the restriction period, until the Nokia shares
are transferred and delivered to plan participants after the end of the restriction period.
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