Nokia 2011 Annual Report Download - page 156

Proposal by the Corporate Governance and Nomination Committee for remuneration to the
Board of Directors in 2012
On January 26, 2012, the Corporate Governance and Nomination Committee of the Board announced
its proposal to the Annual General Meeting convening on May 3, 2012 regarding the remuneration to
the Board of Directors in 2012. The Committee will propose that the annual fee payable to the Board
members elected at the same meeting for a term until the close of the Annual General Meeting in
2013, remain at the same level as during the past four years and be as follows: EUR 440 000 for the
Chairman, EUR 150 000 for the Vice Chairman and EUR 130 000 for each member (excluding the
President and CEO of Nokia if elected to the Nokia Board); for the Chairman of the Audit Committee
and the Chairman of the Personnel Committee an additional annual fee of EUR 25 000, and for each
member of the Audit Committee an additional annual fee of EUR 10 000. Further, the Corporate
Governance and Nomination Committee will propose that, as in the past, approximately 40 percent of
the remuneration be paid in Nokia shares purchased from the market, which shares shall be retained
until the end of the board membership in line with the Nokia policy (except for those shares needed to
offset any costs relating to the acquisition of the shares, including taxes).
Executive Compensation
Executive Compensation Philosophy, Programs and Decision-making Process
The basic principles of our executive compensation philosophy are to attract, retain and motivate
talented executive officers on a global basis with the right mix of skills and capabilities to drive Nokia’s
success in an extremely complex and rapidly evolving mobile communications industry. As a result, we
have developed an overall compensation framework that provides competitive base pay rates
combined with short- and long-term incentives that are intended to result in a competitive total
compensation package.
Our executive compensation programs have been designed to enable Nokia to effectively execute our
new strategy announced in early 2011. Specifically, our programs are designed to:
• incorporate specific measures that align directly with the execution of our new strategy over
the next year;
• deliver an appropriate amount of performance-related variable compensation for the
achievement of strategic goals and financial targets in both the short- and long-term;
• appropriately balance rewards between both Nokia’s and an individual’s performance; and
• foster an ownership culture that promotes sustainability and long-term value creation and
align the interests of the executive officers with those of the shareholders through long-term
equity-based incentives.
The competitiveness of Nokia’s executive compensation levels and practices is one of several key
factors the Personnel Committee of the Board considers in its determination of compensation for Nokia
executive officers. The Personnel Committee compares, on an annual basis, Nokia’s compensation
practices, base salaries and total compensation, including short- and long-term incentives against
those of other relevant companies with the same or similar revenue, size, global reach and complexity
that we believe we compete against for executive talent. The relevant sample includes 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 compensation consultant from Mercer Human
Resources to obtain benchmark data and information on current market trends. The consultant works
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